| Statement Of Income Alternative (USD $) | ||||
| In Millions, except Per Share data | 3 Months Ended
Jun. 30, 2009 | 3 Months Ended
Jun. 30, 2008 | 6 Months Ended
Jun. 30, 2009 | 6 Months Ended
Jun. 30, 2008 |
| Revenues: | ||||
| Product net sales | 1118.7 | 1155.8 | 2113.3 | 2216.8 |
| Other revenues | 12.1 | 16.2 | 24.7 | 31.8 |
| Total revenues | 1130.8 | 1,172 | 2,138 | 2248.6 |
| Operating costs and expenses: | ||||
| Cost of sales (excludes amortization of acquired intangible assets) | 198.3 | 197.5 | 376.1 | 379.7 |
| Selling, general and administrative | 441.9 | 506.9 | 926.4 | 989.1 |
| Research and development | 161.6 | 213.4 | 343.7 | 396.3 |
| Amortization of acquired intangible assets | 35.5 | 35.8 | 74.1 | 70.7 |
| Restructuring charges | 1 | 9.4 | 43.1 | 37.8 |
| Operating income | 292.5 | 209 | 374.6 | 375 |
| Non-operating income (expense): | ||||
| Interest income | 1.5 | 10.3 | 4.2 | 21.5 |
| Interest expense | -18.5 | (21) | -37.9 | -42.5 |
| Unrealized loss on derivative instruments, net | -11.7 | -0.2 | -14.5 | -3.5 |
| Other, net | -6.8 | -8.2 | (6) | -11.1 |
| Nonoperating Income (Expense), Total | -35.5 | -19.1 | -54.2 | -35.6 |
| Earnings before income taxes | 257 | 189.9 | 320.4 | 339.4 |
| Provision for income taxes | 80.2 | 46.1 | 98.6 | 87.7 |
| Net earnings | 176.8 | 143.8 | 221.8 | 251.7 |
| Net earnings attributable to noncontrolling interest | 0.7 | 0.4 | 1 | 0.6 |
| Net earnings attributable to Allergan, Inc. | 176.1 | 143.4 | 220.8 | 251.1 |
| Earnings per share attributable to Allergan, Inc. stockholders: | ||||
| Basic | 0.58 | 0.47 | 0.73 | 0.82 |
| Diluted | 0.58 | 0.47 | 0.72 | 0.82 |
| Statement Of Financial Position Classified (USD $) | ||
| In Millions | Jun. 30, 2009
| Dec. 31, 2008
|
| Current assets: | ||
| Cash and equivalents | 1388.1 | 1110.4 |
| Trade receivables, net | 579 | 538.4 |
| Inventories | 235.9 | 262.5 |
| Other current assets | 323.5 | 359.3 |
| Total current assets | 2526.5 | 2270.6 |
| Investments and other assets | 242.9 | 272.1 |
| Property, plant and equipment, net | 781 | 775.4 |
| Goodwill | 1970.2 | 1981.8 |
| Intangibles, net | 1417.7 | 1491.9 |
| Total assets | 6938.3 | 6791.8 |
| Current liabilities: | ||
| Notes payable | 12.2 | 4.4 |
| Accounts payable | 187 | 173.9 |
| Accrued compensation | 128.9 | 132.6 |
| Other accrued expenses | 336.6 | 336.7 |
| Income taxes | 15.6 | 49.4 |
| Total current liabilities | 680.3 | 697 |
| Long-term debt | 875.2 | 885.3 |
| Long-term convertible notes | 605.3 | 685.2 |
| Deferred tax liabilities | 24.8 | 69 |
| Other liabilities | 403.5 | 402.8 |
| Commitments and contingencies | 0 | 0 |
| Allergan, Inc. stockholders' equity: | ||
| Preferred stock, $.01 par value; authorized 5,000,000 shares; none issued | 0 | 0 |
| Common stock, $.01 par value; authorized 500,000,000 shares; issued 307,512,000 shares as of June 30, 2009 and December 31, 2008 | 3.1 | 3.1 |
| Additional paid-in capital | 2691.5 | 2596.6 |
| Accumulated other comprehensive loss | (185) | -198.7 |
| Retained earnings | 2012.4 | 1842.1 |
| Stockholders Equity Subtotal Before Treasury Stock, Total | 4,522 | 4243.1 |
| Less treasury stock, at cost (3,331,000 shares as of June 30, 2009 and 3,424,000 shares as of December 31, 2008) | -175.6 | -192.4 |
| Total stockholders' equity | 4346.4 | 4050.7 |
| Noncontrolling interest | 2.8 | 1.8 |
| Total equity | 4349.2 | 4052.5 |
| Total liabilities and equity | 6938.3 | 6791.8 |
| Statement Of Financial Position Classified (Parenthetical) (USD $) | ||
| Jun. 30, 2009
| Dec. 31, 2008
| |
| Preferred stock, par value | 0.01 | 0.01 |
| Preferred stock, authorized | 5,000,000 | 5,000,000 |
| Preferred stock, issued | 0 | 0 |
| Common stock, par value | 0.01 | 0.01 |
| Common stock, authorized | 500,000,000 | 500,000,000 |
| Common stock, issued | 307,512,000 | 307,512,000 |
| Treasury stock, shares | 3,331,000 | 3,424,000 |
| Statement Of Cash Flows Indirect (USD $) | ||
| In Millions | 6 Months Ended
Jun. 30, 2009 | 6 Months Ended
Jun. 30, 2008 |
| Cash flows from operating activities: | ||
| Net earnings | 221.8 | 251.7 |
| Non-cash items included in net earnings: | ||
| Depreciation and amortization | 132.2 | 128.7 |
| Amortization of original issue discount and debt issuance costs | 14 | 14.7 |
| Amortization of net realized gain on interest rate swap | -0.7 | -0.7 |
| Deferred income tax benefit | -43.8 | -46.1 |
| Loss on disposal and impairment of assets | 2.9 | 0.9 |
| Loss on extinguishment of convertible debt | 5.3 | 0 |
| Unrealized loss on derivative instruments | 14.5 | 3.5 |
| Expense of share-based compensation plans | 116.4 | 47.2 |
| Restructuring charges | 43.1 | 37.8 |
| Changes in assets and liabilities: | ||
| Trade receivables | -32.6 | -154.5 |
| Inventories | 35.5 | -36.9 |
| Other current assets | 21.8 | 17.3 |
| Other non-current assets | 0.3 | 3.8 |
| Accounts payable | 7 | (6) |
| Accrued expenses | -55.4 | 12.3 |
| Income taxes | -33.8 | -32.6 |
| Other liabilities | 0.7 | 4.4 |
| Net cash provided by operating activities | 449.2 | 245.5 |
| Cash flows from investing activities: | ||
| Acquisitions, net of cash acquired | 0 | -0.1 |
| Additions to property, plant and equipment | -27.4 | (66) |
| Additions to capitalized software | -17.4 | -26.8 |
| Additions to intangible assets | 0 | (63) |
| Contractual purchase price adjustments to prior acquisitions | 11.6 | 0 |
| Proceeds from sale of business and assets | 0 | 6 |
| Proceeds from sale of property, plant and equipment | 0 | 0.1 |
| Net cash used in investing activities | -33.2 | -149.8 |
| Cash flows from financing activities: | ||
| Dividends to stockholders | -30.3 | -30.4 |
| Repayments of convertible borrowings | -98.3 | 0 |
| Payments to acquire treasury stock | -30.9 | -154.8 |
| Net borrowings (repayments) of notes payable | 7.8 | -34.7 |
| Sale of stock to employees | 10.4 | 37.3 |
| Excess tax benefits from share-based compensation | 0 | 7.6 |
| Net cash used in financing activities | -141.3 | (175) |
| Effect of exchange rate changes on cash and equivalents | 3 | 11.6 |
| Net increase (decrease) in cash and equivalents | 277.7 | -67.7 |
| Cash and equivalents at beginning of period | 1110.4 | 1157.9 |
| Cash and equivalents at end of period | 1388.1 | 1090.2 |
| Cash paid for: | ||
| Interest (net of amount capitalized) | 30.9 | 36 |
| Income taxes, net of refunds | 168.3 | 154.3 |
| Notes to Financial Statements | |
| 6 Months Ended
Jun. 30, 2009 USD / shares | |
| Notes to Financial Statements [Abstract] | |
| Supplemental Cash Flow Note | In the first six months of 2009, the Company acquired an office building contiguous to its main facility in Irvine, California for approximately $20.7 million. The Company assumed a mortgage of $20.0 million and paid $0.7 million in cash. |
| Note 1: Basis of Presentation | Note 1: Basis of Presentation In the opinion of management, the accompanying unaudited condensed consolidated financial statements contain all adjustments necessary (consisting only of normal recurring accruals) to present fairly the financial information contained therein. These statements do not include all disclosures required by accounting principles generally accepted in the United States of America (GAAP) for annual periods and should be read in conjunction with the Companys audited consolidated financial statements and related notes for the year ended December31, 2008. The Company prepared the unaudited condensed consolidated financial statements following the requirements of the Securities and Exchange Commission for interim reporting. As permitted under those rules, certain footnotes or other financial information that are normally required by GAAP can be condensed or omitted. The results of operations for the three and six month periods ended June30, 2009 are not necessarily indicative of the results to be expected for the year ending December31, 2009 or any other period(s). Reclassifications Certain reclassifications of prior year amounts have been made to conform to the current year presentation. All prior period information has been retrospectively adjusted to reflect the impact of the adoptions of Financial Accounting Standards Board (FASB) Staff Position No. APB 14-1, Accounting for Convertible Debt Instruments That May Be Settled in Cash upon Conversion (Including Partial Cash Settlement) (FSP APB 14-1) and Statement of Financial Accounting Standards No.160, Accounting and Reporting of Noncontrolling Interests in Consolidated Financial Statements, an amendment of ARB No.51 (SFASNo.160) in the first quarter of 2009. Goodwill In July 2009, the Company decided to change the timing of the annual impairment testing for goodwill from January1 to October1 of each year as a preferable method of applying the provisions of Statement of Financial Accounting Standards No.142, Goodwill and Other Intangible Assets (SFAS No.142). Accordingly, the Company expects to perform its next annual impairment assessment of goodwill in the fourth quarter of 2009. The Company decided to adopt this change in timing in order to assess the recorded values of goodwill for potential impairment at a time closer to its fiscal year end reporting date. The Companys management believes this change is preferable in reducing the potential risk that an undetected impairment indicator could occur in between the timing of the Companys annual impairment test and the preparation of its year end financial statements. This change has no effect on reported earnings for any current or prior periods. Subsequent Events The Company has evaluated subsequent events through August7, 2009, the date of issuance of the unaudited condensed consolidated financial statements, and disclosed, if necessary, any material subsequent events in the notes to these financial statements. Recently Adopted Accounting Standards In May 2009, the FASB issued Statement of Financial Accounting Standards No.165, Subsequent Events (SFAS No.165), which establishes general |
| Note 2: Aczone Asset Purchase | Note 2: Aczone Asset Purchase On July11, 2008, the Company completed the acquisition of assets related to Aczone (dapsone)gel 5%, a topical treatment for acne vulgaris, from QLT USA, Inc. (QLT) for approximately $150.0million. The acquisition was funded from cash and equivalents balances. The Company acquired QLTs right, title and interest in and to the intellectual property, assigned contracts, registrations and inventories related to Aczone, which is approved for sale in both the United States and Canada for the treatment of certain dermatological conditions. The Company accounted for the acquisition as a purchase of net assets. The Company determined that the assets acquired consist of product rights for developed technology for Aczone of $145.6 million and inventories of $4.4 million. The useful life of the developed technology was determined to be approximately eight years. The Company believes the fair values assigned to the assets acquired were based on reasonable assumptions. |
| Note 3: Restructuring Charges and Integration and Transition Costs | Note 3: Restructuring Charges and Integration and Transition Costs 2009 Restructuring Plan On February4, 2009, the Company announced a restructuring plan that involves a workforce reduction of approximately 460 employees, primarily in the United States and Europe. The majority of the employees affected by the restructuring plan are U.S. urology sales and marketing personnel as a result of the Companys decision to focus on the urology specialty and to seek a partner to promote Sanctura XR to general practitioners, and marketing personnel in the United States and Europe as the Company adjusts its back-office structures to a reduced short-term sales outlook for some businesses. The restructuring plan also includes modest workforce reductions in other functions as the Company re-engineers its processes to increase efficiency and productivity. As part of the restructuring plan, the Company modified the outstanding stock options issued in its February 2008 full-round employee stock option grant. The stock options were originally granted with an exercise price of $64.47 with a standard four year graded vesting term, a ten year contractual term, and standard 90 day expiration upon termination of employment provisions. These options were modified to be immediately vested in full and to remove the 90 day expiration upon termination of employment provision. Because the modified awards became fully vested and there was no future derived service period, all unamortized compensation expense related to the original grant and the additional compensation expense attributable to the modification of the awards was recognized in full on the modification date. In addition, the contractual provisions of outstanding stock options, other than the February 2008 full-round employee stock option grant, held by employees impacted by the workforce reduction were modified to extend the stock option expiration dates. Under the original contractual provisions, outstanding stock options held by employees involved in a workforce reduction automatically become fully vested upon termination of employment and the stock options expire after the earlier of 90 days from termination of employment or the remaining stock option contractual term. Under the modified terms, stock options for the impacted employees will expire after the earlier of three years from termination of employment or the remaining contractual term. All unamortized compensation expense related to the original stock option awards plus the incremental compensation expense associated with the modifications will be recognized ratably from the modification date to the employees expected termination date. The Company estimates that the total pre-tax charges related to the 2009 restructuring plan will be between $119.0million and $126.0million, of which $40.0 million to $45.0 million are expected to be cash expenditures. The total estimated pre-tax charges consist primarily of employee severance and other one-time termination benefits of $40.0 million to $45.0 million, asset write-offs of $2.0 million to $3.0 million, costs associated with the modification of stock options issued in the February 2008 ful |
| Note 4: Intangibles | Note 4: Intangibles At June30, 2009 and December31, 2008, the components of amortizable and unamortizable intangibles and certain other related information were as follows: June30, 2009 December31, 2008 Gross Amount Accumulated Amortization Weighted Average Amortization Period Gross Amount Accumulated Amortization Weighted Average Amortization Period (in millions) (in years) (in millions) (in years) Amortizable Intangible Assets: Developed technology $ 1,390.9 $ (265.6 ) 14.3 $ 1,390.8 $ (215.0 ) 14.3 Customer relationships 42.3 (41.5 ) 3.1 42.3 (37.8 ) 3.1 Licensing 223.8 (90.5 ) 10.0 223.5 (78.9 ) 10.0 Trademarks 27.3 (17.3 ) 6.3 27.3 (14.9 ) 6.3 Core technology 190.5 (42.9 ) 15.2 190.4 (36.5 ) 15.2 1,874.8 (457.8 ) 13.5 1,874.3 (383.1 ) 13.5 Unamortizable Intangible Assets: Business licenses 0.7 0.7 $ 1,875.5 $ (457.8 ) $ 1,875.0 $ (383.1 ) Developed technology consists primarily of current product offerings, primarily saline and silicone gel breast implants, obesity intervention products, dermal fillers, skin care and urologics products acquired in connection with business combinations and asset acquisitions. Customer relationship assets consist of the estimated value of relationships with customers acquired in connection with the Inamed acquisition, primarily in the breast implant market in the United States. Licensing assets consist primarily of capitalized payments to third party licensors related to the achievement of regulatory approvals to commercialize products in specified markets and up-front payments associated with royalty obligations for products that have achieved regulatory approval for marketing. Core technology consists of proprietary technology associated with silicone gel breast implants, gastric bands and intragastric balloon systems acquired in connection with the Inamed acquisition, dermal filler technology acquired in connection with the Cornal acquisition, gastric band technology acquired in connection with the EndoArt acquisition, and a drug delivery technology acquired in connection with the Companys 2003 acquisition of Oculex Pharmaceuticals, Inc. The following table provides amortization expense by major categories of acquired amortizable intangible assets for the three and six month periods ended June30, 2009 and 2008, respectively: Threemonthsended Sixmonthsended June30, 2009 June30, 2008 June30, 2009 June30, 2008 (in millions) (in millions) Developed technology $ 25.2 $ 22.9 $ 50.4 $ 45.6 Customer relationships 0.2 3.4 3.6 6.8 Licensing 5.8 5.0 11.6 9.4 Trademarks 1.1 1.2 2.2 2.4 Core technology 3.2 3.3 6.3 6.5 |
| Note 5: Inventories | Note 5: Inventories Components of inventories were: June30, 2009 December31, 2008 (in millions) Finished products $ 154.5 $ 174.9 Work in process 32.0 36.8 Raw materials 49.4 50.8 Total $ 235.9 $ 262.5 At June30, 2009 and December31, 2008, approximately $7.1 million and $11.2 million, respectively, of the Companys finished goods medical device inventories, primarily breast implants, were held on consignment at a large number of doctors offices, clinics and hospitals worldwide. The value and quantity at any one location are not significant. |
| Note 6: Convertible Notes | Note 6: Convertible Notes In 2006, the Company issued the 2026 Convertible Notes for an aggregate principal amount of $750.0 million. The 2026 Convertible Notes are unsecured and pay interest semi-annually on the principal amount of the notes at a rate of 1.50%per annum. The 2026 Convertible Notes will be convertible into cash and, if applicable, shares of the Companys common stock based on an initial conversion rate of 15.7904shares of the Companys common stock per $1,000 principal amount of the 2026 Convertible Notes if the Companys stock price reaches certain specified thresholds. As of June30, 2009, the conversion criteria had not been met. The Company was not permitted to redeem the 2026 Convertible Notes prior to April5, 2009, will be permitted to redeem the 2026 Convertible Notes from and after April5, 2009 to April4, 2011 if the closing price of its common stock reaches a specified threshold, and will be permitted to redeem the 2026 Convertible Notes at any time on or after April5, 2011. Holders of the 2026 Convertible Notes will also be able to require the Company to redeem the 2026 Convertible Notes on April1, 2011, April1, 2016 and April1, 2021 or upon a change in control of the Company. The 2026 Convertible Notes mature on April1, 2026, unless previously redeemed by the Company or earlier converted by the note holders. The Company accounts for the liability and equity components of the 2026 Convertible Notes in accordance with FSP APB14-1. As of June30, 2009, the carrying value of the liability component is $605.3 million with an effective interest rate of 5.59%. The difference between the carrying value of the liability component and the principal amount of the 2026 Convertible Notes of $649.7 million is recorded as debt discount and is being amortized to interest expense through the first noteholder put date in April 2011. In the first quarter of 2009, the Company paid $98.3 million to repurchase $100.3 million principal amount of the 2026 Convertible Notes with a carrying value of $92.3 million and a calculated fair value of approximately $97.0 million. The Company recognized a $4.7 million loss on extinguishment of the convertible debt. In addition, the Company wrote off $0.6 million of related unamortized deferred debt issuances costs as loss on extinguishment of the convertible debt. The difference between the amount paid to repurchase the 2026 Convertible Notes and the calculated fair value of the liability component was recognized as a reduction to additional paid in capital, net of the effect of deferred taxes. |
| Note 7: Income Taxes | Note 7: Income Taxes The provision for income taxes is determined using an estimated annual effective tax rate, which is generally less than the U.S.federal statutory rate, primarily because of lower tax rates in certain non-U.S.jurisdictions, RD tax credits available in the United States and other foreign jurisdictions and deductions available in the United States for domestic production activities. The effective tax rate may be subject to fluctuations during the year as new information is obtained, which may affect the assumptions used to estimate the annual effective tax rate, including factors such as the mix of pre-tax earnings in the various tax jurisdictions in which the Company operates, valuation allowances against deferred tax assets, the recognition or derecognition of tax benefits related to uncertain tax positions, utilization of RD tax credits and changes in or the interpretation of tax laws in jurisdictions where the Company conducts business. The Company recognizes deferred tax assets and liabilities for temporary differences between the financial reporting basis and the tax basis of its assets and liabilities along with net operating loss and tax credit carryovers. The Company records a valuation allowance against its deferred tax assets to reduce the net carrying value to an amount that it believes is more likely than not to be realized. When the Company establishes or reduces the valuation allowance against its deferred tax assets, the provision for income taxes will increase or decrease, respectively, in the period such determination is made. Valuation allowances against deferred tax assets were $8.4 million as of June30, 2009 and December31, 2008. In February 2009, the California Legislature enacted 2009-2010 budget legislation containing various California tax law changes including an election to apply a single sales factor apportionment formula for taxable years beginning on or after January1, 2011. The Company anticipates making the election and as a result, the state and federal deferred tax assets and deferred tax liabilities have been re-determined to reflect an adjustment to the resulting tax rate. The impact of the adjustment was an increase to the provision for income taxes of $1.5 million which was reflected in the first quarter of 2009. The total amount of unrecognized tax benefits was $40.2 million and $47.5 million as of June30, 2009 and December31, 2008, respectively. The total amount of unrecognized tax benefits that, if recognized, would affect the effective tax rate was $38.2 million and $42.0 million as of June30, 2009 and December31, 2008, respectively. The Company expects that during the next 12 months it is reasonably possible that unrecognized tax benefit liabilities will decrease by approximately $17.6 million due to the settlement of an income tax audit in the United States. Total interest accrued related to uncertainty in income taxes included in the Companys unaudited condensed consolidated balance sheet was $5.9 million and $12.8 million as of June30, 2009 and December31, 2008, respectively. The Company has not provided for withholding and U.S.taxes for the unremitted earnin |
| Note 8: Share-Based Compensation | Note 8: Share-Based Compensation The Company recognizes compensation expense for all share-based awards made to employees and directors. The fair value of share-based awards is estimated at the grant date using the Black-Scholes option-pricing model and the portion that is ultimately expected to vest is recognized as compensation cost over the requisite service period using the straight-line single option method. The fair value of modifications to share-based awards is generally estimated using a lattice model. The determination of fair value using the Black-Scholes and lattice option-pricing models is affected by the Companys stock price as well as assumptions regarding a number of highly complex and subjective variables, including expected stock price volatility, risk-free interest rate, expected dividends and projected employee stock option exercise behaviors. The Company estimates stock price volatility based on an equal weighting of the historical average over the expected life of the award and the average implied volatility of at-the-money options traded in the open market. The Company estimates employee stock option exercise behavior based on actual historical exercise activity and assumptions regarding future exercise activity of unexercised, outstanding options. Share-based compensation expense is recognized only for those awards that are ultimately expected to vest, and the Company has applied an estimated forfeiture rate to unvested awards for the purpose of calculating compensation cost. These estimates will be revised in future periods if actual forfeitures differ from the estimates. Changes in forfeiture estimates impact compensation cost in the period in which the change in estimate occurs. For the three and six month periods ended June30, 2009 and 2008, share-based compensation expense was as follows: Three months ended Six months ended June30, 2009 June30, 2008 June30, 2009 June30, 2008 (in millions) (in millions) Cost of sales $ 1.5 $ 2.4 $ 8.2 $ 4.2 Selling, general and administrative 12.2 15.0 78.1 31.4 Research and development 4.5 5.2 30.1 11.6 Pre-tax share-based compensation expense 18.2 22.6 116.4 47.2 Income tax benefit 6.1 8.0 37.9 16.9 Net share-based compensation expense $ 12.1 $ 14.6 $ 78.5 $ 30.3 Share-based compensation expense for the three and six month periods ended June30, 2009 includes $0.6 million and $77.6 million, respectively, of pre-tax compensation expense from stock option modifications related to the 2009 restructuring plan. As of June30, 2009, total compensation cost related to non-vested stock options and restricted stock not yet recognized was approximately $129.2 million, which is expected to be recognized over the next 48 months (35 months on a weighted-average basis). The Company has not capitalized as part of inventory any share-based compensation costs because such costs were negligible as of June30, 2009. |
| Note 9: Employee Retirement and Other Benefit Plans | Note 9: Employee Retirement and Other Benefit Plans The Company sponsors various qualified defined benefit pension plans covering a substantial portion of its employees. In addition, the Company sponsors two supplemental nonqualified plans covering certain management employees and officers and one retiree health plan covering U.S. retirees and dependents. Components of net periodic benefit cost for the three and six month periods ended June30, 2009 and 2008, respectively, were as follows: Three months ended Pension Benefits Other Postretirement Benefits June30, 2009 June30, 2008 June30, 2009 June30, 2008 (in millions) (in millions) Service cost $ 5.7 $ 6.4 $ 0.4 $ 0.4 Interest cost 9.3 8.8 0.6 0.6 Expected return on plan assets (10.7 ) (10.7 ) Amortization of prior service cost (0.1 ) Recognized net actuarial loss 3.2 1.6 Net periodic benefit cost $ 7.5 $ 6.1 $ 1.0 $ 0.9 Six months ended Pension Benefits Other Postretirement Benefits June30, 2009 June30, 2008 June30, 2009 June30, 2008 (in millions) (in millions) Service cost $ 11.3 $ 12.8 $ 0.8 $ 0.8 Interest cost 18.5 17.6 1.2 1.2 Expected return on plan assets (21.3 ) (21.4 ) Amortization of prior service cost (0.1 ) (0.2 ) Recognized net actuarial loss 6.3 3.2 Net periodic benefit cost $ 14.8 $ 12.2 $ 1.9 $ 1.8 In 2009, the Company expects to pay contributions of between $10.0million and $15.0million for its U.S.and non-U.S.pension plans and between $1.0million and $2.0million for its other postretirement plan. |
| Note 10: Legal Proceedings | Note 10: Legal Proceedings The following supplements and amends the discussion set forth in Note 10 Legal Proceedings in the Companys Quarterly Report on Form 10-Q for the quarterly period ended March31, 2009 and in Note 14 Legal Proceedings in the Companys Annual Report on Form 10-K for the fiscal year ended December31, 2008. In July 2008, a complaint entitled Kramer, Bryant, Spears, Doolittle, Clark, Whidden, Powell, Moore, Hennessey, Sody, Breeding, Downey, Underwood-Boswell, Reed-Momot, Purdon Hahn v. Allergan, Inc. was filed in the Superior Court for the State of California for the County of Orange. The complaint makes allegations against the Company relating to Botox and Botox Cosmetic including failure to warn, manufacturing defects, negligence, breach of implied and express warranties, deceit by concealment and negligent misrepresentation and seeks damages, attorneys fees and costs. In 2009, the plaintiffs filed requests for dismissal without prejudice as to plaintiffs Hennessey, Hahn, Underwood-Boswell, Purdon, Moore and Clark and the court dismissed these plaintiffs without prejudice. In March 2008, the Company received service of a Subpoena Duces Tecum from the U.S. Attorney, U.S. Department of Justice, Northern District of Georgia (DOJ). The subpoena requests the production of documents relating to the Companys sales and marketing practices in connection with Botox. The Company is involved in various other lawsuits and claims arising in the ordinary course of business. These other matters are, in the opinion of management, immaterial both individually and in the aggregate with respect to the Companys consolidated financial position, liquidity or results of operations. Because of the uncertainties related to the incurrence, amount and range of loss on any pending litigation, investigation, inquiry or claim, management is currently unable to predict the ultimate outcome of any litigation, investigation, inquiry or claim, determine whether a liability has been incurred or make an estimate of the reasonably possible liability that could result from an unfavorable outcome. The Company believes however, that the liability, if any, resulting from the aggregate amount of uninsured damages for any outstanding litigation, investigation or claim, other than the inquiry being conducted by the DOJ discussed herein or any related qui tam or other action and in Note 11, Contingencies, will not have a material adverse effect on the Companys consolidated financial position, liquidity or results of operations. However, an adverse ruling in a patent infringement lawsuit involving the Company could materially affect the Companys ability to sell one or more of its products or could result in additional competition. In view of the unpredictable nature of such matters, the Company cannot provide any assurances regarding the outcome of any litigation, investigation, inquiry or claim to which the Company is a party or the impact on the Company of an adverse ruling in such matters. |
| Note 11: Contingencies | Note 11: Contingencies During fiscal year 2008, the Company incurred approximately $25.7 million of costs associated with the DOJs inquiry discussed in Note 10, Legal Proceedings above. During the three and six month periods ended June30, 2009, the Company incurred $7.4 million and $15.2 million, respectively, of costs associated with the DOJs inquiry. Costs associated with responding to the DOJ investigation are expected to total approximately $30.0 million to $34.0 million during fiscal year 2009. Estimated costs include attorneys fees and costs associated with document production, imaging and information services support. Because of the uncertainties related to the incurrence, amount and range of loss, if any, that might be incurred related to this inquiry, management is currently unable to predict the ultimate outcome or determine whether a liability has been incurred or make an estimate of the reasonably possible liability that could result from an unfavorable outcome associated with this inquiry. |
| Note 12: Guarantees | Note 12: Guarantees The Companys Restated Certificate of Incorporation, as amended, provides that the Company will indemnify, to the fullest extent permitted by the Delaware General Corporation Law, each person that is involved in or is, or is threatened to be, made a party to any action, suit or proceeding by reason of the fact that he or she, or a person of whom he or she is the legal representative, is or was a director or officer of the Company or was serving at the request of the Company as a director, officer, employee or agent of another corporation or of a partnership, joint venture, trust or other enterprise. The Company has also entered into contractual indemnity agreements with each of its directors and executive officers pursuant to which, among other things, the Company has agreed to indemnify such directors and executive officers against any payments they are required to make as a result of a claim brought against such executive officer or director in such capacity, excluding claims (i)relating to the action or inaction of a director or executive officer that resulted in such director or executive officer gaining illegal personal profit or advantage, (ii)for an accounting of profits made from the purchase or sale of securities of the Company within the meaning of Section16(b) of the Securities Exchange Act of 1934, as amended, or similar provisions of any state law or (iii)that are based upon or arise out of such directors or executive officers knowingly fraudulent, deliberately dishonest or willful misconduct. The maximum potential amount of future payments that the Company could be required to make under these indemnification provisions is unlimited. However, the Company has purchased directors and officers liability insurance policies intended to reduce the Companys monetary exposure and to enable the Company to recover a portion of any future amounts paid. The Company has not previously paid any material amounts to defend lawsuits or settle claims as a result of these indemnification provisions. As a result, the Company believes the estimated fair value of these indemnification arrangements is minimal. The Company customarily agrees in the ordinary course of its business to indemnification provisions in agreements with clinical trials investigators in its drug, biologics and medical device development programs, in sponsored research agreements with academic and not-for-profit institutions, in various comparable agreements involving parties performing services for the Company in the ordinary course of business, and in its real estate leases. The Company also customarily agrees to certain indemnification provisions in its discovery and development collaboration agreements. With respect to the Companys clinical trials and sponsored research agreements, these indemnification provisions typically apply to any claim asserted against the investigator or the investigators institution relating to personal injury or property damage, violations of law or certain breaches of the Companys contractual obligations arising out of the research or clinical testing of the Companys products, compounds or drug candidates. With respect t |
| Note 13: Product Warranties | Note13:Product Warranties The Company provides warranty programs for breast implant sales primarily in the United States, Europe and certain other countries. Management estimates the amount of potential future claims from these warranty programs based on actuarial analyses. Expected future obligations are determined based on the history of product shipments and claims and are discounted to a current value. The liability is included in both current and long-term liabilities in the Companys consolidated balance sheets. The U.S.programs include the ConfidencePlus and ConfidencePlus Premier warranty programs. The ConfidencePlus program generally provides lifetime product replacement and $1,200 of financial assistance for surgical procedures within ten years of implantation. The ConfidencePlus Premier program, which normally requires a low additional enrollment fee, generally provides lifetime product replacement, $2,400 of financial assistance for surgical procedures within ten years of implantation and contralateral implant replacement. The enrollment fee is deferred and recognized as income over the ten year warranty period for financial assistance. The warranty programs in non-U.S.markets have similar terms and conditions to the U.S.programs. The Company does not warrant any level of aesthetic result and, as required by government regulation, makes extensive disclosures concerning the risks of the use of its products and breast implant surgery. Changes to actual warranty claims incurred and interest rates could have a material impact on the actuarial analysis and the Companys estimated liabilities. A large majority of the product warranty liability arises from the U.S.warranty programs. The Company does not currently offer any similar warranty program on any other product. The following table provides a reconciliation of the change in estimated product warranty liabilities through June30, 2009: (inmillions) Balance at December31, 2008 $ 29.5 Provision for warranties issued during the period 3.1 Settlements made during the period (2.9 ) Balance at June30, 2009 $ 29.7 Current portion $ 6.6 Non-current portion 23.1 Total $ 29.7 |
| Note 14: Earnings Per Share | Note 14: Earnings Per Share The table below presents the computation of basic and diluted earnings per share: Three months ended Six months ended June30, 2009 June30, 2008 June30, 2009 June30, 2008 (in millions, except per share amounts) Net earnings attributable to Allergan, Inc. $ 176.1 $ 143.4 $ 220.8 $ 251.1 Weighted average number of shares issued 303.7 304.4 303.7 304.7 Netsharesassumedissuedusingthetreasurystockmethod for optionsand non-vested equity shares and share units outstanding during each period based on average market price 1.7 2.6 1.4 2.9 Diluted shares 305.4 307.0 305.1 307.6 Earnings per share attributable to Allergan, Inc. stockholders: Basic $ 0.58 $ 0.47 $ 0.73 $ 0.82 Diluted $ 0.58 $ 0.47 $ 0.72 $ 0.82 For the three and six month periods ended June30, 2009, options to purchase 17.2million and 18.3million shares of common stock at exercise prices ranging from $39.67 to $65.63 per share, respectively, were outstanding but were not included in the computation of diluted earnings per share because the effect from the assumed exercise of these options calculated under the treasury stock method would be anti-dilutive. There were no potentially diluted common shares related to the Companys 2026 Convertible Notes for the three and six month periods ended June30, 2009, as the Companys average stock price for the respective periods was less than the conversion price of the notes. For the three and six month periods ended June30, 2008, options to purchase 11.7million and 8.4million shares of common stock at exercise prices ranging from $48.07 to $65.63 per share, respectively, were outstanding but were not included in the computation of diluted earnings per share because the effect from the assumed exercise of these options calculated under the treasury stock method would be anti-dilutive. There were no potentially diluted common shares related to the Companys 2026 Convertible Notes for the three and six month periods ended June30, 2008, as the Companys average stock price for the respective periods was less than the conversion price of the notes. |
| Note 15: Comprehensive Income | Note 15: Comprehensive Income The following table summarizes the components of comprehensive income for the three and six month periods ended June30, 2009 and 2008: Three months ended June30, 2009 June30, 2008 BeforeTax Amount Tax (Expense) orBenefit Net-of-Tax Amount BeforeTax Amount Tax (Expense) orBenefit Net-of-Tax Amount (in millions) Foreign currency translation adjustments $ 39.2 $ $ 39.2 $ 3.4 $ $ 3.4 Amortization of deferred holding gains on derivatives designated as cash flow hedges (0.4 ) 0.2 (0.2 ) (0.4 ) 0.2 (0.2 ) Unrealized holding gain (loss) on available-for-sale securities 0.7 (0.3 ) 0.4 (2.7 ) 1.0 (1.7 ) Other comprehensive income $ 39.5 $ (0.1 ) 39.4 $ 0.3 $ 1.2 1.5 Net earnings 176.8 143.8 Total comprehensive income 216.2 145.3 Comprehensive income attributable to noncontrollinginterest 0.8 0.2 Comprehensive income attributable to Allergan, Inc. $ 215.4 $ 145.1 Six months ended June30, 2009 June30, 2008 BeforeTax Amount Tax (Expense) orBenefit Net-of-Tax Amount BeforeTax Amount Tax (Expense) orBenefit Net-of-Tax Amount (in millions) Foreign currency translation adjustments $ 14.0 $ $ 14.0 $ 39.1 $ $ 39.1 Amortization of deferred holding gains on derivatives designated as cash flow hedges (0.7 ) 0.3 (0.4 ) (0.7 ) 0.3 (0.4 ) Unrealized holding gain (loss) on available-for-sale securities 0.9 (0.7 ) 0.2 (4.1 ) 1.6 (2.5 ) Other comprehensive income $ 14.2 $ (0.4 ) 13.8 $ 34.3 $ 1.9 36.2 Net earnings 221.8 251.7 Total comprehensive income 235.6 287.9 Comprehensive income attributable to noncontrollinginterest 1.0 0.4 Comprehensive income attributable to Allergan, Inc. $ 234.6 $ 287.5 |
| Note 16: Financial Instruments | Note16:Financial Instruments In the normal course of business, operations of the Company are exposed to risks associated with fluctuations in interest rates and foreign currency exchange rates. The Company addresses these risks through controlled risk management that includes the use of derivative financial instruments to economically hedge or reduce these exposures. The Company does not enter into derivative financial instruments for trading or speculative purposes. The Company has not experienced any losses to date on its derivative financial instruments due to counterparty credit risk. To ensure the adequacy and effectiveness of its interest rate and foreign exchange hedge positions, the Company continually monitors its interest rate swap positions and foreign exchange forward and option positions both on a stand-alone basis and in conjunction with its underlying interest rate and foreign currency exposures, from an accounting and economic perspective. However, given the inherent limitations of forecasting and the anticipatory nature of the exposures intended to be hedged, the Company cannot assure that such programs will offset more than a portion of the adverse financial impact resulting from unfavorable movements in either interest or foreign exchange rates. In addition, the timing of the accounting for recognition of gains and losses related to mark-to-market instruments for any given period may not coincide with the timing of gains and losses related to the underlying economic exposures and, therefore, may adversely affect the Companys consolidated operating results and financial position. Interest Rate Risk Management The Companys interest income and expense is more sensitive to fluctuations in the general level of U.S.interest rates than to changes in rates in other markets. Changes in U.S.interest rates affect the interest earned on cash and equivalents, interest expense on debt as well as costs associated with foreign currency contracts. On January31, 2007, the Company entered into a nine-year, two-month interest rate swap with a $300.0million notional amount with semi-annual settlements and quarterly interest rate reset dates. The swap receives interest at a fixed rate of 5.75% and pays interest at a variable interest rate equal to 3-month LIBOR plus 0.368%, and effectively converts $300.0million of the Companys $800.0 million in aggregate principal amount of 5.75% Senior Notes due 2016 (2016 Notes) to a variable interest rate. Based on the structure of the hedging relationship, the hedge meets the criteria for using the short-cut method for a fair value hedge under the provisions of SFASNo.133. Under the provisions of SFASNo.133, the investment in the derivative and the related long-term debt are recorded at fair value. At June30, 2009 and December31, 2008, the Company recognized in its consolidated balance sheets an asset reported in Investments and other assets and a corresponding increase in Long-term debt associated with the fair value of the derivative of $31.7 million and $61.9million, respectively. The differential to be paid or received as interest rates change is accrued and recognized as an adju |
| Note 17: Fair Value Measurements | Note 17: Fair Value Measurements The Company accounts for the methods of measuring fair value in accordance with the provisions of Statement of Financial Accounting Standards No.157, Fair Value Measurements (SFAS No.157). As defined in SFAS No.157, fair value is based on the prices that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. In order to increase consistency and comparability in fair value measurements, SFAS No.157 establishes a three-tier fair value hierarchy that prioritizes the inputs used to measure fair value. These tiers include: Level 1, defined as observable inputs such as quoted prices in active markets; Level 2, defined as inputs other than quoted prices in active markets that are either directly or indirectly observable; and Level 3, defined as unobservable inputs for which little or no market data exists, therefore requiring an entity to develop its own assumptions. Assets and Liabilities Measured at Fair Value on a Recurring Basis As of June30, 2009, the Company has certain assets and liabilities that are required to be measured at fair value on a recurring basis. These include commercial paper and foreign time deposits classified as cash equivalents, other cash equivalents, available-for-sale securities, foreign exchange derivatives and the interest rate swap with a $300.0million notional amount. These assets and liabilities are classified in the table below in one of the three categories of the fair value hierarchy described above. Total Level1 Level2 Level3 (in millions) Assets Commercial paper $ 131.4 $ 131.4 $ $ Foreign time deposits 107.8 107.8 Other cash equivalents 1,056.6 1,056.6 Available-for-sale securities 1.5 1.5 Foreign exchange derivative assets 6.3 6.3 Interest rate swap derivative asset 31.7 31.7 $ 1,335.3 $ 1,297.3 $ 38.0 $ Liabilities Interest rate swap derivative liability $ 31.7 $ $ 31.7 $ Commercial paper, foreign time deposits and other cash equivalents are valued at cost, which approximates fair value due to the short-term maturities of these instruments. Available-for-sale securities are valued using quoted stock prices from the National Association of Securities Dealers Automated Quotation System at the reporting date. Foreign currency derivative assets and liabilities are valued using quoted forward foreign exchange prices and option volatility at the reporting date. The interest rate swap derivative asset and liability are valued using LIBOR yield curves at the reporting date. The Company believes the fair values assigned to its available-for-sale securities and derivative instruments as of June30, 2009 and December31, 2008 are based upon reasonable estimates and assumptions. |
| Note 18: Business Segment Information | Note 18: Business Segment Information The Company operates its business on the basis of two reportable segments specialty pharmaceuticals and medical devices. The specialty pharmaceuticals segment produces a broad range of pharmaceutical products, including: ophthalmic products for glaucoma therapy, ocular inflammation, infection, allergy and chronic dry eye; Botox for certain therapeutic and aesthetic indications; skin care products for acne, psoriasis, eyelash growth and other prescription and over-the-counter dermatological products; and urologics products. The medical devices segment produces a broad range of medical devices, including: breast implants for augmentation, revision and reconstructive surgery; obesity intervention products, including the Lap-Band System and the Orbera Intragastric Balloon System (formerly known as the BIB System); and facial aesthetics products. The Company provides global marketing strategy teams to ensure development and execution of a consistent marketing strategy for its products in all geographic regions that share similar distribution channels and customers. The Company evaluates segment performance on a revenue and operating income basis exclusive of general and administrative expenses and other indirect costs, restructuring charges, in-process research and development expenses, amortization of identifiable intangible assets related to business combinations and asset acquisitions and certain other adjustments, which are not allocated to the Companys segments for performance assessment by the Companys chief operating decision maker. Other adjustments excluded from the Companys segments for performance assessment represent income or expenses that do not reflect, according to established Company-defined criteria, operating income or expenses associated with the Companys core business activities. Because operating segments are generally defined by the products they design and sell, they do not make sales to each other. The Company does not discretely allocate assets to its operating segments, nor does the Companys chief operating decision maker evaluate operating segments using discrete asset information. Operating Segments Three months ended Six months ended June30, 2009 June30, 2008 June30, 2009 June30, 2008 (in millions) (in millions) Product net sales: Specialty pharmaceuticals $ 921.2 $ 926.4 $ 1,748.1 $ 1,784.0 Medical devices 197.5 229.4 365.2 432.8 Total product net sales 1,118.7 1,155.8 2,113.3 2,216.8 Other corporate and indirect revenues 12.1 16.2 24.7 31.8 Total revenues $ 1,130.8 $ 1,172.0 $ 2,138.0 $ 2,248.6 Operating income: Specialty pharmaceuticals $ 356.1 $ 308.3 $ 646.0 $ 576.8 Medical devices 56.9 57.9 90.6 107.6 Total segments 413.0 366.2 736.6 684.4 General and administrative expenses, other indirect costs and other adjustment |
| Note 19: Subsequent Events | Note 19: Subsequent Events On July7, 2009, the Company and Samil Pharmaceutical Co. Ltd. entered into a joint venture (Samil Allergan Ophthalmic Joint Venture Company) in Korea by integrating the Samil Eyecare and Allergan Korea ophthalmology divisions. In addition, the Company paid approximately $16.7 million to Samil Pharmaceutical Co. Ltd. to complete the Companys joint venture investment and received a 50.005% stockholder interest (50% plus one share) in the joint venture. On July31, 2009, the U.S. Food and Drug Administration approved the Companys Risk Evaluation and Mitigation Strategy program for Botox, which addresses the risks related to botulinum toxin spread beyond the injection site and the lack of botulinum toxin interchangeability. |
| Document Information | |
| 6 Months Ended
Jun. 30, 2009 USD / shares | |
| Document Information [Text Block] | |
| Document Type | 10-Q |
| Amendment Flag | false |
| Amendment Description | N.A |
| Document Period End Date | 2009-06-30 |
| Entity Information (USD $) | |||
| 6 Months Ended
Jun. 30, 2009 | Jul. 31, 2009
| Jun. 30, 2008
| |
| Entity [Text Block] | |||
| Trading Symbol | AGN | ||
| Entity Registrant Name | ALLERGAN INC | ||
| Entity Central Index Key | 0000850693 | ||
| Current Fiscal Year End Date | --12-31 | ||
| Entity Well-known Seasoned Issuer | Yes | ||
| Entity Current Reporting Status | Yes | ||
| Entity Voluntary Filers | No | ||
| Entity Filer Category | Large Accelerated Filer | ||
| Entity Common Stock, Shares Outstanding | 307,511,888 | ||
| Entity Public Float | $15,974,000,000 |
