<PAGE> 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 [NO FEE REQUIRED EFFECTIVE OCTOBER 7, 1996]
FOR THE FISCAL YEAR ENDED DECEMBER 31, 1998
-----------------
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 NUMBER 1-10269
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.)
<PAGE> 2
4. ERISA Financial Statements and Schedules and Exhibits:
(a) Financial Statements and Schedules:
Independent Auditors' Report of KPMG LLP on the Statements
of Net Assets Available for Plan Benefits, with Fund
Information as of December 31, 1998 and 1997 and the related
Statement of Changes in Net Assets Available for Plan
Benefits, with Fund Information for the Year Ended December
31, 1998 - Allergan, Inc. Savings and Investment Plan.
Statements of Net Assets Available for Plan Benefits, with
Fund Information as of December 31, 1998 and 1997 -
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, 1998 - Allergan, Inc. Savings and Investment Plan.
Notes to Financial Statements - Allergan, Inc. Savings and
Investment Plan.
Line 27a - Schedule of Assets Held for Investment Purposes
as of December 31, 1998 - Allergan, Inc. Savings and
Investment Plan.
Line 27d - Schedule of Reportable Transactions for the Year
Ended December 31, 1998 - Allergan, Inc. Savings and
Investment Plan.
Independent Auditors' Report of KPMG LLP on the Statements
of Net Assets Available for Plan Benefits, with Fund
Information as of December 31, 1998 and 1997 and the related
Statement of Changes in Net Assets Available for Plan
Benefits, with Fund Information for the Year Ended December
31, 1998 - Allergan, Inc. Puerto Rico Savings and Investment
Plan.
Statements of Net Assets Available for Plan Benefits, with
Fund Information as of December 31, 1998 and 1997 -
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, 1998 - Allergan, Inc. Puerto Rico Savings and Investment
Plan.
2
<PAGE> 3
Notes to Financial Statements - Allergan, Inc. Puerto Rico
Savings and Investment Plan.
Line 27a - Schedule of Assets Held for Investment Purposes
as of December 31, 1998 - Allergan, Inc. Puerto Rico Savings
and Investment Plan.
Line 27d - Schedule of Reportable Transactions for the Year
Ended December 31, 1998 - Allergan, Inc. Puerto Rico Savings
and Investment Plan.
(b) Exhibits
Exhibit 23 - Consent of KPMG 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 29, 1999 BY: /s/ FRANCIS R. TUNNEY, JR.
------------------------------------
Francis R. Tunney, Jr.
Allergan, Inc. Corporate Benefits
Committee (formerly known as
Management Plan Committee)
3
<PAGE> 4
ALLERGAN, INC.
SAVINGS AND INVESTMENT PLAN
FINANCIAL STATEMENTS
DECEMBER 31, 1998 AND 1997
<PAGE> 5
ALLERGAN, INC.
SAVINGS AND INVESTMENT PLAN
Index to Financial Statements and Supplementary Schedules
<TABLE>
<CAPTION>
Financial Statements Page
- -------------------- ----
<S> <C>
Independent Auditors' Report ............................................................................ 1
Statement of Net Assets Available for Plan Benefits, with Fund Information --
December 31, 1998...................................................................................... 2
Statement of Net Assets Available for Plan Benefits, with Fund Information --
December 31, 1997...................................................................................... 4
Statement of Changes in Net Assets Available for Plan Benefits,
with Fund Information -- Year ended December 31, 1998.................................................. 6
Notes to Financial Statements............................................................................ 8
Supplementary Schedules Schedule
- ----------------------- --------
Line 27a - Schedule of Assets Held for Investment Purposes --
December 31, 1998...................................................................................... 1
Line 27d - Schedule of Reportable Transactions --
Year ended December 31, 1998........................................................................... 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.
</TABLE>
<PAGE> 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, 1998 and 1997, and for the year
ended December 31, 1998, 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, 1998 and 1997, and the changes in net assets available for plan
benefits for the year ended December 31, 1998 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 LLP
Orange County, California
June 18, 1999
1
<PAGE> 7
ALLERGAN, INC.
Savings and Investment Plan
Statement of Net Assets Available for Plan Benefits, with Fund Information
December 31, 1998
<TABLE>
<CAPTION>
Allergan,
Inc. Interest Growth Global Aggressive
Common Balanced Income and Income Equity Growth
Stock Fund Fund Fund Fund Fund Fund
---------- ---------- ---------- ---------- ---------- -----------
<S> <C> <C> <C> <C> <C> <C>
Investments, at fair value:
Common stock of Allergan, Inc.,
cost $23,167,929 $54,882,764 -- -- -- -- --
American Balanced Fund,
cost $26,695,256 -- 30,528,059 -- -- -- --
Common/collective trusts,
cost approximates market -- -- 24,271,867 -- -- --
Investment Company of
America Fund, cost
$31,905,163 -- -- -- 42,570,069 -- --
New Perspective Fund,
cost $7,976,783 -- -- -- -- 9,360,890 --
Twentieth Century Ultra Fund,
cost $13,105,574 -- -- -- -- -- 14,761,084
Participant loans -- -- -- -- -- --
----------- ----------- ----------- ----------- ----------- -----------
Total Investments 54,882,764 30,528,059 24,271,867 42,570,069 9,360,890 14,761,084
Interest bearing cash and cash
equivalents 311,537 -- -- -- -- --
Receivables:
Accrued interest and dividends 1,152 -- -- -- -- --
Sales pending settlement 12,666 -- -- -- -- --
----------- ----------- ----------- ----------- ----------- -----------
Total Receivables 13,818 -- -- -- -- --
----------- ----------- ----------- ----------- ----------- -----------
Total Assets $55,208,119 30,528,059 24,271,867 42,570,069 9,360,890 14,761,084
----------- ----------- ----------- ----------- ----------- -----------
</TABLE>
<TABLE>
<CAPTION>
Participant
Loans Other Total
----------- ------- ----------
<S> <C> <C> <C>
Investments, at fair value: -- -- 54,882,764
Common stock of Allergan, Inc.,
cost $23,167,929
American Balanced Fund,
cost $26,695,256 -- 30,528,059
Common/collective trusts,
cost approximates market -- -- 24,271,867
Investment Company of
America Fund, cost
$31,905,163 -- -- 42,570,069
New Perspective Fund,
cost $7,976,783 -- -- 9,360,890
Twentieth Century Ultra Fund,
cost $13,105,574 -- -- 14,761,084
Participant loans 3,503,769 -- 3,503,769
---------- ------ -----------
Total Investments 3,503,769 179,878,502
Interest bearing cash and cash
equivalents -- 88,998 400,535
Receivables:
Accrued interest and dividends -- 338 1,490
Sales pending settlement -- -- 12,666
---------- ------ -----------
Total Receivables -- 338 14,156
---------- ------ -----------
Total Assets 3,503,769 89,336 180,293,193
---------- ------ -----------
</TABLE>
See accompanying notes to financial statements.
(continued)
2
<PAGE> 8
ALLERGAN, INC.
Savings and Investment Plan
Statement of Net Assets Available for Plan Benefits, with Fund Information
December 31, 1998
(continued)
<TABLE>
<CAPTION>
Allergan,
Inc. Interest Growth Global Aggressive
Common Balanced Income and Income Equity Growth
Stock Fund Fund Fund Fund Fund Fund
------------ ---------- ---------- ---------- --------- ----------
<S> <C> <C> <C> <C> <C> <C>
Payables:
Purchases pending settlement (86,528) -- -- -- -- --
Short-term fund investment fees -- -- -- -- -- --
------------ ---------- ---------- ---------- --------- ----------
Total Payables (86,528) -- -- -- -- --
------------ ---------- ---------- ---------- --------- ----------
Net assets available for Plan benefits $ 55,121,591 30,528,059 24,271,867 42,570,069 9,360,890 14,761,084
============ ========== ========== ========== ========= ==========
</TABLE>
<TABLE>
<CAPTION>
Participant
Loans Other Total
----------- ------ -----------
<S> <C> <C> <C>
Payables:
Purchases pending settlement -- -- (86,528)
Short-term fund investment fees -- (8) (8)
--------- ------ -----------
Total Payables -- (8) (86,536)
--------- ------ -----------
Net assets available for Plan benefits 3,503,769 89,328 180,206,657
========= ====== ===========
</TABLE>
See accompanying notes to financial statements.
3
<PAGE> 9
ALLERGAN, INC.
Savings and Investment Plan
Statement of Net Assets Available for Plan Benefits, with Fund Information
December 31, 1997
<TABLE>
<CAPTION>
Allergan,
Inc. Interest Growth Global Aggressive
Common Balanced Income and Income Equity Growth
Stock Fund Fund Fund Fund Fund Fund
---------- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C>
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 -- -- -- -- --
----------- ---------- ---------- ---------- ---------- ----------
Total Investments 29,937,978 29,090,520 20,260,073 35,746,371 6,079,769 9,114,988
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
----------- ---------- ---------- ---------- ---------- ----------
</TABLE>
<TABLE>
<CAPTION>
Participant
Loans Other Total
----------- ----- -----
<S> <C> <C> <C>
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 -- -- 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 -- 3,088,178
--------- ------- -----------
Total Investments 3,088,178 -- 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 3,088,178 166,035 133,791,717
--------- ------- -----------
</TABLE>
See accompanying notes to financial statements.
(continued)
4
<PAGE> 10
ALLERGAN, INC.
Savings and Investment Plan
Statement of Net Assets Available for Plan Benefits, with Fund Information
December 31, 1997
(continued)
<TABLE>
<CAPTION>
Allergan,
Inc. Interest Growth Global Aggressive
Common Balanced Income and Income Equity Growth
Stock Fund Fund Fund Fund Fund Fund
---------- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C>
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
============ ============ ============ =========== ============ ============
</TABLE>
<TABLE>
<CAPTION>
Participant
Loans Other Total
----------- ------- -----------
<S> <C> <C> <C>
Payables:
Purchases pending settlement -- -- (3,316)
Short-term fund investment fees -- (31) (63)
--------- ------- -----------
Total Payables -- (31) (3,379)
--------- ------- -----------
Net assets available for Plan benefits 3,088,178 166,004 133,788,338
========= ======= ===========
</TABLE>
See accompanying notes to financial statements.
5
<PAGE> 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, 1998
<TABLE>
<CAPTION>
Allergan,
Inc. Interest Growth Global Aggressive
Common Balanced Income and Income Equity Growth Participant
Stock Fund Fund Fund Fund Fund Fund Loans
---------- ---- ---- ---- ---- ---- -----
<S> <C> <C> <C> <C> <C> <C> <C>
Additions to Plan assets attributed to:
Net appreciation
in fair value of investments $26,221,469 2,105,937 1,334,881 7,374,688 1,778,309 3,533,450 --
Interest 10,759 -- -- -- -- -- 311,986
Dividends 701,919 1,023,578 -- 642,872 96,270 -- --
----------- ----------- ----------- ----------- ----------- ----------- -----------
Total investment income 26,934,147 3,129,515 1,334,881 8,017,560 1,874,579 3,533,450 311,986
Contributions:
Employer - Company match 2,716,060 5,744 18,701 6,880 2,935 2,429 --
Employees:
Before tax 903,029 1,351,959 1,009,714 2,648,508 1,159,647 1,887,821 --
After tax 420,071 463,653 466,613 842,392 303,048 588,714 --
----------- ----------- ----------- ----------- ----------- ----------- -----------
Total contributions 4,039,160 1,821,356 1,495,028 3,497,780 1,465,630 2,478,964 --
----------- ----------- ----------- ----------- ----------- ----------- -----------
Total additions $30,973,307 4,950,871 2,829,909 11,515,340 3,340,209 6,012,414 311,986
----------- ----------- ----------- ----------- ----------- ----------- -----------
</TABLE>
<TABLE>
<CAPTION>
Other Total
----- -----
<S> <C> <C>
Additions to Plan assets attributed to:
Net appreciation
in fair value of investments -- 42,348,734
Interest 17,322 340,067
Dividends -- 2,464,639
----------- -----------
Total investment income 17,322 45,153,440
Contributions:
Employer - Company match -- 2,752,749
Employees:
Before tax -- 8,960,678
After tax -- 3,084,491
----------- -----------
Total contributions -- 14,797,918
----------- -----------
Total additions 17,322 59,951,358
----------- -----------
</TABLE>
See accompanying notes to financial statements.
(continued)
6
<PAGE> 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, 1998
(continued)
<TABLE>
<CAPTION>
Allergan,
Inc. Interest Growth Global Aggressive
Common Balanced Income and Income Equity Growth
Stock Fund Fund Fund Fund Fund Fund
---------- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C>
Deductions from Plan assets attributed to:
Withdrawals and distributions (4,651,785) (1,987,530) (2,475,674) (2,674,768) (613,209) (1,035,191)
Administrative expenses (243) -- (43,880) -- -- --
------------ ------------ ------------ ------------ ------------ ------------
Total deductions (4,652,028) (1,987,530) (2,519,554) (2,674,768) (613,209) (1,035,191)
------------ ------------ ------------ ------------ ------------ ------------
Increase (decrease) in net assets
available for Plan benefits 26,321,279 2,963,341 310,355 8,840,572 2,727,000 4,977,223
Net assets available for Plan
benefits, beginning of year 30,242,435 29,090,520 20,260,073 35,746,371 6,083,085 9,111,672
Net interfund transfers (1,442,123) (1,525,802) 3,701,439 (2,016,874) 550,805 672,189
------------ ------------ ------------ ------------ ------------ ------------
Net assets available for Plan
benefits, end of year $ 55,121,591 30,528,059 24,271,867 42,570,069 9,360,890 14,761,084
============ ============ ============ ============ ============ ============
</TABLE>
<TABLE>
<CAPTION>
Participant
Loans Other Total
----- ----- -----
<S> <C> <C> <C>
Deductions from Plan assets attributed to:
Withdrawals and distributions -- -- (13,438,157)
Administrative expenses -- (50,759) (94,882)
--------- -------- -----------
Total deductions -- (50,759) (13,533,039)
--------- -------- -----------
Increase (decrease) in net assets
available for Plan benefits 311,986 (33,437) 46,418,319
Net assets available for Plan
benefits, beginning of year 3,088,178 166,004 133,788,338
Net interfund transfers 103,605 (43,239) --
------------ ----------- ------------
Net assets available for Plan
benefits, end of year 3,503,769 89,328 180,206,657
============ =========== ============
</TABLE>
See accompanying notes to financial statements.
7
<PAGE> 13
ALLERGAN, INC.
Savings and Investment Plan
Notes to Financial Statements
December 31, 1998 and 1997
(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 $10,000 for the year ended
December 31, 1998, 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
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
<PAGE> 14
ALLERGAN, INC.
Savings and Investment Plan
Notes to Financial Statements
December 31, 1998 and 1997
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 under the name "Twentieth Century Ultra Fund."
The number of employees participating in these funds at
December 31, 1998 and 1997 was as follows:
<TABLE>
<CAPTION>
1998 1997
---- ----
(Unaudited) (Unaudited)
<S> <C> <C>
Allergan, Inc. Common Stock Fund 2,554 2,589
Balanced Fund 1,727 1,756
Interest Income Fund 1,286 1,358
Growth and Income Fund 2,032 2,026
Global Equity Fund 1,209 1,120
Aggressive Growth Fund 1,478 1,315
</TABLE>
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
<PAGE> 15
ALLERGAN, INC.
Savings and Investment Plan
Notes to Financial Statements
December 31, 1998 and 1997
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. In 1998, forfeitures totaled
$219,927.
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
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
<PAGE> 16
ALLERGAN, INC.
Savings and Investment Plan
Notes to Financial Statements
December 31, 1998 and 1997
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.
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
<PAGE> 17
ALLERGAN, INC.
Savings and Investment Plan
Notes to Financial Statements
December 31, 1998 and 1997
(3) Investments
The following tables present the fair values of investments.
1998
----
<TABLE>
<CAPTION>
No. Shares,
Units or
Principal Fair
Amounts Cost Value
---------- ---- -----
<S> <C> <C> <C>
Common Stock:
Allergan, Inc.* 847,610 $23,167,929 $54,882,764
======= =========== ===========
Common/Collective Trusts:
LaSalle National Trust
annual effective returns varying
from 6.16% to 6.42% in 1998* 24,271,867 $24,271,867 $24,271,867
========== =========== ===========
Mutual Funds:
American Balanced Fund* 1,937,060 26,695,256 30,528,059
Investment Company of America Fund* 1,370,134 31,905,163 42,570,069
New Perspective Fund* 407,882 7,976,783 9,360,890
Twentieth Century Ultra Fund* 441,816 13,105,574 14,761,084
========= ---------- ----------
Total Mutual Funds $79,682,776 $97,220,102
=========== ===========
</TABLE>
* Investments represent 5% or more of the Plan's net assets.
12
<PAGE> 18
ALLERGAN, INC.
Savings and Investment Plan
Notes to Financial Statements
December 31, 1998 and 1997
1997
----
<TABLE>
<CAPTION>
No. Shares,
Units or
Principal Fair
Amounts Cost Value
------- ---- -----
<S> <C> <C> <C>
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 $67,190,525 $80,031,648
=========== ===========
</TABLE>
* Investments represent 5% or more of the Plan's net assets.
13
<PAGE> 19
ALLERGAN, INC.
Savings and Investment Plan
Notes to Financial Statements
December 31, 1998 and 1997
(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, 1998 and 1997, the Plan had not been requested to pay
withdrawals and distributions to terminated and withdrawing
participants.
(6) Subsequent Event
Effective January 1, 1999, the Company amended and combined the Plan
with the Puerto Rico Savings and Investment Plan.
14
<PAGE> 20
Schedule 1
ALLERGAN, INC.
Savings and Investment Plan
Line 27a - Schedule of Assets Held for Investment Purposes
December 31, 1998
<TABLE>
<CAPTION>
No. Shares,
Units or
Principal Fair
Amounts Cost Value
------- ---- -----
<S> <C> <C> <C>
Common Stock:
* Allergan, Inc. 847,610 $23,167,929 $54,882,764
======= =========== ===========
Common/Collective Trusts:
LaSalle National Trust
annual effective returns varying
from 6.16% to 6.42% in 1998 24,271,867 $24,271,867 $24,271,867
========== =========== ===========
Mutual Funds:
American Balanced Fund 1,937,060 26,695,256 30,528,059
Investment Company of America Fund 1,370,134 31,905,163 42,570,069
New Perspective Fund 407,882 7,976,783 9,360,890
Twentieth Century Ultra Fund 441,816 13,105,574 14,761,084
========== ---------- ----------
Total Mutual Funds $79,682,776 $97,220,102
=========== ===========
Participant Loans
interest rates varying from 8.75%
to 9.50% in 1998, latest
maturity 2,013 3,503,769 $3,503,769 $3,503,769
========= ========== ==========
Temporary Investments and Deposits:
* Mellon Bank
EB Temporary Investment Fund,
annual effective rate 5.53% 400,535 $400,535 $400,435
======= ======== ========
</TABLE>
* Party in interest
See accompanying independent auditors' report.
15
<PAGE> 21
Schedule 2
ALLERGAN, INC.
Savings and Investment Plan
Line 27d - Schedule of Reportable Transactions
Year Ended December 31, 1998
<TABLE>
<CAPTION>
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)
- -------------- -------- ----- ----- ----- -------- --------
<S> <C> <C> <C> <C> <C> <C>
Not Applicable LaSalle National Trust
Income Plus Fund $7,777,447 -- $7,777,447 $7,777,447 $ 0
Not Applicable LaSalle National Trust
Income Plus Fund -- $5,521,144 5,521,144 5,521,144 0
Mellon Bank N.A EB Temporary
Investment Fund 9,008,465 -- 9,008,465 9,008,465 0
Mellon Bank N.A EB Temporary
Investment Fund -- 8,806,750 8,806,750 8,806,750 0
Various Twentieth Century
Ultra Fund 5,775,763 -- 5,775,763 5,775,763 0
Various Twentieth Century
Ultra Fund -- 2,402,571 2,204,557 2,402,571 198,014
Various American Balanced Fund 5,285,853 -- 5,285,853 5,285,853 0
</TABLE>
<PAGE> 22
Schedule 2
ALLERGAN, INC.
Savings and Investment Plan
Line 27d - Schedule of Reportable Transactions (continued)
Year Ended December 31, 1998
<TABLE>
<CAPTION>
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)
- -------------- -------- ----- ----- ----- -------- --------
<S> <C> <C> <C> <C> <C> <C>
Various American Balanced Fund -- $4,276,991 3,592,123 4,276,991 684,868
Various New Perspective Fund $3,391,620 -- 3,391,620 3,391,620 0
Various New Perspective Fund -- 1,327,937 1,162,595 1,327,937 165,342
Various Investment Company
of America Fund 8,878,151 -- 8,878,151 8,878,151 0
Various Investment Company
of America Fund -- 5,902,318 4,305,722 5,902,318 1,596,596
Various Allergan, Inc.
Common Stock 3,303,966 -- 3,303,966 3,303,966 0
Various Allergan, Inc.
Common Stock -- 7,161,401 3,713,751 7,161,401 3,447,650
</TABLE>
See accompanying independent auditors' report.
<PAGE> 23
ALLERGAN, INC.
PUERTO RICO
SAVINGS AND INVESTMENT PLAN
FINANCIAL STATEMENTS
DECEMBER 31, 1998 AND 1997
<PAGE> 24
ALLERGAN, INC.
PUERTO RICO
SAVINGS AND INVESTMENT PLAN
Index to Financial Statements and Supplementary Schedules
<TABLE>
<CAPTION>
Financial Statements Page
<S> <C>
Independent Auditors' Report............................................................................. 1
Statement of Net Assets Available for Plan Benefits, with Fund Information --
December 31, 1998...................................................................................... 2
Statement of Net Assets Available for Plan Benefits, with Fund Information --
December 31, 1997...................................................................................... 4
Statement of Changes in Net Assets Available for Plan Benefits,
with Fund Information -- Year ended December 31, 1998.................................................. 6
Notes to Financial Statements............................................................................ 8
Supplementary Schedules Schedule
Line 27a - Schedule of Assets Held for Investment Purposes --
December 31, 1998...................................................................................... 1
Line 27d - Schedule of Reportable Transactions --
Year ended December 31, 1998........................................................................... 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.
</TABLE>
<PAGE> 25
INDEPENDENT AUDITORS' REPORT
----------------------------
The Corporate Benefits Committee
Allergan, Inc.:
We have audited the financial statements of the Allergan, Inc. Puerto Rico
Savings and Investment Plan (the "Plan") as of December 31, 1998 and 1997, and
for the year ended December 31, 1998, 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, 1998 and 1997, and the changes in net assets available for plan
benefits for the year ended December 31, 1998 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 statements 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 LLP
Orange County, California
June 18, 1999
1
<PAGE> 26
ALLERGAN, INC.
Puerto Rico Savings and Investment Plan
Statement of Net Assets Available for Plan Benefits, with Fund Information
December 31, 1998
<TABLE>
<CAPTION>
Allergan,
Inc. Interest Growth Global Aggressive
Common Balanced Income and Income Equity Growth Participant
Stock Fund Fund Fund Fund Fund Fund Loans
---------- ---- ---- ---- ---- ---- -----
<S> <C> <C> <C> <C> <C> <C> <C>
Investments, at fair value:
Common stock of Allergan, Inc.,
cost $1,204,733 $2,853,905 -- -- -- -- -- --
American Balanced Fund,
cost $710,957 -- 813,033 -- -- -- -- --
Common/collective trusts,
cost approximates market -- -- 726,495 -- -- -- --
Investment Company of
America Fund, cost
$1,134,609 -- -- -- 1,513,873 -- -- --
New Perspective Fund,
cost $111,481 -- -- -- -- 130,825 -- --
Twentieth Century Ultra Fund,
cost $218,218 -- -- -- -- -- 245,784 --
Participant loans -- -- -- -- -- -- 565,981
---------- --------- ---------- ---------- ------- ---------- ----------
Total Investments 2,853,905 813,033 726,495 1,513,873 130,825 245,784 565,981
Interest bearing cash and cash
equivalents 16,200 -- -- -- -- -- --
Receivables:
Accrued interest and dividends 60 -- -- -- -- -- --
Sales pending settlement 659 -- -- -- -- -- --
---------- -------- ---------- ---------- ------- ---------- ----------
Total Receivables 719 -- -- -- -- -- --
---------- -------- ---------- ---------- ------- ---------- ----------
Total Assets $2,870,824 813,033 726,495 1,513,873 130,825 245,784 565,981
---------- -------- ---------- ---------- ------- ---------- ----------
</TABLE>
<TABLE>
<CAPTION>
Other Total
----- -----
<S> <C> <C>
Investments, at fair value:
Common stock of Allergan, Inc.,
cost $1,204,733 -- 2,853,905
American Balanced Fund,
cost $710,957 -- 813,033
Common/collective trusts,
cost approximates market -- 726,495
Investment Company of
America Fund, cost
$1,134,609 -- 1,513,873
New Perspective Fund,
cost $111,481 -- 130,825
Twentieth Century Ultra Fund,
cost $218,218 -- 245,784
Participant loans -- 565,981
---------- ----------
Total Investments -- 6,849,896
Interest bearing cash and cash
equivalents 2,971 19,171
Receivables:
Accrued interest and dividends 11 71
Sales pending settlement -- 659
----------- ----------
Total Receivables 11 730
----------- ----------
Total Assets 2,982 6,869,797
----------- ----------
</TABLE>
See accompanying notes to financial statements.
(continued)
2
<PAGE> 27
ALLERGAN, INC.
Puerto Rico Savings and Investment Plan
Statement of Net Assets Available for Plan Benefits, with Fund Information
December 31, 1998
(continued)
<TABLE>
<CAPTION>
Allergan,
Inc. Interest Growth Global Aggressive
Common Balanced Income and Income Equity Growth
Stock Fund Fund Fund Fund Fund Fund
---------- -------- -------- ---------- ---- ----------
<S> <C> <C> <C> <C> <C> <C>
Payables - Purchases pending settlement (4,499) -- -- -- -- --
---------- ------- ------- --------- ------- -------
Net assets available for Plan benefits $2,866,325 813,033 726,495 1,513,873 130,825 245,784
========== ======= ======= ========= ======= =======
</TABLE>
<TABLE>
<CAPTION>
Participant
Loans Other Total
----------- ----- ---------
<S> <C> <C> <C>
Payables - Purchases pending settlement -- -- (4,499)
------- ----- ---------
Net assets available for Plan benefits 565,981 2,982 6,865,298
======= ===== =========
</TABLE>
See accompanying notes to financial statements.
3
<PAGE> 28
ALLERGAN, INC.
Puerto Rico Savings and Investment Plan
Statement of Net Assets Available for Plan Benefits, with Fund Information
December 31, 1997
<TABLE>
<CAPTION>
Allergan,
Inc. Interest Growth Global Aggressive
Common Balanced Income and Income Equity Growth Participant
Stock Fund Fund Fund Fund Fund Fund Loans
---------- ---- ---- ---- ---- ---- -----
<S> <C> <C> <C> <C> <C> <C> <C>
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
---------- ---------- ---------- ---------- ---------- ---------- ----------
</TABLE>
<TABLE>
<CAPTION>
Other Total
----- -----
<S> <C> <C>
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
---------- ----------
</TABLE>
See accompanying notes to financial statements.
(continued)
4
<PAGE> 29
ALLERGAN, INC.
Puerto Rico Savings and Investment Plan
Statement of Net Assets Available for Plan Benefits, with Fund Information
December 31, 1997
(continued)
<TABLE>
<CAPTION>
Allergan,
Inc. Interest Growth Global Aggressive
Common Balanced Income and Income Equity Growth Participant
Stock Fund Fund Fund Fund Fund Fund Loans
---------- ---- ---- ---- ---- ---- -----
<S> <C> <C> <C> <C> <C> <C> <C>
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
=========== =========== =========== =========== =========== =========== ===========
</TABLE>
<TABLE>
<CAPTION>
Other Total
----- -----
<S> <C> <C>
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
=========== ===========
</TABLE>
See accompanying notes to financial statements.
5
<PAGE> 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, 1998
<TABLE>
<CAPTION>
Allergan,
Inc. Interest Growth Global Aggressive
Common Balanced Income and Income Equity Growth Participant
Stock Fund Fund Fund Fund Fund Fund Loans
---------- -------- -------- ---------- ------- ---------- -----------
<S> <C> <C> <C> <C> <C> <C> <C>
Additions to Plan assets attributed to:
Net appreciation in fair value
of investments $1,284,531 53,113 41,285 254,037 21,235 49,444 --
Interest 527 -- -- -- -- -- 48,984
Dividends 34,385 25,814 -- 22,145 1,149 -- --
--------- -------- ------- ------- ------ ------- ------
Total investment income 1,319,443 78,927 41,285 276,182 22,384 49,444 48,984
Contributions:
Employer - Company match 263,076 -- -- -- -- -- --
Employees:
Before tax 71,765 130,686 98,285 190,711 33,391 48,055 --
After tax 4,646 18,433 14,169 27,557 5,403 6,786 --
--------- -------- ------- ------- ------ ------- ------
Total contributions 339,487 149,119 112,454 218,268 38,794 54,841 --
--------- -------- ------- ------- ------ ------- ------
Total additions $1,658,930 228,046 153,739 494,450 61,178 104,285 48,984
--------- -------- ------- ------- ------ ------- ------
</TABLE>
<TABLE>
<CAPTION>
Other Total
----- -----
<S> <C> <C>
Additions to Plan assets attributed to:
Net appreciation in fair value
of investments -- 1,703,645
Interest 578 50,089
Dividends -- 83,493
------- ----------
Total investment income 578 1,837,227
Contributions:
Employer - Company match -- 263,076
Employees:
Before tax -- 572,893
After tax -- 76,994
------- ----------
Total contributions -- 912,963
------- ----------
Total additions 578 2,750,190
------- ----------
</TABLE>
See accompanying notes to financial statements.
(continued)
6
<PAGE> 31
ALLERGAN, INC.
Puerto Rico Savings and Investment Plan
Statement of Changes in Net Assets Available for Plan Benefits,
with Fund Information
For the Year Ended December 31, 1998
(continued)
<TABLE>
<CAPTION>
Allergan,
Inc. Interest Growth Global Aggressive
Common Balanced Income and Income Equity Growth
Stock Fund Fund Fund Fund Fund Fund
---------- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C>
Deductions from Plan assets attributed to:
Withdrawals and distributions (227,880) (50,126) (76,567) (92,138) (7,322) (14,486)
Administrative expenses (12) -- (1,357) -- -- --
----------- ----------- ----------- ----------- ----------- -----------
Total deductions (227,892) (50,126) (77,924) (92,138) (7,322) (14,486)
----------- ----------- ----------- ----------- ----------- -----------
Increase (decrease) in net assets
available for Plan benefits 1,431,038 177,920 75,815 402,312 53,856 89,799
Net assets available for Plan
benefits, beginning of year 1,394,400 704,936 683,978 1,192,945 68,781 106,989
Net interfund transfers 40,887 (69,823) (33,298) (81,384) 8,188 48,996
----------- ----------- ----------- ----------- -----------
Net assets available for Plan
benefits, end of year $ 2,866,325 813,033 726,495 1,513,873 130,825 245,784
=========== =========== =========== =========== =========== ===========
</TABLE>
<TABLE>
<CAPTION>
Participant
Loans Other Total
----- ----- -----
<S> <C> <C> <C>
Deductions from Plan assets attributed to
Withdrawals and distributions -- -- (468,519)
Administrative expenses -- (1,694) (3,063)
----------- ----------- -----------
Total deductions -- (1,694) (471,582)
----------- ----------- -----------
Increase (decrease) in net assets
available for Plan benefits 48,984 (1,116) 2,278,608
Net assets available for Plan
benefits, beginning of year 429,509 5,152 4,586,690
Net interfund transfers 87,488 (1,054) --
----------- ----------- -----------
Net assets available for Plan
benefits, end of year 565,981 2,982 6,865,298
=========== =========== ===========
</TABLE>
See accompanying notes to financial statements.
7
<PAGE> 32
ALLERGAN, INC.
Puerto Rico Savings and Investment Plan
Notes to Financial Statements
December 31, 1998 and 1997
(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 $8,500 for the year ended December 31, 1998, 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
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
<PAGE> 33
ALLERGAN, INC.
Puerto Rico Savings and Investment Plan
Notes to Financial Statements
December 31, 1998 and 1997
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 under the name
"Twentieth Century Ultra Fund."
The number of employees participating in these funds at December 31,
1998 and 1997 was as follows:
<TABLE>
<CAPTION>
1998 1997
(unaudited) (unaudited)
<S> <C> <C>
Allergan, Inc. Common Stock Fund 420 371
Balanced Fund 284 239
Interest Income Fund 193 197
Growth and Income Fund 330 272
Global Equity Fund 118 77
Aggressive Growth Fund 128 94
</TABLE>
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
<PAGE> 34
ALLERGAN, INC.
Puerto Rico Savings and Investment Plan
Notes to Financial Statements
December 31, 1998 and 1997
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. In 1998, forfeitures totaled $5,417.
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 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
<PAGE> 35
ALLERGAN, INC.
Puerto Rico Savings and Investment Plan
Notes to Financial Statements
December 31, 1998 and 1997
(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. Participant loans are valued at cost, which
approximates fair value.
Purchases and sales of investments are reflected on the trade-date
basis. Dividend income is recorded on the ex-dividend date.
The Plan presents in the 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
<PAGE> 36
ALLERGAN, INC.
Puerto Rico Savings and Investment Plan
Notes to Financial Statements
December 31, 1998 and 1997
(3) Investments
The following tables present the fair values of investments.
1998
----
<TABLE>
<CAPTION>
No. Shares Fair
or Par Value Cost Value
------------ ---- -----
<S> <C> <C> <C>
Common Stock:
Allergan, Inc.* 44,076 $1,204,733 $2,853,905
====== ========== ==========
Common/Collective Trusts:
LaSalle National Trust
annual effective returns varying
from 6.16% to 6.42% in 1998* 726,495 $726,495 $726,495
======= ======== ========
Mutual Funds:
American Balanced Fund* 51,588 710,957 813,033
Investment Company of America Fund* 48,725 1,134,609 1,513,873
New Perspective Fund 5,700 111,481 130,825
Twentieth Century Ultra Fund* 7,357 218,218 245,784
======= --------- ---------
Total Mutual Funds $2,175,265 $2,703,515
========== ==========
</TABLE>
* Investments represent 5% or more of the Plan's net assets.
12
<PAGE> 37
ALLERGAN, INC.
Puerto Rico Savings and Investment Plan
Notes to Financial Statements
December 31, 1998 and 1997
1997
----
<TABLE>
<CAPTION>
No. Shares Fair
or Par Value Cost Value
------------ ---- -----
<S> <C> <C> <C>
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 $1,683,348 $2,073,651
========== ==========
</TABLE>
* Investments represent 5% or more of the Plan's net assets.
13
<PAGE> 38
ALLERGAN, INC.
Puerto Rico Savings and Investment Plan
Notes to Financial Statements
December 31, 1998 and 1997
(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, 1998 and 1997, the Plan had not been requested to pay
withdrawals and distributions to terminated and withdrawing
participants.
(6) Subsequent Event
Effective January 1, 1999, the Company amended and combined the Plan
with the U.S. Savings and Investment Plan.
14
<PAGE> 39
Schedule 1
----------
ALLERGAN, INC.
Puerto Rico Savings and Investment Plan
Line 27a - Schedule of Assets Held for Investment Purposes
December 31, 1998
<TABLE>
<CAPTION>
No. Shares Fair
or Par Value Cost Value
------------ ---- -----
<S> <C> <C> <C>
Common Stock:
* Allergan, Inc. 44,076 $1,204,733 $2,853,905
====== ========== ==========
Common/Collective Trusts:
LaSalle National Trust
annual effective returns varying
from 6.16% to 6.42% in 1998 726,495 $726,495 $726,495
======= ======== ========
Mutual Funds:
American Balanced Fund 51,588 710,957 813,033
Investment Company of America Fund 48,725 1,134,609 1,513,873
New Perspective Fund 5,700 111,481 130,825
Twentieth Century Ultra Fund 7,357 218,218 245,784
======= --------- ---------
Total Mutual Funds $2,175,265 $2,703,515
========== ==========
Participant Loans
interest rates varying from 8.75%
to 9.50% in 1998, latest maturity 2013 565,981 $565,981 $565,981
======= ======== ========
Temporary Investments and Deposits:
* Mellon Bank
EB Temporary Investment Fund,
annual effective rate 5.53% 19,171 $19,171 $19,171
====== ======= =======
</TABLE>
* Party in interest
See accompanying independent auditors' report.
15
<PAGE> 40
Schedule 2
ALLERGAN, INC.
Puerto Rico Savings and Investment Plan
Line 27d - Schedule of Reportable Transactions
Year Ended December 31, 1998
<TABLE>
<CAPTION>
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)
- -------------- -------- ----- ----- ----- -------- ---------
<S> <C> <C> <C> <C> <C> <C>
Mellon Bank N.A. EB Temporary
Investment Fund $240,472 -- $240,472 $240,472 $0
Mellon Bank N.A. EB Temporary
Investment Fund -- $431,423 431,423 431,423 0
Not Applicable LaSalle National Trust
Income Plus Fund 592,599 -- 592,599 592,599 0
Not Applicable LaSalle National Trust
Income Plus Fund -- 170,757 170,757 170,757 0
Various Twentieth Century
Ultra Fund 128,718 -- 128,718 128,718 0
Various Twentieth Century
Ultra Fund -- 33,619 30,849 33,619 2,770
Various American Balanced Fund 433,529 -- 433,529 433,529 0
Various American Balanced Fund -- 107,868 90,595 107,868 17,273
</TABLE>
<PAGE> 41
Schedule 2
ALLERGAN, INC.
Puerto Rico Savings and Investment Plan
Line 27d - Schedule of Reportable Transactions (continued)
Year Ended December 31, 1998
<TABLE>
<CAPTION>
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)
- -------------- -------- ----- ----- ----- -------- --------
<S> <C> <C> <C> <C> <C> <C>
Various New Perspective Fund $ 90,536 -- $ 90,536 $ 90,536 0
Various New Perspective Fund -- $ 15,857 13,882 15,857 1,975
Various Investment Company
of America Fund 548,639 -- 548,639 548,639 0
Various Investment Company
of America Fund -- 203,318 148,320 203,318 54,998
Various Allergan, Inc. Common Stock 258,646 -- 258,646 258,646 0
Various Allergan, Inc. Common Stock -- 350,821 181,928 350,821 168,893
</TABLE>
See accompanying independent auditors' report.
<PAGE> 42
EXHIBIT INDEX
EXHIBIT NO. DESCRIPTION
- ----------- -----------
23 INDEPENDENT AUDITORS' CONSENT
<PAGE> 1
Exhibit 23
INDEPENDENT AUDITORS' CONSENT
The Corporate Benefits Committee
Allergan, Inc.:
We consent to incorporation by reference in the registration statements Nos.
33-29528, 33-44770 and 333-09091 on Form S-8 of Allergan, Inc. of our report
dated June 18, 1999, relating to the statements of net assets available for plan
benefits of the Allergan, Inc. Savings and Investment Plan as of December 31,
1998 and 1997, and the related statement of changes in net assets available for
plan benefits and related schedules for the year ended December 31, 1998, which
report appears in the December 31, 1998 Annual Report on Form 11-K of Allergan,
Inc. Savings and Investment Plan.
We consent to incorporation by reference in the registration statements Nos.
33-29528, 33-44770 and 333-09091 on Form S-8 of Allergan, Inc. of our report
dated June 18, 1999, relating to the statements of net assets available for plan
benefits of the Allergan, Inc. Puerto Rico Savings and Investment Plan as of
December 31, 1998 and 1997, and the related statement of changes in net assets
available for plan benefits and related schedules for the year ended December
31, 1998, which report appears in the December 31, 1998 Annual Report on Form
11-K of Allergan, Inc. Puerto Rico Savings and Investment Plan.
KPMG LLP
Orange County, California
June 28, 1999
