- 2009 Second Quarter Reported Diluted Earnings per Share Increased
13% to $0.94, and Diluted Earnings per Share, Excluding Certain
Significant Items, Increased 8% to $0.98 - Worldwide Net Revenue
Decreased 4% for the 2009 Second Quarter and Increased 2%,
Excluding the Impact of Foreign Exchange, Driven by Increases of
24% for Prevnar, 21% for Enbrel (outside the U.S. and Canada) and
9% for Nutritionals - Guidance for the 2009 Full Year Diluted
Earnings per Share, Excluding Certain Significant Items, Raised to
a Range of $3.48 to $3.58 - Wyeth Stockholders Approve Merger with
Pfizer; 98% of Votes Cast in Favor of Merger; Closing Expected at
the End of the Third Quarter or during the Fourth Quarter of 2009
MADISON, N.J., July 23 /PRNewswire-FirstCall/ -- Wyeth (NYSE:WYE)
today reported results for the 2009 second quarter and first half
ended June 30, 2009. Worldwide net revenue decreased 4% to $5.7
billion for the 2009 second quarter and decreased 5% to $11.1
billion for the 2009 first half. Excluding the unfavorable impact
of foreign exchange, worldwide net revenue increased 2% for the
2009 second quarter and first half. "Wyeth's results reflect the
ongoing strength of our biotechnology and vaccine franchises Enbrel
and Prevnar and our Nutritionals products, all of which performed
strongly around the world," said Bernard Poussot, Chairman,
President and Chief Executive Officer. "Execution of our medical
innovation strategy led to positive revenue growth in constant
dollar terms. Diluted earnings per share, excluding certain
significant items, increased 8%. Based on this outcome we are
raising full year earnings guidance. We remain focused on
delivering strong performance as we work with Pfizer toward the
successful integration of our two companies." Product Highlights
for the 2009 Second Quarter and First Half The following table
presents worldwide net revenue from Wyeth's principal products for
the 2009 second quarter and first half together with the percentage
changes from the comparable periods in the prior year, both as
reported and excluding the impact of foreign exchange (FX):
(UNAUDITED)
------------------------------------------------------------ Three
Months Ended 6/30/2009 Six Months Ended 6/30/2009
----------------------------- ----------------------------
Increase/ Increase/ (Decrease) (Decrease) Principal $ in Increase/
Excluding $ in Increase/ Excluding Products Millions (Decrease) FX
Millions (Decrease) FX --------- -------- -------- ---------
-------- --------- --------- Effexor $772 (25)% (22)% $1,591 (22)%
(19)% Prevnar 783 13% 24% 1,538 10% 21% Enbrel Outside U.S. and
Canada 736 6% 21% 1,363 5% 22% Alliance Revenue - U.S. and Canada
304 7% 7% 544 (11)% (11)% Nutritionals 436 1% 9% 851 1% 11%
Zosyn/Tazocin 304 (5)% - 614 (7)% (2)% Premarin family 257 (5)%
(3)% 503 (8)% (7)% Hemophilia family(1) 248 (1)% 9% 454 (7)% 3%
Protonix family(2) 237 4% 4% 452 17% 17% Centrum 171 (7)% - 334
(10)% (3)% Advil 162 (2)% 2% 321 (5)% (1)% (1) Hemophilia family
net revenue for the 2009 second quarter and first half included
revenue from BENEFIX of $154 and $284, respectively, and
REFACTO/XYNTHA of $94 and $170, respectively. (2) PROTONIX family
net revenue for the 2009 second quarter and first half included
revenue from the Company's own generic version of $150 and $273,
respectively, and the branded product of $87 and $179,
respectively. 2009 Second Quarter Results Net revenue decreased 4%
for the 2009 second quarter and increased 2%, excluding the impact
of foreign exchange, as compared with the 2008 second quarter. The
2% increase, excluding the impact of foreign exchange, was
primarily due to higher sales of Wyeth's key pharmaceutical
franchises PREVNAR , ENBREL (outside the U.S. and Canada) and
Nutritional products, along with higher sales of PRISTIQ , TYGACIL
, TORISEL and the Hemophilia family and higher Enbrel alliance
revenue. These increases were partially offset by decreased sales
of EFFEXOR due primarily to increased generic competition in
international markets. Excluding the impact of foreign exchange,
net revenue for the 2009 second quarter for the Pharmaceuticals,
Consumer Healthcare and Animal Health segments increased 3%, 2% and
1%, respectively. Gross margin, excluding certain significant
items, as a percentage of net revenue, increased 0.7 percentage
points to 73.2% for the 2009 second quarter from 72.5% for the 2008
second quarter. Selling, general and administrative expenses,
excluding certain significant items, decreased 9% for the 2009
second quarter versus the 2008 second quarter and decreased 4%,
excluding the impact of foreign exchange. This decrease, excluding
the impact of foreign exchange, was primarily due to cost savings
related to the Company's productivity initiatives, which were
partially offset by increased pension expense. Research and
development expenses, excluding certain significant items,
increased 7% for the 2009 second quarter versus the 2008 second
quarter and increased 8%, excluding the impact of foreign exchange.
The increase was primarily due to increased clinical trial
spending, including oncology projects and Prevnar 13 adult, as well
as costs related to a recently announced in-licensing transaction.
Interest expense, net was $83.0 million for the 2009 second quarter
as compared with $18.7 million for the 2008 second quarter. This
change was primarily due to the significant reduction in interest
rates around the world and the resulting decrease in interest
income earned on our investments offset, in part, by the increase
in our 2009 second quarter investment balances as compared with the
2008 second quarter. Other income, net for the 2009 second quarter
was composed primarily of royalty income and income associated with
our foreign exchange hedging program. The Company's tax rate for
the 2009 second quarter, excluding certain significant items,
decreased to 29.3% from 30.5% in the 2008 second quarter. The
decrease in the 2009 second quarter tax rate was primarily due to
the renewal of the U.S. research and development tax credit, which
was renewed by Congress in the fourth quarter of 2008, and
increased profit in tax favorable jurisdictions. Net income and
diluted earnings per share for the 2009 second quarter were
$1,272.0 million and $0.94, respectively, compared with $1,122.1
million and $0.83, respectively, for the 2008 second quarter. The
2009 second quarter results included charges of $66.1 million
($52.0 million after-tax or $0.04 per share-diluted) related to the
Company's productivity initiatives and costs associated with the
merger, as discussed in the Notes to Results of Operations below.
The 2008 second quarter results included net charges of $155.2
million ($110.5 million after-tax or $0.08 per share-diluted)
related to the Company's productivity initiatives. Net income and
diluted earnings per share, excluding these certain significant
items, for the 2009 second quarter were $1,324.1 million and $0.98,
respectively, compared with $1,232.6 million and $0.91,
respectively, for the 2008 second quarter. 2009 First Half Results
Net revenue decreased 5% for the 2009 first half and increased 2%,
excluding the impact of foreign exchange, as compared with the 2008
first half. The 2% increase, excluding the impact of foreign
exchange, was primarily due to higher sales of Wyeth's key
pharmaceutical franchises Prevnar, Enbrel (outside the U.S. and
Canada) and Nutritional products, along with higher sales of
Pristiq, the Protonix family, Tygacil and Torisel. These increases
were partially offset by decreased sales of Effexor due primarily
to increased generic competition in international markets and lower
Enbrel alliance revenue. Excluding the impact of foreign exchange,
net revenue for the 2009 first half for the Pharmaceuticals and
Animal Health segments increased 2% and 6%, respectively, while
Consumer Healthcare was comparable to the 2008 first half. Gross
margin, as a percentage of net revenue, excluding certain
significant items, increased 1.2 percentage points to 74.3% for the
2009 first half from 73.1% for the 2008 first half. The increase
was primarily due to the impact of foreign exchange rates and
favorable manufacturing variances during the 2009 first half.
Selling, general and administrative expenses, excluding certain
significant items, decreased 7% for the 2009 first half versus the
2008 first half and were comparable to the 2008 first half,
excluding the impact of foreign exchange, as cost savings related
to the Company's productivity initiatives were offset by increased
pension expense. Research and development expenses, excluding
certain significant items, were comparable for the 2009 first half
versus the 2008 first half and increased 2%, excluding the impact
of foreign exchange. The increase, excluding the impact of foreign
exchange, was primarily due to increased clinical trial spending,
including oncology projects and Prevnar 13 adult. Interest expense,
net was $148.3 million for the 2009 first half as compared with
interest income, net of $8.8 million for the 2008 first half. This
change was primarily due to the significant reduction in interest
rates around the world and the resulting decrease in interest
income earned on our investments offset, in part, by the increase
in our 2009 first half investment balances as compared with the
2008 first half. Other income, net for the 2009 first half was
composed primarily of income associated with our foreign exchange
hedging program and royalty income. The Company's tax rate for the
2009 first half, excluding certain significant items, decreased to
28.8% from 30.8% in the 2008 first half. The decrease in the 2009
first half tax rate was primarily due to the renewal of the U.S.
research and development tax credit, which was renewed by Congress
in the fourth quarter of 2008, and increased profit in tax
favorable jurisdictions. Net income and diluted earnings per share
for the 2009 first half were $2,470.2 million and $1.83,
respectively, compared with $2,319.0 million and $1.72,
respectively, for the 2008 first half. The 2009 first half results
included charges of $165.1 million ($133.8 million after-tax or
$0.10 per share-diluted) related to the Company's productivity
initiatives and costs associated with the merger, as discussed in
the Notes to Results of Operations below. The 2008 first half
results included net charges of $236.2 million ($180.1 million
after-tax or $0.13 per share-diluted) related to the Company's
productivity initiatives. Net income and diluted earnings per
share, excluding these certain significant items, for the 2009
first half were $2,604.0 million and $1.93, respectively, compared
with $2,499.1 million and $1.85, respectively, for the 2008 first
half. 2009 Guidance Based on the 2009 first half results and
outlook for the remainder of 2009 and assuming trends in foreign
exchange rates continue, the Company has raised its 2009 full year
guidance for diluted earnings per share, excluding certain
significant items, to a range of $3.48 to $3.58. We consider our
productivity initiatives and costs associated with the merger to be
certain significant items. Merger with Pfizer The merger agreement
with Pfizer received the required approval of shareholders at
Wyeth's Annual Meeting on July 20, 2009. Over 98 percent of votes
cast and approximately 78 percent of the outstanding shares were
voted in favor of the Pfizer merger. The transaction is expected to
close at the end of the third quarter or during the fourth quarter
of 2009. Results of Operations The comparative results of
operations are as follows: (In thousands except per share amounts)
(UNAUDITED) ------------------------------------------ Three Months
Ended Six Months Ended --------------------- ----------------------
6/30/2009 6/30/2008 6/30/2009 6/30/2008 --------- ---------
--------- --------- Net Revenue $5,695,160 $5,945,358 $11,072,133
$11,656,007 Cost of Goods Sold 1,564,961 1,683,937 2,945,852
3,245,950 Selling, General and Administrative Expenses 1,598,518
1,832,500 3,190,327 3,554,713 Research and Development Expenses
885,305 836,067 1,658,425 1,675,444 Interest (Income) Expense, Net
83,013 18,685 148,325 (8,771) Other Income, Net (242,901) (44,677)
(365,512) (188,162) -------- ------- -------- -------- Income
before Income Taxes 1,806,264 1,618,846 3,494,716 3,376,833
Provision for Income Taxes 534,245 496,752 1,024,537 1,057,792
------- ------- --------- --------- Net Income $1,272,019
$1,122,094 $2,470,179 $2,319,041 ========== ========== ==========
========== Basic Earnings per Share $0.95 $0.84 $1.85 $1.74 =====
===== ===== ===== Average Number of Common Shares Outstanding
during Each Period - Basic 1,333,435 1,332,682 1,332,544 1,333,945
Diluted Earnings per Share $0.94 $0.83 $1.83 $1.72 ===== =====
===== ===== Average Number of Common Shares Outstanding during Each
Period - Diluted 1,356,071 1,359,496 1,355,189 1,359,903 See Notes
to Results of Operations. Results of Operations - As Adjusted Wyeth
has prepared the following presentation of its results of
operations for the three and six months ended June 30, 2009 and
2008, adjusted to exclude charges related to our productivity
initiatives and merger-related expenses, which are considered
certain significant items for the 2009 and 2008 second quarter and
first half. The comparative results of operations - as adjusted are
as follows: (In thousands except per share amounts) (UNAUDITED) -
AS ADJUSTED -----------------------------------------------------
Three Months Ended Six Months Ended ---------------------
---------------------- 6/30/2009 6/30/2008 6/30/2009 6/30/2008
--------- --------- --------- --------- Net Revenue $5,695,160
$5,945,358 $11,072,133 $11,656,007 Cost of Goods Sold 1,527,358
1,636,296 2,841,681 3,132,381 Selling, General and Administrative
Expenses 1,571,271 1,730,949 3,130,666 3,352,588 Research and
Development Expenses 884,069 830,059 1,657,171 1,650,323 Interest
(Income) Expense, Net 83,013 18,685 148,325 (8,771) Other Income,
Net (242,901) (44,677) (365,512) (83,507) -------- ------- --------
------- Income before Income Taxes 1,872,350 1,774,046 3,659,802
3,612,993 Provision for Income Taxes 548,295 541,472 1,055,777
1,113,862 ------- ------- --------- --------- Net Income $1,324,055
$1,232,574 $2,604,025 $2,499,131 ========== ========== ==========
========== Basic Earnings per Share $0.99 $0.92 $1.95 $1.87 =====
===== ===== ===== Average Number of Common Shares Outstanding
during Each Period - Basic 1,333,435 1,332,682 1,332,544 1,333,945
Diluted Earnings per Share $0.98 $0.91 $1.93 $1.85 ===== =====
===== ===== Average Number of Common Shares Outstanding during Each
Period - Diluted 1,356,071 1,359,496 1,355,189 1,359,903 See Notes
to Results of Operations. Notes to Results of Operations 1. The
average number of common shares outstanding for diluted earnings
per share is higher than for basic earnings per share due to the
assumed conversion of the Company's outstanding convertible senior
debentures, outstanding stock options, deferred contingent common
stock awards, performance share awards, restricted stock awards and
convertible preferred stock into common stock equivalents using the
treasury stock method. For purposes of calculating diluted earnings
per share, interest expense, net of capitalized interest and taxes
related to the Company's outstanding convertible senior debentures,
is added back to reported net income, and the additional shares of
common stock (assuming conversion) are included in total shares
outstanding. Interest expense, net of capitalized interest and
taxes related to these debentures, was $2,485 and $5,440 for the
2009 second quarter and first half, respectively, compared with
$6,765 and $13,836 for the 2008 second quarter and first half,
respectively. Pursuant to the right of the holders to require the
Company to repurchase their convertible senior debentures, on July
15, 2009, the Company announced the repurchase of $765,139, or
97.1% of the outstanding principal amount of these debentures. In
addition, the Company redeemed all of its outstanding shares of
convertible preferred stock on July 15, 2009. 2. Other (income)
expense, net included net hedging income for the 2009 second
quarter and first half of $64,812 and $139,098, respectively,
compared with net hedging expense of $45,257 and $71,906 for the
2008 second quarter and first half, respectively. Other (income)
expense, net also included royalty income for the 2009 second
quarter and first half of $144,942 and $178,564, respectively,
compared with $112,231 and $167,989 for the 2008 second quarter and
first half, respectively. The 2009 second quarter and first half
included a one-time royalty receipt of $108,500. The 2008 second
quarter and first half included a one-time royalty milestone
receipt of $60,000 related to the previously divested SYNVISC
product line. Further, Other (income) expense, net included pre-tax
gains from product divestitures of $4,196 and $29,351 for the 2009
second quarter and first half, respectively, compared with $10,143
and $33,201 for the 2008 second quarter and first half,
respectively. 3. Certain significant items related to our
productivity initiatives and the proposed merger with Pfizer have
been excluded from the results of operations - as adjusted for the
2009 and 2008 second quarter and first half as follows:
Productivity Initiatives (UNAUDITED)
----------------------------------------- Three Months Ended Six
Months Ended ------------------- ------------------- (In thousands
except per Share amounts) 6/30/2009 6/30/2008 6/30/2009 6/30/2008
-------------------------- --------- --------- --------- ---------
Cost of Goods Sold $37,603 $47,641 $104,171 $113,569 Selling,
General and Administrative Expenses 6,026 101,551 11,190 202,125
Research and Development Expenses 1,236 6,008 1,254 25,121 -----
----- ----- ------ Total Productivity Initiatives Charges(a) 44,865
155,200 116,615 340,815 Other Income, Net(b) - - - (104,655)
------- -------- -------- -------- Net Productivity Initiatives
Charges $44,865 $155,200 $116,615 $236,160 ======= ========
======== ======== Net Productivity Initiatives Charges, After-Tax
$30,815 $110,480 $85,375 $180,090 ======= ======== ======= ========
Decrease in Diluted Earnings per Share $0.02 $0.08 $0.06 $0.13
===== ===== ===== ===== (a) 2009 second quarter and first half
charges were primarily accelerated depreciation charges and other
plant-related costs as well as severance and other employee-related
costs associated with a reduction in workforce. 2008 second quarter
and first half charges were primarily severance and other
employee-related costs associated with a reduction in workforce.
(b) Other income, net for the 2008 first half represents the net
gain on the sale of a manufacturing facility in Japan.
Merger-Related Expenses The 2009 second quarter and first half
results included merger-related charges of $21,221 ($0.02 per
share-diluted) and $48,471 ($0.04 per share-diluted), respectively,
which are recorded in selling, general and administrative expenses,
and are associated with the proposed merger with Pfizer. Wyeth
calculates net income, excluding certain significant items, by
excluding the after-tax effect of items considered by management to
be unusual from the net income reported under generally accepted
accounting principles (GAAP). Wyeth's management uses this measure
to manage and evaluate the Company's performance and believes it is
appropriate to disclose this non-GAAP measure to assist investors
with analyzing business performance and trends. Wyeth's management
believes that excluding these items from the Company's results
provides a more appropriate view of the Company's operations for
the accounting periods presented. These measures should not be
considered in isolation or as a substitute for the results of
operations and diluted earnings per share prepared in accordance
with GAAP. (4) The following table presents worldwide net revenue
by reportable segment, together with the percentage changes from
the comparable periods in the prior year, as reported and excluding
the impact of foreign exchange (FX): (UNAUDITED)
-------------------------------------------------------- Three
Months Ended 6/30/2009 Six Months Ended 6/30/2009
---------------------------- -------------------------- Net Revenue
by Increase Increase Reportable $ in Excluding $ in Excluding
Segment Millions Decrease FX Millions Decrease FX --------------
-------- -------- -------- -------- -------- ---------
Pharmaceuticals $4,779 (4)% 3% $9,267 (5)% 2% Consumer Healthcare
631 (5)% 2% 1,244 (7)% - Animal Health 285 (9)% 1% 561 (5)% 6%
------ ------ ------ ------ ------ ------ Consolidated Total $5,695
(4)% 2% $11,072 (5)% 2% ====== ====== ====== ====== ====== ======
Wyeth is one of the world's largest research-driven pharmaceutical
and health care products companies. It is a leader in the
discovery, development, manufacturing and marketing of
pharmaceuticals, vaccines, biotechnology products, nutritionals and
non-prescription medicines that improve the quality of life for
people worldwide. The Company's major divisions include Wyeth
Pharmaceuticals, Wyeth Consumer Healthcare and Fort Dodge Animal
Health. The statements in this press release that are not
historical facts, including our revised 2009 financial guidance,
are forward-looking statements that are subject to risks and
uncertainties that could cause actual results to differ materially
from those expressed or implied by such statements. In particular,
if the assumptions underlying our revised 2009 financial guidance
are not met, our actual results could differ materially from our
guidance. In addition, the statements on the related conference
call regarding development and regulatory timelines for our
pipeline products are subject to risks and uncertainties related to
both the timing and success of regulatory submissions and review
and decisions by regulatory authorities, including the possibility
that regulatory authorities will not agree with our assessments of
clinical data or the sufficiency of regulatory submissions, will
require additional clinical trials or other data, will take longer
to review our submissions than we expect, or will determine not to
approve our applications. Other risks and uncertainties that could
cause actual results to differ materially from those expressed or
implied by forward-looking statements include, among others, risks
related to our proposed merger with Pfizer, including satisfaction
of the conditions of the proposed merger on the proposed timeframe
or at all, contractual restrictions on the conduct of our business
included in the merger agreement, and the potential for loss of key
personnel, disruption in key business activities or any impact on
our relationships with third parties as a result of the
announcement of the proposed merger; the inherent uncertainty of
the timing and success of, and expense associated with, research,
development, regulatory approval and commercialization of our
products and pipeline products; government cost-containment
initiatives; restrictions on third-party payments for our products;
substantial competition in our industry, including from branded and
generic products; emerging data on our products and pipeline
products; the importance of strong performance from our principal
products and our anticipated new product introductions; the highly
regulated nature of our business; product liability, intellectual
property and other litigation risks and environmental liabilities;
the outcome of government investigations; uncertainty regarding our
intellectual property rights and those of others; difficulties
associated with, and regulatory compliance with respect to,
manufacturing of our products; risks associated with our strategic
relationships; global economic conditions; interest and currency
exchange rate fluctuations and volatility in the credit and
financial markets; changes in generally accepted accounting
principles; trade buying patterns; the impact of legislation and
regulatory compliance; risks and uncertainties associated with
global operations and sales; and other risks and uncertainties,
including those detailed from time to time in our periodic reports
filed with the Securities and Exchange Commission, including our
current reports on Form 8-K, quarterly reports on Form 10-Q and
annual report on Form 10-K, particularly the discussion under the
caption "Item 1A, RISK FACTORS" in our Annual Report on Form 10-K
for the year ended December 31, 2008, which was filed with the
Securities and Exchange Commission on February 27, 2009. The
forward-looking statements in this press release are qualified by
these risk factors. We assume no obligation to publicly update any
forward-looking statements, whether as a result of new information,
future developments or otherwise. The Company will hold a
conference call with research analysts at 8:00 a.m. Eastern
Daylight Time today. The purpose of the call is to review the
financial results of the Company for the 2009 second quarter and
first half. Interested investors and others may listen to the call
live or on a delayed basis through the Internet webcast, which may
be accessed by visiting the Company's Internet Web site at
http://www.wyeth.com/ and clicking on the "Investor Relations"
hyperlink. Also, for recent announcements and additional
information, including product sales information, please refer to
the Company's Internet Web site. DATASOURCE: Wyeth CONTACT: Media:
Douglas Petkus, +1-973-660-5218, or Investors: Justin Victoria,
+1-973-660-5340, both of Wyeth Web Site: http://www.wyeth.com/
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