Stock Analysis on Net
Stock Analysis on Net

Allergan Inc. (NYSE:AGN.)

This company has been moved to the archive! The financial data has not been updated since February 19, 2015.

Common-Size Income Statement

Allergan Inc., common-size consolidated income statement

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12 months ended: Dec 31, 2014 Dec 31, 2013 Dec 31, 2012 Dec 31, 2011 Dec 31, 2010
Product net sales 100.00 100.00 100.00 100.00 100.00
Cost of sales, excludes amortization of intangible assets -11.82 -12.84 -13.58 -14.00 -14.98
Amortization of intangible assets -1.58 -1.88 -2.30 -2.39 -2.86
Gross profit 86.60% 85.28% 84.12% 83.61% 82.16%
Other revenues 1.57 1.66 1.70 1.35 2.07
Selling, general and administrative -39.81 -40.65 -39.74 -42.02 -41.86
Research and development -16.72 -16.82 -17.33 -16.88 -16.69
Legal settlement 0.00 0.00 0.00 0.00 -12.64
Impairment of intangible assets and related costs 0.00 -0.18 -0.39 -0.44 -7.66
Restructuring charges -3.44 -0.09 -0.10 -0.09 -0.01
Operating income 28.20% 29.19% 28.26% 25.53% 5.37%
Interest income 0.11 0.11 0.12 0.13 0.15
Interest expense -0.97 -1.21 -1.11 -1.34 -1.63
Other, net 0.59 -0.17 -0.40 -0.01 -0.34
Non-operating income (expense) -0.28% -1.27% -1.40% -1.22% -1.82%
Earnings from continuing operations before income taxes 27.92% 27.93% 26.86% 24.31% 3.54%
Provision for income taxes -6.41 -7.39 -7.55 -6.76 -3.44
Earnings from continuing operations 21.51% 20.53% 19.31% 17.54% 0.10%
Earnings from discontinued operations, net of applicable income tax 0.00 0.23 0.00 0.00 0.00
Loss on sale of discontinued operations, net of applicable income tax -0.05 -4.81 0.00 0.00 0.00
Discontinued operations -0.05% -4.58% 0.00% 0.00% 0.00%
Net earnings 21.45% 15.95% 19.31% 17.54% 0.10%
Net earnings attributable to noncontrolling interest -0.06 -0.06 -0.06 -0.07 -0.09
Net earnings attributable to Allergan, Inc. 21.39% 15.90% 19.25% 17.48% 0.01%

Based on: 10-K (reporting date: 2014-12-31), 10-K (reporting date: 2013-12-31), 10-K (reporting date: 2012-12-31), 10-K (reporting date: 2011-12-31), 10-K (reporting date: 2010-12-31).

A comprehensive analysis of the common-size income statement reveals a significant expansion in overall profitability and operational efficiency between 2010 and 2014. The company transitioned from a near-break-even net earnings position in 2010 to a robust margin of 21.39% attributable to the parent company by 2014.

Gross Profitability and Cost Management
A consistent upward trend in gross profit is observed, rising from 82.16% in 2010 to 86.60% in 2014. This improvement is primarily driven by a steady reduction in the cost of sales (excluding amortization), which decreased from 14.98% to 11.82% over the period. Amortization of intangible assets also showed a gradual decline as a percentage of net sales, moving from 2.86% to 1.58%.
Operating Expense Stability
Operating expenses remained relatively stable as a percentage of revenue. Selling, general and administrative expenses fluctuated within a narrow band, starting at 41.86% in 2010 and ending at 39.81% in 2014. Research and development expenditures exhibited high consistency, maintaining a range between 16.69% and 17.33%, indicating a disciplined approach to innovation investment relative to sales growth.
Impact of Non-Recurring Items
The volatility in operating income during the early part of the period was largely influenced by one-time charges. In 2010, operating income was suppressed to 5.37% due to a legal settlement of 12.64% and an impairment of intangible assets of 7.66%. Following the removal of these headwinds, operating income surged to 25.53% in 2011 and peaked at 29.19% in 2013. A notable restructuring charge of 3.44% occurred in 2014, slightly offsetting margin gains in that year.
Financial and Net Earnings Performance
Non-operating expenses improved over time, with interest expenses declining from 1.63% in 2010 to 0.97% in 2014. Net earnings attributable to the company grew from 0.01% in 2010 to 19.25% in 2012. A temporary contraction occurred in 2013, where net earnings dropped to 15.90% due to a loss from discontinued operations totaling 4.58% of product net sales. However, the trend recovered strongly in 2014, reaching a period high of 21.39%.

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