Allergan Reports First Quarter Operating Results; Pharmaceutical Sales Increased 22 Percent for the First Quarter; Board of Directors Declares First Quarter Dividend.IRVINE Irvine, town, Scotland Irvine (ûr`vĭn), town (1991 pop. 32,507), North Ayrshire, SW Scotland, on the Irvine River estuary. Industries include iron and brass foundries. Other products are chemicals, electric goods, and clothing. , Calif. -- 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. (NYSE NYSE See: New York Stock Exchange :AGN AGN Again (Amateur Radio) AGN Active Galactic Nucleus AGN Acute Glomerulonephritis AGN Accountants Global Network AGN Air Gabon (ICAO code) ) today announced operating results for the first quarter ended March 31, 2006. Allergan also announced that its Board of Directors has declared de·clare v. de·clared, de·clar·ing, de·clares v.tr. 1. To make known formally or officially. See Synonyms at announce. 2. To state emphatically or authoritatively; affirm. 3. a first quarter dividend of $0.10 per share, payable on June June: see month. 13, 2006 to stockholders of record on May 19, 2006. Operating Results For the quarter ended March 31, 2006:
-- Allergan's net sales were $615.2 million, excluding sales of
products acquired in the Inamed acquisition, which was
completed on March 23, 2006.
-- Pharmaceutical sales increased 22.0 percent, or 23.0 percent
at constant currency, compared to pharmaceutical sales in the
first quarter of 2005. Pharmaceutical sales increased 24.0
percent, or 24.9 percent at constant currency, compared to
pharmaceutical sales in the first quarter of 2005 adjusted to
exclude BOTOX(R) sales in Japan as a result of Allergan's
development and promotion arrangement with GlaxoSmithKline
(GSK). A reconciliation of the adjustments made from revenue
reported in accordance with United States Generally Accepted
Accounting Principles (GAAP) to adjusted revenue is contained
in the financial tables of this press release.
-- Allergan reported $3.29 diluted loss per share compared to the
$0.60 diluted earnings per share reported for the first
quarter of 2005. In accordance with GAAP, Allergan began
implementing Statement of Financial Accounting Standards No.
123 (revised 2004), Shared-Based Payment (FAS 123R) in the
first quarter of 2006. The reported $3.29 diluted loss per
share includes a $0.05 per share expense related to the effect
of expensing stock options in accordance with FAS 123R and
also includes the following:
-- purchase accounting adjustments related to acquired
in-process research and development associated with the
Inamed acquisition, which were higher than the guidance
provided on March 27, 2006 (see details contained in the
financial tables of this press release);
-- merger-related integration and transition costs associated
with the Inamed acquisition;
-- the incurrence of net restructuring charges, primarily
related to the streamlining of Allergan's research and
development and select commercial activities throughout
Europe and the reversal of restructuring charges related
to the re-organization of Allergan's operations in Japan
as a result of Allergan's development and promotion
arrangements with GSK relating to BOTOX(R);
-- the incurrence of transition and duplicate operating
expenses related to the streamlining activities throughout
Europe mentioned above;
-- the resolution of uncertain income tax positions due to
completion of the Internal Revenue Service (IRS)
examination for tax years 2000 through 2002;
-- the favorable recovery of previously paid state income
taxes;
-- the reversal of estimated interest income and expense
related to previously paid state income taxes and tax
settlements; and
-- the effect of an unrealized loss on the mark-to-market
adjustment to foreign currency derivative instruments.
The items above included in diluted earnings per share total
$559.4 million, which consists of $580.4 million pre-tax, less
$21.0 million related to the provision for income taxes.
-- The pre-tax costs related to expensing stock options included
in our statement of operations for the three months ended
March 31, 2006 are allocated $0.7 million to cost of sales,
$7.0 million to selling, general and administrative expenses
and $2.4 million to research and development expenses.
Allergan's results of operations for the comparable three
months ended March 25, 2005 do not include any costs related
to expensing stock options.
-- Allergan's adjusted diluted earnings per share were $0.82,
representing a 7.9 percent increase compared to adjusted
diluted earnings per share of $0.76 reported for the first
quarter of 2005. Adjusted diluted earnings per share of $0.82
includes a $0.05 per share expense related to the effect of
expensing stock options in accordance with FAS 123R. Adjusted
diluted earnings per share for the first quarter of 2006
exclude the items outlined above and a reconciliation of the
adjustments made from earnings per share reported in
accordance with GAAP to adjusted diluted earnings per share is
contained in the financial tables of this press release.
"I am extremely pleased with the very strong sales growth across a broad range of products, regions and businesses in the first quarter, driven by our strong investments in sales and marketing programs as well as R&D," said David E.I. Pyott, Allergan's Chairman of the Board and Chief Executive Officer. "Furthermore, we are making excellent progress in integrating Inamed's operations and are successfully establishing ourselves as the leading specialist company in medical aesthetics aesthetics (ĕsthĕt`ĭks), the branch of philosophy that is concerned with the nature of art and the criteria of artistic judgment. , providing a wide range of innovative products to plastic surgeons plastic surgeon A surgeon specialized in reconstruction or cosmetic enhancement of various body regions, most commonly the face–nose, chin, and cheeks, breasts and buttocks; PSs remove fat deposits through liposuction; PSs reduce scarring or disfigurement and dermatologists." Inamed Acquisition On March 23, 2006, Allergan announced that it completed its acquisition of Inamed Corporation. The acquisition of Inamed expands Allergan's global position as a premier specialty A contract under seal. A specialty is a written document that has been sealed and delivered and is given as security for the payment of a specifically indicated debt. pharmaceutical and medical device company in high-growth markets and creates a world-leading medical aesthetics franchise, providing a broad, complementary portfolio of pharmaceutical and medical device products and offerings to physicians and patients. As previously discussed, the first quarter 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 reported by Allergan exclude sales of products acquired in the Inamed acquisition. Total Inamed net sales were $99.4 million for the first quarter of 2006. Actions to reduce in-channel inventory affected ex-factory sales. Based upon second quarter run rates, we are confirming the Inamed sales guidance provided on March 27, 2006. Product and Pipeline Update During the first quarter of 2006:
-- On March 9, 2006, Allergan announced that Allergan and Alcon,
Inc. (NYSE:ACL) settled the patent infringement lawsuit
pending in the United States District Court for the District
of Delaware contending that Alcon's proposed brimonidine 0.15%
product infringed two brimonidine-related patents owned by
Allergan. Pursuant to the settlement, Alcon agreed to license
both patents at issue in the lawsuit for use in the United
States most likely beginning on September 30, 2009.
-- On March 24, 2006, Allergan announced that the Committee for
Medicinal Products for Human Use (CHMP) recommended that the
European Commission approve GANFORT(R), Allergan's
LUMIGAN(R)/timolol combination product (bimatoprost/timolol
ophthalmic solution) for the treatment of glaucoma. The CHMP
opinion serves as the basis for a European Commission
approval, which is expected to be finalized in the second
quarter of 2006. GANFORT(R) is indicated for the reduction of
intraocular pressure (IOP) in patients with open-angle
glaucoma or ocular hypertension who are insufficiently
responsive to topical beta-blockers or prostaglandin
analogues.
On February February: see month. 2, 2006, Allergan announced that F. Michael Ball There are several people named Michael Ball:
Raymond, town (1991 pop. 3,130), S Alta., Canada, SE of Lethbridge, in a sugar beet area. Sugar is refined and honey is produced there. A provincial agricultural college is in the town. Diradoorian to Executive Vice President, Global Technical Operations. With the appointment of Mr. Ball to President, David E.I. Pyott maintained his positions as Allergan's Chairman of the Board and Chief Executive Officer. Following the end of the first quarter, Allergan completed the concurrent At the same time. It implies that multiple processes are taking place simultaneously. See concurrent operation. private placements of $750 million aggregate principal amount of 1.50% Convertible Senior Notes due 2026, and $800 million aggregate principal amount of 5.75% Senior Notes due 2016. Allergan also announced that it will redeem redeem v. to buy back, as when an owner who had mortgaged his/her real property pays off the debt. The term also refers to paying the amount due and all charges after a foreclosure (due to failure to make payments when due) has begun. the entire outstanding principal amount of its Zero Coupon A certificate evidencing the obligation to pay an installment of interest or a dividend that must be cut and presented to its issuer for payment when it is due. Coupons are usually attached to a document, such as a promissory note, bond, share of stock, or a bearer Senior Convertible Notes due 2022 on May 15, 2006. Outlook For the full year of 2006:
-- Allergan is increasing total sales guidance to between $2,825
million and $2,965 million.
-- Allergan is increasing the expected range of
pharmaceutical sales to between $2,465 million and $2,565
million. Pharmaceutical sales excludes sales of products
acquired in the Inamed transaction.
-- Allergan is increasing the expected range of BOTOX(R)
sales to between $890 million and $925 million (excludes
BOTOX(R) sales in Japan as a result of Allergan's
development and promotion arrangements with GSK). To
assist in year-over-year BOTOX(R) sales growth
comparisons, Allergan has provided 2005 and 2004 quarterly
BOTOX(R) net sales in Japan in the financial tables of
this press release.
-- All other revenue guidance provided on March 27, 2006
remains unchanged.
-- Allergan is increasing adjusted diluted earnings per share
guidance to be between $3.57 and $3.63, which includes a $0.20
per share expense related to the estimated effect of expensing
stock options in accordance with FAS 123R. Adjusted diluted
earnings per share guidance excludes non-GAAP adjustments to
adjusted diluted earnings per share, including the following
items:
-- amortization of acquired intangible assets associated with
the Inamed acquisition;
-- purchase accounting adjustments related to inventory and
in-process research and development associated with the
Inamed acquisition;
-- merger-related integration and transition costs associated
with the Inamed acquisition;
-- restructuring activities and transition and duplicate
operating expenses;
-- the resolution of uncertain tax positions due to
completion of the IRS examination;
-- the favorable recovery of previously paid state income
taxes;
-- the reversal of estimated interest income and expense
related to previously paid state income taxes and tax
settlements; and
-- the effect of the unrealized gain/loss on the
mark-to-market adjustment to foreign currency derivative
instruments.
A reconciliation of the adjustments made from GAAP diluted
earnings per share guidance to adjusted diluted earnings per share
guidance is contained in the financial tables of this press
release.
-- All other full year guidance provided on March 27, 2006
remains unchanged including income statement ratios, other
revenue, estimated impact of expensing stock options, diluted
shares outstanding and effective tax rate.
For the second quarter of 2006, Allergan estimates:
-- Total sales between $750 million and $770 million (which
includes Allergan and Inamed combined sales).
-- Adjusted diluted earnings per share are expected to be between
$0.82 and $0.84, which includes a $0.05 per share expense
related to the estimated effect of expensing stock options in
accordance with FAS 123R discussed above. Adjusted diluted
earnings per share guidance excludes non-GAAP adjustments to
adjusted diluted earnings per share, including the following
items:
-- amortization of acquired intangible assets associated with
the Inamed acquisition;
-- merger related integration and transition costs associated
with the Inamed acquisition; and
-- purchase accounting adjustments related to inventory and
in-process research and development associated with the
Inamed acquisition.
A reconciliation of the adjustments made from GAAP diluted
earnings per share guidance to adjusted diluted earnings per share
guidance is contained in the financial tables of this press
release.
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. In this press release, the statements regarding new product development, market potential, expected growth, efficiencies, costs and savings, the statements by Mr. Pyott as well as the outlook for Allergan's earnings per share and revenue forecasts, among other statements above, are forward-looking statements. Because forecasts are inherently estimates that cannot be made with precision, Allergan's performance at times differs materially from its estimates and targets, and Allergan often does not know what the actual results will be until after a quarter's end and year's end. Therefore, Allergan will not report or comment on its progress during a current quarter except through public announcement. Any statement made by others with respect to progress during a current quarter cannot be attributed to Allergan. Any other statements in this press release that refer to Allergan's expected, estimated or anticipated future results are forward-looking statements. All forward-looking statements in this press release reflect Allergan's current analysis of existing trends and information and represent Allergan's judgment only as of the date of this press release. Actual results may differ materially from current expectations based on a number of factors affecting Allergan's businesses, including, among other things, changing competitive, market and 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. conditions; the timing and uncertainty of the results of both the research and development and regulatory processes; domestic and foreign health care and cost containment cost containment, n the features of a dental benefits program or of the administration of the program designed to reduce or eliminate certain charges to the plan. reforms; technological advances and patents obtained by competitors COMPETITORS, French law. Persons who compete or aspire to the same office, rank or employment. As an English word in common use, it has a much wider application. Ferriere, Dict. de Dr. h.t. ; the performance, including the approval, introduction, and consumer and physician acceptance, of new products and the continuing acceptance of currently marketed products; the effectiveness of advertising and other promotional campaigns; the timely and successful implementation of strategic initiatives; the results of any pending or future litigations, investigations or claims; the uncertainty associated with the identification of and successful consummation CONSUMMATION. The completion of a thing; as the consummation of marriage; (q.v.) the consummation of a contract, and the like. 2. A contract is said to be consummated, when everything to be done in relation to it, has been accomplished. and execution of external corporate development initiatives and strategic partnering transactions; and Allergan's ability to obtain and successfully maintain a sufficient supply of products to meet market demand in a timely manner. In addition, matters generally affecting the economy, such as changes in interest and currency exchange rates; international relations international relations, study of the relations among states and other political and economic units in the international system. Particular areas of study within the field of international relations include diplomacy and diplomatic history, international law, ; and the state of the economy worldwide, can materially affect Allergan's results. Therefore, the reader is cautioned not to rely on these forward-looking statements. Allergan expressly disclaims any intent or obligation to update these forward-looking statements except as required to do so by law. Additional information concerning the above-referenced risk factors and other risk factors can be found in press releases issued by Allergan, as well as Allergan's public periodic filings with the Securities and Exchange Commission, including the discussion under the heading "Risk Factors" in Allergan's 2005 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. . Copies of Allergan's press releases and additional information about Allergan is available at www.allergan.com or you can contact the Allergan Investor Relations Investor relations The process by which the corporation communicates with its investors. Department by calling 714-246-4636. About Allergan, Inc. Allergan, Inc., with headquarters in Irvine, California Irvine is an incorporated city in Orange County, California, United States. It is a planned city, mainly developed by the Irvine Company since the 1960s. Formally incorporated on December 28 1971, the 69.7 square mile (180.5 km²) city has a population of 202,079 (as of 2007). , is a technology-driven, global specialty pharmaceutical and medical device company that develops and commercializes innovative products for the ophthalmology ophthalmology (ŏf'thălmŏl`əjē), branch of medicine specializing in the anatomy, function and diseases of the eye. Ophthalmologists specialize in the medical and surgical treatment of eye disorders, vision measurements for , neurosciences, medical dermatology dermatology (dûrmətŏl`əjē), branch of medicine concerned with diagnosis and treatment of diseases and disorders of the skin. , medical aesthetics and other specialty markets. Allergan is dedicated to delivering value to its customers, satisfying unmet un·met adj. Not satisfied or fulfilled: unmet demands. medical needs, and improving people's lives.
ALLERGAN, INC.
Condensed Consolidated Statements of Operations and
Reconciliation of Non-GAAP Adjustments
(Unaudited)
Three months ended
------------------------------------
in millions, except per share March 31, 2006
amounts
--------------------------------- ------------------------------------
Non-GAAP
GAAP Adjustments Adjusted
-------- ------------------ --------
Product sales
Net sales $615.2 $-- $615.2
Cost of sales 101.6 (0.1) (a) 101.5
-------- ----------- --------
Product gross margin 513.6 0.1 513.7
Other revenue 10.5 -- 10.5
Selling, general and
administrative 274.0 (9.2) (a)(b) 264.8
Research and development 670.1 (563.0) (a)(c) 107.1
Restructuring charge 2.8 (2.8) (d) --
-------- ----------- --------
Operating income (loss) (422.8) 575.1 152.3
Interest income 9.2 4.9 (e) 14.1
Interest expense (7.8) (0.6) (e) (8.4)
Unrealized (loss) gain on
derivative instruments, net (1.0) 1.0 (f) --
Other, net (0.7) -- (0.7)
-------- ----------- --------
(0.3) 5.3 5.0
-------- ----------- --------
Earnings (loss) before income
taxes and minority interest (423.1) 580.4 157.3
Provision for income taxes 21.9 21.0 (g) 42.9
Minority interest (0.2) -- (0.2)
-------- ----------- --------
Net earnings (loss) $(444.8) $559.4 $114.6
======== =========== ========
Net earnings (loss) per share:
Basic $(3.29) $0.85
======== ========
Diluted $(3.29) $0.82
======== ========
Weighted average number of common
shares outstanding:
Basic 135.1 135.1
Diluted 135.1 139.6
Selected ratios as a percentage
of net sales
---------------------------------
Gross profit 83.5% 83.5%
Selling, general and
administrative 44.5% 43.0%
Research and development 108.9% 17.4%
Three months ended
--------------------------------
in millions, except per share amounts March 25, 2005
------------------------------------- --------------------------------
Non-GAAP
GAAP Adjustments Adjusted
------- --------------- --------
Product sales
Net sales $527.2 $-- $527.2
Cost of sales 94.1 -- 94.1
------- ----------- --------
Product gross margin 433.1 -- 433.1
Other revenue 2.9 -- 2.9
Selling, general and administrative 213.2 (0.2) (h) 213.0
Research and development 82.0 (0.1) (h) 81.9
Restructuring charge 27.4 (27.4) (d) --
------- ----------- --------
Operating income (loss) 113.4 27.7 141.1
Interest income 5.5 (0.1) (i) 5.4
Interest expense (4.5) -- (4.5)
Unrealized (loss) gain on derivative
instruments, net 0.1 (0.1) (f) --
Other, net 4.5 (3.5) (i) 1.0
------- ----------- --------
5.6 (3.7) 1.9
------- ----------- --------
Earnings (loss) before income taxes
and minority interest 119.0 24.0 143.0
Provision for income taxes 39.2 2.5 (j) 41.7
Minority interest (0.1) -- (0.1)
------- ----------- --------
Net earnings (loss) $79.9 $21.5 $101.4
======= =========== ========
Net earnings (loss) per share:
Basic $0.61 $0.77
======= ========
Diluted $0.60 $0.76
======= ========
Weighted average number of common
shares outstanding:
Basic 131.1 131.1
Diluted 132.6 132.6
Selected ratios as a percentage of
net sales
-------------------------------------
Gross profit 82.2% 82.2%
Selling, general and administrative 40.4% 40.4%
Research and development 15.6% 15.5%
(a) Transition/duplicate operating expenses, consisting of Cost of
sales of $0.1 million, Selling, general and administrative expense
of $4.2 million and Research and development expense of $0.2
million
(b) Integration and transition costs related to the acquisition of
Inamed of $5.0 million
(c) In-process research and development charge of $562.8 million
related to the acquisition of Inamed
(d) Net restructuring charges
(e) Reversal of interest income on previously paid state income taxes
and reversal of interest expense related to the resolution of
uncertain tax positions
(f) Unrealized gain (loss) on the mark-to-market adjustment to
derivative instruments
(g) Resolution of uncertain tax positions and favorable recovery of
previously paid state income taxes of $15.7 million and the tax
effect for non-GAAP adjustments of $5.3 million
(h) Transition/duplicate operating expenses
(i) ISTA Vitrase collaboration fee
(j) Tax effect for non-GAAP adjustments
"GAAP" refers to financial information presented in accordance with
generally accepted accounting principles in the United States.
This press release includes historical non-GAAP financial measures, as
defined in Regulation G promulgated by the Securities and Exchange
Commission, with respect to the three months ended March 31, 2006 and
March 25, 2005. Allergan believes that its presentation of historical
non-GAAP financial measures provides useful supplementary information
to investors. The presentation of historical non-GAAP financial
measures is not meant to be considered in isolation from or as a
substitute for results prepared in accordance with accounting
principles generally accepted in the United States.
In this press release, Allergan reported the non-GAAP financial
measure "adjusted earnings" and related "adjusted diluted earnings per
share." Allergan uses adjusted earnings to enhance the investor's
overall understanding of the financial performance and prospects for
the future of Allergan's core business activities. Specifically,
Allergan believes that a report of adjusted earnings provides
consistency in its financial reporting and facilitates the comparison
of results of core business operations between its current, past and
future periods. Adjusted earnings is one of the primary indicators
management uses for planning and forecasting in future periods.
Allergan also uses adjusted earnings for evaluating management
performance for compensation purposes.
ALLERGAN, INC.
Condensed Consolidated Balance Sheets
(Unaudited)
in millions March 31, December 31,
2006 2005
---------------------------------------------- ---------- ------------
Assets
Cash and equivalents $876.2 $1,296.3
Trade receivables, net 365.2 246.1
Inventories 207.2 90.1
Other current assets 233.4 193.1
---------- ------------
Total current assets 1,682.0 1,825.6
Property, plant and equipment, net 564.9 494.0
Intangible assets, net 816.1 139.8
Goodwill, net 1,922.4 9.0
Other noncurrent assets 275.0 382.1
---------- ------------
Total assets $5,260.4 $2,850.5
========== ============
Liabilities and stockholders' equity
Notes payable $952.0 $169.6
Convertible notes, net of discount 427.3 520.0
Accounts payable 119.8 92.3
Accrued expenses and income taxes 397.8 262.1
---------- ------------
Total current liabilities 1,896.9 1,044.0
Long-term debt 57.7 57.5
Other liabilities 246.8 182.1
Stockholders' equity 3,059.0 1,566.9
---------- ------------
Total liabilities and stockholders' equity $5,260.4 $2,850.5
========== ============
Cash, net of debt $(560.8) $549.2
Debt-to-capital percentage 32.0% 32.3%
ALLERGAN, INC.
Reconciliation of Diluted Earnings Per Share
(Unaudited)
in millions, except per share amounts Three months ended
-------------------------------------------------- -------------------
March 31, March 25,
2006 2005
--------- ---------
Net earnings (loss), as reported $(444.8) $79.9
Non-GAAP pre-tax adjustments:
In-process research and development charge 562.8 --
Net restructuring charge 2.8 27.4
Inamed integration and transition costs 5.0 --
Transition/duplicate operating expenses 4.5 0.3
Interest related to previously paid state income
taxes and income tax settlements 4.3 --
ISTA Vitrase collaboration fee -- (3.6)
Unrealized (gain) loss on derivative instruments 1.0 (0.1)
--------- ---------
135.6 103.9
Tax effect for above items 5.3 2.5
Resolution of uncertain tax positions 14.5 --
State income tax recovery 1.2 --
--------- ---------
Adjusted diluted earnings $114.6 $101.4
========= =========
Weighted average number of shares issued 135.1 131.1
Net shares assumed issued using the treasury stock
method for options outstanding during each period
based on average market price 2.0 1.0
Dilutive effect of assumed conversion of
convertible notes outstanding 2.5 0.5
--------- ---------
139.6 132.6
========= =========
Diluted (loss) earnings per share, as reported $(3.29) $0.60
Effect of additional dilutive shares (a) 0.10 --
--------- ---------
(3.19) 0.60
Non-GAAP earnings per share adjustments:
In-process research and development charge 4.03 --
Net restructuring charge 0.02 0.18
Inamed integration and transition costs 0.02 --
Transition/duplicate operating expenses 0.02 --
Interest related to previously paid state income
taxes and income tax settlements 0.02 --
ISTA Vitrase collaboration fee -- (0.02)
Unrealized (gain) loss on derivative instruments 0.01 --
Income tax benefit from resolution of uncertain
tax positions (0.12) --
State income tax recovery 0.01 --
--------- ---------
Adjusted diluted earnings per share $0.82 $0.76
========= =========
Year over year change 7.9%
=====
(a) The number of shares used to calculate adjusted diluted earnings
per share includes the dilutive effect of outstanding stock
options and the assumed conversion of convertible notes.
ALLERGAN, INC.
Supplemental Non-GAAP Information
(Unaudited)
Net sales, as
reported
---------------------
Three months ended
------------------- $ change in net sales
March 31, March 25, ----------------------------
2006 2005 Total Performance Currency
--------- --------- ------ ----------- ---------
in millions
---------------------
Eye Care
Pharmaceuticals $361.9 $298.0 $63.9 $67.0 $(3.1)
Botox/Neuromodulator 223.0 176.3 46.7 48.4 (1.7)
Skin Care 30.3 29.8 0.5 0.5 --
--------- --------- ------ ----------- ---------
Total 615.2 504.1 111.1 115.9 (4.8)
Other (primarily
contract sales) -- 23.1 (23.1) (23.1) --
--------- --------- ------ ----------- ---------
Total net sales, as
reported $615.2 $527.2 $88.0 $92.8 $(4.8)
========= ========= ====== =========== =========
Alphagan P, Alphagan
and Combigan $71.0 $66.7 $4.3 $5.2 $(0.9)
Lumigan 72.9 62.0 10.9 12.1 (1.2)
Other Glaucoma 4.4 4.6 (0.2) (0.1) (0.1)
Restasis 66.1 37.3 28.8 28.8 --
Domestic 67.4% 66.9%
International 32.6% 33.1%
Percent change in net sales
---------------------------------
Total Performance Currency
-------- ------------ -----------
Eye Care Pharmaceuticals 21.4% 22.5% (1.0)%
Botox/Neuromodulator 26.5% 27.5% (1.0)%
Skin Care 1.7% 1.7% --
Total 22.0% 23.0% (1.0)%
Other (primarily contract sales) (100.0)% (100.0)% --
Total net sales, as reported 16.7% 17.6% (0.9)%
Alphagan P, Alphagan and Combigan 6.4% 7.8% (1.4)%
Lumigan 17.5% 19.5% (2.0)%
Other Glaucoma (3.9)% (1.2)% (2.7)%
Restasis 77.1% 77.1% n/a
Adjusted total net
sales
---------------------
Three months Three months ended
ended -----------------------------------
March 31, March 25, March 25, March 25,
2006 2005 2005 2005
as reported as reported adjustments as adjusted
------------ ----------- ----------- -----------
in millions (a)
---------------------
Eye Care
Pharmaceuticals $361.9 $298.0 $-- $298.0
Botox/Neuromodulator 223.0 176.3 (7.9) 168.4
Skin Care 30.3 29.8 -- 29.8
------------ ----------- ----------- -----------
Total 615.2 504.1 (7.9) 496.2
Other (primarily
contract sales) -- 23.1 (23.1) --
------------ ----------- ----------- -----------
Total net sales $615.2 $527.2 $(31.0) $496.2
============ =========== =========== ===========
Change in adjusted net sales
----------------------------
$ %
------------- -------------
in millions
-----------------------------------------
Eye Care Pharmaceuticals $63.9 21.4%
Botox/Neuromodulator 54.6 32.4%
Skin Care 0.5 1.7%
-------------
Total 119.0 24.0%
Other (primarily contract sales) -- --
-------------
Total net sales $119.0 24.0%
=============
(a) Adjustments to net sales consist of Botox net sales in Japan in
2005 of $7.9 million and other sales (primarily contract sales) of
$23.1 million.
In this press release, Allergan reported sales performance using the
non-GAAP financial measure of constant currency sales. Constant
currency sales represent current period reported sales adjusted for
the translation effect of changes in average foreign exchange rates
between the current period and the corresponding period in the prior
year. Allergan calculates the currency effect by comparing adjusted
current period reported amounts, calculated using the monthly average
foreign exchange rates for the corresponding period in the prior year,
to the actual current period reported amounts. Management refers to
growth rates at constant currency so that sales results can be viewed
without the impact of changing foreign currency exchange rates,
thereby facilitating period-to-period comparisons of Allergan's sales.
Generally, when the dollar either strengthens or weakens against other
currencies, the growth at constant currency rates will be higher or
lower, respectively, than growth reported at actual exchange rates.
Allergan also reported sales performance using the non-GAAP financial
measure of adjusted total net sales. Adjusted total net sales
represents reported sales adjusted to exclude prior period net sales
for Japan and other sales, primarily consisting of sales to Advanced
Medical Optics, Inc. (AMO) pursuant to a manufacturing and supply
agreement entered into as part of the AMO spin-off. This manufacturing
and supply agreement terminated in 2005. Allergan shifted to a third
party license and distribution business model for its operations in
Japan in 2005 and accordingly has recorded no current period product
net sales for the Japan operations. Allergan uses adjusted total net
sales to enhance the investor's overall understanding of the financial
performance and prospects for the future of Allergan's core business
activities. Specifically, Allergan believes that a report of adjusted
total net sales provides consistency in its financial reporting and
facilitates the comparison of net sales of core business operations
between its current, past and future periods. Adjusted total net sales
is one of the primary indicators management uses for planning and
forecasting in future periods. Allergan also uses adjusted total net
sales for evaluating management performance for compensation purposes.
ALLERGAN, INC.
Reconciliation of GAAP Diluted Earnings (Loss) Per Share Guidance
To Adjusted Diluted Earnings Per Share Guidance
(Unaudited)
Quarter 2, 2006
---------------
Low High
------- -------
GAAP diluted earnings per share guidance (a) $0.60 $0.56
Purchase accounting adjustments related to
inventory 0.11 0.13
Amortization of acquired intangible assets 0.09 0.10
Inamed integration and transition costs 0.02 0.05
------- -------
Adjusted diluted earnings per share guidance $0.82 $0.84
======= =======
Fiscal 2006
---------------
Low High
------- -------
GAAP diluted earnings (loss) per share guidance (a) $(0.86) $(0.94)
Effect of additional diluted shares (b) 0.02 0.02
In-process research and development charge 3.73 3.73
Purchase accounting adjustments related to
inventory 0.23 0.26
Amortization of acquired intangible assets 0.26 0.30
Restructuring charge 0.01 0.01
Inamed integration and transition costs 0.26 0.33
Transition/duplicate operating expenses 0.02 0.02
Interest related to previously paid state income
taxes and Income tax settlements 0.02 0.02
Unrealized (gain) loss on derivative instruments (0.01) (0.01)
Income tax benefit from resolution of uncertain
tax positions (0.12) (0.12)
State income tax recovery 0.01 0.01
------- -------
Adjusted diluted earnings per share guidance $3.57 $3.63
======= =======
(a) GAAP diluted earnings per share guidance excludes any potential
impact of future unrealized gains or losses on derivative
instruments and restructuring charges and transition/duplicate
operating expenses that may occur but that are not currently known
or determinable.
(b) The number of shares used to calculate adjusted diluted earnings
per share includes the dilutive effect of outstanding stock
options and the assumed conversion of convertible notes.
ALLERGAN, INC.
Supplemental Information Regarding Botox(R) Net Sales in Japan
(Unaudited)
Year ended
--------------------------
December 31, December 31,
2005 2004
------------- ------------
Japan Botox(R) Net Sales (in millions)
-------------------------------------------
Fiscal Quarter 1 $7.9 $6.4
Fiscal Quarter 2 9.4 8.3
Fiscal Quarter 3 10.1 8.3
Fiscal Quarter 4 11.4 9.5
------------- ------------
Total Year $38.8 $32.5
============= ============
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