Allergan, Inc. (NYSE: AGN) today announced operating results for the
quarter ended December 31, 2010. Allergan also announced that its Board
of Directors has declared a fourth quarter dividend of $0.05 per share,
payable on March 11, 2011 to stockholders of record on February 18, 2011.
Operating Results Attributable to Stockholders
For the quarter ended December 31, 2010:
Allergan reported $0.85 diluted earnings per share attributable to
stockholders compared to $0.72 diluted earnings per share attributable
to stockholders for the fourth quarter of 2009.
Allergan reported $0.88 non-GAAP diluted earnings per share
attributable to stockholders compared to $0.78 non-GAAP diluted
earnings per share attributable to stockholders for the fourth quarter
of 2009, a 12.8 percent increase.
Product Sales
For the quarter ended December 31, 2010:
Allergan reported $1,290.1 million total product net sales. Total
product net sales increased 6.9 percent compared to total product net
sales in the fourth quarter of 2009. On a constant currency basis,
total product net sales increased 7.4 percent compared to total
product net sales in the fourth quarter of 2009.
Total specialty pharmaceuticals net sales increased 6.9 percent,
or 7.3 percent on a constant currency basis, compared to total
specialty pharmaceuticals net sales in the fourth quarter of 2009.
Total medical devices net sales increased 7.1 percent, or 7.9
percent on a constant currency basis, compared to total medical
devices net sales in the fourth quarter of 2009.
?We are very pleased with our fourth quarter and full year results, as
well as the record number of regulatory approvals secured in 2010,? said
David E.I. Pyott, Allergan's Chairman of the Board and Chief Executive
Officer. ?In 2011, we look forward to marketing the new products and
therapies approved in 2010, as well as investing in R&D to reload our
pipeline.?
Based on internal information and assumptions, full year 2010
therapeutic sales accounted for approximately 51% of total BOTOX®
(onabotulinumtoxinA) sales and increased approximately 6% compared to
2009. Full year 2010 cosmetic sales accounted for approximately 49% of
total BOTOX® sales and increased approximately 11% compared to 2009.
Product and Pipeline Update
During the fourth quarter of 2010:
On October 15, 2010, Allergan announced that the United States Food
and Drug Administration (FDA) approved BOTOX® (onabotulinumtoxinA) for
the prophylactic treatment of headaches in adults with chronic
migraine, a distinct and severe neurological disorder characterized by
patients who have a history of migraine and suffer from headaches on
15 or more days per month with headaches lasting four hours a day or
longer.
Allergan filed a supplemental Biologics License Application (sBLA)
with the FDA for the use of BOTOX® in the treatment of urinary
incontinence due to neurogenic detrusor overactivity resulting from
neurogenic bladder.
On December 3, 2010, Allergan announced that the FDA Gastroenterology
and Urology Devices Panel of the Medical Devices Advisory Committee
recommended with an 8-2 vote that the FDA extend the currently
approved use of the LAP-BAND® System, Allergan's gastric band, on the
basis of a favorable benefit-risk profile for weight reduction in
obese adults who have failed more conservative weight reduction
alternatives and have a Body Mass Index (BMI) of at least 35 or a BMI
greater than 30 and at least one comorbid condition.
Following the end of the fourth quarter of 2010:
On January 31, 2011, Allergan and MAP Pharmaceuticals, Inc. announced
a collaboration within the United States for LEVADEX?, a
self-administered, orally inhaled therapy that has completed Phase III
clinical development for the treatment of acute migraine in adults.
MAP Pharmaceuticals currently anticipates submitting its New Drug
Application for LEVADEX? with the FDA in the first half of 2011.
Outlook
For the full year of 2011, Allergan expects:
Total product net sales between $5,020 million and $5,220 million.
Total specialty pharmaceuticals net sales between $4,160 million
and $4,300 million.
Total medical devices net sales between $860 million and $920
million.
ALPHAGAN®franchise product net sales between $380 million
and $400 million.
LUMIGAN®franchise product netsales between $550
million and $580 million.
RESTASIS® product netsales between $680 million and $710
million.
BOTOX® product netsales between $1,490 million and $1,540
million.
LATISSE® product netsales at approximately $100 million.
Breast aestheticsproduct netsales between $330
million and $350 million.
Obesity intervention product netsales between $220 million
and $240 million.
Facial aesthetics product netsales between $310 million
and $330 million.
Non-GAAP cost of sales to product net sales ratio at approximately
14.5%.
Non-GAAP other revenue at approximately $50 million.
Non-GAAP selling, general and administrative expenses to product net
sales ratio between 38% and 39%.
Non-GAAP research and development expenses to product net sales ratio
at approximately 16%.
Non-GAAP amortization of acquired intangible assets at approximately
$20 million. This expectation excludes the amortization of certain
acquired intangible assets associated with business combinations,
asset purchases and product licenses.
Non-GAAP diluted earnings per share attributable to stockholders
between $3.54 and $3.60.
Diluted shares outstanding at approximately 309 million.
Effective tax rate on non-GAAP earnings at approximately 28%.
For the first quarter of 2011, Allergan expects:
Total product net sales between $1,170 million and $1,220 million.
Non-GAAP diluted earnings per share attributable to stockholders
between $0.71 and $0.73.
In this press release, Allergan reports certain historical and expected
non-GAAP results, including earnings attributable to Allergan, Inc.,
non-GAAP basic and diluted earnings per share attributable to
stockholders as well as non-GAAP other revenues, 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 legal settlement, non-GAAP intangible asset impairment
and related costs, non-GAAP restructuring charges, non-GAAP interest
expense, non-GAAP gain on investments, net, non-GAAP other, net,
non-GAAP earnings before income taxes, non-GAAP provision for income
taxes, non-GAAP net earnings and non-GAAP net sales reported in constant
currency. Non-GAAP financial measures are reconciled to the most
directly comparable GAAP financial measure in the financial tables of
this press release and the accompanying footnotes.
Forward-Looking Statements
In this press release, the statements regarding product development,
market potential, expected growth, regulatory approvals, 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
research and development and regulatory processes; domestic and foreign
health care and cost containment reforms, including government pricing,
tax 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 continued economic volatility, 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 Form 10-K for the fiscal year ended December 31,
2009 and Form 10-Q for the quarters ended March 31, 2010, June 30, 2010
and September 30, 2010. 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.
Allergan, Inc. is a multi-specialty health care company established 60
years ago with a commitment to uncover the best of science and develop
and deliver innovative and meaningful treatments to help people reach
their life's potential. Today, we have more than 9,000 highly dedicated
and talented employees, global marketing and sales capabilities with a
presence in more than 100 countries, a rich and ever-evolving portfolio
of pharmaceuticals, biologics and medical devices, and state-of-the-art
resources in R&D, manufacturing and safety surveillance that help
millions of patients see more clearly, move more freely and express
themselves more fully. From our beginnings as an eye care company to our
focus today on several medical specialties, including ophthalmology,
neurosciences, obesity, urologics, medical aesthetics and dermatology,
Allergan is proud to celebrate 60 years of medical advances and proud to
support the patients and physicians who rely on our products and the
employees and communities in which we live and work.
® and ? Marks owned by Allergan, Inc. LEVADEX? is a trademark owned
by MAP Pharmaceuticals, Inc.
ALLERGAN, INC.
Condensed Consolidated Statements of Earnings and
Reconciliation of Non-GAAP Adjustments
(Unaudited)
Three months ended
In millions, except per share amounts
December 31, 2010
December 31, 2009
Non-GAAP
Non-GAAP
GAAP
Adjustments
Non-GAAP
GAAP
Adjustments
Non-GAAP
Revenues
Product net sales
$
1,290.1
$
--
$
1,290.1
$
1,206.5
$
--
$
1,206.5
Other revenues
19.2
--
19.2
17.8
--
17.8
1,309.3
--
1,309.3
1,224.3
--
1,224.3
Operating costs and expenses
Cost of sales (excludes amortization of acquired intangible assets)
182.8
--
182.8
184.6
--
184.6
Selling, general and administrative
527.5
(11.0
)(a)(b)
516.5
497.6
5.3
(i)(j)(k)
502.9
Research and development
200.3
0.1
(b)
200.4
185.4
(0.2
)(i)
185.2
Amortization of acquired intangible assets
32.5
(26.6
)(c)
5.9
36.2
(30.7
)(c)
5.5
Legal settlement
(0.7
)
0.7
(d)
--
--
--
--
Restructuring charges (reversal)
(0.5
)
0.5
(e)
--
3.6
(3.6
)(e)
--
Operating income
367.4
36.3
403.7
316.9
29.2
346.1
Non-operating income (expense)
Interest income
3.2
--
3.2
1.4
--
1.4
Interest expense
(27.8
)
6.4
(f)
(21.4
)
(21.2
)
6.1
(f)
(15.1
)
Other, net
(9.8
)
0.6
(g)
(9.2
)
(1.3
)
(3.6
)(l)
(4.9
)
(34.4
)
7.0
(27.4
)
(21.1
)
2.5
(18.6
)
Earnings before income taxes
333.0
43.3
376.3
295.8
31.7
327.5
Provision for income taxes
69.9
33.3
(h)
103.2
73.0
15.1
(m)
88.1
Net earnings
263.1
10.0
273.1
222.8
16.6
239.4
Net earnings attributable to noncontrolling interest
--
--
--
1.3
--
1.3
Net earnings attributable to Allergan, Inc.
$
263.1
$
10.0
$
273.1
$
221.5
$
16.6
$
238.1
Net earnings per share attributable to Allergan, Inc. stockholders:
Basic
$
0.87
$
0.90
$
0.73
$
0.78
Diluted
$
0.85
$
0.88
$
0.72
$
0.78
Weighted average number of common
shares outstanding:
Basic
304.1
304.1
303.5
303.5
Diluted
310.1
310.1
307.1
307.1
Selected ratios as a percentage of product
net sales
Cost of sales (excludes amortization of acquired intangible assets)
14.2
%
14.2
%
15.3
%
15.3
%
Selling, general and administrative
40.9
%
40.0
%
41.2
%
41.7
%
Research and development
15.5
%
15.5
%
15.4
%
15.4
%
(a)
External costs of $2.9 million associated with responding to the
U.S. Department of Justice (DOJ) subpoena regarding Allergan's
past U.S. sales and marketing practices relating to certain
therapeutic uses of Botox® and related
stockholder derivative litigation costs associated with the DOJ
settlement announced in a company press release on September 1,
2010
(b)
Expense from changes in fair value of contingent consideration of
$7.9 million and integration and transaction costs of $0.1 million
associated with the purchase of a distributor's business in Turkey
related to Allergan's products, consisting of selling, general and
administrative expenses of $8.1 million and a reversal of research
and development expenses of $0.1 million
(c)
Amortization of certain acquired intangible assets related to
business combinations, asset acquisitions and product licenses
(d)
Reversal of legal settlement costs associated with an announced
resolution with the DOJ regarding Allergan's past U.S. sales and
marketing practices relating to certain therapeutic uses of Botox®
(e)
Net restructuring charges (reversal)
(f)
Non-cash interest expense associated with amortization of
convertible debt discount
(g)
Unrealized loss on the mark-to-market adjustment to derivative
instruments
(h)
Total tax effect for non-GAAP pre-tax adjustments and tax benefit of
$21.4 million related to fiscal year 2010 legal settlement costs of
$609.2 million
(i)
Compensation expense from stock option modifications related to the
restructuring plan announced in February 2009 of $0.3 million,
consisting of selling, general and administrative expenses of $0.1
million and research and development expenses of $0.2 million
(j)
External costs of $8.6 million associated with responding to the DOJ
subpoena
(k)
Gain on settlement of a manufacturing and distribution agreement of
$14.0 million related to an eye care pharmaceuticals product
(l)
Unrealized gain on the mark-to-market adjustment to derivative
instruments
(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 $31.7 million
$
(9.9
)
Change in estimated taxes related to uncertain tax positions
included in prior year filings
(5.2
)
$
(15.1
)
?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 twelve months ended December 31, 2010 and
December 31, 2009 and with respect to anticipated results for the first
quarter and full year of 2011. 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 basic and diluted earnings per share attributable to Allergan,
Inc. stockholders? and ?non-GAAP earnings attributable to Allergan,
Inc.? and its subcomponents ?non-GAAP other revenues,? ?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 legal settlement,? ?non-GAAP
intangible asset impairment and related costs,? ?non-GAAP restructuring
charges,? ?non-GAAP operating income,? ?non-GAAP interest expense,?
?non-GAAP gain on investments, net,? ?non-GAAP other, net,? ?non-GAAP
earnings before income taxes,? ?non-GAAP provision for income taxes,?
and ?non-GAAP net earnings.? 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, legal settlements, and
certain acquisitions, including severance and facility transition
costs associated with acquisitions;
it does not reflect asset impairment charges or 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 or income
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.
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)
Twelve months ended
In millions, except per share amounts
December 31, 2010
December 31, 2009
Non-GAAP
Non-GAAP
GAAP
Adjustments
Non-GAAP
GAAP
Adjustments
Non-GAAP
Revenues
Product net sales
$
4,819.6
$
--
$
4,819.6
$
4,447.6
$
--
$
4,447.6
Other revenues
99.8
(36.0
)(a)
63.8
56.0
--
56.0
4,919.4
(36.0
)
4,883.4
4,503.6
--
4,503.6
Operating costs and expenses
Cost of sales (excludes amortization of acquired intangible assets)
722.0
--
722.0
750.9
(20.2
)(n)(o)(p)
730.7
Selling, general and administrative
2,017.6
(67.9
)(b)(c)(d)(e)(f)
1,949.7
1,921.5
(91.9
)(o)(p)(q)(r)(s)(t)(u)
1,829.6
Research and development
804.6
(43.0
)(e)
761.6
706.0
(31.1
)(n)(p)(v)
674.9
Amortization of acquired intangible assets
138.0
(114.5
)(g)
23.5
146.3
(124.4
)(g)
21.9
Legal settlement
609.2
(609.2
)(h)
--
--
--
--
Intangible asset impairment and related costs
369.1
(369.1
)(i)
--
--
--
--
Restructuring charges
0.3
(0.3
)(j)
--
50.9
(50.9
)(j)
--
Operating income
258.6
1,168.0
1,426.6
928.0
318.5
1,246.5
Non-operating income (expense)
Interest income
7.3
--
7.3
7.0
--
7.0
Interest expense
(78.7
)
25.1
(k)
(53.6
)
(76.9
)
24.5
(k)
(52.4
)
Gain on investments, net
--
--
--
24.6
(24.6
)(w)
--
Other, net
(16.4
)
7.6
(l)
(8.8
)
(34.2
)
18.9
(x)(y)
(15.3
)
(87.8
)
32.7
(55.1
)
(79.5
)
18.8
(60.7
)
Earnings before income taxes
170.8
1,200.7
1,371.5
848.5
337.3
1,185.8
Provision for income taxes
165.9
227.4
(m)
393.3
224.7
108.8
(z)
333.5
Net earnings
4.9
973.3
978.2
623.8
228.5
852.3
Net earnings attributable to noncontrolling interest
4.3
--
4.3
2.5
--
2.5
Net earnings attributable to Allergan, Inc.
$
0.6
$
973.3
$
973.9
$
621.3
$
228.5
$
849.8
Net earnings per share attributable to Allergan, Inc. stockholders:
Basic
$
0.00
$
3.21
$
2.05
$
2.80
Diluted
$
0.00
$
3.16
$
2.03
$
2.78
Weighted average number of common shares outstanding:
Basic
303.4
303.4
303.6
303.6
Diluted
308.0
308.0
305.8
305.8
Selected ratios as a percentage of product
net sales
Cost of sales (excludes amortization of acquired intangible assets)
15.0
%
15.0
%
16.9
%
16.4
%
Selling, general and administrative
41.9
%
40.5
%
43.2
%
41.1
%
Research and development
16.7
%
15.8
%
15.9
%
15.2
%
(a)
Net licensing fee of $36.0 million for a development and
commercialization agreement with Bristol-Myers Squibb Company
(b)
External costs of $14.4 million associated with responding to the
DOJ subpoena and related stockholder derivative litigation costs
associated with the DOJ settlement announced in a company press
release on September 1, 2010
(c)
Expense from changes in fair value of contingent consideration of
$7.9 million, distributor termination fee of $33.0 million and
integration and transaction costs of $1.1 million associated with
the purchase of a distributor's business in Turkey related to
Allergan's products
(d)
Integration and transaction costs related to the acquisition of
Serica Technologies, Inc. of $0.5 million
(e)
Upfront licensing fee of $43.0 million included in research and
development expenses associated with a license, development and
commercialization agreement with Serenity Pharmaceuticals, LLC for
technology that has not achieved regulatory approval and related
transaction costs of $0.4 million included in selling, general and
administrative expenses
(f)
Writeoff of manufacturing assets related to the abandonment of an
eye care product of $10.6 million
(g)
Amortization of certain acquired intangible assets related to
business combinations, asset acquisitions and product licenses
(h)
Legal settlement costs associated with an announced resolution
with the DOJ regarding Allergan's past U.S. sales and marketing
practices relating to certain therapeutic uses of Botox®
(i)
Aggregate charges related to the impairment of the Sanctura®
assets
(j)
Net restructuring charges
(k)
Non-cash interest expense associated with amortization of
convertible debt discount
(l)
Unrealized loss on the mark-to-market adjustment to derivative
instruments
(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 $1,200.7 million
$
(226.7
)
Change in estimated taxes related to uncertain tax positions
included in prior year filings
(0.7
)
$
(227.4
)
(n)
Rollout of retention termination benefits and accelerated
depreciation costs capitalized in inventory and other one-time
termination benefits related to the phased closure of the Arklow,
Ireland breast implant manufacturing facility of $14.5 million,
consisting of cost of sales of $14.4 million and research and
development expenses of $0.1 million
(o)
Fair market value inventory adjustment rollout of $0.8 million
included in cost of sales and transaction costs of $0.4 million
included in selling, general and administrative expenses related to
the creation of a joint venture in Korea with Samil Pharmaceutical
Co. Ltd.
(p)
Compensation expense from stock option modifications related to the
restructuring plan announced in February 2009 of $78.6 million,
consisting of cost of sales of $5.0 million, selling, general and
administrative expenses of $52.6 million and research and
development expenses of $21.0 million
(q)
External costs of $32.2 million associated with responding to the
DOJ subpoena
(r)
Asset impairments and accelerated depreciation costs related to the
2009 restructuring plan of $2.3 million
(s)
Integration and transition costs related to the acquisition of
Cornéal of $0.4 million
(t)
Contribution to Allergan Foundation of $18.0 million
(u)
Gain on settlement of a manufacturing and distribution agreement of
$14.0 million related to an eye care pharmaceuticals product
(v)
Upfront payment of $10.0 million for a license and development
agreement with Pieris AG for technology that has not achieved
regulatory approval
(w)
Net gain on sale of investments
(x)
Unrealized loss on the mark-to-market adjustment to derivative
instruments of $13.6 million
(y)
Loss on extinguishment of convertible debt of $5.3 million
(z)
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 $337.3 million
$
(106.2
)
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
)
$
(108.8
)
ALLERGAN, INC.
Condensed Consolidated Balance Sheets
(Unaudited)
in millions
December 31,
2010
December 31,
2009
Assets
Cash and equivalents
$
1,991.2
$
1,947.1
Short-term investments
749.1
--
Trade receivables, net
647.3
576.6
Inventories
229.4
213.9
Other current assets
376.7
368.7
Total current assets
3,993.7
3,106.3
Property, plant and equipment, net
800.6
808.1
Intangible assets, net
996.0
1,357.2
Goodwill
2,038.6
1,998.3
Other noncurrent assets
479.2
266.7
Total assets
$
8,308.1
$
7,536.6
Liabilities and equity
Notes payable
$
28.1
$
18.1
Convertible notes
642.5
--
Accounts payable
222.5
204.0
Other accrued expenses and income taxes
635.3
589.5
Total current liabilities
1,528.4
811.6
Long-term debt
1,534.2
1,491.3
Other liabilities
464.4
389.8
Equity:
Allergan, Inc. stockholders' equity
4,757.7
4,822.8
Noncontrolling interest
23.4
21.1
Total equity
4,781.1
4,843.9
Total liabilities and equity
$
8,308.1
$
7,536.6
DSO
46
44
DOH
115
106
Cash and equivalents and short-term investments
$
2,740.3
$
1,947.1
Total notes payable, convertible notes and long-term debt
(2,204.8
)
(1,509.4
)
Cash and short-term investments, net of debt
$
535.5
$
437.7
Debt-to-capital percentage
31.6
%
23.8
%
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
December 31,
2010
December 31,
2009
Net earnings attributable to Allergan, Inc.
$263.1
$221.5
Non-GAAP pre-tax adjustments:
External costs associated with responding to the DOJ subpoena and
related stockholder derivative litigation costs associated with the
DOJ settlement
2.9
8.6
Expense from changes in fair value of contingent consideration and
integration and transaction costs associated with the purchase of a
distributor's business in Turkey
8.0
--
Amortization of acquired intangible assets
26.6
30.7
Reversal of legal settlement costs associated with a resolution with
the DOJ regarding past U.S. sales and marketing practices relating
to certain therapeutic uses of Botox®
(0.7)
--
Net restructuring charges (reversal)
(0.5)
3.6
Non-cash interest expense associated with amortization of
convertible debt discount
6.4
6.1
Unrealized loss (gain) on derivative instruments
0.6
(3.6)
Compensation expense from stock option modifications related to the
2009 restructuring plan
--
0.3
Gain on settlement of a manufacturing and distribution agreement
related to an eye care pharmaceuticals product
--
(14.0)
306.4
253.2
Tax effect for above items and tax benefit of $21.4 million related
to fiscal year 2010 legal settlement costs of $609.2 million
(33.3)
(9.9)
Change in estimated taxes related to uncertain tax positions
included in prior year filings
--
(5.2)
Non-GAAP earnings attributable to Allergan, Inc.
$273.1
$238.1
Weighted average number of shares outstanding
304.1
303.5
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
5.1
3.6
Dilutive effect of assumed conversion of convertible notes
outstanding
0.9
--
310.1
307.1
Diluted earnings per share attributable to Allergan, Inc.
stockholders
$0.85
$0.72
Non-GAAP earnings per share adjustments:
External costs associated with responding to the DOJ subpoena and
related stockholder derivative litigation costs associated with the
DOJ settlement
0.01
0.02
Expense from changes in fair value of contingent consideration and
integration and transaction costs associated with the purchase of a
distributor's business in Turkey
0.02
--
Amortization of acquired intangible assets
0.06
0.06
Reversal of legal settlement costs and tax benefit of $21.4 million
related to fiscal year 2010 legal settlement costs of $609.2 million
associated with a resolution with the DOJ regarding past U.S. sales
and marketing practices relating to certain therapeutic uses of Botox®
(0.07)
--
Net restructuring charges (reversal)
--
0.01
Non-cash interest expense associated with amortization of
convertible debt discount
0.01
0.01
Gain on settlement of a manufacturing and distribution agreement
related to an eye care pharmaceuticals product
--
(0.03)
Loss on extinguishment of convertible debt
--
0.01
Change in estimated taxes related to uncertain tax positions
included in prior year filings
--
(0.02)
Non-GAAP diluted earnings per share attributable to Allergan, Inc.
stockholders
$0.88
$0.78
Year over year change
12.8%
ALLERGAN, INC.
Reconciliation of Non-GAAP Earnings and Diluted Earnings Per Share
Attributable to Allergan, Inc. Stockholders
(Unaudited)
In millions, except per share amounts
Twelve months ended
December 31,
2010
December 31,
2009
Net earnings attributable to Allergan, Inc.
$
0.6
$
621.3
Non-GAAP pre-tax adjustments:
Net licensing fee for a development and commercialization agreement
with Bristol-Myers Squibb Company
(36.0
)
--
External costs associated with responding to the DOJ subpoena and
related stockholder derivative litigation costs associated with the
DOJ settlement
14.4
32.2
Expense from changes in fair value of contingent consideration,
distributor termination fee and integration and transaction costs
associated with the purchase of a distributor's business in Turkey
42.0
--
Integration and transaction costs related to the acquisition of
Serica Technologies, Inc.
0.5
--
Research and development expense related to an upfront licensing fee
associated with a license, development and commercialization
agreement with Serenity Pharmaceuticals, LLC for technology that has
not achieved regulatory approval and related transaction costs
43.4
--
Writeoff of manufacturing assets related to the abandonment of an
eye care product
10.6
--
Amortization of acquired intangible assets
114.5
124.4
Legal settlement costs associated with a resolution with the DOJ
regarding past U.S. sales and marketing practices relating to
certain therapeutic uses of Botox®
609.2
--
Aggregate charges related to the impairment of the Sanctura®
assets
369.1
--
Net restructuring charges
0.3
50.9
Non-cash interest expense associated with amortization of
convertible debt discount
25.1
24.5
Unrealized loss on derivative instruments
7.6
13.6
Arklow rollout of retention termination benefits and accelerated
depreciation costs capitalized in inventory and other one-time
termination benefits
--
14.5
Fair market value inventory adjustment rollout and transaction costs
related to the Samil joint venture in Korea
--
1.2
Compensation expense from stock option modifications related to the
2009 restructuring plan
--
78.6
Asset impairments and accelerated depreciation costs related to the
2009 restructuring plan
--
2.3
Cornéal integration and transition costs
--
0.4
Contribution to Allergan Foundation
--
18.0
Gain on settlement of a manufacturing and distribution agreement
related to an eye care pharmaceuticals product
--
(14.0
)
Upfront payment for a license and development agreement with Pieris
AG for technology that has not achieved regulatory approval
--
10.0
Net gain on sale of investments
--
(24.6
)
Loss on extinguishment of convertible debt
--
5.3
1,201.3
958.6
Tax effect for above items
(226.7
)
(106.2
)
Change in estimated taxes related to uncertain tax positions
included in prior year filings and pre-acquisition periods
associated with business combinations, and foreign R&D tax credits
received for tax years prior to 2008
(0.7
)
(2.6
)
Non-GAAP earnings attributable to Allergan, Inc.
$
973.9
$
849.8
Weighted average number of shares outstanding
303.4
303.6
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
4.3
2.2
Dilutive effect of assumed conversion of convertible notes
outstanding
0.3
--
308.0
305.8
Diluted earnings per share attributable to Allergan, Inc.
stockholders
$
0.00
$
2.03
Non-GAAP earnings per share adjustments:
Net licensing fee for a development and commercialization agreement
with Bristol-Myers Squibb Company
(0.07
)
--
External costs associated with responding to the DOJ subpoena and
related stockholder derivative litigation costs associated with the
DOJ settlement
0.03
0.07
Expense from changes in fair value of contingent consideration,
distributor termination fee and integration and transaction costs
associated with the purchase of a distributor's business in Turkey
0.12
--
Research and development expense related to an upfront licensing fee
associated with a license, development and commercialization
agreement with Serenity Pharmaceuticals, LLC for technology that has
not achieved regulatory approval and related transaction costs
0.09
--
Writeoff of manufacturing assets related to the abandonment of an
eye care product
0.03
--
Amortization of acquired intangible assets
0.24
0.26
Legal settlement costs associated with a resolution with the DOJ
regarding past U.S. sales and marketing practices relating to
certain therapeutic uses of Botox®
1.92
--
Aggregate charges related to the impairment of the Sanctura®
assets
0.74
--
Net restructuring charges
--
0.13
Non-cash interest expense associated with amortization of
convertible debt discount
0.05
0.05
Unrealized loss on derivative instruments
0.01
0.03
Arklow rollout of retention termination benefits and accelerated
depreciation costs capitalized in inventory and other one-time
termination benefits
--
0.04
Compensation expense from stock option modifications related to the
2009 restructuring plan
--
0.17
Contribution to Allergan Foundation
--
0.04
Gain on settlement of a manufacturing and distribution agreement
related to an eye care pharmaceuticals product
--
(0.03
)
Upfront payment for a license and development agreement with Pieris
AG for technology that has not achieved regulatory approval
--
0.03
Net gain on sale of investments
--
(0.05
)
Loss on extinguishment of convertible debt
--
0.02
Change in estimated taxes related to uncertain tax positions
included in prior year filings and pre-acquisition periods
associated with business combinations, and foreign R&D tax credits
received for tax years prior to 2008
--
(0.01
)
Non-GAAP diluted earnings per share attributable to Allergan, Inc.
stockholders
$
3.16
$
2.78
Year over year change
13.7
%
ALLERGAN, INC.
Supplemental Non-GAAP Information
(Unaudited)
Three months ended
December 31,
December 31,
$ change in net sales
Percent change in net sales
2010
2009
Total
Performance
Currency
Total
Performance
Currency
in millions
Eye Care Pharmaceuticals
$
603.4
$
565.9
$
37.5
$
41.6
$
(4.1
)
6.6
%
7.4
%
(0.8
)%
Botox/Neuromodulator
386.2
347.7
38.5
39.0
(0.5
)
11.1
%
11.2
%
(0.1
)%
Skin Care
58.2
64.5
(6.3
)
(6.4
)
0.1
(9.8
)%
(9.9
)%
0.1
%
Urologics
15.8
17.0
(1.2
)
(1.2
)
--
(7.1
)%
(7.1
)%
--
Total Specialty Pharmaceuticals
1,063.6
995.1
68.5
73.0
(4.5
)
6.9
%
7.3
%
(0.4
)%
Breast Aesthetics
84.7
77.8
6.9
8.0
(1.1
)
8.9
%
10.3
%
(1.4
)%
Obesity Intervention
60.9
67.6
(6.7
)
(6.6
)
(0.1
)
(9.9
)%
(9.8
)%
(0.1
)%
Facial Aesthetics
80.9
66.0
14.9
15.4
(0.5
)
22.6
%
23.3
%
(0.7
)%
Total Medical Devices
226.5
211.4
15.1
16.8
(1.7
)
7.1
%
7.9
%
(0.8
)%
Product net sales
$
1,290.1
$
1,206.5
$
83.6
$
89.8
$
(6.2
)
6.9
%
7.4
%
(0.5
)%
Selected Product Net Sales (a):
Alphagan P, Alphagan, and Combigan
$
103.4
$
102.7
$
0.7
$
1.4
$
(0.7
)
0.7
%
1.4
%
(0.7
)%
Lumigan Franchise
141.8
122.6
19.2
21.7
(2.5
)
15.7
%
17.7
%
(2.0
)%
Restasis
174.9
163.3
11.6
11.5
0.1
7.1
%
7.0
%
0.1
%
Sanctura Franchise
15.8
17.0
(1.2
)
(1.2
)
--
(7.1
)%
(7.1
)%
--
Latisse
17.4
26.0
(8.6
)
(8.7
)
0.1
(32.9
)%
(33.2
)%
0.3
%
Domestic
61.7
%
64.3
%
International
38.3
%
35.7
%
ALLERGAN, INC.
Supplemental Non-GAAP Information
(Unaudited)
Twelve months ended
December 31,
December 31,
$ change in net sales
Percent change in net sales
2010
2009
Total
Performance
Currency
Total
Performance
Currency
in millions
Eye Care Pharmaceuticals
$
2,262.0
$
2,100.6
$
161.4
$
146.5
$
14.9
7.7
%
7.0
%
0.7
%
Botox/Neuromodulator
1,419.4
1,309.6
109.8
93.0
16.8
8.4
%
7.1
%
1.3
%
Skin Care
229.5
208.0
21.5
21.0
0.5
10.3
%
10.1
%
0.2
%
Urologics
62.5
65.6
(3.1
)
(3.1
)
--
(4.7
)%
(4.7
)%
--
Total Specialty Pharmaceuticals
3,973.4
3,683.8
289.6
257.4
32.2
7.9
%
7.0
%
0.9
%
Breast Aesthetics
319.1
287.5
31.6
31.9
(0.3
)
11.0
%
11.1
%
(0.1
)%
Obesity Intervention
243.3
258.2
(14.9
)
(18.2
)
3.3
(5.8
)%
(7.0
)%
1.2
%
Facial Aesthetics
283.8
218.1
65.7
62.2
3.5
30.1
%
28.5
%
1.6
%
Total Medical Devices
846.2
763.8
82.4
75.9
6.5
10.8
%
9.9
%
0.9
%
Product net sales
$
4,819.6
$
4,447.6
$
372.0
$
333.3
$
38.7
8.4
%
7.5
%
0.9
%
Selected Product Net Sales (a):
Alphagan P, Alphagan, and Combigan
$
401.6
$
414.5
$
(12.9
)
$
(15.6
)
$
2.7
(3.1
)%
(3.8
)%
0.7
%
Lumigan Franchise
526.7
456.5
70.2
71.3
(1.1
)
15.4
%
15.6
%
(0.2
)%
Restasis
620.5
522.9
97.6
96.7
0.9
18.7
%
18.5
%
0.2
%
Sanctura Franchise
62.5
65.6
(3.1
)
(3.1
)
--
(4.7
)%
(4.7
)%
--
Latisse
81.8
73.7
8.1
7.6
0.5
11.0
%
10.4
%
0.6
%
Domestic
62.6
%
65.4
%
International
37.4
%
34.6
%
(a)
Percentage change in selected product net sales is calculated on
amounts reported to the nearest whole dollar.
ALLERGAN, INC.
Reconciliation of GAAP Diluted Earnings Per Share Expectations
To Non-GAAP Diluted Earnings Per Share Expectations
(Unaudited)
First Quarter 2011
Low
High
GAAP diluted earnings per share attributable to Allergan, Inc.
stockholders expectations (a)
$
0.64
$
0.66
Amortization of acquired intangible assets
0.06
0.06
Non-cash interest expense associated with amortization of
convertible debt discount
0.01
0.01
Non-GAAP diluted earnings per share expectations
$
0.71
$
0.73
Full Year 2011
Low
High
GAAP diluted earnings per share attributable to Allergan, Inc.
stockholders expectations (a)
$
3.30
$
3.36
Amortization of acquired intangible assets
0.23
0.23
Non-cash interest expense associated with amortization of
convertible debt discount
0.01
0.01
Non-GAAP diluted earnings per share expectations
$
3.54
$
3.60
(a)
GAAP diluted earnings per share expectations exclude any potential
impact of future unrealized gains or losses on derivative
instruments, changes in contingent consideration, restructuring
charges, external costs associated with responding to the DOJ
subpoena and legal settlement and other litigation costs
associated with the resolution with the DOJ regarding past U.S.
sales and marketing practices relating to certain therapeutic uses
of Botox® that may occur but that are not
currently known or determinable.
Allergan, Inc. Jim Hindman, 714-246-4636 (investors) Joann
Bradley, 714-246-4766 (investors) Caroline Van Hove, 714-246-5134
(media)
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