Chiron Reports 1998 Fourth-Quarter and Year-End Results; Net Income of $25 Million, or $0.14 Per Share for the Quarter, Excluding Restructuring and Reorganization Charges.EMERYVILLE, Calif.--(BW HealthWire)--Feb. 9, 1999--Chiron Corporation (NASDAQ NASDAQ in full National Association of Securities Dealers Automated Quotations U.S. market for over-the-counter securities. Established in 1971 by the National Association of Securities Dealers (NASD), NASDAQ is an automated quotation system that reports on : CHIR CHIR Chiricahua National Monument (US National Park Service) ) reported income from continuing operations continuing operations Parts of a business that are expected to be maintained as an ongoing segment of an overall business operation. Income and losses from continuing operations are reported separately if any segments have been discontinued during the of $25 million, or $0.14 per share, for the fourth quarter of 1998. Excluded from these results is approximately $15 million of pretax pre·tax adj. Existing before tax deductions: pretax income. pretax adj [profit] → vor (Abzug der) Steuern restructuring restructuring - The transformation from one representation form to another at the same relative abstraction level, while preserving the subject system's external behaviour (functionality and semantics). and reorganization charges primarily related to the rationalization rationalization, in psychology: see defense mechanism. of the company's vaccines business in Germany and Italy and reorganization costs accrued ac·crue v. ac·crued, ac·cru·ing, ac·crues v.intr. 1. To come to one as a gain, addition, or increment: interest accruing in my savings account. 2. for Emeryville operations. On an as-reported basis, Chiron's income from continuing operations was $14 million, or $.08 per share. For the year, Chiron reported income from continuing operations of $87 million, or $.48 cents per share Cents per share The amount of a mutual fund's dividend or capital gains distributions that a shareholder will receive for each share owned. , excluding restructuring and reorganization charges recognized throughout the year, the write-off Write-Off A reduction in the value of an asset or earnings by the amount of an expense or loss. Companies are able to write off certain expenses that are required to run the business, or have been incurred in the operation of the business and detract from retained revenues. of purchased in-process technologies and the gain on the sale of the Puerto Rico Puerto Rico (pwār`tō rē`kō), island (2005 est. pop. 3,917,000), 3,508 sq mi (9,086 sq km), West Indies, c.1,000 mi (1,610 km) SE of Miami, Fla. and St. Louis facilities in 1998. Included in the total is a license fee of $24 million received in the third quarter for certain technology used in human vaccine vaccine Preparation containing either killed or weakened live microorganisms or their toxins, introduced by mouth, by injection, or by nasal spray to stimulate production of antibodies against an infectious agent. products and a $13 million license fee included in other revenue related to informatics Same as information technology and information systems. The term is more widely used in Europe. technology received in the fourth quarter. On an as-reported basis, Chiron's income from continuing operations was $76 million, or $.42 per share. Net income reported for the fourth quarter of 1998 was $360 million, or $1.96 per share, on a diluted di·lute tr.v. di·lut·ed, di·lut·ing, di·lutes 1. To make thinner or less concentrated by adding a liquid such as water. 2. To lessen the force, strength, purity, or brilliance of, especially by admixture. basis. These results include an after-tax gain of approximately $330 million on the sale of Chiron Diagnostics (1) Software routines that test hardware components (memory, keyboard, disks, etc.). Diagnostics are often stored in ROM chips and activated on startup. (2) Error messages in a programmer's source code that refer to statements or syntax that the compiler or assembler to Bayer Corporation. For the year, Chiron reported net income of $524 million, or $2.90 per share, which, in addition to the gain reported in the fourth quarter, also includes a third-quarter gain of $46 million related to the recognition of deferred tax assets on the sale of Chiron Diagnostics, and a first-quarter gain of $65 million from the sale of Chiron Vision to Bausch & Lomb, Incorporated. Total revenue for the fourth quarter of 1998 increased nearly $64 million, or 40 percent, to $225 million compared to $161 million during the same period in 1997. Total revenue for the year increased 28 percent to $737 million from $575 million in 1997. Contributing to the increase was the acquisition of the remaining 51-percent interest in, and consolidation of, Chiron Behring Beh·ring , Emil Von 1854-1917. German physiologist. He won a 1901 Nobel Prize for work on serum immunization against diphtheria and tetanus. at the beginning of the second quarter of 1998. Excluding the results of Chiron Behring, 1998 product sales in the fourth quarter increased by $20 million, or 25 percent, between years and $55 million, or 22% for the year. Chiron's revenues for the fourth quarter of 1998 also reflect approximately $7 million of Novartis research and development funding as compared with $3 million in 1997. Biopharmaceuticals Therapeutics therapeutics Treatment and care to combat disease or alleviate pain or injury. Its tools include drugs, surgery, radiation therapy, mechanical devices, diet, and psychiatry. and Technologies as a combined biopharmaceutical business reported product sales of $58 million in the fourth quarter of 1998 as compared with $45 million in 1997. The significant components of product sales in the fourth quarter of 1998 were $27 million from commercial sales of Proleukin Proleukin® Aldesleukin, IL-2 Immunology An agent used for metastatic kidney CA, melanoma, NHL, AML, TB, HIV infection, KS. See IL-2. (aldesleukin aldesleukin /al·des·leu·kin/ (al?des-loo´kin) a recombinant interleukin-2 product used as an antineoplastic and biological response modifier. ), Chiron's recombinant recombinant /re·com·bi·nant/ (re-kom´bi-nant) 1. the new entity (e.g., gene, protein, cell, individual) that results from genetic recombination. 2. pertaining or relating to such an entity. See also under DNA. interleukin-2; $17 million from sales of Betaseron (interferon beta-1b interferon beta-1b Betaferon (UK), Betaseron Pharmacologic class: Biological response modifier Therapeutic class: Antiviral, immunoregulator Pregnancy risk category C Action) to Berlex Laboratories IntroductionBerlex Laboratories, Incorporated is a research-based pharmaceutical company headquartered in Montville, New Jersey with operations in Wayne, New Jersey; Bothell, Washington; Seattle, Washington; and Richmond, California. , Inc. for marketing and resale resale n. selling again, particularly at retail. In many states a "resale license" or "resale number" is required so that the state can monitor the collection of sales tax on retail sales. RESALE. ; and $11 million from sales of platelet-derived growth factor platelet-derived growth factor n. A substance in platelets that is mitogenic for cells at the site of a wound, causing endothelial proliferation. , or PDGF PDGF platelet-derived growth factor; interacting with cell surface receptors and stimulating hydrolysis of inositol 1,4,5-triphosphate (IP3). , to Ortho-McNeil, a Johnson & Johnson company for formulation formulation /for·mu·la·tion/ (for?mu-la´shun) the act or product of formulating. American Law Institute Formulation and sale of Regranex (becaplermin) Gel. Royalties resulting from Schering AG's European sales of Betaferon, which are recorded as a component of other revenues, increased to $8 million in the fourth quarter of 1998 up $1 million from the fourth quarter of 1997. On an annual basis, biopharmaceutical product sales were $202 million in 1998 as compared with $151 million in 1997. For the year, Proleukin product sales were up 32 percent to $93 million, Betaseron product sales were up 16 percent to $63 million and PDGF product sales doubled to $36 million. The gross profit margin Gross profit margin Gross profit divided by sales, which is equal to each sales dollar left over after paying for the cost of goods sold. gross profit margin A measure calculated by dividing gross profit by net sales. on biopharmaceutical product sales remained essentially constant at 67 percent in the fourth quarter of 1998, down one percentage point from the fourth quarter of 1997. Vaccines In the fourth quarter of 1998, Chiron Vaccines reported product sales of $58 million as compared with $30 million in 1997. The increase of $28 million resulted primarily from the acquisition and consolidation of the remaining 51-percent interest in Chiron Behring, in the second quarter of 1998. Vaccines' gross profit margin decreased from 63 percent in the fourth quarter of 1997 to 44 percent in 1998. This decrease is largely due to lower margins on products manufactured and sold by Chiron Behring. For the year, vaccines product sales increased $95 million to $177 million in 1998 from $82 million in 1997. This increase is largely due to the consolidation of Chiron Behring, which contributed $92 million to 1998 product sales. Blood Testing Blood Testing revenues in the fourth quarter of 1998 increased nominally to $29 million compared to $28 million in 1997. Chiron's earnings in the fourth quarter of 1998, from its joint blood testing and immunodiagnostics business with Ortho-Clinical Diagnostics Ortho Clinical Diagnostics is a Johnson & Johnson company. It was created following Johnson and Johnson's acquiring of Ortho Diagnostic Systems in 1994, which was then merged with Johnson & Johnson Clinical Diagnostics in 1997. , Inc., a Johnson & Johnson company, increased $1 million from the fourth quarter of 1997. For the year, total blood testing revenues were $99 million in 1998, and $120 million in 1997. These revenues include $74 million from the joint business profits in 1998, and $93 million in 1997. The reduction in the joint business profits is partially due to a first-quarter 1998 adjustment for the final annual accounting for 1997 results of operations. Chiron Corporation Chiron Corporation was a multinational biotechnology firm based in Emeryville, California that was acquired by Novartis International AG on April 20 2006. It had offices and facilities in eighteen countries on five continents. , headquartered in Emeryville, California Emeryville is a small city located in Alameda County, California , in the United States. It is located in a corridor between the cities of Berkeley and Oakland, extending to the shore of San Francisco Bay. , is a leading biotechnology company that participates in three global healthcare markets: therapeutics, blood testing, and vaccines. The company is applying a broad and integrated scientific approach to the development of innovative products for preventing and treating cancer, infectious diseases infectious diseases: see communicable diseases. and cardiovascular disease Cardiovascular disease Disease that affects the heart and blood vessels. Mentioned in: Lipoproteins Test cardiovascular disease . This approach is supported by research strengths in recombinant proteins Since human recombinants have replaced the animal version in human therapeutics, the prefix of "rh" for "human recombinant" appears less and less in the literature Human recombinants that replaced animal or harvested from human types Note: Proleukin is a registered trademark of Chiron Corporation. Betaseron and Betaferon are registered trademarks of Schering AG. Regranex is a registered trademark of Johnson & Johnson. -0-
CHIRON CORPORATION
CONSOLIDATED BALANCE SHEET
(In thousands)
December 31, December 31,
1998 1997
--------- --------
Current assets:
Cash and cash equivalents $513,315 $ 98,483
Short-term investments in
marketable debt securities 716,630 84,588
--------- --------
Total cash and
short-term investments 1,229,945 183,071
Accounts receivable 169,098 344,044
Inventories 79,869 165,652
Deferred taxes 52,735 26,414
Assets held for sale 11,500 -
Other current assets 88,492 50,871
--------- --------
Total current assets 1,631,639 770,052
Noncurrent investments in
marketable debt securities 360,069 75,401
Property, plant, equipment
and leasehold improvements, at cost:
Land and buildings 141,452 218,509
Laboratory, production
and office equipment 236,803 422,278
Leasehold improvements 84,607 123,379
Construction in progress 38,328 67,355
--------- --------
501,190 831,521
Less accumulated depreciation
and amortization (197,812) (277,623)
--------- --------
Net property, plant, equipment
and leasehold improvements 303,378 553,898
Purchased technology, net 14,753 45,903
Other intangible assets, net 166,699 79,955
Investments in equity securities
and affiliated companies 27,456 176,851
Other assets 20,261 66,418
----------- -----------
$ 2,524,255 $ 1,768,478
=========== ===========
Current liabilities:
Accounts payable $ 44,999 $ 79,339
Accrued compensation
and related expenses 40,034 59,405
Short-term borrowings 81,499 154,700
Current portion
of unearned revenue 41,893 13,361
Taxes payable 180,088 37,191
Other current liabilities 168,905 127,190
------- -------
Total current liabilities 557,418 471,186
Long-term debt 338,158 397,217
Other noncurrent liabilities 82,877 26,130
------- -------
Total liabilities 978,453 894,533
------- -------
Commitments and contingencies
Stockholders' equity:
Common stock 1,799 1,757
Additional paid-in capital 1,979,615 1,853,591
Accumulated deficit (437,873) (961,986)
Cumulative foreign currency
translation adjustment (2,510) (27,804)
Unrealized gain from investments 4,771 8,996
Notes receivable from stock sales - (609)
------------ ------------
Total stockholders' equity 1,545,802 873,945
------------ ------------
$ 2,524,255 $ 1,768,478
============ ============
CHIRON CORPORATION
CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share amounts)
Three Months Ended Year Ended
Dec. 31, Dec. 31, Dec. 31, Dec. 31,
1998 1997 1998 1997
------- ------- ------- -------
Revenues:
Product sales, net $ 121,160 $ 79,639 $ 399,251 $ 252,729
Equity in earnings
of unconsolidated
joint businesses 22,476 23,521 73,969 106,356
Collaborative
agreement revenues 16,748 22,684 89,858 115,054
Royalty and license
fee revenues 43,938 13,263 125,263 50,368
Other revenues 20,204 21,924 48,332 50,092
------- ------- ------- -------
Total revenues 224,526 161,031 736,673 574,599
------- ------- ------- -------
Expenses:
Cost of sales 57,146 31,643 178,063 113,612
Research and
development 91,873 65,506 294,249 259,370
Selling, general
and administrative 38,379 34,067 140,436 106,947
Write-off of
purchased
in-process
technologies -- -- 1,645 --
Impairment loss on
long-lived assets -- -- -- 31,300
Restructuring and
reorganization
charges 15,415 -- 26,754 --
Other operating
expenses 3,606 1,171 10,631 4,275
------- ------- ------- -------
Total expenses 206,419 132,387 651,778 515,504
------- ------- ------- -------
Income from
operations 18,107 28,644 84,895 59,095
Gain on sale
of assets -- -- 7,751 --
Interest expense (6,035) (7,900) (24,673) (31,610)
Other income, net 5,814 4,891 27,010 12,721
------- ------- ------- -------
Income from
continuing
operations
before income
taxes 17,886 25,635 94,983 40,206
Provision for
income taxes 3,446 1,149 18,985 14,424
------- ------- ------- -------
Income from
continuing
operations 14,440 24,486 75,998 25,782
------- ------- ------- -------
Discontinued
operations:
Income from
discontinued
operations 15,228 13,179 7,121 30,280
Gain on disposal
of discontinued
operations 330,142 15,157 440,994 15,157
--------- --------- --------- ---------
Net income $ 359,810 $ 52,822 $ 524,113 $ 71,219
========= ========= ========= =========
Basic earnings
per share:
Income from
continuing
operations $ 0.08 $ 0.14 $ 0.43 $ 0.15
========= ========= ========= =========
Net income $ 2.01 $ 0.30 $ 2.95 $ 0.41
========= ========= ========= =========
Diluted earnings
per share:
Income from
continuing
operations $ 0.08 $ 0.14 $ 0.42 $ 0.14
========= ========= ========= =========
Net income $ 1.96 $ 0.29 $ 2.90 $ 0.40
========= ========= ========= =========
Shares used in
calculating basic
per share amounts 178,974 175,369 177,587 173,524
Shares used in
calculating
diluted per share
amounts 183,702 179,307 180,733 177,988
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