SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
________
FORM 6-K
REPORT OF FOREIGN PRIVATE ISSUER
PURSUANT TO RULE 13A-16 OR 15D-16 OF
THE SECURITIES EXCHANGE ACT OF 1934
For the month of February, 2004
Serono S.A.
----------------------------------------
(Registrant's Name)
15 bis, Chemin des Mines
Case Postale 54
CH-1211 Geneva 20
Switzerland
----------------------------------------
(Address of Principal Executive Offices)
1-15096
----------------------------------------
(Commission File No.)
(Indicate by check mark whether the registrant files or will file annual
reports under cover of Form 20-F or Form 40-F.)
Form 20-F X Form 40-F
--- ---
(Indicate by check mark if the registrant is submitting the Form 6-K in
paper as permitted by Regulation S-T Rule 101 (b)(1).) ___
(Indicate by check mark if the registrant is submitting the Form 6-K in
paper as permitted by Regulation S-T Rule 101 (b)(7).) ___
(Indicate by check mark whether the registrant by furnishing the
information contained in this form is also thereby furnishing the information to
the Commission pursuant to Rule 12g3-2(b) under the Securities Exchange Act of
1934.)
Yes No X
--- ---
(If "Yes" is marked, indicate below the file number assigned to the
registrant in connection with Rule 12g3-2(b): 82-______)
SERONO
MEDIA RELEASE
FOR RELEASE FEBRUARY 2, 2004, 4:01 PM EST
-----------------------------------------
--------------------------------------------------------------------------------
RECORD YEAR FOR SERONO WITH OVER $2 BILLION IN REVENUES
- Net income up 21.6% to $390.0 million in 2003 -
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ROCKLAND, MA, FEBRUARY 2, 2004 - 04:01 PM EST - Serono (virt-x: SEO and NYSE:
SRA), the third largest biotechnology company in the world, today reported its
fourth quarter and full year results for the period ended December 31, 2003.
KEY POINTS FOR FULL YEAR 2003
- Total revenues up 31.3% to $2,018.6m (up 20.9% in local currencies)
- Neurology now Serono's largest therapeutic area with sales up 54.9% to
$850.2m
- Reproductive Health core portfolio growing at 20.7% to $593.7m
- Reported net income up 21.6% to $390.0m (up 14.2% in local currencies)
and up 26.9% (or 18.9% in local currencies) excluding non-recurring
non-operational charges
- Reported EPS up 22.7% to $24.63 per bearer share and $0.62 per ADS
- Proposed dividend of CHF8.0 per bearer share and of CHF0.2 per ADS*
- 2004 growth outlook in local currencies of 12% or more for total
revenues and 15% to 20% for net income
"2003 was a record year for Serono with total revenues breaking through the $2
billion mark," said Ernesto Bertarelli, Chief Executive Officer of Serono.
"Going forward we are very well positioned to take advantage of the many
opportunities which exist in the biotech sector."
"We forecast another strong financial performance in 2004," said Allan Shaw,
Chief Financial Officer. "This year, we expect our net income growth to be
between 15% and 20%, inclusive of launch costs for Raptiva(TM)."
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FOURTH QUARTER AND FULL YEAR FINANCIAL PERFORMANCE
Total revenues increased by 31.3% to $2,018.6m in the full year 2003 (2002:
$1,537.8m), and by 29.1% to $565.1m in the fourth quarter (2002: $437.7m).
Worldwide product sales were $1,858.0m in 2003, up 30.6% (2002: $1,423.1m), and
up 26.8% to $519.3m in the fourth quarter (2002: $409.4m). Notwithstanding
weakness in the US dollar, product sales in local currencies grew by 19.9% in
2003 and 16.5% in the fourth quarter.
Royalty and licensing income increased by 40.0% to $160.6m in 2003 (2002:
$114.7m), and was up 61.8% to $45.8m (2002: $28.3m) in the fourth quarter,
reflecting the company's strong intellectual property rights.
Gross margin increased to 85.0% of product sales in 2003 (2002: 84.3%), as a
result of continuing manufacturing improvements leading to higher production
yields. In the fourth quarter of 2003 gross margin was 84.5% (2002: 84.1%).
Selling, General and Administrative expenses were $636.8m or 31.5% of total
revenues in 2003 (2002: $504.2m or 32.8% of total revenues), and 31.7% of
revenues at $178.9m in the fourth quarter (2002: $144.5m or 33.0% of revenues).
The decrease in SG&A as a percentage of revenues reflects an improvement in the
company's operating leverage in 2003.
Research and Development expenses were $467.8m or 23.2% of total revenues (2002:
$358.1m or 23.3% of total revenues) for the full year, and $124.2m or 22.0% of
total revenues in the fourth quarter (2002: $95.4m or 21.8% of total revenues).
Other operating expenses in 2003 were $199.5m (2002: $85.8m), and $49.2m (2002:
$27.7m) in the fourth quarter. The increase in other operating expenses
reflects payments related to licensing agreements for new products and higher
royalties paid to third parties.
Full year 2003 operating income increased by 24.4% to $434.9m or 21.5% of total
revenues (2002: $349.6m or 22.7% of total revenues), and was up 49.5% to $132.4m
in the fourth quarter or 23.4% of total revenues (2002: $88.6m or 20.2% of total
revenues).
Net financial income was $44.0m in 2003 (2002: $36.5m) and $15.2m in the fourth
quarter (2002: $9.2m).
Other expense was $19.7m in 2003 (2002: $1.7m) and $16.1m in the fourth quarter
(2002: income of $0.2m), reflecting non-recurring non-operational charges. In
the fourth quarter, the company took a non-cash charge of $16.1m related to the
write-down of an equity investment made in Swiss International Air Lines.
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Total taxes in 2003 were $68.9m, representing an overall tax rate of 15.0% of
profit before tax (2002: $63.1m, or 16.4% of profit before tax). In the fourth
quarter, taxes were $19.7m, or 15.0% of profit before tax (2002: $15.8m or 16.2%
of profit before tax).
Reported net income in the full year 2003 was up 21.6% to $390.0m (2002:
$320.8m), or 14.2% in local currencies. Excluding non-recurring non-operational
charges, net income growth was 26.9%, or 18.9% in local currencies in 2003. In
the fourth quarter, reported net income grew 36.8%, or 25.8% in local
currencies, to $111.6m (2002: $81.6m).
Basic earnings per share (EPS) were up 22.7% to $24.63 per bearer share (2002:
$20.07) and $0.62 per American Depositary Share (ADS) (2002: $0.50).
On May 25, 2004, the Board of Directors will propose to the Annual General
Meeting a cash dividend of CHF8.0 per bearer share, CHF3.2 per registered share
or CHF0.2 per ADS*, representing an increase of 14.3% over the 2002 dividend.
For the full year ended 2003, net cash flow from operating activities was
$542.9m (2002: $532.0). When excluding one-time payments received from third
parties in connection with the signing of collaborative agreements (Pfizer in
2002 and OSI Pharmaceuticals in 2003), operating cash flows increased 47.0%
compared to 2002.
As of December 31, 2003, there were 15.812 million outstanding equivalent bearer
shares of Serono SA.
NEUROLOGY
Neurology sales were up 54.9% to $850.2m for the full year 2003, and fourth
quarter sales were $242.2m. Full year sales of Rebif(R) were up 49.3% (34.1% in
local currencies) to $819.4m (2002: $548.8m). In the fourth quarter, worldwide
sales of Rebif(R) increased by 35.9% (22.7% in local currencies) to $233.2m
(2002: $171.5m).
Sales of Rebif(R) in the US were up 60.0% to $55.7m in the fourth quarter (2002:
$34.8m). In 2003, with $188.5m sales for the full year, representing an increase
of 164.8% (2002: $71.2m), Rebif(R) was clearly the fastest growing multiple
sclerosis (MS) therapy in the US, more than doubling its market share during the
year.
Rebif(R) continues its market leadership outside the US with 2003 sales
increasing by 32.1% to $630.8m (2002: $477.6m). European sales increased by
39.0% (16.9% in local currencies) to $436.8m (2002: $314.1m). Sales outside the
US were $177.5m in the fourth quarter (2002: $136.7m).
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In 2003, the performance of Rebif(R) was supported by the release of a series of
positive study results. These included the final 63-week EVIDENCE study results,
data showing greater efficacy with Rebif(R) in patients who converted from
Avonex(R) to Rebif(R) at the end of the comparative phase of the study, as well
as the safety and efficacy results from the eight-year long-term follow-up of
the PRISMS study.
Given the strong performance of Rebif(R) in 2003, the company is on track to
achieving its goal of worldwide market leadership by the end of 2006.
Novantrone(R) sales in MS were $30.9m in 2003 and $9.0m the fourth quarter
(total Novantrone(R) sales were $77.1m in 2003 and $22.4m the fourth quarter).
REPRODUCTIVE HEALTH
In 2003, worldwide reproductive health sales grew 11.4% to $692.9m (2002:
$621.9m), and by 15.2% to $191.0m in the fourth quarter (2002: $165.8m). Sales
of Gonal-f(R) increased by 16.8% (7.3% in local currencies) to $526.1m (2002:
$450.4m) in the full year, and by 21.6% (11.2% in local currencies) to $147.5m
(2002: $121.3m) in the fourth quarter.
Serono's core reproductive health portfolio consisting of three recombinant
hormones (Gonal-f(R), Ovidrel(R)/Ovitrelle(R), Luveris(R)) and two complementary
products (Cetrotide(R), Crinone(R)) grew by 20.7% (10.7% in local currencies) to
$593.7m representing 85.7% of total reproductive health sales in 2003. In the
fourth quarter this core portfolio grew by 25.6% (14.7% in local currencies) to
$168.1m (2002: $133.8m).
In October, the Ovidrel(R)/Ovitrelle(R) pre-filled syringe was approved by both
the FDA and the European Commission making it the first liquid, ready-to-use
recombinant hCG..
METABOLIC ENDOCRINOLOGY
Saizen(R) sales increased by 22.1% (11.0% in local currencies) to $151.5m (2002:
$124.0m) in 2003, and were up 17.4% (7.1% in local currencies) to $42.3m (2002:
$36.0m) during the fourth quarter.
Serostim(R) sales were $88.8m for the full year (2002: $95.1m), and $22.8m
(2002: $26.5m) in the fourth quarter.
In December 2003, the FDA approved Zorbtive(TM) [somatropin (rDNA origin) for
injection], Serono's recombinant human growth hormone, for use in the treatment
of short bowel syndrome, a serious and potentially life-threatening condition.
Zorbtive(TM) was granted orphan drug status for use in the treatment of patients
with short bowel syndrome by the FDA Office of Orphan Products Development.
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PSORIASIS
Serono is committed to developing and commercializing new biotherapeutics for
psoriasis, a chronic skin disease.
On October 27, 2003, our partners Genentech and XOMA announced that Raptiva(TM)
(efalizumab) was approved by the FDA for the treatment of chronic
moderate-to-severe plaque psoriasis. Raptiva(TM) is the first biologic therapy
designed to provide continuous control of chronic moderate-to-severe plaque
psoriasis and can be self-administered by patients as a single, once-weekly,
subcutaneous injection. Long-term data on Raptiva(TM) was presented at the
American Academy of Dermatology in July 2003.
Serono is responsible for developing and commercializing Raptiva(TM) worldwide
outside of the United States and Japan. During 2003, Serono submitted
regulatory applications in key markets for the use of Raptiva(TM) in
moderate-to-severe plaque psoriasis and currently expects to commence its launch
program for this innovative therapy in the second half of 2004. Costs
associated with the launch of Raptiva(TM) are projected to be between $30m and
$50m in 2004.
REGIONAL SALES
North American sales grew by 44.8% to $694.3m in 2003 (2002: $479.6m). European
sales increased by 31.2% to $813.8m (2002: $620.4m). In the rest of the world,
sales grew by 8.3% to $349.9m (2002: $323.2m). In the fourth quarter, North
American sales were up 32.2% to $192.7m (Q4 2002: $145.8m) while European sales
grew by 31.0% to $233.0m (Q4 2002: $177.8m) and sales in the rest of the world
increased by 9.1% to $93.6m (Q4 2002: $85.8m).
R&D NEWS
A multicentre multinational head-to-head trial comparing Rebif(R) vs.
Copaxone(R) was recently initiated. This is a 2-year study with a
relapse-related primary endpoint, as well as other clinical and MRI secondary
endpoints.
During the last twelve months, key R&D highlights were:
- In June, positive Phase 2 results for onercept (r-hTBP-1) in psoriasis
were presented at the 9th International Psoriasis Symposium. A Phase 3
program is scheduled to start in due course following completion of
discussions with the FDA.
- Phase 2a studies with IL-18 binding protein were started in rheumatoid
arthritis and psoriasis.
- A Phase 2 trial with anastrozole for follicular development and
ovulation induction in infertile women with ovulatory dysfunction was
initiated in the first quarter. The study outcome is expected by
mid-2004.
- In June, positive results from a proof of concept study of emfilermin
(r-hLIF) for improving embryo implantation in women with recurrent
implantation
-more-
failure were presented at ESHRE. A Phase 2 study aiming to enhance
embryo implantation in patients who have a history of previous IVF
failures was initiated during the second quarter. The outcome of this
study is anticipated in the second half of 2004.
During the last twelve months, significant regulatory milestones were also
achieved including:
- Positive European CPMP opinion for Gonal-f(R) pre-filled pen injector,
- Favorable FDA advisory committee recommendation for Luveris(R) in
treatment of profoundly LH-deficient women,
- EMEA and FDA approvals of Ovidrel(R)/Ovitrelle(R) pre-filled syringe
for infertility,
- FDA approval of Zorbtive(TM) for use in patients with short bowel
syndrome.
CONFERENCE CALL AND WEBCAST
Serono will hold a conference call on February 3rd, 2004, starting at 11:00 am
Eastern Time (5:00 pm Central European Time) during which Serono Management will
present the Company's Fourth Quarter and Full Year 2003 Results. To join the
telephone conference please dial 412 858 4600 (from the US), 091 610 5600 (from
Switzerland), 0207 866 4111 (from the UK) and +41 91 610 5600 (from elsewhere).
Telephone playback will be available one hour after the conference call and
until close of business 5.00 pm ET on February 6th, 2004. To access this
playback please dial the following numbers: 412 858 1440 (from the US), 091 612
4330 (from Switzerland), 0207 866 4300 (from the UK) and +41 91 612 4330 (from
elsewhere) and enter the PIN code 247# from a touch tone telephone.
The event will also be relayed by live audio webcast which interested parties
may access via Serono's Corporate home page, www.serono.com. A link to the
webcast will be provided immediately prior to the event. Additionally, the
webcast will be available for replay until close of business on February 20th,
2004.
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###
Some of the statements in this press release are forward looking. Such
statements are inherently subject to known and unknown risks, uncertainties and
other factors that may cause actual results, performance or achievements of
Serono and affiliates to be materially different from those expected or
anticipated in the forward-looking statements. Forward-looking statements are
based on Serono's current expectations and assumptions, which may be affected by
a number of factors, including those discussed in this press release and more
fully described in Serono's Annual Report on Form 20-F filed with the U.S.
Securities and Exchange Commission on April 17, 2003. These factors include any
failure or delay in Serono's ability to develop new products, any failure to
receive anticipated regulatory approvals, any problems in commercializing
current products as a result of competition or other factors, our ability to
obtain reimbursement coverage for our products, and government regulations
limiting our ability to sell our products. Serono has no responsibility to
update the forward-looking statements contained in this press release to reflect
events or circumstances occurring after the date of this press release.
###
ABOUT SERONO
Serono is a global biotechnology leader. The Company has seven recombinant
products, Rebif(R), Gonal-F(R), Luveris(R), Ovidrel(R)/Ovitrelle(R),
Serostim(R), Saizen(R) and Zorbtive(TM) (Luveris(R) is not approved in the USA).
In addition to being the world leader in reproductive health, Serono has strong
market positions in neurology, metabolism and growth. The Company's research
programs are focused on growing these businesses and on establishing new
therapeutic areas. Currently, there are approximately 30 ongoing development
projects.
In 2003, Serono achieved worldwide revenues of US$2,018.6 million, and a net
income of US$390.0 million, making it the third largest biotech company in the
world. Its products are sold in over 90 countries. Bearer shares of Serono, the
holding company, are traded on the virt-x (SEO) and its American Depositary
Shares are traded on the New York Stock Exchange (SRA).
*i.e. $0.16 based on an exchange rate of $1=CHF1.2562, as of January 30, 2004.
The actual dividend will be based on the exchange rate in effect on the date the
dividend is converted into $ by the depositary for the ADS.
FOR MORE INFORMATION, PLEASE CONTACT:
SERONO IN GENEVA, SWITZERLAND:
MEDIA RELATIONS: INVESTOR RELATIONS:
Tel: +41-22-739 36 00 Tel: +41-22-739 36 01
Fax: +41-22-739 30 85 Fax: +41-22-739 30 22
http://www.serono.com Reuters: SEO.VX / SRA
--------------------- Bloomberg: SEO VX / SRA US
SERONO, INC., ROCKLAND, MA
MEDIA RELATIONS: INVESTOR RELATIONS:
Tel. +1 781 681 2340 Tel. +1 781 681 2552
Fax: +1 781 681 2935 Fax: +1 781 681 2912
http://www.seronousa.com
------------------------
On the following pages, there are:
- Tables detailing sales in dollars by therapeutic area, geographic
region and the top 10 products for the 3 and 12 months ended December
31, 2003 and 2002.
- Consolidated statements of income for the 3 and 12 months ended
December 31, 2003 and 2002, the consolidated statements of cash flows
for the 12 months ended December 31, 2003 and 2002, as well as the
consolidated balance sheets and consolidated statements of equity as
of December 31, 2003 and 2002. These consolidated financial statements
have been prepared on the basis of International Financial Reporting
Standards. The accompanying notes to these consolidated financial
statements will be available upon the release of Serono's 2003 Annual
Report.
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SALES BY THERAPEUTIC AREA
-------------------------
THREE MONTHS ENDED THREE MONTHS ENDED
DECEMBER 31, 2003 DECEMBER 31, 2002
$ MILLION % OF SALES % CHANGE $ $ MILLION % OF SALES
---------------------------------------------------------------------------------------
Neurology 242.2 46.6% 41.0% 171.8 42.0%
Reproductive Health 191.0 36.8% 15.2% 165.8 40.5%
Growth & Metabolism 65.1 12.5% 4.2% 62.5 15.3%
Others 21.0 4.1% 123.4% 9.3 2.2%
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Total sales(US$ million) $ 519.3 100% 26.8% $ 409.4 100%
SALES BY GEOGRAPHIC REGION
--------------------------
THREE MONTHS ENDED THREE MONTHS ENDED
DECEMBER 31, 2003 DECEMBER 31, 2002
$ MILLION % OF SALES % CHANGE $ $ MILLION % OF SALES
---------------------------------------------------------------------------------------
Europe 233.0 44.9% 31.0% 177.8 43.4%
North America 192.7 37.1% 32.2% 145.8 35.6%
Latin America 29.4 5.7% 14.0% 25.8 6.3%
Others 64.2 12.3% 7.0% 60.0 14.7%
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Total sales(US $million) $ 519.3 100% 26.8% $ 409.4 100%
SALES BY THERAPEUTIC AREA
-------------------------
TWELVE MONTHS ENDED TWELVE MONTHS ENDED
DECEMBER 31, 2003 DECEMBER 31, 2002
$ MILLION % OF SALES % CHANGE $ $ MILLION % OF SALES
---------------------------------------------------------------------------------------
Neurology 850.2 45.8% 54.9% 549.1 38.6%
Reproductive Health 692.9 37.3% 11.4% 621.9 43.7%
Growth & Metabolism 240.2 12.9% 9.6% 219.1 15.4%
Others 74.7 4.0% 125.6% 33.0 2.3%
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Total sales(US $million) $ 1,858.0 100% 30.6% $ 1,423.1 100%
SALES BY GEOGRAPHIC REGION
--------------------------
TWELVE MONTHS ENDED TWELVE MONTHS ENDED
DECEMBER 31, 2003 DECEMBER 31, 2002
$ MILLION % OF SALES % CHANGE $ $ MILLION % OF SALES
---------------------------------------------------------------------------------------
Europe 813.8 43.8% 31.2% 620.4 43.6%
North America 694.3 37.4% 44.8% 479.6 33.7%
Latin America 98.8 5.3% (9.5%) 109.2 7.7%
Others 251.1 13.5% 17.3% 213.9 15.0%
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Total sales(US $million) $ 1,858.0 100% 30.6% $ 1,423.1 100%
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TOP TEN PRODUCTS
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THREE MONTHS ENDED THREE MONTHS ENDED
DECEMBER 31, 2003 DECEMBER 31, 2002
-----------------------------------------------------------
* TA $MILLION % OF SALES % CHANGE $ $MILLION % OF SALES
Rebif(R) MS 233.2 44.9% 35.9% 171.5 41.9%
Gonal-f(R) RH 147.5 28.4% 21.6% 121.3 29.6%
Saizen(R) Growth 42.3 8.1% 17.4% 36.0 8.8%
Serostim(R) Wasting 22.8 4.4% (13.9%) 26.5 6.5%
Novantrone(R) MS/Oncology 22.4 4.3% 3372.7% 0.6 0.2%
Pergonal(R) RH 11.9 2.3% (10.6%) 13.3 3.2%
Cetrotide(R) RH 7.7 1.5% 42.3% 5.4 1.3%
Crinone(R) RH 6.4 1.2% 105.5% 3.1 0.8%
Metrodin HP(R) RH 5.3 1.0% (49.6%) 10.4 2.5%
Stilamin(R) Other 3.9 0.7% 5.8% 3.7 0.9%
THREE MONTHS ENDED THREE MONTHS ENDED
DECEMBER 31, 2003 DECEMBER 31, 2002
-----------------------------------------------------------
* TA $MILLION % OF SALES % CHANGE $ $MILLION % OF SALES
Rebif(R) MS 819.4 44.1% 49.3% 548.8 38.6%
Gonal-f(R) RH 526.1 28.3% 16.8% 450.4 31.7%
Saizen(R) Growth 151.5 8.2% 22.1% 124.0 8.7%
Serostim(R) Wasting 88.8 4.8% (6.6%) 95.1 6.7%
Novantrone(R) MS/Oncology 77.1 4.1% 11866.3% 0.6 0.0%
Pergonal(R) RH 45.8 2.5% (0.4%) 46.0 3.2%
Cetrotide(R) RH 24.8 1.3% 35.3% 18.4 1.3%
Metrodin HP(R) RH 24.8 1.3% (50.6%) 50.1 3.5%
Crinone(R) RH 20.8 1.1% 90.2% 10.9 0.8%
Profasi(R) RH 15.4 0.8% (22.4%) 19.8 1.4%
* THERAPEUTIC AREAS
RH = Reproductive Health Wasting = AIDS Wasting
MS = Multiple Sclerosis Growth = Growth Retardation
Oncology = Oncology
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CONSOLIDATED INCOME STATEMENTS
THREE MONTHS ENDED DECEMBER 31 2003 * % OF 2002 * % of
US$'000 REVENUES % change US$'000 Revenues
Revenues
Product sales 519,276 26.8% 409,429
Royalty and license income 45,788 61.8% 28,307
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TOTAL REVENUES 565,064 100.0% 29.1% 437,736 100.0%
-----------------------------------------------------------------------------------------------------
Operating Expenses
Cost of product sales 80,418 23.4% 65,167
% of Sales 15.5% 15.9%
Selling, general and administrative 178,865 31.7% 23.8% 144,518 33.0%
Research and development 124,208 22.0% 30.2% 95,418 21.8%
Restructuring 0 0.0% (100.0%) 16,303 3.7%
Other operating expense, net 49,156 8.7% 77.2% 27,748 6.3%
-----------------------------------------------------------------------------------------------------
Total Operating Expenses 432,647 76.6% 23.9% 349,154 79.8%
-----------------------------------------------------------------------------------------------------
OPERATING INCOME 132,417 23.4% 49.5% 88,582 20.2%
-----------------------------------------------------------------------------------------------------
Financial income, net 15,154 65.6% 9,152
Other (expense)/income, net (16,124) (9313.7%) 175
-----------------------------------------------------------------------------------------------------
Total Non Operating (Expense)/Income, Net (970) 9,327
-----------------------------------------------------------------------------------------------------
Income Before Taxes and Minority Interests 131,447 23.3% 34.3% 97,909 22.4%
Taxes 19,742 15,849
-----------------------------------------------------------------------------------------------------
Income Before Minority Interests 111,705 82,060
Minority interests 92 474
-----------------------------------------------------------------------------------------------------
NET INCOME 111,613 19.8% 36.8% 81,586 18.6%
-----------------------------------------------------------------------------------------------------
Comparative figures have been reclassified to conform with current year's
presentation
* Unaudited
2003 2002 % CHANGE
Basic Earnings per Share (in U.S. dollars)
- Bearer shares 7.05 5.15 37.0%
--------------------------------------------------------------------------------
- Registered shares 2.82 2.06 37.0%
--------------------------------------------------------------------------------
- American depositary shares 0.18 0.13 37.0%
--------------------------------------------------------------------------------
Diluted Earnings per Share (in U.S. dollars)
- Bearer shares 7.04 5.14 36.8%
--------------------------------------------------------------------------------
- Registered shares 2.81 2.06 36.8%
--------------------------------------------------------------------------------
- American depositary shares 0.18 0.13 36.8%
--------------------------------------------------------------------------------
Basic earnings per share are calculated in accordance with IAS 33 (Earnings per
Share) by dividing the net income of the group, US$111.6 million (2002 US$81.6
million), by an appropriate number of shares. This is 11,421,622 bearer shares
(2002 11,446,403) and 11,013,040 registered shares (2002 11,013,040). The total
weighted average equivalent number of bearer shares is 15,826,838 (2002
15,851,619) for the three months ended December 31, 2003. As each American
depositary share represents ownership interest in one fortieth of a bearer
share, basic and diluted earnings per American depositary share is calculated as
one fortieth of the earnings per bearer share.
For diluted earnings per share, the total number of bearer shares is adjusted to
assume conversion of all in the money share options granted to employees and
directors. The number of bearer shares used to calculate diluted earnings per
share is 11,495,708 (2002 11,457,771).
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CONSOLIDATED INCOME STATEMENTS
TWELVE MONTHS ENDED DECEMBER 31 2003 * % OF 2002 % of
US$'000 REVENUES % change US$'000 Revenues
Revenues
Product sales 1,858,009 30.6% 1,423,130
Royalty and license income 160,608 40.0% 114,705
---------------------------------------------------------------------------------------------------------
TOTAL REVENUES 2,018,617 100.0% 31.3% 1,537,835 100.0%
---------------------------------------------------------------------------------------------------------
Operating Expenses
Cost of product sales 279,619 25.0% 223,751
% of Sales 15.0% 15.7%
Selling, general and administrative 636,823 31.5% 26.3% 504,248 32.8%
Research and development 467,779 23.2% 30.6% 358,099 23.3%
Restructuring 0 0.0% (100.0%) 16,303 1.1%
Other operating expense, net 199,476 9.9% 132.5% 85,811 5.6%
---------------------------------------------------------------------------------------------------------
Total Operating Expenses 1,583,697 78.5% 33.3% 1,188,212 77.3%
---------------------------------------------------------------------------------------------------------
OPERATING INCOME 434,920 21.5% 24.4% 349,623 22.7%
---------------------------------------------------------------------------------------------------------
Financial income, net 44,018 20.7% 36,476
Other (expense), net (19,743) -1090.8% (1,658)
---------------------------------------------------------------------------------------------------------
Total Non Operating Income, Net 24,275 34,818
---------------------------------------------------------------------------------------------------------
Income Before Taxes and Minority Interests 459,195 22.7% 19.4% 384,441 25.0%
Taxes 68,905 63,127
---------------------------------------------------------------------------------------------------------
Income Before Minority Interests 390,290 321,314
Minority interests 327 536
---------------------------------------------------------------------------------------------------------
NET INCOME 389,963 19.3% 21.6% 320,778 20.9%
---------------------------------------------------------------------------------------------------------
Comparative figures have been reclassified to conform with current year's
presentation
* Unaudited
2003 2002 % CHANGE
Basic Earnings per Share (in U.S. dollars)
----------------------------------------------------------------------------------
- Bearer shares 24.63 20.07 22.7%
----------------------------------------------------------------------------------
- Registered shares 9.85 8.03 22.7%
----------------------------------------------------------------------------------
- American depositary shares 0.62 0.50 22.7%
----------------------------------------------------------------------------------
Diluted Earnings per Share (in U.S. dollars)
----------------------------------------------------------------------------------
- Bearer shares 24.59 20.04 22.7%
----------------------------------------------------------------------------------
- Registered shares 9.84 8.02 22.7%
----------------------------------------------------------------------------------
- American depositary shares 0.61 0.50 22.7%
----------------------------------------------------------------------------------
Basic earnings per share are calculated in accordance with IAS 33 (Earnings per
Share) by dividing the net income of the group, US$390.0 million (2002 US$320.8
million), by an appropriate number of shares. This is 11,427,194 bearer shares
(2002 11,580,611) and 11,013,040 registered shares (2002 11,013,040). The total
weighted average equivalent number of bearer shares is 15,832,410 (2002
15,985,826) for the twelve months ended December 31, 2003. As each American
depositary share represents ownership interest in one fortieth of a bearer
share, basic and diluted earnings per American depositary share is calculated as
one fortieth of the earnings per bearer share.
For diluted earnings per share, the total number of bearer shares is adjusted to
assume conversion of all in the money share options granted to employees and
directors. The number of bearer shares used to calculate diluted earnings per
share is 11,452,890 (2002 11,598,154).
-more-
CONSOLIDATED BALANCE SHEETS
As of DECEMBER 31, 2003 * December 31, 2002
US$ 000 US$ 000
ASSETS
Current Assets
Cash and cash equivalents 1,003,972 686,033
Short-term financial assets 434,810 378,865
Trade accounts receivable 318,388 257,313
Inventories 319,820 259,477
Prepaid expenses and other current assets 220,334 234,709
--------------------------------------------------------------------------------------------------------
Total Current Assets 2,297,324 1,816,397
--------------------------------------------------------------------------------------------------------
Non-Current Assets
Property, plant and equipment 701,453 554,509
Long-term financial assets 1,104,333 711,201
Intangible assets 259,626 230,117
Deferred tax assets 169,693 126,291
Other long-term assets 39,174 45,763
--------------------------------------------------------------------------------------------------------
Total Non-Current Assets 2,274,279 1,667,881
--------------------------------------------------------------------------------------------------------
TOTAL ASSETS 4,571,603 3,484,278
--------------------------------------------------------------------------------------------------------
LIABILITIES
Current Liabilities
Trade and other payables 338,862 268,089
Short-term financial debt 51,224 93,598
Income taxes 146,086 173,656
Deferred income, current 47,200 18,221
Other current liabilities 170,019 122,985
--------------------------------------------------------------------------------------------------------
Total Current Liabilities 753,391 676,549
--------------------------------------------------------------------------------------------------------
Non-Current Liabilities
Long-term financial debt 532,022 25,857
Deferred tax liabilities 15,919 12,080
Deferred income, non-current 174,911 176,507
Provisions and other long-term liabilities 213,556 130,922
--------------------------------------------------------------------------------------------------------
Total Non-Current Liabilities 936,408 345,366
--------------------------------------------------------------------------------------------------------
Total Liabilities 1,689,799 1,021,915
-------------------------------------------------------------- -------------------- ------------------
--------------------------------------------------------------------------------------------------------
Minority Interests 1,614 1,165
--------------------------------------------------------------------------------------------------------
SHAREHOLDERS' EQUITY
Share capital 253,895 253,416
Share premium 1,002,991 989,141
Treasury shares (157,642) (126,460)
Retained earnings 1,669,700 1,364,626
Fair value and other reserves 22,711 (44,807)
Cumulative foreign currency translation adjustments 88,535 25,282
--------------------------------------------------------------------------------------------------------
Total Shareholders' Equity 2,880,190 2,461,198
--------------------------------------------------------------------------------------------------------
--------------------------------------------------------------------------------------------------------
Total Liabilities, Minority Interests and Shareholders' Equity 4,571,603 3,484,278
--------------------------------------------------------------------------------------------------------
Comparative figures have been reclassified to conform with current year's presentation.
* Unaudited
-more-
CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY
CUMULATIVE
FOREIGN
FAIR VALUE CURRENCY
SHARE SHARE TREASURY RETAINED AND OTHER TRANSLATION
CAPITAL PREMIUM SHARES EARNINGS RESERVES ADJUSTMENTS TOTAL
US$ 000 US $000 US$ 000 US$000 US$ 000 US$ 000 US $000
Balance as of January 1, 2002 253,137 975,335 (9,222) 1,108,086 (25,135) (83,287) 2,218,914
---------------------------------------------------------------------------------------------------------------------------
Issue of share capital 279 13,806 184 14,269
Net income for 2002 320,778 320,778
Purchase of treasury shares (117,422) (117,422)
Dividend for 2001 - bearer shares (46,637) (46,637)
Dividend for 2001 - registered shares (17,601) (17,601)
Revaluation adjustments (19,672) (19,672)
Foreign currency translation adjustments 108,569 108,569
---------------------------------------------------------------------------------------------------------------------------
Balance as of December 31, 2002 253,416 989,141 (126,460) 1,364,626 (44,807) 25,282 2,461,198
---------------------------------------------------------------------------------------------------------------------------
Balance as of January 1, 2003 253,416 989,141 (126,460) 1,364,626 (44,807) 25,282 2,461,198
---------------------------------------------------------------------------------------------------------------------------
Issue of share capital 479 15,129 15,608
Issuance of convertible bond 24,605 24,605
Issue of treasury shares (1,404) 10,844 9,440
Written calls 125 820 945
Net income for 2003 389,963 389,963
Purchase of treasury shares (42,026) (42,026)
Dividend for 2002 - bearer shares (61,849) (61,849)
Dividend for 2002 - registered shares (23,860) (23,860)
Revaluation adjustments 25,903 25,903
Recognition of impairment on
available-for-sale investment 11,265 11,265
Sale of available-for-sale investment 5,745 5,745
Foreign currency translation adjustments 63,253 63,253
---------------------------------------------------------------------------------------------------------------------------
BALANCE AS OF DECEMBER 31, 2003* 253,895 1,002,991 (157,642) 1,669,700 22,711 88,535 2,880,190
---------------------------------------------------------------------------------------------------------------------------
* Unaudited
-more-
CONSOLIDATED STATEMENTS OF CASH FLOWS
Twelve months ended December 31 2003 * 2002
US$ 000 US$ 000
Cash Flows From Operating Activities
Income before taxes and minority interests 459,195 384,441
Depreciation and amortization 133,855 100,552
Financial income (49,815) (64,645)
Financial expense 12,963 10,643
Loss on available-for-sale investments 20,149 --
Other non-cash items 19,598 17,233
---------------------------------------------------------------------------------------------
Cash Flows From Operating Activities Before Working Capital Changes 595,945 448,224
---------------------------------------------------------------------------------------------
Working Capital Changes
Trade accounts payable, other current liabilities and deferred income 104,497 208,341
Trade accounts receivable (34,245) (3,968)
Inventories (41,757) (32,620)
Prepaid expenses and other current assets 8,066 (25,482)
Taxes paid (89,647) (62,513)
---------------------------------------------------------------------------------------------
NET CASH FLOWS FROM OPERATING ACTIVITIES 542,859 531,982
---------------------------------------------------------------------------------------------
Cash Flows From Investing Activities
Acquisition of subsidiary (9,651) (115,092)
Purchase of property, plant and equipment (162,527) (99,144)
Purchase of intangible and other long-term assets (30,813) (25,194)
Purchase of financial assets (439,669) (860,407)
Other non-current liabilities (15,717) (10,257)
Proceeds from sale of financial assets 8,058 344,362
Disposal of subsidiary, net of cash disposed -- 6,628
Proceeds from sale of property, plant and equipment 11,081 10,488
Interest received 67,324 48,005
---------------------------------------------------------------------------------------------
Net Cash Flows From Investing Activities (552,175) (700,611)
---------------------------------------------------------------------------------------------
Cash Flows From Financing Activities
Proceeds from issuance of share capital 13,105 11,610
Proceeds from exercises of stock options 7,536 1,454
Premiums received on written calls 945 --
Purchase of treasury shares (42,026) (117,422)
Repayment of bank advances (27,096) (94,490)
Repayment of long-term debt (23,086) (17,642)
Issuance of long-term debt 53,948 --
Issuance of convertible bond 444,820 --
Interest paid (4,361) (8,121)
Dividends paid (85,709) (64,238)
---------------------------------------------------------------------------------------------
Net Cash Flows From Financing Activities 338,486 (288,849)
---------------------------------------------------------------------------------------------
Effect of Exchange Rate Changes on Cash and Cash Equivalents 8,918 12,420
---------------------------------------------------------------------------------------------
Net Increase/(Decrease) in Cash and Cash Equivalents 317,939 (445,058)
---------------------------------------------------------------------------------------------
Cash and Cash Equivalents
- Beginning of period 686,033 1,131,091
---------------------------------------------------------------------------------------------
- End of period 1,003,972 686,033
---------------------------------------------------------------------------------------------
* Unaudited
-end-
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
SERONO S.A.
a Swiss corporation
(Registrant)
February 2, 2004 By: /s/ Allan Shaw
----------------------------
Name: Allan Shaw
Title: Chief Financial Officer