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, 2001
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.
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.)
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 as of December 31, 2001 and
2000 and the related Statement of Changes in Net Assets Available
for Plan Benefits for the Year Ended December 31, 2001 -
Allergan, Inc. Savings and Investment Plan.
Statements of Net Assets Available for Plan Benefits as of
December 31, 2001 and 2000 - Allergan, Inc. Savings and
Investment Plan.
Statement of Changes in Net Assets Available for Plan Benefits
for the Year Ended December 31, 2001- 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)
- Allergan, Inc. 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
Date: June 28, 2002 BY: /s/ ERIC K. BRANDT
------------- -------------------------------------
Eric K. Brandt
Allergan, Inc. Corporate Benefits
Committee (formerly known as
Management Plan Committee)
2
ALLERGAN, INC.
SAVINGS AND INVESTMENT PLAN
Financial Statements
December 31, 2001 and 2000
(With Independent Auditors' Report Thereon)
ALLERGAN, INC.
SAVINGS AND INVESTMENT PLAN
INDEX TO FINANCIAL STATEMENTS AND SUPPLEMENTARY SCHEDULE
PAGE
Independent Auditors' Report 1
Financial Statements:
Statements of Net Assets Available for Plan Benefits - December 31, 2001 and 2000 2
Statement of Changes in Net Assets Available for Plan Benefits - Year ended December 31,
2001 3
Notes to Financial Statements 4
SUPPLEMENTARY SCHEDULE
Schedule H, Line 4i - Schedule of Assets (Held at End of Year) 10
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.
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, 2001 and 2000 and for the year
ended December 31, 2001 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 auditing standards generally accepted
in the United States of America. 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, 2001 and 2000 and the changes in net assets available for plan
benefits for the year ended December 31, 2001 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 supplemental schedule of the
Allergan, Inc. Savings and Investment Plan as listed in the accompanying index
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. 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/ KPMG LLP
Orange County, California
June 21, 2002
1
ALLERGAN, INC.
SAVINGS AND INVESTMENT PLAN
Statements of Net Assets Available for Plan Benefits
December 31, 2001 and 2000
2001 2000
------------ ------------
Assets:
Investments, at fair value:
Common stock, common/collective trusts, mutual funds,
and participant loans $270,641,327 $318,770,512
Interest bearing cash and cash equivalents 199,245 294,440
Accrued interest and dividends 145,246 143,789
------------ ------------
Total assets 270,985,818 319,208,741
------------ ------------
Net assets available for plan benefits $270,985,818 $319,208,741
============ ============
See accompanying notes to financial statements.
2
ALLERGAN, INC.
SAVINGS AND INVESTMENT PLAN
Statement of Changes in Net Assets Available for Plan Benefits
Year ended December 31, 2001
Additions (reductions) to plan assets attributed to:
Net appreciation (depreciation) in fair value of investments $ (51,349,942)
Interest 1,976,209
Dividends 1,833,956
-------------
Total investment income (loss) (47,539,777)
-------------
Contributions:
Employer - Company match 3,983,275
Rollover contributions 1,803,024
Employees:
Before tax 13,698,899
After tax 1,168,099
-------------
Total contributions 20,653,297
-------------
Transfers from the Allergan Employee Stock Ownership Plan 473,566
-------------
Total additions (reductions) (26,412,914)
-------------
Deductions from plan assets attributed to:
Withdrawals and distributions (21,785,383)
Administrative expenses (24,626)
-------------
Total deductions (21,810,009)
-------------
Decrease in net assets available for plan benefits (48,222,923)
Net assets available for plan benefits:
Beginning of year 319,208,741
-------------
End of year $ 270,985,818
=============
See accompanying notes to financial statements.
3
ALLERGAN, INC.
SAVINGS AND INVESTMENT PLAN
Notes to Financial Statements
December 31, 2001 and 2000
(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 document for a more complete description of the
Plan's provisions.
(a) 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 (k) of the Internal Revenue
Code (Code) of 1986.
Under terms of the Plan, eligible United States employees may
voluntarily elect to contribute:
1. Before-tax dollars up to the lesser of 20% of their
defined compensation or $10,500 for the year ended
December 31, 2001 under the provision 401(k) and
402(g) of the Code or,
2. After-tax dollars up to 20% of their defined
compensation, when aggregated with before-tax
contributions, under provision 401(a) and 401(m) of
the IRC or,
3. Any combination of the above two elections; however,
the total annual additions (participant
contributions, company contributions, and allocated
forfeitures) cannot exceed the lesser of 25% of the
participant's defined compensation or $35,000 under
section 415(c) of the Code.
Under terms of the Plan, eligible Puerto Rico employees may
voluntarily elect to contribute:
1. Before-tax dollars up to the lesser of 10% of their
defined compensation or $8,000 for the year ended
December 31, 2001 under provision 165(e) of the
Puerto Rico Income Tax Act or,
2. After-tax dollars up to 15% of their defined
compensation, when aggregated with before-tax
contributions, under Puerto Rico Code or,
3. Any combination of the above two elections; however,
the total annual additions (participant
contributions, company contributions, and allocated
forfeitures) cannot exceed the lesser of 25% of the
participant's defined compensation or $35,000.
(b) CONTRIBUTIONS
For domestic employees, 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.
For Puerto Rico employees, 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.
4
ALLERGAN, INC.
SAVINGS AND INVESTMENT PLAN
Notes to Financial Statements
December 31, 2001 and 2000
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, American Century Stable Asset Fund, INVESCO
Balanced Fund, American Century Income and Growth Fund, J.P.
Morgan SmartIndex Fund, American Century Ultra Fund, American
Funds New Perspective Fund, American Century International
Growth Fund, and Franklin Small Cap Growth A Fund, or any
combination of the nine funds at the employee's discretion.
Company contributions consist of Allergan, Inc. common stock
which is invested in the Allergan, Inc. Common Stock Fund.
Effective June 1, 2002, participants can elect to diversify
Company contributions into the other investment options.
(c) 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.
(d) 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.
(e) 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 terms range from 1-5
years or up to 30 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 1% 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.
(f) 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 2001, forfeitures totaled
$417,123.
(g) 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 and be suspended from contributing to
the Plan for a period of six months following the withdrawal.
5
ALLERGAN, INC.
SAVINGS AND INVESTMENT PLAN
Notes to Financial Statements
December 31, 2001 and 2000
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.
(h) 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
(a) 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.
(b) 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
INVESCO Balanced Fund, American Century Income and Growth
Fund, J.P. Morgan SmartIndex Fund, American Century Ultra
Fund, American Funds New Perspective Fund, American Century
International Growth Fund, and Franklin Small Cap Growth A
Fund are based upon quotations obtained from the National
Association of Security Dealers Automated Quotations (NASDAQ).
The fair value of the American Century Stable Asset Fund is
based upon the net asset value reported by the fund.
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.
6
ALLERGAN, INC.
SAVINGS AND INVESTMENT PLAN
Notes to Financial Statements
December 31, 2001 and 2000
(c) INTEREST BEARING CASH AND CASH EQUIVALENTS
Interest bearing cash and cash equivalents represent amounts
invested in UMB Scout Prime R, which consists of highly liquid
short-term investments.
(d) ADMINISTRATIVE EXPENSES
Expenses incurred in the administration and operation of the
Plan are paid by the Plan with forfeitures and dividends.
Certain administrative expenses of the Plan are paid by the
Company.
(e) RECLASSIFICATIONS
Certain prior period amounts have been reclassified to conform
to the 2001 presentation.
(3) INVESTMENTS
The following tables present the fair values of investments.
2001
----
NUMBER OF SHARES,
UNITS, OR
PRINCIPAL AMOUNTS FAIR VALUE
----------------- ----------
Common stock:
Allergan, Inc.* 847,484 $ 63,599,904
Allergan, Inc.* ** 872,262 65,467,886
------------
Total common stock $129,067,790
============
Common/collective trusts:
American Century Stable Asset Fund* 31,814,816 $ 31,814,816
========== ============
Mutual funds:
INVESCO Balanced Fund* 1,668,647 $ 24,412,619
American Century Income and Growth Fund* 1,307,118 35,749,689
J.P. Morgan SmartIndex Fund 131,874 1,797,442
American Century Ultra Fund * 740,316 20,462,346
American Funds New Perspective Fund* 727,332 15,775,834
American Century International Growth Fund 209,936 1,673,188
Franklin Small Cap Growth A Fund 142,431 4,439,578
------------
Total mutual funds $104,310,696
============
* Investments represent 5% or more of the Plan's net assets.
** Nonparticipant directed investments.
7
ALLERGAN, INC.
SAVINGS AND INVESTMENT PLAN
Notes to Financial Statements
December 31, 2001 and 2000
2000
----
NUMBER OF
SHARES, UNITS,
OR PRINCIPAL
AMOUNTS FAIR VALUE
------- ----------
Common stock:
Allergan, Inc.* 834,319 $ 80,739,706
Allergan, Inc.* ** 891,344 86,326,906
------------
Total common stock $167,066,612
============
Common/collective trusts:
American Century Stable Asset Fund*
28,571,299 $ 28,571,299
========== ============
Mutual funds:
INVESCO Balanced Fund* 1,730,291 $ 29,172,706
American Century Income and Growth Fund* 1,313,759 39,662,375
J.P. Morgan SmartIndex Fund 65,667 1,026,376
American Century Ultra Fund * 772,455 25,004,353
American Funds New Perspective Fund* 716,011 17,220,060
American Century International Growth Fund 167,062 1,825,987
Franklin Small Cap Growth A Fund 117,239 4,611,003
------------
Total mutual funds $118,522,860
============
* Investments represent 5% or more of the Plan's net assets.
** Nonparticipant directed investments.
(4) NONPARTICIPANT DIRECTED INVESTMENTS
Information about the significant components of the changes in net
assets relating to the nonparticipant directed investments for the year
ended December 31, 2001 is as follows:
2001
-----------------
Changes in Net Assets:
Contributions $ 3,971,125
Dividends 320,640
Net appreciation (depreciation) (21,454,465)
Transfers to participant
directed investments (2,506,641)
Distributions (1,189,685)
-----------------
$(20,859,020)
=================
(5) FEDERAL INCOME TAXES
The Plan obtained its latest determination letter on September 24, 1999
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.
(6) OUTSTANDING COMMITMENTS TO PARTICIPANTS
At December 31, 2001 and 2000, the Plan had not been requested to pay
withdrawals and distributions to terminated and withdrawing
participants.
8
ALLERGAN, INC.
Savings and Investment Plan
Notes to Financial Statements
December 31, 2001 and 2000
(7) EMPLOYEE STOCK OWNERSHIP PLAN TRANSFERS
In accordance with the Internal Revenue Code Section 401(a)(28)(B),
participants in an Employee Stock Ownership Plan (ESOP) are eligible to
diversify a portion of their balance if they are 55 years of age or
older and have been a participant of the Plan for at least 10 years.
During the first five years of eligibility, participants may direct up
to 25% of their ESOP balance into the various investment options
offered in the Savings and Investment Plan. In the sixth year of
eligibility, participants may direct up to 50% of their ESOP balance
into the various options offered in the Savings and Investment Plan. In
the current year, there were $473,566 in transfers from the ESOP to the
Savings and Investment Plan.
(8) SUBSEQUENT EVENT
In January 2002, Allergan, Inc. announced that its board of directors
approved the separation of its pharmaceutical and optical medical
device business into two independent companies by spinning off the
ophthalmic surgical and contact lens care businesses into a new entity
called Advanced Medical Optics, Inc. (AMO). In connection with the spin
off, the assets and liabilities of former participants in the Plan will
be transferred to the Advanced Medical Optics, Inc. 401(k) Plan. AMO
employees will not be eligible thereafter to make contributions to the
Plan.
9
SCHEDULE
ALLERGAN, INC.
SAVINGS AND INVESTMENT PLAN
Schedule H, Line 4i - Schedule of Assets (Held at End of Year)
December 31, 2001
DESCRIPTION OF INVESTMENT
INCLUDING MATURITY DATE, RATE OF
IDENTITY OF ISSUE, BORROWER, INTEREST, COLLATERAL, PAR, OR
LESSOR, OR SIMILAR PARTY MATURITY VALUE FAIR VALUE
------------------------ -------------- ----------
*Allergan, Inc. Common Stock 1,719,746 shares $129,067,790
*American Century Stable Asset
Fund Common/collective trust 31,814,816 units 31,814,816
INVESCO Balanced Fund Mutual Fund 1,668,647 units 24,412,619
*American Century Income
and Growth Fund Mutual Fund 1,307,118 units 35,749,689
*J.P. Morgan SmartIndex Fund Mutual Fund 131,874 units 1,797,442
*American Century Ultra Fund Mutual Fund 740,316 units 20,462,346
American Funds New Perspective
Fund Mutual Fund 727,332 units 15,775,834
*American Century International
Growth Fund Mutual Fund 209,936 units 1,673,188
Franklin Small Cap Growth A Fund Mutual Fund 142,431 units 4,439,578
Participants loans 702 loans with interest rates
ranging from 5.75% to 10.50% 5,448,025
------------
Total $270,641,327
============
*UMB Scout Prime R Money Market 199,245 units $ 199,245
* Denotes a party in interest.
See accompanying independent auditors' report.
10
EXHIBIT INDEX
Exhibit
Number Description of Exhibits
------- -----------------------
23 Consent of KPMG LLP Independent Auditors