Advanced Medical Optics Announces Second-Quarter 2004 Results.SANTA ANA Santa Ana, city, El Salvador Santa Ana (sän'tä ä`nä), city (1993 pop. 129,873), W El Salvador. It is the second largest city in the country and the commercial and processing center for a sugarcane, coffee, and cattle region. , Calif. -- Advanced Medical Optics Advanced Medical Optics, Inc., (NYSE: EYE) (known as AMO) is a global medical device leader focused on the discovery and delivery of innovative vision technologies that optimize the quality of life for people of all ages. , Inc. (NYSE NYSE See: New York Stock Exchange :AVO a·vo n. pl. a·vos See Table at currency. [Portuguese, shortened from oitavo, eighth, from Latin oct ): --Revenue Up 10.9% vs. One Year Ago --Pro Forma forma, adj/n minor elements between the members of a botanical species. Diluted di·lute tr.v. di·lut·ed, di·lut·ing, di·lutes 1. To make thinner or less concentrated by adding a liquid such as water. 2. To lessen the force, strength, purity, or brilliance of, especially by admixture. EPS (Encapsulated PostScript) A PostScript file format used to transfer a graphic image between applications and platforms. EPS files contain PostScript code as well as an optional preview image in TIFF, WMF, PICT or EPSI, the latter being an ASCII-only format. of $0.25 vs. $0.22 One Year Ago --Updated 2004 Guidance Reflects Addition of Pfizer Pfizer Incorporated (NYSE: PFE) is a major research-based pharmaceutical company, which ranks number two in sales The company is based in New York City. It produces the number-one selling drug Lipitor (atorvastatin, used to lower blood cholesterol); the oral antifungal Ophthalmic ophthalmic /oph·thal·mic/ (of-thal´mik) ocular (1). oph·thal·mic adj. Of or relating to the eye; ocular. Ophthalmic Pertaining to the eye. Surgical Business Advanced Medical Optics, Inc. (AMO AMO - America's Multimedia Online ) (NYSE:AVO), a global leader in ophthalmic surgical devices and eye care products, today announced financial results for the second quarter of 2004. Net revenue rose 10.9 percent to $168.7 million compared with last year's second quarter, reflecting strong growth in the company's core ophthalmic surgical and eye care businesses and across all geographic geographic /geo·graph·ic/ (je?o-graf´ik) in pathology, of or referring to a pattern that is well demarcated, resembling outlines on a map. geographic pertaining to geography. regions. Excluding the effect of currency, revenue grew 5.9 percent for the second quarter, compared to the same period in 2003. Pro forma As a matter of form or for the sake of form. Used to describe accounting, financial, and other statements or conclusions based upon assumed or anticipated facts. The phrase pro forma net income for the second quarter of 2004 grew 28.3 percent to $8.5 million, or $0.25 per diluted share, compared to $6.7 million, or $0.22 per diluted share, in the year-ago quarter. During the quarter, the company completed a series of transactions to restructure its balance sheet and fund the acquisition of the Pfizer ophthalmic surgical business, which was successfully closed on June June: see month. 26, 2004. As a result of the recapitalization Recapitalization Restructuring a company's debt and equity mixture often with the aim of making a company's capital structure more stable. Notes: Companies often want to diversify their debt-to-equity ratio to improve liquidity. , AMO recorded a non-cash charge Non-Cash Charge A charge off, made by a company against earnings, that does not require an initial outlay of cash. Notes: Non-cash charges are typically against the depreciation, amortization, and depletion accounts on a company's balance sheet. of approximately ap·prox·i·mate adj. 1. Almost exact or correct: the approximate time of the accident. 2. $110.3 million and a cash charge of approximately $16.0 million that caused a reported net loss in the quarter of $112.5 million, or a loss of $3.67 per diluted share. This compares to reported net income of $4.4 million, or $0.15 per diluted share, one year ago. "With another quarter of solid performance across both businesses, AMO is demonstrating to shareholders its ability to deliver sustained growth by providing superior technologies that improve the productivity of practitioners and the well-being of patients," said James V James V, king of Scotland James V, 1512–42, king of Scotland (1513–42), son and successor of James IV. His mother, Margaret Tudor, held the regency until her marriage in 1514 to Archibald Douglas, 6th earl of Angus, when she lost it to John . Mazzo, president and chief executive officer. "This was a milestone “Milemarker” redirects here. For the American indie rock band, see Milemarker (band). A milestone or kilometre sign is one of a series of numbered markers placed along a road at regular intervals, typically at the side of the road or in a median. quarter for AMO. We continued to improve our financial performance, recapitalized our balance sheet, prepared to close the strategic acquisition of the Pfizer surgical ophthalmic business and prepared to expand our eye care business in select markets with a technologically advanced contact lens contact lens, thin plastic lens worn between the eye and eyelid that may be used instead of eyeglasses. Actors, models, and others wear them for appearance, and athletes use them for safety and convenience. . All of these steps are positioning AMO for future growth." The acquisition of the Pfizer surgical ophthalmic business includes the Healon Healon® Ophthalmology A viscoelastic material used in capsulorrhexis and foldable intraocular lens implant procedures. See Intraocular lens. (R) family of viscoelastics, the CeeOn(R) and Tecnis(R) lines of intraocular lenses Intraocular lens Lens made of silicone or plastic placed within the eye; can be corrective. Mentioned in: Cataract Surgery (IOL IOL Intraocular lens, see there ) and the Baerveldt(R) glaucoma glaucoma (glôkō`mə), ocular disorder characterized by pressure within the eyeball caused by an excessive amount of aqueous humor (the fluid substance filling the eyeball). shunt To divert, switch or bypass. , as well as related manufacturing and R&D facilities. AMO acquired the business, which generated approximately $150 million in revenue in 2003, for $450 million in cash. The acquisition closed on the first day of the company's fiscal third quarter. For the first six months of 2004, net revenue was $319.0 million, compared to $283.3 million for the first six months of 2003, an increase of 12.6 percent. Excluding the impact of currency, revenue grew 5.6 percent. Pro forma net income for the first six months of 2004 was $13.1 million, or $0.40 per diluted share, compared to $6.8 million, or $0.23 per diluted share, in the year-ago period. Including recapitalization-related charges in the second quarter, the company reported a net loss for the first six months of 2004 of $107.8 million, or a loss of $3.59 per diluted share, compared to reported net income of $4.3 million, or $0.14 per diluted share, in the first six months of 2003. "With the acquisition completed and our integration efforts well underway, we now expect 2004 revenue to be between $715 million and $725 million, with pro forma diluted EPS to be between $1.20 and $1.25," said Richard Ri·chard , Joseph Henri Maurice Known as "Rocket." 1921-2000. Canadian hockey player. A right wing for the Montreal Canadiens (1942-1960), he led his team to eight Stanley Cup championships and was the first player to score 50 goals in a A. Meier Mei·er , Richard Born 1934. American architect noted for technically innovative designs that blend respectfully with their natural environments. His best-known works include the High Museum in Atlanta and the Getty Center in Los Angeles. , executive vice president of operations and finance and chief financial officer. "In addition, we are increasing our post-acquisition guidance for 2005 revenue to a range of $810 million to $840 million, and narrowing the range of our 2005 pro forma diluted EPS guidance to $1.60 to $1.70." AMO had previously set revenue and pro forma earnings-per-share guidance for 2004, excluding the Pfizer acquisition, at $635 million to $645 million and $1.02 to $1.04, respectively. Previous 2005 revenue and pro forma earnings-per-share guidance including the Pfizer acquisition was $800 million to $830 million and $1.50 to $1.70, respectively. Ophthalmic Surgical The company's ophthalmic surgical revenue grew 10.7 percent in the second quarter to $86.7 million, compared to $78.3 million in the year-ago quarter. Excluding the effect of currency, ophthalmic surgical revenue grew 6.3 percent. Total IOL revenue rose 7.3 percent to $55.8 million, compared to revenue of $52.0 million in the second quarter of 2003, reflecting sales increases of its proprietary Sensar(R) acrylic acrylic, artificial fiber made from a special group of vinyl compounds, primarily acrylonitrile. Acrylic fibers are thermoplastic (i.e., soften when heated, reharden upon cooling), have low moisture regain, are low in density, and can be made into bulky fabrics. and Clariflex(R) silicone silicone, polymer in which atoms of silicon and oxygen alternate in a chain; various organic radicals, such as the methyl group, CH3, are bound to the silicon atoms. IOLs. Sales of phacoemulsification phacoemulsification /phaco·emul·si·fi·ca·tion/ (-e-mul?si-fi-ka´shun) a method of cataract extraction in which the lens is fragmented by ultrasonic vibrations and simultaneously irrigated and aspirated. products grew 18.9 percent during the second quarter, to $19.8 million, compared to $16.6 million one year ago. This increase is attributable attributable emanating from or pertaining to attribute. attributable proportion see attributable risk (below). attributable risk to continuing demand for the Sovereign SOVEREIGN. A chief ruler with supreme power; one possessing sovereignty. (q.v.) It is also applied to a king or other magistrate with limited powers. 2. In the United States the sovereignty resides in the body of the people. Vide Rutherf. Inst. 282. (R) and Sovereign(R) Compact(TM) systems with WhiteStar The WhiteStar Board System is an arcade system board used for several pinball games designed by Sega Pinball and their successor, Stern Pinball, between 1995 and 2004. It is the successor to Data East Pinball / Sega Pinball's System 11-derived hardware, licensed from Williams. (TM) technology and growth in recurring re·cur intr.v. re·curred, re·cur·ring, re·curs 1. To happen, come up, or show up again or repeatedly. 2. To return to one's attention or memory. 3. To return in thought or discourse. revenue from sales of the consumable A material that is used up and needs continuous replenishment, such as paper and toner. "The low-tech end of the high-tech field!" surgical packs used during every phacoemulsification procedure performed with an AMO machine. For the first six months of 2004, ophthalmic surgical revenue grew 13.1 percent to $164.9 million, compared to $145.8 million in the first six months of 2003. Excluding the effect of currency, growth was 6.6 percent for the period. Eye Care Revenue growth in AMO's eye care business was also strong during the quarter, rising 11.2 percent to $82.1 million, compared to $73.8 million in 2003's second quarter. Excluding the effect of currency, growth was 5.5 percent for the quarter. The company attributed this performance to continued market penetration Noun 1. market penetration - the extent to which a product is recognized and bought by customers in a particular market penetration - the act of entering into or through something; "the penetration of upper management by women" of its COMPLETE(R) branded product line, which grew 30 percent. The centerpiece of this branded line is COMPLETE(R) MoisturePLUS(TM), the first multipurpose mul·ti·pur·pose adj. Designed or used for several purposes: a multipurpose room; multipurpose software. multipurpose Adjective solution with dual artificial tear ingredients to help prevent discomfort Discomfort may refer to pain, an unpleasant sensation, or to suffering, an unpleasant feeling or emotion. caused by contact lens dryness. The company announced earlier this week that it will enter the contact lens market in Europe Europe (y  r`əp), 6th largest continent, c.4,000,000 sq mi (10,360,000 sq km) including adjacent islands (1992 est. pop. 512,000,000). later this year and expand into the Asia
Pacific contact lens market in 2005. Through an agreement with
CooperVision CooperVision is the 3rd largest contact lens maker in the world and the number one manufacturer of toric lenses.With headquarters in Lake Forest, California it manufactures in Albuquerque, New Mexico; Juana Díaz, Puerto Rico; Norfolk, Virginia; Rochester, New York; Limited, AMO will have exclusive selling rights in certain markets to an ultra-stable, hydrogel hy·dro·gel n. A colloidal gel in which the particles are dispersed in water. hydrogel a gel that contains water. hydrogel Wound care A polymer absorptive wound dressing. See Dressing. HEMA/GMA monthly contact lens, to be marketed under the COMPLETE(R)Aquavision(TM) brand name. The moisture-giving properties in COMPLETE(R)Aquavision(TM) lenses are designed to provide greater comfort throughout the day and alleviate Alleviate To make something easier to be endured. Mentioned in: Kinesiology, Applied dryness and discomfort -- the primary reasons contact lens wearers cite for discontinuing use. The move will allow AMO to expand its well established eye care franchise and capitalize on Cap´i`tal`ize on` v. t. 1. To turn (an opportunity) to one's advantage; to take advantage of (a situation); to profit from; as, to capitalize on an opponent's mistakes s>. the growing contact lens markets in Europe and Asia Pacific. For the first six months of 2004, eye care revenue grew 12.1 percent to $154.1 million, compared to $137.5 million in the first six months of 2003. Excluding the effect of currency, growth was 4.6 percent for the period. Financial Highlights The company reported gross profit of $104.7 million for the second quarter of 2004, up 9.7 percent from $95.4 million a year ago. The gross margin for the period was 62.1 percent, compared to 62.7 percent in the second quarter of 2003. The modest decline is consistent with the company's previous guidance and is attributable to unabsorbed manufacturing overhead costs overhead costs see fixed costs. associated with bringing on line the company's recently acquired eye care manufacturing facility in Madrid Madrid (mədrĭd`, Span. mäthhrēth`), city (1990 pop. 3,120,732), capital of Spain and of Madrid prov., central Spain, and the focus of its own autonomous region, on the Manzanares River. , Spain Spain, Span. España (āspä`nyä), officially Kingdom of Spain, constitutional monarchy (2005 est. pop. 40,341,000), 194,884 sq mi (504,750 sq km), including the Balearic and Canary islands, SW Europe. , as well as expansion of its eye care manufacturing facility in Hangzhou Hangzhou (hang`jō`) or Hangchow (hăng`chou), city (1994 est. pop. 1,184,300), capital of Zhejiang prov., E China. , China. These actions are designed to allow AMO to transition away from its manufacturing arrangement with its former parent, Allergan Allergan, Inc., is a global specialty pharmaceutical company. Their product ranges include ophthalmic pharmaceuticals, dermatology products, and neurological products. The company's most notable neurologic product is Botox, used around the world to treat a variety of debilitating , Inc., by mid- mid- pref. Middle: midbrain. 2005. Research and development expenses were $10.2 million, or 6.0 percent of sales, in the second quarter of 2004 compared to $9.0 million, or 5.9 percent of sales, in the same period one year ago. Among the R&D projects set for launch in 2004 are enhancements to the company's phacoemulsification platform, a next generation Amadeus Amadeus, 1845–90, king of Spain (1870–73), duke of Aosta, son of Victor Emmanuel II of Italy. After the expulsion (1868) of Queen Isabella II, Juan Prim urged the Cortes to elect Amadeus as king. He accepted the crown reluctantly. (TM) microkeratome microkeratome /mi·cro·ker·a·tome/ (-ker´ah-tom) an instrument for removing a thin slice, or creating a thin hinged flap, on the surface of the cornea. and the Verisyse(TM) phakic IOL for correction CORRECTION,punishment. Chastisement by one having authority of a person who has committed some offence, for the purpose of bringing him to legal subjection. 2. It is chiefly exercised in a parental manner, by parents, or those who are placed in loco parentis. of myopia myopia: see nearsightedness. . SG&A expenses for the second quarter were $76.9 million, or 45.6 percent of sales, and included expenses incurred in preparation for the integration of the Pfizer ophthalmic surgical business. In the second quarter of 2003, SG&A expenses were $69.9 million, or 45.9 percent of sales. Operating income Operating Income The profit realized from a business' own operations. Notes: This would not include income from things such as investments in other firms. Also referred to as operating profit or recurring profit. for the quarter rose to $17.6 million from $16.6 million in the same quarter last year. The operating margin Operating Margin A ratio used to measure a company's pricing strategy and operating efficiency. Calculated by: for the second quarter of 2004 was 10.4 percent, compared to 10.9 percent in the second quarter of 2003. This decline in the second quarter was attributable to gross margin pressure related to execution of the company's manufacturing strategy and incremental Additional or increased growth, bulk, quantity, number, or value; enlarged. Incremental cost is additional or increased cost of an item or service apart from its actual cost. increases in SG&A expenses related to the acquisition and integration of the Pfizer ophthalmic surgical business. Reported non-operating expenses for the second quarter were $130.6 million including recapitalization-related costs of $126.3 million. This compared to $9.2 million for the same period last year, including costs of $3.9 million associated with the prepayment Prepayment 1. The payment of a debt obligation prior to its due date. 2. The excess payment over a scheduled debt repayment amount. Notes: 1. Examples include deferred expenses such as rent and early loan repayments. 2. of the term loan in June 2003. Pro forma non-operating expenses in the second quarter were $4.5 million, compared to $5.3 million in the second quarter of 2003. Excluding the aggregate charge of approximately $111.8 million related to the exchange of convertible senior subordinated Subordinated A claim ranked lower in priority than other claims. Common stock claims are always subordinated to debt. notes for common stock, as no tax benefit has been recognized, the company's 2004 effective tax rate was 35 percent, compared to 41 percent in 2003. This decline reflects the benefits of a more tax-advantaged capital structure, better coordination coordination /co·or·di·na·tion/ (ko-or?di-na´shun) the harmonious functioning of interrelated organs and parts. co·or·di·na·tion n. 1. The harmonious adjustment or interaction of parts. of inter-company supply and distribution channels with financial objectives and continuing implementation of long-term Long-term Three or more years. In the context of accounting, more than 1 year. long-term 1. Of or relating to a gain or loss in the value of a security that has been held over a specific length of time. Compare short-term. tax strategies. Recapitalization Overview AMO recapitalized its balance sheet during the second quarter with the following transactions: --Exchanged approximately $108.6 million aggregate principal amount of outstanding 3.5 percent convertible senior subordinated notes due 2023 for approximately 5.8 million shares of common stock and approximately $4.6 million in cash; --Repaid a 2.5 billion yen-denominated ($22.4 million equivalent) term loan facility; --Consummated the tender offer to purchase for cash any and all of the $70 million aggregate outstanding principal amount of 9.25 percent senior subordinated notes due 2010; --Completed a private offering of $350 million aggregate principal amount of 2.5 percent convertible senior subordinated notes due 2024; and --Amended and restated its senior credit facility to provide for a new $250 million term loan and a $100 million senior revolver revolver: see small arms. revolver Pistol with a revolving cylinder that provides multishot action. Some early versions, known as pepperboxes, had several barrels, but as early as the 17th century pistols were being made with a revolving chamber to , both maturing on June 25, 2009. "This recapitalization allowed us to fund the acquisition of the Pfizer ophthalmic surgical business, which provides numerous strategic benefits and is expected to be immediately accretive to pro forma earnings pro forma earnings Income not necessarily calculated in accordance with generally accepted accounting principles. For example, a company might report pro forma earnings that exclude depreciation expense and nonrecurring expenses such as restructuring costs. ," said Mr. Meier. "We also increased stockholders' equity Stockholders' Equity The portion of the balance sheet that includes capital received from investors in exchange for stock (paid-in capital), donated capital, and retained earnings. This is equal to total assets minus liabilities, preferred stock and intangible assets. , reduced our cost of capital and interest rate risk and improved our financial flexibility to pursue strategic initiatives in the future." Pro Forma Explanation & Guidance The company provides its earnings per share, net income and non-operating expenses in two formats. The first format represents reported, or GAAP GAAP See: Generally Accepted Accounting Principles GAAP See generally accepted accounting principles (GAAP). , results and the second format presents pro forma, or comparable, results. The pro forma results exclude the unrealized gain Unrealized Gain A profit that results from holding on to an asset rather than cashing it in and using the funds. Notes: Let's say you own a stock that has doubled, but you haven't sold it yet. This is said to be an unrealized gain. or loss on derivative instruments Derivative instruments Contracts such as options and futures whose price is derived from the price of an underlying financial asset. , as well as cash and non-cash charges associated with the company's debt repayment Repayment The act of paying back a debt. Notes: Everyone has to repay their debts eventually. See also: Debt, Defeasance, Loan and recapitalization. A reconciliation of reported and pro forma earnings per share, net income and non-operating expenses for the quarter and year to date is provided below in this press release and is available on the company's Web site at www.amo-inc.com under the section entitled en·ti·tle tr.v. en·ti·tled, en·ti·tling, en·ti·tles 1. To give a name or title to. 2. To furnish with a right or claim to something: "Investors/Media." The company's management uses pro forma results to measure and compare its regional and global performance absent the impact of foreign currency fluctuations on currency derivatives derivatives In finance, contracts whose value is derived from another asset, which can include stocks, bonds, currencies, interest rates, commodities, and related indexes. Purchasers of derivatives are essentially wagering on the future performance of that asset. , debt extinguishment The destruction or cancellation of a right, a power, a contract, or an estate. Extinguishment is sometimes confused with merger, though there is a clear distinction between them. costs and other costs associated with the recapitalization. Additionally, management believes this format is useful for investors to perform more meaningful comparisons of operating results. AMO's guidance for the full-year 2004 and 2005 earnings per share is provided on a pro forma basis. Earnings-per-share guidance for the full year 2004 excludes the effect of $126.3 million of debt extinguishment costs and other costs associated with the 2004 recapitalization, as well as acquisition-related charges, such as in-process research and development, which cannot be estimated at this time, because the company believes this presentation is helpful to its analysis of its business. Guidance for 2004 and 2005 also excludes unrealized gains or losses on derivative instruments due to the unpredictability of foreign currency fluctuations. AMO does not provide a reconciliation of projected pro forma earnings per share to expected reported results due to the unknown effect and potential significance of foreign currency fluctuations on the fair value of its currency derivatives. Live Webcast & Audio Replay Mr. Mazzo and Mr. Meier will host a live Web cast to discuss second quarter results and future expectations today at 10:00 a.m. EDT EDT abbr. Eastern Daylight Time EDT Eastern Daylight Time EDT n abbr (US) (= Eastern Daylight Time) → hora de verano de Nueva York EDT . To participate, visit the company's Investors/Media site at www.amo-inc.com. Audio replay will be available at approximately noon EDT today and will continue through midnight EDT on Friday Friday: see Sabbath; week. Friday young Indian rescued by Crusoe and kept as servant and companion. [Br. Lit.: Robinson Crusoe] See : Servant , August 6, at 800-642-1687 (Passcode 8676196) or by visiting www.amo-inc.com. About Advanced Medical Optics Advanced Medical Optics, Inc. (AMO) is a global leader in the development, manufacturing and marketing of ophthalmic surgical and contact lens care products. The company focuses on developing a broad suite of innovative technologies and devices to address a wide range of eye disorders A
Cataract surgery is a procedure performed to remove a cloudy lens from the eye; usually an intraocular lens is implanted at the same time. Purpose The purpose of cataract surgery is to restore clear vision. , and microkeratomes used in LASIK LASIK laser-assisted in-situ keratomileusis. LA·SIK n. Eye surgery in which the surface of the cornea is reshaped using a laser, performed to correct certain refractive disorders such as myopia. procedures for refractive error refractive error Ametropia, myopic shift Ophthalmology The inability of images to focus properly on the retina, often corrected by glasses contact lenses, or refractive surgery. See Astigmatism, Farsightedness, Myopia, Presbyopia. correction. AMO owns or has the rights to such well-known well-known adj. 1. Widely known; familiar or famous: a well-known performer. 2. Fully known: well-known facts. ophthalmic surgical product brands such as Phacoflex(R), Clariflex(R), Array(R), Sensar(R), Tecnis(R), CeeOn(R) and Verisyse(R) intraocular lenses, the Sovereign(R) and Sovereign(R) Compact(TM) phacoemulsification system with WhiteStar(TM) technology, the Healon(R) family of viscoelastics, the Baerveldt(R) glaucoma shunt and the Amadeus(TM) microkeratome. Products in the contact lens care line include disinfecting solutions, daily cleaners, enzymatic enzymatic of, relating to, caused by, or of the nature of an enzyme. cleaners and lens rewetting drops. Among the well-known contact lens care product brands the Company possesses are COMPLETE(R), COMPLETE(R) Blink-N-Clean(R), COMPLETE(R) Moisture moisture wetness due to any liquid; usually refers to water as a component, e.g. in feed. moisture free a substance heated at 220°F (105°C) to constant weight. Called also oven-dry or 100% dry matter. PLUS(TM), Consept(R)F, Consept(R) 1 Step, Oxysept(R) 1 Step, UltraCare(R), Ultrazyme(R), Total Care(R) and blink blink the involuntary movement of one or both eyelids of both eyes simultaneously. The frequency varies between species. Cats blink the least, with the possible exception of owls. In birds it is the lower eyelid which is moved up to meet the upper lid. (TM) branded products. Amadeus is a licensed product of, and a trademark of, SIS, Ltd. Advanced Medical Optics, Inc. is based in Santa Ana, California Santa Ana is the most populous city in Orange County, California and is the county seat. It lies approximately 10 miles inland from the Pacific Ocean, on the largely seasonal Santa Ana River. , and employs approximately 2,800 worldwide. The company has direct operations in about 20 countries and markets products in approximately 60 countries. For more information, visit www.amo-inc.com. Forward-Looking Statements forward-looking statement A projected financial statement based on management expectations. A forward-looking statement involves risks with regard to the accuracy of assumptions underlying the projections. This press release contains forward-looking statements and forecasts about AMO and its businesses, such as management's revenue and earnings guidance for the full years of 2004 and 2005. Because forecasts are inherently estimates that cannot be made with precision, the company's performance may at times differ from its estimates and targets, and the company often does not know what the actual results will be until after a quarter's end. Therefore, the company will not report or comment on its progress during the quarter. Any statement made by others with respect to progress mid-quarter cannot be attributed to the company. Statements in this press release regarding financial guidance for 2004 and 2005, AMO's expected entry into the contact lens business, AMO's plans to launch new products, as well as Mr. Mazzo's and Mr. Meier's statements, and any other statements in this press release that refer to AMO's estimated or anticipated future results, are forward-looking statements. All forward-looking statements in this press release reflect AMO's current analysis of existing trends and information and represent AMO's judgment only as of the date of this press release. Actual results may differ from current expectations based on a number of factors affecting AMO's businesses including but not limited to risks associated with the integration and operation of the acquired business, and changing competitive, regulatory reg·u·late tr.v. reg·u·lat·ed, reg·u·lat·ing, reg·u·lates 1. To control or direct according to rule, principle, or law. 2. and market conditions; the performance of new products and the continued acceptance of current products; the execution of strategic initiatives and alliances; AMO's ability to maintain a sufficient supply of products and successfully transition its manufacturing of eye care products; product liability claims or quality issues; litigation An action brought in court to enforce a particular right. The act or process of bringing a lawsuit in and of itself; a judicial contest; any dispute. When a person begins a civil lawsuit, the person enters into a process called litigation. ; and the uncertainties associated with intellectual property protection for the company's products. In addition, matters generally affecting the domestic and global economy, such as changes in interest and currency exchange rates, can affect AMO's results. Therefore, the reader is cautioned not to rely on these forward-looking statements. AMO disclaims any intent or obligation to update these forward-looking statements. Additional information concerning these and other risk factors may be found in previous financial press releases issued by AMO. AMO's public periodic filings with the Securities and Exchange Commission, including the discussion under the heading "Certain Factors and Trends Affecting AMO and its Businesses" in AMO's 2003 Form 10-K Form 10-K A report required by the SEC from exchange-listed companies that provides for annual disclosure of certain financial information. Form 10-K See 10-K. and Form 10-Q Form 10-Q See 10-Q. filed in May 2004 include information concerning these and other risk factors. Copies of press releases and additional information about AMO are available at www.amo-inc.com, or you can contact the AMO Investor Relations Investor relations The process by which the corporation communicates with its investors. Department by calling 714-247-8348.
Advanced Medical Optics, Inc.
Condensed Consolidated Statements of Operations
(Unaudited)
Three Months Ended Six Months Ended
------------------- --------------------
(in thousands, except per June 25, June 27, June 25, June 27,
share amounts) 2004 2003 2004 2003
---------- -------- ---------- ---------
Net sales:
Ophthalmic surgical $86,670 $78,308 $164,935 $145,825
Eye care 82,071 73,828 154,113 137,487
---------- -------- ---------- ---------
168,741 152,136 319,048 283,312
Cost of sales 64,011 56,697 123,683 106,717
---------- -------- ---------- ---------
Gross profit 104,730 95,439 195,365 176,595
Selling, general and
administrative 76,947 69,899 148,086 137,507
Research and development 10,196 8,956 19,213 17,740
---------- -------- ---------- ---------
Operating income 17,587 16,584 28,066 21,348
---------- -------- ---------- ---------
Non-operating expense
(income):
Interest expense 7,208 9,703 10,951 14,554
Unrealized loss (gain) on
derivative instruments (250) (19) (526) 282
Other, net 123,673 (499) 123,268 (735)
---------- -------- ---------- ---------
130,631 9,185 133,693 14,101
---------- -------- ---------- ---------
Earnings (loss) before income
taxes (113,044) 7,399 (105,627) 7,247
Provision (benefit) for
income taxes (503) 3,030 2,167 2,971
---------- -------- ---------- ---------
Net earnings (loss) $(112,541) $4,369 $(107,794) $4,276
========== ======== ========== =========
---------- -------- ---------- ---------
Net basic earnings (loss) per
share $(3.67) $0.15 $(3.59) $0.15
========== ======== ========== =========
---------- -------- ---------- ---------
Net diluted earnings (loss)
per share $(3.67) $0.15 $(3.59) $0.14
========== ======== ========== =========
Weighted average number of
shares outstanding:
Basic 30,675 29,018 30,065 28,887
Diluted 30,675 29,955 30,065 29,824
Advanced Medical Optics, Inc.
Global Sales
(Unaudited)
(USD in thousands)
Three Months Ended Six Months Ended
------------------- -------------------
June 25, June 27, June 25, June 27,
2004 2003 2004 2003
--------- ------------------- ---------
Geographic sales:
Americas $48,974 $44,490 $94,267 $84,976
Europe/Africa/Middle East 60,294 54,980 115,203 101,751
Japan 43,432 41,815 80,319 76,597
Asia Pacific 16,041 10,851 29,259 19,988
--------- --------- --------- ---------
$168,741 $152,136 $319,048 $283,312
========= ========= ========= =========
Product sales:
Ophthalmic surgical:
Intraocular lenses $55,775 $51,961 $107,386 $97,836
Phacoemulsification
products 19,790 16,645 37,354 30,175
Other 11,105 9,702 20,195 17,814
--------- --------- --------- ---------
Total Ophthalmic surgical 86,670 78,308 164,935 145,825
--------- --------- --------- ---------
Eye care:
Multi-purpose solutions 38,521 35,071 70,987 66,285
Hydrogen-peroxide solutions 25,540 23,356 49,323 42,812
Other 18,010 15,401 33,803 28,390
--------- --------- --------- ---------
Total Eye care 82,071 73,828 154,113 137,487
--------- --------- --------- ---------
$168,741 $152,136 $319,048 $283,312
========= ========= ========= =========
Three Months Ended
---------------------------
June 25, June 27, % % %
2004 2003 Growth Constant Exchange
Currency Impact
--------- ----------------- --------- ---------
Net sales:
Ophthalmic surgical $86,670 $78,308 10.7% 6.3% 4.4%
Eye care 82,071 73,828 11.2% 5.5% 5.7%
--------- --------- ------- --------- ---------
$168,741 $152,136 10.9% 5.9% 5.0%
========= =========
Six Months Ended
--------------------
June 25, June 27, % % %
2004 2003 Growth Constant Exchange
Currency Impact
--------- ----------------- --------- ---------
Net sales:
Ophthalmic surgical $164,935 $145,825 13.1% 6.6% 6.5%
Eye care 154,113 137,487 12.1% 4.6% 7.5%
--------- --------- ------- --------- ---------
$319,048 $283,312 12.6% 5.6% 7.0%
========= =========
Advanced Medical Optics, Inc.
Pro Forma Condensed Consolidated Statements of Operations(1)
Reconciliation of GAAP to Non-GAAP Information
(Unaudited)
Three Months Ended
June 25, 2004
---------------------------------
(in thousands, except per share GAAP Adjustments Pro Forma
amounts)
---------- ------------ ---------
Net sales:
Ophthalmic surgical $86,670 $- $86,670
Eye care 82,071 82,071
---------- ------------ ---------
168,741 168,741
Cost of sales 64,011 64,011
---------- ------------ ---------
Gross profit 104,730 104,730
Selling, general and administrative 76,947 76,947
Research and development 10,196 10,196
---------- ------------ ---------
Operating income 17,587 17,587
---------- ------------ ---------
Non-operating expense (income):
Interest expense 7,208 (3,621)(3) 3,587
Unrealized (gain) on derivative
instruments (250) 250(2) -
Other, net 123,673 (122,713)(4) 960
---------- ------------
130,631 (126,084) 4,547
---------- ------------
Earnings (loss) before income taxes (113,044) 126,084 13,040
Provision (benefit) for income taxes (503) 4,995(6) 4,492
---------- ------------
Net earnings (loss) $(112,541) $121,089 $8,548
========== ============ =========
----------
Net basic earnings (loss) per share $(3.67) $0.28
========== =========
----------
Net diluted earnings (loss) per
share $(3.67) $0.25(7)
========== =========
Weighted average number of shares
outstanding:
Basic 30,675 30,675
Diluted 30,675 38,239(8)
Three Months Ended
June 27, 2003
-----------------------------
(in thousands, except per share amounts) GAAP Adjustments Pro
Forma
-------- ----------- --------
Net sales:
Ophthalmic surgical $78,308 $- $78,308
Eye care 73,828 73,828
-------- ----------- --------
152,136 152,136
Cost of sales 56,697 56,697
-------- ----------- --------
Gross profit 95,439 95,439
Selling, general and administrative 69,899 69,899
Research and development 8,956 8,956
-------- ----------- --------
Operating income 16,584 16,584
-------- ----------- --------
Non-operating expense (income):
Interest expense 9,703 (4,587)(5) 5,116
Unrealized (gain) on derivative
instruments (19) 19(2) -
Other, net (499) 670(5) 171
-------- ----------- --------
9,185 (3,898) 5,287
-------- ----------- --------
Earnings (loss) before income taxes 7,399 3,898 11,297
Provision (benefit) for income taxes 3,030 1,605(6) 4,635
-------- ----------- --------
Net earnings (loss) $4,369 $2,293 $6,662
======== =========== ========
-------- --------
Net basic earnings (loss) per share $0.15 $0.23
======== ========
-------- --------
Net diluted earnings (loss) per share $0.15 $0.22
======== ========
Weighted average number of shares
outstanding:
Basic 29,018 29,018
Diluted 29,955 29,955
(1) The Pro Forma Condensed Consolidated Statements of Operations
exclude debt refinancing and recapitalization items and the
unrealized gain on derivative instruments. See below for
additional detail.
(2) To exclude the unrealized gain on derivative instruments.
Certain debt refinancing and recapitalization costs associated with
the prepayment of the Japan term loan in June 2004, the exchange of
approximately 5.8 million shares of our common stock and
approximately $4.6 million in cash for approximately $108.6 million
in aggregate principal amount of 3.50% convertible senior
subordinated notes in June 2004 (Convertible Notes) and consummation
of the tender offer in June 2004 to purchase the outstanding $70.0
million aggregate principal amount of 9.25% senior subordinated notes
were incurred and are excluded from pro forma amounts as follows:
(3) Pro-rata write-off of debt issuance costs and one-time commitment
fee of $6,073, write-off of original issue discount of $747 and
recognition of net realized gains on interest rate swaps of
($3,199); and
(4) A non-cash charge of approximately $107,240 and a cash charge of
$4,580 related to the convertible note exchanges, an aggregate
premium paid for the tender offer of $10,784 and early debt
extinguishment costs and fees of $109.
(5) To exclude the write-off of debt issuance costs of $2,411, a
realized loss on an interest rate swap of $2,176 and a foreign
currency gain of ($670) associated with the prepayment of the term
loan in June 2003.
(6) Related tax effect of adjustments above. No tax benefit has been
assumed for the aggregate $111,820 charge related to the
convertible note exchanges.
(7) Includes the after-tax impact of $863 of interest expense on the
Convertible Notes.
(8) Includes the dilutive effect of approximately 2.1 million shares
for stock options, approximately 3.9 million shares for the $108.6
million in aggregate principal amount of Convertible Notes up to
the dates of exchanges and 1.5 million shares for the remaining
Convertible Notes.
Advanced Medical Optics, Inc.
Pro Forma Condensed Consolidated Statements of Operations(1)
Reconciliation of GAAP to Non-GAAP Information
(Unaudited)
Six Months Ended
June 25, 2004
---------------------------------
(in thousands, except per share GAAP Adjustments Pro Forma
amounts)
---------- ------------ ---------
Net sales:
Ophthalmic surgical $164,935 $- $164,935
Eye care 154,113 154,113
---------- ------------ ---------
319,048 319,048
Cost of sales 123,683 123,683
---------- ------------
Gross profit 195,365 195,365
Selling, general and administrative 148,086 148,086
Research and development 19,213 19,213
---------- ------------ ---------
Operating income 28,066 28,066
---------- ------------ ---------
Non-operating expense (income):
Interest expense 10,951 (3,621)(3) 7,330
Unrealized loss (gain) on derivative
instruments (526) 526(2) -
Other, net 123,268 (122,713)(4) 555
---------- ------------
133,693 (125,808) 7,885
---------- ------------
Earnings (loss) before income taxes (105,627) 125,808 20,181
Provision (benefit) for income taxes 2,167 4,896(6) 7,063
---------- ------------
Net earnings (loss) $(107,794) $120,912 $13,118
========== ============ =========
----------
Net basic earnings (loss) per share $(3.59) $0.44
========== =========
----------
Net diluted earnings (loss) per
share $(3.59) $0.40(7)
========== =========
Weighted average number of shares
outstanding:
Basic 30,065 30,065
Diluted 30,065 34,706(8)
Six Months Ended
June 27, 2003
-------------------------------
(in thousands, except per share GAAP Adjustments Pro Forma
amounts)
--------- ----------- ---------
Net sales:
Ophthalmic surgical $145,825 $- $145,825
Eye care 137,487 137,487
--------- ----------- ---------
283,312 283,312
Cost of sales 106,717 106,717
--------- ----------- ---------
Gross profit 176,595 176,595
Selling, general and administrative 137,507 137,507
Research and development 17,740 17,740
--------- ----------- ---------
Operating income 21,348 21,348
--------- ----------- ---------
Non-operating expense (income):
Interest expense 14,554 (4,587)(5) 9,967
Unrealized loss (gain) on derivative
instruments 282 (282)(2) -
Other, net (735) 670(5) (65)
--------- ----------- ---------
14,101 (4,199) 9,902
--------- ----------- ---------
Earnings (loss) before income taxes 7,247 4,199 11,446
Provision (benefit) for income taxes 2,971 1,722(6) 4,693
--------- ----------- ---------
Net earnings (loss) $4,276 $2,477 $6,753
========= =========== =========
--------- ---------
Net basic earnings (loss) per share $0.15 $0.23
========= =========
--------- ---------
Net diluted earnings (loss) per share $0.14 $0.23
========= =========
Weighted average number of shares
outstanding:
Basic 28,887 28,887
Diluted 29,824 29,824
(1) The Pro Forma Condensed Consolidated Statements of Operations
exclude debt refinancing and recapitalization related items and
the unrealized (gain) loss on derivative instruments. See below
for additional detail.
(2) To exclude the unrealized (gain) loss on derivative instruments.
Certain debt refinancing and recapitalization costs associated with
the prepayment of the Japan term loan in June 2004, the exchange of
approximately 5.8 million shares of our common stock and
approximately $4.6 million in cash for approximately $108.6 million
in aggregate principal amount of 3.50% convertible senior
subordinated notes in June 2004 (Convertible Notes) and consummation
of the tender offer in June 2004 to purchase the outstanding $70.0
million aggregate principal amount of 9.25% senior subordinated notes
were incurred and are excluded from pro forma amounts as follows:
(3) Pro-rata write-off of debt issuance costs and one-time commitment
fee of $6,073, write-off of original issue discount of $747 and
recognition of net realized gains on interest rate swaps of
($3,199); and
(4) A non-cash charge of approximately $107,240 and a cash charge of
$4,580 related to the convertible note exchanges, an aggregate
premium paid for the tender offer of $10,784 and early debt
extinguishment costs and fees of $109.
(5) To exclude the write-off of debt issuance costs of $2,411, a
realized loss on an interest rate swap of $2,176 and a foreign
currency gain of ($670) associated with the prepayment of the term
loan in June 2003.
(6) Related tax effect of adjustments above. No tax benefit has been
assumed for the aggregate $111,820 charge related to the
convertible note exchanges.
(7) Includes the after-tax impact of $863 of interest expense on the
Convertible Notes.
(8) Includes the dilutive effect of approximately 1.9 million shares
for stock options, approximately 1.9 million shares for the $108.6
million in aggregate principal amount of Convertible Notes up to
the dates of exchanges and 0.8 million shares for the remaining
Convertible Notes.
Advanced Medical Optics, Inc.
Other Financial Information
(Unaudited)
(USD in thousands)
June 25, December 31,
2004 2003
--------------- ----------------
Cash and equivalents $77,120 $46,104
Trade receivables, net 143,423 130,423
Inventories 44,386 41,596
Working capital, excluding cash and
Pfizer purchase price 105,119 91,087
Long-term debt, aggregate principal
amount 631,438 233,283
=============== ================
Three Months Ended
---------------------------------
June 25, June 27,
2004 2003
---------------- ----------------
Depreciation and amortization $3,716 $3,733
Capital expenditures 5,395 4,727
================ ================
Six Months Ended
---------------------------------
June 25, June 27,
2004 2003
---------------- ----------------
Depreciation and amortization $7,408 $7,624
Capital expenditures 10,276 8,118
================ ================
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