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, 1997
---------------------------------
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, 1997 and 1996 and the related
Statement of Changes in Net Assets Available for Plan Benefits,
with Fund Information for the Year Ended December 31, 1997 -
Allergan, Inc. Savings and Investment Plan.
Statements of Net Assets Available for Plan Benefits, with Fund
Information as of December 31, 1997 and 1996 - 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, 1997 -
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, 1997 - Allergan, Inc. Savings and Investment Plan.
Item 27d - Schedule of Reportable Transactions for the Year
Ended December 31, 1997 - 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, 1997 and 1996 and the related
Statement of Changes in Net Assets Available for Plan Benefits,
with Fund Information for the Year Ended December 31, 1997 -
Allergan, Inc. Puerto Rico Savings and Investment Plan.
Statements of Net Assets Available for Plan Benefits, with Fund
Information as of December 31, 1997 and 1996 - 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, 1997 -
Allergan, Inc. Puerto Rico Savings and Investment Plan.
2
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, 1997 - Allergan, Inc. Puerto Rico Savings and
Investment Plan.
Item 27d - Schedule of Reportable Transactions for the Year
Ended December 31, 1997 - 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 26, 1998 By: /s/ FRANCIS R. TUNNEY, JR.
--------------------- -----------------------------------
Francis R. Tunney, Jr.
Allergan, Inc. Corporate Benefits
Committee (formerly known as
Management Plan Committee)
3
4
ALLERGAN, INC.
SAVINGS AND INVESTMENT PLAN
FINANCIAL STATEMENTS
DECEMBER 31, 1997 AND 1996
5
ALLERGAN, INC.
SAVINGS AND INVESTMENT PLAN
Index to Financial Statements and Supplementary Schedules
Page
----
Financial Statements
- --------------------
Independent Auditors' Report ......................................................... 1
Statement of Net Assets Available for Plan Benefits, with Fund Information --
December 31, 1997................................................................... 2
Statement of Net Assets Available for Plan Benefits, with Fund Information --
December 31, 1996................................................................... 4
Statement of Changes in Net Assets Available for Plan Benefits,
with Fund Information -- Year ended December 31, 1997............................... 6
Notes to Financial Statements......................................................... 8
Schedule
--------
Supplementary Schedules
- -----------------------
Item 27a - Schedule of Assets Held for Investment Purposes -- December 31, 1997....... 1
Item 27d - Schedule of Reportable Transactions -- Year ended December 31, 1997....... 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, 1997 and 1996, and for the year
ended December 31, 1997, 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, 1997 and 1996, and the changes in net assets available for plan
benefits for the year ended December 31, 1997 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 26, 1998
1
7
ALLERGAN, INC.
Savings and Investment Plan
Statement of Net Assets Available for Plan Benefits, with Fund Information
December 31, 1997
Allergan,
Inc. Interest Growth Global Aggressive
Common Balanced Income and Income Equity Growth Participant
Stock Fund Fund Fund Fund Fund Fund Loans
---------- -------- --------- ---------- --------- ---------- -----------
Investments, at fair value:
Common stock of Allergan,
Inc., cost $21,653,771 $29,937,978 -- -- -- -- -- --
American Balanced Fund,
cost $24,769,327 -- 29,090,520 -- -- -- -- --
Common/collective trusts,
cost approximates market -- -- 20,260,073 -- -- -- --
Investment Company of
America Fund, cost
$27,160,605 -- -- -- 35,746,371 -- -- --
New Perspective Fund,
cost $5,718,001 -- -- -- -- 6,079,769 -- --
Twentieth Century Ultra Fund,
cost $9,542,592 -- -- -- -- -- 9,114,988 --
Participant loans -- -- -- -- -- -- 3,088,178
----------- ---------- ---------- ---------- --------- --------- ---------
Total Investments 29,937,978 29,090,520 20,260,073 35,746,371 6,079,769 9,114,988 3,088,178
Interest bearing cash and cash
equivalents 302,971 -- -- -- -- -- --
Receivables:
Accrued interest and dividends 1,518 -- -- -- -- -- --
Sales pending settlement -- -- -- -- 3,316 -- --
----------- ---------- ---------- ---------- --------- --------- ---------
Total Receivables 1,518 -- -- -- 3,316 -- --
----------- ---------- ---------- ---------- --------- --------- ---------
Total Assets $30,242,467 29,090,520 20,260,073 35,746,371 6,083,085 9,114,988 3,088,178
----------- ---------- ---------- ---------- --------- --------- ---------
Other Total
---------- -----------
Investments, at fair value:
Common stock of Allergan,
Inc., cost $21,653,771 $ -- 29,937,978
American Balanced Fund,
cost $24,769,327 -- 29,090,520
Common/collective trusts,
cost approximates market -- 20,260,073
Investment Company of
America Fund, cost
$27,160,605 -- 35,746,371
New Perspective Fund,
cost $5,718,001 -- 6,079,769
Twentieth Century Ultra Fund,
cost $9,542,592 -- 9,114,988
Participant loans -- 3,088,178
---------- -----------
Total Investments -- 133,317,877
Interest bearing cash and cash
equivalents 164,589 467,560
Receivables:
Accrued interest and dividends 1,446 2,964
Sales pending settlement -- 3,316
---------- -----------
Total Receivables 1,446 6,280
---------- -----------
Total Assets $ 166,035 133,791,717
---------- -----------
See accompanying notes to financial statements.
(continued)
2
8
ALLERGAN, INC.
Savings and Investment Plan
Statement of Net Assets Available for Plan Benefits, with Fund Information
December 31, 1997
(continued)
Allergan,
Inc. Interest Growth Global Aggressive
Common Balanced Income and Income Equity Growth Participant
Stock Fund Fund Fund Fund Fund Fund Loans
---------- ---------- ---------- ---------- --------- ---------- -----------
Payables:
Purchases pending settlement $ -- -- -- -- -- (3,316) --
Short-term fund investment
fees (32) -- -- -- -- -- --
----------- -------- ------- ---------- --------- --------- ---------
Total Payables (32) -- -- -- -- (3,316) --
----------- -------- ------- ---------- --------- --------- ---------
Net assets available for
Plan benefits $30,242,435 29,090,520 20,260,073 35,746,371 6,083,085 9,111,672 3,088,178
=========== ========== ========== ========== ========= ========= =========
Other Total
-------- -----------
Payables:
Purchases pending settlement $ -- (3,316)
Short-term fund investment
fees (31) (63)
-------- -----------
Total Payables (31) (3,379)
-------- -----------
Net assets available for
Plan benefits $166,004 133,788,338
======== ===========
See accompanying notes to financial statements.
3
9
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 Aggressive
Common Balanced Income and Income Equity Growth Participant
Stock Fund Fund Fund Fund Fund Fund Loans
---------- ---------- ---------- ---------- --------- ---------- -----------
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 -- --
Ultra Investors Fund,
cost $5,288,094 -- -- -- -- -- 5,486,579 --
Participant loans -- -- -- -- -- -- 2,632,075
----------- ---------- ----------- ---------- --------- --------- ---------
Total Investments 30,900,087 24,545,664 21,517,937 26,438,611 4,033,991 5,486,579 2,632,075
Interest bearing cash and cash
equivalents 340,865 -- -- -- -- -- --
Receivables:
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 5,486,579 2,632,075
----------- ---------- ----------- ---------- --------- --------- ---------
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
Ultra Investors Fund,
cost $5,288,094 -- 5,486,579
Participant loans -- 2,632,075
-------- -----------
Total Investments -- 115,554,944
Interest bearing cash and cash
equivalents 305,051 645,916
Receivables:
Accrued interest and dividends 360 940
Sales pending settlement -- 1,399
-------- -----------
Total Receivables 360 2,339
-------- -----------
Total Assets $305,411 116,203,199
-------- -----------
See accompanying notes to financial statements.
(continued)
4
10
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 Aggressive
Common Balanced Income and Income Equity Growth Participant
Stock Fund Fund Fund Fund Fund Fund Loans
---------- ---------- --------- ---------- --------- --------- -----------
Payables:
Purchases pending settlement $ (102,016) -- -- -- -- (56) --
Short-term fund investment
fees (12) -- -- -- -- -- --
----------- ---------- ---------- ---------- --------- --------- ---------
Total Payables (102,028) -- -- -- -- (56) --
----------- ---------- ---------- ---------- --------- --------- ---------
Net assets available for
Plan benefits $31,139,504 24,545,664 21,518,875 26,438,611 4,034,452 5,486,523 2,632,075
=========== ========== ========== ========== ========= ========= =========
Other Total
-------- -----------
Payables:
Purchases pending settlement $ -- (102,072)
Short-term fund investment
fees (8) (20)
-------- -----------
Total Payables (8) (102,092)
-------- -----------
Net assets available for
Plan benefits $305,403 116,101,107
======== ===========
See accompanying notes to financial statements.
5
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, 1997
Allergan,
Inc. Interest Growth Global Aggressive
Common Balanced Income and Income Equity Growth Participant
Stock Fund Fund Fund Fund Fund Fund Loans
----------- --------- -------- ---------- ------- --------- -----------
Additions to Plan assets
attributed to:
Net appreciation (depreciation)
in fair value of investments $(2,282,672) 4,099,210 1,337,593 7,403,247 582,115 1,354,848 --
Interest 12,149 -- -- -- -- -- 266,811
Dividends 462,053 945,309 -- 564,787 83,696 3,490 1,198
----------- --------- --------- ---------- --------- --------- -------
Total investment income (1,808,470) 5,044,519 1,337,593 7,968,034 665,811 1,358,338 268,009
Contributions:
Employer - Company match 2,794,506 5,823 16,427 8,073 4,701 3,103 --
Employees:
Before tax 1,223,839 1,249,383 1,107,589 2,404,818 989,079 1,492,312 --
After tax 308,803 441,656 295,863 842,798 478,704 648,337 --
----------- --------- --------- ---------- --------- --------- -------
Total contributions 4,327,148 1,696,862 1,419,879 3,255,689 1,472,484 2,143,752 --
----------- --------- --------- ---------- --------- --------- -------
Total additions $ 2,518,678 6,741,381 2,757,472 11,223,723 2,138,295 3,502,090 268,009
----------- --------- --------- ---------- --------- --------- -------
Other Total
------- ----------
Additions to Plan assets
attributed to:
Net appreciation (depreciation)
in fair value of investments $ -- 12,494,341
Interest 16,450 295,410
Dividends -- 2,060,533
------- ----------
Total investment income 16,450 14,850,284
Contributions:
Employer - Company match -- 2,832,633
Employees:
Before tax -- 8,467,020
After tax -- 3,016,161
------- ----------
Total contributions -- 14,315,814
------- ----------
Total additions $16,450 29,166,098
------- ----------
See accompanying notes to financial statements.
(continued)
6
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, 1997
(continued)
Allergan,
Inc. Interest Growth Global Aggressive
Common Balanced Income and Income Equity Growth Participant
Stock Fund Fund Fund Fund Fund Fund Loans
---------- ---------- ---------- ---------- --------- ---------- -----------
Deductions from Plan assets
attributed to:
Withdrawals and distributions $(2,295,156) (1,815,845) (3,098,486) (2,334,639) (970,602) (899,961) --
Administrative expenses (259) (292) (40,163) (359) (50) (97) --
----------- ---------- ---------- ---------- --------- --------- ---------
Total deductions (2,295,415) (1,816,137) (3,138,649) (2,334,998) (970,652) (900,058) --
----------- ---------- ---------- ---------- --------- --------- ---------
Increase in net assets
available for Plan benefits 223,263 4,925,244 (381,177) 8,888,725 1,167,643 2,602,032 268,009
Net assets available for Plan
benefits, beginning of year 31,139,504 24,545,664 21,518,875 26,438,611 4,034,452 5,486,523 2,632,075
Net interfund transfers (1,120,332) (380,388) (877,625) 419,035 880,990 1,023,117 188,094
----------- ---------- ---------- ---------- --------- --------- ---------
Net assets available for Plan
benefits, end of year $30,242,435 29,090,520 20,260,073 35,746,371 6,083,085 9,111,672 3,088,178
=========== ========== ========== ========== ========= ========= =========
Other Total
-------- -----------
Deductions from Plan assets
attributed to:
Withdrawals and distributions $ -- (11,414,689)
Administrative expenses (22,958) (64,178)
--------- -----------
Total deductions (22,958) (11,478,867)
--------- -----------
Increase in net assets
available for Plan benefits (6,508) 17,687,231
Net assets available for Plan
benefits, beginning of year 305,403 116,101,107
Net interfund transfers (132,891) 0
--------- -----------
Net assets available for Plan
benefits, end of year $ 166,004 133,788,338
========= ===========
See accompanying notes to financial statements.
7
13
ALLERGAN, INC.
Savings and Investment Plan
Notes to Financial Statements
December 31, 1997 and 1996
(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 for the years ended
December 31, 1997 and 1996, 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.
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.
8
14
ALLERGAN, INC.
Savings and Investment Plan
Notes to Financial Statements
December 31, 1997 and 1996
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 short term money market funds. The Fund is managed
by LaSalle National Trust under the name "LaSalle Income Plus
Fund."
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, 1997 and 1996 was as follows:
1997 1996
---- ----
(Unaudited) (Unaudited)
Allergan, Inc. Common Stock Fund 2,589 2,525
Balanced Fund 1,756 1,736
Interest Income Fund 1,358 1,476
Growth and Income Fund 2,026 1,880
Global Equity Fund 1,120 847
Aggressive Growth Fund 1,315 1,040
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, 1997 and 1996
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 $83,513 at December 31, 1997.
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 $5,000 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, 1997 and 1996
The Plan allows the Trustee (Mellon Bank) to combine Plan assets
with the assets of the Allergan, Inc. Puerto Rico Savings and
Investment Plan. The accompanying financial statements and
supplemental schedules represent an allocation of the amounts
reported by the Trustee related to the Plan.
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, Twentieth Century Ultra
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, 1997 and 1996
(3) Investments
The following tables present the fair values of investments.
1997
--------------------------------------------------------
No. Shares,
Units or
Principal Fair
Amounts Cost Value
---------- ------------ ------------
Common Stock:
Allergan, Inc. 891,994 $21,653,771 $29,937,978
========== =========== ===========
Common/Collective Trusts:
LaSalle National Trust
annual effective returns varying
from 6.37% to 6.47% in 1997 20,260,073 $20,260,073 $20,260,073
========== =========== ===========
Mutual Funds:
American Balanced Fund 1,855,263 24,769,327 29,090,520
Investment Company of America Fund 1,265,358 27,160,605 35,746,371
New Perspective Fund 313,876 5,718,001 6,079,769
Twentieth Century Ultra Fund 333,882 9,542,592 9,114,988
---------- ------------ ------------
Total Mutual Funds 3,768,379 $67,190,525 $80,031,648
========== =========== ===========
12
18
ALLERGAN, INC.
Savings and Investment Plan
Notes to Financial Statements
December 31, 1997 and 1996
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
Ultra Investors Fund 195,321 5,288,094 5,486,579
---------- ----------- -----------
Total Mutual Funds 3,195,474 $52,099,692 $60,504,845
========== =========== ===========
13
19
ALLERGAN, INC.
Savings and Investment Plan
Notes to Financial Statements
December 31, 1997 and 1996
(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, 1997 and 1996, the Plan had not been requested to pay
withdrawals and distributions to terminated and withdrawing
participants.
14
20
SCHEDULE 1
ALLERGAN, INC.
Savings and Investment Plan
Item 27a - Schedule of Assets Held for Investment Purposes
December 31, 1997
No. Shares,
Units or
Principal Fair
Amounts Cost Value
---------- ----------- -----------
Common Stock:
*Allergan, Inc.** 891,994 $21,653,771 $29,937,978
========== =========== ===========
Common/Collective Trusts:
LaSalle National Trust**
annual effective returns varying
from 6.37% to 6.47% in 1997 20,260,073 $20,260,073 $20,260,073
========== =========== ===========
Mutual Funds:
American Balanced Fund** 1,855,263 24,769,327 29,090,520
Investment Company of America Fund** 1,265,358 27,160,605 35,746,371
New Perspective Fund 313,876 5,718,001 6,079,769
Twentieth Century Ultra Fund** 333,882 9,542,592 9,114,988
---------- ------------ -----------
Total Mutual Funds 3,768,379 $67,190,525 $80,031,648
========== =========== ===========
Participant Loans (463)
interest rates varying from 9.25%
to 10% in 1997, latest
maturity 2012 3,088,178 $3,088,178 $3,088,178
========== ========== ==========
Temporary Investments and Deposits:
*Mellon Bank
EB Temporary Investment Fund,
annual effective rate 5.6% 467,560 $ 467,560 $ 467,560
========== ========== ==========
- ------------------------
* Party in interest
** Items greater than 5% of net assets at the end of the year
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, 1997
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 $3,769,529 -- $3,769,529 $3,769,529 $ 0
Not Applicable LaSalle National Trust
Income Plus Fund -- $6,463,082 6,463,082 6,463,082 0
Mellon Bank N.A. EB Temporary
Investment Fund 4,895,124 -- 4,895,124 4,895,124 0
Mellon Bank N.A. EB Temporary
Investment Fund -- 5,076,363 5,076,363 5,076,363 0
Various Twentieth Century
Ultra Fund 5,152,918 -- 5,152,918 5,152,918 0
Various Twentieth Century
Ultra Fund -- 1,134,918 1,012,130 1,134,918 122,788
Various American Balanced Fund 4,917,568 -- 4,917,568 4,917,568 0
Various American Balanced Fund -- 2,716,845 2,275,471 2,716,845 441,374
Various New Perspective Fund 2,940,879 -- 2,940,879 2,940,879 0
Various New Perspective Fund -- 1,124,575 992,674 1,124,575 131,901
Various Investment Company
of America Fund 8,031,171 -- 8,031,171 8,031,171 0
Various Investment Company
of America Fund -- 3,279,522 2,424,549 3,279,522 854,973
Various Allergan, Inc.
Common Stock 1,045,648 -- 1,045,648 1,045,648 0
Various Allergan, Inc.
Common Stock -- 2,303,744 1,650,115 2,303,744 653,629
See accompanying independent auditors' report.
16
22
ALLERGAN, INC.
PUERTO RICO
SAVINGS AND INVESTMENT PLAN
FINANCIAL STATEMENTS
DECEMBER 31, 1997 AND 1996
23
ALLERGAN, INC.
PUERTO RICO
SAVINGS AND INVESTMENT PLAN
Index to Financial Statements and Supplementary Schedules
Page
----
Financial Statements
- --------------------
Independent Auditors' Report.......................................................... 1
Statement of Net Assets Available for Plan Benefits, with Fund Information --
December 31, 1997................................................................... 2
Statement of Net Assets Available for Plan Benefits, with Fund Information --
December 31, 1996................................................................... 4
Statement of Changes in Net Assets Available for Plan Benefits,
with Fund Information -- Year ended December 31, 1997............................... 6
Notes to Financial Statements......................................................... 8
Schedule
--------
Supplementary Schedules
- -----------------------
Item 27a - Schedule of Assets Held for Investment Purposes -- December 31, 1997....... 1
Item 27d - Schedule of Reportable Transactions -- Year ended December 31, 1997........ 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.
24
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, 1997 and 1996, and
for the year ended December 31, 1997, 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, 1997 and 1996, and the changes in net assets available for plan
benefits for the year ended December 31, 1997 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 26, 1998
1
25
ALLERGAN, INC.
Puerto Rico Savings and Investment Plan
Statement of Net Assets Available for Plan Benefits, with Fund Information
December 31, 1997
Allergan,
Inc. Interest Growth Global Aggressive
Common Balanced Income and Income Equity Growth Participant
Stock Fund Fund Fund Fund Fund Fund Loans
---------- -------- -------- ---------- ------- ---------- -----------
Investments, at fair value:
Common stock of Allergan,
Inc., cost $998,399 $1,380,362 -- -- -- -- -- --
American Balanced Fund,
cost $600,223 -- 704,936 -- -- -- -- --
Common/collective trusts,
cost approximates market -- -- 683,978 -- -- -- --
Investment Company of
America Fund, cost
$906,417 -- -- -- 1,192,945 -- -- --
New Perspective Fund,
cost $64,584 -- -- -- -- 68,670 -- --
Twentieth Century Ultra Fund,
cost $112,124 -- -- -- -- -- 107,100 --
Participant loans -- -- -- -- -- -- 429,509
---------- ------- ------- --------- ------ ------- -------
Total Investments 1,380,362 704,936 683,978 1,192,945 68,670 107,100 429,509
Interest bearing cash and cash
equivalents 13,969 -- -- -- -- -- --
Receivables:
Accrued interest and dividends 70 -- -- -- -- -- --
Sales pending settlement -- -- -- -- 111 -- --
---------- ------- ------- --------- ------ ------- -------
Total Receivables 70 -- -- -- 111 -- --
---------- ------- ------- --------- ------ ------- -------
Total Assets $1,394,401 704,936 683,978 1,192,945 68,781 107,100 429,509
---------- ------- ------- --------- ------ ------- -------
Other Total
------- ---------
Investments, at fair value:
Common stock of Allergan,
Inc., cost $998,399 $ -- 1,380,362
American Balanced Fund,
cost $600,223 -- 704,936
Common/collective trusts,
cost approximates market -- 683,978
Investment Company of
America Fund, cost
$906,417 -- 1,192,945
New Perspective Fund,
cost $64,584 -- 68,670
Twentieth Century Ultra Fund,
cost $112,124 -- 107,100
Participant loans -- 429,509
------ ---------
Total Investments -- 4,567,500
Interest bearing cash and cash
equivalents 5,108 19,077
Receivables:
Accrued interest and dividends 45 115
Sales pending settlement -- 111
------ ---------
Total Receivables 45 226
------ ---------
Total Assets $5,153 4,586,803
------ ---------
See accompanying notes to financial statements.
(continued)
2
26
ALLERGAN, INC.
Puerto Rico Savings and Investment Plan
Statement of Net Assets Available for Plan Benefits, with Fund Information
December 31, 1997
(continued)
Allergan,
Inc. Interest Growth Global Aggressive
Common Balanced Income and Income Equity Growth Participant
Stock Fund Fund Fund Fund Fund Fund Loans
---------- -------- -------- --------- ------ ---------- -----------
Payables:
Purchases pending settlement $ -- -- -- -- -- (111) --
Short-term fund investment
fees (1) -- -- -- -- -- --
---------- ------- ------- --------- ------ ------- -------
Total Payables (1) -- -- -- -- (111) --
---------- ------- ------- --------- ------ ------- -------
Net assets available for Plan
benefits $1,394,400 704,936 683,978 1,192,945 68,781 106,989 429,509
========== ======= ======= ========= ====== ======= =======
Other Total
------ ---------
Payables:
Purchases pending settlement $ -- (111)
Short-term fund investment
fees (1) (2)
------ ---------
Total Payables (1) (113)
------ ---------
Net assets available for Plan
benefits $5,152 4,586,690
====== =========
See accompanying notes to financial statements.
3
27
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 Participant
Stock Fund Fund Fund Fund Fund Fund Loans
---------- -------- -------- -------- ------- ---------- -----------
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 -- --
Ultra Investors Fund,
cost $61,539 -- -- -- -- -- 63,849 --
Participant loans -- -- -- -- -- -- 375,042
---------- ------- ------- ------- ------ ------ -------
Total Investments 1,371,460 541,921 647,693 810,995 38,204 63,849 375,042
Interest bearing cash and cash
equivalents 15,129 -- -- -- -- -- --
Receivables:
Accrued interest and dividends 26 -- -- -- -- -- --
Sales pending settlement -- -- 28 -- 14 -- --
---------- ------- ------- ------- ------ ------ -------
Total Receivables 26 -- 28 -- 14 -- --
---------- ------- ------- ------- ------ ------ -------
Total Assets $1,386,615 541,921 647,721 810,995 38,218 63,849 375,042
---------- ------- ------- ------- ------ ------ -------
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
Ultra Investors Fund,
cost $61,539 -- 63,849
Participant loans -- 375,042
------ ---------
Total Investments -- 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 11 79
------ ---------
Total Assets $8,992 3,873,353
------ ---------
See accompanying notes to financial statements.
(continued)
4
28
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 Participant
Stock Fund Fund Fund Fund Fund Fund Loans
---------- -------- -------- ---------- ------ ---------- -----------
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 63,847 375,042
========== ======= ======= ======= ====== ====== =======
Other Total
----- ---------
Payables:
Purchases pending settlement $ -- (4,530)
Short-term fund investment
fees -- (1)
------ ---------
Total Payables -- (4,531)
------ ---------
Net assets available for
Plan benefits $8,992 3,868,822
====== =========
See accompanying notes to financial statements.
5
29
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, 1997
Allergan,
Inc. Interest Growth Global Aggressive
Common Balanced Income and Income Equity Growth Participant
Stock Fund Fund Fund Fund Fund Fund Loans
---------- -------- -------- ---------- ------- ---------- -----------
Additions to Plan assets
attributed to:
Net appreciation in fair value
of investments $ (105,060) 96,072 41,369 239,209 5,702 15,900 --
Interest 559 -- -- -- -- -- 38,325
Dividends 21,266 22,155 -- 18,249 820 41 172
---------- -------- ------- ------- ------ ------ ------
Total investment income (83,235) 118,227 41,369 257,458 6,522 15,941 38,497
Contributions:
Employer - Company match 124,271 -- -- -- -- -- --
Employees:
Before tax 36,719 119,240 100,358 176,803 20,900 35,458 --
After tax 2,446 9,197 9,245 19,596 2,074 7,784 --
---------- -------- ------- ------- ------ ------ ------
Total contributions 163,436 128,437 109,603 196,399 22,974 43,242 --
---------- -------- ------- ------- ------ ------ ------
Total additions $ 80,201 246,664 150,972 453,857 29,496 59,183 38,497
---------- -------- ------- ------- ------ ------ ------
Other Total
----- -------
Additions to Plan assets
attributed to:
Net appreciation in fair value
of investments $ -- 293,192
Interest 511 39,395
Dividends -- 62,703
---- ---------
Total investment income 511 395,290
Contributions:
Employer - Company match -- 124,271
Employees:
Before tax -- 489,478
After tax -- 50,342
---- ---------
Total contributions -- 664,091
---- ---------
Total additions $511 1,059,381
---- ---------
See accompanying notes to financial statements.
(continued)
6
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, 1997
(continued)
Allergan,
Inc. Interest Growth Global Aggressive
Common Balanced Income and Income Equity Growth Participant
Stock Fund Fund Fund Fund Fund Fund Loans
---------- -------- -------- ---------- -------- ---------- -----------
Deductions from Plan assets
attributed to:
Withdrawals and distributions $ (105,635) (42,557) (95,829) (75,435) (9,508) (10,563) --
Administrative expenses (12) (7) (1,242) (12) -- (1) --
---------- ------- ------- --------- ------ ------- -------
Total deductions (105,647) (42,564) (97,071) (75,447) (9,508) (10,564) --
---------- ------- ------- --------- ------ ------- -------
Increase (decrease) in net assets
available for Plan benefits (25,446) 204,100 53,901 378,410 19,988 48,619 38,497
Net assets available for Plan
benefits, beginning of year 1,382,086 541,921 647,721 810,995 38,218 63,847 375,042
Net interfund transfers 37,760 (41,085) (17,644) 3,540 10,575 (5,477) 15,970
---------- ------- ------- --------- ------ ------- -------
Net assets available for Plan
benefits, end of year $1,394,400 704,936 683,978 1,192,945 68,781 106,989 429,509
========== ======= ======= ========= ====== ======= =======
Other Total
------- ---------
Deductions from Plan assets
attributed to:
Withdrawals and distributions $ -- (339,527)
Administrative expenses (712) (1,986)
------ ---------
Total deductions (712) (341,513)
------ ---------
Increase (decrease) in net assets
available for Plan benefits (201) 717,868
Net assets available for Plan
benefits, beginning of year 8,992 3,868,822
Net interfund transfers (3,639) --
------- ---------
Net assets available for Plan
benefits, end of year $ 5,152 4,586,690
======= =========
See accompanying notes to financial statements.
7
31
ALLERGAN, INC.
Puerto Rico Savings and Investment Plan
Notes to Financial Statements
December 31, 1997 and 1996
(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 1165(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 for the years ended
December 31, 1997 and 1996, under provision 1165(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.
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
32
ALLERGAN, INC.
Puerto Rico Savings and Investment Plan
Notes to Financial Statements
December 31, 1997 and 1996
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 short term money market funds. The Fund is managed
by LaSalle National Trust under the name "LaSalle Income Plus
Fund."
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, 1997 and 1996 was as follows:
1997 1996
---- ----
(unaudited) (unaudited)
Allergan, Inc. Common Stock Fund 371 388
Balanced Fund 239 250
Interest Income Fund 197 217
Growth and Income Fund 272 263
Global Equity Fund 77 50
Aggressive Growth Fund 94 72
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
33
ALLERGAN, INC.
Puerto Rico Savings and Investment Plan
Notes to Financial Statements
December 31, 1997 and 1996
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 $9,163 at December 31, 1997.
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
34
ALLERGAN, INC.
Puerto Rico Savings and Investment Plan
Notes to Financial Statements
December 31, 1997 and 1996
(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.
The Plan allows the Trustee (Mellon Bank) to combine Plan assets
with the assets of the Allergan, Inc. Savings and Investment
Plan. The accompanying financial statements and supplemental
schedules represent an allocation of the amounts reported by the
Trustee related to the Plan.
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, Twentieth Century Ultra
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
35
ALLERGAN, INC.
Puerto Rico Savings and Investment Plan
Notes to Financial Statements
December 31, 1997 and 1996
(3) Investments
The following tables present the fair values of investments.
1997
-------------------------------------------------------
No. Shares Fair
or Par Value Cost Value
------------ -------- ----------
Common Stock:
Allergan, Inc. 41,127 $998,399 $1,380,362
====== ======== ==========
Common/Collective Trusts:
LaSalle National Trust
annual effective returns varying
from 6.37% to 6.47% in 1997 683,978 $683,978 $683,978
======= ======== ========
Mutual Funds:
American Balanced Fund 44,958 600,223 704,936
Investment Company of America Fund 42,228 906,417 1,192,945
New Perspective Fund 3,545 64,584 68,670
Twentieth Century Ultra Fund 3,923 112,124 107,100
------- ---------- ----------
Total Mutual Funds 94,654 $1,683,348 $2,073,651
======= ========== ==========
12
36
ALLERGAN, INC.
Puerto Rico Savings and Investment Plan
Notes to Financial Statements
December 31, 1997 and 1996
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
Ultra Investors Fund 2,273 61,539 63,849
-------- ---------- ----------
Total Mutual Funds 75,092 $1,231,521 $1,454,969
======== ========== ==========
13
37
(4) Tax Status of the Plan
The Plan is intended to constitute a profit sharing plan qualified under
Section 1165(e) 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, 1997 and 1996, the Plan had not been requested to pay
withdrawals and distributions to terminated and withdrawing
participants.
14
38
SCHEDULE 1
ALLERGAN, INC.
Puerto Rico Savings and Investment Plan
Item 27a - Schedule of Assets Held for Investment Purposes
December 31, 1997
No. Shares Fair
or Par Value Cost Value
------------ -------- ----------
Common Stock:
*Allergan, Inc.** 41,127 $998,399 $1,380,362
====== ======== ==========
Common/Collective Trusts:
LaSalle National Trust**
annual effective returns varying
from 6.37% to 6.47% in 1997 683,978 $ 683,978 $ 683,978
======= ========== ==========
Mutual Funds:
American Balanced Fund** 44,958 600,223 704,936
Investment Company of America Fund** 42,228 906,417 1,192,945
New Perspective Fund 3,545 64,584 68,670
Twentieth Century Ultra Fund 3,923 112,124 107,100
------- ---------- ----------
Total Mutual Funds 94,654 $1,683,348 $2,073,651
======= ========== ==========
Participant Loans** (175)
interest rates varying from 9.25%
to 10% in 1997, latest maturity 2012 429,509 $ 429,509 $ 429,509
======= ========== ==========
Temporary Investments and Deposits:
*Mellon Bank
EB Temporary Investment Fund,
annual effective rate 5.6% 19,077 $19,077 $19,077
======= ======= =======
- ------------------
* Party in interest
** Items greater than 5% of net assets at the end of the year
See accompanying independent auditors' report.
15
39
SCHEDULE 2
ALLERGAN, INC.
Puerto Rico Savings and Investment Plan
Item 27d - Schedule of Reportable Transactions
Year Ended December 31, 1997
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 $376,386 -- $376,386 $376,386 $ 0
Mellon Bank N.A. EB Temporary
Investment Fund -- $234,751 234,751 234,751 0
Not Applicable LaSalle National Trust
Income Plus Fund 292,901 -- 292,901 292,901 0
Not Applicable LaSalle National Trust
Income Plus Fund -- 199,889 199,889 199,889 0
Various Twentieth Century
Ultra Fund 105,162 -- 105,162 105,162 0
Various Twentieth Century
Ultra Fund -- 13,320 11,879 13,320 1,441
Various American Balanced Fund 386,680 -- 386,680 386,680 0
Various American Balanced Fund -- 63,674 53,330 63,674 10,344
Various New Perspective Fund 47,515 -- 47,515 47,515 0
Various New Perspective Fund -- 11,015 9,723 11,015 1,292
Various Investment Company
of America Fund 490,870 -- 490,870 490,870 0
Various Investment Company
of America Fund -- 105,966 78,340 105,966 27,626
Various Allergan, Inc.
Common Stock 80,400 -- 80,400 80,400 0
Various Allergan, Inc.
Common Stock -- 106,534 76,308 106,534 30,226
See accompanying independent auditors' report.