Allergan Reports Fourth Quarter 2012 Operating Results
Allergan Reports Fourth Quarter 2012 Operating Results
Business Wire
IRVINE, Calif. -- February 5, 2013
Allergan, Inc. (NYSE: AGN) today announced operating results for the quarter
ended December 31, 2012. Allergan also announced that its Board of Directors
has declared a fourth quarter dividend of $0.05 per share, payable on March
21, 2013 to stockholders of record on February 28, 2013.
Operating Results Attributable to Stockholders
For the quarter ended December 31, 2012:
* Allergan reported $1.06 diluted earnings per share attributable to
stockholders compared to $0.90 diluted earnings per share attributable to
stockholders for the fourth quarter of 2011.
* Allergan reported $1.15 non-GAAP diluted earnings per share attributable
to stockholders compared to $1.00 non-GAAP diluted earnings per share
attributable to stockholders for the fourth quarter of 2011, a 15.0
percent increase.
* Diluted and non-GAAP diluted earnings per share for the fourth quarter of
2012 exclude the full year 2012 impact of the U.S. Research and
Development tax credit, which was signed into law on January 2, 2013 and
retroactively reinstated to January 1, 2012. The estimated impact of the
Research and Development tax credit on net earnings attributable to
Allergan for the full year 2012, which will be reported in Allergan’s
operating results in the first quarter of 2013, was approximately $17.3
million, or $0.06 diluted earnings per share based on weighted average
diluted shares outstanding of 307.1 million for the full year 2012.
Product Sales
For the quarter ended December 31, 2012:
* Allergan reported $1,484.6 million total product net sales. Total product
net sales increased 7.4 percent compared to total product net sales in the
fourth quarter of 2011. On a constant currency basis, total product net
sales increased 8.1 percent compared to total product net sales in the
fourth quarter of 2011.
* Total specialty pharmaceuticals net sales increased 8.2 percent, or
9.0 percent on a constant currency basis, compared to total specialty
pharmaceuticals net sales in the fourth quarter of 2011.
* Total medical devices net sales increased 2.9 percent, or 3.6 percent
on a constant currency basis, compared to total medical devices net
sales in the fourth quarter of 2011.
“Evidenced by our recent acquisitions of SkinMedica and MAP Pharmaceuticals
and our decision to declare our obesity intervention assets as a discontinued
business, we are dynamically managing our portfolio to drive long term sales
growth,” said David E.I. Pyott, Allergan’s Chairman of the Board, President
and Chief Executive Officer. “In 2013, we look forward to making a notable
increase in R&D investment, to secure several regulatory approvals and to
growing our markets.”
Based on internal information and assumptions, full year 2012 therapeutic
sales accounted for approximately 52% of total BOTOX® (onabotulinumtoxinA)
sales and increased approximately 13% compared to 2011. Full year 2012
aesthetic sales accounted for approximately 48% of total BOTOX® sales and
increased approximately 8% compared to 2011.
Product and Pipeline Update
During the fourth quarter of 2012:
* On November 16, 2012, Allergan announced that it had entered into a
definitive agreement with SkinMedica, Inc. to acquire the privately held
company’s topical aesthetics skin care business. On December 19, 2012,
Allergan announced completion of the acquisition of SkinMedica, Inc. Under
the terms of the agreement, Allergan paid approximately $350 million
(subject to certain adjustments) for the business, which includes a
variety of “physician dispensed” non-prescription aesthetic skin care
products and prescription products.
* On November 19, 2012, Allergan received the European Commission decision
for a new preservative-free formulation of LUMIGAN® (Bimatoprost
Ophthalmic Solution) 0.03% in single-dose containers for the 27 countries
of the European Union. LUMIGAN® is licensed for the reduction of elevated
intraocular pressure (IOP) in adults with chronic open-angle glaucoma and
ocular hypertension and is now available in a formulation for those
patients who require a preservative-free treatment.
* In December 2012, the U.S. District Court in Santa Ana, California granted
Allergan’s summary judgment motions, finding that Lifetech’s Rapidlash®,
Cosmetic Alchemy’s LiLash®, and Rocasuba’s neuLash® lines of products are
drugs sold without approval and are therefore misbranded in violation of
California law as well as the federal statutes which California law
incorporates. On October 12, 2012, the court denied a motion by Athena
Cosmetics, Inc. for reconsideration of the court’s decision to grant
Allergan’s motion for summary judgment against Athena Cosmetics, Inc. on
our unfair competition cause of action. In July 2012, the court granted
Allergan’s summary judgment motion, finding that Athena’s Revitalash® line
of products are drugs sold without approval and are therefore misbranded
in violation of California law as well as the federal statutes which
California law incorporates.
* On December 19, 2012, Allergan announced that BOTOX® (botulinum toxin type
A) received a positive opinion from the Irish Medicines Board for the
treatment of idiopathic overactive bladder (OAB) with symptoms of urinary
incontinence, urgency and frequency in adult patients who have an
inadequate response to, or are intolerant of, anticholinergic medications.
This is an important step towards securing national licenses in the 14
European countries involved in the Mutual Recognition Procedure.
* Allergan submitted a supplemental biologics license application (sBLA)
with the U.S. Food and Drug Administration (FDA) for the use of BOTOX®
Cosmetic (onabotulinumtoxinA) for the temporary improvement in the
appearance of moderate to severe lateral canthal lines (crow’s feet lines)
in adults treated either alone or simultaneously with glabellar lines.
Following the end of the fourth quarter of 2012:
* On January 18, 2013, Allergan announced that the FDA approved BOTOX®
(onabotulinumtoxinA) for the treatment of overactive bladder with symptoms
of urge urinary incontinence, urgency and frequency in adults who have had
an inadequate response to or are intolerant of an anticholinergic
medication.
* On January 22, 2013, Allergan and MAP Pharmaceuticals announced that they
entered into a definitive merger agreement whereby Allergan will acquire
100% of the shares of MAP Pharmaceuticals for a price of $25.00 per share.
MAP Pharmaceuticals is a biopharmaceutical company focused on developing
and commercializing new therapies in Neurology, including Levadex®, an
orally inhaled drug for the potential acute treatment of migraine in
adults. Levadex® is currently under review with the FDA.
* In January 2013, Allergan restructured its collaboration agreement with
Spectrum Pharmaceuticals, Inc. (“Spectrum”) pursuant to which Spectrum
reacquired all rights from Allergan under the collaboration agreement in
exchange for agreeing to pay Allergan a royalty on future net sales of
specified products. Going forward, Allergan will have no further
obligations under the agreement to share development costs or perform any
development, regulatory or other activities.
* On February 1, 2013, Allergan completed its previously announced review of
strategic options for maximizing the value of its obesity intervention
business, and has formally committed to pursue a sale of that business
unit. Accordingly, Allergan will begin to consider offers for the sale of
that business unit and currently expects to execute a signed agreement in
the first half of 2013. As a result of Allergan’s approved plan to sell
its obesity intervention business unit, beginning in the first quarter of
2013, Allergan expects to report the financial results from that business
unit in discontinued operations in its statement of earnings and balance
sheet, and intends to retrospectively adjust its prior period statements
of earnings and its balance sheet as of December 31, 2012 to reflect the
classification of assets and liabilities held for sale as discontinued
operations. In the first quarter of 2013, Allergan expects to report
income from discontinued operations and a separate expected disposal loss
from the write-down to fair value of the net assets held for sale.
Allergan is currently unable to estimate the range of the expected
disposal loss. As previously stated, Allergan intends to offset any
potential earnings dilution related to this transaction.
Outlook
For the full year of 2013, Allergan expects:
* Total product net sales between $5,900 million and $6,200 million, which
excludes the obesity intervention business.
* Total specialty pharmaceuticals net sales between $5,100 million and
$5,340 million.
* Total medical devices net sales between $800 million and $860
million.
* ALPHAGAN® franchise product net sales between $440 million and $470
million.
* LUMIGAN® franchise product net sales between $630 million and $660
million.
* RESTASIS® product net sales between $830 million and $870 million.
* BOTOX® product net sales between $1,900 million and $2,000 million.
* LATISSE® product net sales at approximately $110 million.
* Breast aesthetics product net sales between $390 million and $420
million.
* Facial aesthetics product net sales between $410 million and $440
million.
* Non-GAAP cost of sales to product net sales ratio at approximately 13.5%.
* Non-GAAP other revenue at approximately $90 million.
* Non-GAAP selling, general and administrative expenses to product net sales
ratio between 37% and 38%.
* Non-GAAP research and development expenses to product net sales ratio at
approximately 16.5%.
* Non-GAAP amortization of intangible assets at approximately $25 million.
This expectation excludes the amortization of certain intangible assets
associated with business combinations, asset purchases and product
licenses.
* Non-GAAP diluted earnings per share attributable to stockholders between
$4.75 and $4.83, which excludes the 2012 impact of the Research and
Development tax credit, which was signed into law on January 2, 2013 and
retroactively reinstated to January 1, 2012, and excludes the dilutive
impact of the proposed acquisition of MAP Pharmaceuticals as discussed on
the January 23, 2013 conference call.
* Diluted shares outstanding at approximately 303 million.
* Effective tax rate on non-GAAP earnings between 26% and 27%.
For the first quarter of 2013, Allergan expects:
* Total product net sales between $1,375 million and $1,450 million, which
excludes the obesity intervention business.
* Non-GAAP diluted earnings per share attributable to stockholders between
$0.94 and $0.96, which excludes the 2012 impact of the Research and
Development tax credit, which was signed into law on January 2, 2013 and
retroactively reinstated to January 1, 2012, and excludes the dilutive
impact of the proposed acquisition of MAP Pharmaceuticals as discussed on
the January 23, 2013 conference call.
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 revenue, non-GAAP cost of sales, non-GAAP selling, general and
administrative expenses, non-GAAP research and development expenses, non-GAAP
amortization of intangible assets, non-GAAP impairment of intangible assets
and related costs, non-GAAP restructuring charges, non-GAAP interest expense,
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. The information that accompanies
the financial tables of this press release also includes an explanation of why
Allergan uses these non-GAAP financial measures, certain limitations
associated with the use of these non-GAAP financial measures, the manner in
which Allergan management compensates for those limitations, and the reasons
why Allergan management believes that these non-GAAP financial measures
provide useful information to investors.
Forward-Looking Statements
This press release contains forward-looking statements, including but not
limited to the statements by Mr. Pyott and other statements regarding product
development, external corporate development initiatives and strategic
partnering transactions, market potential, expected growth and regulatory
approvals 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. 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, fluctuations
or devaluations in the value of sovereign government debt, 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 U.S. Securities and Exchange
Commission, including the discussion under the heading “Risk Factors” in
Allergan’s 2011 Annual Report on Form 10-K and subsequent Quarterly Reports on
Form 10-Q. Copies of Allergan’s press releases and additional information
about Allergan are available at www.allergan.com or you can contact the
Allergan Investor Relations Department by calling 714-246-4636.
About Allergan, Inc.
Allergan is a multi-specialty health care company established more than 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 approximately 10,800 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, medical devices and over-the-counter consumer products, 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 eye care, neurosciences,
medical aesthetics, medical dermatology, breast aesthetics, obesity
intervention and urologics, Allergan is proud to celebrate more than 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.
For more information regarding Allergan, go to: www.allergan.com.
® and ™ marks owned by Allergan, Inc.
Revitalash® is a registered trademark of Athena Cosmetics, Inc.
Rapidlash® is a registered trademark of Lifetech Resources
LiLash® is a registered trademark of Kurt Wasserman Consulting
neuLash® is a registered trademark of Lifetech Resources
Levadex® is a registered trademark of MAP Pharmaceuticals, Inc.
ALLERGAN, INC.
Condensed Consolidated Statements of Earnings and
Reconciliation of Non-GAAP Adjustments
(Unaudited)
Three months ended
In millions,
except per December 31, 2012 December 31, 2011
share amounts
Non-GAAP Non-GAAP
GAAP Adjustments Non-GAAP GAAP Adjustments Non-GAAP
Revenues
Product net $ 1,484.6 $ -- $ 1,484.6 $ 1,382.8 $ -- $ 1,382.8
sales
Other revenues 24.3 -- 24.3 19.5 -- 19.5
1,508.9 -- 1,508.9 1,402.3 -- 1,402.3
Operating
costs and
expenses
Cost of sales
(excludes
amortization
of 189.2 -- 189.2 182.0 -- 182.0
intangible
assets)
Selling,
general and 557.9 6.9 ^(a)(b)(c)(d) 564.8 551.9 (12.3 )^(k)(l)(m) 539.6
administrative
Research and 239.3 -- 239.3 226.4 (0.2 )^(n) 226.2
development
Amortization
of intangible 33.2 (27.4 )^(e) 5.8 32.0 (26.1 )^(e) 5.9
assets
Impairment of
intangible 22.3 (22.3 )^(f) -- -- -- --
assets and
related costs
Restructuring 1.0 (1.0 )^(g) -- -- -- --
charges
Operating 466.0 43.8 509.8 410.0 38.6 448.6
income
Non-operating
income
(expense)
Interest 1.9 -- 1.9 1.3 -- 1.3
income
Interest (14.8 ) 0.1 ^(h) (14.7 ) (16.7 ) -- (16.7 )
expense
Other, net (3.8 ) 0.1 ^(i) (3.7 ) (10.9 ) 3.6 ^(o)(p)(q) (7.3 )
(16.7 ) 0.2 (16.5 ) (26.3 ) 3.6 (22.7 )
Earnings
before income 449.3 44.0 493.3 383.7 42.2 425.9
taxes
Provision for 124.1 17.0 ^(j) 141.1 104.0 10.9 ^(r) 114.9
income taxes
Net earnings 325.2 27.0 352.2 279.7 31.3 311.0
Net earnings
(loss)
attributable 1.0 -- 1.0 (0.1 ) -- (0.1 )
to
noncontrolling
interest
Net earnings
attributable $ 324.2 $ 27.0 $ 351.2 $ 279.8 $ 31.3 $ 311.1
to Allergan,
Inc.
Net earnings
per share
attributable
to
Allergan, Inc.
stockholders:
Basic $ 1.08 $ 1.17 $ 0.92 $ 1.02
Diluted $ 1.06 $ 1.15 $ 0.90 $ 1.00
Weighted
average number
of common
shares
outstanding:
Basic 299.8 299.8 304.2 304.2
Diluted 305.1 305.1 310.0 310.0
Selected
ratios as a
percentage of
product net
sales
Cost of sales
(excludes
amortization
of 12.7 % 12.7 % 13.2 % 13.2 %
intangible
assets)
Selling,
general and 37.6 % 38.0 % 39.9 % 39.0 %
administrative
Research and 16.1 % 16.1 % 16.4 % 16.4 %
development
Income from changes in fair value of contingent consideration of
(a) $10.4 million and integration and transaction costs of $1.5 million
associated with business combinations
External costs of $0.8 million for stockholder derivative and tax
(b) litigation costs associated with the U.S. Department of Justice
(DOJ) settlement announced in September 2010
Expenses related to the realignment of various business functions
(c) and the restructuring of the obesity intervention business of $1.0
million
Transaction costs of $0.2 million associated with the license and
(d) collaboration agreements with Molecular Partners AG for technology
that has not achieved regulatory approval
(e) Amortization of certain intangible assets related to business
combinations, asset acquisitions and product licenses
Impairment of an in-process research and development asset related
(f) to technology acquired in connection with the 2011 acquisition of
Vicept Therapeutics, Inc. of $17.0 million and a prepaid royalty
asset associated with the Sanctura^® franchise of $5.3 million
(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 $44.0 million $ (18.0 )
Change in estimated taxes related to uncertain tax positions 1.0
included in prior year filings
$ (17.0 )
Expenses from changes in fair value of contingent consideration of
(k) $9.6 million and transaction costs of $0.4 million associated with
business combinations
(l) External costs of $0.3 million for stockholder derivative litigation
costs associated with the DOJ settlement announced in September 2010
(m) Costs associated with tax audit settlements for prior years’ filings
of $2.0 million
(n) Expenses related to the realignment of research and development
functions
(o) Unrealized loss on the mark-to-market adjustment to derivative
instruments of $0.9 million
(p) Gain on sale of investments of $0.5 million
(q) Impairment of a non-marketable equity investment of $3.2 million
(r) 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 U.S. Securities and Exchange Commission, with
respect to the three and twelve months ended December 31, 2012 and December
31, 2011 and with respect to anticipated results for the first quarter and
full year of 2013. 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 revenue,” “non-GAAP cost of sales,” “non-GAAP
selling, general and administrative expenses,” “non-GAAP research and
development expenses,” “non-GAAP amortization of intangible assets,” “non-GAAP
impairment of intangible assets and related costs,” “non-GAAP restructuring
charges,” “non-GAAP operating income,” “non-GAAP interest expense,” “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 December 31, 2012 December 31, 2011
share amounts
Non-GAAP Non-GAAP
GAAP Adjustments Non-GAAP GAAP Adjustments Non-GAAP
Revenues
Product net $ 5,708.8 $ -- $ 5,708.8 $ 5,347.1 $ -- $ 5,347.1
sales
Other revenues 97.3 -- 97.3 72.0 -- 72.0
5,806.1 -- 5,806.1 5,419.1 -- 5,419.1
Operating
costs and
expenses
Cost of sales
(excludes
amortization 775.5 (0.4 )^(a)(b) 775.1 748.7 (0.4 )^(l) 748.3
of intangible
assets)
Selling,
general and 2,268.4 (19.5 )^(b)(c)(d)(e) 2,248.9 2,246.6 (92.7 )^(m)(n)(o)(p)(q)(r) 2,153.9
administrative
Research and 989.6 (62.8 )^(d)(e) 926.8 902.8 (45.2 )^(o)(s) 857.6
development
Amortization
of intangible 131.3 (107.8 )^(f) 23.5 127.6 (104.0 )^(f) 23.6
assets
Impairment of
intangible 22.3 (22.3 )^(g) -- 23.7 (23.7 )^(p)(t)(u) --
assets and
related costs
Restructuring 5.7 (5.7 )^(h) -- 4.6 (4.6 )^(h) --
charges
Operating 1,613.3 218.5 1,831.8 1,365.1 270.6 1,635.7
income
Non-operating
income
(expense)
Interest 6.7 -- 6.7 6.9 -- 6.9
income
Interest (63.6 ) 0.9 ^(i) (62.7 ) (71.8 ) 7.3 ^(v) (64.5 )
expense
Other, net (23.1 ) 15.3 ^(j) (7.8 ) (0.5 ) (9.8 )^(w)(x)(y) (10.3 )
(80.0 ) 16.2 (63.8 ) (65.4 ) (2.5 ) (67.9 )
Earnings
before income 1,533.3 234.7 1,768.0 1,299.7 268.1 1,567.8
taxes
Provision for 430.8 61.2 ^(k) 492.0 361.6 70.8 ^(z) 432.4
income taxes
Net earnings 1,102.5 173.5 1,276.0 938.1 197.3 1,135.4
Net earnings
attributable
to 3.7 -- 3.7 3.6 -- 3.6
noncontrolling
interest
Net earnings
attributable $ 1,098.8 $ 173.5 $ 1,272.3 $ 934.5 $ 197.3 $ 1,131.8
to Allergan,
Inc.
Net earnings
per share
attributable
to
Allergan, Inc.
stockholders:
Basic $ 3.64 $ 4.22 $ 3.07 $ 3.72
Diluted $ 3.58 $ 4.14 $ 3.01 $ 3.65
Weighted
average number
of common
shares
outstanding:
Basic 301.5 301.5 304.4 304.4
Diluted 307.1 307.1 310.2 310.2
Selected
ratios as a
percentage of
product net
sales
Cost of sales
(excludes
amortization
of 13.6 % 13.6 % 14.0 % 14.0 %
intangible
assets)
Selling,
general and 39.7 % 39.4 % 42.0 % 40.3 %
administrative
Research and 17.3 % 16.2 % 16.9 % 16.0 %
development
Fair market value inventory adjustment rollout of $0.3 million
(a) associated with the purchase of a distributor’s business in Russia
related to Allergan’s products
Expenses from changes in fair value of contingent consideration of
$5.4 million and integration and transaction costs of $2.1 million
(b) associated with business combinations, consisting of cost of sales
of $0.1 million and selling, general and administrative expenses of
$2.0 million
Aggregate charges of $9.7 million for external costs for stockholder
(c) derivative and tax litigation associated with the DOJ settlement
announced in September 2010 and other legal contingency expenses
Expenses related to the realignment of various business functions
and the restructuring of the obesity intervention business of $2.4
(d) million, consisting of selling, general and administrative expenses
of $2.1 million and research and development expenses of $0.3
million
Upfront licensing fees of $62.5 million included in research and
development expenses associated with the license and collaboration
(e) agreements with Molecular Partners AG for technology that has not
achieved regulatory approval and related transaction costs of $0.3
million included in selling, general and administrative expenses
(f) Amortization of certain intangible assets related to business
combinations, asset acquisitions and product licenses
Impairment of an in-process research and development asset related
(g) to technology acquired in connection with the 2011 acquisition of
Vicept Therapeutics, Inc. of $17.0 million and a prepaid royalty
asset associated with the Sanctura^® franchise of $5.3 million
(h) Net restructuring charges
(i) Interest expense associated with changes in estimated taxes related
to uncertain tax positions included in prior year filings
(j) Unrealized loss on the mark-to-market adjustment to derivative
instruments
(k) 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 $234.7 million $ (68.9 )
Change in estimated taxes related to uncertain tax positions 7.7
included in prior year filings
$ (61.2 )
Fair market value inventory adjustment rollout associated with the
(l) purchase of a distributor’s business in South Africa related to
Allergan’s products
Expenses from changes in fair value of contingent consideration of
(m) $11.9 million and integration and transaction costs of $1.9 million
associated with business combinations
(n) External costs of $3.4 million for stockholder derivative litigation
costs associated with the DOJ settlement announced in September 2010
Upfront licensing fee of $45.0 million included in research and
development expenses associated with a license and collaboration
(o) 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
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
(p) 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
Upfront payment of $60.0 million and subsequent milestone payment of
$20.0 million for the United States Food and Drug Administration
(q) acceptance of an New Drug Application 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
(r) Costs associated with tax audit settlements for prior years’ filings
of $2.0 million
(s) Expenses related to the realignment of research and development
functions of $0.2 million
Impairment of an in-process research and development asset related
(t) to a tissue reinforcement technology acquired in connection with the
2010 acquisition of Serica Technologies, Inc. of $4.3 million
Additional costs of $3.3 million for the termination of a
(u) 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
(v) Non-cash interest expense associated with amortization of
convertible debt discount
(w) Unrealized gain on the mark-to-market adjustment to derivative
instruments of $11.1 million
(x) Gain on sale of investments of $1.9 million
(y) Impairment of a non-marketable equity investment of $3.2 million
(z) Total tax effect for non-GAAP pre-tax adjustments
ALLERGAN, INC.
Condensed Consolidated Balance Sheets
(Unaudited)
December 31, December 31,
in millions
2012 2011
Assets
Cash and equivalents $ 2,701.8 $ 2,406.1
Short-term investments 260.6 179.9
Trade receivables, net 764.2 730.6
Inventories 282.9 249.7
Other current assets 449.3 482.0
Total current assets 4,458.8 4,048.3
Property, plant and equipment, net 852.9 807.0
Intangible assets, net 1,229.1 1,165.2
Goodwill 2,239.5 2,088.4
Other noncurrent assets 399.0 399.7
Total assets $ 9,179.3 $ 8,508.6
Liabilities and equity
Notes payable $ 48.8 $ 83.9
Accounts payable 233.1 200.4
Other accrued expenses 813.3 670.7
Total current liabilities 1,095.2 955.0
Long-term debt 1,512.4 1,515.4
Other liabilities 709.1 705.8
Equity:
Allergan, Inc. stockholders’ equity 5,837.1 5,309.6
Noncontrolling interest 25.5 22.8
Total equity 5,862.6 5,332.4
Total liabilities and equity $ 9,179.3 $ 8,508.6
DSO 47 48
DOH 136 125
Cash and equivalents and short-term $ 2,962.4 $ 2,586.0
investments
Total notes payable and long-term debt (1,561.2 ) (1,599.3 )
Cash and equivalents and short-term $ 1,401.2 $ 986.7
investments, net of debt
Debt-to-capital percentage 21.0 % 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 Three months ended
amounts
December 31, December 31,
2012 2011
Net earnings attributable to $ 324.2 $ 279.8
Allergan, Inc.
Non-GAAP pre-tax adjustments:
Expenses (income) from changes in
fair value of contingent
consideration and integration and (8.9 ) 10.0
transaction costs associated with
business combinations
External costs for stockholder
derivative and tax litigation 0.8 0.3
associated with the DOJ settlement
Expenses related to the realignment
of various business functions and 1.0 0.2
the restructuring of the obesity
intervention business
Transaction costs associated with
the license and collaboration
agreements with Molecular Partners 0.2 --
AG for technology that has not
achieved regulatory approval
Amortization of intangible assets 27.4 26.1
Impairment of an in-process
research and development asset
related to technology acquired in
connection with the 2011
acquisition of Vicept Therapeutics, 22.3 --
Inc. and a prepaid royalty asset
associated with the Sanctura^®
franchise
Net restructuring charges 1.0 --
Interest expense associated with
changes in estimated taxes related 0.1 --
to uncertain tax positions included
in prior year filings
Unrealized loss on derivative 0.1 0.9
instruments
Costs associated with tax audit
settlements for prior years’ -- 2.0
filings
Gain on sale of investments -- (0.5 )
Impairment of a non-marketable -- 3.2
equity investment
368.2 322.0
Tax effect for above items (18.0 ) (10.9 )
Change in estimated taxes related
to uncertain tax positions included 1.0 --
in prior year filings
Non-GAAP earnings attributable to $ 351.2 $ 311.1
Allergan, Inc.
Weighted average number of shares 299.8 304.2
outstanding
Net shares assumed issued using the
treasury stock method for
options and non-vested equity
shares and share units outstanding 5.3 5.8
during each period based on average
market price
305.1 310.0
Diluted earnings per share
attributable to Allergan, Inc. $ 1.06 $ 0.90
stockholders
Non-GAAP earnings per share
adjustments:
Expenses (income) from changes in
fair value of contingent
consideration and integration and (0.02 ) 0.03
transaction costs associated with
business combinations
Amortization of intangible assets 0.06 0.06
Impairment of an in-process
research and development asset
related to technology acquired in
connection with the 2011
acquisition of Vicept Therapeutics, 0.05 --
Inc. and a prepaid royalty asset
associated with the Sanctura^®
franchise
Impairment of a non-marketable -- 0.01
equity investment
Non-GAAP diluted earnings per share
attributable to Allergan, Inc. $ 1.15 $ 1.00
stockholders
Year over year change 15.0 %
ALLERGAN, INC.
Reconciliation of Non-GAAP Earnings and Diluted Earnings Per Share
Attributable
to Allergan, Inc. Stockholders
(Unaudited)
In millions, except per share amounts Twelve months ended
December 31, December 31,
2012 2011
Net earnings attributable to Allergan, $ 1,098.8 $ 934.5
Inc.
Non-GAAP pre-tax adjustments:
Fair market value inventory adjustment
rollout associated with the purchases of 0.3 0.4
distributor businesses
Expenses from changes in fair value of
contingent consideration and integration 7.5 13.8
and transaction costs associated with
business combinations
Aggregate charges for external costs for
stockholder derivative and tax
litigation associated with the DOJ 9.7 3.4
settlement and other legal contingency
expenses
Expenses related to the realignment of
various business functions and the 2.4 0.2
restructuring of the obesity
intervention business
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 62.8 45.1
achieved regulatory approval and related
transaction costs
Amortization of intangible assets 107.8 104.0
Impairment of an in-process research and
development asset related to technology
acquired in connection with the 2011
acquisition of Vicept Therapeutics, Inc. 22.3 --
and a prepaid royalty asset associated
with the Sanctura^® franchise
Net restructuring charges 5.7 4.6
Interest expense associated with changes
in estimated taxes related to uncertain 0.9 --
tax positions included in prior year
filings
Unrealized loss (gain) on derivative 15.3 (11.1 )
instruments
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 -- 8.9
Easyband^TM Remote Adjustable Gastric
Band System
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. -- 80.6
and related transaction costs
Costs associated with tax audit -- 2.0
settlements for prior years’ filings
Impairment of an in-process research and
development asset related to a tissue
reinforcement technology acquired in
connection with the 2010 acquisition of -- 4.3
Serica Technologies, Inc.
Additional costs for the termination of
a third-party agreement primarily -- 3.3
related to the promotion of Sanctura
XR^®
Non-cash interest expense associated
with amortization of convertible debt -- 7.3
discount
Gain on sale of investments -- (1.9 )
Impairment of a non-marketable equity -- 3.2
investment
1,333.5 1,202.6
Tax effect for above items (68.9 ) (70.8 )
Change in estimated taxes related to
uncertain tax positions included in 7.7 --
prior year filings
Non-GAAP earnings attributable to $ 1,272.3 $ 1,131.8
Allergan, Inc.
Weighted average number of shares 301.5 304.4
outstanding
Net shares assumed issued using the
treasury stock method for
options and non-vested equity shares and
share units outstanding 5.6 5.5
during each period based on average
market price
Dilutive effect of assumed conversion of -- 0.3
convertible notes outstanding
307.1 310.2
Diluted earnings per share attributable to $ 3.58 $ 3.01
Allergan, Inc. stockholders
Non-GAAP earnings per share adjustments:
Expenses from changes in fair value of
contingent consideration and integration and 0.03 0.04
transaction costs associated with business
combinations
Aggregate charges for external costs for
stockholder derivative and tax litigation 0.03 0.01
associated with the DOJ settlement and other
legal contingency expenses
Research and development expenses related to
upfront licensing fees associated with the
license and collaboration agreements with
Molecular Partners AG for technology that has 0.15 0.13
not achieved regulatory approval and related
transaction costs
Amortization of intangible assets 0.24 0.23
Impairment of an in-process research and
development asset related to technology acquired
in connection with the 2011 acquisition of
Vicept Therapeutics, Inc. and a prepaid royalty 0.05 --
asset associated with the Sanctura^® franchise
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 -- 0.03
Gastric Band System
Upfront payment and subsequent milestone payment
for the FDA acceptance of an NDA filing for
technology that has not achieved regulatory -- 0.16
approval associated with a collaboration and
co-promotion agreement with MAP Pharmaceuticals,
Inc. and related transaction costs
Impairment of an in-process research and
development asset related to a tissue
reinforcement technology acquired in connection
with the 2010 acquisition of Serica -- 0.01
Technologies, Inc.
Additional costs for the termination of a
third-party agreement primarily related to the -- 0.01
promotion of Sanctura XR^®
Non-cash interest expense associated with -- 0.01
amortization of convertible debt discount
Impairment of a non-marketable equity investment -- 0.01
Change in estimated taxes related to uncertain 0.02 --
tax positions included in prior year filings
Non-GAAP diluted earnings per share attributable $ 4.14 $ 3.65
to Allergan, Inc. stockholders
Year over year change 13.4 %
ALLERGAN, INC.
Supplemental Non-GAAP Information
(Unaudited)
Three months ended
December December $ change in net sales Percent change in net sales
31, 31,
2012 2011 Total Performance Currency Total Performance Currency
in millions
Eye Care $ 706.1 $ 659.1 $ 47.0 $ 54.0 $ (7.0 ) 7.1 % 8.2 % (1.1 )%
Pharmaceuticals
Botox/Neuromodulator 474.6 415.3 59.3 61.2 (1.9 ) 14.3 % 14.7 % (0.4 )%
Skin Care 77.4 69.7 7.7 7.7 -- 11.0 % 11.0 % --
Urologics (4.1 ) 14.5 (18.6 ) (18.6 ) -- (128.3 )% (128.3 )% --
Total Specialty 1,254.0 1,158.6 95.4 104.3 (8.9 ) 8.2 % 9.0 % (0.8 )%
Pharmaceuticals
Breast Aesthetics 91.4 86.4 5.0 5.7 (0.7 ) 5.8 % 6.6 % (0.8 )%
Obesity Intervention 36.8 46.9 (10.1 ) (9.8 ) (0.3 ) (21.5 )% (20.9 )% (0.6 )%
Facial Aesthetics 102.4 90.9 11.5 12.1 (0.6 ) 12.7 % 13.3 % (0.6 )%
Total Medical 230.6 224.2 6.4 8.0 (1.6 ) 2.9 % 3.6 % (0.7 )%
Devices
Product net sales $ 1,484.6 $ 1,382.8 $ 101.8 $ 112.3 $ (10.5 ) 7.4 % 8.1 % (0.7 )%
Selected Product Net
Sales (a):
Alphagan P,
Alphagan, and $ 118.5 $ 110.2 $ 8.3 $ 9.3 $ (1.0 ) 7.5 % 8.4 % (0.9 )%
Combigan
Lumigan Franchise 170.2 159.8 10.4 12.3 (1.9 ) 6.5 % 7.7 % (1.2 )%
Total Glaucoma 290.8 272.5 18.3 21.2 (2.9 ) 6.7 % 7.8 % (1.1 )%
Products
Restasis 212.0 196.0 16.0 15.8 0.2 8.1 % 8.0 % 0.1 %
Latisse 24.9 24.6 0.3 0.3 -- 1.2 % 1.2 % --
Domestic 61.1 % 62.1 %
International 38.9 % 37.9 %
ALLERGAN, INC.
Supplemental Non-GAAP Information
(Unaudited)
Twelve months ended
December December $ change in net sales Percent change in net sales
31, 31,
2012 2011 Total Performance Currency Total Performance Currency
in millions
Eye Care $ 2,692.2 $ 2,520.2 $ 172.0 $ 244.2 $ (72.2 ) 6.8 % 9.7 % (2.9 )%
Pharmaceuticals
Botox/Neuromodulator 1,766.3 1,594.9 171.4 202.1 (30.7 ) 10.7 % 12.7 % (2.0 )%
Skin Care 298.4 260.1 38.3 38.8 (0.5 ) 14.7 % 14.9 % (0.2 )%
Urologics 27.7 56.8 (29.1 ) (29.1 ) -- (51.2 )% (51.2 )% --
Total Specialty 4,784.6 4,432.0 352.6 456.0 (103.4 ) 8.0 % 10.3 % (2.3 )%
Pharmaceuticals
Breast Aesthetics 377.1 349.3 27.8 36.8 (9.0 ) 8.0 % 10.5 % (2.5 )%
Obesity Intervention 159.5 203.1 (43.6 ) (40.3 ) (3.3 ) (21.5 )% (19.8 )% (1.7 )%
Facial Aesthetics 387.6 362.7 24.9 35.8 (10.9 ) 6.9 % 9.9 % (3.0 )%
Total Medical 924.2 915.1 9.1 32.3 (23.2 ) 1.0 % 3.5 % (2.5 )%
Devices
Product net sales $ 5,708.8 $ 5,347.1 $ 361.7 $ 488.3 $ (126.6 ) 6.8 % 9.1 % (2.3 )%
Selected Product Net
Sales (a):
Alphagan P,
Alphagan, and $ 453.2 $ 419.4 $ 33.8 $ 44.4 $ (10.6 ) 8.1 % 10.6 % (2.5 )%
Combigan
Lumigan Franchise 622.6 612.7 9.9 29.8 (19.9 ) 1.6 % 4.9 % (3.3 )%
Total Glaucoma 1,085.8 1,042.9 42.9 74.1 (31.2 ) 4.1 % 7.1 % (3.0 )%
Products
Restasis 792.0 697.1 94.9 97.1 (2.2 ) 13.6 % 13.9 % (0.3 )%
Latisse 97.3 93.6 3.7 4.2 (0.5 ) 4.0 % 4.5 % (0.5 )%
Domestic 60.9 % 60.2 %
International 39.1 % 39.8 %
Percentage change in selected product net sales is calculated on
(a) amounts reported to the nearest whole dollar. Total glaucoma
products include the Alphagan and Lumigan franchises.
ALLERGAN, INC.
Reconciliation of GAAP Diluted Earnings Per Share Expectations
To Non-GAAP Diluted Earnings Per Share Expectations
(Unaudited)
First Quarter 2013
Low High
GAAP diluted earnings per share attributable to Allergan, $ 0.86 $ 0.88
Inc. stockholders expectations^(a)
Amortization of intangible assets 0.08 0.08
Non-GAAP diluted earnings per share expectations $ 0.94 $ 0.96
Full Year 2013
Low High
GAAP diluted earnings per share attributable to Allergan, $ 4.45 $ 4.53
Inc. stockholders expectations^(a)
Amortization of intangible assets 0.30 0.30
Non-GAAP diluted earnings per share expectations $ 4.75 $ 4.83
GAAP diluted earnings per share expectations exclude any potential
impact of future unrealized gains or losses on derivative instruments,
(a) changes in contingent consideration, restructuring charges and
stockholder derivative and tax litigation costs related to the 2010 DOJ
settlement and other legal contingency expenses that may occur but that
are not currently known or determinable.
Contact:
Allergan
Jim Hindman (714) 246-4636 (investors)
Joann Bradley (714) 246-4766 (investors)
David Nakasone (714) 246-6376 (investors)
Bonnie Jacobs (714) 246-5134 (media)
Cathy Taylor (714) 246-5551 (media)
Sponsored Links
Advertisement
Advertisements
Sponsored Links
Advertisement
Rate this Page