Advanced Medical Optics Reports Fourth-Quarter and Full-Year 2007 Results.* Fourth-Quarter Cataract/Implant Sales Rise 9.6% on Growth Across All Product Categories * 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 Fourth-Quarter Laser Vision Correction Sales Rise 10.6% on Increased Global Penetration of Company's Dual Platform Offering * Eye Care Business Rebound Continues With 20% Sequential Sales Growth in Fourth Quarter * Company Reduces 2008 Guidance on More Conservative Outlook for U.S. 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. Volumes * Company Announces Plan to Enhance Operating Leverage Operating Leverage A measurement of the degree to which a firm or project relies on fixed rather than variable costs. Notes: The higher the degree of operating leverage, the greater the potential danger from forecasting risk. by Reducing Fixed Costs fixed costs, n.pl the costs that do not change to meet fluctuations in enrollment or in use of services (e.g., salaries, rent, business license fees, and depreciation). 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. (AMO AMO - America's Multimedia Online ) (NYSE NYSE See: New York Stock Exchange :EYE), today reported financial results for the fourth quarter and full year 2007, revised financial guidance for 2008 and announced plans to reduce fixed costs. The company's fourth-quarter 2007 net sales Net Sales The amount a seller receives from the buyer after costs associated with the sale are deducted. Notes: This amount is calculated by subtracting the following items from gross sales: merchandise returned for credit, allowances for damaged or missing goods, freight rose 25.0% to $304.6 million on organic growth, the acquisitions of IntraLase Corp. and WaveFront Noun 1. wavefront - (physics) an imaginary surface joining all points in space that are reached at the same instant by a wave propagating through a medium wave front Sciences, Inc. and includes a 5.3% increase related to foreign currency impacts. On a pro forma basis, the company's fourth-quarter sales rose 7.3%. The pro forma sales growth rate reflects comparisons that include the IntraLase and WaveFront Sciences performance as if the acquisitions had occurred in all periods presented. Fourth-quarter sales growth was partially offset by lost sales and returns associated with the company's May 2007 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. care solution recall. AMO reported a fourth-quarter net loss under Generally Accepted Accounting Principles The standard accounting rules, regulations, and procedures used by companies in maintaining their financial records. Generally accepted accounting principles (GAAP) provide companies and accountants with a consistent set of guidelines that cover both broad accounting (GAAP GAAP See: Generally Accepted Accounting Principles GAAP See generally accepted accounting principles (GAAP). ) of $12.3 million, or a net loss of $0.20 per share, compared to a net loss of $7.6 million, or a net loss of $0.13 per share, in 2006's fourth quarter. These results included the impacts of the November 2006 and May 2007 recalls. The fourth-quarter 2007 results also included the following items, which combined to increase the net loss per share by $0.17: * $10.7 million in pre-tax charges related to integration of acquisitions. * $3.4 million pre-tax loss on derivative instruments Derivative instruments Contracts such as options and futures whose price is derived from the price of an underlying financial asset. . * Estimated tax Federal and state tax laws require a quarterly payment of estimated taxes due from corporations, trusts, estates, non-wage employees, and wage employees with income not subject to withholding. effects related to the items mentioned above, totaling $3.8 million. "Our fourth-quarter performance represented a strong finish to 2007, in which we advanced our strategy and moved aggressively to overcome challenges," said Jim Mazzo, chairman and chief executive officer. "Our cataract/implant business delivered growth across all product categories, and we are entering 2008 on track to launch a range of new technologies to position us for future growth. Our eye care business continued to rebound, with fourth-quarter 2007 sales up 20% on a sequential basis. In addition, this business is now launching our first-ever product to relieve dry eye symptoms. Demonstrating the competitive power of our dual excimer and femtosecond laser platform, our laser vision correction business achieved double-digit sales growth on a pro forma basis. With the planned 2008 release of new LASIK innovations, we intend to continue to expand our leadership position. "To ensure we are maximizing the earnings and cash flow power of the global footprint we have created, we need to be diligent in our effort to improve efficiency and productivity. We expect to accomplish this through staff reductions and infrastructure changes designed to reduce fixed costs, improve operating leverage and enhance long-term cash flow. "We remain confident in the strength of our global businesses, technologies, new product pipeline and strategy. However, after the first six weeks of 2008, we have seen the deteriorating U.S. economy negatively impact our domestic LASIK procedure volumes. We have multiple, unique growth drivers that we believe will mitigate our exposure to a slowdown in the elective refractive refractive capacity to refract light. refractive error a difference between the focal length of the cornea and lens, and the length of the eye, resulting in myopia or hyperopia. procedure market, but we feel a more conservative view is prudent at this time." Financial Guidance AMO's revised guidance assumes a decline in its 2008 U.S. excimer procedures of approximately 10%, compared to its prior expectation of approximately 6% growth. The company's revised guidance also assumes a more modest rate of growth for its U.S. femtosecond procedure and refractive IOL IOL Intraocular lens, see there sales than it has previously expected. The company's revised guidance is as follows: [TABLE OMITTED] The company's adjusted 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. guidance excludes charges and write-offs related to acquisitions, reorganizations and recapitalizations, as well as unrealized gains or losses on derivative instruments and other periodic or one-time charges. The company's adjusted EPS guidance includes the estimated after-tax effect of intangible amortization and stock-based compensation expenses, which are non-cash and total approximately $90 million per year, or approximately $0.90 per share. Plan to Reduce Fixed Costs AMO is announcing today plans to reduce its fixed costs in order to further enhance its global competitiveness, operating leverage and cash flow. The plan includes a net workforce reduction of approximately 150 positions, or about 4% of the company's global workforce. In addition, AMO plans to consolidate certain operations to improve its overall facility utilization. To complete this plan, AMO expects to incur charges between $25 million and $30 million in 2008 and estimates that the vast majority will be cash. Upon full implementation, the company expects these actions to result in annualized annualized Of or relating to a variable that has been mathematically converted to a yearly rate. Inflation and interest rates are generally annualized since it is on this basis that these two variables are ordinarily stated and compared. savings of approximately $10 million to $12 million. In 2008, the company estimates savings related to these actions in the range of $4 million to $7 million, which are reflected in the current guidance. The charges outlined above are in addition to the $11 million to $13 million in charges the company expects to take in 2008 to consolidate its equipment manufacturing, which was announced in December 2007. Full-Year 2007 Results AMO's net sales for 2007 rose 9.4% to $1,090.8 million. The rise reflects the IntraLase and WaveFront Sciences acquisitions, organic growth in cataract/implant and laser vision corrections sales and a 2.9% increase related to foreign currency, which were partially offset by recall-related declines in eye care sales. AMO reported a GAAP net loss for 2007 of $192.9 million, or a net loss of $3.22 per share. The per share loss was increased by an estimated $2.26 due to an $87.0 million charge for in-process R&D, approximately $38.2 million in transaction-related charges, a $1.3 million deferred financing cost write-off, a $6.1 million loss on derivative instruments and an estimated $2.8 million tax effect related to the above items. In 2006, the company reported GAAP net income of $79.5 million, or $1.21 per diluted share, which included a $96.9 million pre-tax gain on settlement of legal matters and pre-tax net charges of $89.4 million related primarily to business repositioning initiatives, inventory provisions, charges related to discontinued products, note repurchases, an unrealized loss Unrealized Loss A loss that results from holding onto an asset rather than cashing it in and officially taking the loss. Notes: Let's say you own a stock that is down 50%, but you haven't sold it to realize the loss yet. This is said to be an unrealized loss. on derivative instruments, and an estimated $13.4 million tax effect related to the above items. These gains and charges combined to reduce 2006 GAAP EPS by $0.09. Fourth-Quarter and Full-Year 2007 Sales Performance by Business Below are highlights of fourth-quarter and full-year 2007 results by business. Growth rates Growth Rates The compounded annualized rate of growth of a company's revenues, earnings, dividends, or other figures. Notes: Remember, historically high growth rates don't always mean a high rate of growth looking into the future. reflect comparisons to the same period in 2006 and include foreign currency impacts. Pro forma growth rates reflect comparisons that include IntraLase and WaveFront Sciences performance as if these acquisitions had occurred in all periods presented. For more information, see the "Global Sales" table accompanying this release. Cataract/Implant sales rose 9.6% to $152.3 million in the quarter and 6.4% to $552.0 million for 2007. * Intraocular lens Intraocular lens Lens made of silicone or plastic placed within the eye; can be corrective. Mentioned in: Cataract Surgery (IOL) sales rose 7.6% to $85.7 million in the quarter and 8.8% to $317.2 million for 2007, reflecting continuing demand for the company's Tecnis([R]) monofocal IOLs and its portfolio of refractive IOLs. * Viscoelastics sales rose 9.7% to $33.6 million in the quarter and 0.3% to $123.4 million for 2007. Growth was driven primarily by increased sales of the Healon([R]) family of viscoleastics. * 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. sales rose 10.7% to $26.4 million in the quarter and 3.6% to $90.7 million for 2007. The rise reflected the mid-year launch of the WhiteStar Signature(TM)system and increased surgeon usage of the company's existing phacoemulsification installed base. Surgical pack sales rose 12.9% in the quarter and 9.5% for 2007. Laser Vision Correction (LVC LVC Lebanon Valley College LVC Laser Vision Correction LVC Live Virtual Class (Sun Microsystems) LVC Levi's Vintage Clothing LVC Live Virtual Constructive (simulation space) LVC Low Voltage Cutoff ) sales rose 96.8% to $101.7 million in the quarter and 69.6% to $367.8 million for 2007. Pro forma LVC sales rose 10.6% and 13.8% for the quarter and year, respectively. * Fourth-quarter procedures and related sales of $56.9 million represented a 65.8% increase, or 11.5% on a pro forma basis. For 2007, procedures and related sales of $229.1 million represented a 58.7% increase, or 24.0% on a pro forma basis. Growth reflects primarily market share gains, favorable custom mix shift and continued international expansion. * For 2007, AMO's U.S. excimer procedure volumes grew 6.2% and its U.S. CustomVue[R] procedure mix was 64.4%. For 2007, AMO's U.S. femtosecond procedure volumes grew 41.5% on a pro forma basis. * For 2007, international procedure sales rose 75.1% to $67.6 million, reflecting excimer procedure sales growth of 58.8% and pro forma femtosecond procedure sales growth of 84.2%. * Fourth-quarter system sales System sales is a business term used in the franchising industry. Franchisors provide supplies, marketing and administration services to franchisees in return for a part of the franchisees' revenues. Some franchisors also operate some outlets directly. increased 280.9% to $36.2 million, or an increase of 21.7% on a pro forma basis. For 2007, system sales rose 154.2%, or 3.4% on a pro forma basis. The rise reflects the continued penetration of the company's systems worldwide. * Fourth-quarter unit placements of the VISX([R]) Star S4 IR([R]) excimer laser A gas laser in which a very short electrical pulse excites a mixture containing a halogen such as fluorine and a rare gas such as argon or krypton. It produces a brief, intense pulse of ultraviolet light. declined 17%, reflecting a difficult comparison in the year-ago quarter when a significant U.S. corporate provider adopted the company's excimer technology. For 2007, excimer laser placements rose 13.5%. IntraLase([R]) FS laser placements rose 58.9% for the quarter and 31.4% for 2007, on a pro forma basis. The rise reflects the continued penetration of the company's systems worldwide. Eye Care sales declined 4.6% to $50.5 million in the quarter and 34.6% to $171.0 million for 2007. On a sequential basis, fourth-quarter eye care sales rose 19.9%. * Fourth-quarter multipurpose mul·ti·pur·pose adj. Designed or used for several purposes: a multipurpose room; multipurpose software. multipurpose Adjective sales declined 16.0% to $20.1 million, which included approximately $3.8 million in returns and an estimated $29.2 million in lost sales related to the recall. For 2007, multipurpose sales declined 59.8% to $59.2 million, which included approximately $41.5 million in returns and an estimated $84.0 million in lost sales related to the recall. Sales declines in both periods were partially offset by the re-launch of Complete[R] Easy Rub(TM) Multipurpose Solution. * For the four weeks ended January 15, 2008, Complete[R] Easy Rub(TM) Multipurpose Solution held 6.7% of the U.S. branded multipurpose solution market, according to according to prep. 1. As stated or indicated by; on the authority of: according to historians. 2. In keeping with: according to instructions. 3. IRI Iri (ē`rē`), former city, North Jeolla (Cholla) prov., SW South Korea. An agricultural center and transportation hub, it was absorbed into Iksan. . * Hydrogen peroxide hydrogen peroxide, chemical compound, H2O2, a colorless, syrupy liquid that is a strong oxidizing agent and, in water solution, a weak acid. It is miscible with cold water and is soluble in alcohol and ether. sales rose 22.4% in the quarter to $17.0 million and declined 2.4% to $60.8 million for 2007. Additional Financial Highlights Below are additional highlights for fourth-quarter and full-year results. Growth rates reflect comparisons to the same period one year ago. [TABLE OMITTED] Live Web Cast & Audio Replay AMO will host a live web cast today at 10:00 a.m. ET. To participate and download slides that accompany the company's remarks, visit www.amo-inc.com. An audio replay will be available at approximately noon ET today and will continue through midnight EDT EDT abbr. Eastern Daylight Time EDT Eastern Daylight Time EDT n abbr (US) (= Eastern Daylight Time) → hora de verano de Nueva York EDT on February 28 at (866) 322-1531 (Passcode 31353621) or by visiting www.amo-inc.com. About Advanced Medical Optics (AMO) AMO is focused on providing the full range of advanced refractive technologies and support to help eye care professionals deliver optimal vision and lifestyle experiences to patients of all ages. Products in the cataract/implant line include intraocular lenses (IOLs), phacoemulsification systems, viscoelastics, and related products used in ocular surgery. AMO owns or has the rights to such product brands as ReZoom([R]), Tecnis([R]), Clariflex([R]), Sensar([R]), and Verisyse([R]) IOLs, Sovereign([R]), Sovereign([R]) Compact and WhiteStar Signature([TM]) phacoemulsification systems with WhiteStar([R]) technology, Healon([R]) viscoelastics, 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. . Products in the laser vision correction line (Surv.) a parallel used as a new base line in laying out township in the government lands of the United States. The adoption at certain intervals of a correction line is necessitated by the convergence of of meridians, and the statute requirement that the townships must be squares. include wavefront diagnostic devices, femtosecond lasers and associated patient interface devices, and excimer laser vision correction systems and treatment cards. AMO brands in the laser vision correction business include Star S4 IR([R]), WaveScan Wavefront([R]), Advanced CustomVue([TM]), IntraLase([R]) and IntraLasik([R]). Products in the contact lens care line include disinfecting solutions, enzymatic cleaners and lens rewetting drops. Among the eye care product brands the company possesses are COMPLETE([R]), COMPLETE([R]) Blink-N-Clean([R]), Consept([R])F, Consept([R]) 1 Step, Oxysept([R]) 1 Step, UltraCare([R]), Ultrazyme([R]), Total Care([TM]) and blink[TM] branded products. AMO 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 4,200 worldwide. The company has operations in 24 countries and markets products in approximately 60 countries. For more information, visit the company's Website at www.amo-inc.com. Use of Non-GAAP Measures Our EPS guidance for 2008 is provided on a non-GAAP basis. The company's adjusted EPS guidance excludes any charges associated with acquisitions, reorganizations and recapitalizations and other one-time charges. The guidance also assumes no impact of potential unrealized gains or losses on derivative instruments. The company believes this presentation is useful to investors to conduct a more meaningful, consistent comparison of the company's ongoing operating results. This presentation is also consistent with our internal use of the measure, which we use to measure the profitability of ongoing operating results against prior periods and against our internally developed targets. We believe that our investors also use this measure to analyze the sustainable profitability of the on-going business operations Business operations are those activities involved in the running of a business for the purpose of producing value for the stakeholders. Compare business processes. The outcome of business operations is the harvesting of value from assets . The economic substance related to our use of adjusted per-share guidance is our belief that the appropriate analysis of our profitability cannot be effectively considered while incorporating the effect of unusual items and charges that have not been experienced in prior periods. The company is not able to provide a reconciliation of projected adjusted per-share guidance to expected reported results due to the unknown effect, timing and potential significance of special charges, and our inability to forecast charges associated with future transactions and initiatives. These non-GAAP financial measures are used in addition to and in conjunction with results presented in accordance with GAAP. These non-GAAP financial measures reflect an additional way of viewing aspects of our operations that, when viewed with our GAAP results provide a more complete understanding of factors and trends affecting our business. These non-GAAP measures should be considered as a supplement to, and not as a substitute for, or superior to, the corresponding measures calculated in accordance with generally accepted accounting principles. Status of Guidance During the quarter, AMO management may reiterate guidance in press releases or as part of web cast conference presentations. From the close of business on March 14 until publication of its first-quarter earnings release, AMO will observe a "Quiet Period" during which the company will not discuss its guidance. In addition, guidance disclosed in the company's press releases, presentations and filings with the SEC should be considered historical, as of prior to the Quiet Period only and not subject to update by the company. Forward-Looking Statements This press release contains forecasts about AMO and its businesses, such as management's total revenue and adjusted earnings per-share outlook and forecasts included in the section entitled "Plan to Reduce Fixed Costs." Because forecasts are inherently estimates that cannot be made with precision, the company's performance may at times differ from its estimates and targets. Statements in this press release regarding financial guidance, statements by Mr. Mazzo 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 uncertainties associated with successful re-entry RE-ENTRY, estates. The resuming or retaking possession of land which the party lately had. 2. Ground rent deeds and leases frequently contain a clause authorizing the landlord to reenter on the non-payment of rent, or the breach of some covenant, when the into the multi-purpose solution segment and impacts of our previous eye care recalls; unexpected changes in competitive, regulatory and market conditions; the potential for delays in the launching of new products; the performance of new products and the continued acceptance of current products; the execution of strategic initiatives and alliances; successful integration of prior acquisitions; AMO's ability to maintain a sufficient supply of products and unexpected supply delays, product liability claims or new 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. related to our recall or otherwise; and the uncertainties associated with intellectual property protection for the company's products and exposure to claims of intellectual property infringement by others. In addition, matters generally affecting the domestic and global economy, such as changes in interest and currency exchange rates or consumer confidence indices, 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 "Risk Factors" in AMO's 2006 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. filed in March 2007 and Form 10-Q Form 10-Q See 10-Q. filed in November 2007 that 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 by contacting AMO's Investor Relations Investor relations The process by which the corporation communicates with its investors. Department by calling 714-247-8455. [TABLE OMITTED] [TABLE OMITTED] [TABLE OMITTED] |
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