Allergan Reports Fourth Quarter and Year-End Operating Results.

Business Editors & Health/Medical Writers

IRVINE, Calif.--(BW HealthWire)--Jan. 31, 2001

2000 Earnings Per Share Up 24.0 Percent, Excluding One-Time Items, to $1.60; 2000 Comparable Product Revenue, At Constant

Currency, Up 15.5 Percent; Board of Directors Declares Increase of

Quarterly Dividend

Allergan, Inc. (NYSE: AGN) today announced fourth quarter 2000 worldwide sales of $400.7 million, an increase of $20.4 million or 5.4 percent compared to the fourth quarter of 1999. At constant currency rates, sales increased by 10.6 percent or $40.2 million over the fourth quarter of 1999.

Allergan's diluted earnings per share for the fourth quarter of 2000, increased 20.0 percent to $0.48 compared with $0.40 for last year's fourth quarter, excluding the effects of the one-time items.

Allergan also today announced that its Board of Directors increased the fourth quarter dividend to $0.09 per share, payable March 16, 2001, to stockholders of record on February 16, 2001.

Sales for the year ended December 31, 2000 were $1,562.6 million, an increase of $156.4 million or 11.1 percent over the prior year. Excluding the sales of skin care products divested or outlicensed during the first half of 1999, Allergan sales at constant currency rates increased by 15.5 percent or $215.1 million over the comparable twelve-month period of 1999. Adverse currency movements negatively impacted the Company's sales by $42.6 million or 3.0 percent for the year.

Excluding the effects of certain one-time items, Allergan's diluted earnings per share for the year ended December 31, 2000 increased 24.0 percent to $1.60, compared with $1.29 reported last year.

"As a result of our proven sales and marketing execution, conservative currency forecasting and disciplined financial management, Allergan was able to grow its annual earnings per share by 24 percent, in an extremely challenging foreign currency environment. Allergan continues to aggressively invest in research and development enabling the Company to create possibly the broadest and deepest new product pipeline among the specialty pharmaceutical companies," said David E.I. Pyott, President and Chief Executive Officer. "Our commitment to building leadership positions in rapidly expanding niche markets continues to provide Allergan with sales strength and earnings per share growth over the long term."

Specialty Pharmaceutical Performance

Eye Care Pharmaceutical Product Line

At constant currency rates, eye care pharmaceutical sales increased 14.3 percent or $21.0 million compared to the fourth quarter of 1999. Including the effects of currency, worldwide sales for the eye care pharmaceutical business were $160.7 million for the fourth quarter of 2000, a 9.7 percent increase over 1999's fourth quarter sales of $146.5 million. Worldwide net product sales for Alphagan(R) (Brimonidine Tartrate Ophthalmic Solution 0.2%), indicated for lowering intraocular pressure in patients with ocular hypertension or primary open angle glaucoma, were $55.8 million in the fourth quarter of 2000, a 16.5 percent increase over the same period last year, or a 21.2 percent increase at constant currency.

At constant currency rates, pharmaceutical sales increased 21.6 percent or $123.4 million compared with the year ended December 31, 1999. Pharmaceutical sales for the year ended December 31, 2000 were $675.3 million or 18.2 percent greater than the same period last year. Worldwide net product sales of Alphagan(R) were $231.6 million for 2000, a 33.2 percent increase over the same period last year, or 36.9 percent increase at constant currency. Alphagan(R) increased its share of the U.S. glaucoma market, when measured in dollars, from 13.8 percent at the end of 1999 to 16.5 percent in 2000.

For the third consecutive year, ophthalmologists in a Scott Levin survey voted Allergan's U.S. ophthalmic sales force number one in quality.

During the first quarter of 2001, Allergan plans to initiate a confirmatory study to support the New Drug Application of Restasis(TM) (Cyclosporine Ophthalmic Emulsion, 0.05%), a topical treatment for dry eye disease. The Company intends to file results from this six-month trial, if successful, in the fourth quarter of 2002.

During the fourth quarter of 2000, Allergan submitted the Marketing Authorization Application in Europe through the Centralized Procedure for Lumigan(TM) (Ocular Hypotensive Lipids, 0.3%), a topical treatment for elevated intraocular pressure in patients with glaucoma or ocular hypertension.

Allergan continues to expand its eye care pharmaceutical new product pipeline by adding potential new drug candidates for the treatment of glaucoma. During the quarter, the Company filed an Investigational New Drug Application (IND) for AGN 195795, a gene-specific adrenergic agonist, that was discovered through a functional genomics collaboration with ACADIA Pharmaceuticals.

Additionally, Allergan entered into a collaboration with Aurora Biosciences Corporation, focused on ion channel drug discovery for ophthalmic indications.

Skin Care Product Line

Sales for Allergan skin care products were $20.3 million during the fourth quarter of 2000, an increase of 9.1 percent from the $18.6 million in sales recorded during the same period 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 $10.6 million in the fourth quarter of 2000, a 73.8 percent increase over the same period last year. As measured over the one-year period ended December 31, 2000, Tazorac(R) new prescriptions and total prescriptions in the U.S. grew by approximately 73.9 percent and 66.7 percent, respectively.

Excluding the sales of skin care products divested or outlicensed, Allergan skin care product sales for the year ended December 31, 2000, at constant currency rates, increased by 13.6 percent over the comparable period in 1999. Including the effects of currency and skin care products divested or outlicensed, sales for Allergan skin care products were $68.7 million for 2000, a decrease of 10.3 percent from the $76.6 million in sales recorded during the same period last year. During 1999, Allergan generated $16.1 million in sales from skin care products that were affected by the 1999 and 2000 outlicense/divestiture activity.

Worldwide net product sales of Tazorac(R) and Zorac(R) were $32.7 million for the year ended December 31, 2000, a 57.2 percent increase over the same period last year. Excluding the $2.4 million of European in-market sales of Zorac(R) for 1999, which was outlicensed for Europe in 1999, sales of Tazorac(R) and Zorac(R) brands for 2000 grew at a rate of 77.7 percent over the same period last year.

During the quarter, Allergan filed a Supplemental New Drug Application with the U.S. Food & Drug Administration (FDA) for Tazorac(R) (Tazarotene) Cream 0.1% for the treatment of acne.

BOTOX(R)/Neurotoxin Product Line

At constant currency rates, BOTOX(R) (Botulinum Toxin Type A) Purified Neurotoxin Complex net sales increased by 27.6 percent over the fourth quarter of 1999. Including the effects of currency, sales for BOTOX(R) were $66.7 million during the fourth quarter of 2000, up 23.7 percent over the $53.9 million reported in last year's fourth quarter. Strong BOTOX(R) sales in the fourth quarter of 1999 created a difficult year-over-year comparison as a result of increased demand ahead of Y2K concerns.

At constant currency rates, BOTOX(R) net sales for the year ended December 31, 2000 increased 39.0 percent over last year. Including the effects of currency, BOTOX(R) net product sales for the year were $239.5 million or 36.2 percent greater than the $175.8 million reported for the year ended December 31, 1999.

During the quarter, the Company received approval from the FDA on its Supplemental Biological License Application (SBLA) for BOTOX(R) for the treatment of cervical dystonia. Following the close of the quarter, the Company submitted its SBLA to the FDA for BOTOX(R) for the treatment of glabellar lines (brow furrow).

As previously announced, Mitchell F. Brin, M.D., joined Allergan January 1, 2001, as the Vice President, BOTOX(R)/Neurology. Dr. Brin was one of the first investigators to examine the use of botulinum toxin for the treatment of medical disorders. He pioneered the use of the toxin for the treatment of dystonias, including blepharospasm and other debilitating neurological disorders.

Ophthalmic Surgical and OTC Performance

Ophthalmic Surgical Product Line

At constant currency rates, surgical sales for the fourth quarter of 2000 increased 15.2 percent compared to the prior-year fourth quarter. Including the effects of currency, sales for the ophthalmic surgical business were $69.8 million during the fourth quarter of 2000, an 8.4 percent increase over 1999 fourth quarter sales of $64.4 million. The sales increases are being driven primarily by the Sensar(R) acrylic foldable intraocular lens and strong customer demand for the Sovereign(R) phacoemulsification system.

Ophthalmic surgical sales for the year ended December 31, 2000 were $250.4 million or 12.3 percent greater than the same period last year. At constant currency rates, ophthalmic surgical sales for 2000 increased 15.8 percent over 1999.

Contact Lens Care Product Line

At constant currency rates, contact lens care sales for the fourth quarter of 2000 decreased 7.4 percent compared with the fourth quarter of 1999. Including the effects of currency, sales for the contact lens care business were $83.2 million for the fourth quarter of 2000, a decrease of 14.1 percent over 1999 fourth quarter sales of $96.9 million. Worldwide net product sales for Complete(R) multi-purpose solution, indicated for soft contact lens care, were $34.4 million in the fourth quarter of 2000, a 9.9 percent increase over the same period last year, or a 15.6 percent increase at constant currency. In the U.S., Allergan's Complete(R) multi-purpose solution continues to be a solid performer, growing 11 times faster in-market than the multi-purpose solution market which grew by 1.4 percent in 2000.

Allergan contact lens care product sales for the year ended December 31, 2000 were $328.7 million or 8.6 percent less than the same period last year. At constant currency rates, 2000 contact lens care sales decreased 5.6 percent compared to 1999.

Additional Financial Highlights

Gross profit for the fourth quarter of 2000 was $291.8 million or 72.8 percent of net sales. The gross profit percentage for the year ended December 31, 2000, was 72.5 percent, representing a 1.4 percentage point increase from the comparable 1999 percentage. The gross profit percentage increased in 2000 compared to 1999 primarily as a result of shifts in the mix of products sold to higher margin products, including Botox(R) and eye care pharmaceuticals.

Selling, general & administrative (SG&A) expense as a ratio to net sales was 39.8 percent for the fourth quarter of 2000, compared to 40.7 percent for the same period last year. For the year, SG&A was 41.4 percent of sales, which is flat compared to 1999. This reflects increases in selling and marketing investments offset by decreases in G&A expenses, as a percent of net sales.

Research and development expense as a ratio to net sales was 12.6 percent for the fourth quarter of 2000. Compared to the year ended December 31, 1999, research and development expenditures increased $27.2 million to $195.6 million during 2000. Excluding the effects of one-time items, research and development expense as a ratio to net sales was 12.4 percent for 2000, compared to 11.6 percent for the same period last year.

At December 31, 2000, Allergan's consolidated net worth was $873.8 million. Cash net of debt was $130.0 million as the Company held $773.9 million in cash compared to $643.9 million in debt as of this same date. Allergan's debt-to-equity percentage was 73.7 percent and its debt-to-capital percentage was 42.4 percent at December 31, 2000. The Company generated free cash flow of $244 million, an increase of almost 60 percent over the prior year.

As of December 31, 2000, and flat with the prior quarter end level, the Company's days-sales-outstanding was 66. The Company's inventory days-on-hand level of 103 as of December 31, 2000 represents a three-day reduction from the prior quarter end.

Discussion of Non-Recurring Items

Fourth quarter 2000 diluted earnings per share of $0.48 were not impacted by non-recurring items as a $0.01 charge from the in-licensing of certain technology was offset by a $0.01 gain related to the reversal of a portion of restructuring charges originally recorded in a prior year. Including the benefit of certain one-time costs and credits, Allergan's diluted earnings per share were $0.44 for the quarter ended December 31, 1999.

Diluted earnings per share for the year ended December 31, 2000 were $1.61, including non-recurring income of $0.02 from gains on sales of investments and the reversal of a portion of the restructuring charges recorded in a prior year, and a $0.01 non-recurring charge related to the in-license of technology. Including the effects of non-recurring items, diluted earnings per share for the year ended December 31, 1999 were $1.39. The non-recurring income of $0.10 in 1999 was attributable to gains, net of certain technology acquisition expenses, on the sale of investments and certain product rights; gains on the divestiture of certain skin care products; the receipt of certain milestone payments related to an existing technology collaboration; and the reversal of a portion of restructuring charges recorded in a prior year.

Financial Outlook for 2001

In 2000, foreign currency movement negatively impacted Allergan's revenue by 3.0 percent. Based on the rate of change during 2000 and today's foreign currency exchange rates, Allergan estimates similar negative impact to this year's sales. Taking this three percent or approximately $50-60 million of currency impact into account, Allergan believes 2001 sales will be in the range of $1.7 to $1.8 billion.

Applying Allergan's previously stated objective of 20 percent growth to the $1.60 earnings per share generated in 2000, yields a 2001 earnings objective of $1.92 per share. Due to strategic investments primarily related to the anticipated new product launch of Lumigan(TM), the Company anticipates an increasing pattern of earnings growth across the quarters in 2001. Allergan believes that quarterly earnings per share for 2001 will increase by approximately 10 percent in the first quarter, 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.

For the first quarter of 2001, the company estimates relatively modest growth rates when compared with the prior-year's first quarter. Anticipating increased demand from Y2K concerns, the Company managed inventories down in the fourth quarter of 1999. As a result, last year's first quarter was exceptionally strong due to Y2K-related restocking of pharmaceutical products. Additionally, in the first quarter of 2001 the Company plans to increase sales and marketing expenses related to the anticipated Lumigan(TM) launch. Based on prevailing currency rates, the Company estimates sales in the range of $390 million to $405 million and earnings per share of $0.35 for the first quarter of 2001.

Treatment of SFAS No. 133

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 plans for regulatory registrations and for expansion of new product pipeline, anticipated launches of additional yet-to-be 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, including, by way of example only, discussions of future products, future product approvals, or future approvals for indications regarding previously approved products, 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 1999 Form 10-K and the Form 10-Qs filed to date provide additional risk factors. 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.

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

                            ALLERGAN, INC.
              Condensed Consolidated Statements of Income
                              (unaudited)

                                Three Months        Years
in millions, except per share   Ended December 31,  Ended December 31,
                                2000      1999       2000      1999

Product sales
Net sales                       $400.7    $380.3   $1,562.6  $1,406.2
Cost of sales                    108.9     101.3      429.1     406.4

    Product gross margin         291.8     279.0    1,133.5     999.8

Research services
Research service revenues         18.4      13.4       62.9      46.2
Cost of research services         17.4      12.7       59.4      43.3

    Research services margin       1.0       0.7        3.5       2.9

Selling, general and
  administrative                 160.0     155.8      650.1     587.9
Research & development            50.4      54.0      195.6     168.4
Technology fees from related
 party                            (0.6)     (1.1)      (3.1)     (6.1)
Restructuring charges (credits)   (2.0)     (9.6)      (2.0)     (9.6)
Asset write-offs (credits)          --      (1.4)        --      (1.4)

Operating income                  85.0      82.0      296.4     263.5

Interest income                    9.9       4.2       23.9      14.3
Interest expense                  (4.9)     (5.0)     (19.8)    (15.1)
Gain on investments, net           0.2      11.7        1.0      14.0
Contribution to Allergan
 Foundation                         --      (6.9)        --      (6.9)
Other, net                         1.9      (1.2)       2.3      (0.8)

                                   7.1       2.8        7.4       5.5

Earnings before income taxes
  and minority interest           92.1      84.8      303.8     269.0

Provision for income taxes        26.7      25.4       88.1      80.7

Minority interest                  0.3       0.1        0.6       0.1

Net earnings                    $ 65.1    $ 59.3     $215.1  $  188.2

Earnings per common share:
         Basic                 $  0.50   $  0.45   $   1.65    $ 1.42
         Diluted               $  0.48   $  0.44   $   1.61    $ 1.39

Weighted average number of common shares outstanding:
         Basic                   131.5     131.0      130.7     132.2
         Diluted                 134.7     133.9      133.8     135.2


                            ALLERGAN, INC.
                 Condensed Consolidated Balance Sheets
                              (unaudited)

in millions                               December 31,  December 31,
                                              2000          1999
Assets

Cash and equivalents                       $ 773.9       $ 162.9
Trade receivables, net                       290.1         253.2
Inventories                                  122.7         130.7
Other current assets                         139.6         150.7

Total current assets                       1,326.3         697.5

Property, plant and equipment, net           351.6         330.3
Other noncurrent assets                      293.1         311.3

Total assets                              $1,971.0      $1,339.1

Liabilities and stockholders' equity

Notes payable                             $   59.2      $   85.3
Accounts payable                              96.3          80.5
Accrued expenses and income taxes            277.0         254.1

Total current liabilities                    432.5         419.9

Long-term debt                               584.7         208.8
Other liabilities                             80.0          75.9
Stockholders' equity                         873.8         634.5

Total liabilities and stockholders'
 equity                                   $1,971.0      $1,339.1


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

                                Three Months         Years
in millions                     Ended December 31,   Ended December 31,
                                 2000       1999      2000       1999

Specialty Pharmaceuticals:

    Eye Care Pharmaceuticals   $160.7     $146.5    $675.3     $571.2

    Skin Care                    20.3       18.6      68.7       76.6

    Botox/Neuromuscular          66.7       53.9     239.5      175.8

         Total                  247.7      219.0     983.5      823.6


Medical Devices and
  OTC Product Lines:

    Ophthalmic Surgical          69.8       64.4     250.4      222.9

    Contact Lens Care            83.2       96.9     328.7      359.7

         Total                  153.0      161.3     579.1      582.6

TOTAL NET SALES                $400.7     $380.3  $1,562.6   $1,406.2


Domestic                           51%        46%       52%        48%

International                      49%        54%       48%        52%