8-K

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 8-K

CURRENT REPORT
PURSUANT TO SECTION 13 OR 15 (d) OF
THE SECURITIES EXCHANGE ACT OF 1934

Date of Report (Date of earliest event reported): February 3, 2005

MYLAN LABORATORIES INC.

(Exact name of registrant as specified in its charter)

Pennsylvania	1-9114	25-1211621
(State or other jurisdiction of	(Commission File	(I.R.S. Employer
Incorporation)	Number)	Identification No.)

1500 Corporate Drive
Canonsburg, PA 15317
(Address of principal executive offices)

(724) 514-1800
(Registrant’s telephone number, including area code)

     Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

     £ Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

     £ Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

     £ Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2 (b))

     £ Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4 (c))

TABLE OF CONTENTS

	Item 2.02 — Results of Operations and Financial Condition.
	Item 9.01 — Financial Statements and Exhibits.
SIGNATURE
EXHIBIT INDEX
EX-99.1

Item 2.02 — Results of Operations and Financial Condition.

     On February 3, 2005, Mylan Laboratories Inc., a Pennsylvania corporation, issued a press release reporting its financial results for the quarter and nine months ended December 31, 2004, and revised earnings guidance for fiscal 2005. A copy of the press release is attached hereto as Exhibit 99.1.

     The information in this report (including the exhibit) shall not be deemed to be “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or otherwise subject to the liability of that section, and shall not be incorporated by reference into any registration statement or other document filed under the Securities Act of 1933, as amended, or the Exchange Act, except as shall be expressly set forth by specific reference in such filing.

Item 9.01 — Financial Statements and Exhibits.

(c) Exhibits.

Exhibit No.	Description
99.1	Press release of the registrant, dated February 3, 2005.

SIGNATURE

     Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

	MYLAN LABORATORIES INC.
Date: February 3, 2005	By:	/s/ Edward J. Borkowski
		Edward J. Borkowski
		Chief Financial Officer

2

EXHIBIT INDEX

Exhibit No.	Description
99.1	Press release of the registrant, dated February 3, 2005.

3

EX-99.1

EXHIBIT 99.1

FOR IMMEDIATE RELEASE	CONTACTS:
	Heather Bresch (Public Relations)
	Mylan Laboratories Inc.
	724.514.1800
	Kris King (Investor Relations)
	Mylan Laboratories Inc.
	724.514.1800

Mylan Reports Third Quarter Earnings

PITTSBURGH, PA – February 3, 2005 – Mylan Laboratories Inc. (NYSE: MYL) announced its financial results for the third quarter ended December 31, 2004. Net revenues for the quarter were $291.0 million, a decrease of $58.8 million from the same prior year period. Net earnings were $34.8 million, a decrease of $49.8 million from the third quarter of fiscal 2004, while earnings per diluted share were $0.13 compared to $0.31 in the same prior year period.

“As I have previously stated, the generic industry continues to be under significant pressure,” commented Robert J. Coury, Vice Chairman and Chief Executive Officer. “We have experienced increased pressure on pricing due to overall market conditions and additional competition on certain products, most notably omeprazole and carbidopa/levodopa. This, coupled with the impact of authorized generics, the delay in the launch of our fentanyl transdermal system and limited new significant product launches, has continued to negatively affect our financial results.”

Mylan also today issued revised earnings guidance for fiscal 2005 of $0.75 to $0.80 per diluted share, including net gains on legal settlements in the first quarter of fiscal 2005 which amounted, net of tax, to approximately $0.06 per diluted share. The Company’s revised guidance primarily reflects what we believe to be irrational pricing of fentanyl at market formation.

Mr. Coury further stated, “Mylan continues to demonstrate its leadership ability in bringing to market products that are difficult to both manufacture and develop and will continue to focus on and select future opportunities that meet these criteria. Once again we’ve achieved another Mylan first by becoming the first company to bring to market a class II AB-rated transdermal fentanyl product. Mylan and the generic industry, throughout their history, have weathered a number of cyclical downturns and we believe, as in the past, that Mylan will once again emerge from the current environment even stronger than before.”

For the first nine months of fiscal 2005, Mylan reported net revenues of $936.9 million, a decrease of $104.3 million from the same prior year period. Net earnings and earnings per diluted share decreased to $165.5 million and $0.60 per diluted share, respectively, from $259.8 million and $0.94 per diluted share, respectively, in the prior year. The results for both fiscal 2005 and fiscal 2004 included net gains on legal settlements which amounted, net of tax, to approximately $0.06 per diluted share.

Segment Information

	Three Months Ended						Nine Months Ended
	December 31,						December 31,
	2004		2003		Change		2004		2003		Change
Net Revenues (in millions)
Generic Segment	$	238.4	$	277.4		-14%	$	753.6	$	832.2		-9%
Brand Segment		52.6		72.3		-27%		183.4		209.1		-12%
Total	$	291.0	$	349.8		-17%	$	936.9	$	1,041.3		-10%

Generic Segment

Net revenues for the quarter decreased $39.1 million to $238.4 million from $277.4 million for the same prior year period. Overall unfavorable pricing, including price erosion as a result of increased competition, negatively impacted the Company’s product portfolio, with carbidopa/levodopa being the product most affected. Omeprazole, which was launched in August 2003, has also experienced decreased pricing as a result of competition. However, increased volume on omeprazole nearly offset the impact of the unfavorable pricing.

New products contributed net revenues of $11.8 million in the current quarter. The prior year results included net revenues of $29.5 million from the launch of new products, largely due to omeprazole.

Gross profit for the quarter decreased $46.3 million to $107.2 million, while gross margins decreased to 45.0% from 55.4%. The impact of competition on the pricing of omeprazole and carbidopa/levodopa, as well as other products in the Company’s portfolio, was primarily responsible for the decrease in margins. Earnings from operations decreased $50.5 million to $80.0 million primarily as a result of the decrease in gross profit. Additionally, the Generic Segment’s operating expenses increased $4.2 million, primarily as a result of additional research and development (R&D) expenses. R&D expenses increased as a result of the continued investment in our generic development platform.

For the nine-month period, net revenues decreased $78.6 million to $753.6 million from $832.2 million in the same prior year period. As discussed above, overall unfavorable pricing, in particular on omeprazole and carbidopa/levodopa, were also primarily responsible for the year over year decrease in sales. As was observed for the quarter, lower pricing was partially offset by increased volume. Through the first nine months of fiscal 2005, generic doses shipped were 8.7 billion, more than 5% greater than in fiscal 2004.

New products in the current fiscal year contributed net revenues of $38.0 million compared to $102.5 million in fiscal 2004.

Gross profit for the first nine months of fiscal 2005 was $367.1 million, a decrease of $94.1 million from the first nine months of fiscal 2004. Gross margins decreased to 48.7% in the current year compared to 55.4% in the prior year.

Operating income decreased $105.9 million to $289.2 million for the nine months ended December 31, 2004. This decrease was the result of lower gross profit as well as higher R&D and general and administrative (G&A) expenses.

Brand Segment

Brand Segment net revenues for the third quarter were $52.6 million, a decrease of $19.7 million from $72.3 million in the same prior year period. Included in net revenues for the third quarter of fiscal 2004 was $13.2 million related to the sale of the U.S. and Canadian rights for sertaconazole 2% nitrate cream (“sertaconazole”). Unfavorable pricing, the result of increased generic competition on Amnesteem™, was primarily responsible for the remainder of the decrease.

Brand Segment gross profit decreased $17.5 million to $28.1 million in the third quarter of fiscal 2005, while gross margins decreased to 53.4% from 63.0% in the same prior year period. The decrease in margin is primarily the result of the sale of sertaconazole in the prior year. Excluding the effects of this sale, the decrease in gross margin in the third quarter of fiscal 2005 was not significant.

Earnings from operations were $3.4 million compared to $17.1 million in the same quarter of the prior year, a decrease of $13.7 million. This decrease was the result of the lower gross profit, partially offset by lower operating expenses. R&D expenses decreased $5.7 million primarily as a result of the completion, during fiscal 2004, of the Phase III clinical studies for nebivolol, for which an NDA was accepted for filing by the FDA on June 29, 2004. This decrease was partially offset by higher selling and marketing expenses associated with the Company’s launch of Apokyn™ and pre-marketing activities associated with nebivolol.

For the nine months ended December 31, 2004, Brand Segment net revenues decreased $25.7 million to $183.4 million from $209.1 million in the prior year. Excluding sertaconazole, the decrease in sales of $11.8 million was primarily driven by increased competition on certain branded products, such as Amnesteem, Digitek® and Acticin®, partially offset by higher revenues from phenytoin.

Gross profit for the Brand Segment decreased $19.9 million to $103.2 million in the first nine months of fiscal 2005. Gross margins during this period decreased to 56.3% from 58.9% in the prior year. However, excluding sertaconazole, Brand Segment gross margins for the nine months ended December 31, 2004, increased slightly. This is primarily the result of favorable product mix, with higher margin products such as phenytoin comprising a higher percentage of sales, and Amnesteem, which contributes lower gross margins as a result of royalties paid under a supply and distribution agreement, comprising a smaller percentage.

Operating income for the nine months ended December 31, 2004 was $28.0 million, a decrease of $10.5 million from the same prior year period. This decrease was the result of lower gross profit, partially offset by lower overall operating expenses. As was observed for the quarter, R&D expenses were primarily responsible for the decrease in operating expenses, partially offset by higher selling and marketing.

Corporate/Other

G&A expenses for the third quarter of fiscal 2005 were $34.4 million compared to $24.7 million in the same prior year period. The increase was the result of certain costs associated with the announced (but not completed) acquisition and integration of King Pharmaceuticals, Inc. (“King”) and the implementation of an Enterprise Resource Planning (“ERP”) system, as well as increased payroll and payroll related costs. Other income for the third quarter was $3.7 million compared to $4.1 million in the same prior year period.

For the nine months ended December 31, 2004, G&A expenses increased $22.8 million to $94.2 million. This increase was the result of costs associated with the announced (but not completed) acquisition and integration of King and the implementation of ERP, increased legal and professional fees, and higher payroll and payroll related costs. Other income for the period was $6.3 million compared to $14.7 million in the same prior year period. Included in the prior year was a gain of $5.0 million on the sale of an office building in California.

Conference Call and Live Webcast

Mylan will host a conference call and live webcast to discuss its third quarter 2005 earnings on Thursday, February 3, 2005, at 10:00 am ET. The dial-in number to access the live call is (913) 981-5543. In addition to the live call, a replay will be available from approximately 12:00 pm ET on February 3, 2005, through 12:00 pm ET on February 10, 2005, and can be accessed by dialing (719) 457-0820 with access pass code 3367624. To access the live webcast, go to Mylan’s website at http://www.mylan.com and click on the webcast icon at least 15 minutes before the call is to begin to register and download or install any necessary audio software. If you are unable to listen to the live webcast, please access http://www.mylan.com at any time within seven days to listen to a replay of the webcast.

Forward-Looking Statements

This press release includes statements that constitute “forward-looking statements”, including with regard to the Company’s earnings guidance, its announced (but not completed) acquisition of King, Mylan’s product launches and its strength in the future. These statements are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Because such statements inherently involve risks and uncertainties, actual future results may differ materially from those expressed or implied by such forward-looking statements. Factors that could cause or contribute to such differences include, but are not limited to:

•   the Company’s ability to successfully develop, license or otherwise acquire and introduce new products on a timely basis in relation to competing product introductions;

•   the Company’s ability to obtain required FDA approvals for new products on a timely basis;

•   uncertainties regarding continued market acceptance of and demand for the Company’s products;

•   the Company’s periodic dependence on a relatively small group of products as a significant source of its net revenue or net income;

•   the effects of vigorous competition on commercial acceptance of the Company’s products and their pricing, including, without limitation, the impact of the entry of generic competition for the Company’s fentanyl product;

•   the high cost and uncertainty associated with compliance with extensive regulation of the pharmaceutical industry;

•   the possibility that the calculation and reporting of amounts owed in respect of Medicaid and other governmental pricing programs could be challenged, and that sanctions or penalties could be assessed;

•   the significant research and development expenditures the Company makes to develop products, the commercial success of which is uncertain;

•   the possible loss of business from the Company’s concentrated customer base;

•   the potential costs and product introduction delays that may result from use of legal, regulatory and legislative strategies by the Company’s competitors and other third parties, including the practice of so-called “authorized generics” and the use of citizen’s petitions to delay or prevent product introductions;

•   the Company’s dependence on third party suppliers and distributors for the raw materials, particularly the chemical compound(s) which produces the desired therapeutic effect, the active ingredient the Company uses to manufacture its products;

•   the possible negative effects of any interruption of manufacturing of products at the Company’s principal facilities;

•   the effects of consolidation of the Company’s customer base;

•   uncertainties regarding patent, intellectual and other proprietary property protections;

•   the expending of substantial resources associated with litigation involving patent or other intellectual property protection of products;

•   possible reductions in reimbursement rates for pharmaceutical products;

•   possible negative effects on product pricing of current or future legislative or regulatory programs, including state Medicaid programs;

•   the Company’s exposure to lawsuits and contingencies associated with its business;

•   uncertainties regarding the Company’s performance under indemnification clauses in certain material agreements;

•   the Company’s exposure to risks inherent in acquisitions or joint ventures, including with regard to the announced (but not completed) acquisition of King Pharmaceuticals, Inc.;

•   risks relating to the King acquisition such as the fulfillment of conditions to closing, and, should the acquisition occur, challenges and costs relating to integration of the two businesses;

•   the Company’s ability to attract and retain key personnel;

•   recent decisions by the FDA, current brand tactics and other factors beyond the Company’s control which have placed its generics business under increasing pressure;

•   the Company’s implementation of an Enterprise Resource Planning system;

•   uncertainties and matters beyond the control of management, which could affect the Company’s earnings guidance, as well as the subjectivity inherent in any probability weighted analysis underlying the Company’s assumptions and estimates with respect to the future; and

•   inherent uncertainties involved in the estimates and judgments used in the preparation of financial statements in accordance with GAAP and related standards.

The cautionary statements referred to above should be considered in connection with any subsequent written or oral forward-looking statements that may be made by the Company or by persons acting on its behalf and in conjunction with its periodic SEC filings. In addition, please refer to the cautionary statements and risk factors in Item I of the Company’s Form 10-K for the year ended March 31, 2004, and in its other filings with the SEC. The Company undertakes no duty to update its forward-looking statements, even though its situation may change in the future.

Mylan Laboratories Inc. is a leading pharmaceutical company with four subsidiaries, Mylan Pharmaceuticals Inc., Mylan Technologies Inc., UDL Laboratories, Inc. and Mylan Bertek Pharmaceuticals Inc., that develop, manufacture and market an extensive line of generic and proprietary products. For more information about Mylan, visit www.mylan.com.

Mylan Laboratories Inc. and Subsidiaries
Condensed Consolidated Statements of Earnings
(unaudited; in thousands, except per share amounts)

	Three Months Ended					Nine Months Ended
	December 31, 2004		December 31, 2003			December 31, 2004			December 31, 2003
Net revenues	$	290,972	$	349,786		$	936,939		$	1,041,254
Cost of sales		155,625		150,602			466,586			456,933
Gross profit		135,347		199,184			470,353			584,321
Operating expenses:
Research and development		23,167		25,248			66,704			73,933
Selling and marketing		19,661		18,027			59,552			53,137
General and administrative		43,537		33,096			121,080			95,016
Litigation settlements, net		—		(2,676	)		(25,985	)		(24,345	)
Total operating expenses		86,365		73,695			221,351			197,741
Earnings from operations		48,982		125,489			249,002			386,580
Other income, net		3,699		4,194			6,295			14,727
Earnings before income taxes		52,681		129,683			255,297			401,307
Provision for income taxes		17,911		45,065			89,840			141,548
Net earnings	$	34,770	$	84,618		$	165,457		$	259,759
Earnings per common share:
Basic	$	0.13	$	0.32		$	0.62		$	0.97
Diluted	$	0.13	$	0.31		$	0.60		$	0.94
Weighted average common shares:
Basic		269,165		268,560			268,888			269,141
Diluted		273,139		276,881			273,826			276,478

Mylan Laboratories Inc. and Subsidiaries
Condensed Consolidated Balance Sheets
(unaudited; in thousands)

	December 31, 2004		March 31, 2004
Assets:
Current assets:
Cash and cash equivalents	$	183,313	$	101,713
Marketable securities		651,952		585,445
Accounts receivable, net		196,390		191,094
Inventories		292,385		320,797
Other current assets		115,650		118,792
Total current assets		1,439,690		1,317,841
Non-current assets		588,904		557,449
Total assets	$	2,028,594	$	1,875,290
Liabilities:
Current liabilities	$	169,599	$	173,768
Non-current liabilities		43,969		41,734
Total liabilities		213,568		215,502
Total shareholders’ equity		1,815,026		1,659,788
Total liabilities and shareholders’ equity	$	2,028,594	$	1,875,290

Mylan Laboratories Inc. and Subsidiaries
Segment Results
(unaudited; in thousands)

	Three Months Ended						Nine Months Ended
	December 31, 2004			December 31, 2003			December 31, 2004			December 31, 2003
Consolidated:
Net revenues	$	290,972		$	349,786		$	936,939		$	1,041,254
Cost of sales		155,625			150,602			466,586			456,933
Gross profit		135,347			199,184			470,353			584,321
Research and development		23,167			25,248			66,704			73,933
Selling and marketing		19,661			18,027			59,552			53,137
General and administrative		43,537			33,096			121,080			95,016
Litigation settlements, net		—			(2,676	)		(25,985	)		(24,345	)
Earnings from operations	$	48,982		$	125,489		$	249,002		$	386,580
Generic Segment:
Net revenues	$	238,357		$	277,446		$	753,572		$	832,157
Cost of sales		131,108			123,864			386,436			370,908
Gross profit		107,249			153,582			367,136			461,249
Research and development		18,071			14,436			50,880			42,077
Selling and marketing		3,108			2,743			8,979			8,260
General and administrative		6,103			5,954			18,093			15,809
Earnings from operations	$	79,967		$	130,449		$	289,184		$	395,103
Brand Segment:
Net revenues	$	52,615		$	72,340		$	183,367		$	209,097
Cost of sales		24,517			26,738			80,150			86,025
Gross profit		28,098			45,602			103,217			123,072
Research and development		5,096			10,812			15,824			31,856
Selling and marketing		16,553			15,284			50,573			44,877
General and administrative		3,057			2,454			8,797			7,825
Earnings from operations	$	3,392		$	17,052		$	28,023		$	38,514
Corporate/Other:
General and administrative	$	34,377		$	24,688		$	94,190		$	71,382
Litigation settlements, net		—			(2,676	)		(25,985	)		(24,345	)
Loss from operations	$	(34,377	)	$	(22,012	)	$	(68,205	)	$	(47,037	)