Allergan reports third quarter results; $28.8 million of previously announced special charges recorded.IRVINE, Calif.--(BUSINESS WIRE)--Oct. 16, 1996-- Board of directors raises quarterly dividend Allergan Inc. (NYSE NYSE See: New York Stock Exchange :AGN AGN Again (Amateur Radio) AGN Active Galactic Nucleus AGN Acute Glomerulonephritis AGN Accountants Global Network AGN Air Gabon (ICAO code) ) on Wednesday announced third quarter 1996 worldwide sales of $287.5 million, an increase of 5 percent over the third quarter of 1995. Excluding the impact of foreign currency changes, sales increased 7 percent over the third quarter of 1995. Earnings per share for the third quarter of 1996 were $0.26 compared with $0.53 for the same period in 1995. Third quarter results in 1996 included previously announced special charges for restructuring costs of $28.5 million and asset write-offs of $0.3 million. Net of tax, the special charges reduced earnings by $0.31 per share. Excluding the effect of the special charges in 1996, earnings per share for the third quarter were $0.57 compared with $0.53 in 1995, an increase of 8 percent. Allergan's board of directors increased its third quarter dividend to $0.13 per share, payable Dec. 9, 1996, to stockholders of record on Nov. 18, 1996. Sales for the first nine months of 1996 were $835.2 million, a 9 percent increase over the same period in 1995. Excluding the impact of foreign currency changes, sales for the first nine months of 1996 increased by $81.2 million, or 11 percent, over the same period in 1995. Earnings per share for the nine months ended Sept. 30, 1996, were $0.62 compared with $0.51 for the comparable 1995 period. Excluding the impact of the special charges in 1996 and the contribution to Allergan Ligand Retinoid retinoid /ret·i·noid/ (ret´i-noid) 1. resembling the retina. 2. retinal, retinol, or any structurally similar natural derivative or synthetic compound, with or without vitamin A activity. Therapeutics Inc. (ALRT ALRT Alert ALRT Advanced Light Rapid Transit ALRT Average Likelihood Ratio Test ) in 1995, earnings per share were $1.37 in 1996, an increase of 6 percent over the first nine months of 1995. The company continues to experience intense competition across its principal product lines, primarily generic competition for certain pharmaceutical products, as well as the impact of continued pricing pressures from government and private managed care sources, and expects these trends to continue. "We understand the dynamics of these changing markets. Over the past two years, we have made a number of acquisitions and in June implemented a restructuring program," said Allergan Chairman and Chief Executive Officer William C. Shepherd. "We intend to reinvest the savings from the restructuring program in new product launch efforts, technology collaborations, geographic expansion, and internal research and development." In June, Allergan announced a comprehensive program to streamline operations and reduce costs through management restructuring and facilities consolidation, which will result in a workforce reduction and special pretax charges of up to $75 million during 1996. The $28.5 million of special charges taken during the third quarter of 1996 as part of the program included a $16 million severance expense and $7.9 million facilities consolidation expense. Also during the third quarter of 1996, a separate asset write-off charge of $0.3 million was recorded. Including the special charges recorded during the second quarter of 1996, year to date, Allergan has recorded restructuring charges of $62.7 million, which included $30.4 million in severance expense and $25.7 million in facilities consolidation expense, as well as separate asset write-off charges of $7 million. "We will continue to pursue a number of aggressive investment strategies," Shepherd said. "Allergan is a leader in the competitive specialty global eye care market. We continue to expand these businesses into new geographic markets such as Latin America Latin America, the Spanish-speaking, Portuguese-speaking, and French-speaking countries (except Canada) of North America, South America, Central America, and the West Indies. and the Pacific Rim Pacific Rim, term used to describe the nations bordering the Pacific Ocean and the island countries situated in it. In the post–World War II era, the Pacific Rim has become an increasingly important and interconnected economic region. . Over the past two years, we have made a number of strategic acquisitions and technology collaborations. These investments have both added breadth and depth to our product offerings and expanded our internal R&D efforts with external collaborations." Eye Care Business Unit Performance Pharmaceutical Worldwide sales for the eye care pharmaceutical business were $102.7 million for the third quarter of 1996, a 9 percent decrease from the third quarter of 1995, due primarily to continued generic competition in the U.S. market. Sales for the first nine months of 1996 were $308.8 million, a 4 percent increase over the first nine months of 1995. In September, Allergan received clearance from 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. to market Alphagan (brimonidine) 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. for the treatment of 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. . Alphagan is a relatively selective alpha2 agonist agonist /ag·o·nist/ (ag´ah-nist) 1. one involved in a struggle or competition. 2. agonistic muscle. 3. that significantly lowers intraocular pressure intraocular pressure n. The pressure of the intraocular fluid within the eye. intraocular pressure (in´tr with minimal effects on cardiovascular and pulmonary parameters. Alphagan's dual mechanism of action lowers intraocular pressure by reducing aqueous humor aqueous humor n. The clear, watery fluid circulating in the chamber of the eye between the cornea and the lens. Aqueous humor production and increasing uvescleral outflow. Surgical Worldwide sales for the ophthalmic surgical business were $46.9 million during the third quarter of 1996, a decrease of 1 percent from the third quarter of 1995. Sales for the first nine months of 1996 were $134.5 million, a 1 percent decrease from the first nine months of 1995. Domestic sales of intraocular lenses continue to be negatively impacted by lower average selling prices. Optical Lens Care Worldwide sales for the optical contact lens contact lens, thin plastic lens worn between the eye and eyelid that may be used instead of eyeglasses. Actors, models, and others wear them for appearance, and athletes use them for safety and convenience. care business were $104.7 million for the third quarter of 1996, an increase of 16 percent over the third quarter of 1995. Sales for the first nine months of 1996 were $299.8 million, an 11 percent increase over the first nine months of 1995. Late in the fourth quarter of 1995, Allergan acquired the worldwide contact lens care business of Pilkington Barnes Hind. Sales of these products contributed $13 million to optical sales for the third quarter of 1996. Excluding the sales of these products, the optical business increased 1 percent in the third quarter of 1996. Skin Care Business Unit Sales for Allergan Skin Care products were $16 million during the third quarter of 1996, an increase of 44 percent over the same period last year. Sales for the first nine months of 1996 were $44.2 million, a 61 percent increase over the first nine months of 1995. Azelex (azelaic acid azelaic acid /az·e·la·ic ac·id/ (az?e-la´ik) a topical antibacterial used in the treatment of acne vulgaris. azelaic acid (az´ ) cream, a new class of therapy for mild to moderate inflammatory acne vulgaris acne vul·gar·is n. An inflammatory eruption affecting the face, upper back, and chest, consisting of blackheads, cysts, papules, and pustules, and occurring primarily during puberty and adolescence. , was launched in the United States in February. In August of 1995, Allergan acquired the assets of Herald Pharmacal, a leader in the aesthetic skin care market. Sales of these products contributed $13.4 million to skin care sales for the first nine months of 1996. Excluding the sales of these products, the skin care business grew 24 percent during the first nine months of 1996. In July 1995, Allergan filed for FDA approval to market tazarotene, a topical receptor-selective retinoid gel for the treatment of psoriasis and acne. The tazarotene application is under active review at the FDA. Botox/Neural Care Business Unit Neural care worldwide sales for Botox (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) purified neurotoxin neurotoxin /neu·ro·tox·in/ (noor´o-tok?sin) a substance that is poisonous or destructive to nerve tissue.neu·ro·tox·in n. See neurolysin. complex were $17.2 million for the third quarter of 1996, an increase of 41 percent over the third quarter of 1995. Sales for the first nine months of 1996 were $47.9 million, a 39 percent increase over the first nine months of 1995. Business Collaborations Allergan and SUGEN Inc. entered into an exclusive collaboration in October 1996, to identify, develop and commercialize novel pharmaceutical compounds utilizing SUGEN's proprietary small molecule signal transduction Signal transduction The transmission of molecular signals from a cell's exterior to its interior. Molecular signals are transmitted between cells by the secretion of hormones and other chemical factors, which are then picked up by different cells. inhibition technology for the treatment of ophthalmic neovascular diseases such as 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 diabetic retinopathy diabetic retinopathy n. Retinal changes occurring in long-term diabetes and characterized by punctate hemorrhages, microaneurysms, and sharply defined waxy exudates. . In July 1995, Allergan entered into an option agreement with Peptech Ltd. for the development and commercialization of Peptech's GMDP GMDP Grands Moulins De Paris (a synthetic glucosaminyl muramyl dipeptide muramyl dipeptide a component of the cell wall of the mycobacteria that is active in Freund's complete adjuvant and in purified form also used as an adjuvant. In both instances, it enhances T cell mediated immune responses. ) for dermatologic diseases such as psoriasis. Allergan also has the right of first refusal Right of First Refusal In general, the right of a person or company to purchase something before the offering is made available to others. Notes: For example, a football team may have the right of first refusal on a player's contract. to license GMDP for other potential applications in the fields of ophthalmology and oncology. In June 1995, Allergan and Ligand formed a new public company, ALRT, that replaced the Allergan-Ligand Joint Venture. ALRT's primary purpose is to discover and develop therapeutic pharmaceutical products based on receptor-selective retinoids Retinoids A derivative of synthetic Vitamin A. Mentioned in: Ichthyosis retinoids (reˑ·t . ALRT's topical receptor-selective retinoid gel, Panretin (ALRT1057), is currently in 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 Kaposi's Sarcoma Kaposi's sarcoma (käp`əshē', kəpō`sē), a usually fatal cancer that was considered rare until its appearance in AIDS patients. lesions in patients with advanced HIV HIV (Human Immunodeficiency Virus), either of two closely related retroviruses that invade T-helper lymphocytes and are responsible for AIDS. There are two types of HIV: HIV-1 and HIV-2. HIV-1 is responsible for the vast majority of AIDS in the United States. disease. Additional Financial Highlights Gross profit increased $24.8 million, or 5 percent, during the first nine months of 1996. The gross profit margin Gross profit margin Gross profit divided by sales, which is equal to each sales dollar left over after paying for the cost of goods sold. gross profit margin A measure calculated by dividing gross profit by net sales. was 66.2 percent, a decline from 69.1 percent for the same period last year, primarily due to global competitive pricing pressures, continued generic competition in the United States and shifts in sales to lower margin products. SG&A expenses for the third quarter of 1996 were $111.3 million, a decrease of $0.7 million from the same period last year. SG&A expenses as a ratio to 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 38.7 percent in the third quarter of 1996 compared with 40.9 percent in the third quarter of 1995. SG&A expenses for the first nine months of 1996 were $348.8 million, an increase of $16.9 million over the same period last year. SG&A expenses as a ratio to net sales were 41.8 percent for the nine months ending Sept. 30, 1996, compared with 43.4 percent for the same period in 1995. During the first nine months of 1996, research and development expenditures were essentially flat. Operating income Operating Income The profit realized from a business' own operations. Notes: This would not include income from things such as investments in other firms. Also referred to as operating profit or recurring profit. for the third quarter of 1996 was $20.8 million compared with $50.1 million in 1995, a decrease of 58 percent. Interest income in the third quarter of 1996 included a one-time amount of $3.1 million relating to relating to relate prep → concernant relating to relate prep → bezüglich +gen, mit Bezug auf +acc income tax refunds. Excluding the impact of the $50 million ALRT contribution during the second quarter of 1995 and the special charges in the second and third quarters of 1996, net earnings for the first nine months were $90.6 million, an increase of 9 percent over the first nine months of 1995. Net debt, debt net of cash balances, decreased $31 million during the third quarter of 1996 to $170.2 million. -0- NOTE: Any of the above statements that refer to the company's estimated or anticipated future results are forward-looking and reflect the company's current analysis of existing trends and information. Actual results may differ from current expectations based on a number of factors affecting Allergan's businesses, including competitive conditions and changing market conditions, the timing and uncertainty of results of both research and regulatory processes and performance of new products, the impact of the company's previously announced strategic restructuring, contributions from recently acquired businesses and collaborative relationships, and the results of geographic expansion efforts. These forward-looking statements represent the company's judgment only as of the date of this news release. Actual results could differ materially from those projected in this release. As a result, the reader is cautioned not to rely on these forward-looking statements. The company disclaims, however, any intent or obligation to update these forward-looking statements. Allergan, with headquarters in Irvine, is a technology-driven, global health care company focused on specialty pharmaceutical products for specific disease areas that deliver value to customers, satisfy unmet medical needs and improve patients' lives. The following tables represent condensed con·dense v. con·densed, con·dens·ing, con·dens·es v.tr. 1. To reduce the volume or compass of. 2. To make more concise; abridge or shorten. 3. Physics a. consolidated statements of income, condensed consolidated balance sheets consolidated balance sheet A balance sheet in which assets and liabilities of a parent company and its controlled subsidiaries are combined, thereby presenting balance sheet items for the parent and its subsidiaries as if they were a single firm. and a statement of net sales by division. -0-
ALLERGAN INC.
Condensed Consolidated Statements of Income
Three Months Nine Months
in millions, Ended Sept. 30 Ended Sept. 30,
except per share
pct Inc pct Inc
1996 1995 (Dec) 1996 1995 (Dec)
Net Sales $287.5 $273.6 5pct $835.2 $764.1 9pct
Costs and expenses
Cost of sales 99.7 83.6 282.7 236.4
Selling, general
and adminis-
trative 111.3 112.0 348.8 331.9
Research &
development 26.9 27.9 81.2 79.9
Restructuring
charge 28.5 - 62.7 -
Asset write-offs 0.3 - 7.0 -
Contribution
to ALRT - - - 50.0
Operating Income 20.8 50.1 52.8 65.9
Interest income 5.8 2.3 10.7 7.3
Interest expense (3.1) (4.7) (9.9) (10.2)
Other, net 0.7 1.2 3.6 6.0
Interest and other,
net 3.4 (1.2) 4.4 3.1
Total costs and
expenses 263.3 224.7 778.0 695.1
Earnings before
income taxes and
minority interest 24.2 48.9 57.2 69.0
Provision for
income taxes 7.0 14.4 16.6 35.0
Minority interest (0.1) 0.3 (0.5) 1.1
Net Earnings $ 17.3 $ 34.2 $ 41.1 $ 32.9
Net earnings
per common share: $ 0.26 $ 0.53 $ 0.62 $ 0.51
Weighted average
number of common
shares outstanding 66.2 65.1 65.9 64.7
-0-
ALLERGAN INC.
Condensed Consolidated Balance Sheets
in millions Sept. 30, Dec. 31,
1996 1995
Assets
Cash and equivalents $ 136.0 $ 102.3
Trade receivables, net 220.6 205.7
Inventories 133.1 120.8
Other current assets 108.6 93.5
Total current assets 598.3 522.3
Property, plant and equipment,
net 348.3 357.5
Other noncurrent assets 408.9 436.5
Total assets $1,355.5 $1,316.3
Liabilities and stockholders'
equity
Notes payable $ 66.9 $ 58.5
Accounts payable 55.5 58.7
Accrued expenses and income taxes 223.9 214.4
Total current liabilities 346.3 331.6
Long-term debt 239.3 266.7
Other liabilities 55.5 49.1
Minority interest 0.5 -
Stockholders' equity 713.9 668.9
Total liabilities and
stockholders' equity $1,355.5 $1,316.3
-0-
ALLERGAN INC.
Net Sales by Division
Three Months Nine Months
in millions ended Sept. 30, ended Sept. 30,
1996 1995 1996 1995
Pharmaceuticals $102.7 $112.3 $308.8 $297.2
Surgical 46.9 47.5 134.5 136.0
Optical Lens Care 104.7 90.5 299.8 269.1
Total Eye Care 254.3 250.3 743.1 702.3
Skin Care 16.0 11.1 44.2 27.4
Botox 17.2 12.2 47.9 34.4
TOTAL NET SALES $287.5 $273.6 $835.2 $764.1
Domestic 41 pct 44 pct 41 pct 44 pct
International 59 pct 56 pct 59 pct 56 pct
CONTACT: Allergan, Irvine Jeff D'Eliscu 714/246-4636 (office) 714/675-9475 (home) |
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