As filed with the Securities and Exchange Commission on
September 5, 1997
Registration No. 333-
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
----------------------
FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
ICN PHARMACEUTICALS, INC.
(Exact Name of Registrant as Specified in its Charter)
Delaware 33-0628076
(State or Other Jurisdiction (I.R.S. Employer
of Incorporation or Organization) Identification No.)
3300 Hyland Avenue
Costa Mesa, California 92626
(714) 545-0100
(Address, Including Zip Code, and Telephone Number, Including
Area Code,
of Registrant's Principal Executive Offices)
Copies To:
David C. Watt
Executive Vice President, General Counsel and Corporate Secretary
ICN Pharmaceuticals, Inc.
3300 Hyland Avenue
Costa Mesa, California 92626
(714) 545-0100
(Name, Address, Including Zip Code, and Telephone Number,
Including Area Code,
of Agent For Service)
Approximate date of commencement of proposed sale to the public:
From time to time after this Registration Statement becomes
effective.
If the only securities being registered on this form are
being offered pursuant to dividend or interest reinvestment
plans, please check the following box. [ ]
If any of the securities being registered on this form are
to be offered on a delayed or continuous basis pursuant to Rule
415 under the Securities Act of 1933, other than securities
offered only in connection with dividend or interest reinvestment
plans, check the following box. [X]
If this Form is filed to register additional securities for
an offering pursuant to Rule 462 (b) under the Securities Act,
check the following box and list the Securities Act registration
statement number of the earlier effective registration statement
for the same offering. [ ]
If this Form is a post-effective amendment filed pursuant to
Rule 462(c) under the Securities Act, check the following box and
list the Securities Act registration statement number of the
earlier effective registration statement for the same offering.
[ ]
If delivery of the prospectus is expected to be made
pursuant to Rule 434, please check the following box: [ ]
Calculation of Registration Fee
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<TABLE>
<CAPTION>
Title of
Each Class Proposed Proposed
of Maximum Maximum
Securities Offering Aggregate Amount of
to be Amount to be Price Per Offering Registration
Registered Registered Share (1) Price Fee
- ---------- --------------- ---------- ----------- ------------
<S> <C> <C> <C> <C>
Common 1,500,864 $36.125 $54,218,712 $16,429.91
Stock, shares (3)
$.01 par
value per
share (2)
- ------------------------------------------------------------------
<FN>
(1) The offering price per share is estimated pursuant to Rule
457(c) solely for the purpose of calculating the registration fee
and is based upon the average of the high and low price of shares
of Common Stock as reported on the New York Stock Exchange on
August 29, 1997 (which date is within five business days prior
to the date of the filing of this Registration Statement).
(2) Also includes associated Preferred Stock Purchase Rights.
(3) Pursuant to Rule 416, an indeterminate number of additional
shares of Common Stock are registered hereunder which may be
issued in the event that applicable antidilution provisions with
respect to the exchange of the Certificates become operative.
</FN>
</TABLE>
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON
SUCH DATE OR DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE
DATE UNTIL THE REGISTRANT SHALL FILE A FURTHER AMENDMENT WHICH
SPECIFICALLY STATES THAT THIS REGISTRATION STATEMENT SHALL
THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF
THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT
SHALL BECOME EFFECTIVE ON SUCH DATE AS THE SECURITIES AND
EXCHANGE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(A), MAY
DETERMINE.
Subject to Completion, Dated September 5, 1997
PROSPECTUS
ICN PHARMACEUTICALS, INC.
1,500,864 SHARES OF COMMON STOCK
This Prospectus relates to an offering of up to
1,500,864 shares of Common Stock, par value $0.01 per share (the
"Common Stock") of ICN Pharmaceuticals, Inc., a Delaware
corporation ("ICN" or the "Company"), that may be issued upon the
exchange of the 5-5/8% Exchangeable Certificates 1986-2001 in the
aggregate principal amount of Swiss Francs 100,000,000 (the
"Certificates") of Xr Capital Holding, a Guernsey, Channel
Islands trust. From and after the combination on November 10,
1994 (the "Merger") of ICN Pharmaceuticals, Inc. ("Old ICN"), SPI
Pharmaceuticals ("SPI"), Viratek, Inc. ("Viratek") and ICN
Biomedicals, Inc. ("Biomedicals") (collectively the "Predecessor
Companies"), the Certificates have been exchangeable into shares
of Common Stock. In conjunction with the Merger, SPI, Old ICN and
Viratek merged into ICN Merger Corp., and Biomedicals merged into
ICN Subsidiary Corp., a wholly-owned subsidiary of ICN Merger
Corp., and ICN Merger Corp. was renamed ICN Pharmaceuticals, Inc.
As of August 29, 1997, the Certificates were exchangeable
at a price of $26.695 per share, subject to adjustment for
dilutive issues. Accordingly, each Certificate representing 5000
Swiss Francs principal amount is exercisable into 112.83 shares
of Common Stock. Cash will be paid in lieu of fractional shares.
For the purposes of calculating the number of shares issued on
exchange of the Certificates, the exchange rate of 1.66 Swiss
Francs per U.S. Dollar is used throughout the life of the
Certificates. The Company has agreed to bear all expenses in
connection with the registration of the Common Stock being
offered by the Certificate holders.
The Common Stock is traded on the New York Stock
Exchange ("NYSE") under the symbol "ICN." On August 29,
1997, the closing sale price per share, as reported by the
NYSE, was $36.25.
AN INVESTMENT IN THE COMMON STOCK OFFERED HEREBY
INVOLVES A HIGH DEGREE OF RISK. SEE "RISK FACTORS."
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED
BY THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE
SECURITIES COMMISSION NOR HAS THE SECURITIES AND EXCHANGE
COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON
THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
The Date of this Prospectus is September __, 1997.
Information contained herein is subject to completion or
amendment. A Registration Statement relating to these
securities has been filed with the Securities and Exchange
Commission. These Securities may not be sold nor may
offers to buy be accepted prior to the time the
Registration Statement becomes effective. This Prospectus
shall not constitute an offer to sell or the solicitation
of an offer to buy nor shall there be any sale of these
securities in any jurisdiction in which such offer,
solicitation or sale would be unlawful prior to
registration or qualification under the securities laws of
any such jurisdiction.
AVAILABLE INFORMATION
The Company is subject to the informational requirements of
the Securities Exchange Act of 1934, as amended (the "Exchange
Act"), and in accordance therewith files reports, proxy
statements and other information with the Securities and Exchange
Commission (the "Commission"). Such reports, proxy statements
and other information filed by the Company may be inspected and
copies obtained (at prescribed rates) at the public reference
facilities maintained by the Commission in Washington, D.C. at
450 Fifth Street, N.W., Judiciary Plaza, Washington, D.C. 20549
and at the Commission's Regional Offices in New York, at 7 World
Trade Center, 13th Floor, New York, New York 10048 and in
Chicago, at Citicorp Center, 500 West Madison Street, Suite 1400,
Chicago, Illinois 60661. Copies of such material can be obtained
(at prescribed rates), by writing to the Public Reference Section
of the Commission, 450 Fifth Street, N.W., Washington, D.C.
20549. Such material also is available through the Commission's
Website (http://www.sec.gov). Such material also can be
inspected at the NYSE, 20 Broad Street, New York, New York 10005,
on which the Common Stock is listed.
This Prospectus is part of a Registration Statement on Form
S-3 (together with all amendments and exhibits thereto, the
"Registration Statement") filed by the Company with the
Commission under the Securities Act of 1933, as amended (the
"Securities Act") with respect to the Common Stock. This
Prospectus does not contain all the information set forth or
incorporated by reference in the Registration Statement and the
exhibits and schedules relating thereto, certain portions of
which have been omitted as permitted by the Commission's rules
and regulations. For further information with respect to the
Company and the Common Stock offered hereby, reference is made to
the Registration Statement and the exhibits thereto which are on
file at the offices of the Commission and may be obtained upon
payment of the fee prescribed by the Commission as described
above.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following reports and documents filed by the Company
with the Commission pursuant to the Exchange Act are incorporated
into this Prospectus by reference as of their respective dates:
1. Annual Report on Form 10-K for the fiscal year ended
December 31, 1996, dated March 31, 1997, as amended by Form 10-
K/A, dated July 24, 1997.
2. Quarterly Report on Form 10-Q for the three months
ended March 31, 1997, dated May 15, 1997.
3. Quarterly Report on Form 10-Q for the three months
ended June 30, 1997, dated August 14, 1997.
4. The description of the Common Stock and associated
Preferred Stock Purchase Rights contained in the Registration
Statement on Form 8-A, dated November 10, 1994.
All reports and other documents filed by the Company
pursuant to Sections 13(a), 13(c), 14 or 15(d) of the Exchange
Act subsequent to the date of this Prospectus and prior to the
termination of the offering of the Common Stock pursuant to this
Prospectus (this "Offering") shall be deemed to be incorporated
by reference in this Prospectus and to be a part hereof from the
date of filing of such reports and documents. Any statement
contained herein or in a report or document incorporated or
deemed to be incorporated herein by reference shall be deemed to
be modified or superseded for purposes of this Prospectus to the
extent that a statement contained herein or in any subsequently
filed report or document that is or is deemed to be incorporated
by reference herein modifies or supersedes such statement. Any
statement so modified or superseded shall not be deemed, except
as so modified or superseded, to constitute a part of this
Prospectus.
The making of a modifying or superseding statement shall not
be deemed an admission for any purpose that the modified or
superseded statement, when made, constituted a misrepresentation,
an untrue statement of a material fact or an omission to state a
material fact that is required to be stated or that is necessary
to make a statement not misleading in light of the circumstances
in which it was made.
THE COMPANY WILL PROVIDE, WITHOUT CHARGE, TO EACH PERSON TO
WHOM A COPY OF THIS PROSPECTUS IS DELIVERED, ON THE REQUEST OF
SUCH PERSON, A COPY OF ANY OR ALL OF THE REPORTS AND DOCUMENTS
INCORPORATED HEREIN BY REFERENCE (OTHER THAN EXHIBITS THERETO,
UNLESS SUCH EXHIBITS ARE SPECIFICALLY INCORPORATED BY REFERENCE
INTO SUCH REPORTS OR DOCUMENTS). WRITTEN REQUESTS FOR SUCH
COPIES SHOULD BE DIRECTED TO DAVID C. WATT, EXECUTIVE VICE
PRESIDENT, GENERAL COUNSEL AND CORPORATE SECRETARY, ICN
PHARMACEUTICALS, INC., 3300 HYLAND AVENUE, COSTA MESA, CALIFORNIA
92626. TELEPHONE INQUIRIES MAY BE DIRECTED TO DAVID C. WATT AT
(714) 545-0100.
THE COMPANY
ICN is a multinational pharmaceutical company that develops,
manufactures, distributes and sells pharmaceutical, research and
diagnostic products and provides radiation monitoring services.
The Company pursues a strategy of international expansion which
includes (i) the consolidation of the Company's leadership
position in Eastern Europe and Russia; (ii) the acquisition of
high margin products that complement existing product lines and
can be registered and introduced into additional markets to meet
the specific needs of those markets; and (iii) the creation of a
pipeline of new products through internal research and
development, as well as strategic partnerships and licensing
arrangements. References to ICN or the Company includes the
subsidiaries of ICN, unless the context requires otherwise.
The Company distributes and sells a broad range of
prescription and over-the-counter pharmaceutical and nutritional
products in over 60 countries worldwide, primarily in North
America, Latin America, Western Europe and Eastern Europe. These
pharmaceutical products treat viral and bacterial infections,
diseases of the skin, myasthenia gravis, cancer, cardiovascular
disease, diabetes and psychiatric disorders. Among the Company's
products is the broad spectrum antiviral agent ribavirin, which
is marketed in the United States, Canada and most of Europe under
the trade name Virazole Trademark. Virazole Trademark is
currently approved for commercial sale in over 40 countries for
one or more of a variety of viral infections, including
respiratory syncytial virus ("RSV"), herpes simplex, influenza,
chicken pox, hepatitis and human immundeficiency virus (HIV). In
the United States, Virazole Trademark is approved only for use in
hospitalized infants and young children with severe lower
respiratory infections due to RSV.
The Company believes it has substantial opportunities to
realize growth from its internally developed compounds. These
compounds are the result of significant investments in its
research and development activities related to nucleic acids
conducted over three decades. On July 28, 1995, the Company
entered into an Exchange License and Supply Agreement (the
"Agreement") and a Stock Purchase Agreement with a subsidiary of
Schering-Plough Corporation ("Schering") to license the Company's
proprietary drug ribavirin as a treatment for chronic hepatitis C
in combination with Schering's alpha interferon (the "Combination
Therapy"). The Agreement provided the Company an initial non-
refundable payment by Schering of $23,000,000, and future royalty
payments to the Company for marketing of the drug, including
certain minimum royalty rates. Schering will have exclusive
marketing rights for ribavirin for hepatitis C worldwide, except
that the Company will retain the right to co-market in the
countries of the European Economic Community. In addition,
Schering will purchase up to $42,000,000 in Common Stock upon the
achievement of certain regulatory milestones. Under the
Agreement, Schering is responsible for all clinical developments
and regulatory activities worldwide. During 1996, clinical
trials commenced with the enrollment of more than 2000 patients.
See "Risk Factors -- No Assurance of Successful Development and
Commercialization of Future Products."
The Company believes it is positioned to expand its presence
in the pharmaceutical markets in Eastern and Central Europe. In
1991, a 75% interest was acquired in Galenika Pharmaceuticals
("Galenika"), a large drug manufacturer and distributor in
Yugoslavia. Galenika was subsequently renamed ICN Yugoslavia.
This acquisition added new products and significantly expanded
the sales volume of the Company. With the investment in ICN
Yugoslavia, the Company became one of the first Western
pharmaceutical companies to establish a direct investment in
Eastern Europe. ICN Yugoslavia continues to be a significant
part of the Company's operations although its sales and
profitability have, at times, been substantially diminished owing
principally to the imposition of sanctions on Yugoslavia by the
United Nations. However, the United Nations Security Council
adopted resolutions, that in December 1995, suspended and, in
October 1996, lifted economic sanctions imposed on the Federal
Republic of Yugoslavia since May of 1992. The suspension and
lifting of economic sanctions enabled ICN Yugoslavia to resume
exporting certain of its product lines to Russia, other Eastern
European Markets, Africa, the Middle East and the Far East. See
"Risk Factors -- Risk of Operation in Yugoslavia."
In 1995, the Company acquired a 75% interest in Oktyabr, one
of the largest pharmaceutical companies in the Russian
Federation. In 1996, the Company purchased an additional 15%
interest in Oktyabr, raising its ownership to 90%. Additionally,
the Company greatly expanded its Russian presence through the
acquisition of two additional pharmaceutical companies:
Leksredstva, located in Kursk, and Polypharm, located in
Chelyabinsk. The combined sales of these three companies
establish the Company among the largest pharmaceutical companies
in Russia today and a pioneer and leader in the privatization
movement. In 1996, the Company acquired a 60% interest in
Alkaloida Chemical Co. ("Alkaloida"), one of the largest
pharmaceutical companies in terms of sales in Hungary and a major
world producer of morphine and related compounds. The Company is
currently exploring acquisition opportunities in Poland, Russia
and the Czech Republic. See "Risk Factors -- Risk of Operations
in Eastern Europe, Russia and China."
In August 1997, ICN Puerto Rico, Inc. (the "Subsidiary")
acquired the worldwide rights (except India) to seven Roche
products: Alloferin, Ancotil, Glutril, Limbitrol, Mestinon,
Prostigmin and Protamin from F. Hoffmann-La Roche Ltd.
("Hoffmann"). The Subsidiary also obtained worldwide rights
outside of the United States and India to Efudix and Librium. In
addition, the Subsidiary obtained an option to obtain the U.S.
rights to these two products.
Also in August 1997, the Subsidiary purchased the Hoffmann's
Humacao, Puerto Rico manufacturing plant (the "Humacao, Puerto
Rico Plant"), which meets current U.S. Food and Drug
Administration Good Manufacturing Practices for various products,
including: Aleve, Naprosyn, EC Naprosyn, Anaprox and Cytovene,
for $55 million, payable in a combination of cash and the
assumption of certain debt.
In addition to its pharmaceutical operations, the Company
also develops, manufacturers and sells, through its wholly-owned
subsidiary, ICN Biomedical, Inc., a broad range of research and
diagnostic products and radiation monitoring services. The
Company markets these products internationally to major
scientific, academic, health care and governmental institutions
through catalog and direct mail marketing programs.
The principal executive offices of the Company are located
at 3300 Hyland Avenue, Costa Mesa, California 92626. The
telephone number at such address is (714) 545-0100.
RISK FACTORS
AN INVESTMENT IN THE COMMON STOCK INVOLVES A HIGH DEGREE OF
RISK AND MAY NOT BE APPROPRIATE FOR INVESTORS WHO CANNOT AFFORD
TO LOSE THEIR ENTIRE INVESTMENT. A HOLDER OF THE CERTIFICATES
SHOULD BE FULLY AWARE OF THE RISK FACTORS SET FORTH HEREIN, WHEN
EVALUATING WHETHER TO CONVERT THEIR CERTIFICATES INTO COMMON
STOCK. THIS PROSPECTUS CONTAINS OR INCORPORATES STATEMENTS THAT
CONSTITUTE FORWARD LOOKING STATEMENTS WITHIN THE MEANING OF THE
PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995. THOSE
STATEMENTS APPEAR IN A NUMBER OF PLACES IN THIS PROSPECTUS AND IN
THE DOCUMENTS INCORPORATED BY REFERENCE AND MAY INCLUDE
STATEMENTS REGARDING, AMONG OTHER MATTERS, THE COMPANY'S GROWTH
OPPORTUNITIES, THE COMPANY'S ACQUISITION STRATEGY, REGULATORY
MATTERS PERTAINING TO GOVERNMENTAL APPROVAL OF THE MARKETING OR
MANUFACTURING OF CERTAIN OF THE COMPANY'S PRODUCTS AND OTHER
FACTORS AFFECTING THE COMPANY'S FINANCIAL CONDITION OR RESULTS OF
OPERATIONS. PROSPECTIVE INVESTORS ARE CAUTIONED THAT ANY SUCH
FORWARD LOOKING STATEMENTS ARE NOT GUARANTEES OF FUTURE
PERFORMANCE AND INVOLVE RISKS, UNCERTAINTIES AND OTHER FACTORS
WHICH MAY CAUSE ACTUAL RESULTS, PERFORMANCE OR ACHIEVEMENTS TO
DIFFER MATERIALLY FROM THE FUTURE RESULTS, PERFORMANCE OR
ACHIEVEMENTS EXPRESSED OR IMPLIED IN SUCH FORWARD LOOKING KNOWN
AND UNKNOWN STATEMENTS. SUCH FACTORS INCLUDE THE VARIOUS RISK
FACTORS DESCRIBED BELOW.
DEPENDENCE ON FOREIGN OPERATIONS
Approximately 75% and 80% of the Company's net sales for
1995 and 1996, respectively, and approximately 79% and 81% of the
Company's net sales for the six months ended June 30, 1996 and
1997, respectively were generated from operations outside the
United States. The Company operates directly and through
distributors in North America, Latin America (principally
Mexico), Western Europe and Eastern Europe and through
distributors elsewhere in the world. Foreign operations are
subject to certain risks inherent in conducting business abroad,
including possible nationalization or expropriation, price and
exchange controls, limitations on foreign participation in local
enterprises, health-care regulation and other restrictive
governmental actions. Changes in the relative values of
currencies take place from time to time and may materially affect
the Company's results of operations. Their effects on the
Company's future operations are not predictable. The Company
does not currently have a hedging program to protect against
foreign currency exposure and, in certain of the countries in
which the Company operates, no effective hedging program is
available.
RISK OF OPERATIONS IN YUGOSLAVIA
ICN Yugoslavia represents a material part of the Company's
business. Approximately 46% and 44% of the Company's net sales
for 1995 and 1996, respectively, were from ICN Yugoslavia. In
addition, approximately 39% and 62% of the Company's operating
income for 1995 and 1996, respectively, and approximately 46% and
31% of the Company's net sales for the six months ended June 30,
1996 and 1997, respectively, were from ICN Yugoslavia. ICN
Yugoslavia, a 75% owned subsidiary, operates in a business
environment that is subject to significant economic volatility
and political instability. The economic conditions in Yugoslavia
include continuing liquidity problems, unemployment, a weakened
banking system and a high trade deficit. Between May 1992 and
December 1995, ICN Yugoslovia operated under United Nations'
sanctions that severely limited the ability to import raw
materials and prohibited all exports. While the sanctions have
been suspended, certain risks, such as hyperinflation, currency
devaluations, wage and price controls and potential government
action could continue to have material adverse impact on the
Company's financial position and results of operations.
During 1992 and 1993, the rate of inflation in Yugoslavia
was over one billion percent per year. Inflation was
dramatically reduced in January 1994 when the government enacted
a stabilization program designed to strengthen its currency.
This program reduced the annualized inflation rate to five
percent by the end of 1994, increased the availability of hard
currency, stabilized the exchange rate of the dinar and improved
the overall economy. In 1995, the effectiveness of the
stabilization program began to wane, resulting in a decline in
the availability of hard currency and an acceleration of
inflation to an annual rate of 90% by year end. In November
1995, the dinar was devalued from a rate of 1.4 dinars per U.S.$1
to a rate of 4.7 dinars per U.S.$1.
During 1996, inflation increased further to an annual rate
of 95% and the availability of hard and local currency continued
to decline. The lifting of sanctions by the United Nations
eventually provided opportunities to export outside of
Yugoslavia. A policy of strict monetary control in Yugoslavia
has kept inflation at a current annual level of approximately
40%. However, Yugoslavia has not fully recovered the
international status it held before sanctions were imposed and
management believes that economic reform and privatization is
necessary before the economy will improve dramatically. The
Yugoslavian government is still negotiating to regain membership
in the International Monetary Fund and World Bank. Management
believes that the 1997 Presidential and parliamentary elections
may result in political change that would lead to economic
reform, although such elections also have the potential to create
additional political instability and currency devaluations.
In an effort by the National Bank of Yugoslavia to control
inflation through tight monetary controls, Yugoslavia is now
experiencing severe liquidity problems. This has resulted in
longer collection periods on ICN Yugoslavia's receivables. Most
of ICN Yugoslavia's customers are slow to pay due to delays of
health care payments by the government. This has also resulted
in ICN Yugoslavia being unable to make timely payments on its
payables. ICN Yugoslavia is attempting to reduce its receivables
and improve its cash flow by restricting future sales; however,
these actions may result in sales and earnings in 1997 that are
lower than such amounts in 1996.
ICN Yugoslavia began the year with a net monetary asset
exposure of $134,000,000 which was subject to foreign exchange
loss if a devaluation of the dinar were to occur. During the
first six months of 1997, the Company was successful in reducing
its monetary exposure by converting dinar denominated accounts
receivable into notes receivable from the Yugoslavian government
payable in dinars, but fixed in dollar amounts. The first
conversion was made early in the first quarter with $50,000,000
of accounts receivable converted into a one year note with
interest at the European LIBOR rate plus one percent. A second
conversion was arranged in the middle of the first quarter
through an agreement with the Yugoslavian government to purchase
an additional $50,000,000 of drugs. The accounts receivable
under this agreement were converted into a non-interest bearing
short term note receivable that has special payment guarantees
from the Serbian government with the payment fixed in dollar
amounts. Approximately $30,000,000 of accounts receivable were
converted to notes receivable in the first quarter under this
arrangement and the remainder was converted in the second
quarter. The second agreement also allows the Company to offset
payroll tax obligations against outstanding accounts receivable
balances. As of June 30, 1997, ICN Yugoslavia had a net monetary
asset position of $49,000,000 which would be subject to foreign
exchange loss if a devaluation of the dinar were to occur.
The Company was able to reduce its overall accounts
receivable balance from the beginning of the year through
collections and the conversion of $100,000,000 of accounts
receivable into notes receivable discussed above. As of June 30,
1997, the accounts receivable balance was $93,056,000. Based on
current levels of collections, the Company will impose even
stricter credit terms on its customers which will likely result
in lower future domestic sales. The willingness of the government
to provide the Company protection against devaluation on its
receivables in exchange for longer payment terms is a reflection
of the strict adherence to government policy on controlling
inflation by limiting the amount of hard currency in circulation.
This policy was initially established with the start of the
stabilization program in 1994. The Company is currently
negotiating an arrangement with the government of Yugoslavia
under which ICN Yugoslavia would commit to continue to provide
products, in dollar denominated sales, in an amount up to
$50,000,000 per calendar quarter for one year, and the government
would pay a minimum of $9,000,000 per month toward outstanding
receivables. However, at no point in time can the amount due to
ICN Yugoslavia from the government under this arrangement exceed
$200,000,000, including both accounts and notes receivable.
With 80% of ICN Yugoslavia sales arising from government or
government-sponsored entities, ICN Yugoslavia is financially
dependent on the Yugoslavian government. Additionally, ICN
Yugoslavia is also subject to credit risk in that 60% of its
December 31, 1996, domestic accounts receivables and 31% of its
year-to-date sales are with three major customers.
ICN Yugoslavia is subject to price controls in Yugoslavia.
The size and frequency of government-approved price increases
are influenced by local inflation, devaluations, cost of imported
raw materials and demand for ICN Yugoslavia products. During
1995, 1996 and the first six months of 1997, ICN Yugoslavia
received fewer price increases than in the past due to lower
relative levels of inflation. As inflation increases, the size
and frequency of price increases are expected to increase. Price
increases obtained by ICN Yugoslavia are based on economic events
preceding such an increase and not on expectations of ongoing
inflation. A lag in approved price increases could reduce the
gross margins that ICN Yugoslavia receives on its products.
Although the Company expects that ICN Yugoslavia will limit sales
of products that have poor margins until an acceptable price
increase is received, the impact of an inability to obtain
adequate price increases in the future could have an adverse
impact on the Company as a result of declining gross profit
margins or declining sales in an effort to maintain existing
gross margin levels.
RISK OF OPERATIONS IN EASTERN EUROPE, RUSSIA AND CHINA
The Company has invested a total of approximately
$21,900,000 for majority interests in three pharmaceutical
companies located in Russia. The Company also has invested
approximately $22,100,000 in its 60.0% interest in ICN Hungary.
In September 1996, the Company committed to invest an aggregate
of $24,000,000 in a joint venture with Jiangsu Provincial Wuxi
Pharmaceutical Corporation ("Wuxi"), a Chinese state-owned
pharmaceutical corporation. Although the Company believes that
investment in Russia, Eastern Europe, China and other emerging
markets offers access to growing world markets, the economic and
political conditions in such countries are uncertain. See "--
Dependence on Foreign Operations."
NO ASSURANCE OF SUCCESSFUL DEVELOPMENT AND COMMERCIALIZATION
OF FUTURE PRODUCTS
The Company's future growth will depend, in large part, upon
its ability to develop or obtain and commercialize new products
and new formulations of or indications for current products. The
Company is engaged in an active research and development program
involving compounds owned by the Company or licensed from others
which the Company may, in the future, desire to develop
commercially. There can be no assurance that the Company will be
able to develop or acquire new products, obtain regulatory
approvals to use such products for proposed or new clinical
indications in a timely manner, manufacture its potential
products in commercial volumes or gain market acceptance for such
products. In addition, the Company may require financing over
the next several years to fund costs of development and
acquisitions of new products and, if Virazole Trademark is
approved for treatment of chronic hepatitis C in Combination
Therapy (for which there can be no assurance), to expand the
production and marketing of Virazole Trademark in the countries
of the European Union, where the Company has retained marketing
rights under the License Agreement. It may be desirable or
necessary for the Company to enter into licensing arrangements
with other pharmaceutical companies in order to market
effectively any new products or new indications for existing
products such as the License Agreement with Schering for the
marketing of Virazole Trademark for Combination Therapy (if
approved). There can be no assurance that the Company will be
successful in raising such additional capital or entering into
such marketing arrangements, if required, or that such capital
will be raised, or such marketing arrangements will be, on terms
favorable to the Company.
LIMITED PATENT PROTECTION
The Company may be dependent on the protection afforded by
its patents relating to Virazole Trademark and no assurance can
be given as to the breadth or degree of protection which these
patents will afford the Company. The Company has patent rights
in the United States expiring in 1999 relating to the use of
Virazole Trademark to treat specified human viral diseases. If
future development of Virazole Trademark in Combination Therapy
is successful and approval is granted in the United States, an
additional award of exclusivity will be granted of up to three
years from date of approval (Waxman-Hatch Act); however, there
can be no assurance that such development will be successful or
that such approval will be obtained. While the Company has
patents in certain foreign countries covering the use of Virazole
Trademark in the treatment of certain diseases, which coverage
and expiration varies and which patents expire at various times
through 2006, the Company has no, or limited, patent rights with
respect to Virazole Trademark and/or its use in certain foreign
countries where Virazole Trademark is currently, or in the future
may be, approved for commercial sale, including France, Germany
and Great Britain. However, the Company and Schering intend to
file applications for approval of Combination Therapy through a
centralized procedure in the European Union (which includes
France, Germany and Great Britain). If such approval is granted,
the Company and Schering would be afforded either six or ten
years (depending upon the particular country) of protection for
the Combination Therapy against competition. There can be no
assurance that the loss of the Company's patent rights with
respect to Virazole Trademark upon expiration of the Company's
patent rights in the United States, Europe and elsewhere will not
result in competition from other drug manufacturers or will not
otherwise have a significant adverse effect upon the business and
operations of the Company.
As a general policy, the Company expects to seek patents,
where available, on inventions concerning novel drugs,
techniques, processes or other products which it may develop or
acquire in the future. However, there can be no assurance that
any patents applied for will be granted, or that, if granted,
they will have commercial value or as to the breadth or the
degree of protection which these patents, if issued, will afford
the Company. The Company intends to rely substantially on its
unpatented proprietary know-how, but there can be no assurance
that others will not develop substantially equivalent proprietary
information or otherwise obtain access to the Company's know-how.
Patents for pharmaceutical compounds are not available in certain
countries in which the Company markets its products.
Marketing approvals in certain foreign countries provide an
additional level of protection for products approved for sale in
such countries.
UNCERTAIN IMPACT OF ACQUISITION PLANS
The Company intends aggressively to continue its strategy of
targeted expansion through the acquisition of compatible
businesses and product lines and the formation of strategic
alliances, joint ventures and other business combinations.
Should the Company complete any material acquisition, the
Company's success or failure in integrating the operations of the
acquired company may have a material impact on the future growth
or success of the Company. Since some or all of these potential
acquisitions may be affected with the issuance of Common Stock by
the Company to the sellers of the businesses being acquired or
financed with the issuance of Common Stock or securities
convertible into Common Stock, the interest of existing
stockholders in the Company may be diluted (which dilution may be
material depending on the size and the number of acquisitions
consummated). Subject to sufficient authorized and unissued
shares of Common Stock being available, no stockholder approval
of any acquisition transaction would be required unless the
number of shares of Common Stock issued by the Company in
connection with the transaction (or series of related
transactions) were to exceed 20% of the then outstanding shares
of Common Stock.
POTENTIAL LITIGATION EXPOSURE
ICN is a defendant in a consolidated class action lawsuit
alleging, among other things, violations of federal securities
laws (the "Class Action"). Plaintiffs alleged that ICN made
misrepresentations of material facts and omitted to state
material facts in 1994 and 1995 concerning the Company's NDA for
the use of Virazole Trademark for monotherapy treatment of
chronic hepatitis C (the "Hepatitis C NDA"). In July 1997, the
Company and the plaintiffs in the Class Action agreed to settle
the litigation for the sum of $15.0 million. The settlement is
in the process of being documented and is subject to the approval
of the court. A settlement hearing is expected to be held in the
fall of 1997. The Company intends to urge the district court to
approve the settlement of the Class Action. If the settlement is
not approved, and the Class Action proceeds to trial, the
ultimate outcome of any such trial cannot be predicted with
certainty, and any unfavorable outcome could have a material
adverse effect on the Company.
Pursuant to an Order Directing Private Investigation and
Designating Officers to Take Testimony, entitled In the Matter of
ICN Pharmaceuticals, Inc., (P-177) (the "Order"), a private
investigation is being conducted by the SEC with respect to
certain matters pertaining to the status and disposition of the
Hepatitis C NDA. As set forth in the Order, the investigation
concerns whether, during the period June 1994 through February
1995, the Company, persons or entities associated with it and
others, in the offer and sale or in connection with the purchase
and sale of ICN securities, engaged in possible violations of
Section 17(a) of the Securities Act and Section 10(b) of the
Exchange Act and Rule 10b-5 thereunder, by having
possibly: (i) made false or misleading statements or omitted
material facts with respect to the status and disposition of the
Hepatitis C NDA; (ii) purchased or sold Common Stock while in
possession of material, non-public information concerning the
status and disposition of the Hepatitis C NDA; or (iii) conveyed
material, non-public information concerning the status and
disposition of the Hepatitis C NDA, to other persons who may have
purchased or sold Common Stock. The Company is cooperating with
the Commission in its investigation. The Company has and
continues to produce documents to the SEC pursuant to its request
and the SEC has taken the depositions of certain current and
former officers, directors and employees of the Company.
The Company has received a Subpoena (the "Subpoena") from a
Grand Jury in the United States District Court, Central District
of California requesting the production of documents covering a
broad range of matters over various time periods. The Company
and Milan Panic, Chairman and Chief Executive Officer, are
subjects of the investigation. The Company has and continues to
cooperate in the production of documents pursuant to the
Subpoenas. A number of current and former employees of the
Company have been interviewed by the government in connection
with the investigation.
The ultimate outcome of the SEC and Grand Jury
investigations cannot be predicted and any unfavorable outcome
could have a material adverse effect on the Company.
DEPENDENCE ON KEY PERSONNEL
The Company believes that its continued success will depend
to a significant extent upon the efforts and abilities of its
management, including Milan Panic, its Chairman, President and
Chief Executive Officer. The loss of their services could have a
material adverse effect on the Company. The Company cannot
predict what effect, if any, the Commission's investigation of
the Company, as described under Potential Litigation Exposure,
and the Subpoena may have on Mr. Panic's ability to continue to
devote services on a full time basis to the Company. See " --
Potential Litigation Exposure," above. In addition, Mr. Panic,
who served as Prime Minister of Yugoslavia from July 1992 to
March 1993, remains active in Yugoslavian politics and may again
serve in a governmental office in the future.
POTENTIAL PRODUCT LIABILITY EXPOSURE AND LACK OF INSURANCE
The Company could be exposed to possible claims for personal
injury resulting from allegedly defective products. Even if a
drug were approved for commercial use by an appropriate
governmental agency, there can be no assurance that users will
not claim that effects other than those intended may result from
the Company's products. The Company generally self-insures
against potential product liability exposure with respect to its
marketed products, including Virazole Trademark. While to date
no material adverse claim for personal injury resulting from
allegedly defective products, including Virazole Trademark, has
been successfully maintained against the Company or any of its
predecessors, a substantial claim, if successful, could have a
material adverse effect on the Company.
GOVERNMENT REGULATION
FDA approval must be obtained in the United States and
approval must be obtained from comparable agencies in other
countries prior to marketing or manufacturing new pharmaceutical
products for use by humans in such respective jurisdictions.
Obtaining FDA approval for new products and manufacturing
processes can take a number of years and involves the expenditure
of substantial resources. Numerous requirements must be
satisfied, including preliminary testing programs on animals and
subsequent clinical testing programs on humans, to establish
product safety and efficacy. No assurance can be given that
authorization of the commercial sale of any new drugs or
compounds by the Company for any application or of existing drugs
or compounds for new applications will be secured in the United
States or any other country, or that, if such authorization is
secured, those drugs or compounds will be commercially
successful.
The FDA in the United States and other regulatory agencies
in other countries also periodically inspect manufacturing
facilities. Failure to comply with applicable regulatory
requirements can result in, among other things, sanctions, fines,
delays or suspensions of approvals, seizures or recalls of
products, operating restrictions and criminal prosecutions.
Furthermore, changes in existing regulations or adoption of new
regulations could prevent or delay the Company from obtaining
future regulatory approvals.
The Company is subject to price control restrictions on its
pharmaceutical products in the majority of countries in which it
operates. To date, the Company has been affected by pricing
adjustments in Spain and by the lag in allowed price increases in
Yugoslavia and Mexico, which have created lower sales in U.S.
dollars and reductions in gross profit. Future sales and gross
profit could be materially affected if the Company is unable to
obtain price increases commensurate with the levels of inflation.
COMPETITION
The Company operates in a highly competitive environment.
The Company's competitors, many of whom have substantially
greater capital resources and marketing capabilities and larger
research and development staffs and facilities than the Company,
are actively engaged in marketing products similar to those of
the Company and in developing new products similar to those
proposed to be developed and sold by the Company. Others may
succeed in developing products that are more effective than those
marketed or proposed for development by the Company. Progress by
other researchers in areas similar to those being explored by the
Company may result in further competitive challenges. In early
1996, MedImmune, Inc. began marketing in the United States
RespiGam Trademark, a prophylactic drug for the treatment of RSV.
The Company is aware of several other ongoing research and
development programs which are attempting to develop new
prophylactic and therapeutic products for treatment of RSV.
Although the Company will follow publicly disclosed developments
in this field, on the basis of currently available data, it is
unable to evaluate whether RespiGam Trademark or the other
technology being developed in these programs poses a threat to
the Company's current market position in the treatment of RSV or
its revenue streams. In addition, a number of companies and
researchers are engaged in developmental efforts for the
treatment of Hepatitis C, including through the use of protease
inhibitions. The Company may also face increased competition
from manufacturers of generic pharmaceutical products when
certain of the patents covering certain of its currently marketed
products expire.
INDEBTEDNESS AND OTHER OBLIGATIONS OF THE COMPANY
As of June 30, 1997, after giving effect to the issuance in
August 1997 of $275 million of aggregate principal amount of 9
1/4% Senior Notes due 2005, the Company has outstanding long-term
debt of $497.0 million. The indenture for certain of the
Company's debt contains, and other debt instruments of the
Company may in the future contain, a number of significant
covenants that, among other things, restrict the ability of the
Company to dispose of assets, incur additional indebtedness,
repay other indebtedness or amend other debt instruments, pay
dividends, create liens on assets, enter into investments or
acquisitions, engage in mergers or consolidations, make capital
expenditures or engage in certain transactions with subsidiaries
and affiliates, and otherwise restrict certain corporate
activities. The Company's strategy contemplates continued
strategic acquisitions, and a portion of the cost of such
acquisitions may be financed through additional indebtedness.
There can be no assurance that financing will continue to be
available on terms acceptable to the Company or at all. In the
absence of such financing, the Company's ability to respond to
changing business and economic conditions, to fund scheduled
investments and capital expenditures, to make future acquisitions
or developments and to absorb adverse operating results may be
adversely affected.
EFFECT OF CONVERSION OF THE SERIES B CONVERTIBLE PREFERRED
STOCK - OUTSTANDING PUT RIGHT
On October 9, 1996, the Company issued 50,000 shares of
Series B Convertible Preferred Stock ("Series B Preferred
Stock"). As of August 29, 1997, 18,749 shares of the Series B
Preferred Stock remained outstanding (with the remaining shares
of Series B Preferred Stock having been converted into an
aggregate of 1,392,116 shares of Common Stock). The exact number
of shares of Common Stock issuable upon conversion of all of, or
as dividends on, the remaining outstanding shares of Series B
Preferred Stock will vary inversely with the market price of the
Common Stock. The holders of Common Stock may be materially
diluted by conversion of the Series B Preferred Stock depending
on the future market price of the Common Stock and the discount
rate applied to determine the number of shares of Common Stock
issuable upon conversion. On August 29, 1997, the last reported
sales price of the Common Stock on the NYSE was $36.25 per share.
If such market price were used to determine the number of shares
of Common Stock issuable upon conversion of the remaining
outstanding shares of Series B Preferred Stock and using the
present discount rate of 13%, the Company would issue a total
of approximately 611,364 shares of Common Stock, if all shares of
the outstanding Series B Preferred Stock were converted. To the
extent the market price of the Common Stock used for
determination of the conversion of the Series B Preferred Stock
is lower or higher than such price as of any date on which shares
of Series B Preferred Stock are converted, the Company would
issue more or fewer shares of Common Stock than reflected in such
estimate, and such difference could be material. In addition,
the discount rate that applies in calculating the number of
shares of Common Stock issuable upon conversion is subject to
further increases under certain circumstances, with any such
increases resulting in more shares of Common Stock being issuable
upon conversion.
The Company has granted to certain persons the right to put
709,988 shares of Common Stock to the Company at $30 per share in
January 2000, subject to acceleration under certain circumstances
at a put price equal to $22.50 plus 10% per annum from December
23, 1996. This put right would be terminated (in whole or in
part) if the market price of the Common Stock exceeds certain
specified levels.
USE OF PROCEEDS
This Prospectus relates to the offering of up to 1,500,864
shares of Common Stock that may be issued to the Certificates
holders, upon the exchange of the Certificates from and after the
Merger described above. The Company will not receive any of the
proceeds from the sale of the Common Stock offered hereby.
For information regarding their exchange rights, Certificate
holders are referred to the terms of the Certificates and the
related agreements pertaining to such rights, copies of the indenture
and related documents are attached as an exhibit to the registration
statement of which this prospectus is a part.
The transfer agent for the Common Stock is the American
Stock Transfer & Trust Company unless and until a successor is
selected by the Company.
PLAN OF DISTRIBUTION
This Prospectus has been prepared for the benefit of the
Certificate holders who exchange Certificates for the Common
Stock.
There can be no assurance that any of the Certificate
holders will exchange any of the Certificates into Common Stock.
To the extent required, the Company will use its best efforts to
file, during any period in which exchanges are being made, one or
more supplements to this Prospectus to describe any material
information with respect to the plan of distribution not
previously disclosed in this Prospectus or any material change to
such information in this Prospectus.
LEGAL MATTERS
The legality of the Common Stock offered hereby will be
passed upon for the Company by David C. Watt, Executive Vice
President, General Counsel and Corporate Secretary of the
Company. As of September 3, 1997, Mr. Watt beneficially owned
129,673 shares of Common Stock, including 127,678 shares which he
has the right to acquire upon the exercise of currently
exercisable stock options.
INDEPENDENT PUBLIC ACCOUNTANTS
The consolidated balance sheets as of December 31, 1996 and
1995, and the consolidated statements of income, stockholders'
equity and cash flows for each of the three years in the period
ended December 31, 1996, incorporated by reference in this
Prospectus, have been included herein in reliance on the report,
which includes an emphasis of matter paragraph related to the
Company's net monetary assets at ICN Yugoslavia which would be
subject to foreign exchange loss if a devaluation of the dinar
were to occur, of Coopers & Lybrand L.L.P., independent public
accountants, given on the authority of that firm as experts in
auditing and accounting. With respect to the unaudited interim
financial information for the periods ended June 30, 1997 and
1997, incorporated by reference in this Prospectus, the independent
accountants have reported that they have applied limited
procedures in accordance with professional standards for a review
of such information. However, their separate report included in
the Company's quarterly report on Form 10-Q for the quarter ended
June 30, 1997, and incorporated by reference herein, states that
they did not audit and they do not express an opinion on that
interim financial information. Accordingly, the degree of
reliance on their report on such information should be restricted
in light of the limited nature of the review procedures applied.
The accountants are not subject to the liability provisions of
Section 11 of the Securities Act for their report on the
unaudited interim financial information because that report is
not a "report" or a "part" of the Registration Statement prepared
or certified by the accountants within the meaning of Sections 7
and 11 of the Securities Act.
Any financial statements and schedules hereafter
incorporated by reference in the Registration Statement of which
this Prospectus is a part, that have been audited and are the
subject of a report by independent accountants will be so
incorporated by reference in reliance upon such reports and upon
the authority of such firms as experts in accounting and auditing
to the extent covered by consents filed with the Commission.
NO DEALER, SALESPERSON OR ANY OTHER PERSON HAS BEEN
AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY
REPRESENTATIONS, OTHER THAN THOSE CONTAINED IN THIS PROSPECTUS,
IN CONNECTION WITH THIS OFFERING, AND, IF GIVEN OR MADE, SUCH
OTHER INFORMATION OR REPRESENTATION MUST NOT BE RELIED UPON AS
HAVING BEEN AUTHORIZED BY THE COMPANY. NEITHER THE DELIVERY OF
THIS PROSPECTUS NOR ANY SALE MADE HEREUNDER SHALL, UNDER ANY
CIRCUMSTANCES, CREATE ANY IMPLICATION THAT THERE HAS BEEN NO
CHANGE IN THE AFFAIRS OF THE COMPANY SINCE THE DATE OF THIS
PROSPECTUS. THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER OR
SOLICITATION BY ANYONE IN ANY STATE IN WHICH SUCH OFFER OR
SOLICITATION IS NOT AUTHORIZED OR IN WHICH THE PERSON MAKING SUCH
OFFER OR SOLICITATION IS NOT QUALIFIED TO DO SO OR TO ANYONE TO
WHOM IT IS UNLAWFUL TO MAKE SUCH OFFER OR SOLICITATION.
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.
The following table sets forth the estimated expenses of the
Registrant in connection with the distribution of the securities
being registered hereunder. The Certificate holders will not
bear any of these expenses.
SEC Filing Fee.....................................$16,429.91
Legal Fees and Expenses............................$25,000.00
Accounting Fees and Expenses.......................$20,000.00
Miscellaneous......................................$ 5,000.00
Total...............................$66,429.91
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
Section 145 of the General Corporation Law of Delaware
empowers a corporation to indemnify any person who was or is a
party or is threatened to be made a party to any threatened,
pending or completed action, suit or proceeding, whether civil,
criminal, administrative or investigative by reason of the fact
that he or she is or was a director, officer, employee or agent
of the corporation or is or was serving at the request of the
corporation as a director, officer, employee or agent of another
corporation or enterprise. Depending on the character of the
proceeding, a corporation may indemnify against expenses
(including attorneys' fees), judgments, fines and amounts paid in
settlement actually and reasonably incurred in connection with
such action, suit or proceeding if the person indemnified acted
in good faith and in a manner he or she reasonably believed to be
in or not opposed to the best interests of the corporation, and
with respect to any criminal action or proceeding, had no cause
to believe his or her conduct was unlawful. In the case of an
action by or in the right of the corporation, no indemnification
may be made in respect to any claim, issue or matter as to which
such person shall have been adjudged to be liable to the
corporation unless and only to the extent that the Court of
Chancery or the court in which such action or suit was brought
shall determine that despite the adjudication of liability such
person is fairly and reasonably entitled to indemnity for such
expenses which the court shall deem proper.
Section 145 further provides that to the extent a director
or officer of a corporation has been successful in the defense of
any action, suit or proceeding referred to above or in the
defense of any claim, issue or matter therein, he or she shall be
indemnified against expenses (including attorneys' fees) actually
and reasonably incurred by him or her in connection therewith.
However, if the director or officer is not successful in the
defense of any action, suit or proceeding as referred to above or
in the defense of any claim, issue or matter therein, he shall
only be indemnified by the corporation as authorized in the
specific case upon a determination that indemnification is proper
because he or she met the applicable standard set forth above as
determined by a majority of the disinterested Board of Directors
or by the stockholders.
The Registrant's bylaws provide indemnification to its
officers and directors against liability they may incur in their
capacity as such, which indemnification is similar to that
provided by Section 145, unless a determination is reasonably and
promptly made by a majority of the disinterested Board of
Directors that the indemnitee acted in bad faith and in a manner
that the indemnitee did not believe to be in or not opposed to
the best interests of the Registrant, or, with respect to any
criminal proceeding, that the indemnitee believed or had
reasonable cause to believe that his or her conduct was unlawful.
The Registrant carries directors' and officers' liability
insurance, covering losses up to $5,000,000 (subject to a
$500,000 deductible).
The Registrant, as a matter of policy, enters into
indemnification agreements with its directors and officers
indemnifying them against liability they may incur in their
capacity as such. The indemnification agreements require no
specific standard of conduct for indemnification and make no
distinction between civil and criminal proceedings, except in
proceedings where the dishonesty of an indemnitee is alleged.
Such indemnification is not available if an indemnitee is
adjudicated to have acted in a deliberately dishonest manner with
actual dishonest purpose and intent where such acts were material
to the adjudicated proceeding. Additionally, the indemnity
agreements provide indemnification for any claim against an
indemnitee where the claim is based upon the indemnitee obtaining
personal advantage or profit to which he or she was not legally
entitled, the claim is for an accounting of profits made in
connection with a violation of Section 16(b) of the Securities
Exchange Act of 1934, or similar state law provision, or the
claim was brought about or contributed to by the dishonesty of
the indemnitee.
Section 102(b) (7) of the Delaware General Corporation Law,
as amended, permits a corporation to include in its certificate
of incorporation a provision eliminating or limiting the personal
liability of a director to the corporation or its stockholders
for monetary damages for breach of fiduciary duty as a director,
provided that such provision shall not eliminate or limit the
liability of a director (i) for any breach of the director's duty
of loyalty to the corporation or its stockholders, (ii) for acts
or omissions not in good faith or which involve intentional
misconduct or a knowing violation of law, (iii) under Section 174
of the Delaware General Corporation Law (relating to unlawful
payment of dividend and unlawful stock purchase and redemption),
or (iv) for any transaction from which the director derived an
improper personal benefit. The Registrant has provided in its
certificate of incorporation, as amended, that its directors
shall be exculpated from liability as provided under Section
102(b) (7).
The foregoing summaries are necessarily subject to the
complete text of the Delaware General Corporation Law, the
Registrant's Certificate of Incorporation and the agreements
referred to above and are qualified in their entirety by
reference thereto.
ITEM 16. EXHIBITS
4.1 Amended and Restated Certificate of Incorporation of
Registrant, previously filed as Exhibit 3.1 to Registration
Statement No. 33-83952 on Form S-1, which is incorporated
herein by reference, as amended by the Certificate of
Merger, dated November 10, 1994, of ICN Pharmaceuticals,
Inc., SPI Pharmaceuticals, Inc., and Viratek, Inc. with and
into ICN Merger Corp., previously filed as Exhibit 4.1 to
Registration Statement No. 333-08179 on Form S-3, which is
incorporated herein by reference.
4.2 By laws of the Registrant, previously filed as Exhibit 3.2
to Registration Statement No. 33-83952 on Form S-1, which is
incorporated herein by reference.
4.3 Form of Rights Agreement, dated as of November 2, 1994
between the Registrant and American Stock Transfer & Trust
Company as Trustee, previously filed as Exhibit 4.3 to
Registration Statement on Form 8-A, dated November 10, 1994.
4.4 Xr Capital Holding Trust Instrument between ICN
Pharmaceuticals, Inc. and Ansbacher (C.I.) Limited dated as of
September 17, 1986; Subscription Agreement between Ansbacher
(C.I.) Limited, ICN Pharmaceuticals, Inc., SPI Pharmaceuticals,
Inc., and Banque Gutzwiller, Kurz, Bungener S.A. and the other
financial institutions named therein dated as of September 17,
1986; Bond Issue Agreement between ICN Pharmaceuticals, Inc. and
Ansbacher (C.I.) Limited dated as of September 17, 1986 and
Exchange Agency Agreement between ICN Pharmaceuticals, Inc., SPI
Pharmaceuticals, Inc., Banque Gutzwiller, Kurz, Bungener S.A.,
and the other financial institutions named therein dated as of
September 17, 1986, previously filed as Exhibit 10.36 to Annual
Report on Form 10-K for the fiscal year ended November 30, 1986,
which is incorporated herein by reference.
4.5 Supplemental Agreement between ICN Merger Corp. and Bank Leu
AG dated October 14, 1994.
5. Opinion of David C. Watt, Executive Vice President, General
Counsel and Corporate Secretary of the Registrant, regarding
the legality of the securities being registered.
15.1 Awareness Letter of Independent Accountant regarding
Unaudited Interim Financial Information.
15.2 Review Report of Independent Accountants for the period
ended June 30, 1997, previously filed as Exhibit 15.1 to
Quarterly Report on Form 10-Q for the quarter ended June 30,
1997, and incorporated herein by reference.
23.1 Consent of Coopers & Lybrand L.L.P. Independent Public
Accountants.
23.2 Consent of David C. Watt (contained in his opinion filed as
Exhibit 5).
24. Power of Attorney (included elsewhere in the Registration
Statement).
ITEM 17. UNDERTAKINGS
The undersigned Registrant hereby undertakes:
(1) To file, during any period in which offers or sales are
being made, a post-effective amendment to this Registration
Statement:
(i) To include any prospectus required by section 10(a)(3) of
the Securities Act of 1933;
(ii) To reflect in the prospectus any facts or events arising
after the effective date of the Registration Statement
(or the most recent post-effective amendment thereof)
which, individually or in the aggregate, represent a
fundamental change in the information set forth in the
Registration Statement; and
(iii) To include any material information with respect to the
plan of distribution not previously disclosed in the
Registration Statement or any material change to such
information in the Registration Statement; provided,
however, that paragraphs (i) and (ii) do not apply if the
information required to be included in a post-effective
amendment by those paragraphs is contained in periodic
reports filed by the Registrant pursuant to section 13 or
section 15(d) of the Securities Exchange Act of 1934 that
are incorporated by reference in the Registration
Statement.
(2) That, for the purpose of determining any liability under the
Securities Act of 1933, each such post-effective amendment
shall be deemed to be a new registration statement relating
to the securities offered therein, and the offering of such
securities at that time shall be deemed to be the initial
bona fide offering thereof.
(3) To remove from registration by means of a post-effective
amendment any of the securities being registered which
remain unsold at the termination of offering.
(4) That, for purposes of determining any liability under the
Securities Act of 1933, each filing of the Registrant's
annual report pursuant to section 13(a) or section 15(d) of
the Securities Exchange Act of 1934 (and, where applicable,
each filing of an employee benefit plan's annual report
pursuant to section 15(d) of the Securities Exchange Act of
1934) that is incorporated by reference in the Registration
Statement shall be deemed to be a new registration relating
to the securities offered therein, and the offering of such
securities at that time shall be deemed to be the initial
bona fide offering thereof.
(5) Insofar as indemnification for liabilities arising under the
Securities Act of 1933 may be permitted to directors,
officers and controlling persons of the Registrant pursuant
to that foregoing provisions, or otherwise, the Registrant
has been advised that in the opinion of the Securities and
Exchange Commission such indemnification is against public
policy as expressed in that Act and is, therefore,
unenforceable. In the event that a claim for
indemnification against such liabilities (other than the
payment by the Registrant of expenses incurred or paid by a
director, officer or controlling person of the Registrant in
the successful defense of any action, suit or proceeding) is
asserted by such director, officer or controlling person in
connection with the securities being registered, the
Registrant will, unless in the opinion of its counsel the
matter has been settled by controlling precedent, submit to
a court of appropriate jurisdiction the question whether
such indemnification by it is against public policy as
expressed in the Securities Act of 1933 and will be governed
by the final adjudication of such issue.
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933,
as amended, the Registrant certifies that it has reasonable
grounds to believe that it meets all of the requirements for
filing on Form S-3 and has duly caused this Registration
Statement to be signed on its behalf by the undersigned,
thereunto duly authorized, in the City of Costa Mesa and State of
California on September 5, 1997.
ICN PHARMACEUTICALS, INC.
/s/ Milan Panic
------------------------
By: Milan Panic
Chairman, President
and Chief Executive Officer
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that each person whose signature
appears below constitutes and appoints Milan Panic and David C.
Watt his true and lawful attorneys-in-fact and agents, with full
power of substitution and resubstitution, for him and in his
name, place and stead, in any and all capacities, to sign any and
all amendments (including post-effective amendments) to this
Registration Statement, and to file the same, with all exhibits
thereto, and other documents in connection therewith, with the
Securities and Exchange Commission, granting unto said attorneys-
in-fact and agents, and each of them, full power and authority to
do and perform each and every act and thing requisite and
necessary to be done, as fully to all intents and purposes as he
might or could do in person, hereby ratifying and confirming all
that said attorneys-in-fact and agents, or any of them, or his
substitute or substitutes, may lawfully do or cause to be done by
virtue hereof.
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, THIS
REGISTRATION STATEMENT HAS BEEN SIGNED BY THE FOLLOWING PERSONS
IN THE CAPACITY INDICATED.
SIGNATURE TITLE DATE
/s/ Milan Panic
- ------------------------------
Milan Panic Chairman and Chief September 5,
Executive Officer 1997
(Principal
Executive Officer)
/s/ John E. Giordani
- ------------------------------
John E. Giordani Executive Vice September 5,
President, Chief 1997
Financial Officer
(Principal
Financial and
Accounting
Officer)
/s/ Norman Baker, Jr.
- -------------------------------
Norman Barker, Jr. Director September 5,
1997
/s/ Senator Birch E. Bayh, Jr.
- -------------------------------
Senator Birch E. Bayh, Jr. Director September 5,
1997
/s/ Alan F. Charles
- ------------------------------- Director September 5,
Alan F. Charles 1997
/s/ Roger Guillemin
- -------------------------------
Roger Guillemin, M.D., Ph.D. Director September 5,
1997
/s/ Adam Jerney
- -------------------------------
Adam Jerney Director, September 5,
President, Chief 1997
Operating Officer
/s/ Dale Hanson
- --------------------------------
Dale M. Hanson Director September 5,
1997
/s/ Weldon B. Jolley
- --------------------------------
Weldon B. Jolley, Ph.D. Director September 5,
1997
/s/ Jean-Francois Kurz
- --------------------------------
Jean-Francois Kurz Director September 5,
1997
/s/ Thomas Lenagh
- --------------------------------
Thomas H. Lenagh Director September 5,
1997
/s/ Charles Manatt
- --------------------------------
Charles T. Manatt Director September 5,
1997
/s/ Stephen D. Moses
- --------------------------------
Stephen D. Moses Director September 5,
1997
/s/ Michael Smith
- ---------------------------------
Michael Smith, Ph.D. Director September 5,
1997
/s/ Roberts A. Smith
- --------------------------------
Roberts A. Smith, Ph.D. Director September 5,
1997
/s/ Richard W. Starr
- --------------------------------
Richard W. Starr Director September 5,
1997
INDEX TO EXHIBITS
4.1 Amended and Restated Certificate of Incorporation of
Registrant, previously filed as Exhibit 3.1 to Registration
Statement No. 33-83952 on Form S-1, which is incorporated
herein by reference, as amended by the Certificate of
Merger, dated November 10, 1994, of ICN Pharmaceuticals,
Inc., SPI Pharmaceuticals, Inc., and Viratek, Inc. with and
into ICN Merger Corp.; previously filed as Exhibit 4.1 to
Registration Statement No. 333-08179 on Form S-3, which is
incorporated herein by reference.
4.2 By laws of the Registrant, previously filed as Exhibit 3.2
to Registration Statement No. 33-83952 on Form S-1, which is
incorporated herein by reference.
4.3 Form of Rights Agreement, dated as of November 2, 1994
between the Registrant and American Stock Transfer & Trust
Company as Trustee, previously filed as Exhibit 4.3 to
Registration Statement on Form 8-A, dated November 10, 1994.
4.4 Xr Capital Holding Trust Instrument between ICN
Pharmaceuticals, Inc. and Ansbacher (C.I.) Limited dated as of
September 17, 1986; Subscription Agreement between Ansbacher
(C.I.) Limited, ICN Pharmaceuticals, Inc., SPI Pharmaceuticals,
Inc., and Banque Gutzwiller, Kurz, Bungener S.A. and the other
financial institutions named therein dated as of September 17,
1986; Bond Issue Agreement between ICN Pharmaceuticals, Inc. and
Ansbacher (C.I.) Limited dated as of September 17, 1986 and
Exchange Agency Agreement between ICN Pharmaceuticals, Inc., SPI
Pharmaceuticals, Inc., Banque Gutzwiller, Kurz, Bungener S.A.,
and the other financial institutions named therein dated as of
September 17, 1986, previously filed as Exhibit 10.36 to Annual
Report on Form 10-K for the fiscal year ended November 30, 1986,
which is incorporated herein by reference.
4.5 Supplemental Agreement between ICN Merger Corp. and Bank Leu
AG dated October 14, 1994.
5. Opinion of David C. Watt, Executive Vice President, General
Counsel and Corporate Secretary of the Registrant, regarding the
legality of the securities being registered.
15.1 Awareness Letter of Independent Accountant regarding
Unaudited Interim Financial Information.
15.2 Review Report of Independent Accountants for the period
ended June 30, 1997, previously filed as Exhibit 15.1 to
Quarterly Report on Form 10-Q for the quarter ended June
30, 1997, and incorporated herein by reference.
23.1 Consent of Coopers & Lybrand L.L.P. Independent Public
Accountants.
23.2 Consent of David C. Watt (contained in his opinion filed
as Exhibit 5).
24. Power of Attorney (included elsewhere in the Registration
Statement).
Exhibit 4.5
-----------
SUPPLEMENTAL AGREEMENT, dated as of October 14, 1994,
between ICN Merger Corp., a Delaware corporation ("New ICN"), and
Bank Leu AG (the "Principal Exchange Agent"), as principal
exchange agent of the 5-5/8% certificates due February 5, 2001
(the "Certificates") issued by Xr Capital Holding, a Guernsey,
Channel Island, trust (the "Trust");
WHEREAS on September 17, 1986 Ansbacher (Guernsey)
Limited ("Ansbacher"), as trustee for the Trust, ICN
Pharmaceuticals, Inc. ("ICN"), SPI Pharmaceuticals, Inc. ("SPI")
and Banque Gutzwiller, Kurz, Bungener, S.A. ("Gutzwiller") as
representative of a consortium of Swiss financial institutions
(the "Banks") entered into a Subscription Agreement (the
"Subscription Agreement") pursuant to which the Trust issued SFr.
100,000,000 aggregate principal amount of the Certificates, and,
concurrently therewith, ICN, SPI, Gutzwiller and the Banks
entered into an Exchange Agency Agreement (the "Exchange Agency
Agreement") pursuant to which Gutzwiller was appointed as
principal exchange agent for the exchange of the Certificates in
accordance with the Exchange Provisions attached to the Exchange
Agency Agreement (the "Exchange Provisions");
WHEREAS, each Certificate is exchangeable as follows:
(i) 100% of its face amount for common stock, $1.00 par value
(the "ICN Common Stock"), of ICN at an exchange price immediately
prior to the Merger (as defined herein) of $24.09638554 (the "ICN
Exchange Price") or (ii) 50% of its face amount for ICN Common
Stock at the ICN Exchange Price and 50% of its face amount into
common stock, $.01 par value, of SPI (the "SPI Common Stock") at
an exchange price immediately prior to the Merger of $20.74824
(the "SPI Exchange Price");
WHEREAS, on the date hereof, Certificates with an
aggregate principal amount of SFr. 66,510,000 are outstanding;
WHEREAS, Gutzwiller previously changed its name to Bank
Leu (Geneva) S.A. and Bank Leu (Geneva) S.A. was subsequently
merged into the Principal Exchange Agent;
WHEREAS, in November 1992, the name of the Trustee
changed from Ansbacher (C.I.) Limited to International Bank &
Trust Company and on September 29, 1994, the name of the Trustee
changed from International Bank and Trust Company (Guernsey)
Limited to Ansbacher (Guernsey) Limited;
WHEREAS, pursuant to that certain Agreement and Plan of
Merger, dated as of August 1, 1994 (the "Merger Agreement"),
among ICN, SPI, Viratek, Inc., ICN Biomedicals, Inc. and New ICN,
it is intended that ICN, SPI and one or more affiliates of ICN
and SPI will be merged into New ICN (the "Merger");
WHEREAS, New ICN will be the surviving corporation of
the Merger and, upon the effectiveness thereof, New ICN will
change its name to ICN Pharmaceuticals, Inc.;
WHEREAS, Section 6 of the Exchange Provisions provides
that, in the event of a merger in which ICN or SPI are not the
surviving corporation, the surviving corporation shall enter into
a supplemental agreement with the principal exchange agent which
shall (a) provide that the holder of each Certificate then
outstanding shall have the right to receive thereafter during the
period such Certificate shall be exchangeable upon exchange
thereof in lieu of each share of ICN Common Stock or SPI Common
Stock deliverable upon such exchange immediately prior to such
event, only the kind and amount of shares and/or other securities
and/or property and/or cash which are receivable, upon such
merger by a holder of one share of ICN Common Stock or SPI Common
Stock, as the case may be, and (b) set forth the Applicable
Exchange Price (as defined therein) for the shares and/or other
securities and/or property and/or cash so issueable, which shall
be an amount equal to the Applicable Exchange Price per share of
ICN Common Stock or SPI Common Stock, as the case may be,
immediately prior to such event; and
WHEREAS, New ICN desires to enter into such
supplemental agreement;
NOW THEREFORE, in consideration of the premises herein
set forth and in order to comply with Section 6 of the Exchange
Provisions, the parties hereto agree as follows:
1. In compliance with Section 6 of the Exchange
Provisions, on and after the date hereof until January 10, 2001
the holder of each Certificate shall be entitled to receive upon
exchange of his or her Certificate in accordance with the
provisions of the terms of the Certificates (the "Terms of the
Certificates") and the Exchange Provisions, (a) in lieu of each
share of ICN Common Stock deliverable to such holder immediately
prior to the date hereof, 0.512 shares of common stock, $.01 par
value, of New ICN (the "New ICN Common Stock") and (b) in lieu of
each share of the SPI Common Stock deliverable to such holder
immediately prior to the date hereof one share of New ICN Common
Stock.
2. On and after the date hereof the exchange price
for such 0.512 shares of New ICN Common Stock deliverable to the
holder of a Certificate upon exchange thereof in lieu of one
share of ICN Common Stock shall be $24.09638554, which amount
equals the ICN Exchange Price in effect immediately prior to the
Merger, and the exchange price for such share of New ICN Common
Stock deliverable to a holder of a Certificate upon exchange
thereof in lieu of one share of SPI Common Stock shall be
$20.74824, which amount equals the SPI Exchange Price in effect
immediately prior to the Merger.
3. New ICN hereby represents and warrants to the
Principal Exchange Agent for the benefit of the holders of the
Certificates that the exchange ratios set forth in Section 1
hereof are the exchange ratios applicable to the exchange of ICN
Common Stock and SPI Common Stock for New ICN Common Stock as
provided in the Merger Agreement.
4. The Exchange Agreement and the Terms of the
Certificates are confirmed and preserved in all respects other
than as modified pursuant to Section 1 hereof.
5. This Supplemental Agreement shall become effective
immediately upon the filing of the Certificate of Merger
evidencing the Merger with the Secretary of State of the state of
Delaware.
6. This Supplemental Agreement may be executed in any
number of counterparts each of which so executed shall be deemed
to be an original, but all such counterparts shall together
constitute but one and the same instrument.
7. This Supplemental Agreement shall be construed in
accordance with and governed by the laws of Switzerland, except
as to matters regarding the exchange of the Certificates for ICN
Common Stock, SPI Common Stock or New ICN Common Stock, which
shall be governed by and construed in accordance with the law
of Delaware.
IN WITNESS WHEREOF, the parties hereto have caused this
Supplemental Agreement to be duly executed, as of the date and
year first above written.
ICN MERGER CORP.
By: s/
-----------------------------------------
John E. Giordani
Director and Vice President
BANK LEU AG
By: s/ s/
-----------------------------------------
J. Sturzenegger C. Ehrensperger
Member of Senior Associate
Management
Exhibit 5
---------
September 5, 1997
ICN Pharmaceuticals, Inc.
3300 Hyland Avenue
Costa Mesa, California 92626
RE: Registration Statement of Form S-3
ICN Pharmaceuticals, Inc.
Common Stock
----------------------------------
Ladies and Gentlemen:
I am Executive Vice President, General Counsel and
Corporate Secretary of ICN Pharmaceuticals, Inc., a Delaware
corporation (the "Company"), and have been involved with the
registration under the Securities Act of 1933, as amended
(the "Act"), of the shares (the "Shares") of common stock,
$.01 par value of the Company, being offered pursuant to the
above described Registration Statement.
In connection with the offering of the Shares, I have
examined the Amended and Restated Certificate of
Incorporation of the Company, By-laws of the Company,
the Xr Capital Holding Trust Instrument and related agreements
(the "Trust Instrument"), the Supplemental Agreement, and
other corporate records of the Company, and such other documents
I have deemed relevant to this opinion.
Based and relying solely upon the foregoing, it is my
opinion that the Shares issuable upon the exchange of the 5-
5/8% Exchangeable Certificates 1986-2001 in the aggregate
principle amount of Swiss Francs 100,00,000, when exchanged
in accordance with the terms of the Trust Instrument, will be
duly authorized, validly issued, fully paid and nonassessable.
This opinion may be filed as an exhibit to the above
described Registration Statement. Consent also is given to
the reference to me under the caption "Legal Matters" in
such Registration Statement as having passed upon the
validity of the issuance of the Shares. In giving this
consent, I do not hereby admit that I come within the
category of persons whose consent is required under Section
7 of the Act or the rules and regulations of the Securities
and Exchange Commission promulgated thereunder.
Respectfully submitted,
/s/ David C. Watt
David C. Watt
Executive Vice President,
General Counsel and Corporate Secretary
Exhibit 15.1
September 5, 1997
Securities and Exchange Commission
450 Fifth Street, N.W.
Washington, D.C. 20549
Re: ICN Pharmaceuticals, Inc.
Registrations on Form S-3
We are aware that our report dated July 31, 1997, on our
review of interim financial information of ICN Pharmaceuticals,
Inc. for the three and six month periods ended June 30, 1997 and
included in the Company's quarterly report on Form 10-Q for the
quarter then ended is incorporated by reference in this
Registration Statement. Pursuant to Rule 436(c) under the
Securities Act of 1933, this report should not be considered a
part of the registration statement prepared or certified by us
within the meaning of Sections 7 and 11 of that Act.
/s/ Coopers & Lybrand L.L.P.
-----------------------------
Coopers & Lybrand L.L.P.
Exhibit 23.1
CONSENT OF INDEPENDENT ACCOUNTANTS
We consent to the incorporation by reference in this registration
statement on Form S-3 of our report dated March 4, 1997, which
includes an emphasis of a matter paragraph related to the
Company's net monetary assets at ICN Yugoslavia, which would be
subject to foreign exchange loss if a devaluation of the
Yugoslavian dinar were to occur, on our audits of the
consolidated financial statements and financial statement
schedule of ICN Pharmaceuticals, Inc. We also consent to the
reference to our firm under the caption "Independent Public
Accountants."
Coopers & Lybrand L.L.P.
Newport Beach, California
September 5, 1997
