<PAGE>
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K/A
AMENDMENT NO. 1 TO
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
October 20, 1995
- ----------------------------------------------------------------------------
Date of Report (Date of earliest event reported)
Rhone-Poulenc Rorer Inc.
- ---------------------------------------------------------------------------
(Exact name of registrant as specified in its charter)
Pennsylvania 1-5851 23-1699163
- ---------------------------------------------------------------------------
(State or other juris- (Commission (IRS Employer
diction of incorporation) File Number) Identification No.)
500 Arcola Road, Collegeville, PA 19426
- ---------------------------------------------------------------------------
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (610)454-8000
-------------
- ---------------------------------------------------------------------------
(Former name or former address, if changed since last report)
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Item 7. Financial Statements and Exhibits
---------------------------------
Item 7 of Current Report on Form 8-K dated October 20, 1995
and filed on November 6, 1995 is amended to include the
financial statements of Fisons plc and pro forma financial
information of Rhone-Poulenc Rorer Inc. ("RPR") as follows:
(a) Historical Financial Statements of Fisons plc.,
prepared in accordance with accounting principles
generally accepted in the United Kingdom pursuant to
Rule 3-05 of Regulation S-X.
Full Year (Audited)
- -------------------
- - Report of Independent Accountants
- - Consolidated Statements of Operations for the years
ended December 31, 1994, 1993 and 1992
- - Consolidated Balance Sheets at December 31, 1994 and 1993
- - Consolidated Statements of Cash Flows for the years
ended December 31, 1994, 1993, and 1992
- - Consolidated Statements of Total Recognized Gains and
Losses for the years ended December 31, 1994, 1993 and
1992
- - Consolidated Statements of Changes in Shareholders'
Equity for the years ended December 31, 1994, 1993 and
1992
- - Notes to the Consolidated Financial Statements
Interim Period (Unaudited)
- --------------------------
- - Condensed Consolidated Statements of Operations for the
six months ended June 30, 1995 and 1994
- - Condensed Consolidated Balance Sheet at June 30, 1995
- - Condensed Consolidated Statements of Cash Flows for the
six months ended June 30, 1995 and 1994
- - Notes to the Condensed Consolidated Interim Financial
Statements
(b) Pro Forma Consolidated Financial Information
(Unaudited) reflecting RPR's acquisition of Fisons plc.
- - Pro Forma Condensed Consolidated Statements of Income
for the year ended December 31, 1994 and the six months
ended June 30, 1995
- - Pro Forma Condensed Consolidated Balance Sheet at
June 30, 1995
- - Notes to Pro Forma Condensed Consolidated Financial
Statements
(c) Exhibits
Exhibit 23 - Consent of Independent Accountants
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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 hereunto duly
authorized.
RHONE-POULENC RORER INC.
------------------------
(registrant)
Dated: January 5, 1996 By: /s/ Thomas F. Crawford
--------------------------------
Thomas F. Crawford
Vice President and
Corporate Controller
<PAGE>
FISONS PLC AND SUBSIDIARIES
FINANCIAL STATEMENTS
31 DECEMBER 1994
<PAGE>
<PAGE>
FISONS PLC AND SUBSIDIARIES
INDEX TO FINANCIAL STATEMENTS
Page
Preparation of the Consolidated Financial Statements 1
Report of Independent Accountants 2
Consolidated Statements of Operations for the three
years ended 31st December, 1994 3
Consolidated Balance Sheets as at 31st December, 1994
and 31st December, 1993 4
Consolidated Statements of Cash Flows for the three
years ended 31st December, 1994 5
Consolidated Statements of Total Recognized Gains and
Losses 6
Note of Historical Cost Profits and Losses 6
Consolidated Statements of Changes in Shareholders'
Equity 7
Notes to the Consolidated Financial Statements 9
PREPARATION OF THE CONSOLIDATED FINANCIAL STATEMENTS
The following information has been extracted from the
audited consolidated accounts of Fisons plc for the
three years ended 31st December, 1994. The information
set out below does not constitute statutory accounts
within the meaning of the Companies Act 1985.
Statutory accounts have been delivered to the Registrar
of Companies in England and Wales for each of the three
years ended 31st December, 1994. Unqualified audit
reports in accordance with the requirements of the
Companies Act 1985 have been given by Price Waterhouse,
Chartered Accountants and Registered Auditors, London,
England for the three years ended 31st December, 1994,
being the auditors of the Fisons plc for the relevant
financial periods.
1
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<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS
TO THE BOARD OF DIRECTORS OF FISONS PLC
We have audited the consolidated financial statements
of Fisons plc and its subsidiary undertakings contained
on pages 3 to 40 which are expressed in pounds
sterling. These financial statements are the
responsibility of Fisons plc's management. Our
responsibility is to express an opinion on these
financial statements based on our audits.
We conducted our audits in accordance with auditing
standards generally accepted in the United Kingdom and
the United States. Those standards require that we
plan and perform the audit to obtain reasonable
assurance about whether the financial statements are
free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the
amounts and disclosures in the financial statements.
An audit also includes assessing the accounting
principles used and significant estimates made by
management, as well as evaluating the overall financial
statement presentation. We believe that our audits
provide a reasonable basis for our opinion.
As discussed in Note 1 to the consolidated financial
statements, Fisons plc adopted Urgent Issues Task Force
Abstract 6, "Accounting for Post-retirement Benefits
other than Pensions," with effect from 1st January,
1994, and the consolidated financial statements for the
years ended 31st December, 1993 and 1992 have been
restated to reflect the change in accounting policy.
In our opinion, the financial statements referred to
above present fairly, in all material respects, the
consolidated financial position of Fisons plc and its
subsidiary undertakings at 31st December, 1994 and 1993
and the consolidated results of their operations, total
recognised gains and losses and cash flows for each of
the three years in the period ended 31st December, 1994
in conformity with generally accepted accounting
principles in the United Kingdom.
Accounting principles generally accepted in the United
Kingdom vary in certain significant respects from
accounting principles generally accepted in the United
States. The application of the latter would have
affected the determination of consolidated net income
or loss expressed in pounds sterling for each of the
two years in the period ended 31st December, 1994 and
1993 and the determination of consolidated
shareholders' equity also expressed in pounds sterling
at 31st December, 1994 and 31st December, 1993 to the
extent summarised in Note 2 to the consolidated
financial statements.
PRICE WATERHOUSE
Chartered Accountants London, England
and Registered Auditors 8th December, 1995
2
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<PAGE>
FISONS PLC AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
Results
before
Excep- Excep-
tional tional
Items Items Total
Notes 1994 1994 1994 1993 1992
---------------------------------------------
BPS m BPS m BPS m BPS m BPS m
Sales
Continuing operations 5 1,266.5 - 1,266.5 1,211.3 1,097.3
Discontinued operations 22.5 - 22.5 113.1 186.9
---------------------------------------------
1,289.0 - 1,289.0 1,324.4 1,284.2
Cost of sales 5 (802.9) - (802.9) (831.7) (783.2)
---------------------------------------------
Gross profit 486.1 - 486.1 492.7 501.0
Selling, general and
administration 5 (257.6) - (257.6) (279.7) (250.6)
Research and development 5 (97.5) - (97.5) (94.5) (85.5)
Depreciation 5 (55.5) - (55.5) (53.9) (47.5)
Restructuring of
Pharmaceutical Division 4 - (196.4) (196.4) (8.0) -
Group reorganisation 4 - (24.2) (24.2) (20.7) -
---------------------------------------------
Operating profit/(loss)
Continuing operations 74.7 (220.6) (145.9) 29.4 108.0
Discontinued operations 0.8 - 0.8 6.5 9.4
---------------------------------------------
75.5 (220.6) (145.1) 35.9 117.4
Goodwill written off 16 - (278.6) (278.6) (29.3) (66.0)
Losses less profits on
disposal of businesses 16 - (32.3) (32.3) (15.4) 78.0
Release of provisions 16 - 13.6 13.6 20.0 11.3
---------------------------------------------
75.5 (517.9) (442.4) 11.2 140.7
=======
Net interest expense 3 (21.3) (21.3) (11.9) (18.4)
----------- -------------------------
(Loss)/income before taxation
and minority interests 54.2 (463.7) (0.7) 122.3
===========
Provision for income taxes 8 (17.5) (21.9) (26.9)
Minority interests (1.5) (1.9) (1.0)
-------------------------
Net (loss)/income (482.7) (24.5) 94.4
=========================
Net (loss)/income per share (69.8)p (3.5)p 13.7p
Weighted average shares, in millions 691.1 691.1 690.9
See accompanying notes to the consolidated financial statements
3
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FISONS PLC AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
Notes 1994 1993
---------------
BPS m BPS m
ASSETS
Current assets:
Cash and cash equivalents 20 86.3 98.1
Trade receivables, less allowance
for doubtful accounts
of BPS 6.0m and BPS 6.3m 237.6 269.4
Inventories 13 232.3 264.0
Other current assets 42.0 77.0
---------------
Total current assets 598.2 708.5
Property plant and equipment, net
of accumulated depreciation
of BPS 204.0m and BPS 343.1m 11 330.2 449.2
Other non-current assets 27.2 45.0
---------------
Total assets 955.6 1,202.7
===============
LIABILITIES
Current liabilities:
Notes payable 9 168.3 98.0
Accounts payable 120.5 118.8
Payroll and benefits payable 13.5 13.2
Accrued taxes 30.0 32.6
Accrued dividends 21 29.7 29.7
Accrued liabilities and
deferred income 75.9 72.8
Other creditors 44.6 47.6
---------------
Total current liabilities 482.5 412.7
Long term debt 10 125.9 200.1
Post-retirement benefits
other than pensions 7 21.1 20.0
Restructuring and disposal costs 4,16 92.8 59.5
Other non-current liabilities 24.6 28.9
Equity minority interest 8.2 6.9
---------------
Total liabilities 755.1 728.1
---------------
SHAREHOLDERS' EQUITY
Ordinary shares issued - 691,105,926
(per value BPS 0.25 per
share; 904,000,000 shares authorised) 172.8 172.8
Share premium account 32.3 32.3
Revaluation reserve 8.2 14.1
(Accumulated deficit)/retained earnings (12.8) 255.4
---------------
Total shareholders' equity 200.5 474.6
---------------
Total liabilities and shareholders' equity 955.6 1,202.7
===============
For details of contingent liabilities and commitments, see note 15
to the consolidated financial statements.
See accompanying notes to the consolidated financial statements
4
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<PAGE>
FISONS PLC AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASHFLOWS
1994 1993 1992
------- ------ ------
BPS m BPS m BPS m
NET CASH INFLOW FROM
OPERATING ACTIVITIES
Operating (loss)/profit (145.1) 35.9 117.4
Depreciation 55.5 53.9 47.5
Fixed assets written off 123.4 - -
Decrease/(increase) in
inventories 18.5 (22.1) (10.2)
Decrease/(increase) in receivables
and other current assets 62.9 52.6 (3.9)
Increase/(decrease) in payables
and other current liabilities 1.1 (26.4) 15.0
Increase in provisions 22.5 26.3 -
------- ------- -------
138.8 120.2 165.8
RETURNS ON INVESTMENTS AND SERVICING OF FINANCE
Interest received 2.5 24.9 22.3
Interest paid (18.7) (29.3) (40.1)
Dividends paid to shareholders (29.7) (60.2) (60.2)
Dividends paid to minority
shareholders (0.2) (46.1) (1.3) (65.9) - (78.0)
----------------------------------------------
92.7 54.3 87.8
TAXATION
United Kingdom corporation
tax paid (3.2) (16.9) (22.7)
Overseas tax paid (16.7) (19.9) (11.0) (27.9) (20.4) (43.1)
----------------------------------------------
72.8 26.4 44.7
INVESTING ACTIVITIES
Purchase of tangible fixed assets (92.5) (113.3) (111.7)
Purchase of businesses - (0.6) (28.0)
Sale of tangible fixed assets 11.4 17.4 9.0
Sale of businesses (note 16) 27.9 (53.2) 221.7 125.2 (24.5)(155.2)
----------------------------------------------
NET CASH INFLOW BEFORE FINANCING 19.6 151.6 (110.5)
FINANCING (Note 21)
Issue of Ordinary share capital - - 1.7
(Decrease)/increase in amounts
borrowed (69.3) 131.3 8.4
Decrease in investments 0.8 (68.5) 141.6 272.9 38.5 48.6
----------------------------------------------
(Decrease)/increase in cash
and cash equivalents (48.9) 424.5 (61.9)
Cash and cash equivalents
at 1st January (27.3) (450.0) (322.0)
Effect of exchange rate changes
on cash and cash equivalents (32.4) (1.8) (66.1)
-------------------------------------
Cash and cash equivalents
at 31st December (Note 20) (108.6) (27.3) (450.0)
=====================================
See accompanying notes to the consolidated financial statements
5
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<PAGE>
FISONS PLC AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF TOTAL RECOGNISED GAINS AND LOSSES
1994 1993 1992
-----------------------------
BPS m BPS m BPS m
Profit/(loss) attributable to shareholders (482.7) (24.5) 94.4
Currency translation differences (40.3) (4.5) (11.0)
Unrealised deficit on revaluation of
properties - - (15.8)
-----------------------------
Total recognised profit/(loss) for year (523.0) (29.0) 67.6
=============================
NOTE OF HISTORICAL COST PROFITS AND LOSSES
There have been no material differences between the
results disclosed in the profit and loss accounts for
the three years ended 31st December, 1994 and the
results on an unmodified historical cost basis.
See accompanying notes to the consolidated financial statements
6
<PAGE>
<PAGE>
FISONS PLC AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY
1994 1993 1992 1994 1993 1992
---------------------------------------------
BPS m BPS m BPS m Shares in thousands
Ordinary shares:
Beginning of year 172.8 172.8 172.6 691,092 691,081 690,466
Issued for employee
share schemes - - 0.2 14 11 615
---------------------------------------------
End of year 172.8 172.8 172.8 691,106 691,092 691,081
------------------- =========================
Share premium account:
Beginning of year 32.3 32.3 30.8
Issued for employee
share schemes - - 1.5
-------------------
End of year 32.3 32.3 32.3
-------------------
Revaluation reserve:
Beginning of year 14.1 14.8 33.0
Revaluation reserve
realised (5.9) (0.7) (2.4)
Deficit on property
revaluation - - (15.8)
-------------------
End of year 8.2 14.1 14.8
-------------------
(Accumulated deficit)/
retained earnings:
Beginning of year 255.4 284.1 192.5
Net(loss)/income (482.7) (24.5) 94.4
Dividends (29.7) (29.7)(60.2)
Currency translation
differences (40.3) (4.5)(11.0)
Revaluation reserve
realised 5.9 0.7 2.4
Goodwill written back 278.6 29.3 66.0
-------------------
End of year (12.8) 255.4 284.1
-------------------
Total shareholders'
equity 200.5 474.6 504.0
===================
Goodwill totalling BPS 346.8 million (1993 - BPS 625.4
million; 1992 - BPS 654.7 million) arising from
acquisitions between 1st January, 1972 and 31st
December, 1994, the period during which all material
amounts of goodwill have arisen, has been written off
directly against reserves.
In 1994, the Group changed its accounting principle in
respect of post-retirement benefits other than pensions
and recorded a prior period adjustment of approximately
BPS 20.0 million (see note 1). Consequently,
shareholders' equity has been restated for the years
presented to enable comparability.
7
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FISONS PLC AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY
(Continued)
The cumulative exchange gains and losses on the
translation of foreign currency financial statements
into pounds sterling are taken into account in the
consolidated statement of changes in shareholders'
equity as currency translation differences. The
following is an analysis of the changes during the
period for currency translation differences as a
separate component of equity:
1994 1993 1992
---------------------------------
BPS m BPS m BPS m
Balance at 1st January (63.8) (59.3) (48.3)
Currency translation
differences (40.3) (4.5) (11.0)
---------------------------------
Balance at 31st December (104.1) (63.8) (59.3)
=================================
The currency translation differences are stated after
deducting BPS 42.8 million (1993 - BPS 6.6 million;
1992 - BPS 8.6 million) exchange losses which arose
from the translation of foreign currency borrowings and
currency swap transactions in the nature of borrowings.
Net foreign exchange gains/(losses) included in
determining net income have not been material in 1994,
1993 and 1992.
See accompanying notes to the consolidated financial statements.
8
<PAGE>
<PAGE>
FISONS PLC AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
1 SUMMARY OF PRINCIPAL ACCOUNTING POLICIES
Fisons' accounting policies are in accordance with
United Kingdom generally accepted accounting practices
(UK GAAP). Those accounting practices differ in
certain respects from United States generally accepted
accounting practices (US GAAP) as discussed in Note 2.
In preparing the financial statements and notes
thereto, certain reclassification and changes in
presentation have been made to the financial statements
previously presented to shareholders in order to comply
with accounting presentation and disclosure
requirements in the US.
Basis of preparation
- --------------------
The accounts of Fisons are prepared in accordance with
applicable accounting standards under the historical
cost convention with certain assets included at
revalued amounts and deal with the results of
Fisons plc, all its subsidiaries and its associated
companies for the year ended 31st December. In the
case of acquisitions and disposals during the year only
the results relating to the period of ownership are
dealt with in the accounts.
In accordance with Financial Reporting Standard No. 3,
Reporting Financial Performance, comparative figures
have been restated where necessary.
Foreign currencies
- ------------------
Assets and liabilities in foreign currencies are
expressed in sterling at the rates of exchange ruling
at 31st December. The differences arising on
translation are taken directly to reserves. The
results for the year of overseas companies are
expressed in sterling at the average rates of exchange
prevailing during the year. Currency gains and losses
on trading items are taken to profit and loss account.
Sales
- -----
Sales represents sales to external customers.
Post-employment benefits
- ------------------------
The cost of providing pensions is, together with
surpluses and deficits arising on revaluation of
pension scheme assets and liabilities, charged against
trading profits on a systematic basis over the average
remaining service lives of current benefit scheme
employees.
With effect from 1st January, 1994 the cost of
providing health care and life cover to qualifying
employees is accounted for on an accruals basis over
their service lives. Previously such costs were
charged in the profit and loss account as incurred.
Accordingly, the financial statements for the years
ended 31st December, 1993 and 1992 have been restated
to reflect the change in accounting policy.
9
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<PAGE>
FISONS PLC AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)
1 SUMMARY OF PRINCIPAL ACCOUNTING POLICIES (continued)
Fixed assets and depreciation
- -----------------------------
Fixed assets are stated at cost or valuation less
depreciation, except in the case of freehold land which
is not depreciated. The values of land and buildings
are professionally reviewed on a regular basis.
Depreciation is provided on a straight line basis at an
annual rate over the expected economic lives of the
assets. Within the following asset classifications the
expected economic lives are approximately:
i Freehold buildings (other than in iii) 50 years
ii Leasehold land and buildings: long 50 years
short life of lease
iii Plant and equipment (including
industrial buildings housing
or linked to plant) 10 years
iv Motor vehicles 4 years
Leases
- ------
Assets held under finance leases are treated as if they
had been purchased outright at the present value of the
outstanding rentals payable, less finance charges, over
the primary period of the leases. The corresponding
obligations under these leases are shown as creditors.
The finance charge element of rentals payable is
charged to profit and loss account. Rental payments
under operating leases are charged to profit and loss
account.
Research and development expenditure
- ------------------------------------
Research and development expenditure is charged against
trading profits as incurred.
Intangible assets
- -----------------
Individual elements of purchased goodwill are either
written off directly against reserves or are amortised
through the profit and loss account. Other intangible
assets are amortised through the profit and loss
account.
Inventories
- -----------
Inventories are stated at the lower of cost and net
realisable value on a basis consistent with previous
years. Cost includes appropriate overhead expenses.
Deferred taxation
- -----------------
Provision is made for deferred taxation where it is
probable that a tax liability will become payable
within the foreseeable future.
10
<PAGE>
<PAGE>
FISONS PLC AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)
2 SUMMARY OF SIGNIFICANT DIFFERENCES BETWEEN UK GAAP
AND US GAAP
Purchase accounting, intangible assets and goodwill
- ---------------------------------------------------
Under UK GAAP, goodwill arising on acquisitions
accounted for under the purchase method has been
immediately written off against shareholders' equity.
Upon subsequent disposal or an indication of impairment
in respect of an acquired asset or entity, any
associated goodwill is written back and then charged to
profit and loss.
Under US GAAP, goodwill is first ascribed to
identifiable intangible assets; this amount and any
remaining goodwill is capitalised in the balance sheet
and is subsequently amortised over its estimated useful
economic life not exceeding 40 years. Costs associated
with the closure of existing facilities made redundant
as a result of the acquisition are charged to profit
and loss when incurred. Prior to 1st January, 1993,
such costs were provided for as purchase cost
adjustments under UK GAAP.
For purposes of restating shareholders' equity on a
basis approximating US GAAP, identifiable intangible
assets and goodwill have been reclassified as assets
less accumulated amortisation based upon their
estimated useful economic lives. Identifiable
intangible assets and goodwill are amortised over a
period of 20 years on a straight-line basis. If
attendant circumstances indicate that impairment has
occurred, the net carrying value of the asset is
written down through profit and loss to its net
recoverable value, which is determined on the basis of
future earnings or, in the case of disposals, through
indications of worth from third parties.
The majority of intangible assets, other than goodwill
arising from consolidation, which have significant
value have been generated by the Group's own research
and development and have consequently never been
recognised in the balance sheet. Of the intangible
assets acquired most were treated as brands and
accounted for as if they were acquired goodwill. The
majority of these have either been sold subsequently as
part of the Consumer Health or US and UK Horticulture
businesses or have been amortised under US GAAP to
immaterial amounts. Intangible assets which were not
accounted for as brands such as product licences, trade
marks, etc. have not been regarded as sufficiently
material to show separately in the balance sheet and
are added to debtors.
Foreign currency transactions
- -----------------------------
Under UK GAAP, gains and losses on forward exchange
contracts and other similar financial instruments may
be deferred if they are designated as hedges of
anticipated transactions or future income denominated
in a foreign currency. The deferred gains and losses
are then matched against the foreign currency
transaction or profits to which they relate.
Under US GAAP, these financial instruments are not
considered hedges and consequently the financial
instruments are marked to market at the end of the year
and any resulting gain or loss is recognised in
earnings. In addition certain currency swap
transactions entered into in respect of the Group's
investment in the US did not fulfil the hedge
identification rules under US GAAP and consequently the
financial instruments have been marked to market at the
end of each year and the resulting gain or loss
recognised in earnings.
11
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<PAGE>
FISONS PLC AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)
2 SUMMARY OF SIGNIFICANT DIFFERENCES BETWEEN UK GAAP
AND US GAAP (continued)
Deferred taxation
- -----------------
Under UK GAAP, deferred taxes are calculated under the
liability method and are recorded when it is probable
that a tax liability or tax asset will be payable or
will crystallise in the foreseeable future. This is
known as the partial provision basis under the
liability method.
Under US GAAP, deferred tax liabilities are recorded on
a full provision basis under the liability method.
Deferred tax assets are recorded less a valuation
adjustment to the extent that the asset is more likely
than not of not being realised.
Asset revaluation
- -----------------
Under UK GAAP properties are recorded at historical
cost as modified by periodic revaluation adjustments
which are recorded directly to shareholders' equity
until such time as the revaluation surplus or deficit
is realised, either by depreciation or disposal.
Under US GAAP, properties are recorded at historical
cost and such revaluations are not permitted.
Ordinary dividends
- ------------------
Under UK GAAP, ordinary dividends are provided for in
the financial year in respect of which they are
declared regardless of when they are formally declared.
Under US GAAP, ordinary dividends are provided for in
the financial year in which such declaration is
formally made by the Board of Directors.
Pensions
- --------
Accounting for pension obligations and costs is
generally more prescriptive under US GAAP and
prescribes the use of specific measurement principles.
Most notably, US GAAP requires the projected unit
credit actuarial method, discount rates which reflect
the rates at which pension benefits could be
effectively settled at the balance sheet date and
measurement of obligations and plan assets within three
months of the balance sheet date.
For purposes of US GAAP disclosure, Statement of
Financial Accounting Standard 87 was adopted on
1st January, 1993 as it was not feasible to apply the
standard upon its effective date of 1st January, 1989.
A portion of the transition obligation at 1st January,
1993 was proportionally allocated directly to
shareholders' equity and represents the amortisation
period between 1st January, 1989 and 1st January, 1993.
The transition obligation is being amortised over a
period of 15 years.
12
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<PAGE>
FISONS PLC AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)
2 SUMMARY OF SIGNIFICANT DIFFERENCES BETWEEN UK GAAP
AND US GAAP (continued)
Post-retirement benefits other than pensions
- --------------------------------------------
Accrual of post-retirement benefits other than pensions
was not required under UK GAAP until the fiscal year
ended 31st December, 1994 whereas it was required under
US GAAP for the fiscal year ended 31st December, 1993.
Under US GAAP, the obligation existing at the time of
adoption is charged against profit and loss whereas
under UK GAAP, the adoption adjustment is recorded
directly to shareholders' equity as a prior period
adjustment. US GAAP requires the use of a discount
rate that reflects the rates at which the obligation
could be effectively settled. UK GAAP permits the use
of a longer term discount rate.
Deferred promotion costs
- ------------------------
Expenditure incurred in connection with the launch of a
major new pharmaceutical product is deferred and
amortised over periods to which the related revenue is
generated. Deferred costs include market research,
clinical trials, advertising, sales staff training and
other costs to find the product's place in the market.
The general practice for companies reporting under
US GAAP is to expense these costs as incurred.
Capitalisation of interest
- --------------------------
There is no general accounting standard in the UK
regarding the capitalisation of interest, and the Group
does not capitalise interest in its UK GAAP financial
statements. US GAAP requires that interest incurred as
part of the cost of constructing fixed assets be
capitalised and amortised over the life of the asset.
Capitalised software costs
- --------------------------
In the UK GAAP financial statements, costs associated
with internally developed software have been
capitalised and are amortised over a period not
exceeding four years. Under US GAAP, these amounts
have been charged to expense during the period they are
incurred.
Discontinued operations
- -----------------------
Under UK GAAP, no distinction of sales or net income
between continuing and discontinued operations is made
until such time as the business is sold. Material
gains and losses on disposal are segregated as
exceptional items in the income statement. Under
US GAAP, once a business meets the qualification as a
discontinued operation, the results of operations and
material gains and losses on disposal are segregated
from continuing operations for all periods and are
disclosed as a separate line item in the income
statement. Therefore, this segregation may occur in a
different period from that in which the business is
actually sold.
Restructuring charges
- ---------------------
US GAAP requires that specific events occur before a
restructuring provision can be recorded, primarily in
respect of employee termination costs. Generally,
prior to the date of the financial statements,
management must approve and commit the Company to a
plan of termination, establish the benefits the
employees will receive, and specifically identify the
number and job classifications of employees whose
positions will be terminated. Costs related to moving,
relocation, training and hiring costs may only be
charged in the profit and loss account when incurred.
A portion of the restructuring charge recorded under
UK GAAP has been reversed to conform with US GAAP.
13
<PAGE>
<PAGE>
FISONS PLC AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)
2 SUMMARY OF SIGNIFICANT DIFFERENCES BETWEEN UK GAAP
AND US GAAP (continued)
Approximate effect on net loss and shareholders' equity
of differences between UK GAAP and US GAAP.
1994 1993
---------------
BPS m BPS m
Net loss under UK GAAP (482.7) (24.5)
Adjustments under US GAAP:
Goodwill amortisation 97.4 (10.8)
Foreign currency transactions (14.4) 11.8
Taxes on income 9.7 3.3
Post-retirement benefits other than pensions (1.9) (22.0)
Pensions (9.5) (12.3)
Deferred promotion costs 22.0 (11.3)
Restructuring charges 45.5 -
Asset revaluation 5.9 0.7
Other (net) (0.6) (2.5)
---------------
Net loss under US GAAP (328.6) (67.6)
===============
Represented by:
Loss before cumulative effect of
accounting change (328.6) (51.0)
Cumulative effect of accounting change:
Post-retirement benefits other than pensions
(net of tax benefit of BPS 5.3 million) - (16.6)
---------------
Net loss (328.6) (67.6)
===============
Earnings per share under US GAAP
Loss before cumulative effect of
accounting changes (0.48) (0.08)
Cumulative effect of accounting change:
Post-retirement benefits other than
pensions (net of tax benefit) - (0.02)
--------------
Net loss per share (0.48) (0.10)
==============
Weighted average of shares outstanding 691.1 691.1
==============
Shareholders' equity under UK GAAP 200.5 474.6
Adjustments under US GAAP:
Goodwill and intangible assets (net of
accumulated amortisation of
BPS 92.3m (1993-BPS 128.6m)) 225.7 406.9
Cumulative translation adjustment - goodwill 13.5 18.3
Foreign currency transactions (3.3) (25.1)
Deferred taxation 16.0 9.5
Pensions and other post-retirement benefits (29.3) (17.9)
Restructuring charges 45.5 -
Deferred promotion costs - (22.0)
Accrued dividends 17.9 6.9
Advance Corporation Tax on accrued dividends 4.5 1.7
Asset revaluation (8.2) (14.1)
Capitalised software (7.0) (7.3)
Capitalised interest 19.5 20.4
---------------
Shareholders' equity under US GAAP 495.3 851.9
===============
14
<PAGE>
<PAGE>
FISONS PLC AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)
3 INTEREST
1994 1993
---------------
BPS m BPS m
Interest expense and similar charges:
Wholly repayable within 5 years (24.0) (27.2)
Other (1.7) (2.4)
Interest income 4.4 17.7
---------------
(21.3) (11.9)
===============
4 RESTRUCTURING CHARGES
In 1994 and 1993, the Group recorded restructuring
provisions of BPS 196.4 million and BPS 8.0 million
(before tax), respectively, for worldwide restructuring
of its pharmaceutical division (the "Pharmaceutical
Division"). It also recorded restructuring provisions
of BPS 24.2 million and BPS 20.7 million in 1994 and
1993, respectively, for overall Group reorganisation.
The 1994 restructuring charge consists of:
1994
-------
BPS m
Pharmaceutical Division
Asset write-downs associated with manufacturing
and distribution operations 136.7
Reorganisation costs associated with the
administration and sales functions 19.3
Other charges 40.4
-------
196.4
Group reorganisation 24.2
-------
220.6
=======
Manufacturing and distribution
- ------------------------------
The Pharmaceutical Division's dedicated facilities in
Holmes Chapel and Singapore for the manufacture of the
chemicals sodium cromoglycate and nedocromil sodium
were built in anticipation of a certain level of sales
volumes. Following a reappraisal of the Pharmaceutical
Division's future requirement for these chemicals,
based upon sales forecasts into the foreseeable future,
i.e. the period over which experience has shown
forecasts to be reasonably reliable, and taking into
account current levels of production and demands, it
was clear that there was an excess of manufacturing
capacity. Because the plants concerned were new and
specialised no established method of write down
existed. The basis of write down adopted in these
circumstances was arrived at so as to reduce the
forecast costs of in-house manufacture to estimated
current costs of similar external supplies of
comparable volumes. This basis approximated to the net
present value of future cash flows. Costs were reduced
by a number of methods including the write down of
assets employed by means of a once-off accelerated
depreciation charge totalling BPS 44.4m.
A further amount of BPS 28.6 million has been written
off in respect of other chemical manufacturing assets
and inventories which are surplus to requirements and
have no alternative use and will be destroyed or
reworked.
15
<PAGE>
<PAGE>
FISONS PLC AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)
4 RESTRUCTURING CHARGES (continued)
Outside the UK, secondary manufacture will be
rationalised which will result in a number of
facilities being vacated. This will provide
operational efficiencies but necessitates the writing
down of properties to realisable value and provision
for reorganisation costs. This action will bring
manufacturing capacity into line with projected sales.
The expected cost of these reorganisations, some of
which are already under way, is BPS 34.5 million of
which approximately BPS 7 million represents severance
costs and the balance is asset write down.
The remainder of the provisions associated with
manufacturing and distribution, costing BPS
29.2 million, relates primarily to fixed assets and
inventories at the Pharmaceutical Division's main
manufacturing site at Holmes Chapel. These assets have
been written down to levels which reflect anticipated
future requirements and also take account of the
reduced utilisation periods before the introduction of
more modern and efficient facilities. They were, in
the main, rendered surplus to requirements by new
facilities. They will be scrapped or, in the case of
some buildings, given an alternative use after
extensive refurbishment.
Administration and sales
- ------------------------
Provision has been made for the expected costs of
reducing the number of administrative locations which
the Pharmaceutical Division has in the UK and in
certain overseas territories. The rationalisation,
which represents an extended and accelerated
application of the existing and successful cost
reduction exercise, will involve, over a period of
time, a number of site closures. The provision covers
the related staff redundancies and relocation as well
as the write-down of surplus assets to their
anticipated realisable value.
Other charges
- -------------
The introduction of improved business information
systems, combined with outsourcing of related services,
in part already achieved, has made some existing
systems and assets redundant.
This combined with the more accelerated depreciation
and amortisation policies appropriate as part of an
evolving strategy towards more aggressive outsourcing
of non-core activities and services resulted in an
asset write-down of BPS 12.0 million.
Product launch costs of BPS 19.0 million which had
previously been deferred have been written off and a
number of smaller non-cash impacting items, which
includes certain intangible items now considered to
have no future value, account for the balance of BPS
9.4 million.
At 31st December, 1994, the remaining unutilised
provision in respect of the BPS 196.4 million charge
was BPS 26.4 million and primarily related to future
spending associated with severance, relocation and
business rationalisation costs.
Group reorganisation
- --------------------
The 1994 restructuring charge for Group reorganisation
of BPS 24.2 million comprised severance benefits,
office relocation and other costs associated with the
reduction in Fisons' overall management structure to
concentrate on core operations. At 31st December,
1994, the remaining unutilised provision was BPS
20.0 million.
16
<PAGE>
<PAGE>
FISONS PLC AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)
4 RESTRUCTURING CHARGES (continued)
1993 restructuring
- ------------------
The 1993 restructuring charge of BPS 8.0 million in
respect of the Pharmaceutical Division primarily
related to costs associated with consultancy fees in
respect of a cost reduction study and the transfer of
the manufacture of solution products from the UK to
France.
The 1993 restructuring charge of BPS 20.7 million for
Group reorganisation was principally related to costs
associated with severance benefits and related
reorganisation costs for the Scientific Instruments
Division. At 31st December, 1994, approximately BPS
4.3 million of this charge remained unutilised.
5 SEGMENT INFORMATION
The Group's principal business is the development,
manufacture and worldwide distribution and sale of a
range of human pharmaceutical products; however, during
the periods presented the Group operated through three
divisions:
Pharmaceutical - The Group manufactures a broad line of
anti-allergy and asthma pharmaceuticals which are sold
primarily through prescription or are administered by
healthcare professionals.
Scientific Instruments - The Group manufactures
specialist analytical instruments in three technology
areas: organic analysis, inorganic analysis and surface
science.
Laboratory Supplies - The Group distributes general
laboratory equipment and consumables to industrial
laboratories, medical research centres and educational
establishments.
Net sales by business segment
- -----------------------------
1994 1993 1992
-------------------------
BPS m BPS m BPS m
Continuing operations
Pharmaceutical 475.5 445.8 417.6
Scientific Instruments 260.4 258.5 258.2
Laboratory Supplies 511.0 488.7 404.7
Other 19.6 18.3 16.8
-------------------------
1,266.5 1,211.3 1,097.3
Discontinued operations 22.5 113.1 186.9
-------------------------
1,289.0 1,324.4 1,284.2
=========================
17
<PAGE>
<PAGE>
FISONS PLC AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)
5 SEGMENT INFORMATION (continued)
Operating (loss)/profit by business segment
- -------------------------------------------
1994 1993 1992
-------------------
BPS m BPS m BPS m
Operating profit before exceptional items:
Continuing operations
Pharmaceutical 64.3 49.5 71.4
Scientific Instruments (11.7) (19.4) 8.6
Laboratory Supplies 20.8 27.2 25.9
Other 1.3 0.8 2.1
-------------------
74.7 58.1 108.0
Discontinued operations 0.8 6.5 9.4
-------------------
75.5 64.6 117.4
Exceptional items
Restructuring of Pharmaceutical
Division (196.4) (8.0) -
Group reorganisation (24.2) (20.7) -
--------------------
(145.1) 35.9 117.4
====================
Operating (loss)/profit from continuing
operations includes:
Cost of sales 784.1 754.2 644.2
Selling, general and administration 253.3 256.5 219.2
Research and development 97.3 93.5 83.8
Depreciation 53.9 48.7 42.1
Auditors' fees in respect of
the Group's audit 1.1 1.4 1.5
Auditors' fees in respect of
non-audit work in the UK 0.3 0.1 0.4
18
<PAGE>
<PAGE>
FISONS PLC AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)
5 SEGMENT INFORMATION (continued)
Other items by business segment
- -------------------------------
Capital
Deprec- expend-
Year Assets iation iture
-------------------------------
BPS m BPS m BPS m
Pharmaceutical 1994 422.0 30.7 71.1
1993 578.4 25.1 79.6
1992 586.9 22.6 70.1
Scientific Instruments 1994 242.3 12.4 12.6
1993 263.6 13.7 15.8
1992 284.1 11.1 19.6
Laboratory Supplies 1994 236.4 9.3 7.9
1993 241.7 8.4 13.9
1992 240.3 7.1 14.0
Other 1994 54.9 1.5 0.3
1993 73.9 1.5 1.7
1992 314.5 1.3 2.1
Discontinued operations 1994 - 1.6 0.6
1993 45.1 5.2 2.3
1992 138.4 5.4 5.9
--------------------------
Total 1994 955.6 55.5 92.5
1993 1,202.7 53.9 113.3
1992 1,564.2 47.5 111.7
==========================
19
<PAGE>
<PAGE>
FISONS PLC AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)
5 SEGMENT INFORMATION (continued)
Geographical segments
- ---------------------
Analysis by location of continuing operations
- ---------------------------------------------
Cont-
inental North Rest of
UK Europe America World Total
---------------------------------------
BPS m BPS m BPS m BPS m BPS m
1994
Total sales 348.6 328.8 811.5 72.2 1,561.1
Inter-segment sales (207.7) (65.5) (9.7) (11.7) (294.6)
---------------------------------------
External sales 140.9 263.3 801.8 60.5 1,266.5
---------------------------------------
Sales by destination 99.1 273.9 729.2 164.3 1,266.5
Operating profit/(loss) (13.0) 26.0 50.8 10.9 74.7
Assets 362.1 185.9 342.7 64.9 955.6
1993
Total sales 350.7 321.3 789.4 69.0 1,530.4
Inter-segment sales (214.2) (70.8) (17.1) (17.0) (319.1)
---------------------------------------
External sales 136.5 250.5 772.3 52.0 1,211.3
---------------------------------------
Sales by destination 94.6 261.6 709.6 145.5 1,211.3
Operating profit/(loss) (10.2) (0.5) 56.1 12.7 58.1
Assets 450.8 208.6 399.6 98.6 1,157.6
1992
Total sales 352.4 351.5 665.3 54.0 1,423.2
Inter-segment sales (218.1) (70.4) (23.4) (14.0) (325.9)
---------------------------------------
External sales 134.3 281.1 641.9 40.0 1,097.3
---------------------------------------
Sales by destination 99.6 291.5 576.5 129.7 1,097.3
Operating profit 32.4 29.9 41.7 4.0 108.0
Assets 467.4 332.6 524.1 101.7 1,425.8
Included under North America in the above table are
sales within the United States of America amounting to
BPS 695.6 million (1993: BPS 676.3 million; 1992: BPS
539.8 million).
20
<PAGE>
<PAGE>
FISONS PLC AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)
5 SEGMENT INFORMATION (continued)
Average number of employees by business segment
- -----------------------------------------------
1994 1993 1992
--------------------
Number Number Number
Continuing operations by activity
Pharmaceutical 6,209 6,228 6,184
Scientific Instruments 3,176 3,443 3,717
Laboratory Supplies 2,083 1,954 2,134
Other 101 111 119
--------------------
11,569 11,736 12,154
Discontinued operations 294 1,628 2,323
--------------------
11,863 13,364 14,477
====================
Aggregate employment cost of above employees
- --------------------------------------------
Cont- Dis-
inuing continued
oper- oper- Total
ations ations
--------------------------
BPS m BPS m BPS m
1994
Wages and salaries 280.8 6.2 287.0
Social security costs 42.5 0.8 43.3
Other pension costs 10.2 0.2 10.4
--------------------------
333.5 7.2 340.7
==========================
1993
Wages and salaries 281.8 26.6 308.4
Social security costs 41.7 2.0 43.7
Other pension costs 7.5 0.9 8.4
--------------------------
331.0 29.5 360.5
==========================
1992
Wages and salaries 254.1 40.0 294.1
Social security costs 37.7 3.7 41.4
Other pension costs 8.6 1.9 10.5
--------------------------
300.4 45.6 346.0
==========================
21
<PAGE>
<PAGE>
FISONS PLC AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)
5 SEGMENT INFORMATION (continued)
Discontinued businesses
Discontinued operations consist of the Horticulture and
Consumer Health businesses which were put up for sale
in 1992. The Consumer Health disposal was completed
during 1993 as was the sale of the North American
Horticulture business. The UK Horticulture business
was disposed of during 1994 (see note 16).
Net Sales Operating profit/(loss)
-------------------------------------
1994 1993 1992 1994 1993 1992
-------------------------------------
BPS m BPS m BPS m BPS m BPS m BPS m
Business:
Consumer Health (1) - 19.7 82.6 - (0.3) (0.8)
Horticulture (1) 21.2 80.6 89.5 0.8 6.3 9.0
Other (2) 1.3 12.8 14.8 - 0.5 1.2
-------------------------------------
22.5 113.1 186.9 0.8 6.5 9.4
=====================================
(1) Discontinued operations that would be classified as
major business segments under US GAAP.
(2) Other divested operations which do not meet the
definition of a major business segment under US
GAAP.
6 PENSIONS
The Group operates a number of pension schemes
throughout the world. All major schemes are of the
defined benefit type and are funded to cover future
pension liabilities after allowing for expected future
earnings and pension increases. These schemes are
administered independently of the Company, generally by
trusts, on the advice of independent qualified
actuaries.
The total charge to the profit and loss account for
pension costs for defined benefit and defined
contribution plans was BPS 10.4 million (1993 - BPS
8.4 million; 1992 - BPS 10.5 million) and the amounts
paid to the schemes amounted to BPS 10.1 million (1993 -
BPS 8.4 million; 1992 - BPS 10.5 million).
The most significant schemes impacting materially on
the above figures have a total active membership of
about 6,500 employees. Actuarial valuations of these
schemes are undertaken on a regular basis by
independent qualified actuaries appointed to the
schemes, using the projected unit method. The last
valuation of the UK pension scheme, the largest in the
Group, was made as at 31st March, 1994. The actuarial
assumptions used in each of the valuations reflect the
expected experience of each of these schemes. The
long-term annual rate of returns on investments has
been assumed to be 2.8 per cent. in excess of the
annual increases in pensionable remuneration and, where
applicable, 4.8 per cent. in excess of the annual
increases in present and future pensions in payment.
The total market value of the assets, comprising UK and
overseas equities, fixed interest investments and cash,
at the beginning of each of the pension schemes'
accounting years was BPS 399 million, representing
119 per cent. of the actuarially assessed value of the
total of the benefit entitlements of the members. The
surpluses, arising primarily through good investment
performance, have been amortised over the average
remaining service lives of current scheme employees.
22
<PAGE>
<PAGE>
FISONS PLC AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)
6 PENSIONS (continued)
For purposes of disclosure under US GAAP, the pension
cost associated with the major UK and US defined
benefit plans have been restated in the following
tables as calculated under US GAAP. These plans
represent substantially all employees covered under
defined benefit plans.
The net periodic pension cost for the major defined
benefit plans under US GAAP comprised:
1994 1993
--------------
BPS m BPS m
Service cost 20.9 20.1
Interest cost on projected benefit obligation 30.7 30.8
Actual return on assets (33.0) (33.9)
Net amortization and deferral (3.2) (0.7)
--------------
Net periodic pension cost 15.4 16.3
==============
The estimated funded status of the Group's major
defined benefit plans under US GAAP is as follows:
1994 1993
---------------
BPS m BPS m
Actuarial present value of:
Vested benefit obligation (339.6) (400.0)
===============
Accumulated benefit obligation (342.7) (403.4)
===============
Projected benefit obligation (378.7) (454.7)
Plan assets at fair value 393.4 435.4
---------------
Projected benefit obligation in
excess/(deficit) of plan assets 14.7 (19.3)
Unrecognised net (gain)/loss (28.5) 19.7
Unrecognised prior service cost (1.5) (1.8)
Unrecognised net asset on implementation (9.0) (10.6)
---------------
Accrued pension liability (24.3) (12.0)
===============
Assumed discount rates and rates of increase in
remuneration used in calculating the projected benefit
obligation together with long-term rates of return on
plan assets vary according to the economic conditions
of the country in which the retirement plans are
situated. The weighted average rates used in the main
defined benefit plans for US GAAP purposes were as
follows:
1994 1993
---- ----
% %
Discount rate 8.8 7.0
Long-term rate of increase in remuneration 6.0 6.0
Expected long-term rate of return on assets 9.0 9.0
23
<PAGE>
<PAGE>
FISONS PLC AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)
7 POST RETIREMENT BENEFITS OTHER THAN PENSIONS
The Group operates post-retirement benefit plans for a
number of its existing pensioners and employees. The
most significant of these plans are in the UK and the
US and are for varying benefits relating to medical and
dental care and life cover. Currently, these benefits
are enjoyed by about 1,000 pensioners and dependants,
and there are about 3,000 employees prospectively
eligible to receive these benefits upon retirement from
service. In compliance with the Urgent Issues Task
Force Abstract 6 (UK GAAP) the Group has changed its
policy for accounting for the cost of providing these
benefits. With effect from 1st January 1994 such costs
are accounted for on an accruals basis over the service
lives of qualifying employees. Previously they were
charged in the profit and loss account as incurred.
Accordingly, the financial statements for the years
ended 31st December, 1993 and 1992 have been restated
to reflect the change in accounting policy.
The Group's liability under these plans at 31st
December, 1993 was assessed, by independent actuaries
using discount rates between 8 per cent. and 9 per
cent., at BPS 20 million and this amount has been set
against reserves as a prior year adjustment. The
annual cost of providing for these benefits on an
accruals basis in 1994 was BPS 1.6 million (1993 - BPS
2.5 million) including funding cost, compared with the
cash cost of BPS 0.5 million (1993 - BPS 0.8 million).
Health care costs in the US were assumed to increase
initially by 15 per cent., declining thereafter to
6.5 per cent. by 2006, and in the UK by 10.8 per cent.
in 1994, declining to 6.8 per cent. after 2002.
For purposes of disclosure under US GAAP, the
post-retirement benefit expenses and obligations
associated with the major United Kingdom and United
States plans have been restated in the following tables
as calculated under US GAAP. These plans represent
substantially all employees covered under defined
benefit plans for post-retirement benefits other than
pensions.
The net post-retirement benefit expense under US GAAP
comprised:
1994 1993
-----------
BPS m BPS m
Service cost 1.5 0.6
Interest cost on accumulated
post-retirement benefit obligation 1.9 1.8
Amortisation 0.1 -
----------
Net post-retirement benefit expense 3.5 2.4
==========
24
<PAGE>
<PAGE>
FISONS PLC AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)
7 POST RETIREMENT BENEFITS OTHER THAN PENSION (continued)
The status of the plans was as follows:
1994 1993
-----------
BPS m BPS m
Accumulated post-retirement benefit obligation
Retirees (15.2)(13.5)
Fully eligible active plan participants (4.1) (5.1)
Other active plan participants (4.9) (7.8)
------------
(24.2)(26.4)
Unamortised (gain)/loss (1.2) 2.6
------------
Accrued post-retirement benefit liability (25.4)(23.8)
============
The following assumptions were utilised for measurement
purposes of the accumulated post-retirement benefit
obligation:
1994 1993
-------------
% %
Medical inflation rate - UK 11.4 11.4
Gradual reduction to the year 2001 and
to remain level thereafter 7.1 7.1
Medical inflation rate - US 15.0 15.0
Gradual reduction to the year 2006 and
to remain level thereafter 6.5 6.5
Discount rate - UK and US 8.0-8.8 7.0-8.0
A 1 per cent change in the medical inflation rate would
increase the accumulated post-retirement benefit
obligation and the annual post-retirement benefit
expense by approximately BPS 3.6 million and BPS
0.3 million, respectively.
25
<PAGE>
<PAGE>
FISONS PLC AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)
8 TAXES ON INCOME
The composition of (losses)/earnings before income taxes were:
1994 1993 1992
----------------------
BPS m BPS m BPS m
United Kingdom (408.6) (51.9) 77.7
Non United Kingdom (55.1) 51.2 44.6
----------------------
(463.7) (0.7) 122.3
======================
The provision for income taxes consisted of:
1994 1993 1992
---------------------
BPS m BPS m BPS m
UK Corporation tax at 33 per cent 7.0 15.4 3.7
Relief for non-UK taxation (7.0) (8.5) (3.1)
Advance Corporation Tax 7.4 1.7 19.6
---------------------
7.4 8.6 20.2
Overseas taxation 16.9 18.4 11.3
Deferred taxation (0.2) (3.2) (2.5)
Prior year adjustments (6.6) (1.9) (2.1)
---------------------
17.5 21.9 26.9
=====================
The provision for income taxes in 1994, 1993 and 1992
was different than the amount compiled by applying the
statutory UK corporation tax rate to earnings before
income taxes, as demonstrated in the following
reconciliation.
1994 1993 1992
------------------------
BPS m BPS m BPS m
Statutory rate applied to (loss)/income
before taxation (153.0) (0.2) 40.4
Non deductible book goodwill write offs 91.9 9.7 21.8
Unrelieved exceptional provisions 77.0 - -
UK book/tax depreciation (7.3) (6.6) (6.3)
UK unrelieved losses, provisions and
other differences 6.3 18.5 8.3
UK tax on dividend remittances 4.3 6.9 -
Advance Corporation Tax written off 7.4 1.7 19.6
Overseas profits bearing minimal direct
taxes (3.3) (3.3) (6.9)
Other overseas tax rate differences 0.8 (2.9) (2.6)
Prior year adjustments (6.6) (1.9) (2.1)
Relief on profit from sale of Consumer
Health business - - (45.3)
-----------------------
Total provision for income taxes 17.5 21.9 26.9
=======================
26
<PAGE>
<PAGE>
FISONS PLC AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)
8 TAXES ON INCOME (continued)
As discussed in Note 2, under UK GAAP companies record
deferred tax assets and liabilities only if it is
probable that a tax liability will become payable
within the foreseeable future. If deferred taxes had
been recorded on a full provision basis, amounts that
would have been reflected in the balance sheet are as
follows:
1994 1993
---------------------------------------------------
Pro- Unpro- Pro- Unpro-
vided vided Total vided vided Total
---------------------------------------------------
BPS m BPS m BPS m BPS m BPS m BPS m
Deferred tax assets:
Intangibles - 18.6 18.6 - 22.9 22.9
Post retirement benefits - 7.0 7.0 - 7.0 7.0
Other accrued liabilities - 36.3 36.3 - 42.4 42.4
Advance Corporation Tax - - - - 5.0 5.0
--------------------------------------------------
Total deferred tax assets - 61.9 61.9 - 77.3 77.3
--------------------------------------------------
Deferred tax liabilities:
Fixed assets (0.4) (33.2) (33.6) (0.4) (51.6) (52.0)
Other (2.3) (0.7) (3.0) (2.8) (9.5) (12.3)
--------------------------------------------------
Total deferred tax
liabilities (2.7) (33.9) (36.6) (3.2) (61.1) (64.3)
--------------------------------------------------
Net deferred tax
assets/(liabilities) (2.7) 28.0 25.3 (3.2) 16.2 13.0
==================================================
9 SHORT-TERM BORROWINGS
1994 1993
--------------
BPS m BPS m
Bank overdrafts 47.0 33.5
Loans other than from banks,
including commercial paper 121.3 64.5
--------------
168.3 98.0
==============
The Group had two medium-term revolving credit
facilities totalling $520 million at 31st December,
1994 which were unused as of that date. One facility
for $320 million was to mature in December 1997. This
facility was cancelled in May 1995. The other facility
for $200 million was to mature in July 1997 and was
with a syndicate of ten banks. This facility was
cancelled in February 1995. The weighted average
interest rate during 1994 was 5.5 per cent.
27
<PAGE>
<PAGE>
FISONS PLC AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)
10 LONG-TERM BORROWINGS
Notes 1994 1993
-------------
BPS m BPS m
7 1/2% Bonds due 1999 i 94.5 -
8% Bonds due 2003 ii 5.5 100.0
5 7/8% Unsecured Loan Stock 2004-09 iii 4.3 4.3
11% Unsecured Loan Notes 1991-96 iv 0.3 0.3
Bank loans, primarily floating rate 21.3 41.4
Private placement debt - 54.0
Obligations under capital leases - 0.1
-------------
125.9 200.1
Less: amount due within one year - -
-------------
Long-term debt due after one year 125.9 200.1
=============
i) These bonds were issued on 27th January, 1994. The
Company may purchase the bonds at any time in the
market or by tender (available to all bondholders
alike) at any price. All outstanding bonds will be
redeemed on 27th January, 1999.
ii) These bonds were issued by the Company on 4th
November, 1993. The Company may purchase the bonds
at any time in the market or by tender (available
to all bondholders alike) at any price. All
outstanding bonds will be redeemed on 4th November,
2003. An offer was made on 7th January, 1994 to
the holders of these bonds to exchange their bonds
for 7 1/2% bonds due 1999. This offer was taken up by
such holders to the total value of BPS 94.5 million
and the new five-year bonds were duly issued, in
exchange, to these holders on 27th January, 1994.
iii) This stock was issued by the Company in exchange
for 4 1/2% Cumulative Preference Stock and is
redeemable at par on 31st March, 2009. The Company
may, on giving not less than three months' notice,
redeem the whole or any part (to be selected by
drawings) of the stock at par together with accrued
interest on or at any time after 31st March, 2004.
The Company may at any time purchase stock in the
market or by tender (available to all stockholders
alike) at any price inclusive of interest (but
exclusive of expenses) not exceeding BPS 110 per
cent but not otherwise.
28
<PAGE>
<PAGE>
FISONS PLC AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)
10 LONG-TERM BORROWINGS (continued)
iv) These notes were issued by the Company as part
consideration for the acquisition of VG Instruments
plc. Noteholders may, on giving not less than 30
days' notice, require the redemption of any part of
their holding for cash at par with accrued interest
on any 1st May or 1st November. Any outstanding
notes will be repaid in cash at par together with
accrued interest on 1st November 1996.
Long term debt due after one year will mature as
follows:
BPS m
1996 0.9
1997 -
1998 13.0
1999 94.5
2000 and thereafter 17.5
-----
125.9
=====
11 PROPERTY, PLANT AND EQUIPMENT
Land and Buildings
-----------------------
Lease- Lease-
hold hold Plant and
Freehold Long Short Equipment Total
----------------------------------------
BPS m BPS m BPS m BPS m BPS m
Cost or valuation:
31st December, 1993 193.1 6.5 24.7 428.9 653.2
31st December, 1994 199.0 6.4 14.0 453.9 673.3
Accumulated depreciation:
31st December, 1993 7.9 0.4 3.8 191.9 204.0
31st December, 1994 59.3 2.2 3.7 277.9 343.1
---------------------------------------
Net book amount:
31st December, 1993 185.2 6.1 20.9 237.0 449.2
31st December, 1994 139.7 4.2 10.3 176.0 330.2
=======================================
Cost or valuation comprises:
Valuation at
31st December, 1992 146.6 3.8 1.7 - 152.1
Valuation at
31st December, 1989 1.8 0.6 - - 2.4
Cost 50.6 2.0 12.3 453.9 518.8
---------------------------------------
At 31st December, 1994 199.0 6.4 14.0 453.9 673.3
=======================================
The net book amount of plant and equipment held under
finance leases at 31st December, 1994 and 1993 was not
material.
The book amount of assets under construction at 31st
December, 1994 and 1993 was BPS 101.3 million and BPS
100.0 million, respectively.
29
<PAGE>
<PAGE>
FISONS PLC AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)
12 LEASES
Future minimum commitments for operating leases in
excess of one year are as follows:
BPS m
1995 16.2
1996 13.2
1997 10.0
1998 7.0
1999 4.3
2000 and thereafter 15.0
-----
65.7
=====
Operating lease rental expense was BPS 18.2 million in
1994, BPS 19.7 million in 1993 and BPS 15.8 million in
1992.
13 INVENTORIES
1994 1993
--------------
BPS m BPS m
Raw materials and packaging 61.6 61.7
Work in progress 39.3 50.5
Finished products 131.4 151.8
--------------
232.3 264.0
==============
14 SHARE PLANS
Share Option Schemes
- --------------------
An option granted under the Fisons plc UK and
International Savings Related Share Option Schemes is
normally exercisable on or up to six months in respect
of the UK Scheme and 30 days in respect of the
International Savings Scheme following the fifth
anniversary of the date on which the related savings
contract commenced. The exercise price is ordinarily
such amount as the Directors may decide, being an
amount not less than the higher of (i) 80 per cent. of
the average of the middle market quotations of an
Ordinary Share of the Company derived from the Daily
Official List of the London Stock Exchange ("the
Official List") for the five dealing days immediately
preceding the date on which the invitation to apply for
the grant of the Option is made and (ii) the nominal
value of an Ordinary Share of the Company.
30
<PAGE>
<PAGE>
FISONS PLC AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)
14 SHARE PLANS (continued)
An option granted under the Fisons plc Share Option
Schemes is normally exercisable in whole or part
between the third and tenth anniversaries of the date
of its grant. Any option not exercised will lapse on
the tenth anniversary of the date of grant. No
financial commitment is incurred at the time of grant.
Since July 1994, the related performance condition
associated with a grant of options must also be
satisfied before such options can be exercised. Under
the Company's Share Option Schemes, the exercise price
for an Option is the greater of (i) the average of the
middle market quotations of an Ordinary Share as
derived from the Official List for the five dealing
days immediately preceding the date on which the
invitation to apply for the grant of Option was issued
and (ii) the nominal value of an Ordinary Share of the
Company.
<TABLE>
<CAPTION>
Fisons plc VG Instruments
Fisons plc International plc
Savings Savings Savings Fisons plc
Related Share Related Share Related Share Share
Option Scheme Option Scheme Option Scheme Option Scheme
-----------------------------------------------------------------------------------------
Shares Prices Shares Prices Shares Prices Shares Prices
-----------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Balance 1/1/92 4,320,618 204p-369p - - 172,952 155.66p-295.81p 6,185,500 253p-458p
Grants 3,297,739 137p 1,925,766 276p-288p - - 2,655,000 388p-343p
Exercised 27,439 204p-369p - - 2,021 155.66p 585,000 272.5p
Cancelled 1,475,518 204p-369p 135,201 288p 8,143 155.66p 960,500 272.5p-458p
-----------------------------------------------------------------------------------------
Balance 1/1/93 6,115,400 137p-369p 1,790,565 276p-288p 162,788 155.66p-295.81p 7,295,000 188p-458p
Grants 3,436,407 136p 1,965,867 153p-166p - - 760,000 170p-198p
Exercised 10,175 137p-204p - - 1,141 155.66p - -
Cancelled 1,150,311 137p-369p 1,163,744 166p-288p 31,359 155.66p-295.81p 1,550,000 188p-458p
-----------------------------------------------------------------------------------------
Balance 1/1/94 8,391,321 136p-369p 2,592,688 153p-288p 130,288 155.66p-213.33p 6,505,000 170p-458p
Grants 1,653,802 126p 2,003,253 105p-110p - - 6,752,000 126p-133p
Exercised 13,808 136p-137p - - - - - -
Cancelled 2,567,336 126p-369p 1,063,064 105p-288p 46,072 155.66p-213.33p 1,290,000 133p-458p
-----------------------------------------------------------------------------------------
Balance 31/12/94 7,463,979 126p-369p 3,532,877 105p-288p 84,216 155.66p 11,967,000 136p-458p
=========================================================================================
</TABLE>
Restricted Share Plan
- ---------------------
A Restricted Share Plan (RSP) was established in 1992.
Ordinary Shares are purchased in the open market, which
are held in trust for participating employees.
Approximately 1.3 million Ordinary Shares were purchased
for cash at a cost of BPS 3 million in October 1992.
Shares and related cumulative dividends vest on the
third anniversary of the date of award to the
participant unless otherwise permitted earlier pursuant
to the rules of the RSP.
31
<PAGE>
<PAGE>
FISONS PLC AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)
15 COMMITMENTS AND CONTINGENCIES
The Group has contingent liabilities arising in the
ordinary course of business amounting to BPS 39.6
million (1993 - BPS 46.0 million).
Land and buildings are employed in the business and no
provision is made for the potential liability to
taxation on any capital gains that would arise if they
were disposed of at the value placed upon them in the
accounts.
Deferred taxes have not been provided on undistributed
earnings of overseas subsidiaries which are essentially
permanent in duration, and it would be impractical to
compute the unrecognised deferred tax liability on
those reinvested earnings.
Future capital commitments were as follows:
1994 1993
-----------
BPS m BPS m
Contracted but not provided for in these accounts 5.8 25.1
Authorised by the Directors but contracts not yet
placed 59.3 86.8
-----------
65.1 111.9
===========
The Group, through the US operations of its
Pharmaceutical Division, is involved in a limited
number of remedial actions under various US federal and
state laws and regulations relating to the environment
which impose liability on parties to clean up, or
contribute to the cost of cleaning up, sites on which
their hazardous wastes or materials were disposed of or
released. Although it is not possible to predict with
certainty the outcome of such matters or the total cost
of remediation, the Group believes that it has made
adequate provision for costs associated with known
remediation efforts and does not anticipate the future
costs of such efforts to have a material adverse effect
on financial position, liquidity or results of
operations.
32
<PAGE>
<PAGE>
FISONS PLC AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)
16 DISPOSAL OF BUSINESSES AND GOODWILL WRITTEN OFF
1994 1993 1992
-------------------
BPS m BPS m BPS m
Profits/(losses) on disposals of
businesses:
Book value of net assets disposed of:
Tangible fixed assets 16.1 19.9 -
Inventories 7.7 16.3 1.8
Receivables 6.9 22.5 1.8
Creditors (5.5) (7.2) -
Net borrowings - (6.7) -
-------------------
25.2 44.8 3.6
Proceeds 28.2 70.4 166.3
-------------------
Profits on disposals before costs 3.0 25.6 162.7
===================
Profits on disposals before costs,
by business:
Horticulture 3.0 3.3 -
Consumer Health - 18.8 162.7
Other - 3.5 -
-------------------
3.0 25.6 162.7
Costs of disposals (0.9) (5.7) (2.4)
Assets written off (1.6) (4.6)(29.1)
Provision for future costs (21.3) (16.1)(31.1)
Costs incurred during year (11.5) (14.6)(22.1)
-------------------
Losses less profits on disposal
of businesses (32.3) (15.4) 78.0
===================
Release of provisions (1) 13.6 20.0 11.3
===================
Goodwill written off:
Horticulture - (28.1) -
Consumer Health - (2.5)(66.0)
Scientific Instruments (268.9) - -
Other (9.7) 1.3 -
-------------------
(278.6) (29.3)(66.0)
===================
(1) For presentation under UK GAAP, these amounts are
not shown net as they would be under US GAAP
presentation.
33
<PAGE>
<PAGE>
FISONS PLC AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)
16 DISPOSAL OF BUSINESSES AND GOODWILL WRITTEN OFF (continued)
The Consumer Health business was sold in 1992 for BPS
166.3 million. A further sum was received of BPS
11.6 million representing working capital at date of
completion in early 1993. The Horticulture business
was principally disposed of in two transactions: the
sale of the North American business in 1993 for BPS
26.8 million and the sale of the UK business in 1994
for BPS 25.3 million.
Amounts totalling BPS 278.6 million representing a
permanent impairment in the value of goodwill,
principally in respect of the Scientific Instruments
Division, the disposal of which was announced in March
1995 (Note 24), have been written off in the profit and
loss account in accordance with Urgent Issues Task
Force Abstract 3 (UK GAAP). This goodwill had already
been written off against shareholders' equity on
consolidation.
Under US GAAP, goodwill is capitalised and amortised
over 20 years. For purposes of restating results of
operations under US GAAP, the unamortised goodwill
associated with the Scientific Instruments Division
that was written off to arrive at US GAAP income was
BPS 154.5 million. At 31st December, 1994 this level
of impairment was recognised as a result of objective
third party information obtained as to the value of the
Scientific Instruments Division during negotiations for
its sale.
During 1994, the movement in disposal provisions was as
follows:
BPS m
At 1st January, 1994 34.9
Currency translation adjustment (0.3)
Cash spent (11.3)
Other adjustments (3.3)
Additional provisions 21.3
------
At 31st December, 1994 41.3
======
The provision at 31st December, 1994 principally
relates to costs of reorganising the Scientific
Instruments Division and other estimated liabilities
retained from businesses previously disposed.
34
<PAGE>
<PAGE>
FISONS PLC AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)
16 DISPOSAL OF BUSINESSES AND GOODWILL WRITTEN OFF (continued)
Cash effect of disposals
1994 Pre-1994
Dis- Dis- 1994
posals posals Total 1993 1992
------------------------------------
BPS m BPS m BPS m BPS m BPS m
Proceeds received 27.2 13.1 40.3 234.6 -
Net borrowings assumed - - - 6.7 -
Cash costs (0.9) (11.5) (12.4) (19.6) (24.5)
------------------------------------
Total (see Cash Flow
Statement) 26.3 1.6 27.9 221.7 (24.5)
====================================
The disposals for 1994 had no material effect on the
tax charge (1993 - BPS 3.0 million; 1992 - nil).
17 DERIVATIVE FINANCIAL INSTRUMENTS
Foreign currency
- ----------------
As a multi-national company, Fisons is subject to risks
associated with foreign currency fluctuations and has
established hedging programs to protect against
declines in foreign currency denominated assets and
foreign currency income in respect of future foreign
currency volatility.
To manage this risk, the Group enters into forward
exchange contracts, foreign currency options, including
combination options, and currency swaps for non-trading
purposes for a period of up to five years. The
principal foreign currencies hedged are the US dollar,
German mark, Italian lire, Japanese yen and French
franc and reflect the functional currencies of the
Group's significant overseas operations.
The notional amounts of the Group's forward exchange
contracts, foreign currency options and currency swaps
at 31st December, 1994 and 1993 were BPS 732 million
and BPS 721 million, respectively. In 1994, 91 per
cent, of the Group's reported sales arose in currencies
other than sterling and 48 per cent. of net operating
assets are initially stated in currencies other than
sterling.
Under UK GAAP, all of the forward exchange contracts,
foreign currency options and currency swaps are
classified as hedges as of 31st December, 1994 and
1993; consequently all gains and losses are deferred
and are recognised in the same period as the hedged
transaction or are matched against offsetting gains and
losses arising from foreign currency translation.
Under US GAAP, forward exchange contracts and currency
swaps associated with anticipated transactions must be
marked to market as of the balance sheet date and any
unrealised gain or loss be reflected in profit and
loss. Accordingly, these contracts and swaps have been
marked to market and have been recognised as an
adjustment to net income to conform with US GAAP
(Note 2).
35
<PAGE>
<PAGE>
FISONS PLC AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)
17 DERIVATIVE FINANCIAL INSTRUMENTS (continued)
Interest rate swaps
- -------------------
The Group uses interest rate swaps for certain
long-term debt to convert fixed rate debt to floating
rate debt. The notional value of outstanding contracts
was BPS 100 million and BPS 100 million at
31st December, 1994 and 1993, respectively and are in
effect for a period ranging from 3 to 8 years
thereafter.
In 1994, the effect of interest rate swap agreements
was to lower the Group's average interest rate on the
equivalent amount of sterling funding to 6.88 per cent.
from 7.53 per cent., the rate that would otherwise have
been experienced.
Credit risk
- -----------
The Group is exposed to credit risk in the event of
non-performance by counterparties. These
counterparties primarily consist of major international
financial institutions who are subject to continuing
review by the Company and independent credit rating
reviews. The Company also limits its exposure to any
one party.
18 FAIR VALUE OF NON-DERIVATIVE FINANCIAL INSTRUMENTS
Summarised below are the carrying values and fair
values of the Group's non-derivative financial
instruments at 31st December, 1994 and 1993. Fair
values were estimated based on market price, where
available. Long-term debt is principally floating rate
as a result of interest rate swaps both of which are
taken into account in determining the fair values of
the debt stated below; therefore, fair value
approximates carrying value at 31st December, 1994.
1994 1993
--------------------------
Carrying Fair Carrying Fair
Value Value Value Value
--------------------------
BPS m BPS m BPS m BPS m
Assets:
Cash and cash equivalents 86.3 86.3 98.1 98.1
Trade receivables 237.6 237.6 269.4 269.4
--------------------------
323.9 323.9 367.5 367.5
==========================
Liabilities:
Notes payable 168.3 168.3 98.0 98.0
Accounts payable 120.5 120.5 118.8 118.8
Long-term debt (including
amounts due within one year) 125.9 125.9 200.1 202.3
--------------------------
414.7 414.7 416.9 419.1
==========================
36
<PAGE>
<PAGE>
FISONS PLC AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)
19 CONSOLIDATED STATEMENT OF CASH FLOWS
The Group's consolidated statement of cash flows is
prepared under UK GAAP whose objectives and principles
are similar to those set out under US GAAP. The
principal differences relate to the classifications
within the statement of cash flows and the definition
of cash and cash equivalents.
Under UK GAAP, the Group presents its cash flows
according to the following classifications; operating
activities, returns on investments and servicing of
finance, taxation, investing activities and financing.
US GAAP requires only three classifications: operating,
investing and financing.
Cash flows from taxation and returns on investments and
servicing of finance, excluding dividends paid to
shareholders, would be reclassified as operating
activities under US GAAP. Dividend payments would be
reclassified to financing activities. Investments
classified under financing activities would be excluded
in a US GAAP cash flow statement as it qualifies as a
cash and cash equivalent.
20 CASH AND CASH EQUIVALENTS
As defined by UK GAAP, cash and cash equivalents as
disclosed in the consolidated statement of cash flows
consist of:
1994 1993 1992
----------------------
BPS m BPS m BPS m
Cash at bank and in hand 59.7 70.7 65.0
Bank loans and overdrafts (47.0) (33.5) (96.4)
Other loans (121.3) (64.5) (418.6)
---------------------
(108.6) (27.3) (450.0)
=====================
As defined by US GAAP, cash and cash equivalents as
disclosed in the consolidated balance sheet consist of:
1994 1993 1992
-------------------
BPS m BPS m BPS m
Cash at bank and in hand 59.7 70.7 65.0
Government-listed investments
and floating rate notes 26.6 27.4 169.0
-------------------
86.3 98.1 234.0
===================
37
<PAGE>
<PAGE>
FISONS PLC AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)
21 ANALYSIS OF CHANGES IN FINANCING
Share Long-
capital term Invest-
premium debt ments
------------------------
BPS m BPS m BPS m
At 1st January, 1992 203.4 51.1 (201.8)
Cash inflows from financing 1.7 8.4 38.5
Currency translation differences - 8.5 (5.7)
------------------------
At 31st December, 1992 205.1 68.0 (169.0)
Cash inflows from financing - 131.3 141.6
Currency translation differences - 0.8 -
------------------------
At 31st December, 1993 205.1 200.1 (27.4)
Cash (outflow)/inflow from financing - (69.3) 0.8
Currency translation differences - (4.9) -
------------------------
At 31st December, 1994 205.1 125.9 (26.6)
========================
22 DIVIDENDS
1994 1993 1992
-----------------------
BPS m BPS m BPS m
Interim of 1.7p per share paid
3rd January, 1995
(1993 - 3.3p; 1992 - 3.3p) 11.8 22.8 22.8
Final, proposed, of 2.6p per share
(1993 - 1.0p; 1992 - 5.4p) 17.9 6.9 37.4
-----------------------
29.7 29.7 60.2
=======================
As discussed in Note 2, under US GAAP ordinary
dividends are provided for in the period in which they
are declared by the Board. Consequently, the final
proposed dividend in each of the years ended 1994, 1993
and 1992 would have been provided in the following year
under US GAAP.
Under US GAAP, dividends for the year ended 31st
December would have been BPS 18.7 million, BPS
60.2 million and BPS 60.2 million in 1994, 1993 and
1992, respectively.
38
<PAGE>
<PAGE>
FISONS PLC AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)
23 MOVEMENTS ON MAJOR PROVISIONS
Movements on major provisions between the consolidated
balance sheets as at 31st December, 1992, 1993 and 1994
are as follows:
Retirement
benefits Re-
other Insur- struct- Other
than ance uring prov-
pensions claims costs isions Total
------------------------------------
BPS m BPS m BPS m BPS m BPS m
At 31st December, 1992 18.3 6.6 - 29.2 54.1
Currency difference - - - (0.7) (0.7)
Additions 2.5 3.5 28.7 10.8 45.5
Cash use (0.8) (5.1) (3.4) (11.9)(21.2)
Non-cash use - - - (4.2) (4.2)
------------------------------------
At 31st December, 1993 20.0 5.0 25.3 23.2 73.5
Currency difference - - - (0.1) (0.1)
Additions 1.6 2.4 50.2 8.1 62.3
Cash use (0.5) (1.0) (17.9) (6.1)(25.5)
Non-cash use - - (9.8) - (9.8)
Released - - - (3.2) (3.2)
------------------------------------
At 31st December, 1994 21.1 6.4 47.8 21.9 97.2
====================================
Other provisions include provisions for warranties,
inventories and personnel-related items, including
overseas pension costs. None of these provisions are
individually material.
Inventory obsolescence has largely been allowed for in
earlier restructuring/rationalisation plans with the
relevant inventories having been written off as part of
the charge. Bad debt provisions are set against
receivables and at 31st December, 1993 amounted to BPS
6.3 million. A charge against this provision in 1994
reduced it to BPS 6.0 million at 31st December, 1994.
39
<PAGE>
<PAGE>
FISONS PLC AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)
24 SUBSEQUENT EVENTS
On 2nd March, 1995 the Company announced that it had
entered into a sale and purchase agreement with Thermo
Instrument Systems Inc. relating to the sale of its
worldwide Scientific Instruments business. The cash
purchase price of BPS 202 million will be adjusted by
reference to the total capital employed of the
Scientific Instruments Division as at completion.
Whilst shareholder approval was given for the sale of
this Division at an Extraordinary General Meeting of
the Company held on 27th March, 1995 formal completion
of the sale cannot be effected until government
approvals in the countries involved have been received.
On 24th May, 1995 the Company completed the sale of its
research and development operations at Loughborough in
the UK and Rochester, New York in the US to Astra AB of
Sweden also for BPS 202 million.
On 17th October 1995 the Company completed the sale of
Curtin Matheson Scientific, Inc. in the US and Fisons
Scientific Equipment in the UK, the distribution
businesses within its Laboratory Supplies Division, to
Fisher Scientific International, Inc. for US$310
million (approximately BPS 200 million).
In August 1995 an unsolicited offer was made on behalf
of RPR Acquisition Corp. ("RPR"), a wholly-owned
subsidiary of Rhone-Poulenc Rorer Inc. for the share
capital of the Company at 240p per share. An increased
and final offer of 265p per share was made on 5th
October 1995 which was declared unconditional in all
respects on 20th October 1995 when RPR became a
majority shareholder in the Company.
On 22nd November 1995 the Company completed the sale of
J&W Scientific Inc., a California-based manufacturer of
gas chromatography columns, for a cash consideration of
US$35 million (approximately BPS 23 million) to
Saratoga Partners, a corporate buyout arm of Dillon,
Read & Co., Inc.
40
<PAGE>
<PAGE>
ITEM 7(a) continued
FISONS PLC AND SUBSIDIARIES
FINANCIAL STATEMENTS
JUNE 30, 1995
<PAGE>
<PAGE>
FISONS PLC AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
Six months ended
June 30,
---------------------------
1995 1994
---------------------------
BPS m
Net sales 642.6 640.3
Cost of products sold (393.7) (427.6)
Selling general and administration
expenses (168.2) (128.3)
Research and development expenses (33.6) (47.7)
---------------------------
Operating income 47.1 36.7
Interest expense - net (9.5) (10.1)
Gain on sale of assets 84.8 3.8
Other expenses - net -- --
---------------------------
Income before income taxes 122.4 30.4
Provision for income taxes (31.7) (9.1)
Minority interest (1.8) (0.7)
----------------------------
Net income available to common
shareholders 88.9 20.6
============================
Net income per share 12.9p 3.0p
Cash dividend per share 2.0p 1.7p
Weighted average shares, in millions 691.1 691.1
1
<PAGE>
<PAGE>
FISONS PLC AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited)
June 30,
----------------------------
1995 1994
----------------------------
BPS m
ASSETS
Current:
Cash and cash equivalents 208.9 69.8
Trade receivables, less allowance for
doubtful debts 244.5 248.9
Inventories 227.9 271.5
Other 46.8 96.1
----------------------------
Total current assets 728.1 686.3
Property, plant and equipment, net of
accumulated depreciation 225.5 441.7
Other non-current assets 21.8 45.1
----------------------------
Total assets 975.4 1,173.1
============================
LIABILITIES
Current:
Short-term debt 131.0 144.5
Accounts payable 95.1 86.4
Other 209.2 171.9
----------------------------
Total current liabilities 435.3 402.8
Long-term debt 124.8 196.4
Other non-current liabilities,
including minority interests 146.2 101.2
----------------------------
Total liabilities 706.3 700.4
----------------------------
SHAREHOLDERS' EQUITY
Ordinary shares issued 172.8 172.8
Share premium account 32.3 32.3
Revaluation reserve 8.0 13.8
Retained earnings 166.5 347.2
Cumulative translation adjustments (110.5) (93.4)
----------------------------
Total shareholders' equity 269.1 472.7
----------------------------
Total liabilities and
shareholders' equity 975.4 1,173.1
============================
2
<PAGE>
<PAGE>
FISONS PLC AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
Six months ended June 30,
---------------------------------
1995 1994
---------------------------------
BPS m
NET CASH INFLOW FROM OPERATING
ACTIVITIES
Operating profit 47.1 36.7
Depreciation 23.2 28.8
Working capital movement (25.8) (56.0)
---------------------------------
44.5 9.5
RETURNS ON INVESTMENTS AND SERVICING
OF FINANCE
Net interest paid (13.0) (9.8)
Dividends paid (12.0) (23.0)
--------------------------------
(25.0) (32.8)
TAXATION (10.9) (17.4)
INVESTING ACTIVITIES
Capital expenditures (38.9) (44.0)
Sale of tangible fixed assets 6.1 4.5
Sale of businesses 191.7 10.5
--------------------------------
158.9 (29.0)
--------------------------------
NET CASH INFLOW BEFORE FINANCING 167.5 (69.7)
FINANCING
Decrease in amounts borrowed (0.8) --
Decrease(increase) in investments 2.6 (1.8)
--------------------------------
1.8 (1.8)
--------------------------------
Increase(decrease) in cash and cash
equivalents 169.3 (71.5)
Cash and cash equivalents at January 1 (108.6) (27.3)
Effect of exchange rate changes on
cash and cash equivalents (5.8) (5.1)
--------------------------------
Cash and cash equivalents at June 30 54.9 (103.9)
================================
3
<PAGE>
<PAGE>
NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS
(Unaudited)
1. Allowing for their abbreviated nature, the interim financial statements
have been prepared in a manner consistent with the Group's accounting
policies, as applied to the statutory accounts for the year ended
December 31, 1994.
2. The approximate effect on net income and shareholders' equity of
differences between UK GAAP and US GAAP are as follows:
Six months ended
June 30, 1995
----------------
BPS m
Net income under UK GAAP 88.9
Adjustments under US GAAP:
Goodwill amortization (6.5)
Foreign currency transactions (11.7)
Taxes on income (5.7)
Post-retirement benefits other
than pensions 9.9
Pensions 6.0
Restructuring charges (4.7)
Asset revaluation .2
Other (net) (.6)
----------------
Net income under US GAAP 75.8
================
Earnings per share under US GAAP .11
Weighted average number of
shares outstanding 691.1
Shareholders' equity under UK
GAAP 269.1
Adjustments under US GAAP:
Goodwill and intangible assets 219.0
Cumulative translation
adjustment - goodwill 8.5
Foreign currency transactions (15.0)
Deferred taxation 10.3
Pensions (18.5)
Post-retirement benefits other
than pensions 5.1
Restructuring charges 40.8
Accrued dividends 13.8
Advance Corporation Tax on
accrued dividends 3.4
Asset revaluation (8.0)
Capitalized software (7.0)
Capitalized interest 19.9
-----------------
Shareholder's equity under
US GAAP 541.4
=================
4
<PAGE>
<PAGE>
ITEM 7(b)
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED FINANCIAL INFORMATION
The following unaudited pro forma condensed consolidated financial
information reflects the acquisition by Rhone-Poulenc Rorer Inc. ("RPR" or
the "Company") of the issued outstanding share capital of the U.K.-based
pharmaceutical company Fisons plc. ("Fisons") for an aggregate purchase
price approximating $3.0 billion.
The unaudited Pro Forma Condensed Consolidated Balance Sheet reflects the
acquisition as if it had occurred on June 30, 1995. The unaudited Pro
Forma Condensed Consolidated Statements of Income for the year ended
December 31, 1994 and the six months ended June 30, 1995 reflect the
acquisition as if it had occurred at the beginning of the periods
presented. The pro forma information is based on the historical financial
statements of the Company and Fisons after giving effect to the acquisition
using the purchase method of accounting and assumptions and adjustments
deemed appropriate by the Company, certain of which are described in the
accompanying notes to the pro forma financial statements. The Pro Forma
Condensed Consolidated Statements of Income do not include the results of
operations of Fisons' discontinued Laboratory Supplies and Scientific
Instruments businesses (see Note 3 to the pro forma financial information).
The historical financial statements of Fisons included in Item 7(a) herein
are expressed in British pounds sterling (BPS) and are prepared in
accordance with accounting principles generally accepted in the United
Kingdom ("U.K. GAAP"). For purposes of preparing pro forma information in
accordance with accounting principles generally accepted in the United
States ("U.S. GAAP"), the historical statements have been adjusted as
appropriate utilizing the reconciliations of the approximate effect on net
income(loss) and shareholders' equity of differences between U.K. GAAP and
U.S. GAAP provided in Fisons' historical financial statements. For
purposes of pro forma information, certain reclassifications have also been
made to the U.K. GAAP historical statements to conform with the U.S. GAAP
presentation. The statements have been translated into U.S. dollars using
the following exchange rates:
BPS to $
------------
Pro Forma Condensed Consolidated Statement of Income for
the year ended December 31, 1994 .6533
Pro Forma Condensed Consolidated Statement of Income for
the six months ended June 30, 1995 .6290
Pro Forma Condensed Consolidated Balance Sheet at
June 30, 1995 .6270
The pro forma condensed consolidated information does not purport to be
indicative of the Company's financial position or results of operations had
the acquisition actually occurred on the dates presented nor is it
necessarily indicative of the Company's future financial position or future
operating results. The pro forma consolidated financial information should
be read in conjunction with the separate audited historical consolidated
financial statements of the Company and the notes thereto set forth in the
Company's 1994 Annual Report on Form 10-K (as restated in the Company's
Current Report on Form 8-K dated August 14, 1995 to reflect the acquisition
of certain businesses from Rhone-Poulenc S.A.), and the historical
consolidated financial statements of Fisons and the notes thereto set forth
in Item 7(a) of this Form 8-K/A.
PF 1
<PAGE>
<PAGE>
RHONE-POULENC RORER INC.
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF INCOME
FOR THE YEAR ENDED DECEMBER 31, 1994
(In millions, except per share data)
UNAUDITED
-------------------------------------
RPR Pro Forma RPR
Restated Fisons Adjustments Pro Forma
---------------------------------------------------
Net sales $ 4,486.6 $ 727.8 $ 5,214.4
Cost of products sold 1,555.8 196.5 $ 2.5 E 1,754.8
Selling, delivery and
administrative expenses 1,605.8 317.3 68.8 D 1,991.9
Research and development
expenses 606.1 120.6 726.7
Restructuring and other
charges 121.2 259.3 380.5
---------------------------------------------------
Operating income(loss) 597.7 (165.9) (71.3) 360.5
Interest expense, net 47.1 18.7 113.7 F 179.5
Other expense, net 37.7 35.0 72.7
---------------------------------------------------
Income(loss) from continuing
operations before income
taxes 512.9 (219.6) (185.0) 108.3
Provision for income taxes 145.8 19.9 (51.2) G 114.5
---------------------------------------------------
Income(loss) from
continuing operations 367.1 (239.5) (133.8) (6.2)
Remuneration on preferred
stock and capital
equity notes 19.2 -- 34.1 H 53.3
--------------------------------------------------
Income(loss) from
continuing operations
available to
common shareholders $ 347.9 $ (239.5) $ (167.9) $ (59.5)
==================================================
Income(loss) from continuing
operations per common
share, restated pro forma $ 2.50 $ (.51)
============= ===========
Weighted average number of
common shares outstanding 135.3 135.3
============ ===========
See accompanying notes to unaudited pro forma condensed consolidated
financial statements.
PF 2
<PAGE>
<PAGE>
RHONE-POULENC RORER INC.
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF INCOME
FOR THE SIX MONTHS ENDED JUNE 30, 1995
(In millions, except per share data)
UNAUDITED
-----------------------------------------------------
Pro Forma RPR
RPR Fisons Adjustments Pro Forma
-----------------------------------------------------
Net sales $ 2,339.7 $ 404.5 $ 2,744.2
Cost of products sold 831.7 96.7 $ 1.3 E 929.7
Selling, delivery and
administrative expenses 861.6 194.7 33.5 D 1,089.8
Research and development
expenses 343.0 63.7 406.7
-----------------------------------------------------
Operating income 303.4 49.4 (34.8) 318.0
Interest expense, net 23.0 8.0 56.8 F 87.8
Other (income) expense,
net 10.3 (111.8) (101.5)
-----------------------------------------------------
Income from continuing
operations before
income taxes 270.1 153.2 (91.6) 331.7
Provision for income taxes 83.5 51.9 (25.6) G 109.8
-----------------------------------------------------
Income from continuing
operations 186.6 101.3 (66.0) 221.9
Remuneration on preferred
stock and capital
equity notes 11.4 -- 17.0 H 28.4
----------------------------------------------------
Income from continuing
operations available
to common
shareholders $ 175.2 $ 101.3 $ (83.0) $ 193.5
====================================================
Income from continuing
operations per common
share, restated
pro forma $ 1.29 $ 1.43
================ =============
Weighted average number of
common shares
outstanding 134.1 134.1
================ =============
See accompanying notes to unaudited pro forma condensed consolidated
financial statements.
PF 3
<PAGE>
<PAGE>
RHONE-POULENC RORER INC.
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET
AT JUNE 30, 1995
(Dollars in millions)
UNAUDITED
------------------------------------------------
Pro Forma RPR
RPR Fisons Adjustments Pro Forma
--------------------------------------------------
Assets
Current:
Cash and cash equivalents $ 32.1 $ 332.7 $ (288.1) C $ 76.7
Short-term investments 11.8 -- 11.8
Trade accounts receivable,
net 777.4 147.3 924.7
Inventories 699.3 126.4 13.0 B 838.7
Assets held for sale -- 536.0 (300.0) A 236.0
Other current assets 616.7 55.0 671.7
---------------------------------------------------
Total current assets 2,137.3 1,197.4 (575.1) 2,759.6
Property, plant and
equipment, net 1,279.2 192.7 50.0 B 1,521.9
Goodwill and intangibles,
net 968.0 235.1 2,599.8 B 3,802.9
Other assets 631.6 28.2 659.8
---------------------------------------------------
Total assets $ 5,016.1 $ 1,653.4 $ 2,074.7 $ 8,744.2
===================================================
Liabilities
Current:
Short-term debt $ 254.1 $ 169.5 $ 423.6
Accounts payable 484.0 43.1 527.1
Other current liabilities 745.8 365.8 $ 100.0 A,B 1,211.6
--------------------------------------------------
Total current liabilities 1,483.9 578.4 100.0 2,162.3
Long-term debt 584.4 187.9 1,841.9 A,C 2,614.2
Other liabilities 924.0 24.9 495.0 B 1,443.9
--------------------------------------------------
Total liabilities 2,992.3 791.2 2,436.9 6,220.4
Shareholders' equity 2,023.8 862.2 (362.2) A,B 2,523.8
---------------------------------------------------
Total liabilities and
shareholders' equity $ 5,016.1 $ 1,653.4 $ 2,074.7 $ 8,744.2
===================================================
See accompanying notes to unaudited pro forma condensed consolidated
financial statements.
PF 4
<PAGE>
<PAGE>
RHONE-POULENC RORER INC.
NOTES TO UNAUDITED PRO FORMA CONDENSED CONSOLIDATED FINANCIAL INFORMATION
(Unaudited)
1. Pro forma adjustments for the periods presented were as follows:
(A) The total estimated acquisition price of $2.96 billion represents
purchased Fisons' share capital and approximately $30 million of
liabilities incurred as a direct result of the acquisition. Purchases
of Fisons' share capital were initially financed through drawdowns
under seven-month loan facility arrangements and short-term bank
loans, all of which matured in mid-December 1995. Of the initial
borrowings, approximately $1.2 billion were refinanced under medium-
term line of credit agreements with various banks expiring in five
years. Another $500 million was replaced by medium-term borrowings
under a line of credit agreement entered into with Rhone-Poulenc S.A.
in December 1995. Short-term borrowings approximated $400 million;
however, as the Company has the ability and intent to refinance these
borrowings on a long-term basis under available medium-term lines of
credit, they have been classified as long-term. In addition, the
Company used cash proceeds of $300 million received from the October
1995 sale of the Laboratory Supplies Division (see Note 3) and cash
proceeds of $500 million from the December 1995 issuance of equity
notes to Rhone-Poulenc S.A to reduce indebtedness. Accordingly, for
purposes of the pro forma financial statements, acquisition financing
is shown as a $30 million increase in other current liabilities, a net
$2.1 billion increase in long-term debt and a $500 million increase in
equity.
(B) Preliminary purchase price allocation:
(in millions)
----------------
Inventories $ 13.0
Property, plant and equipment 50.0
Goodwill 2,234.9
Intangibles 600.0
Deferred tax and other
liabilities (565.0)
----------------
Total fair value
adjustments 2,332.9
Carrying amount of net
assets acquired 627.1
----------------
Aggregate purchase
price $2,960.0
================
The purchase price allocation above is based upon preliminary
appraisal values and management estimates and is subject to certain
reclassifications and adjustments. Management is currently finalizing
the components of restructuring programs related to both the acquired
Fisons' business and RPR operations as a result of the Fisons'
integration.
(C) Application of Fisons' cash balances to reduce pro forma consolidated
debt balances.
PF 5
<PAGE>
<PAGE>
RHONE-POULENC RORER INC.
NOTES TO UNAUDITED PRO FORMA CONDENSED CONSOLIDATED FINANCIAL INFORMATION
(Unaudited)
(D) Amortization expense related to incremental goodwill assuming a 40-year
amortization period plus amortization expense resulting from fair
value adjustments to intangibles with amortization periods ranging
from 15 to 30 years.
(E) Depreciation expense resulting from fair value adjustments to
property, plant and equipment; related depreciation periods range from
10 to 30 years.
(F) Interest expense related to acquisition debt computed at a weighted
average annual effective interest rate, based on the London Interbank
Offered Rate (LIBOR) plus a margin and commitment fees, when
applicable, approximating 6.0%. Total interest expense included in
income from continuing operations excludes interest charges on the
incremental debt associated with discontinued operations.
(G) Income tax expense adjustment resulting from taxable pro forma
adjustments to income computed at a statutory tax rate approximating
35%. The effective income tax rate on a pro forma basis is adversely
impacted by nondeductible goodwill amortization.
(H) Remuneration associated with the December 1995 issuance of $500
million equity notes to Rhone-Poulenc S.A. with a variable rate based
on LIBOR plus a margin.
(I) The fair value adjustment to inventory described in Note B would
result in a nonrecurring increase in cost of sales that is not
reflected in the Pro Forma Condensed Consolidated Statements of
Income.
(J) Preliminary estimates of the write-off of acquired in-process research
and development activities for which technological feasibility has not
yet been established and no alternative future use exists approximate
$20 to $30 million. The write-off, which is a noncurring charge, is
not reflected in the Pro Forma Condensed Consolidated Statements of
Income.
(K) Cost savings benefits from synergies derived from the acquisition,
which may be significant, are not reflected in the Pro Forma Condensed
Consolidated Statements of Income.
2. RPR historical and pro forma consolidated income from continuing
operations per common share, restated pro forma include adjustments for the
pro forma effects of interest on indebtedness and preferred dividends
relative to the acquisitions of businesses from Rhone-Poulenc S.A.
PF 6
<PAGE>
<PAGE>
RHONE-POULENC RORER INC.
NOTES TO UNAUDITED PRO FORMA CONDENSED CONSOLIDATED FINANCIAL INFORMATION
(Unaudited)
3. At December 31, 1994, in addition to its pharmaceutical business,
Fisons operations included the Laboratory Supplies Division, a distributor
of laboratory equipment and supplies and clinical diagnostic products, and
the Scientific Instruments Division, a manufacturer of instruments used
in surface science and in elemental spectrometry and analysis. In August
1995, Fisons agreed to sell its Laboratory Supplies Division to Fisher
Scientific International Inc. for approximately $300 million; the sale was
completed in 1995. In March 1995, Fisons announced an agreement to sell
its Scientific Instruments Division to Thermo Instrument Systems Inc.;
completion of the sale is subject to regulatory approval. For purposes of
preparing the pro forma financial information, these businesses have been
accounted for as discontinued operations. Accordingly, the results of
operations of the Laboratory Supplies Division and the Scientific
Instruments Division are not included in income from continuing operations
presented in the Pro Forma Condensed Consolidated Statements of Income for
the twelve months ended December 31, 1994 and the six months ended
June 30, 1995. Net income(loss) from discontinued operations, net of income
taxes, for the businesses totaled ($264) million and $19 million for the twelve
months ended December 31, 1994 and the six months ended June 30, 1995,
respectively. The net assets of the discontinued businesses are classified
as assets held for sale on the Pro Forma Condensed Consolidated Balance
Sheet at June 30, 1995 and are reflected at the estimated net realizable
values of the respective divisions.
4. For the year ended December 31, 1994, Fisons' income from continuing
operations on a U.S. GAAP basis included BPS 169 million (approximately
$260 million) of restructuring charges associated primarily with operations
of the pharmaceutical division. Fisons' income from continuing operations
for the six months ended June 30, 1995 included a BPS 85 million ($135
million) pretax gain on the sale to Astra of the greater part of Fisons'
research and development operations.
5. For the year ended December 31, 1994, RPR's historical results
included $121 million of pretax restructuring charges related to a global
restructuring plan.
PF 7
<PAGE>
<PAGE>
EXHIBIT INDEX
Exhibit 23 Consent of Independent Accountants
PF 8
<PAGE>
<PAGE>
ITEM 7(c) EXHIBIT 23
CONSENT OF INDEPENDENT ACCOUNTANTS
We hereby consent to the incorporation by reference in the
Prospectuses constituting part of the Registration
Statements on Form S-3 (No. 33-58229, No. 33-62052, No. 33-
36558, No. 33-30795, No. 33-23754, No. 33-15671, No. 33-
53378 and No. 33-55694) and in the Registration Statements
on Form S-8 (No. 33-58998, No. 33-24537, No. 2-61635,
No. 2-78374 and No. 33-21902) of Rhone-Poulenc Rorer Inc.
(formerly Rorer Group Inc.) of our report dated 8 December
1995 relating to the consolidated financial statements of
Fisons plc, which appears in the Current Report on
Form 8-K/A of Rhone-Poulenc Rorer Inc. dated 20 October 1995.
/s/ Price Waterhouse
PRICE WATERHOUSE 5 January 1996
Chartered Accountants
London, England
