IMMEDIATE RELEASE
Media Contact: Investor Relations Contact:
Lowell Weiner Justin Victoria
(973) 660-5013 (973) 660-5340
Wyeth Reports
Earnings Results for the
2003 Fourth Quarter and Full Year
Madison, New Jersey, January 22, 2004 - Wyeth (the Company) (NYSE: WYE) today
reported results for the 2003 fourth quarter and full year. Worldwide net
revenue increased 14% for the 2003 fourth quarter and 9% for the 2003 full year.
Net revenue for both the fourth quarter and the full year reflects significant
increases in pharmaceutical sales of Effexor(R) XR, Protonix(R), Enbrel(R) and
Zosyn(R), which more than offset declines in the Premarin(R) family of products.
Prevnar(R) sales for the full year also had significant growth. Consumer
healthcare had a strong performance driven by higher sales of Centrum(R),
Advil(R) and cough/cold/allergy products. Animal health benefited from higher
sales of ProHeart(R) 6 and a full year of sales for the West Nile -
Innovator(TM) vaccine. Excluding the impact of foreign exchange, worldwide net
revenue increased 9% for the 2003 fourth quarter and 5% for the 2003 full year.
2003 Fourth Quarter Results
- ---------------------------
Net income, before certain significant items discussed below, decreased 7% to
$801.7 million for the 2003 fourth quarter compared with $864.1 million in the
prior year. Diluted
earnings per share, before these items, decreased 8% to $0.60 compared with
$0.65 in the prior year. The 2003 fourth quarter significant items included a
special charge of $639.9 million ($466.4 million after-tax or $0.35 per
share-diluted) for manufacturing restructuring and related asset impairments and
the cost of debt extinguishment. Reported net income and diluted earnings per
share for the 2003 fourth quarter were $335.3 million and $0.25, respectively,
compared with $1,574.0 million and $1.18 in the prior year.
The decreases in net income and diluted earnings per share for the 2003 fourth
quarter, before certain significant items, were due primarily to higher selling,
general and administrative expenses and lower other income, net offset by higher
net revenue and lower cost of goods sold, as a percentage of net revenue, and
decreased interest expense. The lower other income, net was primarily a result
of the Company completing the sale of certain of its assets relating to generic
human injectables in the 2002 fourth quarter which resulted in a pre-tax gain of
$172.9 million ($108.9 million after-tax or $0.08 per share-diluted). The lower
cost of goods sold, as a percentage of net revenue, was due in part to the
non-recurrence of certain additional costs that were incurred in 2002 to address
various manufacturing issues and a slightly more profitable product mix in the
2003 fourth quarter. These improvements were partially offset by higher
inventory write-offs in 2003, primarily related to the Premarin family of
products, ReFacto(R) and FluMist(TM).
Certain Significant Items
- -------------------------
As noted above, the Company recorded a special charge of $639.9 million ($466.4
million after-tax or $0.35 per share-diluted) in the 2003 fourth quarter for
manufacturing restructuring, asset impairments and the cost of debt
extinguishment. As a result of lower volume in the Premarin family of products,
the Company has decided to close its
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pharmaceutical plant in Singapore and rationalize its network of collection
sites for Premarin-related raw materials. Approximately $208.2 million ($185.8
million after-tax or $0.14 per share-diluted) of the charges relate to these
issues. The remaining restructuring and asset impairment charges relate to the
closing of the ReFacto manufacturing facility in St. Louis, Missouri, the
write-off of certain rhBMP-2 manufacturing assets in Andover, Massachusetts, and
the write-down of certain fixed and intangible assets related to FluMist. In
addition, the 2003 fourth quarter includes a charge of $152.0 million ($98.8
million after-tax or $0.07 per share-diluted) related to the early
extinguishment of debt in connection with the repurchase of Senior Notes
announced in December 2003. The 2002 fourth quarter results included a special
charge for restructuring and related asset impairments of $340.8 million ($233.5
million after-tax or $0.18 per share-diluted) and 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 common stock.
A reconciliation of net income before certain significant items and diluted
earnings per share before certain significant items to net income and diluted
earnings per share as reported under generally accepted accounting principles
(GAAP) is presented in the following table:
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(In millions except per share amounts)
Three Months Ended Twelve Months Ended
------------------------ ------------------------
Item Description 12/31/2003 12/31/2002 12/31/2003 12/31/2002
- -------------------------------------- ---------- ---------- ---------- ----------
Net income before certain significant
items(1) $801.7 $864.1 $3,258.9 $2,962.6
Gains related to Immunex/Amgen
common stock transactions(2) - 943.4 558.7 2,628.1
Diet drug litigation charges - - (1,300.0) (910.0)
Special charges (466.4) (233.5) (466.4) (233.5)
---------- ---------- ---------- ----------
As reported net income $335.3 $1,574.0 $2,051.2 $4,447.2
========== ========== ========== ==========
Diluted earnings per share before
certain significant items(1) $0.60 $0.65 $2.44 $2.22
Gains related to Immunex/Amgen
common stock transactions(2) - 0.71 0.42 1.97
Diet drug litigation charges - - (0.97) (0.68)
Special charges (0.35) (0.18) (0.35) (0.18)
---------- ---------- ---------- ----------
As reported diluted earnings
per share $0.25 $1.18 $1.54 $3.33
========== ========== ========== ==========
(1) The Company calculates net income before certain significant items by
excluding the after-tax effect of items considered by management to be
unusual from the net income reported under GAAP. The Company's management
uses these measures to manage and evaluate the Company's performance and
believes it is appropriate to disclose these non-GAAP measures to assist
investors with analyzing business performance and trends. The additional
diet drug charges increase the reserve balance for a continuing legal
matter that first resulted in a charge in 1999 and have been excluded due
to their nature and magnitude. The gains related to the Immunex/Amgen
common stock transactions have been excluded due to the fact that the
Company had not previously nor does it currently hold a position for
investment purposes in an entity that, if acquired by another entity,
would impact the Company's financial position or results of operations to
the significant extent of the Immunex/Amgen common stock transactions. The
special charges, which include costs related to manufacturing
restructuring and asset impairments, have been excluded as the Company's
management does not consider these charges to be recurring and therefore
not indicative of continuing operating results. The remaining special
charge, which consists of costs related to debt extinguishment, has been
excluded due to its unusual one-time nature.
These measures should not be considered in isolation or as a substitute
for the results of operations and diluted earnings per share prepared in
accordance with GAAP.
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(2) The gains related to the Immunex/Amgen common stock transactions consist
of the following:
- $860.6 million ($558.7 million after-tax or $0.42 per share-diluted)
recorded during the 2003 first quarter related to the gain on the sale
of 31,235,958 shares of the Company's Amgen common stock holdings.
- $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.
- $2,627.6 million ($1,684.7 million after-tax or $1.26 per
share-diluted) recorded during the 2002 third quarter related 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.
2003 Full Year Results
- ----------------------
Net income and diluted earnings per share, before certain significant items
presented above, each increased 10% for the 2003 full year to $3,258.9 million
and $2.44, respectively, compared with $2,962.6 million and $2.22 in the prior
year. Reported net income and diluted earnings per share for the 2003 full year
each decreased 54% to $2,051.2 million and $1.54, respectively, compared with
$4,447.2 million and $3.33 in the prior year.
Higher net income for the 2003 full year, before certain significant items, was
impacted by increases in net revenue and lower interest expense, partially
offset by higher cost of goods sold, as a percentage of net revenue, due to a
less profitable product mix and inventory write-offs related to ReFacto, the
Premarin family of products and FluMist. Increases in 2003 net income were also
offset by higher selling, general and administrative expenses and lower other
income, net.
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Segment Information
- -------------------
The following table sets forth worldwide net revenue by reportable segment
together with the percentage changes from the comparable period in the prior
year:
Three Months Twelve Months
Ended 12/31/03 Ended 12/31/03
-------------------- --------------------
Reportable Segment ($ in 000's) Inc ($ in 000's) Inc
- ------------------- ------------ --- ------------ ---
Pharmaceuticals $ 3,456,477 14% $12,622,678 8%
Consumer Healthcare 688,618 13% 2,434,542 11%
Animal Health 188,315 11% 793,412 21%
------------ --- ------------ ---
Consolidated Total $ 4,333,410 14% $15,850,632 9%
============ === ============ ===
Pharmaceuticals
---------------
Worldwide pharmaceutical net revenue increased 14% for the 2003 fourth quarter
and 8% for the 2003 full year due primarily to higher sales of Effexor XR,
Protonix, Enbrel and Zosyn and increased alliance revenue offset, in part, by
lower sales of the Premarin family of products. The 2003 full year net revenue
increase was also due to higher sales of Prevnar offset, in part, by lower sales
of Cordarone(R) I.V. (market exclusivity ended October 2002). Excluding the
favorable impact of foreign exchange, worldwide pharmaceutical net revenue
increased 9% for the 2003 fourth quarter and 4% for the 2003 full year.
Consumer Healthcare
-------------------
Worldwide consumer healthcare net revenue increased 13% for the 2003 fourth
quarter and 11% for the 2003 full year. The increases were due primarily to
higher sales of cough/cold/allergy products and Centrum. The 2003 full year net
revenue increase was also attributable to higher sales of Alavert(TM)
(introduced in the 2002 fourth quarter), Advil and Caltrate(R). Excluding the
impact of foreign exchange, worldwide consumer
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healthcare net revenue increased 9% for the 2003 fourth quarter and 8% for the
2003 full year.
Animal Health
-------------
Worldwide animal health net revenue increased 11% for the 2003 fourth quarter
and 21% for the 2003 full year due primarily to higher domestic sales of
ProHeart 6 compared with the similar periods in the prior year which were
impacted by significant ProHeart 6 product returns. The increase in net revenue
for the 2003 full year was also due to higher domestic sales of the Company's
West Nile - Innovator, a biological vaccine for horses. Excluding the favorable
impact of foreign exchange, worldwide animal health net revenue increased 2% for
the 2003 fourth quarter and 16% for the 2003 full year.
2004 Earnings Guidance
- ----------------------
The Company expects diluted earnings per share for 2004 will be $2.60 to $2.70.
Net revenue growth for 2004 is expected to be 6% to 9% and gross margin is
expected to be approximately 72% to 73%. Selling, general and administrative
expenses are expected to increase at approximately the same rate as net revenue
and research and development expenses are projected to grow at a low
double-digit rate. Interest expense is projected to decline somewhat as compared
with 2003.
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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 "2004 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 the timing and success of pharmaceutical
research, product development, manufacturing, commercialization, economic
conditions including interest and currency exchange rate fluctuations, changes
in generally accepted accounting principles, the impact of competitive or
generic products, trade buying patterns, wars or terrorist acts, product
liability and other types of lawsuits, the impact of legislation and regulatory
compliance and obtaining reimbursement, favorable drug pricing, access and other
approvals, environmental liabilities, and patent, and other risks and
uncertainties, including those detailed from time to time in the Company's
periodic reports, including current reports on Form 8-K, 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" hyperlink. 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
------------------------ -------------------------
12/31/2003 12/31/2002 12/31/2003 12/31/2002
---------- ---------- ----------- -----------
Net Revenue $4,333,410 $3,813,994 $15,850,632 $14,584,035
Cost of Goods Sold 1,302,531 1,170,871 4,377,086 3,918,387
Selling, General and Administrative
Expenses 1,500,812 1,214,050 5,468,174 5,010,507
Research and Development Expenses 576,410 554,510 2,093,533 2,080,191
Interest Expense, Net 25,958 40,726 103,140 202,052
Other Income, Net (62,965) (227,743) (332,264) (382,931)
Gains related to Immunex/Amgen
Common Stock Transactions - (1,454,616) (860,554) (4,082,216)
Special Charges 639,905 340,800 639,905 340,800
Diet Drug Litigation Charges - - 2,000,000 1,400,000
---------- ---------- ----------- -----------
Income Before Federal and
Foreign Taxes 350,759 2,175,396 2,361,612 6,097,245
Provision for Federal
and Foreign Taxes 15,496 601,369 310,420 1,650,040
---------- ---------- ----------- -----------
Net Income (1)(3) $335,263 $1,574,027 $2,051,192 $4,447,205
========== ========== =========== ===========
Basic Earnings Per Share $0.25 $1.19 $1.54 $3.35
========== ========== =========== ===========
Average Number of Common Shares
Outstanding During Each
Period - Basic(2) 1,332,603 1,326,420 1,330,276 1,325,577
Diluted Earnings Per Share(1)(3) $0.25 $1.18 $1.54 $3.33
========== ========== =========== ===========
Average Number of Common Shares
Outstanding During Each
Period - Diluted(2) 1,337,669 1,330,604 1,335,910 1,334,127
(1) Net income and diluted earnings per share for the 2003 fourth quarter
were $335,263 and $0.25, respectively, compared with $1,574,027 and $1.18
in the prior year. The 2003 fourth quarter net income and diluted
earnings per share included a special charge of $639,905 ($466,441
after-tax or $0.35 per share-diluted) related to manufacturing
restructuring and related asset impairments and the cost of debt
extinguishment. 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)
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from 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 these items from both the 2003 and 2002 fourth quarter results,
net income and diluted earnings per share for the 2003 fourth quarter
decreased 7% and 8%, respectively.
Net income and diluted earnings per share for the 2003 full year were
$2,051,192 and $1.54 compared with $4,447,205 and $3.33 in the prior year.
The 2003 full year net income and diluted earnings per share included a
first quarter gain of $860,554 ($558,694 after-tax or $0.42 per
share-diluted) from the sale of the remaining 31,235,958 shares of the
Company's Amgen common stock holdings, a third quarter charge of
$2,000,000 ($1,300,000 after-tax or $0.97 per share-diluted) related to
the Redux and Pondimin diet drug litigation and the fourth quarter
significant item described above. 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 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
significant items described above. Excluding these items, net income and
diluted earnings per share for the 2003 full year each increased 10%.
(2) 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.
(3) Net income and diluted earnings per share have not been adjusted to
reflect the impact of the Medicare Prescription Drug, Improvement and
Modernization Act of 2003 (the Act), which was passed into law in December
2003. In accordance with applicable accounting guidance, the Company has
made an election to defer accounting for the effects of the Act to 2004.
As a result, the impact of the Act is likely to result in a reduction in
net postretirement benefit costs for 2004 as compared with 2003.
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