IRVINE, Calif.--(BW HealthWire)--Jan. 27, 1998--Allergan, Inc.
(NYSE:AGN) today announced 1997 worldwide sales of $1.138 billion,
a decrease of $9.0 million or 1 percent compared to 1996. Excluding
the impact of foreign currency changes, sales increased 3 percent or
$37.0 million over the prior year. Worldwide net sales for the
fourth quarter of 1997 were $309.6 million, a 1 percent decrease
compared to the same period in 1996. Excluding the impact of foreign
currency changes, sales for the fourth quarter of 1997 increased
$12.1 million or 4 percent over the comparable period in 1996.
Allergan's board of directors declared a fourth quarter dividend
of $0.13 per share, payable March 10, 1998, to stockholders of record
on February 17, 1998.
Earnings per share for the fourth quarter of 1997, on a diluted
basis, were $0.69, compared to $0.55 for the same period in 1996.
Excluding the effect of the special charges in 1996 and the one-time
items in 1997, earnings per share for the fourth quarter were $0.49
in 1997 compared to $0.63 in 1996. Fourth quarter results in 1996
included previously announced special charges for restructuring costs
of $7.4 million and asset write-offs of $0.4 million. Net of tax,
the special charges reduced fourth quarter 1996 earnings by $0.08 per
share. Fourth quarter results in 1997 included a settlement cost and
severance, as well as previously announced one-time charges and the
one-time decrease in income taxes associated with the ALRT buy back.
The net effect of one-time credits and charges increased fourth
quarter 1997 earnings by $0.20 per share.
Earnings per share were $1.95 in 1997 compared to $1.17 in 1996.
One-time items increased full year 1997 earnings per share by
approximately $0.38. One-time special charges decreased full year
1996 earnings per share by approximately $0.83. Foreign currency
changes negatively impacted earnings per share by approximately $0.24
in 1997 compared to 1996.
On January 1, 1998, David E.I. Pyott assumed the duties of
President and Chief Executive Officer for Allergan. Commenting on
1997 results he stated, "Last year a number of actions were taken to
improve future performance. Wholesaler inventories were worked down
to acceptable levels. Allergan's retinoid franchise was strengthened
as a result of the separation from Ligand. Five manufacturing
facilities were closed. The aggressive roll-out of new product
launches continued around the world. Furthermore, Allergan's
Eurocentre was opened in Dublin, Ireland to improve service to our
European customers while reducing overhead in that important market."
"Positive progress was made," continued Pyott, "but improvements
in sales performance and expense control were more than offset by the
negative impact of a strong dollar, generic erosion of four important
products and the extraordinary costs incurred in launching three
major products during the period. While these trends will still be
felt in the first quarter, my goal for the remainder of the year is
to improve short-term operating performance while continuing to
invest in our exceptional R&D pipeline."
"My agenda is simple," concluded Pyott, "we remain committed to
our fundamental technology-driven strategy and investing in research
and development to create long-term shareholder value. Globally, in
1998 we will focus on improving short-term operating performance. I
plan to accomplish this through a more focused company, tough expense
control, stronger asset management and accelerating revenue growth.
Allergan is well capitalized and very profitable. I look forward to
leading it to improved performance."
Allergan Ligand Retinoid Therapeutics, Inc. (ALRT) Buy Back
During the fourth quarter of 1997, Allergan and Ligand completed
the previously announced planned buy back of ALRT. On September 24,
1997, Ligand Pharmaceuticals Incorporated (NASDAQ:LGND) exercised
its option (Stock Purchase Option) to acquire all of the outstanding
shares of Callable Common Stock of ALRT. At the same time, Allergan,
Inc. exercised its option and paid Ligand $8.9 million in cash to
acquire an undivided one-half interest in the assets and technologies
of ALRT when Ligand exercised its Stock Purchase Option.
At the closing, Allergan paid Ligand the $8.9 million described
above and subsequently received $5.5 million or one-half of the cash
remaining in ALRT at that date. At the closing, Ligand paid Allergan
$4.5 million in exchange for certain rights to certain ALRT
compounds. Additionally, Allergan will receive from Ligand a portion
of future milestone payments made to Ligand from future corporate
partners, as well as royalty payments based on net sales of certain
products. After the closing, Allergan recorded a one-time $16.5
million decrease to its income tax provision related to the tax
benefit associated with a portion of the $50 million contributed to
ALRT in 1995.
Allergan Specialty Therapeutics, Inc. Established
Following the success of ALRT, Allergan has established Allergan
Specialty Therapeutics, Inc. (ASTI) to conduct research and the
development of potential pharmaceutical products based on Allergan's
retinoid and neuroprotective technologies. Allergan anticipates it
will contribute $200 million to ASTI in the first quarter of 1998.
It is currently expected that substantially all of ASTI's funds will
be directed toward continuing the research and development of
products based on retinoid and neuroprotective technologies,
including Memantine and other glutamate and ion channel blockers.
ASTI's technology and product research and development activities
will take place under a research and development agreement with
Allergan.
Allergan has filed an Investigational New Drug (IND) application
with the FDA for Memantine, a glutamate NMDA receptor antagonist.
Memantine blocks the cell death signaling pathway, which involves the
NMDA-type receptors, and protects against glutamate induced retinal
ganglion cell death. A Phase I/II clinical study to determine safety
in the targeted clinical population began in November of 1997.
Specialty Pharmaceutical Performance
Eye Care Pharmaceutical Product Line
Worldwide net sales for the eye care pharmaceutical business were
$408.5 million during 1997, a 4 percent decrease compared to 1996
sales of $425.1 million. Excluding the impact of foreign currency
changes, eye care pharmaceutical sales decreased 1 percent or $4.9
million compared to 1996. Pharmaceutical sales for the fourth
quarter were $113.8 million, a 2 percent decrease compared to the
same period in 1996. Pharmaceutical sales have been impacted by
continuing weakness in the base business, due to generic competition
and some higher than desirable inventory balances at the wholesale
level, offset by strong initial acceptance of the glaucoma product
Alphagan(r) (brimonidine) in the U.S. market. Worldwide full year
net product sales for Alphagan(r) were $49.2 million compared to $5.0
million in 1996.
Skin Care Product Line
Worldwide sales for the skin care products business were $80.6
million during 1997, an increase of 25 percent over the same period
last year. Foreign currency changes had no significant effect on
skin care sales in 1997 compared to 1996. Worldwide skin care sales
for the fourth quarter were $20.6 million, a less than 1 percent
increase over the same period in 1996. Worldwide full year net
product sales for Tazorac(r)/Zorac(r) (tazarotene gel) indicated for
the treatment of psoriasis and acne were $16.2 million in 1997.
Botox(r)/Neuromuscular Product Line
Worldwide net sales for Botox(r) (Botulinum Toxin Type A)
purified neurotoxin complex were $90.1 million during 1997, an
increase of 34 percent over 1996. Excluding the impact of foreign
currency changes, Botox(r) sales increased 37 percent or $25.0
million compared to 1996. Worldwide net sales for the fourth quarter
of 1997 were $25.3 million, a 31 percent increase over 1996.
Allergan has acquired an exclusive option to acquire the
exclusive worldwide rights to U.S. and foreign patents for the use
of botulinum toxin to treat migraine headaches from Miotech, Inc.
Under the terms of the agreement, Allergan will conduct controlled
clinical trials consistent with a product registration strategy. An
Investigational New Drug application was filed for this indication in
December 1997 and a Phase II clinical study is scheduled to begin
next month. Migraine headaches affect approximately 15-20 percent of
women and 5-10 percent of men and can be severely debilitating. The
peak incidence occurs between 25-34 years of age.
Allergan reached an agreement with the Department of Commerce to
resolve a long-standing case regarding the export of Botox(r)
(Botulinum Toxin Type A) purified neurotoxin complex, a finished
pharmaceutical product, during the initial months after exporting
licensing requirements were imposed on botulinum toxin, the active
ingredient in Botox(r) in July 1992. Allergan maintained that these
export licensing requirements did not apply to a finished
pharmaceutical product like Botox(r) and that all of its exports were
entirely lawful. The settlement involved Allergan paying a civil
penalty of $824,000 to resolve the matter without any admission of
wrongdoing.
Medical Device and OTC Performance
Ophthalmic Surgical Product Line
Worldwide sales for the ophthalmic surgical business were $182.2
million during 1997, a 1 percent decrease compared to 1996 sales of
$184.0 million. Excluding the impact of foreign currency changes,
ophthalmic surgical sales increased 3 percent or $6.4 million over
1996. Surgical sales for the fourth quarter of 1997 were $51.9
million compared to $49.5 million for the fourth quarter of 1996.
Last October, Allergan launched the AMO(r)Array(r) Multifocal
Intraocular Lens (IOL) in the United States for the treatment of
cataracts. The AMO(r)Array(r) is a new generation of IOL which
provides distance and intermediate vision comparable to a monofocal
IOL but with the added benefit of increased near vision.
Conventional monofocal IOLs do not provide a full range of vision
because of their fixed-distance focal point. The AMO(r)Array(r) will
provide both the ophthalmologist and the cataract patient with a new
treatment option that may significantly improve the quality of life
for cataract patients by fostering less dependency on glasses over a
range of distances compared to currently available monofocal IOLs.
Optical Contact Lens Care Product Line
Worldwide sales for the optical contact lens care business were
$376.6 million for 1997, a decrease of 7 percent over 1996.
Excluding the impact of foreign currency changes, optical contact
lens care sales decreased 1 percent or $5.6 million compared to 1996.
Worldwide optical contact lens care sales for the fourth quarter of
1997 were $98.0 million or 8 percent less than the same period last
year.
Optical contact lens care product sales in Japan, led by Concept
F(r), were strong, but in Europe sales continued to be negatively
impacted by the market shift from traditional hydrogen peroxide
disinfection systems to more convenient and lower priced one-bottle
disinfection systems and by new private label competition.
Additional Financial Highlights
Worldwide net sales were $1.138 billion in 1997. Net sales in
the United States were $486.6 million in 1997, an increase of 3
percent. Net sales in the Company's Europe, Asia Pacific and Latin
America regions were $338.6 million, $170.1 million and $103.8
million respectively. Other net sales of $38.9 million were
predominantly in North America. Net sales in Europe decreased 12
percent while net sales in Asia Pacific and Latin America increased
13 percent and 6 percent, respectively.
The product gross margin was 65.8 percent for the fourth quarter
of 1997 and 64.9 percent for the full year. The decrease from the
66.5 percent product gross margin for the full year in 1996 was due
primarily to the negative impact of foreign currency changes and
decreases in sales of high margin branded eye care pharmaceutical
products due to generic intrusion.
Selling, general and administrative (SG&A) expenses for the
fourth quarter of 1997 were $118.7 million, an increase of $5.5
million from the same period last year. SG&A expenses as a ratio to
net sales were 38.3 percent in the fourth quarter of 1997 compared to
36.3 percent in the fourth quarter of 1996. SG&A expenses for the
full year in 1997 were $459.1 million compared to $456.6 million for
the full year 1996. SG&A expenses as a ratio to net sales were 40.3
percent for the full year of 1997 compared to 39.8 percent for the
full year of 1996. For the full year 1997, SG&A spending exceeded
$23.0 million for product launch costs for Alphagan(r), Tazorac(r)
and the AMO(r)Array(r).
Over the past eight years, research and development (R&D)
spending has increased from $62.5 million in 1990 to $131.2 million
in 1997. As a percentage of net sales during that same eight-year
period, R&D investments rose from 8.8 percent in 1990 to 11.5 percent
in 1997. Reported R&D spending in 1997 does not include $10.4
million of R&D spending on research performed for ALRT.
At December 31, 1997, the Company's consolidated net worth was
$841.4 million. Net debt was $42.1 million at the end of 1997 as the
company held $180.9 million in cash compared to $223.0 million in
debt. The Company's debt to equity percentage was 26.5 percent and
debt to capital percentage was 21.0 percent at December 31, 1997.
Notes
The company has adopted Statement of Financial Accounting
Standards 128, "Earnings per Share" (EPS) which is effective for
fiscal periods ending after December 15, 1997. This standard
requires presentation of both basic and diluted EPS on the face of
the statements of income. Accordingly, these amounts appear on the
financial statements accompanying this release. The discussion of
earnings per share in this release focuses on diluted EPS. Basic
earnings per common share amounts were $0.70 in the fourth quarter of
1997 compared with $0.55 per common share in the fourth quarter of
1996. For the full year 1997, basic earnings per common share were
$1.97 compared with $1.18 during the same period last year.
Certain amounts have been reclassified in the financial
statements accompanying this release. Revenues and related costs
associated with performance of contract research for ALRT are
disclosed separately. The margins earned from such activities were
previously reported as a reduction of SG&A expenses. Also certain
items previously reported in other non-operating costs have been
reclassified to SG&A expenses.
Forward-looking Statements
Any of the above statements that refer to the company's
estimated or anticipated future results or product performance are
forward-looking and reflect the company's current analysis of
existing trends and information. Actual results may differ from
current expectations based on a number of factors affecting
Allergan's businesses, including new product performance and related
introduction and launch expenses, competitive conditions, changing
market conditions, the timing and uncertainty of results of both
research, development and regulatory processes, the performance,
including consumer acceptance, of new higher margin products, the
realization of the favorable gross profit margin resulting from
product mix shifts and efforts to control expenses. In addition,
matters generally affecting the economy, such as currency exchange
rates and the state of the economy worldwide and in certain regions,
can affect the company's results. These forward-looking statements
represent the company's judgment only as of the date of this press
release. Actual results could differ materially from expectations
reflected in this release. As a result, the reader is cautioned not
to rely on these forward-looking statements. The company disclaims
any intent or obligation to update these forward-looking statements.
Additional information concerning these factors can be found in press
releases as well as in the company's public periodic filings with the
Securities and Exchange Commission, including the discussion under
the heading "Certain Factors and Trends Affecting Allergan and Its
Businesses" in the company's 1996 Form 10-K. These filings are
available publicly and upon request from Allergan's Investor
Relations Department: 714-246-4636 or on the internet at
www.allergan.com.
Allergan, Inc., headquartered in Irvine, California, is a
technology-driven, global health care company focused on specialty
pharmaceutical products for specific disease areas that deliver value
to customers, satisfy unmet medical needs and improve patients'
lives.
The following tables represent condensed consolidated statements
of income, condensed consolidated balance sheets and a statement of
net sales by product line.
*T
ALLERGAN, INC.
Condensed Consolidated Statements of Income
in millions, Three Months Years
except per share Ended December 31, Ended December 31,
1997 1996 1997 1996
Net product sales $309.6 $311.8 $1,138.0 $1,147.0
Cost of product sales 106.0 102.0 399.3 384.7
Product gross margin 203.6 209.8 738.7 762.3
Research service revenues 2.1 2.6 11.0 9.9
Cost of research services 2.0 2.4 10.4 9.2
Research service margin 0.1 0.2 0.6 0.7
Selling, general and
administrative 118.7 113.2 459.1 456.6
Research & development 41.1 37.1 131.2 118.3
Restructuring charge -- 7.4 -- 70.1
Asset write-offs -- 0.4 -- 7.4
Operating income 43.9 51.9 149.0 110.6
Interest income 2.8 2.4 8.9 13.1
Interest expense (1.7) (2.6) (8.9) (12.5)
Other, net (4.3) (0.9) 8.1 (3.2)
Interest and other, net (3.2) (1.1) 8.1 (2.6)
Earnings before income
taxes and minority interest 40.7 50.8 157.1 108.0
Provision for income taxes (4.7) 14.7 29.0 31.3
Minority interest (0.1) 0.1 (0.2) (0.4)
Net earnings $ 45.5 $ 36.0 $128.3 $ 77.1
Earnings per
common share:
Basic $ 0.70 $ 0.55 $ 1.97 $ 1.18
Diluted $ 0.69 $ 0.55 $ 1.95 $ 1.17
Weighted average number of
common shares
outstanding:
Basic 65.2 65.5 65.2 65.1
Diluted 65.9 65.9 65.8 66.1
ALLERGAN, INC.
Condensed Consolidated Balance Sheets
in millions December 31, December 31,
1997 1996
Assets
Cash and equivalents $ 180.9 $ 112.0
Trade receivables, net 187.0 242.5
Inventories 147.8 130.1
Other current assets 120.7 115.1
Total current assets 636.4 599.7
Property, plant and equipment,
net 357.8 348.5
Other noncurrent assets 404.7 401.6
Total assets $1,398.9 $1,349.8
Liabilities and stockholders'
equity
Notes payable $ 80.5 $ 66.6
Accounts payable 83.3 75.4
Accrued expenses and income taxes 199.5 233.3
Total current liabilities 363.3 375.3
Long-term debt 142.5 170.0
Other liabilities 51.7 54.7
Stockholders' equity 841.4 749.8
Total liabilities and
stockholders' equity $1,398.9 $1,349.8
ALLERGAN, INC.
Net Sales by Product Line
Three Months Years
in millions Ended December 31, Ended December 31,
1997 1996 1997 1996
Specialty Pharmaceuticals:
Eye Care
Pharmaceuticals $113.8 $116.3 $408.5 $425.1
Skin Care 20.6 20.5 80.6 64.7
Botox/Neuromuscular 25.3 19.3 90.1 67.2
Total 159.7 156.1 579.2 557.0
Medical Devices and
OTC Product Lines:
Ophthalmic Surgical 51.9 49.5 182.2 184.0
Optical Contact
Lens Care 98.0 106.2 376.6 406.0
Total 149.9 155.7 558.8 590.0
TOTAL NET SALES $309.6 $311.8 $1,138.0 $1,147.0
Domestic 43 pct 43 pct 43 pct 41 pct
International 57 pct 57 pct 57 pct 59 pct
*T
CONTACT: Allergan Inc., Irvine
Jeff D'Eliscu
714/246-4636 (office)
714/675-9475 (home)
KEYWORD: CALIFORNIA
INDUSTRY KEYWORD: MEDICINE EARNINGS
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