Guest guest Posted April 21, 2000 Report Share Posted April 21, 2000 Thursday April 20, 7:36 am Eastern Time Company Press Release SOURCE: Kline Beecham Kline Beecham Reports Earnings Per Share Increase of 15 Percent For First Quarter 2000, 16 Percent Excluding Currency PHILADELPHIA, April 20 /PRNewswire/ -- Kline Beecham (SB) (NYSE: SBH - news) reported today that pre-tax profit for the first quarter ended March 31 increased 10 percent to $905 million/562 million pounds sterling and earnings per ADR/per share rose 15 percent to 55.5 cents/6.9 pence. Excluding the effect of currencies, pre-tax profit increased 12 percent and earnings per ADR/per share rose 16 percent. Excluding currency, sales for SB's retained businesses -- Pharmaceuticals and Consumer Healthcare -- rose 11 percent and operating profit increased 12 percent. Pharmaceuticals sales rose 14 percent and Consumer Healthcare sales grew 4 percent. The currency impact on performance, excluding exceptional items, is shown in the table below: Actual Excluding First Quarter 2000 Rates Growth Currency Growth Sales* 1,987m pounds +9% 2,024m pounds +11% Operating Profit* 568m pounds +10% 576m pounds +12% Pre-tax Profit 562m pounds +10% 570m pounds +12% Earnings Per Share 6.9p +15% 7.0p +16% * Retained businesses During 1999, SB disposed of its Healthcare Services business, which comprised Diversified Pharmaceutical Services and Clinical Laboratories. As expected, the disposals distort the comparison with total group sales for the first quarter of 1999. Total sales for the first quarter of 2000 were $3.20 billion/1.99 billion pounds, a decrease of 3 percent, excluding currency, compared with the first quarter of 1999. All profit and earnings figures exclude exceptional items charged in the first quarter resulting from the restructuring announced in 1999. The pre-tax exceptional charge in the quarter amounted to $25 million/15 million pounds. Commenting on the quarter, SB Chief Executive Jan Leschly said: ``SB had an excellent first quarter, boosted by continued growth from Paxil/Seroxat, the selective serotonin reuptake inhibitor and Augmentin, the broad-spectrum antibiotic. New products also fuelled our success, with strong performances from: Avandia, our new medicine for type 2 diabetes; Twinrix, the combination hepatitis A and B vaccine; Infanrix, our line of combination vaccines that protect against diphtheria, tetanus and pertussis; Havrix, the vaccine that protects against hepatitis A; and Requip, for Parkinson's disease. Sales of new products, those marketed for five years or less, rose 45 percent and accounted for 26 percent of Pharmaceuticals sales. Our Consumer Healthcare business also performed well, benefiting from continued growth in Oral Care and Nutritionals. ``Of particular note is Avandia, which continued to advance in the U.S., helped in part by the withdrawal of Rezulin from the market. I am very pleased to report that it is now the most prescribed glitazone in the U.S. To date, more than 2.6 million prescriptions have been written for more than 800,000 patients, reinforcing Avandia's strong efficacy and safety profile. Additionally, in Europe, Avandia received a positive opinion from the CPMP, the scientific committee of the European Agency for the Evaluation of Medicinal Products. ``Our strong performance reflects our continued momentum as we move toward the completion of our proposed merger with Glaxo Wellcome to create Glaxo Kline. I am pleased to report that we are on track to complete the merger this summer.'' The following sector comparisons for the 2000 first quarter versus the 1999 first quarter exclude the effect of currency translation: Pharmaceuticals Both Pharmaceuticals sales and operating profit increased 14 percent. Pharmaceuticals R & D expenditure rose 15 percent, accounting for 17 percent of Pharmaceuticals sales. Worldwide, products showing continued progress include: -- Paxil/Seroxat, with sales of $560 million/348 million pounds, up 24 percent. It grew 26 percent in the U.S. and maintained its position as the leading antidepressant in Europe, helped by ongoing launches for the social anxiety disorder indication. Strong gains were achieved in Spain (+35%), France (+20%) and Italy (+14%). -- Augmentin, which rose 10 percent to $512 million/318 million pounds, reflecting increases in market share and strong pathology. Augmentin continues to demonstrate exceptional efficacy against a wide range of bacteria, including those that are resistant to other antibiotics. Growth was strong in the U.S. at 16 percent and in International markets at 18 percent. In Europe, where Augmentin is the leading antibiotic, sales declined 3 percent due to increased generic competition. -- Avandia, with sales of $159 million/99 million pounds. Avandia is now approved in 30 markets, including Brazil, Mexico and Canada. In the U.S., Avandia received an additional approval for use in combination with sulfonylureas. -- Sales of vaccines, up 10 percent to $305 million/189 million pounds. New vaccines, which rose 20 percent to $192 million/119 million pounds, were boosted by Twinrix (+53%), Infanrix (+73%) and Havrix (+20%). These increases more than offset the decline in sales of Engerix-B (-12%), the vaccine for protection against hepatitis B. -- Famvir, the antiviral, which rose 9 percent to $53 million/33 million pounds. -- Requip, up 27 percent to $19 million/12 million pounds. U.S. pharmaceutical sales rose 20 percent, driven by strong performances from Augmentin, Paxil and Avandia, offset by a decline in sales of Relafen, the arthritis medicine, due to increased competition from COX-2 inhibitors. European sales increased 6 percent, with France (+9%) and Spain (+13%) making important contributions. Results were driven by Seroxat, new vaccines, Hycamtin and Requip. International sales increased 9 percent despite difficult trading conditions in several markets, including Japan (-10%) and Mexico (-19%). Sales gains were achieved in China (+19%), Africa (+27%) and Australia (+15%). Results were driven by strong performances from Seroxat, Augmentin and vaccines. Consumer Healthcare Both sales and operating profit grew 4 percent. In the U.S., sales decreased 8 percent due to the 28 percent decline in sales of smoking control products. The majority of this shortfall can be attributed to U.S. sales of Nicorette, the smoking control gum, which decreased 38 percent, due to a difficult comparison with a strong first quarter of 1999 when wholesalers stocked up with the new mint flavor. In International markets, Consumer Healthcare sales grew 14 percent, and in Europe, 10 percent. Worldwide sales of Oral Care products rose 13 percent to $237 million/147 million pounds, boosted by strong sales of Aquafresh, Odol and Dr. Best. The U.S. market share for Aquafresh rose to more than 11 percent. Worldwide, sales of the Aquafresh product line advanced 20 percent. Nutritional Healthcare products rose 15 percent to $198 million/123 million pounds. Ribena grew 21 percent and Lucozade 28 percent, offsetting a decline of 4 percent in sales of Horlicks. Worldwide sales of over-the-counter (OTC) medicines totaled $552 million/343 million pounds, a decrease of 3 percent. -- Analgesics rose 5 percent to $100 million/62 million pounds. -- Respiratory tract medicines, which include Contac, Coldrex and Beechams cold and flu remedies, rose 6 percent to $72 million/45 million pounds. -- SB's worldwide smoking control franchise decreased 21 percent to $143 million/89 million pounds. In the U.S., sales of NicoDerm CQ decreased 10 percent due to increased private label competition. As a category, combined worldwide sales of the NicoDerm CQ, NiQuitin CQ and Nicabate smoking control patches rose 5 percent. SB's smoking control patches are the OTC patch brand leaders in the U.S., Belgium, France, Mexico, Australia, New Zealand and Brazil. Dividend Kline Beecham today declared a first-quarter interim dividend of 3.00 pence per Ordinary Share, an increase of 11 percent, payable on July 17, 2000 to shareholders of record on May 8, 2000. The equivalent cash dividend receivable by U.S. shareholders is 23.705 cents per Ordinary Share ADR based on an exchange rate of $1.5803 to 1 pound. Kline Beecham -- one of the world's leading healthcare companies -- discovers, develops, manufactures and markets pharmaceuticals, vaccines, over-the-counter medicines and health-related consumer products. For company information, visit Kline Beecham on the World Wide Web at http://www.sb.com Under the safe harbor provisions of the US Private Securities Litigation Reform Act of 1995, the Company cautions investors that any forward-looking statements or projections made by the Company, including those made in this document, are subject to risks and uncertainties that may cause actual results to differ materially from those projected. Factors that may affect the Company's operations are discussed in Exhibit 99 to the Company's Annual Report on Form 20-F for 1999, filed with the US Securities and Exchange Commission. The directors of Kline Beecham accept responsibility for the information contained in this press announcement. To the best of the knowledge, information and belief of such directors (who have taken all reasonable care to ensure that such is the case), the information contained in this press announcement is in accordance with the facts and does not omit anything likely to affect the import of such information. This press release has been issued by Kline Beecham. It has been approved by Stanley & Co. Limited (`` Stanley Dean Witter'') for the purposes of Section 57 of the Financial Services Act 1986. Stanley Dean Witter is regulated in the United Kingdom by the Securities and Futures Authority. Stanley Dean Witter, which is regulated in the United Kingdom by the Securities and Futures Authority, is acting for Kline Beecham and no one else in connection with the proposed merger with Glaxo Wellcome and will not be responsible to anyone other than Kline Beecham for providing the protections afforded to customers of Stanley Dean Witter, nor for providing advice in relation to the proposed merger. This announcement does not constitute an offer to sell or invitation to purchase any securities. Kline Beecham Consolidated Profit and Loss Account - Business Performance First quarter ended March 31, 2000 - unaudited 2000 1999 2000 1999 Business Act. Comp. ( ( Act. Performance pounds m pounds m (a)% (% $m $m ©% Sales © 1,987 2,089 (5) (3) 3,199 3,405 (6) Retained Businesses 1,987 1,827 9 11 3,199 2,978 7 Healthcare Services - 262 - 427 Cost of goods sold (411) (588) (30) (28) (662) (958) (31) Gross profit 1,576 1,501 5 7 2,537 2,447 4 Selling, general and admin. expenses (763) (758) 1 2 (1,228) (1,236) (1) Research and develop. expenditure (245) (217) 13 14 (394) (354) 11 Operating profit © 568 526 8 10 915 857 7 Retained Businesses 568 515 10 12 915 839 9 Healthcare Services - 11 - 18 Share of trading profit of associates 13 - 21 - Interest (19) (16) (31) (26) Profit before tax 562 510 10 12 905 831 9 Tax (E) (152) (138) (245) (225) Profit after tax 410 372 10 12 660 606 9 Earnings basic Pence Pence Cents Cents Ordinary Share 6.9 6.0 15 16 11.1 9.8 13 Ordinary Share ADR 34.5 30.0 15 16 55.5 48.9 13 Business performance excludes exceptional items. Percentage changes on 1999 - increase(decrease): (a) at actual average rates of exchange ( at comparable rates of exchange © on US$ at actual average rates of exchange Kline Beecham Consolidated Profit and Loss Account First quarter ended March 31, 2000 - unaudited 2000 2000 2000 1999 2000 1999 Total Except Busi Total Total Total -ional -ness items perfor (D) -mance ( ( pounds m pounds m pounds m pounds m $m $m Sales © 1,987 - 1,987 2,089 3,199 3,405 Retained Businesses 1,987 - 1,987 1,827 3,199 2,978 Healthcare Services - - - 262 - 427 Cost of goods sold (413) (2) (411) (588) (665) (958) Gross profit 1,574 (2) 1,576 1,501 2,534 2,447 Selling, general and admin. expenses (771) (8) (763) (758) (1,242) (1,236) Research and develop. expenditure (245) - (245) (217) (394) (354) Operating profit © 558 (10) 568 526 898 857 Retained Businesses 558 (10) 568 515 898 839 Healthcare Services - - - 11 - 18 Share of trading profit of associates 8 (5) 13 - 13 - Interest (19) - (19) (16) (31) (26) Profit on ordinary activities before tax 547 (15) 562 510 880 831 Tax on profit on ord. activities (note 5) (150) 2 (152) (138) (241) (225) Profit on ordinary activities after tax 397 (13) 410 372 639 606 Equity minority int's (25) (30) (40) (48) Preference Share div's (12) (11) (19) (18) Profit attributable to shareholders 360 331 580 540 Dividends payable on equity int's (162) (149) (261) (243) Profit retained 198 182 319 297 Healthcare Services in 1999 made a gross profit of 97 million pounds sterling and a profit after tax of 9 million pounds. Kline Beecham Consolidated Profit and Loss Account - Earnings basic - unaudited 2000 1999 2000 1999 Three months ended Act. Comp. ( ( Act. March 31 pounds m pounds m (a)% (% $m $m ©% Profit attributable to shareholders 360 331 580 540 Exceptional items after tax (notes 4 & 5) 13 - 21 - Adjusted profit attrib. to shareholders 373 331 601 540 Excluding exceptional items Pence Pence Cents Cents Ordinary Share 6.9 6.0 15 16 11.1 9.8 13 Ordinary Share ADR 34.5 30.0 15 16 55.5 48.9 13 Including exceptional items Ordinary Share 6.6 6.0 10 13 10.6 9.8 8 Ordinary Share ADR 33.0 30.0 10 13 53.1 48.9 8 Weighted average number of shares outstanding 5,433m 5,523m 5,433m 5,523m Percentage changes on 1999 - increase (decrease): (a) at actual average rates of exchange ( at comparable rates of exchange © on US$ at actual average rates of exchange Kline Beecham Summary Consolidated Balance Sheet - unaudited March 31 March 31 March 31 March 31 2000 1999 2000 1999 ( ( pounds m pounds m $m $m Fixed assets Intangible assets 963 2,005 1,541 3,248 Tangible assets and investments 2,784 2,826 4,454 4,578 Investments 1,790 716 2,864 1,160 5,537 5,547 8,859 8,986 Current assets Stocks 735 762 1,176 1,235 Debtors 2,215 2,755 3,544 4,463 Investments and cash 381 357 610 578 3,331 3,874 5,330 6,276 Creditors due within one year Loans and overdrafts (797) (682) (1,275) (1,105) Other (2,601) (2,950) (4,162) (4,779) (3,398) (3,632) (5,437) (5,884) Net current (liabilities) assets (67) 242 (107) 392 Creditors due after more than one year Loans (623) (1,108) (997) (1,795) Other (36) (28) (57) (45) Provisions for liabilities and charges (1,273) (1,727) (2,037) (2,798) (1,932) (2,863) (3,091) (4,638) Net assets 3,538 2,926 5,661 4,740 Shareholders' funds - equity interests (F) 2,476 1,829 3,962 2,963 Non-equity minority interest Preference Shares issued by subsidiary 967 954 1,547 1,545 Equity minority interests 95 143 152 232 3,538 2,926 5,661 4,740 Kline Beecham Summary Consolidated Cash Flow Statement and Movement in Net Debt First quarter ended March 31, 2000- unaudited 2000 1999 2000 1999 ( ( pounds m pounds m $m $m Operating profit (incl. except. items) 558 526 898 857 Exceptional items 10 - 16 - Depreciation and other non- cash items 76 79 123 129 Working capital net increase (51) (194) (82) (316) Restructuring costs paid (11) (10) (18) (16) Cash inflow from trading activities 582 401 937 654 Purchase less sale of tangible fixed assets (120) (89) (193) (145) Interest and minority dividends (90) (37) (145) (60) Tax paid on trading activities (176) (82) (283) (134) Free cash flow 196 193 316 315 Purchase less sale of fixed asset investments and intangibles (334) (151) (538) (246) Equity dividends paid (147) (29) (237) (47) Issue of share capital 13 26 21 42 Other (net) - 2 - 3 (272) 41 (438) 67 Translation differences (6) (21) (10) (35) Movement in net debt in the period (278) 20 (448) 32 Net debt at beginning of period (761) (1,453) (1,225) (2,368) Net debt at end of period (1,039) (1,433) (1,673) (2,336) Kline Beecham Notes to the Interim Financial Statement Three months ended March 31, 2000 (A) Basis of Preparation The unaudited results for the three months ended March 31, 2000 have been prepared in accordance with the accounting policies set out in the Annual Report and Form 20-F for the year ended December 31, 1999. The financial information in this statement does not constitute statutory accounts within the meaning of Section 240 of the Companies Act 1985. ( Convenience Translation In this financial statement, the translation of pounds Sterling into U.S. Dollars has been made at the following rates of exchange: Profit and loss account/cash flow statement: the actual average rates of $1.61 to 1 pound sterling for the three months ended March 31, 2000 and, $1.63 to 1 pound for the three months ended March 31, 1999. Balance sheet/movements in shareholders' funds: the actual spot rates of $1.60 to 1 pound at March 31, 2000 and, $1.62 to 1 pound at March 31, 1999. U.S. Dollar comparisons are provided for the convenience of shareholders wishing to make direct Dollar comparisons. Kline Beecham Notes to the Interim Financial Statement Three months ended March 31, 2000 © Segment Information Three months Change ended March 31 Change on 1999 on 2000 1999 rates of exch. 2000 1999 1999 Actual Compar US$ -able ( ( Actual pounds m pounds m % % $m $m % Sales Pharmaceuticals 1,374 1,226 12 14 2,212 1,998 11 Consumer Health. 613 601 2 4 987 980 1 Retained Businesses 1,987 1,827 9 11 3,199 2,978 7 Healthcare Services - 262 - 427 Total 1,987 2,089 (5) (3) 3,199 3,405 (6) Operating profit Pharmaceuticals 477 426 12 14 768 694 11 Consumer Health. 91 89 3 4 147 145 1 Retained Businesses 568 515 10 12 915 839 9 Healthcare Services - 11 - 18 Total before except. items 568 526 8 10 915 857 7 The segmental analysis reflects the way in which management reviews performance. Retained Businesses consist of Pharmaceuticals (prescription pharmaceuticals, vaccines, R & D and healthcare management programs) and Consumer Healthcare (Oral Care, OTC Medicines and Nutritional Healthcare). Healthcare Services primarily includes Clinical Laboratories, Diversified Pharmaceutical Services and Diversified Prescription Delivery. Diversified was sold to Express Scripts, Inc on April 1, 1999 and Clinical Laboratories was sold to Quest Diagnostics, Incorporated on August 16, 1999. Segment percentage movements are calculated on unrounded amounts. Kline Beecham Notes to the Interim Financial Statement Three months ended March 31, 2000 (D) Exceptional Items The exceptional items are included in a separate column in the 2000 profit and loss account. The exceptional items, which amount to 15 million pounds, consist of restructuring initiatives incurred and/or announced during 1998, 1999 and 2000 related to global supply, enhanced purchasing and other cost containment measures, and the Company's share of Quest's integration costs. No exceptional costs were incurred in the first three months of 1999. (E) Taxation Taxation, excluding tax on the exceptional items discussed above, has been calculated on the basis of an estimated effective tax rate of 27.0% for the year ending December 31, 2000. This compares with an effective tax rate of 27.0% for both the 1999 first quarter and the year. Tax relief on exceptional items amounts to 2 million pounds. (F) Movements in Consolidated Shareholders' Funds 2000 1999 2000 1999 ( ( First quarter ended March 31 pounds m pounds m $m $m Profit attributable to shareholders' 360 331 576 536 Exchange adjustments (62) (126) (99) (204) Total recognized gains and losses for the period 298 205 477 332 Dividends (162) (149) (259) (241) New share capital issued 13 26 21 42 Net addition to shareholders' funds 149 82 239 133 Opening shareholders' funds 2,327 1,747 3,723 2,830 Closing shareholders' funds 2,476 1,829 3,962 2,963 Kline Beecham Notes to the Interim Financial Statement Three months ended March 31, 2000 (G) Legal Matters Update With respect to the litigation in the United States concerning the Group's patents for paroxetine (the active ingredient in Paxil/Seroxat), the Group has filed a complaint against Zenith Goldline in the U.S. District Court for the Eastern District of Pennsylvania. A motion has been filed to consolidate the case with the actions pending against Apotex, Inc. and Geneva Pharmaceuticals. Zenith had filed an Abbreviated New Drug Application (``ANDA'') for paroxetine together with a certification that its compound does not infringe the Group's patents or that the patents are invalid. A fourth generic company, Pentech, filed a similar ANDA and related certification in March. The Group believes that its patents are valid and that the generic company compounds do infringe and intends to vigorously litigate its position. With respect to the non-class action brought by the private insurers against Kline Beecham Clinical Laboratories (``SBCL''), in the U.S. District Court for Connecticut, SBCL moved for summary judgment on most of the remaining claims on grounds that the claims were barred by the statute of limitations. In April 2000 the Court granted the motion for summary judgment and entered judgment against the insurers on those claims. The Court also authorized the private insurer group to appeal immediately the prior dismissal in July 1999 of the RICO and other claims. Although the outcome of claims, legal proceedings and other matters in which the Group is involved cannot be predicted with any certainty, the Directors do not expect the Group's ultimate liability for such matters, after taking into account provisions, tax benefits and insurance, to have a material adverse effect on its financial condition, results of its operations or its cash flows. (H) ESOT Purchases In the first three months of 2000 the Company funded 346 million pounds for the Employee Share Ownership Trust to purchase 49 million SB Ordinary Shares to hedge grants in SB's share option and other long-term incentive plans. The ESOT transferred out 4 million SB Ordinary Shares, returning 16 million pounds to the Company. In the first three months of 1999 the Company funded 130 million pounds (less a creditor of 36 million pounds) for the Employee Share Ownership Trust to purchase 16 million SB Ordinary Shares to hedge grants in SB's share option and other long-term incentive plans. The ESOT transferred out 3 million SB Ordinary Shares, returning 13 million pounds to the Company. Kline Beecham Pharmaceutical Product Sales Three months ended March 31, 2000 2000 Total 2000 USA % Var. % Var. ( on ( on pounds m $m 1999 pounds m $m 1999 Anti-infectives 462 743 8 255 411 16 Amoxil 51 82 5 13 21 60 Augmentin 318 512 10 193 311 16 Bactroban 25 40 11 16 26 10 Famvir 33 53 9 24 38 12 Timentin 10 16 5 6 10 1 Other anti-infectives 25 40 (3) 3 5 26 Cardiovascular 28 45 (34) 26 42 (27) Diuretics 4 6 (24) 3 5 (17) Coreg 23 37 (15) 23 37 (6) Other cardiovascular 1 2 (86) 0 0 (111) Inflammation & Tissue Repair and Oncology 80 129 (27) 54 87 (36) Hycamtin 21 34 5 13 21 (5) Relafen/Relifex 48 77 (37) 41 66 (40) Other inflammation etc 11 18 (23) 0 0 (99) Metabolism and Pulmonary 99 159 - 95 153 - Avandia 99 159 - 95 153 - Neurosciences 428 689 21 292 470 22 Kytril 54 87 8 35 56 10 Requip 12 19 27 5 8 21 Paxil/Seroxat 348 560 24 240 387 26 Other neurosciences 14 23 (8) 12 19 (2) Vaccines 189 305 10 41 66 (25) Hepatitis franchise 111 179 6 33 53 (16) Infanrix 37 60 73 7 11 47 LYMErix 1 2 (88) 1 2 (88) Other vaccines 40 64 13 0 0 42 Other 88 142 (11) 10 16 (19) Tagamet 21 34 (17) 1 2 (31) Other 67 108 (9) 9 14 (17) Total Pharmaceutical Product Sales 1,374 2,212 14 773 1,245 20 2000 sales are at actual average rates of exchange. Percentage variances are at comparable rates of exchange. Kline Beecham Product Category Sales Three months ended March 31, 2000 Consumer Healthcare 2000 Total ( % Var. pounds m $m on 1999 OTC Medicines 343 552 (3) Analgesics 62 100 5 Dermatological 27 44 12 Gastrointestinal 72 116 (1) Respiratory Tract 45 72 6 Smoking Control 89 143 (21) Vitamins & Naturals 36 58 18 Other OTC Medicines 12 19 7 Oral Care 147 237 13 Nutritional Healthcare 123 198 15 Total Consumer Healthcare 613 987 4 2000 sales are at actual average rates of exchange. Percentage variances are at comparable rates of exchange. Kline Beecham (for US publication purposes only) $ (Millions) First quarter ended March 31, 2000 % changes on 1999 1st Qtr 1st Qtr on US$ compar 2000 1999 actual -able ended ended exch. exch. 3-31 3-31 rates rates Sales 3,199 3,405 (6) (3) Net Income (excluding exceptional items) 601 540 11 15 Earnings basic - Ordinary Share ADR (excluding exceptional items) $0.56 $0.49 13 16 For convenience purposes, the translation of pounds Sterling into U.S. Dollars has been made at the following rates of exchange. For the three months ended March 31, 2000 and March 31, 1999 the actual average rate for the respective periods, 1 pound sterling = $1.61 and 1 pound = $1.63. SOURCE: Kline Beecham Quote Link to comment Share on other sites More sharing options...
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