Item 1. BUSINESS
Fidelity Leasing Income Fund VI, L.P. (the "Fund"), a Delaware limited partnership, was organized in 1989 and acquires equipment, primarily computer equipment, including printers, tape and disk storage devices, data communications equipment, computer terminals, technical workstations as well as networking equip- ment, which is leased to third parties on a short-term basis. The Fund's principal objective is to generate leasing revenues for distribution. The Fund manages the equipment, releasing or disposing of equipment as it comes off lease in order to achieve its principal objective. The Fund will not borrow funds to purchase equipment.
The Fund generally acquires equipment subject to a lease. Purchases of equipment for lease are typically made through equipment leasing brokers, under a sale-leaseback arrangement directly from lessees owning equipment, from the manufacturer either pursuant to a purchase agreement relating to significant quantities of equipment or on an ad hoc basis to meet the needs of a particular lessee.
The equipment leasing industry is highly competitive. The Fund competes with leasing companies, equipment manufacturers and distributors, and entities similar to the Fund (including similar programs sponsored by the General Partner), some of which have greater financial resources than the Fund and more experience in the equipment leasing business than the General Partner. Other leasing companies and equipment manufacturers and distributors may be in a position to offer equipment to prospective lessees on financial terms which are more favorable than those which the Fund can offer. They may also be in a position to offer trade- in-privileges, maintenance contracts and other services which the Fund may not be able to offer. Equipment manufacturers and distributors may offer to sell equipment on terms and conditions (such as liberal financing terms and exchange privileges) which will afford benefits to the purchaser similar to those obtained through leases. As a result of the advantages which certain of its competitors may have, the Fund may find it necessary to lease its equipment on a less favorable basis than certain of its competitors.
The computer equipment industry is extremely competitive as well. Competitive factors include pricing, technological innovation and methods of financing. Certain manufacturer- lessors maintain advantages through patent protection, where applicable, and through product protection by the use of a policy which combines service and hardware benefits with payment for such benefits accomplished through a single periodic charge.
A brief description of the types of equipment in which the Fund has invested as of December 31, 1996, together with information concerning the users of such equipment is contained in Item 2, following.
The Fund does not have any employees. All persons who work on the Fund are employees of the General Partner.
Item 2.

Item 2. PROPERTIES
The following schedules detail the type and aggregate purchase price of the various types of equipment acquired and leased by the Fund as of December 31, 1996, along with the percentage of total equipment represented by each type of equipment, a breakdown of equipment usage by industrial classification and the average initial term of leases:
Purchase Price Percentage of Type of Equipment Acquired of Equipment Total Equipment
Communication Controllers $ 816,204 5.27% Disk Storage Systems 6,364,230 41.07 Network Communications 68,879 0.44 Printers 959,898 6.19 Tape Storage Systems 1,663,602 10.73 Terminals, Work Stations and Display Stations 5,549,423 35.81 Other 75,596 0.49 ___________ ______
Totals $15,497,832 100.00% =========== ======
Breakdown of Equipment Usage By Industrial Classification
Purchase Price Percentage of Type of Business of Equipment Total Equipment
Computer/Data Processing $ 421,828 2.72% Diversified Financial/Insurance 7,049,792 45.49 Manufacturing/Refining 3,684,364 23.77 Retailing/Consumer Goods 3,315,934 21.40 Telephone/Telecommunications 1,025,914 6.62 ___________ ______
Totals $15,497,832 100.00% =========== ======
Average Initial Term of Leases (in months): 34
All of the above equipment is currently leased under operating leases.
Item 3.

Item 3. LEGAL PROCEEDINGS
Not applicable.
Item 4.

Item 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
Not applicable.
PART II
Item 5.

Item 5. MARKET FOR THE REGISTRANT'S COMMON STOCK AND RELATED SECURITY HOLDER MATTERS
(a) The Fund's limited partnership units are not publicly traded. There is no market for the Fund's limited partnership units and it is unlikely that any will develop.
(b) Number of Equity Security Holders:
Number of Partners Title of Class as of December 31, 1996
Limited Partnership Interests 2,661
General Partnership Interest 1
Item 7.

Item 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Results of Operations
Fidelity Leasing Income Fund VI, L.P. had revenues of $4,740,607, $6,094,886 and $6,442,059 for the years ended December 31, 1996, 1995 and 1994, respectively. Rental income from the leasing of computer peripheral equipment accounted for 85%, 84% and 93% of total income in 1996, 1995 and 1994, respectively. The decrease in total revenues in 1996 and 1995 is primarily attributable to the decrease in rental income. In 1996, rental income decreased by approximately $2,244,000 due to renewals of leases at lower rates and lease terminations or sales of equipment. This decrease, however, was mitigated by an increase of $1,141,000 in rental income generated from equipment purchased in 1996 as well as rental income realized on 1995 equipment purchases for which a full year of rent was earned in 1996 and only a partial year was earned in 1995. Rental income decreased in 1995 by approximately $1,519,000 because of equipment which came off lease and was re-leased at lower rental rates or sold. This decrease was reduced by an increase of $682,000 in rental income generated from equipment purchased in 1995 as well as rental income generated from 1994 equipment purchases for which a full year of rental income was earned in 1995 and only a partial year was earned in 1994. The Fund recognized a net gain on sale of equipment of $513,405 in 1996 as compared to $559,213 in 1995 and a loss on sale of equipment of $48,733 in 1994 which also accounts for the decrease in total revenues in 1996 and reduced the overall decrease in revenues in 1995. In addition, interest income decreased in 1996 and 1995 because of lower cash balances available for investment by the Fund and, in 1996, lower interest rates earned on short-term investments.
Expenses were $4,570,779, $5,497,589 and $5,985,044 for the years ended December 31, 1996, 1995 and 1994, respectively. Depreciation and amortization comprised 76%, 71% and 84% of total expenses in 1996, 1995 and 1994, respectively. The decrease in expenses in 1996 and 1995 was partially attributable to the decrease in depreciation expense due to equipment which came off lease, terminated or was sold. Additionally, the decrease in the write-down of equipment to net realizable value in 1996 also contributed to the overall decrease in total expenses in 1996. The increase in this expense in 1995, however, reduced the amount of the decrease in total expenses from 1994. Currently, the Fund's practice is to review the recoverability of its undepreciated costs of rental equipment quarterly. The Fund's policy, as part of this review, is to analyze such factors as releasing of equipment, technological developments and information provided in third party publications. In 1996, 1995 and 1994, approximately $419,000, $877,000 and $242,000, respectively, was charged to write- down of equipment to net realizable value. In accordance with Generally Accepted Accounting Principles, the Fund writes down its rental equipment to its estimated net realizable value when the amounts are reasonably estimated and only recognizes gains upon actual sale of its rental equipment. Any future losses are dependent upon unanticipated technological developments affecting the computer equipment industry in subsequent years. Furthermore, general and administrative expenses to related party decreased in 1996 and increased in 1995 because of the fluctuation in general and
Item 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (Continued)
Results of Operations (Continued)
administrative expenses incurred to the General Partner during these years which affected the overall decrease in total expenses in 1996 and 1995. The decrease in management fee to related party, resulting from the decrease in rental income in 1996 and 1995, also contributed to the decrease in overall expenses during these years.
The Fund's net income was $169,828, $597,297 and $457,015 for the years ended December 31, 1996, 1995 and 1994, respectively. The earnings per equivalent limited partnership unit, after earnings allocated to the General Partner, were $5.49, $15.94 and $9.35 for the years ended December 31, 1996, 1995 and 1994, respectively. The weighted average number of equivalent limited partnership units outstanding were 29,822, 35,186 and 43,506 for 1996, 1995 and 1994, respectively.
The Fund generated funds from operations, for the purpose of determining cash available for distribution, of $3,568,697, $4,803,454 and $5,746,894 and distributed 15%, 73% and 73% of these amounts to partners in 1996, 1995 and 1994, respectively, and 2%, 3% and 15% of these amounts to partners in January and February 1997, 1996 and 1995, respectively. For financial statement purposes, the Fund records cash distributions to partners on a cash basis in the period in which they are paid. During the fourth quarter of 1995, the General Partner revised its policy regarding cash distributions so that the distribu- tions more accurately reflect the net income of the Fund over the most recent twelve months.
Analysis of Financial Condition
The Fund continues to purchase computer equipment for lease with cash available from operations which is not distributed to partners. During the years ended December 31, 1996, 1995 and 1994, the Fund purchased $3,934,480, $5,430,211 and $1,983,990 respectively, of equipment.
Subsequent to December 31, 1996, the Fund purchased $2,024,611 of equipment subject to an operating lease with an initial lease term of 36 months.
The cash position of the Fund is reviewed daily and cash is invested on a short-term basis.
The Fund's cash from operations is expected to continue to be adequate to cover all operating expenses and contingencies during the next fiscal year.
Item 8.

Item 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
The response to this Item is submitted as a separate section of this report commencing on page.
Item 9.

Item 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE
Not applicable.
PART III
Item 10.

Item 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
In February 1996, the Board of Directors resolved to change the name of the General Partner from Fidelity Leasing Corporation to F.L. Partnership Management, Inc. (FLPMI). F.L. Partnership Management, Inc. is a wholly owned subsidiary of Resource Leasing, Inc., a wholly owned subsidiary of Resource America, Inc. The Directors and Executive Officers of FLPMI are:
FREDDIE M. KOTEK, age 40, Chairman of the Board of Directors, President, and Chief Executive Officer of FLPMI since September 1995 and Senior Vice President of Resource America, Inc. since 1995. President of Resource Leasing, Inc. since September 1995. Executive Vice President of Resource Properties, Inc. (a wholly owned subsidiary of Resource America, Inc.) since 1993. Senior Vice President and Chief Financial Officer of Paine Webber Properties from 1990 to 1991.
MICHAEL L. STAINES, age 47, Director and Secretary of FLPMI since September 1995 and Senior Vice President and Secretary of Resource America, Inc. since 1989.
SCOTT F. SCHAEFFER, age 34, Director of FLPMI since September 1995 and Senior Vice President of Resource America, Inc. since 1995. Vice President-Real Estate of Resource America, Inc. and President of Resource Properties, Inc. (a wholly owned subsidiary of Resource America, Inc.) since 1992. Vice President of the Dover Group, Ltd. (a real estate investment company) from 1985 to 1992.
Others:
STEPHEN P. CASO, age 41, Vice President and General Counsel of FLPMI since 1992.
MARIANNE T. SCHUSTER, age 38, Vice President and Controller of FLPMI since 1984.
KRISTIN L. CHRISTMAN, age 29, Portfolio Manager of FLPMI since December 1995 and Equipment Brokerage Manager since 1993.
Item 11.

Item 11. EXECUTIVE COMPENSATION
The following table sets forth information relating to the aggregate compensation earned by the General Partner of the Fund during the year ended December 31, 1996:
Name of Individual or Capacities in Number in Group Which Served Compensation
F.L. Partnership Management, Inc. General Partner $206,765(1) ========
(1) This amount does not include the General Partner's share of cash distributions made to all partners.
Item 12.

Item 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
(a) As of December 31, 1996, there was no person or group known to the Fund that owned more than 5% of the Fund's outstanding securities either beneficially or of record.
(b) In 1989, the General Partner contributed $1,000 to the capital of the Fund but it does not own any of the Fund's outstanding securities. No individual director or officer of F.L. Partnership Management, Inc. nor such directors or officers as a group, owns more than one percent of the Fund's outstanding securities. The General Partner owns a general partnership interest which entitles it to receive 1% of cash distributions until the Limited Partners have received an amount equal to the purchase price of their Units plus a 12% compounded Priority Return; thereafter 10%. The General Partner will also share in net income equal to the greater of its cash distributions or 1% of net income or to the extent there are losses, 1% of such losses.
(c) There are no arrangements known to the Fund that would, at any subsequent date, result in a change in control of the Fund.
Item 13.

Item 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
During the year ended December 31, 1996, the Fund was charged $206,765 of management fees by the General Partner. The General Partner will continue to receive 5% or 2% of rental payments on equipment under operating leases and full pay-out leases, respectively, for administrative and management services performed on behalf of the Fund. Full pay-out leases are noncancellable leases for which rental payments during the initial term are at least sufficient to recover the purchase price of the equipment, including acquisition fees. This management fee is paid monthly only if and when the Limited
Item 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS (Continued)
Partners have received distributions for the period from January 1, 1990 through the end of the most recent quarter equal to a return for such period at a rate of 12% per year on the aggregate amount paid for their units.
The General Partner may also receive up to 3% of the proceeds from the sale of the Fund's equipment for services and activities to be performed in connection with the disposition of equipment. The payment of this sales fee is deferred until the Limited Partners have received cash distributions equal to the purchase price of their units plus a 12% cumulative compounded Priority Return. Based on current estimates, it is not expected that the Fund will be required to pay this sales fee to the General Partner. As a result, $269,982 of sales fee accrued by the Fund in prior periods was recognized into income as part of the net gain on sale of equipment during the year ended December 31, 1996.
The General Partner also receives 1% of cash distributions until the Limited Partners have received an amount equal to the purchase price of their Units plus a 12% compounded Priority Return. Thereafter, the General Partner will receive 10% of cash distributions. During the year ended December 31, 1996, the General Partner received $6,688 of cash distributions.
The Fund incurred $260,883 of reimbursable costs to the General Partner and its parent company for services and materials provided in connection with the administration of the Fund during 1996.
PART IV
Item 14.

Item 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K
(a) (1) and (2). The response to this portion of Item 14 is submitted as a separate section of this report commencing on page.
(a) (3) and (c) Exhibits (numbered in accordance with Item 601 of Regulation S-K)
Exhibit Numbers Description Page Number
3(a) & (4) Amended and Restated Agreement * of Limited Partnership
(9) not applicable
(10) not applicable
(11) not applicable
(12) not applicable
(13) not applicable
(18) not applicable
(19) not applicable
(22) not applicable
(23) not applicable
(24) not applicable
(25) not applicable
(28) not applicable
* Incorporated by reference.
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
FIDELITY LEASING INCOME FUND VI, L.P. A Delaware limited partnership
By: F.L. PARTNERSHIP MANAGEMENT, INC.
Freddie M. Kotek By: __________________________ Freddie M. Kotek, Chairman and President
Dated March 26, 1997
Pursuant to the requirements of the Securities Exchange Act of 1934, this annual report has been signed below by the following persons, on behalf of the Registrant and in the capacities and on the date indicated:
Signature Title Date
Freddie M. Kotek ___________________________ Chairman of the Board of Directors 3-26-97 Freddie M. Kotek and President of F.L. Partnership Management, Inc. (Principal Executive Officer)
Michael L. Staines ___________________________ Director of F.L. Partnership 3-26-97 Michael L. Staines Management, Inc.
Marianne T. Schuster ___________________________ Vice President and Controller 3-26-97 Marianne T. Schuster of F.L. Partnership Management, Inc. (Principal Financial Officer)
INDEX TO FINANCIAL STATEMENTS AND SCHEDULES
Pages
Report of Independent Certified Public Accountants
Balance Sheets as of December 31, 1996 and 1995
Statements of Operations for the years ended December 31, 1996, 1995 and 1994
Statements of Partners' Capital for the years ended December 31, 1996, 1995 and 1994
Statements of Cash Flows for the years ended December 31, 1996, 1995 and 1994
Notes to Financial Statements -
All schedules have been omitted because the required information is not applicable or is included in the Financial Statements or Notes thereto.
Report of Independent Certified Public Accountants
The Partners Fidelity Leasing Income Fund VI, L.P.
We have audited the accompanying balance sheets of Fidelity Leasing Income Fund VI, L.P. as of December 31, 1996 and 1995, and the related statements of operations, changes in partners' capital and cash flows for each of the three years in the period ended December 31, 1996. These financial statements are the responsibility of the Fund's management. Our responsibility is to express an opinion on these financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Fidelity Leasing Income Fund VI, L.P. as of December 31, 1996 and 1995, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 1996 in conformity with generally accepted accounting principles.
Grant Thornton, LLP Philadelphia, Pennsylvania February 10, 1997
FIDELITY LEASING INCOME FUND VI, L.P.
BALANCE SHEETS
The accompanying notes are an integral part of these financial statements.
FIDELITY LEASING INCOME FUND VI, L.P.
The accompanying notes are an integral part of these financial statements.
FIDELITY LEASING INCOME FUND VI, L.P.
The accompanying notes are an integral part of these financial statements.
FIDELITY LEASING INCOME FUND VI, L.P.
The accompanying notes are an integral part of these financial statements.
FIDELITY LEASING INCOME FUND VI, L.P.
NOTES TO FINANCIAL STATEMENTS
1. ORGANIZATION AND NATURE OF BUSINESS
Fidelity Leasing Income Fund VI, L.P. (the "Fund") was formed in January 1989. The General Partner of the Fund is F.L. Partnership Management, Inc. ("FLPMI") which is a wholly owned subsidiary of Resource Leasing Inc., a wholly owned subsidiary of Resource America, Inc. The Fund is managed by the General Partner. The Fund's limited partnership interests are not publicly traded. There is no market for the Fund's limited partnership interests and it is unlikely that any will develop. The Fund acquires computer equipment, including printers, tape and disk storage devices, data communications equipment, computer terminals, technical workstations as well as networking equipment, which is leased to third parties throughout the United States on a short-term basis.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Investment Securities Held to Maturity
The Fund adopted Statement of Financial Accounting Standard (SFAS) No. 115, "Accounting for Certain Investments in Debt and Equity Securities" on January 1, 1994. This new standard requires investments in securities to be classified in one of three categories: held to maturity, trading and available for sale. Debt securities that the Fund has the positive intent and ability to hold to maturity are classified as held to maturity and are reported at amortized cost. As the Fund does not engage in security trading, the balance, if any, of its debt securities and equity securities are classified as available for sale. Net unrealized gains and losses for securities available for sale are required to be recognized as a separate component of partners' capital and excluded from the determination of net income. The Fund adopted this new standard for the year ended December 31, 1994 with no resulting financial statement impact on the Fund.
Concentration of Credit Risk
Financial instruments which potentially subject the Fund to concentrations of credit risk consist principally of temporary cash investments. The Fund places its temporary investments in bank repurchase agreements.
Concentrations of credit risk with respect to accounts receivables are limited due to the dispersion of the Fund's lessees over different industries and geographies.
Impairment of Long-Lived Assets
Effective January 1, 1996, the Fund adopted SFAS No. 121, "Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets to be Disposed of." This new standard provides guidance on when to recognize and how to measure impairment losses of long-lived assets and how to value long-lived assets to be disposed of. The adoption of SFAS No. 121 had no impact on the net income of the Fund.
FIDELITY LEASING INCOME FUND VI, L.P.
NOTES TO FINANCIAL STATEMENTS (Continued)
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
Equipment Held for Sale or Lease
Equipment held for sale or lease is carried at its estimated net realizable value.
Use of Estimates
In preparing financial statements in conformity with Generally Accepted Accounting Principles, management is required to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the financial statements and revenues and expenses during the reporting period. Actual results could differ from those estimates.
Organization Costs
Organization costs were amortized over a five year period.
Accounting for Leases
The Fund's leasing operations consist primarily of operating leases whereby the cost of the leased equipment is recorded as an asset and depreciated on a straight-line basis over its estimated useful life, up to six years. Acquisition fees associated with lease placements are allocated to equipment when purchased and depreciated as part of equipment cost. Rental income consists primarily of monthly periodic rentals due under the terms of the leases plus deferred revenue recognized. Generally, during the remaining terms of existing operating leases, the Fund will not recover all of the undepreciated cost and related expenses of its rental equipment and is prepared to remarket the equipment in future years. Upon sale or other disposition of assets, the cost and related accumulated depreciation are removed from the accounts and the resulting gain or loss, if any, is reflected in income.
The Fund does have direct financing leases, as well. Under the direct financing method, income (the excess of the aggregate future rentals and estimated additional amounts recoverable upon expiration of the lease over the related equipment cost) is recognized over the life of the lease using the interest method.
Income Taxes
Federal and State income tax regulations provide that taxes on the income or benefits from losses of the Fund are reportable by the partners in their individual income tax returns. Accordingly, no provision for such taxes has been made in the accompanying financial statements.
FIDELITY LEASING INCOME FUND VI, L.P.
NOTES TO FINANCIAL STATEMENTS (Continued)
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
Statements of Cash Flows
For purposes of the statements of cash flows, the Fund considers all highly liquid debt instruments purchased with a maturity of three months or less to be cash equivalents.
Net Income per Equivalent Limited Partnership Unit
Net income per equivalent limited partnership unit is computed by dividing net income allocated to limited partners by the weighted average number of equivalent limited partnership units outstanding during the year. The weighted average number of equivalent units outstanding during the year is computed based on the weighted average monthly limited partners' capital account balances, converted into equivalent units at $500 per unit.
Significant Fourth Quarter Adjustments
Currently, the Fund's practice is to review the recoverability of its undepreciated costs of rental equipment quarterly. The Fund's policy, as part of this review, is to analyze such factors as releasing of equipment, technological developments and information provided in third party publications. Based upon this review, the Fund recorded an adjustment of approximately $109,000, $574,000 and $42,000 or $3.66, $16.31 and $0.97 per equivalent limited partnership unit to write down its rental equipment in the fourth quarter of 1996, 1995 and 1994, respectively.
3. ALLOCATION OF PARTNERSHIP INCOME, LOSS AND CASH DISTRIBUTIONS
Cash distributions, if any, are made monthly as follows: 99% to the Limited Partners and 1% to the General Partner, until the Limited Partners have received an amount equal to the purchase price of their Units, plus a 12% compounded Priority Return (an amount equal to 12% compounded annually on the portion of the purchase price not previously distributed); thereafter, 90% to the Limited Partners and 10% to the General Partner.
Net Losses are allocated 99% to the Limited Partners and 1% to the General Partner. The General Partner is allocated Net Income equal to its cash distributions, but not less than 1% of Net Income, with the balance allocated to the Limited Partners.
Net Income (Losses) allocated to the Limited Partners are allocated to individual limited partners based on the ratio of the daily weighted average partner's net capital account balance (after deducting related commission expense) to the total daily weighted average of the Limited Partners' net capital account balances.
FIDELITY LEASING INCOME FUND VI, L.P.
NOTES TO FINANCIAL STATEMENTS (Continued)
4. EQUIPMENT LEASED
Equipment on lease consists primarily of computer equipment under operating leases. A majority of the equipment was manufactured by IBM. The lessees have agreements with the manufacturer to provide maintenance for the leased equipment. The Fund's operating leases are for initial lease terms of 12 to 60 months.
In accordance with Generally Accepted Accounting Principles, the Fund writes down its rental equipment to its estimated net realizable value when the amounts are reasonably estimated and only recognizes gains upon actual sale of its rental equipment. As a result, in 1996, 1995 and 1994, approximately $419,000, $877,000 and $242,000, respectively was charged to write down of equipment to net realizable value. Any future losses are dependent upon unanticipated technological developments affecting the computer equipment industry in subsequent years.
During the year ended December 31, 1996, the Fund leased equipment under the direct financing method in accordance with SFAS No. 13. This method provides for recognition of income (the excess of the aggregate future rentals and estimated additional amounts recoverable upon expiration of the lease over the related equipment cost) over the life of the lease using the interest method.
The net investment in direct financing leases as of December 31, 1996 is as follows:
Net minimum lease payments to be received $556,000 Less unearned income 53,000 Add expected future residuals - ________ $503,000 ========
The future approximate minimum rentals to be received on noncancellable operating and direct financing leases as of December 31 are as follows:
Direct Operating Financing
1997 $3,213,000 $238,000 1998 1,412,000 238,000 1999 738,000 80,000 __________ ________ $5,363,000 $556,000 ========== ========
Subsequent to December 31, 1996, the Fund purchased $2,024,611 of equipment subject to an operating lease with an initial lease term of 36 months. The future approximate minimum rentals to be received on this noncancellable operating lease are $738,286, $681,495 and $624,704 in 1997, 1998 and 1999, respectively.
FIDELITY LEASING INCOME FUND VI, L.P.
NOTES TO FINANCIAL STATEMENTS (Continued)
5. RELATED PARTY TRANSACTIONS
The General Partner receives 5% or 2% of rental payments on equipment under operating leases and full pay-out leases, respectively, for administrative and management services performed on behalf of the Fund. Full pay-out leases are noncancellable leases for which rental payments during the initial term are at least sufficient to recover the purchase price of the equipment, including acquisition fees. This management fee is paid monthly only if and when the Limited Partners have received distributions for the period from January 1, 1990 through the end of the most recent quarter equal to a return for such period at a rate of 12% per year on the aggregate amount paid for their units.
The General Partner may also receive up to 3% of the proceeds from the sale of the Fund's equipment for services and activities to be performed in connection with the disposition of equipment. The payment of this sales fee is deferred until the Limited Partners have received cash distributions equal to the purchase price of their units plus a 12% cumulative compounded Priority Return. Based on current estimates, it is not expected that the Fund will be required to pay this sales fee to the General Partner. As a result, $269,982 of sales fee accrued by the Fund in prior periods was recognized into income as part of the net gain on sale of equipment during the year ended December 31, 1996.
Additionally, the General Partner and its parent company are reimbursed by the Fund for certain costs of services and materials used by or for the Fund except those items covered by the above-mentioned fees. Following is a summary of fees and costs charged by the General Partner or its parent company during the years ended December 31:
1996 1995 1994 Management fee $206,765 $260,485 $299,259 Reimbursable costs 260,883 364,237 232,828
During 1996, the Fund maintained its checking and investment accounts in Jefferson Bank, a subsidiary of JeffBanks, Inc., in which the Chairman of Resource America, Inc. serves as a director.
Amounts due from related parties at December 31, 1996 and 1995 represent monies due to the Fund from the General Partner and/or other affiliated funds for rentals and sales proceeds collected and not yet remitted the Fund.
Amounts due to related parties at December 31, 1996 and 1995 represent monies due to the General Partner for the fees and costs mentioned above, as well as, rentals and sales proceeds collected by the Fund on behalf of other affiliated funds.
FIDELITY LEASING INCOME FUND VI, L.P.
NOTES TO FINANCIAL STATEMENTS (Continued)
6. MAJOR CUSTOMERS
For the year ended December 31, 1996, two customers accounted for approximately 12% and 11% of the Fund's rental income. For the year ended December 31, 1995, one customer generated approximately 17% of the Fund's rental income. For the year ended December 31, 1994, one customer accounted for approximately 14% of the Fund's rental income.
7. CASH DISTRIBUTIONS
Below is a summary of the cash distributions paid to partners during the years ended December 31:
In addition, the General Partner declared a cash distribution of $50,000 in January 1997 and $25,000 in February 1997 for the months ended November 30 and December 31, 1996, respectively to all admitted partners as of November 30 and December 31, 1996.


ITEM 1. BUSINESS
GENERAL DEVELOPMENT OF BUSINESS
Allergan, Inc. ("Allergan" or the "Company") is a leading provider of specialty therapeutic eye care products throughout the world with niche pharmaceutical products in skin care and movement disorders. Its worldwide consolidated revenues are principally generated by prescription and non-prescription pharmaceutical products in the areas of ophthalmology and skin care, intraocular lenses and other ophthalmic surgical products, and contact lens care products.
Allergan was incorporated in California in 1948 and reincorporated in Delaware in 1977. In 1980, the Company was acquired by SmithKline Beckman Corporation (then known as "SmithKline Corporation" and herein "SmithKline"). The Company operated as a wholly-owned subsidiary of SmithKline from 1980 until 1989 when Allergan again became a stand-alone public company through a spin-off distribution by SmithKline.
In November 1992, the Company sold its contact lens business in North and South America. In August 1993, the Company sold its contact lens business outside of the Americas.
During 1994, the Company acquired the Ioptex Research worldwide intraocular lens product line and Lorsen SA, a manufacturer of skin care products in Argentina. During 1995, the Company completed four acquisitions. In January 1995, the Company acquired Optical Micro Systems, Inc., a U.S.-based developer and manufacturer of phacoemulsification surgical equipment. In June 1995, the Company acquired Laboratorios Frumtost, S.A., a manufacturer of ophthalmic and other pharmaceutical products in Brazil. In August 1995, the Company purchased the assets of Herald Pharmacal, Inc., a U.S.-based developer and manufacturer of glycolic acid-based, aesthetic skin care products. In November 1995, the Company purchased the worldwide contact lens care product business of Pilkington Barnes Hind. Also in 1995, Allergan acquired 100% ownership interest in Santen-Allergan, its Japanese contact lens care joint venture.
On March 5, 1997, the Company announced that it expected, at that time, that earnings for the first half of 1997 would be lower than those reported for the first half of 1996, possibly as much as 20% below the comparable 1996 period, excluding the impact of the special charges in the second quarter of 1996. It attributed the expected decline in operating results primarily to launch expenses for new products and the continuing competitive pressures on the eye care business, as well as the impact of foreign currency fluctuations. At the same time, the Company announced the resumption of its stock repurchase plan approved by the Board of Directors in 1993. The existing Board approval permits repurchase of up to 2.9 million shares. Further repurchases would require the approval of the Board.
ALLERGAN BUSINESSES
The following table sets forth, for the periods indicated, the net sales from continuing operations for each of the Company's specialty therapeutics businesses and product lines:
The foregoing table does not include sales of discontinued operations. See Note 12 of Notes to Consolidated Financial Statements on page 43 of the 1996 Annual Report for further information concerning foreign and domestic operations.
Ophthalmic Pharmaceuticals Business
Allergan develops, manufactures and markets a broad range of prescription and non-prescription products designed to treat diseases and disorders of the eye, including glaucoma, inflammation, infection and allergy. In addition, the specialty over-the-counter product line consists of products designed to treat ocular surface disease, including artificial tears and ocular decongestants.
The largest segment of the market for ophthalmic prescription drugs is for the treatment of glaucoma, a sight-threatening disease characterized by elevated intraocular pressure. Allergan's largest selling pharmaceutical product is Betagan(R) ophthalmic solution, a topical beta blocker used in the initial treatment of glaucoma. Allergan also markets and sells Propine(R) ophthalmic solution, which is used alone or in combination with other drugs when initial drug therapy for glaucoma becomes inadequate. Patent protection for both products expired in the United States in 1991. In 1993, Allergan entered into an agreement with Schein Pharmaceutical, Inc. ("Schein") whereby Schein markets generic versions of Allergan's Betagan(R) and Propine(R) products in the United States. Both Betagan(R) and Propine(R) currently face generic competition from several companies including Bausch & Lomb and Alcon Laboratories, Inc. (a division of Nestle). In September 1996, Alphagan(R) (brimonidine) was approved in the United States for the treatment of open-angle glaucoma and ocular hypertension; the period of new chemical entity exclusivity for Alphagan(R) extends for five years from the date of approval. In March 1997, Alphagan(R) was also approved in the United Kingdom; the Company will seek approval to market Alphagan(R) in the balance of the European community through the mutual recognition filing process. Also, in March 1997, Alphagan(R) was approved in the United States for acute post-surgical elevated pressure in the eye following argon laser trabeculoplasty.
The Company also markets several leading ophthalmic products to treat ocular inflammation and infection. Pred Fort(R) and FML(R) Liquifilm(R) suspensions are leading products in the ocular corticosteroid inflammation market. Allergan's Acular(R)(1) ophthalmic
- ------------------------ (1) Acular , a registered trademark, is licensed from its developer Syntex (U.S.A.) Inc.
solution is indicated for the relief of itch associated with seasonal allergic conjunctivitis and for the treatment of postoperative inflammation in patients who have undergone cataract extraction. An application for U.S. marketing approval for Acular(R) solution for corneal pain was filed with the U.S. Food and Drug Administration ("FDA") in December 1996. Allergan's major products in the anti-infective market are Blephamide(R) suspension, a topical anti-inflammatory and anti-infective, Polytrim(R) solution, a synthetic antimicrobial which treats surface ocular bacterial infections, and Ocuflox(R)/Oflox(R)/Exocin(R) solution, a fluroquinolone which treats bacterial conjunctivitis. In the United States, a marketing approval application for Ocuflox(R) solution for the treatment of corneal ulcers was approved by the FDA in May 1996.
Ophthalmic Surgical Business
Allergan's ophthalmic surgical business develops, manufactures and markets intraocular lenses ("IOLs"), surgically related pharmaceuticals, phacoemulsification equipment and other ophthalmic surgical products.
The largest segment of the surgical market is for the treatment of cataracts. Cataracts are a condition, usually age related, in which the natural lens of the eye becomes progressively clouded. This clouding obstructs the passage of light and can lead to blindness. Most patients blinded by cataracts can be surgically cured by removing the clouded lens and replacing it with an IOL. The Company currently offers a full line of AMO(R) products used in the performance of cataract surgery, including rigid multi-piece, single-piece and small incision design IOLs. In September 1994, Allergan acquired the worldwide IOL business of Ioptex Research Inc., a division of Smith & Nephew, plc.
Sales of all models of the Company's IOLs represented 10%, 12% and 11% of total Company sales in 1994, 1995 and 1996, respectively. Intraocular lenses marketed by Allergan for small incision cataract surgery include the AMO(R)Phacoflex(R) small incision IOL, introduced in 1989, the AMO(R) PhacoflexII(R)SI-30NB(R) foldable small incision IOL, introduced in April 1993, the AMO(R)SI-40NB(R) foldable small incision IOL, introduced in 1995, and the AMO(R)DuraLens(R) IOL, which was also introduced in 1995. The AMO(R)Array(R) multifocal IOL is available in Brazil and several European countries including Germany, France and Italy. An application for U.S. marketing approval was filed with the FDA in August 1996. The Company believes that the AMO(R)Array(R) multifocal IOL will be viewed by ophthalmic surgeons and cataract patients as a significant improvement in IOL design, providing an improved patient outcome.
Small incision IOLs continue to grow in popularity along with increasing use of phacoemulsification, a method of cataract extraction that uses ultrasound waves to break the natural lens into small fragments that can be removed through a hollow needle. Phacoemulsification requires only a 3 to 4 millimeter incision, compared to incisions of up to 12 millimeters for other techniques. Phacoemulsification is currently utilized in more than 80 percent of cataract procedures in the United States. In 1993 Allergan introduced the AMO(R)Prestige(R) phacoemulsification machine. AMO(R)Prestige(R) makes small-incision cataract surgery easier than other phacoemulsification machines by using a sophisticated microprocessor that monitors vacuum and fluid in the eye. In January 1995, Allergan acquired Optical Micro Systems, Inc. ("OMS"). OMS develops and manufactures phacoemulsification equipment. This acquisition, along with the acquisition of the Ioptex business in 1994, provided the Company with additional IOL and phacoemulsification equipment product offerings and the capability to manufacture phacoemulsification equipment. The AMO(R)Diplomax(TM) phacoemulsification machine, launched in the U.S. by the Company in November 1995, is the first OMS phaco-technology system introduced since the acquisition. Allergan also markets AMO(R)Vitrax(R), a viscoelastic used to maintain the anterior chamber and protect endothelial cells during cataract surgery.
Optical Business
The Company has been doing business in the contact lens care market since 1960. On a worldwide basis, it develops, manufactures and markets a broad range of products for use with every available type of contact lens. These products include disinfecting solutions to destroy harmful microorganisms in and on the surface of contact lenses; daily cleaners to remove undesirable film and deposits from contact lenses; and enzymatic cleaners to remove protein deposits from contact lenses. In the area of disinfecting products, the Company offers products that can be used in each of the three disinfecting systems: hydrogen peroxide systems, convenient chemical systems and thermal systems. Allergan's leading hydrogen peroxide system products are the Oxysept 1Step(R)/UltraCare(R) hydrogen peroxide neutralizer/disinfection system and the UltraCare(R) system with a color indicator which turns the solution pink to indicate the disinfectant tablet has dissolved. Both UltraCare(R) products are marketed in many countries around the world under the brand name, Oxysept 1Step(R). Complete(R) brand Multi-Purpose solution is the Company's convenient, one-bottle chemical disinfection system for soft contact lenses. One-bottle systems, including the Company's product, continue to gain popularity with consumers.
In November 1995, the Company acquired the worldwide contact lens care business of Pilkington Barnes Hind. Included in the acquisition was the Consept F(R) Cleaning and Disinfecting System, the first approved non-heat disinfection system for soft contact lenses in Japan. This acquisition significantly increased the Company's contact lens care product business in Japan.
Sales of the Company's proprietary enzymatic cleaners represented 10%, 9% and 6% of total Company sales in 1994, 1995 and 1996, respectively, and sales of the Company's hydrogen peroxide disinfection systems represented 14%, 14% and 12% of total Company sales in 1994, 1995 and 1996, respectively. It is difficult for the Company to predict what effect, if any, the continued market acceptance of daily disposable contact lenses and the increasing acceptance of the surgical correction of nearsightedness and other forms of visual acuity impairment, especially in the United States, will have on the Company's optical business. However, the Company believes that an acceleration of these trends could result in a material adverse impact on sales of the Company's contact lens care products in the United States.
Skin Care Business
Building upon its strength in marketing to medical specialties and taking advantage of synergies in research and development, Allergan's skin care business develops, manufactures and markets therapeutic as well as cosmetic skin care products, primarily in the United States and Argentina. Azelex(R) (azelaic acid) cream for the topical treatment of mild to moderate inflammatory acne vulgaris was launched in the U.S. in December 1995 and has been well received in the market. The therapeutic product line also includes Elimite(R) cream for the treatment of scabies, Naftin(R), a topical anti-fungal gel and cream and Gris-Peg(R) tablets, a systemic anti-fungal product.
During the fourth quarter of 1996, the Company received approval from the German Ministry of Health (Bfarm) to market Zora(R) (tazarotene) 0.05% and 0.1% topical gels to treat mild-to-moderate plaque psoriasis. The Company has received an approvable letter for TazoracTM (the trade name for Zorac(R) in the United States) for the treatment of plaque psoriasis and acne and is currently in final labeling discussions with the FDA.
The Company also develops, manufactures and markets glycolic acid-based skin care products as a result of its 1995 acquisition of the assets of Herald Pharmacal, Inc.
Botox(R)/Movement Disorder Business
Allergan's Botox(R) (Botulinum Toxin Type A) purified neurotoxin complex injection is used in the treatment of certain movement disorders which are characterized by involuntary muscle contractions or spasms. Botox(R) purified neurotoxin complex injection is marketed in the United States and a number of other major countries for the treatment of blepharospasm (the uncontrollable contraction of the eyelid muscles which can force the eye closed and result in functional blindness) and strabismus (misalignment of the eyes) in people 12 years of age and over. In May 1994, Botox(R) was approved in the United Kingdom for blepharospasm and hemifacial spasm. In March 1991, an application was filed with the FDA for approval of a non-ophthalmic claim for the treatment of a neck and shoulder movement disorder known as cervical dystonia (spasmodic torticollis) affecting 160,000 people in the U.S. In March 1995, in response to a request from the FDA, Allergan initiated additional clinical trials in support of the cervical dystonia filing. Botox(R) purified neurotoxin complex has been approved in Canada and several European countries for the treatment of cervical dystonia. Sales of Botox(R) have grown at the rate of over 37% per year for the last two fiscal years.
EMPLOYEE RELATIONS
At December 31, 1996, the Company employed approximately 6,100 persons throughout the world, including approximately 2,500 in the United States. None of the Company's U.S.-based employees are represented by unions. The Company considers that its relations with its employees are, in general, very good.
INTERNATIONAL OPERATIONS
The Company believes that international markets represent a significant opportunity for continued growth. International sales have represented approximately 52.7%, 56.4% and 58.6% of total sales for the years ended December 31, 1994, 1995 and 1996, respectively. Allergan believes that its well-established international market presence provides it with a competitive advantage, enabling the Company to maximize the return on its investment in research, product development and manufacturing.
Allergan established its first foreign subsidiary in 1964 and currently sells products in approximately 100 countries. Marketing activities are coordinated on a worldwide basis and resident management teams provide leadership and infrastructure for customer focused rapid introduction of new products in the local markets.
In Japan, the second largest eye care market in the world, certain of Allergan's eye care pharmaceutical products have been licensed to Santen Pharmaceuticals ("Santen"), the largest eye care pharmaceutical manufacturer in Japan. Allergan also directly markets contact lens care products, IOLs and other eye care surgical products, for which it has a leading market position.
In 1993 and 1994, Allergan launched its Complet(R) brand contact lens care products and two ophthalmic pharmaceutical products, Propine(R) and Betagan(R) solutions, in the People's Republic of China. In 1995, the Company received government approval to do business through its wholly foreign owned entity, Allergan Pharmaceutical (Hangzhou) Co. Ltd., and five additional products were launched. The Company also began construction of its new manufacturing facility in Hangzhou in October, 1995. Also, in June 1995, Allergan acquired Laboratorios Frumtost, S.A., a manufacturer of ophthalmic and other pharmaceutical products in Brazil. In 1994, Allergan and Nicholas Piramal India Limited formed Allergan India Private Ltd., a joint venture to manufacture and market eye care products in India. Since 1994, 13 ophthalmic pharmaceutical products and Botox(R) purified neurotoxin complex have been approved for sale in India.
SALES AND MARKETING
Allergan maintains global marketing and regional sales organizations. Supplementing the sales efforts and promotional activities aimed at eye and skin care professionals, as well as neurologists outside the U.S., who use, prescribe and recommend its products, Allergan has been utilizing its resources increasingly with managed care providers. In addition, Allergan advertises in professional journals and has an extensive direct mail program of descriptive product literature and scientific information to specialists in the ophthalmic, dermatological and movement disorder fields. The Company's specialty therapeutic products are sold to drug wholesalers, independent and chain drug stores, commercial optical chains, mass merchandisers, food stores, hospitals, ambulatory surgery centers and medical practitioners, including neurologists. At December 31, 1996, the Company employed approximately 1,100 sales representatives throughout the world.
RESEARCH AND DEVELOPMENT
The Company's global research and development efforts focus on eye care, skin care and neuromuscular products that are safe, effective, convenient and have an economic benefit. The Company's own research and development activities are supplemented by a commitment to identifying and obtaining new technologies through in-licensing, technological collaborations, joint ventures and acquisition efforts, including the establishment of research relationships with academic institutions and individual researchers.
At December 31, 1996, there were, in the aggregate, approximately 700 people involved in the Company's research and development efforts. The Company's research and development expenditures associated with continuing operations for 1994, 1995 and 1996 were $111.5 million, $116.7 million and $118.3 million, respectively, excluding amounts spent by Allergan Ligand Retinoid Therapeutics, Inc. ("ALRT").
Research and development efforts for the ophthalmic pharmaceuticals business focus primarily on new therapeutic products for glaucoma, inflammation, dry eye, allergy and new anti-infective pharmaceuticals for eye care. The Company is conducting research on new compounds that control intraocular pressure by either reducing the inflow or production, or improving the outflow of aqueous humor. The Company is also conducting research and clinical trials on a class of compounds called prostaglandins. Unlike beta-blockers and alpha2 agonists that decrease the inflow or production of aqueous humor, prostaglandins reduce intraocular pressure by improving its outflow. The Company is also developing topical cyclosporine A for the treatment of severe dry eye.
Research and development activities for the surgical business concentrate on improved cataract surgical systems, implantation instruments and methods, and new IOL materials and designs, including the AMO(R)Array(R) multifocal IOL, designed to allow patients to see well over a range of distances and the AMO(R)Clariflex(TM), an acrylic foldable IOL. The Company filed for U.S. marketing approval for the the AMO(R)Array(R) multifocal IOL in August 1996 and anticipates filing for U.S. marketing approval for the AMO(R)Clariflex(TM) acrylic foldable IOL in 1998.
Research and development efforts for neuromuscular disorders focus on expanding the uses for Botox(R) (Botulinum Toxin Type A) purified neurotoxin complex to include treatment for cervical dystonia, juvenile cerebral palsy, spasticity and pain.
Research and development in the optical business is aimed at contact lens care systems which are effective and more convenient for patients to use, and thus lead to a higher rate of compliance with recommended lens care procedures. Improved compliance can enhance safety and extend the time a patient will be a contact lens wearer. The Company believes that continued development and commercialization of disinfection systems that are both easy-to-use and efficacious will be important for the future success of this part of the Company's business.
During 1992, the Company entered into a joint venture ("Joint Venture") with Ligand Pharmaceuticals Incorporated ("Ligand") to combine Ligand's knowledge of intracellular receptor technology with the Company's experience in receptor-selective retinoids for topical use. In December 1994, the Company and Ligand announced the formation of a new research and development company, ALRT, to devote $100 million to accelerate the activities of the Joint Venture related to the discovery and development of drugs based on receptor selective retinoids. In May 1995, Allergan and Ligand funded ALRT, in part, through a rights offering (the "Offering") of $32.5 million of ALRT Units (consisting of one share of ALRT common stock and two warrants to purchase one share each of Ligand common stock) to their respective shareholders. In June 1995, upon completion of the Offering, Allergan and Ligand contributed all Joint Venture technology and assets to ALRT and made cash payments to ARLT of $50 million and $17.5 million, respectively. Allergan accounted for its contribution as a one-time charge to operating expense at the time of the contribution. In connection with the Offering, the Joint Venture was dissolved and Allergan Pharmaceuticals (Ireland) Ltd., Inc. ("Allergan Ireland"), a wholly owned subsidiary of the Company, acquired an additional $6 million of Ligand common stock. As a result, Allergan Ireland owns approximately 11% of the outstanding common stock of Ligand.
Ligand, or if not exercised by Ligand then Allergan, has the option to purchase all of the common stock of ALRT during a specified period in the future. If Ligand exercises its option, Allergan has the right to acquire an undivided one-half interest in ALRT technology and 50 percent of all other ALRT assets. Additionally, after the earlier of a specified date or approval for commercial sale, Ligand and Allergan have the option to acquire 9-cis retinoic acid (known as ALRT 1057 or Panretin(TM)(2), one of the compounds under development by ALRT, prior to the exercise of the option to acquire ALRT stock. ALRT, Ligand and Allergan have entered into a commercialization agreement which provides for the marketing, manufacture and sale by Ligand and/or Allergan of the retinoid products developed by ALRT. In May 1995, the Company and Ligand initiated a Phase IIb clinical trial program for oral PanretinTM (ALRT 1057) in non-Hodgkin's lymphoma and, in combination with alpha interferon, in renal cell carcinoma. Additional Phase IIb trials of oral PanretinTM (ALRT 1057) are under way in other cancer indications and HIV related disorders. ALRT is also conducting Phase III studies for topical PanretinTM (ALRT 1057) in Kaposi's sarcoma.
In September 1995, the Company entered into an option agreement with Peptech (UK) Ltd. for the development and commercialization of certain therapeutic products based on its GMDP (a synthetic glucosaminyl muramyl dipeptide) compound for dermatology indications, such as psoriasis, ophthalmology and oncology. In October 1996, the Company entered into an exclusive collaboration agreement with SUGEN, Inc. to identify, develop and commercialize novel pharmaceutical compounds utilizing SUGEN's proprietary small molecule signal transduction inhibition technology for the treatment of ophthalmic neovascular diseases, such as age-related macular degeneration and diabetic retinopathy. In November 1996, the Company entered into a collaboration agreement with Cambridge NeuroScience, Inc. ("CNSI") to develop new treatments for glaucoma and other serious ophthalmic diseases. CNSI specializes in glutamate ion channel-blocker and sodium channel technology.
- ------------------ (2) Panretin(TM) is a trademark of Allergan Ligand Retinoid Therapeutics, Inc.
The continuing introduction of new products supplied by the Company's research and development efforts and in-licensing opportunities is critical to the success of the Company. There is no assurance that any of the research projects or pending drug marketing approval applications will result in new products that the Company can commercialize. Delays or failures in one or more significant research projects and pending drug marketing approval applications could have a material adverse impact on the future operations of the Company.
COMPETITION
Allergan faces strong competition in all of its markets worldwide. Numerous companies are engaged in the development, manufacture and marketing of health care products competitive with those manufactured by Allergan, although these companies do not necessarily compete in all of Allergan's product lines. Major eye care competitors include Alcon Laboratories, Inc. (a subsidiary of Nestle), Bausch & Lomb, Chiron Vision (a subsidiary of Chiron Corporation), CIBA Vision Ophthalmics (a division of Novartis), Merck & Co., Inc., Pharmacia Ophthalmics (a subsidiary of Pharmacia & Upjohn) and Storz Ophthalmics (a division of American Home Products Corporation). These competitors have equivalent or, in most cases, greater resources than Allergan. The Company's skin care business competes against a number of companies, including, among others, Schering-Plough Corporation, Johnson & Johnson and Hoffman-La Roche Inc., which all have greater resources than Allergan. In marketing its products to health care professionals, pharmacy benefits management companies, health care maintenance organizations, and various other national and regional health care providers and managed care entities, the Company competes primarily on the basis of product technology, value-added services and price. The Company believes that it competes favorably in its product markets.
GOVERNMENT REGULATION
Drugs, biologics and medical devices, including intraocular lenses (IOLs) and contact lens care products, are subject to regulation by the FDA, state agencies and, in varying degrees, by foreign health agencies. Government regulation of most of the Company's products generally requires extensive testing of new products and filing applications for approval by the FDA prior to sale in the United States and by many foreign health agencies prior to sale in many international markets. The FDA and foreign health agencies review these applications and determine whether the product is safe and effective. The process of developing data to support a premarket application and governmental review is costly and takes many years to complete.
In general, manufacturers of drugs, medical devices and biologicals are operating in an increasingly more rigorous regulatory environment than has been the case in previous years. The total cost of providing health care services has been and will continue to be subject to review by governmental agencies and legislative bodies in the major world markets, including the United States, which are faced with significant pressure to lower health care costs. Prices for some of the Company's products, specifically IOLs and pharmaceutical products, accounting for approximately 48% of the Company's 1996 worldwide sales, are expected to come under increased pressure as governments and managed care providers generally increase their efforts to contain health care costs.
Several legislative and administrative measures to strengthen government regulation of medical devices and drugs have recently been implemented in the United
States, such as the Safe Medical Devices Act of 1990, which among other things, increased reporting requirements of adverse events associated with medical devices, and the Prescription Drug User Fee Act of 1992, which requires payment of substantial fees to the FDA for the review of new drug applications. The United States Congress is expected to consider mandating the application of user fees to medical device applications as well. In the United States, the impact of increased FDA scrutiny is felt by all companies in the pharmaceutical and medical device industries.
Moreover, internationally, the regulation of drugs and medical devices is likewise becoming increasingly complex. In Europe, the Company's products are subject to extensive regulatory requirements. As in the United States, the marketing of medicinal products has for many years been subject to the granting of marketing authorizations by medicine agencies. Particular emphasis is also being placed on more sophisticated and faster procedures for reporting of adverse events to the competent authorities. Additionally, new rules are being introduced in several areas such as the harmonization of clinical research laws and labeling and patient package information, which are expected to assist companies such as Allergan bring products to market quickly once the first European approval is received.
A new EU regulatory regime covers medical devices. This is currently optional but will become mandatory in June 1998. It requires that medical devices may only be placed on the market if they do not compromise safety and health when properly installed, maintained and used in accordance with their intended purpose. National laws conforming to this EU legislation will regulate the Company's IOLs and contact lens care products under the medical devices regulatory system rather than the more complex system for medicinal products under which they are currently regulated. The EU regulatory system for cosmetics, which covers many of the Company's skin care products, has been extended to include, among other aspects, formal maintenance of a technical file, a safety assessment, data on undesirable effects, good manufacturing practice and extended labeling requirements. The Company is working to ensure that its operations remain in compliance with the regulatory requirements of the FDA, its foreign counterparts, and other governmental agencies.
In the United States, a significant percentage of the patients who receive the Company's IOLs are covered by the federal Medicare program. When a cataract extraction with IOL implantation is performed in an ambulatory surgery center ("ASC"), Medicare provides the ASC with a fixed facility fee which includes a $150 allowance to cover the cost of the IOL. When the procedure is performed in a hospital outpatient department, the hospital's reimbursement is determined using a complex formula that blends the hospital's costs with the $150 allowance paid to ASCs. In its effort to reduce Medicare expenditures, Congress may lower the IOL allowance below $150. The Medicare Technical Corrections Bill of 1994 directed the U.S. Health Care Financing Administration ("HCFA") to establish a system through which the agency would pay ASCs and hospitals a rate above $150 for "advanced technology IOLs." Allergan intends to seek "advanced technology" status for the AMO(R)Array(R) multifocal IOL.
The cost of prescription drugs is likely to receive some continuing attention in the United States Congress. Legislation enacted in 1990, and amended and strengthened in 1992, requires pharmaceutical manufacturers to rebate to the government a portion of their revenues from drugs furnished to Medicaid patients. In 1992, legislation was enacted that extends these requirements to covered outpatient pharmaceuticals, and also mandates a reduction in pharmaceutical prices charged to certain federally-funded facilities as well as to certain hospitals serving a disproportionate share of low-income patients. It is likely that some Congressional attention will continue to focus on the costs of drugs generally, and particularly on increases in drug prices in excess of the rate of inflation. A provision of the
Omnibus Budget Reconciliation Act of 1993 limits tax benefits currently realized by U.S. manufacturers as a result of the manufacture of certain products in Puerto Rico, beginning in 1994. A provision of the Small Business Job Protection Act of 1996 further limited these benefits by mandating the elimination of all such tax benefits after the year 2005.
The Company has orphan drug designations from the FDA for two proposed indicated uses for the marketed drug Botox(R) purified neurotoxin complex, cervical dystonia and juvenile cerebral palsy. Clinical trials are under way, and the Company expects to seek supplemental approvals to market the drug for said uses. If the Company gains approval for one or both uses before any other manufacturer of the same designated drug, the Company will be entitled to seven years exclusive marketing in the United States for those uses. In Europe, to date, there have been no special provisions relating to orphan drugs. However, the European Commission is initiating action to foster research and providing companies incentives for development in this area. On December 20, 1995, the Council of Ministers adopted a Resolution calling on the European Commission to look into the question of orphan drug policy, and a draft proposal for a Council Regulation has now been proposed for comments. Although the draft is not final, it is presently proposed that the criteria for designation of orphan drug status will exclude a medicinal product that has already obtained orphan drug benefits in the United States or in Japan.
In 1996, Congress examined the regulatory burdens imposed on drug and medical device manufacturers by the FDA in its product approval processes. The new Congress may consider legislation intended to ameliorate such problems. Congress may also consider less sweeping health care reform legislation. In Europe, on both a European Union level and at the local national level, governments have implemented legislation directed at, among other things, cost containment in the form of reference pricing (i.e., setting a fixed level of reimbursement by drug category), removing various categories of drugs from reimbursement programs and encouraging generic prescribing. Research is being undertaken by the European Commission concerning the use of generic medicines in the EU and may lead to new initiatives to harmonize legislation and professional rules across the Community. In the meantime, national initiatives aimed at encouraging generic prescription are increasing markedly the number of prescriptions written generically in some Member States.
The Company cannot predict the likelihood or pace of any significant legislative action in these areas, nor can it predict whether or in what form health care legislation being formulated by various governments will be passed. The Company also cannot predict exactly what effect such governmental measures would have if they were ultimately enacted into law. However, in general, the Company believes that such legislative activity will likely continue, and the adoption of such measures can be expected to have some adverse impact on the Company's business.
PATENTS, TRADEMARKS AND LICENSES
Allergan owns, or is licensed under, numerous patents relating to its products, product uses and manufacturing processes. It now has numerous patents issued in the United States and corresponding foreign patents issued in many of the major countries in which it does business. Allergan believes that its patents and licenses are important to its business, but that with the exception of those relating to hydrogen peroxide disinfection systems, no one patent or license is currently of material importance in relation to its overall sales. Allergan markets its products under various trademarks and considers these trademarks to be valuable because of their contribution to the market identification of the various products.
ENVIRONMENTAL MATTERS
The Company is subject to federal, state, local and foreign environmental laws and regulations. The Company believes that its operations comply in all material respects with applicable environmental laws and regulations in each country where the Company has a business presence. Although Allergan continues to make capital expenditures for environmental protection, it does not anticipate any significant expenditures in order to comply with such laws and regulations which would have a material impact on the Company's capital expenditures, earnings or competitive position. The Company is not aware of any pending litigation or significant financial obligations arising from current or past environmental practices that are likely to have a material adverse impact on the Company's financial position. There can be no assurance, however, that environmental problems relating to properties owned or operated by the Company will not develop in the future, and the Company cannot predict whether any such problems, if they were to develop, could require significant expenditures on the part of the Company. In addition, the Company is unable to predict what legislation or regulations may be adopted or enacted in the future with respect to environmental protection and waste disposal.
CERTAIN FACTORS AND TRENDS AFFECTING ALLERGAN AND ITS BUSINESSES
Certain disclosures made by the Company in this report and in other reports and statements released by the Company are and will be forward-looking in nature, such as comments which express the Company's opinions about trends and factors which may impact future operating results. Disclosures which use words such as the Company "believes," "anticipates," "expects" and similar expressions are intended to identify forward-looking statements. Such statements are subject to certain risks and uncertainties which could cause actual results to differ materially from expectations. Any such forward-looking statements, whether made in this report or elsewhere, should be considered in context with the various disclosures made by the Company about its businesses including the factors discussed below.
o The overall rate of revenue growth in several of the Company's major product lines has moderated in recent years.
o The pharmaceutical industry and other healthcare-related industries continue to experience consolidation, resulting in larger, more diversified companies with greater resources than the Company.
o Two of the Company's largest ophthalmic pharmaceutical products Betagan(R) and Propine(R) are off patent in the U.S. and continue to face competition from generic versions of these compounds as well as from recently introduced new technology glaucoma products.
o The Company's Optical business continues to be impacted by trends in the contact lens and lens care marketplace, including technological and medical advances in surgical techniques for the correction of vision impairment; the popularity of one-bottle chemical disinfection systems among soft contact lens wearers instead of peroxide-based lens care products which have historically been Allergan's strongest family of lens care products; and the growing use and acceptance of disposable contact lenses which could have the effect of reducing demand for lens care products generally.
o Sales of the Company's surgical and pharmaceutical products have been and are expected to continue to be impacted by continuing pricing pressures resulting from various government initiatives as well as from the purchasing and operational decisions made by managed care organizations.
o In the Company's pharmaceuticals business, the Company has increased the use of sales and promotional incentives to promote the sale of Allergan pharmaceutical products to drug wholesalers. The practices can result in fluctuations in buying patterns and the potential for unanticipated levels of product returns and unanticipated reductions in order levels based on prevailing inventory levels in the marketplace.
o The current sources of supply for the key ingredient of the Company's Botox(R) product are limited, and the manufacturing process for the production of future supplies of such ingredient is unusually challenging. It is possible that sales of Botox(R) products could in the future be constrained by these conditions.
ITEM 2.

ITEM 2. PROPERTIES
Allergan's operations are conducted in owned and leased facilities located throughout the world. Its primary administrative and research facilities are located in Irvine, California. The following table describes the general character of the major existing facilities as of March 1, 1997:
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(3) Lease scheduled to end during 1997.
(4) Lease scheduled to end during 1997.
(5) Property is being sold, subject to a lease-back of a portion of the property.
The Company believes its present facilities are adequate for its current needs.
ITEM 3.

ITEM 3. LEGAL PROCEEDINGS
The Company and its subsidiaries are involved in various litigation and claims arising in the normal course of business which Allergan considers to be normal in view of the size and nature of its business.
In October 1993, the Company disclosed to the U.S. Department of Commerce Office of Export Enforcement (the "Commerce Department") that it had been shipping its medicine, Botox(R) purified neurotoxin complex, under general license authority to various foreign countries in the period since July 15, 1992, when the active ingredient in Botox(R), an attenuated form of botulinum toxin, was reclassified to require validated export licensing. It is the Company's position that the reclassification did not and could not apply to medicines, such as Botox(R), that are exempt from validated export licensing by statute and that have no potential application as biological warfare agents or other undesired uses. After conducting a field investigation, in which the Company cooperated, the Commerce Department advised the Company in the first quarter of 1995 that it did not agree with the Company's position regarding the export classification of Botox(R) and that it had referred the case to the office of the U.S. Attorney in order to determine whether criminal charges might be warranted. In August, 1995, the U.S. Attorney referred the matter back to the Commerce Department, without levying any formal criminal charges, for its evaluation of possible civil liability. In September, 1995, the Company was advised by the Commerce Department that further field investigation would be required. Such investigation occurred with the Company's cooperation. The Company does not believe the imposition of a civil penalty is warranted.
Although the ultimate outcome of any pending litigation and claims, as well as the current government investigation discussed above, cannot be precisely ascertained at this time, Allergan believes that any liability resulting from the aggregate amount of uninsured damages for outstanding lawsuits, investigations and claims will not have a material adverse effect on its consolidated financial position. However, in view of the unpredictable nature of such matters, no assurances can be given in this regard.
ITEM 4.

ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
The Company did not submit any matter during the fourth quarter of the fiscal year covered by this report to a vote of security holders, through the solicitation of proxies or otherwise.
ITEM I-A. EXECUTIVE OFFICERS OF ALLERGAN, INC.
The executive officers of the Company and their ages as of March 1, 1997 are as follows:
Officers are appointed by and hold office at the pleasure of the Board of Directors.
Mr. Shepherd has been Chairman of the Board since January 1, 1996 and President and Chief Executive Officer of the Company since 1992 and prior thereto had been President and Chief Operating Officer from 1984 to 1991. Mr. Shepherd first joined the Company in 1966.
Mr. Ball has been Corporate Vice President and President, North America Region since April 1996. He joined the Company in 1995 as Senior Vice President, U.S. Marketing after 12 years with Syntex Corporation, where he held a variety of positions including president, Syntex Inc. Canada and Senior Vice President, Syntex Laboratories. In November of 1995, Mr. Ball assumed management responsibility for U.S. Eye Care Sales in addition to his responsibilities for U.S. Eye Care Marketing.
Mr. Danse has been Corporate Vice President, and President, Asia Pacific Region since July 1996, prior to which he had been Corporate Vice President, and President, North East Asia Region since April of 1996. Mr. Danse joined Allergan in 1988 as business development director, Americas, and subsequently served briefly as director, Latin America. In early 1990, he was named Vice President and Managing Director, Japan. In late 1993, Mr. Danse was appointed Senior Vice President, North East Asia.
Mr. Donohoe has been Corporate Vice President and President, Europe/Middle East/Africa Region since 1992. Prior thereto, he was Corporate Vice President and President, Optical, Consumer/OTC Group from 1991. Mr. Donohoe was Senior Vice President and General Manager, Contact Lenses from 1990 to 1991 and Area Vice President, Northern Europe from 1989 to 1990. Mr. Donohoe first joined the Company in 1987.
Mr. Fuller has been Corporate Vice President and President, Latin America Region since May 1996, prior to which he had been Vice President of the region from 1994, and Senior Vice President from February of 1996. From January 1992 to July 1994, he was Senior Vice President, Sales and Marketing. Mr. Fuller first joined SmithKline Beckman Corporation, the Company's former parent, in 1974.
Mr. Hilles has been Corporate Vice President, Human Resources since 1991 and prior thereto was Senior Vice President, Human Resources from 1986 to 1991. Mr. Hilles first joined SmithKline Beckman Corporation, the Company's former parent, in 1965.
Dr. Kaplan has been Corporate Vice President, Science and Technology since July 1996 and had been Corporate Vice President, Research and Development since 1992. He had been Senior Vice President, Pharmaceutical Research and Development since 1991 and Senior Vice President, Research and Development since 1989. Dr. Kaplan first joined the Company in 1983.
Dr. Lasezkay has been Vice President, Corporate Development since July 1996. He had been Assistant General Counsel of the Company since 1995 and Senior Counsel to the Company since 1989 when he first joined the Company.
Mr. Moyer joined the Company as Corporate Vice President and Chief Financial Officer in July, 1995. From 1993 until 1995, he had been Senior Vice President and Chief Financial Officer of Coldwell Banker Corporation. Through Moyer and Associates, he offered management consulting services to a variety of companies from 1990 to 1993. Mr. Moyer served as Chief Financial Officer of Western Digital Corporation (1986-1990) and has held various management positions since 1975 with companies such as Westinghouse Electric Corporation, White Consolidated Industries, Inc., National Semiconductor Corporation and Enhansys, Inc.
Ms. Schiavo has been Corporate Vice President, Worldwide Operations since 1992. She was Senior Vice President, Operations from 1991 and Vice President, Operations from 1989. Ms.Schiavo first joined the Company in 1980.
Mr. Tunney has been Corporate Vice President, General Counsel and Secretary of the Company since 1991 and prior thereto was Senior Vice President, General Counsel and Secretary from 1989 through 1991. Mr. Tunney first joined SmithKline Beckman Corporation, the Company's former parent, in 1979.
Mr. Yoder has been Senior Vice President and Controller of the Company since July 1996, prior to which he had been Vice President and Controller since joining the Company in 1990. He is also the Chief Financial Officer of Allergan Ligand Retinoid Therapeutics, Inc.
PART II
ITEM 5.

ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS
The section entitled "Market Prices of Common Stock and Dividends" on the inside back cover of the Annual Report is incorporated herein by reference.
ITEM 6.

ITEM 6. SELECTED FINANCIAL DATA
The table entitled "Selected Financial Data" on page 48 of the Annual Report is incorporated herein by reference.
ITEM 7.

ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The section entitled "Management's Discussion and Analysis of Financial Condition and Results of Operations for the Three Year Period Ended December 31, 1996" on pages 25-30 of the Annual Report is incorporated herein by reference.
ITEM 8.

ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
The financial statements, including the notes thereto, included on pages 25-44 of the Annual Report, together with the sections entitled "Independent Auditors' Report" and "Quarterly Results (Unaudited)" of the Annual Report included on pages 46 and 47, respectively, are incorporated herein by reference.
ITEM 9.

ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE
None.
PART III
ITEM 10.

ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF ALLERGAN, INC.
Information under this Item is included on pages 2-4 of the Proxy Statement and such information is incorporated herein by reference. Information with respect to executive officers is included on pages 14-16 of this Form 10-K.
The information required by Item 405 of Regulation S-K is included on page6 of the Proxy Statement and is incorporated herein by reference.
ITEM 11.

ITEM 11. EXECUTIVE COMPENSATION
The section entitled "Executive Compensation," and the subsection entitled "Director Compensation" included in the Proxy Statement on pages 14-18 and page 6, respectively, are incorporated herein by reference.
ITEM 12.

ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The common stock information in the section entitled "Security Ownership of Certain Beneficial Owners and Management" on pages 12-13 of the Proxy Statement is incorporated herein by reference.
ITEM 13.

ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
The section entitled "Certain Transactions" on pages 22-23 of the Proxy Statement is incorporated herein by reference.
PART IV
ITEM 14.

ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K
(a) Index to Financial Statements *
* Incorporated by reference from the indicated pages of the Company's Annual Report to Shareholders for the fiscal year ended December 31, 1996 (and except for the pages specifically incorporated by reference, the Company's Annual Report to Shareholders for the fiscal year ended December 31, 1996, is not deemed filed as part of this report).
2. Schedules Supporting the Consolidated Financial Statements:
All other schedules have been omitted for the reason that the required information is presented in financial statements or notes thereto, the amounts involved are not significant or the schedules are not applicable.
(b) Reports on Form 8-K
No reports on Form 8-K were filed by the Company during the last quarter of 1996.
(c) Item 601 Exhibits
Reference is made to the Index of Exhibits beginning at page 22 of this report.
(d) Other Financial Statements
There are no financial statements required to be filed by Regulation S-X which are excluded from the annual report to shareholders by Rule 14a-3(b)(1).
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
Date: March 25, 1997 ALLERGAN, INC.
By /s/ WILLIAM C. SHEPHERD --------------------------------- William C. Shepherd President, Chief Executive Officer and Chairman of the Board
Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the Registrant and in the capacities and on the date indicated.
Date: March 25, 1997 By /s/ WILLIAM C. SHEPHERD --------------------------------- William C. Shepherd President, Chief Executive Officer and Chairman of the Board
Date: March 25, 1997 By /s/ A. J. MOYER --------------------------------- A. J. Moyer Corporate Vice President and Chief Financial Officer (Principal Financial Officer)
Date: March 25, 1997 By /s/ DWIGHT J. YODER ---------------------------------- Dwight J. Yoder Senior VicePresident and Controller (Principal Accounting Officer)
Date: March 21, 1997 By /s/ HERBERT W.BOYER ---------------------------------- Herbert W. Boyer, Ph.D., Director
Date: March 20, 1997 By /s/ TAMARA J. ERICKSON ---------------------------------- Tamara J. Erickson, Director
Date: March 25, 1997 By /s/ HANDEL E. EVANS ---------------------------------- Handel E. Evans, Director
Date: March 25, 1997 By /s/ WILLIAM R. GRANT ---------------------------------- William R. Grant, Director
Date: March 25, 1997 By /s/ HOWARD E. GREENE, JR. ---------------------------------- Howard E. Greene, Jr., Director
Date: March 25, 1997 By /s/ GAVIN S. HERBERT ---------------------------------- Gavin S. Herbert, Director and Chairman Emeritus
Date: March 25, 1997 By /s/ DR. LESTER J. KAPLAN ---------------------------------- Lester J. Kaplan, Ph. D., Director
Date: March 25, 1997 By /s/ LESLIE G. MCCRAW ---------------------------------- Leslie G. McCraw, Director
Date: March 25, 1997 By /s/ LOUIS T. ROSSO ---------------------------------- Louis T. Rosso, Director
Date: March 25, 1997 By /s/ LEONARD D. SCHAEFFER ---------------------------------- Leonard D. Schaeffer, Director
Date: March 21, 1997 By /s/ HENRY WENDT ---------------------------------- Henry Wendt, Director
INDEX OF EXHIBITS
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* Management contract or compensatory plan, contract or arrangement required to be filed as an exhibit pursuant to Item 14(c) of Form 10-K.
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* Management contract or compensatory plan, contract or arrangement required to be filed as an exhibit pursuant to Item 14(c) of Form 10-K.
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* Management contract or compensatory plan, contract or arrangement required to be filed as an exhibit pursuant to Item 14(c) of Form 10-K.
INDEPENDENT AUDITORS' REPORT
To the Stockholders and Board of Directors of Allergan, Inc.:
Under date of January 28, 1997, we reported on the consolidated balance sheets of Allergan, Inc. and subsidiaries as of December 31, 1996 and 1995, and the related consolidated statements of earnings and cash flows for each of the years in the three-year period ended December 31, 1996, as contained in the 1996 Annual Report to Stockholders. These consolidated financial statements and our report thereon are incorporated by reference in the Annual Report on Form 10-K for the year 1996. In connection with our audit of the aforementioned consolidated financial statements, we also audited the related consolidated financial statement schedule in the Form 10-K. This financial statement schedule is the responsibility of the Company's management. Our responsibility is to express an opinion on this financial statement schedule based on our audits.
In our opinion, this schedule, when considered in relation to the basic consolidated financial statements taken as a whole, presents fairly, in all material respects, the information set forth therein.
KPMG PEAT MARWICK LLP
Costa Mesa, California January 28, 1997
SCHEDULE VIII
ALLERGAN, INC.
ALLOWANCE FOR DOUBTFUL ACCOUNTS YEARS ENDED DECEMBER 31, 1996, 1995, AND 1994 (IN MILLIONS)
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(a) Provision charged to earnings.
(b) Accounts written off.
S-1