-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, K7AL/ORjyocBEI77D6O0bqNn6IgZowImvruvGl3KXI6ICv3Ui75Lwdl7rWWFwmXT e9KeJ9EGXOmj+Mctb2erRQ== 0000892569-99-001821.txt : 19990701 0000892569-99-001821.hdr.sgml : 19990701 ACCESSION NUMBER: 0000892569-99-001821 CONFORMED SUBMISSION TYPE: 11-K PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19981231 FILED AS OF DATE: 19990630 FILER: COMPANY DATA: COMPANY CONFORMED NAME: ALLERGAN INC CENTRAL INDEX KEY: 0000850693 STANDARD INDUSTRIAL CLASSIFICATION: PHARMACEUTICAL PREPARATIONS [2834] IRS NUMBER: 951622442 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 11-K SEC ACT: SEC FILE NUMBER: 001-10269 FILM NUMBER: 99656575 BUSINESS ADDRESS: STREET 1: 2525 DUPONT DRIVE CITY: IRVINE STATE: CA ZIP: 92612 BUSINESS PHONE: 7142464500 MAIL ADDRESS: STREET 1: P.O. BOX 19534 CITY: IRVINE STATE: CA ZIP: 92713-9534 11-K 1 FORM 11-K FOR THE FISCAL YEAR ENDED 12/31/98 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.) 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 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 4 ALLERGAN, INC. SAVINGS AND INVESTMENT PLAN FINANCIAL STATEMENTS DECEMBER 31, 1998 AND 1997 5 ALLERGAN, INC. SAVINGS AND INVESTMENT PLAN Index to Financial Statements and Supplementary Schedules
Financial Statements Page - -------------------- ---- Independent Auditors' Report ............................................................................ 1 Statement of Net Assets Available for Plan Benefits, with Fund Information -- December 31, 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.
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 7 ALLERGAN, INC. Savings and Investment Plan Statement of Net Assets Available for Plan Benefits, with Fund Information December 31, 1998
Allergan, Inc. Interest Growth Global Aggressive Common Balanced Income and Income Equity Growth Stock Fund Fund Fund Fund Fund Fund ---------- ---------- ---------- ---------- ---------- ----------- Investments, at fair value: Common stock of Allergan, Inc., cost $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 ----------- ----------- ----------- ----------- ----------- -----------
Participant Loans Other Total ----------- ------- ---------- 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 ---------- ------ -----------
See accompanying notes to financial statements. (continued) 2 8 ALLERGAN, INC. Savings and Investment Plan Statement of Net Assets Available for Plan Benefits, with Fund Information December 31, 1998 (continued)
Allergan, Inc. Interest Growth Global Aggressive Common Balanced Income and Income Equity Growth Stock Fund Fund Fund Fund Fund Fund ------------ ---------- ---------- ---------- --------- ---------- Payables: Purchases pending settlement (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 ============ ========== ========== ========== ========= ==========
Participant Loans Other Total ----------- ------ ----------- 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 ========= ====== ===========
See accompanying notes to financial statements. 3 9 ALLERGAN, INC. Savings and Investment Plan Statement of Net Assets Available for Plan Benefits, with Fund Information December 31, 1997
Allergan, Inc. Interest Growth Global Aggressive Common Balanced Income and Income Equity Growth Stock Fund Fund Fund Fund Fund Fund ---------- ---- ---- ---- ---- ---- Investments, at fair value: Common stock of Allergan, Inc., cost $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 ----------- ---------- ---------- ---------- ---------- ----------
Participant Loans Other Total ----------- ----- ----- Investments, at fair value: Common stock of Allergan, Inc., cost $21,653,771 -- -- 29,937,978 American Balanced Fund, cost $24,769,327 -- -- 29,090,520 Common/collective trusts, cost approximates market -- -- 20,260,073 Investment Company of America Fund, cost -- -- 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 --------- ------- -----------
See accompanying notes to financial statements. (continued) 4 10 ALLERGAN, INC. Savings and Investment Plan Statement of Net Assets Available for Plan Benefits, with Fund Information December 31, 1997 (continued)
Allergan, Inc. Interest Growth Global Aggressive Common Balanced Income and Income Equity Growth Stock Fund Fund Fund Fund Fund Fund ---------- ---- ---- ---- ---- ---- Payables: Purchases pending settlement -- -- -- -- -- (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 ============ ============ ============ =========== ============ ============
Participant Loans Other Total ----------- ------- ----------- Payables: Purchases pending settlement -- -- (3,316) Short-term fund investment fees -- (31) (63) --------- ------- ----------- Total Payables -- (31) (3,379) --------- ------- ----------- Net assets available for Plan benefits 3,088,178 166,004 133,788,338 ========= ======= ===========
See accompanying notes to financial statements. 5 11 ALLERGAN, INC. Savings and Investment Plan Statement of Changes in Net Assets Available for Plan Benefits, with Fund Information For the Year Ended December 31, 1998
Allergan, Inc. Interest Growth Global Aggressive Common Balanced Income and Income Equity Growth Participant Stock Fund Fund Fund Fund Fund Fund Loans ---------- ---- ---- ---- ---- ---- ----- Additions to Plan assets attributed to: Net appreciation in fair value of investments $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 ----------- ----------- ----------- ----------- ----------- ----------- -----------
Other Total ----- ----- 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 ----------- -----------
See accompanying notes to financial statements. (continued) 6 12 ALLERGAN, INC. Savings and Investment Plan Statement of Changes in Net Assets Available for Plan Benefits, with Fund Information For the Year Ended December 31, 1998 (continued)
Allergan, Inc. Interest Growth Global Aggressive Common Balanced Income and Income Equity Growth Stock Fund Fund Fund Fund Fund Fund ---------- ---- ---- ---- ---- ---- Deductions from Plan assets attributed to: Withdrawals and distributions (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 ============ ============ ============ ============ ============ ============
Participant Loans Other Total ----- ----- ----- 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 ============ =========== ============
See accompanying notes to financial statements. 7 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 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:
1998 1997 ---- ---- (Unaudited) (Unaudited) 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
Participant Accounts Each participant's account is charged for the participant's withdrawals and credited for the participant's contributions, employer contributions and an allocation of fund earnings. The earnings of each of the funds are allocated daily to the individual accounts of participants based on their relative interest in the fair value of the assets held in each fund, except for dividends and unrealized appreciation (depreciation) on the common stock of Allergan, Inc. which is allocated based upon the number of shares held in the individual accounts of participants. 9 15 ALLERGAN, INC. Savings and Investment Plan Notes to Financial Statements December 31, 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 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 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 ----
No. Shares, Units or Principal Fair Amounts Cost Value ---------- ---- ----- 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 =========== ===========
* Investments represent 5% or more of the Plan's net assets. 12 18 ALLERGAN, INC. Savings and Investment Plan Notes to Financial Statements December 31, 1998 and 1997 1997 ----
No. Shares, Units or Principal Fair Amounts Cost Value ------- ---- ----- Common Stock: Allergan, Inc.* 891,994 $21,653,771 $29,937,978 ======= =========== =========== Common/Collective Trusts: LaSalle National Trust annual effective returns varying from 6.37% to 6.47% in 1997* 20,260,073 $20,260,073 $20,260,073 ========== =========== =========== Mutual Funds: American Balanced Fund* 1,855,263 24,769,327 29,090,520 Investment Company of America Fund* 1,265,358 27,160,605 35,746,371 New Perspective Fund 313,876 5,718,001 6,079,769 Twentieth Century Ultra Fund* 333,882 9,542,592 9,114,988 ========== ------------ ------------ Total Mutual Funds $67,190,525 $80,031,648 =========== ===========
* Investments represent 5% or more of the Plan's net assets. 13 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 20 Schedule 1 ALLERGAN, INC. Savings and Investment Plan Line 27a - Schedule of Assets Held for Investment Purposes December 31, 1998
No. Shares, Units or Principal Fair Amounts Cost Value ------- ---- ----- 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 ======= ======== ========
* Party in interest See accompanying independent auditors' report. 15 21 Schedule 2 ALLERGAN, INC. Savings and Investment Plan Line 27d - Schedule of Reportable Transactions Year Ended December 31, 1998
Current Value Cost of Asset on Identity of Description Purchase Sales of Transaction Net Gain Party Involved of Asset Price Price Asset Date or (Loss) - -------------- -------- ----- ----- ----- -------- -------- Not Applicable LaSalle National Trust Income Plus Fund $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
22 Schedule 2 ALLERGAN, INC. Savings and Investment Plan Line 27d - Schedule of Reportable Transactions (continued) Year Ended December 31, 1998
Current Value Cost of Asset on Identity of Description Purchase Sales of Transaction Net Gain Party Involved of Asset Price Price Asset Date or (Loss) - -------------- -------- ----- ----- ----- -------- -------- Various American Balanced Fund -- $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
See accompanying independent auditors' report. 23 ALLERGAN, INC. PUERTO RICO SAVINGS AND INVESTMENT PLAN FINANCIAL STATEMENTS DECEMBER 31, 1998 AND 1997 24 ALLERGAN, INC. PUERTO RICO SAVINGS AND INVESTMENT PLAN Index to Financial Statements and Supplementary Schedules
Financial Statements Page Independent Auditors' Report............................................................................. 1 Statement of Net Assets Available for Plan Benefits, with Fund Information -- December 31, 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.
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 26 ALLERGAN, INC. Puerto Rico Savings and Investment Plan Statement of Net Assets Available for Plan Benefits, with Fund Information December 31, 1998
Allergan, Inc. Interest Growth Global Aggressive Common Balanced Income and Income Equity Growth Participant Stock Fund Fund Fund Fund Fund Fund Loans ---------- ---- ---- ---- ---- ---- ----- Investments, at fair value: Common stock of Allergan, Inc., cost $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 ---------- -------- ---------- ---------- ------- ---------- ----------
Other Total ----- ----- 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 ----------- ----------
See accompanying notes to financial statements. (continued) 2 27 ALLERGAN, INC. Puerto Rico Savings and Investment Plan Statement of Net Assets Available for Plan Benefits, with Fund Information December 31, 1998 (continued)
Allergan, Inc. Interest Growth Global Aggressive Common Balanced Income and Income Equity Growth Stock Fund Fund Fund Fund Fund Fund ---------- -------- -------- ---------- ---- ---------- Payables - Purchases pending settlement (4,499) -- -- -- -- -- ---------- ------- ------- --------- ------- ------- Net assets available for Plan benefits $2,866,325 813,033 726,495 1,513,873 130,825 245,784 ========== ======= ======= ========= ======= =======
Participant Loans Other Total ----------- ----- --------- Payables - Purchases pending settlement -- -- (4,499) ------- ----- --------- Net assets available for Plan benefits 565,981 2,982 6,865,298 ======= ===== =========
See accompanying notes to financial statements. 3 28 ALLERGAN, INC. Puerto Rico Savings and Investment Plan Statement of Net Assets Available for Plan Benefits, with Fund Information December 31, 1997
Allergan, Inc. Interest Growth Global Aggressive Common Balanced Income and Income Equity Growth Participant Stock Fund Fund Fund Fund Fund Fund Loans ---------- ---- ---- ---- ---- ---- ----- Investments, at fair value: Common stock of Allergan, Inc., cost $998,399 $1,380,362 -- -- -- -- -- -- American Balanced Fund, cost $600,223 -- 704,936 -- -- -- -- -- Common/collective trusts, cost approximates market -- -- 683,978 -- -- -- -- Investment Company of America Fund, cost $906,417 -- -- -- 1,192,945 -- -- -- New Perspective Fund, cost $64,584 -- -- -- -- 68,670 -- -- Twentieth Century Ultra Fund, cost $112,124 -- -- -- -- -- 107,100 -- Participant loans -- -- -- -- -- -- 429,509 ---------- ---------- ---------- ---------- ---------- ---------- ---------- Total Investments 1,380,362 704,936 683,978 1,192,945 68,670 107,100 429,509 Interest bearing cash and cash equivalents 13,969 -- -- -- -- -- -- Receivables: Accrued interest and dividends 70 -- -- -- -- -- -- Sales pending settlement -- -- -- -- 111 -- -- ---------- ---------- ---------- ---------- ---------- ---------- ---------- Total Receivables 70 -- -- -- 111 -- -- ---------- ---------- ---------- ---------- ---------- ---------- ---------- Total Assets $1,394,401 704,936 683,978 1,192,945 68,781 107,100 429,509 ---------- ---------- ---------- ---------- ---------- ---------- ----------
Other Total ----- ----- Investments, at fair value: Common stock of Allergan, Inc. cost $998,399 -- 1,380,362 American Balanced Fund, cost $600,223 -- 704,936 Common/collective trusts, cost approximates market -- 683,978 Investment Company of America Fund, cost $906,417 -- 1,192,945 New Perspective Fund, cost $64,584 -- 68,670 Twentieth Century Ultra Fund, cost $112,124 -- 107,100 Participant loans -- 429,509 ---------- ---------- Total Investments -- 4,567,500 Interest bearing cash and cash equivalents 5,108 19,077 Receivables: Accrued interest and dividends 45 115 Sales pending settlement -- 111 ---------- ---------- Total Receivables 45 226 ---------- ---------- Total Assets 5,153 4,586,803 ---------- ----------
See accompanying notes to financial statements. (continued) 4 29 ALLERGAN, INC. Puerto Rico Savings and Investment Plan Statement of Net Assets Available for Plan Benefits, with Fund Information December 31, 1997 (continued)
Allergan, Inc. Interest Growth Global Aggressive Common Balanced Income and Income Equity Growth Participant Stock Fund Fund Fund Fund Fund Fund Loans ---------- ---- ---- ---- ---- ---- ----- Payables: Purchases pending settlement -- -- -- -- -- (111) -- Short-term fund investment fees (1) -- -- -- -- -- -- ----------- ----------- ----------- ----------- ----------- ----------- ----------- Total Payables (1) -- -- -- -- (111) -- ----------- ----------- ----------- ----------- ----------- ----------- ----------- Net assets available for Plan benefits $ 1,394,400 704,936 683,978 1,192,945 68,781 106,989 429,509 =========== =========== =========== =========== =========== =========== ===========
Other Total ----- ----- Payables: Purchases pending settlement -- (111) Short-term fund investment fees (1) (2) ----------- ----------- Total Payables (1) (113) ----------- ----------- Net assets available for Plan benefits 5,152 4,586,690 =========== ===========
See accompanying notes to financial statements. 5 30 ALLERGAN, INC. Puerto Rico Savings and Investment Plan Statement of Changes in Net Assets Available for Plan Benefits, with Fund Information For the Year Ended December 31, 1998
Allergan, Inc. Interest Growth Global Aggressive Common Balanced Income and Income Equity Growth Participant Stock Fund Fund Fund Fund Fund Fund Loans ---------- -------- -------- ---------- ------- ---------- ----------- Additions to Plan assets attributed to: Net appreciation in fair value of investments $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 --------- -------- ------- ------- ------ ------- ------
Other Total ----- ----- 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 ------- ----------
See accompanying notes to financial statements. (continued) 6 31 ALLERGAN, INC. Puerto Rico Savings and Investment Plan Statement of Changes in Net Assets Available for Plan Benefits, with Fund Information For the Year Ended December 31, 1998 (continued)
Allergan, Inc. Interest Growth Global Aggressive Common Balanced Income and Income Equity Growth Stock Fund Fund Fund Fund Fund Fund ---------- ---- ---- ---- ---- ---- Deductions from Plan assets attributed to: Withdrawals and distributions (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 =========== =========== =========== =========== =========== ===========
Participant Loans Other Total ----- ----- ----- 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 =========== =========== ===========
See accompanying notes to financial statements. 7 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 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:
1998 1997 (unaudited) (unaudited) 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
Participant Accounts Each participant's account is charged for the participant's withdrawals and credited for the participant's contributions, employer contributions and an allocation of fund earnings. The earnings of each of the funds are allocated daily to the individual accounts of participants based on their relative interest in the fair value of the assets held in each fund, except for dividends and unrealized appreciation (depreciation) on the common stock of Allergan, Inc. which is allocated based upon the number of shares held in the individual accounts of participants. (continued) 9 34 ALLERGAN, INC. Puerto Rico Savings and Investment Plan Notes to Financial Statements December 31, 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 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 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 ----
No. Shares Fair or Par Value Cost Value ------------ ---- ----- 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 ========== ==========
* Investments represent 5% or more of the Plan's net assets. 12 37 ALLERGAN, INC. Puerto Rico Savings and Investment Plan Notes to Financial Statements December 31, 1998 and 1997 1997 ----
No. Shares Fair or Par Value Cost Value ------------ ---- ----- Common Stock: Allergan, Inc.* 41,127 $998,399 $1,380,362 ====== ======== ========== Common/Collective Trusts: LaSalle National Trust annual effective returns varying from 6.37% to 6.47% in 1997* 683,978 $683,978 $683,978 ======= ======== ======== Mutual Funds: American Balanced Fund* 44,958 600,223 704,936 Investment Company of America Fund* 42,228 906,417 1,192,945 New Perspective Fund 3,545 64,584 68,670 Twentieth Century Ultra Fund 3,923 112,124 107,100 ======= ----------- ----------- Total Mutual Funds $1,683,348 $2,073,651 ========== ==========
* Investments represent 5% or more of the Plan's net assets. 13 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 39 Schedule 1 ---------- ALLERGAN, INC. Puerto Rico Savings and Investment Plan Line 27a - Schedule of Assets Held for Investment Purposes December 31, 1998
No. Shares Fair or Par Value Cost Value ------------ ---- ----- 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 ====== ======= =======
* Party in interest See accompanying independent auditors' report. 15 40 Schedule 2 ALLERGAN, INC. Puerto Rico Savings and Investment Plan Line 27d - Schedule of Reportable Transactions Year Ended December 31, 1998
Current Value Cost of Asset on Identity of Description Purchase Sales of Transaction Net Gain Party Involved of Asset Price Price Asset Date or (Loss) - -------------- -------- ----- ----- ----- -------- --------- Mellon Bank N.A. EB Temporary Investment Fund $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
41 Schedule 2 ALLERGAN, INC. Puerto Rico Savings and Investment Plan Line 27d - Schedule of Reportable Transactions (continued) Year Ended December 31, 1998
Current Value Cost of Asset on Identity of Description Purchase Sales of Transaction Net Gain Party Involved of Asset Price Price Asset Date or (Loss) - -------------- -------- ----- ----- ----- -------- -------- Various New Perspective Fund $ 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
See accompanying independent auditors' report. 42 EXHIBIT INDEX EXHIBIT NO. DESCRIPTION - ----------- ----------- 23 INDEPENDENT AUDITORS' CONSENT EX-23 2 INDEPENDENT AUDITORS' CONSENT 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 -----END PRIVACY-ENHANCED MESSAGE-----