0001193125-12-271090.txt : 20120614 0001193125-12-271090.hdr.sgml : 20120614 20120614171259 ACCESSION NUMBER: 0001193125-12-271090 CONFORMED SUBMISSION TYPE: 11-K PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 20111231 FILED AS OF DATE: 20120614 DATE AS OF CHANGE: 20120614 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: 1934 Act SEC FILE NUMBER: 001-10269 FILM NUMBER: 12908280 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 d357594d11k.htm FORM 11-K Form 11-K
Table of Contents

 

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 11-K

(Mark One):

 

  þ ANNUAL REPORT PURSUANT TO SECTION 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the fiscal year ended December 31, 2011

OR

 

  ¨ TRANSITION REPORT PURSUANT TO SECTION 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from                      to                     

Commission File Number 1-10269

ALLERGAN, INC.

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)

 

 

 


Table of Contents

REQUIRED INFORMATION

 

4. ERISA Financial Statements and Schedule and Exhibits:

 

  (a) Financial Statements and Schedule:

Report of Independent Registered Public Accounting Firm of Lesley, Thomas, Schwarz & Postma, Inc., dated June 14, 2012, on the Statements of Net Assets Available for Benefits as of December 31, 2011 and 2010 and the related Statements of Changes in Net Assets Available for Benefits for the Years Then Ended — Allergan, Inc. Savings and Investment Plan.

Statements of Net Assets Available for Benefits as of December 31, 2011 and 2010 — Allergan, Inc. Savings and Investment Plan.

Statements of Changes in Net Assets Available for Benefits for the Years Ended December 31, 2011 and 2010 — Allergan, Inc. Savings and Investment Plan.

Notes to Financial Statements — Allergan, Inc. Savings and Investment Plan.

Schedule H, Line 4i — Schedule of Assets (Held at End of Year) — December 31, 2011 — Allergan, Inc. Savings and Investment Plan.

 

  (b) Exhibits

Exhibit 23 — Consent of Lesley, Thomas, Schwarz & Postma, Inc.

SIGNATURE

The Plan. Pursuant to the requirements of the Securities Exchange Act of 1934, the trustees (or other persons who administer the employee benefit plan) have duly caused this annual report to be signed on its behalf by the undersigned hereunto duly authorized.

 

   

ALLERGAN, INC. SAVINGS

AND INVESTMENT PLAN

 

Date: June 14, 2012

    By:   /s/ Jeffrey L. Edwards
       

Jeffrey L. Edwards

        Allergan, Inc.
        Executive Committee


Table of Contents

ALLERGAN, INC.

SAVINGS AND INVESTMENT PLAN

INDEX TO FINANCIAL STATEMENTS

AND SUPPLEMENTAL SCHEDULE

 

     Page  

Report of Independent Registered Public Accounting Firm

     1   

Statements of Net Assets Available for Benefits — December 31, 2011 and 2010

     2   

Statements of Changes in Net Assets Available for Benefits for the Years Ended December  31, 2011 and 2010

     3   

Notes to Financial Statements

     4   

SUPPLEMENTAL SCHEDULE

  

Schedule H, Line 4i – Schedule of Assets (Held At End of Year) — December 31, 2011

     18   

EXHIBIT 23

  

All other schedules are omitted because they are not required or applicable pursuant to ERISA and Department of Labor regulations.


Table of Contents

Report of Independent Registered Public Accounting Firm

To the Executive Committee of Allergan, Inc.

We have audited the accompanying statements of net assets available for benefits of the Allergan, Inc. Savings and Investment Plan as of December 31, 2011 and 2010, and the related statements of changes in net assets available for benefits for the years then ended. 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 the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the financial statements are free of material misstatement. We were not engaged to perform an audit of the Plan’s internal control over financial reporting. Our audits included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Plan’s internal control over financial reporting. Accordingly, we express no such opinion. An audit also 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 Allergan, Inc. Savings and Investment Plan as of December 31, 2011 and 2010, and the changes in net assets available for benefits for the years then ended in conformity with accounting principles generally accepted in the United States of America.

Our audits were performed for the purpose of forming an opinion on the basic financial statements taken as a whole. The accompanying supplemental schedule of Schedule H, Line 4i – Schedule of Assets (Held at End of Year) as of December 31, 2011 is presented for the purpose of additional analysis and is not a required part of the basic financial statements but is 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. This supplemental schedule is the responsibility of the Plan’s management. The supplemental schedule has been subjected to the auditing procedures applied in the audits of the basic financial statements and, in our opinion, is fairly stated in all material respects in relation to the basic financial statements taken as a whole.

/s/ Lesley, Thomas, Schwarz & Postma, Inc.

Lesley, Thomas, Schwarz & Postma, Inc.

Newport Beach, California

June 14, 2012

 

1


Table of Contents

ALLERGAN, INC. SAVINGS AND INVESTMENT PLAN

STATEMENTS OF NET ASSETS AVAILABLE FOR BENEFITS

DECEMBER 31, 2011 AND 2010

 

     2011     2010  

ASSETS

    

Investments in master trust at fair value (Note 3)

   $ 712,099,334      $ 642,493,852   
  

 

 

   

 

 

 

Receivables

    

Employer contributions

     21,610,121        19,055,301   

Notes receivable from participants

     10,264,029        9,326,818   
  

 

 

   

 

 

 

Total receivables

     31,874,150        28,382,119   
  

 

 

   

 

 

 

Net assets available for benefits before adjustment
to contract value

     743,973,484        670,875,971   

Adjustment from fair value to contract value
for fully benefit-responsive investment
contract (Note 2)

     (196,209     454,936   
  

 

 

   

 

 

 

NET ASSETS AVAILABLE FOR BENEFITS

   $ 743,777,275      $ 671,330,907   
  

 

 

   

 

 

 

See the accompanying notes to these financial statements

 

2


Table of Contents

ALLERGAN, INC. SAVINGS AND INVESTMENT PLAN

STATEMENTS OF CHANGES IN NET ASSETS AVAILABLE FOR BENEFITS

FOR THE YEARS ENDED DECEMBER 31, 2011 AND 2010

 

     2011      2010  

ADDITIONS TO NET ASSETS ATTRIBUTED TO:

     

Investment income

     

Net appreciation in contract value of investments (Note 3)

   $ 15,624,768       $ 56,560,378   

Dividends

     9,116,326         8,300,289   
  

 

 

    

 

 

 
     24,741,094         64,860,667   
  

 

 

    

 

 

 

Interest from notes receivable from participants

     459,898         459,712   
  

 

 

    

 

 

 

Contributions

     

Employer—match

     18,473,148         13,773,636   

Employer—retirement

     20,573,877         18,166,478   

Employer—other

     —           1,382,504   

Participant—before tax

     40,847,171         36,718,313   

Participant—after tax

     1,227,372         971,878   

Rollovers

     5,609,860         4,951,583   
  

 

 

    

 

 

 
     86,731,428         75,964,392   
  

 

 

    

 

 

 

Total additions to net assets

     111,932,420         141,284,771   
  

 

 

    

 

 

 

DEDUCTIONS FROM NET ASSETS ATTRIBUTED TO:

     

Benefits paid to participants

     39,415,957         39,210,481   

Corrective distributions

     3,763         1,586   

Deemed distributions

     1,453         13,973   

Administrative expenses

     64,879         39,790   
  

 

 

    

 

 

 

Total deductions from net assets

     39,486,052         39,265,830   
  

 

 

    

 

 

 

NET INCREASE

     72,446,368         102,018,941   

NET ASSETS AVAILABLE FOR BENEFITS, beginning of year

     671,330,907         569,311,966   
  

 

 

    

 

 

 

NET ASSETS AVAILABLE FOR BENEFITS, end of year

   $ 743,777,275       $ 671,330,907   
  

 

 

    

 

 

 

See the accompanying notes to these financial statements

 

3


Table of Contents

ALLERGAN, INC. SAVINGS AND INVESTMENT PLAN

NOTES TO FINANCIAL STATEMENTS

FOR THE YEARS ENDED DECEMBER 31, 2011 AND 2010

NOTE 1 — DESCRIPTION OF THE PLAN

The following description of the Allergan, Inc. Savings and Investment Plan (Restated 2011) (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, established on July 26, 1989, is a defined contribution plan sponsored by Allergan, Inc. (the “Company”). The Plan covers eligible employees of the Company as defined below. The Plan is subject to the provisions of the Employee Retirement Income Security Act of 1974, as amended (“ERISA”) and is qualified under the Internal Revenue Code (the “Code”). The administrator for the Plan is the Allergan, Inc. Executive Committee. The trustee for the Plan is JPMorgan Chase Bank.

Employee Contributions — The Plan provides for immediate eligibility to participate in the Plan. The Company’s eligible United States employees may contribute a portion of their defined compensation, either before tax, after tax, or a combination thereof, subject to the limitations as defined by the Code.

The Company’s eligible Puerto Rico employees may contribute a portion of their defined compensation, either before tax, after tax, or a combination thereof, subject to the limitations as defined by the Puerto Rico Internal Revenue Code.

Participants direct the investment of their contributions into various investment options offered by the Plan through the Master Trust. The plan administrator, or its delegate, regularly consults with an investment advisor to evaluate investment performance and, based thereon, will add or remove investment options. Prior to October 8, 2010, participant contributions could be invested in the Allergan, Inc. Common Stock Fund, JPMorgan Stable Value Fund, Western Asset Core Plus Bond Portfolio Fund, Dodge & Cox Balanced Fund, American Century Income and Growth Fund, BlackRock Equity Index Fund, Janus Adviser INTECH Risk-Managed Growth Fund, American Funds New Perspective R5 Fund, American Funds EuroPacific Growth R5 Fund, Columbia Marsico Focused Equities Fund, Evergreen Special Values Fund, TIAA-CREF Small Cap Blend Index Fund, Times Square Small Cap Growth Fund, Dodge & Cox Stock Fund or any combination of the 14 funds at the participant’s discretion.

Effective October 8, 2010, American Century Income and Growth Fund and Janus Adviser INTECH Risk-Managed Growth Fund were removed from the investment options and Pimco Total Return-Inst Fund, JPMorgan U.S. Equity Fund, and Nuveen Winslow Large Cap Growth Fund were added to the investment options. On October 11, 2010, Western Asset Core Plus Bond Portfolio Fund was removed from the investment options. On December 3, 2010, American Funds EuroPacific Growth R5 Fund, Evergreen Special Values Fund, and American Funds New Perspective R5 Fund were removed from the investment options and American Funds EuroPacific Growth R6 Fund, Wells Fargo Advantage Special Small Cap Value Fund, and American Funds New Perspective R6 Fund were added to the investment options.

Effective August 15, 2011, JPMorgan Stable Value Fund was removed from the investment options and JPMCB Stable Asset Income Fund-Select Fund was added to the investment options.

Certain limitations imposed by the Code may have the effect of reducing the level of contributions initially selected by participants who fall within the classification of “highly compensated employees” as defined in the Code.

Employer Matching Contributions — The Plan authorizes the Company’s Board of Directors, or its delegate, to change the Company’s matching contribution levels from time to time in an amount not to exceed 4% of each employee’s defined compensation. Effective January 1, 2010, the Company contributed an amount equal to 100% of each employee’s contribution up to 3% of defined compensation. Effective August 1, 2010, the match was increased to 100% of each employee’s contribution up to 4% of defined compensation.

 

4


Table of Contents

ALLERGAN, INC. SAVINGS AND INVESTMENT PLAN

NOTES TO FINANCIAL STATEMENTS (CONTINUED)

FOR THE YEARS ENDED DECEMBER 31, 2011 AND 2010

 

NOTE 1 — DESCRIPTION OF THE PLAN (CONTINUED)

 

Employer Retirement Contributions — Effective January 1, 2003, the Company makes an annual retirement contribution equal to 5% of each participant’s defined compensation if they are eligible for the Retirement Contribution feature of the Plan, have completed at least six months of service, and are employed on the last business day of the year (or terminated employment during the year due to death, disability or retirement). In addition, the Company has discretion to make supplemental retirement contributions in the future years as necessary to satisfy applicable non-discrimination requirements set forth under the Code.

Employer Contribution for Account Restoration — During the year ended December 31, 2010, the Company contributed $1,357,504 of employer contributions, which is included in “Employer-other,” and $1,046,905 of related lost earnings, which is included in “Net appreciation in contract value of investments” in the Statements of Changes in Net Assets Available for Benefits, to restore participants’ accounts related to forfeited unvested employer contributions for certain terminated employees.

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 at any time, subject to the Company’s insider trading policy.

Participant Accounts — Each participant’s account is credited for the participant’s contributions, employer match and employer retirement contributions and allocations of fund earnings and charged with an allocation of administrative expenses and fund losses. The earnings and losses 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.

Notes Receivable from Participants — 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 excluding retirement contributions. Loan terms range from one to five years or, for the purchase of a primary residence, up to 15 years. 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. Defaults on participant loans are considered to be deemed distributions. The Plan classified participant loans as notes receivable from participants in the Statements of Net Assets Available for Benefits and measured them at their unpaid principal balance plus any accrued interest.

Vesting and Forfeitures — Participant contributions are fully vested at all times. Participants generally forfeit their share of employer matching contributions if they terminate their employment before completing three years of service with the Company. Employer matching contributions vest based on a cliff vesting of three years of service. Employer retirement contributions generally vest on a graduated basis. After completing one year of service, the participant is 20% vested, and vesting increases 20% each year thereafter until fully vested at the end of the fifth year of service. Forfeitures are used by the Company to offset future employer contribution requirements and to reinstate rehired employee accounts. During the Plan years ended December 31, 2011 and 2010, $1,934,892 and $2,127,970, respectively, of forfeitures were used to offset contributions. At December 31, 2011 and 2010, unutilized forfeitures totaled $17,709 and $8,775, respectively.

 

5


Table of Contents

ALLERGAN, INC. SAVINGS AND INVESTMENT PLAN

NOTES TO FINANCIAL STATEMENTS (CONTINUED)

FOR THE YEARS ENDED DECEMBER 31, 2011 AND 2010

 

NOTE 1 — DESCRIPTION OF THE PLAN (CONTINUED)

 

Payment of Benefits — Participants may withdraw their employee “after-tax” and rollover contributions at any time. After withdrawing all “after-tax” and rollover contributions, vested employer matching contributions can also be withdrawn at any time by a participant who has at least three years of credited service provided that the matching contributions were credited at least two years prior to withdrawal. Withdrawals of employee “after-tax” contributions during employment may cause the participant to become ineligible to receive certain employer matching contributions and be suspended from contributing to the Plan for a period of six months following the withdrawal.

After the permitted withdrawal of employee “after-tax” contributions, rollover contributions and vested employer matching contributions in accordance with the prior paragraph, and upon receipt of any loans available under the Plan, an employee may withdraw his or her “before-tax” contributions and any remaining “after-tax” contributions and vested employer matching contributions in the event of financial hardship. Hardship withdrawals cause the employee to become ineligible to contribute to the Plan for a period of six months following the withdrawal for U.S. employees and 12 months for Puerto Rico employees. Hardship withdrawals of employer retirement contributions are not permitted.

Participants become entitled to payment of the total value of their accounts at the time of termination (if fully vested), attainment of age 59-1/2 (if fully vested), permanent and total disability, or death. Under certain circumstances set forth in the Plan, the participant may elect to receive the distribution in a lump sum or may elect partial distributions. If the participant’s vested account value is $1,000 or more, withdrawals may be postponed until as late as attaining age 70-1/2. After death, payment is made in the form of a lump sum to the designated beneficiary.

NOTE 2 — SIGNIFICANT ACCOUNTING POLICIES

Basis of Accounting — The accompanying financial statements have been prepared on the accrual basis of accounting. Except for unutilized forfeitures (see Note 1), the net assets of the Plan are allocated entirely to individual participants’ accounts.

The Statements of Net Assets Available for Benefits present the fair value of the investment contracts as well as the adjustment of the fully benefit-responsive investment contracts from fair value to contract value. The Statements of Changes in Net Assets Available for Benefits are prepared on a contract value basis.

Accounting Estimates — The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires the plan administrator to make estimates and assumptions that affect the reported amounts of assets, liabilities, and changes therein, and disclosure of contingent assets and liabilities. Actual results could differ from those estimates.

Investment Valuation and Income Recognition — On June 20, 2007, the Plan, along with the Allergan, Inc. Employee Stock Ownership Plan, entered into the Allergan, Inc. Master Trust (the “Master Trust”). See Note 3, for further discussion of the Master Trust. The Plan’s investments in the Master Trust are stated at fair value with the exception of the JPMorgan Stable Value Fund and the JPMCB Stable Asset Income Fund which are stated at their fair values with the related adjustment amounts to their contract values.

The following presentation relates to the fully benefit-responsive investment contracts (JPMCB Stable Asset Income Fund for 2011 and JPMorgan Stable Value Fund for 2010) held in the Master Trust for the years ended December 31, 2011 and 2010:

(a) The accounts are credited with earnings on the underlying investments and charged for participant withdrawals and administrative expenses. The contracts are included in the financial statements at fair value with adjustments to contract value as reported to the Plan by JPMorgan Chase Bank.

(b) The fair value of the investment contracts at December 31, 2011 and 2010 was $79,122,829 and $71,046,219, respectively. The contract value of the investment contracts at December 31, 2011 and 2010 was $78,926,620 and $71,501,155, respectively.

 

6


Table of Contents

ALLERGAN, INC. SAVINGS AND INVESTMENT PLAN

NOTES TO FINANCIAL STATEMENTS (CONTINUED)

FOR THE YEARS ENDED DECEMBER 31, 2011 AND 2010

 

NOTE 2 — SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

 

(c) There are no reserves against the contract value for credit risk of the contract issuer or otherwise. The average yields at December 31, 2011 and 2010 were approximately 2.18% and 1.77%, respectively. The crediting interest rate is based on an agreed-upon formula with the insurer, but cannot be less than zero. This rate is reset each calendar quarter based on the data as of the last business day of the month prior to the end of the quarter. The crediting interest rates in effect at December 31, 2011 and 2010 were approximately 2.18% and 2.25%, respectively. Participant initiated transactions occur at contract value.

Purchases and sales of investments held in the Master Trust are reflected on the trade-date basis. Dividend income is recorded on the ex-dividend date.

The Plan presents, in the Statements of Changes in Net Assets Available for Benefits, the net appreciation (depreciation) in the contract value of its investments held in the Master Trust, which consist of the realized gains or losses and the unrealized appreciation (depreciation) on those investments held in the Master Trust.

Contribution Funding — The participant deferrals and employer matching contributions are funded on a consistent basis following the issuance of each Company payroll. Employer retirement contributions and matching contribution true-ups are funded on an annual basis.

Non-Discrimination for Employee and Employer Contributions — The Plan, as required by the Code, performs annual tests between participants who are highly compensated employees and those who are non-highly compensated employees to ensure that highly compensated employees are not disproportionately favored under the Plan. If the Plan fails the tests, it must refund some of the excess contributions made on behalf of highly compensated employees during the applicable year. Excess contributions that are refunded are accrued as a liability of the Plan in the year to which they relate. No such accrual exists at December 31, 2011 and 2010.

Non-Distributed Benefits — The Plan does not accrue non-distributed benefits related to participants who have withdrawn from the Plan, but recognizes such benefits as a deduction from net assets in the period in which such benefits are paid.

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 non-forfeitable without regard to the years of service of such participants.

Administrative Expenses — Expenses incurred in the administration and operation of the Plan are paid by the Plan, except to the extent paid by the Company. Certain administrative expenses of the Plan are paid by the Company.

Accounting Pronouncements Not Yet Adopted — In May 2011, the Financial Accounting Standards Board issued an accounting standards update that clarifies and amends the existing fair value measurement and disclosure requirements. This guidance is effective for the Plan’s financial statements for the year ended December 31, 2012. The Plan does not anticipate that the adoption of this guidance will have a material impact on the Plan’s financial statements.

Subsequent Events — The Company has evaluated subsequent events through the date which the financial statements were available to be issued.

 

7


Table of Contents

ALLERGAN, INC. SAVINGS AND INVESTMENT PLAN

NOTES TO FINANCIAL STATEMENTS (CONTINUED)

FOR THE YEARS ENDED DECEMBER 31, 2011 AND 2010

 

NOTE 3 — INVESTMENTS

The Master Trust was created pursuant to a trust agreement dated June 20, 2007, between the Company and JPMorgan Chase Bank, as trustee of the funds, to permit the commingling of trust assets of both the Allergan, Inc. Savings and Investment Plan and Allergan, Inc. Employee Stock Ownership Plan, for investment and administrative purposes. The assets of the Master Trust are held by JPMorgan Chase Bank.

The following tables summarize the net assets at fair value and net investment income of the Master Trust.

A) NET ASSETS OF THE MASTER TRUST

 

     December 31, 2011     December 31, 2010  

INVESTMENTS:

    

Mutual Funds

   $ 417,795,241      $ 400,722,302   

Common/Collective Trusts

     153,825,927        133,162,718   

Employer Securities

     318,897,550        264,260,056   

Other

     —          143,167   
  

 

 

   

 

 

 

NET ASSETS OF THE MASTER TRUST

   $ 890,518,718      $ 798,288,243   
  

 

 

   

 

 

 

NET INVESTMENT IN MASTER TRUST—BY PLAN

    

Allergan, Inc. Savings and Investment Plan

    

Investment in Master Trust

   $ 712,099,334      $ 642,493,852   
  

 

 

   

 

 

 

Plan’s percentage interest in net assets of the Master Trust

     80.0     80.5
  

 

 

   

 

 

 

Allergan, Inc. Employee Stock Ownership Plan

    

Investment in Master Trust

   $ 178,419,384      $ 155,794,391   
  

 

 

   

 

 

 

Plan’s percentage interest in net assets of the Master Trust

     20.0     19.5
  

 

 

   

 

 

 

 

8


Table of Contents

ALLERGAN, INC. SAVINGS AND INVESTMENT PLAN

NOTES TO FINANCIAL STATEMENTS (CONTINUED)

FOR THE YEARS ENDED DECEMBER 31, 2011 AND 2010

 

NOTE 3 — INVESTMENTS (CONTINUED)

 

B) NET INVESTMENT INCOME OF THE MASTER TRUST

 

     Year Ended
December 31, 2011
    Year Ended
December 31, 2010
 

INVESTMENT INCOME:

    

Net appreciation (depreciation) in fair value of investments

    

Common Stock

   $ 71,810,257      $ 22,753,057   

Mutual Funds

     (28,875,141     38,149,853   

Common/Collective Trusts

     3,740,669        11,067,027   

U.S. Government Securities

     26,935        3,039   
  

 

 

   

 

 

 
     46,702,720        71,972,976   

Dividends

     10,113,552        9,284,273   
  

 

 

   

 

 

 

NET INVESTMENT INCOME OF THE MASTER TRUST

   $ 56,816,272      $ 81,257,249   
  

 

 

   

 

 

 

NET INVESTMENT INCOME FROM MASTER TRUST—BY PLAN

    

Allergan, Inc. Savings and Investment Plan

   $ 25,392,239      $ 67,252,420   
  

 

 

   

 

 

 

Allergan, Inc. Employee Stock Ownership Plan

   $ 31,424,033      $ 14,004,829   
  

 

 

   

 

 

 

The Plan’s net investment income from the Master Trust reported above is based on fair value of investments held in the Master Trust. This amount differs from the investment income reported in the accompanying Statements of Changes in Net Assets Available for Benefits due primarily to the changes in contract value of benefit-responsive investments.

 

9


Table of Contents

ALLERGAN, INC. SAVINGS AND INVESTMENT PLAN

NOTES TO FINANCIAL STATEMENTS (CONTINUED)

FOR THE YEARS ENDED DECEMBER 31, 2011 AND 2010

 

NOTE 3 — INVESTMENTS (CONTINUED)

 

The following table presents the fair value of the Plan’s investments held in the Master Trust. Investments that represent five percent or more of the Plan’s net assets available for benefits at December 31, 2011 and 2010 are separately identified.

 

     December 31, 2011  
     Number of Shares,
Units or Principal
Amounts
     Fair Value  

PARTICIPANT DIRECTED INVESTMENTS

     

At fair value as determined by quoted market prices (held in Master Trust):

     

Common Stock:

     

Allergan, Inc.*

     2,014,740       $ 176,773,321   
     

 

 

 

Mutual Funds:

     

Dodge & Cox Balanced Fund*

     1,251,688         84,426,366   

Dodge & Cox Stock Fund

     162,925         16,559,717   

Columbia Marsico Focused Equities Fund

     333,963         7,440,687   

Times Square Small Cap Growth Fund

     1,315,355         16,770,771   

TIAA-CREF Small Cap Blend Index Fund

     1,643,348         20,886,951   

Pimco Total Return-Inst Fund*

     4,576,860         49,750,468   

American Funds EuroPacific Growth R6 Fund*

     1,753,637         61,605,279   

American Funds New Perspective R6 Fund*

     2,506,239         65,538,141   

JPMorgan U.S. Equity Fund

     3,171,318         31,427,761   

Nuveen Winslow Large Cap Growth Fund

     610,479         18,375,424   

Wells Fargo Advantage Special Small Cap Value Fund

     905,334         19,582,369   
     

 

 

 

Total mutual funds

        392,363,934   
     

 

 

 

At fair value as reported by the fund (held in Master Trust):

     

Common/Collective Trusts:

     

JPMCB Stable Asset Income Fund*

     191,004         79,122,829   

BlackRock Equity Index Fund*

     1,482,909         63,839,250   
     

 

 

 

Total common/collective trusts

        142,962,079   
     

 

 

 

Total investments held in Master Trust

      $ 712,099,334   
     

 

 

 

 

* Investments that represent five percent or more of the Plan’s net assets available for benefits.

 

10


Table of Contents

ALLERGAN, INC. SAVINGS AND INVESTMENT PLAN

NOTES TO FINANCIAL STATEMENTS (CONTINUED)

FOR THE YEARS ENDED DECEMBER 31, 2011 AND 2010

 

NOTE 3 — INVESTMENTS (CONTINUED)

 

     December 31, 2010  
     Number of Shares,
Units or Principal
Amounts
     Fair Value  

PARTICIPANT DIRECTED INVESTMENTS

     

At fair value as determined by quoted market prices (held in Master Trust):

     

Common Stock:

     

Allergan, Inc.*

     2,118,345       $ 145,466,764   
     

 

 

 

Mutual Funds:

     

Dodge & Cox Balanced Fund*

     1,184,982         83,209,410   

Dodge & Cox Stock Fund

     134,684         14,513,496   

Columbia Marsico Focused Equities Fund

     297,590         6,907,056   

Times Square Small Cap Growth Fund

     1,069,461         13,913,682   

TIAA-CREF Small Cap Blend Index Fund

     1,292,562         17,824,435   

Pimco Total Return-Inst Fund*

     3,641,711         39,512,567   

American Funds EuroPacific Growth R6 Fund*

     1,563,021         64,662,159   

American Funds New Perspective R6 Fund*

     2,256,953         64,616,564   

JPMorgan U.S. Equity Fund

     3,036,693         31,156,475   

Nuveen Winslow Large Cap Growth Fund

     563,281         17,067,406   

Wells Fargo Advantage Special Small Cap Value Fund

     914,536         20,128,934   
     

 

 

 

Total mutual funds

        373,512,184   
     

 

 

 

At fair value as reported by the fund (held in Master Trust):

     

Common/Collective Trusts:

     

JPMorgan Stable Value Fund*

     652,412         71,046,219   

BlackRock Equity Index Fund*

     1,243,628         52,468,685   
     

 

 

 

Total common/collective trusts

        123,514,904   
     

 

 

 

Total investments held in Master Trust

      $ 642,493,852   
     

 

 

 

 

* Investments that represent five percent or more of the Plan’s net assets available for benefits.

 

11


Table of Contents

ALLERGAN, INC. SAVINGS AND INVESTMENT PLAN

NOTES TO FINANCIAL STATEMENTS (CONTINUED)

FOR THE YEARS ENDED DECEMBER 31, 2011 AND 2010

 

NOTE 3 — INVESTMENTS (CONTINUED)

 

The Plan’s investments held in the Master Trust (including gains and losses on investments bought and sold, as well as held during the year) appreciated in value during the years ended December 31, 2011 and 2010 by $16,275,913 and $58,952,131, respectively. Included in net appreciation in contract value of investments on the Statements of Changes in Net Assets Available for Benefits is ($651,145) and ($2,391,753) representing the change in the fair value to contract value adjustment for the fully benefit-responsive contracts for the years ended December 31, 2011 and 2010, respectively.

During the years ended December 31, 2011 and 2010, $9,116,326 and $8,300,289, respectively, of dividends were earned by investments held in the Master Trust and are included in dividends on the Statements of Changes in Net Assets Available for Benefits.

NOTE 4 — FAIR VALUE MEASUREMENTS

Fair value measurements are based on a fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (level 1 measurements) and the lowest priority to unobservable inputs (level 3 measurements). The three levels of the fair value hierarchy are described as follows:

Level 1 — Inputs to the valuation methodology are unadjusted quoted prices for identical assets or liabilities in active markets.

Level 2 — Observable inputs other than Level 1 prices such as quoted prices for similar assets or liabilities; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities.

Level 3 — Inputs to the valuation methodology are unobservable and significant to the fair value measurement.

The asset or liability’s fair value measurement level within the fair value hierarchy is based on the lowest level of any input that is significant to the fair value measurement. Valuation techniques used need to maximize the use of observable inputs and minimize the use of unobservable inputs.

Following is a description of the valuation methodologies used for assets measured at fair value. There have been no changes in the methodologies used at December 31, 2011 and 2010.

Employer Securities: Valued at the closing price reported on the active market on which the individual securities are traded.

Mutual Funds: Valued at the net asset value of shares held by the Plan at year end. The share value is based on the quoted price at the end of the day on the active market in which the individual mutual funds are traded.

Common or Collective Trust Funds: Valued at the net asset value per unit as determined by the collective trust at year end. Each fund may consist of a commingled trust that invests in a diversified portfolio of equity index, fixed income index and/or short-term investments.

 

12


Table of Contents

ALLERGAN, INC. SAVINGS AND INVESTMENT PLAN

NOTES TO FINANCIAL STATEMENTS (CONTINUED)

FOR THE YEARS ENDED DECEMBER 31, 2011 AND 2010

 

NOTE 4 — FAIR VALUE MEASUREMENTS (CONTINUED)

 

Other: Wrapped bonds are valued based on a calculation of the difference between the replacement cost and the actual cost, projected for the duration of the associated portfolio, discounted back to the measurement date using an appropriate discount rate.

The methods described above may produce a fair value calculation that may not be indicative of net realizable value or reflective of future fair values. Furthermore, while the Plan believes its valuation methods are appropriate and consistent with other market participants, the use of different methodologies or assumptions to determine the fair value of certain financial instruments could result in a different fair value measurement at the reporting date.

The following tables set forth by level, within the fair value hierarchy, the Master Trust’s assets as of December 31, 2011 and 2010.

 

             Fair Value Measurements as of December 31, 2011  

Description

   Total
Fair Value
     Quoted Prices in
Active Markets for
Identical Assets
(Level 1)
     Significant Other
Observable Inputs
(Level 2)
     Significant
Unobservable
Inputs
(Level 3)
 

Employer Securities

   $ 318,897,550       $ 318,897,550       $ —         $ —     

Mutual Funds:

           

Value Funds

     36,798,007         36,798,007         —           —     

Blend Funds

     214,236,927         214,236,927         —           —     

Growth Funds

     113,562,942         113,562,942         —           —     

Intermediate Term Bonds

     53,197,365         53,197,365         —           —     
  

 

 

    

 

 

    

 

 

    

 

 

 

Total Mutual Funds

     417,795,241         417,795,241         —           —     

Common/Collective Trusts

     153,825,927         —           153,825,927         —     
  

 

 

    

 

 

    

 

 

    

 

 

 

Total Assets at Fair Value

   $ 890,518,718       $ 736,692,791       $ 153,825,927       $ —     
  

 

 

    

 

 

    

 

 

    

 

 

 

 

13


Table of Contents

ALLERGAN, INC. SAVINGS AND INVESTMENT PLAN

NOTES TO FINANCIAL STATEMENTS (CONTINUED)

FOR THE YEARS ENDED DECEMBER 31, 2011 AND 2010

 

NOTE 4 — FAIR VALUE MEASUREMENTS (CONTINUED)

 

             Fair Value Measurements as of December 31, 2010  

Description

   Total
Fair Value
     Quoted Prices in
Active Markets for
Identical Assets
(Level 1)
     Significant Other
Observable Inputs
(Level 2)
     Significant
Unobservable
Inputs
(Level 3)
 

Employer Securities

   $ 264,260,056       $ 264,260,056       $ —         $ —     

Mutual Funds:

           

Value Funds

     35,361,321         35,361,321         —           —     

Blend Funds

     214,900,334         214,900,334         —           —     

Growth Funds

     107,980,449         107,980,449         —           —     

Intermediate Term Bonds

     42,480,198         42,480,198         —           —     
  

 

 

    

 

 

    

 

 

    

 

 

 

Total Mutual Funds

     400,722,302         400,722,302         —           —     

Common/Collective Trusts

     133,162,718         —           133,162,718         —     

Other

     143,167         —           143,167         —     
  

 

 

    

 

 

    

 

 

    

 

 

 

Total Assets at Fair Value

   $ 798,288,243       $ 664,982,358       $ 133,305,885       $ —     
  

 

 

    

 

 

    

 

 

    

 

 

 

The following tables set forth by level, within the fair value hierarchy, the Plan’s investments at fair value as of December 31, 2011 and 2010.

 

            Fair Value Measurements as of December 31, 2011  

Description

   Total
Fair Value
     Quoted Prices in
Active Markets for
Identical Assets
(Level 1)
     Significant Other
Observable Inputs
(Level 2)
     Significant
Unobservable
Inputs
(Level 3)
 

Investments Held in Master Trust

   $ 712,099,334       $ —         $ 712,099,334       $ —     
  

 

 

    

 

 

    

 

 

    

 

 

 
             Fair Value Measurements as of December 31, 2010  

Description

   Total
Fair Value
     Quoted Prices in
Active Markets for
Identical Assets
(Level 1)
     Significant Other
Observable Inputs
(Level 2)
     Significant
Unobservable
Inputs
(Level 3)
 

Investments Held in Master Trust

   $ 642,493,852       $ —         $ 642,493,852       $ —     
  

 

 

    

 

 

    

 

 

    

 

 

 

 

14


Table of Contents

ALLERGAN, INC. SAVINGS AND INVESTMENT PLAN

NOTES TO FINANCIAL STATEMENTS (CONTINUED)

FOR THE YEARS ENDED DECEMBER 31, 2011 AND 2010

 

NOTE 4 — FAIR VALUE MEASUREMENTS (CONTINUED)

 

The following table for December 31, 2011 and 2010 presents additional information relative to Plan investments reported at net asset value associated with common or collective trust funds.

December 31, 2011:

 

     Fair value      Unfunded
commitment
     Redemption
frequency
  

Other redemption restrictions

   Redemption
notice period

JPMCB Stable Asset
Income Fund (a)

   $ 79,122,829       $ —         Immediate    The Trustee reserves the right to pay out terminating plans anytime within 12 months of receiving the notice at book value.    None

BlackRock Equity
Index Fund (b)

   $ 63,839,250       $ —         Immediate    None    None

December 31, 2010:

 

     Fair value      Unfunded
commitment
     Redemption
frequency
  

Other redemption restrictions

   Redemption
notice period

JPMorgan Stable
Value Fund (c)

   $ 71,046,219       $ —         Immediate    Plan initiated events could result in a limitation of 20% of the Fund to be redeemed in any given Plan year including liquidation of wrapped bonds held in the fund.    None

BlackRock Equity
Index Fund (b)

   $ 52,468,685       $ —         Immediate    None    None

(a) JPMCB Stable Asset Income Fund strategies seek the preservation of principal, while providing current income and liquidity. The fund invests in highly diversified fixed income strategy which may include U.S. treasury and agency securities, commercial mortgage backed securities, asset-backed securities, private mortgages, corporate debt and short-term investments.

(b) BlackRock Equity Index Fund strategies seek to match the performance of the Standards & Poor 500 Index, by investing in stocks that make up the index.

(c) JPMorgan Stable Value Fund strategies seek the preservation of principal, while providing current income and liquidity. The fund invests in highly diversified fixed income strategy which may include U.S. treasury and agency securities, other common/collective trust funds and short-term investments.

 

15


Table of Contents

ALLERGAN, INC. SAVINGS AND INVESTMENT PLAN

NOTES TO FINANCIAL STATEMENTS (CONTINUED)

FOR THE YEARS ENDED DECEMBER 31, 2011 AND 2010

 

NOTE 5 — INCOME TAX STATUS

The Plan obtained its latest determination letter on September 22, 2010, in which the Internal Revenue Service stated that the Plan, as then designed, was in compliance with the applicable requirements of the Code. The Plan has been amended and restated since receiving the determination letter. However, the Plan’s 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 Code and constitutes a qualified plan under Section 401(a) of the Code and that the Plan’s trust is exempt from federal income taxes under provisions of Section 501(a).

Accounting principles generally accepted in the United States of America require plan management to evaluate tax positions taken by the Plan and recognize a tax liability (or asset) if the Plan has taken an uncertain position that more likely than not would not be sustained upon examination by the Internal Revenue Service. The Plan’s administrator has analyzed the positions taken by the Plan, and has concluded that as of December 31, 2011, there are no uncertain positions taken or expected to be taken that would require recognition of a liability (or asset) or disclosure in the financial statements. The Plan has recognized no interest or penalties related to uncertain tax positions. The Plan is subject to routine audits by taxing jurisdictions; however, there are currently no audits for any tax periods in progress. The Plan’s administrator believes it is no longer subject to income tax examinations for years prior to 2008.

NOTE 6 — RELATED PARTY AND PARTY-IN-INTEREST TRANSACTIONS

The Plan allows participants to purchase employer securities held in the Master Trust. As of December 31, 2011 and 2010, the Plan held 2,014,740 and 2,118,345 shares, respectively, of Allergan, Inc. common stock held in the Master Trust. The investment in Allergan, Inc. common stock qualifies as party-in-interest transactions for which there is a statutory exemption.

Certain Plan investments held in the Master Trust and allocated to the Plan are invested in mutual funds that are managed by an affiliate of JPMorgan Chase Bank, the trustee, and therefore, these transactions qualify as party-in-interest transactions for which there is a statutory exemption.

The Plan also allows for the issuance of notes receivable to participants in accordance with the related regulations. These transactions also qualify as party-in-interest transactions for which there is a statutory exemption.

NOTE 7 — RISKS AND UNCERTAINTIES

The Plan through the Master Trust provides for various investment options in mutual funds, common and collective trusts and common stock. Investment securities are exposed to various risks such as interest rate, market, and credit. Due to the level of uncertainty related to changes in the value of investment securities, it is at least reasonably possible that changes in the various risk factors, in the near term, could materially affect participants’ account balances and the amounts reported in the financial statements.

 

16


Table of Contents

ALLERGAN, INC. SAVINGS AND INVESTMENT PLAN

NOTES TO FINANCIAL STATEMENTS (CONTINUED)

FOR THE YEARS ENDED DECEMBER 31, 2011 AND 2010

 

NOTE 8 — CONCENTRATIONS

Investments in the common stock of Allergan, Inc. held in the Master Trust comprised approximately 25% and 23% of the Plan’s total investments as of December 31, 2011 and 2010, respectively.

NOTE 9 — RECONCILIATION OF FINANCIAL STATEMENTS TO FORM 5500

The following is a reconciliation of net assets available for benefits per the financial statements to the Form 5500:

 

     December 31,
2011
     December 31,
2010
 

Net assets available for benefits per the financial statements

   $ 743,777,275       $ 671,330,907   

Less: Adjustment from fair value to contract value for fully benefit-responsive investment contract

     196,209         (454,936
  

 

 

    

 

 

 

Net assets available for benefits per the Form 5500

   $ 743,973,484       $ 670,875,971   
  

 

 

    

 

 

 

The following is a reconciliation of investment income per the financial statements to the Form 5500:

 

     Year Ended
December 31,
2011
     Year Ended
December 31,
2010
 

Total investment income per the financial statements

   $ 24,741,094       $ 64,860,667   

Less: Adjustment from fair value to contract value for fully benefit-responsive investment contract

     651,145         2,391,753   
  

 

 

    

 

 

 

Total investment income per the Form 5500

   $ 25,392,239       $ 67,252,420   
  

 

 

    

 

 

 

 

17


Table of Contents

SUPPLEMENTAL SCHEDULE


Table of Contents

ALLERGAN, INC. SAVINGS AND INVESTMENT PLAN

EMPLOYER ID NUMBER 95-1622442, PLAN NUMBER 002

SCHEDULE OF ASSETS (HELD AT END OF YEAR)

SCHEDULE H, LINE 4i

DECEMBER 31, 2011

 

(a)

  

(b)
Identity of Issue
Borrower
Lessor or Similar Party

  

(c)
Description of Investment
Including Maturity Date,
Rate of Interest, Collateral,
Par or Maturity Value

   (d)
Cost
     (e)
Current
Value
 

*

   Participant loans    Interest rates ranging from 4.25% to 10.5%    $ 0       $ 10,264,029   
        

 

 

    

 

 

 

 

* Party-in-interest

See Report of Independent Registered Public Accounting Firm and

the accompanying notes to the financial statements

 

18


Table of Contents

Exhibit Index

 

Exhibit No.

  

Description

Exhibit 23    Consent of Lesley, Thomas, Schwarz & Postma, Inc.
EX-23 2 d357594dex23.htm EXHIBIT 23 EXHIBIT 23

EXHIBIT 23

Consent of Independent Registered Public Accounting Firm

To The Executive Committee of Allergan, Inc.

We consent to the incorporation by reference in the Registration Statements (Nos. 33-29528, 33-44770, 333-09091, 333-117937 and 333-158925) on Form S-8 of Allergan, Inc. of our report dated June 14, 2012, with respect to the statements of net assets available for benefits of the Allergan, Inc. Savings and Investment Plan as of December 31, 2011 and 2010, and the related statements of changes in net assets available for benefits for the years then ended, and the related supplemental schedule of Schedule H, Line 4i—schedule of assets (held at end of year) as of December 31, 2011, which report appears in the December 31, 2011 annual report on Form 11-K of the Allergan, Inc. Savings and Investment Plan.

/s/ Lesley, Thomas, Schwarz & Postma, Inc.

Lesley, Thomas, Schwarz & Postma, Inc.

Newport Beach, California

June 14, 2012