Advanced Medical Optics Announces First-Quarter 2005 Results

Advanced Medical Optics Announces First-Quarter 2005 Results



SANTA ANA, Calif., April 28  /PRNewswire-FirstCall/ -- Advanced Medical Optics,
Inc. (AMO) (NYSE:AVO), a global leader in ophthalmic surgical devices and eye
care products, today announced financial results for the first quarter of 2005.

(Logo:  http://www.newscom.com/cgi-bin/prnh/20050324/AMOLOGO)

Net earnings for the first quarter were $13.8 million, or $0.35 per fully
diluted share, up 133 percent, compared to the same period last year.  The rise
is attributable to increased revenue and margin expansion.  The first-quarter
2005 results also included a $0.01 benefit related to currency derivatives.

Net revenue for the first quarter rose 28.1 percent, including a 3.7 percent
increase related to foreign currency, to $192.5 million, compared to the first
quarter of 2004.  The growth in revenue reflected the acquisition of the Pfizer
ophthalmic surgical business in mid 2004 and increased sales from the company's
promoted ophthalmic surgical and eye care brands.

"AMO continues to execute a focused plan for achieving sustained, profitable
growth," said Jim Mazzo, president and chief executive officer. "In the first
quarter, we continued to implement our strategy to expand our leadership in the
ophthalmic medical device industry.  This includes building on the strategic
benefits of the Pfizer ophthalmic surgical acquisition, offering products based
on advanced technologies and continued implementation of a cost-efficient
business model.  Looking ahead, we expect to complete our acquisition of VISX
in the second quarter, placing us in the leadership position of the global
refractive surgical marketplace."

AMO announced in November 2004 that it had reached an agreement with VISX,
Incorporated (NYSE:EYE), the global leader in laser vision correction, to
acquire the company for a combination of cash and stock.  Both companies'
stockholders will vote on the transaction at special meetings to be held on May
26, 2005.  Pending a successful outcome, AMO expects to close the transaction
within two business days thereafter.  As previously announced, AMO expects the
transaction to be neutral to its 2005 adjusted earnings-per-share guidance of
$1.65 to $1.75, and expects 2006 adjusted earnings per share to be in the range
of $2.20 to $2.30.  The company's adjusted earnings-per-share guidance excludes
any charges associated with the VISX acquisition, the impact of option
expensing and the effect of currency derivatives.

Ophthalmic Surgical

Ophthalmic surgical revenue grew 51.6 percent in the first quarter, including a
4.2 percent increase related to foreign currency, to $118.7 million, compared
to $78.3 million in the year-ago quarter.

Total intraocular lens (IOL) sales rose 17.2 percent to $60.5 million, compared
to $51.6 million in the first quarter of 2004.  The increase reflects primarily
the acquisition of the Pfizer ophthalmic surgical business and the strength of
the company's promoted IOL technologies, the Tecnis(R) and Sensar(R) lenses.

Sales of viscoelastics rose to $32.6 million, compared to $4.2 million one year
ago.  This rise reflected the addition of the Healon(R) family of
viscoelastics, which AMO acquired as part of the Pfizer transaction, as well as
continued growth of AMO's existing Vitrax(R) brand.

Sales of phacoemulsification products grew 5.2 percent during the quarter to
$18.5 million, compared to $17.6 million one year ago.  Growth was led by the
company's Sovereign(R) Compact(TM) system with WhiteStar(TM) technology.

Eye Care

Eye care revenue grew 2.5 percent in the first quarter, including a 3.3 percent
increase related to foreign currency, to $73.8 million, compared to $72.0
million in 2004's first quarter.  The first-quarter performance was primarily
impacted by a decline in sales in Japan.  This was due in part to a gradual
decline in hydrogen peroxide sales as a result of the market's movement to
single-bottle systems.

While overall eye care sales declined, sales of multipurpose solutions rose 14
percent in the first quarter to $37.0 million, compared to $32.5 million one
year ago.  Sales of the company's flagship COMPLETE(R) branded product line
were up 16.3 percent for the quarter.  AMO continues to expect its global eye
care franchise to grow annually at a rate of 1 percent to 3 percent, excluding
the impacts of currency.

Additional Operating Results

The following are additional operating highlights for the first quarter of
2005.

   *  Gross profit for the first quarter of 2005 was $122.1 million,
      compared to $90.6 million for the same period one year ago.  The gross
      profit margin for the first quarter was 63.4 percent, compared to
      60.3 percent one year ago.  The rise in gross profit margin was due to
      increased revenue, changes in product mix and continued execution of
      the company's manufacturing strategy.

   *  Research and development expense in the first quarter of 2005 was
      $12.4 million, compared to $9.0 million in the same period last year,
      demonstrating AMO's continued commitment to investment in new
      technologies that provide competitive advantages.  R&D expenses as a
      percent of sales were 6.4 percent in the first quarter of 2005,
      compared to 6.0 percent for the same period one year ago.

   *  SG&A expense for the first quarter was $83.8 million, or 43.5 percent
      of sales.  In the first quarter of 2004, the company's SG&A expenses
      stood at $71.1 million, or 47.3 percent of sales.  The decline in SG&A
      as a percent of sales is attributable to an increase in revenue and
      efficiency gains related to the company's centralized operating model.
      On a sequential basis, SG&A declined 9.5 percent from the fourth
      quarter of 2004.

   *  Operating income for the first quarter was $25.9 million, compared to
      $10.5 million in the first quarter of 2004.  The operating profit
      margin was 13.5 percent in the first quarter of 2005, compared to
      7.0 percent for the same period in 2004.

   *  Pretax income for the first quarter rose to $20.9 million, compared to
      $7.4 million in the same period one year ago.  The company's effective
      tax rate stood at 34 percent in the first quarter.

  Live Web Cast & Audio Replay


AMO will host a live Web cast to discuss first quarter results and future
expectations today at 10:00 a.m. EDT.  To participate, visit the company's
Investors site at http://www.amo-inc.com/.  Audio replay will be available at
approximately noon EDT today and will continue through midnight EDT on
Thursday, May 5, at 800-642-1687 (Passcode 5486045) or by visiting
http://www.amo-inc.com/.

Use of Non-GAAP Measures

Our guidance for earnings per share for 2005 and 2006 is provided on a non-GAAP
basis.  The company's adjusted earnings-per-share guidance excludes any
non-recurring charges associated with the VISX acquisition and option
expensing.  The guidance also assumes no impact of potential unrealized gains
or losses on derivative instruments.  The company believes this presentation is
useful to investors to conduct a more meaningful, consistent comparison of the
company's ongoing operating results.  This presentation is also consistent with
our internal use of the measure, which we use to measure the profitability of
ongoing operating results against prior periods and against our internally
developed targets.  We believe that our investors also use this measure to
analyze the sustainable profitability of the on-going business operations.  The
economic substance related to our use of adjusted earnings per share is our
belief that the appropriate analysis of our profitability cannot be effectively
considered while incorporating the effect of unusual items and charges that
have not been experienced in prior periods.  In order to comply with Regulation
FD, we provide our guidance in public forums, such as this press release.  The
company is not able to provide a reconciliation of projected adjusted earnings
per share to expected reported results due to the unknown effect, timing, and
potential significance of option expensing, the uncertainty associated with the
timing of the closing the VISX transaction, and our inability to forecast
non-recurring costs associated with the VISX transaction at this time.

Earnings before interest, taxes, depreciation and amortization (EBITDA) has
been included because the company believes it is a useful tool for us and our
investors to measure our ability to meet debt service, capital expenditure and
working capital requirements.  EBITDA should be considered a supplement to, and
not as a substitute for, or superior to, income from operations or cash flows
from operating activities determined in accordance with generally accepted
accounting principles.  While EBITDA is used as a measure of operations and the
ability to meet debt service, capital expenditure and working capital
requirements, it is not necessarily comparable to other similarly titled
captions of other companies due to differences in methods of calculations.  A
limitation associated with the use of EBITDA is that it does not reflect the
periodic costs of certain capitalized tangible and intangible assets used in
generating revenues in the company's business operations.  The company
compensates for this limitation by evaluating the costs of such tangible and
intangible assets through other financial measures such as capital
expenditures.

These non-GAAP financial measures are used in addition to and in conjunction
with results presented in accordance with GAAP.  These non-GAAP financial
measures reflect an additional way of viewing aspects of our operations that,
when viewed with our GAAP results and the accompanying reconciliations to
corresponding GAAP financial measures, provide a more complete understanding of
factors and trends affecting our business.  These non-GAAP measures should be
considered as a supplement to, and not as a substitute for, or superior to, the
corresponding measures calculated in accordance with generally accepted
accounting principles.

About Advanced Medical Optics

Advanced Medical Optics, Inc. (AMO) is a global leader in the development,
manufacturing and marketing of ophthalmic surgical and eye care products.  The
company focuses on developing a broad suite of innovative technologies and
devices to address a wide range of eye disorders.  Products in the ophthalmic
surgical line include intraocular lenses, phacoemulsification systems,
viscoelastics, microkeratomes and related products used in cataract and
refractive surgery.  AMO owns or has the rights to such ophthalmic surgical
product brands as Phacoflex(R), Clariflex(R), Array(R), Sensar(R), CeeOn(R),
Tecnis(R) and Verisyse(TM) intraocular lenses, Sovereign(R) and Sovereign(R)
Compact(TM) phacoemulsification systems with WhiteStar(TM) technology,
Amadeus(TM) and Amadeus(TM) II microkeratomes, Healon(R) and Vitrax(R)
viscoelastics, and the Baerveldt(R) glaucoma shunt.  Products in the contact
lens care line include disinfecting solutions, daily cleaners, enzymatic
cleaners and lens rewetting drops.  Among the contact lens care product brands
the company possesses are COMPLETE(R) Moisture PLUS(TM), COMPLETE(R)
Blink-N-Clean(R), Consept(R)F, Consept(R) 1 Step, Oxysept(R) 1 Step,
UltraCare(R), Ultrazyme(R), Total Care(R) and blink(TM) branded products.
Amadeus is a licensed product of, and a trademark of, SIS, Ltd.  AMO is based
in Santa Ana, California, and employs approximately 3,000 worldwide.  The
company has operations in about 20 countries and markets products in
approximately 60 countries.  For more information, visit the company's Web site
at http://www.amo-inc.com/.

Forward-Looking Statements

This press release contains forward-looking statements and forecasts about AMO
and its businesses, such as management's earnings estimates for 2005 and 2006. 
Because forecasts are inherently estimates that cannot be made with precision,
the company's performance may at times differ from its estimates and targets. 
The company often does not know what the actual results will be until after a
quarter's end.  Therefore, the company will not report or comment on its
progress during the quarter.  Any statement made by others with respect to
progress mid-quarter cannot be attributed to the company.

Statements in this press release regarding financial guidance and the VISX
transaction, Mr. Mazzo's statements and any other statements in this press
release that refer to AMO's estimated or anticipated future results, are
forward-looking statements.  All forward-looking statements in this press
release reflect AMO's current analysis of existing trends and information and
represent AMO's judgment only as of the date of this press release.  Actual
results may differ from current expectations based on a number of factors
affecting AMO's businesses including but not limited to uncertainties
associated with closing the VISX transaction within the second quarter of 2005
if at all, risks associated with the integration and operation of acquired
businesses, and changing competitive, regulatory and market conditions; the
performance of new products and the continued acceptance of current products;
the execution of strategic initiatives and alliances; AMO's ability to maintain
a sufficient supply of products and successfully transition its manufacturing
of eye care products previously supplied by Allergan; product liability claims
or quality issues; litigation; and the uncertainties associated with
intellectual property protection for the company's products. In addition,
matters generally affecting the domestic and global economy, such as changes in
interest and currency exchange rates, can affect AMO's results. Therefore, the
reader is cautioned not to rely on these forward-looking statements.  AMO
disclaims any intent or obligation to update these forward-looking statements.

Additional information concerning these and other risk factors may be found in
previous financial press releases issued by AMO.  AMO's public periodic filings
with the Securities and Exchange Commission, including the discussion under the
heading "Certain Factors and Trends Affecting AMO and its Businesses" in AMO's
2004 Form 10-K filed in March 2005 include information concerning these and
other risk factors.  Copies of press releases and additional information about
AMO are available at http://www.amo-inc.com/, or you can contact the AMO
Investor Relations Department by calling 714-247-8348.

   Investors:  Sheree Aronson [phone] 
   Media:      Steve Chesterman [phone] 



                      Advanced Medical Optics, Inc.
             Condensed Consolidated Statements of Operations
                               (Unaudited)

                                                   Three Months Ended
   (in thousands, except per share amounts)      March 25,      March 26,
                                                   2005           2004
   Net sales:
      Ophthalmic surgical                        $118,672        $78,265
      Eye care                                     73,847         72,042
                                                  192,519        150,307

   Cost of sales                                   70,439         59,672
      Gross profit                                122,080         90,635

   Selling, general and administrative             83,815         71,139
   Research and development                        12,352          9,017
   Operating income                                25,913         10,479

   Non-operating expense (income):
      Interest expense                              5,827          3,743
      Unrealized gain on derivative
       instruments                                   (531)          (276)
      Other, net                                     (331)          (405)
                                                    4,965          3,062

   Earnings before income taxes                    20,948          7,417
   Provision for income taxes                       7,122          2,670

   Net earnings                                   $13,826         $4,747

   Net basic earnings per share                     $0.37          $0.16

   Net diluted earnings per share (A)               $0.35          $0.15

   Weighted average number of shares
    outstanding:
      Basic                                        37,119         29,420
      Diluted                                      39,815         37,956

   (A) Includes the after-tax impact of $55 and $889 of interest expense on
       the 3.5% convertible notes for the three months ended March 25, 2005
       and March 26, 2004, respectively.



                      Advanced Medical Optics, Inc.
                               Global Sales
                               (Unaudited)
                              (In thousands)

                                                    Three Months Ended
                                                 March 25,      March 26,
                                                    2005           2004
   Geographic sales:
       Americas                                   $55,623        $45,293
       Europe/Africa/Middle East                   73,967         54,909
       Japan                                       40,498         36,888
       Asia Pacific                                22,431         13,217
                                                 $192,519       $150,307


   Product sales:
       Ophthalmic surgical:
         Intraocular lenses (A)                   $60,478        $51,611
         Viscoelastics (B)                         32,626          4,178
         Phacoemulsification products              18,486         17,564
         Other (C)                                  7,082          4,912
       Total Ophthalmic surgical                  118,672         78,265

       Eye care:
         Multi-purpose solutions                   37,005         32,466
         Hydrogen-peroxide solutions               21,291         23,860
         Other                                     15,551         15,716
       Total Eye care                              73,847         72,042

                                                 $192,519       $150,307

      (A)  Includes acquired Pfizer IOL sales of $9,463 in the three months
           ended March 25, 2005.
      (B)  Includes Healon sales of $29,504 in the three months ended March
           25, 2005.
      (C)  Includes Baerveldt shunt sales of $1,259 in the three months
           ended March 25, 2005.






                                  Three Months Ended      %     % Exchange
                                  March 25,  March 26,  Growth    Impact
                                    2005       2004
  Net sales:
     Ophthalmic surgical          $118,672    $78,265    51.6%     4.2%
     Eye care                       73,847     72,042     2.5%     3.3%
                                  $192,519   $150,307    28.1%     3.7%



                        Advanced Medical Optics, Inc.
                         Other Financial Information
                                 (Unaudited)
                                (In thousands)

                                                  March 25,   December 31,
                                                     2005          2004
  Cash and equivalents                             $25,858        $49,455
  Trade receivables, net                           198,311        189,465
  Inventories                                       97,297         85,028
  Working capital, excluding cash                  160,967        133,447
  Long-term debt, aggregate principal amount       552,593        552,593



                                                     Three Months Ended
                                                  March 25,      March 26,
                                                    2005           2004
  Depreciation and amortization                     $7,960         $3,692
  Capital expenditures                              10,540          4,881



                                                     Three Months Ended
                                                  March 25,      March 26,
                                                    2005           2004
  Net earnings                                     $13,826         $4,747
  Interest expense                                   5,827          3,743
  Income taxes                                       7,122          2,670
  Depreciation and amortization                      7,960          3,692
  Earnings before interest, taxes,
   depreciation and amortization (EBITDA)          $34,735        $14,852


http://www.newscom.com/cgi-bin/prnh/20050324/AMOLOGO

http://photoarchive.ap.org/

DATASOURCE: Advanced Medical Optics, Inc.



CONTACT:  investors, Sheree Aronson, [phone],

, or media, Steve Chesterman, [phone],

, both of Advanced Medical Optics, Inc.



Web site:  http://www.amo-inc.com/ 

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