Chiron Restates Three Quarters - TheStreet


(CHIR) - Get Report

revised previously reported earnings for the second, third and fourth quarters of 2004, adding shoddy financial controls to the list of things keeping its shareholders up at night.

Chiron provided few details except to say that the changes were related to accounting for revenue of "certain travel vaccine sales." Travel vaccines include products for rabies, yellow fever, cholera and tick-borne encephalitis. Only the rabies vaccine is sold in the U.S.

Chiron didn't mention Fluvirin,

the flu vaccine whose production was halted in October after British health regulators found contamination and manufacturing problems at the Chiron plant in Liverpool, England. The regulators' action caused the canceling of production on some 50 million vials of vaccine, or about half of the U.S. supply, just as the U.S. flu season was beginning.

British health authorities recently gave Chiron the go-ahead to resume production at the Liverpool plant. The U.S. Food and Drug Administration

will inspect and review Chiron's British operations before approving Fluvirin for the next flu season.

Chiron's announcement Tuesday came after markets had closed. In regular trading, its stock was off 62 cents, or 1.6%, to $38.01. In after-hours trading, the stock fell another 90 cents, or 2.4%.

Chiron said revenue from certain vaccines that had been recorded in the second quarter should have been recorded in the third and fourth quarters of 2004, "and possibly in later quarters." In addition, Chiron said it had identified "three material weaknesses" in internal controls over financial reporting during its year-end review of compliance with the Sarbanes-Oxley Act.

The revised financial reports means that Chiron's non-GAAP earnings per share for 2004 were cut to 67 cents from the 70 cents as reported Jan. 26. GAAP earnings per share were reduced to 28 cents from 32 cents.

The fourth quarter 2004 non-GAAP loss from continuing operations, initially reported Jan. 26, remained at 4 cents a share. On a GAAP basis, the revised loss from operations was 12 cents a share, the same as the previously reported figure.