(Mark One)
| [ X ] Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 |
For the quarterly period ended March 31, 2005
or
| [ ] Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 |
For the transition period from to
(Exact name of registrant as specified in its charter)
| Delaware (State or other jurisdiction of incorporation or organization) Five Giralda Farms, Madison, N.J. (Address of principal executive offices) |
13-2526821 (I.R.S. Employer Identification No.) 07940 (Zip Code) |
Registrant’s telephone number, including area code (973) 660-5000
Indicate by check mark whether the
registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the
Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period
that the registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.
Yes X
No
Indicate by check mark whether the
registrant is an accelerated filer (as defined in Rule 12b-2 of the Exchange Act).
Yes X
No
The number of shares of Common Stock outstanding as of the close of business on April 29, 2005:
| Class |
Number of Shares Outstanding |
|||
|---|---|---|---|---|
Page No.
| Part I - Part II - Signature Exhibit Index |
Financial Information (Unaudited) Item 1. Consolidated Condensed Financial Statements: Consolidated Condensed Balance Sheets - March 31, 2005 and December 31, 2004 Consolidated Condensed Statements of Operations - Three Months Ended March 31, 2005 and 2004 Consolidated Condensed Statements of Changes in Stockholders' Equity - Three Months Ended March 31, 2005 and 2004 Consolidated Condensed Statements of Cash Flows - Three Months Ended March 31, 2005 and 2004 Notes to Consolidated Condensed Financial Statements Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations Item 3. Quantitative and Qualitative Disclosures About Market Risk Item 4. Controls and Procedures Other Information Item 1. Legal Proceedings Item 6. Exhibits |
2 3 4 5 6 7 - 19 20 - 42 43 43 44 44 - 50 51 - 52 53 EX-1 | ||
Items other than those listed above have been omitted because they are not applicable.
1
The consolidated condensed financial statements included herein have been prepared by Wyeth (the Company), without audit, pursuant to the rules and regulations of the Securities and Exchange Commission (SEC). Certain information and footnote disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States have been condensed or omitted pursuant to such rules and regulations; however, the Company believes that the disclosures are adequate to make the information presented not misleading. In the opinion of management, the consolidated condensed financial statements reflect all adjustments, including those that are normal and recurring, considered necessary to present fairly the financial position of the Company as of March 31, 2005 and December 31, 2004, the results of its operations, changes in stockholders’ equity and cash flows for the three months ended March 31, 2005 and 2004. It is suggested that these consolidated condensed financial statements and management’s discussion and analysis of financial condition and results of operations be read in conjunction with the financial statements and the notes thereto included in the Company’s 2004 Annual Report on Form 10-K and information contained in Current Reports on Form 8-K filed since the filing of the 2004 Form 10-K.
We make available through our Company Internet website, free of charge, our Company filings with the SEC as soon as reasonably practicable after we electronically file them with, or furnish them to, the SEC. The reports we make available include Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K, proxy statements, registration statements, and any amendments to those documents. The Company’s Internet website is www.wyeth.com.
2
| March 31, | December 31, | ||||
| 2005 | 2004 | ||||
| ASSETS | |||||
| Cash and cash equivalents | $4,561,854 | $4,743,570 | |||
| Marketable securities | 679,378 | 1,745,558 | |||
| Accounts receivable less allowances | 2,838,481 | 2,798,565 | |||
| Inventories: | |||||
| Finished goods | 716,395 | 851,059 | |||
| Work in progress | 1,453,039 | 1,340,245 | |||
| Materials and supplies | 292,383 | 286,705 | |||
| 2,461,817 | 2,478,009 | ||||
| Other current assets including deferred taxes | 3,272,759 | 2,672,327 | |||
| Total Current Assets | 13,814,289 | 14,438,029 | |||
| Property, plant and equipment | 13,040,299 | 13,077,351 | |||
| Less accumulated depreciation | 3,601,419 | 3,553,001 | |||
| 9,438,880 | 9,524,350 | ||||
| Goodwill | 3,843,696 | 3,856,410 | |||
| Other intangibles, net of accumulated amortization | |||||
| (March 31, 2005-$148,685 and December 31, 2004-$166,827) | 280,381 | 212,360 | |||
| Other assets including deferred taxes | 5,980,265 | 5,598,555 | |||
| Total Assets | $33,357,511 | $33,629,704 | |||
| LIABILITIES | |||||
| Loans payable | $1,518 | $330,706 | |||
| Trade accounts payable | 799,214 | 949,251 | |||
| Accrued expenses | 6,883,973 | 7,051,557 | |||
| Accrued taxes | 264,848 | 204,028 | |||
| Total Current Liabilities | 7,949,553 | 8,535,542 | |||
| Long-term debt | 7,663,388 | 7,792,311 | |||
| Accrued postretirement benefit obligations other than pensions | 1,044,181 | 1,024,239 | |||
| Other noncurrent liabilities | 6,191,266 | 6,429,709 | |||
| Total Liabilities | 22,848,388 | 23,781,801 | |||
| Contingencies and commitments (Note 5) | |||||
| STOCKHOLDERS' EQUITY | |||||
| $2.00 convertible preferred stock, par value $2.50 per share | 39 | 40 | |||
| Common stock, par value $0.33-1/3 per share | 445,540 | 445,031 | |||
| Additional paid-in capital | 4,856,811 | 4,817,024 | |||
| Retained earnings | 4,889,074 | 4,118,656 | |||
| Accumulated other comprehensive income | 317,659 | 467,152 | |||
| Total Stockholders' Equity | 10,509,123 | 9,847,903 | |||
| Total Liabilities and Stockholders' Equity | $33,357,511 | $33,629,704 | |||
The accompanying notes are an integral part of these consolidated condensed financial statements.
3
| Three Months Ended March 31, |
|||||
|---|---|---|---|---|---|
| 2005 |
2004 | ||||
| Net revenue | $4,578,998 | $4,014,789 | |||
| Cost of goods sold | 1,349,457 | 1,161,364 | |||
| Selling, general and administrative expenses | 1,452,681 | 1,354,210 | |||
| Research and development expenses | 607,957 | 705,302 | |||
| Interest expense, net | 29,999 | 26,932 | |||
| Other income, net | (234,562 | ) | (176,910 | ) | |
| Income before income taxes | 1,373,466 | 943,891 | |||
| Provision for income taxes | 295,295 | 194,188 | |||
| Net income | $1,078,171 | $749,703 | |||
| Basic earnings per share | $0.81 | $0.56 | |||
| Diluted earnings per share | $0.80 | $0.55 | |||
| Dividends paid per share of common stock | $0.23 | $0.23 | |||
The accompanying notes are an integral part of these consolidated condensed financial statements.
4
| $2.00 Convertible Preferred Stock |
Common Stock |
Additional Paid-in Capital |
Retained Earnings |
Accumulated Other Comprehensive Income |
Total Stockholders' Equity | ||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Balance at January 1, 2005 | $40 | $445,031 | $4,817,024 | $4,118,656 | $467,152 | $9,847,903 | |||||||
| Net income | 1,078,171 | 1,078,171 | |||||||||||
| Currency translation adjustments | (155,820 | ) | (155,820 | ) | |||||||||
| Unrealized gains on derivative contracts, net | 22,310 | 22,310 | |||||||||||
| Unrealized losses on marketable securities, net | (15,983 | ) | (15,983 | ) | |||||||||
| Comprehensive income, net of tax | 928,678 | ||||||||||||
| Cash dividends declared (1) | (307,268 | ) | (307,268 | ) | |||||||||
| Common stock issued for stock options | 431 | 30,228 | 30,659 | ||||||||||
| Other exchanges | (1 | ) | 78 | 9,559 | (485 | ) | 9,151 | ||||||
| Balance at March 31, 2005 | $39 | $445,540 | $4,856,811 | $4,889,074 | $317,659 | $10,509,123 | |||||||
| $2.00 Convertible Preferred Stock |
Common Stock |
Additional Paid-in Capital |
Retained Earnings |
Accumulated Other Comprehensive Income |
Total Stockholders' Equity | ||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Balance at January 1, 2004 | $42 | $444,151 | $4,764,390 | $4,112,285 | $(26,487 | ) | $9,294,381 | ||||||
| Net income | 749,703 | 749,703 | |||||||||||
| Currency translation adjustments | (58,817 | ) | (58,817 | ) | |||||||||
| Unrealized gains on derivative contracts, net | 9,170 | 9,170 | |||||||||||
| Unrealized gains on marketable securities, net | 2,449 | 2,449 | |||||||||||
| Comprehensive income, net of tax | 702,505 | ||||||||||||
| Cash dividends declared (2) | (306,604 | ) | (306,604 | ) | |||||||||
| Common stock issued for stock options | 167 | 13,181 | 13,348 | ||||||||||
| Other exchanges | 75 | 7,728 | (165 | ) | 7,638 | ||||||||
| Balance at March 31, 2004 | $42 | $444,393 | $4,785,299 | $4,555,219 | $(73,685 | ) | $9,711,268 | ||||||
(1) Includes the preferred stock cash dividend of $0.50 per share ($8 in the aggregate) declared January 27, 2005 and payable on April 1, 2005.
(2) Included the preferred stock cash dividend of $0.50 per share ($8 in the aggregate) declared March 4, 2004 and paid on April 1, 2004.
The accompanying notes are an integral part of these consolidated condensed financial statements.
5
| Three Months Ended March 31, | |||||
|---|---|---|---|---|---|
| 2005 |
2004 | ||||
| Operating Activities | |||||
| Net income | $1,078,171 | $749,703 | |||
| Adjustments to reconcile net income to net cash | |||||
| provided by (used for) operating activities: | |||||
| Gains on sales of assets | (155,712 | ) | (132,480 | ) | |
| Depreciation and amortization | 166,353 | 147,394 | |||
| Change in deferred income taxes | 138,088 | 17,964 | |||
| Seventh Amendment security fund | (1,250,000 | ) | -- | ||
| Diet drug litigation payments | (289,593 | ) | (98,643 | ) | |
| Changes in working capital, net | (303,756 | ) | (230,587 | ) | |
| Other items, net | 46,985 | 48,272 | |||
| Net cash provided by (used for) operating activities | (569,464 | ) | 501,623 | ||
| Investing Activities | |||||
| Purchases of property, plant and equipment | (213,030 | ) | (291,583 | ) | |
| Proceeds from sales of assets | 170,959 | 228,836 | |||
| Proceeds from sales and maturities of marketable securities | 1,067,199 | 182,800 | |||
| Purchases of marketable securities | (20,958 | ) | (200,487 | ) | |
| Net cash provided by (used for) investing activities | 1,004,170 | (80,434 | ) | ||
| Financing Activities | |||||
| Repayments of long-term debt | (328,187 | ) | (1,500,000 | ) | |
| Other borrowing transactions, net | (1,071 | ) | (4,981 | ) | |
| Dividends paid | (307,260 | ) | (306,596 | ) | |
| Exercises of stock options | 30,659 | 13,348 | |||
| Net cash used for financing activities | (605,859 | ) | (1,798,229 | ) | |
| Effect of exchange rate changes on cash and cash equivalents | (10,563 | ) | (1,414 | ) | |
| Decrease in cash and cash equivalents | (181,716 | ) | (1,378,454 | ) | |
| Cash and cash equivalents, beginning of period | 4,743,570 | 6,069,794 | |||
| Cash and cash equivalents, end of period | $4,561,854 | $4,691,340 | |||
| Supplemental Information | |||||
| Interest payments | $157,833 | $99,324 | |||
| Income tax payments, net of refunds | 115,329 | 265,733 | |||
The accompanying notes are an integral part of these consolidated condensed financial statements.
6
| The following policies are required interim updates to those disclosed in Footnote 1 of the 2004 Annual Report on Form 10-K: |
| Stock-Based Compensation: The Company has four Stock Incentive Plans that it accounts for using the intrinsic value method in accordance with APB Opinion No. 25, Accounting for Stock Issued to Employees. All options granted under these plans have an exercise price equal to the market value of the underlying common stock on the date of grant. Accordingly, no stock-based employee compensation cost is reflected in net income other than for the Company’s restricted stock awards. The following table illustrates the effect on net income and earnings per share if the Company had applied the fair value recognition provisions of SFAS No. 123, Accounting for Stock-Based Compensation as amended by SFAS No. 148, Accounting for Stock-Based Compensation – Transition and Disclosure, Amendment of SFAS No. 123, to stock-based employee compensation: |
Three Months
Ended March 31,(In thousands except per share amounts) 2005 2004 Net income, as reported $1,078,171 $749,703 Add: Stock-based employee compensation expense included in reported net income, net of tax 4,477 2,493 Deduct: Total stock-based employee compensation expense determined under fair value-based method for all awards, net of tax (69,679 ) (85,143 ) Adjusted net income $1,012,969 $667,053 Earnings per share: Basic - as reported $0.81 $0.56 Basic - adjusted $0.76 $0.50 Diluted - as reported $0.80 $0.55 Diluted - adjusted $0.75 $0.49
| On December 16, 2004, the Financial Accounting Standards Board (FASB) issued SFAS No. 123 (revised 2004), Share-Based Payment (Statement 123R). Statement 123R replaces SFAS No. 123 and supersedes APB No. 25 and its related implementation guidance. This Statement requires all share-based payments to employees, including grants of employee stock options, to be recognized in the statement of operations as compensation expense based on their fair values and over the vesting period of the award. Currently, the Company provides the required pro forma expense effect of the grants in its footnote disclosure. On April 14, 2005, the SEC approved a new rule that, for public companies, delays the effective date of Statement 123R to annual, rather than interim periods that begin after June 15, 2005. |
7
| The Company expects that the adoption of SFAS No. 123R will have a material impact on its results of operations and earnings per share beginning in 2006. However, the Company has not yet determined the impact of adopting SFAS No. 123R because of changes in the Company’s share-based compensation programs. |
| Goodwill and Other Intangibles: In accordance with SFAS No. 142, Goodwill and Other Intangible Assets, the changes in the carrying amount of goodwill by reportable segment for the three months ended March 31, 2005 are as follows: |
(In thousands) Pharmaceuticals Consumer
HealthcareAnimal
HealthTotal Balance at December 31, 2004 $2,728,565 $593,606 $534,239 $3,856,410 Currency translation adjustments (12,016 ) (460 ) (238 ) (12,714 ) Balance at March 31, 2005 $2,716,549 $593,146 $534,001 $3,843,696
8
The following table sets forth the computations of basic earnings per share and diluted earnings per share:
Three Months
Ended March 31,(In thousands except per share amounts) 2005 2004 Net income less preferred dividends $1,078,163 $749,695 Denominator: Weighted average common shares outstanding 1,335,909 1,332,926 Basic earnings per share $0.81 $0.56 Numerator: Net income $1,078,171 $749,703 Interest expense on contingently convertible debt(1) 4,064 1,010