Exhibit 99.1
Chiron Reports 2003 Total Revenues of $1.8 Billion
47 Percent Increase in Net Product Sales Over 2002
19 Percent Increase in Pro-Forma Earnings Per Share Over 2002
EMERYVILLE, Calif., Jan. 28 /PRNewswire-FirstCall/ -- Chiron Corporation
(Nasdaq: CHIR) today reported pro-forma income from continuing operations of
$297 million, or $1.54 per share, for the year ended December 31, 2003,
compared to $248 million, or $1.29 per share, for the year ended December 31,
2002. For the year, foreign exchange rates, on a pro-forma basis, resulted in
a $0.06 increase in earnings per share. On a GAAP basis, Chiron reported
income from continuing operations of $220 million, or $1.15 per share, for the
year 2003, compared to income from continuing operations of $181 million, or
$0.94 per share, for the year 2002.
For the fourth quarter of 2003, Chiron reported pro-forma income from
continuing operations of $56 million, or $0.29 per share, compared to $63
million, or $0.33 per share, for the fourth quarter of 2002. For the quarter,
foreign exchange rates, on a pro-forma basis, resulted in a $0.02 increase in
earnings per share over the fourth quarter of 2002. On a GAAP basis, Chiron
reported income from continuing operations of $118 million, or $0.59 per
share, for the fourth quarter of 2003, compared to income from continuing
operations of $67 million, or $0.35 per share, for the fourth quarter of 2002.
On a GAAP basis, Chiron recorded a purchase-price allocation adjustment to the
write-off of purchased, in-process research and development related to the
PowderJect Pharmaceuticals acquisition, for the fourth quarter of 2003, upon
completion of strategic assessments of the value of certain research and
development projects.
Chiron management uses pro-forma financial statements to gain an
understanding of the company's operating performance on a comparative basis.
Pro-forma results exclude special items relating to certain acquisitions and
revenues, which may not be relevant to gaining an understanding of the
company's trends or potential future performance. Please refer to the
attached tables at the end of this document for more detail on these items and
a reconciliation to GAAP financial statements. All references to per-share
amounts are per diluted share.
"Chiron's strong performance shows our ability to deliver excellent
financial results while making key investments in our businesses to create
future value for shareholders," said Howard Pien, Chiron's president and chief
executive officer. "Building on our 2003 successes, we have set aggressive
goals for ourselves in 2004.
"We are aiming to reach 20 significant goals and milestones, including the
geographic expansion of Blood Testing into the Pacific Rim, continued
investment in flu vaccine production and development, and initiation of Phase
II and III clinical trials in our infectious disease and cancer franchises, as
well as delivering 20 percent long-term EPS growth. These advances and
investments attest to our commitment to pioneering science and to improve
human health worldwide."
Overall Revenues
Total revenues were $1.8 billion for the year 2003, compared to $1.3
billion for the year 2002. Foreign exchange rates resulted in an 8 percent
increase in total revenues. Net product sales were $1.3 billion for the year
2003, compared to $914 million for the year 2002. Total 2003 revenues for
PowderJect Pharmaceuticals, which Chiron acquired during the third quarter of
2003, were $245 million. Excluding PowderJect revenues and foreign exchange
effect, all other revenues increased 11 percent in 2003.
Blood Testing
Total Blood Testing revenues were $422 million for the year 2003, compared
to $316 million for the year 2002. Blood Testing revenues primarily include
revenues from the sales of products related to Chiron's Procleix(R) HIV-1/HCV
Assay; revenues related to Chiron's joint business arrangement for
immunodiagnostics with Ortho-Clinical Diagnostics, Inc. (Ortho), a Johnson &
Johnson company; and royalties paid by F. Hoffmann-La Roche (Roche) related to
nucleic acid testing (NAT) blood screening.
-- Sales related to the Procleix(R) System were $200 million for the year
2003, compared to sales of $125 million for the year 2002. The
increase is primarily due to a full year of commercial pricing in the
United States, revenues from the investigation-only use of the
Procleix(R) West Nile Virus Assay in the United States, market share
gains in the United States, and continued penetration into several
markets abroad. Procleix sales were $58 million for the fourth quarter
of 2003, compared to $42 million for the fourth quarter of 2002.
-- Revenues from Chiron's joint business arrangement with Ortho were $108
million for the year 2003, compared to $105 million for the year 2002.
Revenues from the joint business arrangement were $28 million for the
fourth quarter of 2003, compared to $26 million for the fourth quarter
of 2002.
-- Royalties paid by Roche related to NAT blood screening were $62 million
for the year 2003, compared to $49 million for the year 2002.
Royalties paid by Roche related to NAT blood screening were $14 million
for the fourth quarter of 2003, compared to $15 million for the fourth
quarter of 2002.
Vaccines
Vaccines net product sales were $678 million for the year 2003, compared
to $357 million for the year 2002. PowderJect product sales were $243 million
for the year 2003. The gross profit margin on vaccines products was 53
percent for the year 2003, compared to 58 percent for the year 2002, with the
decrease primarily due to the one-time effect of additional costs associated
with the fair value of inventory acquired during the acquisition of
PowderJect. Total vaccines product sales were $262 million for the fourth
quarter of 2003, compared to $101 million for the fourth quarter of 2002.
-- Sales of flu vaccines were $332 million for the year 2003, compared to
$90 million for the year 2002. Sales of Fluvirin(R) vaccine, the flu
vaccine that Chiron acquired with PowderJect, were $219 million for the
year 2003, representing one full season of Fluvirin revenues. Sales of
Agrippal(R) S1, Begrivac(TM) and Fluad(R) flu vaccines were $113
million for the year 2003. Flu vaccines sales were $141 million for
the fourth quarter of 2003, compared to $19 million for the fourth
quarter of 2002.
-- Sales of Menjugate(R) conjugate vaccine against meningococcal C disease
were $66 million for the year 2003, compared to $55 million for the
year 2002, with the increase primarily due to sales made to Australia.
Menjugate sales were $34 million for the fourth quarter of 2003,
compared to $33 million for the fourth quarter of 2002.
-- Sales of Chiron's travel vaccines were $88 million for the year 2003,
compared to $64 million for the year 2002. Travel vaccines primarily
include Encepur(TM) vaccine for tick-borne encephalitis and RabAvert(R)
vaccine for rabies. The increase was primarily due to increased sales
of Encepur vaccine in Germany. Travel vaccines sales were $28 million
for the fourth quarter of 2003, compared to $6 million for the fourth
quarter of 2002.
-- Sales of Chiron's pediatric and other vaccines products were $192
million for the year 2003, compared to $148 million for the year 2002,
with the increase primarily due to tender sales of pediatric vaccines
and increased sales following the PowderJect acquisition. Pediatric
and other vaccines products sales were $59 million for the fourth
quarter of 2003, compared to $43 million for the fourth quarter of
2002.
BioPharmaceuticals
The BioPharmaceuticals division reported net product sales and
Betaferon(R) interferon beta-1b royalties of $503 million for the year 2003,
compared to $456 million for the year 2002. The gross profit margin on
biopharmaceutical products was 72 percent for the year 2003, compared to 73
percent for the year 2002. Total biopharmaceutical product sales and
Betaferon royalties were $137 million for the fourth quarter of 2003, compared
to $122 million for the fourth quarter of 2002.
-- TOBI(R) tobramycin solution for inhalation sales were $172 million for
the year 2003, compared to $147 million for the year 2002, with the
increase primarily due to progress of the product in Europe, the
benefit of foreign exchange rates and price increases. TOBI sales were
$49 million for the fourth quarter of 2003, compared to $39 million for
the fourth quarter of 2002.
-- Proleukin(R) (aldesleukin) interleukin-2 sales were $115 million for
the year 2003, compared to $114 million for the year 2002. The
consistent sales pattern was primarily due to price increases, the
benefit of foreign exchange rates and increased patient demand in the
United States, offset by wholesaler ordering patterns. Proleukin sales
were $30 million for the fourth quarter of 2003, compared to $31
million for the fourth quarter of 2002.
-- Sales of Betaseron(R) interferon beta-1b for injection, marketed in
Europe as Betaferon(R), to Berlex, Inc., (and its parent company
Schering AG) for marketing and resale were $125 million for the year
2003, compared to $118 million for the year 2002. The increase was
primarily due to increased patient demand, price increases and the
benefit of foreign exchange rates. The increase was partially offset
by a decline in royalties on product sales in the fourth quarter of
2003, pursuant to our agreement with Schering, and changes in
wholesaler ordering patterns. Royalties from Schering AG's European
sales of Betaferon were $64 million for the year 2003, compared to $47
million for the year 2002. The increase was primarily due to increased
patient demand and the benefit of foreign exchange rates. The increase
was partially offset by a decline in Betaferon royalties in the fourth
quarter of 2003, pursuant to Chiron's agreement with Schering. Sales
of Betaseron for marketing and resale were $36 million for the fourth
quarter of 2003, compared to $34 million for the fourth quarter of
2002. Royalties from Schering AG's European sales of Betaferon were
$17 million for the fourth quarter of 2003, compared to $13 million for
the fourth quarter of 2002.
Pipeline and Products Update
Chiron has seen recent advances in franchises across all three of its
business units and expects continued progress in 2004.
Blood Testing
Chiron expects to expand its leadership in blood testing through new
assays, new geographies, greater market penetration and expansion into blood
safety.
-- At the American Association of Blood Banks annual meeting in San Diego
in November, Chiron announced that the Procleix(R) West Nile Virus
Assay had identified 861 blood donations confirmed to be infected with
the West Nile virus since the investigational-use-only assay was
implemented at the beginning of the 2003 mosquito season. Chiron
expects to begin a registration trial for the assay in the United
States this year.
-- The Procleix(R) Ultrio(TM) Assay, for the simultaneous detection of
HIV-1, hepatitis C virus (HCV) and hepatitis B virus (HBV) in donated
blood, plasma, organs and tissue, received CE marking in Europe, which
will allow full commercialization of the product there.
-- In the United States, the Procleix Ultrio Assay entered clinical
trials, and Chiron, in collaboration with its partner Gen-Probe
Incorporated, expects to file a biologics license application (BLA) for
the assay this year. In the first quarter of this year, Chiron and
Gen-Probe expect to begin clinical trials for 510(k) approval of the
TIGRIS(R) fully automated system, a key enabling technology for
individual donor testing. The TIGRIS clinical trials will run the
Procleix Ultrio Assay in support of its BLA.
-- In collaboration with ZymeQuest Inc., Chiron plans to develop and
commercialize ZymeQuest's enzymatic conversion system, which converts
groups A, B and AB red blood cells to enzyme-converted group O (ECO(R))
red blood cells. This technology could greatly reduce the number of
blood donations currently discarded due to blood types not matching
patient needs.
-- Chiron recently announced an agreement with Infectio Diagnostic Inc.
(IDI) to license IDI's proprietary nucleic acid-based technology for
the rapid detection of bacterial contamination in platelets and blood
products. The technology brings the potential for reducing test time
from two days to one, an important factor given the five-day shelf life
of platelet concentrates.
Vaccines
Chiron Vaccines development is focused on its meningococcal franchise and
flu cell-culture technology.
-- For the 2003-2004 flu season, Chiron increased production of
Fluvirin(R) influenza vaccine for the U.S. market by approximately 50
percent over the 2002-2003 flu season. The company produced more than
40 million Fluvirin doses worldwide, including approximately 38 million
doses for the U.S. market. For the 2004-2005 flu season, Chiron
expects to increase capacity, producing approximately 50 million doses
of Fluvirin, most of which is destined for the United States. The
company has committed approximately $100 million for the expansion of
its manufacturing facility in Liverpool, England.
-- Chiron expects to enter Phase III studies for its flu cell-culture
vaccine this year. A flu cell-culture vaccine may offer additional
manufacturing flexibility.
-- In the development of vaccines for the five primary serogroups that
cause meningococcal disease, Chiron anticipates upcoming advances:
-- The Phase III trial in the United States for Menjugate(R) conjugate
vaccine for meningococcal C disease completed enrollment, and
Chiron expects to present data to the U.S. Food and Drug
Administration (FDA) this year.
-- Chiron expects to see further progress toward the Phase III program
for its conjugated meningococcal ACWY vaccine this year.
-- In collaboration with the HIV Vaccine Trials Network, funded by the
National Institute of Allergy and Infectious Diseases, Chiron initiated
a clinical trial in the United States for its HIV vaccine candidate,
testing a new generation of HIV vaccines that attempt to generate
cellular immune response together with broad antibody response that
will neutralize the virus. The Phase I study will evaluate the safety
and immunogenicity of the vaccine.
BioPharmaceuticals: Infectious Disease
Chiron continues to build its portfolio of products to treat and prevent
infectious disease. This franchise leverages a significant global commercial
infrastructure.
-- Chiron is progressing in its evaluation of aerosolized cyclosporine as
a potential treatment for lung transplant rejection and plans to file a
new drug application (NDA) this year.
-- Chiron is determining the regulatory path forward for daptomycin in the
European Union. Chiron in-licensed the antibiotic, which the FDA has
approved for the treatment of complicated skin and skin structure
infections caused by Gram-positive bacteria, from Cubist
Pharmaceuticals Inc. in 2003, gaining development and commercialization
rights in Europe and several countries outside the United States.
-- Chiron initiated the ELITE (EarLy Intervention TOBI Eradication) trial
in Europe to further study the benefits of TOBI(R) tobramycin solution
for inhalation in treatment of early onset Pseudomonas aeruginosa in
cystic fibrosis patients.
-- Chiron is investing to expand its TOBI franchise in its study of the
dry-powder formulation, delivered with a hand-held device that the
company is developing in collaboration with Nektar Therapeutics.
Chiron anticipates Phase I results from this study in the first half of
the year, and, based on an understanding with the FDA, the company may
move directly to Phase III testing by the end of the year.
-- Chiron plans to initiate a Phase III trial for tifacogin in patients
with severe community-acquired pneumonia this spring.
BioPharmaceuticals: Oncology
Chiron's oncology franchise has three dimensions: immune-based therapies,
monoclonal antibodies and novel cancer agents.
-- Based on objective, durable responses in a specific sub-population,
Chiron is expanding enrollment in its Phase II study of Proleukin(R)
(aldesleukin) for injection plus rituximab in patients with low-grade
non-Hodgkin's lymphoma who have failed rituximab therapy. The company
has submitted an abstract to the American Society of Clinical Oncology
(ASCO) meeting, to be held June 5-8 in New Orleans, to detail these
findings.
-- Chiron is broadening the scope of its development of Proleukin plus
rituximab by initiating a new Phase II study in rituximab-naive
patients to determine the combination's potential as an early treatment
option.
-- Chiron recently began a Phase I study for GFKI-258. This growth factor
kinase inhibitor is Chiron's first small-molecule oncology compound.
-- Chiron expects to file an investigational new drug application (IND)
for another oncology compound, anti-CD40, this year.
BioPharmaceuticals: Betaseron(R) Interferon Beta-1b for Injection
Betaseron continues to distinguish itself in the multiple sclerosis (MS)
market through its strong clinical results. Convenience features and new
studies will help drive Betaseron growth.
-- Chiron and its partner Berlex launched a new pre-filled diluent syringe
for Betaseron, making it easier to use for people with MS. The drug's
formulation remains unchanged, continuing to provide patients with the
proven efficacy of Betaseron.
Other Recent Business Milestones
Other recent business activities underline the value of Chiron's products
and intellectual property and the strength of its leadership.
-- Chiron announced the appointment of David Smith to the position of
chief financial officer. Mr. Smith joined Chiron Corporation as vice
president, corporate controller, in February 1999 and previously held
executive finance positions at Anergen Inc. and Genentech.
-- Chiron granted nonexclusive licenses to Pfizer Inc., Rigel
Pharmaceutials, Vertex Pharmaceutials and Boehringer Ingelheim
International GmbH for the research, development and commercialization
of therapeutics against certain hepatitis C virus (HCV) drug targets.
4Q03 Earnings Conference Call
Chiron will hold a conference call and webcast on Wednesday, January 28,
2004, at 4:45 p.m. EST to review its fourth-quarter 2003 results of operations
and business highlights. In addition, the company may address forward-looking
questions concerning business, financial matters and trends affecting the
company.
To access either the live call or the one-week archive, please log on to
http://www.chiron.com/webcast . Please connect to the website at least 15
minutes prior to the conference call to ensure adequate time to download any
necessary software. Alternatively, please call 1-800-374-0907 (U.S.) or
706-643-3367 (international). Replay is available approximately two hours
after the completion of the call through 11:00 p.m. EST, Wednesday, February
4, 2004. To access the replay, please call 1-800-642-1687 (U.S.) or
706-645-9291 (international). The conference ID number is 1046313.
About Chiron
Chiron Corporation, headquartered in Emeryville, California, is a global
pharmaceutical company that leverages a diverse business model to develop and
commercialize high-value products that make a difference in people's lives.
The company has a strategic focus on cancer and infectious disease. Chiron
applies its advanced understanding of the biology of cancer and infectious
disease to develop products from its platforms in proteins, small molecules
and vaccines. The company commercializes its products through three business
units: BioPharmaceuticals, Vaccines and Blood Testing. For more information
about Chiron, visit the company's website at www.chiron.com.
This news release contains forward-looking statements, including
statements regarding sales growth, product development initiatives, new
product indications, new product marketing, acquisitions, and in- and out-
licensing activities, that involve risks and uncertainties and are subject to
change. A full discussion of the company's operations and financial
condition, including factors that may affect its business and future
prospects, is contained in documents the company has filed with the SEC,
including the form 10-Q for the quarter ended September 30, 2003, and the form
10-K for the year ended December 31, 2002, and will be contained in all
subsequent periodic filings made with the SEC. These documents identify
important factors that could cause the company's actual performance to differ
from current expectations, including the outcome of clinical trials,
regulatory review and approvals, manufacturing capabilities, intellectual
property protections and defenses, stock-price and interest-rate volatility,
and marketing effectiveness. In particular, there can be no assurance that
Chiron will increase sales of existing products, successfully develop and
receive approval to market new products, or achieve market acceptance for such
new products. There can be no assurance that Chiron's out-licensing
activities will generate significant revenue, nor that its in-licensing
activities will fully protect it from claims of infringement by third parties.
In addition, the company may engage in business opportunities, the successful
completion of which are subject to certain risks, including shareholder and
regulatory approvals and the integration of operations.
Consistent with SEC Regulation FD, we do not undertake an obligation to
update the forward-looking information we are giving today.
NOTE: Agrippal, Begrivac, Encepur, Fluad, Fluvirin, Menjugate, Procleix,
Proleukin, RabAvert, TOBI and Ultrio are trademarks of Chiron Corporation.
Betaseron and Betaferon are trademarks of Schering AG. TIGRIS is a registered
trademark of Gen-Probe Incorporated. ZymeQuest and ECO are trademarks of
ZymeQuest, Inc.
CHIRON CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
(In thousands, except per share data)
Three Months Ended
December 31,
2003
Pro Forma Pro Forma
Adjusted (1) Adjustments Actual
Revenues:
Product sales, net $448,611 $-- $448,611
Revenues from joint business
arrangement 28,313 -- 28,313
Collaborative agreement revenues 3,008 -- 3,008
Royalty and license fee revenues 63,605 -- 63,605
Other revenues 11,044 -- 11,044
Total revenues 554,581 -- 554,581
Operating expenses:
Cost of sales 214,508 -- 214,508
Research and development 140,242 -- 140,242
Selling, general and administrative 121,405 -- 121,405
Write-off (reversal) of purchased
in-process research and
development -- 77,400 (77,400)
Amortization expense -- (21,230) 21,230
Restructuring and reorganization
(reversals) charges (103) -- (103)
Other operating expenses 3,803 -- 3,803
Total operating expenses 479,855 56,170 423,685
Income from operations 74,726 (56,170) 130,896
Interest expense (6,581) -- (6,581)
Interest and other income, net 7,498 -- 7,498
Minority interest (329) -- (329)
Income from continuing operations
before income taxes 75,314 (56,170) 131,484
Provision for income taxes 18,828 5,307 13,521
Income from continuing operations 56,486 (61,477) 117,963
Gain from discontinued operations 3,837 -- 3,837
Net income $60,323 $(61,477) $121,800
Basic earnings per share:
Income from continuing operations $0.30 $0.63
Net Income $0.32 $0.65
Diluted earnings per share:
Income from continuing operations $0.29 $0.59
Net Income $0.31 $0.61
Shares used in calculating basic
earnings per share 187,393 187,393
Shares used in calculating diluted
earnings per share 200,567 205,795
2002
Pro Forma Pro Forma
Adjusted (2) Adjustments Actual
Revenues:
Product sales, net $257,054 $-- $257,054
Revenues from joint business
arrangement 26,028 -- 26,028
Collaborative agreement revenues 4,356 -- 4,356
Royalty and license fee revenues 60,397 -- 60,397
Other revenues 8,489 -- 8,489
Total revenues 356,324 -- 356,324
Operating expenses:
Cost of sales 101,985 -- 101,985
Research and development 81,854 -- 81,854
Selling, general and administrative 81,690 -- 81,690
Write-off (reversal) of purchased
in-process research and
development -- 9,600 (9,600)
Amortization expense -- (7,529) 7,529
Restructuring and reorganization
(reversals) charges -- -- --
Other operating expenses 5,776 -- 5,776
Total operating expenses 271,305 2,071 269,234
Income from operations 85,019 (2,071) 87,090
Interest expense (3,323) -- (3,323)
Interest and other income, net 4,906 -- 4,906
Minority interest (304) -- (304)
Income from continuing operations
before income taxes 86,298 (2,071) 88,369
Provision for income taxes 23,300 2,033 21,267
Income from continuing operations 62,998 (4,104) 67,102
Gain from discontinued operations -- -- --
Net income $62,998 $(4,104) $67,102
Basic earnings per share:
Income from continuing operations $0.34 $0.36
Net Income $0.34 $0.36
Diluted earnings per share:
Income from continuing operations $0.33 $0.35
Net Income $0.33 $0.35
Shares used in calculating basic
earnings per share 187,639 187,639
Shares used in calculating diluted
earnings per share 190,899 196,127
(1) Pro Forma Adjusted amounts exclude (a) the amortization expense on
acquired intangible assets related to the acquisitions of
PathoGenesis, Chiron Behring, Pulmopharm and PowderJect
Pharmaceuticals and (b) a purchase price allocation adjustment to
the write-off of purchased in-process research and development
related to the PowderJect Pharmaceuticals acquisition, upon
completion of strategic assessments of the value of certain research
and development projects.
(2) Pro Forma Adjusted amounts exclude (a) the amortization expense on
acquired intangible assets related to the acquisitions of
PathoGenesis, Chiron Behring and Pulmopharm and (b) the adjustment
to the write-off of purchased in-process research and development
related to the Matrix acquisition for a lease assignment.
CHIRON CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
(In thousands, except per share data)
Year Ended
December 31,
2003
Pro Forma Pro Forma
Adjusted (3) Adjustments Actual
Revenues:
Product sales, net $1,345,833 $-- $1,345,833
Revenues from joint business
arrangement 108,298 -- 108,298
Collaborative agreement revenues 18,562 -- 18,562
Royalty and license fee revenues 250,142 -- 250,142
Other revenues 29,113 (14,413) 43,526
Total revenues 1,751,948 (14,413) 1,766,361
Operating expenses:
Cost of sales 571,897 -- 571,897
Research and development 409,806 -- 409,806
Selling, general and administrative 378,890 -- 378,890
Write-off of purchased in-process
research and development -- (45,300) 45,300
Amortization expense -- (56,365) 56,365
Restructuring and reorganization
charges 1,654 -- 1,654
Other operating expenses 11,376 -- 11,376
Total operating expenses 1,373,623 (101,665) 1,475,288
Income from operations 378,325 87,252 291,073
Interest expense (19,104) -- (19,104)
Interest and other income, net 38,668 -- 38,668
Minority interest (1,753) -- (1,753)
Income from continuing operations
before income taxes 396,136 87,252 308,884
Provision for income taxes 99,034 10,488 88,546
Income from continuing operations 297,102 76,764 220,338
Gain (loss) from discontinued
operations 6,975 -- 6,975
Net income $304,077 $76,764 $227,313
Basic earnings per share:
Income from continuing operations $1.59 $1.18
Net income $1.63 $1.22
Diluted earnings per share:
Income from continuing operations $1.54 $1.15
Net income $1.58 $1.19
Shares used in calculating basic
earnings per share 186,835 186,835
Shares used in calculating diluted
earnings per share 199,143 193,915
2002
Pro Forma Pro Forma
Adjusted (4) Adjustments Actual
Revenues:
Product sales, net $914,121 $-- $914,121
Revenues from joint business
arrangement 104,576 -- 104,576
Collaborative agreement revenues 22,142 -- 22,142
Royalty and license fee revenues 198,816 -- 198,816
Other revenues 36,625 -- 36,625
Total revenues 1,276,280 -- 1,276,280
Operating expenses:
Cost of sales 341,808 -- 341,808
Research and development 325,792 -- 325,792
Selling, general and administrative 283,712 -- 283,712
Write-off of purchased in-process
research and development -- (45,181) 45,181
Amortization expense -- (29,857) 29,857
Restructuring and reorganization
charges -- -- --
Other operating expenses 16,952 -- 16,952
Total operating expenses 968,264 (75,038) 1,043,302
Income from operations 308,016 75,038 232,978
Interest expense (12,821) -- (12,821)
Interest and other income, net 46,362 -- 46,362
Minority interest (1,664) -- (1,664)
Income from continuing operations
before income taxes 339,893 75,038 264,855
Provision for income taxes 91,771 8,061 83,710
Income from continuing operations 248,122 66,977 181,145
Gain (loss) from discontinued
operations (320) -- (320)
Net income $247,802 $66,977 $180,825
Basic earnings per share:
Income from continuing operations $1.31 $0.96
Net income $1.31 $0.96
Diluted earnings per share:
Income from continuing operations $1.29 $0.94
Net income $1.29 $0.94
Shares used in calculating basic
earnings per share 188,792 188,792
Shares used in calculating diluted
earnings per share 192,152 192,152
(3) Pro Forma Adjusted amounts exclude: (a) the Biogen and Serono
settlements in connection with the McCormick patents owned by
Schering's U.S. subsidiary, Berlex Labratories, (b) amortization
expense on acquired intangible assets related to the acquisitions of
PathoGenesis, Chiron Behring, Pulmopharm and PowderJect
Pharmaceuticals and (c) the write-off of purchased in-process
research and development related to the PowderJect Pharmaceuticals
acquisition.
(4) Pro Forma Adjusted amounts exclude: (a) write-off of purchased in-
process research and development related to the Matrix acquisition
and (b) amortization expense on acquired identifiable intangible
assets related to the acquisitions of PathoGenesis, Chiron Behring
and Pulmopharm.
Note: Due to rounding, quarterly earnings per share amounts may not
sum fully to yearly earnings per share amounts.
CHIRON CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited)
(In thousands)
December 31, December 31,
2003 2002
Assets
Current assets:
Cash and short-term investments $538,482 $874,080
Accounts receivable, net 382,933 278,625
Current portion of notes
receivable 1,479 718
Inventories, net 199,625 146,005
Other current assets 135,130 86,294
Total current assets 1,257,649 1,385,722
Noncurrent investments in marketable
debt securities 560,292 414,447
Property, plant, equipment and
leasehold improvements, net 689,750 373,558
Other noncurrent assets 1,687,478 786,617
Total assets $4,195,169 $2,960,344
Liabilities and stockholders' equity
Current liabilities $436,913 $298,636
Long-term debt 926,709 416,954
Capital lease 157,677 --
Noncurrent unearned revenue 45,564 62,580
Other noncurrent liabilities 176,944 81,809
Minority interest 7,002 5,355
Put options -- 19,054
Stockholders' equity 2,444,360 2,075,956
Total liabilities and
stockholders' equity $4,195,169 $2,960,344
CHIRON CORPORATION
Supplemental Revenue Summary (Pro Forma)
USD $ (in thousands)
Current Prior Change
Quarter Quarter from Change
Q4 2003 Q3 2003 Prior QTR %
Product Sales, net
Blood Testing
Ortho $8,625 $6,235 $2,390 38.3%
NAT 58,299 53,663 4,636 8.6%
Total Blood Testing 66,924 59,898 7,026 11.7%
Vaccines
Flu Vaccines 141,142 183,250 (42,108) (23.0)%
Meningococcus Vaccines 33,672 10,642 23,030 216.4%
Travel Vaccines 27,850 11,229 16,621 148.0%
Pediatric/Other Vaccines 58,974 57,598 1,376 2.4%
Total Vaccines 261,638 262,719 (1,081) (0.4)%
Biopharmaceuticals:
Proleukin 29,852 29,859 (7) 0.0%
TOBI 49,307 43,022 6,285 14.6%
Betaseron* 36,148 29,010 7,138 24.6%
Other 4,742 8,166 (3,424) (41.9)%
Total Biopharmaceuticals 120,049 110,057 9,992 9.1%
TOTAL PRODUCT SALES, NET $448,611 $432,674 $15,937 3.7%
Revenues From Joint Business
Arrangement $28,313 $26,058 $2,255 8.7%
Collaborative Agreement Revenues 3,008 7,816 (4,808) (61.5)%
Royalty and License Fee Revenues 63,605 66,237 (2,632) (4.0)%
Other Revenues 11,044 7,688 3,356 43.7%
TOTAL REVENUES $554,581 $540,473 $14,108 2.6%
Gross Margins
Blood Testing 38% 40% (2)%
Vaccines 49% 58% (9)%
Biopharmaceuticals 66% 74% (8)%
TOTAL GROSS MARGINS 52% 60% (8)%
* Excludes Betaferon Royalty $16,658 $15,970 $688 4.3%
Year Ago Change
Quarter from Change
Q4 2002 Prior Year %
Product Sales, net
Blood Testing
Ortho $5,513 $3,112 56.4%
NAT 42,041 16,258 38.7%
Total Blood Testing 47,554 19,370 40.7%
Vaccines
Flu Vaccines 18,948 122,194 644.9%
Meningococcus Vaccines 33,152 520 1.6%
Travel Vaccines 5,823 22,027 378.3%
Pediatric/Other Vaccines 43,057 15,917 37.0%
Total Vaccines 100,980 160,658 159.1%
Biopharmaceuticals:
Proleukin 30,588 (736) (2.4)%
TOBI 38,566 10,741 27.9%
Betaseron* 33,920 2,228 6.6%
Other 5,446 (704) (12.9)%
Total Biopharmaceuticals 108,520 11,529 10.6%
TOTAL PRODUCT SALES, NET $257,054 $191,557 74.5%
Revenues From Joint Business
Arrangement $26,028 $2,285 8.8%
Collaborative Agreement Revenues 4,356 (1,348) (30.9)%
Royalty and License Fee Revenues 60,397 3,208 5.3%
Other Revenues 8,489 2,555 30.1%
TOTAL REVENUES $356,324 $198,257 55.6%
Gross Margins
Blood Testing 44% (6)%
Vaccines 58% (9)%
Biopharmaceuticals 67% (1)%
TOTAL GROSS MARGINS 60% (8)%
* Excludes Betaferon Royalty $13,202 $3,456 26.2%
CHIRON CORPORATION
Supplemental YTD Revenue Summary (Pro Forma)
USD $ (in thousands)
Twelve Months Ended Change
December 31, from Change
2003 2002 Prior Year %
Product Sales, net
Blood Testing
Ortho $28,391 $22,652 $5,739 25.3%
NAT 200,066 125,465 74,601 59.5%
Total Blood Testing 228,457 148,117 80,340 54.2%
Vaccines
Flu Vaccines 332,428 89,995 242,433 269.4%
Meningococcus Vaccines 65,548 54,971 10,577 19.2%
Travel Vaccines 87,831 64,335 23,496 36.5%
Pediatric/Other Vaccines 192,511 147,963 44,548 30.1%
Total Vaccines 678,318 357,264 321,054 89.9%
Biopharmaceuticals:
Proleukin 115,075 114,281 794 0.7%
TOBI 172,047 146,874 25,173 17.1%
Betaseron* 124,936 118,513 6,423 5.4%
Other 27,000 29,072 (2,072) (7.1)%
Total Biopharmaceuticals 439,058 408,740 30,318 7.4%
TOTAL PRODUCT SALES, NET $1,345,833 $914,121 $431,712 47.2%
Revenues From Joint Business
Arrangement $108,298 $104,576 $3,722 3.6%
Collaborative Agreement
Revenues 18,562 22,142 (3,580) (16.2)%
Royalty and License Fee Revenues 250,142 198,816 51,326 25.8%
Other Revenues 29,113 36,625 (7,512) (20.5)%
TOTAL REVENUES $1,751,948 $1,276,280 $475,668 37.3%
Gross Margins
Blood Testing 41% 41% 0%
Vaccines 53% 58% (5)%
Biopharmaceuticals 72% 73% (1)%
TOTAL GROSS MARGINS 58% 63% (5)%
* Excludes Betaferon Royalty $63,768 $46,937 $16,831 35.9%
SOURCE Chiron Corporation
-0- 01/28/2004
/CONTACT: Chiron Corporate Communications & Investor Relations, Media:
+1-510-923-6500, or Investors: +1-510-923-2300/
/Web site: http://www.chiron.com /
(CHIR)
CO: Chiron Corporation
ST: California
IN: HEA MTC BIO
SU: ERN CCA