For Immediate Release
Investor Relations Contact: Media Contact:
Justin R. Victoria Lowell B. Weiner
(973) 660-5340 (973) 660-5013
Wyeth Reports
Earnings Results for the
2002 Fourth Quarter and Full Year
Madison, New Jersey, January 28, 2003 - Wyeth (the Company) (NYSE: WYE) today
reported net revenue and earnings results for the 2002 fourth quarter and full
year. Worldwide net revenue increased 4% for both the 2002 fourth quarter and
full year. Excluding the impact of foreign exchange, worldwide net revenue
increased 3% for the 2002 fourth quarter while 2002 full year growth was
unaffected by foreign exchange.
2002 Fourth Quarter Results
- ---------------------------
Net income for the 2002 fourth quarter increased to $1,574.0 million compared
with $822.7 million in the prior year. Diluted earnings per share was $1.18
compared with $0.62 in the prior year. On January 1, 2002, the Company adopted
FASB Statement No. 142, which eliminated the amortization of goodwill. Excluding
the after-tax goodwill amortization of
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$38.7 million ($0.03 per share-diluted) from the 2001 fourth quarter results as
well as the 2002 fourth quarter unusual items discussed below, both net income
and diluted earnings per share were flat for the 2002 fourth quarter at $864.1
million and $0.65, respectively, compared with $861.4 million and $0.65 in the
2001 fourth quarter. Net income for the 2002 fourth quarter, excluding the
unusual items, was impacted by higher cost of goods sold, as a percentage of net
revenue, and higher research and development expenses offset by lower selling,
general and administrative expenses and higher other income, net.
The higher cost of goods sold, as a percentage of net revenue, is attributable
to a change in product mix, and the costs of addressing various manufacturing
issues. Unfavorable product mix for the 2002 fourth quarter is mainly
attributable to decreased sales of higher margin products, including the
Premarin family and Cordarone I.V., and higher sales of lower margin products
such as Protonix. The lower selling, general and administrative expenses were
due to cost management efforts, including the restructuring program described
below. Higher other income, net was primarily a result of the Company completing
the sale of certain of its assets relating to generic human injectables which
resulted
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in a pre-tax gain of $172.9 million ($108.9 million after-tax or $0.08
per share-diluted).
2002 Fourth Quarter Unusual Items
- ---------------------------------
In the 2002 fourth quarter, the Company recorded a gain of $1,454.6 million
($943.4 million after-tax or $0.71 per share-diluted) from the sale of
67,050,400 shares of Amgen Inc. common stock, received in connection with
Amgen's acquisition of Immunex Corporation, for net proceeds of $3,250.8
million. Since December 31, 2002, the Company has sold the remaining 31,235,958
shares of its Amgen common stock holdings, resulting in additional net proceeds
of $1,579.8 million and an after-tax gain of $558.6 million to be recorded in
the 2003 first quarter.
In addition, the Company recorded a special charge for restructuring and related
asset impairments of $340.8 million ($233.5 million after-tax or $0.18 per
share-diluted). The restructuring charge and related asset impairments were
recorded to recognize the costs of closing certain manufacturing facilities and
two research facilities, as well as reducing headcount at the Company's
facilities. The closing of the manufacturing and research facilities, and
reduction of sales and administrative related positions covers approximately
3,150 employees worldwide.
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Approximately 1,200 of these positions are located at the manufacturing and
research facilities that will be closed.
2002 Full Year Results
- ----------------------
Net income for the 2002 full year increased to $4,447.2 million compared with
$2,285.3 million in the prior year. Diluted earnings per share was $3.33
compared with $1.72 in the prior year. The 2002 and 2001 full year results
included the following unusual items:
(In millions, except per share amounts)
Income before Federal Diluted
and Foreign Earnings Per
Item Description Taxes Net Income Share
- ------------------------------ --------------------- -------------------- --------------
2002 2001 2002 2001 2002 2001
---- ---- ---- ---- ---- ----
Income before unusual items $3,755.8 $3,818.7 $2,962.6 $2,900.3 $2.22 $2.18
Gains related to Immunex/Amgen
common stock transactions* 4,082.2 - 2,628.1 - 1.97 -
Redux and Pondimin diet drug
litigation charges (1,400.0) (950.0) (910.0) (615.0) (0.68) (0.46)
Special charge (340.8) - (233.5) - (0.18) -
-------- -------- -------- -------- ----- -----
Income including unusual items $6,097.2 $2,868.7 $4,447.2 $2,285.3 $3.33 $1.72
======== ======== ======== ======== ===== =====
* The gains related to the Immunex/Amgen common stock transactions consist of
the following:
- $2,627.6 million ($1,684.7 million after-tax or $1.26 per share-diluted)
recorded during the 2002 third quarter relating to the acquisition of
Immunex by Amgen. The gain represents the excess of $1,005.2 million in
cash plus the fair value of 98,286,358 Amgen shares received, $2,500.1
million, over the Company's book basis of its investment in Immunex and
certain transaction costs.
- $1,454.6 million ($943.4 million after-tax or $0.71 per share-diluted)
recorded during the 2002 fourth quarter relating to the gain on the sale of
67,050,400 shares of Amgen common stock. The gain was determined by
comparing the basis of the shares sold ($1,782.7 million) to the net
proceeds received ($3,250.8 million), reduced by certain related expenses.
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Excluding the after-tax goodwill amortization of $153.9 million ($0.12 per
share-diluted) from the 2001 full year results, as well as the unusual items
identified above, net income and diluted earnings per share for the 2002 full
year both decreased 3% to $2,962.6 million and $2.22, respectively, compared
with $3,054.2 million and $2.30 in the 2001 full year. The decrease for the full
year resulted from the same factors that impacted the 2002 fourth quarter net
income fluctuation. Additionally, decreased full year sales of higher margin
products, primarily Premarin family and Prevnar, and higher sales of lower
margin products such as Protonix and ReFacto, resulted in a less favorable
product mix for the 2002 full year.
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Segment Information
- -------------------
The following table sets forth worldwide net revenue by operating segment
together with the percentage changes from the comparable period in the prior
year:
Three Months Twelve Months
Ended 12/31/02 Ended 12/31/02
----------------------- ----------------------
Operating Segment ($ in 000's) Inc (Dec) ($ in 000's) Inc (Dec)
- ---------------------- ------------ --------- ------------ ---------
Human Pharmaceuticals $ 3,033,225 8% $11,733,261 7%
Animal Health Products 169,543 (22)% 653,319 (16)%
----------- --------- ----------- ---------
Pharmaceuticals 3,202,768 6% 12,386,580 6%
Consumer Healthcare 611,226 (6)% 2,197,455 (3)%
----------- --------- ----------- ---------
Total * $ 3,813,994 4% $14,584,035 4%
=========== ========= =========== =========
* Effective January 1, 2002, the Company adopted new authoritative accounting
guidance reflecting the cost of certain vendor considerations (i.e.,
cooperative advertising payments) as reductions of revenue rather than
selling and marketing expenses. Financial information for the prior periods
presented has been reclassified to comply with the income statement
classification requirements of the new guidance. These reclassifications
had no effect on total net revenue fluctuations between the periods
presented.
Pharmaceuticals
---------------
Worldwide pharmaceutical net revenue increased 6% for both the 2002 fourth
quarter and full year compared with the same periods in the prior year.
Human Pharmaceuticals
---------------------
Worldwide human pharmaceutical net revenue increased 8% for the 2002 fourth
quarter and 7% for the 2002 full year. The
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2002 fourth quarter and full year increases resulted from higher sales of
Effexor and Protonix, partially offset by decreases in the Premarin family of
products. Additionally, the 2002 fourth quarter net revenue increase was
partially offset by lower sales of Cordarone I.V. and the 2002 full year net
revenue increase was partially offset by lower sales of Prevnar and generic
products.
Animal Health Products
----------------------
Worldwide animal health product net revenue decreased 22% for the 2002 fourth
quarter and 16% for the 2002 full year due primarily to lower sales and higher
than projected returns of ProHeart 6 offset, in part, by higher sales of the
Company's West Nile Virus biological vaccine for horses, which was introduced in
the 2001 third quarter.
Consumer Healthcare
-------------------
Worldwide consumer healthcare net revenue decreased 6% for the 2002 fourth
quarter and 3% for the 2002 full year. The decrease for the 2002 fourth quarter
was due primarily to lower sales of cough/cold/allergy products, Advil and
various other products offset, in part, by initial sales of Alavert, which was
introduced in the 2002 fourth quarter. The decrease for the 2002 full year was
due primarily to lower sales of cough/cold/allergy products, Denorex, which
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was divested in February 2002, and Advil offset, in part, by higher sales of the
Centrum product line and initial sales of Alavert.
2003 Earnings Guidance
- ----------------------
The Company's pro forma diluted earnings per share guidance for 2003 is in the
$2.40-$2.50 range. The pro forma guidance excludes the gain on the sale of the
remaining Amgen shares to be recorded in the first quarter of 2003. Net revenue
growth for 2003 is expected to be in the 6%-9% range. Additionally, gross margin
is expected to be in the 72%-74% range. Selling, general and administrative
expenses and research and development expenses combined are projected to grow by
less than the net revenue growth due primarily to increased marketing for
certain product lines such as Effexor and Alavert and increased pension expense
offset, in part, by continued cost management efforts, resulting from the
restructuring program. Interest expense is projected to decline due to lower
average debt outstanding in 2003 compared with 2002.
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Wyeth is one of the world's largest research-driven pharmaceutical and health
care products companies. It is a leader in the discovery, development,
manufacturing and marketing of pharmaceuticals, vaccines, biotechnology products
and non-prescription medicines that improve the quality of life for people
worldwide. The Company's major divisions include Wyeth Pharmaceuticals, Wyeth
Consumer Healthcare and Fort Dodge Animal Health.
The statements in this press release that are not historical facts, including
the entire section under the caption "2003 Earnings Guidance", are
forward-looking statements based on current expectations of future events that
involve risks and uncertainties including, without limitation, risks associated
with the inherent uncertainty of pharmaceutical research, product development,
manufacturing, commercialization, economic conditions including interest and
currency exchange rate fluctuations, the impact of competitive or generic
products, product liability and other types of lawsuits, the impact of
legislative and regulatory compliance and obtaining approvals, and patent, and
other risks and uncertainties, including those detailed from time to time in the
Company's periodic reports, including quarterly reports on Form 10-Q and the
annual report on Form 10-K, filed with the Securities and Exchange Commission.
Actual results may vary materially from the forward-looking statements. The
Company assumes no obligation to publicly update any forward-looking statements,
whether as a result of new information, future events or otherwise.
The Company will hold a conference call with research analysts at 8:00 a.m.
Eastern Time today. The purpose of the call is to review the financial results
of the Company for the fourth quarter and full year. Interested investors and
others may listen to the call live or on a delayed basis through the internet
webcast, which may be accessed by visiting the Company's website at
www.wyeth.com and clicking on the "Investor Relations" icon. Also, for recent
announcements and additional information including product sales information,
please refer to the Company's website.
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The comparative results of operations are as follows:
(In thousands except per share amounts)
Three Months Ended Twelve Months Ended
----------------------- ------------------------
12/31/2002 12/31/2001 12/31/2002 12/31/2001
---------- ---------- ----------- -----------
Net Revenue(1) $3,813,994 $3,683,468 $14,584,035 $13,983,745
Cost of Goods Sold 1,170,871 919,210 3,918,387 3,388,776
Selling, General and Administrative 1,214,050 1,281,054 5,010,507 5,034,516
Expenses
Research and Development Expenses 554,510 467,402 2,080,191 1,869,679
Interest Expense, Net 40,726 52,393 202,052 146,358
Other Income, Net (227,743) (95,186) (382,931) (274,331)
Gains related to Immunex/Amgen
Common Stock transactions (1,454,616) - (4,082,216) -
Litigation Charges - - 1,400,000 950,000
Special Charge 340,800 - 340,800 -
---------- ---------- ----------- ----------
Income Before Federal and Foreign 2,175,396 1,058,595 6,097,245 2,868,747
Taxes
Provision for Federal and
Foreign Taxes 601,369 235,923 1,650,040 583,453
---------- ---------- ----------- ----------
Net Income(2) $1,574,027 $822,672 $4,447,205 $2,285,294
========== ========== =========== ==========
Basic Earnings Per Share $1.19 $0.62 $3.35 $1.74
========== ========== =========== ==========
Average Number of Common Shares
Outstanding During Each
Period - Basic(3) 1,326,420 1,320,102 1,325,577 1,317,102
Diluted Earnings Per Share(2) $1.18 $0.62 $3.33 $1.72
========== ========== =========== ==========
Average Number of Common Shares
Outstanding During Each
Period - Diluted(3) 1,330,604 1,332,902 1,334,127 1,330,809
(1) Effective January 1, 2002, the Company adopted new authoritative
accounting guidance reflecting the cost of certain vendor considerations
(i.e., cooperative advertising payments) as reductions of revenue rather
than selling and marketing expenses. Financial information for the prior
periods presented has been reclassified to comply with the income
statement classification requirements of the new guidance. These
reclassifications had no effect on total net revenue fluctuations between
the periods presented.
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(2) The 2002 fourth quarter net income and diluted earnings per share were
$1,574,027 and $1.18 compared with $822,672 and $0.62 in the prior year.
The 2002 fourth quarter net income and diluted earnings per share included
a gain of $1,454,616 ($943,401 after-tax or $0.71 per share-diluted)
relating to the sale of 67,050,400 shares of the Company's Amgen common
stock holdings and a special charge for restructuring and related asset
impairments of $340,800 ($233,500 after-tax or $0.18 per share-diluted).
Excluding the after-tax goodwill amortization of $38,687 ($0.03 per
share-diluted) from the 2001 fourth quarter results as well as the unusual
items noted above, net income and diluted earnings per share for the 2002
fourth quarter were $864,126 and $0.65, respectively, compared with
$861,359 and $0.65 for the 2001 fourth quarter.
The 2002 full year net income and diluted earnings per share were
$4,447,205 and $3.33 compared with $2,285,294 and $1.72 in the prior year.
The 2002 full year results included a gain of $2,627,600 ($1,684,723
after-tax or $1.26 per share-diluted) related to the acquisition of
Immunex by Amgen, an additional litigation charge related to the Redux and
Pondimin diet drug litigation of $1,400,000 ($910,000 after-tax or $0.68
per share-diluted), and the fourth quarter unusual items described above.
The 2001 full year net income and diluted earnings per share included an
additional litigation charge related to the Redux and Pondimin diet drug
litigation of $950,000 ($615,000 after-tax or $0.46 per share-diluted).
Excluding the after-tax goodwill amortization of $153,926 ($0.12 per
share-diluted) as well as all the unusual items noted above, net income
and diluted earnings per share for the 2002 full year were $2,962,581 and
$2.22, respectively, compared with $3,054,220 and $2.30 for the 2001 full
year, both decreases of 3%.
(3) The average number of common shares outstanding for diluted earnings per
share is higher than for basic earnings per share due to the assumed
conversion of outstanding stock options into common stock equivalents
using the treasury stock method.