Allergan Reports Record Year-End Operating Results; Fourth Quarter Earnings Per Share Up 27.1 Percent and Year-End Earnings Per Share Up 22.5 Percent, Excluding One-Time Items.Business Editors and Health/Medical Writers NEW YORK--(BW HealthWire)--Jan. 22, 2002 Planned Spin-Off of Ophthalmic Surgical and 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 Businesses to Form New Publicly Traded Company publicly traded company A company whose shares of common stock are held by the public and are available for purchase by investors. The shares of publicly traded firms are bought and sold on the organized exchanges or in the over-the-counter market. -- Advanced Medical Optics Board of Directors Declares Quarterly Dividend Allergan, 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 worldwide sales of $453.1 million for the quarter ended December 31, 2001. Worldwide sales increased 13.1 percent, or 15.5 percent at constant currency, over the fourth quarter of 2000. Excluding the effects of certain non-recurring items, which net to zero, described in detail later in this document, and the unrealized non-cash gain on derivative instruments Derivative instruments Contracts such as options and futures whose price is derived from the price of an underlying financial asset. of $0.02 per share, Allergan's diluted earnings per share diluted earnings per share An earnings measure calculated by dividing net income less preferred stock dividends for a period by the average number of shares of common stock that would be outstanding if all convertible securities were converted into shares of for the fourth quarter of 2001 were $0.61, an increase of 27.1 percent over the fourth quarter 2000 earnings per share of $0.48. Including the effects of the above-referenced non-recurring items and the unrealized non-cash gain on derivative instruments, Allergan reported diluted earnings per share of $0.63 for the fourth quarter of 2001. Allergan also today announced that its Board of Directors has declared a fourth quarter dividend of $0.09 per share, payable March 14, 2002, to stockholders of record on February 15, 2002. In a separate press release issued this morning, Allergan announced that its Board of Directors has approved the separation of its pharmaceutical and optical medical device businesses into two independent companies. Allergan's optical medical device business is comprised of the eye care surgical product line and the contact lens care product line. The new entity, to be called 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 ), will be established as an independent, publicly traded company through a tax-free spin-off to Allergan stockholders. Further detail relating to relating to relate prep → concernant relating to relate prep → bezüglich +gen, mit Bezug auf +acc this announcement is available in the above-referenced press release. The Company will host a meeting and conference call/Web cast this morning, scheduled for 11:30 a.m. (EST EST electroshock therapy. EST abbr. electroshock therapy ), to provide additional transaction-related information. The Web cast can be accessed through the Company's Web site at www.allergan.com. At constant currency rates, sales for the year ended December 31, 2001 increased by $179.8 million, or 11.5 percent, over the comparable period in 2000. Including the impact of currency, sales for the year 2001 were $1,685.2 million, a 7.8 percent increase over $1,562.6 million reported for the prior year. Excluding the non-recurring items incurred during the fourth quarter, the one-time charge related to the purchase of Allergan Specialty Therapeutics, Inc (ASTI) and the net year-to-date unrealized non-cash gain on derivative instruments, Allergan reported diluted earnings per share for 2001 of $1.96, an increase of 22.5 percent over the adjusted 2000 diluted earnings per share of $1.60. Including the effects of these special items, Allergan's diluted earnings per share for 2001 were $1.68, compared with $1.61 for 2000. "The fourth quarter marked the best local currency growth since the first quarter of 2000," said Allergan Chairman, President and CEO (1) (Chief Executive Officer) The highest individual in command of an organization. Typically the president of the company, the CEO reports to the Chairman of the Board. , David E.I. Pyott. "As we had forecasted and discussed earlier in 2001, we are seeing an acceleration in sales growth with particularly powerful growth in the pharmaceutical businesses. When compared with the same period last year, sales grew 21 percent in the third quarter and 25 percent in the fourth quarter. 2001 was the best year in the history of Allergan for regulatory approvals. We are now observing the benefit of multiple product launches, or approvals of new indications, flowing through into enhanced sales. This is a positive indication of the longer-term sustainability of our 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. . Lastly, with respect to the year 2001, I am pleased to report that we delivered on our objective of producing accelerating earnings and revenue growth throughout the year, having invested in the critical launch of Lumigan(R) in the U.S. In 2002, we anticipate a similar earnings growth trajectory throughout the year as we invest in the launches of Lumigan(R) in Europe and the cosmetic indication of Botox(R) in the U.S. and Europe." Specialty Pharmaceutical Performance Eye Care Pharmaceutical Product Line At constant currency rates, fourth quarter 2001 worldwide eye care pharmaceutical sales increased 21.7 percent over the fourth quarter of 2000. Including the effects of currency, fourth quarter worldwide eye care pharmaceutical sales amounted to $192.5 million, a 19.8 percent increase over last year's $160.7 million. Worldwide net product sales for the Alphagan(R) ophthalmic solutions ophthalmic solution n. A sterile solution that is free from foreign particles and is compounded and dispensed for eyedrops. product line, which includes both Alphagan(R) (Brimonidine Tartrate tartrate /tar·trate/ (tahr´trat) a salt of tartaric acid. tar·trate n. A salt or ester of tartaric acid. tartrate a salt of tartaric acid. Ophthalmic Solution 0.2%) and Alphagan(R) P (Brimonidine Tartrate Ophthalmic Solution 0.15%), preserved with Purite(R), indicated for lowering intraocular pressure intraocular pressure n. The pressure of the intraocular fluid within the eye. intraocular pressure (in´tr (IOP IOP intraocular pressure. IOP Intraocular pressure, see there ) in patients with ocular hypertension Ocular hypertension (OHT) is intraocular pressure higher than normal in the absence of optic nerve damage or visual field loss.[1][2] Current consensus in ophthalmology defines normal introcular pressure (IOP) as that between 10 mmHg and 21 mmHg. and primary open angle 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). , were $65.6 million in the fourth quarter of 2001, an increase of 17.6 percent, or 17.7 percent at constant currency over the same period last year. Worldwide net product sales of Lumigan(R) (Bimatoprost Ophthalmic Solution 0.03%), indicated for the reduction of elevated intraocular pressure (IOP) in patients with open-angle glaucoma o·pen-an·gle glaucoma n. Primary glaucoma in which the aqueous humor has free access to the trabecular reticulum. Also called simple glaucoma. or ocular hypertension who are intolerant of other IOP-lowering medications or insufficiently responsive to another IOP-lowering medication, were $15.2 million for the quarter ended December 31, 2001. At constant currency, eye care pharmaceutical sales for 2001 increased 13.4 percent, or $90.8 million over the same period last year. Including the effects of currency, eye care pharmaceutical sales were $745.8 million, an increase of 10.4 percent over the $675.3 million reported for 2000. In 2001, worldwide net product sales for the Alphagan(R) product line, including sales for both Alphagan(R) and Alphagan(R) P ophthalmic solutions, were $250.9 million, a 8.3 percent increase, or 9.6 percent increase at constant currency, over last year. Year-to-date worldwide net product sales for Lumigan(R) were $35.4 million. During the quarter, the Committee for Proprietary Medicinal Products medicinal product, n a substance administered to humans or animals through injection, application, oral ingestion, inhalation, and so forth, whose purpose is to ultimately restore health or eliminate disease in an individual. (CPMP CPMP Committee for Proprietary Medicinal Products CPMP Core-Plus Mathematics Project CPMP Crew Procedures Management Plan (NASA) CPMP Canadian Project Management Professional CPMP Corporate Planning and Management Practices ) recommended the approval of Lumigan(R) by the individual member states of the European Union European Union (EU), name given since the ratification (Nov., 1993) of the Treaty of European Union, or Maastricht Treaty, to the European Community . National licenses permitting the launch of the product should be received in the first quarter of 2002. At constant currency, Allergan's sales of glaucoma products, comprising Alphagan(R), Alphagan(R) P, Lumigan(R) and Betagan(R), increased by 38.5 percent in the fourth quarter over last year's fourth quarter and by 18.9 percent for the year when compared with 2000. 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. Scott-Levin data, Allergan's new prescriptions for Lumigan(R), Alphagan(R), and Alphagan(R) P ophthalmic solutions in the United States United States, officially United States of America, republic (2005 est. pop. 295,734,000), 3,539,227 sq mi (9,166,598 sq km), North America. The United States is the world's third largest country in population and the fourth largest country in area. , have grown year-over-year 45.7 percent, or 4.8 share points, to reach 19.3 percent market share. The latest new prescription market share data for Lumigan(R) and the Alphagan(R) franchise were 4.4 percent and 14.8 percent, respectively. In December 2001, Allergan signed a global license agreement with Laboratories Thea S.A. for the use of the ABAK(TM) device, a multi-dose system for the delivery of preservative-free eye drops eye drops eye npl → gouttes fpl pour les yeux eye drops eye npl → Augentropfen pl . Initially the ABAK will be used for Alphagan(R) in Europe, and later, possibly Lumigan(R). During the quarter, Allergan and McNeil Consumer Healthcare, a subsidiary of Johnson & Johnson (NYSE:JNJ JNJ Johnson and Johnson (stock symbol) JNJ Journal of Nursing Jocularity ), agreed to amicably terminate their commercial collaboration regarding the promotion of Allergan's proprietary anti-infective, Ocuflox(R) (ofloxacin ophthalmic solution 0.3%), in the U.S. pediatric pediatric /pe·di·at·ric/ (pe?de-at´rik) pertaining to the health of children. pe·di·at·ric adj. Of or relating to pediatrics. market. Allergan is now establishing a sales force to promote Ocuflox(R) and Alocril(R) (nedocromil sodium ne·doc·ro·mil sodium n. A anti-inflammatory drug used in inhaler form to treat mild-to-moderate asthma. nedocromil sodium (ned´ōkrō´mil), n brand name: ophthalmic solution 2%) to pediatricians. Following the close of the quarter, Allergan and Aurora Biosciences Corporation announced a collaboration to develop functional cell-based assays for several key G protein-coupled receptor G protein-coupled receptors (GPCRs), also known as seven transmembrane receptors, 7TM receptors, heptahelical receptors, and G protein linked receptors (GPLR targets, and to screen these targets to identify lead drug candidates. Botox(R)/Neurotoxin Product Line At constant currency rates, Botox(R) (Botulinum Toxin Type A botulinum toxin type A Botox, Botox Cosmetic, Dysport (UK), Vistabel (UK) Pharmacologic class: Neurotoxin Therapeutic class: Neuromuscular blocker Pregnancy risk category C Action) net sales Net SalesThe 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 for the fourth quarter increased by 35.1 percent over the fourth quarter of 2000. Including the effects of currency, sales for Botox(R) were $88.3 million during the fourth quarter of 2001, a 32.4 percent increase over 2000's fourth quarter sales of $66.7 million. At constant currency rates, Botox(R) sales for 2001 increased 32.7 percent over the same period last year. Including the effects of currency, Botox(R) net product sales for the year ended December 31, 2001 increased 29.2 percent to $309.5 million from the $239.5 million reported over the same period last year. During the quarter, Botox(R) received a positive opinion by the European Commission European Commission, branch of the governing body of the European Union (EU) invested with executive and some legislative powers. Located in Brussels, Belgium, it was founded in 1967 when the three treaty organizations comprising what was then the European Community for the treatment of focal spasticity spasticity /spas·tic·i·ty/ (spas-tis´i-te) the state of being spastic; see spastic (2). spas·tic·i·ty n. 1. A spastic state or condition. 2. Spastic paralysis. of the wrist and hand in adult post-stroke patients, an approval from Health Canada Health Canada (French: Santé Canada) is the department of the government of Canada with responsibility for national public health. Health Canada's goal is to improve Canadian life by improving Canadian longevity, lifestyle and use of public healthcare. for the management of focal spasticity, including the treatment of upper limb In human anatomy, the upper limb (also upper extremity) refers to what in common English is known as the arm, that is, the region of the shoulder to the fingertips. It includes the entire limb, and thus, is not synonymous with the term upper arm. spasticity associated with stroke in adults, and was granted approval for hyperhidrosis and brow furrow furrow /fur·row/ (fur´o) a groove or sulcus. atrioventricular furrow the transverse groove marking off the atria of the heart from the ventricles. in New Zealand New Zealand (zē`lənd), island country (2005 est. pop. 4,035,000), 104,454 sq mi (270,534 sq km), in the S Pacific Ocean, over 1,000 mi (1,600 km) SE of Australia. The capital is Wellington; the largest city and leading port is Auckland. . Skin Care Product Line Sales for Allergan skin care products were $23.8 million for the quarter ended December 31, 2001, an increase of 17.2 percent from the $20.3 million in sales reported in the fourth quarter of last year. Worldwide net sales for Tazorac(R) and Zorac(R) brands (Tazarotene Gel and Cream 0.05% and 0.1%), indicated for the treatment of acne and psoriasis psoriasis (sôrī`əsĭs), occasionally acute but usually chronic and recurrent inflammation of the skin. The exact cause is unknown, but the disease appears to be an inherited, possibly autoimmune disorder that causes the , were $15.7 million in the fourth quarter of 2001, a 48.1 percent increase, or a 48.0 percent increase at constant currency over the same period last year. Allergan reported skin care product sales of $78.9 million for the year ended December 31, 2001, an increase of 14.8 percent over the prior year. Worldwide net product sales of Tazorac(R) and Zorac(R) were $45.4 million for 2001, a 38.8 percent increase, or 39.5 percent at constant currency over the same period last year. In 2001, Tazorac(R) new prescriptions and total prescriptions in the United States have grown 105% and 92% respectively over last year, according to Scott-Levin data. Ophthalmic Surgical and OTC OTC See: Over-the-counter. OTC See over-the-counter market (OTC). Performance Ophthalmic Surgical Product Line At constant currency rates, surgical sales increased 4.4 percent compared to the fourth quarter of 2000. Including the effects of currency, sales for the ophthalmic surgical business were $71.1 million during the fourth quarter of 2001 compared with $69.8 million reported for last year's fourth quarter. At constant currency rates, ophthalmic surgical sales for 2001 increased 5.8 percent over the previous year. Ophthalmic surgical sales for 2001 were $253.9 million compared with $250.4 million reported last year. During the quarter, Allergan entered into a distribution agreement with Ophtec, a Netherlands-based company with a presence in the cataract cataract, in medicine, opacity of the lens of the eye, which impairs vision. In the young, cataracts are generally congenital or hereditary; later they are usually the result of degenerative changes brought on by aging or systemic disease (diabetes). and refractive surgery Refractive surgery A surgical procedure that corrects visual defects. Mentioned in: Photorefractive Keratectomy and Laser-Assisted In-Situ Keratomileusis refractive surgery market. The agreement covers the U.S., Canada, Mexico and Japan. Allergan will seek to introduce a new Phakic intraocular lens 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 ) based on Ophtec's Artisan(TM) lens technology, once regulatory approval is received, and will market this new brand of Phakic IOL exclusively. In the European Region and the rest of the world, Ophtec will continue to distribute the Artisan(TM) lens and Allergan will market and sell its own brand. Phakic intraocular lenses are implantable 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. and toric tor·ic adj. Of, relating to, or shaped like a torus or part of a torus. lenses designed for use in refractive surgery for the correction of myopia myopia: see nearsightedness. , hyperopia hyperopia (hī'pərō`pēə): see farsightedness. and astigmatism astigmatism (əstĭg`mətĭz'əm), type of faulty vision caused by a nonuniform curvature in the refractive surfaces—usually the cornea, less frequently the lens—of the eye. . The product has the CE Marking in Europe and is in Phase 3 clinical trials phase 3 clinical trial Phase 3 study. See Phase study. in the United States. After the close of the quarter, Japan's Ministry of Health and Labor Welfare provided Allergan with approval to market the Array(R) multifocal multifocal /mul·ti·fo·cal/ (mul?te-fo´k'l) arising from or pertaining to many foci. mul·ti·fo·cal adj. Relating to or arising from many foci. silicone intraocular lens, which is used to replace the natural lens during cataract surgery Cataract Surgery Definition 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. . Using a series of optical zones, the Array(R), provides a range of vision from near to far and significantly reduces the patient's dependence on eyeglasses eyeglasses or spectacles, instrument or device for aiding and correcting defective sight. Eyeglasses usually consist of a pair of lenses mounted in a frame to hold them in position before the eyes. . Contact Lens Care Product Line At constant currency rates, contact lens care sales decreased 3.1 percent compared to the fourth quarter of 2000. Including the impact of currency, sales for the contact lens care business were $77.4 million for the fourth quarter of 2001, a decrease of 7.0 percent from 2000 fourth quarter sales of $83.2 million. Worldwide net product sales for Complete(R) brand solutions (excluding private label), indicated for soft contact lens care were $29.6 million in the fourth quarter of 2001, a 21 percent increase or, as measured at constant currency, a 27.1 percent increase over the same period last year. At constant currency rates, contact lens care sales decreased 4.4 percent compared to the previous year, impacted by the loss in the fourth quarter of certain private-label contracts with mass merchandisers. Including the impact of currency, contact lens care sales for 2001 were $297.1 million or 9.6 percent less than the last year. For 2001, worldwide net product sales for Complete(R) brand solutions totaled $135.3 million, an increase of 8.6 percent or 14.9 percent at constant currency, over last year. Description of Non-Recurring Items During the fourth quarter 2001, diluted earnings per share included the following non-recurring items: a $0.03 loss associated with the permanent impairment of certain equity investments, and a $0.02 charge related to expenses incurred in the fourth quarter associated with the spin-off of the optical medical device businesses. This was offset by the benefits of a $0.01 finalization payment associated with the termination of a partnering deal, a $0.01 gain from the divestiture The breakup of AT&T. By federal court order, AT&T divested itself on January 1, 1984 of its 23 operating companies, which became known as the Regional Bell Operating Companies (RBOCs). of specific pharmaceutical products in Brazil, a $0.02 gain on the sale of an asset and a $0.01 gain related to the reversal of restructuring charges restructuring charge The expense of reorganizing a company's operations. A restructuring charge is an infrequent expense that generally results from asset writedowns or facility closings. originally recorded in a prior year. During the fourth quarter 2000 diluted earnings per share included non-recurring items of a $0.01 charge from in-licensing of certain technology, which was offset by a $0.01 gain related to the reversal of a portion of a restructuring charge originally recorded in a prior year. Additional Financial Highlights Gross profit for the fourth quarter of 2001 was $345.6 million or 76.3 percent of net sales, which represents a 3.5 percentage point increase from the fourth quarter of 2000. The gross profit percentage increased in 2001 compared to 2000 primarily as a result of shifts in the mix of products sold to higher margin pharmaceutical products, as well as an increase in the gross margin of every product line. The gross profit percentage for the year ended December 31, 2001, was 75.7 percent, representing a 3.2 percentage point increase from the comparable 2000 percentage. SG&A expenses increased $10.9 million in the fourth quarter over the same period last year to $170.3 million. SG&A as a ratio to net sales was 37.6 percent for the fourth quarter of 2001, compared to 39.8 percent for the same period last year. Research and development expenses were $59.0 million and as a ratio to net sales were 13.0 percent for the fourth quarter of 2001. On April 20, 2001, Allergan purchased the Class A Common Stock of ASTI for $71.0 million. In the second quarter, Allergan recorded a one-time charge of $40.0 million, or $0.30 per share, related to in-process research and development and has capitalized the value of core technology on its balance sheet. Including the in-process research and development associated with the purchase of ASTI, research and development expenditures in 2001 increased $60.9 million to $256.5 million. At December 31, 2001, Allergan's consolidated net worth was $977.4 million. Cash net of debt was $167.2 million as the Company held $781.9 million in cash and cash equivalents compared to $614.7 million in debt at December 31, 2001. Allergan's debt-to-equity percentage was 62.9 percent and debt-to-capital percentage was 38.6 percent at December 31, 2001. The Company's days-sales-outstanding was 56 and inventory days-on-hand level was 102 as of December 31, 2001. Earnings Per Share Impact by Adoption of SFAS SFAS Statement of Financial Accounting Standards SFAS Special Forces Assessment and Selection SFAS Student Financial Aid Services SFAS Sport Fishing Association of Singapore SFAS Safety Features Actuation System SFAS Statewide Fixed Assets System No. 133, "Accounting for Derivative Instruments and Hedging Activities" As communicated in the first quarter earnings release, the Company's management decided not to designate its derivative instruments as accounting hedges upon its implementation of SFAS No. 133 on January 1, 2001. As a result, the Company marks-to-market all foreign exchange derivative contracts, (derivative contracts) and reports changes in the mark-to-market value on its statement of earnings under the heading unrealized gain/loss on derivative instruments. For the first quarter ended March 30, 2001 this mark-to-market activity resulted in an 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. of $3.5 million, including the $2.5 million pre-tax effect of the adoption of SFAS No. 133 on January 1, 2001. During 2001, all of the outstanding derivative contracts, which accounted for the unrealized gains reported on March 30, 2001 expired in an "in-the-money" position and resulted in realized gains Realized Gain A gain resulting from selling an asset at a price higher than the original purchase price. Notes: There may be tax consequences for a realized profit. of $6.3 million or $1.2 million net of derivative premium costs. The reversal of the previously reported unrealized gains at March 30, 2001 for the expired derivatives have been accounted for as unrealized losses in the Company's statement of earnings while the realized gains have been accounted for as Other, net in the Company's statement of earnings. Additionally, at December 31, 2001 the Company also recorded a $3.4 million unrealized gain representing the mark-to-market adjustment related to newly purchased derivative contracts for fiscal 2002 and represent the one-time item. The derivative contracts presently in place at Allergan will mature throughout 2002. These derivative contracts provide Allergan with a unilateral option to exercise these derivatives at certain predetermined pre·de·ter·mine v. pre·de·ter·mined, pre·de·ter·min·ing, pre·de·ter·mines v.tr. 1. To determine, decide, or establish in advance: foreign exchange rate levels. To the extent these contracts mature in an "in-the-money" position, Allergan will exercise its unilateral option and will recognize a realized gain. At maturity, these derivative contracts may have an actual positive cash value; however, they cannot have a negative cash value. Allergan's foreign exchange hedging strategy utilizes derivative contracts which function as "insurance" against potentially negative market environments and do not subject the Company to realized downside exposure at the maturity of the contracts. Forward-Looking Statements In this press release, the statements from Mr. Pyott and statements regarding the proposed spin-off of the optical medical device business are forward-looking statements. Because forecasts are inherently estimates that cannot be predicted with precision, the Company's performance at times differed from its 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. Any other statements in this press release that refer to Allergan's estimated or anticipated future results are forward-looking statements. All forward-looking statements in this press release reflect the Company's current analysis of existing trends and information and represent the Company'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 Allergan's businesses, including changing competitive, regulatory and market 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; the performance, including the approval, introduction and consumer acceptance of new products and continuing acceptance of currently marketed products; the effectiveness of consumer advertising and promotional campaigns; the timely and successful implementation of strategic initiatives; the uncertainty associated with the identification of and successful consummation and execution of external corporate development and partnering transactions; Allergan's ability to obtain and maintain a sufficient supply of its products to meet market demand in a timely manner; the uncertainties associated with effecting a spin off of a separate public company; and the discretion of Allergan's board to delay or cancel the spin-off prior to execution. In addition, matters generally affecting the economy, such as changes in interest and currency exchange rates and the state of the economy worldwide, can affect the Company's results. Therefore, the reader is cautioned not to rely on these forward-looking statements. The Company disclaims any intent or obligation to update these forward-looking statements. Additional information concerning these 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 " Certain Factors and Trends Affecting Allergan and its Businesses" in Allergan's 2000 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. for the quarter ended September 28, 2001. Copies of Allergan press releases and additional information about Allergan are available on the World Wide Web 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. Allergan Inc. Allergan, Inc., headquartered 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 health care company providing eye care and specialty pharmaceutical products worldwide. Allergan develops and commercializes products in the eye care pharmaceutical, ophthalmic surgical device, over-the-counter contact lens care, movement disorder List of Movement disorders
pertaining to dermatology; of or affecting the skin. markets that deliver value to our customers, satisfy unmet medical needs and improve patients' lives.
ALLERGAN, INC.
Condensed Consolidated Statements of Earnings
(Unaudited)
in millions, except per share amounts
Three Months Ended Twelve Months Ended
Dec. 31, Dec. 31, Dec. 31, Dec. 31,
2001 2000 2001 2000
Product sales
Net sales $453.1 $400.7 $1,685.2 $1,562.6
Cost of sales 107.5 108.9 410.2 429.1
Product gross margin 345.6 291.8 1,275.0 1,133.5
Research services
Research service
revenues (primarily from
related parties
through April 16, 2001) 10.6 18.4 60.3 62.9
Cost of research services 9.6 17.4 56.1 59.4
Research services margin 1.0 1.0 4.2 3.5
Selling, general and
administrative 170.3 160.0 704.0 650.1
Research and development 59.0 50.4 256.5 195.6
Technology fees from
related party -- (0.6) (0.7) (3.1)
Restructuring charge
reversal (1.7) (2.0) (1.7) (2.0)
Operating income 119.0 85.0 321.1 296.4
Interest income 4.8 9.9 30.6 23.9
Interest expense (5.1) (4.9) (21.4) (19.8)
(Loss)/gain on
investments, net (5.3) 0.2 (5.2) 1.0
Unrealized gains on
derivative instruments 3.4 -- 5.9 --
Other, net 1.5 1.9 5.4 2.3
(0.7) 7.1 15.3 7.4
Earnings before
income taxes
and minority interest 118.3 92.1 336.4 303.8
Provision for income
taxes 34.3 26.7 109.1 88.1
Minority interest (0.1) 0.3 0.6 0.6
Net earnings before
cumulative effect of
change in accounting
principle 84.1 65.1 226.7 215.1
Cumulative effect of change
in accounting principle,
net $0.7 million of tax -- -- (1.8) --
Net earnings $ 84.1 $ 65.1 $ 224.9 $ 215.1
Basic earnings per share:
Before cumulative
effect of change
in accounting
principle $ 0.64 $ 0.50 $ 1.72 $ 1.65
Cumulative effect
of accounting
change, net -- -- (0.01) --
Net basic earnings
per share $ 0.64 $ 0.50 $ 1.71 $ 1.65
Diluted earnings per share:
Before cumulative
effect of change
in accounting
principle $ 0.63 $ 0.48 $ 1.69 $ 1.61
Cumulative effect
of accounting
change, net -- -- (0.01) --
Net diluted
earnings per share $ 0.63 $ 0.48 $ 1.68 $ 1.61
Weighted average number
of common shares outstanding:
Basic 131.4 131.5 131.8 130.7
Diluted 137.4 134.7 137.8 133.8
ALLERGAN, INC.
Condensed Consolidated Balance Sheets
(Unaudited)
in millions December 31, December 31,
2001 2000
Assets
Cash and equivalents $ 781.9 $ 773.9
Trade receivables, net 279.4 290.1
Inventories 120.2 122.7
Other current assets 143.8 139.6
Total current assets 1,325.3 1,326.3
Property, plant and equipment, net 388.7 351.6
Other noncurrent assets 332.2 293.1
Total assets $ 2,046.2 $1,971.0
Liabilities and stockholders' equity
Notes payable $ 94.1 $ 59.2
Accounts payable 104.3 96.3
Accrued expenses and income taxes 291.6 277.0
Total current liabilities 490.0 432.5
Long-term debt 520.6 584.7
Other liabilities 58.2 80.0
Stockholders' equity 977.4 873.8
Total liabilities and
stockholders' equity $2,046.2 $1,971.0
ALLERGAN, INC.
Net Sales by Product Line
(Unaudited)
in millions Three Months Ended Twelve Months Ended
Dec. 31, Dec. 31, Dec. 31, Dec. 31,
2001 2000 2001 2000
Specialty Pharmaceuticals:
Eye Care Pharmaceuticals $192.5 $160.7 $745.8 $675.3
Skin Care 23.8 20.3 78.9 68.7
Botox/Neuromuscular 88.3 66.7 309.5 239.5
Total 304.6 247.7 1,134.2 983.5
Medical Devices and
OTC Product Lines:
Ophthalmic Surgical 71.1 69.8 253.9 250.4
Contact Lens Care 77.4 83.2 297.1 328.7
Total 148.5 153.0 551.0 579.1
TOTAL NET SALES $453.1 $400.7 $1,685.2 $1,562.6
Domestic 53% 51% 55% 52%
International 47% 49% 45% 48%
ALLERGAN, INC.
Pro forma
(Unaudited)
in millions, except per share amounts
Three Months Ended Twelve Months Ended
Dec. 31, Dec. 31, Dec. 31, Dec. 31,
2001 2000 2001 2000
Net earnings,
as reported $ 84.1 $ 65.1 $ 224.9 $ 215.1
Pro forma pre-tax
adjustments for
one-time/special items:
Unrealized gain on
derivative
instruments (3.4) -- (3.4) --
Partnering deal (1.5) 2.0 (1.5) 2.0
In-process R&D charge -- -- 40.0 --
Divestiture of
pharmaceutical
products in Brazil (2.0) -- (2.0) --
(Gain)/loss on equity
investments 5.2 -- 5.2 (2.0)
One-time spin-off expenses 4.4 -- 4.4 --
Restructuring charge
reversal (1.7) (2.0) (1.7)
Gain on sale of asset (4.5) (4.5) (2.0)
80.6 65.1 261.4 213.1
Tax effect for
one-time/special items 1.0 -- 0.9 0.6
Pro forma net earnings $ 81.6 $ 65.1 $262.3 $213.7
Diluted earnings per
share, as reported $ 0.63 $ 0.48 $ 1.68 $ 1.61
Pro forma after-tax adjustments:
Unrealized gain on
derivative instruments (0.02) -- (0.02) --
Partnering deals (0.01) 0.01 (0.01) 0.01
In-process R&D charge -- -- 0.30 --
Divestiture of
pharmaceutical
products in Brazil (0.01) -- (0.01) --
(Gain)/loss on equity
investments 0.03 -- 0.03 (0.01)
One-time spin-off expenses 0.02 -- 0.02 --
Restructuring charge
reversal (0.01) (0.01) (0.01) (0.01)
Gain on sale of asset (0.02) -- (0.02) --
Pro forma earnings
per share $ 0.61 $ 0.48 $ 1.96 $ 1.60
Pro forma year over
year change 27.1% 22.5%
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