OPERATIONS HIGHLIGHTS

In millions, except per share data		Year Ended December 31,
	2007			2006			2005			2004			2003
STATEMENT OF OPERATIONS HIGHLIGHTS
(As reported under U.S. GAAP)
Product net sales	$	3,879.0		$	3,010.1		$	2,319.2		$	2,045.6		$	1,755.4
Total revenues		3,938.9			3,063.3			2,342.6			2,058.9			1,780.8
Research and development		718.1			1,055.5			388.3			342.9			762.6
Earnings (loss) from
continuing operations		501.0			(127.4	)		403.9			377.1			(52.5	)
Loss from
discontinued operations		(1.7	)		—			—			—			—
Net earnings (loss)		499.3			(127.4	)		403.9			377.1			(52.5	)
Basic earnings (loss)
per share:
Continuing operations		1.64			(0.43	)		1.54			1.44			(0.20	)
Discontinued operations		—			—			—			—			—
Diluted earnings (loss)
per share:
Continuing operations		1.62			(0.43	)		1.51			1.41			(0.20	)
Discontinued operations		—			—			—			—			—
Dividends per share		0.20			0.20			0.20			0.18			0.18
ADJUSTED AMOUNTS (a)
Adjusted earnings from
continuing operations		672.9			547.2			453.3			368.8			305.2
Adjusted basic earnings
per share:
Continuing operations		2.21			1.86			1.73			1.40			1.17
Adjusted diluted earnings
per share:
Continuing operations		2.18			1.83			1.69			1.38			1.15
NET SALES BY PRODUCT LINE
Specialty Pharmaceuticals:
Eye Care Pharmaceuticals	$	1,776.5		$	1,530.6		$	1,321.7		$	1,137.1		$	999.5
BOTOX®/Neuromodulator		1,211.8			982.2			830.9			705.1			563.9
Skin Care		110.7			125.7			120.2			103.4			109.3
Urologics		6.0			—			—			—			—
Subtotal
pharmaceuticals		3,105.0			2,638.5			2,272.8			1,945.6			1,672.7
Other (primarily
contract sales)		—			—			46.4			100.0			82.7
Total specialty
pharmaceuticals		3,105.0			2,638.5			2,319.2			2,045.6			1,755.4
Medical Devices:
Breast Aesthetics		298.4			177.2			—			—			—
Obesity Intervention		270.1			142.3			—			—			—
Facial Aesthetics		202.8			52.1			—			—			—
Core medical devices		771.3			371.6			—			—			—
Other		2.7			—			—			—			—
Total medical devices		774.0			371.6			—			—			—
Total product net sales	$	3,879.0		$	3,010.1		$	2,319.2		$	2,045.6		$	1,755.4
PRODUCT SOLD BY LOCATION
Domestic		65.7	%		67.4	%		67.5	%		69.1	%		70.4	%
International		34.3	%		32.6	%		32.5	%		30.9	%		29.6	%

COMPARISON OF 5-YEAR CUMULATIVE TOTAL RETURN*

 

(a)

The adjusted amounts in 2007 exclude the favorable recovery of $1.6 million in previously paid state income taxes and the after-tax effects of the following: 1) $72.0 million charge for in-process research and development related to the acquisition of EndoArt SA (EndoArt), 2) $99.9 million amortization of acquired intangible assets related to the acquisitions of Inamed Corporation (Inamed), Groupe Cornéal Laboratoires (Cornéal), EndoArt and Esprit Pharma Holding Company, Inc. (Esprit), 3) $25.9 million restructuring charges and $14.7 million of integration and transition costs related to the acquisitions of Inamed, Cornéal, EndoArt and Esprit, 4) $3.3 million roll-out of fair-market value inventory adjustments related to the acquisitions of Esprit and Cornéal, 5) $2.3 million settlement of an unfavorable Cornéal distribution contract, 6) $6.4 million settlement of a patent dispute, 7) $0.9 million restructuring charge related to the streamlining of the Company’s European operations, 8) $0.4 million of interest income related to income tax settlements and 9) $0.4 million unrealized loss on derivative instruments. The adjusted amounts in 2006 exclude income tax benefits of $11.7 million related to the resolution of uncertain tax positions and favorable recovery of previously paid state income taxes, an income tax benefit of $17.2 million related to a reduction in valuation allowance associated with a deferred tax asset, an income tax benefit of $2.8 million related to a change in estimated income taxes on 2005 dividend repatriation, income tax expenses of $1.6 million related to intercompany transfers of trade businesses and net assets, and the after-tax effects of the following: 1) $579.3 million charge for in-process research and development related to the acquisition of Inamed, 2) $58.6 million amortization of acquired intangible assets related to the acquisition of Inamed, 3) $47.9 million roll-out of fair-market value inventory adjustment related to the acquisition of Inamed, 4) $12.3 million restructuring charge and $20.7 million of integration and transition costs related to the acquisition of Inamed, 5) $28.5 million contribution to The Allergan Foundation, 6) $9.8 million restructuring charge and $6.2 million of transition/duplicate operating costs related to the streamlining of the Company’s European operations, 7) $0.6 million restructuring charge related to the scheduled termination of the Company’s manufacturing and supply agreement with Advanced Medical Optics, 8) $4.9 million reversal of interest income on previously paid state income taxes and $4.9 million reversal of interest expense related to the resolution of uncertain tax positions, 9) $2.7 million of costs to settle a contingency involving non-income taxes in Brazil, 10) $0.4 million reversal of restructuring charge related to the streamlining of the Company’s operations in Japan, 11) $0.1 million of costs related to the acquisition of Cornéal, and 12) $0.3 million unrealized loss on derivative instruments. 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, 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, 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. All per share data reflect the effect of Allergan’s June 2007 two-for-one stock split for all periods presented. The foregoing presentation contains certain non-GAAP financial measures and non-GAAP adjustments. For a reconciliation of these non-GAAP financial measures to GAAP financial measures, please refer to the Consolidated Statements section of this Annual Report.