Chiron Reports 2005 Adjusted Earnings of $1.34 Per Share, GAAP Earnings of $0.97 Per Share; FLUVIRIN(R) Influenza Virus Vaccine Sales Drive 12 Percent Product Sales Growth Compared to 2004.EMERYVILLE, Calif. -- 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. (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) ) today reported financial results for the year ended December December: see month. 31, 2005. OVERVIEW --Chiron's FLUVIRIN(R) influenza virus vaccine influenza virus vaccine n. A vaccine containing influenza virus, usually several strains of the virus, prepared in chick embryos and used to immunize against influenza. returned to the U.S. market in 2005. The company sold approximately ap·prox·i·mate adj. 1. Almost exact or correct: the approximate time of the accident. 2. 13 million doses of the 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. to its customers in 2005. --Total revenues for the year ended December 31, 2005, increased 11 percent compared to the year ended December 31, 2004. --Chiron continues to build on the company's promising pandemic pandemic /pan·dem·ic/ (pan-dem´ik) 1. a widespread epidemic of a disease. 2. widely epidemic. pan·dem·ic adj. Epidemic over a wide geographic area. n. influenza vaccine influenza vaccine Flu vaccine A vaccine recommended for those at high risk for serious complications from influenza: > age 65; Pts with chronic diseases of heart, lung or kidneys, DM, immunosuppression, severe anemia, nursing home and other chronic-care program. The company announced preliminary data from a clinical study of an investigational vaccine candidate, both with and without Chiron's adjuvant adjuvant /ad·ju·vant/ (aj?dbobr-vant) (a-joo´vant) 1. assisting or aiding. 2. a substance that aids another, such as an auxiliary remedy. 3. MF59, against an H9N2 avian influenza avian influenza: see influenza. strain, as well as a contract to supply the U.S. government with candidate pre-pandemic influenza vaccines for a stockpile stock·pile n. A supply stored for future use, usually carefully accrued and maintained. tr.v. stock·piled, stock·pil·ing, stock·piles To accumulate and maintain a supply of for future use. to protect against an H5N1 avian influenza virus strain. In the fourth quarter of 2005, Chiron Chiron (kī`rŏn), in Greek mythology, centaur, son of Kronos. He was a renowned sage, physician, and prophet. Among his pupils were Hercules, Achilles, Jason, and Asclepius. also advanced clinical studies in the United States United States, officially United States of America, republic (2005 est. pop. 295,734,000), 3,539,227 sq mi (9,166,598 sq km), North America. The United States is the world's third largest country in population and the fourth largest country in area. and Europe Europe (y  r`əp), 6th largest continent, c.4,000,000 sq mi (10,360,000 sq km) including adjacent islands (1992 est. pop. 512,000,000). of cell culture-derived vaccine for seasonal
influenza influenza or flu, acute, highly contagious disease caused by a virus; formerly known as the grippe. There are three types of the virus, designated A, B, and C, but only types A and B cause more serious contagious infections. , which could also prove beneficial in a pandemic.--Completion of the Novartis AG Novartis AG Swiss pharmaceutical company. It was formed through the 1996 merger of two Swiss firms: Ciba (see Ciba-Geigy) and Sandoz, a chemical company with interests in pharmaceuticals, nutrition, and agriculture. (Novartis Novartis International AG (NYSE: NVS) is a multinational pharmaceutical company based in Basel, Switzerland that manufactures drugs such as diclofenac (Voltaren), carbamazepine (Tegretol), valsartan (Diovan), imatinib mesylate (Gleevec / Glivec), cyclosporin A (Neoral / ) acquisition of Chiron, as announced on October October: see month. 31, 2005, is expected in the first half of 2006, subject to approval by Chiron's stockholders and other customary closing conditions. Chiron reported adjusted 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 $259 million, or $1.34 per share, for the year ended December 31, 2005, compared to adjusted income from continuing operations of $127 million, or $0.67 per share, for the year ended December 31, 2004. Chiron reported GAAP GAAP See: Generally Accepted Accounting Principles GAAP See generally accepted accounting principles (GAAP). income from continuing operations of $187 million, or $0.97 per share, for the year ended December 31, 2005, compared to GAAP income from continuing operations of $54 million, or $0.28 per share, for the year ended December 31, 2004. "We are pleased with our achievements in the past year, particularly our return to the U.S. influenza vaccine market and advancements in our key programs such as pandemic influenza virus vaccines, cell-culture derived de·rive v. de·rived, de·riv·ing, de·rives v.tr. 1. To obtain or receive from a source. 2. influenza vaccines and tifacogin. Thanks to the dedication and hard work of Chiron employees, we finished the year a much stronger company," said Howard Howard, English noble family. Landowners in Norfolk from the 13th cent., the Howards obtained the duchy of Norfolk through the marriage of Sir Robert Howard to Margaret Mowbray, daughter of Thomas Mowbray, 1st duke of Norfolk. Pien, chief executive officer of Chiron. The following factors had significant impact on the annual comparison of financial results: return of FLUVIRIN vaccine to the U.S. market in the fourth quarter of 2005; lost contribution from sales of BEGRIVAC(R) influenza virus vaccine in 2005; and a decrease in the effective tax rate to 11 percent on an adjusted and GAAP basis for the year ended December 31, 2005. Foreign exchange rates resulted in an approximate ap·prox·i·mate v. To bring together, as cut edges of tissue. adj. 1. Relating to the contact surfaces, either proximal or distal, of two adjacent teeth; proximate. 2. Close together. $0.01 decrease in adjusted earnings per share and an approximate $0.01 decrease in GAAP earnings per share for the year ended December 31, 2005. Chiron uses adjusted financial information to gain an understanding of the company's operating performance on a comparative basis. Adjusted amounts exclude special items relating to relating to relate prep → concernant relating to relate prep → bezüglich +gen, mit Bezug auf +acc certain acquisitions and impairment Impairment 1. A reduction in a company's stated capital. 2. The total capital that is less than the par value of the company's capital stock. Notes: 1. This is usually reduced because of poorly estimated losses or gains. 2. losses on acquired intangible assets Intangible Asset An asset that is not physical in nature. Notes: Examples are things like copyrights, patents, intellectual property, and goodwill. These are the opposite of tangible assets. , which may not be indicative indicative: see mood. of the company's trends or potential future performance. Please refer to the tables at the end of this press release for more detail on these items and a reconciliation of the adjusted financial information to GAAP financial information; this information is also located at www.chiron.com in the Investors section under Financial Reports. All references to per-share amounts are per diluted di·lute tr.v. di·lut·ed, di·lut·ing, di·lutes 1. To make thinner or less concentrated by adding a liquid such as water. 2. To lessen the force, strength, purity, or brilliance of, especially by admixture. share. SELECTED FINANCIAL RESULTS Selected financial results, on an adjusted and GAAP basis, except where noted ($ millions) Year 2005 Year 2004 Change ---------------------------------------------------------------------- Net product sales $1,423 $1,268 12% Total revenues 1,921 1,723 11% Cost of sales 726 676 7% Gross profit margin 49% 47% Research and development 434 431 1% Selling, general and administrative 502 460 9% Income from continuing operations (adjusted) 259 127 104% Net income (adjusted) 259 152 71% Income from continuing operations (GAAP) 187 54 245% Net income (GAAP) 187 79 136% ---------------------------------------------------------------------- Net product sales for the year ended December 31, 2005, increased 12 percent, or $155 million, compared to the year ended December 31, 2004, primarily due to $96 million in sales of FLUVIRIN vaccine in 2005, compared to $2 million in sales of FLUVIRIN vaccine in 2004, which related to late sales from the 2003-2004 influenza season. In addition, net product sales increased due to higher sales of travel vaccines, PROCLEIX(R) NAT (Network Address Translation) An IETF standard that allows an organization to present itself to the Internet with far fewer IP addresses than there are nodes on its internal network. products, TOBI TOBI® Infectious disease An aerosolized tobramycin used to treat chronic lung infection in Pts with cystic fibrosis infected with Pseudomonas aeruginosa and other bacteria. See Cystic fibrosis. (R) tobramycin tobramycin /to·bra·my·cin/ (to?brah-mi´sin) an aminoglycoside antibiotic derived from a complex produced by Streptomyces tenebrarius, inhalation inhalation /in·ha·la·tion/ (in?hah-la´shun) 1. the drawing of air or other substances into the lungs.inhala´tional 2. the drawing of an aerosolized drug into the lungs with the breath. 3. solution, meningococcal vaccines, and BETASERON Betaseron® Recombinant IFN-β1b, see there (R) interferon beta-1b interferon beta-1b Betaferon (UK), Betaseron Pharmacologic class: Biological response modifier Therapeutic class: Antiviral, immunoregulator Pregnancy risk category C Action. These increases were partially offset by no sales of BEGRIVAC vaccine in 2005, compared to $53 million of sales in 2004.Total revenues increased 11 percent, or $198 million, primarily due to the increase in net product sales, and increases in both royalty Compensation for the use of property, usually copyrighted works, patented inventions, or natural resources, expressed as a percentage of receipts from using the property or as a payment for each unit produced. and license fee revenues and revenues from the joint business contractual arrangement 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. . Royalty and license fee revenues increased, primarily due to various settlements in 2005, including a favorable fa·vor·a·ble adj. 1. Advantageous; helpful: favorable winds. 2. Encouraging; propitious: a favorable diagnosis. 3. settlement with Centocor Centocor is a biotechnology company that was founded in Philadelphia in 1979 with an initial goal of developing new diagnostic assays using monoclonal antibody technology. relating to certain patents, which resulted in the recognition of upfront payments and royalties Not to be confused with Royal family. Royalties (sometimes, running royalties) are usage-based payments made by one party (the "licensee") to another (the "licensor") for ongoing use of an asset, most typically an intellectual property (IP) right. , and a settlement with the Scottish National Blood Transfusion Service The Scottish National Blood Transfusion Service (SNBTS) is the national blood, blood product and tissue provider to Scotland. It is a special health board of the National Health Service in Scotland. regarding certain Chiron hepatitis C Hepatitis C Definition Hepatitis C is a form of liver inflammation that causes primarily a long-lasting (chronic) disease. Acute (newly developed) hepatitis C is rarely observed as the early disease is generally quite mild. (HCV HCV abbr. hepatitis C virus HCV 1 Hepatitis C virus, see there 2. Human coronavirus. See Coronavirus. ) and HIV HIV (Human Immunodeficiency Virus), either of two closely related retroviruses that invade T-helper lymphocytes and are responsible for AIDS. There are two types of HIV: HIV-1 and HIV-2. HIV-1 is responsible for the vast majority of AIDS in the United States. patents. BETAFERON(R) interferon beta-1b royalties increased primarily due to higher demand and price increases. Royalties related to NAT blood screening received from F. Hoffmann-La Roche n. 1. Rock. Ltd. (Roche) increased due to higher applicable royalty rates as certain countries entered the EU and an increase in reported donations. Revenues from the joint business contractual arrangement with Ortho-Clinical Diagnostics increased primarily due to higher profitability realized by the joint business arrangement. 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. increased to 49 percent primarily due to the return of FLUVIRIN vaccine to the U.S. market in 2005. As previously reported, in the year ended December 31, 2004, the entire FLUVIRIN vaccine product inventory was written off, resulting in a $91 million charge to cost of sales. The increase in gross profit margin was partially offset by FLUVIRIN remediation costs in 2005, no sales of BEGRIVAC influenza virus vaccine in 2005 due to a product sterility sterility: see infertility. issue, and inventory write-offs in 2005. Research and development expenses increased primarily due to the cost of development efforts in Chiron's oncology oncology /on·col·o·gy/ (ong-kol´ah-je) the sum of knowledge regarding tumors; the study of tumors. on·col·o·gy n. and meningococcal vaccine franchises, tifacogin, and cell culture-derived influenza vaccine. This increase was partially offset by decreases from a variety of research and development programs that were discontinued dis·con·tin·ue v. dis·con·tin·ued, dis·con·tin·u·ing, dis·con·tin·ues v.tr. 1. To stop doing or providing (something); end or abandon: prior to 2005. Selling, general and administrative expenses increased due to a broad range of activities, including Novartis transaction-related costs, the pre-launch program for CUBICIN(R) daptomycin Daptomycin is a novel lipopeptide antibiotic used in the treatment of certain infections caused by Gram-positive organisms. It is a naturally-occurring compound found in the soil saprotroph Streptomyces roseosporus. in Europe, higher employee-related costs, compliance with the Sarbanes-Oxley Act See SOX. and higher FLUVIRIN vaccine-related legal costs. The effective tax rate was 11 percent on an adjusted and GAAP basis for the year ended December 31, 2005, compared to 25 percent on an adjusted basis and 28 percent on a GAAP basis for the year ended December 31, 2004. The decrease was primarily due to lower profits in certain ex-U.S. locations and the transfer of certain product rights in 2004. Chiron does not consider this tax rate to be indicative of the company's effective tax rate going forward. BLOOD TESTING Total Blood Testing revenues were $556 million for the year ended December 31, 2005, an increase of 12 percent compared to the year ended December 31, 2004.
Selected Blood Testing Revenues
($ millions) Year 2005 Year 2004 Change
----------------------------------------------------------------------
Ortho-Clinical Diagnostics $31 $28 12%
PROCLEIX(R) NAT products 273 250 9%
-------------------------------
Blood Testing net product sales 305 278 10%
Revenues from joint business
contractual arrangement 137 118 16%
Royalty and license fee revenues 106 89 19%
Total Blood Testing revenues (1) $556 $494 12%
----------------------------------------------------------------------
(1) Total Blood Testing revenues consist of net product sales from
Chiron's joint business contractual arrangement with Ortho-Clinical
Diagnostics and from Chiron's PROCLEIX NAT products, revenues from
Chiron's joint business contractual arrangement with Ortho-Clinical
Diagnostics, collaborative agreement revenues, royalty and license fee
revenues, and other revenues. Totals may not sum due to rounding and
the inclusion of only selected financial information.
--PROCLEIX NAT products: The increase in sales was primarily due to continued geographic geographic /geo·graph·ic/ (je?o-graf´ik) in pathology, of or referring to a pattern that is well demarcated, resembling outlines on a map. geographic pertaining to geography. expansion and the introduction of the PROCLEIX(R) ULTRIO(R) Assay ASSAY. A chemical examination of metals, by which the quantity of valuable or precious metal contained in any mineral or metallic mixture is ascertained. 2. By the acts of Congress of March 3, 1823, 3 Story's L. U. S. 1924; of June 25, 1834, 4 Shars. cont. Story's L. U. S. and PROCLEIX(R) TIGRIS(R) System into a number of markets outside of the United States. --Joint business contractual arrangement with Ortho-Clinical Diagnostics: The increase in revenues was primarily due to increased profitability realized by the joint business. --Royalty and license fee revenues related to NAT blood screening: The increase was primarily due to increased royalties from Roche due to an increase in applicable royalty rates as certain countries entered the EU and an increase in reported donations. In addition, royalties increased due to various licensing agreements and settlements with entities such as the Scottish National Blood Transfusion Service, the German Red Cross, and LabCorp Laboratory Corporation of America Holdings (NYSE: LH), more commonly known as LabCorp, is an S&P 500 company in Burlington, North Carolina, and one of the largest clinical laboratory networks in the world, with a United States network of 36 primary laboratories. . Royalty and license fee revenues also increased due to payments recognized in 2005 relating to the Blood Testing share of a settlement entered into in 2004 with Roche regarding Chiron's HIV patent in the United States for use in clinical 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 and blood screening (the 2004 Roche settlement). This was partially offset by recognition in 2004 of a lump-sum payment and deferred amounts related to the 2004 Roche settlement. The gross profit margin for Blood Testing products was 41 percent for the year ended December 31, 2005, compared to 42 percent for the year ended December 31, 2004. The decrease was primarily due to the cost of additional PROCLEIX TIGRIS System support and service. VACCINES Vaccines net product sales were $582 million for the year ended December 31, 2005, an increase of 22 percent compared to the year ended December 31, 2004.
Selected Vaccines Revenues
($ millions) Year 2005 Year 2004 Change
----------------------------------------------------------------------
Influenza vaccines $225 $153 47%
Meningococcal vaccines 43 28 56%
Travel vaccines 148 97 52%
Pediatric and other vaccines 166 201 (17%)
-------------------------------
Vaccines net product sales 582 479 22%
Total Vaccines revenues (1) $604 $510 18%
----------------------------------------------------------------------
(1) Total Vaccines revenues consist of net product sales,
collaborative agreement revenues, royalty and license fee revenues,
and other revenues. Totals may not sum due to rounding and the
inclusion of only selected financial information.
--Influenza vaccines: The increase in influenza vaccines sales was due to the return of FLUVIRIN vaccine to the U.S. market. Sales of FLUVIRIN vaccine were $96 million in 2005, compared to $2 million in 2004, which related to sales from the 2003-2004 influenza season. Sales of other influenza vaccines were $129 million in 2005, a decrease of 15 percent compared to 2004, primarily due to no sales of BEGRIVAC vaccine in 2005, compared to $53 million of sales in 2004. This decrease was partially offset by increased sales of other influenza vaccines. --Meningococcal vaccines: The increase in meningococcal vaccines was primarily due to increased sales of MENZB MeNZB is a vaccine against a specific strain of group B meningococcus, currently being used to control an epidemic of meningococcal disease in New Zealand. Most people are able to carry the meningococcus bacteria safely with no ill effects. (TM) meningococcal B vaccine to the Ministry of Health in New Zealand New Zealand (zē`lənd), island country (2005 est. pop. 4,035,000), 104,454 sq mi (270,534 sq km), in the S Pacific Ocean, over 1,000 mi (1,600 km) SE of Australia. The capital is Wellington; the largest city and leading port is Auckland. and an increase in tender sales of MENJUGATE(R) meningococcal C vaccine. --Travel vaccines: The increase in travel vaccines sales was primarily due to an increase in sales of ENCEPUR(R) tick-borne tick-borne adj. Carried or transmitted by ticks, as certain diseases. encephalitis encephalitis (ĕnsĕf'əlī`təs), general term used to describe a diffuse inflammation of the brain and spinal cord, usually of viral origin, often transmitted by mosquitoes, in contrast to a bacterial infection of the meninges vaccine and RABAVERT(R)/RABIPUR(R) rabies vaccines rabies vaccine n. 1. A vaccine introduced by Pasteur as a method of treatment for the bite of a rabid animal, consisting of 23 daily injections of virus that are increased serially from noninfective doses to doses containing fully infective . The increase in ENCEPUR vaccine sales was due to overall market growth and marketing initiatives that increased the company's market share. In addition, ENCEPUR vaccine sales in 2004 were lower due to sales that took place in the fourth quarter of 2003. Sales of RABAVERT/RABIPUR rabies vaccines increased in 2005, primarily due to an increase in demand driven by a product recall from another supplier, a price increase, and an increase in tender sales in Europe and Asia. --Pediatric and other vaccines: The decrease in pediatric pediatric /pe·di·at·ric/ (pe?de-at´rik) pertaining to the health of children. pe·di·at·ric adj. Of or relating to pediatrics. and other vaccines sales was primarily due to a decline in polio vaccine Two polio vaccines are used throughout the world to combat polio. The first was developed by Jonas Salk, first tested in 1952, and announced to the world by Salk on April 12, 1955. It consists of an injected dose of inactivated (dead) poliovirus. sales and mumps, measles measles or rubeola (r  bē`ələ), highly contagious disease of young children, caused by a filterable virus and spread by droplet spray from the nose, mouth, and rubella vaccine rubella vaccine See MMR vaccine. sales due to product unavailability un·a·vail·a·ble adj. Not available, accessible, or at hand. un  a·vail as a result of manufacturing upgrades. In addition, certain other
vaccine sales declined due to remediation efforts at Chiron's
Liverpool Liverpool, city (1991 pop. 448,300), NW England, on the Mersey River near its mouth. It is one of Britain's largest cities. A large center for food processing (especially flour and sugar), Liverpool has a variety of industries, including the manufacture of electrical manufacturing facility, which resulted in an interruption INTERRUPTION. The effect of some act or circumstance which stops the course of a prescription or act of limitation's.2. Interruption of the use of a thing is natural or civil. of production. These decreases were partially offset by an increase in sales of diphtheria diphtheria (dĭfthēr`ēə), acute contagious disease caused by Corynebacterium diphtheriae (Klebs-Loffler bacillus) bacteria that have been infected by a bacteriophage. It begins as a soreness of the throat with fever. , pertussis pertussis: see whooping cough. and tetanus vaccine tetanus vaccine n. Abbr. T Tetanus toxoids vaccine. tetanus vaccine, n one of several vaccinations used to immunize against tetanus (lockjaw). concentrate. The gross profit margin for Vaccines products was 32 percent for the year ended December 31, 2005, compared to 23 percent for the year ended December 31, 2004. The increase was primarily due to the return of FLUVIRIN vaccine to the U.S. market in 2005. As previously reported, in the year ended December 31, 2004, the entire FLUVIRIN vaccine product inventory was written off, resulting in a $91 million charge to cost of sales. The increase in gross profit margin was partially offset by FLUVIRIN remediation costs, no sales of BEGRIVAC vaccine in 2005, inventory write-offs, and decreased sales of pediatric vaccines. BIOPHARMACEUTICALS BioPharmaceuticals net product sales were $536 million for the year ended December 31, 2005, an increase of 5 percent compared to the year ended December 31, 2004. Selected BioPharmaceuticals Revenues ($ millions) Year 2005 Year 2004 Change ---------------------------------------------------------------------- TOBI(R) tobramycin inhalation solution $233 $213 9% PROLEUKIN(R) (aldesleukin) for injection 124 129 (5%) BETASERON(R) interferon beta-1b 142 131 9% BioPharmaceuticals net product sales (1) 536 512 5% BETAFERON(R) interferon beta-1b royalties 60 52 16% Total BioPharmaceuticals revenues (2) $629 $596 6% ---------------------------------------------------------------------- (1) Net product sales include sales from TOBI, PROLEUKIN, BETASERON and other products. (2) Total BioPharmaceuticals revenues consist of net product sales, collaborative agreement revenues, royalty and license fee revenues, and other revenues. Totals may not sum due to the inclusion of only selected financial information. --TOBI: The increase in TOBI product sales was primarily due to price increases and increased patient demand in both the United States and Europe, partially offset by wholesaler ordering patterns. --PROLEUKIN: The decrease in PROLEUKIN Proleukin® Aldesleukin, IL-2 Immunology An agent used for metastatic kidney CA, melanoma, NHL, AML, TB, HIV infection, KS. See IL-2. product sales was primarily due to decreased patient demand in the United States and Europe, partially offset by price increases. --BETASERON: The increase in BETASERON product sales to Berlex Inc. (and its parent company Schering For the American pharmaceutical company created by seizure of assets from Schering AG during World War II, see . Schering AG was a research-centered pharmaceutical company founded in 1851 that merged with Bayer in December 2006. AG) 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. was primarily due to price increases and a shift from third-party to in-house In-house In the context of general equities, keeping an activity within the firm. For example, rather than go to the marketplace and sell a security for a client to anyone, an attempt is made to find a buyer to complete the transaction with the firm. production, partially offset by a reduction in shipments to Berlex and inventory ordering patterns. --BETAFERON royalties: The increase in BETAFERON royalties was due to an increase in demand and price, partially offset by a shift from third-party to in-house production. The gross profit margin for BioPharmaceuticals products was 72 percent for the year ended December 31, 2005, consistent with the year ended December 31, 2004. ROYALTY AND LICENSE FEE REVENUES Total royalty and license fee revenues include royalties and license fees attributed to the Blood Testing, Vaccines and BioPharmaceuticals businesses. These revenues also include other royalty and license fee revenues, which consist primarily of royalties from Roche and Bayer HealthCare AG for clinical diagnostic products.
Selected Royalty and License Fee Revenues
($ millions) Year 2005 Year 2004 Change
----------------------------------------------------------------------
Blood Testing $106 $89 19%
Vaccines 5 5 (1%)
BioPharmaceuticals 73 72 2%
Other 133 124 7%
-------------------------------
Total royalty and license fee
revenues (1) $317 $290 9%
----------------------------------------------------------------------
(1) Totals may not sum due to rounding.
--Total royalty and license fee revenues: In addition to the variances in Blood Testing, Vaccines and BioPharmaceuticals royalty and license fee revenues for 2005 compared to 2004 as explained above, other royalty and license fee revenues increased. The increase was primarily due to a 2005 settlement with Centocor relating to certain patents, which resulted in the recognition of upfront payments and royalties, and increased royalties from Roche due to an increase in reported sales. The increase was partially offset by recognition in 2004 of a lump-sum payment and deferred amounts related to the 2004 Roche Settlement. FINANCIAL GUIDANCE The company will not provide 2006 financial guidance at this time. RECENT NOVARTIS-RELATED EVENTS --On October 31, 2005, Chiron announced that the company had entered into a definitive merger agreement with Novartis under which Novartis would acquire all of the shares of Chiron that it does not currently own for $45.00 per Chiron share, or a total of approximately $5.1 billion, in cash. The non-Novartis board of directors of Chiron determined that the merger is fair and in the best interests of Chiron's stockholders and unanimously recommend that the stockholders of Chiron adopt the merger agreement. The company's proxy statement Proxy Statement A document containing the information that a company is required by the SEC to provide to shareholders so they can make informed decisions about matters that will be brought up at an annual stockholder meeting. , which contains detailed information about the merger, including the background and reasons for the non-Novartis directors' recommendation, is expected to be mailed to Chiron stockholders in the near future, subject to completion of review by the U.S. Securities and Exchange Commission. --On December 6, 2005, Chiron announced that the U.S. Federal Trade Commission approved early termination The point where a line, channel or circuit ends. See SCSI termination and hybrid. of the antitrust Antitrust The antitrust laws apply to virtually all industries and to every level of business, including manufacturing, transportation, distribution, and marketing. They prohibit a variety of practices that restrain trade. waiting period under the Hart-Scott-Rodino Act Hart-Scott-Rodino Act Often used in risk arbitrage. Antitrust act administered by U.S. Department of Justice and the FTC that requires an investor to file a form with the government before he acquires an economic interest in the lesser amount of $15 million or 15% of the for the proposed acquisition of the company by Novartis. --Under provisions of the 1994 Subscription Agreement with Novartis, as amended a·mend v. a·mend·ed, a·mend·ing, a·mends v.tr. 1. To change for the better; improve: amended the earlier proposal so as to make it more comprehensive. 2. , on October 30, 2005, Chiron exercised its right to have Novartis purchase newly issued shares of Chiron common stock. On December 8, 2005, Chiron announced that the company sold 6,896,552 newly issued shares of its common stock at a price of $43.50 per share to a subsidiary of Novartis, for $300 million in the aggregate, following receipt of necessary regulatory reg·u·late tr.v. reg·u·lat·ed, reg·u·lat·ing, reg·u·lates 1. To control or direct according to rule, principle, or law. 2. approvals. --On January January: see month. 23, 2006, the Committee on Foreign Investments in the United States (CFIUS CFIUS Committee on Foreign Investment in the United States ) advised Chiron that it had concluded its review of the proposed acquisition of Chiron by Novartis and determined that there are no issues of national security sufficient to warrant an investigation under the Defense Production Act. RECENT PRODUCT AND PIPELINE-RELATED EVENTS Blood Testing --The U.S. Food and Drug Administration (FDA FDA abbr. Food and Drug Administration FDA, n.pr See Food and Drug Administration. FDA, n.pr the abbreviation for the Food and Drug Administration. ) approved the PROCLEIX(R) West Nile Virus West Nile virus, microorganism and the infection resulting from it, which typically produces no symptoms or a flulike condition. The virus is a flavivirus and is related to a number of viruses that cause encephalitis. Assay for use on the PROCLEIX(R) System to screen whole blood donations “Give blood” redirects here. For other uses, see Give blood (disambiguation). Blood donation is a process by which a blood donor voluntarily has blood drawn for storage in a blood bank, generally for subsequent use in a blood transfusion. . The assay, which was developed in collaboration Working together on a project. See collaborative software. with Gen-Probe Incorporated, has been used to screen more than 29 million units of blood on an investigational-use-only basis since June June: see month. 2003 and has intercepted more than 1,500 West Nile West Nile may refer to:
Vaccines --Chiron initiated a Phase 1/Phase 2 study of an investigational cell culture-derived vaccine for seasonal influenza in the United States. The company also completed enrollment of a second Phase 3 study of investigational cell culture-derived influenza vaccine in Europe. A first pivotal Phase 3 study of cell culture-derived influenza vaccine in Europe, conducted in 2004, met the safety and immunogenicity immunogenicity /im·mu·no·ge·nic·i·ty/ (-je-nis´it-e) the property enabling a substance to provoke an immune response, or the degree to which a substance possesses this property. endpoints of the study. --Chiron won a contract to supply the U.S. government with a candidate pre-pandemic influenza vaccine for a stockpile to protect against an H5N1 avian influenza virus strain. Under the agreement with the Department of Health and Human Services Noun 1. Department of Health and Human Services - the United States federal department that administers all federal programs dealing with health and welfare; created in 1979 Health and Human Services, HHS (HHS HHS Department of Health and Human Services. ), Chiron will provide a bulk stockpile of the candidate H5N1 influenza vaccine. The amount payable to Chiron under the agreement depends upon the amount of bulk vaccine actually delivered, which is subject to manufacturing factors such as yield, throughput The speed with which a computer processes data. It is a combination of internal processing speed, peripheral speeds (I/O) and the efficiency of the operating system and other system software all working together. 1. and total manufacturing time. --Chiron announced preliminary promising data from a clinical study of its investigational vaccine against an H9N2 avian influenza strain. The trial was supported by the National Institute of Allergy allergy, hypersensitive reaction of the body tissues of certain individuals to certain substances that, in similar amounts and circumstances, are innocuous to other persons. Allergens, or allergy-causing substances, can be airborne substances (e.g. and Infectious Diseases infectious diseases: see communicable diseases. (NIAID NIAID National Institute of Allergy and Infectious Diseases. ), part of the U.S. National Institutes of Health (NIH "Not invented here." See digispeak. NIH - The United States National Institutes of Health. ). The study explored the safety and immunogenicity of four different doses of the investigational vaccine with and without Chiron's adjuvant MF59. All vaccine formulations containing the adjuvant MF59 proved highly immunogenic im·mu·no·gen·ic adj. Producing an immune response. immunogenic producing immunity; evoking an immune response. , inducing antibody antibody, protein produced by the immune system (see immunity) in response to the presence in the body of antigens: foreign proteins or polysaccharides such as bacteria, bacterial toxins, viruses, or other cells or proteins. levels believed to confer protection against the influenza strain, including at the lowest antigen antigen: see immunity. antigen Foreign substance in the body that induces an immune response. The antigen stimulates lymphocytes to produce antibodies or to attack the antigen directly (see antibody;immunity). dose tested, 3.75 micrograms. BioPharmaceuticals --The European Commission European Commission, branch of the governing body of the European Union (EU) invested with executive and some legislative powers. Located in Brussels, Belgium, it was founded in 1967 when the three treaty organizations comprising what was then the European Community granted marketing approval for CUBICIN(R) (daptomycin) in the 25 member states of the European Union European Union (EU), name given since the ratification (Nov., 1993) of the Treaty of European Union, or Maastricht Treaty, to the European Community , Iceland Iceland, Icel. Ísland, officially Republic of Iceland, republic (2005 est. pop. 297,000), 39,698 sq mi (102,819 sq km), the westernmost state of Europe, occupying an island in the Atlantic Ocean just S of the Arctic Circle, c. , Liechtenstein Liechtenstein (lĭkh`tənshtīn'), officially Principality of Liechtenstein, principality (2005 est. pop. 33,700), 62 sq mi (160 sq km), W central Europe. and Norway Norway, Nor. Norge, officially Kingdom of Norway, constitutional monarchy (2005 est. pop. 4,593,000), 125,181 sq mi (324,219 sq km), N Europe, occupying the western part of the Scandinavian peninsula. . Under the approval, CUBICIN is a first-in-class intravenous intravenous /in·tra·ve·nous/ (-ve´nus) within a vein or veins.intrave´nously in·tra·ve·nous adj. Abbr. IV Within or administered into a vein. antibiotic antibiotic, any of a variety of substances, usually obtained from microorganisms, that inhibit the growth of or destroy certain other microorganisms. Types of Antibiotics indicated for the treatment of complicated skin and soft-tissue infections (cSSTI) caused by Gram-positive gram-positive /gram-pos·i·tive/ (-poz´it-iv) retaining the stain or resisting decolorization by alcohol in Gram's method of staining, a primary characteristic of bacteria whose cell wall is composed of peptidoglycan and teichoic acid. bacteria bacteria [pl. of bacterium], microscopic unicellular prokaryotic organisms characterized by the lack of a membrane-bound nucleus and membrane-bound organelles. Once considered a part of the plant kingdom, bacteria were eventually placed in a separate kingdom, Monera. . --An independent Data Monitoring Committee (DMC DMC Devil May Cry (video game) DMC Detroit Medical Center DMC Darryl McDaniels (rapper) DMC Destination Management Company DMC Del Mar College (Corpus Christi, TX) ) recommended the continuation continuation - continuation passing style of Chiron's CAPTIVATE study, an ongoing Phase 3 clinical trial phase 3 clinical trial Phase 3 study. See Phase study. of tifacogin for the treatment of patients with severe community-acquired pneumonia community-acquired pneumonia Pneumonia caused by an infection currently present in the community; CAP is the most common cause of infectious death–US, and number 6 killer overall; of the 57% of CAPs in which a pathogen is identified, S pneumoniae . The DMC made its recommendation following a planned interim analysis of clinical data from the study. The study data remains blinded to Chiron, and a detailed analysis will not be available until the trial has been completed. The committee identified no safety concerns, confirming safety assessments conducted when patient enrollment reached 300 and 600. EARNINGS CONFERENCE CALL Chiron will hold a conference call and webcast on Tuesday Tuesday: see week. , January 31, 2006, at 4:45 p.m. EST P.M. also p.m. or p.m. abbr. post meridiem Usage Note: By definition, 12 a.m. to review its 2005 results of operations and business highlights. In addition, the company may address forward-looking for·ward-look·ing adj. Concerned with or making provision for the future: forward-looking educators; a forward-looking corporate plan. Adj. 1. questions concerning business and financial matters and trends affecting the company. To access either the live call or the one-year adj. 1. completing its life cycle within a year. Adj. 1. one-year - completing its life cycle within a year; "a border of annual flowering plants" annual phytology, botany - the branch of biology that studies plants webcast archive (1) A file that contains one or more compressed files. Most archive formats are also capable of storing folders in order to reconstruct the file/folder relationship when decompressed. See archive formats. , please log on to www.chiron.com/webcast. Please connect to the website at least 15 minutes prior to the conference call to ensure adequate time to download To receive a file transmitted over a network. In any communications session, "download" means receive, and "upload" means send. The download/upload often implies a big/little scenario, in which data is being downloaded from the "big" server into the "little" user's computer. any necessary software. Alternatively, please call (800) 819-7026 from the United States or Canada Canada (kăn`ədə), independent nation (2001 pop. 30,007,094), 3,851,787 sq mi (9,976,128 sq km), N North America. Canada occupies all of North America N of the United States (and E of Alaska) except for Greenland and the French islands of or (706) 643-7768 from other locations. Replay by phone is available approximately two hours after the completion of the call through 11:55 p.m. EST, Tuesday, February February: see month. 7, 2006. To access the replay, please call (800) 642-1687 from the United States or Canada or (706) 645-9291 from other locations. The conference ID number is 4436756. ABOUT CHIRON Chiron delivers innovative and valuable products to protect human health by advancing pioneering science across the landscape of biotechnology biotechnology, the use of biological processes, as through the exploitation and manipulation of living organisms or biological systems, in the development or manufacture of a product or in the technological solution to a problem. . The company works to deliver on the limitless promise of science and make a positive difference in people's lives. For more information about Chiron, please visit www.chiron.com. FINANCIAL INFORMATION 2005 financial information in PDF (Portable Document Format) The de facto standard for document publishing from Adobe. On the Web, there are countless brochures, data sheets, white papers and technical manuals in the PDF format. format http://www.chiron.com/investors/8701/chiron_financial.pdf 2005 financial information online http://www.chiron.com/investors/finreports/index.html This news release contains forward-looking statements forward-looking statement A projected financial statement based on management expectations. A forward-looking statement involves risks with regard to the accuracy of assumptions underlying the projections. , including statements regarding product development initiatives, new product indications, new product marketing, and clinical trials, that involve risks and uncertainties and are subject to change. A discussion of the company's operations and financial condition, including factors that may affect its business and future prospects that could cause actual results and developments to differ materially from those expressed or implied Inferred from circumstances; known indirectly. In its legal application, the term implied is used in contrast with express, where the intention regarding the subject matter is explicitly and directly indicated. by these forward-looking statements, is contained in documents the company has filed with the SEC, including the Form 10-K Form 10-K A report required by the SEC from exchange-listed companies that provides for annual disclosure of certain financial information. Form 10-K See 10-K. for the year ended December 31, 2004, and the Form 10-Q Form 10-Q See 10-Q. for the quarter ended September September: see month. 30, 2005, 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, among others, additional adverse developments resulting from the previous suspension suspension, in vehicles suspension, in automobiles, system of springs used to suspend the frame, body, engine, and power train above the wheels. Its principal purpose is to lessen the jarring of the automobile that is caused by irregularities in the roads of Chiron's UK license to manufacture FLUVIRIN(R) influenza virus vaccine, the announcement of such suspension and the litigation An action brought in court to enforce a particular right. The act or process of bringing a lawsuit in and of itself; a judicial contest; any dispute. When a person begins a civil lawsuit, the person enters into a process called litigation. and investigations relating to those matters, the outcome of clinical trials, regulatory review and approvals, manufacturing capabilities, competition, intellectual property protections and defenses, litigation, stock-price and interest-rate volatility Volatility 1. A statistical measure of the tendency of a market or security to rise or fall sharply within a period of time. 2. A variable in option pricing formulas that denotes the extent to which the return of the underlying asset will fluctuate between now and the , and marketing effectiveness Marketing Effectiveness is the function of improving how marketers go to market with the goal of optimizing their marketing spend to achieve even better results for both the short-term and long-term. Also related to Marketing ROI and Return on Marketing Investment (ROMI). . There can be no assurance that Chiron will successfully develop and receive approval to market new products or achieve market acceptance for such new products. No assurance can be given that the transaction contemplated by the merger agreement with Novartis AG will be consummated con·sum·mate tr.v. con·sum·mat·ed, con·sum·mat·ing, con·sum·mates 1. a. To bring to completion or fruition; conclude: consummate a business transaction. b. . In addition, the company may engage in business opportunities, the successful completion of which is subject to certain risks, including approval by Novartis AG, stockholder and regulatory approvals, and the integration of operations. Chiron does not undertake an obligation to update the forward-looking information the company is giving today.2005 financial results included in this press release are preliminary and quarterly information is unaudited. NOTE: BEGRIVAC, ENCEPUR, FLUVIRIN, MENJUGATE, MENZB, PROCLEIX, PROLEUKIN, RABAVERT, RABIPUR, TOBI and ULTRIO are trademarks of Chiron. BETASERON and BETAFERON are trademarks of Schering AG. TIGRIS is a trademark of Gen-Probe Incorporated. CUBICIN is a trademark of Cubist Pharmaceuticals.
CHIRON CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
(In thousands, except per share data)
Three Months Ended December 31,
--------------------------------------
2005
--------------------------------------
Adjusted (1) Adjustments Actual
------------ ------------ ------------
Revenues:
Product sales, net $ 475,267 $ - $ 475,267
Revenues from joint business
arrangement 33,547 - 33,547
Collaborative agreement
revenues 1,955 - 1,955
Royalty and license fee
revenues 89,697 - 89,697
Other revenues 15,173 - 15,173
------------ ------------ ------------
Total revenues 615,639 - 615,639
------------ ------------ ------------
Operating expenses:
Cost of sales 215,116 - 215,116
Research and development 109,271 - 109,271
Selling, general and
administrative 125,777 - 125,777
Amortization expense - (11,969) 11,969
Impairment loss on acquired
intangible assets - (1,136) 1,136
Other operating expenses 7,692 - 7,692
------------ ------------ ------------
Total operating expenses 457,856 (13,105) 470,961
------------ ------------ ------------
Income (loss) from operations 157,783 13,105 144,678
Loss on disposal of assets (319) - (319)
Interest expense (7,683) - (7,683)
Interest and other income, net 19,644 - 19,644
Minority interest (498) - (498)
------------ ------------ ------------
Income (loss) from continuing
operations before income taxes 168,927 13,105 155,822
Provision for (benefit of)
income taxes 5,085 (6,552) 11,637
------------ ------------ ------------
Income (loss) from continuing
operations 163,842 19,657 144,185
============ ============ ============
Net income (loss) $ 163,842 $ 19,657 $ 144,185
============ ============ ============
Basic earnings (loss) per
share:
Income (loss) from continuing
operations $ 0.86 $ 0.76
============ ============
Net income (loss) $ 0.86 $ 0.76
============ ============
Diluted earnings (loss) per
share:
Income (loss) from continuing
operations $ 0.81 $ 0.71
============ ============
Net income (loss) $ 0.81 $ 0.71
============ ============
Shares used in calculating
basic earnings (loss) per
share 190,679 190,679
============ ============
Shares used in calculating
diluted earnings (loss) per
share 205,008 205,008
============ ============
Three Months Ended December 31,
--------------------------------------
2004
--------------------------------------
Adjusted (2) Adjustments Actual
------------ ------------ ------------
Revenues:
Product sales, net $ 330,467 $ - $ 330,467
Revenues from joint business
arrangement 25,336 - 25,336
Collaborative agreement
revenues 3,577 - 3,577
Royalty and license fee
revenues 68,177 - 68,177
Other revenues 6,838 - 6,838
------------ ------------ ------------
Total revenues 434,395 - 434,395
------------ ------------ ------------
Operating expenses:
Cost of sales 177,136 - 177,136
Research and development 129,392 - 129,392
Selling, general and
administrative 137,727 - 137,727
Amortization expense - (21,426) 21,426
Impairment loss on acquired
intangible assets - - -
Other operating expenses 4,804 - 4,804
------------ ------------ ------------
Total operating expenses 449,059 (21,426) 470,485
------------ ------------ ------------
Income (loss) from operations (14,664) 21,426 (36,090)
Loss on disposal of assets (2,092) - (2,092)
Interest expense (6,653) - (6,653)
Interest and other income, net 14,390 - 14,390
Minority interest (385) - (385)
------------ ------------ ------------
Income (loss) from continuing
operations before income taxes (9,404) 21,426 (30,830)
Provision for (benefit of)
income taxes (2,351) 5,356 (7,707)
------------ ------------ ------------
Income (loss) from continuing
operations (7,053) 16,070 (23,123)
============ ============ ============
Net income (loss) $ (7,053) $ 16,070 $ (23,123)
============ ============ ============
Basic earnings (loss) per
share:
Income (loss) from continuing
operations $ (0.04) $ (0.12)
============ ============
Net income (loss) $ (0.04) $ (0.12)
============ ============
Diluted earnings (loss) per
share:
Income (loss) from continuing
operations $ (0.04) $ (0.12)
============ ============
Net income (loss) $ (0.04) $ (0.12)
============ ============
Shares used in calculating
basic earnings (loss) per
share 186,813 186,813
============ ============
Shares used in calculating
diluted earnings (loss) per
share 186,813 186,813
============ ============
(1) 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) an
impairment loss of $1.1 million on acquired intangible assets from our
acquisition of PowderJect Pharmaceuticals related to a contract
manufacturing agreement.
(2) Adjusted amounts exclude the amortization expense on acquired
intangible assets related to the acquisitions of PathoGenesis, Chiron
Behring, Pulmopharm and PowderJect Pharmaceuticals.
CHIRON CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
(In thousands, except per share data)
Year Ended December 31,
--------------------------------------
2005
--------------------------------------
Adjusted (3) Adjustments Actual
------------ ------------ ------------
Revenues:
Product sales, net $ 1,423,180 $ - $ 1,423,180
Revenues from joint business
arrangement 136,701 - 136,701
Collaborative agreement
revenues 13,084 - 13,084
Royalty and license fee
revenues 317,006 - 317,006
Other revenues 31,394 - 31,394
------------ ------------ ------------
Total revenues 1,921,365 - 1,921,365
------------ ------------ ------------
Operating expenses:
Cost of sales 726,121 - 726,121
Research and development 433,891 - 433,891
Selling, general and
administrative 501,579 - 501,579
Purchased in-process research
and development - - -
Amortization expense - (66,206) 66,206
Impairment loss on acquired
intangible assets - (15,658) 15,658
Other operating expenses 20,515 - 20,515
------------ ------------ ------------
Total operating expenses 1,682,106 (81,864) 1,763,970
------------ ------------ ------------
Income from operations 239,259 81,864 157,395
Loss on disposal of assets (1,108) - (1,108)
Interest expense (30,615) - (30,615)
Interest and other income, net 86,692 - 86,692
Minority interest (2,221) - (2,221)
------------ ------------ ------------
Income from continuing
operations before income taxes 292,007 81,864 210,143
Provision for income taxes 32,710 9,170 23,540
------------ ------------ ------------
Income from continuing
operations 259,297 72,694 186,603
============ ============ ============
Gain from discontinued
operations, net of taxes - - -
------------ ------------ ------------
Net income $ 259,297 $ 72,694 $ 186,603
============ ============ ============
Basic earnings per share:
Income from continuing
operations $ 1.38 $ 0.99
============ ============
Net income $ 1.38 $ 0.99
============ ============
Diluted earnings per share:
Income from continuing
operations $ 1.34 $ 0.97
============ ============
Net income $ 1.34 $ 0.97
============ ============
Shares used in calculating
basic earnings per share 188,448 188,448
============ ============
Shares used in calculating
diluted earnings per share 199,280 198,704
============ ============
Year Ended December 31,
--------------------------------------
2004
--------------------------------------
Adjusted (4) Adjustments Actual
------------ ------------ ------------
Revenues:
Product sales, net $ 1,268,303 $ - $ 1,268,303
Revenues from joint business
arrangement 118,246 - 118,246
Collaborative agreement
revenues 18,044 - 18,044
Royalty and license fee
revenues 289,561 - 289,561
Other revenues 29,201 - 29,201
------------ ------------ ------------
Total revenues 1,723,355 - 1,723,355
------------ ------------ ------------
Operating expenses:
Cost of sales 675,944 - 675,944
Research and development 431,128 - 431,128
Selling, general and
administrative 459,502 - 459,502
Purchased in-process research
and development - (9,629) 9,629
Amortization expense - (84,503) 84,503
Impairment loss on acquired
intangible assets - - -
Other operating expenses 12,844 - 12,844
------------ ------------ ------------
Total operating expenses 1,579,418 (94,132) 1,673,550
------------ ------------ ------------
Income from operations 143,937 94,132 49,805
Loss on disposal of assets (3,247) - (3,247)
Interest expense (26,093) - (26,093)
Interest and other income, net 56,797 - 56,797
Minority interest (1,968) - (1,968)
------------ ------------ ------------
Income from continuing
operations before income taxes 169,426 94,132 75,294
Provision for income taxes 42,357 21,126 21,231
------------ ------------ ------------
Income from continuing
operations 127,069 73,006 54,063
============ ============ ============
Gain from discontinued
operations, net of taxes 24,854 - 24,854
------------ ------------ ------------
Net income $ 151,923 $ 73,006 $ 78,917
============ ============ ============
Basic earnings per share:
Income from continuing
operations $ 0.68 $ 0.29
============ ============
Net income $ 0.81 $ 0.42
============ ============
Diluted earnings per share:
Income from continuing
operations $ 0.67 $ 0.28
============ ============
Net income $ 0.80 $ 0.41
============ ============
Shares used in calculating
basic earnings per share 187,545 187,545
============ ============
Shares used in calculating
diluted earnings per share 190,202 190,202
============ ============
(3) Adjusted amounts exclude (a) the amortization expense on acquired
intangible assets related to the acquisitions of PathoGenesis, Chiron
Behring, Pulmopharm and PowderJect Pharmaceuticals, (b) an impairment
loss of $14.5 million on acquired intangible assets from our
acquisition of PowderJect Pharmaceuticals related to a yellow fever
vaccine and (c) an impairment loss of $1.1 million on acquired
intangible assets from our acquisition of PowderJect Pharmaceuticals
related to a contract manufacturing agreement.
(4) 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) Purchased
in-process research and development related to the Sagres acquisition.
CHIRON CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited)
(In thousands)
December 31, December 31,
2005 2004
------------- -------------
Assets
-------------------------------------------
Current assets:
Cash, cash equivalents and short-term
investments $ 680,128 $ 603,621
Accounts receivable, net of allowances 477,402 402,094
Inventories, net of reserves 237,636 221,154
Other current assets 195,096 167,154
------------- -------------
Total current assets 1,590,262 1,394,023
Non-current investments in marketable debt
securities 728,663 409,421
Property, plant, equipment and leasehold
improvements, net 860,928 799,415
Other non-current assets 1,546,114 1,702,644
------------- -------------
Total assets $ 4,725,967 $ 4,305,503
============= =============
Liabilities and stockholders' equity
-------------------------------------------
Current liabilities $ 516,714 $ 434,444
Long-term debt 939,233 936,652
Long-term portion of capital lease 156,661 156,952
Non-current unearned revenue 27,359 26,175
Other non-current liabilities 84,829 140,226
Minority interest 10,904 9,350
Stockholders' equity 2,990,267 2,601,704
------------- -------------
Total liabilities and stockholders'
equity $ 4,725,967 $ 4,305,503
============= =============
CHIRON CORPORATION
SUPPLEMENTAL SCHEDULE OF COMPUTATION OF EARNINGS (LOSS) PER SHARE
(Unaudited)
(In thousands, except per share data)
Three Months Ended
December 31,
2005 2004
------------------- -------------------
Adjusted Actual Adjusted Actual
------------------- -------------------
Computation for earnings
(loss) per share --
continuing operations
Income (loss) (Numerator):
Income (loss) from
continuing operations $163,842 $144,185 $ (7,053) $(23,123)
Plus: Interest on 1.625%
convertible debentures, net
of taxes 1,586 1,586 - -
Plus: Interest on Liquid
Yield Option Notes, net of
taxes 147 147 - -
--------- --------- --------- ---------
Income (loss) from
continuing operations, plus
impact from assumed
conversions $165,575 $145,918 $ (7,053) $(23,123)
=======================================
Shares (Denominator):
Weighted-average common
shares outstanding 190,679 190,679 186,813 186,813
Additional shares from
exercise of right under an
agreement with Novartis (5) 3,448 3,448 - -
Effect of dilutive securities:
Stock options and
equivalents 3,001 3,001 - -
1.625% convertible
debentures 7,306 7,306 - -
Liquid Yield Option Notes 574 574 - -
--------- --------- --------- ---------
Weighted-average common
shares outstanding, plus
impact from assumed
conversions 205,008 205,008 186,813 186,813
=======================================
Basic earnings (loss) per
share from continuing
operations $ 0.86 $ 0.76 $ (0.04) $ (0.12)
========= ========= ========= =========
Diluted earnings (loss) per
share from continuing
operations $ 0.81 $ 0.71 $ (0.04) $ (0.12)
========= ========= ========= =========
Computation for earnings
(loss) per share -- net
income (loss)
Income (loss) (Numerator):
Net income (loss) $163,842 $144,185 $ (7,053) $(23,123)
Plus: Interest on 1.625%
convertible debentures, net
of taxes 1,586 1,586 - -
Plus: Interest on Liquid
Yield Option Notes, net of
taxes 147 147 - -
--------- --------- --------- ---------
Net income (loss), plus
impact from assumed
conversions $165,575 $145,918 $ (7,053) $(23,123)
=======================================
Shares (Denominator):
Weighted-average common
shares outstanding 190,679 190,679 186,813 186,813
Additional shares from
exercise of right under an
agreement with Novartis (5) 3,448 3,448 - -
Effect of dilutive securities:
Stock options and
equivalents 3,001 3,001 - -
1.625% convertible
debentures 7,306 7,306 - -
Liquid Yield Option Notes 574 574 - -
--------- --------- --------- ---------
Weighted-average common
shares outstanding, plus
impact from assumed
conversions 205,008 205,008 186,813 186,813
=======================================
Basic earnings (loss) per
share from net income $ 0.86 $ 0.76 $ (0.04) $ (0.12)
========= ========= ========= =========
Diluted earnings (loss) per
share from net income $ 0.81 $ 0.71 $ (0.04) $ (0.12)
========= ========= ========= =========
(5) On October 30, 2005 we exercised our right under an agreement with
Novartis (as successor to Ciba-Geigy), dated as of November 20, 1994,
as amended, to require Novartis or its affiliate to purchase shares of
our common stock for an aggregate purchase price of $300.0 million at
a per share purchase price of $43.50. On December 8, 2005, we closed
on a sale of $300.0 million in newly issued shares of our common stock
at a price of $43.50 per share to a subsidiary of Novartis. For
purposes of calculating diluted earnings per share, the issued shares
of this transaction are considered outstanding from October 30, 2005.
As a result, the calculation of diluted earnings per share for the
fourth quarter of 2005 included an additional 3.4 million shares.
CHIRON CORPORATION
SUPPLEMENTAL SCHEDULE OF COMPUTATION OF EARNINGS PER SHARE
(Unaudited)
(In thousands, except per share data)
Year Ended
December 31,
2005 2004
------------------- -------------------
Adjusted Actual Adjusted Actual
------------------- -------------------
Computation for earnings per
share -- continuing
operations
Income (Numerator):
Income from continuing
operations $259,297 $186,603 $127,069 $ 54,063
Plus: Interest on 1.625%
convertible debentures, net
of taxes 6,357 6,357 - -
Plus: Interest on Liquid
Yield Option Notes, net of
taxes 586 - - -
--------- --------- --------- ---------
Income from continuing
operations, plus impact
from assumed conversions $266,240 $192,960 $127,069 $ 54,063
=======================================
Shares (Denominator):
Weighted-average common
shares outstanding 188,448 188,448 187,545 187,545
Additional shares from
exercise of right under an
agreement with Novartis (6) 1,061 1,061 - -
Effect of dilutive securities:
Stock options and
equivalents 1,887 1,887 2,657 2,657
1.625% convertible
debentures 7,308 7,308 - -
Liquid Yield Option Notes 576 - - -
--------- --------- --------- ---------
Weighted-average common
shares outstanding, plus
impact from assumed
conversions 199,280 198,704 190,202 190,202
=======================================
Basic earnings per share from
continuing operations $ 1.38 $ 0.99 $ 0.68 $ 0.29
========= ========= ========= =========
Diluted earnings per share
from continuing operations $ 1.34 $ 0.97 $ 0.67 $ 0.28
========= ========= ========= =========
Computation for earnings per
share -- net income
Income (Numerator):
Net income $259,297 $186,603 $151,923 $ 78,917
Plus: Interest on 1.625%
convertible debentures, net
of taxes 6,357 6,357 - -
Plus: Interest on Liquid
Yield Option Notes, net of
taxes 586 - - -
--------- --------- --------- ---------
Net income, plus impact from
assumed conversions $266,240 $192,960 $151,923 $ 78,917
=======================================
Shares (Denominator):
Weighted-average common
shares outstanding 188,448 188,448 187,545 187,545
Additional shares from
exercise of right under an
agreement with Novartis (6) 1,061 1,061 - -
Effect of dilutive securities:
Stock options and
equivalents 1,887 1,887 2,657 2,657
1.625% convertible
debentures 7,308 7,308 - -
Liquid Yield Option Notes 576 - - -
--------- --------- --------- ---------
Weighted-average common
shares outstanding, plus
impact from assumed
conversions 199,280 198,704 190,202 190,202
=======================================
Basic earnings per share from
net income $ 1.38 $ 0.99 $ 0.81 $ 0.42
========= ========= ========= =========
Diluted earnings per share
from net income $ 1.34 $ 0.97 $ 0.80 $ 0.41
========= ========= ========= =========
(6) On October 30, 2005, we exercised our right under an agreement
with Novartis (as successor to Ciba-Geigy), dated as of November 20,
1994, as amended, to require Novartis or its affiliate to purchase
shares of our common stock for an aggregate purchase price of $300.0
million at a per share purchase price of $43.50. On December 8, 2005,
we closed on a sale of $300.0 million in newly issued shares of our
common stock at a price of $43.50 per share to a subsidiary of
Novartis. For purposes of calculating diluted earnings per share, the
issued shares of this transaction are considered outstanding from
October 30, 2005. As a result, the calculation of diluted earnings per
share for the year included an additional 1.1 million shares.
CHIRON CORPORATION
SUPPLEMENTAL REVENUE SUMMARY
(Unaudited)
(In thousands, except percentages)
----------------------------------------------------------------------
Current Prior Change
Quarter Quarter from Change
Q4 2005 Q3 2005 Prior QTR %
----------------------------------------------------------------------
Product Sales
Blood Testing
Ortho $ 9,825 $ 7,023 $ 2,802 40%
NAT 72,195 70,677 1,518 2%
---------------------------------------
Total Blood Testing 82,020 77,700 4,320 6%
Vaccines
Influenza vaccines 161,955 60,321 101,634 168%
Meningococcal vaccines 8,968 11,635 (2,667) (23)%
Travel vaccines (TBE,
Rabies, Arilvax and
Dukoral) 23,722 35,012 (11,290) (32)%
Pediatric/Other vaccines 50,574 45,800 4,774 10%
---------------------------------------
Total Vaccines 245,219 152,768 92,451 61%
Biopharmaceuticals
Proleukin 31,259 31,028 231 1%
TOBI 65,199 57,890 7,309 13%
Betaseron (7) 40,545 36,927 3,618 10%
Other 11,025 10,862 163 2%
---------------------------------------
Total Biopharmaceuticals 148,028 136,707 11,321 8%
TOTAL PRODUCT SALES, NET $475,267 $367,175 $108,092 29%
=======================================
Revenues from joint business
arrangement $ 33,547 $ 36,093 $ (2,546) (7)%
Collaborative agreement
revenues 1,955 3,149 (1,194) (38)%
Royalty and license fee
revenues 89,697 70,726 18,971 27%
Other revenues 15,173 2,470 12,703 514%
---------------------------------------
TOTAL REVENUES $615,639 $479,613 $136,026 28%
=======================================
Gross Margins
Blood Testing 38% 42% (4)%
Vaccines 48% 45% 3%
Biopharmaceuticals 76% 71% 5%
-----------------------------
TOTAL GROSS MARGINS 55% 54% 1%
=============================
----------------------------------------------------------------------
(7) Excludes Betaferon Royalty $ 14,122 $ 13,413 $ 709 5%
----------------------------------------------------------------------
Change
Prior from
Year Prior Change
Q4 2004 Year %
------------------------------------------------------------
Product Sales
Blood Testing
Ortho $ 7,904 $ 1,921 24%
NAT 63,705 8,490 13%
-----------------------------
Total Blood Testing 71,609 10,411 15%
Vaccines
Influenza vaccines 44,015 117,940 268%
Meningococcal vaccines 9,309 (341) (4)%
Travel vaccines (TBE,
Rabies, Arilvax and
Dukoral) 21,159 2,563 12%
Pediatric/Other vaccines 57,656 (7,082) (12)%
-----------------------------
Total Vaccines 132,139 113,080 86%
Biopharmaceuticals
Proleukin 30,713 546 2%
TOBI 53,276 11,923 22%
Betaseron (7) 33,639 6,906 21%
Other 9,091 1,934 21%
-----------------------------
Total Biopharmaceuticals 126,719 21,309 17%
TOTAL PRODUCT SALES, NET $330,467 $144,800 44%
=============================
Revenues from joint business
arrangement $ 25,336 $ 8,211 32%
Collaborative agreement
revenues 3,577 (1,622) (45)%
Royalty and license fee
revenues 68,177 21,520 32%
Other revenues 6,838 8,335 122%
-----------------------------
TOTAL REVENUES $434,395 $181,244 42%
=============================
Gross Margins
Blood Testing 40% (2)%
Vaccines 28% 20%
Biopharmaceuticals 70% 6%
-------------------
TOTAL GROSS MARGINS 46% 9%
===================
------------------------------------------------------------
(7) Excludes Betaferon Royalty $ 12,798 $ 1,324 10%
------------------------------------------------------------
CHIRON CORPORATION
SUPPLEMENTAL YTD REVENUE SUMMARY
(Unaudited)
(In thousands, except percentages)
Year Ended
December 31, Change from Change
2005 2004 Prior Year %
----------------------------------------------------------------------
Product Sales
Blood Testing
Ortho $ 31,298 $ 27,844 $ 3,454 12%
NAT 273,407 249,809 23,598 9%
-----------------------------------------------
Total Blood Testing 304,705 277,653 27,052 10%
Vaccines
Influenza vaccines 225,355 153,413 71,942 47%
Meningococcal
vaccines 43,361 27,739 15,622 56%
Travel vaccines
(TBE, Rabies,
Arilvax and
Dukoral) 147,507 96,864 50,643 52%
Pediatric/Other
vaccines 165,994 200,948 (34,954) (17)%
-----------------------------------------------
Total Vaccines 582,217 478,964 103,253 22%
Biopharmaceuticals
Proleukin 123,549 129,377 (5,828) (5)%
TOBI 232,624 212,876 19,748 9%
Betaseron (8) 142,238 130,572 11,666 9%
Other 37,847 38,861 (1,014) (3)%
-----------------------------------------------
Total
Biopharmaceuticals 536,258 511,686 24,572 5%
TOTAL PRODUCT
SALES, NET $1,423,180 $1,268,303 $ 154,877 12%
===============================================
Revenues from joint
business arrangement $ 136,701 $ 118,246 $ 18,455 16%
Collaborative
agreement revenues 13,084 18,044 (4,960) (27)%
Royalty and license
fee revenues 317,006 289,561 27,445 9%
Other revenues 31,394 29,201 2,193 8%
-----------------------------------------------
TOTAL REVENUES $1,921,365 $1,723,355 $ 198,010 11%
===============================================
Gross Margins
Blood Testing 41% 42% (1)%
Vaccines 32% 23% 9%
Biopharmaceuticals 72% 72% 0%
-----------------------------------
TOTAL GROSS
MARGINS 49% 47% 2%
===================================
----------------------------------------------------------------------
(8) Excludes Betaferon
Royalty $ 59,955 $ 51,564 $ 8,391 16%
----------------------------------------------------------------------
|
|
||||||||||||
Printer friendly
Cite/link
Email
Feedback
Reader Opinion