Allergan Reports Third Quarter Operating Results and Increases Full Year Earnings Guidance; Pharmaceutical Sales Increased 25 Percent for the Third Quarter; Board of Directors Declares Third 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 third quarter ended September September: see month. 30, 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 third quarter dividend of $0.10 per share, payable on December December: see month. 12, 2005 to stockholders of record on November November: see month. 16, 2005. Operating Results For the quarter ended September 30, 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 $606.1 million, including $0.2 million of non-pharmaceutical product sales. --Pharmaceutical sales increased 25.0 percent, or 23.6 percent at constant currency, compared to pharmaceutical sales in the third quarter of 2004. --Allergan reported $1.12 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 compared to the $0.69 diluted earnings per share reported for the third quarter of 2004. The reported $1.12 diluted earnings per share includes:
-- the incurrence of restructuring charges related to the
scheduled termination of Allergan's manufacturing and
supply agreement with Advanced Medical Optics (AMO);
-- the incurrence of restructuring charges and transition and
duplicate operating expenses related to the streamlining
of Allergan's research and development and select
commercial activities throughout Europe;
-- a decrease in the amount of taxes previously estimated in
connection with the repatriation of foreign earnings that
had been permanently re-invested outside the United
States;
-- the recognition of a gain from the sale of a third party
equity investment;
-- a charge associated with the buy-out of a licensing
agreement with Johns Hopkins University;
-- the recognition of a gain on the sale of assets primarily
used for contract manufacturing and the former
distribution of AMO related products;
-- the recognition of a gain associated with the sale of
Allergan's contact lens care product (CLCP) and surgical
product distribution business in India;
-- the recognition of an additional amount of income tax
benefit for previously paid state income taxes and
interest income related to the total income tax benefit;
-- the resolution of several significant income tax audit
issues, including transfer prices, related to tax years
currently under examination or not yet settled through
expiration of the statute of limitations and a related
reversal of previously accrued statutory interest expense
associated with these previously uncertain tax positions;
and
-- the effect of an unrealized gain on the mark-to-market
adjustment to foreign currency derivative instruments.
The items above included in diluted earnings per share total $38.4 million, which consists of $18.5 million pre-tax pre-tax adj → anterior al impuesto pre-tax adj → avant impôt(s) pre-tax adj → al lordo d'imposta , $23.0 million related to the provision for income taxes and $3.1 million related to minority interest. --Allergan's adjusted diluted earnings per share were $0.83, representing a 23.9 percent increase compared to adjusted diluted earnings per share of $0.67 reported for the third quarter of 2004. Adjusted diluted earnings per share for the third quarter of 2005 exclude the items outlined above and 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 extremely pleased with our results and performance in the third quarter and as a result have increased our full year financial guidance," said David E.I. Pyott, Allergan's Chairman of the Board, President and Chief Executive Officer. "Moreover, we recently entered into a strategic agreement with GlaxoSmithKline GlaxoSmithKline plc (LSE: GSK NYSE: GSK) is a British based pharmaceutical, biological, and healthcare company. GSK is a research-based company with a wide portfolio of pharmaceutical products covering anti-infectives, central nervous system (CNS), respiratory, which we expect will help us to continue to maximize In a graphical environment, to enlarge a window to the full size of the screen. See Win Maximize windows. the value of our assets globally and strengthen our strategic position; and further demonstrates our intent to continually con·tin·u·al adj. 1. Recurring regularly or frequently: the continual need to pay the mortgage. 2. adapt our business model to realize greater sales, greater productivity and increase stockholder value." Product and Pipeline Update During the third quarter of 2005: --On August 19, 2005, Allergan announced that it received a written approval 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. ) to market Alphagan Alphagan Brimonidine Ophthalmology An alpha-2 agonist for treating open-angle glaucoma. See Open angle glaucoma. (R) P (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. ) 0.1%, indicated 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. or 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. . --On September 28, 2005, Allergan announced that it received positive opinions for Combigan(TM), Allergan's Alphagan(R)/timolol combination product for 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). (brimonidine tartrate/timolol ophthalmic solution), from all twenty-one twenty-one: see blackjack. Concerned Member States included in the Combigan(TM) Mutual Recognition Procedure for 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 . --On September 29, 2005, Allergan entered into a multi-year alliance with Sirna Therapeutics Sirna Therapeutics Inc. (NYSE: RNAI), Sirna develops therapeutics based on RNA interference (RNAi) technology, a new and extremely potent method of using nucleic acids as drugs. , Inc. to develop Sirna-027, a novel RNAi-based therapeutic currently in Phase I for age-related macular degeneration Age-related macular degeneration (ARMD) Degeneration of the macula (the central part of the retina where the rods and cones are most dense) that leads to loss of central vision in people over 60. , and to discover and develop other novel RNAi-based therapeutics therapeutics Treatment and care to combat disease or alleviate pain or injury. Its tools include drugs, surgery, radiation therapy, mechanical devices, diet, and psychiatry. against select gene targets in 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. diseases. Following the end of the third quarter of 2005: --On October October: see month. 3, 2005, Allergan announced that it entered into a long-term Long-term Three or more years. In the context of accounting, more than 1 year. long-term 1. Of or relating to a gain or loss in the value of a security that has been held over a specific length of time. Compare short-term. agreement with GlaxoSmithKline (GSK GSK GlaxoSmithKline plc (pharmaceutical company) GSK Glycogen Synthase Kinase GSK Gruppentraining Sozialer Kompetenzen (Germany) GSK Greenland Shark (FAO fish species code) ) to develop and promote Allergan's 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) (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) in Japan and China and to co-promote GSK's products Imitrex Im·i·trexA trademark for the drug sumatriptan and its succinate form. sumatriptan succinate Imigran (UK), Imitrex Pharmacologic class: Selective 5-hydroxytryptamine1 (5-HT1 STATdose System(R) (sumatriptan succinate sumatriptan succinate (soo´m  trip´-tan suk´s ) and Amerge(R) (naratriptan hydrochloride naratriptan hydrochlorideAmerge, Naramig (UK) Pharmacologic class: Selective 5-hydroxytryptamine1 (5-HT1) agonist Therapeutic class: Vascular headache suppressant, antimigraine drug ) 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. . --On October 3, 2005, Acadia Pharmaceuticals announced that it received a milestone “Milemarker” redirects here. For the American indie rock band, see Milemarker (band). A milestone or kilometre sign is one of a series of numbered markers placed along a road at regular intervals, typically at the side of the road or in a median. payment from Allergan in connection with the advancement A gift of money or property made by a person while alive to his or her child or other legally recognized heir, the value of which the person intends to be deducted from the child's or heir's eventual share in the estate after the giver's death. of a clinical program directed at novel treatment for neuropathic neuropathic /neu·ro·path·ic/ (-path´ik) pertaining to or characterized by neuropathy. neuropathic pertaining to disease of the nervous system. pain. --On October 24, 2005, NPS NPS National Park Service NPS Naval Postgraduate School NPS Net Promoter Score (customer management) NPS Non-Point Source pollution NPS Native Plant Society NPS Norfolk Public Schools (Virginia) Pharmaceuticals announced that it entered into an agreement with Allergan to promote 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%) to rheumatologists in the United States.Other Events --Allergan recently made the decision to terminate Terminate (terminat.exe) was a shareware modem terminal and host program for MS-DOS and compatible operating systems developed from the early to the late 1990s by the Dane Bo Bendtsen. The last release (5. its clinical program for 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® for the treatment of moderate to very severe 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 based on a comprehensive cost benefit and net present value analysis which demonstrated that research and development resources should be directed to more valuable opportunities in the pipeline. Allergan will continue to investigate the use of tazarotene for the treatment of retinal retinal /ret·i·nal/ (ret´i-n'l) 1. pertaining to the retina. 2. the aldehyde of retinol, derived from absorbed dietary carotenoids or esters of retinol and having vitamin A activity. disease. Outlook For the fourth quarter of 2005, Allergan estimates: --Total sales between $565 million and $580 million. --Adjusted diluted earnings per share in the range of $0.88 and $0.89. For the full year of 2005: --Allergan is increasing total pharmaceutical sales guidance to between $2,240 million and $2,260 million. --Allergan is increasing the expected range of Restasis(R) sales to between $180 million and $200 million and is also increasing the expected range of the Alphagan(R) franchise sales to between $255 million and $275 million. All other individual product sales guidance provided in July July: see month. 2005 remains unchanged. --Pharmaceutical only income statement ratio guidance provided in July 2005 has changed to:
-- Gross Profit of approximately 83.0% to 84.0%.
-- SG&A of approximately 40.0%.
--Research and development pharmaceutical only income statement ratio guidance provided in July 2005 remains unchanged. --Diluted shares outstanding guidance and the effective tax rate on adjusted earnings guidance provided in July 2005 remain unchanged. --Allergan is increasing adjusted diluted earnings per share guidance to approximately ap·prox·i·mate adj. 1. Almost exact or correct: the approximate time of the accident. 2. $3.26 to $3.27, which is approximately a $0.05 per share increase from guidance provided in July 2005. Adjusted diluted earnings per share guidance anticipates non-GAAP adjustments to diluted earnings per share including the following items discussed above and in previous earnings releases:
-- the recognition of income associated with the termination
of Allergan's Vitrase(R) collaboration agreement with ISTA
Pharmaceuticals, Inc.;
-- restructuring activities;
-- taxes on the repatriation of foreign earnings;
-- the gain on the equity investment sale;
-- the licensing agreement termination charge;
-- the gain on the sale of AMO assets;
-- the gain on the sale of India's distribution business
related to CLCP & Surgical;
-- the income tax benefit for previously paid state income
taxes and interest income related to the total income tax
benefit; and
-- the resolution of several significant tax audit issues and
related reversal of previously accrued statutory interest
expense.
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 June June: see month. 24, 2005. 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 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 September 30, 2005
amounts
----------------------------------- ----------------------------------
Non-GAAP
GAAP Adjustments Adjusted
------- ----------- --------
Product sales
Net sales $606.1 $-- $606.1
Cost of sales 98.5 (0.1)(a) 98.4
------- ----------- --------
Product gross margin 507.6 0.1 507.7
Selling, general and administrative 237.7 12.8 (a)(j) 250.5
Research and development 110.2 (3.5)(a)(b) 106.7
Special charges (0.1) 0.1 (c) --
------- ----------- --------
Operating income 159.8 (9.3) 150.5
Interest income 11.4 (2.1)(d) 9.3
Interest expense 1.6 (6.5)(d) (4.9)
Unrealized gain (loss) on
derivative instruments, net (0.2) 0.2 (e) --
Gain on investments 0.8 (0.8)(f) --
Other, net (0.8) -- (0.8)
------- ----------- --------
12.8 (9.2) 3.6
------- ----------- --------
Earnings before income taxes and
minority interest 172.6 (18.5) 154.1
Provision for income taxes 19.9 23.0 (g) 42.9
Minority interest 2.2 (3.1)(k) (0.9)
------- ----------- --------
Net earnings $150.5 $(38.4) $112.1
======= =========== ========
Net earnings per share:
Basic $1.15 $0.86
Diluted $1.12 $0.83
======= ========
Weighted average number of common shares outstanding:
Basic 131.0 131.0
Diluted 134.7 134.7
Selected ratios as a percentage of
net sales
-----------------------------------
Gross profit 83.7% 83.8%
Selling, general and administrative 39.2% 41.3%
Research and development 18.2% 17.6%
Three months ended
----------------------------------
in millions, except per share September 24, 2004
amounts
----------------------------------- ----------------------------------
Non-GAAP
GAAP Adjustments Adjusted
---------- ----------- --------
Product sales
Net sales $510.8 $-- $510.8
Cost of sales 99.1 -- 99.1
---------- ----------- --------
Product gross margin 411.7 -- 411.7
Selling, general and administrative 195.5 -- 195.5
Research and development 83.0 -- 83.0
Special charges -- -- --
---------- ----------- --------
Operating income 133.2 -- 133.2
Interest income 2.6 -- 2.6
Interest expense (6.8) -- (6.8)
Unrealized gain (loss) on
derivative instruments, net (0.1) 0.1 (e) --
Gain on investments -- -- --
Other, net 3.6 (5.0)(h) (1.4)
---------- ----------- --------
(0.7) (4.9) (5.6)
---------- ----------- --------
Earnings before income taxes
and minority interest 132.5 (4.9) 127.6
Provision for income taxes 40.3 (1.9)(i) 38.4
Minority interest 0.2 -- 0.2
---------- ----------- --------
Net earnings $92.0 $(3.0) $89.0
========== =========== ========
Net earnings per share:
Basic $0.70 $0.68
Diluted $0.69 $0.67
========== ========
Weighted average number of common shares outstanding:
Basic 131.5 131.5
Diluted 132.8 132.8
Selected ratios as a percentage of
net sales
-----------------------------------
Gross profit 80.6% 80.6%
Selling, general and administrative 38.3% 38.3%
Research and development 16.2% 16.2%
(a) Transition/duplicate operating expenses, consisting of Cost of
sales of $0.1 million; Selling, general and administrative expense
of $0.9 million and Research and development expense of $0.5
million
(b) Buy-out of license agreement with Johns Hopkins
(c) Restructuring charge reversal
(d) Interest income related to previously paid state income taxes and
reversal of interest expense related to tax settlements
(e) Unrealized loss on the mark-to-market adjustment to derivative
instruments
(f) Gain on sale of third party equity investment
(g) Total tax effect for non-GAAP pre-tax adjustments and other income
tax adjustments, consisting of the following amounts (in
millions):
Tax effect
Non-GAAP pre-tax adjustments of $18.5 million $4.1
Additional benefit for state income taxes (1.4)
Resolution of uncertain tax positions (19.5)
Change in estimated income taxes on additional dividends
repatriated above the base and extraordinary dividends
amount (6.2)
-------
$(23.0)
=======
(h) Technology transfer fee
(i) Income tax benefit for previously paid state income taxes and tax
effect for non-GAAP adjustments
(j) Gain on sale of assets primarily used for AMO contract
manufacturing ($5.8 million) and gain on sale of distribution
business in India ($7.9 million)
(k) Minority interest related to gain on sale of distribution business
in India
"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 nine months ended September
30, 2005 and September 24, 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)
Nine months ended
-------------------------------------
in millions, except per share September 30, 2005
amounts
-------------------------------- -------------------------------------
Non-GAAP
GAAP Adjustments Adjusted
--------- ----------- ---------
Product sales
Net sales $1,724.3 $-- $1,724.3
Cost of sales 304.3 (0.4)(a)(c) 303.9
--------- ----------- ---------
Product gross margin 1,420.0 0.4 1,420.4
Selling, general and
administrative 689.5 11.7 (a)(j) 701.2
Research and development 283.5 (4.0)(a)(b) 279.5
Special charges 37.6 (37.6)(c) --
--------- ----------- ---------
Operating income 409.4 30.3 439.7
Interest income 23.0 (2.2)(d)(f) 20.8
Interest expense (7.5) (6.5)(d) (14.0)
Unrealized gain (loss) on
derivative instruments, net 1.0 (1.0)(e) --
Gain on investments 0.8 (0.8)(l) --
Other, net 3.0 (3.5)(f) (0.5)
--------- ----------- ---------
20.3 (14.0) 6.3
--------- ----------- ---------
Earnings before income taxes and
minority interest 429.7 16.3 446.0
Provision for income taxes 163.2 (34.0)(g) 129.2
Minority interest 2.7 (3.1)(m) (0.4)
--------- ----------- ---------
Net earnings $263.8 $53.4 $317.2
========= =========== =========
Net earnings per share:
Basic $2.02 $2.43
Diluted $1.98 $2.38
========= =========
Weighted average number of common shares outstanding:
Basic 130.8 130.8
Diluted 133.2 133.2
Selected ratios as a percentage
of net sales
--------------------------------
Gross profit 82.4% 82.4%
Selling, general and
administrative 40.0% 40.7%
Research and development 16.4% 16.2%
Nine months ended
----------------------------------
in millions, except per share September 24, 2004
amounts
----------------------------------- ----------------------------------
Non-GAAP
GAAP Adjustments Adjusted
--------- ----------- ---------
Product sales
Net sales $1,489.4 $-- $1,489.4
Cost of sales 282.9 -- 282.9
--------- ----------- ---------
Product gross margin 1,206.5 -- 1,206.5
Selling, general and administrative 572.8 2.4 (h) 575.2
Research and development 257.6 -- 257.6
Special charges -- -- --
--------- ----------- ---------
Operating income 376.1 (2.4) 373.7
Interest income 6.8 -- 6.8
Interest expense (14.2) -- (14.2)
Unrealized gain (loss) on
derivative instruments, net 0.1 (0.1)(e) --
Gain on investments -- -- --
Other, net 2.3 (5.0)(k) (2.7)
--------- ----------- ---------
(5.0) (5.1) (10.1)
--------- ----------- ---------
Earnings before income taxes and
minority interest 371.1 (7.5) 363.6
Provision for income taxes 105.8 3.2 (i) 109.0
Minority interest 0.7 -- 0.7
--------- ----------- ---------
Net earnings $264.6 $(10.7) $253.9
========= =========== =========
Net earnings per share:
Basic $2.02 $1.93
Diluted $1.97 $1.89
========= =========
Weighted average number of common shares outstanding:
Basic 131.3 131.3
Diluted 134.1 134.1
Selected ratios as a percentage of
net sales
-----------------------------------
Gross profit 81.0% 81.0%
Selling, general and administrative 38.5% 38.6%
Research and development 17.3% 17.3%
(a) Transition/duplicate operating expenses, consisting of Cost of
sales of $0.1 million; Selling, general and administrative expense
of $2.0 million and Research and development expense of $1.0
million
(b) Buy-out of license agreement with Johns Hopkins
(c) Restructuring charge of $37.6 million and related inventory
write-offs of $0.3 million
(d) Interest income related to previously paid state income taxes and
reversal of interest expense related to tax settlements
(e) Unrealized gain on the mark-to-market adjustment to derivative
instruments
(f) Termination of ISTA Vitrase collaboration agreement (including
interest income of $0.1 million)
(g) Total tax effect for non-GAAP pre-tax adjustments and other income
tax adjustments, consisting of the following amounts (in
millions):
Tax effect
Non-GAAP pre-tax adjustments of $16.3 million $0.7
Additional benefit for state income taxes (1.4)
Resolution of uncertain tax positions (19.5)
Extraordinary dividends of $674 million under the American
Jobs Creation Act of 2004 32.8
Additional repatriation of foreign earnings of $85.8 million
above extraordinary dividends amount 21.4
-------
$34.0
=======
(h) Patent infringement settlement
(i) Income tax benefit for previously paid state income taxes and tax
effect for non-GAAP adjustments
(j) Gain on sale of assets primarily used for AMO contract
manufacturing ($5.8 million) and gain on sale of distribution
business in India ($7.9 million)
(k) Technology transfer fee
(l) Gain on sale of third party equity investment
(m) Minority interest related to gain on sale of distribution business
in India
"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.
ALLERGAN, INC.
Condensed Consolidated Balance Sheets
(Unaudited)
September 30, December 31,
in millions 2005 2004
------------------------------------------- ------------- ------------
Assets
Cash and equivalents $1,110.6 $894.8
Trade receivables, net 252.3 243.5
Inventories 90.5 89.9
Other current assets 173.3 147.8
------------- ------------
Total current assets 1,626.7 1,376.0
Property, plant and equipment, net 466.9 468.5
Other noncurrent assets 539.8 412.5
------------- ------------
Total assets $2,633.4 $2,257.0
============= ============
Liabilities and stockholders' equity
Notes payable $126.0 $13.1
Accounts payable 114.4 97.9
Accrued expenses and income taxes 359.0 348.6
------------- ------------
Total current liabilities 599.4 459.6
Long-term debt 575.6 570.1
Other liabilities 118.8 111.1
Stockholders' equity 1,339.6 1,116.2
------------- ------------
Total liabilities and stockholders' equity $2,633.4 $2,257.0
============= ============
Days on Hand (DOH) 84 79
Days Sales Outstanding (DSO) 38 40
Cash, net of debt $409.0 $311.6
Debt-to-capital percentage 34.4% 34.3%
ALLERGAN, INC.
Reconciliation of Diluted Earnings Per Share
(Unaudited)
in millions, except per share
amounts Three months ended Nine months ended
------------------------------ ------------------- -------------------
September September September September
30, 24, 30, 24,
2005 2004 2005 2004
--------- --------- --------- ---------
Net earnings, as reported $150.5 $92.0 $263.8 $264.6
Non-GAAP earnings per share
adjustments:
Restructuring charge (a) (0.1) -- 37.9 --
Transition/duplicate
operating expense 1.5 -- 3.1 --
Buy-out of license
agreement with Johns
Hopkins 3.0 -- 3.0 --
Gain on sale of
distribution business in
India (7.9) -- (7.9) --
Gain on sale of assets
primarily used for AMO
contract manufacturing (5.8) -- (5.8) --
Termination of ISTA Vitrase
collaboration agreement -- -- (3.6) --
Gain on sale of equity
investment (0.8) -- (0.8) --
Interest related to
previously paid state
income taxes and income
tax settlements (8.6) -- (8.6) --
Technology transfer fee -- (5.0) -- (5.0)
Patent infringement
settlement -- -- -- (2.4)
Unrealized (gain) loss on
derivative instruments 0.2 0.1 (1.0) (0.1)
--------- --------- --------- ---------
132.0 87.1 280.1 257.1
Tax effect for above items 4.1 1.9 0.7 2.9
Resolution of uncertain tax
positions (19.5) -- (19.5) --
Tax effect of dividend
repatriation (6.2) -- 54.2 --
State income tax recovery (1.4) -- (1.4) (6.1)
Minority interest effect of
sale of distribution business
in India 3.1 -- 3.1 --
--------- --------- --------- ---------
Adjusted diluted earnings $112.1 $89.0 $317.2 $253.9
========= ========= ========= =========
Weighted average number of
shares issued 131.0 131.5 130.8 131.3
Net shares assumed issued
using the treasury stock
method for options
outstanding during each
period based on average
market price 2.1 0.7 1.5 1.7
Dilutive effect of assumed
conversion of convertible
subordinated notes
outstanding 1.6 0.6 0.9 1.1
--------- --------- --------- ---------
134.7 132.8 133.2 134.1
========= ========= ========= =========
Diluted earnings per share, as
reported $1.12 $0.69 $1.98 $1.97
Non-GAAP earnings per share
adjustments:
Restructuring charge (a) -- -- 0.25 --
Transition/duplicate
operating expense 0.01 -- 0.02 --
Buy-out of license
agreement with Johns
Hopkins 0.02 -- 0.02 --
Gain on sale of
distribution business in
India (0.05) -- (0.05) --
Gain on sale of assets
primarily used for AMO
contract manufacturing (0.04) -- (0.04) --
Termination of ISTA Vitrase
collaboration agreement -- -- (0.02) --
Gain on sale of equity
investment (0.01) -- (0.01) --
Interest related to
previously paid state
income taxes and income
tax settlements (0.04) -- (0.04) --
Technology transfer fee -- (0.02) -- (0.02)
Patent infringement
settlement -- -- -- (0.01)
Unrealized (gain) loss on
derivative instruments 0.01 -- -- --
Resolution of uncertain tax
positions (0.15) -- (0.15) --
Tax effect of dividend
repatriation (0.05) -- 0.41 --
State income tax recovery (0.01) -- (0.01) (0.05)
Minority interest effect of
sale of distribution
business in India 0.02 -- 0.02 --
--------- --------- --------- ---------
Adjusted diluted earnings per
share $0.83 $0.67 $2.38 $1.89
========= ========= ========= =========
Year over year change 23.9% 25.9%
=================== ===================
(a) Including inventory write-offs of $0.3 million for the nine month
period ending September 30, 2005.
ALLERGAN, INC.
Supplemental Non-GAAP Information
(Unaudited)
Three months ended
-------------------
September September $ change in net sales
30, 24, ---------------------------
2005 2004 Total Performance Currency
--------- --------- ------ ----------- --------
in millions
----------------------
Eye Care
Pharmaceuticals $358.1 $285.4 $72.7 $68.7 $4.0
Botox/Neuromodulator 214.8 174.6 40.2 37.7 2.5
Skin Care 33.0 24.8 8.2 8.2 --
--------- --------- ------ ----------- --------
Total 605.9 484.8 121.1 114.6 6.5
Other (primarily
contract sales) 0.2 26.0 (25.8) (25.8) --
--------- --------- ------ ----------- --------
Net sales, as reported $606.1 $510.8 $95.3 $88.8 $6.5
========= ========= ====== =========== ========
Alphagan P, Alphagan
and Combigan $75.1 $73.2 $1.9 $1.3 $0.6
Lumigan 72.8 60.3 12.5 11.9 0.6
Other Glaucoma 4.7 4.6 0.1 (0.1) 0.2
Restasis 54.0 24.1 29.9 29.8 0.1
Domestic 69.0% 69.2%
International 31.0% 30.8%
Percent change in net sales
----------------------------
Total Performance Currency
------- ----------- --------
Eye Care Pharmaceuticals 25.5% 24.1% 1.4%
Botox/Neuromodulator 23.0% 21.6% 1.4%
Skin Care 33.1% 33.1% --%
Total 25.0% 23.6% 1.4%
Other (primarily contract sales) (99.2)% (99.2)% --%
Net sales, as reported 18.7% 17.4% 1.3%
Alphagan P, Alphagan and Combigan 2.6% 1.8% 0.8%
Lumigan 20.7% 19.8% 0.9%
Other Glaucoma 2.0% (1.0)% 3.0%
Restasis 123.8% 123.6% 0.2%
Nine months ended
-------------------
September September $ change in net sales
30, 24, ----------------------------
2005 2004 Total Performance Currency
--------- --------- ------- ----------- --------
in millions
---------------------
Eye Care
Pharmaceuticals $981.1 $835.1 $146.0 $131.1 $14.9
Botox/Neuromodulator 603.6 502.2 101.4 92.3 9.1
Skin Care 93.2 73.9 19.3 19.2 0.1
--------- --------- ------- ----------- --------
Total 1,677.9 1,411.2 266.7 242.6 24.1
Other (primarily
contract sales) 46.4 78.2 (31.8) (32.0) 0.2
--------- --------- ------- ----------- --------
Net sales, as
reported $1,724.3 $1,489.4 $234.9 $210.6 $24.3
========= ========= ======= =========== ========
Alphagan P, Alphagan
and Combigan $206.1 $204.9 $1.2 $(1.5) $2.7
Lumigan 196.3 171.1 25.2 22.4 2.8
Other Glaucoma 13.7 14.8 (1.1) (1.7) 0.6
Restasis 137.6 65.5 72.1 72.0 0.1
Domestic 67.7% 69.4%
International 32.3% 30.6%
Percent change in net sales
----------------------------
Total Performance Currency
------- ----------- --------
Eye Care Pharmaceuticals 17.5% 15.7% 1.8%
Botox/Neuromodulator 20.2% 18.4% 1.8%
Skin Care 26.1% 26.0% 0.1%
Total 18.9% 17.2% 1.7%
Other (primarily contract sales) (40.7)% (40.9)% 0.2%
Net sales, as reported 15.8% 14.1% 1.7%
Alphagan P, Alphagan and Combigan 0.6% (0.7)% 1.3%
Lumigan 14.7% 13.1% 1.6%
Other Glaucoma (7.7)% (11.3)% 3.6%
Restasis 110.1% 109.9% 0.2%
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) $2.86 $2.87
Restructuring charge (a) 0.25 0.25
Transition/duplicate operating expense 0.02 0.02
Buy-out of license agreement with Johns Hopkins 0.02 0.02
Gain on sale of distribution business in India (0.05) (0.05)
Gain on sale of assets primarily used for AMO contract
manufacturing (0.04) (0.04)
Termination of ISTA Vitrase collaboration agreement (0.02) (0.02)
Gain on sale of equity investment (0.01) (0.01)
Interest related to previously paid state income taxes
and income tax settlements (0.04) (0.04)
Resolution of uncertain tax positions (0.15) (0.15)
State income tax recovery (0.01) (0.01)
Tax effect of dividend repatriation 0.41 0.41
Minority interest effect of sale of distribution
business in India 0.02 0.02
------ ------
Adjusted diluted Earnings Per Share Guidance $3.26 $3.27
====== ======
(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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