Allergan Reports 15.6% Increase in Earnings Per Share to $0.37 for the First Quarter, Excluding One-Time Items.

Business Editors & Health/Medical Writers

IRVINE, Calif.--(BW HealthWire)--April 24, 2001

Exceeds First Call Consensus by $0.02 and Delivers Multiple Product

Approvals

Allergan, Inc. (NYSE:AGN) today announced worldwide sales increased by 8.8 percent or $33.0 million over the first quarter last year, at constant currency rates. Including the effects of currency, worldwide sales for the quarter ended March 30, 2001 were $396.1 million, an increase of 5.3 percent over $376.2 million reported in last year's first quarter.

Allergan reported diluted earnings per share of $0.39 and $0.33 for the first quarters of 2001 and 2000, respectively. Excluding a non-recurring loss from the cumulative effect of a change in accounting principle (adoption of SFAS No. 133 discussed later in this document), an unrealized gain on derivative instruments and a non-recurring investment gain, Allergan's diluted earnings per share for the first quarter of 2001, increased 15.6 percent to $0.37 compared with $0.32 for last year's first quarter.

"It's been a blockbuster period for product approvals for Allergan. The recent approvals for Lumigan(TM) and Alphagan(R) P by the U.S. Food and Drug Administration (FDA), BOTOX Cosmetic(TM) by the Canadian Health Authorities and Sensar(TM) by the Ministry of Health and Welfare in Japan are the result of our aggressive investment in Allergan's research and development pipeline. Additionally, in the consumer eye care business, Allergan received approval for Consept OneStep(R) in Japan and the new no rub claim for Complete(R) in the U.S. and Europe. This focus on technology, along with our full commitment toward the successful launch of these new products, places Allergan at the beginning of a new cycle of growth," said David E.I. Pyott, President and Chief Executive Officer. "The continuous creation and development of new proprietary technology is essential to the ongoing success of any pharmaceutical company. Allergan is absolutely committed to dynamic innovation, the fulfillment of unmet medical needs, and the creation of further stockholder value," Pyott added.

Specialty Pharmaceutical Performance

Eye Care Pharmaceutical Product Line

At constant currency rates, first quarter worldwide eye care pharmaceutical sales increased 7.5 percent or $13.5 million compared with the first quarter of 2000. Including the effects of currency, first quarter 2001 worldwide eye care pharmaceutical sales amounted to $188.0 million, a 5.0 percent increase over last year's $179.1 million. Year-over-year comparisons are difficult since the first quarter of 2000 was exceptionally strong due to Y2K-related restocking of pharmaceutical products. Anticipating increased inventory build from Y2K concerns, the Company held distributors' inventories down in the fourth quarter of 1999.

For the first quarter of 2001, worldwide net product sales of Alphagan(R) (Brimonidine Tartrate Ophthalmic Solution 0.2%), indicated for lowering intraocular pressure (IOP) in patients with ocular hypertension or primary open angle glaucoma, were $66.5 million, a 5.1 percent increase over the same period last year, or a 6.5 percent increase at constant currency.

During the first quarter of 2001, Allergan received U.S. FDA approval for both Lumigan(TM) (Bimatoprost Ophthalmic Solution 0.03%) and Alphagan(R) P (Brimonidine Tartrate Ophthalmic Solution 0.15%) preserved with Purite(R). Lumigan(TM) is indicated for the reduction of elevated intraocular pressure (IOP) in patients with open-angle glaucoma or ocular hypertension who are intolerant of other IOP-lowering medications or insufficiently responsive to another IOP- lowering medication. Alphagan(R) P is a topical treatment for elevated intraocular pressure in patients with glaucoma or ocular hypertension. Lumigan(TM) was officially launched the second week of April. Alphagan(R) P is expected to be available in the next six months.

Additionally in the quarter, Allergan licensed the right to develop and commercialize ATX-S10, an early stage compound used for photodynamic therapy to treat age-related macular degeneration from Photochemical Co., Ltd. of Japan.

Skin Care Product Line

Sales for Allergan skin care products were $18.0 million for the quarter ended March 30, 2001, an increase of 14.6 percent from the $15.7 million reported in the first quarter of last year.

Worldwide net sales for Tazorac(R) and Zorac(R) brands (Tazarotene Gel 0.05% and 0.10%), indicated for the treatment of acne and psoriasis, were $8.4 million in the first quarter of 2001, a 21.7 percent increase over the same period last year. Tazorac(R) total prescription and new prescription growth in the U.S. increased over the first quarter of last year by 66.7 percent and 74.3 percent, respectively.

BOTOX(R)/Neurotoxin Product Line

At constant currency rates, BOTOX(R) (Botulinum Toxin Type A) Purified Neurotoxin Complex net sales increased by 33.5 percent over the first quarter of 2000. Including the effects of currency, sales for BOTOX(R) were $67.6 million during the first quarter of 2001, up 30.0 percent over the $52.0 million reported in last year's first quarter.

During the quarter, the Company received regulatory approval from Canadian Health Authorities (Therapeutic Products Programme) for BOTOX Cosmetic(TM) for the treatment of glabellar lines (brow furrow) associated with corrugator and/or procerus muscle activity. This represents Allergan's first cosmetic approval based on its Phase 3 clinical program. Also in the first quarter, the Company submitted a Supplemental Biologics License Application (SBLA) with the U.S. FDA and a variation to its Marketing Authorization license in France for BOTOX(R) in the treatment of glabellar lines. France will serve as the Reference Member State during the process of including this indication in our label in Europe under the Mutual Recognition Procedure.

Ophthalmic Surgical and OTC Performance

Ophthalmic Surgical Product Line

At constant currency rates, ophthalmic surgical sales for the first quarter of 2001 increased 5.7 percent compared to the prior-year first quarter. Including the effects of currency, sales for the ophthalmic surgical business were $56.7 million during the first quarter of 2001, compared with sales of $56.5 million reported in the same period last year. Slower surgical growth was primarily caused by conditions in the U.S. business. The slowdown in the U.S. economy appears to have negatively impacted both the capital equipment market, including phacoemulsification machines, and the number of elective cataract surgery procedures.

Following the end of the quarter, Sensar(TM), Allergan's foldable acrylic intraocular lens indicated for the treatment of cataracts, was approved by the Ministry of Health and Welfare in Japan. Additionally, Allergan has expanded its multi-year distribution agreement with SIS AG Surgical Instrument Systems of Biel Switzerland to include worldwide rights to commercialize the Amadeus(TM) microkeratome used in refractive surgery.

Contact Lens Care Product Line

At constant currency rates, contact lens care sales for the first quarter of 2001 decreased 4.7 percent compared with the first quarter of 2000. Including the effects of currency, sales for the contact lens care business were $65.8 million for the quarter ended March 30, 2001, a decrease of 9.7 percent over last year's first quarter sales of $72.9 million. While the Company continued to see sales decline in its hydrogen peroxide-based contact lens care systems, worldwide net product sales for Complete(R) Multi-Purpose Solution, indicated for soft contact lens care, amounted to $31.6 million, a 26.4 percent increase over the same period last year, or a considerable 32.8 percent increase at constant currency, in the first quarter of 2001.

During the quarter, Complete(R) Multi-Purpose Solution was approved in the U.S. and Europe for cleaning frequent-replacement (30 days or less) soft contact lenses without having to rub them. Extensive tests, meeting FDA requirements, confirmed that daily use of Complete(R) cleans lenses without rubbing so that this step can be eliminated for many wearers. Additionally, a new modern-looking Complete(R) "rocket" bottle, with its sleek styling and snap-on storage area for the lens case was introduced to the market in the first quarter of 2001. Following the end of the quarter, the regulatory authorities approved Consept OneStep(R) contact lens care system in Japan.

Additional Financial Highlights

For the quarter ended March 30, 2001, gross profit was $296.8 million or 74.9 percent of net sales, representing a 2.4 percentage point increase over last year's first quarter percentage. The gross profit percentage increased as a result of shifts in the mix of products sold to higher margin products including BOTOX(R) and eye care pharmaceuticals, and gross margin improvements in most of Allergan's product lines.

Selling, general & administrative (SG&A) expense as a ratio to net sales was 47.6 percent for the first quarter of 2001, compared to 43.8 percent for the same period last year. The increase of $24.0 million in SG&A year-over-year in the first quarter was due to increased selling and marketing investments primarily related to the preparation for the product launch of Lumigan(TM).

In the first quarter of 2001, research and development expense was $45.7 million, or 11.5 percent as a ratio to net sales. This was somewhat lower than anticipated primarily due to timing associated with the commencement of programs. The Company continues to believe that R&D spending for the year will approximate 12.5 percent of sales.

At March 30, 2001, Allergan's consolidated net worth was $878.7 million. Cash net of debt was $114.1 million as the Company held $747.4 million in cash compared to $633.3 million in debt as of this same date. Allergan's debt-to-capital percentage was 41.9 percent at March 30, 2001. As of March 30, 2001, the Company's days-sales-outstanding was 68. The Company's inventory days-on-hand level was 118 as of March 30, 2001.

Earnings Per Share Impact by Adoption of SFAS No. 133, "Accounting for Derivative Instruments and Hedging Activities" and Non-Recurring Items

First quarter 2001 diluted earnings per share of $0.39 included a net gain of $0.02 per share, resulting from a non-recurring $0.01 per share loss, net of tax, from the cumulative effect of a change in accounting principle (adoption of SFAS No. 133 on January 1, 2001) and a $0.03 per share after-tax unrealized non-cash gain on derivative instruments. The unrealized gain on derivative instruments is related to the marked-to-market value of derivatives used for foreign-exchange hedging activities Allergan employs to protect against market volatility and its related impact on the Company's earnings. As a matter of policy, Allergan does not and will not enter into what would be considered speculative positions with respect to the derivatives it utilizes. Upon the adoption of SFAS No. 133, the Company's management decided not to designate these derivative instruments as accounting hedges. As a result, the Company has quantified and will continue to quantify the non-cash impact of the marked-to-market value of the contracts on its income statement under the heading unrealized gain on derivative instruments. In the first quarter of 2000, Allergan's diluted earnings per share of $0.33 included a $0.01 per share non-recurring investment gain.

Financial Outlook for 2001

Allergan believes that quarterly earnings per share for 2001 will increase by approximately 18 percent in the second quarter and in excess of 20 percent for the third and fourth quarters when compared with the corresponding prior-year quarters and has increased its 2001 earnings per share objective to $1.93. Based on prevailing currency rates, the Company estimates second quarter 2001 sales in the range of $415 million to $425 million and earnings per share of approximately $0.46 excluding the $40 million one-time charge related to in-process research and development as a result of acquiring Allergan Specialty Therapeutics, Inc. These estimates reflect and anticipate a negative effect from currency of more than three percent on sales.

Treatment of SFAS No. 133 (Reiterated from fourth quarter press release)

Upon adoption of Financial Accounting Standards Board Statement No. 133, "Accounting for Derivative Instruments and Hedging Activities" on January 1, 2001, and following a comprehensive review of this Statement, Allergan has chosen not to apply hedge accounting treatment for certain of its derivative positions under this Statement. Allergan believes that the accounting requirements, as dictated by SFAS No. 133, to receive hedge accounting treatment, are onerous and will not enable the Company to produce an optimal risk management outcome.

SFAS No. 133 establishes accounting and reporting standards for all derivative instruments, including derivatives utilized for foreign exchange and interest rate hedging activities. SFAS No. 133 requires that changes in the derivative's value be marked-to-market through earnings unless specific hedge accounting criteria are met.

Allergan currently utilizes both foreign exchange and interest rate derivatives to protect against market volatility and its related impact on the Company's earnings. The Company does not, and will not as a matter of policy, enter into what would be considered speculative positions with respect to the derivatives it utilizes. Furthermore, the Company does not trade into or out of these derivative positions. Rather, the Company maintains its position within the particular derivative until the instrument's maturity. Generally, the Company utilizes non-complex derivatives for both foreign exchange and interest rate hedging.

With respect to foreign currency derivatives, the Company typically utilizes options and forward contracts. These strategies function as "insurance" against potentially negative market environments and do not subject the Company to downside exposure at maturity. With respect to interest rate derivatives, the Company utilizes "vanilla" interest rate swaps, which typically convert variable-rate debt to fixed rate and has elected to apply hedge accounting.

Allergan has determined that for its foreign currency derivatives to qualify for hedge accounting treatment under SFAS No. 133, the Company would have to substantially increase the number of derivatives utilized and, as such, the related cost. This requirement would also result in a meaningful increase in related administrative and maintenance requirements. Additionally, as it relates to the foreign currency options, the Company would be required to substantially alter current business practices in the areas of intercompany product transfer pricing and billing currencies for foreign third party sales. As such, the Company will be required to mark-to-market through earnings the value of foreign currency derivatives on a quarterly basis.

On a going-forward basis within Allergan's quarterly earnings releases, the Company will quantify the impact to earnings of the mark-to-market adjustment required under SFAS No. 133 on its outstanding foreign currency options. The Company will provide earnings per share information with and without the impact of this mark-to-market adjustment. The financial impact of this mark-to-market adjustment as a result of applying SFAS No. 133 will be non-cash in nature during periods preceding maturity. At maturity, the derivative may have an actual positive cash value, however can not have a negative cash value.

Forward-Looking Statements

In this press release, the statements from Mr. Pyott, statements regarding the availability of newly approved products, and our statements in the "Financial Outlook for 2001" section are forward-looking statements. It is important to note that our financial targets are not predictions of actual performance. Because forecasts are inherently estimates that cannot be predicted with precision, the Company's performance at times differed from its targets, and the Company often does not know what the actual results will be until after a quarter's end. Therefore, the Company will not report or comment on its progress during the quarter. Any statement made by others with respect to progress mid-quarter cannot be attributed to the Company.

Any other statements in this press release that refer to Allergan's estimated or anticipated future results are forward-looking statements. All forward-looking statements in this press release reflect the Company's current analysis of existing trends and information and represent the Company's judgment only as of the date of this press release. Actual results may differ from current expectations based on a number of factors affecting Allergan's businesses, including changing competitive, regulatory and market conditions; the timing and uncertainty of the results of both the research and development and regulatory processes; domestic and foreign health care and cost containment reforms; technological advances and patents obtained by competitors; the performance, including the approval, introduction and consumer acceptance of new products and continuing acceptance of currently marketed products; the effectiveness of consumer advertising and promotional campaigns; the timely and successful implementation of strategic initiatives; the uncertainty associated with the identification of and successful consummation and execution of external corporate development transactions; and Allergan's ability to obtain and maintain a sufficient supply of its products to meet market demand in a timely manner. In addition, matters generally affecting the economy, such as changes in interest and currency exchange rates and the state of the economy worldwide, can affect the Company's results. Therefore, the reader is cautioned not to rely on these forward-looking statements. The Company disclaims any intent or obligation to update these forward-looking statements.

Additional information concerning the factors that affect Allergan's businesses can be found in other Allergan press releases as well as Allergan's periodic public filings with the Securities and Exchange Commission. In particular, the discussion under the heading "Certain Factors and Trends Affecting Allergan and its Businesses" in Allergan's 2000 Form 10-K provides additional information. These filings are available at http://www.allergan.com or upon request from Allergan's Investor Relations Department, [phone].

Allergan Inc.

Allergan, Inc., headquartered in Irvine, California, is a technology-driven, global health care company providing eye care and specialty pharmaceutical products worldwide. Allergan develops and commercializes products in the eye care pharmaceutical, ophthalmic surgical device, over-the-counter contact lens care, movement disorder, and dermatological markets that deliver value to our customers, satisfy unmet medical needs and improve patients' lives.

Allergan Contacts:

Jeff Edwards [phone] (investors)

Vince Scullin [phone] (investors)

Suki Shattuck [phone] (investors/media)

Christine Cassiano [phone] (media)

The following tables represent condensed consolidated statements of earnings, condensed consolidated balance sheets, and a statement of net sales by product line.

                            ALLERGAN, INC.
             Condensed Consolidated Statements of Earnings
                              (Unaudited)


                                                Three months
in millions, except per share amounts              Ended

                                         March 30,         March 31,
                                           2001              2000

Product sales
Net sales                               $ 396.1           $ 376.2
Cost of sales                              99.3             103.4

       Product gross margin               296.8             272.8

Research services
Research service revenues,
 primarily from related parties            26.9              15.6
Cost of research services                  25.6              14.8

       Research services margin             1.3               0.8

Selling, general and administrative       189.2             165.5
Technology fees from related party         (0.5)             (0.8)
Research and development                   45.7              45.7

Operating income                           63.7              63.2

Interest income                            11.0               3.9
Interest expense                           (5.3)             (4.9)
Unrealized gain on derivative
 instruments                                6.0                --
Other, net                                  0.6              (0.1)

                                           12.3              (1.1)

Earnings before income taxes
 and minority interest                     76.0              62.1

Provision for income taxes                 22.0              18.6
Minority interest                           0.1                --

Net earnings before cumulative
 effect of change in accounting
 principle                                 53.9              43.5

Cumulative effect of change in
 accounting principle, net $0.7
 million of tax                             1.8                --

Net earnings                            $  52.1           $  43.5

Basic earnings per share:
       Before cumulative effect
        of change in accounting
        principle                       $  0.41           $  0.33
       Cumulative effect of
        accounting change, net            (0.01)               --

       Net basic earnings per share     $  0.40           $  0.33

Diluted earnings per share:
       Before cumulative effect
        of change in accounting
        principle                       $  0.40           $  0.33
       Cumulative effect of
        accounting change, net            (0.01)               --

       Net diluted earnings per share   $  0.39           $  0.33

Weighted average number of common
 shares outstanding:
       Basic                              131.9             129.9
       Diluted                            134.1             132.6


                            ALLERGAN, INC.
                 Condensed Consolidated Balance Sheets
                              (Unaudited)


in millions                              March 30,        December 31,
                                           2001              2000

Assets

Cash and equivalents                   $  747.4          $  773.9
Trade receivables, net                    297.3             290.1
Inventories                               128.0             122.7
Other current assets                      148.4             139.6

Total current assets                    1,321.1           1,326.3

Property, plant and equipment, net        351.2             351.6
Other noncurrent assets                   287.2             293.1

Total assets                           $1,959.5          $1,971.0


Liabilities and stockholders' equity

Notes payable                          $   56.5          $   59.2
Accounts payable                           89.8              96.3
Accrued expenses and income taxes         282.6             277.0

Total current liabilities                 428.9             432.5

Long-term debt                            576.8             584.7
Other liabilities                          75.1              80.0
Stockholders' equity                      878.7             873.8


Total liabilities and stockholders'
 equity                                $1,959.5          $1,971.0


                            ALLERGAN, INC.
                       Net Sales by Product Line
                              (Unaudited)


                                                Three Months
in millions                                        Ended
                                         March 30,         March 31,
                                           2001              2000

Specialty Pharmaceuticals:

   Eye Care Pharmaceuticals              $188.0            $179.1

   Skin Care                               18.0              15.7

   BOTOX/Neuromuscular                     67.6              52.0

       Total                              273.6             246.8


Medical Devices and
  OTC Product Lines:

   Ophthalmic Surgical                     56.7              56.5

   Contact Lens Care                       65.8              72.9

       Total                              122.5             129.4

TOTAL NET SALES                          $396.1            $376.2



Domestic                                    58%               55%

International                               42%               45%