New Threads Only:  Add to Google Reader or Homepage
New Threads & Replies:  Add to Google Reader or Homepage
Forums are for serious investors only. GuruFocus Forum Rules.

Forum List » Business News and Headlines
SEC Filings, Earing Reports, Press Releases
New Topic Search
Goto Thread: PreviousNext
Goto: Forum ListMessage ListNew TopicSearchLog In
Allergan Inc. Reports Operating Results (10-Q)
Posted by: gurufocus (IP Logged)
Date: August 6, 2012 02:22PM

Allergan Inc. (AGN) filed Quarterly Report for the period ended 2012-06-30. Allergan, Inc. has a market cap of $26.28 billion; its shares were traded at around $85.29 with a P/E ratio of 22.2 and P/S ratio of 4.9. The dividend yield of Allergan, Inc. stocks is 0.2%. Allergan, Inc. had an annual average earning growth of 14.9% over the past 10 years.



Highlight of Business Operations:

Eye care pharmaceuticals product net sales increased in the second quarter of 2012 compared to the second quarter of 2011 in the United States, Canada and Asia Pacific. Net sales of eye care pharmaceutical products in Europe and Latin America decreased in the second quarter of 2012 compared to the second quarter of 2011 primarily due to the negative translation effect of average foreign currency exchange rates in effect during the second quarter of 2012 compared to the second quarter of 2011. When measured at constant currency, net sales of eye care pharmaceutical products in Europe and Latin America increased in the second quarter of 2012 compared to the second quarter of 2011. The overall increase in total sales in dollars of our eye care pharmaceutical products is primarily due to an increase in sales of Restasis®, our therapeutic treatment for chronic dry eye disease, an increase in sales of our glaucoma drug Lumigan® 0.01%, an increase in sales of Ozurdex®, our biodegradable, sustained-release steroid implant for the treatment of certain retinal diseases, an increase in sales of Combigan®, our Alphagan® and timolol combination for the treatment of glaucoma, an increase in sales of Alphagan® P 0.1% and Alphagan® P 0.15%, and an increase in sales of our Refresh® artificial tears products, partially offset by decreases in sales of our older-generation products, including our glaucoma drugs Alphagan® and Lumigan® 0.03% and our topical allergy medication Elestat®, decreases in sales of our fluoroquinolone products Zymar® and Zymaxid®, and decreases in sales of our non-steroidal anti-inflammatory drugs Acular® and Acuvail®.

We increased prices on certain eye care pharmaceutical products in the United States in the second half of 2011 and the first half of 2012. Effective January 7, 2012, we increased the published U.S. list price for Alphagan® P 0.15% by three percent, Acular®, Acular LS® and Acuvail® by four percent, Lumigan® 0.1% and Lumigan® 0.3% by five percent, Alphagan® P 0.1%, Combigan® and Zymaxid® by eight percent and Lastacaft® by ten percent. Effective April 7, 2012, we increased the published U.S. list price for Restasis® by five percent. Effective May 12, 2012, we increased the published U.S. list price for Lastacaft® by an additional five percent, Alphagan® P 0.15%, Alphagan® P 0.1%, Lumigan® 0.1%, Lumigan® 0.3% and Combigan® by an additional eight percent, and Acular®, Acular LS®, Acuvail® and Zymaxid® by an additional ten percent. These price increases had a positive net effect on our U.S. sales in the second quarter of 2012 compared to the second quarter of 2011, but the actual net effect is difficult to determine due to the various managed care sales rebate and other incentive programs in which we participate. Wholesaler buying patterns and the change in dollar value of the prescription product mix also affected our reported net sales dollars, although we are unable to determine the impact of these effects. Due to the strong acceptance of Lumigan® 0.1% in the United States market, we recently announced that we plan to cease manufacturing Lumigan® 0.3% for the U.S. market by the end of fiscal year 2012.

product net sales, in the second quarter of 2012 compared to $566.7 million, or 40.5% of product net sales, in the second quarter of 2011. SG&A expenses in the second quarter of 2012 include an aggregate expense reversal of $1.0 million for external costs of stockholder derivative litigation associated with the 2010 global settlement with the U.S. Department of Justice, or DOJ, regarding our past U.S. sales and marketing practices relating to certain therapeutic uses of Botox® and other legal contingency expenses, and a $12.8 million charge related to the change in fair value of contingent consideration liabilities associated with certain business combinations. SG&A expenses in the second quarter of 2011 include $0.7 million of stockholder derivative litigation costs associated with the 2010 global settlement with the DOJ regarding our past U.S. sales and marketing practices relating to certain therapeutic uses of Botox®, a $2.3 million charge related to the change in fair value of a contingent consideration liability associated with our purchase of a distributor's business in Turkey and a fixed asset impairment charge reversal of $0.1 million related to the discontinued development of EasyBand™. Excluding the effect of the items described above, SG&A expenses increased $9.0 million, or 1.6%, to $572.8 million, or 39.0% of product net sales, in the second quarter of 2012 compared to $563.8 million, or 40.3% of product net sales in the second quarter of 2011. The increase in SG&A expenses in dollars, excluding the charges described above, primarily relates to increases in selling and marketing expenses, partially offset by a reduction in promotion expenses and a small decline in general and administrative expenses. The increase in selling and marketing expenses in the second quarter of 2012 compared to the second quarter of 2011 principally relates to increased personnel and related incentive compensation costs that support the 4.8% increase in product net sales, and additional costs supporting the expansion of our sales forces, including the addition of several new direct operations in emerging markets. The decrease in promotion expenses is primarily related to a reduction in direct-to-consumer advertising for Latisse® and other promotional programs, partially offset by an increase in direct-to-consumer advertising related to Botox® for the treatment of chronic migraine in the United States and our breast aesthetics and facial aesthetics products in Europe. The decrease in general and administrative expenses is primarily due to a reduction in legal costs and bad debt expenses, partially offset by an increase in compliance, compensation and general insurance costs.

SG&A expenses increased $13.5 million, or 1.2%, to $1,169.7 million, or 41.3% of product net sales, in the first six months of 2012 compared to $1,156.2 million, or 43.6% of product net sales, in the first six months of 2011. SG&A expenses in the first six months of 2012 include aggregate expenses of $8.4 million for external costs of stockholder derivative litigation associated with the 2010 global settlement with the DOJ regarding our past U.S. sales and marketing practices relating to certain therapeutic uses of Botox® and other legal contingency expenses, and a $13.4 million charge related to the change in fair value of contingent consideration liabilities associated with certain business combinations. SG&A expenses in the first six months of 2011 include an upfront payment of $60.0 million related to a collaboration and co-promotion agreement with MAP Pharmaceuticals, Inc., or MAP, for the development and commercialization of Levadex®, a self-administered, orally inhaled therapy for the acute treatment of migraine in adults that has not yet achieved regulatory approval and other potential indications in the United States, a gain of $9.4 million from the substantially complete liquidation of a foreign subsidiary and fixed asset impairment charges of $2.2 million related to the discontinued development of EasyBand™, $2.3 million of stockholder derivative litigation costs associated with the 2010 global settlement with the DOJ regarding our past U.S. sales and marketing practices relating to certain therapeutic uses of Botox®, and a $2.3 million charge related to the change in fair value of a contingent consideration liability associated with our purchase of a distributor's business in Turkey. Excluding the effect of the items described above, SG&A expenses increased $49.1 million, or 4.5%, to $1,147.9 million, or 40.5% of product net sales, in the first six months of 2012 compared to $1,098.8 million, or 41.4% of product net sales in the first six months of 2011. The increase in SG&A expenses in dollars, excluding the charges described above, primarily relates to increases in selling and marketing, promotion, and general and administrative expenses. The increase in selling and marketing expenses in the first six months of 2012 compared to the first six months of 2011 principally relates to increased personnel and related incentive compensation costs that support the 6.8% increase in product net sales, and additional costs supporting the expansion of our sales forces, including the addition of several new direct operations in emerging markets. The increase in promotion expenses is primarily due to an increase in direct-to-consumer advertising, primarily related to Botox® for the treatment of chronic migraine in the United States, partially offset by a decline in advertising for Restasis® and Latisse®. The increase in general and administrative expenses is primarily due to increased compliance costs, an increase in compensation costs, including an increase in regional management costs related to the expansion of our direct selling operations in emerging markets, and an increase in legal expenses and general insurance costs, partially offset by a decrease in bad debt expense.

Our effective tax rate for the second quarter of 2012 was 30.8%. Our effective tax rate for the first six months of 2012 was 30.1%. Included in our earnings before income taxes for the first six months of 2012 are charges related to changes in the fair value of contingent consideration associated with certain business combination agreements of $13.4 million, the fair market value inventory adjustment rollout and integration costs related to the purchase of a distributor's business in Russia of $0.9 million, external costs of stockholder derivative litigation associated with the 2010 global settlement with the DOJ regarding our past U.S. sales and marketing practices relating to certain therapeutic uses of Botox® and other legal contingency expenses of $8.4 million, $0.8 million of interest expense associated with changes in estimated taxes related to uncertain tax positions included in prior year filings and restructuring charges of $0.9 million. In the first six months of 2012 we recorded no income tax benefits related to the changes in the fair value of contingent consideration liabilities, $0.1 million of income tax benefits related to the fair market value inventory adjustment rollout and integration costs related to the purchase of a distributor's business in Russia, $0.9 of income tax benefits related to external costs of stockholder derivative litigation associated with the 2010 global settlement with the DOJ regarding our past U.S. sales and marketing practices relating to certain therapeutic uses of Botox® and other legal contingency expenses, income tax benefits of $0.3 million related to interest expense associated with changes in estimated taxes related to uncertain tax positions included in prior year filings and $0.3 million of income tax benefits related to the restructuring charges. In the first six months of 2012 we also recorded an income tax provision of $6.7 million for changes in estimated taxes related to uncertain tax positions included in prior year filings. Excluding the impact of the pretax charges of $24.4 million and the net income tax provision of $5.1 million for the items discussed above, our adjusted effective tax rate for the first six months of 2012 was 28.5%. We believe that the use of an adjusted effective tax rate provides a more meaningful measure of the impact of income taxes on our results of operations because it excludes the effect of certain items that are not included as part of our core business activities. This allows investors to better determine the effective tax rate associated with our core business activities.

Read the The complete Report



Stocks Discussed: AGN,
Rate this post:




Sorry, only registered users may post in this forum.

Please Login if you have an account or Create a Free Account if you don't




Get WordPress Plugins for easy affiliate links on Stock Tickers and Guru Names | Earn affiliate commissions by embedding GuruFocus Charts
GuruFocus Affiliate Program: Earn up to $400 per referral. ( Learn More)
Free 7-day Trial