Allergan Reports Third Quarter 2012 Operating Results

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 share amounts			September 30, 2012																		September 30, 2011
			GAAP					Non-GAAP Adjustments							Non-GAAP						GAAP					Non-GAAP Adjustments							Non-GAAP
Revenues
Product net sales			$	4,224.2				$	--						$	4,224.2					$	3,964.3				$	--						$	3,964.3
Other revenues				73.0					--							73.0						52.5					--							52.5
				4,297.2					--							4,297.2						4,016.8					--							4,016.8
Operating costs and expenses
Cost of sales (excludes amortization of acquired intangible assets)				586.3					(0.4	)		(a)(b)				585.9						566.7					(0.4	)		(k)				566.3
Selling, general and administrative				1,710.5					(26.4	)		(b)(c)(d)(e)				1,684.1						1,694.7				(80.4		)		(l)(m)(n)(o)(p)				1,614.3
Research and development				750.3					(62.8	)		(d)(e)				687.5						676.4				(45.0		)		(n)				631.4
Amortization of acquired intangible assets				98.1					(80.4	)		(f)				17.7						95.6					(77.9	)		(f)				17.7
Impairment of intangible assets and related costs				--					--							--						23.7				(23.7		)		(o)(q)(r)				--
Restructuring charges				4.7					(4.7	)		(g)				--						4.6					(4.6	)		(g)				--
Operating income				1,147.3					174.7							1,322.0						955.1					232.0							1,187.1
Non-operating income (expense)
Interest income				4.8					--							4.8						5.6					--							5.6
Interest expense				(48.8	)				0.8			(h)				(48.0	)					(55.1	)				7.3			(s)				(47.8	)
Other, net				(19.3	)				15.2			(i)				(4.1	)					10.4				(13.4		)		(t)(u)				(3.0	)
				(63.3	)				16.0							(47.3	)					(39.1	)				(6.1	)						(45.2	)
Earnings before income taxes				1,084.0					190.7							1,274.7						916.0					225.9							1,141.9
Provision for income taxes				306.7					44.2			(j)				350.9						257.6				59.9				(v)				317.5
Net earnings				777.3					146.5							923.8						658.4					166.0							824.4
Net earnings attributable to noncontrolling interest				2.7					--							2.7						3.7					--							3.7
Net earnings attributable to Allergan, Inc.			$	774.6				$	146.5						$	921.1					$	654.7				$	166.0						$	820.7
Net earnings per share attributable to Allergan, Inc. stockholders:
Basic			$	2.56											$	3.05					$	2.15											$	2.70
Diluted			$	2.52											$	2.99					$	2.11											$	2.64
Weighted average number of common shares outstanding:
Basic				302.1												302.1						304.4												304.4
Diluted				307.7												307.7						310.3												310.3
Selected ratios as a percentage of product net sales
Cost of sales (excludes amortization of acquired intangible assets)				13.9	%											13.9	%					14.3	%											14.3	%
Selling, general and administrative				40.5	%											39.9	%					42.7	%											40.7	%
Research and development				17.8	%											16.3	%					17.1	%											15.9	%

(a)				Fair market value inventory adjustment rollout of $0.3 million associated with the purchase of a distributor’s business in Russia related to Allergan’s products
(b)				Expenses from changes in fair value of contingent consideration of $15.8 million and integration and transaction costs of $0.6 million associated with business combinations, consisting of cost of sales of $0.1 million and selling, general and administrative expenses of $0.5 million
(c)				Aggregate charges of $8.9 million for external costs for stockholder derivative litigation associated with the DOJ settlement announced in September 2010 and other legal contingency expenses
(d)				Expenses related to the realignment of various business functions and the restructuring of the obesity intervention business of $1.4 million, consisting of selling, general and administrative expenses of $1.1 million and research and development expenses of $0.3 million
(e)				Upfront licensing fees of $62.5 million included in research and development expenses associated with the license and collaboration agreements with Molecular Partners AG for technology that has not achieved regulatory approval and related transaction costs of $0.1 million included in selling, general and administrative expenses
(f)				Amortization of certain acquired intangible assets related to business combinations, asset acquisitions and product licenses
(g)				Net restructuring charges
(h)				Interest expense associated with changes in estimated taxes related to uncertain tax positions included in prior year filings
(i)				Unrealized loss on the mark-to-market adjustment to derivative instruments
(j)				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 $190.7 million			$	(50.9	)
Change in estimated taxes related to uncertain tax positions included in prior year filings				6.7
			$	(44.2	)

(k)				Fair market value inventory adjustment rollout associated with the purchase of a distributor’s business in South Africa related to Allergan’s products
(l)				Expenses from changes in fair value of contingent consideration of $2.3 million and integration and transaction costs of $1.5 million associated with business combinations
(m)				External costs of $3.1 million for stockholder derivative litigation costs associated with the DOJ settlement announced in September 2010
(n)				Upfront licensing fee of $45.0 million included in research and development expenses associated with a license and collaboration agreement with Molecular Partners AG for technology that has not achieved regulatory approval and related transaction costs of $0.1 million included in selling, general and administrative expenses
(o)				Fixed asset impairment of $2.2 million and a gain of $9.4 million from the substantially complete liquidation of Allergan’s investment in a foreign subsidiary included in selling, general and administrative expenses, and intangible asset impairment of $16.1 million resulting from the discontinued development of the Easyband TM Remote Adjustable Gastric Band System, a technology acquired by Allergan in the 2007 EndoArt SA acquisition
(p)				Upfront payment of $60.0 million and subsequent milestone payment of $20.0 million for the FDA acceptance of an NDA filing for technology that has not achieved regulatory approval associated with a collaboration and co-promotion agreement with MAP Pharmaceuticals, Inc. and related transaction costs of $0.6 million
(q)				Impairment of an in-process research and development asset related to a tissue reinforcement technology acquired in connection with the 2010 acquisition of Serica Technologies, Inc. of $4.3 million
(r)				Additional costs of $3.3 million for the termination of a third-party agreement primarily related to the promotion of Sanctura XR ® associated with the impairment of the Sanctura ® assets in the third quarter of 2010
(s)				Non-cash interest expense associated with amortization of convertible debt discount
(t)				Unrealized gain on the mark-to-market adjustment to derivative instruments of $12.0 million
(u)				Gain on sale of investments of $1.4 million
(v)				Total tax effect for non-GAAP pre-tax adjustments

ALLERGAN, INC.
Condensed Consolidated Balance Sheets
(Unaudited)
in millions			September 30, 2012						December 31, 2011
Assets
Cash and equivalents			$	2,655.0					$	2,406.1
Short-term investments				279.9						179.9
Trade receivables, net				872.6						730.6
Inventories				265.1						249.7
Other current assets				463.2						482.0
Total current assets				4,535.8						4,048.3
Property, plant and equipment, net				822.8						807.0
Intangible assets, net				1,079.4						1,165.2
Goodwill				2,092.9						2,088.4
Other noncurrent assets				380.0						399.7
Total assets			$	8,910.9					$	8,508.6
Liabilities and equity
Notes payable			$	40.7					$	83.9
Accounts payable				210.6						200.4
Other accrued expenses and income taxes				803.6						670.7
Total current liabilities				1,054.9						955.0
Long-term debt				1,515.5						1,515.4
Other liabilities				746.2						705.8
Equity:
Allergan, Inc. stockholders’ equity				5,569.6						5,309.6
Noncontrolling interest				24.7						22.8
Total equity				5,594.3						5,332.4
Total liabilities and equity			$	8,910.9					$	8,508.6
DSO				57						48
DOH				128						125
Cash and equivalents and short-term investments			$	2,934.9					$	2,586.0
Total notes payable and long-term debt				(1,556.2	)					(1,599.3	)
Cash and equivalents and short-term investments, net of debt			$	1,378.7					$	986.7
Debt-to-capital percentage				21.8	%					23.1	%

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, 2012							September 30, 2011
Net earnings attributable to Allergan, Inc.				$	249.4						$	249.8
Non-GAAP pre-tax adjustments:
Expenses from changes in fair value of contingent consideration and integration and transaction costs associated with business combinations					2.4							0.6
External costs for stockholder derivative litigation associated with the DOJ settlement					0.5							0.8
Expenses related to the realignment of various business functions and the restructuring of the obesity intervention business					0.6							--
Research and development expenses related to upfront licensing fees associated with the license and collaboration agreements with Molecular Partners AG for technology that has not achieved regulatory approval and related transaction costs					62.6							--
Amortization of acquired intangible assets					27.4							26.0
Net restructuring charges (reversal)					3.8							(0.1	)
Unrealized loss (gain) on derivative instruments					7.1							(16.8	)
Fair market value inventory adjustment rollout associated with the purchase of a distributor’s business in South Africa					--							0.4
Milestone payment for the FDA acceptance of an NDA filing for technology associated with a collaboration and co-promotion agreement with MAP Pharmaceuticals, Inc.					--							20.0
Impairment of an in-process research and development asset related to a tissue reinforcement technology acquired in connection with the 2010 acquisition of Serica Technologies, Inc.					--							4.3
Gain on sale of investments					--							(0.5	)
					353.8							284.5
Tax effect for above items					(28.8	)						(10.2	)
Change in estimated tax benefit associated with the upfront licensing fee paid to Molecular Partners AG					--							11.7
Change in estimated taxes related to uncertain tax positions and tax credits included in prior year filings					--							(1.9	)
Non-GAAP earnings attributable to Allergan, Inc.				$	325.0						$	284.1
Weighted average number of shares outstanding					300.1							304.2
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					5.2							5.6
					305.3							309.8
Diluted earnings per share attributable to Allergan, Inc. stockholders				$	0.82						$	0.81
Non-GAAP earnings per share adjustments:
Expenses from changes in fair value of contingent consideration and integration and transaction costs associated with business combinations					0.01							--
Research and development expenses related to upfront licensing fees associated with the license and collaboration agreements with Molecular Partners AG for technology that has not achieved regulatory approval and related transaction costs					0.15							--
Amortization of acquired intangible assets					0.06							0.06
Net restructuring charges (reversal)					0.01							--
Unrealized loss (gain) on derivative instruments					0.01							(0.03	)
Milestone payment for the FDA acceptance of an NDA filing for technology associated with a collaboration and co-promotion agreement with MAP Pharmaceuticals, Inc.					--							0.04
Impairment of an in-process research and development asset related to a tissue reinforcement technology acquired in connection with the 2010 acquisition of Serica Technologies, Inc.					--							0.01
Change in estimated tax benefit associated with the upfront licensing fee paid to Molecular Partners AG					--							0.04
Change in estimated taxes related to uncertain tax positions and tax credits included in prior year filings					--							(0.01	)
Non-GAAP diluted earnings per share attributable to Allergan, Inc. stockholders				$	1.06						$	0.92
Year over year change									15.2	%

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, 2012				September 30, 2011
Net earnings attributable to Allergan, Inc.		$	774.6			$	654.7
Non-GAAP pre-tax adjustments:
Fair market value inventory adjustment rollout associated with the purchases of distributor businesses			0.3				0.4
Expenses from changes in fair value of contingent consideration and integration and transaction costs associated with business combinations			16.4				3.8
Aggregate charges for external costs for stockholder derivative litigation associated with the DOJ settlement and other legal contingency expenses			8.9				3.1
Expenses related to the realignment of various business functions and the restructuring of the obesity intervention business			1.4				--
Research and development expenses related to upfront licensing fees associated with the license and collaboration agreements with Molecular Partners AG for technology that has not achieved regulatory approval and related transaction costs			62.6				45.1
Amortization of acquired intangible assets			80.4				77.9
Net restructuring charges			4.7				4.6
Interest expense associated with changes in estimated taxes related to uncertain tax positions included in prior year filings			0.8				--
Unrealized loss (gain) on derivative instruments			15.2				(12.0	)
Cumulative net expense for fixed asset impairment, a gain from the substantially complete liquidation of Allergan’s investment in a foreign subsidiary and intangible asset impairment resulting from the discontinued development of the Easyband TM Remote Adjustable Gastric Band System			--				8.9
Upfront payment and subsequent milestone payment for the FDA acceptance of an NDA filing for technology that has not achieved regulatory approval associated with a collaboration and co-promotion agreement with MAP Pharmaceuticals, Inc. and related transaction costs			--				80.6
Impairment of an in-process research and development asset related to a tissue reinforcement technology acquired in connection with the 2010 acquisition of Serica Technologies, Inc.			--				4.3
Additional costs for the termination of a third-party agreement primarily related to the promotion of Sanctura XR ®			--				3.3
Non-cash interest expense associated with amortization of convertible debt discount			--				7.3
Gain on sale of investments			--				(1.4	)
			965.3				880.6
Tax effect for above items			(50.9	)			(59.9	)
Change in estimated taxes related to uncertain tax positions included in prior year filings			6.7				--
Non-GAAP earnings attributable to Allergan, Inc.		$	921.1			$	820.7
Weighted average number of shares outstanding			302.1				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 market price			5.6				5.5
Dilutive effect of assumed conversion of convertible notes outstanding			--				0.4
			307.7				310.3

Diluted earnings per share attributable to Allergan, Inc. stockholders		$	2.52			$	2.11
Non-GAAP earnings per share adjustments:
Expenses from changes in fair value of contingent consideration and integration and transaction costs associated with business combinations			0.05				0.01
Aggregate charges for external costs for stockholder derivative litigation associated with the DOJ settlement and other legal contingency expenses			0.03				--
Research and development expenses related to upfront licensing fees associated with the license and collaboration agreements with Molecular Partners AG for technology that has not achieved regulatory approval and related transaction costs			0.15				0.13
Amortization of acquired intangible assets			0.18				0.17
Net restructuring charges			0.01				0.02
Unrealized loss (gain) on derivative instruments			0.03				(0.02	)
Cumulative net expense for fixed asset impairment, a gain from the substantially complete liquidation of Allergan’s investment in a foreign subsidiary and intangible asset impairment resulting from the discontinued development of the Easyband TM Remote Adjustable Gastric Band System			--				0.03
Upfront payment and subsequent milestone payment for the FDA acceptance of an NDA filing for technology that has not achieved regulatory approval associated with a collaboration and co-promotion agreement with MAP Pharmaceuticals, Inc. and related transaction costs			--				0.16
Impairment of an in-process research and development asset related to a tissue reinforcement technology acquired in connection with the 2010 acquisition of Serica Technologies, Inc.			--				0.01
Additional costs for the termination of a third-party agreement primarily related to the promotion of Sanctura XR ®			--				0.01
Non-cash interest expense associated with amortization of convertible debt discount			--				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		$	2.99			$	2.64
Year over year change				13.3	%

ALLERGAN, INC.
Supplemental Non-GAAP Information
(Unaudited)
				Three months ended
				September 30,					September 30,					$ change in net sales															Percent change in net sales
					2012					2011				Total					Performance					Currency					Total				Performance				Currency
in millions
Eye Care Pharmaceuticals				$	663.2				$	611.6				$	51.6				$	76.2				$	(24.6	)			8.4	%			12.5	%			(4.1	)%
Botox/Neuromodulator					431.6					396.7					34.9					45.8					(10.9	)			8.8	%			11.5	%			(2.7	)%
Skin Care					74.0					66.4					7.6					7.8					(0.2	)			11.4	%			11.7	%			(0.3	)%
Urologics					9.7					15.0					(5.3	)				(5.3	)				--				(35.3	)%			(35.3	)%			--
Total Specialty Pharmaceuticals					1,178.5					1,089.7					88.8					124.5					(35.7	)			8.1	%			11.4	%			(3.3	)%
Breast Aesthetics					86.1					83.3					2.8					5.9					(3.1	)			3.4	%			7.1	%			(3.7	)%
Obesity Intervention					37.4					49.7					(12.3	)				(11.0	)				(1.3	)			(24.7	)%			(22.1	)%			(2.6	)%
Facial Aesthetics					89.1					88.4					0.7					4.4					(3.7	)			0.8	%			5.0	%			(4.2	)%
Total Medical Devices					212.6					221.4					(8.8	)				(0.7	)				(8.1	)			(4.0	)%			(0.3	)%			(3.7	)%
Product net sales				$	1,391.1				$	1,311.1				$	80.0				$	123.8				$	(43.8	)			6.1	%			9.4	%			(3.3	)%
Selected Product Net Sales (a):
Alphagan P, Alphagan, and Combigan				$	111.3				$	100.5				$	10.8				$	14.3				$	(3.5	)			10.8	%			14.3	%			(3.5	)%
Lumigan Franchise					152.0					147.0					5.0					12.0					(7.0	)			3.4	%			8.2	%			(4.8	)%
Restasis					198.3					166.1					32.2					32.7					(0.5	)			19.4	%			19.7	%			(0.3	)%
Latisse					23.4					21.8					1.6					1.8					(0.2	)			7.2	%			7.9	%			(0.7	)%
Domestic					62.1	%				59.3	%
International					37.9	%				40.7	%

ALLERGAN, INC.
Supplemental Non-GAAP Information
(Unaudited)
		Nine months ended
		September 30,				September 30,				$ change in net sales													Percent change in net sales
		2012				2011				Total				Performance				Currency					Total			Performance			Currency
in millions
Eye Care Pharmaceuticals		$	1,986.1			$	1,861.1			$	125.0			$	190.2			$	(65.2	)			6.7	%		10.2	%		(3.5	)%
Botox/Neuromodulator			1,291.7				1,179.6				112.1				140.9				(28.8	)			9.5	%		11.9	%		(2.4	)%
Skin Care			221.0				190.4				30.6				31.1				(0.5	)			16.1	%		16.3	%		(0.2	)%
Urologics			31.8				42.3				(10.5	)			(10.5	)			--				(24.8	)%		(24.8	)%		--
Total Specialty Pharmaceuticals			3,530.6				3,273.4				257.2				351.7				(94.5	)			7.9	%		10.7	%		(2.8	)%
Breast Aesthetics			285.7				262.9				22.8				31.1				(8.3	)			8.7	%		11.8	%		(3.1	)%
Obesity Intervention			122.7				156.2				(33.5	)			(30.5	)			(3.0	)			(21.4	)%		(19.5	)%		(1.9	)%
Facial Aesthetics			285.2				271.8				13.4				23.7				(10.3	)			4.9	%		8.7	%		(3.8	)%
Total Medical Devices			693.6				690.9				2.7				24.3				(21.6	)			0.4	%		3.5	%		(3.1	)%
Product net sales		$	4,224.2			$	3,964.3			$	259.9			$	376.0			$	(116.1	)			6.6	%		9.5	%		(2.9	)%
Selected Product Net Sales (a):
Alphagan P, Alphagan, and Combigan		$	334.7			$	309.2			$	25.5			$	35.1			$	(9.6	)			8.3	%		11.4	%		(3.1	)%
Lumigan Franchise			452.4				452.9				(0.5	)			17.5				(18.0	)			(0.1	)%		3.9	%		(4.0	)%
Restasis			580.0				501.1				78.9				81.3				(2.4	)			15.7	%		16.2	%		(0.5	)%
Latisse			72.4				69.0				3.4				3.9				(0.5	)			5.0	%		5.6	%		(0.6	)%
Domestic			60.9	%			59.6	%
International			39.1	%			40.4	%

(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)
		Fourth Quarter 2012
		Low			High
GAAP diluted earnings per share attributable to Allergan, Inc. stockholders expectations (a)		$	1.12		$	1.14
Amortization of acquired intangible assets			0.06			0.06
Non-GAAP diluted earnings per share expectations		$	1.18		$	1.20
		Full Year 2012
		Low			High
GAAP diluted earnings per share attributable to Allergan, Inc. stockholders expectations (a)		$	3.64		$	3.66
Expenses from changes in fair value of contingent consideration and integration and transaction costs associated with business combinations			0.05			0.05
Aggregate charges for external costs for stockholder derivative litigation associated with the DOJ settlement and other legal contingency expenses			0.03			0.03
Research and development expenses related to upfront licensing fees associated with the license and collaboration agreements with Molecular Partners AG for technology that has not achieved regulatory approval and related transaction costs			0.15			0.15
Net restructuring charges			0.01			0.01
Amortization of acquired intangible assets			0.24			0.24
Unrealized loss on derivative instruments			0.03			0.03
Change in estimated taxes related to uncertain tax positions included in prior year filings			0.02			0.02
Non-GAAP diluted earnings per share expectations		$	4.17		$	4.19

(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 and stockholder derivative litigation costs related to the 2010 DOJ settlement and other legal contingency expenses that may occur but that are not currently known or determinable.

« First ‹ Previous 1 2 3 4 5 6 7 8 Next › Last »