1
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
(MARK ONE):
[X] ANNUAL REPORT PURSUANT TO SECTION 15(d) OF THE SECURITIES EXCHANGE ACT OF
1934 [FEE REQUIRED]
FOR THE FISCAL YEAR ENDED DECEMBER 31, 1996
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 15(d) OF THE SECURITIES EXCHANGE ACT
OF 1934 [NO FEE REQUIRED]
FOR THE TRANSITION PERIOD FROM _________ TO__________
COMMISSION FILE NUMBERS 33-29528, 33-44770 AND 333-09091
ALLERGAN, INC.
SAVINGS AND INVESTMENT PLAN
(Full title of the plan)
ALLERGAN, INC.
PUERTO RICO SAVINGS AND INVESTMENT PLAN
(Full title of the plan)
ALLERGAN, INC.
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.)
2
4. ERISA Financial Statements and Schedules and Exhibits:
(a) Financial Statements and Schedules:
Independent Auditors' Report of KPMG Peat Marwick LLP on the
Statements of Net Assets Available for Plan Benefits, with
Fund Information as of December 31, 1996 and 1995 and the
related Statement of Changes in Net Assets Available for Plan
Benefits, with Fund Information for the Year Ended December
31, 1996 - Allergan, Inc. Savings and Investment Plan.
Statements of Net Assets Available for Plan Benefits, with
Fund Information as of December 31, 1996 and 1995 - Allergan,
Inc. Savings and Investment Plan.
Statement of Changes in Net Assets Available for Plan
Benefits, with Fund Information for the Year Ended December
31, 1996 - Allergan, Inc. Savings and Investment Plan.
Notes to Financial Statements - Allergan, Inc. Savings and
Investment Plan.
Item 27a - Schedule of Assets Held for Investment Purposes as
of December 31, 1996 - Allergan, Inc. Savings and Investment
Plan.
Item 27d - Schedule of Reportable Transactions for the Year
Ended December 31, 1996 - Allergan, Inc. Savings and
Investment Plan.
Independent Auditors' Report of KPMG Peat Marwick LLP on the
Statements of Net Assets Available for Plan Benefits, with
Fund Information as of December 31, 1996 and 1995 and the
related Statement of Changes in Net Assets Available for Plan
Benefits, with Fund Information for the Year Ended December
31, 1996 - Allergan, Inc. Puerto Rico Savings and Investment
Plan.
Statements of Net Assets Available for Plan Benefits, with
Fund Information as of December 31, 1996 and 1995 - Allergan,
Inc. Puerto Rico Savings and Investment Plan.
Statement of Changes in Net Assets Available for Plan
Benefits, with Fund Information for the Year Ended December
31, 1996 - Allergan, Inc. Puerto Rico Savings and Investment
Plan.
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3
Notes to Financial Statements - Allergan, Inc. Puerto Rico
Savings and Investment Plan.
Item 27a - Schedule of Assets Held for Investment Purposes as
of December 31, 1996 - Allergan, Inc. Puerto Rico Savings and
Investment Plan.
Item 27d - Schedule of Reportable Transactions for the Year
Ended December 31, 1996 - Allergan, Inc. Puerto Rico Savings
and Investment Plan.
(b) Exhibits
Exhibit 23 - Consent of KPMG Peat Marwick LLP
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
ALLERGAN, INC. PUERTO RICO
SAVINGS AND INVESTMENT PLAN
Date: June 25, 1997 BY: FRANCIS R. TUNNEY, JR.
------------------ -------------------------
Francis R. Tunney, Jr.
Allergan, Inc. Corporate Benefits
Committee (formerly known as
Management Plan Committee)
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4
ALLERGAN, INC.
SAVINGS AND INVESTMENT PLAN
FINANCIAL STATEMENTS
DECEMBER 31, 1996 AND 1995
5
ALLERGAN, INC.
SAVINGS AND INVESTMENT PLAN
Index to Financial Statements and Supplementary Schedules
Financial Statements Page
- -------------------- ----
Independent Auditors' Report ................................................ 1
Statement of Net Assets Available for Plan Benefits, with Fund Information --
December 31, 1996 ......................................................... 2
Statement of Net Assets Available for Plan Benefits, with Fund Information --
December 31, 1995 ......................................................... 4
Statement of Changes in Net Assets Available for Plan Benefits,
with Fund Information -- Year ended December 31, 1996 ..................... 6
Notes to Financial Statements ............................................... 8
Supplementary Schedules Schedule
- ----------------------- --------
Item 27a - Schedule of Assets Held for Investment Purposes --
December 31, 1996 ......................................................... 1
Item 27d - Schedule of Reportable Transactions --
Year ended December 31, 1996 .............................................. 2
Other schedules are omitted because they are not required or are not applicable
based on disclosure requirements of the Employee Retirement Income Security Act
of 1974 and regulations issued by the Department of Labor.
6
INDEPENDENT AUDITORS' REPORT
The Corporate Benefits Committee
Allergan, Inc.:
We have audited the financial statements of the Allergan, Inc. Savings and
Investment Plan (the "Plan") as of December 31, 1996 and 1995, and for the year
ended December 31, 1996, as listed in the accompanying index. 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 generally accepted auditing
standards. Those standards require that we plan and perform the audit 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 Plan as of
December 31, 1996 and 1995, and the changes in net assets available for plan
benefits for the year ended December 31, 1996 in conformity with generally
accepted accounting principles.
Our audits were performed for the purpose of forming an opinion on the basic
financial statements taken as a whole. The supplemental schedules of the
Allergan, Inc. Savings and Investment Plan as listed in the accompanying index
are presented for the purpose of additional analysis and are not a required part
of the basic financial statements but are 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. The Fund Information
in the statement of net assets available for plan benefits and the statement of
changes in net assets available for plan benefits is presented for purposes of
additional analysis rather than to present the net assets available for plan
benefits and changes in net assets available for plan benefits of each fund. The
supplemental schedules and Fund Information have been subjected to the auditing
procedures applied in the audits of the basic financial statements and, in our
opinion, are fairly stated in all material respects in relation to the basic
financial statements taken as a whole.
KPMG PEAT MARWICK LLP
Orange County, California
June 4, 1997
1
7
ALLERGAN, INC.
Savings and Investment Plan
Statement of Net Assets Available for Plan Benefits, with Fund Information
December 31, 1996
Allergan,
Inc. Interest Growth Global
Common Balanced Income and Income Equity
Stock Fund Fund Fund Fund Fund
----------- ---------- ---------- ---------- ---------
Investments, at fair value:
Common stock of Allergan, Inc.,
cost $19,897,106 $30,900,087 -- -- -- --
American Balanced Fund,
cost $21,658,482 -- 24,545,664 -- -- --
Common/collective trusts,
cost approximates market -- -- 21,517,937 -- --
Investment Company of
America Fund, cost
$ 21,391,689 -- -- -- 26,438,611 --
New Perspective Fund,
cost $3,761,427 -- -- -- -- 4,033,991
Twentieth Century Ultra Fund,
cost $5,288,094 -- -- -- -- --
Participant loans -- -- -- -- --
----------- ---------- ---------- ---------- ---------
Total Investments 30,900,087 24,545,664 21,517,937 26,438,611 4,033,991
Interest bearing cash and cash
equivalents 340,865 -- -- -- --
Receivables:
Due to Plan -- -- -- -- --
Accrued interest and dividends 580 -- -- -- --
Sales pending settlement -- -- 938 -- 461
----------- ---------- ---------- ---------- ---------
Total Receivables 580 -- 938 -- 461
----------- ---------- ---------- ---------- ---------
Total Assets 31,241,532 24,545,664 21,518,875 26,438,611 4,034,452
Aggressive
Growth Participant
Fund Loans Other Total
--------- --------- ------- -----------
Investments, at fair value:
Common stock of Allergan, Inc.,
cost $19,897,106 -- -- -- 30,900,087
American Balanced Fund,
cost $21,658,482 -- -- -- 24,545,664
Common/collective trusts,
cost approximates market -- -- -- 21,517,937
Investment Company of
America Fund, cost
$ 21,391,689 -- -- -- 26,438,611
New Perspective Fund,
cost $3,761,427 -- -- -- 4,033,991
Twentieth Century Ultra Fund,
cost $5,288,094 5,486,579 -- -- 5,486,579
Participant loans -- 2,632,075 -- 2,632,075
--------- --------- ------- -----------
Total Investments 5,486,579 2,632,075 -- 115,554,944
Interest bearing cash and cash
equivalents -- -- 305,051 645,916
Receivables:
Due to Plan -- --
Accrued interest and dividends -- -- 360 940
Sales pending settlement -- -- -- 1,399
--------- --------- ------- -----------
Total Receivables -- -- 360 2,339
--------- --------- ------- -----------
Total Assets 5,486,579 2,632,075 305,411 116,203,199
See accompanying notes to financial statements.
(continued)
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ALLERGAN, INC.
Savings and Investment Plan
Statement of Net Assets Available for Plan Benefits, with Fund Information
December 31, 1996
(continued)
Allergan,
Inc. Interest Growth Global
Common Balanced Income and Income Equity
Stock Fund Fund Fund Fund Fund
------------ ---------- ----------- ---------- ---------
Payables:
Purchases pending settlement (102,016) -- -- -- --
Short-term fund investment fees (12) -- -- -- --
------------ ---------- ---------- ---------- ---------
Total Payables (102,028) -- -- -- --
------------ ---------- ---------- ---------- ---------
Net assets available for Plan benefits $ 31,139,504 24,545,664 21,518,875 26,438,611 4,034,452
============ ========== ========== ========== =========
Aggressive
Growth Participant
Fund Loans Other Total
---------- --------- -------- ----------
Payables:
Purchases pending settlement (56) -- -- (102,072)
Short-term fund investment fees -- -- (8) (20)
--------- --------- -------- ----------
Total Payables (56) -- (8) (102,092)
--------- --------- -------- ----------
Net assets available for Plan benefits 5,486,523 2,632,075 305,403 116,101,107
========= ========= ======= ===========
See accompanying notes to financial statements.
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9
ALLERGAN, INC.
Savings and Investment Plan
Statement of Net Assets Available for Plan Benefits, with Fund Information
December 31, 1995
Allergan,
Inc. Interest Growth Global
Common Balanced Income and Income Equity
Stock Fund Fund Fund Fund Fund
----------- ---------- ---------- ---------- ---------
Investments, at fair value:
Common stock of Allergan, Inc.,
cost $15,423,150 $25,615,185 -- -- -- --
American Balanced Fund,
cost $20,349,044 -- 23,057,732 -- -- --
Common/collective trusts,
cost approximates market -- -- 21,843,305 -- --
Investment Company of
America Fund, cost
$18,400,798 -- -- -- 21,444,247 --
New Perspective Fund,
cost $2,080,885 -- -- -- -- 2,074,740
Twentieth Century Ultra Fund,
cost $3,175,654 -- -- -- -- --
Participant loans -- -- -- -- --
----------- ---------- ---------- ---------- ---------
Total Investments 25,615,185 23,057,732 21,843,305 21,444,247 2,074,740
Interest bearing cash and cash
equivalents 242,304 -- 80,228 124 --
Receivables:
Due to Plan -- -- -- -- --
Accrued interest and dividends 1,086 -- 83 27 --
Sales pending settlement -- -- 13,349 -- --
----------- ---------- ---------- ---------- ---------
Total Receivables 1,086 -- 13,432 27 --
----------- ---------- ---------- ---------- ---------
Total Assets 25,858,575 23,057,732 21,936,965 21,444,398 2,074,740
Aggressive
Growth Participant
Fund Loans Other Total
--------- --------- ------- ----------
Investments, at fair value:
Common stock of Allergan, Inc.,
cost $15,423,150 -- -- -- 25,615,185
American Balanced Fund,
cost $20,349,044 -- -- -- 23,057,732
Common/collective trusts,
cost approximates market -- -- -- 21,843,305
Investment Company of
America Fund, cost
$18,400,798 -- -- -- 21,444,247
New Perspective Fund,
cost $2,080,885 -- -- -- 2,074,740
Twentieth Century Ultra Fund,
cost $3,175,654 3,201,513 -- -- 3,201,513
Participant loans -- 1,902,928 -- 1,902,928
--------- --------- ------- ----------
Total Investments 3,201,513 1,902,928 -- 99,139,650
Interest bearing cash and cash
equivalents -- 36 55,730 378,422
Receivables:
Due to Plan -- -- 110,037 110,037
Accrued interest and dividends -- -- 31 1,227
Sales pending settlement -- -- -- 13,349
--------- --------- ------- ----------
Total Receivables -- -- 110,068 124,613
--------- --------- ------- ----------
Total Assets 3,201,513 1,902,964 165,798 99,642,685
See accompanying notes to financial statements.
(continued)
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ALLERGAN, INC.
Savings and Investment Plan
Statement of Net Assets Available for Plan Benefits, with Fund Information
December 31, 1995
(continued)
Allergan,
Inc. Interest Growth
Common Balanced Income and Income
Stock Fund Fund Fund Fund
------------ ----------- ----------- -----------
Payables:
Due from Plan (37,452) (12,389) (43,016) (17,180)
Contribution refunds (23,644) (17,490) (29,082) (21,685)
Purchases pending settlement -- (4,028) -- (138,658)
Short-term fund investment fees (23) -- (2) (1)
------------ ---------- ---------- ----------
Total Payables (61,119) (33,907) (72,100) (177,524)
------------ ---------- ---------- ----------
Net assets available for Plan benefits $ 25,797,456 23,023,825 21,864,865 21,266,874
============ ========== ========== ==========
Global Aggressive
Equity Growth Participant
Fund Fund Loans Other Total
---------- ---------- --------- -------- -----------
Payables:
Due from Plan -- -- -- -- (110,037)
Contribution refunds (987) (1,094) -- -- (93,982)
Purchases pending settlement (1,239) (1,354) -- -- (145,279)
Short-term fund investment fees -- -- -- -- (26)
--------- --------- --------- ------- ----------
Total Payables (2,226) (2,448) -- -- (349,324)
--------- --------- --------- ------- ----------
Net assets available for Plan benefits 2,072,514 3,199,065 1,902,964 165,798 99,293,361
========= ========= ========= ======= ==========
See accompanying notes to financial statements.
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11
ALLERGAN, INC.
Savings and Investment Plan
Statement of Changes in Net Assets Available for Plan Benefits, with
Fund Information
For the Year Ended December 31, 1996
Allergan,
Inc. Interest Growth Global
Common Balanced Income and Income Equity
Stock Fund Fund Fund Fund Fund
---------- --------- --------- --------- ---------
Additions to Plan assets attributed to:
Net appreciation
in fair value of investments $1,467,051 2,021,055 1,400,183 3,716,043 466,303
Interest 18,039 7 775 195 --
Dividends 501,042 910,476 -- 645,647 65,609
---------- --------- --------- --------- ---------
Total investment income 1,986,132 2,931,538 1,400,958 4,361,885 531,912
Contributions:
Employer - Company match 2,707,285 4,367 22,901 10,107 4,817
Employees:
Before tax 1,007,208 1,290,548 1,317,756 2,305,603 757,490
After tax 554,028 556,671 656,104 964,837 489,277
---------- --------- --------- --------- ---------
Total contributions 4,268,521 1,851,586 1,996,761 3,280,547 1,251,584
---------- --------- --------- --------- ---------
Total additions 6,254,653 4,783,124 3,397,719 7,642,432 1,783,496
---------- --------- --------- --------- ---------
Aggressive
Growth Participant
Fund Loans Other Total
--------- ------- ------ ----------
Additions to Plan assets attributed to:
Net appreciation
in fair value of investments 571,828 -- -- 9,642,463
Interest -- 207,591 13,401 240,008
Dividends -- -- -- 2,122,774
--------- ------- ------ ----------
Total investment income 571,828 207,591 13,401 12,005,245
Contributions:
Employer - Company match 5,907 -- -- 2,755,384
Employees:
Before tax 1,182,127 -- -- 7,860,732
After tax 807,465 -- -- 4,028,382
--------- ------- ------ ----------
Total contributions 1,995,499 -- -- 14,644,498
--------- ------- ------ ----------
Total additions 2,567,327 207,591 13,401 26,649,743
--------- ------- ------ ----------
See accompanying notes to financial statements.
(continued)
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12
ALLERGAN, INC.
Savings and Investment Plan
Statement of Changes in Net Assets Available for Plan Benefits, with
Fund Information
For the Year Ended December 31, 1996
(continued)
Allergan,
Inc. Interest Growth
Common Balanced Income and Income
Stock Fund Fund Fund Fund
------------ ----------- ----------- -----------
Deductions from Plan assets attributed to:
Withdrawals and distributions (1,979,182) (2,321,441) (2,556,043) (2,182,338)
Administrative expenses (404) (1,511) (57,856) (1,992)
------------ ---------- ----------- -----------
Total deductions (1,979,586) (2,322,952) (2,613,899) (2,184,330)
------------ ---------- ----------- -----------
Increase in net assets
available for Plan benefits 4,275,067 2,460,172 783,820 5,458,102
Net assets available for Plan
benefits, beginning of year 25,797,456 23,023,825 21,864,865 21,266,874
Net interfund transfers 1,066,981 (938,333) (1,129,810) (286,365)
------------ ---------- ---------- ----------
Net assets available for Plan
benefits, end of year $ 31,139,504 24,545,664 21,518,875 26,438,611
============ ========== ========== ==========
Global Aggressive
Equity Growth Participant
Fund Fund Loans Other Total
---------- ---------- --------- -------- ------------
Deductions from Plan assets attributed to:
Withdrawals and distributions (276,661) (460,890) -- -- (9,776,555)
Administrative expenses (1,171) (374) -- (2,134) (65,442)
--------- --------- --------- ------- -----------
Total deductions (277,832) (461,264) -- (2,134) (9,841,997)
--------- --------- --------- ------- -----------
Increase in net assets
available for Plan benefits 1,505,664 2,106,063 207,591 11,267 16,807,746
Net assets available for Plan
benefits, beginning of year 2,072,514 3,199,065 1,902,964 165,798 99,293,361
Net interfund transfers 456,274 181,395 521,520 128,338 --
--------- --------- --------- ------- -----------
Net assets available for Plan
benefits, end of year 4,034,452 5,486,523 2,632,075 305,403 116,101,107
========= ========= ========= ======= ===========
See accompanying notes to financial statements.
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ALLERGAN, INC.
Savings and Investment Plan
Notes to Financial Statements
December 31, 1996 and 1995
(1) Description of the Plan
The following description of the Allergan, Inc. Savings and Investment
Plan ("the Plan") provides only general information. Participants should
refer to the Plan agreement for a more complete description of the Plan's
provisions.
General
The Plan is a defined contribution plan sponsored by Allergan, Inc.
(the "Company"). The Plan was established on July 27, 1989. The Plan
is subject to the provisions of the Employee Retirement Income
Security Act of 1974 (ERISA). The Plan is qualified under Section
401(a) and (b) of the Internal Revenue Code of 1986.
Under terms of the Plan, eligible employees may voluntarily elect to
contribute:
(1) "After-tax" dollars up to 15% of their defined compensation
under provision 401(a) of the Internal Revenue Code or,
(2) "Before-tax" dollars up to the lesser of 10% of their defined
compensation or $9,500 and $9,240 for the years ended December
31, 1996 and 1995, respectively, under provision 401(k) of the
Internal Revenue Code or,
(3) Any combination of the above two elections; however, the total
contribution cannot exceed the lesser of 15% of their defined
compensation or $30,000.
Contributions
Effective March 1, 1995, the Company contributes an amount equal to
75% of each employee's contribution on the first 2% of defined
compensation, 50% of each employee's contribution on the next 1% of
defined compensation and 25% of each employee's contribution on the
next 2% of defined compensation. Prior to March 1, 1995, the Company
contributed an amount equal to 50% of each employee's contribution
not exceeding 5% of defined compensation.
Certain limitations imposed by the Internal Revenue Code may have
the effect of reducing the level of contributions initially selected
by participants who come within the classification of "highly
compensated employees" as defined in the Code.
Participant contributions are invested in the Allergan, Inc. Common
Stock Fund, the Balanced Fund, the Interest Income Fund, the Growth
and Income Fund, the Global Equity Fund or the Aggressive Growth
Fund, or any combination of the six funds at the employee's
discretion. Company contributions consist of Allergan, Inc. Common
Stock which are invested in the Allergan, Inc. Common Stock Fund
except, after participants reach age 55, they may elect to have
Company contributions, both past and current, invested in any of the
funds.
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.
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14
ALLERGAN, INC.
Savings and Investment Plan
Notes to Financial Statements
December 31, 1996 and 1995
A description of each investment fund follows:
Allergan, Inc. Common Stock Fund - The Allergan, Inc. Common Stock
Fund is invested in Allergan, Inc. common stock.
Balanced Fund - The Balanced Fund is invested primarily in U.S.
stocks, bonds and U.S. government securities. The stock portfolio
consists of large, intermediate and small companies. The bond
portfolio consists of U.S. Treasury, U.S. Agency and corporate
issues. The Fund is managed by the American Funds under the name
"American Balanced Fund."
Interest Income Fund - The Interest Income Fund is invested in a
portfolio of group annuity contracts and short term money market
funds issued by major insurance companies and banks.
Growth and Income Fund - The Growth and Income Fund is invested in a
portfolio of U.S. common stocks to meet the objective of long-term
growth of capital and income. The Fund is managed by American Funds
under the name "Investment Company of America Fund."
Global Equity Fund - The Global Equity Fund is invested in a
portfolio of U.S. and foreign company common stocks to meet the
objective of long-term growth of capital and income. The Fund is
managed by American Funds under the name "New Perspective Fund."
Aggressive Growth Fund - The Aggressive Growth Fund is invested
primarily in U.S. common stocks of small and intermediate companies.
The Fund is managed by American Century Investments (formerly
Twentieth Century) under the name "Twentieth Century Ultra Fund."
The number of employees participating in these funds at December 31,
1996 and 1995 was as follows:
1996 1995
---- ----
(Unaudited) (Unaudited)
Allergan, Inc. Common Stock Fund 2,525 2,496
Balanced Fund 1,736 1,732
Interest Income Fund 1,476 1,580
Growth and Income Fund 1,880 1,809
Global Equity Fund 847 609
Aggressive Growth Fund 1,040 742
Participant Accounts
Each participant's account is charged for the participant's
withdrawals and credited for the participant's contributions,
employer contributions and an allocation of fund earnings. The
earnings 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.
9
15
ALLERGAN, INC.
Savings and Investment Plan
Notes to Financial Statements
December 31, 1996 and 1995
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. Loan transactions are treated as a transfer
to (from) the investment fund from (to) the participant loans fund.
Loan terms range from 1-5 years or up to 15 years for the purchase
of a primary residence. 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
Employee contributions are fully vested at all times. Participants
forfeit their share of employer contributions if they withdraw their
employee contributions after having completed less than three years
of service with the Company. Forfeitures are used by the Company to
offset future contribution requirements. Forfeitures available for
offset of future contribution requirements totaled $112,302 at
December 31, 1996.
Withdrawals
Participants may withdraw employee "after-tax" contributions during
employment. However, except for financial hardship or emergency (as
defined in the Plan), even participants who are fully vested are not
eligible to withdraw any portion of employer contributions credited
to them within the prior two-year period, although such
contributions may be withdrawn at a later date. Withdrawals of
employee "after-tax" contributions and employer contributions during
employment may cause the employee to become ineligible to receive
Company matching contributions in the Plan for a period of six
months following the withdrawal.
Prior to age 59 1/2, employee "before-tax" contributions may only be
withdrawn in the event of financial hardship, and after the
withdrawal of the value of employee "after-tax" contributions and
employer contributions. Hardship withdrawals cause the employee to
become ineligible to contribute to the Plan for a period of twelve
months following the withdrawal.
Participants become entitled to payment of the total value of their
accounts at the time of termination (if fully vested), attainment of
age 62, permanent and total disability, or death. After death,
payment is in the form of a lump sum; otherwise, 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 may elect annuity payments. If an
extended payment option is selected and the participant's account
value is $3,500 or more, participants may postpone their withdrawal
until as late as attaining age 70 1/2.
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 nonforfeitable without
regard to the years of service of such participants.
(2) Summary of Significant Accounting Policies
Basis of Presentation
The accompanying financial statements have been prepared on an
accrual basis of accounting. The net assets of the Plan are
allocated entirely to individual participant accounts. The
preparation of financial statements requires the use of Plan
Administrator estimates.
10
16
ALLERGAN, INC.
Savings and Investment Plan
Notes to Financial Statements
December 31, 1996 and 1995
Investments
Investments are stated at fair value. The fair value of Allergan,
Inc. common stock is based upon quotations obtained from the New
York Stock Exchange. The fair values of the American Balanced Fund,
Investment Company of America Fund, Ultra Investors Fund, Interest
Income Fund and New Perspective Fund are based upon the net asset
value reported by the funds. Participant loans are valued at cost
which approximates fair value.
Investments in group contracts with banks are stated at cost
(contract value), which approximates market. Contract value
represents contributions, net of distributions made under the Plan,
plus interest at the contract rate.
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 statement of changes in net assets
available for plan benefits the net appreciation (depreciation) in
the fair value of its investments which consists 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 Mellon Bank's EB Temporary Investment Fund which
consists of highly liquid short-term investments.
Administrative Expenses
Certain administrative expenses of the Plan are paid by the Company.
11
17
ALLERGAN, INC.
Savings and Investment Plan
Notes to Financial Statements
December 31, 1996 and 1995
(3) Investments
The following tables present the fair values of investments.
1996
----
No. Shares,
Units or
Principal Fair
Amounts Cost Value
---------- ----------- -----------
Common Stock:
Allergan, Inc. 867,371 $19,897,106 $30,900,087
========== =========== ===========
Common/Collective Trusts:
LaSalle National Trust
annual effective returns varying
from 6.29% to 6.49% in 1996 21,517,937 $21,517,937 $21,517,937
========== =========== ===========
Mutual Funds:
American Balanced Fund 1,686,987 21,658,482 24,545,664
Investment Company of America Fund 1,091,152 21,391,689 26,438,611
New Perspective Fund 222,014 3,761,427 4,033,991
Twentieth Century Ultra Fund 195,321 5,288,094 5,486,579
---------- ----------- -----------
Total Mutual Funds 3,195,474 $52,099,692 $60,504,845
========== =========== ===========
12
18
ALLERGAN, INC.
Savings and Investment Plan
Notes to Financial Statements
December 31, 1996 and 1995
1995
----
No. Shares,
Units or
Principal Fair
Amounts Cost Value
---------- ----------- -----------
Common Stock:
Allergan, Inc. 788,160 $15,423,150 $25,615,185
========== =========== ===========
Common/Collective Trusts:
LaSalle National Trust
annual effective returns varying
from 6.30% to 6.46% in 1995 13,097,616 13,097,616 13,097,616
J.P. Morgan
Contract #428, annual
effective returns varying
from 5.79%, 6.38% and 6.67%
in 1995, latest maturity 12/23/96 5,332,668 5,332,668 5,332,668
J.P. Morgan
Maaagic Fund #2045
effective return 6.04%
in 1995, maturity 2/15/98 3,413,021 3,413,021 3,413,021
---------- ----------- -----------
Total Common/Collective Trusts 21,843,305 $21,843,305 $21,843,305
========== =========== ===========
Mutual Funds:
American Balanced Fund 1,629,522 20,349,044 23,057,732
Investment Company of America Fund 992,330 18,400,798 21,444,247
New Perspective Fund 126,663 2,080,885 2,074,740
Twentieth Century Ultra Fund 122,616 3,175,654 3,201,513
---------- ----------- -----------
Total Mutual Funds 2,871,131 $44,006,381 $49,778,232
========== =========== ===========
13
19
ALLERGAN, INC.
Savings and Investment Plan
Notes to Financial Statements
December 31, 1996 and 1995
(4) Federal Income Taxes
The Plan obtained its latest determination letter on February 12, 1996, in
which the Internal Revenue Service stated that the Plan, as then designed,
was in compliance with the applicable requirements of the Internal Revenue
Code. 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 Internal Revenue Code.
Employer contributions and dividends, interest, capital gains, or other
distributions with respect to assets held by the trustee are not taxable
to the employee until withdrawn from the Plan.
(5) Outstanding Commitments to Participants
At December 31, 1996, the Plan had not been requested to pay withdrawals
and distributions to terminated and withdrawing participants. At December
31, 1995 the Plan had a commitment to pay withdrawals and distributions
totaling $10,794. These amounts were paid subsequent to December 31, 1995.
14
20
Schedule 1
ALLERGAN, INC.
Savings and Investment Plan
Item 27a - Schedule of Assets Held for Investment Purposes
December 31, 1996
No. Shares,
Units or
Principal Fair
Amounts Cost Value
---------- ----------- -----------
Common Stock:
* Allergan, Inc. 867,371 $19,897,106 $30,900,087
========== =========== ===========
Common/Collective Trusts:
LaSalle National Trust
annual effective returns varying
from 6.29% to 6.49% in 1996 21,517,937 $21,517,937 $21,517,937
========== =========== ===========
Mutual Funds:
American Balanced Fund 1,686,987 21,658,482 24,545,664
Investment Company of America Fund 1,091,152 21,391,689 26,438,611
New Perspective Fund 222,014 3,761,427 4,033,991
Twentieth Century Ultra Fund 195,321 5,288,094 5,486,579
---------- ----------- -----------
Total Mutual Funds 3,195,474 $52,099,692 $60,504,845
========== =========== ===========
Participant Loans
interest rates varying from 9.25%
to 10.0% in 1996, latest
maturity 12/1/11 2,632,075 $ 2,632,075 $ 2,632,075
========== =========== ===========
Temporary Investments and Deposits:
* Mellon Bank
EB Temporary Investment Fund,
annual effective rate 5.4% 645,916 $ 645,916 $ 645,916
========== =========== ===========
*Party in interest
See accompanying independent auditors' report.
15
21
Schedule 2
ALLERGAN, INC.
Savings and Investment Plan
Item 27d - Schedule of Reportable Transactions
Year Ended December 31, 1996
Current Value
Cost of Asset on
Identity of Description Purchase Sales of Transaction Net Gain
Party Involved of Asset Price Price Asset Date or (Loss)
- -------------- -------- ----- ----- ----- -------- ---------
Not Applicable LaSalle National Trust
Income Plus Fund $12,297,205 - $12,297,205 $12,297,205 $ -0-
Not Applicable LaSalle National Trust
Income Plus Fund - $5,563,205 5,563,205 5,563,205 -0-
Various JP Morgan Interest
Income Fund - 3,255,586 3,248,879 3,255,586 6,707
Mellon Bank N.A. EB Temporary
Investment Fund 6,453,136 - 6,453,136 6,453,136 -0-
Mellon Bank N.A. EB Temporary
Investment Fund - 6,181,488 6,181,488 6,181,488 -0-
Various Twentieth Century
Ultra Fund 3,277,862 - 3,277,862 3,277,862 -0-
Various Twentieth Century
Ultra Fund - 1,564,730 1,479,392 1,564,730 85,338
Various American Balanced Fund 3,122,328 - 3,122,328 3,122,328 -0-
22
Schedule 2
ALLERGAN, INC.
Savings and Investment Plan
Item 27d - Schedule of Reportable Transactions (continued)
Year Ended December 31, 1996
Current Value
Cost of Asset on
Identity of Description Purchase Sales of Transaction Net Gain
Party Involved of Asset Price Price Asset Date or (Loss)
- -------------- -------- ----- ----- ----- --------- ---------
Various American Balanced Fund - $3,728,750 3,258,161 3,728,750 470,589
Various New Perspective Fund $2,118,009 - 2,118,009 2,118,009 -0-
Various New Perspective Fund - 621,834 577,395 621,834 44,439
Various Investment Company
of America Fund 4,625,545 - 4,625,545 4,625,545 -0-
Various Investment Company
of America Fund - 3,428,265 2,799,208 3,428,265 629,057
Various Allergan, Inc.
Common Stock 2,832,237 - 2,832,237 2,832,237 -
Various Allergan, Inc.
Common Stock - 1,359,238 782,417 1,359,738 576,821
See accompanying independent auditors' report.
23
ALLERGAN, INC.
PUERTO RICO
SAVINGS AND INVESTMENT PLAN
FINANCIAL STATEMENTS
DECEMBER 31, 1996 AND 1995
24
ALLERGAN, INC.
PUERTO RICO
SAVINGS AND INVESTMENT PLAN
Index to Financial Statements and Supplementary Schedules
Financial Statements Page
- -------------------- ----
Independent Auditors' Report ................................................ 1
Statement of Net Assets Available for Plan Benefits, with Fund Information --
December 31, 1996 ......................................................... 2
Statement of Net Assets Available for Plan Benefits, with Fund Information --
December 31, 1995 ......................................................... 4
Statement of Changes in Net Assets Available for Plan Benefits,
with Fund Information -- Year ended December 31, 1996 ..................... 6
Notes to Financial Statements ............................................... 8
Supplementary Schedules Schedule
- ----------------------- --------
Item 27a - Schedule of Assets Held for Investment Purposes --
December 31, 1996 ......................................................... 1
Item 27d - Schedule of Reportable Transactions --
Year ended December 31, 1996 .............................................. 2
Other schedules are omitted because they are not required or are not applicable
based on disclosure requirements of the Employee Retirement Income Security Act
of 1974 and regulations issued by the Department of Labor.
25
INDEPENDENT AUDITORS' REPORT
The Corporate Benefits Committee
Allergan, Inc.:
We have audited the financial statements of the Allergan, Inc. Puerto Rico
Savings and Investment Plan (the "Plan") as of December 31, 1996 and 1995, and
for the year ended December 31, 1996, as listed in the accompanying index. 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 generally accepted auditing
standards. Those standards require that we plan and perform the audit 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 Plan as of
December 31, 1996 and 1995, and the changes in net assets available for plan
benefits for the year ended December 31, 1996 in conformity with generally
accepted accounting principles.
Our audits were performed for the purpose of forming an opinion on the basic
financial statements taken as a whole. The supplemental schedules of the
Allergan, Inc. Puerto Rico Savings and Investment Plan as listed in the
accompanying index are presented for the purpose of additional analysis and are
not a required part of the basic financial statements but are 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. The Fund Information in the statement of net assets available for plan
benefits and the statement of changes in net assets available for plan benefits
is presented for purposes of additional analysis rather than to present the net
assets available for plan benefits and changes in net assets available for plan
benefits of each fund. The supplemental schedules and Fund Information have been
subjected to the auditing procedures applied in the audits of the basic
financial statements and, in our opinion, are fairly stated in all material
respects in relation to the basic financial statements taken as a whole.
KPMG PEAT MARWICK LLP
Orange County, California
June 4, 1997
1
26
ALLERGAN, INC.
Puerto Rico Savings and Investment Plan
Statement of Net Assets Available for Plan Benefits, with Fund Information
December 31, 1996
Allergan,
Inc. Interest Growth Global Aggressive
Common Balanced Income and Income Equity Growth
Stock Fund Fund Fund Fund Fund Fund
---------- ---------- ---------- ---------- ---------- ----------
Investments, at fair value:
Common stock of Allergan, Inc.,
cost $883,107 $1,371,460
American Balanced Fund,
cost $478,178 541,921
Common/collective trusts,
cost approximates market 647,693
Investment Company of
America Fund, cost
$656,182 810,995
New Perspective Fund,
cost $35,622 38,204
Twentieth Century Ultra Fund,
cost $61,539 63,849
Participant loans
---------- ------- ------- ------- ------ ------
Total Investments 1,371,460 541,921 647,693 810,995 38,204 63,849
Interest bearing cash and cash
equivalents 15,129
Receivables:
Accrued interest and dividends 26
Sales pending settlement 28 14
---------- ------- ------- ------- ------ ------
Total Receivables 15,155 -- 28 -- 14 --
---------- ------- ------- ------- ------ ------
Total Assets 1,386,615 541,921 647,721 810,995 38,218 63,849
Participant
Loans Other Total
---------- ---------- ----------
Investments, at fair value:
Common stock of Allergan, Inc.,
cost $883,107 1,371,460
American Balanced Fund,
cost $478,178 541,921
Common/collective trusts,
cost approximates market 647,693
Investment Company of
America Fund, cost
$656,182 810,995
New Perspective Fund,
cost $35,622 38,204
Twentieth Century Ultra Fund,
cost $61,539 63,849
Participant loans 375,042 375,042
------- ----- ---------
Total Investments 375,042 -- 3,849,164
Interest bearing cash and cash
equivalents 8,981 24,110
Receivables:
Accrued interest and dividends 11 37
Sales pending settlement 42
------- ----- ---------
Total Receivables -- 8,992 24,189
------- ----- ---------
Total Assets 375,042 8,992 3,873,353
See accompanying notes to financial statements.
(continued)
2
27
ALLERGAN, INC.
Puerto Rico Savings and Investment Plan
Statement of Net Assets Available for Plan Benefits, with Fund Information
December 31, 1996
(continued)
Allergan,
Inc. Interest Growth Global Aggressive
Common Balanced Income and Income Equity Growth
Stock Fund Fund Fund Fund Fund Fund
---------- ---------- ---------- ---------- ---------- ----------
Payables:
Purchases pending settlement (4,528) (2)
Short-term fund investment fees (1)
---------- ------- ------- ------- ------ ------
Total Payables (4,529) -- -- -- -- (2)
---------- ------- ------- ------- ------ ------
Net assets available for Plan benefits $1,382,086 541,921 647,721 810,995 38,218 63,847
========== ======= ======= ======= ====== ======
Participant
Loans Other Total
---------- ---------- ----------
Payables:
Purchases pending settlement (4,530)
Short-term fund investment fees (1)
------- ----- ---------
Total Payables -- -- (4,531)
------- ----- ---------
Net assets available for Plan benefits 375,042 8,992 3,868,822
======= ===== =========
See accompanying notes to financial statements.
3
28
ALLERGAN, INC.
Puerto Rico Savings and Investment Plan
Statement of Net Assets Available for Plan Benefits, with Fund Information
December 31, 1995
Allergan,
Inc. Interest Growth Global Aggressive
Common Balanced Income and Income Equity Growth
Stock Fund Fund Fund Fund Fund Fund
---------- ---------- ---------- ---------- ---------- ----------
Investments, at fair value:
Common stock of Allergan, Inc.,
cost $721,248 $1,197,867
American Balanced Fund,
cost $361,379 409,483
Common/collective trusts,
cost approximates market 735,390
Investment Company of
America Fund, cost
$514,545 599,649
New Perspective Fund,
cost $11,890 11,855
Twentieth Century Ultra Fund,
cost $13,191 13,299
Participant loans
---------- ------- ------- ------- ------ ------
Total Investments 1,197,867 409,483 735,390 599,649 11,855 13,299
Interest bearing cash and cash
equivalents 11,331 -- 2,701 3 -- --
Receivables:
Accrued interest and dividends 50 -- 3 1 -- --
Sales pending settlement -- -- 449 -- -- --
---------- ------- ------- ------- ------ ------
Total Receivables 50 -- 452 1 -- --
---------- ------- ------- ------- ------ ------
Total Assets 1,209,248 409,483 738,543 599,653 11,855 13,299
Participant
Loans Other Total
---------- ---------- ----------
Investments, at fair value:
Common stock of Allergan, Inc.,
cost $721,248 1,197,867
American Balanced Fund,
cost $361,379 409,483
Common/collective trusts,
cost approximates market 735,390
Investment Company of
America Fund, cost
$514,545 599,649
New Perspective Fund,
cost $11,890 11,855
Twentieth Century Ultra Fund,
cost $13,191 13,299
Participant loans 242,719 242,719
------- ----- ---------
Total Investments 242,719 -- 3,210,262
Interest bearing cash and cash
equivalents 5 1,694 15,734
Receivables:
Accrued interest and dividends -- -- 54
Sales pending settlement -- -- 449
------- ----- ---------
Total Receivables -- -- 503
------- ----- ---------
Total Assets 242,724 1,694 3,226,499
See accompanying notes to financial statements.
(continued)
4
29
ALLERGAN, INC.
Puerto Rico Savings and Investment Plan
Statement of Net Assets Available for Plan Benefits, with Fund Information
December 31, 1995
(continued)
Allergan,
Inc. Interest Growth Global Aggressive
Common Balanced Income and Income Equity Growth
Stock Fund Fund Fund Fund Fund Fund
---------- ---------- ---------- ---------- ---------- ----------
Payables:
Purchases pending settlement -- (71) -- (3,877) (35) (38)
Short-term fund investment fees (1) -- -- -- -- --
---------- ------- ------- ------- ------ ------
Total Payables (1) (71) -- (3,877) (35) (38)
---------- ------- ------- ------- ------ ------
Net assets available for Plan benefits $1,209,247 409,412 738,543 595,776 11,820 13,261
========== ======= ======= ======= ====== ======
Participant
Loans Other Total
---------- ---------- ----------
Payables:
Purchases pending settlement -- -- (4,021)
Short-term fund investment fees -- -- (1)
------- ----- ---------
Total Payables -- -- (4,022)
------- ----- ---------
Net assets available for Plan benefits 242,724 1,694 3,222,477
======= ===== =========
See accompanying notes to financial statements.
5
30
ALLERGAN, INC.
Puerto Rico Savings and Investment Plan
Statement of Changes in Net Assets Available for Plan Benefits,
with Fund Information
For the Year Ended December 31, 1996
Allergan,
Inc. Interest Growth Global Aggressive
Common Balanced Income and Income Equity Growth
Stock Fund Fund Fund Fund Fund Fund
---------- ---------- ---------- ---------- ---------- ----------
Additions to Plan assets attributed to:
Net appreciation in fair value
of investments $ 64,957 39,354 40,335 104,688 2,579 4,960
Interest 799 -- 22 5 -- --
Dividends 22,239 17,729 -- 18,189 363 --
--------- ------- ------- ------- ------ ------
Total investment income 87,995 57,083 40,357 122,882 2,942 4,960
Contributions:
Employer - Company match 247,976 -- -- -- -- --
Employees:
Before tax 85,782 133,328 117,319 189,493 11,731 32,690
After tax 3,657 5,116 7,452 7,461 290 1,343
--------- ------- ------- ------- ------ ------
Total contributions 337,415 138,444 124,771 196,954 12,021 34,033
--------- ------- ------- ------- ------ ------
Total additions 425,410 195,527 165,128 319,836 14,963 38,993
--------- ------- ------- ------- ------- ------
Participant
Loans Other Total
---------- ---------- ----------
Additions to Plan assets attributed to:
Net appreciation in fair value
of investments -- -- 256,873
Interest 29,575 395 30,796
Dividends -- -- 58,520
------ --- ---------
Total investment income 29,575 395 346,189
Contributions:
Employer - Company match -- -- 247,976
Employees:
Before tax -- -- 570,343
After tax -- -- 25,319
------ --- ---------
Total contributions -- -- 843,638
------ --- ---------
Total additions 29,575 395 1,189,827
------ --- ---------
See accompanying notes to financial statements.
(continued)
6
31
ALLERGAN, INC.
Puerto Rico Savings and Investment Plan
Statement of Changes in Net Assets Available for Plan Benefits,
with Fund Information
For the Year Ended December 31, 1996
(continued)
Allergan,
Inc. Interest Growth Global Aggressive
Common Balanced Income and Income Equity Growth
Stock Fund Fund Fund Fund Fund Fund
---------- ---------- ---------- ---------- ---------- ----------
Deductions from Plan assets attributed to:
Withdrawals and distributions (232,436) (28,714) (202,587) (72,735) (1,414) (3,753)
Administrative expenses (18) (29) (1,667) (56) (7) (3)
---------- ---------- ---------- ---------- ---------- ----------
Total deductions (232,454) (28,743) (204,254) (72,791) (1,421) (3,756)
---------- ------- -------- ------- ------ ------
Increase (decrease) in net assets
available for Plan benefits 192,956 166,784 (39,126) 247,045 13,542 35,237
Net assets available for Plan
benefits, beginning of year 1,209,247 409,412 738,543 595,776 11,820 13,261
Net interfund transfers (20,117) (34,275) (51,696) (31,826) 12,856 15,349
---------- ------- -------- ------- ------ ------
Net assets available for Plan
benefits, end of year $1,382,086 541,921 647,721 810,995 38,218 63,847
========== ======= ======== ======= ====== ======
Participant
Loans Other Total
---------- ---------- ----------
Deductions from Plan assets attributed to:
Withdrawals and distributions
Administrative expenses -- -- (541,639)
-- (63) (1,843)
------- ----- ---------
Total deductions
-- (63) (543,482)
------- ----- ---------
Increase (decrease) in net assets
available for Plan benefits
29,575 332 646,345
Net assets available for Plan
benefits, beginning of year
242,724 1,694 3,222,477
Net interfund transfers
102,743 6,966 --
------- ----- ---------
Net assets available for Plan
benefits, end of year
375,042 8,992 3,868,822
======= ===== =========
See accompanying notes to financial statements.
7
32
ALLERGAN, INC.
Puerto Rico Savings and Investment Plan
Notes to Financial Statements
December 31, 1996 and 1995
(1) Description of the Plan
The following description of the Allergan, Inc. Puerto Rico Savings and
Investment Plan (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 is a defined contribution plan sponsored by Allergan,
Inc. (the "Company"). The Plan was established on July 27,
1989. The Plan is subject to the provisions of the Employee
Retirement Income Security Act of 1974 (ERISA). The Plan is
qualified under Section 165(a) and (e) of the Puerto Rico
Income Tax Act of 1954 and Section 401(a) and (b) of the
Internal Revenue Code of 1986.
Under terms of the Plan, eligible employees may voluntarily
elect to contribute:
(1) "After-tax" dollars up to 15% of their defined
compensation under provision 401(a) of the Internal
Revenue Code or,
(2) "Before-tax" dollars up to the lesser of 10% of their
defined compensation or $7,500 and $7,000 for the
years ended December 31, 1996 and 1995, respectively,
under provision 165(e) of the Puerto Rico Income Tax
Act or,
(3) Any combination of the above two elections; however,
the total contribution cannot exceed the lesser of
15% of their defined compensation or $30,000.
Contributions
Effective March 1, 1995, the Company contributes an amount
equal to 75% of each employee's contribution on the first 2%
of defined compensation, 50% of each employee's contribution
on the next 2% of defined compensation and 25% of each
employee's contribution on the next 2% of defined
compensation. Prior to March 1, 1995, the Company contributed
an amount equal to 50% of each employee's contribution not
exceeding 6% of defined compensation.
Certain limitations imposed by the Internal Revenue Code and
the Puerto Rico Income Tax Act of 1954 may have the effect of
reducing the level of contributions initially selected by
participants who come within the classification of "highly
compensated employees" as defined in the Code.
Participant contributions are invested in the Allergan, Inc.
Common Stock Fund, the Balanced Fund, the Interest Income
Fund, the Growth and Income Fund, the Global Equity Fund or
the Aggressive Growth Fund, or any combination of the six
funds at the employee's discretion. Company contributions
consist of Allergan, Inc. Common Stock and are invested in the
Allergan, Inc. Common Stock Fund except, after participants
reach age 55, they may elect to have Company contributions,
both past and current, invested in any of the funds.
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.
(continued)
8
33
ALLERGAN, INC.
Puerto Rico Savings and Investment Plan
Notes to Financial Statements
December 31, 1996 and 1995
A description of each investment fund follows:
Allergan, Inc. Common Stock Fund - The Allergan, Inc. Common
Stock Fund is invested in Allergan, Inc. common stock.
Balanced Fund - The Balanced Fund is invested primarily in
U.S. stocks, bonds and U.S. government securities. The stock
portfolio consists of large, intermediate and small companies.
The bond portfolio consists of U.S. Treasury, U.S. Agency and
corporate issues. The Fund is managed by American Funds under
the name "American Balanced Fund."
Interest Income Fund - The Interest Income Fund is invested in
a portfolio of group annuity contracts and short term money
market funds issued by major insurance companies and banks.
Growth and Income Fund - The Growth and Income Fund is
invested in a portfolio of U.S. common stocks to meet the
objective of long-term growth of capital and income. The Fund
is managed by American Funds under the name "Investment
Company of America Fund."
Global Equity Fund - The Global Equity Fund is invested in a
portfolio of U.S. and foreign company common stocks to meet
the objective of long-term growth of capital and income. The
Fund is managed by American Funds under the name "New
Perspective Fund."
Aggressive Growth Fund - The Aggressive Growth Fund is
invested primarily in U.S. common stocks of small and
intermediate companies. The Fund is managed by American
Century Investments (formerly Twentieth Century) under the
name "Twentieth Century Ultra Fund."
The number of employees participating in these funds at
December 31, 1996 and 1995 was as follows:
1996 1995
---- ----
(unaudited) (unaudited)
Allergan, Inc. Common Stock Fund 388 427
Balanced Fund 250 268
Interest Income Fund 217 253
Growth and Income Fund 263 281
Global Equity Fund 50 40
Aggressive Growth Fund 72 60
Participant Accounts
Each participant's account is charged for the participant's
withdrawals and credited for the participant's contributions,
employer contributions and an allocation of fund earnings. The
earnings 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.
(continued)
9
34
ALLERGAN, INC.
Puerto Rico Savings and Investment Plan
Notes to Financial Statements
December 31, 1996 and 1995
Participant Loans Receivable
Participants may borrow from their fund accounts a minimum of
$500 up to a maximum equal to the lesser of $50,000 or 50% of
their vested account balance. Loan transactions are treated as
a transfer to (from) the investment fund from (to) the
participant loans fund. Loan terms range from 1-5 years or up
to 15 years for the purchase of a primary residence. 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 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
Employee contributions are fully vested at all times.
Participants forfeit their share of employer contributions if
they withdraw their employee contributions after having
completed less than three years of service with the Company.
Forfeitures are used by the Company to offset future
contribution requirements. Forfeitures available for offset of
future contribution requirements totaled $1,308 at December
31, 1996.
Withdrawals
Participants may withdraw employee "after-tax" contributions
during employment. However, except for financial hardship or
emergency (as defined in the Plan), even participants who are
fully vested are not eligible to withdraw any portion of
employer contributions credited to them within the prior
two-year period, although such contributions may be withdrawn
at a later date. Withdrawals of employee "after-tax"
contributions and employer contributions during employment may
cause the employee to become ineligible to receive Company
matching contributions in the Plan for a period of six months
following the withdrawal.
Prior to age 59 1/2, employee "before tax" contributions may
only be withdrawn in the event of financial hardship, and
after the withdrawal of the value of employee "after tax"
contributions and employer contributions. Hardship withdrawals
cause the employee to become ineligible to contribute to the
Plan for a period of twelve months following the withdrawal.
Participants become entitled to payment of the total value of
their accounts at the time of termination (if fully vested),
attainment of age 62, permanent and total disability, or
death. After death, payment is in the form of a lump sum;
otherwise, 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 may elect annuity payments. If an extended payment
option is selected, participants may postpone their withdrawal
until as late as attaining age 70 1/2 and, in the interim, all
fund values are transferred to the Interest Income Fund at the
time of termination.
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
nonforfeitable without regard to the years of service of such
participants.
(continued)
10
35
ALLERGAN, INC.
Puerto Rico Savings and Investment Plan
Notes to Financial Statements
December 31, 1996 and 1995
(2) Summary of Significant Accounting Policies
Basis of Presentation
The accompanying financial statements have been prepared on
the accrual basis of accounting. The net assets of the Plan
are allocated entirely to individual participant accounts. The
preparation of financial statements requires the use of Plan
Administrator estimates.
Investments
Investments are stated at fair value. The fair value of
Allergan, Inc. common stock is based upon quotations obtained
from the New York Stock Exchange. The fair values of the
American Balanced Fund, Investment Company of America Fund,
Ultra Investors Fund, Interest Income Fund and the New
Perspective Fund are based upon the net asset value reported
by the funds.
Investments in group contracts with banks are stated at cost
(contract value), which approximates market. Contract value
represents contributions, net of distributions made under the
Plan, plus interest at the contract rate.
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 statement of changes in net assets
available for plan benefits the net appreciation
(depreciation) in the fair value of its investments which
consists 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 Mellon Bank's EB Temporary Investment Fund which
consists of highly liquid short-term investments.
Administrative Expenses
Certain administrative expenses of the Plan are paid by the
Company.
(continued)
11
36
ALLERGAN, INC.
Puerto Rico Savings and Investment Plan
Notes to Financial Statements
December 31, 1996 and 1995
(3) Investments
The following tables present the fair values of investments.
1996
----
No. Shares Fair
or Par Value Cost Value
---------- ---------- ----------
Common Stock:
Allergan, Inc. 38,497 $ 883,107 $1,371,460
======= ========== ==========
Common/Collective Trusts:
LaSalle National Trust
annual effective returns varying
from 6.29% to 6.49% in 1996 647,693 $ 647,693 $ 647,693
======= ========== ==========
Mutual Funds:
American Balanced Fund 37,245 478,178 541,921
Investment Company of America Fund 33,471 656,182 810,995
New Perspective Fund 2,103 35,622 38,204
Twentieth Century Ultra Fund 2,273 61,539 63,849
------- ---------- ----------
Total Mutual Funds 75,092 $1,231,521 $1,454,969
======= ========== ==========
12
37
ALLERGAN, INC.
Puerto Rico Savings and Investment Plan
Notes to Financial Statements
December 31, 1996 and 1995
1995
----
No. Shares Fair
or Par Value Cost Value
---------- ---------- ----------
Common Stock:
Allergan, Inc. 36,857 $721,248 $1,197,867
======= ======== ==========
Common/Collective Trusts:
LaSalle National Trust
annual effective returns varying
from 6.30% to 6.46% in 1995 440,952 440,952 440,952
J.P. Morgan
Contract #428
annual effective returns varying
from 5.79%, 6.38% and 6.67%
in 1995, latest maturity 12/23/96 179,533 179,533 179,533
J.P. Morgan
Maaagic Fund #2045
Effective return 6.04%
in 1995, maturity 2/15/98 114,905 114,905 114,905
------- -------- ----------
Total Common/Collective Trusts 735,390 $735,390 $ 735,390
======= ======== ==========
Mutual Funds:
American Balanced Fund 28,939 361,379 409,483
Investment Company of America Fund 27,749 514,545 599,649
New Perspective Fund 724 11,890 11,855
Ultra Investors Fund 509 13,191 13,299
------- -------- ----------
Total Mutual Funds 57,921 $901,005 $1,034,286
======= ======== ==========
13
38
ALLERGAN, INC.
Puerto Rico Savings and Investment Plan
Notes to Financial Statements
December 31, 1996 and 1995
(4) Tax Status of the Plan
The Plan is intended to constitute a profit sharing plan qualified
under Section 165(a) of the Puerto Rico Income Tax Act of 1954 and
Section 401(a) of the Internal Revenue Code of 1986 and is exempt from
taxation under Section 501(a).
The Plan obtained its latest determination letter on March 7, 1995, in
which the Internal Revenue Service stated that the Plan, as then
designed, was in compliance with the applicable requirements of the
Internal Revenue Code.
(5) Outstanding Commitments to Participants
At December 31, 1996 and 1995, the Plan had not been requested to pay
withdrawals and distributions to terminated and withdrawing
participants.
14
39
Schedule 1
ALLERGAN, INC.
Puerto Rico Savings and Investment Plan
Item 27a - Schedule of Assets Held for Investment Purposes
December 31, 1996
No. Shares Fair
or Par Value Cost Value
---------- ---------- ----------
Common Stock:
* Allergan, Inc. 38,497 $ 883,107 $1,371,460
======= ========== ==========
Common/Collective Trusts:
LaSalle National Trust
annual effective returns varying
from 6.29% to 6.49% in 1996 647,693 $ 647,693 $ 647,693
======= ========== ==========
Mutual Funds:
American Balanced Fund 37,245 478,178 541,921
Investment Company of America Fund 33,471 656,182 810,995
New Perspective Fund 2,103 35,622 38,204
Twentieth Century Ultra Fund 2,273 61,539 63,849
------- ---------- ----------
Total Mutual Funds 75,092 $1,231,521 $1,454,969
======= ========== ==========
Participant Loans
interest rates varying from 9.25%
to 10.0% in 1996, latest maturity
6/1/06 375,042 $ 375,042 $ 375,042
======= ========== ==========
Temporary Investments and Deposits:
* Mellon Bank
EB Temporary Investment Fund,
annual effective rate 5.4% 24,110 $ 24,110 $ 24,110
======= ========== ==========
* Party in interest
See accompanying independent auditors' report.
15
40
Schedule 2
ALLERGAN, INC.
Puerto Rico Savings and Investment Plan
Item 27d - Schedule of Reportable Transactions
Year Ended December 31, 1996
Current Value
Cost of Asset on
Identity of Description Purchase Sales of Transaction Net Gain
Party Involved of Asset Price Price Asset Date or (Loss)
- -------------- -------- -------- -------- -------- -------- --------
Mellon Bank N.A. EB Temporary
Investment Fund $ 73,094 -- $ 73,094 $ 73,094 $ 0
Mellon Bank N.A. EB Temporary
Investment Fund -- $273,700 273,700 273,700 0
Not Applicable LaSalle National Trust
Income Plus Fund 772,415 -- 772,415 772,415 0
Not Applicable LaSalle National Trust
Income Plus Fund -- 160,257 160,257 160,257 0
Various JP Morgan Interest
Income Fund -- 91,716 91,527 91,716 189
Various Twentieth Century
Ultra Fund 60,083 -- 60,083 60,083 0
Various Twentieth Century
Ultra Fund -- 13,573 12,833 13,573 740
Various American Balanced Fund 238,990 -- 238,990 238,990 0
Various American Balanced Fund -- 72,606 63,443 72,606 9,163
41
Schedule 2
ALLERGAN, INC.
Puerto Rico Savings and Investment Plan
Item 27d - Schedule of Reportable Transactions (continued)
Year Ended December 31, 1996
Current Value
Cost of Asset on
Identity of Description Purchase Sales of Transaction Net Gain
Party Involved of Asset Price Price Asset Date or (Loss)
- -------------- -------- -------- -------- -------- -------- --------
Various New Perspective Fund $ 23,990 -- 23,990 23,990 0
Various New Perspective Fund -- $ 3,439 3,193 3,439 246
Various Investment Company
of America Fund 284,279 -- 284,279 284,279 0
Various Investment Company
of America Fund -- 96,581 78,859 96,581 17,722
Various Allergan, Inc. Common Stock 223,364 -- 223,364 223,364 0
Various Allergan, Inc. Common Stock -- 60,183 34,643 60,183 25,540
See accompanying independent auditors' report.