<PAGE> 1
UNITED STATES SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
- --------------------------------------------------------------------------------
(Mark One)
|X| QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended September 26, 1997.........................
OR
| | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934.
- --------------------------------------------------------------------------------
FOR THE QUARTER ENDED COMMISSION FILE NUMBER
SEPTEMBER 26, 1997 1-10269
ALLERGAN, INC.
A DELAWARE CORPORATION IRS EMPLOYER IDENTIFICATION
95-1622442
2525 DUPONT DRIVE, IRVINE, CALIFORNIA 92612
TELEPHONE NUMBER 714/752-4500
Indicate by a check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.
(1) X yes no
------ ------
(2) X yes no
------ ------
Indicate the number of shares outstanding of each of the issuer's classes of
common stock as of the latest practicable date.
As of October 31, 1997 there were 65,248,462 shares of common stock outstanding.
1
<PAGE> 2
ALLERGAN, INC.
FORM 10-Q FOR THE QUARTER ENDED SEPTEMBER 26, 1997
INDEX
<TABLE>
<CAPTION>
Page
<S> <C>
PART I - FINANCIAL INFORMATION
ITEM 1 - CONSOLIDATED FINANCIAL STATEMENTS
(A) Consolidated Statements of Earnings - 3
Three Months and Nine Months Ended
September 26, 1997 and September 30, 1996
(B) Consolidated Balance Sheets - 4
September 26, 1997 and December 31, 1996
(C) Consolidated Statements of Cash Flows - 5
Nine Months Ended September 26, 1997 and
September 30, 1996
(D) Notes to Consolidated Financial Statements 6-7
ITEM 2 - MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS 8-12
PART II - OTHER INFORMATION
ITEM 5 13
ITEM 6 14
Signature 15
Exhibits
</TABLE>
2
<PAGE> 3
PART I - FINANCIAL INFORMATION
Allergan, Inc.
Consolidated Statements of Earnings
(In millions, except per share amounts)
<TABLE>
<CAPTION>
Three months Nine months
Ended, Ended,
---------------------------- ----------------------------
September 26, September 30, September 26, September 30,
1997 1996 1997 1996
------------- ------------- ------------- -------------
<S> <C> <C> <C> <C>
Net sales $287.7 $287.5 $828.4 $835.2
Operating costs and expenses:
Cost of sales 100.6 99.7 293.3 282.7
Selling, general and
administrative 107.8 111.3 344.2 348.8
Research and development 31.6 26.9 90.1 81.2
Restructuring charge -- 28.5 -- 62.7
Asset write-offs -- 0.3 -- 7.0
------ ------ ------ ------
240.0 266.7 727.6 782.4
------ ------ ------ ------
Operating income 47.7 20.8 100.8 52.8
Nonoperating income (expense):
Interest income 2.3 5.8 6.1 10.7
Interest expense (2.5) (3.1) (7.2) (9.9)
Other, net 14.0 0.7 16.7 3.6
------ ------ ------ ------
13.8 3.4 15.6 4.4
------ ------ ------ ------
Earnings before income taxes and
minority interest 61.5 24.2 116.4 57.2
Provision for income taxes 17.8 7.0 33.7 16.6
Minority interest 0.1 (0.1) (0.1) (0.5)
------ ------ ------ ------
Net earnings $ 43.6 $ 17.3 $ 82.8 $ 41.1
====== ====== ====== ======
Net earnings per common share $ 0.66 $ 0.26 $ 1.26 $ 0.62
====== ====== ====== ======
Weighted average common
shares outstanding 65.6 66.2 65.8 65.9
</TABLE>
See accompanying notes to consolidated financial statements.
3
<PAGE> 4
Allergan, Inc.
Consolidated Balance Sheets
(In millions, except share data)
<TABLE>
<CAPTION>
September 26, December 31,
1997 1996
------------- ------------
ASSETS
<S> <C> <C>
Current assets:
Cash and equivalents $ 141.5 $ 112.0
Trade receivables, net 222.7 242.5
Inventories 141.1 130.1
Other current assets 122.9 115.1
-------- --------
Total current assets 628.2 599.7
Investments and other assets 192.3 163.0
Property, plant and equipment, net 342.2 348.5
Goodwill and intangibles, net 220.2 238.6
-------- --------
Total assets $1,382.9 $1,349.8
======== ========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Notes payable $ 87.4 $ 66.6
Accounts payable 63.1 75.4
Accrued expenses 165.5 186.1
Income taxes 42.8 47.2
-------- --------
Total current liabilities 358.8 375.3
Long-term debt 173.0 170.0
Other liabilities 55.6 54.7
Commitments and contingencies
Stockholders' equity:
Preferred stock, $.01 par value; authorized
5,000,000 shares; none issued -- --
Common stock, $.01 par value; authorized
150,000,000 shares; issued 67,204,000
and 67,244,000 shares 0.7 0.7
Additional paid-in capital 206.8 205.6
Foreign currency translation
adjustment (9.4) 4.0
Other 17.0 3.1
Retained earnings 633.4 574.8
-------- --------
848.5 788.2
Less - treasury stock, at cost
(2,034,000 and 1,731,000 shares) (53.0) (38.4)
-------- --------
Total stockholders' equity 795.5 749.8
-------- --------
Total liabilities and
stockholders' equity $1,382.9 $1,349.8
======== ========
</TABLE>
See accompanying notes to consolidated financial statements.
4
<PAGE> 5
Allergan, Inc.
Consolidated Statements of Cash Flows
(In millions)
<TABLE>
<CAPTION>
Nine months
Ended,
---------------------------------------
September 26, September 30,
1997 1996
------------- -------------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net earnings $ 82.8 $ 41.1
Non-cash items included in net earnings:
Depreciation and amortization 53.1 53.8
Amortization of prepaid royalties 7.3 5.7
Deferred income taxes (0.9) (0.4)
Loss on sale of assets 1.2 0.5
Expense of compensation plans 5.1 1.4
Minority interest (0.1) (0.5)
Restructuring charge -- 62.7
Asset write-offs -- 7.0
Changes in assets and liabilities:
Trade receivables 8.9 (21.5)
Inventories (17.4) (16.0)
Accounts payable (11.4) (0.7)
Accrued liabilities (13.5) (24.2)
Income taxes (2.4) 4.7
Other (7.3) (15.4)
------ ------
Net cash provided by operating activities 105.4 98.2
------ ------
CASH FLOWS FROM INVESTING ACTIVITIES:
Additions to property, plant and equipment (35.2) (40.0)
Disposals of property, plant and equipment 5.8 3.7
Other, net (30.9) (9.9)
------ ------
Net cash used in investing activities (60.3) (46.2)
------ ------
CASH FLOWS FROM FINANCING ACTIVITIES:
Dividends to stockholders (25.1) (23.0)
Net borrowings (repayments) under commercial
paper obligations 52.0 (27.5)
Increase (decrease) in notes payable (23.8) 4.0
Sale of stock to employees 16.4 15.8
Long term debt borrowings 3.6 18.8
Repayments of long-term debt (1.5) (9.7)
Acquisition of capital leases (0.7) (0.2)
Other financing -- 0.6
Payments to acquire treasury stock (34.0) --
------ ------
Net cash used in financing activities (13.1) (21.2)
------ ------
Effect of exchange rates on cash and
equivalents (2.5) 2.9
------ ------
Net increase in cash and equivalents 29.5 33.7
Cash and equivalents at beginning of period 112.0 102.3
------ ------
Cash and equivalents at end of period $141.5 $136.0
====== ======
</TABLE>
See accompanying notes to consolidated financial statements.
5
<PAGE> 6
Allergan, Inc.
Notes to Consolidated Financial Statements
1. In the opinion of management, the accompanying consolidated financial
statements contain all adjustments necessary (consisting only of normal
recurring accruals) to present fairly the financial information contained
therein. These statements do not include all disclosures required by generally
accepted accounting principles and should be read in conjunction with the
audited financial statements of the Company for the year ended December 31,
1996. The results of operations for the nine months ended September 26, 1997 are
not necessarily indicative of the results to be expected for the year ending
December 31, 1997.
2. Components of inventory were:
<TABLE>
<CAPTION>
September 26, December 31,
1997 1996
------------- ------------
(in millions)
<S> <C> <C>
Finished goods $ 97.4 $ 87.5
Work in process 12.4 11.1
Raw materials 31.3 31.5
------ ------
Total $141.1 $130.1
====== ======
</TABLE>
3. Income taxes are determined using an estimated annual effective tax rate,
which is less than the U.S. Federal statutory rate, primarily because of lower
tax rates in Puerto Rico and in certain non U.S. jurisdictions. Withholding and
U.S. taxes have not been provided for unremitted earnings of certain non U.S.
subsidiaries because the Company expects that such earnings have been or will be
reinvested in operations, or will be offset by appropriate credits for foreign
income taxes paid.
4. The Company is involved in various litigation and claims arising in the
normal course of business. The Company's management believes that recovery or
liability with respect to these matters would not have a material adverse effect
on the consolidated financial position and results of operations of the Company.
5. On October 15, 1997 the Board of Directors declared a quarterly cash dividend
of $0.13 per share, payable December 8, 1997 to stockholders of record on
November 17, 1997.
6
<PAGE> 7
6. Earnings per common and common equivalent share were computed by dividing net
earnings by the weighted average number of common and common equivalent shares
outstanding during the respective periods. In February 1997, the Financial
Accounting Standards Board issued Statement of Financial Accounting Standards
(SFAS) No. 128, "Earnings per Share." The new statement replaces the
calculations currently used with "basic earnings per share" including only
actual weighted shares outstanding; and "diluted earnings per share" including
the effect of any common equivalent shares or other items that are dilutive.
The new rules are effective at the end of 1997.
If the new rules were in effect, the Company's earnings per share amounts would
be:
<TABLE>
<CAPTION>
Third Qtr. Nine Months
---------- -----------
1997 1996 1997 1996
---- ---- ---- ----
<S> <C> <C> <C> <C>
As reported:
Primary and Fully Diluted $0.66 $0.26 $1.26 $0.62
Per SFAS No. 128:
Basic $0.67 $0.27 $1.27 $0.63
Diluted $0.66 $0.26 $1.26 $0.62
</TABLE>
7. In June 1997, SFAS No. 130 - "Reporting Comprehensive Income" and SFAS No.
131 - "Disclosures about Segments of an Enterprise and Related Information" were
issued and are effective for periods beginning after December 15, 1997. SFAS No.
130 establishes standards for reporting comprehensive income and its components.
SFAS No. 131 establishes standards for reporting financial and descriptive
information regarding an enterprise's operating segments. These standards
increase disclosure in the financial statements, and will have no impact on the
Company's financial position or results of operations.
7
<PAGE> 8
ALLERGAN, INC.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS FOR THE QUARTER ENDED SEPTEMBER 26, 1997
RESULTS OF OPERATIONS
- ---------------------
The following table compares 1997 and 1996 net sales by Product Line for the
third quarter and year-to-date periods (in millions):
<TABLE>
<CAPTION>
Three Months Nine Months
Ended Ended
----------------------------------- ------------------------------------
September 26, September 30, September 26, September 30,
Net sales by product line: 1997 1996 1997 1996
------------- ------------- ------------- -------------
<S> <C> <C> <C> <C>
Specialty pharmaceuticals:
Eye care pharmaceuticals $ 97.6 $102.7 $294.7 $308.8
Skin care 26.4 16.0 60.0 44.2
Botox/neuromuscular 22.8 17.2 64.8 47.9
------ ------ ------ ------
Total 146.8 135.9 419.5 400.9
Medical devices and OTC product lines:
Ophthalmic surgical 45.1 46.9 130.3 134.5
Optical contact lens care 95.8 104.7 278.6 299.8
------ ------ ------ ------
Total 140.9 151.6 408.9 434.3
------ ------ ------ ------
Total Net Sales $287.7 $287.5 $828.4 $835.2
====== ====== ====== ======
</TABLE>
For the quarter ended September 26, 1997 total net sales of $287.7 million were
flat compared to $287.5 million in the third quarter of 1996. Net sales for the
nine months ended September 26, 1997 were $828.4 million, a 1% decrease from the
comparable 1996 amount.
The impact of foreign currency changes decreased net sales by $12.5 million or
4% for the quarter and by $31.7 million or 4% for the nine months ended
September 26, 1997. Excluding the impact of foreign currency changes, sales
increased by $12.7 million or 4% during the quarter, and $24.9 million or 3% for
the nine months ended September 26, 1997.
Historically, the Company has used special sales and promotional incentives to
distributors to promote the sale of eye care pharmaceuticals and skin care
pharmaceuticals. A curtailment of these special programs in the United States in
the third quarter of 1997 reduced wholesaler inventories and applicable net
sales by approximately $14 million or 11% of third quarter net sales and 4% of
net sales for the nine months ended September 26, 1997 in comparison with
comparable 1996 amounts. In addition, domestic sales decreased in the first nine
months of 1997 as a result of an increase in the rate of product returns in the
first quarter of 1997.
For the three months and nine months ended September 26, 1997, Eye Care
Pharmaceuticals sales decreased 5% from the comparable 1996 periods. Sales in
the United States decreased $2.8 million in the quarter and $0.5 million in the
first nine months of 1997 primarily as a result of the loss of sales due to the
curtailment of promotional incentives discussed above. Growth in sales of
Alphagan(R), introduced in the third quarter of 1996 for the treatment of
glaucoma, offset most of the decrease, although the Company also experienced
decreases in sales of other glaucoma products and anti-
8
<PAGE> 9
Allergan, Inc.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS FOR THE QUARTER ENDED SEPTEMBER 26, 1997 (Continued)
RESULTS OF OPERATIONS (Continued)
- ---------------------------------
inflammation products. Sales in international markets decreased by $2.3 million
in the quarter and $13.6 million in the first nine months of 1997 as a result of
the negative effect of currency changes of $3.7 million in the quarter and $8.0
million for the nine months ended September 26, 1997. In addition, a reduction
in wholesaler inventory positions in the Argentina market decreased sales by
$2.6 million in the second quarter and contributed to the year-to-date 1997
decrease.
Skin Care third quarter 1997 sales were 65% higher than the comparable quarter
in 1996. Sales for the nine months ended September 26, 1997 were 36% higher than
the comparable period in 1996. Tazorac(R), a topical gel used to treat psoriasis
and acne, was launched in the United States in the second quarter of 1997 and
launched in Canada in the first quarter of 1997. Zorac(R) (the global brand
name) has also been launched in Germany. Sales of Tazorac(R)/Zorac(R), including
initial wholesaler inventory stocking in the United States in the third quarter
of 1997, accounted for the sales growth in the third quarter and for the nine
months ended September 26, 1997 in comparison with 1996 amounts.
Botox(R) (Botulinum Toxin Type A) purified neurotoxin complex sales increased by
33% in the third quarter and 35% in the first nine months of 1997 compared to
1996 results. The increases were the result of strong sales growth in both the
United States and international markets.
Surgical sales decreased 4% in the third quarter of 1997 compared to the third
quarter of 1996. For the first nine months of 1997, surgical sales were 3% less
than the comparable period in 1996. In the third quarter, domestic sales were
flat while international sales decreased 6% from the third quarter of 1996. For
the nine month period ended September 26, 1997, domestic sales decreased 3% and
international sales decreased 4% compared to the first nine months of 1996.
Domestic surgical sales decreased during the third quarter and for the first
nine months of 1997, in part, as a result of a decrease in sales of PMMA
intraocular lenses. International sales decreased as a result of foreign
currency changes. Absent the effects of foreign currency changes, international
surgical sales increased by 1% in the third quarter and for the first nine
months of 1997 compared with 1996 results for comparable periods.
Optical lens care sales of $95.8 million for the three months ended September
26, 1997 decreased by 9% from the third quarter of 1996. Sales for the nine
months ended September 26, 1997 of $278.6 million decreased by 7% compared to
1996 sales. Domestic optical sales decreased by 14% in the third quarter and by
10% in the first nine months of 1997 compared to comparable 1996 amounts.
Optical sales in international markets decreased by 7% in the third quarter and
6% in the first nine months of 1997 compared to comparable 1996 results.
Domestic optical lens care sales decreased during the third quarter and for the
nine months ended September 26, 1997 as a result of decreases in sales of
ancillary contact lens care products. This decrease is the result of increasing
use of disposable and frequent replacement contact lenses. International sales
were negatively impacted
9
<PAGE> 10
Allergan, Inc.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS FOR THE QUARTER ENDED SEPTEMBER 26, 1997 (Continued)
RESULTS OF OPERATIONS (Continued)
- ---------------------------------
by foreign currency changes. Absent the effects of foreign currency changes,
international optical lens care sales increased by 1% during the third quarter
of 1997 and for the first nine months compared to comparable periods in 1996.
Sales growth in international markets, primarily in Europe, has been depressed
by increased use of lower priced one bottle cold chemical disinfection systems
rather than peroxide based disinfection systems.
Allergan's gross margin percentage for the third quarter of 1997 was 65.0% of
net sales, which represents a 0.3 percentage point decrease from the third
quarter of 1996. The gross margin percentage for the nine months ended September
26, 1997 was 64.6% representing a 1.6 percentage point decrease from the
comparable 1996 percentage. The gross margin percentage decreased in 1997
compared to 1996 primarily as a result of the negative impact of foreign
currency changes, decreases in sales of high margin branded eye care
pharmaceutical products, and increased return rates in eye care pharmaceutical
products. Such decrease was partially offset by sales of new high margin
products, Alphagan(R) and Tazorac(R)/Zorac(R).
Gross margin in dollars decreased by $0.7 million or 0.4% in the third quarter
and $17.4 million or 3.1% in the first nine months of 1997 from comparable 1996
results. Such decreases were the result, primarily, of the decreases in gross
margin percentage. Gross margin in dollars was also reduced by approximately $13
million in the third quarter of 1997 as a result of the curtailment of
promotional incentives.
Operating income was $47.7 million for the third quarter and $100.8 million for
the nine months ended September 26, 1997, compared to $20.8 million for the
third quarter and $52.8 million for the first nine months of 1996. Third quarter
results in 1996 include special charges for restructuring costs of $28.5 million
and asset write-offs of $0.3 million. Excluding the impact of the special
charges in 1996, operating income was $49.6 million for the third quarter and
$122.5 million for the nine months ended September 30, 1996. The decreases in
operating income in 1997 in comparison with 1996 amounts, excluding the special
charges, were primarily the result of the decreases in gross margin and
increased costs related to new product launches in the first nine months of
1997. Gross margin decreased by $0.7 million in the third quarter and $17.4
million for the first nine months of 1997. In addition, research and development
expense increased by $4.7 million in the third quarter and $8.9 million in the
first nine months of 1997. Such decreases in operating income were partially
offset by certain transactions including $9.6 million in income from sales of
product rights, $7.5 million in income from settlement of a product related
lawsuit, decreases in selling, general and administrative expense as a result of
reductions in costs resulting from the restructuring activities begun in the
second quarter of 1996, and the impact of foreign currency changes.
Net earnings in 1996 include the impacts of special charges, net of applicable
income taxes, of $20.2 million in the third quarter and $44.5 million for the
first nine months of 1996 from the restructuring charge, and $0.2 million in the
third quarter and $5.0 million for the first nine months of 1996 from the asset
write-offs. Excluding the impact on net
10
<PAGE> 11
Allergan, Inc.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS FOR THE QUARTER ENDED SEPTEMBER 26, 1997 (Continued)
RESULTS OF OPERATIONS (Continued)
- ---------------------------------
earnings from the restructuring charge and asset write-offs in 1996, net
earnings for the third quarter of 1997 were $43.6 million compared to $37.7
million in 1996; and for the nine months ended September 26, 1997 net earnings
were $82.8 million compared to $90.6 million in 1996. Net earnings, excluding
the effect of the special charges in 1996, increased in the third quarter,
primarily as a result of a gain on sale of an investment of $12.4 million
included in other non-operating income. Net earnings for the nine months ended
September 26, 1997, excluding the effect of the special charges in 1996,
decreased primarily as a result of the decrease in operating income, partially
offset by the gain on sale of stock in the third quarter.
LIQUIDITY AND CAPITAL RESOURCES
- -------------------------------
As of September 26, 1997, the Company had a medium term note program and three
long-term credit facilities, one of which supports a commercial paper borrowing
arrangement. The note program allows the Company to issue up to $200 million in
notes. The credit facilities allow for borrowings of up to $16.6 million through
February 1998, $30.6 million through 1999, $250 million through 2001, and $41.4
million through 2003. Borrowings under the credit facilities are subject to
certain financial and operating covenants, including a requirement that the
Company maintain certain financial ratios, and other customary covenants for
credit facilities of similar kind. As of September 26, 1997, the Company had
$65.0 million in borrowings under the note program and $78.2 million in
borrowings under two of the credit facilities.
As of September 26, 1997, the Company had commercial paper borrowings of $67.0
million. As of September 26, 1997, the Company has classified $41.0 million of
short-term borrowings under the credit facilities and $36.8 million of its
commercial paper borrowings as a long-term debt based upon the Company's ability
to maintain such debt under terms of the credit facilities described above.
The net cash provided by operating activities for the nine months ended
September 26, 1997 was $105.4 million compared with $98.2 million for the first
nine months of 1996. Net cash flows from operating activities increased in 1997
compared to 1996, primarily as a result of net collections of accounts
receivable in 1997 compared to a net increase in accounts receivable in 1996.
Most of the Company's existing cash and equivalents are held by its non-U.S.
subsidiaries and will be reinvested in operations outside the United States.
The Company invested $35.2 million in new facilities and equipment during the
nine months ended September 26, 1997 compared to $40.0 million during the
comparable period in 1996.
Cash used in financing activities was $13.1 million in the nine months ended
September 26, 1997 compared to $21.2 million cash used in financing activities
in the comparable period in 1996. The amounts include dividend outflows of $25.1
million in 1997 and $23.0 million in 1996 and $34.0 million for the repurchase
of stock in 1997.
11
<PAGE> 12
Allergan, Inc.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS FOR THE QUARTER ENDED SEPTEMBER 26, 1997 (Continued)
FORWARD-LOOKING STATEMENTS
- --------------------------
Any of the above statements that refer to the Company's estimated or anticipated
future results or product performance are forward-looking and reflect the
Company's current analysis of existing trends and information. Actual results
may differ from current expectations based on a number of factors affecting
Allergan's businesses, including new product performance, competitive
conditions, changing market conditions, the timing and uncertainty of results of
both research and regulatory processes, the continued supply of difficult to
manufacture bulk toxin material for Botox(R), the performance, including
customer acceptance, of new products, and realization of the favorable gross
profit margin impact expected from the Company's previously announced strategic
restructuring, as well as the availability of retinoid financing. In addition,
matters generally affecting the economy, such as currency exchange rates and the
state of the economy worldwide, can affect the Company's results. These
forward-looking statements represent the Company's judgment only as of the date
of this document. Actual results could differ materially from expectations
reflected in this document. As a result, the reader is cautioned not to rely on
these forward-looking statements. The Company disclaims any intent or obligation
to update these forward-looking statements.
12
<PAGE> 13
Allergan, Inc.
PART II - OTHER INFORMATION
Item 5. Other Information.
Change in Management.
---------------------
On October 3, 1997, the registrant announced that William C. Shepherd
will retire as Chairman of the Board, President and Chief Executive Officer,
effective January 1, 1998. He will be succeeded by Dr. Herbert W. Boyer who will
become Chairman of the Board and David E. I. Pyott who will become President and
Chief Executive Officer.
Annual Meeting.
---------------
The Company's next annual stockholders' meeting will be held on Tuesday,
April 21, 1998 at 10:00 A.M. at the Company's headquarters, Irvine, California.
Nomination of Directors.
------------------------
The Restated Certificate of Incorporation of the Company provides that
any stockholder entitled to vote for the election of directors at a meeting may
nominate persons for election as directors only if written notice of such
stockholder's intent to make such nomination is given, either by personal
delivery or United States mail, postage prepaid, to Francis R. Tunney, Jr.,
Secretary, Allergan, Inc., 2525 Dupont Drive, Irvine, CA 92612. To be timely, a
stockholder's notice must be delivered to, or mailed and received at, the
address provided not less than 30 days nor more than 60 days prior to the
scheduled annual meeting, regardless of any postponements, deferrals or
adjournments of that meeting to a later date; provided, however, that if less
than 40 days' notice or prior public disclosure of the date of the scheduled
annual meeting is given or made, notice by the stockholder, to be timely, must
be so delivered or received not later than the close of business on the tenth
day following the earlier of the day on which such notice of the date of the
scheduled annual meeting was mailed or the day on which such public disclosure
was made. A stockholder's notice to the Secretary shall set forth (a) as to each
person whom the stockholder proposes to nominate for election or re-election as
a director, (i) the name, age, business address and residence address of the
person, (ii) the principal occupation or employment of the person, (iii) the
class and number of shares of capital stock of the Company which are
beneficially owned by the person, (iv) any other information relating to the
person that is required to be disclosed in solicitations for proxies for
election of directors pursuant to Rule 14a under the Securities Exchange Act of
1934, as amended; and (b) as to the stockholder giving the notice (i) the name
and address, as they appear on the Company's books, of the stockholder and (ii)
the class and number of shares of the Company's stock which are beneficially
owned by the stockholder on the date of such stockholder notice. The Company may
require any proposed nominee to furnish such other information as may be
reasonably required by the Company to determine the eligibility of such proposed
nominee to serve as director of the Company.
13
<PAGE> 14
Allergan, Inc.
PART II - OTHER INFORMATION
Item 5. Other Information. (Continued)
Other Business.
---------------
As of the date of this Quarterly Report on Form 10-Q, management knows
of two other matters that are expected to be brought before the stockholders at
the Annual Meeting, namely, approval of an amendment of the 1989 Nonemployee
Director Stock Plan to increase the number of shares of restricted stock to be
granted from 600 to 900 per year, and approval of an incentive plan for senior
managers.
With respect to any additional matters, pursuant to the Company's
Restated Certificate of Incorporation only such business shall be conducted at
an annual meeting of stockholders as is properly brought before the meeting. For
business to be properly brought before an annual meeting by a stockholder, in
addition to any other applicable requirements, timely notice of the matter must
be first given to the Secretary of the Company. To be timely, written notice
must be received by the Secretary no less than 30 days nor more than 60 days
prior to the meeting. If less than 40 days' notice or prior public disclosure of
the meeting has been given to stockholders, then notice of the proposed business
matter must be received by the Secretary not later than ten days after the
mailing of notice of the meeting or such public disclosure. Any notice to the
Secretary must include as to each matter the stockholder proposes to bring
before the meeting (a) a brief description of the proposal desired to be brought
before the meeting and the reason for conducting such business at the annual
meeting, (b) the name and record address of the stockholder proposing such
business and any other stockholders known by such stockholder to be supporting
such proposal, (c) the class and number of shares of the Company which are
beneficially owned by the stockholder on the date of such stockholder notice and
by other stockholders known by such stockholder to be supporting such proposal
on the date of such stockholder notice, and (d) any material interest of the
stockholder in such business.
Item 6. Exhibits and Reports on Form 8-K
- Exhibit Index
11 Statement re Computation of Per Share Earnings
27 Financial Data Schedule
14
<PAGE> 15
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
Date: November 6, 1997 ALLERGAN, INC.
/s/ A. J. Moyer
------------------------------------
A. J. Moyer
Corporate Vice President and
Chief Financial Officer
15
<PAGE> 1
ALLERGAN, INC.
EXHIBIT 11
COMPUTATION OF EARNINGS PER SHARE
Earnings per share of common stock, including common stock equivalents, have
been computed based on the following weighted average number of shares and net
earnings:
<TABLE>
<CAPTION>
Three Months Nine Months
Ended Ended
September 26, 1997 September 26, 1997
------------------ ------------------
(in millions, except per share amounts)
<S> <C> <C>
Weighted average number of shares
outstanding during the period 64.9 65.2
Weighted average number of additional shares issuable in connection
with dilutive stock options based upon use of the treasury stock
method
and average market prices 0.7 0.6
----- -----
Weighted average number of common shares
including common stock equivalents 65.6 65.8
===== =====
Net earnings for the period $43.6 $82.8
===== =====
Primary earnings per common share $0.66 $1.26
===== =====
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
CONSOLIDATED STATEMENT OF EARNINGS AND BALANCE SHEETS OF ALLERGAN, INC. AND IS
QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH REPORT ON FORM 10-Q FOR THE
QUARTER ENDED SEPTEMBER 26, 1997.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> JAN-01-1997
<PERIOD-END> SEP-26-1997
<CASH> 141,500
<SECURITIES> 0
<RECEIVABLES> 231,100
<ALLOWANCES> 8,400
<INVENTORY> 141,100
<CURRENT-ASSETS> 628,200
<PP&E> 591,800
<DEPRECIATION> 249,600
<TOTAL-ASSETS> 1,382,900
<CURRENT-LIABILITIES> 358,800
<BONDS> 173,000
0
0
<COMMON> 700
<OTHER-SE> 794,800
<TOTAL-LIABILITY-AND-EQUITY> 1,382,900
<SALES> 828,400
<TOTAL-REVENUES> 828,400
<CGS> 293,300
<TOTAL-COSTS> 293,300
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 2,200
<INTEREST-EXPENSE> 7,200
<INCOME-PRETAX> 116,400
<INCOME-TAX> 33,700
<INCOME-CONTINUING> 82,800
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 82,800
<EPS-PRIMARY> 1.26
<EPS-DILUTED> 1.26
</TABLE>
