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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K/A
AMENDMENT TO CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Amendment No. 1
Amendment to Current Report on Form 8-K Dated
September 28, 1995 and filed on October 11, 1995
Rhone-Poulenc Rorer Inc.
- -----------------------------------------------------------------
(Exact name of registrant as specified in its charter)
Pennsylvania 1-5851 23-1699163
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(State or other juris- (Commission (IRS Employer
diction of incorporation) File Number) Identification No.)
500 Arcola Road, Collegeville, PA 19426
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (610)454-8000
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(Former name or former address, if changed since last report)
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The undersigned registrant hereby amends the following item of
its Current Report on Form 8-K dated September 28, 1995, and
filed October 11, 1995, as set forth in the pages attached
hereto:
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS.
(a) Combined Financial Statements of the Plasma Division of
Behringwerke AG and of selected foreign subsidiaries of
Hoechst AG.
(b) Pro Forma Financial Information (unaudited) to reflect
RPR's acquisition of a 50% interest in a joint venture
formed to combine the plasma protein businesses of
Rhone-Poulenc Rorer's Armour Pharmaceutical Company and
Hoechst AG's Behringwerke subsidiaries.
(c) EXHIBITS.
Exhibit 23 - Consent of Independent Accountants.
2
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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.
RHONE-POULENC RORER INC.
--------------------------------
(registrant)
Dated: October 30, 1995 By: /s/ Thomas F. Crawford
---------------------------------
Thomas F. Crawford
Vice President and
Corporate Controller
3
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ITEM 7(a)
COMBINED FINANCIAL STATEMENTS
PLASMA DIVISION
OF
BEHRINGWERKE AG
SUBJECT TO THE JOINT VENTURE AGREEMENT
BETWEEN
BEHRINGWERKE AG
AND
ARMOUR PHARMACEUTICAL COMPANY AND ITS SUBSIDIARY
PLASMA ENTERPRISES, INC.
YEAR ENDED DECEMBER 31, 1994
WITH REPORT OF INDEPENDENT ACCOUNTANTS
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COMBINED FINANCIAL STATEMENTS
PLASMA DIVISION
OF
BEHRINGWERKE AG
SUBJECT TO THE JOINT VENTURE AGREEMENT
BETWEEN
BEHRINGWERKE AG
AND
ARMOUR PHARMACEUTICAL COMPANY AND ITS SUBSIDIARY
PLASMA ENTERPRISES, INC.
CONTENTS
Page
----
Report of Independent Accountants 3
Combined Financial Statements:
Combined balance sheet 4
Combined income statement 5
Combined statement of cash flows 6
Notes to combined financial statements 7 - 19
2
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REPORT OF INDEPENDENT ACCOUNTANTS
To the Board of Directors of Behringwerke AG:
We have audited the accompanying combined balance sheet of
the Plasma Division of Behringwerke AG and of selected foreign
subsidiaries of Hoechst AG (as described in Note 1 and 2 to the
combined financial statements) prepared in accordance with the
Joint Venture Agreement between Behringwerke AG and Armour
Pharmaceutical Company and its Subsidiary Plasma Enterprises,
Inc. as of December 31, 1994, and the related combined
statements of income and cash flows for the year then ended.
These financial statements are the responsibility of management.
Our responsibility is to express an opinion on these financial
statements based on our audits.
We conducted our audit in accordance with auditing
standards generally accepted in the United States. These
standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are
free of material misstatement. An audit includes examining, on
a test basis, evidence supporting the amounts and disclosures in
the financial statements. An audit also includes assessing the
accounting principles used and significant estimates made by
management, as well as evaluating the overall financial
statement presentation. We believe that our audit provides a
reasonable basis for our opinion.
In our opinion, the combined financial statements referred
to above present fairly, in all material respects, the combined
financial position of the Plasma Division of the Behringwerke AG
and selected foreign subsidiaries of Hoechst AG as of December
31, 1994 and the combined results of operations and cash flows
for the year then ended in conformity with accounting principles
generally accepted in the United States of America.
Frankfurt am Main, Germany C & L Deutsche Revision
April 28, 1995 Aktiengesellschaft
Wirtschaftsprufungsgesellschaft
Dreissig ppa. Wegener
Wirtschaftsprufer Wirtschaftsprufer
3
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PLASMA DIVISION
SUBJECT TO THE JOINT VENTURE AGREEMENT
BETWEEN BEHRINGWERKE AG AND
ARMOUR PHARMACEUTICAL COMPANY AND ITS
SUBSIDIARY PLASMA ENTERPRISES, INC.
COMBINED BALANCE SHEET AS OF DECEMBER 31, 1994
---------------------------------------------------------------
1994
--------
TDM
A S S E T S
Cash 627
Trade accounts receivable, net 166,124
Inventories 195,227
Other current assets 8,339
-------
Total current assets 370,317
Property, plant and equipment 63,150
Intangible assets 7,137
Other assets 4,714
-------
Total long term assets 75,001
-------
Total Assets 445,318
=======
L I A B I L I T I E S
Trade accounts payable 36,333
Accrued liabilities 82,459
Other current liabilities 35,174
-------
Total current liabilities 153,966
Long-term debt 47,296
Other liabilities 13,119
-------
Total Liabilities 214,381
Net assets 230,937
-------
Total Liabilities and Net Assets 445,318
=======
See the notes to the combined financial statements
4
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PLASMA DIVISION
SUBJECT TO THE JOINT VENTURE AGREEMENT
BETWEEN BEHRINGWERKE AG AND
ARMOUR PHARMACEUTICAL COMPANY AND ITS
SUBSIDIARY PLASMA ENTERPRISES, INC.
COMBINED INCOME STATEMENT FOR THE YEAR ENDED 1994
---------------------------------------------------------------
1994
-------
TDM
Net sales 696,708
Cost of goods sold 285,588
Selling, general and administrative
expenses 140,610
-------
Operating Income 270,510
Interest expense, net 11,187
Other expense, net 38,536
-------
Income Before Income Taxes 220,787
Income taxes 96,382
-------
Net Income 124,405
=======
See the notes to the combined financial statements
5
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PLASMA DIVISION
SUBJECT TO THE JOINT VENTURE AGREEMENT
BETWEEN BEHRINGWERKE AG AND
ARMOUR PHARMACEUTICAL COMPANY AND ITS
SUBSIDIARY PLASMA ENTERPRISES, INC.
COMBINED STATEMENT OF CASH FLOWS
FOR THE YEAR ENDED 1994
- ----------------------------------------------------------------
1994
-------
TDM
Cash flow from operating activities :
Net Income 124,405
Adjustments to reconcile net income to net
cash provided by operating activities :
Depreciation and amortization 11,173
Increase (decrease) in provisions 30,200
Changes in assets and liabilities :
Inventories -34,862
Receivables 10,955
Accounts payable and other
operating liabilities 20,048
Other operating assets -3,574
-------
Cash provided by operating activities 158,345
Cash flows from investing activities :
Purchases of non current assets -3,726
Disposals of non current assets 654
-------
Cash used for investing activities -3,072
Cash flow from financing activities :
Transfers to Hoechst AG -158,455
-------
Cash used in financing activities -158,455
-------
Net (decrease) increase in cash -3,182
Cash at beginning of year 3,809
-------
Cash at end of year 627
=======
See the notes to the combined financial statements
6
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PLASMA DIVISION
SUBJECT TO THE JOINT VENTURE AGREEMENT
BETWEEN BEHRINGWERKE AG AND
ARMOUR PHARMACEUTICAL COMPANY AND ITS
SUBSIDIARY PLASMA ENTERPRISES, INC.
YEAR ENDED DECEMBER 31, 1994
NOTES TO COMBINED FINANCIAL STATEMENTS
1. FORMATION OF THE JOINT VENTURE
On February 22, 1995, a joint venture agreement ("the
Agreement") was entered into between Behringwerke AG
("Behring"), a German company, and Armour Pharmaceutical Company
("Armour") and its subsidiary Plasma Enterprises, Inc., United
States companies, whereby it was agreed to combine their
respective blood plasma derivative businesses into a worldwide
joint venture ("the Joint Venture") in which the worldwide
profits shall be split evenly between Armour and Behring. The
business includes the manufacture, distribution and sale of
products in the field of therapeutics and prophylaxis.
The agreement specifies, among other things, that Behring shall
transfer or cause to be transferred their worldwide blood plasma
derivative business ("the Plasma Division") including all
functional and administrative areas to the Joint Venture which
is accounted for in one industry segment.
2. BASIS OF PRESENTATION
The accompanying combined financial statements have been
prepared in connection with the Joint Venture Agreement to
reflect certain historical information relating to the Plasma
Division which include the entities comprising Behring's
contribution to the Joint Venture.
The financial statements have been prepared from the accounting
records of Behring and included companies. Complete records of
assets and liabilities and revenues and expenses of Behring's
and included companies' separate product lines comprising the
Plasma Division were not maintained. Therefore, these
statements included certain amounts derived through allocations
of accounts as further described where applicable in the notes
to the combined financial statements. Management of Behring
believes the methods used to allocate such items provide a
reasonable basis for presentation.
Due to the organization and reporting structure of the Plasma
Business, summarized financial records of this business were not
maintained as one consolidated group. Further, certain services,
such as treasury, were mainly provided by the Hoechst AG group
to the Plasma Division. Therefore, the accompanying financial
statements do not purport to present the complete financial
position or results of operations and cash flows of the Plasma
Division as if it had been operated as a separate, unaffiliated
entity, but rather as a part of Behring's overall business
during the period presented. Further, these statements were
prepared for the purpose of complying with the rules and
regulations of the Securities and Exchange Commission located in
the United States of America.
7
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PLASMA DIVISION
SUBJECT TO THE JOINT VENTURE AGREEMENT
BETWEEN BEHRINGWERKE AG AND
ARMOUR PHARMACEUTICAL COMPANY AND ITS
SUBSIDIARY PLASMA ENTERPRISES, INC.
YEAR ENDED DECEMBER 31, 1994
NOTES TO COMBINED FINANCIAL STATEMENTS
3. SIGNIFICANT ACCOUNTING POLICIES
ALL MONETARY AMOUNTS HEREIN ARE SHOWN IN THOUSANDS OF DEUTSCHE
MARKS.
Principles of Combination
The entities included in the accompanying combined financial
statements and the related equity ownership interest of Behring
at December 31, 1994 are as follows:
Name City / Country Ownership %
- ---- -------------- -----------
Seroplas GmbH Berlin, Germany 50 % directly
50 % indirectly
Kryo-Plas GmbH Berlin, Germany 100 %
Associated Bioscience Inc. Phoenix, USA 100 %
In addition to these companies the financial statements also
include the Plasma Division of the following 100% owned Hoechst
AG companies which is the parent company of Behring.
Name City / Country
- ---- --------------
Hoechst do Brazil Quimica e
Farmaceutica S.A. Sao Paulo, Brazil
Istituto Behring S.p.A. Milan, Italy
Hoechst Iberica, S.A. Barcelona, Spain
Behring Institut Ges.m.b.H Vienna, Austria
Hoechst Roussel Ltd. Denham, UK
The impact of material transactions between the entities
included in the combined financial statements have been
eliminated.
8
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PLASMA DIVISION
SUBJECT TO THE JOINT VENTURE AGREEMENT
BETWEEN BEHRINGWERKE AG AND
ARMOUR PHARMACEUTICAL COMPANY AND ITS
SUBSIDIARY PLASMA ENTERPRISES, INC.
YEAR ENDED DECEMBER 31, 1994
NOTES TO COMBINED FINANCIAL STATEMENTS
3. SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
Accounts Receivable
Accounts receivable are presented net of the allowances for
doubtful accounts. Allowances are provided for both the
specific and general risks inherent in receivables. The Plasma
Division evaluates the credit worthiness of each customer, but
it generally does not require its accounts receivable to be
collateralized.
Inventories
Inventories are stated at the lower of cost or market, with cost
generally determined on an average cost basis.
Property, Plant and Equipment
Property, plant and equipment are recorded at cost.
Maintenance, repairs and minor renewals are charged to expense
while major renewals and betterments are capitalized.
Depreciation expense is computed principally on the straight-
line method over the estimated useful lives of the assets as
follows:
Buildings - 20 - 33 years
Technical equipment and machinery - 5 - 10 years
Equipment factory and office equipment - 4 - 10 years
Intangible Assets
Intangible assets consist mainly of goodwill, licenses and
purchased software. Amortization is provided using the straight-
line method over 20 years for goodwill and 3 to 5 years for
purchased software, 40 years for licenses.
Revenue Recognition
Revenue is recognized upon shipment of goods to customers net of
applicable discounts and customer bonuses.
9
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PLASMA DIVISION
SUBJECT TO THE JOINT VENTURE AGREEMENT
BETWEEN BEHRINGWERKE AG AND
ARMOUR PHARMACEUTICAL COMPANY AND ITS
SUBSIDIARY PLASMA ENTERPRISES, INC.
YEAR ENDED DECEMBER 31, 1994
NOTES TO COMBINED FINANCIAL STATEMENTS
3. SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
Research and Development
Research and development costs are charged to expense as
incurred and amounted in total to 12,826 in 1994.
Foreign Currency Translation
Local currencies are considered the functional currencies of the
international entities included in the combined financial
statements. Assets and liabilities are translated at year-end
exchange rates for operations in local currency environments
while income and expense items are translated at average rates
of exchange prevailing during the year. Translation adjustments
are recorded as a component of net assets.
4. CASH
The treasury function is generally not separately maintained by
each of the components of the Plasma Division, but rather is
centrally maintained by Hoechst AG who provides cash required
and receives cash generated by the entities in the combined
financial statements who do not maintain their own treasury
function. Therefore, cash included in the combined financial
statements is only for those entities which directly maintained
and accounted for their own cash balances. For those components
of the Plasma Division which did not maintain their own cash,
the net cash activity with Hoechst AG is included as a component
of the funds made available by Hoechst AG in net assets.
5. ACCOUNTS RECEIVABLE
Plasma Division accounts receivable to a certain extent in 1994
were not separately maintained for the Plasma Division in the
accounting records. Therefore, the balances allocated to Plasma
Division have been partly estimated by using statistical methods
based on a ratio of Plasma Division sales to total sales.
According to applicable agreements, the foreign accounts
receivable of the German components of the Plasma Division are
settled by Hoechst AG, which is a related entity, three months
after the date of the related sale. These foreign receivables of
68,122 as of December 31, 1994 thus represent the combined
year's export sales for the months October, November and
December. The bad debt risk for these sales remains with Hoechst
AG.
10
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PLASMA DIVISION
SUBJECT TO THE JOINT VENTURE AGREEMENT
BETWEEN BEHRINGWERKE AG AND
ARMOUR PHARMACEUTICAL COMPANY AND ITS
SUBSIDIARY PLASMA ENTERPRISES, INC.
YEAR ENDED DECEMBER 31, 1994
NOTES TO COMBINED FINANCIAL STATEMENTS
5. ACCOUNTS RECEIVABLE (CONTINUED)
The total allowance for doubtful accounts amounts to
approximately 800 as of December 31, 1994.
Receivable from related parties were 184 as of December 31,
1994.
6. INVENTORIES
1994
--------
Finished goods 40,833
Work in process 66,493
Raw materials and supplies 87,901
--------
195,227
========
Inventories of the Plasma Division were identified directly from
the inventory records at the end of the year. Inventory
reserves of 10,017 as of December 31, 1994 are included in the
above amount in order to state the inventory balances at their
estimated net realizable value.
7. OTHER CURRENT ASSETS
The other current assets were not maintained separately for the
Plasma Division in the accounting records and therefore amounts
have been allocated to the Plasma Division based on a ratio of
Plasma Division sales to total sales insofar as they could not
be allocated individually.
The above mentioned amounts mainly consist of receivables from
tax authorities in various locations arising from tax
overpayments, receivables due to social security overpayments as
well as receivables against suppliers and insurance companies.
11
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PLASMA DIVISION
SUBJECT TO THE JOINT VENTURE AGREEMENT
BETWEEN BEHRINGWERKE AG AND
ARMOUR PHARMACEUTICAL COMPANY AND ITS
SUBSIDIARY PLASMA ENTERPRISES, INC.
YEAR ENDED DECEMBER 31, 1994
NOTES TO COMBINED FINANCIAL STATEMENTS
8. FIXED ASSETS
Other
equipment,
Technical factory
Land equipment and
and and office
building machinery equipment Total
------ ------ ------ ------
Balance at
December 31, 1994 93,873 73,509 28,323 195,705
Accumulated
Depreciation 56,811 55,529 20,215 132,555
------ ------ ------ -------
Book Value at
December 31, 1994 37,062 17,980 8,108 63,150
====== ====== ====== =======
Depreciation for
the year 3,896 3,160 3,463 10,519
The fixed assets utilized by the Plasma Division are generally
not owned directly, but have been made effectively available by
related companies to the Plasma Division generally through
capital lease arrangements. These leasing arrangements are
recorded in the combined financial statements as a capital
leases according to the US GAAP requirements of SFAS 13,
"Accounting for Leases". At inception of the related capital
leases, the related assets as part of property, plant and
equipment and corresponding obligations are recorded as long
term debt at the net book value of the leased assets. During
1994 new capital lease obligations of 2,540 were entered into.
These are considered non cash transactions for cash flow
statement purposes.
The following is a schedule by year of future minimum payments
under capital leases as of December 31, 1994 (contracts
generally have an indefinite term with a 2 year minimum period):
12
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PLASMA DIVISION
SUBJECT TO THE JOINT VENTURE AGREEMENT
BETWEEN BEHRINGWERKE AG AND
ARMOUR PHARMACEUTICAL COMPANY AND ITS
SUBSIDIARY PLASMA ENTERPRISES, INC.
YEAR ENDED DECEMBER 31, 1994
NOTES TO COMBINED FINANCIAL STATEMENTS
8. FIXED ASSETS (CONTINUED)
1995 13,618
1996 12,057
1997 10,500
1998 9,500
1999 8,750
------
Total minimum lease payments 54,423
Less, Amount representing interest 18,955
------
Present value of minimum obligations under capital
lease 35,468
Less, Current portion of obligations under capital
leases 8,366
------
Long-Term obligation under capital leases 27,102
======
Because not all of the leased facilities and equipment can be
attributed directly to the Plasma Division, only those tangible
assets which were used 100% by the Plasma Division or which
could be attributed 100% to cost centers of the Plasma Division
have been included in the combined financial statements.
9. INTANGIBLE ASSETS
1994
------
Goodwill 7,710
Intangibles 2,215
------
Total 9,925
Accumulated Amortization 2,788
------
Net Book Value 7,137
======
Amortization for the year 654
13
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PLASMA DIVISION
SUBJECT TO THE JOINT VENTURE AGREEMENT
BETWEEN BEHRINGWERKE AG AND
ARMOUR PHARMACEUTICAL COMPANY AND ITS
SUBSIDIARY PLASMA ENTERPRISES, INC.
YEAR ENDED DECEMBER 31, 1994
NOTES TO COMBINED FINANCIAL STATEMENTS
10. OTHER ASSETS
The other investments include the long term portion of lendings
to employees of the Plasma Division provided in connection with
the promotion of house building. Loans which are non-interest
bearing or below market interest bearing have been discounted to
their present value.
11. TRADE ACCOUNTS PAYABLE
Trade accounts payable are stated at repayment amounts and have
been partly identified if possible on a one for one basis and
for the remaining amounts on the basis of ratio of Plasma
Division sales to total sales.
Related party payables amount to 4,137 as of December 31,1994.
12. ACCRUED LIABILITIES
Accrued liabilities consist of the following:
1994
------
Various litigation matters 61,733
Accrued liabilities for staff related expenses
(anniversary bonuses, vacation pay, compulsory
employees' accident insurance) 4,704
Risks from pending contracts (sales contracts) 5,860
Other 10,162
------
TOTAL 82,459
======
14
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PLASMA DIVISION
SUBJECT TO THE JOINT VENTURE AGREEMENT
BETWEEN BEHRINGWERKE AG AND
ARMOUR PHARMACEUTICAL COMPANY AND ITS
SUBSIDIARY PLASMA ENTERPRISES, INC.
YEAR ENDED DECEMBER 31, 1994
NOTES TO COMBINED FINANCIAL STATEMENTS
13. OTHER CURRENT LIABILITIES
The other current liabilities consist of the following:
1994
------
Current obligations under capital leases 8,366
Taxes, duties and VAT 17,472
Payroll liabilities 4,919
Other 4,417
------
Total 35,174
======
The distribution of the liabilities in connection with payroll
accounts was calculated based on the number of staff in the
Plasma Division compared to that of the total. All other
liabilities that could not be identified on a one for one basis
were allocated to the Plasma Division according to the ratio of
Plasma Division sales to total sales.
14. PENSION OBLIGATIONS
Substantially all employees of the Plasma Division in Germany
participate in a defined benefit pension plan, based on years of
service. These employees are entitled to pension benefits at
the age of 60 years, for disability and widows' benefits.
Pension rights are vested after ten years of membership in the
plan or after twelve years of service and three years of
membership. In addition, an employee must be at least 35 years
old in order to have vested pension rights. Employees are
entitled to the benefit plan if pensionable income is above the
social security contribution ceiling.
Some of the foreign affiliated entities operate immaterial
defined benefit and defined contribution pension plans.
Behring also has a defined contribution plan.
The annual pension cost for the contribution plans were:
1994
-----
Germany 800
Other countries 208
-----
1,008
=====
15
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PLASMA DIVISION
SUBJECT TO THE JOINT VENTURE AGREEMENT
BETWEEN BEHRINGWERKE AG AND
ARMOUR PHARMACEUTICAL COMPANY AND ITS
SUBSIDIARY PLASMA ENTERPRISES, INC.
YEAR ENDED DECEMBER 31, 1994
NOTES TO COMBINED FINANCIAL STATEMENTS
14. PENSION OBLIGATIONS (CONTINUED)
The following information for the employees of the Plasma
Division's material pension plan is provided in accordance with
the US GAAP disclosure requirements of SFAS No. 87, "Employers'
Accounting for Pensions". For 1994, assumptions used to
calculate costs and actuarial present value include an assumed
discount and rates of increase in remuneration and post-
retirement pension increase used in calculating the projected
benefit obligation were 7%, 3.5% and 2.5%, respectively.
According to present German pension legislation, the employer is
under obligation to review every three years the adequacy of
current pension payments to former employees. The material
pension plan is unfunded.
The net periodic pension cost for the Plasma Division's
retirement plan covering 604 employees of Behringwerke AG
comprised:
1994
------
Service cost: present value of benefits
earned during the year 469
Interest cost on projected benefit obligation 570
Amortization of transition amount 54
-----
Total Pension Cost 1,093
Further pension cost due to other accessory
pension considerations 55
-----
Total annual pension cost 1,148
=====
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PLASMA DIVISION
SUBJECT TO THE JOINT VENTURE AGREEMENT
BETWEEN BEHRINGWERKE AG AND
ARMOUR PHARMACEUTICAL COMPANY AND ITS
SUBSIDIARY PLASMA ENTERPRISES, INC.
YEAR ENDED DECEMBER 31, 1994
NOTES TO COMBINED FINANCIAL STATEMENTS
14. PENSION OBLIGATIONS (CONTINUED)
The status of the Plasma Division's retirement plans is as
follows:
1994
------
Actuarial present value of benefits:
Vested 7,437
Non-vested 879
------
Accumulated benefit obligation 8,316
Effect of projected future salary increases 857
------
Projected benefit obligation 9,173
Unrecognized transition amount 704
------
Total Pension Liability 8,469
Further liabilities due to accessory pension
considerations 589
------
Total Long-Term Liability 9,058
======
15. INCOME TAXES
Income before income taxes in Germany was 202,599 in 1994 while
income before income taxes outside of Germany was 18,188 in
1994.
The provision for income taxes are:
1994
------
Current:
Germany 88,851
Non-Germany 8,411
------
97,262
Deferred:
Germany -534
Non-Germany -346
------
-880
------
Total income tax 96,382
======
17
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PLASMA DIVISION
SUBJECT TO THE JOINT VENTURE AGREEMENT
BETWEEN BEHRINGWERKE AG AND
ARMOUR PHARMACEUTICAL COMPANY AND ITS
SUBSIDIARY PLASMA ENTERPRISES, INC.
YEAR ENDED DECEMBER 31, 1994
NOTES TO COMBINED FINANCIAL STATEMENTS
15. INCOME TAXES (CONTINUED)
The current tax provision was calculated on a stand alone basis
for the Plasma Division using the various enacted tax rates in
which the Plasma Division operates. The deferred tax provision
was calculated based on actual temporary differences residing to
the Plasma Division. Deferred income taxes are provided for
temporary differences between book and tax bases of the Plasma
Division's assets and liabilities. Temporary differences giving
rise to a significant portion of the deferred tax assets and
liabilities as at December 31 are:
1994
-----
Deferred Tax Assets
Accrued liabilities 4,178
Other items 381
Deferred Tax Liabilities
Inventories 5,510
16. OTHER LIABILITIES
Other liabilities consist mainly of pension and anniversary
liabilities.
17. NET ASSETS
1994
--------
Balance at beginning of year 260,014
Net profit for the year 124,405
Transfers (to) Hoechst AG -153,094
Translation differences -388
--------
Balance at end of year 230,937
========
Transfers to Hoechst AG are mainly related due to profit
distribution and a transfer of available funds.
18
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PLASMA DIVISION
SUBJECT TO THE JOINT VENTURE AGREEMENT
BETWEEN BEHRINGWERKE AG AND
ARMOUR PHARMACEUTICAL COMPANY AND ITS
SUBSIDIARY PLASMA ENTERPRISES, INC.
YEAR ENDED DECEMBER 31, 1994
NOTES TO COMBINED FINANCIAL STATEMENTS
18. COMMITMENTS AND CONTINGENCIES
Commitments to enter into new capital leases: 33,260 as of
December 31, 1994.
Various lawsuits arising during the normal course of business
are pending against the Plasma Division. In the opinion of the
Plasma Division's management, the ultimate outcome, if any,
resulting from these matters are covered by the accruals set up
and therefore will not have a further significant effect on the
Plasma Divisions net assets.
19. FINANCIAL INSTRUMENTS
The Plasma Division has no foreign exchange forward or option
contracts for the reporting periods as the treasury function is
mainly held by the parent company Hoechst AG. The Plasma
Division does not engage in speculation.
20. CONCENTRATION OF CREDIT RISK
Financial instruments that potentially subject the Plasma
Division to significant concentrations of credit risk consist
principally of cash and accounts receivable. The carrying
amount of these items are a reasonable estimate of their fair
market value due to their short term nature.
Concentrations of credit risk with respect to accounts
receivable are generally diversified due to the large number of
entities comprising the customer base for the Plasma Division
and their disposition across many different industries and
geographic locations. No single customer accounted for a
significant amount of the sales of the Plasma Division and there
was no significant accounts receivable from a single customer.
19
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ITEM 7(b)
RHONE-POULENC RORER INC.
UNAUDITED PRO FORMA CONSOLIDATED FINANCIAL INFORMATION
The following unaudited pro forma consolidated financial
information reflects the contribution by Rhone-Poulenc Rorer
Inc.'s ("RPR" or the "Company") Armour Pharmaceutical Company
subsidiary ("Armour") of certain net assets related to its
plasma proteins business to a joint venture with Behringwerke AG
("Behring"), a subsidiary of Germany's Hoechst AG, in exchange
for a 50% equity interest in the new entity. Accordingly, the
RPR unaudited pro forma consolidated financial statements
reflect the elimination of Armour contributed net assets and the
equity method of accounting for the 50% ownership interest in
the new joint venture entity.
The unaudited pro forma consolidated financial information
reflects the transaction as if it had occurred on December 31,
1994 with respect to the balance sheet and January 1, 1994 with
respect to the statement of income. Accordingly, certain
previously reported items have been reclassified to conform to
current classifications. The unaudited pro forma consolidated
financial information does not purport to be indicative of the
Company's financial position or results of operations had the
transaction actually occurred on those dates. This information
is not necessarily indicative of future financial position or
future operating results.
The unaudited pro forma consolidated financial information has
been prepared based upon assumptions deemed appropriate by
Armour and Behring. Certain of the assumptions and adjustments
made in the preparation of such information are described under
the caption "Notes to Unaudited Pro Forma Consolidated Financial
Information" following the tables below.
The unaudited pro forma consolidated financial information
should be read in conjunction with the separate audited
historical consolidated financial statements of the Company and
the notes thereto set forth in the Company's 1994 Annual Report
on Form 10-K (as restated in the Company's Current Report on
Form 8-K dated August 14, 1995 to reflect the acquisition of
certain businesses from Rhone-Poulenc S.A.) , and the separate
audited historical combined financial statements of Behring and
the notes thereto set forth in Item 7(a) of this Form 8-K/A.
1
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RHONE-POULENC RORER INC.
UNAUDITED PRO FORMA CONSOLIDATED BALANCE SHEET
AT DECEMBER 31, 1994
(Dollars in millions)
UNAUDITED
----------------------------------
Less
Restated Armour Pro Forma RPR
1994 Contributed Adjustments Pro Forma
-------------------------------------------
Assets
Current:
Cash and cash equivalents $ 118.8 $0.0 $ 118.8
Trade accounts receivable,
net 812.1 67.8 744.3
Inventories 612.5 89.6 522.9
Other current assets 543.3 14.2 529.1
------- ---------- ------- --------
Total current assets 2,086.7 171.6 0.0 1,915.1
Property, plant and
equipment, net 1,199.8 11.1 (55.6) A 1,133.1
Goodwill and intangibles,
net 876.4 91.7 784.7
Other assets 489.4 1.3 158.5 A,B 646.6
-------- ----------- -------- --------
Total assets $4,652.3 $ 275.7 $ 102.9 $4,479.5
======== =========== ======== ========
Liabilities
Current:
Short-term debt $127.8 $ 2.0 $ 125.8
Accounts payable 470.5 21.9 448.6
Income taxes payable 70.6 0.0 70.6
Other current liabilities 826.1 0.0 826.1
-------- ----------- -------- --------
Total current liabilities 1,495.0 23.9 0.0 1,471.1
Long-term debt 439.9 143.6 296.3
Deferred income taxes 31.6 0.0 31.6
Other liabilities 575.4 5.3 570.1
-------- ----------- -------- ---------
Total liabilities 2,541.9 172.8 0.0 2,369.1
-------- ----------- -------- ---------
Shareholders' equity 2,110.4 102.9 102.9 B 2,110.4
-------- ----------- -------- ---------
Total liabilities and
shareholders' equity $4,652.3 $ 275.7 $ 102.9 $4,479.5
======== =========== ======== =========
See accompanying notes to unaudited pro forma consolidated
financial statements.
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RHONE-POULENC RORER INC.
UNAUDITED PRO FORMA CONSOLIDATED INCOME STATEMENT
FOR THE YEAR ENDED DECEMBER 31, 1994
(Dollars in millions, except per share data)
UNAUDITED
-------------------------------
Less
Restated Armour Pro Forma RPR
1994 Contributed Adjustments Pro Forma
--------------------------------------------
Net sales $4,486.6 $415.1 $4,071.5
Cost of products sold 1,555.8 193.9 1,361.9
Selling, delivery and
administrative expenses 1,605.8 57.7 1,548.1
Research and development
expenses 606.1 15.1 591.0
Restructuring and other
charges 121.2 0.0 121.2
-------- -------- --------- --------
Operating income 597.7 148.4 0.0 449.3
Interest expense, net 47.1 9.8 (3.9) C 33.4
Other (income) expense, net (8.8) (1.3) (7.5)
Equity in (earnings) loss of
nonconsolidated affiliates 46.5 0.0 (134.1) D (87.6)
-------- ------- ------- -------
Income before income taxes 512.9 139.9 138.0 511.0
Provision for income taxes 145.8 51.8 52.2 E 146.2
-------- ------- ------- -------
Net income 367.1 88.1 85.8 364.8
Dividends on preferred stock 19.2 0.0 0.0 19.2
-------- ------- -------- -------
Net income available to
common shareholders $ 347.9 $ 88.1 $ 85.8 $ 345.6
======== ======= ======== =======
Earnings per common share,
restated, pro forma $ 2.50 $ 2.49
======== =======
Weighted average number of
common shares outstanding: 135.3 135.3
======== =======
See accompanying notes to unaudited pro forma consolidated
financial statements.
3
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RHONE-POULENC RORER INC.
NOTES TO UNAUDITED PRO FORMA CONSOLIDATED FINANCIAL INFORMATION
(Unaudited)
(A) Decrease in property, plant and equipment (and
corresponding increase in other non-current assets) of $55.6
million reflects the contribution of RPR's Kankakee production
facility to the joint venture through a direct financing lease.
(B) Contribution of RPR's plasma division net assets of $102.9
million in exchange for a 50 percent equity investment in the
new entity. The assets and liabilities contributed by RPR and
Hoechst to the joint venture are recorded at their historical
net book values and, consequently, no recognition is given to
their fair market values at formation. In combining the assets
and liabilities under this premise, RPR's initial equity
interest in the joint venture has a net book value of $78.4
million, calculated at 50 percent of the combined net assets
contributed by RPR and Hoechst. Therefore, RPR's 50 percent
equity interest in the joint venture is exceeded by the book
value of the net assets contributed by $24.5 million. However,
no recognition is given to this amount in the Pro Forma
Financial Statements.
The following table presents unaudited summarized financial
information of the joint venture's balance sheet on a pro forma
basis at December 31, 1994:
Amount
($ in Millions)
---------------
Current assets 403.1
Noncurrent assets 205.8
Current liabilities 51.9
Noncurrent liabilities 400.2
Net assets 156.8
RPR's equity
in net assets 78.4
(C) Represents interest income earned on direct financing lease
(see note A) bearing interest at an annual rate of 7 percent.
4
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RHONE-POULENC RORER INC.
NOTES TO UNAUDITED PRO FORMA CONSOLIDATED FINANCIAL INFORMATION
(Unaudited)
(D) Increase in equity earnings of nonconsolidated affiliates
to reflect RPR's share of joint venture pro forma earnings. The
pro forma earnings of the joint venture contain an appropriate
level of service fee adjustments as determined by the parent
companies in order to approximate the results of operations
assuming the transaction had been effective on January 1, 1994.
The following table presents unaudited summarized earnings data
of the joint venture on a pro forma basis for the year ended
December 31, 1994:
Amount
($ in Millions)
---------------
Net sales 850.5
Gross margin 478.7
Income before tax 268.3
RPR's equity in income
of joint venture 134.1
(E) Income tax expense adjustment resulting from certain
taxable pro forma adjustments to income. Tax expense on U.S.
based income is computed at a combined Federal and State
statutory rate of 37%. All other non-U.S. sourced income is
taxed at an effective tax rate of 43%.
5
ITEM 7(c)
EXHIBIT 23
CONSENT OF INDEPENDENT ACCOUNTANTS
We consent to the incorporation by reference in the registration
statements of Rhone-Poulenc Rorer Inc. (formerly Rorer Group
Inc.) on Form S-3 (Registration No. 33-62052, Registration No.
33-36558, Registration No. 33-30795, Registration No. 33-23754,
Registration No. 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) of our report dated April 28, 1995,
on our audit of the combined financial statements of the Plasma
Division of Behringwerke AG and of selected foreign subsidiaries
of Hoechst AG as of December 31, 1994, and for the year then
ended, which report is included in the current report on Form 8-K.
Frankfurt, Germany
September 28, 1995
C&L Deutsche Revision
Aktiengesellschaft
Wirtschaftsprufungsgesellschaft
/s/ DREISSIG /s/ PPA. WEGENER
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DREISSIG PPA. WEGENER
