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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 11-K
ANNUAL REPORT
PURSUANT TO SECTION 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
PURSUANT TO SECTION 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
(Mark One):
þ | ANNUAL REPORT PURSUANT TO SECTION 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the fiscal year ended December 31, 2007
OR
o | TRANSITION REPORT PURSUANT TO SECTION 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the transition period from to
Commission File Number 1-10269
ALLERGAN, INC.
SAVINGS AND INVESTMENT PLAN
SAVINGS AND INVESTMENT PLAN
(Full title of the plan)
ALLERGAN, INC.
2525 Dupont Drive
Irvine, California 92612
2525 Dupont Drive
Irvine, California 92612
(Name of issuer of the securities held
pursuant to the plan and the address of its
principal executive office)
pursuant to the plan and the address of its
principal executive office)
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4. ERISA Financial Statements and Schedule and Exhibits:
(a) | Financial Statements and Schedule: | ||
Report of Independent Registered Public Accounting Firm of Lesley, Thomas, Schwarz & Postma, Inc., dated June 23, 2008, on the Statements of Net Assets Available for Benefits as of December 31, 2007 and 2006 and the related Statements of Changes in Net Assets Available for Benefits for the Years Then Ended — Allergan, Inc. Savings and Investment Plan. | |||
Statements of Net Assets Available for Benefits as of December 31, 2007 and 2006 — Allergan, Inc. Savings and Investment Plan. | |||
Statements of Changes in Net Assets Available for Benefits for the Years Ended December 31, 2007 and 2006 — Allergan, Inc. Savings and Investment Plan. | |||
Notes to Financial Statements — Allergan, Inc. Savings and Investment Plan. | |||
Schedule H, Line 4i — Schedule of Assets (Held at End of Year) — December 31, 2007 — Allergan, Inc. Savings and Investment Plan. | |||
(b) | Exhibits | ||
Exhibit 23 — Consent of Lesley, Thomas, Schwarz & Postma, Inc. |
SIGNATURES
The Plan. Pursuant to the requirements of the Securities Exchange Act of 1934, the trustees (or other persons who administer the Plan) have duly caused this annual report to be signed by the undersigned thereunto duly authorized.
ALLERGAN, INC. SAVINGS AND INVESTMENT PLAN | ||||
Date: June 27, 2008 | By: | /s/ Jeffrey L. Edwards | ||
Jeffrey L. Edwards | ||||
Allergan, Inc. Executive Committee | ||||
ALLERGAN, INC.
SAVINGS AND INVESTMENT PLAN
SAVINGS AND INVESTMENT PLAN
INDEX TO FINANCIAL STATEMENTS
AND SUPPLEMENTAL SCHEDULE
AND SUPPLEMENTAL SCHEDULE
Page | ||||||||
1 | ||||||||
2 | ||||||||
3 | ||||||||
4-15 | ||||||||
SUPPLEMENTAL SCHEDULE | ||||||||
16 | ||||||||
EXHIBIT 23 |
All other schedules are omitted because they are not required or applicable pursuant to ERISA and Department of Labor regulations.
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Report of Independent Registered Public Accounting Firm
To the Executive Committee of Allergan, Inc.
We have audited the accompanying statements of net assets available for benefits of the Allergan, Inc. Savings and Investment Plan as of December 31, 2007 and 2006, and the related statements of changes in net assets available for benefits for the years then ended. These financial statements are the responsibility of the Plan’s management. Our responsibility is to express an opinion on these financial statements based on our audits.
We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in all material respects, the net assets available for benefits of the Allergan, Inc. Savings and Investment Plan as of December 31, 2007 and 2006, and the changes in net assets available for benefits for the years then ended in conformity with accounting principles generally accepted in the United States of America
Our audits were performed for the purpose of forming an opinion on the basic financial statements taken as a whole. The supplemental schedule of Schedule H, line 4i — Schedule of Assets (Held at End of Year) as of December 31, 2007 is presented for the purpose of additional analysis and is not a required part of the basic financial statements but is supplementary information required by the Department of Labor’s Rules and Regulations for Reporting and Disclosure under the Employee Retirement Income Security Act of 1974. This supplemental schedule is the responsibility of the Plan’s management. The supplemental schedule has been subjected to the auditing procedures applied in the audits of the basic financial statements and, in our opinion, is fairly stated in all material respects in relation to the basic financial statements taken as a whole.
/s/ Lesley, Thomas, Schwarz & Postma, Inc.
Lesley, Thomas, Schwarz & Postma, Inc.
Newport Beach, California
Newport Beach, California
June 23, 2008
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ALLERGAN, INC. SAVINGS AND INVESTMENT PLAN
STATEMENTS OF NET ASSETS AVAILABLE FOR BENEFITS
DECEMBER 31, 2007 AND 2006
2007 | 2006 | |||||||
ASSETS | ||||||||
Investments | ||||||||
Investments at estimated fair value (Note 3) | $ | 5,638,789 | $ | 431,935,120 | ||||
Investments in master trust at fair value (Note 3) | 505,597,522 | — | ||||||
Total investments | 511,236,311 | 431,935,120 | ||||||
Receivables | ||||||||
Participant contributions | 925 | 1,312 | ||||||
Employer contributions | 12,739,560 | 7,814,327 | ||||||
Total receivables | 12,740,485 | 7,815,639 | ||||||
Net assets available for benefits, at fair value | 523,976,796 | 439,750,759 | ||||||
Adjustment from fair value to contract value for fully benefit-responsive investment contract (Note 2) | 1,355,908 | 840,870 | ||||||
NET ASSETS AVAILABLE FOR BENEFITS | $ | 525,332,704 | $ | 440,591,629 | ||||
See the accompanying notes to these financial statements
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ALLERGAN, INC. SAVINGS AND INVESTMENT PLAN
STATEMENTS OF CHANGES IN NET ASSETS AVAILABLE FOR BENEFITS
FOR THE YEARS ENDED DECEMBER 31, 2007 AND 2006
2007 | 2006 | |||||||
ADDITIONS TO NET ASSETS ATTRIBUTED TO: | ||||||||
Investment income | ||||||||
Net appreciation in fair value of investments (Note 3) | $ | 17,004,269 | $ | 37,266,978 | ||||
Interest | 406,982 | 307,511 | ||||||
Dividends | 7,319,981 | 5,910,296 | ||||||
24,731,232 | 43,484,785 | |||||||
Contributions | ||||||||
Employer — match | 13,129,903 | 9,170,167 | ||||||
Employer — retirement | 12,008,958 | 7,404,320 | ||||||
Participant — before tax | 29,924,361 | 22,067,601 | ||||||
Participant — after tax | 957,647 | 775,435 | ||||||
Rollovers | 6,983,935 | 4,878,436 | ||||||
63,004,804 | 44,295,959 | |||||||
Total additions to net assets | 87,736,036 | 87,780,744 | ||||||
DEDUCTIONS FROM NET ASSETS ATTRIBUTED TO: | ||||||||
Benefits paid to participants | 28,746,604 | 22,387,182 | ||||||
Corrective distributions | — | 1,737 | ||||||
Administrative expenses | 22,624 | 18,061 | ||||||
Total deductions from net assets | 28,769,228 | 22,406,980 | ||||||
TRANSFERS FROM ANOTHER PLAN (NOTE 8) | 25,774,267 | 355,240 | ||||||
NET INCREASE | 84,741,075 | 65,729,004 | ||||||
NET ASSETS AVAILABLE FOR BENEFITS, beginning of year | 440,591,629 | 374,862,625 | ||||||
NET ASSETS AVAILABLE FOR BENEFITS, end of year | $ | 525,332,704 | $ | 440,591,629 | ||||
See the accompanying notes to these financial statements
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ALLERGAN, INC. SAVINGS AND INVESTMENT PLAN
NOTES TO FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2007 AND 2006
NOTE 1 — DESCRIPTION OF THE PLAN
The following description of the Allergan, Inc. Savings and Investment Plan (Restated 2005) (the “Plan”) provides only general information. Participants should refer to the Plan document for a more complete description of the Plan’s provisions.
General — The Plan, established on July 26, 1989, is a defined contribution plan sponsored by Allergan, Inc. (the “Company”). The Plan provides for immediate eligibility into the Plan. The Plan is subject to the provisions of the Employee Retirement Income Security Act of 1974, as amended (ERISA) and is qualified under the Internal Revenue Code (the “Code”). The administrator for the Plan is the Allergan, Inc. Executive Committee. The trustee for the Plan is JPMorgan Chase Bank.
Employee Contributions — The Company’s eligible United States employees may contribute a portion of their defined compensation, either before tax, after tax, or a combination thereof, subject to the limitations as defined by the Code.
The Company’s eligible Puerto Rico employees may contribute a portion of their defined compensation, either before tax, after tax, or a combination thereof, subject to the limitations as defined by the Puerto Rico Internal Revenue Code.
Prior to December 15, 2006, participant contributions could be invested in the Allergan, Inc. Common Stock Fund, American Century Stable Asset Fund, Western Asset Core Plus Bond Portfolio Fund, Dodge & Cox Balanced Fund, Hotchkis and Wiley Large Cap Value Fund, American Century Income and Growth Fund, Barclays Global Inv S&P 500 Equity Index Fund, American Century Ultra Fund, American Century Small Cap Value Fund, Artisan Small Cap Fund, American Funds New Perspective Fund, and American Funds EuroPacific Growth Fund, or any combination of the 12 funds at the participant’s discretion.
Effective December 15, 2006, American Century Ultra Fund was removed from the investment options and Janus Risk Managed Growth Fund was added to the investment options. On January 3, 2007, two additional funds were added to the investment options, Columbia Marsico Focused Equities Fund and the Evergreen Special Values Fund. On June 20, 2007, the JPMorgan Stable Value Fund was added, and on June 29, 2007, two funds were removed from the investment options, the American Century Stable Asset Fund and the American Century Small Cap Value Fund. On July 2, 2007, the TIAA-CREF Intst Small-Cap Blend Index Fund was added and on July 31, 2007, the Fidelity Advisor Stable Value Portfolio Class II was removed as an investment option.
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ALLERGAN, INC. SAVINGS AND INVESTMENT PLAN
NOTES TO FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2007 AND 2006
NOTE 1 — DESCRIPTION OF THE PLAN (CONTINUED)
Effective August 1, 2007, participant contributions may be invested in the Allergan, Inc. Common Stock Fund, JPMorgan Stable Value Fund, Western Asset Core Plus Bond Portfolio Fund, Dodge & Cox Balanced Fund, Hotchkis and Wiley Large Cap Value Fund, American Century Income and Growth Fund, Barclays Global Inv S&P 500 Equity Index Fund, Janus Risk Managed Growth Fund, Artisan Small Cap Fund, American Funds New Perspective Fund, American Funds EuroPacific Growth Fund, Columbia Marsico Focused Equities Fund, Evergreen Special Values Fund, TIAA-CREF Intst Small-Cap Blend Index Fund or any combination of the 14 funds at the participant’s discretion. Additionally, certain assets are invested in the Advanced Medical Optics, Inc. Common Stock Fund, although new allocations are not permitted and have not been made to that fund since June 29, 2002.
Certain limitations imposed by the Code may have the effect of reducing the level of contributions initially selected by participants who fall within the classification of “highly compensated employees” as defined in the Code.
Employer Matching Contributions — The Company contributed an amount equal to 100% of each employee’s contribution up to 4% of defined compensation for the years ended December 31, 2007 and 2006.
Employer matching contributions are made in Allergan, Inc. common stock which is invested in the Allergan, Inc. Common Stock Fund. Participants who are over 55 can, however, elect to direct their employer matching contributions into any of the 14 investment funds. All participants can elect at any time to diversify their employer matching contributions in the Allergan, Inc. Common Stock Fund into any of the other 13 investment funds, subject to the Company’s insider trading policy.
Employer Retirement Contributions — Effective January 1, 2003, the Company makes an annual contribution equal to 5% of each participant’s defined compensation if they are eligible for the Retirement Contribution Feature of the Plan, have completed at least six months of service, and are employed on the last business day of the year.
Investment Options — Participants have the right to elect investment options upon enrollment or re-enrollment into the Plan. Additionally, participants may elect to change their investment options and transfer their account balances among the different investment funds at any time, subject to the Company’s insider trading policy.
Participant Accounts — Each participant’s account is credited for the participant’s contributions, employer match and employer retirement contributions and allocations of fund earnings and charged with an allocation of administrative expenses and fund losses. The earnings and losses of each of the funds are allocated daily to the individual accounts of participants based on their relative interest in the fair value of the assets held in each fund, except for dividends and unrealized appreciation (depreciation) on the common stock of Allergan, Inc., which is allocated based upon the number of shares held in the individual accounts of participants.
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ALLERGAN, INC. SAVINGS AND INVESTMENT PLAN
NOTES TO FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2007 AND 2006
NOTE 1 — DESCRIPTION OF THE PLAN (CONTINUED)
Participant Loans Receivable — Participants may borrow from their fund accounts a minimum of $1,000 up to a maximum equal to the lesser of $50,000 or 50% of their vested account balance excluding retirement contributions. Loan terms range from one to five years or, for the purchase of a primary residence, up to 15 years. The loans are secured by the balance in the participant’s account and bear interest at prime plus one percent as determined on the date of the loan application. The interest rate is fixed for the term of the loan. Principal and interest is paid through payroll deductions each pay period.
Vesting and Forfeitures — Participant contributions are fully vested at all times. Participants forfeit their share of employer matching contributions if they terminate their employment before completing three years of service with the Company. Employer retirement contributions vest on a graduated basis. After completing one year of service, the participant is 20% vested, and vesting increases 20% each year thereafter until fully vested at the end of the fifth year of service. Forfeitures are used by the Company to offset future employer contribution requirements and to reinstate rehired employee accounts. During the Plan years ended December 31, 2007 and 2006, $1,201,115 and $1,308,345, respectively, of forfeitures were used to offset contributions. At December 31, 2007 and 2006, unutilized forfeitures totaled $364,369 and $246,008, respectively.
Payment of Benefits — Participants may withdraw their employee “after-tax” and rollover contributions at any time. Vested employer matching contributions can also be withdrawn at any time providing they were credited at least two years prior to withdrawal or in the case of a financial hardship. Withdrawals of employee “after-tax” contributions and employer matching contributions during employment may cause the participant to become ineligible to receive certain employer matching contributions and be suspended from contributing to the Plan for a period of six months following the withdrawal.
Prior to age 59-1/2, employee “before-tax” contributions may be withdrawn in the event of financial hardship, after the withdrawal of the value of employee “after-tax” contributions and employer matching contributions. Hardship withdrawals cause the employee to become ineligible to contribute to the Plan for a period of six months following the withdrawal for U.S. employees and 12 months for Puerto Rico employees. Hardship withdrawals of employer retirement contributions are not permitted.
Participants become entitled to payment of the total value of their accounts at the time of termination (if fully vested), attainment of age 59-1/2 (if fully vested), permanent and total disability, or death. Under certain circumstances set forth in the Plan, the participant may elect to receive the distribution in a lump sum (in cash or in cash and common stock of Allergan, Inc. or Advanced Medical Optics, Inc.) or may elect partial distributions. If the participant’s account value is $5,000 or more, withdrawals may be postponed until as late as attaining age 70-1/2. After death, payment is in the form of a lump sum to the designated beneficiary.
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ALLERGAN, INC. SAVINGS AND INVESTMENT PLAN
NOTES TO FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2007 AND 2006
NOTE 1 — DESCRIPTION OF THE PLAN (CONTINUED)
New Accounting Pronouncements — In September 2006, the Financial Accounting Standards Board (FASB) issued Statement of Financial Accounting Standards No. 157, Fair Value Measurements (SFAS 157). SFAS 157 establishes a single authoritative definition of fair value, sets out a framework for measuring fair value and requires additional disclosures about fair value measurement. SFAS 157 is effective for financial statements issued for fiscal years beginning after November 15, 2007, which is the Plan’s fiscal year 2008. The Plan does not expect that the adoption of SFAS 157 will have a material impact on its financial statements.
NOTE 2 — SIGNIFICANT ACCOUNTING POLICIES
Basis of Accounting — The accompanying financial statements have been prepared on the accrual basis of accounting. Except for unutilized forfeitures (see Note 1), the net assets of the Plan are allocated entirely to individual participants’ accounts.
As described in FASB Staff Position FSP AAG INV-1 and Statement of Position No. 94-4-1, Reporting of Fully Benefit-Responsive Investment Contracts Held by Certain Investment Companies Subject to the AICPA Investment Company Guide and Defined-Contribution Health and Welfare and Pension Plans (the FSP), investment contracts held by a defined-contribution plan are required to be reported at fair value. However, contract value is the relevant measurement attribute for that portion of the net assets available for benefits of a defined-contribution plan attributable to fully benefit-responsive investment contracts because contract value is the amount participants would receive if they were to initiate permitted transactions under the terms of the plan. As required by the FSP, the Statement of Net Assets Available for Benefits presents the fair value of the investment contracts as well as the adjustment of the fully benefit-responsive investment contracts from fair value to contract value. The Statement of Changes in Net Assets Available for Benefits is prepared on a contract value basis.
Accounting Estimates — The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires the plan administrator to make estimates and assumptions that affect the reported amounts of assets, liabilities, and changes therein, and disclosure of contingent assets and liabilities. Actual results could differ from those estimates.
Investment Valuation and Income Recognition — On June 20, 2007, the Plan, along with the Allergan, Inc. Employee Stock Ownership Plan, entered into the Allergan, Inc. Master Trust (the “Master Trust”). See Note 3, for further discussion of the Master Trust. The Plan’s investments in the Master Trust are stated at fair value. The fair value of Allergan, Inc. and Advanced Medical Optics, Inc. common stock is based upon quotations obtained from the New York Stock Exchange. The fair values of the Western Asset Core Plus Bond Portfolio Fund,
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ALLERGAN, INC. SAVINGS AND INVESTMENT PLAN
NOTES TO FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2007 AND 2006
NOTE 2 — SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
Dodge & Cox Balanced Fund, Hotchkis and Wiley Large Cap Value Fund, American Century Income and Growth Fund, American Century Ultra Fund, American Century Small Cap Value Fund, Artisan Small Cap Fund, American Funds New Perspective Fund, American Funds EuroPacific Growth Fund, Janus Risk Managed Growth Fund, Fidelity Advisor Stable Value Fund, Columbia Marsico Focused Equities Fund, Evergreen Special Values Fund, and TIAA-CREF Intst Small-Cap Blend Index Fund are based upon quotations of each fund’s net asset value obtained from the National Association of Security Dealers Automated Quotations (NASDAQ). The fair value of the American Century Stable Asset Fund, Barclays Global Inv S&P 500 Equity Index Fund, and JPMorgan Stable Value Fund is based upon the net asset value reported by the fund (these funds are reported at contract value in accordance with SOP 94-4-1). Participant loans are valued at the outstanding balance which the plan sponsor has estimated approximate fair value.
Purchases and sales of investments are reflected on the trade-date basis. Dividend income is recorded on the ex-dividend date.
The Plan presents, in the Statements of Changes in Net Assets Available for Benefits, the net appreciation (depreciation) in the fair value of its investments, which consist of the realized gains or losses and the unrealized appreciation (depreciation) on those investments.
Interest Bearing Cash and Cash Equivalents — Interest bearing cash and cash equivalents represent amounts invested in JPMorgan Chase Bank, which consist of highly liquid short-term investments.
Contribution Funding — The participant deferrals and employer matching contributions are funded on a consistent basis following the issuance of each Company payroll. Employer retirement contributions are funded on an annual basis.
Non-Discrimination for Employee and Employer Contributions — The Plan, as required by the Code, performs annual tests between highly compensated participants versus non-highly compensated participants to ensure that highly compensated participants are not disproportionately favored under the Plan. If the Plan fails the tests, it must refund some of the excess deferral contributions. Excess deferral contributions which are refunded within two and one-half months of the Plan year end are accrued as a liability to the Plan. No such accrual exists at December 31, 2007 and 2006. Excess deferral contributions which are not refunded within two and one-half months of the Plan year end are recorded as a distribution in the Plan year in which the refund is paid.
Non-Distributed Benefits — The Plan does not accrue non-distributed benefits related to participants who have withdrawn from the Plan, but recognizes such benefits as a deduction from net assets in the period in which such benefits are paid.
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ALLERGAN, INC. SAVINGS AND INVESTMENT PLAN
NOTES TO FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2007 AND 2006
NOTE 2 — SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
Continuation of the Plan — The Company anticipates and believes the Plan will continue without interruption, but reserves the right to discontinue the Plan. If the Plan is terminated by the Company, the accounts of all affected participants shall become 100% vested and non-forfeitable without regard to the years of service of such participants.
Administrative Expenses — Expenses incurred in the administration and operation of the Plan are paid by the Plan. Certain administrative expenses of the Plan are paid by the Company.
NOTE 3 — INVESTMENTS
The Master Trust was created pursuant to a trust agreement dated June 20, 2007, between the Company and JPMorgan Chase Bank, as trustee of the funds, to permit the commingling of trust assets of both the Allergan, Inc. Savings and Investment Plan and Allergan, Inc. Employee Stock Ownership Plan, for investment and administrative purposes. The assets of the Master Trust are held by JPMorgan Chase Bank.
The following tables summarize the net assets and net investment income of the Master Trust.
A) NET ASSETS OF THE MASTER TRUST
December 31, 2007 | ||||
INVESTMENTS: | ||||
Common Stock | $ | 8,303,592 | ||
Mutual Funds | 308,669,603 | |||
Common/Collective Trusts | 76,970,925 | |||
Interest Bearing Cash | 17,930 | |||
U.S. Government Securities | 76,746 | |||
Employer Securities | 283,284,406 | |||
NET ASSETS OF THE MASTER TRUST | $ | 677,323,202 | ||
NET INVESTMENT IN MASTER TRUST — BY PLAN | ||||
Allergan, Inc. Savings and Investment Plan | ||||
Investment in Master Trust | $ | 505,597,522 | ||
Plan’s percentage interest in net assets of the Master Trust | 74.6 | % | ||
Allergan, Inc. Employee Stock Ownership Plan | ||||
Investment in Master Trust | $ | 171,725,680 | ||
Plan’s percentage interest in net assets of the Master Trust | 25.4 | % | ||
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ALLERGAN, INC. SAVINGS AND INVESTMENT PLAN
NOTES TO FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2007 AND 2006
NOTE 3 — INVESTMENTS (CONTINUED)
B) NET INVESTMENT INCOME OF THE MASTER TRUST
Year Ended | ||||
December 31, 2007 | ||||
INVESTMENT INCOME: | ||||
Net appreciation (depreciation) in fair value of investments | ||||
Common Stock | $ | 17,943,874 | ||
Mutual Funds | (10,711,194 | ) | ||
Common/Collective Trusts | 519,559 | |||
Short-term Money Market | 917 | |||
7,753,156 | ||||
Dividends | 445,443 | |||
NET INVESTMENT INCOME OF THE MASTER TRUST | $ | 8,198,599 | ||
NET INVESTMENT INCOME FROM MASTER TRUST — BY PLAN | ||||
Savings and Investment Plan | $ | (151,818 | ) | |
Employee Stock Ownership Plan | $ | 8,350,417 | ||
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ALLERGAN, INC. SAVINGS AND INVESTMENT PLAN
NOTES TO FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2007 AND 2006
NOTE 3 — INVESTMENTS (CONTINUED)
The following table presents the fair value of investments. Investments that represent five percent or more of the Plan’s net assets available for benefits at December 31, 2007 and 2006 are separately identified.
December 31, 2007 | ||||||||
Number of Shares, | ||||||||
Units or Principal | ||||||||
Amounts | Fair Value | |||||||
PARTICIPANT DIRECTED INVESTMENTS (held in Master Trust) | ||||||||
At fair value as determined by quoted market prices | ||||||||
Common Stock: | ||||||||
Allergan, Inc. * | 2,271,961 | $ | 145,950,750 | |||||
Advanced Medical Optics, Inc. | 130,378 | 3,198,172 | ||||||
Total common stock | 149,148,922 | |||||||
Mutual Funds: | ||||||||
Dodge & Cox Balanced Fund * | 935,059 | 75,739,842 | ||||||
American Century Income and Growth Fund * | 1,505,700 | 43,514,717 | ||||||
American Funds New Perspective Fund * | 1,452,009 | 49,295,708 | ||||||
American Funds EuroPacific Growth Fund * | 811,981 | 41,305,458 | ||||||
Artisan Small Cap Fund | 651,552 | 11,024,258 | ||||||
Hotchkis and Wiley Large Cap Value Fund | 663,633 | 13,511,566 | ||||||
Western Asset Core Plus Bond Portfolio Fund | 924,728 | 9,423,183 | ||||||
Janus Risk Managed Growth Fund | 1,352,845 | 19,913,882 | ||||||
Columbia Marsico Focused Equities Fund | 168,576 | 4,226,199 | ||||||
Evergreen Special Values Fund | 851,699 | 17,545,004 | ||||||
TIAA-CREF Intst Small-Cap Blend Index Fund | 105,142 | 1,507,743 | ||||||
Total mutual funds | 287,007,560 | |||||||
At fair value as reported by the fund: | ||||||||
Common/Collective Trusts: | ||||||||
JPMorgan Stable Value Fund * | 426,552 | 42,316,556 | ||||||
Barclays Global Inv S&P 500 Equity Index Fund * | 589,529 | 27,106,554 | ||||||
Total common/collective trusts | 69,423,110 | |||||||
Investments at estimated fair value: | ||||||||
Interest bearing cash and cash equivalents | 17,930 | |||||||
Total investments held in Master Trust | 505,597,522 | |||||||
Investments at estimated fair value: | ||||||||
Participant loans | 5,638,789 | |||||||
Total investments | $ | 511,236,311 | ||||||
* | Investments that represent five percent or more of the Plan’s net assets available for benefits. |
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ALLERGAN, INC. SAVINGS AND INVESTMENT PLAN
NOTES TO FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2007 AND 2006
NOTE 3 — INVESTMENTS (CONTINUED)
December 31, 2006 | ||||||||
Number of Shares, | ||||||||
Units or Principal | ||||||||
Amounts | Fair Value | |||||||
PARTICIPANT DIRECTED INVESTMENTS | ||||||||
At fair value as determined by quoted market prices | ||||||||
Common Stock: | ||||||||
Allergan, Inc. * | 2,301,048 | ** | $ | 137,763,746 | ||||
Advanced Medical Optics, Inc. | 164,244 | 5,781,382 | ||||||
Total common stock | 143,545,128 | |||||||
Mutual Funds: | ||||||||
Dodge & Cox Balanced Fund * | 768,733 | 66,944,289 | ||||||
American Century Income and Growth Fund * | 1,249,701 | 41,717,513 | ||||||
American Funds New Perspective Fund * | 970,908 | 30,831,548 | ||||||
American Funds EuroPacific Growth Fund | 455,689 | 21,216,885 | ||||||
Artisan Small Cap Fund | 582,104 | 10,594,285 | ||||||
American Century Small Cap Value Fund | 2,099,371 | 20,490,345 | ||||||
Hotchkis and Wiley Large Cap Value Fund | 535,328 | 13,538,437 | ||||||
Western Asset Core Plus Bond Portfolio Fund | 358,932 | 3,783,148 | ||||||
Janus Risk Managed Growth Fund | 134,476 | 18,776,034 | ||||||
Fidelity Advisor Stable Value Fund | 355,240 | 355,240 | ||||||
Total mutual funds | 228,247,724 | |||||||
At fair value as reported by the fund: | ||||||||
Common/Collective Trusts: | ||||||||
American Century Stable Asset Fund * | 44,746,069 | 44,746,069 | ||||||
Barclays Global Inv S&P500 Equity Index Fund | 250,933 | 10,945,712 | ||||||
Total common/collective trusts | 55,691,781 | |||||||
Investments at estimated fair value: | ||||||||
Participant loans | 4,450,088 | |||||||
Interest bearing cash and cash equivalents | 399 | |||||||
Total investments | $ | 431,935,120 | ||||||
* | Investments that represent five percent or more of the Plan’s net assets available for benefits. | |
** | Adjusted to reflect the effect of Allergan, Inc.’s two-for-one stock split completed on June 22, 2007. |
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ALLERGAN, INC. SAVINGS AND INVESTMENT PLAN
NOTES TO FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2007 AND 2006
NOTE 3 — INVESTMENTS (CONTINUED)
The Plan’s investments (including gains and losses on investments bought and sold, as well as held) appreciated (depreciated) in value during the years ended December 31, 2007 and 2006. A summary of the change in fair value of investments is as follows:
Year Ended | Year Ended | |||||||
December 31, 2007 | December 31, 2006 | |||||||
Common Stock | $ | (265,836 | ) | $ | 12,596,415 | |||
Master Trust | (376,900 | ) | — | |||||
Mutual Funds | 15,655,941 | 23,280,375 | ||||||
Common/Collective Trusts | 1,991,064 | 1,390,188 | ||||||
$ | 17,004,269 | $ | 37,266,978 | |||||
NOTE 4 — INCOME TAX STATUS
The Plan obtained its latest determination letter on July 22, 2002, in which the Internal Revue Service stated that the Plan, as then designed, was in compliance with the applicable requirements of the Code. The Plan has been amended since receiving the determination letter. However, the plan administrator and the Plan’s tax counsel believe that the Plan is currently designed and being operated in compliance with the applicable requirements of the Code and constitutes a qualified trust under Section 401(a) of the Code and is therefore exempt from federal income taxes under provisions of Section 501(a).
NOTE 5 — RELATED PARTY AND PARTY-IN-INTEREST TRANSACTIONS
The Plan allows participants to purchase employer securities. As of December 31, 2007 and 2006, the Plan held 2,271,961 and 2,301,048 shares, respectively, of Allergan, Inc. common stock.
Certain Plan investments are invested in mutual funds that are managed by an affiliate of JPMorgan Chase Bank, the trustee, and therefore, these transactions qualify as party-in-interest transactions for which there is a statutory exemption.
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ALLERGAN, INC. SAVINGS AND INVESTMENT PLAN
NOTES TO FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2007 AND 2006
NOTE 6 — RISKS AND UNCERTAINTIES
The Plan provides for various investment options in mutual funds, common and collective trusts, common stock and cash and cash equivalents. Investment securities are exposed to various risks such as interest rate, market, and credit. Due to the level of uncertainty related to changes in the value of investment securities, it is at least reasonably possible that changes in the various risk factors, in the near term, could materially affect participants’ account balances and the amounts reported in the financial statements.
NOTE 7 — CONCENTRATIONS
Investments in the common stock of Allergan, Inc. comprised approximately 29% and 32% of the Plan’s total investments as of December 31, 2007 and 2006, respectively.
NOTE 8 — CORPORATE MERGERS
The Company acquired Inamed Corporation (Inamed) during 2006. However, employees of Inamed continued to be participants in the Inamed Corporation Retirement Savings Plan (the “Inamed Plan”) through December 31, 2006. Effective January 1, 2007, the participants in the Inamed Plan were enrolled into the Plan and the assets from the Inamed Plan were transferred into the Plan.
One of the investment funds from the Inamed Plan, the Fidelity Advisor Stable Value Fund, transferred its assets into the Plan on December 29, 2006. The amount of the fund, $355,240, is reflected in these financial statements as transfers from another plan. The remaining assets of the Inamed Plan, amounting to $25,774,267, were transferred into the Plan on January 2, 2007.
On October 15, 2007, the Company acquired Esprit Pharma Holding Company, Inc. (Esprit). The employees of Esprit became eligible to participate in the Plan effective October 16, 2007, and their former plan was frozen. The Esprit 401(k) Plan will not be merged into the Plan; instead, past participants may elect to rollover their account balances into the Plan through the normal rollover process.
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ALLERGAN, INC. SAVINGS AND INVESTMENT PLAN
NOTES TO FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2007 AND 2006
NOTE 9 — RECONCILIATION OF FINANCIAL STATEMENTS TO FORM 5500
The following is a reconciliation of net assets available for benefits per the financial statements to the Form 5500:
December 31, | December 31, | |||||||
2007 | 2006 | |||||||
Net assets available for benefits per the financial statements | $ | 525,332,704 | $ | 440,591,629 | ||||
Less: Adjustment from fair value to contract value for fully benefit-responsive investment contract | (1,355,908 | ) | (840,870 | ) | ||||
Net assets available for benefits per the Form 5500 | $ | 523,976,796 | $ | 439,750,759 | ||||
The following is a reconciliation of investment income per the financial statements to the Form 5500:
Year Ended | Year Ended | |||||||
December 31, | December 31, | |||||||
2007 | 2006 | |||||||
Total investment income per the financial statements | $ | 24,731,232 | $ | 43,484,785 | ||||
Less: Adjustment from fair value to contract value for fully benefit-responsive investment contract | (515,038 | ) | (840,870 | ) | ||||
Total investment income per the Form 5500 | $ | 24,216,194 | $ | 42,643,915 | ||||
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SUPPLEMENTAL SCHEDULE
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ALLERGAN, INC. SAVINGS AND INVESTMENT PLAN
SCHEDULE OF ASSETS (HELD AT END OF YEAR)
SCHEDULE H, LINE 4i
EMPLOYER ID NUMBER 95-1622442, PLAN NUMBER 002
DECEMBER 31, 2007
(c) | ||||||||||||
(b) | Description of Investment | |||||||||||
Identity of Issue | Including Maturity Date, | (e) | ||||||||||
Borrower | Rate of Interest, Collateral, | (d) | Current | |||||||||
(a) | Lessor or Similar Party | Par or Maturity Value | Cost | Value | ||||||||
* | Allergan, Inc. | Common Stock, 2,271,961 shares | ** | $ | 145,950,750 | |||||||
Advanced Medical Optics, Inc. | Common Stock, 130,378 shares | ** | 3,198,172 | |||||||||
Dodge & Cox Balanced Fund | Mutual Fund, 935,059 shares | ** | 75,739,842 | |||||||||
* | American Century Income and Growth Fund | Mutual Fund, 1,505,700 shares | ** | 43,514,717 | ||||||||
Barclays Global Inv S&P 500 Equity Index Fund | Common/Collective Trust, 589,529 shares | ** | 27,106,554 | |||||||||
American Funds New Perspective Fund | Mutual Fund, 1,452,009 shares | ** | 49,295,708 | |||||||||
American Funds EuroPacific Growth Fund | Mutual Fund, 811,981 shares | ** | 41,305,458 | |||||||||
Artisan Small Cap Fund | Mutual Fund, 651,552 shares | ** | 11,024,258 | |||||||||
Hotchkis and Wiley Large Cap Value Fund | Mutual Fund, 663,633 shares | ** | 13,511,566 | |||||||||
Western Asset Core Plus Bond Portfolio Fund | Mutual Fund, 924,728 shares | ** | 9,423,183 | |||||||||
Janus Risk Managed Growth Fund | Mutual Fund, 1,352,845 shares | ** | 19,913,882 | |||||||||
* | JPMorgan Stable Value Fund | Common/Collective Trust, 426,552 shares | ** | 42,316,556 | ||||||||
Columbia Marsico Focused Equities Fund | Mutual Fund, 168,576 shares | ** | 4,226,199 | |||||||||
Evergreen Special Values Fund | Mutual Fund, 851,699 shares | ** | 17,545,004 | |||||||||
TIAA-CREF Intst Small-Cap Blend Index Fund | Mutual Fund, 105,142 shares | ** | 1,507,743 | |||||||||
* | Participant loans | Interest rates ranging from 5% to 10.5% | $ | 0 | 5,638,789 | |||||||
* | JPMorgan Chase Bank | Money Market, 17,930 units | ** | 17,930 | ||||||||
$ | 0 | $ | 511,236,311 | |||||||||
* | Party-in interest | |
** | Historical cost information is not required for participant directed investment funds |
See Report of Independent Registered Public Accounting Firm and
the accompanying notes to the financial statements
the accompanying notes to the financial statements
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Exhibit Index
Exhibit No. | Description | |
Exhibit 23 | Consent of Lesley, Thomas, Schwarz & Postma, Inc. |