Advanced Medical Optics (EYE)

Net sales. Total net sales increased 4.2% and 12.9% in the three and nine months ended September 29, 2006, compared to the same periods last year. The increase in net sales in the three months ended September 29, 2006  primarily resulted from increased Eye Care, international Laser Vision Correction (LVC) and refractive IOL sales, partially offset by lost sales from discontinued non-strategic Cataract/Implant and Eye Care products.  The increase in net sales in the nine months ended September 29, 2006 primarily resulted from sales of acquired VISX products and strong demand for our core brands, partially offset by lost sales from discontinued non-strategic Cataract/Implant and Eye Care products.  Net sales include a favorable foreign currency impact of 0.6% in the three months ended September 29, 2006 and an unfavorable impact of 1.3% in the nine months ended September 29, 2006. Our sales and earnings may be negatively impacted during times of a strengthening U.S. dollar. Total net sales in the U.S. and Japan represented 40.8% and 15.9%, respectively, of total net sales in the three months ended September 29, 2006. Total net sales in the U.S. and Japan represented 42.1% and 13.7%, respectively, of total net sales in the nine months ended September 29, 2006. No other country, or any single customer, generated over 10% of total net sales in the periods presented.

Net sales from our Cataract/Implant business increased by 4.0% and 4.2% in the three and nine months ended September 29, 2006, compared with the same periods last year. The increases in net sales were primarily the result of sales of our branded promoted products, including Tecnis and ReZoom intraocular lenses, partially offset by a decrease in sales of non-promoted older-technology intraocular lenses and viscoelastics and reimbursement pressures in certain European markets and in Japan for viscoelastic products.  Net sales from phacoemulsification systems were down slightly in the three months ended September 29, 2006 and up by approximately 7% for the nine months ended September 29, 2006 as a result of higher unit placements during this period compared with the same period last year.  Net sales growth in the Americas of 17.9% and 20.9% in the three and nine months ended September 29, 2006, respectively, were due to strong demand for our core products, partially offset by decreases in sales of non-promoted older-technology intraocular lenses and viscoelastics.  Sales in Europe/Africa/Middle East declined by 3.3% and 3.5% in the three and nine months ended September 29, 2006.  Sales in Japan declined by 1.9% and 8.4% in the three and nine months ended September 29, 2006.  Sales in Asia Pacific declined by 11.9% and 3.9% in the three and nine months ended September 29, 2006.  The sales declines in Europe/Africa/Middle East, Japan and Asia Pacific were due to decreasing sales of older generation intraocular lenses, rationalized viscoelastics and reimbursement pressures, especially in Europe. Net sales in our Cataract/Implant business reflect a favorable foreign currency impact of 0.9% in the three months ended September 29, 2006 and an unfavorable foreign currency impact of 1.5% in the nine months ended September 29, 2006, largely from fluctuations of the euro and Japanese yen versus the U.S. dollar.

Net sales from our Laser Vision Correction business increased by $0.6 million and $96.7 million in the three and nine months ended September 29, 2006, respectively, compared with the same periods last year.  The increase in the three months ended September 29, 2006 reflect strong international system sales and increased demand for our CustomVue procedures, partially offset by softer US procedure volumes.  The increase in the nine months ended September 29, 2006 primarily resulted from sales of acquired VISX products. Net sales of acquired VISX products were $48.2 million and $156.6 million in the three and nine months ended September 29, 2006, respectively, compared with $47.7 million and $61.1 million in the three and nine months ended September 30, 2005. See Note 2 to the unaudited consolidated financial statements for the proforma impact of VISX net sales for the same period last year. Net sales in the Americas decreased by $1.6 million in the three months ended September 29, 2006 and increased by $78.3 million in the nine months ended September 29, 2006, compared with the same periods last year, due to acquired VISX products and strong demand for our CustomVue procedures and system sales. As a result of our international expansion strategy for the LVC business, we saw net sales in Europe/Africa/Middle East of $4.3 million and $12.2 million in the three and nine months ended September 29, 2006, respectively and Asia Pacific sales of $5.2 million and $14.6 million in the three and nine months ended September 29, 2006, compared to significantly lower amounts in the same periods last year.  The foreign currency impact in the three and nine months ended September 29, 2006 was negligible.

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Net sales from our Eye Care business increased by 6.4% in the three months ended September 29, 2006 and decreased by 11.0% in the nine months ended September 29, 2006, compared with the same periods last year. The increase in total net sales of eye care products in the three months ended September 29, 2006 were largely driven by higher sales of multipurpose solution products, partially offset by slightly lower sales of hydrogen peroxide-based products.  Net sales increased in the Americas by 32.8% and 37.2% in the three and nine months ended September 29, 2006, respectively, due to increased demand for our multipurpose products, largely attributable to our strategy to increase our sampling programs, selling efforts to practitioners and their staffs and the withdrawal of a competitor’s product in the second quarter of 2006. Net sales also increased in Asia Pacific by 31.9% in the three months ended September 29, 2006.  The decrease in total net sales of eye care products in the nine months ended September 29, 2006 were primarily due to lower sales of hydrogen peroxide-based products caused by continued shrinkage of this market as contact lens wearers gravitate increasingly to more convenient multipurpose solutions and decreased sales of multipurpose solution products primarily due to rapid growth of daily disposable lenses, particularly in the Japan market. These factors contributed significantly to net sales declines of 7.6% in Japan and 10.7% in Europe/Africa/Middle East during the three months ended September 29, 2006 and 36.6% in Japan, 21.1% in Europe/Africa/Middle East and 3.1% in Asia Pacific during the nine months ended September 29, 2006, compared with the same periods last year. Net sales in our Eye Care business included a favorable foreign currency impact of 0.3% in the three months ended September 29, 2006 and an unfavorable foreign currency impact of 1.4% in the nine months ended September 29, 2006, largely resulting from fluctuations of the euro and Japanese yen versus the U.S. dollar.

As part of our product rationalization and repositioning plan to maximize our competitive advantage as the global refractive leader and improve the global penetration of our core cataract, refractive and eye care brands, we have discontinued a variety of non-strategic cataract surgical and eye care products that lack critical revenue mass, have experienced steadily declining sales trends and/or have generated relatively unattractive margins. The decreases in total net sales resulting from the product rationalization were approximately $6.6 million and $27.7 million in the three and nine months ended September 29, 2006.  We expect the growth of our promoted products to offset the decline in net sales related to these discontinued products.

Net sales. Total net sales increased 13.2% and 18.0% in the three and six months ended June 30, 2006, compared to the same periods last year. The increases in net sales were primarily the result of sales of acquired VISX products and strong demand for our core brands, partially offset by negative foreign currency impact of 0.4% and 2.5% in the three and six months ended June 30, 2006, respectively. Our sales and earnings may be negatively impacted during times of a strengthening U.S. dollar. Total net sales in the U.S. and Japan represented 42.6% and 11.8%, respectively, of total net sales in the three months ended June 30, 2006. Total net sales in the U.S. and Japan represented 42.8% and 12.6%, respectively, of total net sales in the six months ended June 30, 2006. No other country, or any single customer, generated over 10% of total net sales in the periods presented.

Net sales from our Cataract/Implant business increased by 5.2% and 4.3% in the three and six months ended June 30, 2006, compared with the same periods last year. The increases in net sales were primarily the result of sales of our branded promoted products, including Tecnis and ReZoom intraocular lenses and phacoemulsification systems, partially offset by a decrease in sales of non-promoted older-technology intraocular lenses and viscoelastics and reimbursement pressures in

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certain European markets and in Japan for viscoelastic products. Net sales growth in the Americas of 23.2% and 22.6% in the three and six months ended June 30, 2006, respectively, were due to strong demand for our core products, partially offset by decreases in sales of non-promoted older-technology intraocular lenses and viscoelastics.  Sales in Europe/Africa/Middle East were flat in the three months ended June 30, 2006 and declined by 3.6% in the six months ended June 30, 2006.  Sales in Japan declined by 11.8% and 11.7% in the three and six months ended June 30, 2006.  The sales declines in Europe/Africa/Middle East and Japan were due to decreasing sales of older generation intraocular lenses, rationalized viscoelastics and reimbursement pressures, as well as the negative impact of foreign currency fluctuations. The differences in net sales in our Cataract/Implant business reflect unfavorable foreign currency impacts of 0.5% and 2.7% in the three and six months ended June 30, 2006, largely from fluctuations of the euro and Japanese yen versus the U.S. dollar.

Net sales from our Laser Vision Correction (LVC) business increased by $37.1 million and $96.1 million in the three and six months ended June 30, 2006, respectively, compared with the same periods last year.  These increases were primarily the result of sales of acquired VISX products. Net sales of acquired VISX products were $50.8 million and $108.5 million in the three and six months ended June 30, 2006, respectively, compared with $13.4 million in the three and six months ended June 24, 2005. See Note 2 to the unaudited consolidated financial statements for the proforma impact of VISX net sales for the same period last year. Net sales in the Americas increased by $29.4 million and $79.8 million in the three and six months ended June 30, 2006, respectively, compared with the same periods last year, due to acquired VISX products and strong demand for our custom LASIK procedures and system sales. As a result of our international expansion strategy for the LVC business, we saw net sales in Europe/Africa/Middle East of $3.9 million and $8.0 million in the three and six months ended June 30, 2006, respectively and Asia Pacific sales of $5.4 million and $9.4 million in the three and six months ended June 30, 2006, compared to significantly lower amounts in the same periods last year. The difference in net sales in our LVC business also includes an unfavorable foreign currency impact of $0.2 million, or 1.3% in the six months ended June 30, 2006, largely from fluctuations of the euro and Japanese yen versus the U.S. dollar.  The foreign currency impact in the three months ended June 30, 2006 was negligible.

Net sales from our Eye Care business decreased by 16.7% and 19.7% in the three and six months ended June 30, 2006, respectively, compared with the same periods last year. The decreases in sales of eye care products were primarily due to lower sales of hydrogen peroxide-based products caused by continued shrinkage of this market as contact lens wearers gravitate increasingly to more convenient multipurpose solutions, decreased sales of multipurpose products primarily due to rapid growth of daily disposable lenses, particularly in the Japan market, and a provision of $3.9 million in the current quarter for expected sales returns for discontinued products. These factors contributed significantly to net sales declines of 62.3% in Japan, 20.3% in Europe/Africa/Middle East and 12.5% in Asia Pacific during the three months ended June 30, 2006 and 49.0% in Japan, 26.5% in Europe/Africa/Middle East and 19.1% in Asia Pacific during the six months ended June 30, 2006, compared with the same periods last year. These declines were partially offset by increases in the Americas of 72.2% and 39.8% in the three and six months ended June 30, 2006, respectively, due to increasing demand for our multipurpose products, largely attributable to our strategy to increase our sampling programs, selling efforts to practitioners and their staffs and the withdrawal of a competitor’s product in the second quarter of 2006. The difference in net sales in our Eye Care business also include unfavorable foreign currency impacts of 0.5% and 2.3% in the three and six months ended June 30, 2006, respectively, largely resulting from fluctuations of the euro and Japanese yen versus the U.S. dollar.

As part of our product rationalization and repositioning plan to maximize our competitive advantage as the global refractive leader and improve the global penetration of our core cataract, refractive and eye care brands, we have discontinued a variety of non-strategic cataract surgical and eye care products that lack critical revenue mass, have experienced steadily declining sales trends and/or have generated relatively unattractive margins. The decreases in total net sales resulting from the product rationalization were approximately $13 million and $21 million in the three and six months ended June 30, 2006.  We expect the growth of our promoted products to offset the decline in net sales related to these discontinued products.