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 September 30, 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.
134,278,795 shares as of October 31, 1995.
The exhibit index is located on page 23.
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RHONE-POULENC RORER INC.
TABLE OF CONTENTS
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Page
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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 7-13
Item 2. Management's Discussion and Analysis of Results of
Operations and Financial Condition 14-23
PART II. OTHER INFORMATION
Item 1. Legal Proceedings 24-28
Item 6. Exhibits and Reports on Form 8-K 29-30
2
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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
September 30, 1995, and the related condensed consolidated
statements of income and cash flows for the three and nine month
periods ended September 30, 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 appearing in the Company's Form
8-K dated August 14, 1995. Those financial statements were
prepared to give effect to the acquisitions from Rhone-Poulenc
S.A. of Cooperation Pharmaceutique Francaise and a Brazilian
pharmaceutical business in the second quarter of 1995. The
acquisitions of these entities under common control were treated
for accounting purposes in a manner similar to a pooling of
interests as described in Note 2. 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
except for the transactions described in Note 2 for which date
is August 14, 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
October 20, 1995
3
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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 Nine Months Ended
September 30, September 30,
------------------ -------------------
Restated Restated
1995 1994 1995 1994
-------- -------- -------- --------
Net sales $1,212.7 $1,137.3 $3,552.4 $3,083.9
Cost of products sold 419.9 396.4 1,251.6 1,070.2
Selling, delivery and
administrative expenses 421.6 407.6 1,283.2 1,133.5
Research and development
expenses 189.7 153.3 532.7 430.1
Restructuring and other charges -- -- -- 121.2
-------- -------- -------- --------
Operating income 181.5 180.0 484.9 328.9
Interest expense - net 17.9 12.7 40.9 36.0
(Gain) loss on sale of assets -- (4.6) (49.5) (8.6)
Other expense - net 5.8 8.0 65.6 34.3
-------- -------- -------- --------
Income before income taxes 157.8 163.9 427.9 267.2
Provision for income taxes 45.7 49.4 129.2 73.3
-------- -------- -------- --------
Net income 112.1 114.5 298.7 193.9
Dividends on preferred stock (4.8) (4.9) (16.2) (13.8)
-------- -------- -------- --------
Net income available to
common shareholders $107.3 $109.6 $282.5 $180.1
======== ======== ======== ========
Earnings per common share $ 0.80
========
Earnings per common share,
pro forma $ 0.80 $ 2.09 $ 1.28
======== ======== ========
Cash dividend per common share $ 0.30 $ 0.28 $ 0.90 $ 0.84
Average common shares
outstanding 134.2 134.8 134.2 135.6
See accompanying Notes to Condensed Consolidated Financial Statements.
4
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RHONE-POULENC RORER INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited - dollars in millions)
Restated
September 30, December 31
1995 1994
------------- -----------
ASSETS
Current:
Cash and cash equivalents $ 44.3 $ 118.8
Short-term investments 11.8 --
Trade accounts and notes receivable, less
reserves of $82.2 (1994: $78.6) 777.9 812.1
Inventories 713.3 612.5
Other current assets 640.5 543.3
-------------- ----------
Total current assets 2,187.8 2,086.7
Time deposits, at cost 43.6 55.8
Property, plant and equipment, net of accumulated
depreciation of $1,256.9 (1994: $1,111.1) 1,282.5 1,199.8
Goodwill, net of accumulated amortization of $240.7
(1994: $210.2) 747.7 705.9
Intangibles, net of accumulated amortization of $132.1
(1994: $121.2) 199.0 170.5
Other assets 632.8 433.6
-------------- ----------
Total assets $5,093.4 $4,652.3
============== ==========
LIABILITIES
Current:
Short-term debt $ 162.0 $ 127.8
Accounts payable 473.0 470.5
Other current liabilities 780.4 896.7
-------------- ----------
Total current liabilities 1,415.4 1,495.0
Long-term debt 872.2 439.9
Deferred income taxes 20.8 31.6
Other liabilities, including minority interests 948.6 575.4
-------------- ----------
Total liabilities 3,257.0 2,541.9
Contingencies
SHAREHOLDERS' EQUITY
Market Auction Preferred Shares, without par value
(liquidation preference $1,000 per share);
authorized, issued and outstanding
1994-225,000 shares -- 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 134,278,795 shares
(1994: 134,095,649 shares) 139.3 139.1
Capital in excess of stated value 144.9 412.2
Retained earnings 1,565.5 1,403.7
Employee Benefits Trust (185.7) (185.7)
Cumulative translation adjustments (2.6) (58.9)
----------- ----------
Total shareholders' equity 1,836.4 2,110.4
----------- ----------
Total liabilities and shareholders' equity $5,093.4 $4,652.3
=========== ==========
See accompanying Notes to Condensed Consolidated Financial Statements.
5
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RHONE-POULENC RORER INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited - dollars in millions)
Nine Months Ended
September 30,
------------------
Restated
1995 1994
------- --------
CASH FLOWS FROM OPERATING ACTIVITIES:
Net cash provided by operating activities $ 275.6 $ 411.9
CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures (192.7) (144.4)
Businesses acquired (185.0) --
Purchase of investments/product rights (124.7) (28.7)
Proceeds from sale of assets 85.4 10.5
Net investment hedging, net (3.5) (33.4)
------- -------
Net cash used in investing activities (420.5) (196.0)
CASH FLOWS FROM FINANCING ACTIVITIES:
Debt borrowings (repayments):
Long-term debt, net 29.7 35.9
Short-term debt, net 394.3 (16.2)
Redemption of Market Auction Preferred Shares (225.0) --
Issuances of common stock 6.9 1.8
Shares repurchased for Employee Benefits Trust -- (109.5)
Dividends paid (136.9) (127.9)
------- --------
Net cash provided by (used in) financing
activities 69.0 (215.9)
Effect of exchange rate changes on cash 1.4 3.9
------- --------
Net increase (decrease) in cash and cash
equivalents (74.5) 3.9
Cash and cash equivalents at beginning of year 118.8 35.4
------- --------
Cash and cash equivalents at September 30 $ 44.3 $ 39.3
======= ========
See accompanying Notes to Condensed Consolidated Financial Statements.
6
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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, all of which are of a normal recurring nature,
necessary for a fair presentation of financial position, cash
flows and results of operations for the periods presented.
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 and the Company's restated financial statements
for the year ended December 31, 1994 as filed on a Current
Report on Form 8-K dated August 14, 1995 are on file with the
Securities and Exchange Commission and should be read in
conjunction with these condensed consolidated financial
statements.
NOTE 2.- ACQUISITIONS FROM RHONE-POULENC S.A.
In the 1995 second quarter, Rhone-Poulenc Rorer Inc. acquired
from Rhone-Poulenc S.A. ("RP") the businesses of Cooperation
Pharmaceutique Francaise ("Cooper"), primarily in France, and a
pharmaceutical business in Brazil for cash and preferred stock
of a French subsidiary aggregating approximately $270 million.
The preferred shares, accounted for as minority interest in
other liabilities, have a liquidation preference approximating
645 million French francs and pay dividends of 7.5% per annum on
a stated value of 145 million French francs. The acquisition
agreements call for potential adjustments to the purchase price
of the businesses based on several factors, including earnings
performance.
The acquisitions of these entities under common control were
treated for accounting purposes on an "as-if pooling" basis and,
accordingly, the Company has restated its first quarter 1995 and
full year 1994 results to include the accounts of Cooper and the
Brazilian business as of April 1, 1994 and January 1, 1994,
respectively. The effect of restatements in periods prior to
1994 was not material. The assets and liabilities of the
acquired businesses were recorded by the Company at the carrying
values used by RP as of the restatement dates. Earnings per
share for the restated periods reflect pro forma adjustments
giving effect to interest on indebtedness and preferred
dividends relative to the acquisition transactions.
NOTE 3.- JOINT VENTURE
Under terms of a September 28, 1995 Amendment to the Joint
Venture Agreement (the "Amendment"), the Company's Armour
Pharmaceutical Company subsidiary ("Armour") and Behringwerke AG
("Behring"), a subsidiary of Germany's Hoechst AG, completed the
formation of their 50/50 global joint venture in the plasma
proteins business.
The joint venture's Board of Directors will be formally
established on January 1, 1996, at which time joint control and
profit-sharing provisions also take effect. Accordingly, the
Company will continue to consolidate the results of Armour
through the year 1995.
7
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NOTE 4.- 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 September 30, 1995, the Company's
workforce had been reduced by just under 1,000 employees. To-
date, cash outlays related to the plan have totaled $69.9
million and are expected to exceed $90.0 million. Cash outlays
for the three and nine month periods ended September 30, 1995
have approximated $8.7 million and $35.8 million, respectively.
Asset writeoffs in conjunction with certain production
facilities have totaled $22.7 million, including $3.3 million
during the nine months ended September 30, 1995.
A rollforward of the remaining 1994 restructuring provision from
December 31, 1994 is as follows:
December 31, Payments/ Translation
1994 asset adjustments/ September 30,
(Restated) writeoffs other 1995
--------- --------- --------- ------------
(Dollars in millions)
Social costs $ 52.8 $ (31.3) $ 6.9 $ 28.4
Third parties 8.4 (4.5) (0.1) 3.8
Asset writeoffs 8.2 (3.3) (3.3) 1.6
--------- --------- --------- ------------
Total $ 69.4 $ (39.1) $ 3.5 $ 33.8
========= ========= ========= ============
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 September 30, 1995, the
Company's workforce had been reduced by over 650 employees
relative to these activities.
A rollforward of the remaining 1993 restructuring provision from
December 31, 1994 is as follows:
December 31, Payments/ Translation
1994 asset adjustments/ September 30,
(Restated) writeoffs other 1995
--------- --------- --------- ----------
(Dollars in millions)
Social costs $ 12.2 $ (6.3) $ 0.8 $ 6.7
Asset writeoffs 9.0 (1.4) 0.7 8.3
--------- --------- --------- ----------
Total $ 21.2 $ (7.7) $ 1.5 $ 15.0
========= ========= ========= ==========
8
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NOTE 5.- GAIN ON SALE OF ASSETS AND OTHER EXPENSE - NET
Pretax gains from the sale of assets totaled $49.5 million ($.25
per share) for the nine months ended September 30, 1995 and
included gains on the sale of assets related to the Company's
Canadian over-the-counter business to Ciba-Geigy Limited and the
sale of certain European product rights during the 1995 first
quarter.
Other expense-net for the nine months ended September 30, 1995
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, recorded in the first quarter.
NOTE 6.- INCOME TAXES
The Company records income tax expense based on an estimated
full year effective income tax rate. The year-to-date reported
effective tax rate approximated 30.2% in 1995 compared with
27.4% in 1994. The current year rate was affected by reduced
tax benefits from Puerto Rico operations and certain asset
sales/writeoffs. The 1994 year-to-date effective tax rate was
favorably impacted by restructuring charges.
NOTE 7.- INVENTORIES
Inventories consisted of the following:
December 31,
September 30, 1994
1995 (Restated)
------------- ------------
(Dollars in millions)
Finished goods $ 293.0 $ 323.2
Work in process 157.6 125.0
Raw materials and supplies 262.7 164.3
------------- ------------
$ 713.3 $ 612.5
============= ============
9
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<TABLE>
NOTE 8.- SHAREHOLDERS' EQUITY
<CAPTION>
Market Money
Auction market Common Capital Retained Employee Cumulative
Preferred preferred shares at in excess earnings Benefits translation
Shares stock stated of stated Trust adjustments
value value
-------- --------- -------- --------- -------- -------- -----------
<S> <C> <C> <C> <C> <C> <C> <C>
Balance, December 31, 1994
(Restated) $225.0 $175.0 $139.1 $412.2 $1,403.7 $ (185.7) $(58.9)
Net income 298.7
Cash dividends, $.90 per
common share (120.7)
Dividends on preferred
stock (16.2)
Redemption of Market Auction
Preferred Shares (225.0)
Adjustment of capital
contributions for
acquisition liabilities (273.2)
Issuance of shares under
employee benefit plans 0.2 5.9
Translation adjustments, net
of $5.2 million reductions
due to hedging activities 56.3
------- ------ ------- ------- -------- --------- -------
Balance, September 30, 1995 $ -- $175.0 $ 139.3 $ 144.9 $1,565.5 $ (185.7) $(2.6)
======= ====== ======= ======= ======== ========= =======
In the 1995 third quarter, the Company redeemed Series A, C and D of Market
Auction Preferred Shares for $225 million plus accrued dividends.
As discussed in Note 2, the Company has restated its 1994 results to include
the accounts of Cooper and the Brazilian business as of April 1, 1994 and
January 1, 1994, respectively. The assets and liabilities of the acquired
businesses were recorded by the Company at the carrying values used by RP as
of the restatement dates and the value of net assets acquired was reflected
in capital in excess of stated value as a capital contribution from RP.
In 1995, the Company reduced capital in excess of stated value to reflect
the purchase obligation related to the acquisition transactions of
approximately $270 million.
</TABLE>
10
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NOTE 9.- RELATED PARTY TRANSACTIONS
Receivables from Rhone-Poulenc S.A. and affiliates at September
30, 1995 included $8.2 million in accounts receivable from sales
of products to RP and $48.3 million classified as other current
assets.
Accounts payable related to the purchase of materials and
services from RP were $14.6 million at September 30, 1995;
accrued and other liabilities due to RP totaled $17.1 million.
As of September 30, 1995, the Company had $51.6 million short-
term and $60.1 million long-term debt outstanding with RP.
Sales to RP totaled $7.5 million in the third quarter and $24.0
million for the nine-month period; services purchased from and
interest paid to RP totaled $9.0 million in the third quarter
and $28.2 million for the first nine months of 1995. For the
comparable 1994 periods on a restated basis, sales to RP were
$8.8 million and $22.8 million, respectively. Services
purchased from and interest paid to RP totaled $9.0 million and
$27.0 million, respectively.
In the 1995 second quarter, the Company acquired Cooper and a
pharmaceutical business in Brazil from RP for cash and preferred
stock of an RPR subsidiary aggregating approximately $270
million. The preferred shares, accounted for as minority
interest in other liabilities, have a liquidation preference
approximating 645 million French francs (approximately $130
million) and pay dividends of 7.5% per annum on a stated value
of 145 million French francs. See Note 2.
NOTE 10.- CONTINGENCIES
The Company is involved in litigation incidental to its business,
including but not limited to: (1) approximately 373 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 Immmune Deficiency Syndrome-related
conditions or death therefrom, may have been caused by admin-
istration of antihemophilic factor ("AHF") concentrates processed
by Armour in the early and mid-1980s. Armour has also
been named as a defendant in six 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 diethylstilbestrol ("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, retail chains and consumers;
(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(r); 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.
11
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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 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 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.
NOTE 11.- FISONS
On October 20, 1995, the Company gained operational control of
the U.K.-based pharmaceutical company Fisons plc via beneficial
ownership of a majority of Fisons' total share capital. By mid-
November 1995, RPR had completed the purchase of 93% of the
outstanding shares of Fisons for approximately $2.7 billion. Of
this amount, $1.75 billion was financed under the Societe
General and Banque Nationale de Paris loan facility
arrangements; $700 million, the majority of which represented
open market share purchases, was financed under short-term loan
arrangements with certain banks; a further $250 million
represented drawdowns of the Company's medium-term lines of
credit. The weighted average annual effective interest rate on
the borrowings approximates 6.1%. The $2.7 billion drawings
mature in December 1995 at which time the Company intends to
establish longer-term financing arrangements. The acquisition
will be accounted for using the purchase method.
NOTE 12.- APPLIED IMMUNE SCIENCES, INC.
In October 1995, the Company and Applied Immune Sciences, Inc.
("AIS"), a pioneer in cell and gene therapy, announced that they
entered into a definitive agreement and plan of merger. The
agreement provides for the acquisition by RPR of the 7.2 million
AIS shares not previously owned by RPR at a cash price of $11.75
per share, or approximately $84.4 million. The acquisition is
expected to be financed under available medium-term lines of
credit bearing interest at an annual rate of LIBOR plus a
margin.
Prior to the transaction, the Company owned approximately 47% of
AIS and accounted for this interest under the equity method.
The acquisition of the remaining outstanding shares of AIS will
be accounted for under the purchase method and, accordingly, the
purchase price will be allocated to 53% of AIS' assets and
liabilities based on their estimated fair values as of the
acquisition date.
12
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Consummation of the tender offer is subject to the valid tender
of a majority of the AIS shares not held by RPR and certain
other conditions. Completion of the merger is subject to the
closing of the tender offer and the absence of any legal
prohibitions. Subject to the foregoing, the transaction is
expected to be completed by the end of 1995.
13
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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.
In the 1995 second quarter, RPR acquired from RP the businesses
of Cooperation Pharmaceutique Francaise ("Cooper"), with
operations primarily in France, and a pharmaceutical business in
Brazil. The acquisitions of entities under common control were
treated for accounting purposes on an "as-if pooling" basis and,
accordingly, RPR restated its first quarter 1995 results and
full year 1994 results to include the accounts of Cooper and the
Brazilian business as of April 1, 1994 and January 1, 1994,
respectively. Earnings per share for the restated periods
reflect pro forma adjustments giving effect to interest on
indebtedness and preferred dividends relative to the acquisition
transactions. The discussion that follows reflects the effect of
such restatements.
Results of Operations (Three and nine months ended September 30,
1995 versus comparable 1994 periods)
At $107 million, third quarter net income available to common
shareholders was essentially level with the prior year ($.80 per
common share in both years). Net income for the first nine
months of 1995 totaled $283 million ($2.09 per common share) as
compared with $180 million ($1.28 per common share) in 1994.
Results for the 1994 year-to-date period included pretax
restructuring charges of $121 million ($.58 per common share).
Results for the first nine months of 1995 included a $.04 per
share benefit from the net effects of asset sales and certain
one-time charges recorded in the first quarter. The comparable
prior year-to-date period included $.04 per share of gains on
sales of assets.
Sales
Third quarter 1995 sales ($1,213 million) increased by 7% on
both an as-reported and operational basis as the favorable
effects of currency fluctuations due to a weaker U.S. dollar
(+4%) were offset by product divestitures, principally the
Company's U.S. and Canadian over-the-counter businesses (-4%).
Operational sales growth resulted from volume increases (+5%),
including new product presentations, and net higher prices in
Europe and in the U.S. prescription pharmaceuticals business
(+2%). For the first nine months of 1995, reported sales
increased by 15% including currency fluctuations (+7%) and
product divestitures (-4%). On an operational basis, sales
growth was 12%, including 3% from the inclusion of Cooper sales
for nine months in 1995 compared with six months in 1994, 2%
from new product presentations, and 2% from net price changes in
Europe and in the U.S. (prescription pharmaceuticals and plasma
proteins).
14
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In the tables and discussion which follow, percentage
comparisons of sales are presented excluding the effects of
currency fluctuations unless otherwise noted.
Sales by geographic area (excluding product divestitures) were
as follows:
Three Months ended
September 30,
--------------------
Restated %
($ in millions) 1995 1994 Change
------- ------- -----
U.S. $ 313 $ 318 8%
------- ------- -----
France 416 385 --%
Other Europe 276 253 4%
Rest of World 208 181 25%
------- ------- -----
Total Non-U.S. 900 819 6%
------- ------- -----
Total Sales $ 1,213 $ 1,137 7%
======= ======= =====
Nine Months ended
September 30,
--------------------
Restated %
($ in millions) 1995 1994 Change
------- ------- -----
U.S. $ 813 $ 820 11%
------- ------- -----
France 1,326 1,052 12%
Other Europe 840 732 5%
Rest of World 573 480 28%
------- ------- -----
Total Non-U.S. 2,739 2,264 13%
------- ------- -----
Total Sales $ 3,552 $ 3,084 12%
======= ======= =====
<PAGE>
Three- and nine-month sales in the United States exceeded prior
year levels as the Company's prescription pharmaceuticals
Azmacort(r), Lovenox(r) and DDAVP(r) and plasma proteins
(recombinant Factor VIII offerings and Albuminar(r)) continued to
perform well. In France, increased quarterly sales of Doliprane(r)
and Maalox(r) and contributions from the recently acquired
Biogalenique generics business were offset by reduced sales of anti-
infectives. Sales growth in France on a year-to-date basis
reflected improved performance of analgesics and anti-infectives
and also benefited from the inclusion of nine months of Cooper
sales as compared to six months in 1994. In Other European
markets, sales of prescription pharmaceuticals continued to recover
over the prior year periods in Germany (+14% on a year-to-date
basis) and in Italy (+8%) where Granocyte(r) was launched in the
second quarter. Ethical product sales in the U.K. (-4%) included
positive performance by Granocyte(r) and Imovane(r)/Amoban(r) but
continued to be negatively impacted by generic competition. Sales
increases in Central and Eastern Europe added to Other Europe sales
growth for the three- and nine-month periods. In the Rest of World
area, sales expansion continued in South American countries,
particularly Argentina and Brazil, with sales gains posted by anti-
infectives and bone metabolism/rheumatology products. Quarterly
and year-to-date sales in Japan (Albuminar(r) and Maalox(r)) also
exceeded prior year levels.
15
<PAGE>
<PAGE>
Sales by therapeutic area were as follows:
Three Months ended
Therapeutic Area/Principal September 30,
Offerings
---------------------
Restated %
($ in millions) 1995 1994 Change*
------------------------------------- -------- -----
Clexane(r)/Lovenox(r) $ 70 $ 51 29%
Dilacor(r) XR 36 38 -3%
Lozol(r)/Indapamide 20 26 -24%
Selectol(r)/Selecor(r) 19 14 28%
Total Cardiovascular 235 221 2%
Zagam(tm) -- 6 --
Granocyte(r) 12 6 --
Total Anti-infectives/
Oncology 175 139 22%
Albuminar(r) 48 39 21%
Monoclate-P(r)/Factor VIII 47 38 21%
Total Plasma Proteins 143 126 11%
Doliprane(r) 32 26 13%
Imovane(r)/Amoban(r) 33 24 30%
Total CNS/Analgesics 149 122 17%
Azmacort(r) 49 40 21%
Nasacort(r) 21 21 -3%
Total Respiratory 120 115 2%
Maalox(r) 42 59 -29%
Total Gastrointestinal 94 109 -15%
Calcitonins 26 20 29%
Orudis(r)/Profenid(r)/Oruvail(r) 59 48 22%
Total Bone Metabolism/
Rheumatology 100 82 21%
DDAVP(r) 27 22 22%
Other Therapeutic Areas 197 223 -16%
* Percentage change calculation excludes effects of currency
fluctuations.
<PAGE>
Nine Months ended
Therapeutic Area/Principal September 30,
Offerings ------------------
Restated %
($ in millions) 1995 1994 Change*
------------------------------------- -------- -----
Clexane(r)/Lovenox(r) $211 $149 30%
Dilacor(r) XR 81 76 6%
Lozol(r)/Indapamide 47 56 -15%
Selectol(r)/Selecor(r) 53 39 24%
Total Cardiovascular 666 586 6%
Zagam(tm) 17 6 --
Granocyte(r) 33 11 --
Total Anti-infectives/
Oncology 495 400 15%
Albuminar(r) 146 114 24%
Monoclate-P(r)/Factor VIII 153 111 32%
Total Plasma Proteins 428 354 17%
Doliprane(r) 98 71 23%
Imovane(r)/Amoban(r) 92 65 29%
Total CNS/Analgesics 420 342 13%
Azmacort(r) 129 95 36%
Nasacort(r) 55 59 -6%
Total Respiratory 319 289 7%
Maalox(r) 123 163 -27%
Total Gastrointestinal 281 319 -17%
Calcitonins 77 61 19%
Orudis(r)/Profenid(r)/Oruvail(r) 153 142 3%
Total Bone Metabolism/
Rheumatology 275 241 8%
DDAVP(r) 62 54 16%
Other Therapeutic Areas 669 553 12%
* Percentage change calculation excludes effects of currency
fluctuations.
<PAGE>
Three-month sales of cardiovascular products increased modestly as
continued growth of Clexane(r)/Lovenox(r) in the U.S., France and
Germany was partially offset by reduced quarterly sales of
Dilacor(r) XR and indapamide products in the U.S. Lower quarter-on-
quarter Dilacor(r) XR sales resulted from the introductory stocking
of certain new packagings in the prior year. Although Dilacor(r) XR
lost U.S. FDA exclusivity in mid-1995, management does not
anticipate sales erosion in the current year from generic
intrusion. In 1995, both Lovenox(r) and Dilacor(r) XR were approved
by the FDA for new indications.
Increased third quarter sales of anti-infectives resulted from the
continued sales expansion of antibiotics in South America,
particularly with respect to the antiparasitic Flagyl(r). A
quarter-on-quarter reduction in anti-infective sales in France
resulted from the absence of Zagam(tm) sales due to an incidence of
photosensitivity. Future Zagam(tm) sales levels in France will be
determined by the outcome of a review of product indications and
labeling requirements by the European Union regulatory authority in
November 1995.
16
<PAGE>
<PAGE>
The largest contributors to quarterly sales of the Company's
oncological product Granocyte(r) were France, Italy and Germany;
Granocyte(r) is now available in all European Union countries.
Third quarter 1995 introductions of oncology products included the
launch in France of Campto(r), for treatment of colorectal cancer,
and the Canadian launch of Taxotere(r), for use in treatment of
advanced breast and non-small cell lung cancer. In October 1995,
Taxotere(r) received an approvable letter from the U.S. FDA for use
in treatment of advanced breast cancer when other lines of therapy
fail. Taxotere(r) has now been approved or recommended for
approval in seven countries and has been launched in three
countries.
Third quarter and year-to-date sales growth of plasma proteins was
driven by double-digit sales increases of Albuminar(r) in the U.S.
and Japan and of worldwide Factor VIII offerings (Monoclate-P(r),
Helixate(r) and Bioclate(r)). Sales of Monoclate-P(r) were higher
in Europe but declined slightly in the U.S. due to increased sales
of the competitive recombinant brands, Helixate(r) and Bioclate(r).
In the first quarter of 1995, the Company initiated a voluntary
withdrawal of certain of its immune globulin offerings in the U.S.
in response to the FDA's industry-wide request that such products
undergo a new testing technique. In the third quarter of 1995, the
Company received FDA approval for Gammar(r) IV-P pasteurized
immunoglobulin; Gammar(r) IV experienced third quarter sales
declines in anticipation of the fourth quarter 1995 launch of the
new pasteurized immunoglobulin offering.
Under terms of a September 28, 1995 amendment to the Joint Venture
Agreement (the "Amendment"), the Company's Armour Pharmaceutical
Company subsidiary ("Armour") and Behringwerke AG ("Behring"), a
subsidiary of Germany's Hoechst AG, completed the formation of a
50/50 global joint venture in the plasma proteins business. The
joint venture's Board of Directors will be formally established on
January 1, 1996 at which time joint control and profit- sharing
provisions will also take effect.
Improved sales of central nervous system products were led by
higher sales of the sleeping agent Imovane(r)/Amoban(r) in Europe
and Japan. The French analgesic Doliprane(r) registered three- and
nine-month sales gains over comparable prior year periods which
were affected by weak demand. In the third quarter, an FDA
advisory committee recommended the Company's product Rilutek(tm)
(riluzole) for U.S. FDA approval for the treatment of Amyotrophic
Lateral Sclerosis. The recommendation will be considered by the
FDA in its review of the Company's new drug application for
Rilutek(tm).
Higher sales of Azmacort(r) in the U.S. helped generate modest
sales growth of respiratory products for the three-month period.
On a year-to-date basis, Azmacort(r) sales registered improvement
compared to a prior year period which was negatively affected by
trade inventory reductions. The impact of a competitive entry kept
current year Nasacort(r) sales below prior year levels for the
quarter and nine-month periods.
Early in the fourth quarter of 1995, the Company acquired the U.K.-
based pharmaceutical company Fisons plc. Of Fisons' 1994
pharmaceutical sales which totaled $730 million, sales of
asthma/allergy products exceeded $500 million. Management believes
17
<PAGE>
<PAGE>
that the acquisition of Fisons, which has established positions in
the U.S., Europe and Japan, should result in a strong global
respiratory franchise.
Maalox(r) recorded solid quarterly and nine-month sales
improvements in France and in Japan where Maalox(r) granules were
launched at the end of 1994. Although higher on a year-to-date
basis, three-month sales of Maalox(r) in Other European markets
were slightly below the prior year period due, in part, to a
quarterly decline in Germany. 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. Reported sales for 1994
included approximately $25 million and $69 million of U.S. and
Canadian Maalox(r) sales for the three- and nine-month periods,
respectively.
Sales growth of the anti-inflammatory Orudis(r)/
Profenid(r)/Oruvail(r) was spurred by quarterly increases
in South American countries and in Japan. Sales of Orudis(r) in
European markets were essentially level quarter-on-quarter and
remained below the prior year on a nine-month basis. Increased
three- and nine-month sales of bone metabolism products reflected
continued expansion of injectable and generic calcitonins in the
United States. In European markets, calcitonin sales remained below
the prior year levels.
18
<PAGE>
<PAGE>
Operating Income
Three Months ended September 30,
--------------------------------------
1995 1994 (Restated)
---------------- ----------------
% of % of Total
(in millions) $ Sales $ Sales Change
----- -------- ------ ------- -------
Gross margin $793 65.4% $741 65.1% 7%
Selling, delivery
and administrative 422 34.8 408 35.8 3
Research and
development 190 15.6 153 13.5 24
Operating income 182 15.0 180 15.8 1
Nine Months ended September 30,
------------------------------------
1995 1994 (Restated)
-------------- ----------------
% of % of Total
(in millions) $ Sales $ Sales Change
------ ------ ------ ------ ------
Gross margin $2,301 64.8% $2,014 65.3% 14%
Selling, delivery
and administrative 1,283 36.1 1,133 36.8 13
Research and
development 533 15.0 430 13.9 24
Operating income 485 13.6 329 10.7 47
<PAGE>
Quarter-on-quarter gross margin improvements reflected the
favorable impact of price and product mix-related benefits.
Commercial expenses declined as a percentage of sales as the impact
of reduced advertising and promotional spending offset higher
selling expenses, principally in the U.S. pharmaceuticals business
and in support of the German and East/Central European markets.
Quarterly operating income margin declined as an increased
investment in research and development offset improved gross margin
and commercial expenses as a percentage of sales.
On a year-to-date basis, gross margin was negatively affected by
unfavorable product mix and the lower margin Cooper business; net
change in price had a favorable effect on year-to-date gross
margin. Nine-month selling, delivery and administrative expense
ratios benefited from the absence in 1995 of higher advertising and
promotion costs associated with the Company's North American over-
the-counter businesses. Excluding the effect of prior year
restructuring charges, operating income margin declined by almost
one percentage point due to reduced year-on-year gross margin and
higher research and development expense as a percentage of sales.
In June 1994, the Company recorded a $121 million charge related to
a global restructuring plan. For the three- and nine-month periods
ended September 30, 1995, cash outlays associated with the plan
approached $9 million and $36 million, respectively; asset write-
offs were not significant. As of September 30, 1995, the Company's
workforce had been reduced by just under 1,000 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. Year-to-date cash
outlays associated with the 1993 program exceeded $6 million. As
of September 30, 1995, over 650 positions had been affected by the
1993 plan.
Interest, Other Expense, and Taxes
Increased net interest expense for the quarter reflected higher
worldwide average debt balances in support of acquired new
businesses and higher average interest rates. Increased net
interest expense for the nine-month period was due principally to
higher average interest rates in the United States and in certain
new and/or expanding markets including South America and Eastern
Europe.
19
<PAGE>
<PAGE>
During the third quarter, the Company redeemed its outstanding
Market Auction Preferred Shares ("MAPS"), resulting in a slight
quarter-on-quarter decline in preferred dividends. Increased
preferred dividends for the nine months of 1995 were due to higher
short-term interest rates in the United States.
Gains on sales of assets totaling $50 million ($.25 per share) were
recorded in the first quarter of 1995. These gains included the
sale of assets related to the Company's Canadian over-the-counter
business and certain European product rights. Similar gains
totaled $9 million ($.04 per share) in the comparable 1994 period.
Other expense-net for the nine months of 1995 included charges of
$38 million ($.21 per share) recorded in the first quarter,
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 year-to-date reported effective income tax rate
approximated 30% in 1995 compared with 27% in 1994. The current
year rate was affected by reduced tax benefits from Puerto Rico
operations and certain asset sales/write-offs while the prior
year's effective tax rate was favorably impacted by restructuring
charges.
Acquisitions
In October 1995, the Company gained operational control of the U.K.-
based pharmaceutical company Fisons plc via beneficial ownership of
a majority of Fisons' total share capital. By mid-November 1995,
RPR had completed the acquisition of substantially all of the
outstanding share capital of Fisons. At 265 pence per share, the
aggregate purchase price will approximate $2.9 billion.
On October 18, 1995, the Company announced a definitive agreement
and plan of merger with AIS. The agreement provides for the
acquisition by RPR of the seven million AIS shares not previously
owned by RPR at a cash price of $11.75 per share, or approximately
$84 million. Subject to certain events and conditions, the tender
offer and merger are expected to be completed by the end of 1995.
Financial Condition
Cash Flows
Operating activities provided cash of $276 million during the nine-
month period of 1995 as compared with $412 million in the prior
year. Lower 1995 operating cash flows reflected increased working
capital needs and higher cash outlays for restructuring activities
and income taxes. Year-to-date cash outlays related to
restructuring activities totaled $42 million. Income tax payments
for the nine months included a $42 million first quarter tax
payment related to the Ciba transaction.
20
<PAGE>
<PAGE>
Current year investing activities included cash outflows of $185
million related to the acquisition of new businesses, including a
Brazilian pharmaceutical business formerly owned by RP and a
generics company in France. Cash outflows also included $80 million
associated with certain investments in technologies including $43
million in the first half of 1995 for the acquisition of two
million common shares of AIS, and payments of $41 million related
to the purchase of certain product rights. Proceeds from sales of
assets, including the sales of the Company's Canadian over-the-
counter business and certain European product rights, totaled $85
million. Nine-month capital expenditures exceeded comparable 1994
spending by $48 million.
Financing activities provided cash inflows of $69 million.
Increased borrowings, primarily in support of businesses acquired
and to finance preferred share redemptions totaled $424 million for
the nine-month period. Cash outflows associated with the third
quarter redemption of MAPS Series A, C and D totaled $225 million.
Cash dividends paid to common shareholders were $137 million ($.90
per share) as compared with $128 million in 1994 ($.84 per share).
In October 1995, the Board of Directors declared a fourth quarter
cash dividend of $.30 per share payable November 30, 1995 to
holders of record on November 10, 1995. Cash outlays of $216
million in 1994 included open market common share repurchases for
the Employee Benefits Trust totaling $109 million.
21
<PAGE>
<PAGE>
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 .34 to 1 at September 30, 1995 from .16 to 1 at
December 31, 1994 principally as a result of increased borrowings.
The ratio of current assets to current liabilities was 1.55 to 1
compared to 1.40 to 1 at December 31, 1994.
At September 30, 1995, the Company had committed lines of credit
totaling $5.2 billion with approximately $100 million of borrowings
outstanding under these lines. Of the $5.2 billion, $4.3 billion
represented loan facility agreements effective August 17, 1995 with
Banque Nationale de Paris ("BNP"), Credit Lyonnais and Societe
Generale. Drawings under these facilities, which mature in
February 1996, bear interest at the London Interbank Offered Rate
("LIBOR") plus a margin. These arrangements temporarily suspended
certain other line of credit agreements previously in place with
the same banks totaling $680 million; the suspended amounts are
reestablished upon the maturity of the August 17th facilities and
will expire in the year 2000. Of the remaining $.9 billion of the
total $5.2 billion committed lines of credit at September 30th,
$400 million related to a long-term revolving credit facility
unconditionally guaranteed by RP; this facility was terminated on
October 25, 1995. The remaining $500 million consisted of new or
renegotiated medium-term multicurrency line of credit agreements
expiring in the next five years. At September 30, 1995, the
Company had the ability and intent to renew or to refinance under
its facilities approximately $635 million of short-term third party
borrowings for at least one year. Accordingly, this amount was
classified as long-term debt.
By mid-November 1995, RPR had completed the purchase of 93% of the
outstanding shares of Fisons for approximately $2.7 billion. Of
this amount, $1.75 billion was financed under the Societe Generale
and BNP loan facility arrangements; $700 million, the majority of
which represented open market share purchases, was financed under
short-term loan arrangements with certain banks; a further $250
million represented drawdowns of the Company's medium-term lines of
credit. The weighted average annual effective interest rate on the
$2.7 billion of new borrowings approximated 6.1%. These drawings
mature in December 1995 at which time the Company intends to
establish longer-term financing arrangements.
The sale of Fisons' Laboratory Supplies Division to Fisher
Scientific International Inc. for $310 million was completed in
October 1995. Sale of Fisons' Scientific Instruments Division to
Thermo Instrument Systems Inc. for $318 million is subject to
regulatory approval and will not be completed in 1995.
In October 1995, the Company announced a definitive agreement and
plan of merger with AIS, providing for the acquisition by RPR of
the remaining shares of AIS not owned by RPR at a cash price
approximating $84 million. The transaction, when finalized, is
expected to be financed under available medium-term lines of credit
bearing interest at an annual rate of LIBOR plus a margin.
Pursuant to a shelf registration, the Company has the ability to
issue an additional $325 million in public debt securities and/or
preferred shares.
22
<PAGE>
<PAGE>
In October 1995, Moody's Investor Service ("Moody's") and Standard
& Poor's ("S&P") lowered the Company's senior unsecured debt and
preferred share credit ratings, attributing the change to the
acquisition of Fisons. The Company's senior unsecured debt is now
rated Baa1 by Moody's and BBB by S&P. The Company's preferred
shares are rated Baa2 by Moody's and BBB- by S&P.
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 routinely explores 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 10 of the Notes to
Condensed Consolidated Financial Statements and in Legal
Proceedings in Part II of this Form 10-Q.
23
<PAGE>
<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 in February 1995.
All pending cases are currently being defended by insurance
carriers, sometimes under a reservation of rights.
AHF Litigation
There are approximately three hundred and eleven lawsuits in the
United States, six in Canada and fifty-six 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 four
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.
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
24
<PAGE>
<PAGE>
both motions and Armour appealed the judgment to the United
States Court of Appeals for the Eleventh Circuit. In June 1995,
the Court of Appeals issued an opinion reversing the verdict and
remanding the case for a new trial because of prejudicial error
in the district court's instruction concerning the learned
intermediary doctrine. The court affirmed in respect to
Armour's contentions regarding an absence of sufficient evidence
of causation. Both parties' petitions for rehearing were
denied, and the case has been returned to the district court for
retrial. Regardless of the ultimate outcome of this case, and
because the facts vary widely in such cases, the Company does
not view a possibly adverse 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 1980s 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. Subsequent to the issuance of the
court's opinion in March, Armour reached an out of court
settlement with the plaintiffs. Armour reasonably expects that
other cases may 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
two proposed state class actions (Jeffrey Stanger, et al. v.
---------------------------
Armour Pharmaceutical Company, et al., Superior Court, Pima
- -------------------------------------
County, Arizona and Jones v. Bayer Corporation et al, Florida),
--------------------------------
discussed further below, have been filed against several
fractionators, including Armour. The federal actions are part
of the MDL proceeding in Chicago.
In an August 1994 bench ruling and Memorandum Opinion, 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-
- --------
25
<PAGE>
<PAGE>
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. 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 varied widely, Armour
did not believe that class action status was 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 in April
1995. In June 1995, the Court of Appeals on plaintiffs' motion
entered an order staying its mandate so as to permit the
plaintiffs to seek a writ of certiorari from the United States
Supreme Court. In July 1995, plaintiffs filed their petition
for a writ of certiorari with the U.S. Supreme Court. In
October 1995, the Supreme Court denied plaintiffs' petition. As
a result, the negligence class previously certified by the
District Court in Wadleigh will be decertified.
--------
As noted above, in May 1995, an additional "nationwide" class
action (Jones) was filed in the Florida state court against the
-----
same defendants as in Wadleigh, together with a Florida plasma
--------
provider; plaintiffs' counsel consist of a subgroup of counsel
from Wadleigh. Defendants have removed the action to federal
--------
court. Plaintiffs' motion to remand the action to the state
court is pending.
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. In August 1994, 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. However, as a result of the Court's
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 carriers that
provided insurance to Revlon, Inc., the party from which it
purchased the Armour business in 1986 ("Revlon carriers"). The
Company also believes 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") and an umbrella
insurance carrier ("the umbrella carrier"), as well as with
certain of the Revlon carriers, relative to carrier defense and
indemnity obligations associated with AHF litigation ("the
insurance coverage litigation"). In late 1994, 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. The Company has also settled its disputes with the
26
<PAGE>
<PAGE>
umbrella carrier and certain of the Revlon carriers. Recently,
after lengthy discussions, the Company and the remaining Revlon
carriers in the insurance coverage litigation reached an
agreement in principle regarding the extent and other conditions
of coverage of those carriers. Based upon the above, 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 (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(r).
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. At present, two arbitration proceedings before the
same panel are underway. 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 121 antitrust
lawsuits. It is presently a party to eight state court actions
pending in California, and one each in Wisconsin, Alabama,
Washington, Minnesota, Colorado and New York. Additionally, the
Company has been named in 107 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). Seven of the cases brought in California
state court have similarly been coordinated before a judge in
the San Francisco Superior Court; defendants have moved to
coordinate the recently filed eighth case in San Francisco
Superior Court with the other cases. 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 brand name pharmaceutical products and further
conspired to maintain prices at artificially high levels to the
detriment of these pharmacies. One of the California actions
alleges injury to a class of California residents who are
consumers of brand name prescription products. The cases in New
York, Colorado and Washington allege proposed consumer class
claims. On October 4, 1995, the Washington state court action
was dismissed with prejudice with the court holding that
Washington law did not permit a consumer action in this
instance. Many of the federal actions were brought on behalf of
an alleged class of retail pharmacies throughout the United
States; three 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
27
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<PAGE>
November 1994. Notice to the class was given and the opt-out
period ended March 10, 1995. The coordinating California state
court certified retail and consumer classes in June 1995.
Notice to the class has not yet been provided.
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(r) XR does not infringe the MMD/Tanabe patent under
any circumstances and that the MMD/Tanabe patent is invalid and
unenforceable. An appeal was taken and the Commission
effectively affirmed the ITC Judge's rulings on invalidity,
unenforceability and noninfringement findings. MMD/Tanabe has
appealed to the Court of Appeals for the Federal Circuit.
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.
28
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<PAGE>
ITEM 6. Exhibits and Reports on Form 8-K
a. Exhibits
10 Material contracts.
(a) $200,000,000 Loan Facility Agreement with Banque
Nationale de Paris dated June 15, 1993 ("BNP Agreement").
(b) First Supplemental Agreement to the BNP Agreement
dated April 13, 1995.
(c) Amendment No. 2 to the BNP Agreement effective
August 17, 1995.
(d) $1,100,000,000 Loan Facility Agreement with
Societe Generale effective August 17, 1995.
(e) $1,500,000,000 Loan Facility Agreement with
Credit Lyonnais effective August 17, 1995.
11 Statement re computation of earnings per common share.
15 Letter re unaudited interim financial information.
b. Reports on Form 8-K
The Company filed the following Current Reports on Form 8-K:
- - Current Report on Form 8-K dated August 14, 1995 containing
the restated financial statements for the year ended
December 31, 1994 resulting from the Cooper and Brazilian
business acquisition transactions.
- - Current Report on Form 8-K dated August 17, 1995 containing
the Company's press release announcing a cash offer for
Fisons plc and disclosing additional loan facility
arrangements.
- - Current Report on Form 8-K dated September 28, 1995
announcing the creation of the joint venture between Armour
Pharmaceutical Company and Behringwerke AG.
- - Current Report on Form 8-K/A (Amendment to Form 8-K dated
September 28, 1995) containing Behringwerke AG historical
combined financial statements and company pro forma
financial information.
- - Current Report on Form 8-K dated October 5, 1995 containing
the Company's press releases announcing a final cash offer
for Fisons plc, certain open market purchases of Fisons'
ordinary shares, and the recommendation of the offer by
Fisons' Board to its shareholders.
- - Current Report on Form 8-K dated October 18, 1995
containing the press release announcing a definitive
agreement and plan of merger between the Company and
Applied Immune Sciences, Inc.
29
<PAGE>
<PAGE>
- - Current Report on Form 8-K dated October 20, 1995
containing the Company's press releases declaring the
Company's offer for Fisons plc unconditional and announcing
beneficial ownership over 90%.
30
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<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)
November 14, 1995 /s/ PATRICK LANGLOIS
-------------------- -------------------------------
Patrick Langlois
Senior Vice President and
Chief Financial Officer
31
<PAGE>
<PAGE>
INDEX TO EXHIBITS
Exhibit No.
- -----------
10 Material contracts.
(a) $200,000,000 Loan Facility Agreement
with Banque Nationale de Paris
dated June 15, 1993 ("BNP Agreement").
(b) First Supplemental Agreement to the BNP
Agreement dated April 13, 1995.
(c) Amendment No. 2 to the BNP Agreement
effective August 17, 1995.
(d) $1,100,000,000 Loan Facility Agreement with
Societe Generale effective August 17, 1995.
(e) $1,500,000,000 Loan Facility Agreement with
Credit Lyonnais effective August 17, 1995.
11 Statement re computation of earnings
per common share.
15 Letter re unaudited interim financial
information.
32
Exhibit 10(a)
TRANSLATION FOR INFORMATION PURPOSES ONLY
BETWEEN:
- - BANQUE NATIONALE DE PARIS or BNP, a "societe anonyme" with a
share capital of FF 3,536,972,150, whose registered office is at
16 Boulevard des Italiens, 75009 PARIS, registered with the
PARIS Registry of Commerce and Companies under number B 662 042
449,
represented by:
- - Mr Ervin ROSENBERG, Manager
- - Mr Alain CHANTEREAU, Assistant Manager
(the "Bank", if not referred to by name)
OF THE ONE PART,
AND:
- - RHONE-POULENC RORER INC, a limited liability company with a
share capital of USD 438,298,771, whose registered office is at
500 Arcola Road, COLLEGEVILLE, PENNSYLVANIA 19426, UNITED STATES
OF AMERICA,
represented by:
- - Mr Patrick LANGLOIS
Corporate Senior Vice President, Chief Financial Officer
(the "Borrower", if not referred to by name)
OF THE OTHER PART,
<PAGE>
<PAGE>
IT IS AGREED AS FOLLOWS:
ARTICLE I - AMOUNT AND PURPOSE OF LOAN
The Bank agrees to grant the Borrower a loan facility (the
"Loan") of a maximum amount of USD 200,000,000 (TWO HUNDRED
MILLION US DOLLARS) or its equivalent in FRF, DEM or GBP.
The Loan is entered into in order to reinforce the Borrower's
financial resources.
Subject to the prior written agreement of RHONE-POULENC RORER
INC, the following companies, being subsidiaries owned as to
more than 50% by RHONE-POULENC RORER INC:
- - RHONE-POULENC RORER S.A.
- - RHONE-POULENC RORER LTD
- - RHONE-POULENC RORER GmbH
may make drawings under the Loan subject to the guarantee by
RHONE-POULENC RORER INC in the form attached as schedule I
hereto.
Subject to the prior written agreement of RHONE-POULENC RORER
INC, RHONE-POULENC S.A. may make drawings under the Loan.
RHONE-POULENC S.A., RHONE-POULENC RORER S.A., RHONE-POULENC
RORER LTD and RHONE-POULENC RORER GmbH shall, prior to the first
drawing that they may make, enter into an undertaking directly
with the Bank on the terms of schedule II to this loan
agreement. The terms and conditions agreed with RHONE-POULENC
RORER INC shall apply to these companies.
RHONE-POULENC RORER INC, RHONE-POULENC RORER S.A., RHONE-POULENC
RORER LTD, RHONE-POULENC RORER GmbH and RHONE-POULENC S.A. shall
hereafter be referred to as the "Borrowing Companies".
<PAGE>
<PAGE>
ARTICLE II - DURATION OF THE LOAN
The Loan is granted for a period of four years from 15th June,
1993 to 15th June, 1997.
ARTICLE III - REPAYMENT
Except in the case of prepayment under Article VIII ("PREPAYMENT
FACILITY"), the Loan shall be repaid in one single instalment on
15th June, 1997.
ARTICLE IV - METHODS OF DRAWING
Drawings may be made under this loan on one business day's
notice in respect of drawings in FRP and two business days'
notice in respect of drawings in USD, GBP or DEM, by the
debiting of a special account constituting a simple accounting
record, which shall not have the legal consequences of a running
account and which shall be opened for these purposes by each of
the Borrowing Companies in the books of the BNP LA DEFENSE
Branch. Drawings shall have a duration of one, two, three or six
months. However, drawings in French francs may have a minimum
duration of fifteen days.
RHONE-POULENC RORER INC shall also be able to make drawings in
USD without prior notice through BNP NEW YORK.
In respect of drawings in French francs, the Borrowing Companies
shall draw one or more notes in favour of the Bank payable at
BANQUE NATIONALE DE PARIS, which shall include a provision that
the bearer of the note is not required to protest the notes at
their maturity.
The amount of drawings in currencies other than US Dollars shall
be calculated on the basis of the rate of exchange of the US
Dollar against the relevant currency, on the PARIS Foreign
Exchange Market, two business days before the drawing date (one
business day in the case of drawings in French francs).
<PAGE>
<PAGE>
"Business day" means any complete day on which the banks are
open:
- - in respect of drawings in French francs, in PARIS;
- - in respect of drawings in euro-currencies, in LONDON and the
principal national financial centre of the currency in which the
drawing is made.
After having drawn on the Loan and reimbursed it in one or more
instalments, in whole or in part, the Borrowing Companies may
request new drawings, subject to the limits relating to amount
and duration set out herein.
The drawings as well as subsequent renewals and prepayments, if
any, shall be made in accordance with the provisions of the
Exchange Control Regulations ("Reglementations des Changes")
that may apply to such transactions.
ARTICLE V - NON-AVAILABILITY OF CURRENCY
If the Bank observes, at the time of either any drawing or a new
interest period, that the currency is not available on the PARIS
inter-bank market, it shall notify the Borrowing Companies
thereof as soon as possible.
In such a situation, the parties shall consult in order to reach
an agreement on the replacement currency or on a possible
reversion to French francs. Failing agreement between the
parties, the drawing or the renewal shall not take place.
Existing drawings in the non-available currency shall then be
repaid in French francs by the drawing company or companies as
regards principal, interest, costs and expenses (if any)
incurred by the Bank by reason of the non-availability of the
currency. The Bank agrees to supply evidence of these costs,
incidental expenses and possible costs on demand by the
Borrowing Companies.
<PAGE>
<PAGE>
The amount in FRF to be repaid shall be determined according to
the most recent quotation of the rate for the currency in which
the loan was then denominated.
ARTICLE VI - CONTROL OF THE EQUIVALENT AMOUNT IN USD OF THE
OUTSTANDING AMOUNT
The total amount of drawings shall not exceed the equivalent of
USD 200,000,000 (TWO HUNDRED MILLION US DOLLARS) (the "Original
Amount") reduced by repayments that shall already have been
made. The US dollar equivalent of the drawings shall be verified
at the time of each drawing or at the beginning of each interest
period at the exchange rate in force on the day of the
verification.
If the US dollar equivalent is larger by 5% than the Original
Amount reduced by repayments already made, the Bank shall only
renew the outstanding amount for a sum in foreign currencies
corresponding to the equivalent amount of the Original Amount
expressed in USD reduced by repayments already made, and the
drawing company or companies shall repay the difference thus
calculated.
However, if this equivalent is not larger by 5% than the
Original Amount expressed in USD reduced by repayments already
made, the Bank shall renew the outstanding amount in foreign
currencies at its previous level.
ARTICLE VII - CONDITIONS
- - COMMITMENT FEE:
0.20% per annum payable half-yearly in advance on the authorised
amount irrespective of any drawings.
This fee shall, in any event, be borne by RHONE-POULENC RORER
INC, which shall secure the division thereof between the
Borrowing Companies. It shall be calculated on the basis of a
360-day year and shall be payable in US dollars.
<PAGE>
<PAGE>
- - INTEREST:
- - in respect of drawings or renewals of drawings in FRF:
Interest shall be calculated according to the precise number
of days in the relevant period as compared with 360 days at the
PIBOR rate (PARIS INTERBANK OFFERED RATE) for the selected
period of drawing or renewal or the next longest period shown at
11.00 a.m. on the Business Day preceding the date of drawing or
renewal on TELERATE page 20041 or any other page substituted
therefor, increased by 0.25% annum.
The above interest shall be paid at the end of each interest
period.
- - in respect of drawings or renewals of drawings in foreign
currencies:
Interest shall be calculated according to the precise number
of days in the relevant period as compared with 360 days for all
currencies, with the exception of GBP, interest in respect of
which shall be calculated as compared with 365 days.
Interest shall be determined according to the LIBOR rate
(LONDON INTERBANK OFFERED RATE) for the relevant currency for
the selected period of drawing or renewal for sums equivalent to
those advanced, calculated under the aegis of the BRITISH
BANKERS ASSOCIATION and shown on TELERATE - Page 3750 or any
other page substituted therefor at 11.00 a.m. (LONDON time), two
business days before the drawing date or the beginning of a new
interest period, increased by 0.25% per annum.
In the case of drawings made by RHONE-POULENC RORER INC in USD
without prior notice through BNP NEW YORK, interest shall be
<PAGE>
<PAGE>
determined according to the cost of funds of BNP NEW YORK for
the selected drawing or renewal period, increased by 0.25% per
annum.
The above interest shall be payable at the end of each
interest period.
The Bank shall notify the Borrowing Company of the rate of
interest applicable to the relevant interest period. This rate
shall be revised at the end of each interest period.
The special account referred to above in Article IV "METHODS OF
DRAWING" shall be exempt from the payment of any account fee and
any fee on the largest overdraft outstanding thereon. Interest
shall automatically be debited to the current account maintained
on the books of the BNP LA DEFENSE Branch by each of the
Borrowing Companies.
If the determination of an interest rate has become impossible
by reason of the occurrence of certain events, the Bank shall
notify the Borrowing Companies of such fact, and the parties
shall enter into negotiations. If no agreement is reached with a
view to a solution within 30 days of this notification, the
Borrowing Companies shall repay the Loan as to principal
interest, costs, incidental expenses and costs (if any) provided
that the applicable interest rate shall be the Bank's own cost
of financing, increased by 0.25% per annum.
Any sum not paid on its contractual or accelerated maturity date
shall automatically bear interest for the period from and
including such maturity date until but excluding the day of full
payment, at the rate applied during the preceding drawing or
renewal period, increased by 1% per annum.
Interest outstanding for a whole year shall be capitalised in
accordance with Article 1154 of the Civil Code.
These provisions do not constitute consent to late payment.
<PAGE>
<PAGE>
For the purposes of article 4 of the Law of 28th December, 1966
relating to notice of global effective rates, it is hereby
provided that, taking account of the three-month LIBOR rate for
US dollars on 9th June, 1993 and a commitment fee payable half-
yearly in advance, a full drawing of this loan on 10th June,
1993 would have resulted in a rate of 3.83%.
ARTICLE VIII - PREPAYMENT FACILITY
Each of the Borrowing Companies may cancel the Loan or prepay
it, in whole or in part, at the end of any current drawing
period, provided that it gives the Bank at least 30 (thirty)
days' notice by registered letter with postal acknowledgment of
receipt of its irrevocable intention to terminate or to repay
the loan, in whole or in part.
Any termination or prepayment shall be final for the relevant
Borrowing Company.
The commitment fee shall cease to be due on that part of the
loan in respect of which the Borrower shall have given such
notice as from the end of the half-yearly commitment fee period
during which the cancellation shall have taken effect.
ARTICLE IX - ACCELERATION OF MATURITY
A/ The Bank reserves the right to declare the acceleration of
all the sums due from any of the Borrowing Companies as regards
principal, interest, default interest, fees, costs and expenses
and no further drawing may be made by such Company in the
following circumstances:
1) if RHONE-POULENC RORER INC reduces its direct or indirect
shareholding in the share capital of such Company such that it
becomes a subsidiary that is less than 50% owned (this clause
shall not apply to RHONE-POULENC S.A.),
<PAGE>
<PAGE>
2) if payment is not made by such Company of any sum due under
the Loan on its due date, and such default is not made good
within fifteen days of receipt of a notice from the Bank to the
Company by registered letter,
3) if payments are not made by such Company on their due dates
of sums due to any party under other borrowings, and such
default in payment has caused the acceleration of such
borrowings. Acceleration shall not be declared if the debt is
validly disputed or if the sums involved are of a nominal amount
of less than USD 10m (USD 30m so far as RHONE-POULENC S.A. is
concerned), or its equivalent,
4) if such Company does not comply with any of its other
obligations undertaken under the Loan or if a written warranty
made by such Company or any undertaking, certificate or document
signed by it or supplied under the Loan by any person is shown
to be inaccurate, to the extent that such inaccuracy has a
material impact on the position of such Company,
5) if the BANK OF FRANCE ("BANQUE DE FRANCE") ceases to
recognise such Company's signature,
6) if such company is dissolved, subject to a voluntary
winding-up, or ceases to trade or to make payments,
7) in the event of administration or judicial liquidation, or,
generally, any collective compromise proceedings relating to the
liabilities of such Company.
B\ The Bank reserves the right to declare the acceleration of
all the sums due from all the Borrowing Companies (except for
RHONE-POULENC S.A.) as regards principal, interest, default
interest, fees, costs and expenses, and no other drawing may be
made by any Borrowing Company (other than RHONE-POULENC S.A.) in
the following circumstances:
<PAGE>
<PAGE>
1) failure to make payment within fifteen days following
receipt of a request for payment sent by the Bank to RHONE-
POULENC RORER INC as guarantor, of the sums not settled by any
one of RHONE-POULENC RORER S.A., RHONE-POULENC RORER LTD and
RHONE-POULENC RORER GmbH,
2) if payment is not made by RHONE-POULENC RORER INC of any
sum due under the Loan on its due date, and such default is not
made good within fifteen days after receipt of a notice by the
Bank to such company by registered letter,
3) if payment is not made by RHONE-POULENC RORER INC on their
due dates of sums due to any party under other borrowings, and
such default in payment has caused the acceleration of such
borrowings. Acceleration shall not be declared if the debt is
validly disputed or if the sums involved are of a nominal amount
of less than USD 10m or its equivalent.
4) If RHONE-POULENC RORER INC does not comply with any of its
other obligations undertaken under the Loan or if a written
warranty made by such company or any undertaking, certificate or
document signed by it or supplied under the Loan by any person
is shown to be inaccurate, to the extent that such inaccuracy
has a material impact on the position of RHONE-POULENC RORER
INC,
5) if the BANK OF FRANCE ("BANQUE DE FRANCE") ceases to
recognise RHONE-POULENC RORER INC's signature,
6) if RHONE-POULENC RORER INC is dissolved, subject to a
voluntary winding-up, or ceases to trade or to make payments,
7) in the event of administration or judicial liquidation, or,
generally, any collective compromise proceedings relating to the
liabilities of RHONE-POULENC RORER INC.
Any sums that shall have become payable under paragraphs A/ and
B/ shall bear interest at the rate applied during the current
<PAGE>
<PAGE>
drawing or renewal period. This rate shall be increased by 1% in
the event that the repayment of the sums does not take place
within eight days as from the due date; this provision shall not
constitute consent to late payment.
Any interest payable that is outstanding for a whole year shall
be capitalised in accordance with Article 1154 of the Civil
Code.
ARTICLE X - UNDERTAKINGS OF THE BORROWING COMPANIES
So long as any one of the Borrowing Companies shall be capable
of being a debtor hereunder, it shall:
- - provide to the Bank as soon as possible and at the latest
within 90 days from the Ordinary General Meeting approving its
accounts, two copies of its annual balance sheets, profit and
loss accounts and documents attached thereto (consolidated
accounts so far as RHONE-POULENC S.A. and RHONE-POULENC RORER
INC are concerned),
- - inform the Bank, as soon as possible, of any fact that may be
capable of affecting the size or value of its assets to a
material extent,
- - keep the Bank informed of any changes to its bye-laws that may
be capable of affecting this loan by providing the new bye-laws
within one month from the resolution of shareholders approving
this change,
- - immediately inform the Bank of changes to the powers of the
persons authorised to act on its behalf,
- - undertake not to grant or allow to exist as security for any
future borrowings in an amount greater than 30 million US
dollars or as security for the guarantee of such a debt, any
mortgage, charge, pledge or any other right whatsoever over the
whole or any part of its assets or income, present or future,
<PAGE>
<PAGE>
unless the repayment or payment of all sums that may be due
under this Loan enjoys the same priority as such security, with
the exception of any security granted:
- - on an asset acquired after the date of signature of this
Agreement for the sole purpose of financing such acquisition and
to secure payment of sums not exceeding in principal the cost of
such acquisition,
- - to CREDIT NATIONAL, the EUROPEAN INVESTMENT BANK, the FONDS
INDUSTRIEL DE MODERNISATION, the FONDS DE DEVELOPPEMENT
ECONOMIQUE ET SOCIAL, or any other financial institution
controlled by the French State or the European Economic
Community and which, by law or its common practice, requires
such security.
Further, so long as any of the Borrowing Companies shall be
capable of being a debtor hereunder, RHONE-POULENC RORER INC
shall give prior notice to the Bank of any planned reduction in
its direct or indirect shareholding in the share capital of the
Borrowing Companies (other than RHONE-POULENC S.A.) which shall
result in reducing its shareholding such that any such company
shall become a subsidiary that is less than 50% owned.
ARTICLE XI - CHANGES OF CIRCUMSTANCE
The terms of this Agreement should be read as requiring full
payment to the Bank of all amounts falling due thereunder.
If interest or fees payable under the Loan become liable to any
duty, levy or tax whatsoever to which they are not currently
subject, the Borrower or any one of the Borrowing Companies
undertakes to pay the amount thereof, if evidence thereof is
given by the Bank, at the mere request of the latter, such that
the Bank shall bear no part thereof. Accordingly, the possible
lifting of or decrease in such new charges shall also be passed
on to the Borrowing Companies.
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The occurrence of new circumstances of a monetary, financial,
banking or fiscal nature resulting from legal or regulatory
provisions or directives, recommendations or interpretations by
an official authority or a professional organisation that
results in the Bank incurring a new obligation leading to an
increased cost or the loss of a gain, linked directly or
indirectly to the transactions under this Agreement such as, for
example, the obligatory setting aside of reserves or making
deposits, a quantitative regulation of the loan, the
introduction or increase of liquidity ratios, own funds or other
matters relating to the whole of the assets or liabilities
(including off balance sheet liabilities), shall result in a
renegotiation of the terms.
In the event of disagreement at the end of a thirty day
negotiation period, commencing on the date of the despatch by
the Bank of a registered letter informing the Borrower of the
occurrence of an event bringing this clause into effect, each
party shall be entitled to repudiate the facility forthwith.
In such event, the Borrowing Companies shall bear the
supplementary cost and/or the loss of a gain referred to in the
above paragraph incurred by the Bank during such thirty day
period. RHONE-POULENC RORER INC shall secure the division
thereof between the Borrowing Companies.
ARTICLE XII - APPLICABLE LAW
The provisions of this confirmed Credit are governed by French
law, and the Courts of PARIS alone shall be competent to hear
and resolve any litigation, dispute or difficulty that may occur
between the parties in relation to the interpretation and
carrying out of the provisions of this Agreement.
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ARTICLE XIII - MISCELLANEOUS
The Borrower shall bear all costs, levies and taxes, fees,
interest or other sums payable by reference to this Agreement or
resulting therefrom or consequent thereupon, and shall secure
the division thereof between the Borrowing Companies.
ARTICLE XIV - ELECTION OF RESIDENCE
Any notice concerning the confirmed Credit shall be sent:
- - to the Borrower at the Registered Office of RHONE-POULENC
RORER S.A., 20 Avenue Raymond Aron, 92165 ANTONY CEDEX, where an
election in respect of residence is made,
- - to the Bank at its LA DEFENSE Branch, where an election in
respect of residence is made.
Signed in PARIS, on 15th June 1993
in two original copies
BANQUE NATIONALE DE PARIS RHONE-POULENC RORER INC
/s/ Ervin /s/ Alain /s/ Patrick
ROSENBERG CHANTEREAU LANGLOIS
Ervin Alain Patrick
ROSENBERG CHANTEREAU LANGLOIS
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Exhibit 10(b)
FIRST SUPPLEMENTAL AGREEMENT TO THE AGREEMENT
OF 15TH JUNE, 1993
BETWEEN:
BANQUE NATIONALE DE PARIS, a "societe anonyme" with a share
capital of FRF 4,751,153,975, whose registered office is at 16
Boulevard des Italiens, 75009 Paris, registered with the Paris
Registry of Commerce and Companies under number B 662 042 449,
represented by:
- - Mr. Jean-Daniel WURTZ, Manager of the Department
- - Mr. Alain CHANTEREAU, Assistant Manager
(the "Bank", if not referred to by name)
OF THE FIRST PART,
AND:
RHONE-POULENC RORER INC, a "societe anonyme" with a share
capital of USD, whose registered office is at 500 Arcola Road,
COLLEGEVILLE, PENNSYLVANIA 19426, UNITED STATES OF AMERICA,
represented by: Mr. Philippe MAITRE, Corporate Treasurer
(the "Borrower", if not referred to by name)
OF THE SECOND PART,
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On 15th June, 1993 RHONE-POULENC RORER INC and the Bank entered
into an Agreement (the "Agreement"), making available to RHONE-
POULENC RORER INC a loan (the "Loan"), in a maximum amount of
USD 200,000,000, under which drawings may be made in FRF, USD,
GBP and DEM. RHONE-POULENC RORER S.A., RHONE-POULENC RORER
LIMITED and RHONE-POULENC RORER GmbH may also make drawings
under the Loan, subject to certain conditions; RHONE-POULENC
RORER INC has guaranteed the indebtedness of such companies
under a guarantee signed on 15th June, 1993. RHONE-POULENC S.A.
may also make drawings thereunder.
At the request of RHONE-POULENC RORER INC, BNP agrees that the
amount of the loan should be increased, its duration be
extended, and to amend the rate of the margin contained in the
interest rates and the commitment fee.
At the request of RHONE-POULENC RORER INC, BNP also agrees that,
subject to certain conditions, the subsidiaries of RHONE-POULENC
RORER INC that are more than 50% owned by the company, other
than those already referred to in the Agreement, may make
drawings under the Loan.
WHEREAS IT IS AGREED AS FOLLOWS:
ARTICLE I
1. The maximum amount of the loan defined in article I of the
Agreement is increased to a maximum amount of USD 250,000,000
(TWO HUNDRED AND FIFTY MILLION US DOLLARS) or its equivalent in
any other currency in which drawings may be made under the terms
of the Agreement.
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2. As a consequence, the sum referred to in article VI of the
Agreement is replaced by USD 250,000,000 (TWO HUNDRED AND FIFTY
MILLION US DOLLARS).
ARTICLE II
1. The duration of the loan as defined in article II of the
Agreement is extended until 13.04.2000.
2. As a consequence, the date referred to in article III of
the Agreement is replaced by the date 13.04.2000.
ARTICLE III
The margin of 0.25% referred in article VII - "CONDITIONS -
Interest" is decreased to 0.175%, provided that this reduction
shall come into effect at the end of each interest period
current at the date of entry into effect of this supplemental
agreement.
ARTICLE IV
The commitment fee of 0.20% referred to in article VII of the
Agreement is reduced to 0.125% per annum as from 15th June,
1995.
ARTICLE V
In the event that RHONE-POULENC S.A. reduces its direct or
indirect shareholding in the share capital of RHONE-POULENC
RORER INC to a level less than 51%, the terms set out in
articles III and IV of this supplemental agreement shall be
renegotiated at the request of BANQUE NATIONALE DE PARIS within
a maximum margin of 0.075%.
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ARTICLE VI
Drawings under the Loan by RHONE-POULENC RORER S.A., RHONE-
POULENC RORER LTD and RHONE-POULENC RORER GmbH shall not exceed
a maximum principal amount of USD 200,000,000 (TWO HUNDRED
MILLION US DOLLARS) or its equivalent in one of the permitted
currencies under the Agreement, and shall be repaid by 15th
June, 1997, until the Guarantee of 15th June, 1993, attached as
schedule I to the Agreement, has been amended by a supplemental
agreement on the terms of schedule I hereto.
ARTICLE VII
Drawings may be made under the Loan by the subsidiaries of RHONE-
POULENC RORER INC that are more than 50% owned by that company,
in addition to those already set out in Article I of the
Agreement, subject to the following conditions:
- - the prior written agreement of RHONE-POULENC RORER INC
- - the prior written agreement of the Bank
- - the prior receipt by the Bank of a letter from the relevant
subsidiary under which it enters into a direct undertaking to
the Bank, in the form of Schedule II to the Agreement. The terms
and conditions agreed with RHONE-POULENC RORER INC shall apply
to the relevant subsidiary.
- - the prior grant of a guarantee by RHONE-POULENC RORER INC to
BANQUE NATIONALE DE PARIS in respect of the obligations of the
relevant subsidiary relating to the Loan, in the form of the
draft which shall be sent by the Bank to RHONE-POULENC RORER INC
at that time. This guarantee shall be duly authorised by the
Board of Directors of RHONE-POULENC RORER INC.
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- - the prior signature of a supplement to the Agreement
authorising the relevant subsidiary to make drawings under the
Loan.
ARTICLE VIII
On the basis of a drawing made on 12.04.1995 for a period of 3
months, the complete drawing of this loan in French francs would
show an effective global rate of 8.12% per annum, calculated on
the proportional basis.
ARTICLE IX
All the provisions of the Agreement that shall not have been
amended by this Supplemental Agreement shall remain in full
force and effect.
ARTICLE X
This Supplemental Agreement shall come into force once the
agreement of the subsidiaries of RHONE-POULENC RORER INC with
the Bank by way of acceptance of the commitments set out in
schedule II to the Agreement has been obtained.
Signed in PARIS, on 13th April 1995
in two original copies
BANQUE NATIONALE DE PARIS RHONE-POULENC RORER INC
/s/ Jean-Daniel WURTZ /s/ Alain CHANTEREAU /s/ Philippe Maitre
Jean-Daniel WURTZ Alain CHANTEREAU Philippe Maitre
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Exhibit 10(c)
ENGLISH TRANSLATION FOR INFORMATION ONLY
AMENDMENT NO. 2 TO THE AGREEMENT
OF 15TH JUNE, 1993
BETWEEN THE UNDERSIGNED:
BANQUE NATIONALE DE PARIS, whose registered office is at 16,
boulevard des Italiens, 75009 Paris, represented by Messrs
Philippe Arnold and Jean-Daniel Wurtz, duly authorised
hereinafter referred to as the "Bank"
OF THE ONE PART
AND
RHONE-POULENC RORER INC. whose registered office is at
Collegeville, 500 Arcola Road, Pennsylvania (U.S.A.),
represented by Mr. Philippe Maitre
hereinafter referred to as the "Client"
OF THE OTHER PART
WHEREAS:
By an agreement dated 15th June, 1993 the Bank granted to the
Client and certain of its subsidiaries a credit facility
(hereinafter referred to as the "Credit"). The said agreement
was amended by Amendment no. 1 dated 13th April, 1995. The said
agreement as so amended is hereinafter referred to as the
"Agreement". At the Client's request, the Bank has agreed to
amend the Agreement anew in accordance with the following
provisions. Expressions defined in the Agreement have the same
meaning as in this amendment (hereinafter referred to as
"Amendment no. 2").
NOW IT IS HEREBY AGREED AS FOLLOWS:
CLAUSE 1 SPECIAL PERIOD
During the period of seven months (hereinafter referred to as
the "Special Period") which will commence upon delivery by the
Client to the Bank (including by fax) of a certified copy of an
extract of the minutes of a meeting of the Board of Directors of
the Client ratifying the Amendment no. 2, such copy extract to
be delivered to the Bank in any event not later than 11th
September, 1995, the following provisions shall be deemed to be
contained in the Agreement, any contrary provision being
inapplicable until the expiry of the Special Period.
(A) BORROWER
Only Rhone-Poulenc Rorer Inc. shall be entitled to use the
Credit.
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(B) AMOUNT OF THE CREDIT
The amount of the Credit referred to, in particular, in
Clauses I and VI of the Agreement, is increased during the
Special Period to 1,700,000,000 United States dollars or
the equivalent of such amount in Deutsche Marks, French
Francs or Pounds Sterling.
(C) PURPOSE OF THE CREDIT
The exclusive purpose of the Credit shall be the financing
or refinancing in whole or in part of (i) the acquisition
price of a group of companies whose dominant activity is
similar or complementary to that of the Client and all or
some of whose holding company's share capital is listed,
(ii) the indebtedness (including the preferred shares
currently issued by the Client) of the Client or any of its
subsidiaries, (iii) the expenses associated with such
acquisition and (iv) any procedures related to buying out
minorities.
(D) TERMS
The financial terms of the Credit shall remain unchanged
except, during the Special Period, firstly, in respect of
the amount by reference to which they are to be taxed and,
secondly, in the following respects:-
(i)the Bank will receive from the Client a flat fee of
USD 150,000 in respect of the preparation and costs
incurred in respect of the Amendment no. 2, payable on
the first day of the Special Period;
(ii) the commitment commission provided for in the
Agreement shall be payable monthly in advance.
By way of illustration, by reason of the temporary increase
in the amount of the credit and on the basis of a maximum
drawing on 4th August, 1995 in FRF for 3 months, the global
effective rate calculated on the proportional basis is
6.33% per annum.
(E) DURATION OF DRAWINGS
The Credit may be used subject to 2 business days, in the
case of FRF, (prior to 11 a.m.) and 3 business days, in the
case of USD, DEM or GBP, notice (prior to 11 a.m.) by way
of drawings or renewals of drawings denominated in USD,
FRF, DEM or GBP with a minimum duration of 7 days and a
maximum duration equal to the remainder of the Special
Period. The drawing date means the date on which funds are
made available.
(F) INTEREST
As regards any drawing period which is not an integral
multiple of 1 month, other than 7 day USD drawings or
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renewals, the applicable rate shall be the sum of (i) the
Bank's offered rate in Paris for the relevant duration and
currency, on the preceding business day, in the case of
FRF, and two business days prior thereto, in the case of
foreign currencies and (ii) a margin of 0.175% per annum.
In the case of 7 day USD drawings or renewals, the
reference rate shall be determined on the basis of the
average of the rates published by NatWest, Bank of Tokyo
and Barclays for 1 week on Reuter LIBOR page at 11 A.M.
(London time) 2 business days prior to the drawing date,
plus a margin of 0.175% per annum.
(G) EVENTS OF DEFAULT AND UNDERTAKINGS
Clause IX of the Agreement shall not apply during the
Special Period. In addition, failure by the Client to
comply with its obligations under Clause X of the Agreement
shall not be the subject of any sanction, claim or
procedure whatsoever by the Bank.
(H) CHANGE OF CIRCUMSTANCES
In the event of any of the circumstances described in the
third paragraph of Clause XI of the Agreement arising
during the Special Period, the Client shall be entitled to
require the Credit to be maintained and the Bank shall not
be entitled to repudiate it, provided that all costs and
expenses suffered by the Bank as a result thereof shall be
borne by the Client.
CLAUSE 2 OTHER PROVISIONS OF THE AGREEMENT
The provisions of the Agreement which are not modified by the
above provisions shall remain in full force and effect.
CLAUSE 3 EXPIRY OF THE SPECIAL PERIOD
With effect from the expiry of the Special Period, the initial
provisions of the Agreement shall again become applicable as
they subsisted prior to modification by Amendment no. 2.
CLAUSE 4 APPLICABLE LAW
Clause XII of the Agreement also applies to the Amendment no. 2.
Made in Paris (France)
on 7th August, 1995
/s/ P. Arnold /s/ J.D. Wurtz /s/ P. Maitre
_______________________________ _________________________
P. Arnold J.D. Wurtz P. Maitre
Banque Nationale de Paris Rhone-Poulenc Rorer Inc.
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Exhibit 10(d)
RHONE-POULENC
RORER INC.
LOAN FACILITY AGREEMENT
dated 7th August, 1995
SOCIETE GENERALE
SLAUGHTER AND MAY
112, AVENUE KLEBER
75116 PARIS
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THIS AGREEMENT IS MADE THE 7TH DAY OF AUGUST 1995
BETWEEN
SOCIETE GENERALE, a societe anonyme with a share capital of
FRF 2,498,779,170, whose registered office is at 29, boulevard
Haussmann, 75009 Paris, represented by Mr. Gerard GICQUEL
(hereinafter referred to as the "Bank")
OF THE ONE PART
AND
RHONE-POULENC RORER INC., a company with a share capital of
USD 429 million whose registered office is at Collegeville, 500
Arcola Road, Pennsylvania, United States of America, represented
by Mr. Philippe Maitre, Corporate Treasurer,
(hereinafter referred to as the "Client")
OF THE OTHER PART
NOW IT IS HEREBY AGREED AS FOLLOWS:
CLAUSE 1 - DEFINITIONS
The following definitions shall have the following respective
meanings, unless the context other requires:-
"Available Amount" means, on any date, the amount of the
Facility less the aggregate amount of the Drawings outstanding.
"Business Day" means a whole day not being a Saturday on which
the interbank market is open or banks are open (i) in Paris, in
the case of French Franc Drawings and (ii) in London, Paris and
the principal financial centre of the currency of the Drawing,
in the case of any other Drawing.
"DEM" means Deutsche Marks.
"Drawing" means a Drawing made under the Facility or, as the
case may be, the amount thereof for the time being outstanding.
"Facility" means the unconditional, irrevocable, confirmed
revolving facility made available by the Bank to the Client the
maximum amount whereof is stated in Clause 3.
"FRF" means French Francs.
"GBP" means Pounds Sterling.
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"Reference Banks" means (i) in the case of DEM, Bayerische
Landesbank, Commerzbank, Deutsche Bank and Dresdner Bank, (ii)
in the case of FRF, Caisse Centrale des Banques Populaires,
Caisse des Depots et Consignations, Caisse Nationale du Credit
Agricole and Credit Commercial de France, (iii) in the case of
GBP, Barclays Bank, Lloyds Bank, Midland Bank and National
Westminster Bank and (iv) in the case of USD, Chase Manhattan
Bank, Chemical Bank, Citibank and J.P. Morgan.
"TMP" means the average rate recorded in day to day transactions
between banks on the French inter-bank market and weighted by
volume, as published by the Banque de France and currently
available on Telerate page 3205.
"USD" means United States Dollars.
CLAUSE 2 - PURPOSE
The object of the Facility shall be the financing or refinancing
in whole or in part of (i) the acquisition price of a group of
companies whose dominant activity is similar or complementary to
that of the Client and all or some of whose holding company's
share capital is listed, (ii) the indebtedness (including share
capital which may be repurchased or redeemed) of the Client or
any of its subsidiaries, (iii) the expenses associated with such
acquisition and (iv) any procedures related to buying out
minorities.
CLAUSE 3 - AMOUNT AND DURATION OF THE FACILITY
The Bank hereby grants to the Client an unconditional,
irrevocable, confirmed revolving loan facility in the maximum
amount of 1,100,000,000 United States Dollars or its equivalent
in Deutsche Marks, French Francs and Pounds Sterling.
Drawings under the Facility may be made during the period of
seven months (hereinafter referred to as the "Availability
Period") commencing on the day following the date of delivery
(which shall not be made later than 60 days after the date of
this Agreement) to the Bank of a certified copy of an extract of
the minutes of the Board of Directors deciding on the principle
of the acquisition referred to in Clause 2 and ratifying the
signature of this Agreement by Mr. Philippe Maitre.
CLAUSE 4 - DRAWINGS
4.1 - NOTICE OF DRAWING
Each Drawing shall be made on a Business Day. Any request
for a Drawing must be notified to the Bank not later than
10 a.m. (Paris time) on the Business Day prior to the
proposed Drawing Date, in the case of FRF Drawings, and 2
Business Days in the case of any other Drawings. Any
request for renewals shall be subject to the same notice.
In the case of large Drawings, the Client shall, to the
extent possible, inform the Bank as early as possible
prior thereto.
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Notification of a request for a Drawing shall be given by
telephone and shall be confirmed by fax by the Client in
the form set out in the Schedule and any such fax shall be
as effective between the parties as if it were an
original.
Subject to Clauses 5.3.1 and 5.3.4, the notice of Drawing
duly signed by authorised persons shall irrevocably bind
the Client which shall make the Drawing on the date
stipulated in the notice of Drawing.
4.2 - DURATION AND AMOUNT OF EACH DRAWING
Drawings shall not exceed the Available Amount at any
given time and may only be made for a period of seven
days, one month, three months or six months, and all
amounts due in respect thereof shall be paid or repaid not
later than the last day of the Availability Period.
The amount of each Drawing shall not be less than USD TEN
MILLION, or the equivalent thereof for Drawings in DEM,
FRF or GBP. The Client shall, to the extent reasonably
possible, use its best endeavours to keep the number of
Drawings outstanding at any time to a minimum.
Each Drawing shall be repaid on the last day of the
relevant Drawing period or, if such day is not a Business
Day, on the following Business Day.
4.3 - ACCOUNTING AND AVAILABILITY OF FUNDS
In order to keep accounting records of the implementation
of this Facility the Bank shall open in the name of the
Client a special account which shall be a non-running,
simple accounting mechanism which shall not have the legal
effects of a running account ("compte courant").
The amount of each Drawing shall be entered by the Bank as
a credit in the current account of the Client.
The transactions resulting from the Drawings and
repayments of the credit shall be excluded from all
running accounts which the Client has or may have with the
Bank.
The Client acknowledges that the making and repayment of
borrowings hereunder shall be adequately evidenced in the
accounts of the Bank.
CLAUSE 5 - FEES - INTEREST
5.1 - MANAGEMENT FEE
The Client shall pay to the Bank, on the date of signature
of this Agreement, a management fee in an amount
(excluding tax) of 150,000 US Dollars.
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5.2 - FACILITY FEE
A Facility fee calculated on the total amount of the
Facility, being U.S.D. 1,100,000,000 subject to Clause 8.2
(whether or not any Drawing is made) on a 360-day year
basis shall be paid to the Bank quarterly in advance, and
the first payment shall be made on the date of signature
of this Agreement.
The Facility fee shall be at a rate of 1/8 of 1% per annum
until the expiry of this Agreement.
5.3 - INTEREST
5.3.1 - Calculation of interest on Drawings in French Francs
Subject to the provisions of Clause 5.3.7, the reference
rate applicable to Drawings of 1, 3 or 6 months is the
corresponding PIBOR as defined in Clause 5.3.2.
As regards seven day Drawings, the reference rate shall be
determined by the Bank as being the average (rounded up,
if necessary, to the nearest 1/16 of 1% per annum) of the
rates at which deposits are offered in the Paris
inter-bank market by the relevant Reference Banks on the
Business Day preceding the proposed Drawing Date at about
11.00 a.m. (Paris time) for a duration and in an amount
equal to those of the relevant Drawing. The Bank shall
forthwith inform the Client of such determination by
telephone, whereupon the Client shall be entitled, if the
rate so determined is not acceptable to it, to cancel the
Drawing or select a duration of 1, 3 or 6 months therefor.
Interest in respect of any FRF Drawing shall be calculated
at the aggregate of the reference rate and a margin of
0.175% per annum on the basis of the exact number of days
in the Drawing period divided by 360.
Interest shall be payable without deduction for impost,
taxes and/or withholding at source.
Interest shall be payable on the last day of the relevant
Drawing period or, if such day is not a Business Day, on
the following Business Day.
5.3.2 - Definition of PIBOR
PIBOR, in respect of any French Franc denominated Drawing
means the annual rate published by TELERATE (currently
page 20041) under the aegis of the Association Francaise
des Banques ("AFB") at about 11.30 a.m. (Paris time) on
the Business Day preceding the proposed Drawing date or
the date of renewal thereof, as being the rate at which
French Franc deposits are offered on the Paris Interbank
Market for the period of such Drawing or renewal, as the
case may be.
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5.3.3 - Non-publication of PIBOR
If PIBOR, as calculated and published by the AFB, ceases
to be published for any reason whatsoever the Bank shall
forthwith notify the Client by any method and the
following provisions shall apply:-
- if a reference rate replacing PIBOR is published
under the aegis of the AFB, such rate shall be
immediately applicable to any new Drawings and
renewals thereof;
- otherwise, the Bank and the Client shall negotiate
in order to agree a new reference rate for 1, 3 or 6
months Drawings.
In the event of failure to agree and for so long as no
mechanism for the determination of a reference rate for 1,
3 or 6 month Drawings shall not have been officially
established, Drawings may only be made for periods of
seven days and interest shall accrue thereon in accordance
with the second paragraph of Clause 5.3.1.
5.3.4. - Calculation of interest on Drawings in USD, DEM or
GBP
Drawings in USD, DEM or GBP shall have a duration of seven
days, 1, 3 or 6 months.
The Client may request two Business Days prior to the end
of each Drawing period the conversion in whole or in part
of one or more Drawings into a currency of its choice
(being USD, DEM, FRF or GBP) without exceeding the
Available Amount, subject to such conversion not resulting
in the Facility amount being exceeded (by virtue of a
change of parity between the currencies used and United
States Dollars) by 5% or more of the total Facility amount
Provided that the Client shall eliminate such excess by
adjusting the amount of subsequent Drawings to the extent
necessary.
Subject to the preceding paragraph, repayment of each
Drawing shall be made in the currency in which such
Drawing is denominated.
Subject to Clause 5.3.8, the reference rate applicable to
Drawings in USD, DEM or GBP for a duration of 1, 3 or 6
months shall be LIBOR as defined in Clause 5.3.5.
As regards seven day Drawings, the relevant reference rate
shall be determined by the Bank as being the average
(rounded up, if necessary, to the nearest 1/16 of 1% per
annum) of the rates at which deposits are offered in the
London inter-bank market by the relevant Reference Banks
two Business Days preceding the proposed Drawing date at
about 11.00 a.m. (London time) for a duration and in an
amount equal to those of the relevant Drawing. The Bank
shall forthwith inform the Client of such determination by
telephone, whereupon the Client shall be entitled, if the
rate so determined is not acceptable to it, to cancel the
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Drawing or select a duration of 1, 3 or 6 months therefor.
Interest in respect of any USD, DEM or GBP Drawings shall
be calculated at the aggregate of the relevant reference
rate and a margin of 0.175% per annum in accordance with
euromarket practice on a 365/360 basis not later than the
first day of each period selected, except that it will be
calculated on a 365/365 basis for GBP.
Interest shall be payable without deduction for impost,
taxes and/or withholding at source.
Interest shall be payable on the last day of the relevant
Drawing period or, if such day is not a Business Day, on
the following Business Day.
In the event that, at the date for repayment of a Drawing
in USD, DEM or GBP, the relevant currency shall not be
available on the London interbank market, the Bank and the
Client shall consult with a view to reaching agreement on
a replacement currency for the payment of principal and
interest in respect of such Drawing and, failing such
agreement within two Business Days, FRF shall be the
replacement currency.
5.3.5 - Definition of LIBOR
LIBOR (London Interbank Offered Rate), in respect of any
USD, DEM or GBP denominated Drawing, means the annual rate
published by TELERATE (currently page 3750) under the
aegis of the British Bankers Association at about 11.00
a.m. (London time) two Business Days prior to the proposed
Drawing date or date of renewal thereof, as being the rate
at which deposits in the relevant currency are offered on
the London Interbank Market for the period of such Drawing
or renewal, as the case may be.
5.3.6 - Unavailability of LIBOR
In the event that the Bank shall be unable to determine
LIBOR, the Bank shall promptly notify the Client,
whereupon the Client and the Bank shall commence
negotiations with a view to finding a mutually acceptable
solution. The Bank shall be under no obligation to pursue
such negotiation after the expiry of a period of 30 days
after the date of such notice. In the absence of
agreement, the applicable reference rate shall be
determined by the Bank as being the average (rounded up,
if necessary, to the nearest 1/16 of 1% per annum) of the
rates at which deposits are offered in the London
inter-bank market by the Reference Banks two Business Days
preceding the proposed Drawing Date at about 11.00 a.m.
(London time) for a duration and in an amount equal to
those of the relevant Drawing.
5.3.7 - 1, 3 and 6 month French Franc Drawings substitute
rate
In the event that, on the Business Day prior to a proposed
Drawing date or date of renewal thereof, the Bank shall
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determine, as a result of consulting the relevant
Reference Banks in Paris, that the arithmetic mean of the
rates at which FRF deposits are offered by them in the
Paris inter-bank market for a duration and in an amount
equivalent to those of the relevant Drawing is higher than
the PIBOR which would otherwise apply to such Drawing by
more than 1/16% per annum, the applicable reference rate
shall be that determined by the Bank as being the average
(rounded up, if necessary, to the nearest 1/16 of 1% per
annum) of the rates at which FRF deposits are offered in
the Paris inter-bank market by such Reference Banks on
such Business Day at about 11.30 a.m. (Paris time) for
such duration and amount.
5.3.8 - 1, 3 or 6 month DEM or GBP Drawings substitute rate
In the event that, on the second Business Day prior to the
date on which funds are to be made available in respect of
a Drawing or a renewal thereof, the Bank shall determine,
as a result of consulting the relevant Reference Banks in
London, that the arithmetic mean of the rates at which
deposits in the relevant currency are offered by them in
the London inter-bank market for a duration and in an
amount equivalent to those of the relevant Drawing is
higher than the LIBOR which would otherwise apply to such
Drawing by more than 1/16% per annum, the applicable
reference rate shall be that determined by the Bank as
being the average (rounded up, if necessary, to the
nearest 1/16 of 1% per annum) of the rates at which
deposits in the relevant currency are offered in the
London inter-bank market by such reference banks on such
Business Day at about 11.30 a.m. (London time) for such
duration and amount.
5.3.9 - Reference Banks
Whenever a reference rate shall be set on the basis of
Reference Banks' quotations, the Bank shall notify such
quotations to the Client. The Bank's determination of
reference rates on such basis, shall, in the absence of
manifest error, be conclusive.
In the event that no or only one Reference Bank provides
any quotation prior to the making or renewal of any
Drawing, the reference rate for such Drawing shall be the
annual rate which the Bank shall certify to the Client as
representing the cost of funding such Drawings from
external sources, such certificate to be accompanied by
relevant evidence of such cost.
5.4 - PLACE OF PAYMENT
All payments to be made under this Agreement shall be made
by transfer to the account of the Bank:-
(i) in the case of DEM, with Societe Generale
Frankfurt - SOGE DE FF, Mainzer Landstrasse 36
Postfach 101935, D6000 Frankfurt Am Main 1 (Germany)
under reference Rhone-Poulenc Rorer/Franklin, Mme
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Francoise Graviche-Loiseau - Eurocredits;
(ii) in the case of FRF, with Societe Generale Paris
- SOGE FR PP, under reference Rhone-Poulenc
Rorer/Franklin (Code Guichet 699-3), Mme Francoise
Graviche-Loiseau - Eurocredits;
(iii) in the case of GBP, with Societe Generale London
- SGE GB 2L, Exchange House Primrose Street, London
EC2A 2HT (United Kingdom), under reference
Rhone-Poulenc Rorer/Franklin, Mme Francoise
Graviche-Loiseau - Eurocredits;
(iv) in the case of USD, with Societe Generale New
York - SOGE US 33, currently at 1221 avenue of the
Americas, New York N.Y. 10020 (United States), no.
0152595 under reference Rhone-Poulenc Rorer/Franklin,
Mme Francoise Graviche-Loiseau - Eurocredits.
The Client irrevocably authorises the Bank to deduct the
amount required for payment of all sums due under this
Agreement from its current account at SOCIETE GENERALE
OPERA, 6, rue Auber, 75009 Paris.
CLAUSE 6 - EFFECTIVE GLOBAL RATE
For the purposes of sections L. 313-3 et seq. of the French
Consumers Code ("Code de la Consommation") and the order
("decret") 85-944 of 4th September, 1985 and assuming a maximum
borrowing denominated in USD for the term of the Facility and
otherwise on the financial terms set out in this Agreement, the
Bank hereby notifies the Client, by way of example, that LIBOR
for one month being 5.875%, the effective global rate is
therefore 6.29% per annum.
The effective global rate applicable for each Drawing will
depend on the manner in which Drawings are made under this
Agreement.
CLAUSE 7 - CHANGES IN CIRCUMSTANCES
The terms for remunerating the Bank in respect of the Facility
have been fixed on the basis of the regulations applicable on
the date of signature of this Agreement and the Client's
membership of the RHONE-POULENC Group.
If RHONE-POULENC S.A.'s direct or indirect participation in the
capital of RHONE-POULENC RORER INC. falls below 50%, the Bank
and the Client shall agree either on a prepayment of the
Facility together with interest and all other amounts relating
thereto or on increased terms, which in any event shall be a
maximum of PIBOR (for French Franc Drawings) or LIBOR (for USD,
DEM or GBP Drawings) plus 0.25% and a Facility fee of 0.25% per
annum.
If, following a new legislative or regulatory provision or
interpretation by a competent authority, such provision or
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authority being French, European, United States or foreign,
whereby the Bank is subject to any tax, monetary, financial or
banking measure resulting in an additional cost relating to this
Agreement (arising, for example, from reserves or obligatory
deposits, share capital, liquidity or other ratios or any tax,
or other taxation, except corporation tax) resulting in a
reduction of payment to the Bank or if such reduction of payment
results from a judicial decision, the following provisions shall
apply:-
- - the Bank shall notify the Client in writing, indicating
the estimated increase in costs under this Agreement or of
the reduction of its payment in respect of this Agreement
and the required indemnity, enclosing documents providing
evidence thereof,
- - the Client and the Bank, on the initiative of the Bank
shall consult as soon as practicable and negotiate during
a maximum period of 30 days from the date of the said
notice in order to reach a solution which permits the
resolution of any difficulties arising, in the same spirit
of cooperation as presided over this Agreement.
In the event of disagreement at the end of the period of
consultation, the Client shall have the option within a maximum
period of seven business days following the last day of the
period of 30 days either:-
- - to request the Bank to continue the Facility, undertaking
nevertheless to be wholly liable for the additional cost
incurred by the Bank from the day such cost is incurred by
the Bank; or
- - to terminate the Facility by prepayment of all sums due in
principal, interest and fees, increased as necessary by
all fees and all costs incurred by the Bank relating to
such prepayment (including and upon presentation of
evidence, the estimated cost of replacing the funds on the
date of prepayment).
CLAUSE 8 - CANCELLATION
8.1 AUTOMATIC CANCELLATION
The Facility shall expire 60 days after the date of
signature of this Agreement in the event of the Client
failing to deliver the certified copy extract referred to
in Clause 3 prior to the expiry of such 60 days.
8.2 VOLUNTARY CANCELLATION
The Client may at any time cancel the Facility in whole or
in part, subject to prior written notice to the Bank.
However, such cancellation shall only have effect seven
calendar days after receipt of such letter by the Bank.
Such cancellation shall be definitive so that the amount
of the Facility shall be reduced accordingly.
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Consequently, the Facility fee shall cease to be due on
the cancelled portion of the Facility with effect from the
expiry of the quarterly period for the Facility fee during
which the cancellation has taken effect.
CLAUSE 9 - PREPAYMENT
The Client may not prepay one or more outstanding Drawings
without the prior express consent of the Bank.
In the event of such consent, such prepayment may be made upon
the following conditions:-
- - each prepayment shall be in respect of a whole Drawing.
It may only be effected on a Business Day;
- - the request for prepayment by the Client shall relate to a
minimum of USD 50,000,000 and shall reach the Bank with
seven calendar days' prior notice;
- - the Client shall indemnify the Bank for all potential
losses to the Bank resulting from the difference between
the interest rate applied to the relevant Drawing and the
rate obtained by the Bank in replacing the funds on the
market during the remaining period until the date of
repayment of the Drawing.
CLAUSE 10 - DEFAULT INTEREST
All sums due under this Agreement shall without prior notice
bear interest at TMP, in the case of French Franc amounts, or at
the relevant overnight London inter-bank offered rate in the
case of USD, DEM or GBP amounts plus, in each case, 1% per annum
from their due date for payment until actual payment.
Such provision shall not constitute a waiver of the obligation
to pay on the relevant due date.
Interest shall be capitalised if it is due for one year in
accordance with the provisions of 1154 of the Civil Code.
CLAUSE 11 - TAXES AND EXPENSES
Payment of any sum due by the Client under this Agreement shall
be effected net of any tax retained at source or any present or
future withholding of whatever nature.
The Client shall be liable for all duly evidenced expenses
incurred in good faith by the Bank in the preparation, signing
and performance of this Agreement up to USD 30,000. In addition,
the Client shall be liable for all expenses and fees incurred by
the Bank in recovering sums due by the Client.
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CLAUSE 12 - WAIVERS
The non-exercise or late exercise by the Bank of any right
arising out of this Agreement shall not constitute a waiver of
that right. Any partial exercise of a right shall not preclude
any further exercise of rights which have not been fully
exercised. The rights provided in this Clause shall be
cumulative with any right provided by law.
CLAUSE 13 - DOMICILE
For the performance of this Agreement, the Bank elects as its
domicile the place indicated in Clause 14 and, the Client elects
its registered office.
CLAUSE 14 - NOTICES
Any notice to be given under this Agreement shall be addressed
as follows:-
(i) if to the Bank, to
FOR CREDIT MATTERS:
Societe Generale
MARC/FIN/Acq
Tour Societe Generale
17 cours Valmy
92987 Paris La Defense Cedex
France
For the attention of Mr. Dominique LEROY/Mlle Isabelle
LE BOULC'H
Fax no.: (33.1) 42 13 79 13 Tel no.: (33.1) 42 13 75 98
FOR OPERATIONAL AND ADMINISTRATIVE MATTERS:
Societe Generale
MARC/GEF/tit/eur
Tour Societe Generale
17 cours Valmy
92987 Paris La Defense Cedex
France
For the attention of Mlle Laurence Gaertner
Fax no.: (33.1) 42 13 69 67 Tel no.: (33.1) 42 13 77 71
(ii) if to the Client, to
Rhone-Poulenc Rorer Inc.
500 Arcola Road
Collegeville
Pennsylvania
United States of America
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For the attention of the Corporate Treasurer
or in his absence the Deputy Corporate Treasurer
Fax no.: 610 454 8605 Tel no.: 610 454 3510
or, in either case, to such other address as may be notified
from time to time for that purpose by the relevant party.
CLAUSE 15 - GOVERNING LAW
This Agreement shall be governed by French law and all disputes
not resolved by common agreement shall be submitted to the
non-exclusive jurisdiction of the Tribunal de Commerce of Paris.
SIGNED IN PARIS,
IN TWO ORIGINALS
/s/ Gerard Gicquel /s/ Philippe Maitre
SOCIETE GENERALE RHONE-POULENC RORER INC.
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Exhibit 10(e)
RHONE-POULENC
RORER INC.
LOAN FACILITY AGREEMENT
dated 7th August 1995
CREDIT LYONNAIS
SLAUGHTER AND MAY
112, AVENUE KLEBER
75116 PARIS
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THIS AGREEMENT IS MADE THE 7TH DAY OF AUGUST 1995
BETWEEN
CREDIT LYONNAIS, a French corporation with a stated capital of
FRF 9,389,925,000, whose registered office is at Lyon (Rhone)
18, avenue de la Republique and whose principal office is at 19,
boulevard des Italiens, 75002 Paris, registered under
No. B 954 509 741, Lyon Commercial Register represented by
Jean-Louis JOUBERT
(hereinafter referred to as the "Bank")
OF THE ONE PART
AND
RHONE-POULENC RORER INC., a company with a share capital of
USD 429 million whose registered office is at Collegeville, 500
Arcola Road, Pennsylvania, United States of America, represented
by Mr. Philippe Maitre, Corporate Treasurer,
(hereinafter referred to as the "Client")
OF THE OTHER PART
NOW IT IS HEREBY AGREED AS FOLLOWS:
CLAUSE 1 - DEFINITIONS
The following definitions shall have the following respective
meanings, unless the context other requires:-
"Available Amount" means, on any date, the amount of the
Facility less the aggregate amount of the Drawings outstanding.
"Business Day" means a whole day not being a Saturday on which
the interbank market is open or banks are open (i) in Paris, in
the case of French Franc Drawings and (ii) in London and Paris,
in the case of any other Drawing.
"Drawing" means a Drawing made under the Facility or, as the
case may be, the amount thereof for the time being outstanding.
"Facility" means the unconditional, irrevocable, confirmed
facility made available by the Bank to the Client the maximum
amount whereof is stated in Clause 2.
"Reference Banks" means (i) in the case of DEM, Bayerische
Landesbank, Caisse des Depots et Consignations and Commerzbank,
(ii) in the case of FRF, Caisse des Depots et Consignations,
Caisse Nationale du Credit Agricole and Credit Commercial de
France, (iii) in the case of GBP, Barclays Bank, Caisse des
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Depots et Consignations and Lloyds Bank and (iv) Caisse des
Depots et Consignations, Chemical Bank and J.P. Morgan.
CLAUSE 2 - PURPOSE
The object of the Facility shall be the financing or refinancing
in whole or in part of (i) the acquisition price of a group of
companies whose dominant activity is similar or complementary to
that of the Client and all or some of whose holding company's
share capital is listed, (ii) the indebtedness (including share
capital which may be repurchased or redeemed) of the Client or
any of its subsidiaries, (iii) the expenses associated with such
acquisition and (iv) any procedures related to buying out
minorities.
CLAUSE 3 - AMOUNT AND DURATION OF THE FACILITY
The Bank hereby grants to the Client an unconditional,
irrevocable, confirmed loan facility in the maximum amount of
1,500,000,000 United States Dollars or its equivalent in
Deutsche Marks, French Francs and Pounds Sterling.
Drawings under the Facility may be made during the period of
seven months (hereinafter referred to as the "Availability
Period") commencing on the date of delivery (which shall not be
made later than 60 days after the date of this Agreement) to the
Bank of a certified copy of an extract of the minutes of the
Board of Directors ratifying the signature of this Agreement.
CLAUSE 4 - DRAWINGS
4.1 - NOTICE OF DRAWING
Each Drawing shall be made on a Business Day. Any request
for a Drawing must be notified to the Bank not later than
10 a.m. (Paris time) on the Business Day prior to the
proposed Drawing Date, in the case of FRF Drawings, and 2
Business Days in the case of any other Drawings. Any
request for renewals shall be subject to the same notice.
Notification of a request for a Drawing shall be given by
the Client in the form set out in the Schedule and may be
sent by fax which shall be as effective between the
parties as if it were an original and the Client hereby
relieves the Bank of any liability which might result from
any faulty, improper or fraudulent use of such means of
transmission other than by the Bank.
Subject to Clauses 5.3.1 and 5.3.4, the notice of Drawing
duly signed by authorised persons shall irrevocably bind
the Client which shall make the Drawing on the date
stipulated in the notice of Drawing.
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4.2 - DURATION AND AMOUNT OF EACH DRAWING
Drawings not exceeding the Available Amount may be made
for a period of eight days, one month, three months or six
months, and all amounts due in respect thereof shall be
paid or repaid not later than the last day of the
Availability Period.
The amount of each Drawing shall not be less than USD
FIFTY MILLION, or the equivalent thereof for Drawings in
DEM, FRF or GBP.
Each Drawing shall be repaid on the last day of the
relevant Drawing period or, if such day is not a Business
Day, on the following Business Day except that if the
following Business Day falls in a new calendar month, then
on the preceding Business Day.
4.3 - ACCOUNTING AND AVAILABILITY OF FUNDS
In order to keep accounting records of the implementation
of this Facility the Bank shall open in the name of the
Client a special account which shall be a non-running,
simple accounting mechanism which shall not have the legal
effects of a running account.
The amount of each Drawing shall be entered by the Bank as
a credit in the current account of the Client.
The transactions resulting from the Drawings and
repayments of the credit shall be excluded from all
running accounts which the Client has or may have with the
Bank.
The Client acknowledges that the making and repayment of
borrowings hereunder shall be adequately evidenced in the
accounts of the Bank.
CLAUSE 5 - FEES - INTEREST
5.1 - MANAGEMENT FEE
The Client shall pay to the Bank, on the date of signature
of this Agreement, a management fee in an amount excluding
tax of 150,000 US Dollars.
5.2 - COMMITMENT FEE
A commitment fee shall be paid to the Bank in arrear every
90 days after the date of this Agreement or, if
applicable, at the termination of the Availability Period,
and calculated at a rate of 0.15% per annum on the daily
Available Amount during the relevant 90 day period (or
other such period, if applicable) on a 360-day year basis.
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5.3 - INTEREST
5.3.1 - Calculation of interest on Drawings in French Francs
The interest reference rate applicable to Drawings of 1, 3
or 6 months is the corresponding PIBOR as defined in
Clause 5.3.2.
As regards eight day Drawings, the relevant reference rate
shall be determined by the Bank as being the average
(rounded up, if necessary, to the nearest 1/16 of 1% per
annum) of the rates at which deposits are offered in the
Paris inter-bank market by prime banks to the relevant
Reference Banks on the Business Day preceding the proposed
Drawing Date at about 11.00 a.m. (Paris time) for a
duration and in an amount equal to those of the relevant
Drawing. The Bank shall forthwith inform the Client of
such determination by telephone, whereupon the Client
shall be entitled, if the rate so determined is not
acceptable to it, to cancel the Drawing or select a
different duration therefor.
Interest in respect of any FRF Drawing shall be calculated
at the aggregate of the relevant reference rate and a
margin of 0.325% per annum, on the basis of the exact
number of days in the Drawing period divided by 360.
Interest shall be paid on the last day of the relevant
Drawing period or, if such day is not a Business Day, on
the following Business Day, except that if the following
Business Day falls in a new calendar month, then on the
preceding Business Day.
5.3.2 - Definition of PIBOR
PIBOR, in respect of any French Franc denominated Drawing
means the annual rate published by TELERATE (currently
page 20041) under the aegis of the Association Francaise
des Banques ("AFB") at about 11.30 a.m. (Paris time) on
the Business Day preceding the proposed Drawing or renewal
date, as being the rate at which French Franc deposits are
offered on the Paris Interbank Market for the period of
such Drawing or renewal, as the case may be.
5.3.3 - Non-publication of PIBOR
If PIBOR, as calculated and published by the AFB, ceases
to be published for any reason whatsoever the Bank shall
forthwith notify the Client by any method and the
following provisions shall apply:-
- if a reference rate replacing PIBOR is published
under the aegis of the AFB, such rate shall be
immediately applicable to any new Drawings and
renewals thereof;
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- otherwise, the Bank and the Client shall negotiate
in order to agree a new reference rate for 1, 3 or 6
months Drawings.
In the event of failure to agree and for so long as no
mechanism for the determination of a reference rate for 1,
3 or 6 month Drawings shall not have been officially
established, Drawings may only be made for periods of 8
days and interest shall acrrue thereon in accordance with
the second paragraph of Clause 5.3.1.
5.3.4. - Calculation of interest on Drawings in USD, DEM or
GBP
Drawings in USD, DEM or GBP shall have a duration of 8
days, 1, 3 or 6 months.
The Client may request two Business Days prior to the end
of each Drawing period the conversion of one or more
Drawings, in whole or, if in part, then in minimum amounts
of USD 50 million or approximate equivalents thereof in
another authorised currency, into a currency of its choice
without exceeding the Available Amount, subject to such
conversion not resulting in the Facility amount being
exceeded by virtue of a change of parity between the
currencies used and United States Dollars.
Subject to the preceding paragraph, repayment of each
Drawing shall be made in the currency in which such
Drawing is denominated.
The reference rate applicable to Drawings in USD, DEM or
GBP for a duration of 1, 3 or 6 months shall be LIBOR as
defined in Clause 5.3.5. Provided that the Client shall
pay to the Bank, in the case of any GBP Drawing,
additional interest equal to the difference between the
LIBOR applied to such Drawing and the actual rate at which
and the LIBOR which would have applied if it had been
determined on the Drawing date.
As regards eight day Drawings, the relevant reference rate
shall be determined by the Bank as being the average
(rounded up, if necessary, to the nearest 1/16 of 1% per
annum) of the rates at which deposits are offered in the
London inter-bank market by prime banks to the relevant
Reference Banks two Business Days preceding the proposed
Drawing date at about 11.00 a.m. (London time) for a
duration and in an amount equal to those of the relevant
Drawing. The Bank shall forthwith inform the Client of
such determination by telephone, whereupon the Client
shall be entitled, if the rate so determined is not
acceptable to it, to cancel the Drawing or select a
different duration therefor.
Interest in respect of any USD, DEM or GBP Drawing shall
be calculated at the aggregate of the relevant reference
rate and a margin of 0.325% per annum, in accordance with
euromarket practice on a 365/360 basis at the commencement
of each period selected, except that it will be calculated
on a 365/365 basis for GBP.
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Interest shall be payable without any deduction
whatsoever, including for impost, taxes and/or withholding
at source.
Interest shall be paid on the last day of the relevant
Drawing period or, if such day is not a Business Day, on
the following Business Day except that if the following
Business Day falls in a new calendar month, then on the
preceding Business Day.
In the event that, at the date for repayment of a Drawing
in USD, DEM or GBP, the relevant currency shall not be
available on the interbank market, the Bank and the Client
shall consult with a view to reaching agreement on a
replacement currency for the payment of principal and
interest in respect of such Drawing and, failing such
agreement, FRF shall be the replacement currency.
5.3.5 - Definition of LIBOR
LIBOR (London Interbank Offered Rate), in respect of any
USD, DEM or GBP denominated Drawing, means the annual rate
published by TELERATE (currently page 3750) under the
aegis of the British Bankers Association at about 11.00
a.m. (London time) two Business Days prior to the proposed
Drawing or renewal date, as being the rate at which
deposits in the relevant currency are offered on the
London Interbank Market for the period of such Drawing or
renewal, as the case may be.
5.3.6 - Unavailability of LIBOR
In the event that the Bank shall be unable to determine
LIBOR, the Bank shall promptly notify the Client,
whereupon the Client and the Bank shall commence
negotiations with a view to finding a mutually acceptable
solution. The Bank shall be under no obligation to pursue
such negotiation after the expiry of a period of 30 days
after the date of such notice. In the absence of
agreement, the applicable reference rate shall be
determined by the Bank as being the average (rounded up,
if necessary, to the nearest 1/16 of 1% per annum) of the
rates at which deposits are offered in the London
inter-bank market by prime banks to the relevant Reference
Banks two Business Days preceding the proposed Drawing
Date at about 11.00 a.m. (London time) for a duration and
in an amount equal to those of the relevant Drawing.
5.3.7 - Evidence
Whenever a reference rate shall be determined on the basis
of reference banks' quotations, notice of such quotations
shall, upon request by the Client, forthwith be provided
by the Bank to the Client.
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5.4 - PLACE OF PAYMENT
All payments to be made under this Agreement shall be made
by transfer to the account of Credit Lyonnais - DME, La
Defense 6, Tour Credit Lyonnais Cedex 10, 92081 Paris La
Defense.
CLAUSE 6 - EFFECTIVE GLOBAL RATE
For the purposes of sections L. 313-3 et seq. of the French
Consumers Code ("Code de la Consommation") and the order
("decret") 85.944 of 4th September, 1985 and assuming a maximum
borrowing for the term of the Facility by renewable Drawings of
one month and the financial terms set out in this Agreement, the
Bank hereby notifies the Client, by way of example, that:-
- - PIBOR for one month on 3rd August, 1995, being 6.1250% per
annum, the contractual interest rate is 6.45% per annum,
- - the rate for a period of one month is accordingly 0.53750%,
- - the effective global rate is therefore 6.45017% per annum.
The effective global rate applicable for each Drawing will
depend on the manner in which Drawings are made under this
Agreement.
CLAUSE 7 - CHANGES IN CIRCUMSTANCES
The terms for remunerating the Bank in respect of the Facility
have been fixed on the basis of the regulations applicable on
the date of signature of this Agreement.
If, following a new legislative or regulatory provision or
interpretation by a competent authority, such provision or
authority being French, European or foreign, whereby the Bank is
subject to any tax, monetary, financial or banking measure
resulting in an additional cost relating to this Agreement
(arising, for example, from reserves or obligatory deposits,
share capital, liquidity or other ratios or any tax, or other
taxation, except corporation tax) resulting in a reduction of
any amounts received or to be received by the Bank or if such
reduction of any amounts received or to be received by the Bank
results from a judicial decision, the following provisions shall
apply:-
- - the Bank shall notify the Client in writing, indicating the
estimated increase in costs under this Agreement or of the
reduction of its payment in respect of this Agreement and
the required indemnity, enclosing documents providing
evidence thereof,
- - the Client and the Bank, on the initiative of the Bank shall
consult as soon as practicable and negotiate during a
maximum period of 30 days from the date of the said notice
in order to reach a solution which permits the resolution of
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any difficulties arising, in the same spirit of cooperation
as presided over this Agreement.
In the event of disagreement at the end of the period of
consultation, the Client shall have the option within a maximum
period of 7 business days following the last day of the period
of 30 days either:-
- - to request the Bank to continue the Facility, undertaking
nevertheless to be wholly liable for the additional cost
incurred by the Bank from the day such cost is incurred by
the Bank; or
- - to terminate the Facility by prepayment of all sums due in
principal, interest and fees, increased as necessary by all
fees and all costs incurred by the Bank relating to such
prepayment (including and upon presentation of evidence, the
estimated cost of replacing the funds on the date of
prepayment).
CLAUSE 8 - CANCELLATION
8.1 AUTOMATIC CANCELLATION
The Facility shall expire 60 days after the date of
signature of this Agreement in the event of the Client
failing to deliver the certified copy extract referred to in
Clause 3 prior to the expiry of such 60 days, whereupon the
Client shall pay the commitment fee to the Bank as if the
Facility had been in force for 90 days.
8.2 VOLUNTARY CANCELLATION
The Client may at any time cancel the Facility in whole or
in part, subject to 15 days' prior written notice to the
Bank.
Such cancellation shall be definitive so that the amount of
the Facility shall be reduced accordingly and the commitment
fee shall cease to be due on the cancelled portion of the
Facility with effect from the expiry of such notice period
Provided Always that in respect of the first 90 days of this
Agreement, the fee shall be due as if the Facility had
remained fully in force for such 90 days.
CLAUSE 9 - PREPAYMENT
The Client may not prepay one or more outstanding Drawings
without the prior express consent of the Bank.
In the event of such consent, such prepayment may be made upon
the following conditions:-
- - each prepayment shall be in respect of a whole Drawing. It
may only be effected on a Business Day;
- - the request for prepayment by the Client shall reach the
Bank with 7 calendar days' notice;
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- - the Client shall indemnify the Bank for all potential losses
to the Bank resulting from the difference between the
interest rate applied to the relevant Drawing and the rate
obtained by the Bank in replacing the funds on the market
during the remaining period until the date of repayment of
the Drawing.
CLAUSE 10 - DEFAULT INTEREST
All sums due under this Agreement shall without prior notice
bear interest at TMP or at the overnight rate for the relevant
currency plus 1% per annum from their due date for payment until
actual payment.
Such provision shall not constitute a waiver of the obligation
to pay on the relevant due date.
Interest shall be capitalised if it is due for one year in
accordance with the provisions of 1154 of the Civil Code.
CLAUSE 11 - TAXES AND EXPENSES
Payment of any sum due by the Client under this Agreement shall
be effected net of any tax retained at source or any present or
future withholding of whatever nature.
The Client shall be liable for all expenses and fees incurred by
the Bank in recovering sums due by the Client under this
Agreement.
CLAUSE 12 - WAIVERS
The non-exercise or late exercise by the Bank of any right
arising out of this Agreement shall not constitute a waiver of
that right. Any partial exercise of a right shall not preclude
any further exercise of rights which have not been fully
exercised. The rights provided in this Clause shall be
cumulative with any right provided by law.
CLAUSE 13 - DOMICILE
For the performance of this Agreement and subsequent agreements,
the Bank elects as its domicile the place indicated above for
payments and, the Client elects its registered office.
<PAGE>
<PAGE>
CLAUSE 14 - GOVERNING LAW
This Agreement shall be governed by French law and all disputes
not resolved by common agreement shall be submitted to the
non-exclusive jurisdiction of the Tribunal de Commerce of Paris.
SIGNED IN PARIS,
IN TWO ORIGINALS
/s/ Jean-Louis Joubert /s/ Philippe Maitre
Jean-Louis Joubert Phillipe Maitre
CREDIT LYONNAIS RHONE-POULENC RORER INC.
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
September 30,
-------------------
Restated
1995 1994
-------- --------
Net income per common share as reported:
Net income before preferred dividend $ 112.1 $ 114.5
Less: Dividend on preferred stock (4.8) (4.9)
-------- --------
Net income available to common shareholders $ 107.3 109.6
========
Pro forma adjustments for interest and
preferred dividends, net of tax effects (2.4)
--------
Net income available to common shareholders,
pro forma $ 107.2
========
Average shares outstanding 134.2 134.8
======== ========
Net income available to common shareholders
per share $ .80
========
Net income available to common shareholders
per share, pro forma $ 0.80
========
Net income per common share assuming full
dilution:
Net income before preferred dividend $ 112.1 $ 114.5
Less: Dividend on preferred stock (4.8) (4.9)
-------- --------
Net income available to common shareholders $ 107.3 109.6
========
Pro forma adjustments for interest and
preferred dividends, net of tax effects (2.4)
--------
Net income available to common shareholders,
pro forma $ 107.2
========
Average shares outstanding 134.2 134.8
Shares contingently issuable for stock plan 0.7 0.4
--------- --------
Average shares outstanding, assuming full
dilution 134.9 135.2
========= ========
Net income available to common shareholders
per share, assuming full dilution $ 0.80
=========
Net income available to common shareholders
per share, pro forma, assuming full dilution $ 0.79
========
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%.
<PAGE>
<PAGE>
EXHIBIT 11
RHONE-POULENC RORER INC. AND SUBSIDIARIES
Computation of Earnings Per Common Share
(Unaudited-dollars and shares in millions except per share data)
Nine Months Ended
September 30,
--------------------
Restated
1995 1994
-------- --------
Net income per common share as reported:
Net income before preferred dividend $ 298.7 $ 193.9
Less: Dividend on preferred stock (16.2) (13.8)
-------- --------
Net income available to common shareholders 282.5 180.1
Pro forma adjustments for interest and
preferred dividends, net of tax effects (1.6) (6.6)
-------- --------
Net income available to common shareholders,
pro forma $ 280.9 $ 173.5
======== ========
Average shares outstanding 134.2 135.6
======== ========
Net income available to common shareholders
per share, pro forma $ 2.09 $ 1.28
======== ========
Net income per common share assuming full
dilution:
Net income before preferred dividend $ 298.7 $ 193.9
Less: Dividend on preferred stock (16.2) (13.8)
-------- --------
Net income available to common shareholders 282.5 180.1
Pro forma adjustments for interest and
preferred dividends, net of tax effects (1.6) (6.6)
-------- --------
Net income available to common shareholders,
pro forma $ 280.9 $ 173.5
======== ========
Average shares outstanding 134.2 135.6
Shares contingently issuable for stock plan 0.7 0.5
-------- --------
Average shares outstanding, assuming full
dilution 134.9 136.1
======== ========
Net income available to common shareholders
per share, pro forma, assuming full
dilution $ 2.08 $ 1.27
======== ========
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%.
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 October 20, 1995, on our
review of interim financial information of Rhone-Poulenc Rorer
Inc. ("the Company"), for the period ended September 30, 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
November 14, 1995
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM CONDENSED
CONSOLIDATED BALANCE SHEET AND THE RELATED CONDENSED CONSOLIDATED STATEMENT OF
INCOME FOR THE NINE-MONTH PERIOD ENDING SEPTEMBER 30, 1995 AND IS QUALIFIED IN
ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
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<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-END> SEP-30-1995
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<ALLOWANCES> 82
<INVENTORY> 713
<CURRENT-ASSETS> 2188
<PP&E> 2539
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0
175
<OTHER-SE> 1522
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<CGS> 1252
<TOTAL-COSTS> 3067
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