The unaudited financial statements for the quarter ended 31 March 2004 have been prepared in accordance with UK generally accepted accounting principles. The accounting policies applied are those set out in AstraZeneca PLC’s 2003 Annual Report and Form 20-F. The unaudited financial statements include all normal recurring adjustments necessary to provide a fair presentation of the results of operations, cash flows and financial position for the periods presented. The results of operations for the interim periods are not necessarily indicative of the results of operations for the full year.
These interim financial statements do not constitute statutory accounts of the Group within the meaning of Section 240 of the Companies Act 1985. Statutory accounts for the year ended 31 December 2003 will be filed with the Registrar of Companies following the Company’s Annual General Meeting. The auditor's report on those accounts was unqualified and did not contain any statement under Section 237 of the Companies Act 1985.
2
LEGAL PROCEEDINGS
Plendil (felodipine)
In April 2004, Zenith Goldline Pharmaceuticals, Inc. (now known as Ivax Pharmaceuticals, Inc.) filed a motion for summary judgment on the issue of non-infringement in the patent infringement action pending between AstraZeneca Pharmaceuticals LP and Zenith/Ivax in the US District Court for the District of New Jersey. The patent infringement action against Zenith/Ivax, which AstraZeneca filed in July 2001, resulted from a May 2001 letter to AstraZeneca in which Zenith/Ivax declared its intention to market a generic version of
Plendil
extended release tablets (felodipine) prior to the expiration of AstraZeneca's patent covering the extended release formulation. Zenith/Ivax filed counterclaims in the litigation alleging non-infringement. The parties have completed the briefing on Zenith/Ivax's motion. No hearing date for the motion has been set.
Toprol-XL (metoprolol succinate)
In April 2004, AstraZeneca filed proceedings against Eon Labs Manufacturing Inc. in the US District Court for the District of Delaware following Eon's notification that it had filed an abbreviated new drug application with the US Food and Drug Administration seeking approval to market generic forms of
Toprol-XL
in the 25mg, 50mg, 100mg and 200mg doses. AstraZeneca maintains that its patents are valid and infringed by Eon's products.
Additional government investigations into drug marketing practices
Since publication of the Annual Report and Form 20-F Information 2003, AstraZeneca has received two subpoenas from the US Attorney's Office in Boston, Massachusetts. The first seeks documents relating to promotional programmes involving healthcare professionals at three regional healthcare entities in the Boston area. The second seeks documents relating to the marketing and sale of three products (
Zestril
,
Naropin
and
Cefotan
) to a leading provider of pharmacy services to long term care facilities. AstraZeneca is cooperating fully with the document requests.
3
RECONCILIATION OF MOVEMENTS IN SHAREHOLDERS’ FUNDS
For the
quarter
ended 31 March
2004
$
m
2003
$
m
Shareholders’ funds at beginning of period
13,178
11,172
Net profit for the period
801
932
Dividends to Shareholders
–
–
Issue of AstraZeneca PLC Ordinary Shares
28
–
Repurchase of AstraZeneca PLC Ordinary
(608)
(129)
Shares
Foreign exchange adjustments on
(104)
124
consolidation, net of tax
Net addition to Shareholders’ funds
117
927
Shareholders’ funds at end of period
13,295
12,099
4
NET CASH FUNDS
The table below provides an analysis of net cash funds and a reconciliation of net cash flow to movement in net cash funds.
At 1 Jan
2004
$
m
Cash
flow
$
m
Other
non-cash
$
m
Exchange
movements
$
m
At 31
Mar
2004
$m
Loans due after one year
(303)
(1)
–
–
(304)
Current instalments of loans
–
–
–
–
–
Total loans
(303)
(1)
–
–
(304)
Short-term investments
3,218
296
–
4
3,518
Cash
733
(236)
–
(6)
491
Overdrafts
(152)
81
–
–
(71)
3,799
141
–
(2)
3,938
Net cash funds
3,496
140
–
(2)
3,634
Issue of AstraZeneca PLC Ordinary
(28)
Shares
Repurchase of AstraZeneca PLC
608
Ordinary Shares
Net cash inflow before management of
720
liquid resources and financing
Information for US Investors
RECONCILIATION TO GENERALLY ACCEPTED ACCOUNTING PRINCIPLES IN THE UNITED STATES
Income attributable to Shareholders
Quarter 1
2004
$m
Quarter 1
2003
$m
Net income for the period under UK GAAP
801
932
Adjustments to conform to US GAAP
Purchase accounting adjustments (including goodwill and
intangibles)
- deemed acquisition of Astra
- amortisation and other acquisition adjustments
(257)
(229)
- others
15
14
Capitalisation, less disposals and amortisation of interest
5
2
Deferred taxation
- on fair value of Astra
72
64
- others
8
(34)
Pension and other post-retirement benefits expense
(10)
(7)
Software costs capitalised
(6)
(16)
Share based compensation
(12)
(1)
Fair value of derivative financial instruments
(8)
(27)
Unrealised losses on foreign exchange and others
(3)
6
Net income in accordance with US GAAP
605
704
Net income per Ordinary Share under US GAAP (basic and diluted)
$0.36
$0.41
RECONCILIATION TO GENERALLY ACCEPTED ACCOUNTING PRINCIPLES IN THE UNITED STATES
Shareholders’ equity
31 Mar
2004
$m
31 Mar
2003
$m
Shareholders’ equity under UK GAAP
13,295
12,099
Adjustment to conform to US GAAP
Purchase accounting adjustments (including goodwill and
intangibles)
- deemed acquisition of Astra
- goodwill
13,869
13,152
- tangible and intangible fixed assets
7,170
7,751
- others
160
100
Capitalisation, less disposals and amortisation of interest
260
240
Deferred taxation
- on fair value of Astra
(2,171)
(2,323)
- others
(205)
(197)
Dividend
914
808
Pension and other post retirement benefits expense
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