Allergan Reports Third Quarter Operating Results.Business Editors 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.--(BUSINESS WIRE)--Oct. 22, 2003 -- Pharmaceutical Sales Increased 24.1 Percent for the Third Quarter -- Board of Directors Declares Third Quarter Dividend 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. 26, 2003. 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 $0.09 per share, payable on December December: see month. 5, 2003 to stockholders of record on November November: see month. 7, 2003. Operating Results For the quarter ended September 26, 2003: -- 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 $443.3 million, including $21.4 million of non-pharmaceutical product sales primarily consisting of contract manufacturing sales to Advanced Medical Optics optics, scientific study of light. Physical optics is concerned with the genesis, nature, and properties of light; physiological optics with the part light plays in vision; and geometrical optics with the reflection and refraction of light as encountered in the study , Inc. (AMO AMO - America's Multimedia Online ), a former subsidiary that was spun-off from Allergan on June June: see month. 29, 2002. -- Pharmaceutical sales were up 24.1 percent, or 21.0 percent at constant currency, compared to pharmaceutical sales in the third quarter of 2002. -- Allergan reported $0.57 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 effects of an unrealized non-cash 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 derivative: see calculus. derivative In mathematics, a fundamental concept of differential calculus representing the instantaneous rate of change of a function. instruments totaling $0.1 million pre-tax pre-tax adj → anterior al impuesto pre-tax adj → avant impôt(s) pre-tax adj → al lordo d'imposta , compared to the $0.28 diluted di·lute tr.v. di·lut·ed, di·lut·ing, di·lutes 1. To make thinner or less concentrated by adding a liquid such as water. 2. To lessen the force, strength, purity, or brilliance of, especially by admixture. loss per share reported for the third quarter of 2002. -- Allergan's adjusted diluted earnings per share was $0.57, excluding the effects of the unrealized non-cash gain, representing an 18.8 percent increase compared to the adjusted diluted earnings per share of $0.48 reported for the third quarter of 2002. A reconciliation of the adjustments made from reported earnings per share to adjusted earnings per share is in the financial tables of this document. "We are extremely pleased with Allergan's continued strong pharmaceutical sales growth of over 24 percent year-over-year and even more gratifying grat·i·fy tr.v. grat·i·fied, grat·i·fy·ing, grat·i·fies 1. To please or satisfy: His achievement gratified his father. See Synonyms at please. 2. is that the overall growth of our business remains broadly distributed across all of our businesses -- eye care, neuromodulators and skin care. In addition to our strong quarterly results, our recently announced acquisition of Oculex Pharmaceuticals, Inc. is further evidence of our focus on adding quality technology to our already deep pipeline and positioning Allergan as a premier technology driven pharmaceutical company," said David E.I. Pyott, Chairman of the Board, 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. . Product and Pipeline Update During the third quarter of 2003: -- Allergan launched Acular Noun 1. Acular - nonsteroidal anti-inflammatory drug (trade names Acular and Toradol) that is administered only intramuscularly ketorolac tromethamine, Toradol LS(TM) (Ketorolac Tromethamine ketorolac tromethamine Acular, Acular LS Pharmacologic class: Nonsteroidal anti-inflammatory drug (NSAID) Therapeutic class: Analgesic, antipyretic, anti-inflammatory Pregnancy risk category C Ophthalmic Solution ophthalmic solution n. A sterile solution that is free from foreign particles and is compounded and dispensed for eyedrops. 0.4%) for the reduction of ocular ocular /oc·u·lar/ (ok´u-lar) 1. of, pertaining to, or affecting the eye. 2. eyepiece. oc·u·lar adj. 1. Of or relating to the eye or the sense of sight. pain and burning/stinging following corneal corneal pertaining to the cornea. See also keratitis, keratopathy. corneal anomaly includes microcornea, coloboma, megalocornea, dermoid, congenital opacity. corneal black body see corneal sequestrum (below). refractive surgery Refractive surgery A surgical procedure that corrects visual defects. Mentioned in: Photorefractive Keratectomy and Laser-Assisted In-Situ Keratomileusis refractive surgery . -- Allergan received a positive opinion in the Mutual Recognition Procedure (MRP (Material Requirements Planning) An information system that determines what assemblies must be built and what materials must be procured in order to build a unit of equipment by a certain date. ) for Vistabel(R) for seven additional European European emanating from or pertaining to Europe. European bat lyssavirus see lyssavirus. European beech tree fagussylvaticus. European blastomycosis see cryptococcosis. countries. -- Allergan filed with the 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. the Biologics Biologics include a wide range of medicinal products such as vaccines, blood and blood components, allergenics, somatic cells, gene therapy, tissues, and recombinant therapeutic proteins. License Application (BLA BLA abbr. Bachelor of Liberal Arts ) supplement for the use of 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) for hyperhidrosis Hyperhidrosis Definition Hyperhidrosis is a disorder marked by excessive sweating. It usually begins at puberty and affects the palms, soles, and armpits. 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. . -- Allergan filed with the FDA a New Drug Application (NDA (Non Disclosure Agreement) An agreement signed between two parties that have to disclose confidential information to each other in order to do business. In general, the NDA states why the information is being divulged and stipulates that it cannot be used for any ) for a combination product of Lumigan Lumigan is a drug used in the reduction of intraocular pressure (IOP) in patients with open-angle glaucoma or ocular hypertension; should be used in patients who are intolerant of other IOP-lowering medications or failed treatment with another IOP-lowering medication. (R) and timolol timolol /ti·mo·lol/ (ti´mo-lol) a nonselective beta-adrenergic blocking agent used as the maleate salt in the treatment of hypertension, the treatment and prophylaxis of recurrent myocardial infarction and the prophylaxis of migraine; for the reduction of intraocular pressure intraocular pressure n. The pressure of the intraocular fluid within the eye. intraocular pressure (in´tr in patients with 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). 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. . Following the end of the third quarter of 2003: -- Allergan announced an agreement to acquire Oculex, whose lead product Posurdex(R) is a proprietary, biodegradable biodegradable /bio·de·grad·a·ble/ (-de-grad´ah-b'l) susceptible of degradation by biological processes, as by bacterial or other enzymatic action. bi·o·de·grad·a·ble adj. , extended release implant implant /im·plant/ (im-plant´) to insert or to graft (tissue, or inert or radioactive material) into intact tissues or a body cavity. that delivers dexamethasone dexamethasone /dex·a·meth·a·sone/ (dek?sah-meth´ah-son) a synthetic glucocorticoid used primarily as an antiinflammatory in various conditions, including collagen diseases and allergic states; it is the basis of a screening test in the directly to the targeted disease site at the back of the eye. -- Allergan received approval in the United States from the FDA for Elestat(TM) (epinastine Epinastine hydrochloride (Elestat) is an antihistamine that is used in eye drops to treat allergic conjunctivitis. Elestat is presently marketed by Allergan. External links
prevention of itching itching or pruritus Stimulation of nerve endings in the skin, usually incited by histamine, that evokes a desire to scratch. It is often transient and easily relieved. Pathological itching with skin changes usually signals dermatologic disease. associated with allergic conjunctivitis allergic conjunctivitis n. Conjunctivitis caused by an allergic reaction to a substance. Also called atopic conjunctivitis. allergic conjunctivitis . Allergan anticipates that Elestat(TM) will be launched in the United States in the first quarter of 2004. Outlook For the fourth quarter of 2003, Allergan estimates: -- Total worldwide sales, including contract sales to AMO, between $440 million and $460 million. -- Adjusted diluted earnings per share in the fourth quarter of $0.67, an increase of 24 percent compared to the fourth quarter of 2002. For the full year of 2003: -- Allergan is increasing the expected range of Alphagan Alphagan Brimonidine Ophthalmology An alpha-2 agonist for treating open-angle glaucoma. See Open angle glaucoma. (R) Franchise sales by $20 million to between $255 million and $265 million. -- Allergan is increasing the range of total pharmaceutical only sales by $20 million to between $1,600 million and $1,660 million. -- All other full year sales guidance remains unchanged from the guidance provided in January January: see month. 2003. -- Allergan's guidance on income statement ratios provided in April 2003 remains unchanged. -- Full year diluted shares outstanding guidance provided in July July: see month. 2003 remains unchanged. -- Full year adjusted diluted earnings per share guidance remains at $2.31. Adjusted diluted earnings per share guidance excludes: -- Any non-cash gain or loss on mark-to-market adjustments to foreign currency derivative instruments. -- In-process research and development charges incurred in connection with the Bardeen Bar·deen , John 1908-1991. American physicist. He shared a Nobel Prize in 1956 for the development of the electronic transistor and in 1972 for a theory of superconductivity. Noun 1. Sciences Company, LLC (Logical Link Control) See "LANs" under data link protocol. LLC - Logical Link Control acquisition that closed in the second quarter of 2003. -- In-process research and development charges incurred in connection with the recently announced Oculex acquisition, which are estimated to be as much as 75 to 90 percent of the 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. $230 million purchase price. -- The potential write-off Write-Off A reduction in the value of an asset or earnings by the amount of an expense or loss. Companies are able to write off certain expenses that are required to run the business, or have been incurred in the operation of the business and detract from retained revenues. of any capitalized Capitalized Recorded in asset accounts and then depreciated or amortized, as is appropriate for expenditures for items with useful lives longer than one year. costs associated with Allergan's remaining un-retired zero-coupon convertible Zero-Coupon Convertible A zero-coupon bond issued by a corporation that can be converted into that corporation's common stock. Also known as a split coupon bond. Notes: subordinated Subordinated A claim ranked lower in priority than other claims. Common stock claims are always subordinated to debt. notes due 2020, which Allergan may retire retire v. 1) to stop working at one's occupation. 2) to pay off a promissory note, and thus "retire" the loan. 3) for a jury to go into the jury room to decide on a verdict after all evidence, argument and jury instructions have been completed. in November 2003. 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 the outlook for Allergan's earnings per share and revenue forecasts, and statements from Mr. Pyott, 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. 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 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 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. 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 2002 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 27, 2003. 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 eye care and 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 our customers, satisfy unmet un·met adj. Not satisfied or fulfilled: unmet demands. medical needs, and improve patients' lives.
ALLERGAN, INC.
Condensed Consolidated Statements of Operations and
Reconciliation of Non-GAAP Adjustments
(Unaudited)
Three months ended
in millions, except per share September 26, 2003
amounts
Non-GAAP
GAAP Adjustments Adjusted
Product sales
Net sales $443.3 -- $443.3
Cost of sales 82.8 -- 82.8
Product gross margin 360.5 -- 360.5
Research services
Research service revenues -- -- --
Cost of research services -- -- --
Research services margin -- -- --
Selling, general and
administrative 170.5 -- 170.5
Research and development 81.0 -- 81.0
Legal settlement -- -- --
Restructuring charge and asset
write-offs -- -- --
Operating income (loss) 109.0 -- 109.0
Interest income 2.6 -- 2.6
Interest expense (3.9) -- (3.9)
Gain (loss) on investments 0.2 -- 0.2
Unrealized gain on derivative
Instruments 0.1 $ (0.1)(1) --
Other, net (1.6) -- (1.6)
(2.6) (0.1) (2.7)
Earnings (loss) before income
taxes and minority interest 106.4 (0.1) 106.3
Provision (benefit) for income
taxes 29.8 -- 29.8
Minority interest 0.6 -- 0.6
Net earnings (loss) $76.0 $(0.1) $75.9
Net earnings (loss) per share:
Basic $ 0.58 $ 0.58
Diluted(9) $ 0.57 $ 0.57
Weighted average number of common shares
outstanding:(9)
Basic 130.5 130.5
Diluted 133.0 133.0
Selected ratios as a percentage
of net sales
Gross profit 81.3% 81.3%
Selling, general and
administrative 38.5% 38.5%
Research and development 18.3% 18.3%
Three months ended
in millions, except per share September 27, 2002
amounts
Non-GAAP
GAAP Adjustments Adjusted
Product sales
Net sales $350.6 -- $350.6
Cost of sales 60.7 $(1.3)(2) 59.4
Product gross margin 289.9 1.3 291.2
Research services
Research service revenues 9.4 -- 9.4
Cost of research services 8.6 -- 8.6
Research services margin 0.8 -- 0.8
Selling, general and
administrative 148.4 (2.8)(3) 145.6
Research and development 59.0 -- 59.0
Legal settlement 118.7 (118.7)(4) --
Restructuring charge and asset
write-offs 0.5 (0.5)(5) --
Operating income (loss) (35.9) 123.3 87.4
Interest income 3.7 -- 3.7
Interest expense (4.0) -- (4.0)
Gain (loss) on investments (22.2) 22.2(6) --
Unrealized gain on derivative
Instruments 1.6 (1.6)(1) --
Other, net 6.3 (5.7)(7) 0.6
(14.6) 14.9 0.3
Earnings (loss) before income
taxes and minority interest (50.5) 138.2 87.7
Provision (benefit) for income
taxes (14.1) 38.7(8) 24.6
Minority interest 0.4 -- 0.4
Net earnings (loss) $(36.8) $99.5 $62.7
Net earnings (loss) per share:
Basic $ (0.28) $ 0.48
Diluted(9) $ (0.28) $ 0.48
Weighted average number of common shares
outstanding:(9)
Basic 129.3 129.3
Diluted 129.3 130.5
Selected ratios as a percentage
of net sales
Gross profit 82.7% 83.1%
Selling, general and
administrative 42.3% 41.5%
Research and development 16.8% 16.8%
(1) Unrealized gain on the mark-to-market adjustment to derivative
instruments.
(2) Duplicate operating expenses of $1.0 million and restructuring
charge and asset write-offs of $0.3 million.
(3) Duplicate operating expenses incurred related to the spin-off
of AMO.
(4) Legal settlement regarding Lumigan.
(5) Restructuring charge and asset write-offs related to the
spin-off of AMO.
(6) Marked-to-market loss on investments and related third-party
collaborations.
(7) Gain on sale of facility (spin-related).
(8) Tax effect for non-GAAP adjustments.
(9) See "Reconciliation of Diluted Earnings Per Share" for GAAP
and non-GAAP earnings per share computations.
Note: "GAAP" refers to financial measures calculated as presented
in accordance with generally accepted accounting principles in the
United States.
ALLERGAN, INC.
Condensed Consolidated Statements of Operations and
Reconciliation of Non-GAAP Adjustments
(Unaudited)
Nine months ended
in millions, except per share September 26, 2003
amounts
Non-GAAP
GAAP Adjustments Adjusted
Product sales
Net sales $1,276.0 -- $1,276.0
Cost of sales 231.3 -- 231.3
Product gross margin 1,044.7 -- 1,044.7
Research services
Research service revenues 16.0 -- 16.0
Cost of research services 14.5 -- 14.5
Research services margin 1.5 -- 1.5
Selling, general and
administrative 524.8 -- 524.8
Research and development 492.6 $(278.8)(1) 213.8
Legal settlement -- -- --
Restructuring charge and asset
write-offs -- -- --
Operating income 28.8 278.8 307.6
Interest income 10.7 -- 10.7
Interest expense (12.2) -- (12.2)
Loss on investments -- -- --
Unrealized loss on derivative
instruments (0.9) 0.9(2) --
Other, net (3.0) -- (3.0)
(5.4) 0.9 (4.5)
Earnings from continuing
operations before income taxes and
minority interest 23.4 279.7 303.1
Provision (benefit) for income
taxes (16.2) 101.0(3) 84.8
Minority interest 1.3 -- 1.3
Earnings (loss) from continuing
operations 38.3 178.7 217.0
Earnings from discontinued
operations, net of applicable
income tax expense of $7.0
million for the nine months
ended 2002 -- -- --
Net earnings $38.3 $178.7 $217.0
Basic earnings (loss) per share:
Continuing operations $ 0.29 $ 1.67
Discontinued operations -- --
Net basic earnings per share $ 0.29 $ 1.67
Diluted earnings (loss) per share:
Continuing operations(12) $ 0.29 $ 1.64
Discontinued operations -- --
Net diluted earnings per
share $ 0.29 $ 1.64
Weighted average number of common shares
outstanding:(12)
Basic 130.2 130.2
Diluted 132.1 132.5
Selected ratios as a percentage
of net sales
Gross profit 81.9% 81.9%
Selling, general and
administrative 41.1% 41.1%
Research and development 38.6% 16.8%
Nine months ended
in millions, except per share September 27, 2002
amounts
Non-GAAP
GAAP Adjustments Adjusted
Product sales
Net sales $1,006.8 -- $1,006.8
Cost of sales 151.9 $(3.4)(4) 148.5
Product gross margin 854.9 3.4 858.3
Research services
Research service revenues 27.6 -- 27.6
Cost of research services 25.1 -- 25.1
Research services margin 2.5 -- 2.5
Selling, general and
administrative 480.8 (38.5)(5) 442.3
Research and development 170.3 (4.6)(6) 165.7
Legal settlement 118.7 (118.7)(7) --
Restructuring charge and asset
write-offs 64.4 (64.4)(8) --
Operating income 23.2 229.6 252.8
Interest income 10.7 -- 10.7
Interest expense (12.8) -- (12.8)
Loss on investments (30.2) 30.2(9) --
Unrealized loss on derivative
instruments (2.7) 2.7(2) --
Other, net 12.2 (10.7)(10) 1.5
(22.8) 22.2 (0.6)
Earnings from continuing
operations before income taxes
and minority interest 0.4 251.8 252.2
Provision (benefit) for income
taxes 0.1 70.5(3) 70.6
Minority interest 0.7 -- 0.7
Earnings (loss) from continuing
operations (0.4) 181.3 180.9
Earnings from discontinued
operations, net of applicable
income tax expense of $7.0
million for the nine months
ended 2002 11.2 (11.2)(11) --
Net earnings $10.8 $170.1 $180.9
Basic earnings (loss) per share:
Continuing operations -- $ 1.40
Discontinued operations $ 0.08 --
Net basic earnings per share $ 0.08 $ 1.40
Diluted earnings (loss) per share:
Continuing operations(12) -- $ 1.38
Discontinued operations $ 0.08 --
Net diluted earnings per share $ 0.08 $ 1.38
Weighted average number of common shares
outstanding:(12)
Basic 129.6 129.6
Diluted 129.6 131.1
Selected ratios as a percentage
of net sales
Gross profit 84.9% 85.3%
Selling, general and
administrative 47.8% 43.9%
Research and development 16.9% 16.5%
(1) In-process research and development charge related to the
acquisition of Bardeen Sciences Company, LLC.
(2) Unrealized loss on the mark-to-market adjustment to derivative
instruments.
(3) Tax effect for non-GAAP adjustments.
(4) Duplicate operating expenses of $2.0 million and restructuring
charge and asset write-offs of $1.4 million.
(5) Duplicate operating expenses incurred related to the spin-off
of AMO.
(6) Duplicate operating expenses of $0.6 million and partnering
collaboration expense of $4.0 million.
(7) Legal settlement regarding Lumigan.
(8) Restructuring charge and asset write-offs related to the
spin-off of AMO.
(9) Marked-to-market loss on investments and related third party
collaborations.
(10) Partnering deal settlement of $5.0 million and gain on sale
of facility (spin-related) of $5.7 million.
(11) Discontinued operations.
(12) See "Reconciliation of Diluted Earnings Per Share" for GAAP
and non-GAAP earnings per share computations.
Note: "GAAP" refers to financial measures calculated as presented
in accordance with generally accepted accounting principles in the
United States.
ALLERGAN, INC.
Condensed Consolidated Balance Sheets
(Unaudited)
September December
in millions 26, 31,
2003 2002
Assets
Cash and equivalents $723.2 $774.0
Trade receivables, net 235.1 220.6
Inventories 73.8 70.4
Other current assets 124.8 135.2
Total current assets 1,156.9 1,200.2
Property, plant and equipment, net 385.3 352.0
Other noncurrent assets 361.2 254.4
Total assets $1,903.4 $1,806.6
Liabilities and stockholders' equity
Notes payable $67.6 $89.7
Accounts payable 87.3 82.0
Accrued expenses and income taxes 261.7 231.9
Total current liabilities 416.6 403.6
Long-term debt 561.1 526.4
Other liabilities 75.4 68.3
Stockholders' equity 850.3 808.3
Total liabilities and stockholders' equity $1,903.4 $1,806.6
DOH 81 92
DSO 48 53
Cash, net of debt $94.5 $157.9
Debt-to-capital percentage 42.5% 43.3%
ALLERGAN, INC.
Reconciliation of Diluted Earnings Per Share
(Unaudited)
in millions, except Three months ended Nine months ended
per share amounts September September September September
26, 27, 26, 27,
2003 2002 2003 2002
Earnings (loss) from
continuing operations, as
reported $76.0 $(36.8) $38.3 $(0.4)
Non-GAAP pre-tax adjustments:
In-process research and
development -- -- 278.8 --
Legal settlement -- 118.7 -- 118.7
Unrealized (gain) loss on
derivative instruments (0.1) (1.6) 0.9 2.7
Restructuring charge and
asset write-offs -- 0.8(b) -- 65.8(b)
Duplicate operating expenses -- 3.8(c) -- 41.1(c)
Loss on investments -- 22.2 -- 30.2
Partnering deals -- -- -- (1.0)
Gain on sale of facility -- (5.7) -- (5.7)
75.9 101.4 318.0 251.4
Tax effect for above items -- (38.7) (101.0) (70.5)
75.9 62.7 217.0 180.9
Non-GAAP earnings adjustment,
net of tax due to spin-off of
AMO(a) -- -- -- (5.4)
Adjusted diluted earnings from
continuing operations 75.9 62.7 217.0 175.5
Interest expense from
convertible subordinated
notes, net of tax 0.2 -- 0.6 --
$76.1 $62.7 $217.6 $175.5
Weighted average number of
shares issued 130.5 129.3 130.2 129.6
Net shares assumed issued
using the treasury stock
method for options outstanding
during each period based on
average market price 2.1 1.2 1.9 1.5
Dilutive effect of assumed
conversion of convertible
subordinated notes outstanding 0.4 -- 0.4 --
133.0 130.5 132.5 131.1
Diluted earnings per share
from continuing operations,
as reported $0.57 $(0.28) $0.29 --
Non-GAAP adjustments:
In-process research and
development -- -- 1.34 --
Legal settlement -- $0.65 -- $0.65
Unrealized (gain) loss on
derivative instruments -- -- 0.01 0.02
Restructuring charge and
asset write-offs -- -- -- 0.36
Duplicate operating expenses -- 0.02 -- 0.23
Loss on investments -- 0.12 -- 0.16
Partnering deals -- -- -- (0.01)
Gain on sale of facility -- (0.03) -- (0.03)
0.57 0.48 1.64 1.38
Non-GAAP earnings adjustment,
net of tax due to spin-off of
AMO(a) -- -- -- (0.04)
Adjusted diluted earnings per
share from continuing
operations $0.57 $0.48 $1.64 $1.34
Year over year change 18.8% 22.4%
(a) Reflects the estimated net impact of G&A dissynergies, cash
from distribution and estimated income from contract sales to AMO
that would have been incurred in the first six months of 2002 if
Allergan's specialty pharmaceutical businesses and AMO had been
operating as stand-alone companies.
(b) The restructure charge and asset write-offs include charges of
$0.3 million and $1.4 million included in cost of sales for the
quarter and nine months ended September 27, 2002.
(c) Duplicate operating expenses include charges of $1.0 million
included in cost of sales for the quarter ended September 27, 2002
and $2.0 million and $0.6 million included in cost of sales and
research and development, respectively, for the nine months ended
September 27, 2002.
ALLERGAN, INC.
Supplemental Non-GAAP Information
(Unaudited)
Three months ended
Sept. Sept.
26, 27, $ change
2003 2002 Total Performance Currency
in millions
Eye Care
Pharmaceuticals $252.8 $202.5 $50.3 $43.1 $7.2
Botox/Neuromodulator 139.9 110.7 29.2 26.2 3.0
Skin Care 29.2 26.9 2.3 2.2 0.1
Total 421.9 340.1 81.8 71.5 10.3
Other (primarily
contract sales) 21.4 10.5 10.9 10.8 0.1
Net sales, as reported $443.3 $350.6 $92.7 $82.3 $10.4
Alphagan P and Alphagan $71.4 $49.2 $22.2 $20.5 $1.7
Lumigan 46.8 35.0 11.8 10.4 1.4
Other Glaucoma 5.5 6.0 (0.5) (0.9) 0.4
Restasis 10.7 -- 10.7 10.7 --
Tazorac, Zorac and
Avage 22.3 20.2 2.1 2.1 --
Domestic 69.3% 69.8%
International 30.7% 30.2%
Three Months Ended (Cont'd)
in millions Percent change
Total Performance Currency
Eye Care
Pharmaceuticals 24.8% 21.3% 3.5%
Botox/Neuromodulator 26.4% 23.7% 2.7%
Skin Care 8.6% 8.2% 0.4%
Total 24.1% 21.0% 3.1%
Other (primarily
contract sales) 103.8% 102.9% 0.9%
Net sales, as reported 26.4% 23.5% 2.9%
Alphagan P and Alphagan 45.1% 41.7% 3.4%
Lumigan 33.7% 29.7% 4.0%
Other Glaucoma (8.3%) (15.0%) 6.7%
Restasis n/a n/a n/a
Tazorac, Zorac and
Avage 10.4% 10.4% --
Nine months ended
Sept. Sept.
26, 27, $ change
2003 2002 Total Performance Currency
in millions
Eye Care
Pharmaceuticals $727.1 $616.5 $110.6 $92.1 $18.5
Botox/Neuromodulator 406.1 311.5 94.6 85.8 8.8
Skin Care 79.8 68.3 11.5 11.4 0.1
Total 1,213.0 996.3 216.7 189.3 27.4
Other (primarily
contract sales) 63.0 10.5 52.5 52.5 --
Net sales, as reported $1,276.0 $1,006.8 $269.2 $241.8 $27.4
Alphagan P and Alphagan $213.6 $183.9 $29.7 $24.4 $5.3
Lumigan 129.6 88.0 41.6 37.5 4.1
Other Glaucoma 16.7 18.7 (2.0) (3.1) 1.1
Restasis 22.5 -- 22.5 22.5 --
Tazorac, Zorac and
Avage 58.9 46.9 12.0 11.9 0.1
Domestic 70.7% 71.1%
International 29.3% 28.9%
Nine Months Ended (Cont'd)
in millions Percent change
Total Performance Currency
Eye Care Pharmaceuticals 17.9% 14.9% 3.0%
Botox/Neuromodulator 30.4% 27.5% 2.9%
Skin Care 16.8% 16.7% 0.1%
Total 21.8% 19.0% 2.8%
Other (primarily
contract sales) 500.0% 500.0% --
Net sales, as reported 26.7% 24.0% 2.7%
Alphagan P and Alphagan 16.2% 13.3% 2.9%
Lumigan 47.3% 42.6% 4.7%
Other Glaucoma (10.7%) (16.6%) 5.9%
Restasis n/a n/a n/a
Tazorac, Zorac and
Avage 25.6% 25.4% 0.2%
Note: Currency effect is determined by comparing adjusted 2003
reported amounts, calculated using 2002 monthly average exchange rates
for the respective period, to the actual 2002 reported amounts.
Constant currency sales is not a GAAP defined measure of revenue.
Allergan routinely evaluates its net sales performance at constant
currency rates because Allergan believes it provides a useful measure
of actual local currency sales performance year over year. Constant
currency sales as defined and presented by Allergan may not be
comparable to similar measures reported by other companies.
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