Allergan Reports Third Quarter 2009 Operating Results
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IRVINE, Calif.--(BUSINESS WIRE)-- Allergan, Inc. (NYSE: AGN) today announced operating results for the quarter ended September 30, 2009. Allergan also announced that its Board of Directors has declared a third quarter dividend of $0.05 per share, payable on November 30, 2009 to stockholders of record on November 9, 2009.
Operating Results Attributable to Stockholders
For the quarter ended September 30, 2009:
-- Allergan reported $0.58 diluted earnings per share attributable to
stockholders compared to $0.54 diluted earnings per share attributable
to stockholders reported for the third quarter of 2008.
-- Allergan's non-GAAP diluted earnings per share attributable to
stockholders were $0.70 in the third quarter of 2009, compared to
non-GAAP diluted earnings per share attributable to stockholders of
$0.65 in the third quarter of 2008, a 7.7 percent increase.
Product Sales
For the quarter ended September 30, 2009:
-- Allergan's total product net sales were $1,127.8 million. Total product
net sales increased 4.2 percent compared to total product net sales in
the third quarter of 2008. On a constant currency basis, total product
net sales increased 7.0 percent compared to total product net sales in
the third quarter of 2008.
o Total specialty pharmaceuticals net sales increased 7.8 percent, or
10.7 percent on a constant currency basis, compared to total specialty
pharmaceuticals net sales in the third quarter of 2008.
o Total medical devices net sales decreased 10.6 percent, or 8.3 percent
on a constant currency basis, compared to total medical devices net
sales in the third quarter of 2008.
"We are pleased with our continued operational performance during the third quarter as our businesses are performing better than was expected at the beginning of 2009," said David E.I. Pyott, Allergan's Chairman of the Board and Chief Executive Officer. "With this strength in our businesses, we made the strategic decision to invest in increased Direct to Consumer advertising programs in the U.S. as we anticipate recovery from the recession. We are also pleased that we filed, with the U.S. Food and Drug Administration (FDA), BOTOX(R) (onabotulinumtoxinA) for chronic migraine as well as for upper limb spasticity."
Product and Pipeline Update
During the third quarter of 2009:
-- On July 7, 2009, a joint venture was created in Korea with Samil
Pharmaceutical Co. Ltd. following decades of partnership to establish a
leading position in ophthalmic pharmaceuticals.
-- On July 7, 2009, Senju Pharmaceutical Co., Ltd received approval from
the Japanese Ministry of Health, Labour and Welfare for LUMIGAN(TM)
Ophthalmic Solution 0.03% for the treatment of glaucoma or ocular
hypertension. Allergan and Senju had previously entered into an
exclusive licensing agreement in Japan to market and develop LUMIGAN
(TM)within the ophthalmic specialty area. Senju will pay Allergan a
royalty based on LUMIGAN(TM)sales in Japan.
-- On July 14, 2009, Allergan announced Korea Food and Drug Administration
(KFDA) approval of LATISSE(R) (bimatoprost ophthalmic solution) 0.03%, a
novel treatment for eyelash hypotrichosis, or inadequate eyelashes.
LATISSE(R) is the first and only science-based treatment approved by the
FDA and KFDA to enhance eyelash prominence as measured by increases in
length, thickness and darkness of eyelashes.
-- On July 23, 2009, Allergan announced FDA approval of ACUVAIL(TM)
(ketorolac tromethamine ophthalmic solution) 0.45%, an advanced,
preservative-free formulation of ketorolac, a nonsteroidal
anti-inflammatory drug indicated for the treatment of pain and
inflammation following cataract surgery.
-- On September 15, 2009, a collaboration agreement with Pieris AG was
announced that combines Pieris' proprietary Anticalin technology with
Allergan's expertise in drug delivery and ophthalmic drug development
with a goal of developing agents for the treatment of serious ocular
disorders.
-- On September 25, 2009, Allergan and Quintiles Transnational Corp.
announced an agreement under which Quintiles will co-promote Allergan's
SANCTURA XR(R) (trospium chloride extended release capsules), an
anticholinergic approved for the treatment of overactive bladder,
predominantly to primary care physicians in the United States.
-- Allergan filed a supplemental Biologics License Application (sBLA) with
the FDA for the use of BOTOX(R) (onabotulinumtoxinA) to treat chronic
migraine.
-- Allergan submitted to the FDA the additional information requested by
the FDA in its complete response letter regarding Allergan's sBLA for
BOTOX(R) to treat upper limb spasticity.
-- Allergan filed a supplemental Premarket Approval application with the
FDA for the LAP-BAND(R) System to treat weight reduction for severely
obese adolescent patients (ages 14-17).
Following the end of the third quarter of 2009:
-- On October 1, 2009, Allergan filed a declaratory relief action in the
United States District Court for the District of Columbia to seek a
ruling that would allow the company to proactively share truthful and
relevant information with the medical community regarding the safe use
of BOTOX(R) for certain therapeutic off-label treatments.
-- On October 23, 2009, Allergan announced that the Committee for Medicinal
Products for Human Use recommended granting a Marketing Authorization
for LUMIGAN(R) (bimatoprost ophthalmic solution) 0.01% in the 27 member
states of the European Union.
-- On October 23, 2009, Allergan announced that the United States District
Court for the District of Delaware ruled in favor of Allergan, Inc. in
its patent infringement suit against Exela PharmSci, Inc., Exela
PharmSci Pvt., Ltd., Apotex, Inc. and Apotex Corp. (collectively, the
"Defendants") finding that the patents are valid and enforceable against
the Defendants and that the Defendants' proposed generic versions of
Allergan's ALPHAGAN(R) P (brimonidine tartrate ophthalmic solution) 0.1%
and 0.15% products infringe Allergan's patents. Pursuant to the
Hatch-Waxman Act, the FDA is required to delay approval of the
Defendants' proposed generic products until after Allergan's last
applicable patent expires in 2022.
-- Allergan filed a supplemental New Drug Application with the FDA for the
approval of OZURDEX(TM) (dexamethasone intravitreal implant) 0.7 mg to
treat non-infectious intermediate and posterior uveitis.
Outlook
For the full year of 2009, Allergan estimates:
-- Total product net sales between $4,350 million and $4,400 million.
o Total specialty pharmaceuticals net sales between $3,635 million and
$3,655 million.
o Total medical devices net sales between $715 million and $745 million.
o ALPHAGAN(R)franchise product net sales between $380 million and $390
million.
o LUMIGAN(R)franchise product netsales between $450 million and $460
million.
o RESTASIS(R) product netsales between $500 million and $510 million.
o SANCTURA(R) franchise product netsales at approximately $70 million.
o BOTOX(R) product netsales between $1,280 million and $1,290 million.
o LATISSE(R) product netsales at approximately $70 million.
o Breast aestheticsproduct netsales between $270 million and $280
million.
o Obesity intervention product netsales between $245 million and $255
million.
o Facial aesthetics product netsales between $200 million and $210
million.
-- Non-GAAP cost of sales to product net sales ratio between 16.5% and
17.0%.
-- Other revenue at approximately $60 million.
-- Non-GAAP selling, general and administrative expenses to product net
sales ratio between 40% and 41%.
-- Non-GAAP research and development expenses to product net sales ratio
between 15% and 16%.
-- Non-GAAP amortization of acquired intangible assets at approximately $20
million. This guidance excludes the amortization of acquired intangible
assets associated with the Inamed, Corneal, EndoArt, Esprit, and Samil
acquisitions and the ACZONE(R) asset purchase.
-- Non-GAAP diluted earnings per share attributable to stockholders
guidance between $2.75 and $2.77.
-- Diluted shares outstanding between approximately 304 million and 306
million.
-- Effective tax rate on non-GAAP earnings between 28% and 29%.
For the fourth quarter of 2009, Allergan estimates:
-- Total product net sales between $1,110 million and $1,160 million.
-- Non-GAAP diluted earnings per share attributable to stockholders
guidance between $0.75 and $0.77.
On January 1, 2009, Allergan adopted the update to Financial Accounting Standards Board (FASB) guidance related to the accounting for convertible debt instruments that may be settled fully or partially in cash upon conversion, which requires retrospective application to prior periods. The impact from the adoption of this guidance on the previously reported GAAP results for the third quarter and first nine months of 2008 was a reduction of diluted earnings per share attributable to stockholders of $0.01 and $0.03, respectively, from the amounts previously reported. Non-GAAP diluted earnings per share attributable to stockholders for the third quarter and first nine months of 2008 were not impacted.
Historical non-GAAP basic and diluted earnings per share attributable to stockholders and guidance amounts for non-GAAP diluted earnings per share attributable to stockholders, non-GAAP cost of sales, non-GAAP selling, general and administrative expenses, non-GAAP research and development expenses, non-GAAP amortization of acquired intangible assets as well as non-GAAP net sales reported in constant currency are each reconciled to the most directly comparable GAAP financial measure in the financial tables of this press release and the accompanying footnotes. The reconciliation for the guidance amounts in the financial tables includes historical non-GAAP adjustments and an estimate of the future effect from amortization of acquired intangible assets and non-cash interest expense associated with amortization of convertible debt discount.
All prior period information in the financial tables of this press release has been retrospectively adjusted to reflect the impact of the adoptions in the first quarter of 2009 of updates to FASB guidance related to the accounting for convertible debt instruments that may be settled fully or partially in cash upon conversion and the accounting and financial reporting of noncontrolling ownership interests in subsidiaries held by parties other than the parent.
Forward-Looking Statements
In this press release, the statements regarding product development, market potential, expected growth, anticipated product filings, approvals and labeling, the statements by Mr. Pyott as well as Allergan's earnings per share, product net sales, revenue forecasts and any other statements that refer to Allergan's expected, estimated or anticipated future results, 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 the end of the applicable reporting period. 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.
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 the following: changing competitive, market and regulatory conditions; the timing and uncertainty of the results of both the R&D and regulatory processes; domestic and foreign health care and cost containment reforms, including government pricing and reimbursement policies; 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 litigation, 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, U.S. and international economic conditions, including higher unemployment, financial hardship, consumer confidence and debt levels, taxation, changes in interest and currency exchange rates, international relations, capital and credit availability, the status of financial markets and institutions, as well as the general impact of the current economic crisis, 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 2008 Form 10-K and Allergan's Forms 10-Q for the quarters ended March 31, 2009 and June 30, 2009. 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.
Founded in 1950, Allergan, Inc., with headquarters in Irvine, California, is a multi-specialty health care company that discovers, develops and commercializes innovative pharmaceuticals, biologics and medical devices that enable people to live life to its greatest potential - to see more clearly, move more freely, express themselves more fully. The Company employs more than 8,000 people worldwide and operates state-of-the-art R&D facilities and world-class manufacturing plants. In addition to its discovery-to-development research organization, Allergan has global marketing and sales capabilities with a presence in more than 100 countries.
(R) and (TM) Marks owned by Allergan, Inc.
ALLERGAN, INC.
Condensed Consolidated Statements of Earnings and
Reconciliation of Non-GAAP Adjustments
(Unaudited)
Three months ended
In millions,
except per September 30, 2009 September 30, 2008
share amounts
GAAP Non-GAAP Non-GAAP GAAP Non-GAAP Non-GAAP
Adjustments Adjustments
Revenues
Product net $1,127.8 $ -- $1,127.8 $1,081.9 $ -- $1,081.9
sales
Other revenues 13.5 -- 13.5 16.3 -- 16.3
1,141.3 -- 1,141.3 1,098.2 -- 1,098.2
Operating
costs and
expenses
Cost of sales
(excludes
amortization
of 190.2 (3.6) (a) 186.6 194.7 (4.6) (n) 190.1
(b)
acquired
intangible
assets)
(b) (n)
Selling, (c) (o)
general and 497.5 (27.2) (d) 470.3 440.4 (6.3) (p) 434.1
administrative (e) (q)
(f)
Research and 176.9 (10.2) (c) 166.7 186.6 (6.4) (n) 180.2
development (g) (r)
Amortization
of acquired 36.0 (30.5) (h) 5.5 39.3 (33.8) (h) 5.5
intangible
assets
Restructuring 4.2 (4.2) (i) -- (0.2) 0.2 (i) --
charges
Operating 236.5 75.7 312.2 237.4 50.9 288.3
income
Non-operating
income
(expense)
Interest 1.4 -- 1.4 6.5 -- 6.5
income
Interest (17.8) 6.0 (j) (11.8) (20.8) 6.3 (j) (14.5)
expense
Unrealized
(loss) gain on
derivative (2.7) 2.7 (k) -- 7.9 (7.9) (k) --
instruments,
net
Gain on
investments, 24.6 (24.6) (l) -- -- -- --
net
Other, net (9.7) -- (9.7) 2.0 -- 2.0
(4.2) (15.9) (20.1) (4.4) (1.6) (6.0)
Earnings
before income 232.3 59.8 292.1 233.0 49.3 282.3
taxes
Provision for 53.1 23.4 (m) 76.5 67.0 14.3 (s) 81.3
income taxes
Net earnings 179.2 36.4 215.6 166.0 35.0 201.0
Net earnings
attributable
to 0.2 -- 0.2 0.6 -- 0.6
noncontrolling
interest
Net earnings
attributable $179.0 $36.4 $215.4 $165.4 $35.0 $200.4
to Allergan,
Inc.
Net earnings
per share
attributable
to Allergan,
Inc.
stockholders:
Basic $ 0.59 $ 0.71 $ 0.54 $ 0.66
Diluted $ 0.58 $ 0.70 $ 0.54 $ 0.65
Weighted
average number
of common
shares
outstanding:
Basic 303.5 303.5 303.8 303.8
Diluted 306.0 306.0 306.3 306.3
Selected
ratios as a
percentage of
product net
sales
Cost of sales
(excludes
amortization 16.9% 16.5% 18.0% 17.6%
of acquired
intangible
assets)
Selling,
general and 44.1% 41.7% 40.7% 40.1%
administrative
Research and 15.7% 14.8% 17.2% 16.7%
development
Rollout of retention termination benefits and accelerated depreciation
(a) costs capitalized in inventory related to the phased closure of the Arklow,
Ireland breast implant manufacturing facility of $2.8 million
Samil fair market value inventory adjustment rollout of $0.8 million
(b) included in cost of sales and transaction related costs of $0.2 million
included in selling, general and administrative expenses
Compensation expense from stock option modifications related to the
(c) restructuring plan announced in February 2009 of $0.7 million, consisting
of selling, general and administrative expenses of $0.5 million and
research and development expenses of $0.2 million
(d) Accelerated depreciation costs related to the 2009 restructuring plan of
$0.1 million
External costs of approximately $8.4 million associated with responding to
(e) the U.S. Department of Justice (DOJ) subpoena announced in a company press
release on March 3, 2008
(f) Contribution to Allergan Foundation of $18.0 million
(g) Upfront payment of $10.0 million for a license and development agreement
with Pieris AG for technology that has not achieved regulatory approval
(h) Amortization of acquired intangible assets related to business combinations
and asset acquisitions
(i) Net restructuring charges
(j) Non-cash interest expense associated with amortization of convertible debt
discount
(k) Unrealized (loss) gain on the mark-to-market adjustment to derivative
instruments
(l) Net gain on sale of investments
(m) 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 $59.8 million $(16.7)
Foreign R&D tax credits received for tax years prior to 2008 (6.7)
$(23.4)
One-time termination benefits and rollout of retention termination benefits
and accelerated depreciation costs capitalized in inventory related to the
(n) phased closure of the Arklow, Ireland breast implant manufacturing facility
of $4.8 million, consisting of cost of sales of $4.6 million, selling,
general and administrative expenses of $0.1 million and research and
development expenses of $0.1 million
(o) Integration and transition costs related to the acquisitions of Esprit and
Corneal of $0.1 million
(p) External costs of approximately $6.7 million associated with responding to
DOJ subpoena and ACZONE transaction costs of $0.3 million
Gain on sale of technology and fixed assets of $0.9 million related to the
(q) phased closure of the collagen manufacturing facility in Fremont,
California
(r) Upfront payment of $6.3 million for in-licensing of Asterand technology
that has not achieved regulatory approval
(s) Total tax effect for non-GAAP pre-tax adjustments.
"GAAP" refers to financial information presented in accordance with generally accepted accounting principles in the United States.
This press release includes non-GAAP financial measures, as defined in Regulation G promulgated by the Securities and Exchange Commission, with respect to the three and nine months ended September 30, 2009 and September 30, 2008 and with respect to anticipated results for the fourth quarter and full year of 2009. Allergan believes that its presentation of non-GAAP financial measures provides useful supplementary information to investors regarding its operational performance because it enhances an investor's overall understanding of the financial performance and prospects for the future of Allergan's core business activities by providing a basis for the comparison of results of core business operations between current, past and future periods. The presentation of historical non-GAAP financial measures is not meant to be considered in isolation from or as a substitute for results as reported under GAAP.
In this press release, Allergan reported the non-GAAP financial measures "non-GAAP earnings attributable to Allergan, Inc." and "non-GAAP basic and diluted earnings per share attributable to Allergan, Inc. stockholders" as well as "non-GAAP cost of sales," "non-GAAP selling, general and administrative expenses," "non-GAAP research and development expenses," "non-GAAP amortization of acquired intangible assets," "non-GAAP restructuring charges," "non-GAAP operating income," "non-GAAP interest expense," "non-GAAP unrealized (loss) gain on derivative instruments," "non-GAAP gain on investments, net," "non-GAAP earnings before income taxes" and "non-GAAP provision for income taxes." Allergan uses non-GAAP earnings to enhance the investor's overall understanding of the financial performance and prospects for the future of Allergan's core business activities. Non-GAAP earnings is one of the primary indicators management uses for planning and forecasting in future periods, including trending and analyzing the core operating performance of Allergan's business from period to period without the effect of the non-core business items indicated. Management uses non-GAAP earnings to prepare operating budgets and forecasts and to measure Allergan's performance against those budgets and forecasts on a corporate and segment level. Allergan also uses non-GAAP earnings for evaluating management performance for compensation purposes.
Despite the importance of non-GAAP earnings in analyzing Allergan's underlying business, the budgeting and forecasting process and designing incentive compensation, non-GAAP earnings has no standardized meaning defined by GAAP. Therefore, non-GAAP earnings has limitations as an analytical tool, and should not be considered in isolation, or as a substitute for analysis of Allergan's results as reported under GAAP. Some of these limitations are:
-- it does not reflect cash expenditures, or future requirements, for
expenditures relating to restructurings, and certain acquisitions,
including severance and facility transition costs associated with
acquisitions;
-- it does not reflect gains or losses on the disposition of assets
associated with restructuring and business exit activities;
-- it does not reflect the tax benefit or tax expense associated with the
items indicated;
-- it does not reflect the impact on earnings of charges resulting from
certain matters Allergan considers not to be indicative of its on-going
operations; and
-- other companies in Allergan's industry may calculate non-GAAP earnings
differently than it does, which may limit its usefulness as a
comparative measure.
Allergan compensates for these limitations by using non-GAAP earnings only to supplement net earnings on a basis prepared in conformance with GAAP in order to provide a more complete understanding of the factors and trends affecting its business. Allergan strongly encourages investors to consider both net earnings and cash flows determined under GAAP as compared to non-GAAP earnings, and to perform their own analysis, as appropriate.
Allergan uses the financial measures non-GAAP basic and diluted earnings per share attributable to Allergan, Inc. stockholders and non-GAAP earnings attributable to Allergan, Inc. and its subcomponents non-GAAP cost of sales, non-GAAP selling, general and administrative expenses, non-GAAP research and development expenses, non-GAAP amortization of acquired intangible assets, and non-GAAP provision for income taxes, for its full year 2009 guidance to provide a more complete understanding of the cost components affecting its business. Allergan includes these financial measures in the determination of non-GAAP earnings to evaluate its management's performance for compensation purposes and to assist in comparing certain of its costs to its competitors' costs. These non-GAAP cost measures do not take into account the non-core business items removed in its calculations of non-GAAP earnings and non-GAAP basic and diluted earnings per share and, therefore, are subject to the same limitations discussed above. Allergan strongly encourages investors to consider both cost of sales, selling, general and administrative expenses, research and development expenses, amortization of acquired intangible assets and provision for income taxes determined under GAAP as compared to the non-GAAP amounts included in this press release.
In this press release, Allergan also 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.
Reporting sales performance using constant currency sales has the limitation of excluding currency effects from the comparison of sales results over various periods, even though the effect of changing foreign currency exchange rates has an actual effect on Allergan's operating results. Investors should consider these effects in their overall analysis of Allergan's operating results.
ALLERGAN, INC.
Condensed Consolidated Statements of Earnings and
Reconciliation of Non-GAAP Adjustments
(Unaudited)
Nine months ended
In millions,
except per September 30, 2009 September 30, 2008
share amounts
GAAP Non-GAAP Non-GAAP GAAP Non-GAAP Non-GAAP
Adjustments Adjustments
Revenues
Product net $3,241.1 $ -- $3,241.1 $3,298.7 $ -- $3,298.7
sales
Other revenues 38.2 -- 38.2 48.1 -- 48.1
3,279.3 -- 3,279.3 3,346.8 -- 3,346.8
Operating
costs and
expenses
Cost of sales
(excludes
amortization (a) (p)
of 566.3 (20.2) (c) 546.1 574.4 (16.5) (q) 557.9
(e) (r)
acquired
intangible
assets)
(a)
Selling, (b) (q)
general and 1,423.9 (97.2) (d) 1,326.7 1,429.5 (18.1) (r) 1,411.4
administrative (e) (s)
(f) (t)
(g)
Research and (a) (q)
development 520.6 (30.9) (c) 489.7 582.9 (20.5) (u) 562.4
(h) (v)
Amortization
of acquired 110.1 (93.7) (i) 16.4 110.0 (94.2) (i) 15.8
intangible
assets
Restructuring 47.3 (47.3) (j) -- 37.6 (37.6) (j) --
charges
Operating 611.1 289.3 900.4 612.4 186.9 799.3
income
Non-operating
income
(expense)
Interest 5.6 -- 5.6 28.0 -- 28.0
income
Interest (55.7) 18.4 (k) (37.3) (63.3) 18.6 (k) (44.7)
expense
Unrealized
(loss) gain on
derivative (17.2) 17.2 (l) -- 4.4 (4.4) (l) --
instruments,
net
Gain on
investments, 24.6 (24.6) (m) -- -- -- --
net
Other, net (15.7) 5.3 (n) (10.4) (9.1) -- (9.1)
(58.4) 16.3 (42.1) (40.0) 14.2 (25.8)
Earnings
before income 552.7 305.6 858.3 572.4 201.1 773.5
taxes
Provision for 151.7 93.7 (o) 245.4 154.7 60.9 (w) 215.6
income taxes
Net earnings 401.0 211.9 612.9 417.7 140.2 557.9
Net earnings
attributable
to 1.2 -- 1.2 1.2 -- 1.2
noncontrolling
interest
Net earnings
attributable $399.8 $211.9 $611.7 $416.5 $140.2 $556.7
to Allergan,
Inc.
Net earnings
per share
attributable
to Allergan,
Inc.
stockholders:
Basic $ 1.32 $ 2.01 $ 1.37 $ 1.83
Diluted $ 1.31 $ 2.00 $ 1.36 $ 1.81
Weighted
average number
of common
shares
outstanding:
Basic 303.7 303.7 304.4 304.4
Diluted 305.4 305.4 307.2 307.2
Selected
ratios as a
percentage of
product net
sales
Cost of sales
(excludes
amortization 17.5% 16.8% 17.4% 16.9%
of acquired
intangible
assets)
Selling,
general and 43.9% 40.9% 43.3% 42.8%
administrative
Research and 16.1% 15.1% 17.7% 17.0%
development
Compensation expense from stock option modifications related to the
restructuring plan announced in February 2009 of $78.3 million, consisting
(a) of cost of sales of $5.0 million, selling, general and administrative
expenses of $52.5 million and research and development expenses of $20.8
million
(b) Asset impairments and accelerated depreciation costs related to the 2009
restructuring plan of $2.3 million
Rollout of retention termination benefits and accelerated depreciation
costs capitalized in inventory of $14.4 million included in cost of sales
(c) and one-time termination benefits of $0.1 million included in research and
development expenses related to the phased closure of the Arklow, Ireland
breast implant manufacturing facility
(d) External costs of approximately $23.6 million associated with responding to
DOJ subpoena
Samil fair market value inventory adjustment rollout of $0.8 million
(e) included in cost of sales and transaction related costs of $0.4 million
included in selling, general and administrative expenses
(f) Integration and transition costs related to the acquisition of Corneal of
$0.4 million
(g) Contribution to Allergan Foundation of $18.0 million
(h) Upfront payment of $10.0 million for a license and development agreement
with Pieris AG for technology that has not achieved regulatory approval
(i) Amortization of acquired intangible assets related to business combinations
and asset acquisitions
(j) Net restructuring charges
(k) Non-cash interest expense associated with amortization of convertible debt
discount
(l) Unrealized (loss) gain on the mark-to-market adjustment to derivative
instruments
(m) Net gain on sale of investments
(n) Loss on extinguishment of convertible debt
(o) 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 $305.6 million $(96.3)
Change in estimated taxes related to pre-acquisition periods
associated with business combinations and uncertain tax positions 2.6
included in prior year filings, and foreign R&D tax credits received
for tax years prior to 2008
$(93.7)
(p) Esprit fair market value inventory rollout adjustment of $11.7 million
One-time termination benefits, asset impairments and rollout of retention
termination benefits and accelerated depreciation costs capitalized in
(q) inventory related to the phased closure of the Arklow, Ireland breast
implant manufacturing facility of $5.8 million, consisting of cost of sales
of $4.7 million, selling, general and administrative expenses of $0.8
million and research and development expenses of $0.3 million
Integration and transition costs related to the acquisitions of Esprit and
(r) Corneal, consisting of cost of sales of $0.1 million and selling, general
and administrative expenses of $1.9 million
(s) External costs of approximately $15.7 million associated with responding to
DOJ subpoena and ACZONE transaction costs of $0.6 million
Gain on sale of technology and fixed assets of $0.9 million related to the
(t) phased closure of the collagen manufacturing facility in Fremont,
California
(u) Upfront payment of $13.9 million for in-licensing of Canadian Sanctura
product rights that have not achieved regulatory approval
(v) Upfront payment of $6.3 million for in-licensing of Asterand technology
that has not achieved regulatory approval
(w) 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 $201.1 million $(58.5)
US state and federal deferred tax benefit from legal entity (2.4)
integration of Esprit and Inamed
$(60.9)
ALLERGAN, INC.
Condensed Consolidated Balance Sheets
(Unaudited)
September 30, December 31,
in millions
2009 2008
Assets
Cash and equivalents $1,698.6 $1,110.4
Trade receivables, net 574.8 538.4
Inventories 229.5 262.5
Other current assets 318.3 359.3
Total current assets 2,821.2 2,270.6
Property, plant and equipment, net 785.2 775.4
Intangible assets, net 1,391.7 1,491.9
Goodwill 2,000.1 1,981.8
Other noncurrent assets 264.8 272.1
Total assets $7,263.0 $6,791.8
Liabilities and equity
Notes payable $ 16.3 $ 4.4
Accounts payable 229.6 173.9
Accrued expenses and income taxes 510.5 518.7
Total current liabilities 756.4 697.0
Long-term debt 1,492.8 1,570.5
Other liabilities 446.6 471.8
Equity:
Allergan, Inc. stockholders' equity 4,546.9 4,050.7
Noncontrolling interest 20.3 1.8
Total equity 4,567.2 4,052.5
Total liabilities and equity $7,263.0 $6,791.8
DSO 47 47
DOH 110 128
Cash and equivalents $1,698.6 $1,110.4
Total notes payable and long-term debt (1,509.1) (1,574.9)
Cash, net of debt $ 189.5 $ (464.5)
Debt-to-capital percentage 24.8% 28.0%
ALLERGAN, INC.
Reconciliation of Non-GAAP Earnings and Diluted Earnings Per
Share Attributable to Allergan, Inc. Stockholders
(Unaudited)
In millions, except per share amounts Three months ended
September 30, 2009 September 30, 2008
Net earnings attributable to Allergan, $ 179.0 $ 165.4
Inc.
Non-GAAP pre-tax adjustments:
Net restructuring charges 4.2 (0.2 )
Amortization of acquired intangible 30.5 33.8
assets
External costs associated with 8.4 6.7
responding to DOJ subpoena
Upfront payment for in-licensing of
Asterand technology that has not
achieved regulatory approval -- 6.3
ACZONE transaction costs -- 0.3
Corneal integration and transition costs -- 0.2
Esprit integration and transition costs -- (0.1 )
Arklow rollout of retention termination
benefits and accelerated
depreciation costs capitalized in
inventory and other one-time
termination benefits 2.8 4.8
Non-cash interest expense associated
with amortization of convertible
debt discount 6.0 6.3
Gain on sale of technology and fixed
assets related to the phased
closure of the collagen manufacturing -- (0.9 )
facility in Fremont, California
Samil fair market value inventory
adjustment rollout and transaction
related costs 1.0 --
Net gain on sale of investments (24.6 ) --
Contribution to Allergan Foundation 18.0 --
Upfront payment for a license and
development agreement with Pieris
AG for technology that has not achieved 10.0 --
regulatory approval
Compensation expense from stock option
modifications related to the
2009 restructuring plan 0.7 --
Accelerated depreciation costs related 0.1 --
to the 2009 restructuring plan
Unrealized loss (gain) on derivative 2.7 (7.9 )
instruments
238.8 214.7
Tax effect for above items (16.7 ) (14.3 )
Foreign R&D tax credits received for tax (6.7 ) --
years prior to 2008
Non-GAAP earnings attributable to $ 215.4 $ 200.4
Allergan, Inc.
Weighted average number of shares issued 303.5 303.8
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 2.5 2.5
market price
306.0 306.3
Diluted earnings per share attributable $ 0.58 $ 0.54
to Allergan, Inc. stockholders
Non-GAAP earnings per share adjustments:
Net restructuring charges 0.01 --
Amortization of acquired intangible 0.06 0.07
assets
External costs associated with 0.02 0.01
responding to DOJ subpoena
Upfront payment for in-licensing of
Asterand technology that has not
achieved regulatory approval -- 0.02
Arklow rollout of retention termination
benefits and accelerated
depreciation costs capitalized in
inventory and other one-time
termination benefits 0.01 0.02
Non-cash interest expense associated
with amortization of convertible
debt discount 0.01 0.01
Net gain on sale of investments (0.05 ) --
Contribution to Allergan Foundation 0.04 --
Upfront payment for a license and
development agreement with Pieris
AG for technology that has not achieved 0.03 --
regulatory approval
Compensation expense from stock option
modifications related to the
2009 restructuring plan -- --
Unrealized loss (gain) on derivative 0.01 (0.02 )
instruments
Foreign R&D tax credits received for tax (0.02 ) --
years prior to 2008
Non-GAAP diluted earnings per share
attributable to Allergan, Inc.
stockholders $ 0.70 $ 0.65
Year over year change 7.7%
ALLERGAN, INC.
Reconciliation of Non-GAAP Earnings and Diluted Earnings Per
Share Attributable to Allergan, Inc. Stockholders
(Unaudited)
In millions, except per share amounts Nine months ended
September 30, 2009 September 30, 2008
Net earnings attributable to Allergan, $ 399.8 $ 416.5
Inc.
Non-GAAP pre-tax adjustments:
Net restructuring charges 47.3 37.6
Amortization of acquired intangible 93.7 94.2
assets
External costs associated with 23.6 15.7
responding to DOJ subpoena
Upfront payment for in-licensing of
Canadian Sanctura
products rights that have not achieved
regulatory
approval -- 13.9
Upfront payment for in-licensing of
Asterand
technology that has not achieved -- 6.3
regulatory approval
ACZONE transaction costs -- 0.6
Corneal integration and transition costs 0.4 1.3
Esprit integration and transition costs -- 0.7
Esprit fair market value inventory -- 11.7
adjustment rollout
Arklow rollout of retention termination
benefits and
accelerated depreciation costs
capitalized in
inventory, and other one-time
termination benefits
and asset impairments 14.5 5.8
Non-cash interest expense associated
with
amortization of convertible debt 18.4 18.6
discount
Gain on sale of technology and fixed
assets related
to the phased closure of the collagen
manufacturing
facility in Fremont, California -- (0.9 )
Loss on extinguishment of convertible 5.3 --
debt
Net gain on sale of investments (24.6 ) --
Contribution to Allergan Foundation 18.0 --
Upfront payment for a license and
development
agreement with Pieris AG for technology
that has not
achieved regulatory approval 10.0 --
Samil fair market value inventory
adjustment rollout
and transaction related costs 1.2 --
Compensation expense from stock option
modifications
related to the 2009 restructuring plan 78.3 --
Asset impairments and accelerated
depreciation costs
related to the 2009 restructuring plan 2.3 --
Unrealized loss (gain) on derivative 17.2 (4.4 )
instruments
705.4 617.6
Tax effect for above items (96.3 ) (58.5 )
Change in estimated taxes related to
pre-acquisition periods associated
with business combinations and uncertain
tax positions included in
prior year filings, and foreign R&D tax
credits received for tax years
prior to 2008 2.6 --
US state and federal deferred tax
benefit from legal entity integration of
Esprit and Inamed -- (2.4 )
Non-GAAP earnings attributable to $ 611.7 $ 556.7
Allergan, Inc.
Weighted average number of shares issued 303.7 304.4
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 1.7 2.8
market price
305.4 307.2
Diluted earnings per share attributable $ 1.31 $ 1.36
to Allergan, Inc. stockholders
Non-GAAP earnings per share adjustments:
Net restructuring charges 0.12 0.11
Amortization of acquired intangible 0.20 0.20
assets
External costs associated with 0.05 0.03
responding to DOJ subpoena
Upfront payment for in-licensing of
Canadian Sanctura products
rights that have not achieved regulatory -- 0.03
approval
Upfront payment for in-licensing of
Asterand technology that
has not achieved regulatory approval -- 0.02
Esprit fair market value inventory -- 0.03
adjustment rollout
Arklow rollout of retention termination
benefits and
accelerated depreciation costs
capitalized in inventory, and
other one-time termination benefits and 0.04 0.02
asset impairments
Non-cash interest expense associated
with amortization of
convertible debt discount 0.04 0.03
Loss on extinguishment of convertible 0.01 --
debt
Net gain on sale of investments (0.05 ) --
Contribution to Allergan Foundation 0.04 --
Upfront payment for a license and
development agreement with
Pieris AG for technology that has not
achieved regulatory
approval 0.03 --
Compensation expense from stock option
modifications related
to the 2009 restructuring plan 0.17 --
Unrealized loss (gain) on derivative 0.03 (0.01 )
instruments
Change in estimated taxes related to
pre-acquisition periods
associated with business combinations
and uncertain tax
positions included in prior year
filings, and foreign R&D tax
credits received for tax years prior to 0.01 --
2008.
US state and federal deferred tax
benefit from legal entity
integration of Esprit and Inamed -- (0.01 )
Non-GAAP diluted earnings per share
attributable to Allergan, Inc. $ 2.00 $ 1.81
stockholders
Year over year change 10.5%
ALLERGAN, INC.
Supplemental Non-GAAP Information
(Unaudited)
Three months ended
September September $ change in net sales Percent change in net sales
30, 30,
2009 2008 Total Performance Currency Total Performance Currency
in millions
Eye Care $ 535.1 $ 510.4 $ $ $ ) 4.8 % 8.0 % (3.2 )%
Pharmaceuticals 24.7 41.0 (16.3
Botox/Neuromodulator 327.8 318.4 9.4 18.4 (9.0 ) 3.0 % 5.8 % (2.8 )%
Skin Care 62.9 26.7 36.2 36.3 (0.1 ) 135.6 % 136.0 % (0.4 )%
Urologics 14.8 17.0 (2.2 ) (2.2 ) -- (12.9 )% (12.9 )% --
Total Specialty 940.6 872.5 68.1 93.5 (25.4 ) 7.8 % 10.7 % (2.9 )%
Pharmaceuticals
Breast Aesthetics 69.0 72.1 (3.1 ) (1.3 ) (1.8 ) (4.3 )% (1.8 )% (2.5 )%
Obesity Intervention 64.5 79.0 (14.5 ) (13.2 ) (1.3 ) (18.4 )% (16.7 )% (1.7 )%
Facial Aesthetics 53.7 58.3 (4.6 ) (2.9 ) (1.7 ) (7.9 )% (5.0 )% (2.9 )%
Total Medical 187.2 209.4 (22.2 ) (17.4 ) (4.8 ) (10.6 )% (8.3 )% (2.3 )%
Devices
Product net sales $1,127.8 $1,081.9 $ $ $ ) 4.2 % 7.0 % (2.8 )%
45.9 76.1 (30.2
Alphagan P, $ $
Alphagan, and $ 104.9 $ 107.1 (2.2 ) $ 0.7 (2.9 ) (2.0 )% 0.7 % (2.7 )%
Combigan
Lumigan Franchise 115.5 107.8 7.7 12.3 (4.6 ) 7.2 % 11.4 % (4.2 )%
Other Glaucoma 2.8 3.7 (0.9 ) (0.8 ) (0.1 ) (26.0 )% (20.5 )% (5.5 )%
Restasis 128.5 107.1 21.4 21.7 (0.3 ) 19.9 % 20.2 % (0.3 )%
Sanctura Franchise 14.7 17.0 (2.3 ) (2.3 ) -- (13.0 )% (13.0 )% --
Latisse 22.3 -- 22.3 22.3 -- -- -- --
Domestic 64.9 % 64.1 %
International 35.1 % 35.9 %
ALLERGAN, INC.
Supplemental Non-GAAP Information
(Unaudited)
Nine months ended
September September $ change in net sales Percent change in net sales
30, 30,
2009 2008 Total Performance Currency Total Performance Currency
in millions
Eye Care $1,534.7 $1,542.2 $ ) $ $ ) (0.5 )% 4.4 % (4.9 )%
Pharmaceuticals (7.5 67.9 (75.4
Botox/Neuromodulator 961.9 981.7 (19.8 ) 30.1 (49.9 ) (2.0 )% 3.1 % (5.1 )%
Skin Care 143.5 81.0 62.5 63.0 (0.5 ) 77.2 % 77.8 % (0.6 )%
Urologics 48.6 51.6 (3.0 ) (3.0 ) -- (5.8 )% (5.8 )% --
Total Specialty 2,688.7 2,656.5 32.2 158.0 (125.8 ) 1.2 % 5.9 % (4.7 )%
Pharmaceuticals
Breast Aesthetics 209.7 239.1 (29.4 ) (19.0 ) (10.4 ) (12.3 )% (7.9 )% (4.4 )%
Obesity Intervention 190.6 227.5 (36.9 ) (28.6 ) (8.3 ) (16.2 )% (12.6 )% (3.6 )%
Facial Aesthetics 152.1 175.6 (23.5 ) (13.0 ) (10.5 ) (13.4 )% (7.4 )% (6.0 )%
Total Medical 552.4 642.2 (89.8 ) (60.6 ) (29.2 ) (14.0 )% (9.4 )% (4.6 )%
Devices
Product net sales $3,241.1 $3,298.7 $ ) $ $ ) (1.7 )% 3.0 % (4.7 )%
(57.6 97.4 (155.0
Alphagan P, $ $
Alphagan, and $311.8 $ 307.4 $ 4.4 18.9 (14.5 ) 1.4 % 6.1 % (4.7 )%
Combigan
Lumigan Franchise 333.9 327.8 6.1 28.5 (22.4 ) 1.9 % 8.7 % (6.8 )%
Other Glaucoma 8.9 11.9 (3.0 ) (1.9 ) (1.1 ) (25.4 )% (15.9 )% (9.5 )%
Restasis 359.6 327.3 32.3 32.9 (0.6 ) 9.8 % 10.0 % (0.2 )%
Sanctura Franchise 48.6 51.2 (2.6 ) (2.6 ) -- (5.1 )% (5.1 )% --
Latisse 47.7 -- 47.7 47.7 -- -- -- --
Domestic 65.8 % 63.8 %
International 34.2 % 36.2 %
ALLERGAN, INC.
Reconciliation of GAAP Diluted Earnings Per Share Guidance
To Non-GAAP Diluted Earnings Per Share Guidance
(Unaudited)
Fourth Quarter 2009
Low High
GAAP diluted earnings per share attributable to Allergan, $ 0.68 $ 0.70
Inc. stockholders guidance (a)
Amortization of acquired intangible assets 0.06 0.06
Non-cash interest expense associated with amortization of 0.01 0.01
convertible debt discount
Non-GAAP diluted earnings per share guidance $ 0.75 $ 0.77
Full Year 2009
Low High
GAAP diluted earnings per share attributable to Allergan, $ 1.98 $ 2.00
Inc. stockholders guidance (a)
Net restructuring charges 0.12 0.12
External costs associated with responding to DOJ subpoena 0.05 0.05
Arklow rollout of termination benefits and accelerated
depreciation costs capitalized in inventory and other 0.04 0.04
one-time termination benefits
Loss on extinguishment of convertible debt 0.01 0.01
Unrealized loss on derivative instruments 0.03 0.03
Compensation expense from stock option modifications 0.17 0.17
related to the 2009 restructuring plan
Amortization of acquired intangible assets 0.27 0.27
Non-cash interest expense associated with amortization of 0.05 0.05
convertible debt discount
Net gain on sale of investments (0.05 ) (0.05 )
Contribution to Allergan Foundation 0.04 0.04
Upfront payment for a license and development agreement
with Pieris AG for technology that has not achieved 0.03 0.03
regulatory approval
Change in estimated taxes related to pre-acquisition
periods associated with business combinations and 0.01 0.01
uncertain tax positions included in prior year filings,
and foreign R&D tax credits for tax years prior to 2008
Non-GAAP diluted earnings per share guidance $ 2.75 $ 2.77
GAAP diluted earnings per share guidance excludes any potential impact of
future unrealized gains or losses on derivative instruments, restructuring
charges (including, without limitation, the impact of the phased closure of
(a) the Arklow, Ireland facility and the 2009 restructuring plan), external
costs associated with responding to the DOJ subpoena, Samil transaction
related costs and compensation expense from stock option modifications
related to the 2009 restructuring plan that may occur but that are not
currently known or determinable.
Source: Allergan, Inc.
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