Allergan Annual Report 2005


				YEAR ENDED DECEMBER 31,
In millions, except per share data	2005			2004			2003			2002			2001



STATEMENT OF OPERATIONS HIGHLIGHTS (As reported under U.S. GAAP)

Product net sales	$	2,319.2		$	2,045.6		$	1,755.4		$	1,385.0		$	1,142.1
Gross profit		1,919.6			1,658.9			1,435.1			1,163.3			944.0
Research and development		391.0			345.6			763.5			233.1			227.5
Earnings (loss) from continuing operations		403.9			377.1			(52.5	)		64.0			171.2
Earnings from discontinued operations		—			—			—			11.2			54.9
Net earnings (loss)		403.9			377.1			(52.5	)		75.2			224.9

Basic earnings (loss) per share:
Continuing operations		3.08			2.87			(0.40	)		0.49			1.30
Discontinued operations		—			—			—			0.09			0.42
Diluted earnings (loss) per share:
Continuing operations		3.01			2.82			(0.40	)		0.49			1.29
Discontinued operations		—			—			—			0.08			0.40

Dividends per share		0.40			0.36			0.36			0.36			0.36

ADJUSTED AMOUNTS^(a)
Adjusted earnings from continuing operations		453.3			368.8			305.2			252.3			207.7
Adjusted basic earnings per share:
Continuing operations		3.46			2.81			2.34			1.95			1.58
Adjusted diluted earnings per share:
Continuing operations		3.38			2.75			2.30			1.92			1.55

NET SALES BY PRODUCT LINE
Specialty Pharmaceuticals:
Eye Care Pharmaceuticals	$	1,321.7		$	1,137.1		$	999.5		$	827.3		$	753.7
BOTOX®/Neuromodulators		830.9			705.1			563.9			439.7			309.5
Skin Care		120.2			103.4			109.3			90.2			78.9


Total Pharmaceutical Sales		2,272.8			1,945.6			1,672.7			1,357.2			1,142.1
Other		46.4			100.0			82.7			27.8			—


Total Net Sales	$	2,319.2		$	2,045.6		$	1,755.4		$	1,385.0		$	1,142.1

PRODUCT SOLD BY LOCATION
Domestic		67.5	%		69.1	%		70.4	%		70.6	%		67.0	%
International		32.5	%		30.9	%		29.6	%		29.4	%		33.0	%

^(a)

The adjusted amounts in 2005 exclude income taxes of $49.6 million related to the repatriation of foreign earnings that had been previously permanently reinvested outside the United States, and income tax benefits of $24.1 million related to the resolution of uncertain tax positions and an additional benefit for state income taxes of $1.4 million, and the after-tax effects of the following: 1) $28.8 million restructuring charge and $5.6 million of transition/duplicate operating costs related to the streamlining of the Company’s European operations, 2) $12.9 million restructuring charge related to the scheduled termination of the Company’s manufacturing and supply agreement with Advanced Medical Optics, 3) $7.9 million gain on the sale of a distribution business in India, 4) $7.3 million reduction in interest expense related to the resolution of uncertain income tax positions and $2.1 million of interest income related to previously paid state income taxes, 5) $5.7 million gain on the sale of assets previously used in contract manufacturing activities, 6) $2.3 million restructuring charge related to the streamlining of the Company’s operations in Japan, 7) $0.6 million gain on the sale of a former manufacturing plant in Argentina, 8) $0.8 million gain on the sale of a third party equity investment, 9) $3.6 million gain on the termination of the Vitrase collaboration agreement with ISTA Pharmaceuticals, 10) $3.0 million buy-out of a license agreement with Johns Hopkins University, 11) $0.4 million in costs related to the acquisition of Inamed Corporation, and 12) $1.1 million unrealized gain on derivative instruments.

The adjusted amounts in 2004 exclude the favorable recovery of $6.1 million of previously paid state income taxes and the after-tax effects of the following: 1) income of $2.4 million from a patent infringement settlement, 2) $7.0 million restructuring charge related to the scheduled termination of the Company’s manufacturing and supply agreement with Advanced Medical Optics, 3) $0.4 million unrealized loss on derivative instruments, and 4) income of $11.5 million from a technology transfer fee and a revised Vitrase collaboration agreement with ISTA Pharmaceuticals.

The adjusted amounts in 2003 exclude the after-tax effects of the following: 1) $179.2 million charge for in-process research and development related to the purchase of Oculex Pharmaceuticals, Inc., 2) $278.8 million charge for in-process research and development related to the purchase of Bardeen Sciences Company, LLC, 3) $0.4 million reversal of restructuring charge and asset write-offs, net related to the 2002 spin-off of the Company’s ophthalmic surgical and contact lens care businesses, 4) $0.3 million unrealized loss on derivative instruments, and 5) $0.9 million charge for the early extinguishment of convertible debt.

The adjusted amounts in 2002 exclude the after-tax effects of the following: 1) $118.7 million in litigation settlement costs, 2) net costs of $100.3 million associated with the 2002 spin-off of the Company’s ophthalmic surgical and contact lens care businesses to Advanced Medical Optics which consist of restructuring charge and asset write-offs of $63.5 million, duplicate operating expenses of $42.5 million and gain of $5.7 million on sale of a facility, 3) $30.2 million loss on the other than temporary impairment of equity investments, 4) $1.7 million unrealized loss on derivative instruments, 5) net gain of $1.0 million from partnering agreements, and 6) $11.7 million charge for the early extinguishment of convertible debt.

The adjusted amounts in 2001 exclude the $40.0 million charge for in-process research and development related to the purchase of Allergan Specialty Therapeutics, Inc. and the after-tax effects of the following: 1) $6.2 million restructuring charge and asset write-off reversal consisting of $1.7 million restructuring charge reversal and a $4.5 million gain on sale of a facility reducing the write-offs recorded in 1998, 2) income of $1.5 million from a partnering agreement, 3) $4.5 million loss on the permanent impairment of equity investments, 4) $2.0 million gain on the sale of divested pharmaceutical products in Brazil, 5) $4.2 million unrealized gain on derivative instruments, and 6) $4.4 million associated with the 2002 spin-off of the Company’s ophthalmic surgical and contact lens care businesses.

The foregoing language contains certain non-GAAP financial measures and non-GAAP adjustments. For a reconciliation of these non-GAAP financial measures to GAAP financial measures, please go see Consolidated Statements of this Annual Report.

As reported, including discontinued operations.

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Adjustments to GAAP net earnings (loss) used to calculate return on equity, adjusted for non-GAAP items, and return on capital, adjusted for non-GAAP items, include the aggregate non-GAAP adjustments, net of tax, detailed in the Consolidated Statements of this Annual Report. Return on equity using GAAP net earnings (loss) was 26%, 34%, (7)%, 9% and 23% for 2005, 2004, 2003, 2002 and 2001, respectively. Return on capital using GAAP net earnings (loss) was 17%, 22%, (4)%, 5% and 14% for 2005, 2004, 2003, 2002 and 2001, respectively.