Chiron releases second quarter 1996 results.

EMERYVILLE, Calif.--(BUSINESS WIRE)--July 31, 1996--Chiron Corporation (NASDAQ:CHIR) announced today that for the second quarter ended June 30, 1996, the company had net income of $15,355,000 or 35 cents per share on revenues of $315,735,000 vs. net income of $830,000 or 2 cents per share on revenues of $281,752,000 for the second quarter of 1995.

For the six months ended June 30, 1996, Chiron had net income of $28,098,000 or 63 cents per share on revenues of $621,486,000 compared to a net loss of $384,949,000 or $9.60 per share on revenues of $499,997,000 for the first six months of 1995.

The per share calculations in this release and the accompanying tables do not reflect a 4-for-1 split in Chiron's common stock that will be effected with a share dividend to be distributed Aug. 2. Per share calculations will be adjusted to reflect the split in financial filings and communications subsequent to Aug. 2, including Chiron's Form 10-Q for the quarter ended June 30, 1996.

Chiron's results for the second quarter of 1996 include a $12.1 million pre-tax gain arising from the sale of its 50 percent interest in a generic chemotherapeutics business to its partner Ben Venue Laboratories Inc., effective May 1, 1996. Chiron's results for the first six months of 1995 included charges totaling $358 million of additional operating expenses, primarily resulting from a strategic partnership transaction with Ciba-Geigy Limited whereby Chiron acquired Ciba Corning Diagnostics Corp. and interests in The Biocine Company and Biocine S.p.A.; Chiron's acquisition of the IOLAB Surgical Division from Johnson & Johnson and its integration into the operations of Chiron Vision; and from certain restructuring charges.

While Chiron's total revenues increased 12 percent from the second quarter of 1995 to the second quarter of 1996, income from operations increased 148 percent during the same period, from $6.3 million in the second quarter of 1995 to $15.6 million in the second quarter of 1996. The improvement in operating income resulted from increased gross margins from product sales, an increase in collaborative agreement revenues and increased sales fees from the sales of Aredia, all offset partially by higher operating expenses.

Net product sales increased to $251.1 million in the second quarter of 1996 from $248.3 million in the second quarter a year earlier. Net product sales increased between the second quarter of 1995 and the second quarter of 1996 primarily as a result of increased sales of diagnostic and ophthalmic products. Sales of vaccine and oncology products were flat between the two periods, and sales of Betaseron (interferon beta-1b) by Chiron to its partner, Berlex Laboratories, the U.S. affiliate of Schering AG of Germany, decreased.

Diagnostic product sales increased to $143.1 million in the second quarter of 1996 from $137.8 million in the second quarter of 1995. The increase is primarily the result of increased immunodiagnostic product sales, including sales of ACS systems, for which increased penetration of the market combined with an expanded menu has generated increased assay volume. Increased diagnostic sales volumes during the second quarter of 1996 were negatively affected by unfavorable exchange rates, which when compared to the second quarter of 1995, reduced diagnostic product sales by approximately $6.8 million.

Ophthalmic product sales by Chiron Vision increased to $59.5 million in the second quarter of 1996 from $52.4 million in the second quarter of 1995 primarily as a result of increased sales of intraocular lenses and viscoelastic products, and the first full quarter of sales of the Vitrasert Implant for treating CMV-retinitis, which was released for marketing in the United States in March 1996. Sales of the Vitrasert Implant were $4.8 million in the second quarter of 1996.

Oncology product sales by Chiron Therapeutics in the United States and Europe increased slightly to $15.7 million in the second quarter of 1996 from $15.2 million in the second quarter of 1995, resulting from an increase of shipments of Proleukin in the United States. Revenues earned from sales of Aredia by Chiron Therapeutics in the United States on behalf of Ciba Pharmaceuticals, which are accounted for in "Other Revenues," increased $7.6 million in the second quarter of 1996 compared to a year ago.

Vaccine product sales were flat, at $19.5 million in the second quarter of 1996 compared to $19.6 million in the second quarter of 1995. During the first six months of 1996, Chiron's Italian vaccine facilities were temporarily idled to allow for the expansion of existing capacity and to prepare the FDA filing for commercial production of a new genetically engineered acellular pertussis vaccine, combined with diphtheria and tetanus.

Betaseron revenues decreased to $13.9 million in the second quarter of 1996 from $22.4 million in the second quarter of 1995. Chiron's Betaseron revenues in the second quarter of 1996 consist primarily of secondary payments by Berlex resulting from final sales of the product to customers, shipments to Schering for its Canadian and European markets, and the first royalties to Chiron from Schering's European sales of Betaferon (the name for Betaseron in this market). Chiron's revenues in the second quarter of 1995 resulted primarily from initial payments for shipments of Betaseron to Berlex. Chiron elected not to ship Betaseron product for the U.S. market during the second quarter of 1996 pending packaging changes.

Collaborative research agreement revenues increased to $23.1 million in the second quarter of 1996 from $5.0 million in the second quarter of 1995, largely as a result of research funding of $15.0 million received from Ciba in the second quarter of 1996 primarily for certain vaccine research and development programs.

On June 30, 1996, Chiron held cash, cash equivalents and investments in marketable debt securities totaling $170.0 million. During the first six months of 1996, Chiron consumed a net $54.2 million of cash and investment assets, largely for capital expenditures. -0-

                       Chiron Corporation
               Consolidated Statement of Operations
                           (Unaudited)
              (In thousands, except per share data)

                            Three Months Ended    Six Months Ended
                          June 30,    June 30,   June 30,    June 30,
                            1996        1995       1996        1995
Revenues:
 Product Sales, net       $ 251,088  $ 248,333  $ 489,347  $ 432,242
 Equity in earnings of
 unconsolidated joint
 businesses                  22,008     21,360     45,616     39,538
 Collaborative agreement
 revenues                    23,147      4,956     54,561     10,522
 Other revenues              19,492      7,103     31,962     17,695
  Total revenues            315,735    281,752    621,486    499,997

Expenses:

 Cost of sales              107,133    108,547    209,112    198,829
 Research and development    91,789     71,904    175,837    170,959
 Selling, general and
  administrative             98,730     88,364    191,059    173,259
 Write-off of purchased
  in-process
  technologies                  --       1,759        --     232,415
 Costs related to Ciba
  transaction                   --         (43)       --      49,478
 Restructuring and
  reorganization charges        --       1,414        --      39,055
 Other operating expenses     2,492      3,512      5,600      5,791

  Total expenses            300,144    275,457    581,608    869,786

Income (loss) from
 operations                  15,591      6,295     39,878   (369,789)
Other income (expense), net   6,761     (2,110)       942     (3,499)
Income (loss) before income
 taxes                       22,352      4,185     40,820   (373,288)

Provision for income taxes    6,997      3,355     12,722     11,661

Net income (loss)         $  15,355  $     830  $  28,098 $ (384,949)

Net income (loss) per
share                     $    0.35  $    0.02  $    0.63 $    (9.60)

Weighted average number of
shares used in computing
per share amounts            44,467     40,895     44,521     40,086

                        Chiron Corporation
                     Consolidated Balance Sheet
                           (In thousands)

                                            June 30,        Dec. 31,
                                              1996            1995
                                           (Unaudited)
ASSETS

Current assets:
 Cash and cash equivalents               $    54,345     $    74,318
 Short-term investments in marketable
  debt securities                             61,197          61,066
  Total cash and short-term investments
   in marketable debt securities             115,542         135,384
 Accounts receivable                         323,008         285,779
 Inventories                                 181,454         165,941
 Other current assets                         61,950          49,899
  Total current assets                       681,954         637,003
Noncurrent investments in marketable
 debt securities                              54,458          88,833
Property, plant, equipment and leasehold
 improvements, at cost:
 Land and buildings                          209,937         208,233
 Laboratory, production and office
  equipment                                  332,388         292,828
 Leasehold improvements                      104,903          95,472
 Construction in progress                     74,923          62,046
                                             -------         -------
                                             722,151         658,579
 Less accumulated depreciation and
  amortization                               174,616         140,761
  Net property, plant, equipment and
   leasehold improvements                    547,535         517,818
Purchased technology, net                     76,643          80,600
Other intangible assets, net                  77,361          71,571
Investments in equity securities and
 affiliated companies                         53,109          54,359
Other assets                                  49,141          40,014
                                           ---------       ---------
                                         $ 1,540,201     $ 1,490,198

LIABILITIES AND STOCKHOLDERS' EQUITY

Current liabilities:
 Accounts payable                        $    86,017     $    81,081
 Accrued compensation and related
  expenses                                    45,746          56,994
 Short-term borrowings                        32,198          50,036
 Current portion of unearned revenue          21,463          20,838
 Taxes payable                                32,579          27,551
 Other current liabilities                   148,997         132,095
  Total current liabilities                  367,000         368,595

Long-term debt                               417,162         413,248
Other noncurrent liabilities                  33,793          35,943

Stockholders' equity:
 Common stock                                    424             417
 Additional paid-in capital                1,756,762       1,727,711
 Accumulated deficit                      (1,059,601)     (1,087,699)
 Cumulative foreign currency translation
  adjustment                                  (4,918)            721
 Unrealized gain from investments             29,579          31,262
  Total stockholders' equity                 722,246         672,412
                                           ---------       ---------
                                         $ 1,540,201     $ 1,490,198

CONTACT: Chiron Corporation

Larry Kurtz, 510/601-2476