-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, U9p74i/wPAozd2BbKX0Z+Uo0WU7NpRKn3iHkmHOkUMBCcmQPbuBP4U22aGkIFguA nSfbMG+TBW6KdqK/YNZ1Pw== 0000930184-98-000003.txt : 19980218 0000930184-98-000003.hdr.sgml : 19980218 ACCESSION NUMBER: 0000930184-98-000003 CONFORMED SUBMISSION TYPE: 8-K/A PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19971208 ITEM INFORMATION: FILED AS OF DATE: 19980217 SROS: NYSE FILER: COMPANY DATA: COMPANY CONFORMED NAME: ICN PHARMACEUTICALS INC CENTRAL INDEX KEY: 0000930184 STANDARD INDUSTRIAL CLASSIFICATION: PHARMACEUTICAL PREPARATIONS [2834] IRS NUMBER: 330628076 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 8-K/A SEC ACT: SEC FILE NUMBER: 001-11397 FILM NUMBER: 98542565 BUSINESS ADDRESS: STREET 1: 3300 HYLAND AVE CITY: COSTA MESA STATE: CA ZIP: 92626 BUSINESS PHONE: 7146683102 MAIL ADDRESS: STREET 1: 3300 HYLAND AVE CITY: COSTA MESA STATE: CA ZIP: 92626 FORMER COMPANY: FORMER CONFORMED NAME: ICN MERGER CORP DATE OF NAME CHANGE: 19940915 8-K/A 1 FORM 8-K/A SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 8-K/A (AMENDMENT NO. 1) CURRENT REPORT Pursuant to Section 13 or Section 15(d) of the Securities Exchange Act of 1934 Date of Report (Date of earliest event reported): December 8, 1997 ICN PHARMACEUTICALS, INC. (Exact name of registrant as specified in its charter) Delaware 1-11397 33-0628076 (State or other (Commission File Number) (IRS Employer jurisdiction of Identification Number) Incorporation) 3300 Hyland Avenue, Costa Mesa, California 92626 (Address of principal executive offices) (Zip code) Registrant's telephone number, including area code: (714) 545-0100 Not Applicable (Former name or address, if changed since last report) ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS (a) In August 1997, ICN Puerto Rico, Inc. (the "Subsidiary") acquired the worldwide rights (except India) to seven products: Alloferin, Ancotil, Glutril, Limbitrol, Mestinon, Prostigmin and Protamin from F. Hoffmann-La Roche Ltd. ("Roche"). The Subsidiary also obtained worldwide rights outside of the United States and India to Efudix and Librium. Registrant received the product rights in exchange for $90,000,000 payable in a combination of 1,600,000 shares of Registrant's common stock valued at $40,000,000 and 2,000 shares of a new issue of Registrant's convertible preferred stock valued at $50,000,000. Each share of the Registrant's convertible preferred stock was convertible into 1,000 shares of common stock at a conversion price equivalent to $25 per share. The Registrant guaranteed Roche a price initially at $25.75 per share of common stock, increasing at a rate of 6% per annum for three years, with the Registrant being entitled to any proceeds realized by Roche from the sale of these shares during the guarantee period in excess of the guaranteed price. Also in August 1997, the Subsidiary purchased Roche's Humacao, Puerto Rico manufacturing plant (the "Humacao, Puerto Rico Plant"), which meets current U.S. Food and Drug Administration Good Manufacturing Practices for various products, including: Aleve, Naprosyn, EC Naprosyn, Anaprox and Cytovene, for $55,000,000 in cash (the source of which was working capital and the proceeds of a debt offering in August 1997). Simultaneously, Roche leased the Humacao, Puerto Rico Plant from the Registrant for two years at $4,000,000 per annum. On December 5, 1997, the Registrant acquired the worldwide rights to Levo-Dromoran and Tensilon from subsidiaries of Roche, and pursuant to an option granted by Roche to the Registrant in connection with the August 1997 transaction, the Registrant obtained the U.S. rights to Efudix and Librium for a total aggregate purchase price of approximately $89,000,000, which was paid utilizing the price appreciation in the common stock (including those shares of common stock issued on conversion of the convertible preferred stock) issued to Roche in August 1997. The description of the acquisitions is a summary and as such is not intended to be complete and is subject to and qualified by reference to the agreements relating to the acquisitions, which are incorporated by reference herein. Also incorporated by reference, and attached hereto as an exhibit, is a press release issued by the Registrant on December 8, 1997 concerning the Registrant's acquisition of certain products from Roche. Included in Item 7 of this report are historical financial statements relating to the acquired products. The acquisition of the Plant assets did not constitute the acquisition of a "business" as defined by Regulation S-X promulgated by the Securities and Exchange Commission and, consequently, historical financial statements of the Plant are not required to be included herein. (b) Roche marketed the pharmaceutical products internationally and used the Humacao, Puerto Rico Plant for the manufacture and distribution of pharmaceutical products. Registrant intends to use the assets for the same purposes. ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS (a) Financial statements of business acquired. Special-Purpose Financial Statement of F. Hoffmann-La Roche Ltd., Hoffmann-La Roche Inc., and Roche Products Inc. Report of Independent Accountants Statement of Net Sales and Direct Expenses for the year ended December 31, 1996 Notes to the Unaudited Statement of Net Sales and Direct Expenses Unaudited Interim Special-Purpose Financial Statements of F. Hoffmann-La Roche Ltd., Hoffmann-La Roche Inc., and Roche Products Inc. Unaudited Interim Statement of Net Sales and Direct Expenses for the six months ended June 30, 1997 Notes to the Unaudited Statement of Net Sales and Direct Expenses Unaudited Interim Special-Purpose Financial Statements of Hoffmann-La Roche Inc. and Roche Products Inc. Unaudited Interim Statement of Net Sales and Direct Expenses for the three months ended September 30, 1997 Notes to the Unaudited Statement of Net Sales and Direct Expenses (b) Pro forma financial information. Unaudited Pro Forma Combined Condensed Balance Sheet as of September 30, 1997 Unaudited Pro Forma Combined Condensed Statements of Income for the nine months ended September 30, 1997. Unaudited Pro Forma Combined Condensed Statements of Income for the year ended December 31, 1996. Notes to Unaudited Pro Forma Combined Condensed Financial Statements. (c) Exhibits. 2.1 Asset Purchase Agreement between F. Hoffmann - La Roche Ltd., ICN Puerto Rico Inc. and ICN Pharmaceuticals, Inc., dated June 20, 1997, as amended by the Amendment Agreement dated August 7, 1997, previously filed as Exhibit 10.1 to Registration Statement No. 333-35241 on Form S-3, which is incorporated herein by reference, as amended by the Second Amendment Agreement between F. Hoffmann - La Roche Ltd., ICN Puerto Rico, Inc., and ICN Pharmaceuticals, Inc. 2.2 Form of Asset Purchase Agreement by and between Hoffmann - La Roche Inc., a New Jersey corporation, and ICN Pharmaceuticals, Inc., a Delaware corporation, dated as of October 30, 1997, previously filed as Exhibit 10.1 to Quarterly Report on Form 10-Q for the three months ended September 30, 1997, dated November 14, 1997, which is incorporated herein by reference. 2.3 Form of Asset Purchase Agreement by and between Roche Products Inc., a Panamanian corporation, and ICN Pharmaceuticals, Inc., a Delaware corporation, dated as of October 30, 1997, previously filed as Exhibit 10.2 to Quarterly Report on Form 10-Q for the three months ended September 30, 1997, dated November 14, 1997, which is incorporated herein by reference. 2.4 Form of Asset Purchase Agreement by and between Syntex (F.P.) Inc., a Delaware corporation, Syntex (U.S.A.) Inc., a Delaware corporation, ICN Puerto Rico, Inc., a Puerto Rico corporation, and ICN Pharmaceuticals, Inc., a Delaware corporation, dated as of June 13, 1997, previously filed as Exhibit 10.3 to Quarterly Report on Form 10-Q for the three months ended September 30, 1997, dated November 14, 1997, which is incorporated herein by reference. 23.1 Consent of Price Waterhouse LLP. 99. Press Release dated December 8, 1997, previously filed. EXHIBIT INDEX 2.1 Asset Purchase Agreement between F. Hoffmann - La Roche Ltd., ICN Puerto Rico Inc. and ICN Pharmaceuticals, Inc., as amended by the Amendment Agreement dated August 7, 1997, previously filed as Exhibit 10.1 to Registration Statement No. 333-35241 on Form S-3, which is incorporated herein by reference, as amended by the Second Amendment Agreement between F. Hoffmann - La Roche Ltd., ICN Puerto Rico, Inc., and ICN Pharmaceuticals, Inc. 2.2 Form of Asset Purchase Agreement by and between Hoffmann - La Roche Inc., a New Jersey corporation, and ICN Pharmaceuticals, Inc., a Delaware corporation, dated as of October 30, 1997, previously filed as Exhibit 10.1 to Quarterly Report on Form 10-Q for the three months ended September 30, 1997, dated November 14, 1997, which is incorporated herein by reference. 2.3 Form of Asset Purchase Agreement by and between Roche Products Inc., a Panamanian corporation, and ICN Pharmaceuticals, Inc., a Delaware corporation, dated as of October 30, 1997, previously filed as Exhibit 10.2 to Quarterly Report on Form 10-Q for the three months ended September 30, 1997, dated November 14, 1997, which is incorporated herein by reference. 2.4 Form of Asset Purchase Agreement by and between Syntex (F.P.) Inc., a Delaware corporation, Syntex (U.S.A.) Inc., a Delaware corporation, ICN Puerto Rico, Inc., a Puerto Rico corporation, and ICN Pharmaceuticals, Inc., a Delaware corporation, dated as of June 13, 1997, previously filed as Exhibit 10.3 to Quarterly Report on Form 10-Q for the three months ended September 30, 1997, dated November 14, 1997, which is incorporated herein by reference. 23.1 Consent of Price Waterhouse LLP. 99. Press Release dated December 8, 1997, previously filed. SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this Report to be signed on its behalf by the undersigned hereunto duly authorized. ICN PHARMACEUTICALS, INC. Date: February 17, 1998 By: /s/ John E. Giordani ---------------------------------------- John E. Giordani Executive Vice President and Chief Financial Officer F. HOFFMANN-LA ROCHE LTD, HOFFMANN-LA ROCHE INC., AND ROCHE PRODUCTS INC. SPECIAL-PURPOSE FINANCIAL STATEMENT DECEMBER 31, 1996 F. HOFFMANN-LA ROCHE LTD, HOFFMANN-LA ROCHE INC., AND ROCHE PRODUCTS INC. INDEX TO SPECIAL-PURPOSE FINANCIAL STATEMENT - -------------------------------------------------------------------------------- Page ---- Report of Independent Accountants 1 Statement of Net Sales and Direct Expenses 2 Notes to Special-Purpose Financial Statement 3-4 REPORT OF INDEPENDENT ACCOUNTANTS TO THE BOARDS OF DIRECTORS OF F. HOFFMANN-LA ROCHE LTD, HOFFMANN-LA ROCHE INC., AND ROCHE PRODUCTS INC. We have audited the accompanying special-purpose statement of net sales and direct expenses for the year ended December 31, 1996 (the financial statement), of certain Products (the Products), as described in Note 1, of F. Hoffmann-La Roche Ltd, Hoffmann-La Roche Inc., and Roche Products Inc. This financial statement is the responsibility of management. Our responsibility is to express an opinion on this financial statement based on our audit. We conducted our audit in accordance with generally accepted auditing standards in the United States. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the statement of net sales and direct expenses is free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statement. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statement. We believe that our audit provides a reasonable basis for our opinion. The accompanying financial statement was prepared for the purpose of complying with the rules and regulations of the Securities and Exchange Commission to reflect the net sales and direct expenses attributable to the Products described in Note 1 and are not intended to be a complete presentation of the Products' expenses. In our opinion, the financial statement referred to above presents fairly, in all material respects, the net sales and direct expenses of the Products as described in Note 1, for the year ended December 31, 1996 in conformity with generally accepted accounting principles in the United States. /s/ PRICE WATERHOUSE LLP Price Waterhouse LLP Morristown, New Jersey February 13, 1998 F. HOFFMANN-LA ROCHE LTD, HOFFMANN-LA ROCHE INC., AND ROCHE PRODUCTS INC. STATEMENT OF NET SALES AND DIRECT EXPENSES (in thousands) - ------------------------------------------------------------------------------- FOR THE YEAR ENDED DECEMBER 31, 1996 ----------------- Net sales $ 89,941 Cost of goods sold 26,088 ----------- Gross profit 63,853 Direct expenses 3,598 ----------- Product contribution $ 60,255 =========== The accompanying notes are an integral part of this special-purpose financial statement. F. HOFFMANN-LA ROCHE LTD, HOFFMANN-LA ROCHE INC., AND ROCHE PRODUCTS INC. NOTES TO THE STATEMENT OF NET SALES AND DIRECT EXPENSES (in thousands) - ------------------------------------------------------------------------------- 1. BASIS OF PRESENTATION F. Hoffmann-La Roche Ltd, Hoffmann-La Roche Inc., and Roche Products Inc. (collectively Roche) sold certain assets (the Assets) and the rights to manufacture and market certain products (the Products) pursuant to Asset Purchase Agreements (the Agreements). The Products are sold through wholesalers which in turn distribute to pharmacies, hospitals, physicians, retailers, and other healthcare institutions throughout the United States, Europe, Latin America, and Asia. The Assets, as more specifically described in the Agreements, include primarily trademarks, registrations, inventories, manufacturing technology and know-how exclusively used for and dedicated to the Products. The Assets, other than the related inventories, had no net book value as of December 31, 1996. The Products include: Librium Glutril Efudex Limbitrol Tensilon Mestinon Levo-Dromoran Prostigmin Alloferin Protamine Ancotil The accompanying special-purpose financial statement presents only the net sales, costs of goods sold, and other direct expenses (the Product contribution) of the Products for the year ended December 31, 1996. This statement includes all adjustments necessary for a fair presentation of the Product contribution for the year ended December 31, 1996. This financial statement has been prepared in accordance with Roche accounting policies and is in accordance with generally accepted accounting principles in the United States. However, this financial statement does not purport to represent all the costs and expenses associated with a stand alone separate company, or the costs which may be incurred by an unaffiliated company to achieve similar results. Net sales includes an allowance for sales returns. Cost of goods sold includes the corresponding direct production costs and related production overhead of goods manufactured. After considering the relative maturity of the Products in their life cycle, the variability of expenses in different geographic regions, and other individual product characteristics, management has estimated that direct operating expenses, primarily distribution related, approximate 4% of net sales for the year ended December 31, 1996. Roche did not incur any significant operating expenses during the year ended December 31, 1996 attributable to the marketing, promotion, advertisement, or development of the Products. F. HOFFMANN-LA ROCHE LTD, HOFFMANN-LA ROCHE INC., AND ROCHE PRODUCTS INC. NOTES TO THE STATEMENT OF NET SALES AND DIRECT EXPENSES (in thousands) - ------------------------------------------------------------------------------- 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES USE OF ESTIMATES In conformity with generally accepted accounting principles, management has used estimates and assumptions that affect the reported amounts of net sales and direct expenses and the disclosure of contingent assets and liabilities. Actual results could differ from those estimates. REVENUE RECOGNITION Sales are recognized upon shipment of products to customers. FOREIGN CURRENCY VALUATION Sales, cost of goods sold, and direct expenses are translated at the average rates of exchange for the year ended December 31, 1996. 3. COMMITMENTS AND CONTINGENCIES Various lawsuits, claims and proceedings of a nature considered to be in the normal course of business are pending with regard to the Products. Management believes that these lawsuits, claims and proceedings will not have a material adverse effect on the reported net sales, and Product contribution. Concurrent with the sale of the Products, Roche entered into a two year supply agreement with the buyer. Such agreement provides that Roche will manufacture the Products on behalf of the buyer, who will purchase the Products at agreed-upon prices which approximate Roche's direct production costs and related production overheads of goods manufactured. F. HOFFMANN-LA ROCHE LTD HOFFMANN-LA ROCHE INC. ROCHE PRODUCTS INC. UNAUDITED INTERIM STATEMENT OF NET SALES AND DIRECT EXPENSES FOR THE SIX MONTHS ENDED JUNE 30, 1997 (In thousands) Net Sales $65,747 Cost of Goods Sold 20,914 ------- Gross Profit 44,833 Direct Expenses 2,630 ------- Product Contribution $42,203 ======= The accompanying note is an integral part of this special-purpose financial statement. F. HOFFMANN-LA ROCHE LTD, HOFFMANN-LA ROCHE INC., AND ROCHE PRODUCTS INC. NOTES TO THE UNAUDITED INTERIM STATEMENT OF NET SALES AND DIRECT EXPENSES For the six months ended June 30, 1997 (in thousands) - ------------------------------------------------------------------------------- 1. BASIS OF PRESENTATION F. Hoffmann-La Roche Ltd, Hoffmann-La Roche Inc., and Roche Products Inc. (collectively Roche) sold certain assets (the Assets) and the rights to manufacture and market certain products (the Products) pursuant to Asset Purchase Agreements (the Agreements) effective, for certain products, July 1, 1997 and for the remaining products October 1, 1997. The Products are sold through wholesalers which in turn distribute to pharmacies, hospitals, physicians, retailers, and other healthcare institutions throughout the United States, Europe, Latin America, and Asia. The Assets, as more specifically described in the Agreements, include primarily trademarks, registrations, inventories, manufacturing technology and know-how exclusively used for and dedicated to the Products. The Assets, other than the associated inventories, had no net book values at the time of sale. The Products include: Librium Glutril Efudex Limbitrol Tensilon Mestinon Levo-Dromoran Prostigmin Alloferin Protamine Ancotil The accompanying special-purpose financial statement presents only the net sales, costs of goods sold, and other direct expenses (the Product contribution) of the Products. This statement includes all adjustments necessary for a fair statement of the net sales and product contribution for the period ended as noted. This financial statement has been prepared in accordance with Roche accounting policies. However, this financial statement does not purport to represent all the costs and expenses associated with a stand alone separate company, or the costs which may be incurred by an unaffiliated company to achieve similar results. Net sales include allowances for sales returns. Cost of goods sold includes the corresponding direct production costs and related production overhead of goods manufactured. HOFFMANN-LA ROCHE INC. ROCHE PRODUCTS INC. UNAUDITED INTERIM STATEMENT OF NET SALES AND DIRECT EXPENSES FOR THE THREE MONTHS ENDED SEPTEMBER 30, 1997 (In thousands) Net Sales $ 5,200 Cost of Goods Sold 996 ------- Gross Profit 4,204 Direct Expenses 208 ------- Product Contribution $ 3,996 ======= The accompanying note is an integral part of this special-purpose financial statement. HOFFMANN-LA ROCHE INC. AND ROCHE PRODUCTS INC. NOTES TO THE UNAUDITED INTERIM STATEMENT OF NET SALES AND DIRECT EXPENSES For the three months ended September 30, 1997 (in thousands) - ------------------------------------------------------------------------------- 1. BASIS OF PRESENTATION Hoffmann-La Roche Inc. and Roche Products Inc. (collectively Roche) sold certain assets (the Assets) and the rights to manufacture and market certain products (the Products) pursuant to Asset Purchase Agreements (the Agreements), effective October 1, 1997. The Products are sold through wholesalers which in turn distribute to pharmacies, hospitals, physicians, retailers, and other healthcare institutions throughout the United States, Europe, Latin America, and Asia. The Assets, as more specifically described in the Agreements, include primarily trademarks, registrations, inventories, manufacturing technology and know-how exclusively used for and dedicated to the Products. The Assets, other than the associated inventories, had no net book values at the time of sale. The Products include: Librium Efudex Levo-Dromoran The accompanying special-purpose financial statement presents only the net sales, costs of goods sold, and other direct expenses (the Product contribution) of the Products. This statement includes all adjustments necessary for a fair statement of the net sales and product contribution for the period ended as noted. This financial statement has been prepared in accordance with Roche accounting policies. However, this financial statement does not purport to represent all the costs and expenses associated with a stand alone separate company, or the costs which may be incurred by an unaffiliated company to achieve similar results. Net sales include allowances for sales returns. Cost of goods sold includes the corresponding direct production costs and related production overhead of goods manufactured. ICN PHARMACEUTICALS, INC. UNAUDITED PRO FORMA COMBINED CONDENSED FINANCIAL STATEMENTS The following Unaudited Pro Forma Combined Condensed Financial Statements of ICN Pharmaceuticals, Inc. and Subsidiaries (the "Company") as of September 30, 1997 and for the year ended December 31, 1996 and the nine months ended September 30, 1997 give effect to the 1997 acquisition of the rights to certain products (the "Acquired Products") and a manufacturing plant (not currently manufacturing the Acquired Products) from Roche, as if each of the acquisitions had taken place as of January 1, 1996. The Acquired Products had no historical book value as of January 1, 1996 or for any period thereafter. Acquisition of Product Rights In August 1997, the Company acquired the worldwide rights to seven products and the non-U.S. rights to two other products, all effective July 1, 1997 (the "Initial Product Rights"). Under the agreement with Roche, the Company received the product rights in exchange for $90 million payable in a combination of 1.6 million shares of the Company's common stock (valued at $40 million) and 2,000 shares of the Company's Series C convertible preferred stock (valued at $50 million). Each share of the Company's Series C convertible preferred stock was convertible into 1,000 shares of the Company's common stock at a conversion price equivalent to $25 per share. In December 1997, the Company acquired the worldwide rights to two additional products, and the U.S. rights to two products covered by the Initial Product Rights (the "Additional Product Rights"), all effective as of October 1, 1997. The $89 million consideration for the Additional Product Rights was paid utilizing the price appreciation of the common stock (including those shares of common stock issued on conversion of the convertible preferred stock) issued in August 1997 for the Initial Product Rights. The Unaudited Pro Forma Combined Condensed Statements of Income for the nine months ended September 30, 1997 include the historical results of operations for the Company, which reflect the net sales and expenses of products covered by the Initial Product Rights from the effective date of acquisition, July 1, 1997. The historical Acquired Products financial statements include the net sales and direct expenses of products covered by the Initial Product Rights for the period from January 1, 1997 through June 30, 1997 and the net sales and direct expenses of the products covered by the Additional Product Rights for the periods from January 1, 1997 through September 30, 1997. The Unaudited Pro Forma Combined Condensed Statements of Income for the year ended December 31, 1996 include the historical results of operations for the Company. The historical Acquired Products financial statements include the net sales and direct expenses of all of the Acquired Products for the period from January 1, 1996 through December 31, 1996. These amounts, when combined with the pro forma adjustments, give effect to the acquisitions as if these transactions had taken place as of January 1, 1996. Acquisition of Plant Assets Effective August 1, 1997 the Company purchased from Roche a GMP-standard manufacturing plant (the "Plant") in Humacao, Puerto Rico. The consideration for the purchase of the Plant was cash in the amount of $55 million, which was funded from working capital and a portion of the proceeds of the Company's August, 1997 offering of $275 million of 9.25% Senior Notes. The purchase of the Plant is under a sale/leaseback arrangement whereby Roche will lease the Plant from the Company under a two year lease with lease payments totaling $4 million annually. During the lease term, all of the manufacturing effort of the Plant remains with Roche. The Unaudited Pro Forma Combined Condensed Financial Statements give effect to the sale/leaseback arrangement as if it had taken place as of January 1, 1996 and, with respect to the Plant, the Unaudited Pro Forma Combined Condensed Statements of Income reflect only the impact of the sale/leaseback arrangement with Roche. The Unaudited Pro Forma Combined Condensed Financial Statements are based on the historical operating results of the Company and the historical net sales and direct expenses of the Acquired Products, under the assumptions and adjustments set forth in the accompanying notes thereto. The Unaudited Pro Forma Combined Condensed Financial Statements may not be indicative of the results that actually would have occurred if the acquisitions had been consummated at the foregoing dates, or of the results which may result in the future. ICN PHARMACEUTICALS, INC. UNAUDITED PRO FORMA COMBINED CONDENSED STATEMENTS OF INCOME FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1997 (in thousands, except per share information)
HISTORICAL ACQUIRED PRO FORMA PRO FORMA ICN PRODUCTS(1) ADJUSTMENTS ICN ---------- -------------- ----------- --------- Net sales $ 496,594 $ 70,947 $ -- $ 567,541 Cost of sales 228,070 21,910 (3,000) (2) 246,980 -------- ------- -------- -------- Gross profit 268,524 49,037 3,000 320,561 Selling, general and administrative expenses 165,369 2,838 11,351 (3) 188,066 2,020 (4) 150 (4) 6,338 (5) Lease revenue -- -- (2,333)(4) (2,333) Research and development costs 13,210 -- -- 13,210 -------- ------- -------- -------- Income from operations 89,945 46,199 (14,526) 121,618 Translation and exchange loss, net 7,204 -- -- 7,204 Interest income (9,855) -- -- (9,855) Interest expense 13,332 -- -- 13,332 -------- ------- -------- -------- Income before minority interest and income taxes 79,264 46,199 (14,526) 110,937 Provision(benefit) for income taxes (12,311) -- 12,669 (6) 358 Minority interest 13,438 -- -- 13,438 -------- ------- -------- -------- Net income $ 78,137 $ 46,199 $ (27,195) $ 97,141 ======== ======= ======== ======== Per share information: Primary: Net income per share $ 1.79 $ 2.13 (7) ======== ======== Shares used in per share computation 40,403 42,803 ======== ======== Fully diluted: Net income per share $ 1.66 $ 1.97 (7) ======== ======== Shares used in per share computation 46,864 49,264 ======== ========
See accompanying Notes to Unaudited Pro Forma Combined Condensed Financial Statements. ICN PHARMACEUTICALS, INC. UNAUDITED PRO FORMA COMBINED CONDENSED STATEMENTS OF INCOME FOR THE YEAR ENDED DECEMBER 31, 1996 (in thousands, except per share information)
HISTORICAL ACQUIRED PRO FORMA PRO FORMA ICN PRODUCTS(1) ADJUSTMENTS ICN ---------- -------------- ----------- --------- Net sales $ 614,080 $ 89,941 $ -- $ 704,021 Cost of sales 291,807 26,088 (4,000)(2) 313,895 -------- ------- -------- -------- Gross profit 322,273 63,853 4,000 390,126 Selling, general and administrative expenses 192,441 3,598 14,390 (3) 224,269 3,462 (4) 200 (4) 10,178 (5) Lease revenue -- -- (4,000)(4) (4,000) Research and development costs 15,719 -- -- 15,719 -------- ------- -------- -------- Income from operations 114,113 60,255 (20,230) 154,138 Translation and exchange loss, net 2,282 -- -- 2,282 Interest income (3,001) -- -- (3,001) Interest expense 15,780 -- -- 15,780 -------- ------- -------- -------- Income before minority interest and income taxes 99,052 60,255 (20,230) 139,077 Provision(benefit) for income taxes (6,815) -- 16,010 (6) 9,195 Minority interest 18,939 -- -- 18,939 -------- ------- -------- -------- Net income $ 86,928 $ 60,255 $ (36,240) $ 110,943 ======== ======= ======== ======== Per share information: Primary: Net income per share $ 2.40 $ 2.80 (7) ======== ======== Shares used in per share computation 34,919 38,519 ======== ======== Fully diluted: Net income per share $ 2.27 $ 2.63 (7) ======== ======== Shares used in per share computation 40,138 43,738 ======== ========
See accompanying Notes to Unaudited Pro Forma Combined Condensed Financial Statements ICN PHARMACEUTICALS, INC. UNAUDITED PRO FORMA COMBINED CONDENSED BALANCE SHEETS AS OF SEPTEMBER 30, 1997 (in thousands, except per share information)
HISTORICAL PRO FORMA PRO FORMA ICN ADJUSTMENTS ICN ---------- ----------- ---------- ASSETS Current assets: Cash and cash equivalents $ 269,861 $ $ 269,861 Restricted cash 552 -- 552 Marketable securities 4,327 -- 4,327 Receivables, net 202,694 -- 202,694 Notes Receivable 130,000 -- 130,000 Inventories, net 123,471 -- 123,471 Prepaid expenses and other current assets 21,238 -- 21,238 ---------- ---------- ---------- Total current assets 752,143 -- 752,143 Property, plant and equipment, net 300,902 -- 300,902 Deferred taxes, net 60,188 -- 60,188 Other assets 56,565 -- 56,565 Goodwill and intangibles, net 122,954 89,008 (8) 211,962 ---------- ---------- ---------- Total assets $1,292,752 $ 89,008 $1,381,760 ========== ========== ========== LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities: Trade payables $ 52,552 -- $ 52,552 Accrued liabilities 55,136 -- 55,136 Notes payable 9,745 -- 9,745 Current portion of long-term debt 176,674 -- 176,674 Income taxes payable 3,926 -- 3,926 ---------- ---------- ---------- Total current liabilities 298,033 -- 298,033 Long-term debt less current portion: Convertible into common stock 5,381 -- 5,381 Other long-term debt 320,321 -- 320,321 Deferred license and royalty income 12,885 -- 12,885 Other liabilities 22,174 -- 22,174 Minority interest 119,742 -- 119,742 Commitments and contingencies Stockholders' equity: Preferred stock, $ .01 par value; 10,000 shares authorized; 4 shares of Series B issued and outstanding ($4,000 liquidation preference) 1 -- 1 Common stock, $ .01 par value; 100,000 shares authorized; 38,734 shares outstanding) 387 -- 387 Additional capital 514,745 89,008 (8) 603,753 Retained earnings 38,277 -- 38,277 Foreign currency translation adjustments (39,194) -- (39,194) ---------- ---------- ---------- Total stockholders' equity 514,216 89,008 603,224 ---------- ---------- ---------- Total liabilities and stockholders' equity $1,292,752 $ 89,008 $1,381,760 ========== ========== ==========
See accompanying Notes to Unaudited Pro Forma Combined Condensed Financial Statements ICN PHARMACEUTICALS, INC. NOTES TO UNAUDITED PRO FORMA COMBINED CONDENSED FINANCIAL STATEMENTS (in thousands) The following is a summary of items and adjustments reflected in the Unaudited Pro Forma Combined Condensed Financial Statements: (1) Revenues and expenses related to the sale of products covered by the Initial Product Rights are included in the Company's historical financial statements since July 1, 1997 and accordingly the Acquired Products historical financial statements include the revenues and direct expenses associated with these products prior to that date. No revenues or expenses related to the sale of the products covered by the Additional Product Rights are included in the Company's historical financial statements. Accordingly, the Acquired Products historical financial statements also include the revenues and direct expenses associated with these products for all periods presented. Sales and cost of goods sold do not include the results of operations related to the historical manufacturing operations of the Plant as such operations remain with Roche subsequent to the acquisition, and through the term of the lease. The Acquired Products are not currently manufactured at the Plant. (2) In connection with the Asset Purchase Agreement, Roche granted to the Company credits against future purchases of products totaling $4,000 per year for a two-year period. Accordingly, the pro forma adjustments include a reduction of cost of sales of $3,000 and $4,000 for the nine months ended September 30, 1997 and the year ended December 31, 1996, respectively. (3) The historical selling, general and administrative expenses of the Acquired Products for each of the periods presented are based upon the Special-Purpose Financial Statements of F. Hoffman-La Roche Ltd., Hoffman-La Roche Inc., and Roche Products Inc. included elsewhere herein. Such historical amounts are the product of allocation methods used by management of Roche to approximate the actual amounts of such direct expenses that might have been incurred, were such information available on a product basis. Such amounts do not include any allocations of indirect or nonoperating expenses related to the Acquired Products, and the historical amounts of these costs are not indicative of the costs that might be incurred by the Company in the future. The pro forma adjustments related to selling, general and administrative expenses of $11,351 and $14,390 for the nine months ended September 30, 1997 and the year ended December 31, 1996, respectively, are based upon estimates obtained from Roche as to the amount of indirect selling, general and administrative expenses that might have been incurred had such information been available on a product basis. However, there can be no assurance that the Company will achieve these levels of selling, general and administrative costs in the future. (4) During the Company's first two years of ownership of the Plant it will lease the Plant to Roche. In the third year, upon assuming operating control of the Plant, the Company will provide limited contract manufacturing services to Roche. After that period, the capacity of the Plant will be utilized by the Company for internal production requirements and third party manufacturing services. However, there can be no guarantee that the Company will be successful in providing third party manufacturing services. Under the terms of the lease, Roche shall pay the Company an annual rental fee totaling $4,000; the first year's rent is payable in the form of a credit against the purchase price for the Plant and thereafter rent is payable in cash. ICN PHARMACEUTICALS, INC. NOTES TO UNAUDITED PRO FORMA COMBINED CONDENSED FINANCIAL STATEMENTS (continued) (in thousands) The pro forma adjustments include rental income to be received under the lease of $2,333 and $4,000 for the nine months ended September 30, 1997 and the year ended December 31, 1996, respectively, representing the pro forma rental income in excess of the amounts included in the Company's historical financial statements since the date of acquisition of the Plant. The Company will be responsible for paying property taxes on the Plant which total approximately $200 annually and the pro forma adjustments include property taxes expenses of $150 and $200 for the nine months ended September 30, 1997 and the year ended December 31, 1996, respectively. Depreciation on the Plant will be approximately $3,462 annually, based upon the Company's basis in the Plant. The pro forma adjustments of $2,020 and $3,462 for the nine months ended September 30, 1997 and the year ended December 31, 1996, respectively, represent the pro forma depreciation in excess of the amounts included in the Company's historical financial statements since the date of acquisition of the Plant, as if the purchase and leaseback was consummated on January 1, 1996. During the term of the lease, Roche will be responsible for all other operating costs. (5) The Company will record amortization of the intangible assets related to the product rights purchased from Roche, over an 18-year period, totaling approximately $10,178 per year. The amortization is based upon a preliminary valuation of approximately $183,200 for the Acquired Products. The pro forma adjustments reflect amortization expense of $6,338 and $10,178 for the nine months ended September 30, 1997 and the year ended December 31, 1996, respectively, representing the pro forma amortization expense in excess of the amounts included in the Company's historical financial statements since the date of acquisition of the Initial Product Rights, as if the purchase of all of the Product Rights had been consummated on January 1, 1996. (6) Represents the tax effect of the acquisitions earnings and the pro forma adjustments to earnings before taxes based on the estimated federal, Puerto Rican and state statutory rates, which when combined are approximately 40%. (7) The consideration for the Acquired Products consisted of 2 shares of the Company's Series C Preferred Stock (convertible into 2,000 shares of the Company's Common Stock) and 1,600 shares of the Company's Common Stock. These shares have all been included in the determination of the Company's historical net income from July 1, 1997. The weighted-average number of shares outstanding used in the determination of the pro forma primary and fully diluted earnings per share have been adjusted to reflect an additional 3,600 and 2,400 shares for the year ended December 31, 1996 and the nine months ended September 30, 1997, respectively. All of the Series C Preferred Stock was converted into shares of the Company's common stock subsequent to September 30, 1997. (8) The acquisition of the Additional Product Rights was consummated subsequent to September 30, 1997. The $89,008 purchase price for the Additional Product Rights was paid utilizing the price appreciation of the common stock issued in August 1997 as consideration for the Initial Product Rights. The pro forma adjustments reflect the additional intangible assets and the additional capital which arise from the completion of this transaction. EX-23.1 2 CONSENT OF PRICE WATERHOUSE LLP EXHIBIT 23.1 CONSENT OF INDEPENDENT ACCOUNTANTS We hereby consent to the incorporation by reference in the Registration Statements on Form S-3 (Nos. 333-10661, 333-16409, 333-35167, 333-35241, 333-38901), and on Form S-8 (No. 33-56971) of ICN Pharmaceuticals, Inc. of our report dated February 13, 1998 relating to the special-purpose financial statement of F. Hoffmann-La Roche Ltd, Hoffmann-La Roche Inc., and Roche Products Inc., which appears in the Current Report on Form 8-K/A of ICN Pharmaceuticals, Inc. dated December 8, 1997. /s/ PRICE WATERHOUSE LLP PRICE WATERHOUSE LLP Morristown, New Jersey February 13, 1998 -----END PRIVACY-ENHANCED MESSAGE-----