Chiron Reports 2003 Third-Quarter Pro-Forma Income of 60 Cents Per
Share 47 Percent Increase in Revenues Over 2002 Driven by New U.S.
Flu Sales EMERYVILLE, Calif., Oct. 29 /PRNewswire-FirstCall/ --
Chiron Corporation today reported pro-forma income from continuing
operations of $117 million, or $0.60 per share, for the third
quarter of 2003, compared to $88 million, or $0.46 per share, for
the third quarter of 2002. Foreign exchange rates, on a pro-forma
basis, resulted in a $0.02 increase in earnings per share. On a
GAAP basis, Chiron's loss from continuing operations was $20
million, or $0.11 per share, for the third quarter of 2003,
compared to income from continuing operations of $83 million, or
$0.43 per share, for the third quarter of 2002. The loss was due to
the write-off of in-process research and development in the
PowderJect acquisition. 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
continues to deliver the solid financial results that are a
hallmark of the company," said Howard Pien, Chiron's president and
CEO. "Looking forward, we expect 2004 to be a year of strong growth
in vaccines and blood testing, enabling investment that will
further enhance shareholder value and increase our impact on human
health worldwide. "We reaffirm our mid-year 2003 pro-forma EPS
guidance to be at the upper end of the $1.40-$1.50 range. Our 2004
guidance is consistent with our 20 percent pro-forma EPS growth
goal. It is a testament to the strength of the Chiron business
model that we can deliver superior earnings and fund worthy
investment opportunities across our three business units." 2004
Guidance Chiron expects 2004 pro-forma earnings per share from
continuing operations to be between $1.80 and $1.90. In 2004,
Chiron expects product sales to be between $1.5 billion and $1.6
billion, with revenues between $1.9 billion and $2.0 billion. Gross
margins are expected to be equivalent or down slightly from 2003,
while operating expenses are expected to be up approximately 10
percent over the prior year. The tax rate is expected to be at or
slightly higher than the 2003 tax rate. Overall Revenues Total
revenues in the third quarter of 2003 were $540 million, an
increase of approximately 47 percent from $368 million in the third
quarter of 2002. Foreign exchange rates resulted in a 6 percent
increase in revenues. Net product sales increased 59 percent in the
third quarter of 2003, to $433 million from $272 million in the
third quarter of 2002. Total third-quarter 2003 revenues for
PowderJect Pharmaceuticals, which Chiron acquired during the third
quarter of 2003, were $116 million. Excluding PowderJect revenues
and foreign exchange effect, all other revenues increased 10
percent in the third quarter of 2003. BioPharmaceuticals The
BioPharmaceuticals division reported net product sales and
Betaferon(R) interferon beta-1b royalties of $126 million in the
third quarter of 2003, compared to $115 million in the third
quarter of 2002. The gross profit margin on biopharmaceutical
products sold during the third quarter of 2003 was 74 percent,
compared to 77 percent in the third quarter of 2002. --
Proleukin(R) (aldesleukin) interleukin-2 sales were $30 million in
the third quarter of 2003, compared to $32 million in the third
quarter of 2002, with the decrease primarily due to wholesaler
ordering patterns, offset by price increases. -- TOBI(R) tobramycin
solution for inhalation sales in the third quarter of 2003 were $43
million, compared to $39 million in the third quarter of 2002, with
the increase primarily due to greater product penetration in Europe
and price increases in both the United States and Europe, which
were partially offset by wholesale ordering patterns. -- Sales of
Betaseron(R) interferon beta-1b, marketed in Europe as Betaferon,
to Berlex, Inc. (and its parent company Schering AG) for marketing
and resale were $29 million in the third quarter of 2003, compared
to $28 million in the third quarter of 2002. The increase was due
to price increases and increased patient demand, partially offset
by wholesaler ordering patterns. Royalties from Schering AG's
European sales of Betaferon were $16 million in the third quarter
of 2003, compared to $10 million in the third quarter of 2002.
Vaccines Vaccines net product sales in the third quarter of 2003
were $263 million, compared to $125 million in the third quarter of
2002. PowderJect product revenues were $114 million in the third
quarter of 2003. The gross profit margin on vaccines products in
the third quarter of 2003 was 58 percent, compared to 60 percent in
the third quarter of 2002. -- Sales of flu vaccines were $183
million in the third quarter of 2003, compared to $67 million in
the third quarter of 2002. Sales of Fluvirin(R) vaccine, the flu
vaccine that Chiron acquired with PowderJect, were $103 million in
the third quarter of 2003, the first quarter in which Chiron
recorded Fluvirin revenues. -- Sales of Menjugate(TM) conjugate
vaccine against meningococcal C disease were $11 million in the
third quarter of 2003, compared to $6 million in the third quarter
of 2002, with the increase primarily due to sales made to
Australia, Spain and France. -- Sales from Chiron's travel vaccines
were $11 million in the third quarter of 2003, compared to $16
million in the third quarter of 2002. Travel vaccines include
Encepur(TM) vaccine for tick-borne encephalitis, RabAvert(R)
vaccine for rabies, and, newly acquired with PowderJect,
Arilvax(TM) vaccine for yellow fever and Dukoral(TM) vaccine for
cholera. The decrease is primarily due to the seasonality of
tick-borne encephalitis, as the first half of the year is typically
the prime season for Encepur. -- Sales of Chiron's pediatric and
other vaccines products were $58 million in the third quarter of
2003, compared to $36 million in the third quarter of 2002, with
the increase primarily due to tender sales of pediatric vaccines
and increased sales following the PowderJect acquisition. Blood
Testing Total Blood Testing revenues in the third quarter of 2003
were $109 million, compared to $89 million in the third quarter of
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 $54
million in the third quarter of 2003, compared to sales of $36
million in the third quarter of 2002. The increase is primarily due
to 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. -- Revenues from Chiron's joint business arrangement with
Ortho were $26 million in the third quarter of 2003, compared to
$32 million in the third quarter of 2002, with the decrease
primarily due to lower profits from U.S. operations. -- Royalties
paid by Roche related to NAT blood screening were $19 million in
the third quarter of 2003, compared to $13 million in the third
quarter of 2002. Pipeline and Products Update Since mid-year,
Chiron has seen advances in franchises across all three of its
business units. BioPharmaceuticals: Oncology Chiron's oncology
franchise has three dimensions: immune-based therapies, monoclonal
antibodies and novel cancer agents. -- Over the past year, Chiron
has been conducting four clinical trials to evaluate the potential
of Proleukin(R) (aldesleukin) interleukin-2 and its
second-generation liquid formulation to increase the clinical
benefit of monoclonal antibodies in cancer treatments. -- The Phase
II study of Proleukin and rituximab in patients with low-grade
non-Hodgkin's lymphoma who have failed rituximab therapy continues
to enroll patients and should yield sufficient data to allow a
decision on next steps by the end of the year. -- The Phase II
trial of Proleukin and rituximab in patients with high-grade
lymphoma who have failed prior chemotherapy and/or rituximab
therapy will not continue due to limited efficacy. -- The Phase I
study of liquid IL-2 with rituximab in patients with advanced
non-Hodgkin's lymphoma continues to enroll patients and should
yield sufficient data to allow a decision on next steps by the end
of the year. -- The Phase I study of liquid IL-2 and trastuzumab in
patients with metastatic breast cancer met the primary endpoint of
determining maximum tolerated dose and will no longer enroll
patients. -- Chiron and its collaborator Sirna are seeking a
licensee for the further development of ANGIOZYME(TM), a ribozyme
that inhibits vascular endothelial growth factor (VEGF) signaling
via inhibition of VEGFR-1 expression. A pilot Phase II program
studied ANGIOZYME in breast cancer and colorectal cancer.
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. -- As announced separately today, Chiron plans to
initiate a Phase III trial for tifacogin in patients with severe
community-acquired pneumonia. This indication would fulfill a
substantial unmet medical need. -- Chiron inlicensed the antibiotic
daptomycin for injection from Cubist Pharmaceuticals, Inc., gaining
development and commercialization for the product in multiple
countries outside the United States. The FDA recently approved
Cubicin for the treatment of complicated skin and skin structure
infections caused by Gram-positive bacteria. -- Chiron is further
developing TOBI(R) tobramycin solution for inhalation, used by
cystic fibrosis patients with chronic pseudomonal lung infection.
The company has completed enrollment and dosing for two cohorts of
its Phase I trial for the dry-powder formulation and hand-held
device for TOBI, which it is developing in collaboration with
Nektar Therapeutics. Chiron anticipates results of this phase of
the multiyear program in the first half of next year.
BioPharmaceuticals: Betaseron(R) Interferon Beta-1b 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. -- The FDA
approved 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. -- At the 19th Congress of the European Committee for
Treatment and Research in Multiple Sclerosis (ECTRIMS) in Milan,
Chiron's partner Schering AG announced the completion of the pilot
phase of its BEYOND study, with the first clinical outcomes showing
that both the approved Betaferon dose and a new, double-dose of
Betaferon were safe and well tolerated in relapsing-remitting MS
patients, and no new or unpredictable side effects were reported.
Vaccines Chiron Vaccines development is focused on its
meningococcal franchise and flu cell culture technology. --
Chiron's newly acquired U.S. flu business is on schedule to deliver
Fluvirin(R) flu vaccine to reach millions of patients in the United
States. -- 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(TM) conjugate vaccine for meningococcal C disease is on
track to complete enrollment this year, and Chiron expects to
present data to the FDA in 2004. -- Chiron expects to see results
from the Phase II trial for a conjugated meningococcal ACYW vaccine
in 2004. -- In collaboration with St. Louis University, Chiron has
initiated its Phase I trial for a hepatitis C virus (HCV) vaccine.
Blood Testing: Procleix(R) System Chiron expects to expand its
leadership in blood testing through new geographies and greater
market penetration. -- Since its June introduction to customers in
the United States on a cost-recovery basis under an IND, the
Procleix(R) West Nile Virus Assay has detected hundreds of
confirmed samples of blood infected with West Nile virus,
preventing those donations from entering the blood supply. Recent
Business Milestones Recent business activities underline the value
of Chiron's products and intellectual property and the strength of
its leadership. -- At the 17th Annual North American Cystic
Fibrosis Conference (NACFC) in Anaheim, California, Chiron
announced funding for the establishment of the TOBI Foundation, an
independent non-profit foundation dedicated to increasing access to
TOBI(R) tobramycin solution for inhalation for uninsured and
underinsured people with CF. -- Chiron and Children's Hospital and
Regional Medical Center of Seattle have settled a patent
infringement suit against Roxane Laboratories, a subsidiary of
Boehringer-Ingelheim Corporation, regarding Roxane's plans to
market a generic equivalent of TOBI. Roxane agreed that it would
not seek approval to market the product until the patent expiration
in 2014 and dropped its challenge to the patent. -- The federal
Centers for Medicare and Medicaid Services recently implemented a
reimbursement change that will increase access to Proleukin(R)
(aldesleukin) interleukin-2 therapy for certain patients with
metastatic renal cancer and metastatic melanoma. -- Chiron
announced that, as of the May 2004 annual meeting of shareholders,
president and CEO Howard Pien will become chairman of the board,
succeeding current chairman Sean Lance. Mr. Lance intends to retire
from active service with Chiron and its board of directors as of
the same meeting. -- Chiron further strengthened its
BioPharmaceuticals senior management team. Following the
appointments last quarter of senior vice presidents of BioPharma
research and BioPharma commercial operations, Chiron recently
filled the role of senior vice president and head of BioPharma
development. -- Chiron granted a nonexclusive license to Gilead
Sciences for the research, development and commercialization of
small molecule therapeutics against certain hepatitis C virus (HCV)
drug targets. 3Q03 Earnings Conference Call Chiron will hold a
conference call and webcast on Wednesday, October 29, 2003, at 4:45
p.m. Eastern Standard Time (EST) to review its third-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 webcast 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 11:59 p.m. EST, Friday, November 7, 2003. To access the
replay, please call 1-800-642-1687 (U.S.) or 706-645-9291
(international). The conference ID number is 3325860. 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
http://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 June 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 activity 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: Arilvax, Dukoral, Encepur, Fluvirin,
Menjugate, Procleix, Proleukin, RabAvert and TOBI are trademarks of
Chiron Corporation. Betaseron and Betaferon are trademarks of
Schering AG. CHIRON CORPORATION CONDENSED CONSOLIDATED STATEMENTS
OF OPERATIONS (Unaudited) (In thousands, except per share data)
Three Months Ended September 30, 2003 Pro Forma Pro Forma Adjusted
(1) Adjustments Actual Revenues: Product sales, net $432,674 $--
$432,674 Revenues from joint business arrangement 26,058 -- 26,058
Collaborative agreement revenues 7,816 -- 7,816 Royalty and license
fee revenues 66,237 -- 66,237 Other revenues 7,688 -- 7,688 Total
revenues 540,473 -- 540,473 Operating expenses: Cost of sales
174,380 -- 174,380 Research and development 97,519 -- 97,519
Selling, general and administrative 104,736 -- 104,736 Write-off of
purchased in-process research and development -- (122,700) 122,700
Amortization expense -- (19,821) 19,821 Restructuring and
reorganization charges 1,082 -- 1,082 Other operating expenses
4,779 -- 4,779 Total operating expenses 382,496 (142,521) 525,017
Income from operations 157,977 142,521 15,456 Interest expense
(6,222) -- (6,222) Interest and other income, net 5,239 -- 5,239
Minority interest (443) -- (443) Income from continuing operations
before income taxes 156,551 142,521 14,030 Provision for income
taxes 39,138 4,955 34,183 Income (loss) from continuing operations
117,413 137,566 (20,153) Gain (loss) from discontinued operations
1,174 -- 1,174 Net income (loss) $118,587 $137,566 $(18,979) Basic
earnings (loss) per share: Income (loss) from continuing operations
$0.63 $(0.11) Net Income (loss) $0.64 $(0.10) Diluted earnings
(loss) per share: Income (loss) from continuing operations $0.60
$(0.11) Net Income (loss) $0.61 $(0.10) Shares used in calculating
basic earnings (loss) per share 186,685 186,685 Shares used in
calculating diluted earnings (loss) per share 200,463 186,685 Three
Months Ended September 30, 2002 Pro Forma Pro Forma Adjusted (2)
Adjustments Actual (3) Revenues: Product sales, net $272,190 $--
$272,190 Revenues from joint business arrangement 32,356 -- 32,356
Collaborative agreement revenues 4,977 -- 4,977 Royalty and license
fee revenues 48,047 -- 48,047 Other revenues 10,911 -- 10,911 Total
revenues 368,481 -- 368,481 Operating expenses: Cost of sales
97,432 -- 97,432 Research and development 81,635 -- 81,635 Selling,
general and administrative 68,159 -- 68,159 Write-off of purchased
in-process research and development -- -- -- Amortization expense
-- (7,504) 7,504 Restructuring and reorganization charges -- -- --
Other operating expenses 5,694 -- 5,694 Total operating expenses
252,920 (7,504) 260,424 Income from operations 115,561 7,504
108,057 Interest expense (3,210) -- (3,210) Interest and other
income, net 8,696 -- 8,696 Minority interest (477) -- (477) Income
from continuing operations before income taxes 120,570 7,504
113,066 Provision for income taxes 32,554 2,024 30,530 Income
(loss) from continuing operations 88,016 5,480 82,536 Gain (loss)
from discontinued operations (320) -- (320) Net income (loss)
$87,696 $5,480 $82,216 Basic earnings (loss) per share: Income
(loss) from continuing operations $0.47 $0.44 Net Income (loss)
$0.47 $0.44 Diluted earnings (loss) per share: Income (loss) from
continuing operations $0.46 $0.43 Net Income (loss) $0.46 $0.43
Shares used in calculating basic earnings per share 188,493 188,493
Shares used in calculating diluted earnings per share 196,547
196,547 (1) Pro Forma Adjusted amounts exclude the amortization
expense on acquired intangible assets related to the acquisitions
of PathoGenesis, Chiron Behring, Pulmopharm and PowderJect
Pharmaceuticals and (b) the write-off of purchased in-process
research and development related to the PowderJect Pharmaceuticals
acquisition. (2) Pro Forma Adjusted amounts exclude the
amortization expense on acquired intangible assets related to the
acquisitions of PathoGenesis, Chiron Behring and Pulmopharm. (3)
Actual results reflect increased cost of sales of $1.9 million (a
reduction of $1.4 million in net income) compared to Chiron's
earnings press release dated October 23, 2002, related to the
results for the three months ended September 30, 2002. There was a
corresponding decrease in inventories of $1.9 million at September
30, 2002. CHIRON CORPORATION CONDENSED CONSOLIDATED STATEMENTS OF
OPERATIONS (Unaudited) (In thousands, except per share data) Nine
Months Ended September 30, 2003 Pro Forma Pro Forma Adjusted (4)
Adjustments Actual Revenues: Product sales, net $897,222 $--
$897,222 Revenues from joint business arrangement 79,985 -- 79,985
Collaborative agreement revenues 15,554 -- 15,554 Royalty and
license fee revenues 186,537 -- 186,537 Other revenues 18,069
(14,413) 32,482 Total revenues 1,197,367 (14,413) 1,211,780
Operating expenses: Cost of sales 357,389 -- 357,389 Research and
development 269,564 -- 269,564 Selling, general and administrative
257,485 -- 257,485 Write-off of purchased in-process research and
development -- (122,700) 122,700 Amortization expense -- (35,135)
35,135 Restructuring and reorganization charges 1,757 -- 1,757
Other operating expenses 7,573 -- 7,573 Total operating expenses
893,768 (157,835) 1,051,603 Income from operations 303,599 143,422
160,177 Interest expense (12,523) -- (12,523) Interest and other
income, net 31,170 -- 31,170 Minority interest (1,424) -- (1,424)
Income from continuing operations before income taxes 320,822
143,422 177,400 Provision for income taxes 80,206 5,181 75,025
Income from continuing operations 240,616 138,241 102,375 Gain
(loss) from discontinued operations 3,138 -- 3,138 Net income
$243,754 $138,241 $105,513 Basic earnings per share: Income from
continuing operations $1.29 $0.55 Net income $1.31 $0.57 Diluted
earnings per share: Income from continuing operations $1.25 $0.54
Net income $1.27 $0.55 Shares used in calculating basic earnings
per share 186,658 186,658 Shares used in calculating diluted
earnings per share 196,935 190,488 Nine Months Ended September 30,
2002 Pro Forma Pro Forma Adjusted (5) Adjustments Actual (6)
Revenues: Product sales, net $657,067 $-- $657,067 Revenues from
joint business arrangement 78,548 -- 78,548 Collaborative agreement
revenues 17,786 -- 17,786 Royalty and license fee revenues 138,419
-- 138,419 Other revenues 28,136 -- 28,136 Total revenues 919,956
-- 919,956 Operating expenses: Cost of sales 239,823 -- 239,823
Research and development 243,938 -- 243,938 Selling, general and
administrative 202,022 -- 202,022 Write-off of purchased in-process
research and development -- (54,781) 54,781 Amortization expense --
(22,328) 22,328 Restructuring and reorganization charges -- -- --
Other operating expenses 11,176 -- 11,176 Total operating expenses
696,959 (77,109) 774,068 Income from operations 222,997 77,109
145,888 Interest expense (9,498) -- (9,498) Interest and other
income, net 41,456 -- 41,456 Minority interest (1,360) -- (1,360)
Income from continuing operations before income taxes 253,595
77,109 176,486 Provision for income taxes 68,471 6,028 62,443
Income from continuing operations 185,124 71,081 114,043 Gain
(loss) from discontinued operations (320) -- (320) Net income
$184,804 $71,081 $113,723 Basic earnings per share: Income from
continuing operations $0.98 $0.60 Net income $0.98 $0.60 Diluted
earnings per share: Income from continuing operations $0.96 $0.59
Net income $0.96 $0.59 Shares used in calculating basic earnings
per share 189,175 189,175 Shares used in calculating diluted
earnings per share 192,565 192,565 (4) Pro Forma Adjusted amounts
exclude: (a) amortization expense on acquired intangible assets
related to the acquisitions of PathoGenesis, Chiron Behring,
Pulmopharm and PowderJect Pharmaceuticals, (b) the Biogen and
Serono settlements in connection with the McCormick patents owned
by Schering's U.S. subsidiary, Berlex Labratories, and (c) the
write-off of purchased in-process research and development related
to the PowderJect Pharmaceuticals acquisition. (5) 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. (6) Actual results reflect increased cost of sales of
$1.9 million (a reduction of $1.4 million in net income) compared
to Chiron's earnings press release dated October 23, 2002, related
to the results for nine months ended September 30, 2002. There was
a corresponding decrease in inventories of $1.9 million at
September 30, 2002. 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) September 30, December 31, Assets 2003
2002 Current assets: Cash and short-term investments $697,698
$874,080 Accounts receivable, net 427,749 278,625 Current portion
of notes receivable 1,469 718 Inventories, net 247,641 146,005
Other current assets 150,041 86,294 Total current assets 1,524,598
1,385,722 Noncurrent investments in marketable debt securities
340,308 414,447 Property, plant, equipment and leasehold
improvements, net 642,318 373,558 Other noncurrent assets 1,585,221
786,617 Total assets $4,092,445 $2,960,344 Liabilities and
stockholders' equity Current liabilities $477,231 $298,636
Long-term debt 923,725 416,954 Capital lease 157,756 -- Noncurrent
unearned revenue 49,696 62,580 Other noncurrent liabilities 217,566
81,809 Minority interest 6,633 5,355 Put options -- 19,054
Stockholders' equity 2,259,838 2,075,956 Total liabilities and
stockholders' equity $4,092,445 $2,960,344 CHIRON CORPORATION
Supplemental Revenue Summary (Pro Forma) USD $ (in thousands)
Current Prior Change Quarter Quarter from Change Q3 2003 Q2 2003
Prior QTR % Product Sales Biopharmaceuticals: Proleukin $29,859
$29,381 $478 1.6% TOBI 43,022 38,984 4,038 10.4% Betaseron* 29,010
30,478 (1,468) (4.8)% Other 8,166 8,424 (258) (3.1)% Total
Biopharmaceuticals 110,057 107,267 2,790 2.6% Vaccines Flu Vaccines
183,250 3,783 179,467 4744.0% Meningococcus Vaccines 10,642 13,696
(3,054) (22.3)% Travel Vaccines 11,229 23,052 (11,823) (51.3)%
Pediatric/Other Vaccines 57,598 45,026 12,572 27.9% Total Vaccines
262,719 85,557 177,162 207.1% Blood Testing Ortho 6,235 7,123 (888)
(12.5)% NAT 53,663 45,981 7,682 16.7% Total Blood Testing 59,898
53,104 6,794 12.8% TOTAL PRODUCT SALES $432,674 $245,928 $186,746
75.9% Revenues from Joint Business Arrangement $26,058 $27,475
$(1,417) (5.2)% Collaborative Agreement Revenues 7,816 3,624 4,192
115.7% Royalty and License Fees 66,237 66,876 (639) (1.0)% Other
Revenues 7,688 6,369 1,319 20.7% TOTAL REVENUES $540,473 $350,272
$190,201 54.3% Gross Margins Biopharmaceuticals 74% 71% 3% Vaccines
58% 56% 2% Blood Testing 40% 46% (6)% TOTAL GROSS MARGINS 60% 60%
0% *Excludes Betaferon Royalty $15,970 $17,174 $(1,204) (7.0)% Year
Ago Change Quarter from Change Q3 2002 Prior Year % Product Sales
Biopharmaceuticals: Proleukin $32,088 $(2,229) (6.9)% TOBI 38,971
4,051 10.4% Betaseron* 28,533 477 1.7% Other 6,127 2,039 33.3%
Total Biopharmaceuticals 105,719 4,338 4.1% Vaccines Flu Vaccines
66,907 116,343 173.9% Meningococcus Vaccines 6,193 4,449 71.8%
Travel Vaccines 16,621 (5,392) (32.4)% Pediatric/Other Vaccines
35,963 21,635 60.2% Total Vaccines 125,684 137,035 109.0% Blood
Testing Ortho 4,826 1,409 29.2% NAT 35,961 17,702 49.2% Total Blood
Testing 40,787 19,111 46.9% TOTAL PRODUCT SALES $272,190 $160,484
59.0% Revenues from Joint Business Arrangement $32,356 $(6,298)
(19.5)% Collaborative Agreement Revenues 4,977 2,839 57.0% Royalty
and License Fees 48,047 18,190 37.9% Other Revenues 10,911 (3,223)
(29.5)% TOTAL REVENUES $368,481 $171,992 46.7% Gross Margins
Biopharmaceuticals 77% (3)% Vaccines 60% (2)% Blood Testing 40% 0%
TOTAL GROSS MARGINS 64% (4)% *Excludes Betaferon Royalty $9,622
$6,348 66.0% DATASOURCE: Chiron Corporation CONTACT: Chiron
Corporate Communications & Investor Relations, Media,
+1-510-923-6500, or Investors, +1-510-923-2300 Web site:
http://www.chiron.com/
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