<PAGE>
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 10-Q
X QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE
- ---- SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 1995
OR
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE
- -----SECURITIES EXCHANGE ACT OF 1934
For the transition period from_______________ to _______________
Commission file number 1-5851
Rhone-Poulenc Rorer Inc.
- ---------------------------------------------------------------------------
(Exact name of registrant as specified in its charter)
Commonwealth of Pennsylvania 23-1699163
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification Number)
500 Arcola Road
Collegeville, Pennsylvania 19426-0107
- --------------------------------------------------------------------------------
(Address of principal (Zip Code)
executive offices)
(610)454-8000
- ---------------------------------------------------------------------------
(Registrant's telephone number, including area code)
(Former name, address and fiscal year,
if changed since last report.)
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15 (d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period
that the registrant was required to file such reports), and (2) has been subject
to such filing requirements for the past 90 days. Yes x No
-------- ---------
Indicate the number of shares outstanding of each of the issuer's classes
of common stock, as of the latest practicable date. 134,149,790 shares as
of April 28, 1995.
The exhibit index is located on page 25.
<PAGE>
RHONE-POULENC RORER INC.
TABLE OF CONTENTS
--------------------------------------------------
Page
PART I. FINANCIAL INFORMATION
Item 1. Financial statements:
Report of Independent Accountants 3
Condensed Consolidated Statements of Income 4
Condensed Consolidated Balance Sheets 5
Condensed Consolidated Statements of Cash Flows 6
Notes to Condensed Consolidated Financial Statements 7-11
Item 2. Management's Discussion and Analysis of Results of
Operations and Financial Condition 12-17
PART II. OTHER INFORMATION
Item 1. Legal Proceedings 18-22
Item 6. Exhibits 23
2
<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS
To the Shareholders of Rhone-Poulenc Rorer Inc.:
We have reviewed the accompanying condensed consolidated balance sheet of
Rhone-Poulenc
Rorer Inc. and subsidiaries as of March 31, 1995, and the related condensed
consolidated
statements of income and cash flows for the three-month periods ended March
31, 1995 and 1994.
These financial statements are the responsibility of the Company's management.
We conducted our review in accordance with standards established by the
American Institute of
Certified Public Accountants. A review of interim financial information
consists principally of applying
analytical procedures to financial data and making inquiries of persons
responsible for financial and
accounting matters. It is substantially less in scope than an audit in
accordance with generally
accepted auditing standards, the objective of which is the expression of an
opinion regarding the
financial statements taken as a whole. Accordingly, we do not express such an
opinion.
Based on our review, we are not aware of any material modifications that should
be made to the condensed consolidated financial statements referred to above
for them to be in conformity with generally accepted accounting principles.
We have previously audited, in accordance with generally accepted auditing
standards, the
consolidated balance sheet of Rhone-Poulenc Rorer Inc. and subsidiaries as of
December 31, 1994,
and the related consolidated statements of income and cash flows for the year
then ended (not
presented herein) and, in our report, which includes an explanatory paragraph
on the Company's
change in its method of accounting for income taxes in 1992, dated January 20,
1995, we expressed an unqualified opinion on those consolidated financial
statements. In our opinion, the information
set forth in the accompanying condensed consolidated balance sheet as of
December 31, 1994, is fairly stated, in all material respects, in relation
to the consolidated balance sheet from which it has been derived.
/s/COOPERS & LYBRAND L.L.P.
-----------------------------
COOPERS & LYBRAND L.L.P.
Philadelphia, Pennsylvania
April 21, 1995
3
<PAGE>
PART I. FINANCIAL INFORMATION
ITEM 1. Financial Statements
-----------------------------
RHONE-POULENC RORER INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(Unaudited - amounts in millions except per share data)
Three Months Ended
March 31,
---------------------------
1995 1994
---------------------------
Net sales $992.2 $870.6
Cost of products sold 343.9 293.3
Selling, delivery and administrative expenses 348.8 318.4
Research and development expense 156.7 129.1
---------------------------
Operating income 142.8 129.8
Interest expense - net 10.6 11.8
Gain on sales of assets (49.5) (4.1)
Other expense - net 47.8 12.2
---------------------------
Income before income taxes 133.9 109.9
Provision for income taxes 42.0 32.0
--------------------------
Net income 91.9 77.9
Dividend on preferred stock (5.7) (4.2)
---------------------------
Net income available to common shareholders $86.2 $73.7
===========================
Earnings per common share $0.64 $0.54
===========================
Cash dividend per common share $0.30 $0.28
Average common shares outstanding 134.1 136.5
See accompanying Notes to Condensed Consolidated Financial Statements.
4
<PAGE>
RHONE-POULENC RORER INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited - dollars in millions)
March 31, December 31,
1995 1994
-------------------------------
ASSETS
Current:
Cash and cash equivalents $44.7 $118.8
Short-term investments 11.8 --
Trade accounts and notes receivable, less reserves
of $ 57.8 (1994: $74.6) 637.1 730.1
Inventories 622.9 546.9
Other current assets 567.2 496.5
-------------------------------
Total current assets 1,883.7 1,892.3
Time deposits, at cost 43.9 55.8
Property, plant and equipment, net of accumulated
depreciation of $1,145.9 (1994: $1,049.8) 1,178.5 1,123.0
Goodwill, net of accumulated amortization of
$230.1(1994: $210.2) 740.7 705.9
Intangibles, net of accumulated amortization
of $118.6(1994: $115.7) 181.7 167.2
Other assets 453.7 418.3
------------------------------
Total assets $4,482.2 $4,362.5
=============================
LIABILITIES
Current:
Short-term debt $124.2 $126.3
Accounts payable 397.2 420.2
Other current liabilities 697.9 820.7
-----------------------------
Total current liabilities 1,219.3 1,367.2
Long-term debt 517.0 439.9
Deferred income taxes 23.7 28.6
Other liabilities 606.7 545.7
-----------------------------
Total liabilities 2,366.7 2,381.4
Contingencies
SHAREHOLDERS' EQUITY
Market Auction Preferred Shares, without par
value (liquidation preference $1,000 per share);
authorized, issued and outstanding 225,000 shares 225.0 225.0
Money market preferred stock, without par value
(liquidation preference $100,000 per share);
authorized, issued and outstanding 1,750 shares 175.0 175.0
Common stock, without par value; stated value
$1 per share; authorized 200,000,000 shares;
issued and outstanding 134,136,183 shares
(1994: 134,095,649 shares) 139.1 139.1
Capital in excess of stated value 306.1 305.1
Retained earnings 1,433.6 1,387.6
Employee Benefits Trust (185.7) (185.7)
Cumulative translation adjustments 22.4 (65.0)
-----------------------------------
Total shareholders' equity 2,115.5 1,981.1
----------------------------------
Total liabilities and shareholders' equity $4,482.2 $4,362.5
=================================
See accompanying Notes to Condensed Consolidated Financial Statements.
5
<PAGE>
RHONE-POULENC RORER INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited - dollars in millions)
Three Months Ended
March 31,
---------------------
1995 1994
---------------------
CASH FLOWS FROM OPERATING ACTIVITIES:
Net cash provided by (used in) operating activities $(3.6) $126.4
CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures (64.6) (44.1)
Assets (acquired) sold, net (1.3) (3.2)
Net investment hedging, net (4.4) (10.4)
---------------------
Net cash used in investing activities (70.3) (57.7)
CASH FLOWS FROM FINANCING ACTIVITIES:
Debt borrowings (repayments):
Long-term debt, net (2.3) (14.1)
Short-term debt, net 44.5 24.9
Issuances of common stock 1.0 3.4
Shares repurchased for Employee Benefits Trust -- (39.7)
Dividends paid (45.9) (42.2)
------------------------
Net cash used in financing activities (2.7) (67.7)
Effect of exchange rate changes on cash 2.5 0.6
-----------------------
Net increase (decrease) in cash and cash equivalents (74.1) 1.6
Cash and cash equivalents at beginning of year 118.8 35.4
---------------------
Cash and cash equivalents at March 31 $44.7 $37.0
=====================
See accompanying Notes to Condensed Consolidated Financial Statements.
6
<PAGE>
RHONE-POULENC RORER INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
NOTE 1.- RESULTS FOR INTERIM PERIODS
In the opinion of management, the accompanying unaudited condensed
consolidated financial
statements reflect all adjustments of a normal recurring nature necessary for a
fair presentation of
financial position, cash flows and results of operations for the periods
presented. Significant unusual
and nonrecurring transactions are described in detail in the accompanying
footnotes.
The statements are presented in accordance with the requirements of Form 10-
Q and do not include
all disclosures required by generally accepted accounting principles or those
made in the Annual
Report on Form 10-K. The Annual Report on Form 10-K for the year 1994 is on
file with the
Securities and Exchange Commission and should be read in conjunction with
these condensed
consolidated financial statements.
NOTE 2.- RESTRUCTURING AND OTHER CHARGES
In June 1994, the Company recorded a $121.2 million pretax charge in
connection with a global
restructuring plan that is expected to be completed in 1995. Annual pretax
savings associated with
the plan approximated $20.0 million in 1994 and should grow to over $50.0
million in 1996. The
restructuring will reduce the Company's workforce by approximately 1,300
positions, or 6%; as of
March 31, 1995, the Company's workforce had been reduced by more than 700
employees. Total
cash outlays related to the plan are expected to exceed $90.0 million; to date,
cash outlays have
totaled $47.8 million, $13.7 million of which occurred in the 1995 first
quarter. Asset writeoffs in
conjunction with certain production facilities have totaled $20.8 million,
including $1.4 million in the three months ended March 31, 1995.
A rollforward of the remaining 1994 restructuring provision from December 31,
1994 is as follows:
Payments/ Translation
December 31 asset adjustments/ March
1994 writeoffs other 31, 1995
----------------------------------------------------------
(Dollars in millions)
Social costs $52.8 $(13.2) $5.7 $45.3
Third parties 8.4 (0.5) (2.0) 5.9
Asset writeoffs 8.2 (1.4) 0.3 7.1
----------------------------------------------------------
Total $69.4 $(15.1) $4.0 $58.3
=========================================================
In 1993, the Company recorded charges of $93.8 million for the cost of certain
restructuring and
manufacturing streamlining programs, principally in Europe, and increased
provisions for certain
litigation. The programs include a plan to divest a portion of a manufacturing
facility in Monts, France by the end of 1995. Total workforce reductions
associated with the plan
will approximate 800 positions; as of March 31, 1995, the Company's workforce
had been reduced by over 650 employees.
7
<PAGE>
A rollforward of the remaining 1993 restructuring provision from
December 31, 1994 is as follows:
Payments/ Translation
December 31 asset adjustments/ March
1994 writeoffs other 31, 1995
---------------------------------------------------------
(Dollars in millions)
Social costs $12.2 $(2.1) $1.0 $11.1
Asset writeoffs 9.0 (0.2) 0.8 9.6
-------------------------------------------------------
Total $21.2 $(2.3) $1.8 $20.7
=======================================================
NOTE 3.- GAIN ON SALES OF ASSETS AND OTHER EXPENSE - NET
In the first quarter of 1995, the Company recorded pretax gains from the sales
of assets totaling $49.5 million ($.25 per share), including the sale to Ciba-
Geigy Limited of assets related to the
Company's Canadian over-the-counter business and the sale of certain
European product rights.
Gains on asset sales totaled $4.1 million ($.02 per share) in the 1994 first
quarter.
Other expense-net for the 1995 first quarter included $13.0 million ($.06 per
share) of acquired
research and development expense related to an additional investment in
Applied Immune Sciences,
Inc. and pretax charges of $25.4 million ($.15 per share) related to the
reassessment of the carrying
value of certain assets, including those associated with the Company's prior
investment in The
Immune Response Corporation.
NOTE 4.- INCOME TAXES
The Company records income tax expense based on an estimated full year
effective income tax rate.
The first quarter effective tax rate on operations was 31.4% in 1995 and 29.1%
in 1994 as a result of
reduced tax benefits from Puerto Rico operations and certain asset
sales/writeoffs.
NOTE 5.- INVENTORIES
Inventories consisted of the following:
March 31, December 31,
1995 1994
------------------------------------
(Dollars in millions)
Finished goods $297.7 $282.9
Work in process 146.3 119.1
Raw materials and supplies 178.9 144.9
------------------------------------
$622.9 $546.9
====================================
8
<PAGE>
<TABLE>
NOTE 6.- SHAREHOLDERS' EQUITY
<CAPTION>
Market Money Common Capital
Auction market shares in excess Employee Cumulative
Preferred preferred at stated of stated Retained Benefits Translation
Shares stock value value earnings Trust adjustment
--------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Balance, December 31, 1994
$225.0 $175.0 $139.1 $305.1 $1,387.6 $(185.7) $(65.0)
Net income
91.9
Cash dividends, $.30 per common share
(40.2)
Dividends on preferred stock
(5.7)
Issuance of shares under employee benefit plans
1.0
Translation adjustments, net of $6.9 million
reductions due to hedging activities
87.4
-----------------------------------------------------------------------------------------------------
Balance, March 31, 1995
$225.0 $175.0 $139.1 $306.1 $1,433.6 $(185.7) $22.4
======================================================================================================
</TABLE>
9
<PAGE>
NOTE 7.- RELATED PARTY TRANSACTIONS
Receivables from Rhone-Poulenc S.A. and affiliates (RP) at March 31, 1995
included $28.6
million in accounts receivable from sales of products to RP and $61.8 million
classified as other
current assets.
Accounts payable related to the purchase of materials and services from RP
were $9.8 million at
March 31, 1995; accrued and other liabilities due to RP totaled $17.0 million.
As of March 31, 1995, the Company had $36.9 million short-term and $32.3
million long-term debt
outstanding with RP.
First quarter 1995 sales to RP, including sales to the Cooperation
Pharmaceutique Francaise
affiliate (Cooper) acquired by RP in the first half of 1994, totaled $49.9
million (1994: $11.1
million). Services purchased from and interest paid to RP were $9.1 million
(1994: $9.0 million).
In the first quarter of 1995, the Company performed services with respect to
certain RP affiliates
totaling approximately $6.3 million.
NOTE 8.- CONTINGENCIES
The Company is involved in litigation incidental to its business, including,
but not limited to: (1)
approximately 334 pending lawsuits in the United States, Canada and Ireland
against the
Company and its Armour Pharmaceutical Company subsidiary ("Armour"), in
which it is claimed
by individuals infected with the Human Immunodeficiency Virus (HIV) that their
infection with HIV
and, in some cases, resulting illnesses, including Acquired Immune Deficiency
Syndrome-related
conditions or death therefrom, may have been caused by administration of
antihemophilic factor
(AHF) concentrates processed by Armour in the early and mid-1980s. Armour
has also been
named as a defendant in five proposed class action lawsuits filed on behalf of
HIV-infected
hemophiliacs and their families. None of the cases involves Armour's currently
distributed AHF
concentrates; (2) legal actions pending against one or more subsidiaries of the
Company and
various groupings of more than one hundred pharmaceutical companies, in
which it is generally
alleged that certain individuals were injured as a result of the development of
various
reproductive tract abnormalities because of in utero exposure to diethyl
stilbestrol (DES) (typically,
two former operating subsidiaries of the Company are named as defendants,
along with
numerous other DES manufacturers, when the claimant is unable to identify the
manufacturer);
(3) antitrust actions in the U.S. alleging that the Company engaged in price
discrimination
practices to the detriment of certain independent community pharmacists; (4)
alleged breach of
contract by a subsidiary of the Company with respect to agreements involving
another company's
bisphosphonate compound and the Company's licensed product Lozol; and (5)
potential
responsibility relating to past waste disposal practices, including potential
involvement, for which
the Company believes its share of liability, if any, to be negligible, at three
sites on the U.S. National Priority List created by Superfund legislation.
The eventual outcomes of the above matters of pending litigation cannot be
predicted with certainty. The defense of these matters and the defense of
expected additional lawsuits related to these matters may require substantial
legal defense expenditures. The Company follows Statement of Financial
Accounting Standards No. 5 in determining whether to recognize losses
and accrue liabilities relating to such matters. Accordingly, the Company
recognizes a loss if
10
<PAGE>
available information indicates that a loss or range of losses is probable and
reasonably estimable. The Company estimates such losses on the basis of
current facts and circumstances, prior experience with similar matters, the
number of claims and the anticipated cost of administering, defending and,
in some cases, settling such claims. The Company has also recorded as an asset
certain insurance recoveries which are determined to be probable of occurrence
on the basis of the status of current discussions with its insurance carriers.
If a contingent loss is not probable but is reasonably possible, the Company
discloses this contingency in the notes to its consolidated financial statements
if it is material. Based on the material adverse impact on the Company's
financial position, results of operations or cash flows.
11
<PAGE>
ITEM 2. Management's Discussion and Analysis of Results of Operations
and Financial Condition
Rhone-Poulenc Rorer Inc. ("RPR" or "the Company") is one of the largest
research-based pharmaceutical companies in the world. RPR was formed in
1990 by the combination of Rorer Group Inc. and substantially all of the
Human Pharmaceutical Business of Rhone-Poulenc S.A. ("RP"), based in Paris,
France. RP owns approximately two-thirds of RPR's common stock and controls
the Company.
Results of Operations (First quarter 1995 versus first quarter 1994)
On sales of $992 million, net income available to common shareholders was
$86 million ($.64 per common share), an increase of 17% from $74 million
($.54 per common share) in 1994. Results for the 1995 first quarter included
a $.04 per share benefit from the net effects of asset sales and certain one-
time charges. The comparable prior year quarter included $.02 per share of
gains on sales of assets.
Sales
In the table and discussion which follows, percentage comparisons of quarter-
on-quarter sales are presented excluding the effects of currency fluctuations
unless otherwise noted.
1Q95 1Q94
Therapeutic Area/Principal Offerings Sales Sales % Change (*)
- --------------------------------------------------------------------------
(in millions)
Clexane(R)/Lovenox(R) $ 65 $ 46 28%
Dilacor(R) XR 19 15 24%
Lozol(R)/indapamide 11 13 -14%
Selectol(R)/Selecor(R) 16 11 29%
Total Cardiovascular 195 168 7%
Zagam(TM) 11 0 --
Granocyte(R) 9 1 --
Total Anti-infectives/Oncology 160 124 18%
Albuminar(R) 44 35 23%
Monoclate-P(R) /Factor VIII 53 36 40%
Total Plasma Proteins 135 110 19%
Doliprane(R) 26 22 5%
Imovane(R)/Amoban(R) 28 21 21%
Total CNS/Analgesics 122 105 6%
Maalox(R) 37 47 -27%
Total Gastrointestinal 91 101 -16%
Calcitonins 24 18 23%
Orudis(R)/Profenid(R)/Oruvail(R) 44 43 -3%
Total Bone Metabolism/Rheumatology 82 71 7%
Azmacort(R) 30 14 115%
Nasacort(R) 10 10 0%
Total Respiratory 82 63 23%
DDAVP(R) 12 13 -7%
Other Therapeutic Areas 125 129 -11%
* excludes effects of currency fluctuations
12
<PAGE>
First quarter 1995 reported sales increased 14%. Excluding the favorable
effects of currency fluctuations (+8%) due to a weaker U.S. dollar relative to
European currencies and the impact of product divestitures (-4%), consisting
principally of the Company's U.S. and Canadian over-the-counter businesses,
sales increased 10%. Volume increases, including new product presentations,
and the net favorable effect of higher prices in Europe and in the U.S.
(prescription pharmaceuticals and plasma proteins) contributed 7 and 3
percentage points of underlying sales growth, respectively.
Sales by geographic area were as follows:
1Q95 1Q94 %
Sales Sales Change (*)
------------------------------------------
(in millions)
U.S. $208 $213 11%
---------------------------------------
France 381 310 8%
Other Europe 274 237 4%
Rest of World 129 111 29%
---------------------------------------
Total Non-U.S. 784 658 10%
--------------------------------------
Total Sales $992 $871 10%
======================================
* excludes effects of currency fluctuations and product divestitures.
Excluding prior year sales of the Company's U.S. over-the-counter business
which was sold in late 1994, sales in the United States increased quarter-on-
quarter. Sales increases in the United States reflected growth of the
Company's prescription pharmaceuticals (Azmacort(R), Lovenox(R) and
Dilacor(R) XR) and
its plasma proteins (Albuminar(R) and Factor VIII offerings). Sales in France,
the Company's largest market, included sales of new products Granocyte(R), for
chemotherapy-induced neutropenia, and the quinolone antibiotic Zagam(TM),
launched in that market in the 1994 first and third quarters, respectively. In
Other European markets, sales of prescription pharmaceuticals in Germany and
Italy recovered from the prior year by approximately 8% in each market while
ethical product sales in the U.K. (-7%) continued to be impacted by generic
competition. Sales increases in Central and Eastern Europe contributed to the
modest sales improvement in the Other Europe region. Higher sales of anti-
infectives in South America and Africa and improved sales in Japan
(particularly
of Maalox(R) and calcitonins) compared with the prior year which was affected
by government-imposed price reductions drove sales growth in the Rest of
World area.
Sales of Clexane(R)/Lovenox(R) in the U.S., France and Germany led sales of
cardiovascular products. Higher sales were also recorded by Dilacor(R) XR in
the U.S. and Selectol(R)/Selecor(R) in France and the United States. During
the first quarter, Lovenox(R), available in the U.S. since 1993 for the
prevention of deep vein thrombosis following hip replacement surgery, was
approved by the FDA for use in the U.S. following knee replacement surgery.
Dilacor(R) XR, a
calcium channel blocker available in the U.S. since 1992 for the treatment of
hypertension, was recently approved by the FDA for the management of chronic
stable angina. Dilacor(R) XR faces loss of U.S. FDA exclusivity in mid-1995
although management does not currently anticipate sales erosion in 1995 from
generic intrusion.
13
<PAGE>
Anti-infectives' sales growth reflected the acceptance of the quinolone
antibiotic
Zagam(TM) in France and continued growth of antibiotics in South American and
Asian countries. Increased sales of oncology products were driven by sales of
Granocyte(R) in France, Germany and certain other European markets.
Plasma proteins posted sales increases during the quarter. In the U.S.,
Albuminar(R) and the recombinant Factor VIII offerings Helixate(R) and
Bioclate(R) performed well although U.S. sales of Monoclate-P(R) were slightly
below the prior year. Sales of Monoclate-P(R) and Mononine(TM) were higher
in Europe and in Brazil. In the first quarter, the Company initiated a
voluntary
withdrawal of certain of its immune globulin offerings in U.S. in response to
the FDA's industry-wide request that such products undergo a new testing
technique. This action had a moderate negative impact on first quarter
Gammar(R) IV sales, but is not expected to significantly affect future immune
globulin sales. The Company's Armour Pharmaceutical Company subsidiary has
recently received U.S. and European regulatory approvals to form a 50/50 joint
venture in the global plasma proteins business with Behringwerke AG, a
subsidiary of Germany's Hoechst AG. The global joint venture is expected to
become operational later in 1995.
In the central nervous system/analgesia therapeutic area, sales of Doliprane(R)
improved modestly in France. Imovane(R)/Amoban(R) also experienced sales
growth in European markets and in Canada.
Sales of bone metabolism/rheumatology products, particularly calcitonins,
improved from a low prior year base. Calcitonin product sales were higher in
the U.S. and Japan, but, as anticipated, continued to decline in Italy and
Spain due to restrictive government programs. Full-year calcitonin sales
are expected to
be slightly below 1994 sales. Sales of Orudis(R)/Profenid(R)/Oruvail(R)
declined modestly as the impact of lower sales in France and Italy was
partially
offset by higher sales in South America and Asia. Menorest(R), a hormone
replacement skin patch for treatment of post menopausal symptoms and the
prevention of osteoporosis, was launched in the Netherlands in the first
quarter;
marketing approvals have been received in France and several other European
markets.
Maalox(R) recorded good performance in European markets, particularly in
France, Germany and Poland. Strong sales gains were also registered in
Japan, where Maalox(R) granules were launched at the end of 1994. In January
1995, the Company completed the transfer of its Canadian Maalox(R) product
rights to Ciba-Geigy Limited ("Ciba"); the Company's U.S. rights were
transferred
to Ciba in December 1994. First quarter 1994 reported sales included
approximately $20 million of U.S. and Canadian Maalox(R) sales.
Increased sales of respiratory products reflected higher Azmacort(R) sales as
compared to the first quarter of 1994 which had been negatively impacted by
trade inventory reductions. Azmacort(R) experienced good prescription growth
during the first few months of 1995. Three-month sales of Nasacort(R) were
impacted by a competitive entry and remained level with the prior year quarter.
14
<PAGE>
Operating Income
Three Months Three Months
Ended % of Ended % of Total
March 31, 1995 Sales March 31, 1994 Sales Change
------------------------------------------------------
(in millions)
Gross margin $648.3 65.3% $577.3 66.3% 12%
Selling, delivery and
administrative 348.8 35.2 318.4 36.6 10
Research and development 156.7 15.8 129.1 14.8 21
Operating income 142.8 14.4 129.8 14.9 10
Quarter-on-quarter, operating income margin declined one-half of one
percentage point due to higher cost of sales and an increased investment in
research and development, partially offset by reduced selling, delivery and
administrative expenses as a percentage of sales. Gross margin declined one
percentage point in 1995 as a result of unfavorable product mix stemming from
higher sales of lower margin products. The effects of unfavorable mix were
partially mitigated by favorable changes in price. Despite increased
expenses in
support of new markets in Central Europe and South America and in Japan,
commercial expenses were lower as a percentage of sales, particularly in the
U.S. pharmaceuticals business and in Germany. The absence in 1995 of
advertising and promotion activities associated with the Company's North
American over-the-counter businesses also favorably impacted the ratio to
sales. On a basis which excludes the effects of currency fluctuations, the
Company's investment in research and development activities increased 12%
quarter-on-quarter.
In June 1994, the Company recorded a $121 million charge related to a global
restructuring plan. The plan, which is expected to be completed in 1995, is
intended to contribute to management's objective to reduce the Company's cost
base (exclusive of research and development expenditures) as a percentage of
sales. For the quarter ended March 31, 1995, cash outlays associated with the
plan totaled $14 million; asset writeoffs were not significant. As of March 31,
1995, the Company's workforce had been reduced by over 700 positions as a
result of the 1994 restructuring.
In 1993, the Company recorded charges of $94 million for the cost of certain
restructuring and manufacturing streamlining programs and increased provisions
for certain litigation. First quarter 1995 cash outlays associated with the
1993 program totaled $2 million; asset writeoffs were not significant.
As of March 31, 1995, over 650 positions had been affected by the 1993 program.
Interest, Other (Income)Expense, and Taxes
Net interest expense declined 10% to $11 million due principally to lower
average worldwide net debt balances, partially offset by higher average interest
rates in the United Kingdom and the United States. Higher U.S. short-term
interest rates also gave rise to an increase in first quarter 1995 preferred
dividends.
15
<PAGE>
Gains on sales of assets, including assets related to the Company's Canadian
over-the-counter business and certain European product rights, approximated
$50 million ($.25 per share) for the quarter ended March 31, 1995. Similar
gains totaled $4 million ($.02 per share) in the comparable 1994 quarter.
In the 1995 first quarter, the Company recorded certain charges of $38 million
($.21 per share), including $13 million ($.06 per share) of acquired research
and development expense related to an additional investment in Applied Immune
Sciences, Inc. ("AIS") and $25 million ($.15 per share) related to the
reassessment of the carrying value of certain assets, including those
associated with the Company's prior investment in The Immune Response
Corporation.
The Company's first quarter effective tax approximated 31% in 1995 compared
with 29% in 1994 as a result of reduced tax benefits from Puerto Rico operations
and certain asset sales/writeoffs.
Financial Condition
Cash Flows
First quarter 1995 operating activities used cash of $4 million as compared
with first quarter 1994 operating activities which provided cash of $126
million. The
reduction in 1995 operating cash flows reflects higher outlays for income
taxes, working capital needs and restructuring activities. First quarter 1995
income tax payments in the U.S. approximated $74 million and included a $42
million tax payment related to the Ciba transaction. Cash outlays related to
restructuring activities approched $16 million during the quarter. Operating
cash outflows also included $32 million associated with activities to minimize
the Company's exposure to exchange rate changes on certain foreign currency-
denominated intercompany financing arrangements; management anticipates
that a corresponding cash inflow will be realized in the 1995 second quarter.
The increase in cash outflows for investing activities reflected higher capital
expenditures in the first quarter of 1995. The effect of higher proceeds from
sales of assets, including the Company's Canadian over-the-counter business
and certain European product rights, was counterbalanced by cash outflows of
$58 million associated with certain investments in technologies, including $21
million related to the acquisition of an additional interest in AIS, and
payments of $20 million related to the purchase of certain product rights.
Cash used in financing activities decreased $65 million quarter-on-quarter due,
in part, to increased short-term borrowings. Cash outlays in the first quarter
of 1994 included open market common share repurchases for the Employee
Benefits Trust totaling $40 million. Cash dividends paid to common
shareholders were $40 million ($.30 per share) as compared with $38 million in
1994 ($.28 per share). In April 1995, the Board of Directors declared a second
quarter cash dividend of $.30 per share payable May 31, 1995 to holders of
record on May 10, 1995.
Liquidity
The Company's net debt (short- and long-term debt including notes payable to
RP, less cash and cash equivalents, short-term investments and time deposits)
to net debt plus equity ratio increased to .20 to 1 at March 31, 1995 from
.17 to 1 at December 31, 1994 principally as a result
16
<PAGE>
of increased borrowings. The ratio of current assets to current liabilities was
1.54 to 1 compared to 1.51 to 1 a year ago.
At April 30, 1995, the Company has committed lines of credit totaling $1.2
billion
with approximately $38 million of borrowings outstanding under these lines. Of
the $1.2 billion, $400 million relates to a long-term revolving credit facility
unconditionally guaranteed by RP; the amount available under this facility
reduces by $200 million per year until expiration of the facility in 1997; on
April
30, an additional $100 million of the facility expired. In a separate
agreement
with RP related to the issuance of MAPS, the Company must maintain as unused
under this facility the smaller of $325 million or the principal amount of debt
outstanding (excluding borrowings from, or guaranteed by, RP). The Company
has an additional $800 million available under several multicurrency line of
credit agreements expiring principally in the next five years. At March 31,
1995,
the Company had the ability and intent to renew, or to refinance under such
facilities, approximately $305 million of short-term third party borrowings
for at least one year. Accordingly, this amount has been classified as long-
term debt.
Pursuant to a shelf registration, the Company has the ability to issue an
additional $325 million in public debt securities and/or preferred shares.
Management believes that cash flows from operations, supplemented by
financing expected to be available from external sources, will provide
sufficient
liquidity to meet its needs for the foreseeable future. Long-term liquidity is
dependent upon the Company's competitive position, including its ability to
discover, develop and market innovative new therapies and maximize the
benefits of new business alliances. The Company will continue to explore new
strategic business alliances as such opportunities arise.
The Company is involved in litigation incidental to its business. A discussion
of contingencies appears in Note 8 of the Notes to Condensed Consolidated
Financial Statements and in Legal Proceedings in Part II of this Form 10-Q.
17
<PAGE>
PART II. OTHER INFORMATION
ITEM 1. Legal Proceedings
---------------------------
Diethylstilbestrol ("DES") Litigation
There are approximately two hundred and fifty legal actions pending against one
or more
subsidiaries of the Company and various groupings of more than one hundred
pharmaceutical
companies, in which it is generally alleged that "DES daughters" and/or their
offspring were
injured as a result of the development of various reproductive tract
abnormalities in the "DES
daughters" because of their in utero exposure to DES. Typically, William H.
Rorer, Inc. ("WHR")
and Kremers-Urban Company ("K-U"), two former operating subsidiaries of the
Company, are
named as defendants, along with numerous other former DES manufacturers, when
the claimant
is unable to identify the manufacturer of the DES to which she was exposed.
While the
aggregate monetary damages sought in all of these DES actions are substantial,
the Company
believes that both WHR and K-U have adequate defenses to DES claims. In May
1994, a
proposed class action was filed on behalf of persons alleging injuries caused
by DES and living in
the state of Ohio (Kurczi, et al. v. Eli Lilly, et al., United States District
Court for the Northern
District of Illinois). The Company and certain of its current and former
subsidiaries were named
among the 192 defendants. Class certification was denied on February 27, 1995.
All pending
cases are currently being defended by insurance carriers, sometimes under a
reservation of
rights. The Company is also responsible for the obligations of Nattermann &
Cie GmbH
("Nattermann") with respect to DES-related legal actions brought against
certain of its former U.S.
subsidiaries. Under the terms of the 1990 Acquisition Agreement with
Rhone-Poulenc S.A.
("RP"), RP is obligated to indemnify the Company for amounts expended
on the Nattermann DES
claims in excess of $2 million. The Company believes that the former
Nattermann subsidiaries
have adequate defenses to DES claims.
AHF Litigation
There are approximately two hundred and seventy-two lawsuits in the
United States, seven in
Canada and fifty-five in Ireland pending against the Company's Armour
Pharmaceutical Company
("Armour") subsidiary, and in some instances, the Company and certain
of its other subsidiaries,
in which individuals with hemophilia and infected with the Human
Immunodeficiency Virus ("HIV"),
or their representatives, claim that such infection and, in some cases,
resulting illnesses,
including Acquired Immune Deficiency Syndrome-related conditions or
death therefrom, may
have been caused by administration of anti-hemophilic factor ("AHF")
concentrates processed by
Armour in the early and mid-1980s; none of these cases involves Armour's
currently distributed AHF concentrates. In most of these suits, Armour is
one of a number of defendants, including other fractionators who
supplied AHF during that period. To date, approximately one hundred
and three cases and claims have been resolved either by dismissal by the
plaintiffs or the Court or through settlement. A majority of the currently
pending lawsuits were filed in 1993, and management expects
additional lawsuits will be filed. It is not possible,
however, to predict with certainty the number of additional lawsuits
that may eventually be filed alleging HIV-related claims.
18
<PAGE>
In January 1993, a jury in Florida held that Armour was liable to the
parents of a deceased HIV-infected hemophiliac for damages of approximately
$2 million. Armour believed this verdict to be
inconsistent with evidence specific to the case and, accordingly, filed
motions with the trial court seeking reversal or, alternatively, a new trial.
The trial court denied both motions and Armour has
appealed the judgment to the United States Court of Appeals for the Eleventh
Circuit. The appeal has been argued and awaits decision. Regardless of the
outcome of this case, and because the facts vary widely
in such cases, the Company does not view this verdict as predictive of, or as
precedent for, decisions in any other cases. Juries in other AHF cases
have determined that Armour and the other plasma fractionators acted responsibly
and were not negligent. In October 1993, Armour obtained a directed verdict
dismissing it from a lawsuit pending in Louisiana State
Court on the basis that the plaintiff had not presented evidence
sufficient to maintain an action against Armour. That decision has been
appealed by plaintiff to the state appellate court in
Louisiana and was argued in March 1995. Additionally, in November 1993,
a jury verdict in favor of Armour and the other plasma fractionators was
obtained in an action pending in the United States District Court for the
Northern District of Illinois. The jury concluded that the fractionators
of Factor VIII concentrate in the early 1980's were not negligent as
alleged and accordingly were not liable to the claimant. In March 1995, the
United States Court of Appeals for the Seventh Circuit granted the plaintiffs'
appeal in this action and remanded the case for a new trial because
of improper closing argument by counsel for one of the defendants. That
re-trial has not yet been scheduled. Armour reasonably expects that other
cases will proceed to trial in the future.
In December 1993, the Federal Multi-District Litigation Panel ("MDL")
authorized the consolidation of all AHF litigation pending in U.S. Federal
Courts for purposes of pre-trial discovery and the transfer of such cases to
the U.S. District Court for the Northern District of
Illinois for this purpose. Four proposed federal class action lawsuits
(Wadleigh, et al. v. Armour Pharmaceutical Company, et al., United States
District Court, Northern District, Illinois; Richard Roe and his mother, Jane
Roe v. Armour Pharmaceutical Company, et al., United States District
Court, Idaho District; Jose Alvarez, Jr. et al. v. Armour Pharmaceutical
Company, et al., United States District Court for the Eastern District of
Louisiana; and Timmy Dale Martin, et al. v. Armour Pharmaceutical Company,
et al., United States District Court for the Northern District of
Alabama); and one proposed state class action (Jeffrey Stanger, et al. v.
Armour Pharmaceutical Company, et al., Superior Court, Pima County, Arizona),
have been filed against several fractionators, including Armour. The federal
actions are part of the MDL proceeding in Chicago.
In a bench ruling on August 5, 1994, and a Memorandum Opinion filed August
17, 1994, the Court in Wadleigh stated that it intended to certify the issue
of negligence in that action for class action treatment, but that it would deny
plaintiffs' motion for certification of an all-purpose class action and
plaintiffs' motion for certification of the issues of strict liability,
breach of warranty, proximate cause, and punitive damages. In September
1994, the Court denied the defendants' motion for reconsideration, and also
denied defendants' request that it certify the issues for immediate
consideration by the Court of Appeals. In an order entered in October 1994,
the Court ruled that it would not certify plaintiffs' concert of action claim
for class treatment. In November 1994, the Court entered its formal class
certification order, and in December 1994 entered further
orders regarding notice to the class and also denied class certification
in the federal actions other than Wadleigh. Under the issue certification
contemplated by the Court in Wadleigh, only the
issue of negligence would be tried on a class-wide basis. In the event
of a defense verdict, all class members would be bound thereby; in the event
of a plaintiffs' verdict, it would be necessary
for each class member to attempt to utilize that favorable outcome in his
own separate litigation.
19
<PAGE>
The class trial would not involve any issues of causation or damages, or
a determination as to any defenses such as the statute of limitations.
As the facts in each individual lawsuit vary widely, Armour does not believe
that class action status is warranted in the Wadleigh action. In December
1994, Armour and the other fractionator/defendants in Wadleigh filed a
petition for a writ of mandamus in the Seventh Circuit Court of Appeals
in Chicago seeking to have the class certification order vacated. In March
1995, the Court of Appeals granted the writ of mandamus in a two-to-one
decision and directed the District Court to decertify the plaintiff class.
The plaintiffs thereafter filed a petition for rehearing and suggestion for
rehearing en banc with the Court of Appeals. Plaintiffs' petition for
rehearing was denied on April 27, 1995. Barring the filing by the plaintiffs
of a petition for certiorari to the United States Supreme Court, the
negligence class previously certified by the District Court in Wadleigh will
be decertified.
In the U.S., Armour and other plasma fractionators have participated in
discussions with representatives of the hemophilia community, including the
National Hemophilia Foundation, concerning the issue of assistance
for U.S. hemophiliacs infected with HIV. Armour and Baxter Healthcare
Corporation ("Baxter") reached a tentative settlement with attorneys
representing claimants in the purported class-action lawsuits pending
against the respective companies and submitted a Memorandum of Understanding
to the Court in that regard on August 2, 1994. However, as a result of
the Court's August 5, 1994 statements with respect to class certification in
Wadleigh, plaintiffs' counsel withdrew their recommendation concerning the
settlement. Armour will continue to vigorously defend its position in all
cases and claims brought against it.
With respect to this litigation, the Company has contractual rights to certain
insurance coverage provided by insurance carriers to Revlon, Inc., the party
from which it purchased the Armour business in 1986 ("Revlon carriers").
The Company also believes it has certain insurance coverage from an umbrella
insurance carrier and that it has access to "excess" liability insurance
coverage from other carriers, effective in 1986, for certain of these cases if
certain self-insured retention levels from relevant insurable losses are
exceeded. The Company has been involved in litigation with a principal
insurance carrier ("the principal carrier") as well as with certain of the
Revlon carriers, relative to carrier defense and indemnity obligations
associated with AHF litigation. Recently, the Company settled the dispute
being litigated with the principal carrier by entering into an agreement
which defines the principal carrier's obligations with respect to the
underlying AHF litigation. Additionally, the Company and certain of the other
carriers are engaged in extensive discussions aimed principally at settling the
extent and other conditions of coverage of those carriers. If necessary, a
trial in the insurance coverage litigation will likely take
place in the United States District Court for the Eastern District of
Pennsylvania sometime in 1995. Based upon these discussions, the Company
believes that, although not a certainty, a substantial level of coverage
(including substantial coverage for legal defense expenditures) for
the Company's estimated liability determined in accordance with Statement of
Financial Accounting Standards No. 5 ("SFAS 5") is probable of occurrence.
Certain Contract Litigation
Rhone-Poulenc Rorer Pharmaceuticals Inc. ("RPRP"), a subsidiary of the Company,
has been named as a defendant in two related breach of contract lawsuits
initiated by Boehringer Mannheim GmbH and its American affiliate, Boehringer
Mannheim Pharmaceuticals Corporation
20
<PAGE>
(collectively, "BM"), seeking compensatory damages. Specifically, BM commenced
arbitration proceedings in Switzerland and litigation in the state court of
Maryland alleging that RPRP breached an agreement related to the development
of BM's bisphosphonate compound and a copromotion agreement pertaining to the
Company's licensed product Lozol. RPR filed a counterclaim in the Maryland
litigation against BM for fraud related to representations made by
BM and its agents prior to the execution of the agreements. In March 1995, the
parties agreed to dismiss the Maryland litigation and to transfer all of those
claims to final and binding arbitration in Switzerland. The Company believes
that the claims asserted by BM are without merit and RPRP
intends to vigorously defend its position.
Antitrust Litigation
The Company has been named as a defendant in 101 antitrust lawsuits. It is
presently a party to six state court actions pending in California, and one
each in Wisconsin, Alabama, Washington and Minnesota. Additionally, the
Company has been named in 91 antitrust actions brought in
several federal courts which have been coordinated before a judge in the U. S.
District Court for the Northern District of Illinois (Chicago). The cases
brought in California state court have
similarly been coordinated before a judge in the San Francisco Superior Court.
The suits allege that certain pharmaceutical companies (including RPR) and
wholesalers, in conjunction with certain pharmacy benefits managers,
discriminated against independent community pharmacist plaintiffs and/or
retail chains with respect to the prices charged for pharmaceutical products
and further conspired to maintain prices at artificially high levels to the
detriment of these pharmacies. One suit alleges injury to a proposed class
of California residents who are consumers of brand name prescription products
. Many of the federal actions were brought on behalf of an alleged
class of retail pharmacies throughout the United States; four of the state cases
similarly allege classes of pharmacists within those states. Plaintiffs in
these lawsuits seek injunctive relief and a monetary award for past
damages alleged. The federal class plaintiffs have filed an amended
consolidated Complaint so that issues affecting the class are pleaded
consistently. The coordinating federal court certified the class alleged in
the amended consolidated Complaint in November 1994. Notice to the class has
been given and the opt-out period ended March 10, 1995.
The Company believes that these claims are without merit and it intends to
vigorously defend these lawsuits.
Patent and Intellectual Property Litigation
In February 1993, Tanabe Seiyaku Company ("Tanabe") of Japan and their U.S.
licensee, Marion Merrell Dow Inc. ("MMD") initiated an action before the
International Trade Commission ("ITC"), the administrative agency responsible
for handling complaints of imports which allegedly infringe
U.S. intellectual property rights. The complaint names ten domestic and foreign
respondents, including the Company, and alleges infringement of a Tanabe U.S.
patent, claiming a process for preparing bulk diltiazem, the active ingredient
in the Company's Dilacor(R)XR product. In January 1995, the ITC Administrative
Judge ruled that Dilacor XR does not infringe the MMD/Tanabe patent under any
circumstances and that the MMD/Tanabe patent is invalid and unenforceable.
An appeal has been taken and a decision by the Commission is expected in June
1995.
21
<PAGE>
The Company is a plaintiff in a patent infringement lawsuit with Chiron
Corporation filed in the
United States District Court in California involving the patent licensed
exclusively to the Company
by the Scripps Research Institute ("Scripps") covering the anti-hemophilic
Factor VIII:C. The
Court is considering pending summary judgment motions. If this case goes to
trial, such trial is
likely to be scheduled to commence within the six to twelve months after the
Court's decision on
the summary judgment motions.
The eventual outcomes of the above matters of pending litigation cannot be
predicted with
certainty. The defense of these matters and the defense of expected additional
lawsuits related
to these matters may require substantial legal defense expenditures. The
Company follows
SFAS 5 in determining whether to recognize losses and accrue liabilities
relating to such matters.
Accordingly, the Company recognizes a loss if available information indicates
that a loss or range
of losses is probable and reasonably estimable. The Company estimates such
losses on the
basis of current facts and circumstances, prior experience with similar
matters, the number of
claims and the anticipated cost of administering, defending and, in some cases,
settling such
claims. The Company has also recorded as an asset, insurance recoveries which
are determined
to be probable of occurrence on the basis of the status of current discussions
with its insurance
carriers. If a contingent loss is not probable, but is reasonably possible,
the Company discloses
this contingency in the notes to its consolidated financial statements if it is
material. Based on
the information available, the Company does not believe that reasonably
possible uninsured
losses in excess of amounts recorded for the above matters of litigation would
have a material
adverse impact on the Company's financial position, results of operations or
cash flows.
22
<PAGE>
ITEM 4. Submission of Matters to a Vote of Security Holders
--------------------------------------------------------------
At the Annual Meeting of Shareholders held on April 25, 1995, the four nominees
to the Board of
Directors were elected to three-year terms ending in 1998 and the selection
of independent
accountants for 1995 was ratified.
The adoption of a new equity compensation plan was approved with 119,043,549
votes for,
5,527,788 votes against and 8,988,151 abstentions.
ITEM 6. Exhibits and Reports on Form 8-K
------------------------------------
a. Exhibits
11 Statement re computation of earnings per common share.
15 Letter re unaudited interim financial information.
27 Financial Data Schedule.
b. Reports on Form 8-K
The Company filed a Current Report on Form 8-K dated February 22, 1995
announcing the
agreement between Armour Pharmaceutical Company and Behringwerke AG to form
a plasma
proteins business joint venture.
23
<PAGE>
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 thereunto
duly authorized.
RHONE-POULENC RORER INC.
-------------------------------------------------
(Registrant)
May 12, 1995 /s/ PATRICK LANGLOIS
- ----------------- -----------------------------------------
Patrick Langlois
Senior Vice President and
Chief Financial Officer
24
<PAGE>
INDEX TO EXHIBITS
Exhibit No. Page
- ----------- -------
11 Statement re computation of earnings
per common share. 26
15 Letter re unaudited interim financial information. 27
27 Financial Data Schedule 28
25
EXHIBIT 11
RHONE-POULENC RORER INC. AND SUBSIDIARIES
Computation of Earnings Per Common Share
(Unaudited-dollars and shares in millions except per share data)
Three Months Ended
March 31,
--------------------
1995 1994
--------------------
Net income per common share as reported:
Net income before preferred dividend $91.9 $77.9
Less: Dividend on preferred stock (5.7) (4.2)
---------------------
Net income available to common shareholders $86.2 $73.7
====================
Average shares outstanding 134.1 136.5
=====================
Net income available to common
shareholders per share $0.64 $0.54
=====================
Net income per common share assuming full dilution:
Net income before preferred dividend $91.9 $77.9
Less: Dividend on preferred stock (5.7) (4.2)
---------------------
Net income available to common shareholders,
assuming full dilution $86.2 $73.7
====================
Average shares outstanding 134.1 136.5
Shares contingently issuable for stock plan 0.6 0.4
--------------------
Average shares outstanding, assuming full dilution 134.7 136.9
=====================
Net income available to common shareholders per
share, assuming full dilution $0.64 $0.54
====================
This calculation is submitted in accordance with the regulations of the
Securities and Exchange
Commission although not required by APB Opinion No. 15 because it results
in dilution of less
than 3%.
26
EXHIBIT 15
Securities and Exchange Commission
450 Fifth Street, N.W.Washington, DC 20549
RE: Rhone-Poulenc Rorer Inc.
Quarterly Report on Form 10-Q
We are aware that our report dated April 21, 1995, on our review of interim
financial information of Rhone-Poulenc Rorer Inc. (the Company), for the period
ended March 31, 1995, and included in the Company's quarterly report on Form
10-Q for the quarter then ended is incorporated by reference in the
registration statements of the Company on Form S-3 (Registration No. 33-58229,
Registration No. 33-62052, Registration No. 33-36558, Registration No. 33-
30795, Registration No. 33-23754, Registration No. 33-15671, Registration No.
33-43941, Registration No. 33-53378 and Registration No. 33-55694) and on
Form S-8 (Registration No. 33-58998, Registration No. 33-24537, Registration
No. 2-61635, Registration No. 2-78374 and Registration No. 33-21902).
Pursuant to Rule 436(c) under the Securities Act of 1933, this report should
not be considered a part of the registration statements prepared or certified
by us within the meaning of Sections 7 and 11 of that Act.
/s/COOPERS & LYBRAND L.L.P.
----------------------------------
COOPERS & LYBRAND L.L.P.
Philadelphia, Pennsylvania
May 12, 1995
27
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