Advanced Medical Optics (EYE)

Eye Care Sales Overview

Third-quarter eye care sales rose 6.4 percent over the same period last year to $82.6 million.  This performance reflects growth in branded multipurpose solutions, a slight decline in hydrogen peroxide solution sales, lost sales associated with planned product rationalizations and a 0.3 percent benefit from foreign currency.  Below are highlights of eye care categories for the third quarter of 2006.  Growth rates reflect comparisons to the same period in 2005 and include the impacts of foreign currency.

·                  Multipurpose solution sales rose 17.0 percent to $48.1 million, driven primarily by a 35.0 percent increase in sales of the company’s flagship COMPLETE® brand multipurpose solution.

·                  U.S. sales of COMPLETE® MoisturePlus™ rose 36.3 percent, reflecting the growing demand for the company’s proprietary solution and the removal of a major competitor’s product from the market earlier this year.  According to IRI, an independent market research firm, COMPLETE® dollar share of the U.S. branded multipurpose solution market was 15.9 percent for the five weeks ended September 17, 2006, representing a 37 percent increase since the beginning of 2006.

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·                  Sales of hydrogen peroxide solutions declined 0.8 percent to $18.3 million, reflecting primarily a slowdown in the rate of this market’s contraction in Japan and Europe.

·                  Sales of other eye care products declined 10.3 percent to $16.2 million, reflecting the planned rationalization of older-generation products, partially offset by a 7.0 percent increase in contact lens rewetters.

Eye Care Sales Overview

Eye care sales declined 16.7 percent to $69.2 million in the second quarter, including a 0.5 percent decrease related to foreign currency. These results reflect strong growth in the sales of branded products in the U.S., offset by a decline in sales of discontinued products outside the U.S. and continued shrinkage of the hydrogen peroxide market. As previously announced, the company expanded the rationalization of its product line during the second quarter, which impacted sales in all segments. The company also took additional actions to increase manufacturing capacity, redirect market focus and streamline inventory. As a result of these activities, AMO expects to return to growth in the second half of 2006 and 2007. Below are highlights of eye care categories for the second quarter of 2006. Growth rates reflect comparisons to the same period in 2005 and include the impacts of foreign currency.

·                  Multipurpose solution sales declined 4.7 percent to $42.9 million. Sales of the company’s flagship COMPLETE® MoisturePLUSä brand in the Americas more than doubled, largely associated with the removal of a major competitor’s product from the market. Sales growth in the Americas was offset by the decline in sales of discontinued products and the expanded rationalization of Asia Pacific and Japan product lines.

·                  Sales of hydrogen peroxide solutions declined 20.1 percent to $16.0 million, reflecting the continued contraction of this market predominantly in Japan and parts of Europe, as well as the planned discontinuation of non-strategic products.

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·                  Sales of other eye care products declined 42.7 percent to $10.4 million, reflecting the accelerated rationalization of older-generation products that no longer fit AMO’s growth strategy.