Operating Results
“Furthermore, we are making excellent progress in preparing for the launch of GANFORT(R) in Europe and JUVEDERM(TM) in the United States.”
For the quarter ended June 30, 2006:
-- Allergan's total product net sales were $787.0 million, which
includes $128.3 million of product net sales acquired in
connection with the Inamed acquisition. Total product net
sales increased 33.2 percent, or 32.7 percent at constant
currency, compared to total product net sales in the second
quarter of 2005.
-- Pharmaceutical sales (excluding the product sales acquired in
connection with the Inamed acquisition) increased 16.0
percent, or 15.5 percent at constant currency, compared to
pharmaceutical sales in the second quarter of 2005.
Pharmaceutical sales increased 17.9 percent, or 17.4 percent
at constant currency, compared to pharmaceutical sales in the
second quarter of 2005 adjusted to exclude BOTOX(R) sales in
Japan as a result of Allergan's development and promotion
arrangement with GlaxoSmithKline (GSK). A reconciliation of
the adjustments made from pharmaceutical product net sales
reported in accordance with United States Generally Accepted
Accounting Principles (GAAP) to adjusted pharmaceutical
product net sales is contained in the financial tables of this
press release.
-- Allergan's reported diluted earnings per share were $0.49,
representing a 96 percent increase compared to reported
diluted earnings per share of $0.25 for the second quarter of
2005. In accordance with GAAP, Allergan began implementing
Statement of Financial Accounting Standards No. 123 (revised
2004), Shared-Based Payment (FAS 123R) in the first quarter of
2006. The reported $0.49 diluted earnings per share includes a
$0.05 per share expense related to the effect of expensing
stock options in accordance with FAS 123R and also includes
the following:
-- purchase accounting adjustments related to inventory and
acquired in-process research and development associated
with the Inamed acquisition;
-- merger-related integration and transition costs associated
with the Inamed acquisition;
-- amortization of acquired intangible assets associated with
the Inamed acquisition;
-- the incurrence of restructuring charges, primarily related
to the streamlining of Allergan's research and development
and select commercial activities throughout Europe and
certain one time termination benefits related to the
Inamed acquisition;
-- the incurrence of transition and duplicate operating
expenses related to the streamlining activities throughout
Europe mentioned above;
-- the incurrence of accrued costs for a previously disclosed
contingency involving non-income taxes in Brazil related
to a longstanding administrative matter for the payment of
certain sales taxes for years prior to 2000, which
Allergan management determined it is probable that the
Company could sustain a liability for unpaid taxes,
including interest and penalties; and
-- the effect of an unrealized loss on the mark-to-market
adjustment to foreign currency derivative instruments.
The items above included in diluted earnings per share total $57.1
million, which consist of $77.5 million pre-tax, less $20.4
million related to the provision for income taxes.
-- The pre-tax costs related to expensing stock options included
in our statement of operations for the three months ended June
30, 2006 are allocated as follows: $0.7 million to cost of
sales, $7.8 million to selling, general and administrative
expenses and $2.8 million to research and development
expenses. Allergan's results of operations for the comparable
three months ended June 24, 2005 do not include any costs
related to expensing stock options.
-- Amortization of acquired intangible assets is now reported on
a separate line in our statement of operations. This line
consists of both the amortization related to intangible assets
associated with the Inamed acquisition, as well as the
amortization of other intangible assets previously reported in
cost of sales, selling, general and administrative expenses,
and research and development expenses. To assist in
year-over-year comparisons, Allergan has provided the
historical detail of the previously reported amortization of
acquired intangible assets in the financial tables of this
press release. As a result of this change to the statement of
operations, Allergan will no longer report product gross
profit.
-- Allergan's adjusted diluted earnings per share were $0.86,
representing a 10.3 percent increase compared to adjusted
diluted earnings per share of $0.78 reported for the second
quarter of 2005. Adjusted diluted earnings per share of $0.86
includes a $0.05 per share expense related to the effect of
expensing stock options in accordance with FAS 123R. Adjusted
diluted earnings per share for the second quarter of 2006
excludes the items outlined above and a reconciliation of the
adjustments made from earnings per share reported in
accordance with GAAP to adjusted diluted earnings per share is
contained in the financial tables of this press release.
"We are very pleased with our continued strong sales and earnings growth in the second quarter across a broad range of our key products," said David E.I. Pyott, Allergan's Chairman of the Board and Chief Executive Officer. "Furthermore, we are making excellent progress in preparing for the launch of GANFORT(R) in Europe and JUVEDERM(TM) in the United States."
Product and Pipeline Update
During the second quarter of 2006:
-- On May 25, 2006, Allergan announced that it received the
license from the European Commission to market GANFORT(R) in
the European Union. GANFORT(R) is Allergan's
LUMIGAN(R)/timolol combination product (bimatoprost/timolol
ophthalmic solution) for the treatment of glaucoma, and is
indicated for the reduction of intraocular pressure (IOP) in
patients with open-angle glaucoma or ocular hypertension who
are insufficiently responsive to topical beta-blockers or
prostaglandin analogues. A fixed combination of bimatoprost
0.03% and timolol maleate 0.5%, GANFORT(R) offers powerful
IOP-lowering efficacy comparable to the free combination of
these two agents, and greater efficacy than either agent used
alone.
-- On June 5, 2006, Allergan announced that the United States
District Court for the Northern District of California ruled
in favor of Allergan, Inc. and Syntex (USA) LLC in a patent
infringement lawsuit against Apotex, Inc., Apotex Corp., and
Novex Pharma (the "Defendants"). In 2004, Allergan and Syntex
won a patent infringement trial against the Defendants, who
had filed an Abbreviated New Drug Application (ANDA) to market
a generic version of Allergan's non-steroidal
anti-inflammatory drug, ACULAR(R) (ketorolac tromethamine
ophthalmic solution) 0.5%. After remand from the United States
Court of Appeals for the Federal Circuit, and after a
rehearing of the matter, the court issued its opinion on June
2, 2006, finding that the Defendants' ANDA infringes U.S.
Patent No. 5,110,493 - owned by Syntex and licensed by
Allergan - and that the patent is valid and enforceable.
-- On June 5, 2006, Allergan announced approval by the U.S. Food
and Drug Administration (FDA) of the JUVEDERM(TM) dermal
filler gel family of products, a 'next generation' of
hyaluronic acid dermal fillers that provide a smooth,
long-lasting correction of facial wrinkles and folds.
-- On June 23, 2006, Allergan announced approval by the FDA of
the once-daily prescription eye drop LUMIGAN(R) (bimatoprost
ophthalmic solution) 0.03% as a first-line treatment for
elevated intraocular pressure associated with open-angle
glaucoma or ocular hypertension.
Outlook
For the full year of 2006:
-- Allergan is increasing:
-- Total product net sales guidance to between $2,865 million
and $3,005 million.
-- The expected range of pharmaceutical product net sales to
between $2,505 million and $2,605 million. Pharmaceutical
product net sales exclude sales of products acquired in
connection with the Inamed acquisition.
-- The expected range of LUMIGAN(R) sales to between $290
million and $310 million.
-- The expected range of RESTASIS(R) sales to between $280
million and $300 million.
-- The expected range of BOTOX(R) sales to between $910
million and $945 million (excludes BOTOX(R) sales in Japan
as a result of Allergan's development and promotion
arrangement with GSK). To assist in year-over-year
BOTOX(R) sales growth comparisons, Allergan has provided
2005 and 2004 quarterly BOTOX(R) net sales in Japan in the
financial tables of this press release.
-- All other product net sales guidance provided on May 3, 2006
remains unchanged.
-- Other revenue guidance remains unchanged at between $50
million and $60 million, which consists of other revenue
associated with the development and promotion arrangement with
GSK and other various contractual and royalty agreements.
-- Allergan is now providing full year guidance for amortization
of acquired intangible assets at approximately $20 million.
This guidance excludes the amortization of acquired intangible
assets associated with the Inamed acquisition. As discussed
earlier in this press release, amortization of acquired
intangible assets is now reported on a separate line in our
statement of operations. As a result of this change to the
statement of operations, Allergan will no longer provide
product gross profit guidance. Cost of sales ratio to product
net sales is expected to be between 17.5% and 18.0%.
-- Selling, General and Administrative ratio to product net sales
guidance has changed to between 41% and 42%.
-- Research and Development ratio to product net sales guidance
remains unchanged at approximately 16%.
-- Allergan is increasing adjusted diluted earnings per share
guidance to between $3.59 and $3.65, which includes a $0.20
per share expense related to the estimated effect of expensing
stock options in accordance with FAS 123R. Adjusted diluted
earnings per share guidance excludes non-GAAP adjustments to
adjusted diluted earnings per share, including the following
items:
-- purchase accounting adjustments related to inventory and
in-process research and development associated with the
Inamed acquisition;
-- merger-related integration and transition costs associated
with the Inamed acquisition;
-- amortization of acquired intangible assets associated with
the Inamed acquisition;
-- restructuring activities and transition and duplicate
operating expenses;
-- the resolution of uncertain tax positions due to
completion of the Internal Revenue Service examination for
tax years 2000 through 2002;
-- the favorable recovery of previously paid state income
taxes;
-- the reversal of estimated interest income and expense
related to previously paid state income taxes and tax
settlements;
-- the incurrence of accrued costs for a previously disclosed
contingency involving non-income taxes in Brazil; and
-- the effect of the unrealized gain/loss on the
mark-to-market adjustment to foreign currency derivative
instruments.
A reconciliation of the adjustments made from GAAP diluted
earnings per share guidance to adjusted diluted earnings per share
guidance is contained in the financial tables of this press
release.
-- Allergan currently estimates diluted shares outstanding to be
between approximately 149 million and 151 million.
-- Allergan's estimate for the effective tax rate on adjusted
earnings remains unchanged at approximately 28%.
For the third quarter of 2006, Allergan estimates:
-- Total product net sales between $770 million and $790 million
(which includes combined Allergan and Inamed product net
sales).
-- Adjusted diluted earnings per share between $0.92 and $0.94,
which includes a $0.05 per share expense related to the
estimated effect of expensing stock options in accordance with
FAS 123R discussed above. Adjusted diluted earnings per share
guidance excludes non-GAAP adjustments to adjusted diluted
earnings per share, including the following items:
-- purchase accounting adjustments related to inventory
associated with the Inamed acquisition;
-- merger related integration and transition costs associated
with the Inamed acquisition; and
-- amortization of acquired intangible assets associated with
the Inamed acquisition.
A reconciliation of the adjustments made from GAAP diluted earnings per share guidance to adjusted diluted earnings per share guidance is contained in the financial tables of this press release.
Forward-Looking Statements
In this press release, the statements regarding new product development, market potential, expected growth, efficiencies, costs and savings, the statements by Mr. Pyott 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 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 reforms; technological advances and patents obtained by competitors; 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 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; 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 "Risk Factors" in Allergan's 2005 Form 10-K and Allergan's Form 10-Q for the period ended March 31, 2006. 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 Department by calling 714-246-4636.
About Allergan, Inc.
With more than 55 years of experience providing high-quality, science-based products, Allergan, Inc., with headquarters in Irvine, California, discovers, develops and commercializes products in the ophthalmology, neurosciences, medical dermatology, medical aesthetics, obesity intervention and other specialty markets that deliver value to its customers, satisfy unmet medical needs, and improve patients' lives.
(R) Marks owned by Allergan, Inc.
ACULAR(R), a trademark of Roche Palo Alto LLC
JUVEDERM(TM) is a trademark of LEA Derm
ALLERGAN, INC.
Condensed Consolidated Statements of Operations and
Reconciliation of Non-GAAP Adjustments
(Unaudited)
Three months ended
--------------------------------
in millions, except per share amounts June 30, 2006
------------------------------------- --------------------------------
Non-GAAP
GAAP Adjustments Adjusted
------- --------------- --------
Revenues
Product net sales $787.0 $-- $787.0
Other revenues 14.7 -- 14.7
------- ------ --------
801.7 -- 801.7
Operating costs and expenses
Cost of sales 168.2 (24.4)(a)(b) 143.8
Selling, general and administrative 337.5 (6.0)(a)(c) 331.5
Research and development 140.3 (16.9)(a)(c)(d) 123.4
Amortization of acquired intangible
assets 24.8 (19.5)(e) 5.3
Restructuring charges 5.7 (5.7)(f) --
------- ------ --------
Operating income 125.2 72.5 197.7
Non-operating income (expense)
Interest income 12.3 -- 12.3
Interest expense (20.5) -- (20.5)
Unrealized (loss) gain on derivative
instruments, net (0.2) 0.2 (g) --
Other, net (4.5) 4.8 (h) 0.3
------- ------ --------
(12.9) 5.0 (7.9)
------- ------ --------
Earnings before income taxes and
minority interest 112.3 77.5 189.8
Provision for income taxes 37.8 20.4 (i) 58.2
Minority interest 0.3 -- 0.3
------- ------ --------
Net earnings $74.2 $57.1 $131.3
======= ====== ========
Net earnings per share:
Basic $0.49 $0.88
======= ========
Diluted $0.49 $0.86
======= ========
Weighted average number of common
shares outstanding:
Basic 150.0 150.0
Diluted 152.3 152.3
Selected ratios as a percentage of
product net sales
-------------------------------------
Selling, general and administrative 42.9% 42.1%
Research and development 17.8% 15.7%
Three months ended
----------------------------
in millions, except per share amounts June 24, 2005
----------------------------------------- ----------------------------
Non-GAAP
GAAP Adjustments Adjusted
------- ----------- --------
Revenues
Product net sales $591.0 $-- $591.0
Other revenues 3.6 -- 3.6
------- -------- --------
594.6 -- 594.6
Operating costs and expenses
Cost of sales 107.2 (0.3)(j) 106.9
Selling, general and administrative 245.1 (0.8)(k) 244.3
Research and development 90.7 (0.5)(k) 90.2
Amortization of acquired intangible
assets 5.1 -- 5.1
Restructuring charges 10.3 (10.3)(j) --
------- -------- --------
Operating income 136.2 11.9 148.1
Non-operating income (expense)
Interest income 6.1 -- 6.1
Interest expense (4.6) -- (4.6)
Unrealized (loss) gain on derivative
instruments, net 1.1 (1.1)(g) --
Other, net (0.7) -- (0.7)
------- -------- --------
1.9 (1.1) 0.8
------- -------- --------
Earnings before income taxes and minority
interest 138.1 10.8 148.9
Provision for income taxes 104.1 (59.5)(l) 44.6
Minority interest 0.6 -- 0.6
------- -------- --------
Net earnings $33.4 $70.3 $103.7
======= ======== ========
Net earnings per share:
Basic $0.26 $0.80
======= ========
Diluted $0.25 $0.78
======= ========
Weighted average number of common shares
outstanding:
Basic 130.4 130.4
Diluted 132.2 132.2
Selected ratios as a percentage of
product net sales
-----------------------------------------
Selling, general and administrative 41.5% 41.3%
Research and development 15.3% 15.3%
(a) Integration and transition costs related to the acquisition of
Inamed, consisting of Cost of sales of $0.4 million, Selling,
general and administrative expense of $4.7 million and Research
and development expense of $0.2 million
(b) Inamed fair-market value inventory adjustment roll out of $24.0
million
(c) Transition/duplicate operating expenses, consisting of Selling,
general and administrative expense of $1.3 million and Research
and development expense of $0.2 million
(d) In-process research and development charge of $16.5 million
related to the acquisition of Inamed
(e) Amortization of acquired intangible assets
(f) Restructuring charge
(g) Unrealized gain (loss) on the mark-to-market adjustment to
derivative instruments
(h) Accrued costs for a previously disclosed contingency involving
non-income taxes in Brazil
(i) Tax effect for non-GAAP adjustments
(j) Restructuring charge and related inventory write-offs
(k) Transition/duplicate operating expenses
(l) 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 $10.8 million $(0.9)
Extraordinary dividends of $674 million under the American
Jobs Creation Act of 2004 32.8
Additional repatriation of foreign earnings of $85.4 million
above extraordinary dividends amount 27.6
-------
$59.5
=======
"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 months ended June 30, 2006 and
June 24, 2005. 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.
Six months ended
------------------------------------
in millions, except per share June 30, 2006
amounts
--------------------------------- ------------------------------------
Non-GAAP
GAAP Adjustments Adjusted
--------- ---------------- ---------
Revenues
Product net sales $1,402.2 $-- $1,402.2
Other revenues 25.2 -- 25.2
--------- ------- ---------
1,427.4 -- 1,427.4
Operating costs and expenses
Cost of sales 265.5 (24.5)(a)(b) 241.0
Selling, general and
administrative 611.4 (15.2)(a)(c) 596.2
Research and development 809.7 (579.9)(a)(c)(d) 229.8
Amortization of acquired
intangible assets 29.9 (19.5)(e) 10.4
Restructuring charges 8.5 (8.5)(f) --
--------- ------- ---------
Operating (loss) income (297.6) 647.6 350.0
Non-operating income (expense)
Interest income 21.5 4.9 (g) 26.4
Interest expense (28.3) (0.6)(g) (28.9)
Unrealized (loss) gain on
derivative instruments, net (1.2) 1.2 (h) --
Other, net (5.2) 4.8 (i) (0.4)
--------- ------- ---------
(13.2) 10.3 (2.9)
--------- ------- ---------
(Loss) earnings before income
taxes and minority interest (310.8) 657.9 347.1
Provision for income taxes 59.7 41.4 (j) 101.1
Minority interest 0.1 -- 0.1
--------- ------- ---------
Net (loss) earnings $(370.6) $616.5 $245.9
========= ======= =========
Net (loss) earnings per share:
Basic $(2.60) $1.72
========= =========
Diluted $(2.60) $1.69
========= =========
Weighted average number of common
shares outstanding:
Basic 142.6 142.6
Diluted 142.6 145.9
Selected ratios as a percentage
of product net sales
---------------------------------
Selling, general and
administrative 43.6% 42.5%
Research and development 57.7% 16.4%
Six months ended
----------------------------------
in millions, except per share June 24, 2005
amounts
----------------------------------- ----------------------------------
Non-GAAP
GAAP Adjustments Adjusted
--------- -------------- ---------
Revenues
Product net sales $1,118.2 $-- $1,118.2
Other revenues 6.5 -- 6.5
--------- ----------- ---------
1,124.7 -- 1,124.7
Operating costs and expenses
Cost of sales 200.1 (0.3)(k) 199.8
Selling, general and
administrative 458.1 (1.0)(l) 457.1
Research and development 172.0 (0.6)(l) 171.4
Amortization of acquired
intangible assets 7.2 -- 7.2
Restructuring charges 37.7 (37.7)(k) --
--------- ----------- ---------
Operating (loss) income 249.6 39.6 289.2
Non-operating income (expense)
Interest income 11.6 (0.1)(m) 11.5
Interest expense (9.1) -- (9.1)
Unrealized (loss) gain on
derivative instruments, net 1.2 (1.2)(h) --
Other, net 3.8 (3.5)(m) 0.3
--------- ----------- ---------
7.5 (4.8) 2.7
--------- ----------- ---------
(Loss) earnings before income taxes
and minority interest 257.1 34.8 291.9
Provision for income taxes 143.3 (57.0)(n) 86.3
Minority interest 0.5 -- 0.5
--------- ----------- ---------
Net (loss) earnings $113.3 $91.8 $205.1
========= =========== =========
Net (loss) earnings per share:
Basic $0.87 $1.57
========= =========
Diluted $0.86 $1.55
========= =========
Weighted average number of common
shares outstanding:
Basic 130.8 130.8
Diluted 132.4 132.4
Selected ratios as a percentage of
product net sales
-----------------------------------
Selling, general and administrative 41.0% 40.9%
Research and development 15.4% 15.3%
(a) Integration and transition costs related to the acquisition of
Inamed, consisting of Cost of sales of $0.5 million, Selling,
general and administrative expense of $9.7 million and Research
and development expense of $0.2 million
(b) Inamed fair-market value inventory adjustment roll out of $24.0
million
(c) Transition/duplicate operating expenses, consisting of Selling,
general and administrative expense of $5.5 million and Research
and development expense of $0.4 million
(d) In-process research and development charge of $579.3 million
related to the acquisition of Inamed
(e) Amortization of acquired intangible assets
(f) Restructuring charge
(g) Reversal of interest income on previously paid state income taxes
and reversal of interest expense related to the resolution of
uncertain tax positions
(h) Unrealized gain (loss) on the mark-to-market adjustment to
derivative instruments
(i) Accrued costs for a previously disclosed contingency involving
non-income taxes in Brazil
(j) Resolution of uncertain tax positions and favorable recovery of
previously paid state income taxes of $15.7 million and the tax
effect for non-GAAP adjustments of $25.7 million
(k) Restructuring charge and related inventory write-offs
(l) Transition/duplicate operating expenses
(m) ISTA Vitrase collaboration fee
(n) 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 $34.8 million $(3.4)
Extraordinary dividends of $674 million under the American
Jobs Creation Act of 2004 32.8
Additional repatriation of foreign earnings of $85.4 million
above extraordinary dividends amount 27.6
-------
$57.0
=======
ALLERGAN, INC.
Condensed Consolidated Balance Sheets
(Unaudited)
June 30, December 31,
in millions 2006 2005
----------------------------------------------- --------- ------------
Assets
Cash and equivalents $895.2 $1,296.3
Trade receivables, net 356.4 246.1
Inventories 183.4 90.1
Other current assets 212.5 193.1
--------- ------------
Total current assets 1,647.5 1,825.6
Property, plant and equipment, net 566.1 494.0
Intangible assets, net 1,092.7 139.8
Goodwill, net 1,797.0 9.0
Other noncurrent assets 276.5 382.1
--------- ------------
Total assets $5,379.8 $2,850.5
========= ============
Liabilities and stockholders' equity
Notes payable $59.0 $169.6
Convertible notes, net of discount - 520.0
Accounts payable 132.6 92.3
Accrued expenses and income taxes 342.5 262.1
--------- ------------
Total current liabilities 534.1 1,044.0
Long-term debt 1,605.8 57.5
Other liabilities 373.0 182.1
Stockholders' equity 2,866.9 1,566.9
--------- ------------
Total liabilities and stockholders' equity $5,379.8 $2,850.5
========= ============
DSO 41 38
DOH 99 90
Cash, net of debt $(769.6) $549.2
Debt-to-capital percentage 36.7% 32.3%
ALLERGAN, INC.
Reconciliation of Diluted Earnings Per Share
(Unaudited)
in millions, except per share
amounts Three months ended Six months ended
--------------------------------- ------------------ -----------------
June 30, June 24, June 30, June 24,
2006 2005 2006 2005
--------- -------- -------- --------
Net earnings (loss), as reported $74.2 $33.4 $(370.6) $113.3
Non-GAAP pre-tax adjustments:
Restructuring charges (b) 5.7 10.6 8.5 38.0
Ista Vitrase collaboration -- -- -- (3.6)
Transition/duplicate operating
expenses 1.5 1.3 5.9 1.6
Unrealized (gain) loss on
derivative instruments 0.2 (1.1) 1.2 (1.2)
Interest related to previously
paid state income taxes and
income tax settlements -- -- 4.3 --
Inamed integration costs 5.3 -- 10.4 --
Accrued costs for a previously
disclosed contingency
involving non-income taxes in
Brazil 4.8 -- 4.8 --
In-process research and
development charge 16.5 -- 579.3 --
Inamed fair-value inventory
adjustment rollout 24.0 -- 24.0 --
Amortization of acquired
intangible assets 19.5 -- 19.5 --
--------- -------- -------- --------
151.7 44.2 287.3 148.1
Tax effect for above items (20.4) (0.9) (25.7) (3.4)
Tax effect of dividend
repatriation above base amount -- 60.4 -- 60.4
State income tax recovery -- -- (15.7) --
--------- -------- -------- --------
Adjusted diluted earnings $131.3 $103.7 $245.9 $205.1
Weighted average number of shares
issued 150.0 130.4 142.6 130.8
Net shares assumed issued using
the treasury stock method for
options and non-vested equity
shares and share units
outstanding during each period
based on average market price 1.4 1.3 1.7 1.1
Dilutive effect of assumed
conversion of convertible notes
outstanding 0.9 0.5 1.6 0.5
--------- -------- -------- --------
152.3 132.2 145.9 132.4
========= ======== ======== ========
Diluted earnings (loss) per
share, as reported $0.49 $0.25 $(2.60) $0.86
Effect of additional dilutive
shares (a) -- -- 0.06 --
Non-GAAP earnings per share
adjustments:
Restructuring charges (b) 0.03 0.07 0.05 0.25
In-process research and
development charge 0.11 -- 3.97 --
Inamed integration/merger
costs 0.02 -- 0.04 --
Amortization of acquired
intangible assets 0.08 -- 0.09 --
Inamed fair value inventory
roll out 0.11 -- 0.11 --
Accrued costs for a previously
disclosed contingency
involving non-income taxes in
Brazil 0.02 -- 0.02 --
Ista Vitrase collaboration -- -- -- (0.02)
Transition/duplicate operating
expenses -- 0.01 0.03 0.01
Unrealized (gain) loss on
derivative instruments -- (0.01) 0.01 (0.01)
Tax effect of dividend
repatriation above base
amount -- 0.46 -- 0.46
Interest related to previously
paid state income taxes and
income tax settlements -- -- 0.02 --
Income tax benefit from
resolution of uncertain tax
positions -- -- (0.12) --
State income tax recovery -- -- 0.01 --
--------- -------- -------- --------
Adjusted diluted earnings per
share $0.86 $0.78 $1.69 $1.55
========= ======== ======== ========
Year over year change 10.3% 9.0%
================== =================
(a) The number of shares used to calculate adjusted diluted earnings
per share includes the dilutive effect of outstanding stock
options and the assumed conversion of convertible notes.
(b) Including inventory write-offs of $0.3 million for the three and
six month periods ended June 24, 2005.
ALLERGAN, INC.
Supplemental Non-GAAP Information
(Unaudited)
Product net sales, as
reported
-----------------------
Three months
ended
---------------- $ change in net sales
June 30, June 24, ----------------------------
2006 2005 Total Performance Currency
-------- -------- ------- ----------- --------
in millions
-----------------------
Eye Care
Pharmaceuticals $379.2 $325.0 $54.2 $52.6 $1.6
Botox/Neuromodulator 248.4 212.5 35.9 34.5 1.4
Skin Care 31.1 30.4 0.7 0.7 --
-------- -------- ------- ----------- --------
Subtotal
Pharmaceuticals 658.7 567.9 90.8 87.8 3.0
Other (primarily
contract sales) -- 23.1 (23.1) (23.1) --
-------- -------- ------- ----------- --------
Total Specialty
Pharmaceuticals 658.7 591.0 67.7 64.7 3.0
Breast Aesthetics $64.6 $-- $64.6 $64.6 $--
Health 45.8 -- 45.8 45.8 --
Fillers 17.9 -- 17.9 17.9 --
-------- -------- ------- ----------- --------
Total Medical Devices 128.3 -- 128.3 128.3 --
Product net sales, as
reported $787.0 $591.0 $196.0 $193.0 $3.0
======== ======== ======= =========== ========
Alphagan P, Alphagan,
and Combigan $70.2 $64.3 $5.9 $5.6 $0.3
Lumigan 81.7 61.5 20.2 19.9 0.3
Other Glaucoma 4.2 4.4 (0.2) (0.3) 0.1
Restasis 65.6 46.3 19.3 19.3 --
Domestic 67.2% 67.0%
International 32.8% 33.0%
Percent change in net sales
-----------------------------
Total Performance Currency
-------- ----------- --------
Eye Care Pharmaceuticals 16.7% 16.2% 0.5%
Botox/Neuromodulator 16.9% 16.2% 0.7%
Skin Care 2.3% 2.3% NA
Subtotal Pharmaceuticals 16.0% 15.5% 0.5%
Other (primarily contract sales) (100.0)% (100.0)% NA
Total Specialty Pharmaceuticals 11.5% 11.0% 0.5%
Breast Aesthetics NA NA NA
Health NA NA NA
Fillers NA NA NA
Total Medical Devices NA NA NA
Product net sales, as reported 33.2% 32.7% 0.5%
Alphagan P, Alphagan, and Combigan 9.2% 8.8% 0.4%
Lumigan 32.7% 32.2% 0.5%
Other Glaucoma (4.4)% (5.6)% 1.2%
Restasis 41.8% 41.8% NA
Six months ended
------------------- $ change in net sales
June 30, June 24, ----------------------------
2006 2005 Total Performance Currency
--------- --------- ------- ----------- --------
in millions
---------------------
Eye Care
Pharmaceuticals $741.1 $623.0 $118.1 $119.6 $(1.5)
Botox/Neuromodulator 471.4 388.8 82.6 82.9 (0.3)
Skin Care 61.4 60.2 1.2 1.2 --
--------- --------- ------- ----------- --------
Subtotal
Pharmaceuticals 1,273.9 1,072.0 201.9 203.7 (1.8)
Other (primarily
contract sales) -- 46.2 (46.2) (46.2) --
--------- --------- ------- ----------- --------
Total Specialty
Pharmaceuticals 1,273.9 1,118.2 155.7 157.5 (1.8)
Breast Aesthetics $64.6 -- $64.6 $64.6 $--
Health 45.8 -- 45.8 45.8 --
Fillers 17.9 -- 17.9 17.9 --
--------- --------- ------- ----------- --------
Total Medical
Devices 128.3 -- 128.3 128.3 --
Product net sales, as
reported $1,402.2 $1,118.2 $284.0 $285.8 $(1.8)
========= ========= ======= =========== ========
Alphagan P, Alphagan,
and Combigan $141.2 $131.0 $10.2 $10.8 $(0.6)
Lumigan 154.5 123.5 31.0 31.9 (0.9)
Other Glaucoma 8.6 9.0 (0.4) (0.3) (0.1)
Restasis 131.7 83.6 48.1 48.0 0.1
Domestic 67.3% 67.0%
International 32.7% 33.0%
Percent change in net sales
-----------------------------
Total Performance Currency
-------- ----------- --------
Eye Care Pharmaceuticals 19.0% 19.2% (0.2)%
Botox/Neuromodulator 21.2% 21.3% (0.1)%
Skin Care 2.0% 2.0% NA
Subtotal Pharmaceuticals 18.8% 19.0% (0.2)%
Other (primarily contract sales) (100.0)% (100.0)% NA
Total Specialty Pharmaceuticals 13.9% 14.1% (0.2)%
Breast Aesthetics NA NA NA
Health NA NA NA
Fillers NA NA NA
Total Medical Devices NA NA NA
Product net sales, as reported 25.4% 25.6% (0.2)%
Alphagan P, Alphagan, and Combigan 7.8% 8.3% (0.5)%
Lumigan 25.1% 25.8% (0.7)%
Other Glaucoma (4.1)% (3.3)% (0.8)%
Restasis 57.5% 57.4% 0.1%
Adjusted total
pharmaceutical
product net sales
--------------------
Three months Three months ended
ended ------------------------------------
June 30, June 24, June 24, June 24,
2006 2005 2005 2005
as reported as reported adjustments as adjusted
------------ ------------ ----------- -----------
in millions (a)
--------------------
Eye Care
Pharmaceuticals $379.2 $325.0 $-- $325.0
Botox/Neuromodulator 248.4 212.5 (9.4) 203.1
Skin Care 31.1 30.4 -- 30.4
------------ ------------ ----------- -----------
Total pharmaceutical
product net sales $658.7 $567.9 $(9.4) $558.5
============ ============ =========== ===========
Change in adjusted net sales
----------------------------
$ %
-------------- -------------
in millions
-----------------------------------------
Eye Care Pharmaceuticals $54.2 16.7%
Botox/Neuromodulator 45.3 22.3%
Skin Care 0.7 2.3%
--------------
Total pharmaceutical product net sales $100.2 17.9%
==============
Six months Six months ended
ended -----------------------------------
June 30, June 24, June 24, June 24,
2006 2005 2005 2005
as reported as reported adjustments as adjusted
----------- ----------- ----------- -----------
in millions (a)
----------------------
Eye Care
Pharmaceuticals $741.1 $623.0 $-- $623.0
Botox/Neuromodulator 471.4 388.8 (17.3) 371.5
Skin Care 61.4 60.2 -- 60.2
----------- ----------- ----------- -----------
Total pharmaceutical
product net sales $1,273.9 $1,072.0 $(17.3) $1,054.7
=========== =========== =========== ===========
Change in adjusted net sales
----------------------------
$ %
-------------- -------------
in millions
-----------------------------------------
Eye Care Pharmaceuticals $118.1 19.0%
Botox/Neuromodulator 99.9 26.9%
Skin Care 1.2 2.0%
--------------
Total pharmaceutical product net sales $219.2 20.8%
==============
(a) Adjustments to total pharmaceutical product net sales consist of
Botox net sales in Japan in 2005 of $9.4 and $17.3 million for the
three and six month periods ended June 24, 2005, respectively.
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 also reported sales performance using the non-GAAP financial
measure of adjusted total pharmaceutical product net sales. Adjusted
total pharmaceutical product net sales represents reported sales
adjusted to exclude prior period net sales for Japan. Allergan shifted
to a third party license and distribution business model for its
operations in Japan in 2005 and accordingly has recorded no current
period pharmaceutical product net sales for the Japan operations.
Allergan uses adjusted total pharmaceutical product net sales 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
total pharmaceutical product net sales provides consistency in its
financial reporting and facilitates the comparison of net sales of
core business operations between its current, past and future periods.
Adjusted total pharmaceutical product net sales is one of the primary
indicators management uses for planning and forecasting in future
periods. Allergan also uses adjusted total pharmaceutical product net
sales for evaluating management performance for compensation purposes.
ALLERGAN, INC.
Reconciliation of GAAP Diluted Earnings (Loss) Per Share Guidance
To Adjusted Diluted Earnings Per Share Guidance
(Unaudited)
Quarter 3, 2006
---------------
Low High
------- -------
GAAP diluted earnings per share guidance (a) $0.65 $0.64
Purchase accounting adjustments related to
inventory 0.11 0.11
Amortization of acquired intangible assets 0.09 0.10
Inamed integration and transition costs 0.07 0.09
------- -------
Adjusted diluted earnings per share guidance $0.92 $0.94
======= =======
Fiscal 2006
---------------
Low High
------- -------
GAAP diluted loss per share guidance (a) $(1.08) $(1.08)
Effect of additional diluted shares (b) 0.02 0.02
In-process research and development charge 3.88 3.88
Purchase accounting adjustments related to
inventory 0.23 0.23
Amortization of acquired intangible assets 0.28 0.28
Restructuring charge 0.04 0.04
Inamed integration and transition costs 0.27 0.33
Transition/duplicate operating expenses 0.03 0.03
Interest related to previously paid state income
taxes and income tax settlements 0.02 0.02
Unrealized (gain) loss on derivative instruments (0.01) (0.01)
Income tax benefit from resolution of uncertain
tax positions (0.12) (0.12)
Accrued costs for a previously disclosed
contingency involving non-income taxes in
Brazil 0.02 0.02
State income tax recovery 0.01 0.01
------- -------
Adjusted diluted earnings per share guidance $3.59 $3.65
======= =======
(a) GAAP diluted earnings per share guidance excludes any potential
impact of future unrealized gains or losses on derivative
instruments and restructuring charges and transition/duplicate
operating expenses that may occur but that are not currently known
or determinable.
(b) The number of shares used to calculate adjusted diluted earnings
per share includes the dilutive effect of outstanding stock
options and the assumed conversion of convertible notes.
ALLERGAN, INC.
Supplemental Non-GAAP Information Regarding
Amortization of Intangible Assets
Summary of amounts reclassified from prior reporting periods
(Unaudited)
Amortization of Quarter Quarter Quarter Quarter Quarter
Intangible Assets ended ended ended ended ended
----------------------
(in millions) March 25, June 24, Sept. 30, Dec. 31, March 31,
2005 2005 2005 2005 2006
--------- -------- --------- -------- ---------
Cost of sales $(1.2) $(4.5) $(4.3) $(4.3) $(4.3)
SG&A (0.2) -- (0.1) (0.2) (0.1)
Research and
development (0.7) (0.6) (0.7) (0.7) (0.7)
Amortization of
intangible assets 2.1 5.1 5.1 5.2 5.1
--------- -------- --------- -------- ---------
Total $-- $-- $-- $-- $--
========= ======== ========= ======== =========
Supplemental Information Regarding Botox(R) Net Sales in Japan
(Unaudited)
Year ended
-------------------------
December 31, December 31,
2005 2004
------------ ------------
Japan Botox(R) Net Sales (in millions)
--------------------------------------------
Fiscal Quarter 1 $7.9 $6.4
Fiscal Quarter 2 9.4 8.3
Fiscal Quarter 3 10.1 8.3
Fiscal Quarter 4 11.4 9.5
------------ ------------
Total Year $38.8 $32.5
============ ============
Facebook
Twitter
LinkedIn
Delicious
Reddit
StumbleUpon
Digg
MySpace
Newsvine
Google Bookmark
Yahoo! Bookmark
