Allergan Reports Second Quarter Operating Results and Increases Full Year Earnings Guidance; Pharmaceutical Sales Increased 19 Percent for the Second Quarter; Board of Directors Declares Second 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 second quarter ended June June: see month. 24, 2005. 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 second quarter dividend of $0.10 per share, payable on September September: see month. 7, 2005 to stockholders of record on August 12, 2005. Operating Results For the quarter ended June 24, 2005: --Allergan's 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 were $591.0 million, including $23.1 million of non-pharmaceutical product sales, primarily consisting of contract manufacturing sales to 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 ), a former subsidiary that was spun-off from Allergan in June 2002. --Pharmaceutical sales increased 18.6 percent, or 16.3 percent at constant currency, compared to pharmaceutical sales in the second quarter of 2004. --Allergan reported $0.25 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 , including the incurrence In`cur´rence n. 1. The act of incurring, bringing on, or subjecting one's self to (something troublesome or burdensome); as, the incurrence of guilt, debt, responsibility, etc. s> Noun 1. 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. related to the scheduled termination The point where a line, channel or circuit ends. See SCSI termination and hybrid. of Allergan's manufacturing and supply agreement with AMO, the incurrence of restructuring charges and transition and duplicate DUPLICATE. The double of anything. 2. It is usually applied to agreements, letters, receipts, and the like, when two originals are made of either of them. Each copy has the same effect. operating expenses Operating expenses The amount paid for asset maintenance or the cost of doing business, excluding depreciation. Earnings are distributed after operating expenses are deducted. related to the streamlining of Allergan's research and development and select commercial activities throughout Europe Europe (y  r`əp), 6th largest continent, c.4,000,000 sq mi (10,360,000 sq km) including adjacent islands (1992 est. pop. 512,000,000). , the incurrence of anticipated taxes related to the scheduled
repatriation RepatriationThe process of converting a foreign currency into the currency of one's own country. Notes: If you are American, converting British Pounds back to U.S. dollars is an example of repatriation. of foreign earnings previously permanently re-invested outside 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. and the effect of 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. on the mark-to-market Mark-to-market Adjustment of the book value or collateral value of a security to reflect current market value. adjustment to foreign currency derivative instruments Derivative instruments Contracts such as options and futures whose price is derived from the price of an underlying financial asset. totaling $70.3 million, which consists of $10.8 million pre-tax pre-tax adj → anterior al impuesto pre-tax adj → avant impôt(s) pre-tax adj → al lordo d'imposta plus $59.5 million related to the provision for income taxes, compared to the $0.68 diluted earnings per share reported for the second quarter of 2004. --Allergan's adjusted diluted earnings per share were $0.78, representing a 23.8 percent increase compared to adjusted diluted earnings per share of $0.63 reported for the second quarter of 2004. Adjusted diluted earnings per share for the second quarter of 2005 exclude the restructuring charges related to the AMO agreement, the restructuring charges and transition and duplicate operating expenses related to the European European emanating from or pertaining to Europe. European bat lyssavirus see lyssavirus. European beech tree fagussylvaticus. European blastomycosis see cryptococcosis. streamlining activities, the anticipated taxes to be incurred as a result of the scheduled repatriation of foreign earnings and the unrealized gain on foreign currency derivative instruments. A reconciliation of the adjustments made from reported earnings per share to adjusted diluted earnings per share is contained in the financial tables of this document. "We are very pleased with our continued strong sales and earnings growth during the second quarter as our business continues to perform better than was anticipated at the beginning of 2005," said David E.I. Pyott, Allergan's Chairman of the Board, President and Chief Executive Officer. "In addition, we look forward to commencing with the key clinical trials for our exciting new Botox Botox Trademark for botulinum toxin type A, a drug produced by the bacterium Clostridium botulinum. It contains the same toxin that causes severe food poisoning (botulism). (R) indications, which include chronic daily headache headache Pain in the upper portion of the head. Episodic tension headaches are the most common, usually causing mild to moderate pain on both sides. They result from sustained contraction of face and neck muscles, often due to fatigue, stress, or frustration. and overactive bladder Overactive Bladder Definition Overactive bladder is the leakage of large amounts of urine at unexpected times, including during sleep. Description ." Product and Pipeline Update During the second quarter of 2005: --Effective April 19, 2005, Allergan entered into a royalty Compensation for the use of property, usually copyrighted works, patented inventions, or natural resources, expressed as a percentage of receipts from using the property or as a payment for each unit produced. buy-out buy·out also buy-out n. 1. The purchase of the entire holdings or interests of an owner or investor. 2. The purchase of a company or business: agreement with Novartis Novartis International AG (NYSE: NVS) is a multinational pharmaceutical company based in Basel, Switzerland that manufactures drugs such as diclofenac (Voltaren), carbamazepine (Tegretol), valsartan (Diovan), imatinib mesylate (Gleevec / Glivec), cyclosporin A (Neoral / related to Restasis(R) (cyclosporine ophthalmic emulsion cyclosporine ophthalmic emulsion Sandimmun (UK), Restasis Pharmacologic class: Polypeptide antibiotic Therapeutic class: Immunosuppressant Pregnancy risk category C FDA Boxed Warning0.05%) and agreed to pay $110 million to Novartis in exchange for Novartis' worldwide rights and obligations, excluding Japan, for technology, patents and products relating to relating to relate prep → concernantrelating to relate prep → bezüglich +gen, mit Bezug auf +acc the topical topical /top·i·cal/ (top´i-k'l) pertaining to a particular area, as a topical antiinfective applied to a certain area of the skin and affecting only the area to which it is applied. top·i·cal adj. ophthalmic ophthalmic /oph·thal·mic/ (of-thal´mik) ocular (1). oph·thal·mic adj. Of or relating to the eye; ocular. Ophthalmic Pertaining to the eye. use of cyclosporine cyclosporine /cy·clo·spor·ine/ (-spor´en) a cyclic peptide from an extract of soil fungi that selectively inhibits T cell function; used as an immunosuppressant to prevent rejection in organ transplant recipients and to treat severe A, the active ingredient An active ingredient, also active pharmaceutical ingredient (or API), is the substance in a drug that is pharmaceutically active. Some medications may contain more than one active ingredient. in Restasis(R). Under the royalty buy-out agreement, Allergan will no longer be required to make royalty payments to Novartis in connection with Allergan's sales of Restasis(R). --On June 1, 2005, Allergan announced that it received a written response from the United States Food and Drug Administration United States Food and Drug Administration (FDA), n.pr a unit of the Public Health Service created to protect the health of the nation against impure and unsafe foods, drugs, and cosmetics. (FDA FDA abbr. Food and Drug Administration FDA, n.pr See Food and Drug Administration. FDA, n.pr the abbreviation for the Food and Drug Administration. ) regarding Allergan's request for formal dispute resolution on its oral tazarotene tazarotene /ta·zar·o·tene/ (tah-zar´o-ten) a retinoid prodrug used topically in the treatment of acne vulgaris and psoriasis. tazarotene Allergan®, Tazorac®, Zorac® capsule capsule In botany, a dry fruit that opens when ripe. It splits from top to bottom into separate segments known as valves, as in the iris, or forms pores at the top (e.g., poppy), or splits around the circumference, with the top falling off (e.g., pigweed and plantain). New Drug Application. In the response, the FDA outlined multiple potential options for improving oral tazarotene's risk-benefit profile. Allergan has submitted a protocol for a special protocol assessment to the FDA and will provide details once it reaches an agreement with the FDA. --The FDA issued an approvable letter for Alphagan Alphagan Brimonidine Ophthalmology An alpha-2 agonist for treating open-angle glaucoma. See Open angle glaucoma. (R) Z (brimonidine brimonidine /bri·mo·ni·dine/ (bri-mo´ni-den) an a agonist used as the tartrate salt in the treatment of open-angle glaucoma and ocular hypertension. 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 ophthalmic solution n. A sterile solution that is free from foreign particles and is compounded and dispensed for eyedrops. ) for the lowering of intraocular pressure intraocular pressure n. The pressure of the intraocular fluid within the eye. intraocular pressure (in´tr 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. and 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. . Allergan has responded to the FDA's questions and is waiting on a response from the FDA. --The Medicines and Healthcare products Regulatory Agency The Medicines and Healthcare products Regulatory Agency (MHRA) is the UK government agency which is responsible for ensuring that medicines and medical devices work and are acceptably safe. granted marketing authorization The right or permission to use a system resource; the process of granting access. See access control. for Combigan(TM) in the United Kingdom. --Allergan met with the FDA and reached agreement to enter Phase III clinical trials Noun 1. phase III clinical trial - a large clinical trial of a treatment or drug that in phase I and phase II has been shown to be efficacious with tolerable side effects; after successful conclusion of these clinical trials it will receive formal approval from the for Botox(R) to treat neurogenic neurogenic /neu·ro·gen·ic/ (-jen´ik) 1. forming nervous tissue. 2. originating in the nervous system or from a lesion in the nervous system. overactive bladder and Phase II clinical trials Noun 1. phase II clinical trial - a clinical trial on more persons than in phase I; intended to evaluate the efficacy of a treatment for the condition it is intended to treat; possible side effects are monitored phase II for Botox(R) to treat idiopathic idiopathic /id·io·path·ic/ (id?e-o-path´ik) self-originated; occurring without known cause. id·i·o·path·ic adj. 1. Of or relating to a disease having no known cause; agnogenic. overactive bladder. On May 19, 2005, Allergan announced the appointment of Louis Louis, titular duke of Burgundy Louis, 1682–1712, titular duke of Burgundy; grandson of King Louis XIV of France. He became heir to the throne on the death (1711) of his father, Louis the Great Dauphin. J. Lavigne Lavigne (French: la vigne, literally: the vine or the vineyard), is a surname, and may refer to:
On July 25, 2005, Allergan's Board of Directors approved a plan under the American American, river, 30 mi (48 km) long, rising in N central Calif. in the Sierra Nevada and flowing SW into the Sacramento River at Sacramento. The discovery of gold at Sutter's Mill (see Sutter, John Augustus) along the river in 1848 led to the California gold rush of Jobs Creation Act of 2004 (The Act) to repatriate repatriate To bring home assets that are currently held in a foreign country. Domestic corporations are frequently taxed on the profits that they repatriate, a factor inducing the firms to leave overseas the profits earned there. foreign earnings previously permanently reinvested outside of the United States and to reinvest re·in·vest tr.v. re·in·vest·ed, re·in·vest·ing, re·in·vests To invest (capital or earnings) again, especially to invest (income from securities or funds) in additional shares. those earnings domestically. The Act provides favorable fa·vor·a·ble adj. 1. Advantageous; helpful: favorable winds. 2. Encouraging; propitious: a favorable diagnosis. 3. tax treatment for repatriated earnings that are above a base amount determined based on a company's historical repatriation levels and not more than a specified spec·i·fy tr.v. spec·i·fied, spec·i·fy·ing, spec·i·fies 1. To state explicitly or in detail: specified the amount needed. 2. To include in a specification. 3. threshold The point at which a signal (voltage, current, etc.) is perceived as valid. . Allergan anticipates repatriating approximately ap·prox·i·mate adj. 1. Almost exact or correct: the approximate time of the accident. 2. $759 million above the base amount. This includes $674 million under its repatriation and reinvestment plan reinvestment plan See dividend reinvestment plan (DRIP). that is equal to Allergan's specified threshold and is subject to a favorable tax treatment under The Act and an approximate ap·prox·i·mate v. To bring together, as cut edges of tissue. adj. 1. Relating to the contact surfaces, either proximal or distal, of two adjacent teeth; proximate. 2. Close together. $85 million of additional foreign earnings previously permanently reinvested outside of the United States. Outlook For the third quarter of 2005, Allergan estimates: --Total pharmaceutical only sales between $565 million and $580 million. --Adjusted diluted earnings per share between $0.78 and $0.79. For the full year of 2005: --Allergan is increasing total pharmaceutical sales guidance to between $2,175 million and $2,225 million. --Allergan is increasing the expected range of Restasis(R) sales to between $165 million and $185 million. All other individual product sales guidance provided in April 2005 remains unchanged. --Pharmaceutical only income statement ratio guidance provided in April 2005 has changed to:
-- Gross Profit of approximately 82.5% to 83.5%.
-- SG&A of approximately 38% to 39%.
--Research and development pharmaceutical only income statement ratio guidance provided in April 2005 remains unchanged. --Diluted shares outstanding guidance and the effective tax rate on adjusted earnings guidance provided in April 2005 remain unchanged. --Allergan is increasing adjusted diluted earnings per share guidance to between $3.20 and $3.23, which is approximately a $0.04 per share increase from guidance provided in April 2005. Adjusted diluted earnings per share guidance anticipates non-GAAP adjustments to diluted earnings per share including the recognition of income associated with the termination of Allergan's Vitrase Vitrase® Hyaluronidase Ophthalmology An agent injected directly into the vitreous cavity to treat hemorrhage. See Intraocular hemorrhage. (R) collaboration Working together on a project. See collaborative software. agreement with ISTA ISTA International Safe Transit Association ISTA Indiana State Teachers Association ISTA International Seed Testing Association ISTA International Sail Training Association ISTA Information, Science, and Technology Agency (British Columbia) Pharmaceuticals, Inc., restructuring restructuring - The transformation from one representation form to another at the same relative abstraction level, while preserving the subject system's external behaviour (functionality and semantics). activities and anticipated taxes on the scheduled repatriation of foreign earnings discussed above. A reconciliation of the adjustments made from diluted earnings per share guidance to adjusted diluted earnings per share guidance is contained in the financial tables of this document. Adjusted diluted earnings per share guidance for 2005 excludes the effect of expensing stock options. Consistent with the Securities and Exchange Commission's announcement amending the compliance dates for Financial Accounting Standards Board Financial Accounting Standards Board (FASB) Board composed of independent members who create and interpret Generally Accepted Accounting Principles (GAAP). Statement No. 123R (FAS 123R), Allergan will begin implementing FAS 123R when it becomes effective, which is currently anticipated to be the first fiscal quarter of 2006. 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, 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 "Certain Factors and Trends Affecting Allergan and its Businesses" in Allergan's 2004 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 Allergan's Form 10-Q Form 10-Q See 10-Q. for the quarter ended March 25, 2005. Copies of Allergan's press releases and additional information about Allergan is 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. 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 health care company providing 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 products worldwide. Allergan develops and commercializes products in the eye care, neuromodulator neuromodulator /neu·ro·mod·u·la·tor/ (-mod´u-la?ter) a substance, other than a neurotransmitter, released by a neuron and transmitting information to other neurons, altering their activities. , skin care and other specialty markets that deliver value to its customers, satisfy unmet un·met adj. Not satisfied or fulfilled: unmet demands. medical needs, and improve patients' lives.
ALLERGAN, INC.
Condensed Consolidated Statements of Earnings and
Reconciliation of Non-GAAP Adjustments
(Unaudited)
Three months ended
--------------------------------
in millions, except per share amounts June 24, 2005
------------------------------------- --------------------------------
Non-GAAP
GAAP Adjustments Adjusted
-------- -------------- --------
Product sales
Net sales $591.0 $-- $591.0
Cost of sales 111.7 (0.3)(a) 111.4
-------- ----------- --------
Product gross margin 479.3 0.3 479.6
Selling, general and administrative 241.5 (0.8)(b) 240.7
Research and development 91.3 (0.5)(b) 90.8
Restructuring charge 10.3 (10.3)(a) --
-------- ----------- --------
Operating income 136.2 11.9 148.1
Interest income 6.1 -- 6.1
Interest expense (4.6) -- (4.6)
Unrealized gain (loss) on derivative
instruments, net 1.1 (1.1)(c) --
Other, net (0.7) -- (0.7)
-------- ----------- --------
1.9 (1.1) 0.8
-------- ----------- --------
Earnings (loss) before income taxes
and minority interest 138.1 10.8 148.9
Provision (benefit) for income taxes 104.1 (59.5)(d) 44.6
Minority interest 0.6 -- 0.6
-------- ----------- --------
Net earnings (loss) $33.4 $70.3 $103.7
======== =========== ========
Net earnings (loss) per share:
Basic $0.26 $0.80
======== ========
Diluted $0.25 $0.78
======== ========
Weighted average number of common
shares outstanding:
Basic 130.4 130.4
Diluted 132.2 132.2
Selected ratios as a percentage of
net sales
-------------------------------------
Gross profit 81.1% 81.2%
Selling, general and administrative 40.9% 40.7%
Research and development 15.4% 15.4%
Three months ended
--------------------------------
in millions, except per share amounts June 25, 2004
------------------------------------- --------------------------------
Non-GAAP
GAAP Adjustments Adjusted
-------- -------------- --------
Product sales
Net sales $506.2 $-- $506.2
Cost of sales 96.2 -- 96.2
-------- ----------- --------
Product gross margin 410.0 -- 410.0
Selling, general and administrative 196.7 196.7
Research and development 88.5 -- 88.5
Restructuring charge -- -- --
-------- ----------- --------
Operating income 124.8 -- 124.8
Interest income 2.2 -- 2.2
Interest expense (3.7) -- (3.7)
Unrealized gain (loss) on derivative
instruments, net 0.3 (0.3)(c) --
Other, net (1.2) -- (1.2)
-------- ----------- --------
(2.4) (0.3) (2.7)
-------- ----------- --------
Earnings (loss) before income taxes
and minority interest 122.4 (0.3) 122.1
Provision (benefit) for income taxes 30.4 6.0 (e) 36.4
Minority interest 0.2 -- 0.2
-------- ----------- --------
Net earnings (loss) $91.8 $(6.3) $85.5
======== =========== ========
Net earnings (loss) per share:
Basic $0.70 $0.65
======== ========
Diluted $0.68 $0.63
======== ========
Weighted average number of common
shares outstanding:
Basic 131.6 131.6
Diluted 135.2 135.2
Selected ratios as a percentage of
net sales
-------------------------------------
Gross profit 81.0% 81.0%
Selling, general and administrative 38.9% 38.9%
Research and development 17.5% 17.5%
(a) Restructuring charge and related inventory write-offs
(b) Transition/duplicate operating expenses
(c) Unrealized gain on the mark-to-market adjustment to derivative
instruments
(d) Total tax effect for non-GAAP pre-tax adjustments and dividend
repatriation consists of the following amounts (in millions):
Tax effect
----------
Non-GAAP pre-tax adjustments of $10.8 million $(0.9)
Extraordinary dividends of $674 million under the American
Jobs Creation Act of 2004 32.8
Additional repatriation of foreign earnings of $85.4 million
above extraordinary dividends amount 27.6
------
$59.5
======
(e) Income tax benefit for previously paid state income taxes and 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 and six months ended June 24,
2005 and June 25, 2004. 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 Statements of Earnings and
Reconciliation of Non-GAAP Adjustments
(Unaudited)
Six months ended
----------------------------------
in millions, except per share June 24, 2005
amounts
----------------------------------- ----------------------------------
Non-GAAP
GAAP Adjustments Adjusted
--------- -------------- ---------
Product sales
Net sales $1,118.2 $-- $1,118.2
Cost of sales 205.8 (0.3)(a) 205.5
--------- ----------- ---------
Product gross margin 912.4 0.3 912.7
Selling, general and administrative 451.8 (1.0)(b) 450.8
Research and development 173.3 (0.6)(b) 172.7
Restructuring charge 37.7 (37.7)(a) --
--------- ----------- ---------
Operating income 249.6 39.6 289.2
Interest income 11.6 (0.1)(g) 11.5
Interest expense (9.1) -- (9.1)
Unrealized gain (loss) on
derivative instruments, net 1.2 (1.2)(c) --
Other, net 3.8 (3.5)(g) 0.3
--------- ----------- ---------
7.5 4.8 2.7
--------- ----------- ---------
Earnings (loss) before income taxes
and minority interest 257.1 34.8 291.9
Provision (benefit) for income
taxes 143.3 (57.0)(d) 86.3
Minority interest 0.5 -- 0.5
--------- ----------- ---------
Net earnings (loss) $113.3 $91.8 $205.1
========= =========== =========
Net earnings (loss) per share:
Basic $0.87 $1.57
========= =========
Diluted $0.86 $1.55
========= =========
Weighted average number of common
shares outstanding:
Basic 130.8 130.8
Diluted 132.4 132.4
Selected ratios as a percentage of
net sales
-----------------------------------
Gross profit 81.6% 81.6%
Selling, general and administrative 40.4% 40.3%
Research and development 15.5% 15.4%
Six months ended
----------------------------------
in millions, except per share June 25, 2004
amounts
----------------------------------- ----------------------------------
Non-GAAP
GAAP Adjustments Adjusted
--------- -------------- ---------
Product sales
Net sales $978.6 $-- $978.6
Cost of sales 183.8 -- 183.8
--------- ----------- ---------
Product gross margin 794.8 -- 794.8
Selling, general and administrative 377.3 2.4 (e) 379.7
Research and development 174.6 -- 174.6
Restructuring charge -- -- --
--------- ----------- ---------
Operating income 242.9 (2.4) 240.5
Interest income 4.2 -- 4.2
Interest expense (7.4) -- (7.4)
Unrealized gain (loss) on
derivative instruments, net 0.2 (0.2)(c) --
Other, net (1.3) -- (1.3)
--------- ----------- ---------
(4.3) (0.2) (4.5)
--------- ----------- ---------
Earnings (loss) before income taxes
and minority interest 238.6 (2.6) 236.0
Provision (benefit) for income
taxes 65.5 5.1 (f) 70.6
Minority interest 0.5 -- 0.5
--------- ----------- ---------
Net earnings (loss) $172.6 $(7.7) $164.9
========= =========== =========
Net earnings (loss) per share:
Basic $1.32 $1.26
========= =========
Diluted $1.28 $1.22
========= =========
Weighted average number of common
shares outstanding:
Basic 131.2 131.2
Diluted 134.8 134.8
Selected ratios as a percentage of
net sales
-----------------------------------
Gross profit 81.2% 81.2%
Selling, general and administrative 38.6% 38.8%
Research and development 17.8% 17.8%
"GAAP" refers to financial information presented in accordance with
generally accepted accounting principles in the United States. See
non-GAAP financial measures disclosure on previous page.
(a) Restructuring charge and related inventory write-offs
(b) Transition/duplicate operating expenses
(c) Unrealized gain on the mark-to-market adjustment to derivative
instruments
(d) Total tax effect for non-GAAP pre-tax adjustments and dividend
repatriation consists of the following amounts (in millions):
Tax effect
----------
Non-GAAP pre-tax adjustments of $34.8 million $(3.4)
Extraordinary dividends of $674 million under the American
Jobs Creation Act of 2004 32.8
Additional repatriation of foreign earnings of $85.4
million above extraordinary dividends amount 27.6
----------
$57.0
======
(e) Patent infringement settlement
(f) Income tax benefit for previously paid state income taxes and tax
effect for non-GAAP adjustments
(g) ISTA Vitrase collaboration fee
ALLERGAN, INC.
Condensed Consolidated Balance Sheets
(Unaudited)
June 24, December 31,
in millions 2005 2004
----------- ----------- ------------
Assets
Cash and equivalents $873.1 $894.8
Trade receivables, net 281.0 243.5
Inventories 88.7 89.9
Other current assets 154.8 147.8
----------- ------------
Total current assets 1,397.6 1,376.0
Property, plant and equipment, net 461.9 468.5
Other noncurrent assets 501.9 412.5
----------- ------------
Total assets $2,361.4 $2,257.0
=========== ============
Liabilities and stockholders' equity
Notes payable $4.1 $13.1
Accounts payable 118.2 97.9
Accrued expenses and income taxes 412.8 348.6
----------- ------------
Total current liabilities 535.1 459.6
Long-term debt 573.8 570.1
Other liabilities 118.4 111.1
Stockholders' equity 1,134.1 1,116.2
----------- ------------
Total liabilities and stockholders' equity $2,361.4 $2,257.0
=========== ============
Days on Hand (DOH) 73 79
Days Sales Outstanding (DSO) 43 40
Cash, net of debt $295.2 $311.6
Debt-to-capital percentage 33.8% 34.3%
ALLERGAN, INC.
Reconciliation of Diluted Earnings Per Share
(Unaudited)
in millions, except per share amounts Three months ended
------------------------------------- ------------------
June 24, June 25,
2005 2004
-------- --------
Net earnings, as reported $33.4 $91.8
Non-GAAP pre-tax adjustments:
Restructuring charge(a) 10.6 --
ISTA Vitrase collaboration -- --
Transition/duplicate operating expenses 1.3 --
Unrealized gain on derivative instruments (1.1) (0.3)
Patent infringement settlement -- --
-------- --------
44.2 91.5
Tax effect for above items (0.9) 0.1
Tax effect of dividend repatriation above base
amount 60.4 --
State income tax recovery -- (6.1)
-------- --------
Adjusted diluted earnings $103.7 $85.5
======== ========
Weighted average number of shares issued 130.4 131.6
Net shares assumed issued using the treasury stock
method for options and non-vested equity shares and
share units outstanding during each period based on
average market price 1.3 2.1
Dilutive effect of assumed conversion of convertible
notes outstanding 0.5 1.5
-------- --------
132.2 135.2
======== ========
Diluted earnings per share, as reported $0.25 $0.68
Non-GAAP pre-tax adjustments:
Restructuring charge(a) 0.07 --
ISTA Vitrase collaboration -- --
Transition/duplicate operating expenses 0.01 --
Unrealized gain on derivative instruments (0.01) --
Patent infringement settlement -- --
Tax effect of dividend repatriation above base
amount 0.46 --
State income tax recovery -- (0.05)
-------- --------
Adjusted diluted earnings per share $0.78 $0.63
======== ========
Year over year change 23.8%
=======
in millions, except per share amounts Six months ended
------------------------------------- -----------------
June 24, June 25,
2005 2004
-------- --------
Net earnings, as reported $113.3 $172.6
Non-GAAP pre-tax adjustments:
Restructuring charge(a) 38.0 --
ISTA Vitrase collaboration (3.6) --
Transition/duplicate operating expenses 1.6 --
Unrealized gain on derivative instruments (1.2) (0.2)
Patent infringement settlement -- (2.4)
-------- --------
148.1 170.0
Tax effect for above items (3.4) 1.0
Tax effect of dividend repatriation above base
amount 60.4 --
State income tax recovery -- (6.1)
-------- --------
Adjusted diluted earnings $205.1 $164.9
======== ========
Weighted average number of shares issued 130.8 131.2
Net shares assumed issued using the treasury stock
method for options and non-vested equity shares and
share units outstanding during each period based on
average market price 1.1 2.1
Dilutive effect of assumed conversion of convertible
notes outstanding 0.5 1.5
-------- --------
132.4 134.8
======== ========
Diluted earnings per share, as reported $0.86 $1.28
Non-GAAP pre-tax adjustments:
Restructuring charge(a) 0.25 --
ISTA Vitrase collaboration (0.02) --
Transition/duplicate operating expenses 0.01 --
Unrealized gain on derivative instruments (0.01) --
Patent infringement settlement -- (0.01)
Tax effect of dividend repatriation above base
amount 0.46 --
State income tax recovery -- (0.05)
-------- --------
Adjusted diluted earnings per share $1.55 $1.22
======== ========
Year over year change 27.0%
=======
(a) Including inventory write-offs of $0.3 million for the three and
six month periods ended June 24, 2005.
ALLERGAN, INC.
Supplemental Non-GAAP Information
(Unaudited)
Three months ended $ change in net sales
------------------ ---------------------------
June 24, June 25, Total Performance Currency
in millions 2005 2004
----------- --------- -------- ------ ----------- --------
Eye Care
Pharmaceuticals $325.0 $277.6 $47.4 $40.7 $6.7
Botox/Neuromodulator 212.5 176.9 35.6 31.4 4.2
Skin Care 30.4 24.4 6.0 5.9 0.1
---------- ------- ------ ----------- --------
Total 567.9 478.9 89.0 78.0 11.0
Other (primarily
contract sales) 23.1 27.3 (4.2) (4.3) 0.1
---------- ------- ------ ----------- --------
Net sales, as reported $591.0 $506.2 $84.8 $73.7 $11.1
========== ======= ====== =========== ========
Alphagan P, Alphagan,
and Combigan $64.3 $62.4 $1.9 $0.7 $1.2
Lumigan 61.5 57.3 4.2 2.9 1.3
Other Glaucoma 4.4 5.3 (0.9) (1.2) 0.3
Restasis 46.3 20.1 26.2 26.1 0.1
Domestic 67.0% 68.7%
International 33.0% 31.3%
Percent change in net sales
----------------------------
Total Performance Currency
------- ----------- --------
Eye Care
Pharmaceuticals 17.1% 14.7% 2.4%
Botox/Neuromodulator 20.1% 17.8% 2.4%
Skin Care 24.6% 24.2% 0.4%
Total 18.6% 16.3% 2.3%
Other (primarily
contract sales) (15.4)% (15.8)% 0.4%
Net sales, as reported 16.8% 14.6% 2.2%
Alphagan P, Alphagan,
and Combigan 3.1% 1.2% 1.9%
Lumigan 7.3% 5.0% 2.3%
Other Glaucoma (17.6)% (22.2)% 4.6%
Restasis 130.5% 130.2% 0.3%
Six months ended $ change in net sales
----------------- ----------------------------
June 24, June 25, Total Performance Currency
in millions 2005 2004
----------- -------- -------- ------ ----------- ---------
Eye Care
Pharmaceuticals $623.0 $549.7 $73.3 $62.4 $10.9
Botox/Neuromodulator 388.8 327.6 61.2 54.6 6.6
Skin Care 60.2 49.1 11.1 11.0 0.1
--------- ------- ------- ----------- --------
Total 1,072.0 926.4 145.6 128.0 17.6
Other (primarily
contract sales) 46.2 52.2 (6.0) (6.2) 0.2
--------- ------- ------- ----------- --------
Net sales, as reported $1,118.2 $978.6 $139.6 $121.8 $17.8
========= ======= ======= =========== ========
Alphagan P, Alphagan,
and Combigan $131.0 $131.7 $(0.7) $(2.8) $2.1
Lumigan 123.5 110.8 12.7 10.5 2.2
Other Glaucoma 9.0 10.2 (1.2) (1.6) 0.4
Restasis 83.6 41.4 42.2 42.2 --
Domestic 67.0% 69.6%
International 33.0% 30.4%
Percent change in net sales
----------------------------
Total Performance Currency
------- ----------- --------
Eye Care
Pharmaceuticals 13.3% 11.4% 2.0%
Botox/Neuromodulator 18.7% 16.7% 2.0%
Skin Care 22.6% 22.4% 0.2%
Total 15.7% 13.8% 1.9%
Other (primarily
contract sales) (11.5)% (11.9)% 0.4%
Net sales, as reported 14.3% 12.4% 1.8%
Alphagan P, Alphagan,
and Combigan (0.5)% (2.1)% 1.6%
Lumigan 11.5% 9.5% 2.0%
Other Glaucoma (12.0)% (15.9)% 3.9%
Restasis 102.1% 102.1% --
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, INC.
Reconciliation of GAAP Diluted Earnings Per Share Guidance
To Adjusted Diluted Earnings Per Share Guidance
(Unaudited)
Fiscal 2005
----------------
Low High
------- --------
GAAP diluted Earnings Per Share Guidance (a) $2.51 $2.54
Restructuring charge and related inventory write-offs 0.25 0.25
ISTA Vitrase collaboration (0.02) (0.02)
Transition/duplicate operating expenses 0.01 0.01
Unrealized (gain) loss on derivative instruments (0.01) (0.01)
Tax effect of dividend repatriation above base amount 0.46 0.46
------- --------
Adjusted diluted Earnings Per Share Guidance $3.20 $3.23
======= ========
(a) GAAP diluted earnings per share guidance excludes any potential
impact of future unrealized gains or losses on derivative
instruments and future restructuring charges and
transition/duplicate operating expenses associated with the
Company's planned restructuring and streamlining of its European
operations and the termination of the manufacturing and supply
agreement with Advanced Medical Optics.
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