0000950144-01-508160.txt : 20011030
0000950144-01-508160.hdr.sgml : 20011030
ACCESSION NUMBER: 0000950144-01-508160
CONFORMED SUBMISSION TYPE: S-3/A
PUBLIC DOCUMENT COUNT: 3
FILED AS OF DATE: 20011026
FILER:
COMPANY DATA:
COMPANY CONFORMED NAME: IVAX CORP /DE
CENTRAL INDEX KEY: 0000772197
STANDARD INDUSTRIAL CLASSIFICATION: PHARMACEUTICAL PREPARATIONS [2834]
IRS NUMBER: 161003559
STATE OF INCORPORATION: FL
FISCAL YEAR END: 1231
FILING VALUES:
FORM TYPE: S-3/A
SEC ACT: 1933 Act
SEC FILE NUMBER: 333-66310
FILM NUMBER: 1768074
BUSINESS ADDRESS:
STREET 1: 4400 BISCAYNE BLVD
CITY: MIAMI
STATE: FL
ZIP: 33137
BUSINESS PHONE: 3055756000
MAIL ADDRESS:
STREET 1: 4400 BISCAYNE BOULEVARD
CITY: MIAMI
STATE: FL
ZIP: 33137
FORMER COMPANY:
FORMER CONFORMED NAME: INLAND VACUUM INDUSTRIES INC
DATE OF NAME CHANGE: 19870611
FORMER COMPANY:
FORMER CONFORMED NAME: IVACO INDUSTRIES INC
DATE OF NAME CHANGE: 19871213
FORMER COMPANY:
FORMER CONFORMED NAME: IVAX CORP
DATE OF NAME CHANGE: 19920703
S-3/A
1
g71669a2s-3a.txt
IVAX CORPORATION AMENDMENT NO. 2
As filed with the Securities and Exchange Commission on October 26, 2001
Registration No. 333-66310
================================================================================
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
---------------
AMENDMENT NO. 2
TO
FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
---------------
IVAX CORPORATION
(Exact Name of Registrant as Specified in Its Charter)
FLORIDA 16-1003559
(State or Other Jurisdiction of (I.R.S. Employer
Incorporation or Organization) Identification Number)
4400 BISCAYNE BOULEVARD
MIAMI, FLORIDA 33137
(305) 575-6000
(Address, Including Zip Code, and Telephone Number, Including Area Code,
of Registrant's Principal Executive Offices)
STEVEN D. RUBIN, ESQ.
SENIOR VICE PRESIDENT, GENERAL COUNSEL AND SECRETARY
IVAX CORPORATION
4400 BISCAYNE BOULEVARD
MIAMI, FLORIDA 33137
(305) 575-6000
(Name, Address, Including Zip Code, and Telephone Number,
Including Area Code, of Agent for Service)
Copy to:
KARA L. MACCULLOUGH, ESQ.
AKERMAN, SENTERFITT & EIDSON, P.A.
ONE SOUTHEAST THIRD AVENUE, 28TH FLOOR
MIAMI, FLORIDA 33131
(305) 374-5600
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: From
time to time after the effective date of this registration statement.
If the only securities being registered on this Form are being offered
pursuant to dividend or interest reinvestment plans, please check the following
box. [ ]
If any of the securities being registered on this Form are to be
offered on a delayed or continuous basis pursuant to Rule 415 under the
Securities Act of 1933, other than securities offered only in connection with
dividend or interest reinvestment plans, check the following box. [X]
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following box
and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. [ ]
If this Form is a post-effective amendment filed pursuant to Rule
462(c) under the Securities Act, check the following box and list the Securities
Act registration statement number of the earlier effective registration
statement for the same offering. [ ]
If delivery of the prospectus is expected to be made pursuant to Rule
434, please check the following box. [ ]
--------------
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE
OR DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT
SHALL FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF
THE SECURITIES ACT OF 1933 OR UNTIL THIS REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(A),
MAY DETERMINE.
================================================================================
PROSPECTUS
IVAX CORPORATION
$725,000,000 4 1/2% CONVERTIBLE SENIOR SUBORDINATED NOTES DUE 2008
AND
18,102,344 SHARES OF COMMON STOCK ISSUABLE UPON CONVERSION OF THE NOTES
This prospectus covers up to $725,000,000 principal amount of our 4
1/2% convertible senior subordinated notes due 2008 and 18,102,344 shares of our
common stock issuable upon conversion of the notes together with their related
common stock purchase rights which may be offered and sold from time to time by
the selling security holders named in this prospectus. We will receive no
proceeds from the sales of the securities in this offering.
The notes are convertible into 24.96875 shares of our common stock, par
value $.10 per share, per $1,000 principal amount of notes, as adjusted to
reflect the five-for-four stock split paid in common stock on May 18, 2001, and
subject to further adjustment in certain circumstances. This results in an
initial conversion price of $40.05 per share. We will pay cash interest on the
notes semiannually on May 15 and November 15 of each year, with the first
payment to be made on November 15, 2001, at the rate of 4 1/2% per annum. The
notes will mature on May 15, 2008.
The notes rank pari passu in right of payment with the $250.0 million
principal amount of our 5 1/2% convertible senior subordinated notes due 2007
that were issued in May 2000, are subordinated to all other existing and future
indebtedness not expressly subordinated or equal in right of payment to the
notes and are structurally subordinated to all existing and future indebtedness
or liabilities of our subsidiaries. As of June 30, 2001, we had approximately
$82.3 million of consolidated indebtedness and other obligations effectively
ranking senior to the notes.
The notes trade on The PORTAL Market. Our common stock is traded on the
American Stock Exchange under the symbol "IVX" and on the London Stock Exchange
under the Symbol "IVX.L." On October 24, 2001, the last reported sale price of
our common stock on the American Stock Exchange was $22.63 per share.
INVESTING IN THESE SECURITIES INVOLVES RISKS. SEE "RISK FACTORS"
BEGINNING ON PAGE 7 OF THIS PROSPECTUS.
NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES
COMMISSION HAS APPROVED OR DISAPPROVED OF THESE SECURITIES OR PASSED UPON THE
ADEQUACY OR ACCURACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
The date of this prospectus is October 26, 2001.
TABLE OF CONTENTS
PAGE
----
Summary............................................................... 1
Risk Factors.......................................................... 7
Disclosure Regarding Forward-Looking Statements....................... 17
Ratio of Earnings to Fixed Charges.................................... 18
Use of Proceeds....................................................... 18
Selling Security Holders.............................................. 19
Plan of Distribution.................................................. 22
Description of Notes.................................................. 24
Description of Capital Stock.......................................... 35
Transfer Agent, Registrar and Trustee................................. 36
Certain United States Federal Income Tax Considerations............... 37
Legal Matters......................................................... 43
Independent Certified Public Accountants.............................. 43
Where You Can Find More Information................................... 43
Information Incorporated by Reference................................. 44
i
SUMMARY
This summary highlights selected information from this prospectus. In
addition to reading this summary, you should carefully review the entire
prospectus, especially the "Risk Factors" section of this prospectus beginning
on page 7. When used in this prospectus and any prospectus supplement, the terms
"IVAX," "we," "our," and "us" refer to IVAX corporation.
OUR COMPANY
OVERVIEW
We are a multinational company engaged in the research, development,
manufacture and marketing of pharmaceutical products. We have grown through the
development of proprietary and brand-equivalent products and through strategic
acquisitions, focused primarily on countries whose pharmaceutical markets are
developing, where there is the greatest growth potential.
Our full line of brand-equivalent drugs includes the first United
States Food and Drug Administration (FDA) approved equivalent to branded
Taxol(R), a $1.5 billion oncology drug, and we have marketing applications
pending for many other products that are equivalent to important branded drugs.
Based on our unique patented inhalers, we have built a strong franchise in the
asthma market, and we are expanding that franchise by conducting studies to
support marketing applications for respiratory products in the United States and
in other markets served by our global marketing network. Our product pipeline
also includes novel compounds that we have discovered or licensed from third
parties, some of which have already successfully completed Phase II clinical
trials and are now undergoing Phase III trials, which is the final step before
submission of applications for marketing approval.
Our business has grown significantly during the past year. During 2000, we
generated net revenues of $793 million, up from $656 million in 1999, and net
income of $131 million, up from $71 million in 1999. During the first six months
of 2001, we generated net revenues of $562 million, up from $368 million in the
first six months of 2000, and net income of $128 million, up from $50.4 million
in the first six months of 2000.
GROWTH STRATEGIES
We expect our future growth to come from the following:
o DISCOVERING AND DEVELOPING AND/OR ACQUIRING NEW PRODUCTS. In October
1999, we dramatically increased the size and scope of our new
product development capability through our acquisition of an
independent research company, now known as IVAX Drug Research
Laboratories, Ltd. We are committed to the cost-effective
development of proprietary pharmaceuticals directed primarily toward
indications having relatively large patient populations or for which
limited or inadequate treatments are available. We seek to
accelerate product development and commercialization by in-
licensing compounds, especially after clinical testing has begun,
and by developing new dosage forms or new therapeutic indications
for existing products.
1
o LEVERAGING PROPRIETARY TECHNOLOGY AND DEVELOPMENT STRENGTHS. We
intend to continue to leverage our proprietary technology and
development strengths, including our patented inhalation technology
and our expertise in developing and commercializing respiratory
products and experience in the development and commercialization of
oncology drugs to develop a significant portfolio of proprietary,
high value pharmaceutical products.
o PURSUING COMPLEMENTARY, ACCRETIVE OR STRATEGIC ACQUISITIONS. We
intend to pursue accretive or strategic business acquisitions or
ones that will complement our existing businesses and provide new
product and market opportunities, as well as leverage our existing
assets. In addition, we will continue to actively pursue strategic
product acquisitions and other collaborative arrangements that
permit us to leverage our existing infrastructure by adding sales
from acquired products while minimizing incremental costs.
o STRATEGICALLY EXPANDING SALES AND DISTRIBUTION OF OUR PRODUCTS. We
recently completed acquisitions of pharmaceutical companies in
Venezuela, Mexico and Chile and continue the expansion of our Latin
American operations. Our future plans include (1) acquiring
additional manufacturing and distribution capabilities in Europe and
Latin America and (2) establishing additional joint ventures and
selectively establishing distribution channels for our major
products in Asia.
PHARMACEUTICAL BUSINESS
We have pharmaceutical manufacturing facilities located in Argentina,
Chile, China, the Czech Republic, England, Germany, Hungary, Ireland, Mexico,
Peru, Puerto Rico, the United States, Uruguay, Venezuela, and the Virgin
Islands. Marketing and/or research facilities are located in these same
countries, and also in Canada, France, India, Kazakhstan, Latvia, The
Netherlands, Poland, Russia, Sweden, Switzerland, The Slovak Republic, Taiwan,
and the Ukraine. In other countries, our products are marketed through
distributors or joint ventures. Our pharmaceutical business has grown through
the development and acquisition of proprietary, brand-equivalent and
over-the-counter pharmaceutical products, the licensing of technology and
products from third parties, and the acquisition of companies engaged in the
pharmaceuticals business in various geographic regions.
PROPRIETARY AND BRANDED PRODUCTS
We market a number of proprietary and branded products treating a
variety of conditions through our subsidiaries throughout the world. These
products are marketed by our direct sales force to physicians, pharmacies,
hospitals, managed health care organizations and government agencies. These
products are sold primarily to wholesalers, retail pharmacies, distributors,
hospitals and physicians.
We have a strong foundation in the oncology field based on our
proprietary anti-cancer drug PAXENE(R) (paclitaxel injection), which is
therapeutically equivalent to the Bristol-Myers Squibb product Taxol(R), the
largest selling anti-cancer drug in the world. In September 2000, the FDA
approved our Abbreviated New Drug Application (ANDA) for paclitaxel, which is
marketed in the U.S. as Onxol(TM).
2
We also have substantial expertise in the development, manufacture and
marketing of respiratory drugs, primarily for asthma, in metered-dose inhaler
formulations. Our subsidiary in the United Kingdom is the third largest
respiratory company in that market. At the core of our respiratory franchise are
advanced delivery systems, which include a patented metered-dose inhaler called
Easi-Breathe(R), and a unique new dry powder inhaler, as well as conventional
metered-dose inhalers.
BRAND-EQUIVALENT PRODUCTS
In the United States, we manufacture and market approximately 56
brand-equivalent prescription drugs in capsule or tablet forms in an aggregate
of 123 dosage strengths. We also distribute in the United States approximately
282 additional brand-equivalent prescription and over-the-counter drugs and
vitamin supplements, in various dosage forms, dosage strengths and package
sizes. We are also a leading provider of brand-equivalent pharmaceuticals in the
United Kingdom. We market approximately 110 brand-equivalent prescription and
over-the-counter drugs, about half of which we manufacture, in various dosage
forms and dosage strengths, constituting an aggregate of approximately 229
products. In addition, we manufacture and market various "blow-fill-seal"
pharmaceutical products, such as solutions for injection or irrigation, and
unit-dose vials for nebulization to treat respiratory disorders.
OTHER BUSINESSES
NUTRACEUTICALS. We provide contract manufacturing services for the
nutritional supplement industry from our encapsulating facility in Miami,
Florida. Utilizing herbal extracts manufactured by our Czech Republic
subsidiary, we also manufacture a line of high quality herbal nutraceutical
products in soft gelatin capsules.
VETERINARY PRODUCTS. We formulate, package and distribute to
veterinarians various products for companion animals under the "DVM
Pharmaceuticals" trade name. Capitalizing on our proprietary research for human
pharmaceuticals, DVM Pharmaceuticals is developing proprietary products in the
therapeutic areas of asthma, gastrointestinal disorders and skin conditions in
horses and companion animals.
DIAGNOSTICS. We own approximately 70% of the equity of IVAX
Diagnostics, Inc., a publicly traded company whose stock is listed on the
American Stock Exchange under the symbol "IVD." IVAX Diagnostics, Inc. develops,
manufactures and markets proprietary diagnostic reagents, instrumentation and
software through its subsidiaries located in the United States and Italy. Its
products include Mago(R) instruments and related diagnostic kits, as well as
autoimmune reagents and other in vitro diagnostic products for use in research,
clinical, and hospital laboratories.
3
RECENT DEVELOPMENTS
On July 5, 2001, we acquired, through tender offers, 99.6% of the
outstanding shares of Laboratorio Chile S.A., a Chilean pharmaceutical company
with operations in Chile, Argentina and Peru. On September 17, 2001, we
completed our tender offers for the remaining outstanding shares. As a result of
the two offers, we acquired 99.9% of the outstanding shares of Laboratorio
Chile, for an aggregate consideration of approximately US$395 million.
Laboratorio Chile is the largest Chilean pharmaceutical company in revenue terms
and is also among the major pharmaceutical companies in Argentina and Peru.
Laboratorio Chile manufactures and/or markets a broad line of more than 900
branded and brand-equivalent products in Chile, Argentina and Peru and reported
revenues of over US$173 million in 2000. Laboratorio Chile's main products are
to treat respiratory and infectious diseases, but it also has strong franchises
with cardiovascular, neurological and gynecologic products. We believe that
Laboratorio Chile, as well as our current operations in Argentina, Mexico, Peru,
Uruguay and Venezuela, create an excellent platform from which to launch our
proprietary and brand-equivalent pharmaceutical products, as well as products
from other companies which may not be so well represented in Latin America.
On October 16, 2001, we announced the completion of our acquisition of
the intranasal steroid brand products, Nasarel(R) and Nasalide(R), from Elan
Corporation, plc. These products are for the treatment of allergic rhinitis
which affects more than 25% of the U.S. population. We will immediately begin
marketing these products in the U.S. through our subsidiary, IVAX Laboratories,
Inc. (f/k/a Wakefield Pharmaceuticals).
On October 25, 2001, we announced our financial results for the third
quarter ended September 30, 2001. Net income for the third quarter of 2001 was
$61.5 million, or $.30 per diluted share, representing an increase of 99% over
net income of $30.9 million, or $.15 per diluted share, reported in the third
quarter of 2000. Our net income also includes nearly $7.1 million in gains on
the early retirement of debt. Net revenues for the third quarter of 2001
increased by 76% to $322.0 million as compared to net revenues of $182.6 million
in the third quarter of 2000.
PRINCIPAL EXECUTIVE OFFICES
Our principal executive offices are located at 4400 Biscayne Boulevard,
Miami, Florida 33137, and our telephone number is (305) 575-6000.
4
THE NOTES AND COMMON STOCK ISSUABLE UPON CONVERSION OF THE NOTES
Issuer...............................................IVAX Corporation.
Securities Offered...................................$725,000,000 aggregate principal amount of 4 1/2% convertible
senior subordinated notes due 2008.
Conversion...........................................The notes are convertible into 24.96875 shares of our common
stock, par value $.10 per share, per $1,000 principal amount
of notes, as adjusted to reflect the five-for-four stock
split paid in common stock on May 18, 2001, and subject to
further adjustment in certain circumstances. This rate results
in an initial conversion price of $40.05 per share.
Issue Date...........................................May 4, 2001.
Maturity.............................................May 15, 2008.
Interest Payment Dates...............................Interest of 4 1/2% per annum will be paid on May 15 and
November 15 of each year commencing on November 15, 2001.
Optional Redemption..................................At any time after May 29, 2004, we may, at our option,
redeem the notes, in whole or in part, at the redemption
prices described herein, together with accrued interest, if
any, to the date of redemption. See "Description of Notes -
Redemption - Redemption at IVAX' option."
Change in Control....................................If we experience a change in control, we must offer to
repurchase each holder's notes at 100% of their principal
amount, together with accrued interest, if any, to the
repurchase date. See "Description of the Notes - Redemption
- Repurchase at option of holders upon change in control."
Ranking..............................................The notes are:
o unsecured;
o pari passu in right of payment with the $250.0
million principal amount of our 5 1/2% convertible
senior subordinated notes due 2007 that were issued
in May 2000;
o subordinated to all other existing and future
indebtedness not expressly subordinated or equal in
right of payment to the notes; and
o structurally subordinated to all existing and
future indebtedness or liabilities of our
subsidiaries.
5
As of June 30, 2001, we had approximately $82.3 million
of consolidated indebtedness and other obligations
effectively ranking senior to the notes. The indenture
under which the notes were issued will not restrict our or
our subsidiaries' ability to incur senior indebtedness or
any other indebtedness or liabilities.
Use of Proceeds......................................We will receive no proceeds from this offering. The selling
security holders will receive the proceeds from this
offering.
Listing and Trading..................................The notes trade on The PORTAL Market. Our common stock is
listed on the American Stock Exchange under the symbol "IVX"
and on the London Stock Exchange under the symbol "IVX.L."
Risk Factors.........................................In analyzing an investment in the notes or common stock
offered by this prospectus, prospective investors should
carefully consider, along with other matters referred to
in the prospectus, the information set forth under "Risk
Factors."
For a more complete description of the terms of the notes, see
"Description of Notes." For a more complete description of the common stock, see
"Description of Capital Stock."
6
RISK FACTORS
You should carefully consider the following risks before making an
investment decision. These and other risks could materially and adversely affect
our business, operating results or financial condition. You should also refer to
the other information contained or incorporated by reference in this prospectus,
before making an investment decision.
RISKS RELATING TO OUR COMPANY
OUR RESEARCH AND DEVELOPMENT EXPENDITURES MAY NOT RESULT IN COMMERCIALLY
SUCCESSFUL PRODUCTS.
We spent approximately $65.3 million during 2000 and $38.9 million
during the first six months of 2001 on our research and development efforts.
This amount represents a significant increase in the amounts we allocated to
research and development in prior periods. We may in the future increase the
amounts we expend for research and development. As a result, our research and
development expenditures may have an adverse impact on our earnings in the short
term. Further, we cannot be sure that our research and development expenditures
will, in the long term, result in the discovery or development of products which
prove to be commercially successful.
OUR POTENTIAL ACQUISITIONS MAY REDUCE OUR EARNINGS, BE DIFFICULT FOR US TO
COMBINE INTO OUR OPERATIONS OR REQUIRE US TO OBTAIN ADDITIONAL FINANCING.
We search for and evaluate acquisitions which will provide new product
and market opportunities, benefit from and maximize our existing assets and add
critical mass. Acquisitions may expose us to additional risks and may have a
material adverse effect on our results of operations. Any acquisitions we make
may:
o fail to accomplish our strategic objectives;
o not be successfully combined with our operations;
o not perform as expected; and
o expose us to cross border risks.
In addition, based on current acquisition prices in the pharmaceutical
industry, our acquisitions could initially reduce our per share earnings and add
significant intangible assets and related goodwill amortization charges. Our
acquisition strategy may require us to obtain additional debt or equity
financing, resulting in additional leverage, or increased debt obligations as
compared to equity, and dilution of ownership. We may not be able to finance
acquisitions on terms satisfactory to us.
WE DEPEND ON OUR DEVELOPMENT, MANUFACTURE AND MARKETING OF NEW PRODUCTS FOR OUR
FUTURE SUCCESS.
Our future success is largely dependent upon our ability to develop,
manufacture and market commercially successful new pharmaceutical products and
brand-equivalent versions of pharmaceutical products that are no longer subject
to patents. Generally, the commercial marketing of pharmaceutical products
depends upon:
o continually developing and testing products;
o proving that new products are safe and effective in clinical trials;
o proving that there is no significant difference in the rate and
extent to which the active ingredient in the brand-equivalent
product becomes available at the site of drug action as compared to
the brand name version; and
o receiving requisite regulatory approval for all new products.
7
Delays in the development, manufacture and marketing of new products
will impact our results of operations. Each of the steps in the development,
manufacture and marketing of our products, as well as the process taken as a
whole, involves significant periods of time and expense. We cannot be sure that:
o any of our products presently under development, if and when fully
developed and tested, will perform as we expect;
o we will obtain necessary regulatory approvals in a timely manner, if
at all; or
o we can successfully and profitably produce and market any of our
products.
WE DEPEND ON OUR PATENTS AND PROPRIETARY RIGHTS AND CANNOT BE CERTAIN OF THEIR
CONFIDENTIALITY AND PROTECTION.
Our success with our proprietary products depends, in large part, on
our ability to protect our current and future technologies and products and to
defend our intellectual property rights. If we fail to adequately protect our
intellectual property, competitors may manufacture and market products similar
to ours. We have numerous patents covering our technologies. We have filed, and
expect to continue to file, patent applications seeking to protect newly
developed technologies and products in various countries, including the United
States. The United States Patent and Trademark Office does not publish patent
applications or make information about pending applications available to the
public until it issues the patent. Since publication of discoveries in the
scientific or patent literature tends to follow actual discovery by several
months, we cannot be certain that we were the first to file patent applications
on our discoveries. We cannot be sure that we will receive patents for any of
our patent applications or that any existing or future patents that we receive
or license will provide competitive advantages for our products. We also cannot
be sure that competitors will not challenge, invalidate or avoid the application
of any existing or future patents that we receive or license. In addition,
patent rights may not prevent our competitors from developing, using or selling
products that are similar or functionally equivalent to our products.
We also rely on trade secrets, unpatented proprietary know-how and
continuing technological innovation. We use confidentiality agreements with
licensees, suppliers, employees and consultants to protect our trade secrets,
unpatented proprietary know-how and continuing technological innovation. We
cannot assure you that these parties will not breach their agreements with us.
We also cannot be certain that we will have adequate remedies for any breach.
Disputes may arise concerning the ownership of intellectual property or the
applicability of confidentiality agreements. Furthermore, we cannot be sure that
our trade secrets and proprietary technology will not otherwise become known or
that our competitors will not independently develop our trade secrets and
proprietary technology. We also cannot be sure, if we do not receive patents for
products arising from research, that we will be able to maintain the
confidentiality of information relating to our products.
THIRD PARTIES MAY CLAIM THAT WE INFRINGE THEIR PROPRIETARY RIGHTS AND MAY
PREVENT US FROM MANUFACTURING AND SELLING SOME OF OUR PRODUCTS.
The manufacture, use and sale of new products that are the subject of
conflicting patent rights have been the subject of substantial litigation in the
pharmaceutical industry. These lawsuits relate to the validity and infringement
of patents or proprietary rights of third parties. We may have to defend against
charges that we violated patents or proprietary rights of third parties. This is
especially true for the sale of the brand-equivalent version of products on
which the patent covering the branded product is expiring, an area where
8
infringement litigation is prevalent. Our defense against charges that we
infringed third party patents or proprietary rights could require us to incur
substantial expense and to divert significant effort of our technical and
management personnel. If we infringe on the rights of others, we could lose our
right to develop or make some products or could be required to pay monetary
damages or royalties to license proprietary rights from third parties.
Although the parties to patent and intellectual property disputes in
the pharmaceutical industry have often settled their disputes through licensing
or similar arrangements, the costs associated with these arrangements may be
substantial and could include ongoing royalties. Furthermore, we cannot be
certain that the necessary licenses would be available to us on terms we believe
to be acceptable. As a result, an adverse determination in a judicial or
administrative proceeding or failure to obtain necessary licenses could prevent
us from manufacturing and selling a number of our products.
REDUCTIONS IN THE SALES VOLUME OR MARGINS OF OUR PACLITAXEL PRODUCT COULD
IMPACT OUR REVENUES AND MARGINS.
Sales of our paclitaxel product represented a significant component of
our net revenues during the first nine months of 2001. In addition, an important
component of our 2001 and 2002 revenue and gross margin estimates depends on our
sales of paclitaxel. Recently, two competitors have received FDA approval for
the sale of their paclitaxel products and others may receive similar approvals.
Competitive pressures during the third quarter of 2001 have resulted in lower
prices and reduced revenues for our paclitaxel product. Our competitors and any
future competitors may continue to lower the price of such products and could
gain market share. Additionally, we currently rely on third parties to supply
raw materials for, and to manufacture, our paclitaxel products; in the future
these parties may not produce for us a continuing and reliable supply of
paclitaxel or the cost of such supply may significantly increase. The reduction
of the market price of paclitaxel, our loss of market share or our inability to
obtain a cost-effective supply of paclitaxel may result in a continued decrease
of net sales and gross margin from our paclitaxel product.
FUTURE INABILITY TO OBTAIN RAW MATERIALS OR PRODUCTS COULD SERIOUSLY AFFECT
OUR OPERATIONS.
In many instances, we obtain raw materials and other products from
single domestic or foreign suppliers. Political disruptions have and may
continue to impact our ability to transport raw materials from foreign suppliers
and to ship finished goods worldwide. Additionally, many of the raw materials
utilized in our pharmaceutical products are rare or difficult to obtain.
Interruptions in supply or scarcity of raw materials would require us to seek to
obtain substitute materials or products, which, even if available, would require
additional regulatory approvals. Further, we cannot assure you that our third
party suppliers will continue to supply us. In addition, changes in our raw
material suppliers could result in delays in production, higher raw material
costs and loss of sales and customers because regulatory authorities must
generally approve raw material sources for pharmaceutical products. Any
significant interruption of supply could have a material adverse effect on our
operations.
MARKETING PRACTICES SUCH AS RETURNS, ALLOWANCES AND CHARGE-BACKS AND MARKETING
PROGRAMS ADOPTED BY WHOLESALERS MAY REDUCE SALES REVENUES IN SUBSEQUENT PERIODS.
Based on industry practice, brand-equivalent manufacturers, including
us, have liberal return policies and have been willing to give customers
post-sale inventory allowances. Under these arrangements, the manufacturers give
customers credits on the manufacturer's brand-equivalent products which the
customers hold in inventory after decreases in the market prices of the
brand-equivalent products. Therefore, if new competitors enter the marketplace
and significantly lower the prices of any of our products, we would have to
provide significant credits that could reduce sales and gross margin. Like our
competitors, we also give credits for charge-backs to wholesale customers that
have contracts with us for their sales to hospitals, group purchasing
organizations, pharmacies or other retail customers. A charge-back is the
difference between the price the wholesale customer pays and the price that the
wholesale customer's end-customer pays for a product. Although we establish
reserves based on our prior experience and our best estimates of the impact that
these policies may have in subsequent periods, we cannot ensure that our
reserves are adequate or that actual product returns, inventory allowances and
charge-backs will not exceed our estimates. In the second quarter of 1996, based
upon price declines at a time of significant inventory levels, these credits
were approximately $44 million higher than the average levels that we
experienced in prior quarters. Following our announcement of the expected
credits prior to the end of the second quarter, the market price of our common
stock immediately fell approximately 36%, and a number of persons subsequently
filed class action litigation against us based on the decline. That class action
litigation was resolved in our favor when the court dismissed it on the merits.
THE CONCENTRATION OF OWNERSHIP AMONG OUR EXECUTIVE OFFICERS AND DIRECTORS MAY
PERMIT THOSE PERSONS TO INFLUENCE CORPORATE MATTERS AND POLICIES.
As of September 30, 2001, our executive officers and directors
currently have or share voting control over approximately 21.72% of our issued
and outstanding common stock. As a result, these persons may have the ability to
significantly influence the election of the members of our board of directors
and other corporate decisions.
A NUMBER OF INTERNAL AND EXTERNAL FACTORS HAVE CAUSED AND MAY CONTINUE TO CAUSE
THE MARKET PRICE OF OUR STOCK TO BE VOLATILE.
The market prices for securities of companies engaged in pharmaceutical
development, including us, have been volatile. Many factors, including many over
which we have no control, may have a significant impact on the market price of
our common stock, including without limitation:
9
o our or our competitors' announcement of technological innovations or
new commercial products;
o changes in governmental regulation;
o our or our competitors' receipt of regulatory approvals;
o our or our competitors' developments relating to patents or
proprietary rights;
o publicity regarding actual or potential medical results for products
that we or our competitors have under development; and
o period-to-period changes in financial results.
POLITICAL AND ECONOMIC INSTABILITY AND FOREIGN CURRENCY FLUCTUATIONS MAY
ADVERSELY AFFECT THE REVENUES OUR FOREIGN OPERATIONS GENERATE.
Our foreign operations may be affected by the following factors, among others:
o political instability in some countries in which we currently do
business or may do business in the future through acquisitions or
otherwise;
o uncertainty as to the enforceability of, and government control
over, commercial rights;
o expropriation by foreign governmental entities; and
o currency exchange fluctuations and currency restrictions.
We sell products in many countries that are susceptible to significant
foreign currency risk. We sell many of these products for United States dollars,
which eliminates our direct currency risk but increases our credit risk if the
local currency devalues significantly and it becomes more difficult for
customers to purchase the United States dollars required to pay us. We sell a
growing number of products, particularly in Latin America, for local currency,
which results in a direct currency risk to us if the local currency devalues
significantly. Additional foreign acquisitions may increase our foreign currency
risk and the other risks identified above.
On June 20, 2000, we announced our acquisition of Laboratorios Elmor
S.A., a pharmaceutical company based in Venezuela. Venezuela was considered to
have a highly inflationary economy, but it is no longer considered highly
inflationary. In the third quarter of 2001, we acquired 99.9% of Laboratorio
Chile S.A., a Chilean pharmaceutical company with operations in Chile, Argentina
and Peru. Although neither Chile nor Argentina have been classified as having
highly inflationary economies, each of these economies has experienced strong
inflation rates and devaluation of their respective currencies.
10
INCREASED INDEBTEDNESS MAY IMPACT OUR FINANCIAL CONDITION AND RESULTS OF
OPERATIONS.
On June 30, 2001, we had approximately $1,003.6 million of consolidated
indebtedness. We may incur additional indebtedness in the future. Our level of
indebtedness will have several important effects on our future operations,
including, without limitation:
o we will be required to use a portion of our cash flow from
operations for the payment of any principal or interest due on our
outstanding indebtedness;
o our outstanding indebtedness and leverage will increase the impact
of negative changes in general economic and industry conditions, as
well as competitive pressures; and
o the level of our outstanding debt may affect our ability to obtain
additional financing for working capital, capital expenditures or
general corporate purposes.
General economic conditions, industry cycles and financial, business
and other factors affecting our operations, many of which are beyond our
control, may affect our future performance. As a result, these and other factors
may affect our ability to make principal and interest payments on our
indebtedness. We anticipate that approximately $52 million of cash flow from
operations will be required each year to discharge our annual obligations on our
currently outstanding indebtedness. Our business might not continue to generate
cash flow at or above current levels. If we cannot generate sufficient cash flow
from operations in the future to service our debt, we may, among other things:
o seek additional financing in the debt or equity markets;
o refinance or restructure all or a portion of our indebtedness;
o sell selected assets; or
o reduce or delay planned capital expenditures.
These measures might not be sufficient to enable us to service our
debt. In addition, any financing, refinancing or sale of assets might not be
available on economically favorable terms.
COMPLIANCE WITH GOVERNMENTAL REGULATION IS CRITICAL TO OUR BUSINESS.
Our pharmaceutical and diagnostic operations are subject to extensive
regulation by governmental authorities in the United States and other countries
with respect to the testing, approval, manufacture, labeling, marketing and sale
of pharmaceutical and diagnostic products. We devote significant time, effort
and expense to addressing the extensive government regulations applicable to our
business. In general, the trend is toward more stringent regulation.
On an ongoing basis, the FDA reviews the safety and efficacy of
marketed pharmaceutical products and products considered medical devices and
monitors labeling, advertising, and other matters related to the promotion of
such products. The FDA also regulates the facilities and procedures used to
manufacture pharmaceutical and diagnostic products in the United States or for
sale in the United States. Such facilities must be registered with the FDA and
all products made in such facilities must be manufactured in accordance with
"good manufacturing practices" established by the FDA. Compliance with good
manufacturing practices guidelines requires the dedication of substantial
resources and requires significant costs. The FDA periodically inspects our
manufacturing facilities and procedures to assure compliance. The FDA may cause
a recall or withdraw product approvals if regulatory standards are not
maintained. The FDA approval to manufacture a drug is site-specific. In the
event an approved manufacturing facility for a particular drug becomes
11
inoperable, obtaining the required FDA approval to manufacture such drug at a
different manufacturing site could result in production delays, which could
adversely affect our business and results of operations.
In connection with our activities outside the United States, we are
also subject to regulatory requirements governing the testing, approval,
manufacture, labeling, marketing and sale of pharmaceutical and diagnostic
products, which requirements vary from country to country. Whether or not FDA
approval has been obtained for a product, approval of the product by comparable
regulatory authorities of foreign countries must be obtained prior to marketing
the product in those countries. The approval process may be more or less
rigorous from country to country, and the time required for approval may be
longer or shorter than that required in the United States. Our inability or
delay in receiving or the loss of any approval could have a material adverse
effect on our results of operations.
WE HAVE ENACTED A SHAREHOLDER RIGHTS PLAN AND CHARTER PROVISIONS THAT MAY HAVE
ANTI-TAKEOVER EFFECTS.
We have in place a shareholder rights plan under which we issued
common stock purchase rights. As a result of the plan, each share of our common
stock carries with it one common stock purchase right. Each common stock
purchase right entitles the registered holder to purchase from us .9375 of a
share of our common stock at a price of $12.00 per .9375 of a share, subject to
adjustment. The common stock purchase rights are intended to cause substantial
dilution to a person or group who attempts to acquire us on terms that our board
of directors has not approved. The existence of the common stock purchase rights
could make it more difficult for a third party to acquire a majority of our
common stock. Other provisions of our articles of incorporation and bylaws may
also have the effect of discouraging, delaying or preventing a merger, tender
offer or proxy contest, which could have an adverse effect on the market price
of our common stock.
RISKS RELATING TO OUR INDUSTRY
OUR REVENUES AND PROFITS FROM BRAND-EQUIVALENT PHARMACEUTICALS WILL DECLINE AS
WE OR OUR COMPETITORS INTRODUCE ADDITIONAL BRAND-EQUIVALENTS OF THOSE PRODUCTS.
Revenues and gross profit derived from brand-equivalent pharmaceutical
products tend to follow a pattern based on regulatory and competitive factors
unique to the brand-equivalent pharmaceutical industry. As patents for brand
name products and the related exclusivity periods established by regulation
expire, the first brand-equivalent manufacturer to apply for regulatory approval
for a brand-equivalent of a brand name product may be entitled to a 180-day
period of marketing exclusivity under the Hatch-Waxman Act. During this
exclusivity period, the United States Food and Drug Administration, or FDA,
cannot approve any other brand-equivalent. If we are not the first
brand-equivalent applicant, our brand-equivalent product will be kept off the
market for an additional 180 days after the brand name drug's patents expire.
Whether due to the 180-day period of marketing exclusivity or other factors that
delay the approval of other brand-equivalent competitors, the first
brand-equivalent on the market is usually able to initially achieve relatively
high revenues and gross profit. As other brand-equivalent manufacturers receive
regulatory approvals on competing products, prices and revenues typically
decline. The timing of these declines is unpredictable and can result in a
significantly curtailed period of profitability for a brand-equivalent product.
The level of revenues and gross profit attributable to brand-equivalent products
that we develop and manufacture is dependent, in part, on:
o our ability to develop and introduce new brand-equivalent products;
o the timing of regulatory approval of brand-equivalent products;
o the number and timing of regulatory approvals of competing products;
12
o strategies brand name companies adopt to maintain their market
share; and
o our cost of manufacturing.
Brand-equivalent products (but not including branded brand-equivalent
products) represented 49%, 56% and 51% of our revenues for the years ended
December 31, 2000, 1999 and 1998, respectively.
LEGISLATIVE PROPOSALS, REIMBURSEMENT POLICIES OF THIRD PARTIES, COST CONTAINMENT
MEASURES AND HEALTH CARE REFORM COULD AFFECT THE MARKETING, PRICING AND DEMAND
FOR OUR PRODUCTS.
Various legislative proposals, including proposals relating to
prescription drug benefits, could materially impact the pricing and sale of our
products. Further, reimbursement policies of third parties may affect the
marketing of our products. Our ability to market our products will depend in
part on reimbursement levels for the cost of the products and related treatment
established by health care providers, including government authorities, private
health insurers and other organizations, such as health maintenance
organizations, or HMOs, and managed care organizations, or MCOs. Insurance
companies, HMOs, MCOs, Medicaid and Medicare administrators and others are
increasingly challenging the pricing of pharmaceutical products and reviewing
their reimbursement practices. In addition, the following factors could
significantly influence the purchase of pharmaceutical products, which would
result in lower prices and a reduced demand for our products:
o the trend toward managed health care in the United States;
o the growth of organizations such as HMOs and MCOs;
o legislative proposals to reform health care and government insurance
programs; and
o price controls and non-reimbursement of new and highly priced
medicines for which the economic therapeutic rationales are not
established.
THESE COST CONTAINMENT MEASURES AND HEALTH CARE REFORM PROPOSALS COULD AFFECT
OUR ABILITY TO SELL OUR PRODUCTS.
The reimbursement status of a newly approved pharmaceutical product may
be uncertain. Reimbursement policies may not include some of our products. Even
if reimbursement policies of third parties grant reimbursement status for a
product, we cannot be sure that these reimbursement policies will remain in
effect. Limits on reimbursement could reduce the demand for our products. The
unavailability or inadequacy of third party reimbursement for our products would
reduce or possibly eliminate demand for our products. We are unable to predict
whether governmental authorities will enact additional legislation or regulation
which will affect third party coverage and reimbursement that reduces demand for
our products.
OUR INDUSTRY IS HIGHLY COMPETITIVE WHICH AFFECTS OUR PRODUCT SELECTION, PRICING,
GROSS PROFIT AND MARKET SHARE.
The pharmaceutical industry is intensely competitive. Most or all of
the products that we sell or license will face competition from different
chemical or other agents intended to treat the same diseases. Our current and
future products will also face competition from traditional forms of drug
delivery and from advanced delivery systems others are developing. Our
competitors vary depending upon geographic regions, product categories, and
within each product category, upon dosage strengths and drug delivery systems.
Some of our major competitors are:
o 3M
o Astra Zeneca
13
o Barr Laboratories
o Boehringer Ingelheim
o Bristol-Myers Squibb
o Geneva Pharmaceuticals
o Glaxo Wellcome
o Eli Lilly
o Mylan Pharmaceuticals
o Novartis Pharmaceuticals
o Schering-Plough
o Teva Pharmaceuticals
Our competitors may be able to develop products and processes competitive with
or superior to our own for many reasons, including that they may have:
o significantly greater financial resources;
o larger research and development and marketing staffs; or
o larger production facilities or extensive experience in preclinical
testing and human clinical trials.
RISKS RELATED TO THE NOTES
INCREASED LEVERAGE MAY HAVE AN IMPACT ON OUR FINANCIAL CONDITION AND RESULTS OF
OPERATIONS.
At June 30, 2001, we had approximately $1,003.6 million of consolidated
indebtedness. We may incur additional indebtedness in the future. Our level of
indebtedness will have several important effects on our future operations,
including, without limitation:
o a portion of our cash flow from operations will be dedicated to the
payment of any interest or amortization required with respect to
outstanding indebtedness;
o outstanding indebtedness and leverage will increase our
vulnerability to adverse changes in general economic and industry
conditions, as well as to competitive pressure; and
o depending on the levels of our outstanding debt, our ability to
obtain additional financing for working capital, capital
expenditures, general corporate and other purposes may be limited.
Our ability to make payments of principal and interest on our
indebtedness depends upon our future performance, which will be subject to
general economic conditions, industry cycles and financial, business and other
factors affecting our operations, many of which are beyond our control. Our
business might not continue to generate cash flow at or above current levels. If
we are unable to generate sufficient cash flow from operations in the future to
service our debt, we may be required, among other things:
o to seek additional financing in the debt or equity markets;
o to refinance or restructure all or a portion of our indebtedness,
including the notes;
o to sell selected assets; or
o to reduce or delay planned capital expenditures.
Such measures might not be sufficient to enable us to service our debt.
In addition, any such financing, refinancing or sale of assets might not be
available on economically favorable terms.
14
THE NOTES ARE SUBORDINATED TO OUR SENIOR INDEBTEDNESS AND EFFECTIVELY
SUBORDINATED TO ALL LIABILITIES OF OUR SUBSIDIARIES.
The notes are subordinated in right of payment to all of our existing
and future senior indebtedness, and are structurally subordinated to all
indebtedness or liabilities, including trade payables, of our subsidiaries and
rank pari passu in right of payment with the $250.0 million principal amount of
our 5 1/2% convertible senior subordinated notes due 2007 that were issued in
May 2000. As of June 30, 2001, we had approximately $82.3 million of
consolidated indebtedness and other obligations ranking senior to the notes. The
indenture governing the notes does not restrict the incurrence of senior
indebtedness or other debt by us or our subsidiaries. By reason of such
subordination, in the event of the insolvency, bankruptcy, liquidation,
reorganization, dissolution or winding up of our business, our assets will be
available to pay the amounts due on the notes only after all senior indebtedness
has been paid in full, and, therefore, there may not be sufficient assets
remaining to pay amounts due on any or all of the notes then outstanding.
OUR DEPENDENCE ON OUR SUBSIDIARIES FOR CASH FLOW MAY NEGATIVELY AFFECT OUR
BUSINESS AND OUR ABILITY TO PAY THE PRINCIPAL, INTEREST AND OTHER AMOUNTS DUE ON
THE NOTES.
Our ability to meet our cash obligations in the future will be
dependent upon the ability of our subsidiaries to make cash distributions to us.
The ability of our subsidiaries to make these distributions is and will continue
to be restricted by, among other limitations, applicable provisions of governing
law and contractual provisions. The indenture governing the notes does not limit
the ability of our subsidiaries to incur such restrictions in the future. Our
right to participate in the assets of any subsidiary (and thus the ability of
holders of the notes to benefit indirectly from such assets) is generally
subject to the prior claims of creditors, including trade creditors, of that
subsidiary except to the extent that we are recognized as a creditor of such
subsidiary, in which case our claim would still be subject to any security
interest or other priority interest of other creditors of such subsidiary. The
notes, therefore, are structurally subordinated to creditors, including trade
creditors, of our subsidiaries with respect to the assets of the subsidiaries
against which such creditors have a claim.
WE MAY NOT HAVE THE ABILITY TO RAISE THE FUNDS NECESSARY TO FINANCE THE CHANGE
IN CONTROL OFFER REQUIRED BY THE INDENTURE.
If we undergo a change in control (as defined in the indenture), each
holder of the notes may require us to repurchase all or a portion of the
holder's notes. We cannot assure you that there will be sufficient funds
available for any required repurchases of these securities if a change in
control occurs. In addition, the terms of any agreements related to borrowing
which we may enter from time to time may prohibit or limit or make our
repurchase of notes an event of default under those agreements. If we fail to
repurchase the notes in that circumstance, we will be in default under the
indenture governing the notes. See "Description of Notes - Repurchase at option
of holders upon change in control."
15
ABSENCE OF A PUBLIC MARKET FOR THE NOTES COULD CAUSE PURCHASERS OF THE NOTES TO
BE UNABLE TO RESELL THEM FOR AN EXTENDED PERIOD OF TIME.
Although the notes trade on The PORTAL Market, there is not an
established trading market for the notes and we cannot assure you than an active
public trading market of the notes will develop, or, if such market develops,
how liquid it will be. We have been informed by UBS Warburg LLC, the initial
purchaser, that it intends to make a market in the notes. The initial purchaser
may cease its market-making at any time without notice. We have no present
intention of causing the notes to be listed for trading on any national
securities exchange or Nasdaq stock market.
If a trading market does not develop or is not maintained, holders of
the notes may experience difficulty in reselling, or an inability to sell, the
notes. If a market for the notes develops, any such market may be discontinued
at any time. If a public trading market develops for the notes, future trading
prices of the notes will depend on many factors, including, among other things,
the price of our common stock into which the notes are convertible, prevailing
interest rates, our operating results and the market for similar securities.
Depending on the price of our common stock into which the notes are convertible,
prevailing interest rates, the market for similar securities and other factors,
including our financial condition, the notes may trade at a discount from their
principal amount.
16
DISCLOSURE REGARDING FORWARD-LOOKING STATEMENTS
This prospectus and the documents incorporated by reference into this
prospectus contain "forward-looking statements" within the meaning of Section
27A of the Securities Act and Section 21E of the Exchange Act. These statements
relate to expectations, beliefs, projections, future plans and strategies,
anticipated events or trends and similar expressions concerning matters that are
not historical facts. Specifically, this prospectus and the documents
incorporated into this prospectus by reference contain forward-looking
statements regarding:
o our intention to generate growth through the introduction of new
proprietary drugs, the expanded sale and distribution of our current
products, the acquisition of new businesses and products and
strategic collaborations;
o the ability of our research programs to develop improved forms of
drugs, novel compounds and new delivery systems, including the
development of improved formulations of paclitaxel and complementary
products;
o our ability to integrate operations and exploit opportunities among
our subsidiaries;
o our capacity to become a worldwide leader in the asthma market;
o our ability to capitalize on current relationships in the oncology
market to market new brand-equivalent biotech drugs and our
commercialization of Paxoral(TM) and other oncology products;
o our capability to identify, acquire and successfully integrate new
acquisitions of companies and products;
o anticipated benefits stemming from the acquisition of Laboratorio
Chile;
o the ability of our new patented oral administration system to
provide patients effective doses of paclitaxel with more convenience
and reduced side-effects and the applicability of this system to
other chemotherapeutic agents;
o our ability to develop Easi-Breathe(R) for use with various
compounds;
o our ability to further develop CFC-free inhalation aerosol products;
o our ability to develop a corticosteroid with minimal side effects to
treat asthma and inflammatory diseases of the large intestine;
o our ability to develop new formulations and obtain marketing
authorizations which will enable us to be the first, or among the
first, to launch brand-equivalent products;
o our ability to further develop and market talampanel, cladribine,
human growth hormone, interferon or products to treat cystic
fibrosis;
o our ability to develop or license proprietary products for
indications having large patient populations, or for which limited
or inadequate treatments exist;
o our capacity to accelerate product development and commercialization
by in-licensing products and by developing new dosage forms or new
therapeutic indications for existing products;
o anticipated trends in the pharmaceutical industry and the effect of
technological advances on competition;
o our estimates regarding the capacity of our facilities;
o our intention to fund capital expenditures from existing cash and
internally generated funds; and
o our ability to use Laboratorio Chile and our other foreign
subsidiaries to launch our proprietary and brand-equivalent
pharmaceutical products in Latin American markets.
These forward-looking statements reflect our current views about future
events and are subject to risks, uncertainties and assumptions. We wish to
caution readers that certain important factors may have affected and could in
17
the future affect our actual results and could cause actual results to differ
significantly from those expressed in any forward-looking statement. The most
important factors that could prevent us from achieving our goals, and cause the
assumptions underlying forward-looking statements and the actual results to
differ materially from those expressed in or implied by those forward-looking
statements include, but are not limited to, the following:
o difficulties we may experience in product development;
o efficacy or safety concerns with respect to marketed products,
whether or not scientifically justified, leading to recalls,
withdrawals or declining sales;
o our ability to obtain new materials or products;
o our ability to identify potential acquisitions and to successfully
acquire and integrate such operations or products;
o our failure to realize the anticipated benefits of the acquisition
of Laboratorio Chile;
o risks that arise from the operation of Laboratorio Chile;
o our ability to obtain approval from the FDA to market new
pharmaceutical products;
o the acceptance of new products by the medical community as effective
as alternative forms of treatment for indicated conditions;
o the outcome of any pending or future litigation; and
o the impact of new regulations or court decisions regarding the
protection of patents and the exclusivity period for the marketing
of branded drugs.
You should read carefully the section of this prospectus under the heading "Risk
Factors" beginning on page 7. We assume no responsibility for updating
forward-looking statements contained in this prospectus, any supplements to this
prospectus, and in any documents that we incorporate by reference into this
prospectus.
RATIO OF EARNINGS TO FIXED CHARGES
The following table sets forth our consolidated ratio of earnings to
fixed charges for the years ended December 31, 1996, 1997, 1998, 1999 and 2000
and for the six months ended June 30, 2001.
YEAR ENDED DECEMBER 31,
----------------------------------------------- SIX MONTHS ENDED
1996 1997 1998 1999 2000 JUNE 30, 2001
---- ---- ---- ---- ---- ------------------
Ratio of earnings to fixed charges. . (10.5)x(1) (9.7)x(1) 5.9x 15.3x 11.1x 11.2x
---------
(1) The dollar amounts of the coverage deficiency for the years ended December
31, 1996 and 1997 were $189.4 million and $160.5 million, respectively.
The ratio of earnings to fixed charges was calculated by dividing
earnings by total fixed charges. Earnings consist of pretax income plus fixed
charges. Fixed charges consist of interest expense on all indebtedness
(including amortization of deferred debt issuance costs) and a portion of rent
expense (5-8%) estimated by management to be the interest component of such
rentals.
USE OF PROCEEDS
We will receive no proceeds from this offering. The selling security
holders will receive the proceeds from this offering.
18
SELLING SECURITY HOLDERS
On May 4, 2001, we issued and sold $725,000,000 of 4 1/2% convertible
senior subordinated notes due 2008 in private placement transactions to
"qualified institutional buyers" (as defined in Rule 144A under the Securities
Act), to institutional "accredited investors" (as defined in Rule 501 under the
Securities Act) in compliance with Regulation D under the Securities Act and to
non-U.S. persons outside the U.S. in compliance with Regulation S under the
Securities Act. The selling security holders (which term includes their
transferees, pledgees, donees or their successors) may from time to time offer
and sell pursuant to this prospectus or prospectus supplement any or all of the
notes and common stock issuable upon conversion of the notes.
No offer or sale under this prospectus may be made by a holder of the
securities unless that holder is listed in the table in this prospectus or until
that holder has notified us and a supplement to this prospectus has been filed
or an amendment to this registration statement has become effective. We will
supplement or amend this prospectus to include additional selling security
holders upon request and upon provision of all required information to us.
Information concerning the selling security holders may change from time to time
and any changed information will be set forth in supplements to this prospectus
if and when necessary.
The following table sets forth information about each selling security
holder, including the name, the number and percentage of the notes beneficially
owned and being offered by the selling security holder and the number and
percentage of common stock beneficially owned and being offered by the selling
security holder. Unless otherwise indicated below, none of the selling security
holders nor any of their affiliates, officers, directors or principal entity
holders has held any position or office or has had any material relationship
with us within the past three years.
PRINCIPAL
AMOUNT OF
NOTES NUMBER OF SHARES OF
BENEFICIALLY PERCENTAGE COMMON STOCK PERCENTAGE OF
OWNED AND OF NOTES BENEFICIALLY OWNED COMMON STOCK
NAME AND RELATIONSHIP, IF ANY OFFERED HEREBY OUTSTANDING AND OFFERED HEREBY(1) OUTSTANDING (2)
----------------------------- -------------- ----------- ------------------ -----------
Absolute Return Fund, Ltd. $ 821,000 * 20,499 *
Alexandra Global Investment
Fund I Ltd. $ 2,000,000 * 49,938 *
Allstate Insurance Company $ 3,600,000 * 89,888 *
Allstate Life Insurance Company $ 850,000 * 21,223 *
Argent Classic Convertible Arbitrage
Fund (Bermuda) Ltd. $13,000,000 1.79% 324,594 *
Argent Convertible Arbitrage Fund Ltd. $ 5,500,000 * 137,328 *
Argent LowLev Convertible Arbitrage
Fund LLC $ 500,000 * 12,484 *
Banc of America Securities LLC $ 8,250,000 1.14% 205,992 *
Bank Austria Cayman Islands Ltd. $ 7,250,000 1.00% 181,023 *
Bear Stearns & Co. Inc. $ 5,500,000 * 137,328 *
Black Diamond Capital I, Ltd. $ 1,500,000 * 37,453 *
Black Diamond Offshore Ltd. $ 3,397,000 * 84,819 *
BNP CooperNeff Convertible Strategies
Fund, L.P. $ 652,000 * 16,280 *
BNP Paribas Equity Strategies, SNC $14,299,000 1.97% 357,028 *
Calamos(R) Market Neutral Fund-
Calamos(R) Investment Trust $ 3,200,000 * 79,900 *
Chrysler Corporation Master Retirement
Trust $ 3,305,000 * 82,522 *
CFFX, LLC $ 3,000,000 * 74,906 *
Consulting Group Capital
Markets Funds $ 380,000 * 9,488 *
Convertible Securities Fund $ 200,000 * 4,994 *
CooperNeff Convertible Strategies
Fund, L.P. $ 137,000 * 3,421 *
Deam Convertible Arbitrage Fund $ 2,500,000 * 62,422 *
19
PRINCIPAL
AMOUNT OF
NOTES NUMBER OF SHARES OF
BENEFICIALLY PERCENTAGE COMMON STOCK PERCENTAGE OF
OWNED AND OF NOTES BENEFICIALLY OWNED COMMON STOCK
NAME AND RELATIONSHIP, IF ANY OFFERED HEREBY OUTSTANDING AND OFFERED HEREBY(1) OUTSTANDING (2)
----------------------------- -------------- ----------- ------------------ -----------
Delta Air Lines Master Trust $ 855,000 * 21,348 *
Delta Pilots D&S Trust $ 445,000 * 11,111 *
Deutsche Banc Alex Brown Inc. $ 32,400,000 4.47% 808,988 *
Double Black Diamond Offshore LDC $ 15,743,000 2.17% 393,083 *
First Union National Bank $ 61,000,000 8.41% 1,523,094 *
GLG Market Neutral Fund $ 14,000,000 1.93% 349,563 *
Goldman Sachs & Company $ 3,000,000 * 74,906 *
Granville Capital Corporation $ 5,000,000 * 124,844 *
Jersey (IMA) Ltd. $ 2,100,000 * 52,434 *
JMG Capital Partners, L.P. $ 3,000,000 * 74,906 *
Lancer Securities Cayman Ltd. $ 750,000 * 18,727 *
Leonardo, L.P. $ 4,000,000 * 99,875 *
Lexington (IMA) Limited $ 584,000 * 14,582 *
LibertyView Global Volatility Fund, L.P. $ 1,300,000 * 32,459 *
LibertyView Fund LLC $ 600,000 * 14,981 *
LibertyView Funds, L.P. $ 6,000,000 * 149,813 *
Lincoln National Global Asset Allocation
Fund, Inc. $ 50,000 * 1,248 *
Lipper Convertibles, L.P. $ 26,000,000 3.59% 649,188 *
Lipper Convertibles, L.P. (Class B) $ 1,000,000 * 24,969 *
Lipper Convertibles Series II, L.P. $ 2,000,000 * 49,938 *
Lipper Offshore Convertibles, L.P. $ 5,000,000 * 124,844 *
Lipper Offshore Convertibles, L.P. #2 $ 1,000,000 * 24,969 *
Merrill Lynch, Pierce, Fenner &
Smith, Inc. $ 1,385,000 * 34,582 *
Merrill Lynch Quantitative Advisors
Convertible Securities Arbitrage
Limited $ 11,000,000 1.52% 274,656 *
Microsoft Corporation $ 475,000 * 11,860 *
Morgan Stanley & Co. $ 10,000,000 1.38% 249,688 *
Morgan Stanley Dean Witter
Convertible Securities Trust $ 31,000,000 4.28% 774,031 *
Motion Picture Industry Health
Plan--Active Member Fund $ 305,000 * 7,615 *
Motion Picture Industry Health
Plan--Retiree Member Fund $ 130,000 * 3,246 *
Museum of Fine Arts Boston $ 10,000 * 250 *
Nations Convertible Securities Fund $ 5,700,000 * 142,322 *
Nicholas Applegate Capital Management
FBO: Arkansas Teachers Retirement $ 3,788,000 * 94,582 *
Nicholas Applegate Capital Management
FBO: Baptist Health of South Florida $ 490,000 * 12,235 *
Nicholas Applegate Capital Management
FBO: Boston Museum of Fine Art $ 52,000 * 1,298 *
Nicholas Applegate Capital Management
FBO: Engineers Joint Pension Fund $ 488,000 * 12,185 *
Nicholas Applegate Capital Management
FBO: Enterprise Convertible Securities
Fund $ 147,000 * 3,670 *
Nicholas Applegate Capital Management
FBO: Innovest Finanzdienstleistungs $ 550,000 * 13,733 *
Nicholas Applegate Capital Management
FBO: Lumbermens $ 489,000 * 12,210 *
Nicholas Applegate Capital Management
FBO: Motion Pictures Industry $ 567,000 * 14,157 *
Nicholas Applegate Capital Management
FBO: Nicholas Applegate Convertible
Fund $ 1,446,000 * 36,105 *
Nicholas Applegate Capital Management
FBO: Nicholas Applegate Global
Holdings $ 37,000 * 924 *
Nicholas Applegate Capital Management
FBO: Physicians Life $ 186,000 * 4,644 *
Nicholas Applegate Capital Management
FBO: San Diego City Retirement $ 943,000 * 23,546 *
Nicholas Applegate Capital Management
FBO: San Diego County Convertible $ 1,894,000 * 47,291 *
Nicholas Applegate Capital Management
FBO: Screen Actors Guild $ 523,000 * 13,059 *
Nicholas Applegate Capital Management
FBO: Wake Forest Convertible Arbitrage $ 417,000 * 10,412 *
Nicholas Applegate Capital Management
FBO: Wake Forest University $ 733,000 * 18,302 *
Nicholas Applegate Capital Management
FBO: Writers Guild Convertible $ 307,000 * 7,665 *
Nicholas Applegate Capital Management
FBO: Wyoming State Treasurer $ 1,018,000 * 25,418 *
Northern Income Equity Fund $ 1,000,000 * 24,969 *
OCM Convertible Limited Partnership $ 100,000 * 2,497 *
OCM Convertible Trust $ 2,035,000 * 50,811 *
OZ Master Fund, Ltd. $ 8,095,000 1.12% 202,122 *
Palladin Securities LLC $ 750,000 * 18,727 *
Parker-Hannifin Corporation $ 80,000 * 1,998 *
Partner Reinsurance Company Ltd. $ 525,000 * 13,109 *
Peoples Benefit Life Insurance Company
Teamsters c/o Camden Asset
Management, LP $ 6,125,000 * 152,934 *
Putnam Asset Allocation Funds-
Balanced Portfolio $ 380,000 * 9,488 *
Putnam Asset Allocation Funds-
Conservative Portfolio $ 290,000 * 7,241 *
Putnam Convertible Income-Growth
Trust $ 2,940,000 * 73,408 *
Putnam Convertible Opportunities and
Income Trust $ 100,000 * 2,497 *
Putnam Variable Trust-Putnam VT
Global Asset Allocation Fund $ 100,000 * 2,497 *
RCG Latitude Master Fund Ltd. $ 2,000,000 * 49,938 *
RCG Multi Strategy LP $ 250,000 * 6,242 *
SG Cowen Securities Inc. $ 13,500,000 1.86% 337,078 *
State Employees' Retirement Fund of the
State of Delaware $ 1,310,000 * 32,709 *
State of Connecticut Combined
Investment Funds $ 2,785,000 * 69,538 *
Sturgeon Limited $ 64,000 * 1,598 *
TD Securities (USA) Inc. $ 5,000,000 * 124,844 *
The Northwestern Mutual Life Insurance
Company $ 4,000,000 * 99,875 *
The Northwestern Mutual Life Insurance
Company for its Group Annuity
Separate Account $ 250,000 * 6,242 *
TQA Master Fund, Ltd. $ 90,000 * 2,247 *
TQA Master Plus Fund, Ltd. $ 3,410,000 * 85,143 *
Tribeca Investments LLC $ 15,000,000 2.07% 374,531 *
Vanguard Convertible Securities
Fund, Inc. $ 3,330,000 * 83,146 *
White River Securities L.L.C $ 5,500,000 * 137,328 *
Wilmington Trust Company as
Owner Trustee for the Forrestal
Funding Master Trust $ 40,000,000 5.52% 998,750 *
Worldwide Transactions Ltd. $ 860,000 * 21,473 *
Yield Strategies Fund I, LLP $ 8,875,000 1.22% 221,598 *
Any other holder of notes or
future transferee, pledgee, donee,
or successor of any such holder(3) $244,274,000 33.69% 6,099,216 2.99%
-----------
* Less than 1.0%.
(1) Assumes conversion of all of the holder's notes into 24.96875 shares of our
common stock, par value $.10 per share, per $1,000 principal amount of
notes, as adjusted to reflect the five-for-four stock split paid in common
stock on May 18, 2001. This conversion rate, however, will be subject to
further adjustment as described under "Description of Notes - Conversion."
As a result, the number of shares of common stock issuable upon conversion
of the notes may increase or decrease in the future.
(2) Calculated based on Rule 13d-3(d)(i) of the Exchange Act using 197,851,064
shares of common stock outstanding as of September 30, 2001. In calculating
the percentage of common stock outstanding for each selling security
holder, we treated as outstanding the number of shares of common stock
issuable upon conversion of all of the particular selling security holder's
notes.
(3) Information about other selling security holders will be set forth in one
or more amendments to this registration statement or prospectus
supplements, if required. Assumes that any other holders of notes, or any
future transferees, pledgees, donees or successors of or from any such
other holders of notes, do not beneficially own any common stock other than
the common stock issuable upon conversion of the notes at the conversion
rate.
20
We prepared this table based on the information supplied to us by the
selling security holders named in the table and we have not sought to verify
such information.
The selling security holders listed in the above table may have sold or
transferred, in transactions exempt from the registration requirements of the
Securities Act, some or all of their notes since the date on which the
information in the above table was provided to us. Information about the selling
security holders may change over time.
Because the selling security holders may offer all or some of the notes
or the shares of common stock issuable upon conversion of the notes from time to
time, we cannot estimate the amount of the notes or shares of common stock that
will be held by the selling security holders upon the termination of any
particular offering by a selling security holder.
21
PLAN OF DISTRIBUTION
On May 4, 2001, we issued and sold $725,000,000 of 4 1/2% convertible
senior subordinated notes due 2008 in private placement transactions to
"qualified institutional buyers" (as defined in Rule 144A under the Securities
Act), to institutional "accredited investors" (as defined in Rule 501 under the
Securities Act) in compliance with Regulation D under the Securities Act and to
non-U.S. persons outside the U.S. in compliance with Regulation S under the
Securities Act. We will not receive any of the proceeds from this offering. The
selling security holders will receive the proceeds from this offering.
The selling security holders and their successors, which term includes
their transferees, pledgees, donees or their successors may from time to time
sell the notes and the common stock covered by this prospectus directly to
purchasers or offer the notes and common stock through underwriters,
broker-dealers or agents, who may receive compensation in the form of
underwriting discounts, concessions or commissions from the selling security
holders and/or the purchasers of securities for whom they may act as agent,
which discounts, concessions or commissions as to any particular underwriter,
broker-dealer or agent may be in excess of those customary in the types of
transactions involved.
The notes and the common stock may be sold in one or more transactions
at fixed prices, at prevailing market prices at the time of sale, at prices
related to such prevailing market prices, at varying prices determined at the
time of sale, or at negotiated prices. The notes and the common stock may be
sold by one or more of, or a combination of, the following:
o a block trade in which the broker-dealer so engaged will attempt to
sell the securities as agent but may position and resell a portion
of the block as principal to facilitate the transaction;
o purchases by a broker-dealer as principal and resale by such
broker-dealer for its account pursuant to this prospectus;
o an exchange distribution in accordance with the rules of such
exchange;
o ordinary brokerage transactions and transactions in which the broker
solicits purchasers; and
o in privately negotiated transactions.
In connection with the sale of the notes and common stock, the selling
security holders may enter into hedging transactions with broker-dealers or
other financial institutions which may in turn engage in short sales of the
securities and deliver these securities to close out such short positions, or
loan or pledge the securities to broker-dealers that in turn may sell these
securities.
The aggregate proceeds to the selling security holders from the sale of
the securities offered by them hereby will be the purchase price of such
securities less discounts and commissions, if any. The selling security holder
reserves the right to accept and, together with its agent from time to time, to
reject, in whole or in part, any proposed purchase of securities to be made
directly or through agents.
Our notes are traded on The PORTAL Market. Our common stock is listed
for trading on the American Stock Exchange under the symbol "IVX" and on the
London Stock Exchange under the symbol "IVX.L."
In order to comply with the securities laws of some states, if
applicable, the securities may be sold in such jurisdictions only through
registered or licensed brokers or dealers. In addition, in some states the
securities may not be sold unless they have been registered or qualified for
sale in the applicable state or an exemption from registration or qualification
requirements is available and is complied with.
The selling security holders and any underwriters, broker-dealers or
agents that participate in the sale of the securities, may be "underwriters"
22
within the meaning of Section 2(11) of the Securities Act. Any discounts,
commissions, concessions or profit they earn on any resale of the securities may
be underwriting discounts and commissions under the Securities Act. If any
selling security holder is an "underwriter" within the meaning of Section 2(11)
of the Securities Act it will be subject to the prospectus delivery requirements
of the Securities Act. The selling security holders have acknowledged that they
understand their obligations to comply with the provisions of the Exchange Act
and the rules thereunder relating to stock manipulation, particularly Regulation
M, and have agreed that they will not engage in any transaction in violation of
such provision.
In addition, any securities covered by this prospectus which qualify
for sale pursuant to Rule 144 of the Securities Act may be sold under Rule 144
rather than pursuant to this prospectus. The selling security holder may not
sell any security described herein and may not transfer, devise or gift such
securities by other means not described in this prospectus.
At the time of a particular offering of securities by a selling
security holder, a supplement to this prospectus, if required, will be
circulated setting forth the aggregate amount and type of securities being
offered and the terms of the offering, including the name or names of any
underwriters, broker-dealers or agents, any discounts, commissions and other
terms constituting compensation from the selling security holders and any
discounts, commissions or concessions allowed or reallowed or paid to
broker-dealers.
23
DESCRIPTION OF NOTES
On May 4, 2001, we issued and sold $725,000,000 of 4 1/2% convertible
senior subordinated notes due 2008 in private placement transactions to
"qualified institutional buyers" (as defined in Rule 144A under the Securities
Act), to institutional "accredited investors" (as defined in Rule 501 under the
Securities Act) in compliance with Regulation D under the Securities Act and to
non-U.S. persons outside the U.S. in compliance with Regulation S under the
Securities Act. The notes were issued under the Indenture, dated as of May 4,
2001, between us and U.S. Bank Trust National Association as trustee (the
"Indenture"). The following statements are subject to the detailed provisions of
the Indenture and are qualified in their entirety by reference to the Indenture.
The Indenture is by its terms subject to and governed by the Trust Indenture Act
of 1939. Copies of the Indenture are available for review at the corporate
office of the trustee and may also be obtained from us upon request. Particular
provisions of the Indenture which are referred to in this prospectus are
incorporated by reference as a part of the statements made, and the statements
are qualified in their entirety by the reference. For purposes of this summary,
the terms "IVAX", "we", "us", "our" and "company" refer only to IVAX Corporation
and not to any of our subsidiaries. References to "interest" shall be deemed to
include "liquidated damages" unless the context otherwise requires.
GENERAL
The notes represent our unsecured general obligations, subordinate in
right of payment to certain of our other obligations as described below under
"Subordination of Notes", and convertible into common stock as described below
under "Conversion." The notes rank pari passu with our $250.0 million principal
amount of 5 1/2% convertible senior subordinated notes due 2007. We will pay
interest on the notes semiannually on May 15 and November 15 of each year, with
the first payment to be made on November 15, 2001, at the rate of 4 1/2% per
annum, to the persons who are registered holders of notes at the close of
business on the preceding May 1st and November 1st, respectively. Interest
payments on the notes are subject to exceptions in the case of notes redeemed or
repurchased upon a change in control between a record date and the next
succeeding interest payment date. Unless previously redeemed, repurchased or
converted, the notes will mature on May 15, 2008. We may pay principal, premium,
if any, and interest by check and may mail an interest check to a holder's
registered address. Holders must surrender notes to the paying agent to collect
principal payments.
We issued the notes without coupons in denominations of $1,000 and
whole multiples of $1,000. A holder may transfer, exchange or convert notes in
accordance with the Indenture. We will not impose any service charge for any
transfer, exchange or conversion of the notes, except for any tax or other
governmental charges that may be imposed in connection with any transfers,
exchanges or conversion. The registrar for the notes need not transfer or
exchange any notes selected for redemption. The registered holder of a note may
be treated as its owner for all purposes.
Initially, the trustee will act as registrar, paying agent and
conversion agent. We may appoint an additional, or change any, paying agent,
registrar or conversion agent without notice. We may act in any such capacity.
The Indenture does not contain any financial covenants or any
restrictions on the payment of dividends or on the repurchase of our securities.
The Indenture does not require us to maintain any sinking fund or other reserves
for repayment of the notes.
CONVERSION
Holders of notes will be entitled at any time after the original
issuance of the notes and before the close of business on the date of maturity
24
of the notes, subject to prior redemption or repurchase, to convert the notes,
or portions thereof (if the portions are $1,000 or whole multiples thereof) into
24.96875 shares of common stock per $1,000 of principal amount of notes. This
rate results in a conversion price of approximately $40.05 per share. Except as
described below, the number of shares into which a note is convertible will not
be adjusted for dividends on any common stock issued on conversion. We will not
issue fractional shares of common stock upon conversion of notes and instead
will deliver a check in lieu of the fractional share based upon the market value
of the common stock on the last trading day prior to the conversion date. In the
case of notes called for redemption, conversion rights will expire at the close
of business on the date five business days prior to the redemption date, and in
the event any holder exercises its repurchase right (as defined below), such
holder's conversion right will terminate upon IVAX' receipt of the written
notice of exercise of the repurchase right. In the case of notes called for
redemption on a redemption date between a record date and the opening of
business on the next succeeding interest payment date, no cash interest will be
payable on any notes converted during such period. See "Description of Notes -
Redemption - Repurchase at option of holders upon change in control."
We are not obligated to pay interest on a note that is converted,
unless the conversion takes place between a record date for the payment of
interest and the next succeeding interest payment date, in which case we will
pay interest on the interest payment date to the registered holder of the note
on the record date. Accordingly, if a note is converted between a record date
and the next succeeding interest payment date, the note must be accompanied by
funds equal to the interest payable to the registered holder on the interest
payment date on the principal amount being converted, unless the note has been
called for redemption on a redemption date between the record date and the
interest payment date. A note converted on an interest payment date need not be
accompanied by any payment, and the interest on the principal amount of that
note will be paid on the interest payment date to the registered holder of that
note on the immediately preceding record date.
The number of shares issuable on conversion is subject to adjustment as
set forth in the Indenture in certain events, including:
o the payment of dividends or distributions on the common stock in
shares of capital stock;
o subdivisions or combinations of the common stock into a greater or
smaller number of shares;
o a reclassification of the common stock resulting in an issuance of
any shares of our capital stock;
o the distribution of rights or warrants to all holders of common
stock entitling them for a period of sixty days or less to purchase
common stock at less than the market price at that time; and
o the distribution to all holders of common stock of assets or debt
securities or any rights or warrants to purchase assets or debt
securities, which assets, debt securities, rights or warrants have
an aggregate fair market value on the date such distribution is
declared that exceeds the "permitted dividend amount."
The "permitted dividend amount" equals:
o 10% of our market capitalization (the product of the current market
price of the common stock and the number of shares of common stock
outstanding as of any particular date) minus
25
o the aggregate value of all dividends or distributions made to
holders of common stock within the 12 months preceding such
distribution (excluding any distributions or dividends referred to
in the first four bullet points in the preceding paragraph),
except that with respect to any distribution not paid out of our retained
earnings, the permitted dividend amount shall be zero, unless the dividend is
paid out of consolidated net income or in the form of common stock.
The terms of the notes do not require any adjustment for rights to
purchase common stock pursuant to any plans we have for reinvestment of
dividends or interest, or for a change in the par value of the common stock. To
the extent that notes become convertible into cash, no adjustment will be
required thereafter as to cash. No adjustment in the number of shares issuable
on conversion will be made unless such adjustment would require a change of at
least 1% in the conversion rate; however, any adjustment that would otherwise be
required to be made shall be carried forward and taken into account in any
subsequent adjustment. We reserve the right to make such increases in the
conversion rate in addition to those required in the foregoing provisions as we
in our discretion shall determine to be advisable in order that stock-related
distributions hereafter made by us to our shareholders shall not be taxable or
for any other appropriate reason. Except as stated above, the number of shares
issuable on conversion will not be adjusted for the issuance of common stock or
any securities convertible into or exchangeable for common stock, or carrying
the right to purchase any of the foregoing.
If we reclassify the common stock or merge into, or transfer or lease
substantially all of our assets to, another corporation, the holders of the
notes then outstanding will be entitled thereafter to convert their notes into
the kind and amount of shares of capital stock, other securities, cash or other
assets which they would have owned immediately after such event had such notes
been converted immediately before the effective date of the transaction.
Adjustments in the number of shares issuable upon conversion may in
certain circumstances result in constructive distributions that could be taxable
as dividends under the Internal Revenue Code of 1986, as amended, to holders of
notes or to holders of common stock issued upon conversion thereof. See "Certain
United States Federal Income Tax Considerations - United States Holders
- Dividends on the Common Stock."
REDEMPTION
The notes are not redeemable prior to May 29, 2004.
No "sinking fund" is provided for the notes, which means that the
Indenture does not require us to redeem the notes prior to their stated
maturity.
REDEMPTION AT IVAX' OPTION
The notes will be redeemable at our option, in whole or in part, at any
time on or after May 29, 2004, on any date not less than 30 nor more than 60
days after the mailing of a redemption notice to each holder of notes to be
redeemed at its address appearing in the security register. The redemption price
for the notes, expressed as a percentage of principal amount, is as follows:
PERIOD BEGINNING REDEMPTION PRICE
---------------- ----------------
May 29, 2004......................102.571%
May 16, 2005......................101.929%
May 16, 2006......................101.286%
May 16, 2007......................100.643%
We will also pay accrued interest to the redemption date.
26
REPURCHASE AT OPTION OF HOLDERS UPON CHANGE IN CONTROL
Upon any change in control (as defined below) with respect to IVAX,
each holder of the notes shall have the right, at the holder's option, to
require us to repurchase all of such holder's notes or a portion thereof (in a
minimum amount of $1,000 or any integral multiple thereof), on the date that is
45 days after the date of the notice from us (as described in the next
paragraph) at a repurchase price equal to 100% of the principal amount of such
holder's notes tendered for repurchase, plus accrued interest to the repurchase
date.
Within 30 days after the occurrence of a change in control, we will be
obligated to mail to all holders of record of the notes a notice of the
occurrence of such change in control and the repurchase right arising as a
result thereof. We will deliver a copy of the notice to the trustee and will
cause a copy of the notice to be published in The New York Times and The Wall
Street Journal or another newspaper of national circulation. To exercise the
repurchase right, a holder of notes must, on or before the 30th day after the
date of the notice, deliver an irrevocable written notice to us (or an agent
designated by us for such purpose) and the trustee of the holder's exercise of
its repurchase right, together with the notes with respect to which the
repurchase right is being exercised, duly endorsed for transfer.
A "change in control" of IVAX means:
o the acquisition by any person, entity or "group", within the meaning
of Section 13(d)(3) or 14(d)(2) of the Exchange Act (excluding, for
this purpose, IVAX and its subsidiaries, any employee benefit plan
of IVAX or its subsidiaries which acquires beneficial ownership of
voting securities of IVAX and any current affiliate of IVAX whose
beneficial ownership does not in the future exceed 45% of common
stock), of beneficial ownership (within the meaning of Rule 13d-3
promulgated under the Exchange Act) of shares of common stock
sufficient to elect a majority of directors;
o persons who, as of the date of the Indenture, constitute the Board
of Directors (the "incumbent board") cease for any reason to
constitute at least a majority of the Board of Directors, provided
that any person becoming a director subsequent to the date hereof
whose election, or nomination for election by our shareholders, was
approved by a vote of at least a majority of the directors then
comprising the incumbent board shall be considered as though such
person were a member of the incumbent board;
o approval by our shareholders of a reorganization, merger or
consolidation, in each case, with respect to which persons who were
our shareholders immediately prior to such reorganization, merger or
consolidation do not, immediately thereafter, beneficially own
shares sufficient to elect a majority of directors of the
reorganized, merged or consolidated company; or
o a liquidation or dissolution of IVAX (other than pursuant to the
United States Bankruptcy Code) or the conveyance, transfer or
leasing of all or substantially all of our assets to any person.
No quantitative or other established meaning has been given to the
phrase "all or substantially all" (which appears in the definition of change in
control) by courts which have interpreted this phrase in various contexts. In
interpreting this phrase, courts make a subjective determination as to the
portion of assets conveyed, considering such factors as the value of assets
conveyed and the proportion of an entity's income derived from the assets
conveyed. To the extent the meaning of such phrase is uncertain, it may be
uncertain whether a change in control has occurred (and, accordingly, whether
the holders of notes have the right to require us to repurchase their notes).
27
The occurrence of a change in control might, under the terms of the
indebtedness incurred by us from time to time, permit the lenders to require
prepayment of some or all amounts outstanding under our debt agreements. In the
event of a change in control, any repurchase of the notes could, absent waiver
or payment in full of any amounts outstanding under such indebtedness or credit
facilities, be prevented. See "- Subordination of Notes." Our failure to
repurchase the notes when required would result in an event of default with
respect to the notes whether or not such repurchase is permitted by the lenders.
The right to require us to repurchase notes could delay or deter a change in
control of IVAX, even if such change in control were supported by the Board of
Directors.
If a change in control occurs, there can be no assurance that we would
have sufficient funds or financing to repay any senior indebtedness then
required to be repaid or to repurchase any or all notes then required to be
repurchased under the Indenture. If an offer is made to repurchase notes as a
result of a change in control, we intend to comply with all tender offer rules,
including but not limited to Section 13(e) and 14(e) under the Exchange Act and
Rules 13e-1 and 14e-1 thereunder, to the extent applicable to such offer.
SUBORDINATION OF NOTES
Upon any distribution to our creditors in a liquidation or dissolution
of IVAX or in a bankruptcy, reorganization, insolvency, receivership or similar
proceeding relating to IVAX or its property, the payment of all amounts due on
the notes (other than cash payments due upon conversion in lieu of fractional
shares) will be subordinated, to the extent provided in the Indenture, in right
of payment to the prior payment in full of all senior indebtedness and all
indebtedness of our subsidiaries.
We will not pay, directly or indirectly, any amount due on the notes
(including any repurchase price pursuant to the exercise of the repurchase
right), or acquire any of the notes, in the following circumstances:
o if any default in payment of principal, premium, if any, or interest
on senior indebtedness (as defined below) exists, unless and until
the default has been cured or waived or has ceased to exist;
o if any default, other than a default in payment of principal,
premium, if any, or interest, has occurred with respect to senior
indebtedness, and that default permits the holders of the senior
indebtedness to accelerate its maturity, until the expiration of the
"payment blockage period" described below unless and until the
default has been cured or waived or has ceased to exist; or
o if the maturity of senior indebtedness has been accelerated, until
the senior indebtedness has been paid or the acceleration has been
cured or waived.
A "payment blockage period" is a period of 183 days that begins on the
date that we receive a written notice from any holder of senior indebtedness or
a holder's representative, or from a trustee under an indenture under which
senior indebtedness has been issued, that an event of default with respect to
and as defined under any senior indebtedness (other than default in payment of
the principal of, or premium, if any, or interest on any senior indebtedness)
which event of default permits the holders of senior indebtedness to accelerate
its maturity has occurred and is continuing. However, if the maturity of such
senior indebtedness is accelerated, no payment may be made on the notes until
such senior indebtedness that has matured has been paid or such acceleration has
been cured or waived.
Senior indebtedness is defined in the Indenture as all indebtedness (as
defined below) of IVAX outstanding at any time except indebtedness that by its
terms is subordinate in right of payment to the notes or indebtedness that is
28
not otherwise senior in right of payment to the notes. Senior indebtedness does
not include indebtedness of IVAX to any of its subsidiaries.
Indebtedness is defined with respect to any person as the principal of,
and premium, if any, and interest on (a) all indebtedness of such person for
borrowed money (including all indebtedness evidenced by notes, bonds, debentures
or other securities sold by such person for money), (b) all obligations incurred
by such person in the acquisition (whether by way of purchase, merger,
consolidation or otherwise and whether by such person or another person) of any
business, real property or other assets (except inventory and related items
acquired in the ordinary course of the conduct of the acquiror's usual
business), (c) guarantees by such person of indebtedness described in clause (a)
or (b) of another person, (d) all renewals, extensions, refundings, deferrals,
restructurings, amendments and modifications of any indebtedness, obligation or
guarantee, (e) all reimbursement obligations of such person with respect to
letters of credit, bankers' acceptances or similar facilities issued for the
account of such person, (f) all capital lease obligations of such person and (g)
all net obligations of such person under interest rate swap, currency exchange
or similar agreements of such person.
By reason of the subordination provisions described above, in the event
of insolvency, funds which would otherwise be payable to note holders will be
paid to the holders of senior indebtedness to the extent necessary to pay senior
indebtedness in full. As a result of these payments, our general creditors may
recover less, ratably, than holders of senior indebtedness and such general
creditors may recover more, ratably, than holders of notes or other subordinated
indebtedness of IVAX.
There are no restrictions in the Indenture upon the creation of
additional senior indebtedness by us, or on the creation of any indebtedness by
us or any of our subsidiaries. As of June 30, 2001 we had approximately $82.3
million of consolidated indebtedness and other obligations effectively ranking
senior to the notes.
PROHIBITION ON LAYERING
The Indenture provides that we will not incur, create, issue, guarantee
or otherwise become liable for any indebtedness that is both (a) subordinate or
junior in right of payment to any senior indebtedness and (b) senior in any
respect in right of payment to the notes.
MERGER OR CONSOLIDATION
The Indenture does not permit us to consolidate with, or merge into, or
transfer or lease all or substantially all of our assets to, another person
unless such other person is a corporation, limited liability company or other
entity organized under the laws of the United States, any state thereof or the
District of Columbia and such person assumes by supplemental indenture all of
our obligations under the notes and the Indenture, and immediately after giving
effect to the transaction, no default shall exist.
RULE 144A INFORMATION REQUIREMENT
We have agreed to furnish to the holders or beneficial holders of the
notes and prospective purchasers of the notes designated by the holders of the
notes, the information required to be delivered pursuant to Rule 144A(d)(4)
under the Securities Act at any time while (1) the notes or the common stock
issuable upon conversion of the notes are restricted securities within the
meaning of the Securities Act and (2) we are not subject to the informational
requirements of the Exchange Act.
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DEFAULTS AND REMEDIES
An event of default includes the occurrence of any of the following:
o default for 30 days in payment of interest or liquidated damages on
the notes;
o default in payment of principal at maturity, upon redemption or
exercise of a repurchase right or otherwise;
o our failure for 60 days after notice to us to comply with any of our
other agreements in the Indenture or the notes; and
o certain events of bankruptcy or insolvency.
If an event of default occurs and is continuing, the trustee or the
holders of at least 25% in principal amount of the notes may declare all the
notes to be due and payable immediately, except for defaults due to certain
events of bankruptcy or insolvency, in which case if an event of default occurs
and is continuing, the aggregate principal amount on the date of notice of
acceleration shall automatically become immediately due and payable. The trustee
may require indemnity satisfactory to it before it enforces the Indenture or the
notes. Subject to certain limitations, holders of a majority in principal amount
of the notes may direct the trustee in its exercise of any trust power. The
trustee may withhold notice of any default (except a default in payment of
amounts due) if it determines that withholding notice is in the interests of the
holders of the notes. We are required to file with the trustee annually an
officers' statement as to the absence of defaults in fulfilling any of our
obligations under the Indenture.
MODIFICATIONS OF THE INDENTURE
We and the trustee may amend the Indenture without notice to any note
holder but with the written consent of the holders of a majority in principal
amount of the outstanding notes. However, without the consent of each note
holder affected, an amendment may not:
o reduce the amount of notes whose holders must consent to an
amendment;
o reduce the rate or change the time for payment of interest on any
note;
o reduce the principal of or change the fixed maturity of any note
(including, without limitation, the optional redemption provisions);
o make any note payable in money other than that stated in the note;
o change the provisions of the Indenture regarding the right of a
majority of the note holders to waive defaults under the Indenture
or impair the right of any note holder to institute suit for the
enforcement of any payment of principal and interest on the notes on
and after their respective due dates; or
o make any change that adversely affects the rights to convert any
note or to require us to repurchase any note upon a change in
control.
SATISFACTION AND DISCHARGE OF INDENTURE
The Indenture will be discharged and canceled upon the satisfaction of
certain conditions, including the payment of all the notes or the deposit with
the trustee, within not more than six months prior to the maturity of the notes
or within one year of redemption of all of the notes, of funds sufficient for
such payment or redemption.
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REPORTS TO TRUSTEE
We will regularly furnish to the trustee copies of our annual report to
shareholders, containing audited financial statements, and any other financial
reports which we furnish to our shareholders.
LISTING
The notes trade on The PORTAL Market. The common stock is listed on the
American Stock Exchange under the symbol "IVX" and on the London Stock Exchange
under the symbol "IVX.L."
BOOK ENTRY
The notes were issued in the form of a global security issued in
reliance on Rule 144A, a global security issued in reliance on Regulation S and
a global security issued to institutional "accredited investors" (as defined in
Rule 501 under the Securities Act) in reliance on Regulation D under the
Securities Act. Upon the issuance of a global security, the depository or its
nominee credits the accounts of persons holding through it with the respective
principal amounts of the notes represented by such global security. Such
accounts have been designated by the initial purchaser with respect to notes
placed by the initial purchaser for us. Ownership of beneficial interests in a
global security is limited to persons that have accounts with the depository
("participants") or persons that may hold interests through participants.
Ownership of beneficial interests by participants in a global security is shown
on, and the transfer of that ownership interest will be effected only through,
records maintained by the depository for such global security. Ownership of
beneficial interests in such global security by persons that hold through
participants is shown on, and the transfer of that ownership interest through
such participant will be effected only through, records maintained by such
participant. The foregoing may impair the ability to transfer beneficial
interests in a global security.
Payment of all amounts due on notes represented by any such global
security will be made to the depository or its nominee, as the case may be, as
the sole holder of the notes represented thereby for all purposes under the
Indenture. None of IVAX, the trustee, any agent of IVAX or the trustee or the
initial purchaser have any responsibility or liability for any aspect of the
depository's records relating to or payments made on account of beneficial
ownership interests in global security representing any notes or for
maintaining, supervising or reviewing any of the depository's records relating
to such beneficial ownership interests.
We have been advised by the depository that, upon receipt of any
payment on any global security, the depository will immediately credit, on its
book-entry registration and transfer system, the accounts of participants with
payments in amounts proportionate to their respective beneficial interests in
the principal amount of such global security as shown on the records of the
depository. Payments by participants to owners of beneficial interests in a
global security held through such participants will be governed by standing
instructions and customary practices as is now the case with securities held for
customer accounts registered in "street name," and will be the sole
responsibility of such participants.
A global security may not be transferred except as a whole by the
depository for such global security to a nominee of such depository or by a
nominee of such depository to such depository or another nominee of such
depository or by such depository or any such nominee to a successor of such
depository or a nominee of such successor. If the depository is at any time
unwilling or unable to continue as depository and a successor depository is not
appointed by us or the depository within 90 days, we will issue notes in
definitive form in exchange for the global security. In either instance, an
owner of a beneficial interest in the global security will be entitled to have
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notes equal in principal amount to such beneficial interest registered in its
name and will be entitled to physical delivery of such notes in definitive form.
Notes so issued in definitive form will be issued in denominations of $1,000 and
integral multiples thereof and will be issued in registered form only, without
coupons. Amounts due on the notes will be payable, and the notes may be
presented for registration of transfer or exchange, at the offices of the
trustee.
So long as the depository for a global security, or its nominee, is the
registered owner of such global security, such depository or such nominee, as
the case may be, will be considered the sole holder of the notes represented by
such global security for the purposes of receiving payment on the notes,
receiving notices and for all other purposes under the Indenture and the notes.
Beneficial interests in notes will be evidenced only by, and transfers thereof
will be effected only through, records maintained by the depository and its
participants. Cede & Co. has been appointed as the nominee of the depository.
Except as provided above, owners of beneficial interests in a global security
will not be entitled to and will not be considered the holders thereof for any
purposes under the Indenture. Accordingly, any such person owning a beneficial
interest in such a global security must rely on the procedures of the
depository, and, if any such person is not a participant, on the procedures of
the participant through which such person owns its interest, to exercise any
rights of a holder under the Indenture. The Indenture provides that the
depository may grant proxies and otherwise authorize participants to give or to
take any request, demand, authorization, direction, notice, consent, waiver or
other action which a holder is entitled to give or take under the Indenture. We
understand that under existing industry practices, in the event that we request
any action of holders or that an owner of a beneficial interest in such a global
security desires to give or take any action which a holder is entitled to give
or take under the Indenture, the depository would authorize the participants
holding the relevant beneficial interest to give or take such action and such
participants would authorize beneficial owners owning through such participants
to give or take such action or would otherwise act upon the instructions of
beneficial owners owning through them.
The Depository Trust Company ("DTC") has been appointed as the initial
depository. DTC has advised us that it is a limited-purpose trust company
organized under the laws of the State of New York, a member of the Federal
Reserve System, a "clearing corporation" within the meaning of the New York
Uniform Commercial Code, and a "clearing agency" registered under the Exchange
Act. DTC was created to hold the securities of its participants and to
facilitate the clearance and settlement of securities transactions among its
participants in such securities through electronic book-entry changes in
accounts of the participants, thereby eliminating the need for physical movement
of securities certificates. DTC's participants include securities brokers and
dealers (including the initial purchaser), banks, trust companies, clearing
corporations and certain other organizations, some of whom (and/or their
representatives) own the depository. Access to DTC's book-entry system is also
available to others, such as banks, brokers, dealers and trust companies, that
clear through or maintain a custodial relationship with a participant, either
directly or indirectly.
Beneficial interests in any global security may be exchanged for
beneficial interests in any other global security only in connection with a
transfer of such interest. Such transfers are subject to compliance with
customary certification requirements which are set forth in the Indenture.
Any beneficial interest in one of the global securities that is
exchanged for an interest in any other global security will cease to be an
interest in such global security and will become an interest in such other
global security. Accordingly, such interest will thereafter be subject to all
transfer restrictions and other procedures applicable to beneficial interests in
such other global security for as long as it remains such an interest. Any
exchange of a beneficial interest in one global security for a beneficial
interest in any other global security will be effected by DTC by means of an
instruction originated by the trustee through its Deposit/Withdraw at Custodian
("DWAC") system. Accordingly, in connection with any such exchange, appropriate
32
adjustments will be made in the records of the registrar to reflect a decrease
in the principal amount of such global security and a corresponding increase in
the principal amount of such other global security.
PAYMENTS OF PRINCIPAL AND INTEREST
The Indenture will require that payments in respect of the notes held
of record by DTC or its nominee (including notes evidenced by the global
securities) be made in same day funds. Payments in respect of the notes held of
record by holders other than DTC may, at our option, be made by check and mailed
to such holders of record as shown on the register for the notes.
REGISTRATION RIGHTS; LIQUIDATED DAMAGES
We and the initial purchaser entered into a Registration Rights
Agreement, dated May 4, 2001. Pursuant to the Registration Rights Agreement, we
agreed with the initial purchaser of the notes to file a shelf registration
statement, of which this prospectus is a part, covering the resales of the notes
and the common stock issuable upon the conversion of the notes in accordance
with Rule 415 under the Securities Act.
Subject to certain rights to suspend use of the shelf registration
statement, we will use our best efforts to cause a shelf registration statement
to be declared effective and to keep the shelf registration statement effective
until the earliest of (1) two years from the effective date of the shelf
registration statement, (2) the date on which the notes or underlying shares of
common stock have been effectively registered under the Securities Act and
disposed of, whether or not in accordance with the shelf registration statement
and (3) the date which is two years after the later of the date of original
issue of the notes and the last date that we or any of our affiliates was the
owner of such notes (or any predecessor thereto) or such shorter period of time
as permitted by Rule 144(k) under the Securities Act or any successor provision
thereunder. There can be no assurance that we will be able to maintain an
effective and current registration statement as required. The absence of such a
registration statement may limit a holder's ability to sell the securities
offered hereby or adversely affect the price at which the securities can be
sold.
We have agreed to pay predetermined liquidated damages as described
herein to holders of the notes and the holders of common stock issued upon
conversion of the notes, who have timely provided the required selling
shareholder information to us if the shelf registration statement is not
declared effective by October 31, 2001 (180 days from of the date on which the
notes were originally issued) or the shelf registration statement ceases to be
effective (without being succeeded immediately by an additional registration
statement filed and declared effective) or usable for the sale of the notes or
the common stock underlying the notes for a period of time (including any period
of time where offers or sales are prohibited) which shall exceed 60 days in the
aggregate in any 12-month period. The liquidated damages shall accrue at a rate
of 0.25% per year per $1,000 principal amount of the notes and, if applicable,
on an equivalent basis per share of common stock (subject to adjustment in the
event of stock splits, stock recombinations, stock dividends and the like) for
each 90-day period until the shelf registration statement is declared effective
or again becomes effective or usable, as the case may be, up to a maximum amount
of liquidated damages of 0.75% per year per $1,000 principal amount of the notes
and, if applicable, on an equivalent basis per share of common stock (subject to
adjustment as set forth above).
The foregoing summary does not purport to be complete and is subject
to, and is qualified in its entirety by references to, the provisions of the
Registration Rights Agreement. Copies of the Registration Rights Agreement are
available from us or UBS Warburg LLC, the initial purchaser, upon request.
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GOVERNING LAW
The Indenture and, except as may otherwise be required by mandatory
provisions of law, notes are governed by and construed in accordance with the
laws of the State of New York, without giving effect to such state's conflicts
of laws principles.
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DESCRIPTION OF CAPITAL STOCK
DESCRIPTION OF COMMON STOCK
We have the authority to issue 437,500,000 shares of common stock, par
value $0.10 per share. The holders of common stock are entitled to one vote per
share on all matters submitted to a vote of the shareholders. The holders of
common stock have equal, ratable rights to dividends from funds legally
available therefor, when, as and if declared by the Board of Directors, and are
entitled to share ratably in all of the assets available for distribution to
holders of common stock upon the liquidation, dissolution or winding-up of our
affairs. Holders of common stock do not have preemptive, subscription or
conversion rights. There are no redemption or sinking fund provisions in our
Articles of Incorporation. The outstanding shares of common stock are fully paid
and nonassessable. Our Articles of Incorporation do not provide for cumulative
voting by shareholders. Our Common Stock is listed on the American Stock
Exchange under the trading symbol "IVX" and on the London Stock Exchange under
the symbol "IVX.L."
DESCRIPTION OF COMMON STOCK PURCHASE RIGHTS
On December 19, 1997, our Board of Directors declared a dividend of one
common stock Purchase Right (the "Right(s)") for each outstanding share of
common stock. The dividend was payable as of December 29, 1997 to shareholders
of record on that date. Each Right entitles the registered holder to purchase
from us .9375 of a share of common stock at a price of $12.00 per .9375 of a
share (the "Exercise Price"), subject to certain adjustments. The description
and terms of the Rights are set forth in that certain Rights Agreement (the
"Rights Agreement") between us and the rights agent named therein. The Rights
are not exercisable and are not certificated until the Distribution Date (as
defined below). Until that time the Rights will automatically trade with the
common stock. The Rights will expire at the close of business on December 18,
2007, unless earlier redeemed by us. The number of shares of common stock
issuable upon exercise of the Rights is subject to certain adjustments from time
to time in the event of a stock dividend on, or a subdivision or combination of,
the common stock. The Exercise Price for the Rights is subject to adjustment in
the event of extraordinary distributions of cash or other property to holders of
common stock. Until a Right is exercised, the holder of a Right will have no
rights as a shareholder, including, without limitation, the right to vote or to
receive dividends.
DISTRIBUTION DATE
Unless earlier redeemed by our Board of Directors, the Rights become
exercisable upon the close of business on the Distribution Date which is the
earlier of (1) the tenth day following a public announcement that a person or
group of affiliated or associated persons, with certain exceptions, has acquired
beneficial ownership of 15% or more of our outstanding voting stock (an
"Acquiring Person") and (2) the tenth business day (or such later date as may
be determined by our Board of Directors) after the date of the commencement or
announcement of a person's or group's intention to commence a tender or exchange
offer the consummation of which would result in the ownership of 15% or more of
our outstanding voting stock.
EFFECT OF TRIGGERING EVENT
Unless the Rights are earlier redeemed, in the event that, after the
time that a person becomes an Acquiring Person, we were to be acquired in a
merger or other business combination (in which any shares of common stock are
changed into or exchanged for other securities or assets) or more than 50% of
our subsidiaries' (taken as a whole) assets or earning power were to be sold or
transferred in one or a series of related transactions, the Rights Agreement
provides that proper provision will be made so that each holder of record of a
Right will from and after such date have the right to receive, upon payment of
35
the Exercise Price, that number of shares of common stock of the acquiring
company having a market value at the time of such transaction equal to two times
the Exercise Price. In addition, unless the Rights are earlier redeemed, if a
person or group (with certain exceptions) becomes the beneficial owner of 15% or
more of our voting stock, the Rights Agreement provides that proper provision
will be made so that each holder of record of a Right, other than the Acquiring
Person (whose Rights will thereupon become null and void), will thereafter have
the right to receive, upon payment of the Exercise Price, that number of shares
of common stock having a market value at the time of the transaction equal to
two times the Exercise Price. The Rights Agreement also grants our Board of
Directors the option, after any person or group acquires beneficial ownership of
15% or more of the voting stock but before there has been a 50% acquisition, to
exchange one share of common stock for each then valid Right (which would
exclude Rights held by the Acquiring Person that have become void).
REDEMPTION
At any time on or prior to the close of business on the tenth day after
the time that a person has become an Acquiring Person (or such later date as a
majority of our Board of Directors may determine), we may redeem the Rights in
whole, but not in part, at a price of $.01 per Right (the "Redemption Price").
Immediately upon the effective time of the action of our Board of Directors
authorizing redemption of the Rights, the right to exercise the Rights will
terminate and the only right of the holders of the Rights will be to receive the
Redemption Price.
AMENDMENT
For as long as the Rights are then redeemable, we may, except with
respect to the Redemption Price or date of expiration of the Rights, amend the
Rights in any manner, including an amendment to extend the time period in which
the Rights may be redeemed. At any time when the Rights are not then redeemable,
we may amend the Rights in any manner that does not materially adversely affect
the interests of holders of the Rights as such.
CERTAIN EFFECTS OF THE RIGHTS
The Rights have certain anti-takeover effects. The Rights will cause
substantial dilution to a person or group who attempts to acquire us on terms
not approved by our Board of Directors. The Rights should not interfere with any
merger or other business combination approved by our Board of Directors because
we may redeem them at $.01 per Right at any time until the close of business on
the tenth day (or such later date as described above) after a person or group
has obtained beneficial ownership of 15% or more of our voting stock.
TRANSFER AGENT, REGISTRAR AND TRUSTEE
The transfer agent and trustee for the notes is U.S. Bank Trust
National Association at 180 East Fifth Street, St. Paul, Minnesota 55101. The
transfer agent and registrar for the common stock is ChaseMellon Shareholder
Services, LLC, 85 Challenger Road, Overpeck Centre, Ridgefield Park, New Jersey
07660.
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CERTAIN UNITED STATES FEDERAL INCOME TAX CONSIDERATIONS
The following is a summary of certain material United States federal
income and estate tax considerations relating to the purchase, ownership and
disposition of the notes and of common stock into which notes may be converted,
but does not purport to be a complete analysis of all the potential tax
considerations relating thereto. This summary is based on the provisions of the
Internal Revenue Code of 1986, as amended (the "Code"), the applicable Treasury
Regulations promulgated thereunder ("Regulations"), judicial authority and
current administrative rulings and practice, all of which are subject to change,
possibly on a retroactive basis. This summary deals only with holders that
purchase notes at their original issuance at their issue price. This summary
also deals only with holders that will hold notes and common stock into which
notes may be converted as "capital assets" (within the meaning of Section 1221
of the Code). This summary does not purport to deal with all aspects of United
States federal income or estate taxation that might be relevant to particular
holders in light of their personal investment circumstances or status, nor does
it address tax considerations applicable to investors that may be subject to
special tax rules, such as certain financial institutions, tax-exempt
organizations, S Corporations, insurance companies, broker-dealers, dealers or
traders in securities or currencies, expatriates subject to Code Section 877 and
taxpayers subject to the alternative minimum tax, and also does not discuss
notes held as part of a hedge, straddle, "synthetic security" or other
integrated investment composed of a note and one or more other investments, or
situations in which the functional currency of the holder is not the United
States dollar. Moreover, the effect of any applicable state, local or foreign
tax laws is not discussed. We have not sought any ruling from the Internal
Revenue Service (the "Service") with respect to the statements made and the
conclusions reached in the following summary, and there can be no assurance that
the Service will agree with such statements and conclusions.
THE FOLLOWING DISCUSSION IS FOR GENERAL INFORMATION ONLY. INVESTORS
CONSIDERING THE PURCHASE OF NOTES SHOULD CONSULT THEIR OWN TAX ADVISORS WITH
RESPECT TO THE APPLICATION OF THE UNITED STATES FEDERAL INCOME AND ESTATE TAX
LAWS TO THEIR PARTICULAR SITUATIONS AS WELL AS ANY TAX CONSEQUENCES ARISING
UNDER THE LAWS OF ANY STATE, LOCAL OR FOREIGN TAXING JURISDICTION OR UNDER ANY
APPLICABLE TAX TREATY.
The term "United States Holder" means a holder of a note that is, for
United States federal income tax purposes, (1) a citizen or resident of the
United States, (2) a corporation created or organized under the laws of the
United States or of any political subdivision thereof, (3) an estate, the income
of which is subject to United States federal income taxation regardless of
source or (4) a trust, if (a) a court within the United States is able to
exercise primary jurisdiction over its administration and one or more United
States persons have the authority to control all of its substantial decisions,
or (b) in the case of a trust that was treated as a domestic trust under the
law in effect before 1997, a valid election is in place under applicable
Regulations to treat such trust as a domestic trust. The term "Non-United States
Holder" means a holder of a note that is neither a United States Holder nor a
partnership for United States federal income tax purposes.
A partnership for United States federal income tax purposes is not
subject to the income tax on income derived from holding the notes. A partner of
the partnership may be subject to tax on such income pursuant to rules similar
to the rules for United States Holders or Non-United States Holders depending on
whether (1) the partnership is a United States or a non-United States
partnership, (2) the partner is a United States or a non-United States person
and (3) the partnership is or is not engaged in a United States trade or
business to which income or gain from the notes is effectively connected.
37
UNITED STATES HOLDERS
PAYMENT OF INTEREST
The semiannual interest payments on the notes will be qualified stated
interest. Consequently, a United States Holder of a note generally will be
required to include such interest in ordinary income when it is received or when
it accrues, depending upon such holder's method of accounting for United States
federal income tax purposes. The notes will not be issued with original issue
discount, and, accordingly issues relating to original issue discount are not
summarized in this document.
SALE, EXCHANGE OR REDEMPTION OF THE NOTES
Upon the sale, exchange or redemption of a note, a United States Holder
generally will recognize capital gain or loss equal to the difference between
(1) the amount of cash proceeds and the fair market value of any property
received on the sale, exchange or redemption (except to the extent such amount
is attributable to accrued and unpaid interest, which is treated as interest
subject to the rules discussed above under "Payment of Interest") and (2) such
holder's adjusted tax basis in the note. A United States Holder's adjusted tax
basis in a note generally will equal the cost of the note to such holder. Such
capital gain or loss will be long-term capital gain or loss if the United States
Holder's holding period in the note is more than one year at the time of sale,
exchange or redemption.
CONVERSION OF THE NOTES
A United States Holder generally will not recognize any income, gain or
loss upon conversion of a note into common stock, except with respect to cash
received in lieu of a fractional share of common stock. Such holder's tax basis
in the common stock received on conversion of a note will be the same as such
holder's adjusted tax basis in the note at the time of conversion (reduced by
any basis allocable to a fractional share interest), and the holding period for
the common stock received on conversion will generally include the holding
period of the note converted.
Cash received in lieu of a fractional share of common stock upon
conversion should be treated as a payment in exchange for the fractional share
of common stock. Accordingly, the receipt of cash in lieu of a fractional share
of common stock generally should result in capital gain or loss measured by the
difference between the cash received for the fractional share and the United
States Holder's adjusted tax basis in the fractional share.
DIVIDENDS ON THE COMMON STOCK
The amount of any distribution by us in respect of the common stock
(including any liquidated damages in respect of common stock as described above
under "Description of Notes - Registration Rights; Liquidated Damages") will be
equal to the amount of cash and the fair market value, on the date of
distribution, of any property distributed. Generally, distributions will be
treated as a dividend, subject to a tax as ordinary income, to the extent of our
current or accumulated earnings and profits, then as a tax-free return of
capital to the extent of the holder's tax basis in the common stock, and
thereafter as capital gain from the sale or exchange of such stock, long-term or
short-term depending on whether the holder's holding period exceeds one year.
In general, a dividend distribution to a corporate United States Holder
will qualify for the 70% dividends received deduction if the holder owns less
than 20% of the voting power and value of our stock (other than any non-voting,
non-convertible, non-participating preferred stock). A corporate United States
Holder that owns 20% or more of the voting power and value of our stock (other
than any non-voting, non-convertible, non-participating preferred stock)
38
generally will qualify for an 80% dividends received deduction. The dividends
received deduction is subject, however, to certain holding period, taxable
income and other limitations.
If at any time (1) we make a distribution of cash or property to our
stockholders or purchase common stock and such distribution or purchase would be
taxable to such shareholders as a dividend for United States federal income tax
purposes (e.g., distributions of evidences of indebtedness or assets of ours,
but generally not stock dividends or rights to subscribe for common stock) and,
pursuant to the antidilution provisions of the Indenture, the conversion price
of the notes is decreased or (2) the conversion price of the notes is
decreased at our discretion, such decrease in conversion price may be deemed to
be the payment of a taxable dividend to United States Holders of notes (pursuant
to Section 305 of the Code) to the extent of our current or accumulated earnings
and profits. Such holders of notes could therefore have taxable income as a
result of an event pursuant to which they received no cash or property.
SALE OF COMMON STOCK
Upon the sale or exchange of common stock, a United States Holder
generally will recognize capital gain or loss equal to the difference between
(1) the amount of cash and the fair market value of any property received upon
the sale or exchange and (2) such holder's adjusted tax basis in the common
stock. Such capital gain or loss will be long-term if the United States Holder's
holding period in the common stock is more than one year at the time of the sale
or exchange. A United States Holder's basis and holding period in common stock
received upon conversion of a note are determined as discussed above under
"- United States Holders - Conversion of the Notes."
INFORMATION REPORTING AND BACKUP WITHHOLDING TAX
In general, information reporting requirements will apply:
o to payments of principal and interest made on a note;
o to payments of the proceeds of a sale or exchange of a note before
maturity;
o to payments of dividends on common stock (including the payment of
liquidated damages under the Registration Rights Agreement); and
o to payments of the proceeds of a sale or exchange of common stock
that are made to a non-corporate United States Holder. A "backup withholding"
tax of 31% will apply to such payments if the holder fails to provide a correct
taxpayer identification number or otherwise comply with applicable requirements
of the backup withholding rules. The backup withholding tax is not an additional
tax. Any amounts withheld under the backup withholding rules from a payment to a
United States Holder will be allowed as a credit against the holder's U.S.
federal income tax liability and may entitle such holder to a refund of such
withheld amounts, provided the required information is furnished to the Service.
NON-UNITED STATES HOLDERS
PAYMENT OF INTEREST
Generally, interest income of a Non-United States Holder that is not
effectively connected with a United States trade or business is subject to a
withholding tax at a 30% rate (or, if applicable, a lower treaty rate). However,
interest paid on a note by us or any paying agent to a Non-United States Holder
39
will qualify for the "portfolio interest exemption" and therefore, subject to
the discussion of backup withholding below, will not be subject to United States
federal income tax or withholding tax, provided that such interest income is not
effectively connected with a United States trade or business of the Non-United
States Holder and provided that the Non-United States Holder (1) does not
actually or constructively own (pursuant to the conversion feature of the notes
or otherwise) 10% or more of the combined voting power of all classes of our
stock entitled to vote, (2) is not a controlled foreign corporation related to
us actually or constructively through stock ownership, (3) is not a bank which
acquired the notes in consideration for an extension of credit made pursuant to
a loan agreement entered into in the ordinary course of business and (4) the
beneficial owner of the notes certifies to us or our agent, under penalties of
perjury, that it is not a United States Holder and provides its name and address
on United States Treasury Form W-8BEN (or a suitable substitute form) or a
securities clearing organization, bank or other financial institution that holds
customers' securities in the ordinary course of its trade or business (a
"financial institution") and certifies under penalties of perjury that such a
Form W-8BEN (or suitable substitute form) has been received from the beneficial
owner by it or by a financial institution between it and the beneficial owner
and furnishes the payor with a copy thereof. If the foregoing exceptions do not
apply, payments on the notes may be subject to gross withholding at the rate of
30%. This rate may be reduced if the Non-United States Holder is a resident of a
country with which the United States has a tax treaty which provides for reduced
withholding taxes.
Except to the extent that an applicable treaty otherwise provides, a
Non-United States Holder generally will be taxed in the same manner as a United
States Holder with respect to interest if the interest income is effectively
connected with a United States trade or business of the Non-United States
Holder. Effectively connected interest received by a corporate Non-United States
Holder may also, under certain circumstances, be subject to an additional
"branch profits tax" at a 30% rate (or, if applicable, a lower treaty rate).
Even though such effectively connected interest is subject to income tax, and
may be subject to the branch profits tax, it is not subject to withholding tax
if the holder delivers a properly executed Internal Revenue Service Form W-8ECI
to the payor.
SALE, EXCHANGE OR REDEMPTION OF THE NOTES
Subject to the discussion below under "- FIRPTA Treatment of Non-United
States Holders," a Non-United States Holder of a note will generally not be
subject to United States federal income tax or withholding tax on any gain
realized on the sale, exchange or redemption of the note (including the receipt
of cash in lieu of fractional shares upon conversion of a note into common stock
but not including any amount representing interest) unless (1) the gain is
effectively connected with a United States trade or business of the Non-United
States Holder or (2) in the case of a Non-United States Holder who is an
individual, such holder is present in the United States for a period or periods
aggregating 183 days or more during the taxable year of the disposition and
certain other requirements are met.
CONVERSION OF THE NOTES
In general, no United States federal income tax or withholding tax will
be imposed upon the conversion of a note into common stock by a Non-United
States Holder except with respect to the receipt of cash in lieu of fractional
shares by Non-United States Holders upon conversion of a note where either of
the conditions described above under "- Non-United States Holders - Sale,
Exchange or Redemption of the Notes" is satisfied.
SALE OR EXCHANGE OF COMMON STOCK
Subject to the discussion below under "- Non-United States Holders -
FIRPTA Treatment of Non-United States Holders," a Non-United States Holder
generally will not be subject to United States federal income tax or withholding
40
tax on the sale or exchange of common stock unless either of the conditions
described above under "- Non- United States Holders - Sale, Exchange or
Redemption of the Notes" is satisfied.
FIRPTA TREATMENT OF NON-UNITED STATES HOLDERS
Under the Foreign Investment in Real Property Tax Act of 1980, as
amended ("FIRPTA"), foreign persons generally are subject to United States
federal income tax on capital gain realized on the disposition of any interest
(other than solely as a creditor) in a corporation that is a United States real
property holding corporation (a "USRPHC"). For this purpose, a foreign person is
defined as any holder who is a foreign corporation (other than certain foreign
corporations that elect to be treated as domestic corporations), a non-resident
alien individual, a non-resident fiduciary of a foreign estate or trust, or a
foreign partnership. Under FIRPTA, a corporation is a USRPHC if the fair market
value of the United States real property interests held by the corporation is
50% or more of the aggregate fair market value of certain assets of the
corporation.
We do not currently believe that we are a USRPHC. If we are not a
USRPHC, a Non-United States Holder will not be subject to United States federal
income tax imposed by FIRPTA on a sale or other disposition of the notes or
shares of common stock. If we are a USRPHC, a Non-United States Holder generally
will not be subject to FIRPTA withholding on proceeds from a sale or other
disposition of notes or common stock by reason of our USRPHC status unless the
holder's interest in the notes or common stock exceeds the relevant threshold
described below.
Assuming the common stock is regularly traded, a Non-United States
Holder will not be subject to FIRPTA withholding on a sale or other disposition
of common stock unless such holder owns, actually or constructively, common
stock with a fair market value in excess of 5% of the fair market value of all
the common stock outstanding at any time during the shorter of the five-year
period preceding such disposition or the holder's holding period. In the case of
a sale or other disposition of notes, the relevant ownership threshold depends
upon whether the notes are regularly traded. If the notes are not regularly
traded, a Non-United States Holder will be subject to FIRPTA withholding only if
on the date the holder acquired such notes they had a fair market value greater
than 5% of the aggregate value of the outstanding common stock. If the notes are
publicly traded, a holder will be subject to FIRPTA withholding only if such
holder owned more than 5% of the total fair market value of all the notes
outstanding at any time during the shorter of the five-year period preceding
such disposition or the holder's holding period for such notes.
We believe that the common stock will be treated as regularly traded.
DIVIDENDS
Distributions by us with respect to the common stock that are treated
as dividends paid (or deemed paid), as described above under "- United States
Holders - Dividends on the Common Stock" to a Non-United States Holder
(excluding dividends that are effectively connected with the conduct of a trade
or business in the United States by such holder which are taxable as described
below) will be subject to United States federal withholding tax at a 30% rate
(or lower rate provided under any applicable income tax treaty). Except to the
extent that an applicable tax treaty otherwise provides, a Non-United States
Holder will be taxed in the same manner as a United States Holder on dividends
paid (or deemed paid) that are effectively connected with the conduct of a trade
or business in the United States by the Non-United States Holder. If such
Non-United States Holder is a foreign corporation, it may also be subject to a
United States branch profits tax on such effectively connected income at a 30%
rate or such lower rate as may be specified by an applicable income tax treaty.
41
Even though such effectively connected dividends are subject to income tax, and
may be subject to the branch profits tax, they will not be subject to United
States withholding if the holder delivers a properly executed Service Form
W-8ECI to the payor.
Under current Regulations, dividends paid to an address in a foreign
country are presumed to be paid to a resident of that country (unless the payor
has knowledge to the contrary) for purposes of the withholding discussed above
and, under the current interpretation of the Regulations, for purposes of
determining the applicability of a tax treaty rate. A Non-United States Holder
of common stock who wishes to claim the benefit of an applicable treaty rate
would be required to satisfy applicable certification and other requirements. In
addition, in the case of common stock held by a foreign partnership, the
certification requirement would generally be applied to the partners of the
partnership (unless the partnership agrees to become a "withholding foreign
partnership") and the partnership would be required to provide certain
information, including a United States taxpayer identification number. These
Regulations also provide look-through rules for tiered partnerships.
DEATH OF A NON-UNITED STATES HOLDER
A note held by an individual who is a Non-United States Holder at the
time of his or her death will not be includable in the decedent's gross estate
for United States estate tax purposes, provided that such holder or beneficial
owner did not at the time of death directly or indirectly, actually or
constructively, own 10% or more of the combined voting power of all classes of
our stock entitled to vote, and provided that, at the time of death, payments
with respect to such notes would not have been effectively connected with the
conduct by such Non-United States Holder of a trade or business within the
United States.
Common Stock actually or beneficially held (other than through a
foreign corporation) by a Non-United States Holder at the time of his or her
death (or previously transferred subject to certain retained rights or powers)
will be subject to United States federal estate tax unless otherwise provided by
an applicable estate tax treaty.
INFORMATION REPORTING AND BACKUP WITHHOLDING TAX
In general, backup withholding and information reporting will not apply
to payments made by us or our paying agents, in their capacities as such, to a
Non-United States Holder if the holder has provided the required certification
that it is not a United States person as described above, provided that neither
we nor our paying agent has actual knowledge that the holder is a United States
person. Payments of the proceeds from a disposition by a Non-United States
Holder of a note or common stock made to or through a foreign office of a broker
will generally not be subject to information reporting or backup withholding.
However, information reporting will apply to those payments, if the broker is:
o a United States person;
o a controlled foreign corporation for United States federal income
tax purposes;
o a foreign person 50% or more of whose gross income from all sources
is effectively connected with a United States trade or business for
a specified three-year period; or
o a foreign partnership, if at any time during its tax year, one or
more of its partners are United States persons, as defined in
Regulations, who in the aggregate hold more than 50% of the income
or capital interest in the partnership or if, at any time during its
tax year, the foreign partnership is engaged in a United States
trade or business;
42
unless (1) such broker has documentary evidence in its records that the
beneficial owner is not a United States person and certain other conditions are
met or (2) the beneficial owner otherwise establishes an exemption.
Payments of the proceeds from a disposition by a Non-United States
Holder of a note or common stock made to or through the United States office of
a broker is subject to information reporting and backup withholding unless the
statement that the payee is not a United States person described above has been
received (and the payor does not have actual knowledge that the beneficial owner
is a United States person) or the holder or beneficial owner otherwise
establishes an exemption from information reporting and backup withholding.
LEGAL MATTERS
Akerman, Senterfitt & Eidson, P.A., Miami, Florida will pass upon the
validity of the notes and the validity of the common stock being issuable upon
conversion of the notes.
INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
Our consolidated balance sheets as of December 31, 1999 and 2000 and
the related consolidated statements of operations, stockholders' equity and cash
flows for each of the three years in the period ended December 31, 2000
incorporated by reference in this prospectus have been audited by Arthur
Andersen LLP, independent certified public accountants, as stated in their
report which is also incorporated by reference in this prospectus. Reference is
made to said report, which includes an explanatory paragraph with respect to the
change in method of accounting for up-front licensing fees to comply with the
Securities and Exchange Commission Staff Accounting Bulletin No. 101, Revenue
Recognition in Financial Statements.
WHERE YOU CAN FIND MORE INFORMATION
We file annual, quarterly and current reports, proxy statements and
other information with the SEC. You can inspect, read and copy these reports,
proxy statements and other information at the public reference facilities the
SEC maintains at:
o Room 1024, 450 Fifth Street, N.W., Judiciary Plaza, Washington, D.C.
20549; and
o Suite 1400, 500 West Madison Street, Chicago, Illinois 60661-2511.
You can also obtain copies of these materials from the public reference
facilities of the SEC at prescribed rates. You can obtain information on the
operation of the public reference facilities by calling the SEC at
1-800-SEC-0330. The SEC also maintains a web site (http://www.sec.gov) that
makes available reports, proxy statements and other information regarding
issuers that file electronically with it. In addition, you can inspect the
reports, proxy statements and other information we file at the offices of the
American Stock Exchange, Inc., 86 Trinity Place, New York, New York 10006.
We have filed with the Commission a registration statement on Form S-3
under the Securities Act of 1933, as amended, to register with the Commission
the securities described herein. This prospectus, which is a part of the
registration statement, does not contain all of the information set forth in the
registration statement. For further information about us and our securities, you
should refer to the registration statement.
43
INFORMATION INCORPORATED BY REFERENCE
The Commission allows us to provide information about our business and
other important information to you by "incorporating by reference" the
information we file with the Commission, which means that we can disclose the
information to you by referring in this prospectus to the documents we file with
the Commission. Under the Commission's regulations, any statement contained in a
document incorporated by reference in this prospectus is automatically updated
and superseded by any information contained in this prospectus, or in any
subsequently filed document of the types described below.
We incorporate into this prospectus by reference the following
documents filed by us with the Commission, each of which should be considered an
important part of this prospectus:
SEC FILING (FILE NO. 001-09623) PERIOD COVERED OR DATE OF FILING
------------------------------- --------------------------------
Annual Report on Form 10-K ...................................... Year ended December 31, 2000
Quarterly Reports on Form 10-Q.................................... Quarters ended March 31, 2001 and June 30, 2001
Current Reports on Form 8-K...................................... February 23, 2001, April 30, 2001, May 25,
2001, July 20, 2001, as amended by the
Form 8-K/A filed on August 1, 2001,
July 31, 2001 and August 16, 2001
Description of our common stock contained in Registration
Statement on Form 8-B and any amendment or report filed for the
purpose of updating such description............................. July 28, 1993
Description of our common stock purchase rights contained in a
Current Report on Form 8-K....................................... December 31, 1997
All subsequent documents filed by us under Sections 13(a), 13(c),
14 or 15(d) of the Exchange Act of 1934.......................... After the date of this prospectus
You may request a copy of each of our filings at no cost, by writing or
telephoning us at the following address or telephone number:
IVAX Corporation
4400 Biscayne Boulevard
Miami, Florida 33137
Attention: Corporate Secretary
Phone: (305) 575-6000
Exhibits to a document will not be provided unless they are
specifically incorporated by reference in that document.
You should rely only on the information contained in this prospectus or
any supplement. We have not authorized any other person to provide you with
different information. If anyone provides you with different or inconsistent
information, you should not rely on it. We are not making an offer to sell these
securities in any jurisdiction where the offer or sale is not permitted. You
should not assume that the information in this prospectus or any supplement is
accurate as of any date other than the date on the front of those documents. Our
business, financial condition, results of operations and prospects may have
changed since that date.
The information in this prospectus or any supplement may not contain
all of the information that may be important to you. You should read the entire
prospectus or any supplement, as well as the documents incorporated by reference
in the prospectus or any supplement, before making an investment decision.
44
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION
The following table sets forth the fees and expenses in connection with
the issuance and distribution of the securities being registered hereunder,
other than underwriting discounts and commissions. All such fees and expenses
shall be borne by the Company. All amounts shown are estimated except for the
Commission Registration Fee.
Commission Registration Fee $ 181,250
Legal Fees and Expenses 30,000
Accounting Fees and Expenses 10,000
Printing, Engraving and Mailing Expenses 10,000
----------
Total $ 231,250
==========
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS
Section 607.0831 of the Florida Business Corporation Act (the "Florida
Act") provides that a director is not personally liable for monetary damages to
the corporation or any person for any statement, vote, decision or failure to
act regarding corporate management or policy, by a director, unless: (a) the
director breached or failed to perform his duties as a director; and (b) the
director's breach of, or failure to perform, those duties constitutes: (1) a
violation of criminal law unless the director had reasonable cause to believe
his conduct was lawful or had no reasonable cause to believe his conduct was
unlawful; (2) a transaction from which the director derived an improper personal
benefit, either directly or indirectly; (3) a circumstance under which the
director is liable for an improper distribution; (4) in a proceeding by, or in
the right of the corporation to procure a judgment in its favor or by or in the
right of a shareholder, conscious disregard for the best interest of the
corporation, or willful misconduct or (5) in a proceeding by or in the right of
someone other than the corporation or a shareholder, recklessness or an act or
omission which was committed in bad faith or with malicious purpose or in a
manner exhibiting wanton or willful disregard of human rights, safety or
property.
Section 607.0850 of the Florida Act provides that a corporation shall
have the power to indemnify any person who was or is a party to any proceeding
(other than an action by, or in the right of, the corporation), by reason of the
fact that he is or was a director, officer or employee or agent of the
corporation, against liability incurred in connection with such proceeding if he
acted in good faith and in a manner he reasonably believed to be in, or not
opposed to, the best interest of the corporation and, with respect to any
criminal action or proceeding, had no reasonable cause to believe his conduct
was unlawful. Section 607.0850 also provides that a corporation shall have the
power to indemnify any person, who was or is a party to any proceeding by, or in
the right of, the corporation to procure a judgment in its favor by reason of
the fact that he is or was a director, officer, employee or agent of the
corporation, against expenses and amounts paid in settlement not exceeding, in
the judgment of the board of directors, the estimated expense of litigating the
proceeding to conclusion, actually and reasonably incurred in connection with
the defense or settlement of such proceeding, including any appeal thereof.
Section 607.0850 further provides that such indemnification shall be
authorized if such person acted in good faith and in a manner he reasonably
believed to be in, or not opposed to, the best interests of the corporation,
except that no indemnification shall be made under this provision in respect of
II-1
any claim, issue, or matter as to which such person shall have been adjudged to
be liable unless, and only to the extent that, the court in which such
proceeding was brought, or any other court of competent jurisdiction, shall
determine upon application that, despite the adjudication of liability, but in
view of all circumstances of the case, such person is fairly and reasonably
entitled to indemnity for such expenses which court shall deem proper. Section
607.0850 further provides that to the extent that a director, officer, employee
or agent has been successful on the merits or otherwise in defense of any of the
foregoing proceedings, or in defense of any claim, issue or matter therein, he
shall be indemnified against expenses actually and reasonably incurred by him in
connection therewith. Under Section 607.0850, any indemnification under the
foregoing provisions, unless pursuant to a determination by a court, shall be
made by the corporation only as authorized in the specific case upon a
determination that the indemnification of the director, officer, employee or
agent is proper under the circumstances because he has met the applicable
standard of conduct. Notwithstanding the failure of a corporation to provide
such indemnification, and despite any contrary determination by the corporation
in a specific case, a director, officer, employee or agent of the corporation
who is or was a party to a proceeding may apply for indemnification to the
appropriate court and such court may order indemnification if it determines that
such person is entitled to indemnification under the applicable standard.
Section 607.0850 also provides that a corporation shall have the power
to purchase and maintain insurance on behalf of any person who is or was a
director, officer, employee or agent of the corporation against any liability
asserted against him and incurred by him in any such capacity or arising out of
his status as such, whether or not the corporation would have the power to
indemnify him against such liability under the provisions of Section 607.0850.
The registrant's bylaws provide that it shall indemnify its officers
and directors and former officers and directors to the full extent permitted by
law.
The registrant has entered into indemnification agreements with each of
its officers and directors. The indemnification agreements generally provide
that the registrant will pay certain amounts incurred by an officer or director
in connection with any civil or criminal action or proceeding and specifically
including actions by or in the name of the registrant (derivative suits) where
the individual's involvement is by reason of the fact that he was or is an
officer or director. Under the indemnification agreements, an officer or
director will not receive indemnification if such person is found not to have
acted in good faith and in a manner he reasonably believed to be in or not
opposed to the best interests of the registrant. The agreements provide a number
of procedures and presumptions used to determined the officer's or director's
right to indemnification and include a requirement that in order to receive an
advance of expenses, the officer or director must submit an undertaking to repay
any expenses advanced on his behalf that are later determined he was not
entitled to receive.
The registrant's directors and officers are covered by insurance
policies indemnifying them against certain liabilities, including liabilities
under the federal securities laws (other than liability under Section 16(b) of
the Exchange Act), which might be incurred by them in such capacities.
II-2
ITEM 16. EXHIBITS
EXHIBIT
NUMBER DESCRIPTION
------ -----------
1.1* Purchase Agreement, dated May 1, 2001, between IVAX
Corporation and UBS Warburg LLC, as the Initial Purchaser,
with respect to the $725,000,000 4 1/2% Convertible Senior
Subordinated Notes due 2008.
4.5* Indenture, dated as of May 4, 2001, between IVAX Corporation
and U.S. Bank Trust National Association, as Trustee, with
respect to the $725,000,000 4 1/2% Convertible Senior
Subordinated Notes due 2008.
4.6* Form of 4 1/2% Convertible Senior Subordinated Notes due 2008.
5.1* Opinion of Akerman, Senterfitt & Eidson, P.A.
10.28* Registration Rights Agreement, dated May 4, 2001, between IVAX
Corporation and UBS Warburg LLC, as the Initial Purchaser,
with respect to the $725,000,000 4 1/2% Convertible Senior
Subordinated Notes due 2008.
12.2* Statement Regarding Computation of Ratio of Earnings to Fixed
Charges.
23.1 Consent of Arthur Andersen LLP. (1)
23.2 Consent of Arthur Andersen-Langton Clarke. (1)
23.3 Consent of Akerman, Senterfitt & Eidson, P.A. (included in
Exhibit 5.1).
24.1* Power of Attorney of certain directors and officers of IVAX.
25.1* Statement of Eligibility of Trustee.
99.1 Annual Report on Form 20-F for the year ended December 31,
2000 for Laboratorio Chile S.A. (2)
--------------
* Previously filed.
(1) Filed herewith.
(2) Incorporated by reference to the Annual Report on Form 20-F for the year
ended December 31, 2000 filed by Laboratorio Chile S.A. with the Commission
on June 22, 2001.
ITEM 17. UNDERTAKINGS
(a) The undersigned registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being
made, a post-effective amendment to this registration
statement:
(i) To include any prospectus required by Section
10(a)(3) of the Securities Act of 1933;
(ii) To reflect in the prospectus any facts or events
arising after the effective date of the registration
statement (or the most recent post-effective
amendment thereof) which, individually or in the
aggregate, represent a fundamental change in the
information set forth in the registration statement.
Notwithstanding the foregoing, any increase or
decrease in volume of securities offered (if the
total dollar value of securities offered would not
exceed that which was registered) and any deviation
II-3
from the low or high end of the estimated maximum
offering range may be reflected in the form of
prospectus filed with the Commission pursuant to Rule
424(b) if, in the aggregate, the changes in volume
and price represent no more than a 20% change in the
maximum aggregate offering price set forth in the
"Calculation of Registration Fee" table in the
effective registration statement;
(iii) To include any material information with respect to
the plan of distribution not previously disclosed in
the registration statement or any material change to
such information in the registration statement;
PROVIDED, HOWEVER, that paragraphs (a)(1)(i) and (a)(1)(ii) do
not apply if the information required to be included in a
post-effective amendment by those paragraphs is contained in
periodic reports filed with or furnished to the Commission by
the registrant pursuant to Section 13 or Section 15(d) of the
Securities Exchange Act of 1934 that are incorporated by
reference in the registration statement.
(2) That, for the purpose of determining any liability under the
Securities Act of 1933, each such post-effective amendment
shall be deemed to be a new registration statement relating to
the securities offered therein, and the offering of such
securities at that time shall be deemed to be the initial bona
fide offering thereof.
(3) To remove from registration by means of a post-effective
amendment any of the securities being registered which remain
unsold at the termination of the offering.
(b) The undersigned registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act of 1933, each filing
of the registrant's annual report pursuant to Section 13(a) or Section
15(d) of the Securities Exchange Act of 1934 that is incorporated by
reference in the registration statement shall be deemed to be a new
registration statement relating to the securities offered therein, and
the offering of such securities at that time shall be deemed to be the
initial bona fide offering thereof.
(c) Insofar as indemnification for liabilities arising under the Securities
Act of 1933 may be permitted to directors, officers and controlling
persons of the registrant pursuant to the foregoing provisions, or
otherwise, the registrant has been advised that in the opinion of the
Commission such indemnification is against public policy as expressed
in the Securities Act of 1933 and is, therefore, unenforceable. In the
event that a claim for indemnification against such liabilities (other
than the payment by the registrant of expenses incurred or paid by a
director, officer or controlling person of the registrant in the
successful defense of any action, suit or proceeding) is asserted by
such director, officer or controlling person in connection with the
securities being registered, the registrant will, unless in the opinion
of its counsel the matter has been settled by controlling precedent,
submit to a court of appropriate jurisdiction the question whether such
indemnification by it is against public policy as expressed in the
Securities Act of 1933 and will be governed by the final adjudication
of such issue.
(d) The undersigned registrant hereby undertakes to file an application for
the purpose of determining the eligibility of the trustee to act under
subsection (a) of 310 of the Trust Indenture Act in accordance with the
rules and regulations prescribed by the Commission under Section
305(b)(2) of the Trust Indenture Act.
II-4
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the
registrant certifies that it has reasonable grounds to believe that it meets all
of the requirements for filing on Form S-3 and has duly caused this registration
statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of Miami, State of Florida on October 26, 2001.
IVAX CORPORATION
By: /s/ PHILLIP FROST, M.D.
----------------------------------------------
Phillip Frost, M.D.
Chairman of the Board and Chief Executive Officer
II-5
Pursuant to the requirements of the Securities Act of 1933, as amended,
this registration statement has been signed by the following persons in the
capacities and on the dates indicated.
SIGNATURE TITLE DATE
--------- ----- ----
/s/ PHILLIP FROST, M.D. Director, Chairman of the Board and Chief Executive October 26, 2001
----------------------- Officer (Principal Executive Officer)
Phillip Frost, M.D.
/s/ NEIL FLANZRAICH Director, Vice Chairman and President October 26, 2001
-----------------------
Neil Flanzraich
* Director, Vice Chairman- Technical Affairs and Chief October 26, 2001
----------------------- Technical Officer
Jane Hsiao, Ph.D.
* Director and Deputy Chief Executive Officer October 26, 2001
-----------------------
Isaac Kaye
/s/ THOMAS E. BEIER Senior Vice President - Finance and Chief October 26, 2001
----------------------- Financial Officer (Principal Financial Officer)
Thomas E. Beier
/s/ THOMAS E. MCCLARY Vice President- Accounting October 26, 2001
----------------------- (Principal Accounting Officer)
Thomas E. McClary
* Director October 26, 2001
-----------------------
Mark Andrews
* Director October 26, 2001
-----------------------
Ernst Biekert, Ph.D
* Director October 26, 2001
-----------------------
Charles M. Fernandez
* Director October 26, 2001
-----------------------
Jack Fishman, Ph.D.
* /s/ Thomas E. Beier
-----------------------
Thomas E. Beier
Attorney-in-fact
II-6
EXHIBIT INDEX
EXHIBIT
NUMBER DESCRIPTION
------ -----------
23.1 Consent of Arthur Andersen LLP.
23.2 Consent of Arthur Andersen-Langton Clarke.
EX-23.1
3
g71669a2ex23-1.txt
CONSENT OF ARTHUR ANDERSEN
EXHIBIT 23.1
CONSENT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
As independent certified public accountants, we hereby consent to the
incorporation by reference in this registration statement on Form S-3/A of our
report dated February 5, 2001, except with respect to the matters discussed in
Note 17, as to which the date is March 14, 2001, included in IVAX Corporation's
Annual Report on Form 10-K for the year ended December 31, 2000 and to all
references to our Firm included in this registration statement.
ARTHUR ANDERSEN LLP
Miami, Florida,
October 26, 2001.
EX-23.2
4
g71669a2ex23-2.txt
CONSENT OF ARTHUR ANDERSEN - LANGSTON CLARKE
EXHIBIT 23.2
CONSENT OF INDEPENDENT ACCOUNTANTS
As independent accountants, we hereby consent to the incorporation by reference
in this Form S-3 of our reports dated June 20, 2001 and February 20, 2001,
except for Note 41 for which the date is June 20, 2001, included in the
Laboratorio Chile S.A. and subsidiaries (the "Company") Form 20-F for the year
ended December 31, 2000. It should be noted that we have not audited any
financial statements of the Company subsequent to December 31, 2000 or performed
any audit procedures subsequent to the date of our report.
ARTHUR ANDERSEN - LANGTON CLARKE
Santiago, Chile October 26, 2001