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FORM 10-K
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES
EXCHANGE ACT OF 1934
FOR THE FISCAL YEAR ENDED DECEMBER 31, 1994
COMMISSION FILE NO.1-10269
ALLERGAN, INC.
(Exact name of Registrant as Specified in its Charter)
DELAWARE 95-1622442
(State of Incorporation) (I.R.S. Employer Identification No.)
2525 DUPONT DRIVE
IRVINE, CALIFORNIA 92715-1599
(Address of principal executive offices) (Zip Code)
Registrant's telephone number: (714) 752-4500
Securities registered pursuant to Section 12(b) of the Act:
Title of each class Name of each exchange on which each class registered
Common Stock, $0.01 par value New York Stock Exchange
Preferred Share Purchase Rights
Securities registered pursuant to Section 12(g) of the Act:
NONE
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months, and (2) has been subject to such filing
requirements for the past 90 days.
Yes X No
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The aggregate market value of the registrant's voting stock held by
non-affiliates was approximately $1,800,000,000 on March 6, 1995, based upon
the closing price on the New York Stock Exchange on such date.
Common Stock outstanding as of March 6, 1995 - 63,935,883 shares
Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K is not contained herein, and will not be contained, to
the best of registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-K or any
amendement to this Form 10-K. [ ]
DOCUMENTS INCORPORATED BY REFERENCE
Parts I, II and IV incorporate certain information by reference from the
registrant's Annual Report to Stockholders for the fiscal year ended December
31, 1994. With the exception of the sections of the Annual Report specifically
incorporated by reference herein, the Annual Report is not deemed filed as part
of this Report on Form 10-K.
Part III incorporates certain information by reference from the
registrant's definitive proxy statement for the annual meeting of stockholders
to be held on April 25, 1995, which proxy statement will be filed no later than
120 days after the close of the registrant's fiscal year ended December 31,
1994.
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TABLE OF CONTENTS
PART I
PAGE
Item 1. Business . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Item 2. Properties. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
Item 3. Legal Proceedings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
Item 4. Submission of Matters to a Vote of Security Holders. . . . . . . . . . . . . 10
Item I-A. Executive Officers of Allergan, Inc. . . . . . . . . . . . . . . . . . . . . 11
PART II
Item 5. Market for Registrant's Common Equity and Related
Stockholder Matters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
Item 6. Selected Financial Data . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
Item 7. Management's Discussion and Analysis of Financial
Condition and Results of Operations . . . . . . . . . . . . . . . . . . . . . 13
Item 8. Financial Statements and Supplementary Data . . . . . . . . . . . . . . . . . 13
Item 9. Changes in and Disagreements with Accountants on
Accounting and Financial Disclosure . . . . . . . . . . . . . . . . . . . . . 13
PART III
Item 10. Directors and Executive Officers of Allergan, Inc. . . . . . . . . . . . . . 14
Item 11. Executive Compensation . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
Item 12. Security Ownership of Certain Beneficial Owners and
Management . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
Item 13. Certain Relationships and Related Transactions . . . . . . . . . . . . . . . 14
PART IV
Item 14. Exhibits, Financial Statement Schedules and Reports
on Form 8-K.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
SIGNATURES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
INDEX OF EXHIBITS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
INDEPENDENT AUDITORS' REPORT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
SCHEDULE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-1
EXHIBITS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (Attached to this
Report on Form 10-K)
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PART I
ITEM 1. BUSINESS
GENERAL DEVELOPMENT OF BUSINESS
Allergan, Inc. ("Allergan" or the "Company") is a leading provider of
specialty therapeutic eye care products throughout the world with niche
pharmaceutical products in skin care and neural care. Its worldwide
consolidated revenues are principally generated by prescription and
non-prescription pharmaceutical products in the areas of ophthalmology and skin
care, intraocular lenses and other ophthalmic surgical products, and contact
lens care products.
Allergan was incorporated in California in 1948 and reincorporated in
Delaware in 1977. In 1980, the Company was acquired by SmithKline Beckman
Corporation (then known as "SmithKline Corporation" and herein "SmithKline").
The Company operated as a wholly-owned subsidiary of SmithKline from 1980 until
1989 when Allergan again became a stand-alone public company through a spin-off
distribution by SmithKline.
During the fourth quarter of 1991, the Company divested its computer-based
ophthalmic diagnostic instrument business, Allergan Humphrey. In November
1992, the Company sold its contact lens business in North and South America.
In August 1993, the Company sold its contact lens business outside of the
Americas.
ALLERGAN BUSINESSES
The following table sets forth, for the periods indicated, the net sales
from continuing operations for each of the Company's specialty therapeutics
businesses and product lines:
Year Ended December 31
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1994 1993 1992
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(in millions)
Eye Care
Pharmaceuticals $390.7 $360.9 $339.7
Surgical 144.3 115.3 111.8
Optical Lens Care 339.4 325.0 322.4
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Total Eye Care 874.4 801.2 773.9
Skin Care 37.3 32.4 37.3
Botox(R) 35.5 25.3 19.5
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Total Net Sales $947.2 $858.9 $830.7
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Domestic 47.3% 47.5% 47.9%
International 52.7% 52.5% 52.1%
The foregoing table does not include sales of discontinued operations.
See Note 11 of Notes to Consolidated Financial Statements on page 41 of the
1994 Annual Report for further information concerning foreign and domestic
operations.
Ophthalmic Pharmaceuticals Business
Allergan develops, manufactures and markets a broad range of prescription
and non-prescription products designed to treat diseases and disorders of the
eye, including glaucoma,
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inflammation, infection and allergy. In addition, the specialty
over-the-counter product line consists of products designed to treat ocular
surface disease, including artificial tears and ocular decongestants.
The largest segment of the market for ophthalmic prescription drugs is for
the treatment of glaucoma, a sight-threatening disease characterized by
elevated intraocular pressure. Allergan's largest selling pharmaceutical
product is Betagan(R) ophthalmic solution, a beta blocker used in the initial
treatment of glaucoma. Allergan also markets and sells Propine(R) ophthalmic
solution, which is used alone or in combination with other drugs when initial
drug therapy for glaucoma becomes inadequate. Patent protection for both
products expired in the United States in 1991. In 1993, in anticipation of
generic competition, Allergan entered into an agreement with Schein
Pharmaceutical, Inc. ("Schein") whereby Schein will market generic versions of
certain Allergan products that are off-patent in the United States. During
1994, Bausch & Lomb and Alcon Laboratories separately announced receipt of
marketing approval from the FDA for a generic version of Betagan(R) and
Propine(R), respectively. In each instance, Schein began marketing a generic
version of the corresponding Allergan product immediately after each
announcement.
The Company also markets several leading ophthalmic products to treat
ocular inflammation and infection. Allergan holds a major share of the U.S.
market for ophthalmic corticosteroids. Pred Forte(R) and FML(R) Liquifilm(R)
suspensions are leading products in the ocular corticosteroid inflammation
market. Allergan's major products in the anti-infective market are
Blephamide(R) suspension, a topical anti-inflammatory and anti-infective,
Polytrim(R) solution, a synthetic antimicrobial which treats surface ocular
bacterial infections and Ocuflox(R) solution, a fluroquinolone which treats
bacterial conjunctivitis. Ocuflox(R) solution was first marketed in the U.S.
in August 1993. It is also marketed in many countries internationally and is
awaiting approval in Spain and Canada.
In 1993, Allergan entered into a strategic alliance with Fisons
Corporation to co-promote certain ophthalmic pharmaceuticals in the United
States. The alliance currently involves Allergan's Acular(R)1 ophthalmic
solution for the relief of itch associated with seasonal allergic
conjunctivitis. Later, under the terms of the alliance, co-promotion is
planned to expand to include Fisons' Opticrom(R)2 ophthalmic solution and
nedocromil sodium ophthalmic solution.
Ophthalmic Surgical Business
Allergan's surgical business (known as Allergan Medical Optics or "AMO")
develops, manufactures and markets intraocular lenses ("IOLs"), surgically
related pharmaceuticals, phacoemulsification equipment and other ophthalmic
surgical products.
The largest segment of the surgical market is for the treatment of
cataracts. Cataracts are a condition, usually age related, in which the
natural lens of the eye becomes progressively clouded. This clouding obstructs
the passage of light and can lead to blindness. Most patients blinded by
cataracts can be surgically cured by removing the clouded lens and replacing it
with an IOL. AMO currently offers a full line of products used in the
performance of cataract surgery, including rigid multi-piece, single-piece and
small incision design IOLs. Sales of all models of the Company's IOLs
represented 9.7%, 9.1% and 10% of total Company sales in 1992, 1993 and 1994,
respectively. Intraocular lenses marketed by Allergan for small incision
cataract surgery
__________________________________
1 Acular(R) is a registered trademark, which is licensed from Syntex (U.S.A.)
Inc.
2 Opticrom(R) is a registered trademark of Fisons Corporation.
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include the AMO(R)Phacoflex(R) small incision IOL, introduced in 1989, the
AMO(R)Foldable Phacoflex(R)II SI-30NB(TM) small incision IOL, introduced in
April 1993, and the AMO(R)DuraLens(TM) IOL which was introduced in various
European countries during 1994. AMO(R)Array(R) multifocal IOL is also
available in several European countries including Germany, France and Spain and
is currently undergoing clinical trials in the U. S. Sales growth of IOLs in
the U.S. has been adversely impacted by price erosion resulting from
competitive pressures and government pricing policies.
Small incision IOLs continue to grow in popularity along with increasing
use of phacoemulsification, a method of cataract extraction that uses
ultrasound waves to break the natural lens into small fragments that can be
removed through a hollow needle. Phacoemulsification requires only a 3 to 4
millimeter incision, compared to incisions of up to 12 millimeters for other
techniques. Phacoemulsification accounts for more than 80 percent of cataract
procedures in the United States. In 1993 Allergan introduced the
AMO(R)Prestige(TM) phacoemulsification machine. AMO(R)Prestige(TM) makes
small-incision cataract surgery easier than other phacoemulsification machines
by using a sophisticated microprocessor that monitors vacuum and fluid in the
eye. Allergan also markets AMO(R)Vitrax(R), a viscoelastic used to maintain
the anterior chamber and protect endothelial cells during cataract surgery.
In September 1994, Allergan acquired the worldwide IOL business of Ioptex
Research Inc., formerly a division of Smith & Nephew. In January 1995,
Allergan acquired Optical Micro Systems ("OMS"). OMS develops and
manufactures phacoemulsification equipment. These two acquisitions provide the
Company with additional IOL and phacoemulsification equipment product offerings
and the capability to manufacture phacoemulsification equipment.
Optical Business
The Company has been in the contact lens care market since 1960. It
develops, manufactures and markets a broad range of products worldwide for use
with every available type of contact lens. These products include disinfecting
solutions to destroy harmful microorganisms on the surface of contact lenses;
daily cleaners to remove undesirable film and deposits from contact lenses; and
enzymatic cleaners to remove protein deposits from contact lenses. The Company
offers products that can be used in each of the three disinfecting systems now
available: hydrogen peroxide systems, convenient chemical systems and heat
systems. UltraCare(R) neutralizer/disinfectant, Allergan's one-step hydrogen
peroxide disinfection system, was approved by the FDA in March 1992 for general
marketing in the United States. In the third quarter of 1994, Allergan
received U.S. marketing approval for UltraCare(R) with a new color indicator.
The new system, which had been previously launched in Germany, relies on a
Vitamin B-12 color indicator which turns the solution pink to indicate complete
neutralization of the peroxide. Allergan's Complete(R) brand Multi-Purpose
convenient chemical disinfection system for soft contact lenses was launched in
Australia, Canada, China Germany and Italy during 1993 and in the United
States, the United Kingdom and Mexico in 1994.
Sales of the Company's proprietary enzymatic cleaners represented 11%, 11%
and 10% of total Company sales in 1992, 1993 and 1994, respectively, and sales
of the Company's hydrogen peroxide disinfection systems represented 13%, 14%
and 14% of total Company sales in 1992, 1993 and 1994, respectively.
Skin Care Business
Building upon its strength in marketing to medical specialties and taking
advantage of synergies in research and development, Allergan's skin care
business (known as Allergan
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Herbert) develops, manufactures and markets a line of therapeutic skin care
products primarily to dermatologists in the United States. Its product line
includes Gris-Peg(R) tablets, a systemic anti-fungal product, Elimite(R) cream
for the treatment of scabies and Naftin(R), a topical anti-fungal gel and
cream.
Botox(R)/Neuromuscular Business
Allergan's Botox(R) (Botulinum Toxin Type A) purified neurotoxin complex
is used in the treatment of certain neuromuscular disorders which are
characterized by involuntary muscle contractions or spasms. Botox(R) purified
neurotoxin complex is marketed in the United States, Canada, Germany, France,
Italy, New Zealand and a number of other countries for the treatment of
blepharospasm (the uncontrollable abnormal contraction of the eyelid muscles
which can force the eye closed) and strabismus (misalignment of the eyes) in
people 12 years of age and over. In May 1994, Botox(R) purified neurotoxin
complex was approved in the United Kingdom for blepharospasm and hemifacial
spasm. In March 1991, an application was filed with the FDA for approval of a
nonophthalmic claim for an indication related to a neck and shoulder
neuromuscular disorder known as cervical dystonia (torticollis). Allergan has
been asked to provide supplemental clinical data to support the torticollis
filing. Botox(R) has been approved in several European countries for the
treatment of cervical dystonia.
EMPLOYEE RELATIONS
At December 31, 1994, the Company employed approximately 4,900 persons
throughout the world, including approximately 2,220 in the United States. None
of the Company's U.S.-based employees are represented by unions. The Company
considers that its relations with its employees are, in general, very good.
INTERNATIONAL OPERATIONS
The Company believes that international markets represent a significant
opportunity for continued growth. International sales have represented
approximately 52.1%, 52.5% and 52.7% of total sales for the years ended
December 31, 1992, 1993 and 1994, respectively. Allergan believes that its
well-established international market presence provides it with a competitive
advantage, enabling the Company to maximize the return on its investment in
research, product development and manufacturing.
Allergan established its first foreign subsidiary in 1964 and currently
sells products in approximately 100 countries. Marketing activities are
coordinated on a worldwide basis and resident management teams provide
leadership and infrastructure for customer focused rapid introduction of new
products in their local markets.
In Japan, the second largest eye care market in the world, certain of
Allergan's eye care pharmaceutical products are licensed to Santen
Pharmaceuticals (the largest eye care pharmaceutical manufacturer in Japan),
and Allergan's contact lens care products are sold through a joint venture
between Santen and Allergan. IOLs and other eye care surgical products are
sold directly in Japan. In 1994, Allergan and Nicholas Piramal India Limited
formed a joint venture to manufacture and market eye care products in India.
Also in 1994, fifteen ophthalmic pharmaceutical products and Botox(R) purified
neurotoxin complex were approved for sale in India. In October 1994, Allergan
launched its first two prescription products, Propine(R) and Betagan(R)
solutions, in the Peoples' Republic of China. This followed the earlier
introduction of its Complete(R) system in 1993. The Company is scheduled to
begin construction of a new manufacturing facility in Hangzhou in 1995.
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SALES AND MARKETING
Allergan maintains global marketing and regional sales organizations.
Supplementing the sales efforts and promotional activities aimed at eye and
skin care professionals, as well as neurologists outside the U.S., who use,
prescribe and recommend its products, Allergan has been shifting its resources
increasingly toward managed care providers. In addition, Allergan advertises
in professional journals and has an extensive direct mail program of
descriptive product literature and scientific information to specialists in the
ophthalmic and dermatological fields. The Company's specialty therapeutic
products are sold to drug wholesalers, independent and chain drug stores,
commercial optical chains, mass merchandisers, food stores, hospitals,
ambulatory surgery centers and medical practitioners, including neurologists.
At December 31, 1994, the Company employed approximately 820 sales
representatives throughout the world.
RESEARCH AND DEVELOPMENT
The Company's global research and development efforts focus on eye care,
skin care and neuromuscular products that are safe, effective, convenient and
have an economic benefit. The Company's own research and development
activities are supplemented by a commitment to identifying and obtaining new
technologies through in-licensing, joint ventures and acquisition efforts
including the establishment of research relationships with academic
institutions and individual researchers.
Research and development efforts for the ophthalmic pharmaceuticals
business focus primarily on new therapeutic products for glaucoma,
inflammation, dry eye, allergy and new anti-infective pharmaceuticals for eye
care. The Company is conducting research on new compounds that control
intraocular pressure by either reducing the inflow or production, or improving
the outflow of aqueous humor. Alpha2 agonists are a new class of glaucoma
treatments currently being tested. They may be used by patients who cannot use
beta-blockers or as an adjunct therapy. Allergan's lead compound in this
category is brimonidine, which has completed Phase III clinical trials for the
control of post-surgical intraocular pressure elevation and is currently
undergoing Phase III trials for ocular hypertension and glaucoma. During the
third quarter of 1994, Allergan filed a drug approval application with the FDA
on brimonidine for acute post-surgical elevated pressure in the eye following
argon laser trabeculoplasty. The Company is also conducting research and
clinical trials on a class of compounds called prostaglandins. Unlike
beta-blockers and alpha2 agonists that decrease the inflow or production of
aqueous humor, prostaglandins reduce intraocular pressure by improving its
outflow. The Company is also developing topical cyclosporine A for the
treatment of severe dry eye.
Research and development activities for the surgical business concentrate
on improved cataract surgical systems, implantation instruments and methods,
and new IOL materials and designs, including the AMO(R)Array(R) multifocal IOL,
designed to allow patients to see well over a range of distances.
Research and development in the optical business is aimed at contact lens
care systems which are effective and more convenient for patients to use, thus
lead to a higher rate of compliance with recommended lens care procedures.
Improved compliance can enhance safety and extend the time a patient will be a
contact lens wearer. The Company believes that continued development and
commercialization of disinfection systems that are both easy-to-use and
efficacious will be important for the future success of this part of the
Company's business.
During the first quarter of 1993, Allergan began Phase III clinical trials
with its proprietary topical retinoid tazarotene (previously known as
AGN190168) for both acne and psoriasis. In July 1994, the Company released
initial Phase III clinical trial results for
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tazarotene for psoriasis, which met expectations based on results of earlier
clinical studies. By mid-1995, the Company intends to file with the FDA an
application for marketing approval for tazarotene in the treatment of psoriasis
and acne, based on the results of this initial trial and six additional trials
with more than 2,000 patients. Also, during the first quarter of 1994, an
application was filed with the FDA seeking approval to market Azelex(TM)
(azelaic acid) cream in the U.S. for the treatment of acne.
During 1992, the Company entered into a joint venture ("Joint Venture")
with Ligand Pharmaceuticals Incorporated ("Ligand") to combine Ligand's
knowledge of intracellular receptor technology with the Company's experience in
receptor-selective retinoids for topical use. The Joint Venture filed an
Investigational New Drug Application ("IND") with the FDA in November 1993 for
the use of 9-cis Retinoic acid (LGD1057) to be given orally for cancer therapy.
In March 1994, the Joint Venture filed an IND for the topical use of LGD 1057
for cancers involving the skin.
In December 1994, the Company and Ligand announced the formation of a new
research and development company, Allergan Ligand Retinoid Therapeutics, Inc.
("ALRT"), to devote $100 million to the accelerated research and development of
retinoid products. Allergan and Ligand will fund ALRT in part through a public
offering of $32.5 million of ALRT units through a rights offering to their
respective shareholders. ALRT will be the successor to the Joint Venture which
will be dissolved immediately prior to the consummation of the offering.
Allergan and Ligand will contribute all Joint Venture technology and assets to
ALRT. Upon consummation of the transaction, Allergan and Ligand will make cash
payments to ARLT of $50 million and $17.5 million, respectively, and expense
these cash payments as a one-time charge to earnings. A registration statement
relating to the units has been filed with the SEC but has not yet become
effective. These securities may not be sold nor may offers to buy be accepted
prior to the time the registration statement becomes effective. This
disclosure shall not constitute an offer to sell or the solicitation of an
offer to buy, nor shall there be any sale of these securities in any state in
which such offer, solicitation or sale would be unlawful prior to registration
or qualification under the securities laws of any such state.
The continuing introduction of new products supplied by the Company's
research and development efforts and in-licensing opportunities is critical to
the success of the Company. Delays or failures in one or more significant
research projects could have a material adverse impact on the future operations
of the Company. At December 31, 1994, there were an aggregate of approximately
650 people involved in the Company's research and development efforts. The
Company's research and development expenditures associated with continuing
operations for 1992, 1993 and 1994 were $89.5 million, $102.5 million and
$111.5 million, respectively.
COMPETITION
Allergan faces strong competition in all of its markets worldwide.
Numerous companies are engaged in the development, manufacture and marketing of
health care products competitive with those manufactured by Allergan, although
these companies do not necessarily compete in all of Allergan's product lines.
Major eye care competitors include Alcon Laboratories (a subsidiary of Nestle),
Bausch & Lomb, Ciba Vision Corp. (a subsidiary of Ciba-Geigy), IOLab (a
subsidiary of Johnson & Johnson), Merck, Pharmacia Ophthalmics (a subsidiary of
Kabi Pharmacia), and Sola/Barnes-Hind (a subsidiary of Pilkington plc). These
competitors have equivalent or greater resources than Allergan. The Company's
skin care business competes against a number of companies, including, among
others, Schering-Plough, Johnson & Johnson and Hoffman LaRoche, which have
greater resources than Allergan. In marketing its products to health care
professionals, the Company competes primarily on the basis of product
technology, service and price. The Company believes that it competes favorably
in its product markets.
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GOVERNMENT REGULATION
Drugs, biologics and medical devices, including IOLs and contact lens care
products, are subject to regulation by the FDA, state agencies and, in varying
degrees, by foreign health agencies. Government regulation of many of the
Company's products generally requires extensive testing of new products and
filing applications for approval by the FDA prior to sale in the United States
and by foreign health agencies prior to sale in many international markets.
The FDA and foreign health agencies review these applications and determine
whether the product is safe and effective. The process of developing data to
support a pre-market application and governmental review can be costly and take
many years to complete.
In general, manufacturers of drugs, medical devices and biologics are
operating in an increasingly more rigorous regulatory environment than has been
the case in previous years. The total cost of providing health care services
has been and will continue to be subject to review by governmental agencies and
legislative bodies in the major world markets, including the United States,
which are faced with significant pressure to lower health care costs. Prices
for some of the Company's products, specifically IOLs and pharmaceutical
products, accounting for approximately 52% of the Company's 1994 worldwide
sales, are expected to come under increased pressure as governments and managed
care providers generally increase their efforts to contain health care costs.
Several legislative and administrative measures to strengthen government
regulation of medical devices and drugs have recently been implemented in the
United States, such as the Safe Medical Devices Act of 1990, which among other
things, increased reporting requirements of adverse events associated with
medical devices, and the Prescription Drug User Fee Act of 1992, which requires
payment of substantial fees to the FDA for the review of new drug applications.
The United States Congress is expected to consider mandating the application of
user fees to medical device applications as well. Other measures are pending
or have been proposed. In addition, there has been increased scrutiny of drug
and device manufacturers by the FDA as a result of a scandal in the generic
drug industry and controversies surrounding the safety of certain medical
devices. While the Company is not primarily involved in these areas of
business, the impact of increased FDA scrutiny is felt by all companies in the
drug and device industries. Moreover, in Europe and other major Allergan
markets, the regulation of drugs and medical devices is likewise increasing.
The Company is working to ensure that its operations remain in compliance with
the regulatory requirements of the FDA, its foreign counterparts, and other
governmental agencies.
In the United States, a significant percentage of the patients who receive
the Company's IOLs are covered by the federal Medicare program. When a
cataract extraction with IOL implantation is performed in an ambulatory surgery
center ("ASC"), Medicare provides the ASC with a fixed $150 allowance to cover
the cost of the IOL. When the procedure is performed in a hospital outpatient
department, the hospital's reimbursement is determined using a complex formula
that blends the hospital's costs with the $150 allowance paid to ASCs. This
$150 IOL payment could be subject to reduced levels by Congress through various
legislative actions: health care reform; deficit reduction legislation; or
implementation of a balanced budget amendment. The Medicare Technical
Corrections Bill of 1994 directed the U.S. Health Care Financing Administration
("HCFA") to establish a system through which the agency would pay ASCs and
hospitals a rate above $150 for "advanced technology IOLs". HCFA is not
expected to consider applications from manufacturers for preferential "advanced
technology" status before 1996. In November 1990, HCFA issued proposed
regulations under which Medicare would not recognize hospitals' expenditures
for IOLs implanted during outpatient cataract surgery to the extent that those
expenditures exceed the ASC allowance of $150. The Company cannot predict
whether HCFA will promulgate a final regulation imposing this limitation, or
whether limits on IOL payment will be incorporated within a more broadly
sweeping reform of the Medicare outpatient hospital reimbursement system.
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The cost of prescription drugs is likely to receive some continuing
attention in the United States Congress. Legislation enacted in 1990, and
amended and strengthened in 1992, requires pharmaceutical manufacturers to
rebate to the government a portion of their revenues from drugs furnished to
Medicaid patients. In 1992, legislation was enacted that extends these
requirements to covered outpatient pharmaceuticals, and also mandates a
reduction in pharmaceutical prices charged to certain federally-funded
facilities as well as to certain hospitals serving a disproportionate share of
low-income patients. A provision of the Omnibus Budget Reconciliation Act of
1993 limits tax benefits currently realized by U.S. manufacturers as a result
of the manufacture of certain products in Puerto Rico, beginning in 1994. It
is likely that some Congressional attention will continue to focus on the costs
of drugs generally, and particularly on increases in drug prices in excess of
the rate of inflation.
The United States Congress also devoted significant attention in 1994 and
in prior years to proposed amendments to the Orphan Drug Act. Under one
proposal, once cumulative sales of an orphan drug exceed a designated dollar
amount the FDA would be authorized to approve competitors' marketing
applications. The Company currently markets one orphan drug product, Botox(R)
purified neurotoxin complex. While legislation was not enacted in 1994, it is
expected that Congress will consider further amendments to the Orphan Drug Act
in 1995.
As a result of the change in its leadership, the Unites States Congress
may reexamine the regulatory burdens imposed on drug and medical device
manufacturers by the FDA. Congress will also consider less sweeping health
care reform legislation. In Europe, on both a European Union level and at the
local national level, governments have implemented legislation directed at,
among other things, cost containment in the form of reference pricing (i.e.,
setting a fixed level of reimbursement by drug category), removing various
categories of drugs from reimbursement programs, and encouraging generic
prescribing.
The Company cannot predict the likelihood of any significant legislative
action in these areas, nor can it predict whether or in what form health care
legislation being formulated by various governments will be passed. The
Company also cannot predict exactly what effect such governmental measures
would have if they were ultimately enacted into law. However, in general, the
Company believes that such legislative activity will likely continue and the
adoption of such measures can be expected to have some adverse impact on the
Company's business.
PATENTS, TRADEMARKS AND LICENSES
Allergan owns or is licensed under numerous patents relating to its
products, product uses and manufacturing processes. It now has numerous
patents issued in the United States and corresponding foreign patents issued in
the major countries in which it does business. Allergan believes that its
patents and licenses are important to its business, but that with the exception
of those relating to hydrogen peroxide disinfection systems, no one patent or
license is currently of material importance in relation to its business as a
whole. Allergan markets its products under various trademarks and considers
these trademarks to be valuable because of their contribution to the market
identification of the various products.
ENVIRONMENTAL MATTERS
The Company is subject to federal, state, local and foreign environmental
laws and regulations. The Company believes that its operations comply in all
material respects with applicable environmental laws and regulations in each
country where the Company has a business presence. Although Allergan continues
to make capital expenditures for environmental protection, it does not
anticipate any significant expenditures in order to comply with such laws and
regulations which would have a material impact on the Company's capital
expenditures,
8
11
earnings or competitive position. The Company is not aware of any pending
litigation or significant financial obligations arising from current or past
environmental practices. There can be no assurance, however, that
environmental problems relating to properties owned or operated by the Company
will not develop in the future, and the Company cannot predict whether any such
problems, if they were to develop, could require significant expenditures on
the part of the Company. In addition, the Company is unable to predict what
legislation or regulations may be adopted or enacted in the future with respect
to environmental protection and waste disposal.
ITEM 2. PROPERTIES
Allergan's operations are conducted in owned and leased facilities located
throughout the world. Its primary administrative and research facilities are
located in Irvine, California. The following table describes the general
character of the major existing facilities as of March 6, 1995:
Location Primary Function Interest
- -------- ---------------- --------
Irvine, California Headquarters, research and development,
manufacturing, administrative Owned
Santa Ana, California Manufacturing, warehousing Owned
Waco, Texas Manufacturing, warehousing Owned
Irwindale, California Manufacturing, warehousing, administrative Leased
Lenoir, North Carolina Manufacturing, administrative, warehousing Owned
Berkeley, California Manufacturing, warehousing, administrative Leased
North Andover, Massachusetts Manufacturing, administrative Leased
Hormigueros, Puerto Rico Manufacturing, warehousing Owned
Anasco, Puerto Rico Manufacturing, warehousing Leased
Buenos Aires, Argentina Administrative, manufacturing, warehousing Owned
Markham, Canada Administrative, warehousing Leased
County Mayo, Ireland Administrative, manufacturing, warehousing Owned
High Wycombe, U.K. Administrative, warehousing Leased
Sophia Antipolis, France Administrative, warehousing Leased
Pomezia, Italy Administrative, manufacturing, Owned
research and development, warehousing
Madrid, Spain Administrative, warehousing Owned
Ettlingen, Germany Administrative, warehousing Owned
Zaventem, Belgium Administrative, warehousing Leased
9
12
Sao Paulo, Brazil Administrative, manufacturing, warehousing Owned
Johannesburg, South Africa Administrative, warehousing Leased
Sydney, Australia Administrative, warehousing Owned/Leased
Hong Kong Administrative, warehousing Leased
Tokyo, Japan Administrative, research and development Leased
The Company believes its present facilities are adequate for its current
needs.
ITEM 3. LEGAL PROCEEDINGS
The Company and its subsidiaries are involved in various litigation and
claims arising in the normal course of business which Allergan considers to be
normal in view of the size and nature of its business. Although the ultimate
outcome of pending litigation cannot be precisely ascertained at this time,
Allergan believes that any liability resulting from the aggregate amount of
uninsured damages for outstanding lawsuits and claims will not have a material
adverse effect on its consolidated financial position. However, in view of the
unpredictable nature of litigation, no assurances can be given in this regard.
The Company, in cooperation with regulatory authorities in Puerto Rico, is
evaluating and implementing operational improvements to the wastewater
treatment system at the Company's Hormigueros facility. These improvements,
which will reduce the ecological impacts of the Company's operations, will not
have a material adverse impact of the Company's business.
In October 1993, the Company disclosed to the U.S. Department of Commerce
Office of Export Enforcement (the "Commerce Department") that it had been
shipping its medicine, Botox(R) purified neurotoxin complex, under general
license authority to various foreign countries in the period since July 15,
1992, when the active ingredient in Botox(R), an attenuated form of botulinum
toxin, was reclassified to require validated export licensing. It is the
Company's position that the reclassification did not and could not apply to
medicines, such as Botox(R), that are exempt from validated export licensing by
statute and that have no potential application as biological warfare agents or
other undesired uses. After conducting a field investigation, in which the
Company cooperated, the Commerce Department advised the Company in the first
quarter of 1995 that it did not agree with the Company's position regarding the
export classification of Botox(R) and that it had referred the case to the
office of the U.S. Attorney in order to determine whether criminal charges
might be warranted. The Company does not believe that the filing of criminal
charges would be warranted.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
The Company did not submit any matter during the fourth quarter of the
fiscal year covered by this report to a vote of security holders, through the
solicitation of proxies or otherwise.
10
13
ITEM I-A. EXECUTIVE OFFICERS OF ALLERGAN, INC.
The executive officers of the Company and their ages as of March 6, 1995 are as
follows:
Vicente Anido, Jr., Ph.D. 42 Corporate Vice President and President, Americas Region
Jeffrey B. D'Eliscu 44 Corporate Vice President, Corporate Communications
Michael J. Donohoe 52 Corporate Vice President and President, Europe Region
Richard M. Haugen 42 Executive Vice President and Chief Operating Officer
Richard J. Hilles 52 Corporate Vice President, Human Resources
Lester J. Kaplan, Ph.D. 44 Corporate Vice President, Research and Development
Diethart Reichardt 52 Corporate Vice President, Optical
Jacqueline J. Schiavo 46 Corporate Vice President, Worldwide Operations
William C. Shepherd 56 President and Chief Executive Officer
Francis R. Tunney, Jr. 47 Corporate Vice President, General Counsel and Secretary
Dwight J. Yoder 49 Vice President, Controller, Principal Accounting Officer
Officers are appointed by and hold office at the pleasure of the Board of
Directors.
Dr. Anido has been Corporate Vice President and President, Americas Region
since 1993. Prior thereto, he had 18 years of experience with pharmaceutical
companies. Dr. Anido was Vice President, Business Management of the U.S.
Prescription Products Division of Marion Merrell Dow, Inc. from 1991 to 1993,
President and General Manager (1990-1991) and Vice President, Sales & Marketing
(1989-1990) of Nordic Laboratories, Inc. He also held various management
positions with Marion Laboratories, Inc.
Mr. D'Eliscu has been Corporate Vice President, Corporate Communications since
1992 and was Vice President, Investor Relations and Public Communications from
1991. Mr. D'Eliscu had been Senior Director, Investor Relations of the Company
from 1989 to 1991 and prior thereto, he had been Director of Business
Development from 1988 and Senior Product Manager from 1985. Mr. D'Eliscu first
joined the Company in 1979.
Mr. Donohoe has been Corporate Vice President and President, Europe Region
since 1992. Prior thereto, he was Corporate Vice President and President,
Optical, Consumer/OTC Group from 1991. Mr. Donohoe was Senior Vice President
and General Manager, Contact Lenses from 1990 to 1991 and Area Vice President,
Northern Europe from 1989 to 1990. Mr. Donohoe held the position of Senior
Vice President, Worldwide Marketing for the Optical Division from 1988 to 1989
and was Vice President, International Marketing from 1987 to 1988. Mr. Donohoe
first joined the Company in 1987.
Mr. Haugen has been Executive Vice President and Chief Operating Officer since
April 1992 and had been Corporate Vice President of the Company and President,
Worldwide Eye Marketing and Sales & Operations since January 1992. Prior
thereto, Mr. Haugen was Corporate Vice President and President, Americas Region
in 1991 and had been President of Allergan Optical and Senior Vice President of
the Company from 1989 to 1991. Prior thereto he was Senior Vice President and
President of Allergan Pharmaceuticals from 1988 to 1989 and was Senior Vice
President, Planning and Business Development since 1987. Mr. Haugen first
joined the Company in 1976.
Mr. Hilles has been Corporate Vice President, Human Resources since 1991 and
prior thereto was Senior Vice President, Human Resources from 1986 to 1991. He
was Vice President, Human
11
14
Resources from 1981 to 1986. Mr. Hilles first joined SmithKline Beckman
Corporation in 1965.
Dr. Kaplan has been Corporate Vice President, Research and Development since
1992. He had been Senior Vice President, Pharmaceutical Research and
Development since 1991, Senior Vice President, Research and Development since
1989 and Vice President since 1988. Dr. Kaplan had served as Senior Director
in Group Research and Development from 1986 to 1988 and as Associate Director,
Discovery Research from 1984 to 1986. Dr. Kaplan first joined the Company in
1983.
Mr. Reichardt has been Corporate Vice President, Optical since 1992. Prior
thereto, he was Senior Vice President, Marketing/Business Development,
Optical-Europe from 1991 and Senior Vice President, Northern Europe from 1983.
Mr. Reichardt first joined the Company in 1972.
Ms. Schiavo has been Corporate Vice President, Worldwide Operations since 1992.
She was Senior Vice President, Operations from 1991 and Vice President,
Operations from 1989. Prior thereto, she was Senior Director, Operations from
1988 to 1989. Ms. Schiavo first joined the Company in 1980.
Mr. Shepherd has been President and Chief Executive Officer of the Company
since 1992 and prior thereto had been President and Chief Operating Officer
from 1984 to 1991. Prior to 1984, Mr. Shepherd was President of Allergan U.S.,
Senior Vice President, U.S. Operations and Vice President, Operations. Mr.
Shepherd first joined the Company in 1966.
Mr. Tunney has been Corporate Vice President, General Counsel and Secretary of
the Company since 1991 and prior thereto was Senior Vice President, General
Counsel and Secretary from 1989 through 1991. Mr. Tunney had served as Vice
President, General Counsel and Assistant Secretary of the Company since 1986,
and as Associate General Counsel of the Company since 1985. Prior thereto he
was Senior International Attorney for SmithKline Beckman Corporation which he
joined in 1979.
Mr. Yoder has been Vice President and Controller of the Company since 1990.
Prior thereto, Mr. Yoder held various management positions with Del Taco, Inc.
from 1983 to 1989, including Vice President, Finance of Del Taco/Naugles
Restaurants and Vice President, Controller of Del Taco, Inc. Mr. Yoder first
joined the Company in 1990.
The information required by Item 405 of Regulation S-K is included on page
7 of the Proxy Statement and is incorporated herein by reference.
12
15
PART II
ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS
The section entitled "Market Prices of Common Stock and Dividends" on the
inside back cover of the Annual Report is incorporated herein by reference.
ITEM 6. SELECTED FINANCIAL DATA
The table entitled "Selected Financial Data" on page 46 of the Annual
Report is incorporated herein by reference.
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
The section entitled "Management's Discussion and Analysis of Financial
Condition and Results of Operations for the Three Year Period Ended December
31, 1994" on pages 23-28 of the Annual Report is incorporated herein by
reference.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
The financial statements, including the notes thereto, together with the
sections entitled "Independent Auditors' Report" and "Quarterly Results
(Unaudited)" of the Annual Report included on pages 44 and 45, respectively,
are incorporated herein by reference.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
The section entitled "Independent Auditors" on page 20 of the Proxy
Statement is incorporated herein by reference.
13
16
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF ALLERGAN, INC.
Information under this Item is included on pages 2-5 of the Proxy
Statement and such information is incorporated herein by reference.
Information with respect to executive officers is included on pages 10-12 of
this Form 10-K.
ITEM 11. EXECUTIVE COMPENSATION
The section entitled "Executive Compensation," and the subsection
entitled "Director Compensation" included in the Proxy Statement on pages
11-12, and page 6, respectively, are incorporated herein by reference.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The common stock information in the section entitled "Security Ownership
of Certain Beneficial Owners and Management" on pages 8-10 of the Proxy
Statement is incorporated herein by reference.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
The subsection entitled "Other Matters" and the section entitled
"Compensation Committee Interlocks and Insider Participation" on pages 7 and 19
of the Proxy Statement are incorporated herein by reference.
14
17
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K
(a) Index to Financial Statements
* Page(s) in
Annual Report
-------------
1. Financial Statements included in Part II of this report:
Independent Auditors' Report 44
Consolidated Balance Sheets at December 31, 1994 and
December 31, 1993 29
Consolidated Statements of Earnings for Each of the
Years in the Three Year Period Ended December 31, 1994 30
Consolidated Statements of Cash Flows for Each of the 31
Years in the Three Year Period Ended December 31, 1994
Notes to Consolidated Financial Statements 32-42
* Incorporated by reference from the indicated pages of the Company's Annual
Report to Shareholders for the fiscal year ended December 31, 1994 (and except
for these pages, the Company's Annual Report to Shareholders for the fiscal
year ended December 31, 1994, is not deemed filed as part of this report).
2. Schedules Supporting the Consolidated Financial Statements:
Page in
This Report
-----------
Independent Auditors' Report 21
Schedule numbered in accordance with Rule 5-04 of Regulation S-X:
VIII Allowance for Doubtful Accounts................................ S-1
All other schedules have been omitted for the reason that the
required information is presented in financial statements or
notes thereto, the amounts involved are not significant or the
schedules are not applicable.
(b) Reports on Form 8-K
No reports on Form 8-K were filed by the Company during the
last quarter of 1994.
(c) Item 601 Exhibits
Reference is made to the Index of Exhibits beginning at
page 18 of this report.
(d) Other Financial Statements
There are no financial statements required to be filed by
Regulation S-X which are excluded from the annual report to
shareholders by Rule 14 a-3(b)(1).
15
18
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the Registrant has duly caused this report to be signed
on its behalf by the undersigned, thereunto duly authorized.
Date: March 22, 1995 ALLERGAN, INC.
By /S/ WILLIAM C. SHEPHERD
-------------------------------------
William C. Shepherd
President and Chief Executive Officer
Pursuant to the requirements of the Securities Exchange Act of 1934,
this report has been signed below by the following persons on behalf of the
Registrant and in the capacities and on the date indicated.
Date: March 22, 1995 By /S/ WILLIAM C. SHEPHERD
-- -------------------------------------
William C. Shepherd
President and Chief Executive Officer
Date: March 22,1995 By /S/ DWIGHT J. YODER
-- -------------------------------------
Dwight J. Yoder
Vice President and Controller
(Principal Accounting Officer)
Date: March 22, 1995 By /S/ HERBERT W. BOYER
-- -------------------------------------
Herbert W. Boyer, Ph.D., Director
Date: March 22, 1995 By /S/ TAMARA J. ERICKSON
-- -------------------------------------
Tamara J. Erickson Director
Date: March 22, 1995 By /S/ HANDEL E. EVANS
-- -------------------------------------
Handel E. Evans, Director
Date: March 22, 1995 By /S/ WILLIAM R. GRANT
-- -------------------------------------
William R. Grant, Director
Date: March 22, 1995 By /S/ HOWARD E. GREENE, JR
-- -------------------------------------
Howard E. Greene, Jr., Director
Date: March 22, 1995 By /S/ RICHARD M. HAUGEN
-- -------------------------------------
Richard M. Haugen, Director
16
19
Date: March 22, 1995 By /S/ GAVIN S. HERBERT
-- -------------------------------------
Gavin S. Herbert
Chairman of the Board
Date: March 22, 1995 By /S/ LESTER J. KAPLAN
-- -------------------------------------
Lester J. Kaplan, Ph. D., Director
Date: March 22,1995 By /S/ LESLIE G. MCCRAW
-- -------------------------------------
Leslie G. McCraw, Director
Date: March 22, 1995 By /S/ LOUIS T. ROSSO
-- -------------------------------------
Louis T. Rosso, Director
Date: March 22, 1995 By /S/ LEONARD D. SCHAFFER
-- -------------------------------------
Leonard D. Schaeffer, Director
Date: March 22, 1995 By /S/ HENRY WENDT
-- -------------------------------------
Henry Wendt, Director
17
20
INDEX OF EXHIBITS
SEQUENTIALLY
EXHIBIT NUMBERED
NUMBER DESCRIPTION PAGE
- ------ ----------- ------------
3.1 Restated Certificate of Incorporation of the Company as
filed with the State of Delaware on May 22, 1989
(incorporated by reference to Exhibit 3.1 to Registration
Statement on Form S-1 No. 33-28855, filed May 24, 1989) . . . . . . . .
3.2 Bylaws of the Company (incorporated by reference to
Exhibit 3 to Form 8-K filed March 3, 1994) . . . . . . . . . . . . . . .
4.1 Certificate of Designation, Preferences and Rights of
Series A Participating Preferred Stock as filed with the
State of Delaware on May 22, 1989 (incorporated by reference
to Exhibit 4.1 to Registration Statement on Form S-1
No. 33-28855, filed May 24, 1989) . . . . . . . . . . . . . . . . . . .
4.2 Rights Agreement, dated as of May 18, 1989, between
Allergan, Inc. and First Chicago Trust Company of
New York (as successor Rights Agent to Morgan Shareholder
Services Trust Company (incorporated by reference to
Exhibit 4.2 to Registration Statement on Form S-1
No. 33-28855, filed May 24, 1989) . . . . . . . . . . . . . . . . . . .
4.3 Amendment to Rights Agreement, dated as of September 28, 1993
between Allergan, Inc. and First Chicago Trust Company of
New York (as successor Rights Agent to Morgan Shareholder
Services Trust Company) (incorporated by reference to Exhibit 4
to Form 8-K, filed March 3, 1994) . . . . . . . . . . . . . . . . . . .
10.1 Form of director and executive officer Indemnity Agreement
(incorporated by reference to Exhibit 10.4 to the
Company's Report on Form 10-K for the Fiscal Year ended
December 31, 1992) . . . . . . . . . . . . . . . . . . . . . . . . . . .
10.2 Allergan, Inc. 1989 Nonemployee Director Stock Plan, as amended
and restated (incorporated by reference to Exhibit A to the
Company's Proxy Statement dated March 17, 1994, filed in definitive
form on March 16, 1994) . . . . . . . . . . . . . . . . . . . . . . . .
10.3 Allergan, Inc. Deferred Directors' Fee Program (incorporated
by reference to Exhibit 10.6 to the Company's Report on Form
10-K for the Fiscal Year ended December 31, 1991) . . . . . . . . . . .
10.4 Allergan, Inc. 1989 Incentive Compensation Plan , as
amended April 1992 (incorporated by reference to Exhibit 10.2
to the Company's Report on Form 10-Q for the Quarter ended
March 31, 1992) . . . . . . . . . . . . . . . . . . . . . . . . . . . .
10.5 Restated Allergan, Inc. Employee Stock Ownership Plan ("ESOP")
(incorporated by reference to Exhibit 10.1 to the Company's Report
on Form 10-Q for the Quarter ended June 30, 1993) . . . . . . . . . . .
18
21
INDEX OF EXHIBITS
SEQUENTIALLY
EXHIBIT NUMBERED
NUMBER DESCRIPTION PAGE
- ------ ----------- ------------
10.6 Restated Allergan, Inc. Savings and Investment Plan
(incorporated by reference to Exhibit 10.2 to the
Company's Report on Form 10-Q for the Quarter
ended June 30, 1993) . . . . . . . . . . . . . . . . . . . . . . . . . .
10.7 Form of Allergan change in control severance agreement
(replaces the document filed as Exhibit 10.8 to
Registration Statement on Form S-1 No. 33-28855)
(incorporated by reference to Exhibit 10.13 to the
Company's Report on Form 10-K for the Fiscal Year
ended December 31, 1989) . . . . . . . . . . . . . . . . . . . . . . . .
10.8 Credit Agreement dated as of December 22, 1993 among
the Company, the Banks Listed Therein, Morgan Guaranty
Trust Company of New York, as Agent and Bank of America
National Trust and Savings Association, as Co-Agent in the original
aggregate principal amount of $150,000,000 (the "Credit Agreement")
(incorporated by reference to Exhibit 10.8 to the Company's Report on
Form 10-K for the fiscal year ended December 31, 1993) . . . . . . . . .
10.9 Amendment No. 1 to the Credit Agreement dated as of September 30, 1994
increasing the aggregate principal amount to $225,000,000 . . . . . . .
10.10 Restated Allergan, Inc. Pension Plan ("Pension Plan) (incorporated
by reference to Exhibit 10.3 to the Company's Report on
Form 10-Q for the Quarter ended June 30, 1993) . . . . . . . . . . . . .
10.11 Allergan, Inc. Supplemental Retirement Income Plan
(incorporated by reference to Exhibit 10.16 to the
Company's Report on Form 10-K for the Fiscal Year
ended December 31, 1989) . . . . . . . . . . . . . . . . . . . . . . . .
10.12 Allergan, Inc. Supplemental Executive Benefit Plan
(incorporated by reference to Exhibit 10.17 to the
Company's Report on Form 10-K for the Fiscal Year
ended December 31, 1989) . . . . . . . . . . . . . . . . . . . . . . . .
10.13 Allergan, Inc. Management Bonus Plan (incorporated by reference
to Exhibit 10.4 to the Company's Report on Form 10-Q for
the Quarter ended June 30, 1993) . . . . . . . . . . . . . . . . . . . .
10.14 Distribution Agreement dated March 4, 1994 between Allergan, Inc.
and Merrill Lynch & Co. and J.P. Morgan Securities Inc (incorporated by
reference to Exhibit 10.14 to the Company's Report on Form 10-K for the
fiscal year ended December 31, 1993) . . . . . . . . . . . . . . . . . .
10.15 Allergan, Inc. Executive Deferred Compensation Plan
dated as of January 1, 1995 . . . . . . . . . . . . . . . . . . . . . .
19
22
INDEX OF EXHIBITS
SEQUENTIALLY
EXHIBIT NUMBERED
NUMBER DESCRIPTION PAGE
- ------ ----------- ------------
11 Statement re Computation of Earnings Per Share . . . . . . . . . . . . .
13 The Company's Annual Report to Shareholders for the
fiscal year ended December 31, 1994 (with the exception
of the information incorporated by reference into
Items 5, 6, 7, 8 and 14 of this report, the Annual Report to
Shareholders is not deemed to be filed as part of this report) . . . . .
21 List of Subsidiaries of the Company . . . . . . . . . . . . . . . . . .
23 Consent of KPMG Peat Marwick to the incorporation
of their reports herein to Registration Statements
Nos. 33-29528, 33-29527, 33-44770, 33-48908 and 33-66874 . . . . . . . .
27 Financial Data Schedule . . . . . . . . . . . . . . . . . . . . . . . .
20
23
INDEPENDENT AUDITORS' REPORT
To the Stockholders and Board of Directors of Allergan, Inc.:
Under date of January 23, 1995, we reported on the consolidated balance sheets
of Allergan, Inc. and subsidiaries as of December 31, 1994 and 1993, and the
related consolidated statements of earnings and cash flows for each of the
years in the three-year period ended December 31, 1994, as contained in the
1994 Annual Report to Stockholders. These consolidated financial statements
and our report thereon are incorporated by reference in the Annual Report on
Form 10-K for the year 1994. In connection with our audit of the
aforementioned consolidated financial statements, we also audited the related
consolidated financial statement schedule in the Form 10-K. This financial
statement schedule is the responsibility of the Company's management. Our
responsibility is to express an opinion on this financial statement schedule
based on our audits.
In our opinion, this schedule, when considered in relation to the basic
consolidated financial statements taken as a whole, presents fairly, in all
material respects, the information set forth therein.
As discussed in note 6 to the consolidated financial statements, the Company
changed its method of accounting for income taxes in 1992 to adopt the
provisions of the Financial Accounting Standards Board's Statement of Financial
Accounting Standards No. 109, "Accounting for Income Taxes." As discussed in
note 8 to the consolidated financial statement, the Company also adopted the
provisions of the Financial Accounting Standards Board's Statement of Financial
Accounting Standards No. 106, "Employer's Accounting for Postretirement
Benefits Other Than Pensions," in 1992.
KPMG PEAT MARWICK LLP
Costa Mesa, California
January 23, 1995
21
24
SCHEDULE VIII
ALLERGAN, INC.
Allowance for Doubtful Accounts
Years Ended December 31, 1994, 1993 and 1992
(Dollars in millions)
Balance at Balance
Beginning at End
of Year Additions Deductions of Year
========== ========= ========== =======
1994 $5.8 $3.5(a) $2.1(b) $7.2
==== ==== ==== ====
1993 $0.4(c)
2.5(b)
-----
$7.0 $1.7(a) $2.9 $5.8
==== ==== ==== ====
1992 $0.5(c)
3.3(b)
-----
$10.4 $0.4(a) $3.8 $7.0
===== ==== ==== ====
_________________________
(a) Provision charged to earnings.
(b) Accounts written off.
(c) Allowance of business sold.
S-4