SCHEDULE 14A INFORMATION
Proxy Statement Pursuant To Section 14(a) Of
The Securities Exchange Act Of 1934
Filed by the Registrant [X]
Filed by a Party other than the Registrant [_]
Check the appropriate box:
[_] Preliminary Proxy Statement
[_] CONFIDENTIAL, FOR USE OF THE COMMISSION ONLY (AS PERMITTED BY
RULE 14A-6(E)(2))
[_] Definitive Proxy Statement
[X] Definitive Additional Materials
[_] Soliciting Material Pursuant to Section 240.14a-12
ICN Pharmaceuticals, Inc.
--------------------------------------------------------
(Name of Registrant as Specified in its Charter)
N/A
--------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[_] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
(1) Title of each class of securities to which transaction applies:
-------------------------------------------------------------------
(2) Aggregate number of securities to which transaction applies:
-------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
-------------------------------------------------------------------
(5) Total fee paid:
-------------------------------------------------------------------
[_] Fee paid previously with preliminary materials.
[_] Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee was
paid previously. Identify the previous filing by registration statement
number, or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
-------------------------------------------------------------------
(2) Form, Schedule or Registration Statement No.:
-------------------------------------------------------------------
(3) Filing Party:
-------------------------------------------------------------------
(4) Date Filed:
-------------------------------------------------------------------
Following is the text of a presentation and other materials delivered to
ICN Pharmaceuticals, Inc. stockholders on or about May 8, 2002:
ICN PHARMACEUTICALS, INC.
CIBC World Markets
Annual Biotechnology & Specialty
Pharmaceuticals Conference
May 1-2, 2002
FORWARD LOOKING STATEMENTS
------------------------------------------------------------------------------
THE SAFE HARBOR STATEMENT UNDER THE PRIVATE SECURITIES LITIGATION
REFORM ACT OF 1995:
o Except for the historical information herein, the matters discussed in
this presentation include forward-looking statements that may involve
a number of risks and uncertainties, including but not limited to,
projections of future sales, operating income, returns on invested
assets, obtaining and maintaining regulatory approval processes,
market acceptance of, and continuing demand for ICN pharmaceuticals'
products and other risks detailed from time to time in the Company's
Securities and Exchange Commission filings
Consolidated Revenues - Continued Operations
[Bar Graph Omitted]
1995 - 2001 CAGR: +21%
1995 - 273mm
1996 - 347mm
1997 - 527mm
1998 - 696mm
1999 - 747mm
2000 - 800mm
2001 - 858mm
Note: Excludes ICN Yugoslavia
Includes Royalties
CONSOLIDATED EBITDA
[Bar Graph Omitted]
1995-2001 CAGR: +19%
1995 - 93mm
1996 - 114mm
1997 - 154mm
1998 - 208mm
1999 - 264mm
2000 - 248mm
2001 - 265mm
FINANCIAL POSITION
------------------------------------------------------------------------------
SELECTED BALANCE SHEET DATA
DECEMBER 31, DECEMBER 31,
(US$mm) 2000 2001
-------------------------------------------------------------------------
Cash 155.6 327.6
Total Assets 1,477.1 1,754.4
Senior Debt 496.9 191.2
Convertible Debt - 525.0
Total Debt 510.8 740.7
Total Stockholders Equity 757.2 810.7
-------------------------------------------------------------------------
CREDIT STATISTICS
2000 2001
-------------------------------------------------------------------------
Total Debt/EBITDA 1.86x 2.80x
EBITDA/Interest 4.56x 4.73x
Total Debt/Total Book Cap. 40% 48%
-------------------------------------------------------------------------
Q1 RESULTS FINANCIAL PERFORMANCE
Q1 02 Q1 01 %CHG.
----- ----- -----
Revenues $246M R $199M 23
Royalties 57M R 28M 103
REVENUES - SPECIALTY PHARMA 189M 171M 10
Operating income 66M R 41M 60
Net Interest 13M 11M 22
Translation 2M .4M nm
Provision for income taxes 20M 9M 119
Net Income* 30M R 21M 43
Cumulative effect 4M -- nm
Net Income 34M R 21M 62
EPS (diluted)-income 0.36 R 0.26 38
Cumulative efect 0.04 --
Net Income 0.40 R 0.26 54
* Before Cumulative Effect of Accounting Change
Q1 2002 KEY MESSAGES
o Record revenue for First Quarter 2002
-------------------------------------
o Record Gross Margin - 62%
-------------------------
o Record royalties in 1Q' 02
--------------------------
o Record operating income in 1Q'02
--------------------------------
o Record pre-tax income
---------------------
- Spec.Pharma -- Increased sales in all regions
- Improved Gross Margin from 53% to 62%
> Better manufacturing utilization and cost reductions
> Improved supply chain function due to transfer of
manufacturing of acquired products to our own facilities
Q1 2002 KEY MESSAGES (cont'd)
o Provision for Taxes -- We are generating more income in higher
tax jurisdictions, such as North America. Royalties are taxed at the
full U.S. rate
o S, G & A (in $M):
S,G & A expenses as reported 92
One time charges:
Ribapharm charges/allocation 2
Legal expense 3
Stock comp. Charges 3
Debt repurchase expenses 1
Other non-recurring charges 2
IR/PR expenses 2
----
S, G & A expenses
without one-time charges 79
84
Product Sales 189
S, G & A % of sales 42%
CONTINUED SUCCESS
------------------------------------------------------------------------------
PERFORMANCE
o Developed the world's second largest biotech drug franchise.
o Delivered on our promise to restructure the company with tangible results.
o Completed the Ribapharm IPO raising nearly $300 million.
o Delivered record operating results for 2001 and the first quarter of 2002.
9
PERFORMANCE
------------------------------------------------------------------------------
o ICN has a long history of scientific innovation that has helped improve
human health around the world
o Proven by Ribavirin - $1 billion drug.
o ICN management has decades of unmatched international experience, and
unique expertise that cannot easily be replaced.
10
PERFORMANCE
------------------------------------------------------------------------------
o ICN is a complex business that cannot be entrusted to the care of
inexperienced management.
o A global company with operations in areas of the world that require
local expertise, knowledge and contacts
o Scientific depth and experience in developing extensive nucleoside
analogue library.
11
STOCK PERFORMANCE OUTPACES KEY INDEXES
------------------------------------------------------------------------------
o ICN beat Dow Jones Index by 19%
o ICN beat S&P by 26%
o ICN beat Biotech Industry by 18%
o ICN beat Drug Industry by 27%
12
ICN BEATS DRUG INDUSTRY BY 27% - ONE YEAR COMPARISON
Source: Bloomberg, March 29, 2002
------------------------------------------------------------------------------
[GRAPH OMITTED]
13
ICN BEATS BIOTECH INDUSTRY BY 18% - ONE YEAR COMPARISON
Source: Bloomberg, March 29, 2002
------------------------------------------------------------------------------
[GRAPH OMITTED]
14
ICN BEATS S&P 500 BY 26% - ONE YEAR COMPARISON
Source: Bloomberg, March 29, 2002
------------------------------------------------------------------------------
[GRAPH OMITTED]
15
ICN BEATS DOW JONES BY 19% - ONE YEAR COMPARISON
Source: Bloomberg, March 29, 2002
------------------------------------------------------------------------------
[GRAPH OMITTED]
16
SG&A COST CONTROLS
------------------------------------------------------------------------------
o SG&A expenses in line with pharmaceutical industry
o Attributed to cost of business:
- Acquisitions
- Increased investment in specialty business, esp. photonics
o Target expense reduction from 8.5% to 7% post-proxy through:
- Legal - New hire freeze
- IR/PR expenses - Redundancy reduction
- Centralization/RNA shift - Tighten vendor controls
17
RESTRUCTURING HISTORY
------------------------------------------------------------------------------
o The restructuring was ALWAYS ICN's and UBS's idea; no one else had it.
o It was ALWAYS designed to unlock value for shareholders.
o The restructuring is a complicated process that cannot be rushed.
o The timing has been SOLELY impacted by market conditions.
18
RESTRUCTURING OVERVIEW
------------------------------------------------------------------------------
o Initiatives to unlock significant shareholder value
Biotechnology Ribapharm
- RNA listed on NYSE
on April 12, 2002
- IPO Completed
- tax-free
spin-off in 2002
Specialty
ICN Pharmaceuticals Pharmaceuticals ICN Americas
Americas
Specialty
Pharmaceuticals ICN International
Europe
o IPO Prospectus filed
19
RESTRUCTURING PROGRESS
------------------------------------------------------------------------------
o Ribapharm IPO completed - raised nearly $300 million in 20% interest.
o Second largest biotech IPO EVER.
o Debt repurchase completed.
o Request for tax-free treatment filed with the IRS.
o Spin off or distribution of remaining interenst in Ribapharm as soon as
IRS approves.
RESTRUCTURING STEPS
------------------------------------------------------------------------------
Tax Free
Distribution & Spin-off
of Rebapharm
Ribapharm IPO ICN International IPO
Retire Remaining
Debt
Retire Partial Debt
Convertible Offering
Filed Prospectus for
ICN International
S-1 Filed for
Ribapharm
Announced UNLOCKING EQUITY VALUE
Restructuring
Reorganization of
Business Operations
Into Three Distinct
Businesses
21
INTERNATIONAL SPIN-OFF - FACT VS. FICTION
------------------------------------------------------------------------------
o Committed to the international IPO.
o European market conditions do not exist for this transaction.
o International IPO scheduled in early 2003 or sooner.
22
RESTRUCTURING - FACT VS. FICTION
------------------------------------------------------------------------------
o ICN has DELIVERED on its promise to restructure the company with
tangible results.
o To have done so when market conditions were not conducive would have
been DESTRUCTIVE to shareholder value.
o The results point to management's patience, wisdom and experience.
o Opposition suggestion that a restructuring should have been done sooner
points to their lack of experience and the danger to shareholders of
electing their slate.
23
GOVERNANCE
------------------------------------------------------------------------------
o ICN has had a long history of dependable corporate governance.
o Corporate governance provisions adopted that codify what ICN has
practiced all along.
o Nominating committee established that it is comprised solely of
independent directors.
- Membership
- Process
o CEO succession process established that will result in a timely and
orderly change in leadership.
- CANDIDATE INTERVIEWS
- NOMINEE QUALIFICATIONS
24
BOARD INDEPENDENCE
------------------------------------------------------------------------------
o ICN's board has ALWAYS been comprised of independent directors.
o Since ICN's founding, 39 out of 42 directors have been non-insiders.
o As of May 29, 2002, five elected within the last year:
- Three as shareholder candidates
- Two as qualified by nominating committee
- Roderick Hills
- Barry Cohen
- Gen. Ronald Fogleman
- Ed Burkhardt
- Steven Lee
25
SUCCESSION PLANNING
o Plan for succession process presented to Board
o Search committee formed consisting of the following directors:
- Hills, Fogleman, Barker
o Retained Korn Ferry International
o The committee will perform search function in orderly and timely fashion
26
ICN LEADERSHIP
------------------------------------------------------------------------------
o Developed the world's second largest biotech drug franchise.
o Delivered on our promise to restructure the company with tangible results.
o Completed the Ribapharm IPO raising nearly $300 million.
o Delivered record operating results for 2001 and the first quarter of 2002.
27
OPPOSITION - NO STRATEGY
------------------------------------------------------------------------------
o Opposition has NEVER articulated a strategy or objective for ICN
shareholders - EVER.
o They have NO experience managing a global pharmaceutical company.
o They have NO scientific knowledge needed for continued innovations.
o They are very recent shareholders who have executed at least 195 trades,
including 62 sales.
28
SUBSTANTIAL RISK TO SHAREHOLDERS
------------------------------------------------------------------------------
o There is ENORMOUS RISK to shareholders in siding with the opposition.
o They have NO track record, NO experience and NO strategy.
o ICN management has CONSISTENTLY delivered on its promises.
o A VOTE FOR THE OPPOSITION PLACES YOUR INVESTMENT IN ICN AT SUBSTANTIAL
RISK.
29
SPECIALTY PHARMACEUTICALS
------------------------------------------------------------------------------
SPECIALTY PHARMA INVESTMENT HIGHLIGHTS
------------------------------------------------------------------------------
o High margin specialty business in Americas
- Record of historical growth in Latin America since 1970
- Consistent new product flow in pharmaceuticals
- New growth platform in vast cosmetic dermatology market
o One of the largest specialty pharmaceutical businesses in Europe
- 57% of international revenues from Western Europe
- New product pipeline
31
SPECIALTY PHARMACEUTICALS REVENUES
------------------------------------------------------------------------------
SPECIALITY PHARMA REVENUES ANNUAL GROWTH 12% [BAR GRAPH OMITTED]
ICN International Annual Growth 6%
2000 $338mm
2001 $359mm
ICN Americas Annual Growth 18%
2000 $307mm
2001 $362mm
2000 $645mm
2001 $721mm
32
SPECIALTY PHARMACEUTICALS OPERATING INCOME
------------------------------------------------------------------------------
SPECIALTY PHARMA OPERATING INCOME ANNUAL GROWTH 35% [BAR GRAPH OMITTED]
ICN International Annual Growth 114%
2000 $12mm
2001 $26mm
ICN Americas Annual Growth 24%
2000 $94mm
2001 $117mm
2000 $105mm
2001 $142mm
33
SPECIALTY PHARMACEUTICALS EBITDA
------------------------------------------------------------------------------
SPECIALTY PHARMA EBITDA ANNUAL GROWTH 26% [BAR GRAPH OMITTED]
ICN International Annual Growth 32%
2000 $41mm
2001 $54mm
ICN Americas Annual Growth 24%
2000 $121mm
2001 $150mm
2000 $162mm
2001 $204mm
34
SPECIALTY PHARMA REVENUES
Q1 2002 vs. 2001
------------------------------------------------------------------------------
Q1 2002 Q1 2001 % CHANGE
------- ------- --------
AMERICAS $92,211 $83,849 10%
-------- ------- --------
INTERNATIONAL 96,450 87,570 10%
-------- ------- --------
TOTAL SPECIALTY 188,661 171,419 10%
SPECIALTY PHARMA OPERATING INCOME
Q1 2001 VS. 2001
------------------------------------------------------------------------------
Q1 2002 Q1 2001 %
Actual Actual CHANGE
------- ------- -------
AMERICAS $92,211 $83,849 10%
-------- ------- -------
INTERNATIONAL 96,450 87,570 10%
-------- ------- -------
TOTAL SPECIALTY 188,661 171,419 10%
* Excludes corporate charges
SPECIALTY PHARMA OPERATING INCOME
Q1 2002 VS. 2001
------------------------------------------------------------------------------
Q1 2002 Q1 2001 % CHANGE
------- ------- --------
AMERICAS $27,6 $28,6 -4%
-------- ------- --------
INTERNATIONAL 9,0 3,4 166%
-------- ------- --------
TOTAL 36,6 32,0 14%
SPECIALTY PHARMA EBITDA
Q1 2002 VS. 2001
------------------------------------------------------------------------------
Q1 2002 Q1 2001 %
Actual Actual CHANGE
------- ------- -------
AMERICAS $34.4 $36.4 -5%
-------- ------- -------
INTERNATIONAL 18.3 11.4 60%
-------- ------- -------
TOTAL 52,7 47,8 10%
SPECIALTY PHARMACEUTICALS INTERNATIONAL
------------------------------------------------------------------------------
SPECIALTY PHARMACEUTICALS INTERNATIONAL - OVERVIEW
------------------------------------------------------------------------------
2001 Revenue: US$359mm
o 466 ethical products 2001 EBITDA: US$54mm*
o 266 OTC products
o A broad product portfolio with
increasing focus on:
- central nervous system
- anti-infective / anti-virals [PIE CHART OMITTED]
- dermatology Export
(AAA)
- alimentary tract and metabolism 14%
- oncology Eastern
Europe
o 2,100+ sales and marketing staff 29%
Western
Europe
* before corporate allocations 57%
39
-----------------------------------------------------------------------------
SPECIALTY PHARMACEUTICALS AMERICAS
SPECIALTY PHARMACEUTICALS AMERICAS -
OVERVIEW
-----------------------------------------------------------------------------
o High-margined product portfolio 2001 Revenue: US$362mm
o Increasing investment in sales 2001 EBITDA: US$150mm*
and marketing
o Significant expansion in
dermatology
o consistent new product flow [PIE CHART OMITTED]
Latin America 35%
North America 65%
* before corporate allocations
41
SPECIALTY PHARMACEUTICALS AMERICAS -
GEOGRAPHIC SALES
-----------------------------------------------------------------------------
YEAR ENDED DECEMBER 31, 2001 [PIE CHART OMITTED]
Brazil $6mm
Argentina $15mm
Mexico $107mm
Canada $24mm
United States $210mm
$362mm
42
SPECIALTY PHARMACEUTICALS AMERICAS -
REVENUE MIX [PIE CHART OMITTED]
-----------------------------------------------------------------------------
Biomedical
2000 $59mm
2001 $60mm
Ethical Pharma
2000 $248mm
2001 $269mm
Photonics
2000 $33mm
2000 $307mm
2001 $362mm
43
THERAPEUTIC MIX - NORTH AMERICA PRODUCT SALES*
-----------------------------------------------------------------------------
YEAR ENDED DECEMBER 31, 2001 [PIE CHART OMITTED]
HRT 8%
Neurology 14%
Dermatology 60%
Other 18%
$155mm
*Excluding Biomedicals
44
TOP TEN PRODUCTS - SALES SUMMARY*
-----------------------------------------------------------------------------
2000 Sales 2001 Sales Gross
Product Category (US$mm) (US$mm) Margin
------- -------- -------- ------- ------
Efudex Dermatologic 32.4 41.4 93%
Bedoyecta Vitamin 25.5 25.3 71%
Mestinon Myasthenia Gravis 18.1 24.3 85%
NLite Dermatologic Laser na 19.0 64%
Kinerase Dermatologic 12.6 12.1 86%
GlyQuin Dermatologic 1.7 9.8 84%
Virazole Antiviral 11.7 9.8 94%
Oxsoralen Dermatologic 6.6 9.3 90%
Testred HRT 5.2 7.9 93%
CES HRT 5.7 5.3 41%
--------- -------- --------
119.5 164.2 82%
Percentage of Total Revenue 48% 54%
*Excluding Biomedicals
45
ICN NORTH AMERICA
-----------------------------------------------------------------------------
MARKET LEADERSHIP IN PHYSICIAN SKIN CARE
46
DEMOGRAPHICS DRIVE DEMAND
-----------------------------------------------------------------------------
o 78 million Americans between 35-54
o 22 million women with household
income of $56,000
o Seek non-invasive products that will [GRAPHIC OMITTED]
treat and prevent aging with minimal
downtime
o Growing importance of AK therapy
as risk of skin cancer increases
47
SKIN CARE STRATEGY
-----------------------------------------------------------------------------
[GRAPHIC OMITTED]
DERMATOLOGY --- Rx
DERMATOLOGY --- Physician
Dispensed
DERMATOLOGY --- Aesthetic
Elective
48
BROAD SKIN AGING PORTFOLIO
-----------------------------------------------------------------------------
[GRAPHIC OMITTED]
49
GLYQUIN TRx MARKET SHARE
-----------------------------------------------------------------------------
52 WEEK TREND
[GRAPHIC OMITTED]
Source: IMS Health National Prescription Audit
50
WRINKLE REDUCTION PROCEDURE MARKET
-----------------------------------------------------------------------------
Number of Procedures (000s)
1997 1998 1999 2000 2001
-------- -------- ------- -------- --------
BOTOX 65 180 498 1,097 1,600
ABLATIVE RESURFACING 64 283 1,262 1,358 2,399
COLLAGEN 347 406 475 592 1,099
NONABLATIVE LASER -- -- -- 50 150
------- ------ ------ ------ ------
TOTAL 476 869 2,235 3,097 5,248
======= ====== ====== ====== ======
Sources: ASAPS, ICN Estimate
51
GROWTH DRIVERS
-----------------------------------------------------------------------------
NLITE
Laser Collagen Replenishment
o GROWTH OF NON ABLATIVE
PROCEDURES
o CONTINUED PHYSICIAN ADOPTION FOR
NON-ABLATIVE LASERS
[GRAPHIC OMITTED] o COMBINATION THERAPY WITH
BOTULINUM TOXIN FOR WRINKLES DUE
TO COLLAGEN DEFICIENCY
o MULTI APPLICATION SYSTEM
- FDA approved: wrinkles
- Current studies: acne scars,
vascular, active acne
o CONSUMER MARKETING
- Drive patients directly to physicians
52
PHYSICIAN DIRECT
-----------------------------------------------------------------------------
o DISTRICT OFFICES - AESTHETIC ACCOUNT MANAGEMENT
[] AREAS SERVED
2000 2001
(ACTUAL) (ACTUAL)
-------- --------
PROCEDURES PER MONTH NA 4200
STATES SERVED 47 50
-------------------- -------- --------
[GRAPHIC OMITTED] DOCTORS SERVED
PLASTIC SURGEONS 687 1,400
Dermatologists 518 2,977
--- -----
1,105 4,377
OBGYN NA 1,055
Podiatrists NA 0
-- -
1,105 1,105
----- -----
TOTAL 2,720 5,432
53
ACTINIC KERATOSES PATIENTS [BAR GRAPH OMITTED]
-----------------------------------------------------------------------------
R&D PIPELINE
-----------------------------------------------------------------------------
PHOTOTHERAPY NEW INDICATION PIPELINE
-----------------------------------------------------------------------------
DISCOVERY PRECLINICAL CLINICAL SUBMISSION CLEARANCE
PHOTOTHERAPY
------------
PERIOCULAR WRINKLE
GENERAL WRINKLE
[BAR GRAPH OMITTED]
VASCULAR
ACNE SCAR
STRIAE
ACNE
55
ICN INTERNATIONAL PIPELINE
-----------------------------------------------------------------------------
[GRAPH OMITTED]
56
ICN LATIN AMERICA PIPELINE
-----------------------------------------------------------------------------
[GRAPH OMITTED]
57
THE VISION
-----------------------------------------------------------------------------
o Concentrate in the fast growing skin aging market
o Cross sell Rx, light and cosmetic products.
o Invest in product development, clinical proof and line
extensions.
o Accelerate consumer advertising.
o Licensing, product and corporate acquisition consistent
with the growth strategy.
58
ICN PHARMACEUTICALS, INC.
CIBC World Markets
Annual Biotechnology & Specialty
Pharmaceuticals Conference
May 1-2, 2002
SPECIALTY PHARMACEUTICALS MANAGEMENT TEAM
[Graphic Omitted - ICN Logo]
MANAGEMENT TEAM
[Graphic Omitted - Photograph of The Honorable Milan Panic]
THE HONORABLE MILAN PANIC
Milan Panic is Chairman of the Board and Chief Executive Officer of
ICN Pharmaceuticals, Inc., a global health care company headquartered in
Costa Mesa, California and Moscow, Russia. Mr. Panic founded ICN with $200
in 1960 after defecting from his native Yugoslavia. Today, ICN is listed on
the New York Stock Exchange and has sales approaching $1 billion.
Mr. Panic was born in Belgrade in 1929. In 1956, Mr. Panic and his
family immigrated to the United States. He arrived in New York with his
wife and two small children, two suitcases and $20. Having studied
chemistry at the University of Belgrade and Heidelberg University, he
worked as a research assistant in the Department of Chemistry at the
University of Southern California (1957-1959). Shortly thereafter, he
founded ICN.
It was the dawn of the biological revolution. The company's first
product was commercialized DNA, the forerunner of a series of potentially
new therapeutic molecules based on nucleic acid research. One of the early
successes of this work was the approval of the company's flagship
drug,Virazole" (ribavirin), which has been used to treat more than five
million people worldwide for a range of indications, including infants
hospitalized with severe respiratory infections caused by respiratory
syncytial virus (RSV). Most recently, it was approved as a part of a
breakthrough combination therapy for hepatitis C.
With the fall of communism, Mr. Panic became a leader in the
privatization movement in Eastern Europe. ICN's venture with Galenika
Pharmaceutical Company in 1991 was the largest privatization of industry in
Yugoslavia's history. In a gesture that typically combined altruism with a
sound understanding of human nature, he turned the 5,300 Galenika Yugoslav
employees into capitalists and owners of the company. They were given 1.2
million shares of stock (worth $30 million) in ICN's then publicly owned
subsidiary, SPI Pharmaceuticals. It was the first time Eastern European
workers held shares in a company listed on a major worldwide stock
exchange.
In 1993, ICN acquired Octyabr, which was founded by Peter the Great
and remains the oldest pharmaceutical company in Russia. Again, workers
under the communist system received an instant infusion of democracy and
capitalism; a program of privatization through stock ownership by the
workers.
Successful operational expansion in the emerging markets of Eastern
and Central Europe has extended ICN's family which now includes five
manufacturing plants and four major distribution centers in Russia,
European headquarters in Moscow, and facilities in Yugoslavia, Poland,
Hungary, the Czech Republic, and Macedonia.
An American citizen since 1963, Mr. Panic received special permission
from the President of the United States to serve as Prime Minister of
Yugoslavia from 1992-1993. During his tenure, Mr. Panic became a symbol of
hope and freedom throughout Yugoslavia. As Prime Minister, he became a
major figure on the world stage with his pivotal participation in the
London Conference on Yugoslavia in August 1992, his address to the United
Nations General Assembly (the "Speech of Peace") the following month and
his appearance before the Parliament of the European Union in Brussels.
Mr. Panic gained worldwide respect and admiration both for his common
sense approach to the complex problems and competing interests in that
region and for his untiring efforts to bring peace to his native country.
He also initiated a vigorous program of personal diplomacy and traveled to
meet more than 100 world leaders - including French President Francois
Mitterand, Spanish Prime Minister Felipe Gonzales, British Prime Minister
John Major, German Chancellor Helmut Kohl, Chinese Premier Li Peng and
General Secretary of the United Nations, Boutros Boutros Ghali - within his
first several weeks in office.
In December 1992, The Wall Street Journal named him one of the
"Europeans of the Year", placing him in select company that included Queen
Elizabeth II, British Prime Minister John Major, and Russian economic
reformer, Prime Minister Yegor Gaidar.
In 1994, Czech Prime Minister Vaclav Klaus called on Mr. Panic for
advice on the continuing economic reform and democratic transformation of
the Czech Republic. In succeeding years, in his quest to bring economic
stability to Eastern Europe, he also met with the Presidents of Albania and
Romania.
During and subsequent to his tenure as Prime Minister, Mr. Panic
received extensive television and press coverage for his outspoken views on
achieving peace through economic cooperation and development, including:
over 25,000 articles in international papers, journals, and magazines; news
interviews on all major global TV networks (CBS, NBC, ABC, CNN, BBC,
Antenne, TV Beijing, Sky News, TVS, ZDF, RAI, etc.); and, numerous guest
appearances on talk shows (e.g., Larry King Live, This Week in Review, Good
Morning America, Charlie Rose, and Prime Time Live).
Mr. Panic has also addressed numerous international forums, world
organizations and government bodies both domestically and internationally,
including The Foreign Affairs Council (New York), The World Affairs Council
(Los Angeles, San Francisco, Orange County, Philadelphia), The Institute of
International Sociology (Gorizia, Italy) and The United Nations Industrial
Development Organization (Vienna, Austria).
His early years under totalitarianism and his role in fighting fascism
made Mr. Panic a strong champion of fundamental American values. On October
17, 1986, he was awarded the Congressionally sponsored "Ellis Island Medal
of Honor" by the Statue of Liberty-Ellis Island Foundation. This award
recognizes Mr. Panic's "distinguished service to humanity" as well as the
contributions which immigrants have made to the United States. In 1985, he
was appointed to the Board of Directors of the Freedoms Foundation at
Valley Forge. As part of his commitment to the fundamental principles of
democracy, Mr. Panic underwrote a "Bill of Responsibilities" monument,
which stands today at the Foundation's campus in Valley Forge,
Pennsylvania.
Mr. Panic makes major philanthropic contributions to various
universities, research programs, museums, political causes and charities.
[Graphic Omitted - Photograph of Jeff Cole]
JEFF COLE
Jeff Cole joined ICN in 2002 as the Vice President of Finance for
North America Operations. Prior to joining ICN, Mr. Cole served as CFO at
CQOS Inc., a networking device and services company. He also served as Vice
President Finance at a venture-backed telecom company. His background as a
senior financial executive includes experience in financing, financial and
strategic planning, and infrastructure implementation. Mr. Cole also spent
six years at Pricewaterhouse Coopers, where he managed the firm's West
Region Financial Management consulting practice. At PWC, he worked with
Fortune 1000 companies across multiple industries in the areas of
organizational restructuring, cost management, operational integration, and
process improvement.
Mr. Cole oversees all finance activities pertaining to U.S.
Pharmaceuticals, Canada, and the domestic and international Photonics
businesses.
Mr. Cole obtained his CPA while working in audit at Deloitte & Touche.
He has a MBA with distinction from the University of Michigan and a BS in
Accounting from the University of Southern California.
MANAGEMENT TEAM
[Graphic Omitted - Photograph of Christopher M. Timmons]
CHRISTOPHER M. TIMMONS
Christopher Timmons is Vice President of Legal. Mr. Timmons joined ICN
in January 1999 as Associate Counsel.
Mr. Timmons is responsible for all legal functions for ICN Americas,
including general corporate legal advice; contract review, preparation and
negotiation; legal support for acquisitions, including due diligence,
contract preparation and negotiation; and support to all departments in the
North America region.
Mr. Timmons obtained a Juris Doctor from Valparaiso University School
of Law and a BA from The University of Texas at Arlington.
[Graphic Omitted - Photograph of Enrique Iribarne]
ENRIQUE IRIBARNE
Enrique Iribarne is North America Controller. Mr. Iribarne joined ICN
in January 1981 as Senior Accountant. He has held a variety of positions
within ICN, including Assistant Controller, Assistant Treasurer, and ICN
Biomedicals Controller. Prior to working with ICN, he worked with Arthur
Andersen & Co.
Mr. Iribarne manages the budgeting process, conducts all forecasting
activities, develops and maintains all actual reporting and variance
analyses for ICN North America.
Mr. Iribarne holds a licentiate in Business Administration (BA) degree
and a public accounting degree from the University of Buenos Aires,
Argentina.
MANAGEMENT TEAM
[Graphic Omitted - Photograph of George Kateyiannis]
GEORGE KATEYIANNIS
George Kateyiannis is Vice President of Corporate Development, North
America. Mr. Kateyiannis joined ICN in January 2001 as Director of
Corporate Development, North America. He has worked for Mattel, Sunrise
Medical and The Westec Security Group in various positions, ranging from
Senior Financial Analyst to Manager of Corporate Development. At ICN he has
served as interim General Manager of ICN's device sales business in the US.
Mr. Kateyiannis now serves as General Manager of ICN's Medical
Alliance mobile services business. His responsibilities also include
oversight of product licensing, mergers and acquisitions for ICN's North
American pharmaceuticals and Photonics businesses. In addition, he also
assists in the implementation of strategic plans through the ongoing
analysis of various initiatives in ICN Photonics, consumer marketing of
devices and pharmaceuticals, and post-acquisition performance audits.
Mr. Kateyiannis obtained a MBA in finance from the University of
Chicago and a MEng in electrical engineering from Cornell University. He
received a BS degree in electrical engineering from Michigan State
University.
[Graphic Omitted - Photograph of Adam Jerney]
ADAM JERNEY
Adam Jerney is President and Chief Operating Officer of ICN. He was
appointed President in 1997 and has been COO since 1980. Mr. Jerney also
served as President and Chief Executive Officer of ICN from July 1992 to
March 1993 while Milan Panic served as Prime Minister of Yugoslavia.
Born in Budapest, Hungary during World War II, Mr. Jerney escaped to
Austria after the revolution in 1956. He graduated in biochemistry from the
University of Geneva, Switzerland, where he also conducted postgraduate
research in endocrinology with a scholarship from the United Nations.
Later, he studied business administration and marketing in Geneva and
Paris.
Mr. Jerney joined ICN in Europe in 1973 after reading an article in
Fortune magazine about ICN's revolutionary research projects and expansion
plans. Prior to that, he had held positions of increasing responsibility at
Hoffman-LaRoche, the Swiss-based pharmaceutical company. Before leaving
Hoffman-LaRoche, he served as Director of Worldwide Product Management in
the company's corporate headquarters in Basel, Switzerland.
In 1981, Mr. Jerney and his family moved to the United States to
manage worldwide operations for ICN. He is an international businessman who
is conversant in six languages and is active in the World Affairs Council
of Orange County.
Mr. Jerney has been a member of the ICN Board of Directors since 1992.
MANAGEMENT TEAM
[Graphic Omitted - Photograph of Javier Rovalo]
JAVIER ROVALO
Javier Rovalo, M.D., is Vice President and General Manager of North
America and Latin America. Dr. Rovalo has been an integral part of ICN for
more than 15 years. He has broad experience in the pharmaceutical industry,
having served in positions of increasing responsibility in medical,
marketing and management for several major pharmaceutical firms in Mexico.
He began his career with Mexico-based Laboratorios Senosiain, where he
served as Medical Director for six years. He then joined Boehringer Group
as Medical Director, quickly moving upward in position to Marketing
Director of Mexico, Marketing Director of Central America, and Marketing
Director of Spain. Dr. Rovalo held the position of General Manager of
Laboratorios Grossman, a near-bankrupt company based in Mexico when he
later turned around.
Dr. Rovalo is responsible for ICN's operations in Canada, the United
States, Mexico and Latin America. He has been a member of the Board of the
Latin American Work Group (the Mexican branch of the U.S. Pharmaceutical
Manufacturers Association) during the last 14 years and has served as its
Treasurer for six years. He was also President of the Liaison Committee
with the Academy of Medicine. Additionally, he serves as an advisor for the
pharmaceutical industry in Mexico through the Pharmaceutical Chamber and as
an advisor to three Mexico-based medical journals.
Dr. Rovalo received his medical degree from National University in
Mexico City, where ICN has its Latin American headquarters.
[Graphic Omitted - Photograph of Chris Dax]
CHRIS DAX
Chris Dax is Vice President of U.S. Sales and Marketing. Mr. Dax
joined ICN in July 2001. His previous experience in the pharmaceutical
industry includes his work with Novartis, as the head of the Dermatology
Marketing department, where he launched Lamisil tablets in the oral
antifungal market, with sales today of over $500 million in the U.S. and $1
billion worldwide. Mr. Dax also served as the Director of Marketing for
Allergan, Inc., where he successfully launched Tazorac, a novel retinoid
for acne and psoriasis with sales of over $50 million. While with Allergan,
Inc., Mr. Dax was also instrumental in the development of its Dermatology
division, culminating in the photodamage indication for Tazorac and the
cosmetic indication for Botox.
Mr. Dax now leads all marketing and sales for the U.S. Pharmaceuticals
business, including all device marketing.
Mr. Dax holds a MBA from Case Western Reserve University and a BS
degree in marketing from Lehigh University.
MANAGEMENT TEAM
[Graphic Omitted - Photograph of Marc Clement]
MARC CLEMENT
Marc Clement, Ph.D., is Senior Vice President, ICN Photonics LTD
Research and Development.
Dr. Clement founded SLS, Ltd. (now ICN Photonics) in 1989. He
possesses a Ph.D. in Laser Physics and is a member of the Institute of
Physics and a fellow of the Institute of Electronic Engineers. Dr. Clement
is a highly accomplished scientist and inventor.
Dr. Clement chairs our Medical Advisory Board and also serves as
Chairman of the Board of ICN Photonics LTD. He currently oversees all
Photonics research and development, product design and development,
clinical trials and FDA filings, publication execution, and intellectual
property.
[Graphic Omitted - Photograph of Mark Taylor]
MARK TAYLOR
Mark Taylor is Executive Vice President of ICN North America. He is
responsible for the operating performance of three divisions that comprise
the North American Business Unit: US Pharma, ICN Canada, and the worldwide
Photonics light-based therapy business. This unit had consolidated revenue
of $174 million in fiscal 2001.
Since taking this post, Mr. Taylor has refocused the company's growth
strategy on the rapidly growing skin aging market. In 2001 several
technologies and companies were acquired to give ICN a commanding presence
in the market with broad product offerings in the Rx, direct to physician,
and aesthetic elective segments of dermatology and plastic surgery.
Mr. Taylor rejoined ICN in 1999 from Watson Pharmaceuticals, where he
served for two years as Vice President Business Development. In that
capacity, Mr. Taylor participated in numerous acquisitions and licensing
transactions as Watson formed its specialty pharmaceuticals business in
dermatology, neurology, and women's health.
From 1994 until joining Watson, Mr. Taylor served in management
positions within business development at ICN. He was responsible for
spearheading three acquisitions within the biomedicals unit and played key
roles in the Ribavirin licensing pact with Schering Plough, as well as the
1995 roll-up of ICN's three majority-owned business units: Viratek, SPI
Pharmaceuticals, and ICN Biomedicals.
Mr. Taylor is a graduate of Tulane University. He spent 8 years on
Wall Street with several top tier investment banks in retail and
institutional sales, specializing in biotechnology and health care.
Mr. Taylor is married with three daughters. He is active in a number
of youth development programs.
MANAGEMENT TEAM
[Graphic Omitted - Photograph of Ajit Desai]
AJIT DESAI
Ajit Desai is Vice President and General Manager Worldwide Photonics
Operations. Mr. Desai joined ICN in April 2001 as VP of Corporate
Development/Operations. He has an extensive background in business
management and has been in the hi-tech industries for more than two
decades, including his work with Shell Oil, Triton Biosciences, and Western
Sky Industries. Mr. Desai has held various positions in operations
including Director Business Development, General Manager, Vice President,
and Senior Vice President.
Mr. Desai oversees all ICN Photonics LTD manufacturing, quality
control, regulatory, international sales and marketing, finance, and
business development.
Mr. Desai holds a MSE from Princeton University and a MBA from Harvard
Business School.
[Graphic Omitted - Photograph of Andre Camilli]
ANDRE CAMILLI
Andre Camilli is the General Manager of ICN Canada. Mr. Camilli joined
ICN in February 1989 as Director of Finance. His responsibilities included
Purchasing and MIS. Mr. Camilli also held the position of Vice President of
Finance and Administration, which included the addition of the Human
Resources division, before becoming General Manager. He has also worked as
Secretary-Treasurer and Controller for a furniture company.
Mr. Camilli's mandate continues to be the high performance of the
division and the development of the Canadian employees in order to serve
both ICN Canada's customers and ICN Pharmaceuticals, Inc. Under his
direction, ICN Canada has emerged as a choice organization for its
customers and employees.
Mr. Camilli studied business and management at Sir George William
University and at the Executive Development Institute of McGill University
in Quebec, Canada.
[Graphic Omitted - Ribapharm Logo]
I. Board of Directors
HANS THIERSTEIN, our Chairman of the Board, was Chairman of the Board of
Ares-Serono from 1992 until 1999 and a board member since 1997. Mr.
Thierstein was Chief Financial Officer of Ares-Serono from 1980 until 1996.
KIM CAMPBELL, PC, QC, was a director of ICN from November 2, 2000 until May
30, 2001. Since January 2001, Ms. Campbell has been a fellow at the Center
for Public Leadership at the John F. Kennedy School of Government at
Harvard University. From September 2000 until January 2001, Ms. Campbell
was an author and lecturer. She was the Consul General of Canada in Los
Angeles from September 1996 until September 2000. From February 1996 until
September 1996, she was an author and lecturer. Ms. Campbell held several
positions in the Canadian Government, including Prime Minister from June
1993 to November 1993, Minister of Justice and Attorney General from
February 1990 to January 1993, and Minister of National Defense from
January 1993 to June 1993. Ms. Campbell also serves on the governing board
of Harvard University, Northeastern University, UCLA and the Thunderbird
American Graduate School of International Management.
ROGER GUILLEMIN, MD, PH.D., was a member of ICN's board of directors from
1989 until the completion of this offering. Dr. Guillemin has been adjunct
professor of medicine at the University of California College of Medicine
in San Diego since 1970. He was a distinguished scientist at the Whittier
Institute in La Jolla, California from March 1989 to 1995 and was resident
fellow and Chairman of the Laboratories for Neuroendocrinology at the Salk
Institute in La Jolla, California. He was awarded the Nobel Prize in
Medicine in 1977 and in the same year, was presented the National Medal of
Science by the President of the United States. He was affiliated with the
department of physiology at Baylor College of Medicine in Houston, Texas
from 1952 to 1970. He is a member of the National Academy of Science, and a
fellow of the American Association for the Advancement of Science. He has
also served as resident of the American Endocrine Society.
ARNOLD H. KROLL has been a Senior Advisor of Burnham Securities since May
2000. From March 1997 through April 2000, he was a Senior Advisor at
Schroder & Co. During that time, Mr. Kroll represented ICN in three
issuances of senior notes, including ICN's 8 3/4 senior notes due 2008. He
was a managing director and Schroder & Co. and its predecessors from 1988
to 1997. Prior to that time, he was a managing director of L.F.Rothschild
and its predecessor fom 1972 to 1988. Mr. Kroll is a member of the board of
directors of National Airlines and Heynetwork.com.
ROBERTS A. SMITH, PH.D., was a director of ICN from 1960 until May 30,
2001. Dr. Smith was President of Viratek, Inc., then a subsidiary of ICN,
and Vice President, Research and Develoment of SPI Pharmaceuticals, Inc.,
then a subsidiary of ICN through 1992. For more than eleven years, Dr.
Smith was professor of chemistry and biochemistry at the University of
California at Los Angeles.
JOHN VIERLING, MD, has been on the Executive Committee of the board of
directors for the American Liver Foundation since 1992. He has been a
medical professor in residence at the University of California, Los
Angeles, since July 1996 and a director of hepatology at Cedars-Sinai
Medical Center since 1990.
II. MANAGEMENT
JOHNSON LAU, MD, PH.D., our Chief Executive Officer, Chief Scientific
Officer was Senior Vice President, Research and Development of ICN from
March 2000 until the completion of this offering. Before joining ICN, he
was a Senior Director in Antiviral Research at the Schering-Plough Research
Institute from 1997 to February 2000. He served a faculty member at the
University of Florida from 1992 to 1996. From 1989 to 1991, he served as a
faculty member at the Institute of Liver Studies, King's College Hospital
School of Medicine and Dentistry, University of London.
THOMAS STANKOVICH, our President, Chief Operating Officer and Chief
Financial Officer was Vice President/Financail Controller, ICN Europe, AAA
of ICN from 1996 until the completion of this offering. Prior to that time,
he held various positions at ICN since 1986, including Director of
Financial Reporting, Corporate, Assistant Controller, Senior Accountant,
Assistant to the Chairman of the Board and Financial Analyst.
ROGER D. LOOMIS, JR., our Senior Vice President and General Counsel and
Secretary, was Senior Vice President, Law, of ICN from November 2001 until
the completion of this offering. Prior to joining ICN, Mr. Loomis was
President of Advanced Document Services LLC in Los Angeles since 2000.
Prior to that, Mr. Loomis was of Counsel to the law firm of Coudert
Brothers in Los Angeles since 1997, and, prior thereto, a shareholder of
the law firm of Buchalter, Nemer, Feels and Younger in Los Angeles since
1995.
ICN PHARMACEUTICALS, INC. - CONSOLIDATED EXHIBIT V
ACCOUNTS RECEIVABLE
($ IN 000's)
[Line Chart Omitted]
----------------------------------------------------------------------
TRADE RECEIVABLES
------------------------------------------------------------------------------------------------------------------------
Unbilled AGING OF TRADE ACCOUNTS RECEIVABLE
Month A/R and --------------------------------------------------------
Balance (1) Other Balance Current 0-30 30-60 Over 60 (2)
------------------------------------------------------------------------------------------------------------------------
March 2001 $161,703 $14,135 $147,568 $117,653 $17,314 $6,839 $5,762
June 2001 172,158 20,461 151,697 117,245 20,979 6,404 7,069
September 2001 167,922 15,427 152,495 117,543 18,117 7,491 9,344
December 2001 196,248 16,462 179,786 149,663 16,890 5,880 7,353
March 2002 187,547 15,730 171,817 137,265 16,667 8,607 9,278
------------------------------------------------------------------------------------------------------------------------
(1) Excludes Schering-Plough receivables
(2) Net of Reserves
Q1 2001 Q2 2001 Q3 2001 Q4 2001 Q1 2002
Months Sales in Receivables 3.18 3.04 2.98 3.18 3.02
ICN PHARMACEUTICALS, INC. - CONSOLIDATED EXHIBIT VI
INVENTORIES
($ IN 000's)
---------------------- -------------------------------------------------------------------
FY 2001 Q1 2001 Q2 2001 Q3 2001 Q4 2001 Q1 2002 *
---------------------- -------------------------------------------------------------------
Month's Sales in Inv.
Actual 6.9 6.9 7.8 6.0 6.8
---------------------- -------------------------------------------------------------------
Net Inventory
Actual 159,651 159,915 170,290 163,930 160,570
---------------------- -------------------------------------------------------------------
* Includes $3M increase due to Cool Touch acquisition
NUMBERS FOR GRAPH:
Q1 2001 Q2 2001 Q3 2001 Q4 2001 Q1 2002
OVER
Actual 159.651 159.915 170.29 163.93 160.57
Plan
MOVE FORMULAS UP:
Month's Sales in Inv. (1) 6.77205758
Actual
Net Inventory 160570
ICN PHARMACEUTICALS, INC. - CONSOLIDATED EXHIBIT VII
ACCOUNTS PAYABLE
($ IN 000's)
[Line Chart Omitted]
-----------------------------------------------------------------------------------------------------------------
Total Trade AGING OF ACCOUNTS PAYABLES
Month Accounts Accounts -----------------------------------------------
Payable Other Payable Current 0-30 30-60 Over 60
-----------------------------------------------------------------------------------------------------------------
March 2001 $45,126 $1,613 $43,513 $36,897 $2,883 $1,544 $2,189
June 2001 44,700 2,159 42,541 35,430 3,105 1,521 2,485
September 2001 52,953 1,495 51,458 41,078 3,719 4,205 2,456
December 2001 55,718 1,331 54,387 43,488 5,600 2,962 2,337
March 2002 52,819 2,404 50,415 44,457 3,348 438 2,172
-----------------------------------------------------------------------------------------------------------------
Q1 2001 Q2 2001 Q3 2001 Q4 2001 Q1 2002
Months Cost of Sales in 1.94 1.94 2.43 2.06 2.23
Payables
CIBC
WORLD MARKETS
EQUITY RESEARCH
May 2, 2002 Conference Update
---------------------------------------------
CONFERENCE UPDATE: ICN
PHARMACEUTICALS INC., ICN, STRONG
SPECIALITY PHARMACEUTICALS BUY(1)
[] Restructuring underway: 1) Ribapharm - IPO
done, 2) ICN Americas 3) ICN
International - IPO filed
[] Focused on dermatology pharma products,
"cosmecuticals", and laser resurfacing
treatments
Steven B. Gerber, M.D.
1 (310) 446-3655
Steven.Gerber@us.cibc.com
------------------------------------------------------------------------------
CIBC World Markets Inc. P.O. Box 500, 161 Bay Street, BCE Place, Toronto,
Canada M5J2SB =1-416-594-7000 / Find CIBC research on Bloomberg (CIER [go]),
CIBC World Markets Corp., 417 Fifth Avenue, New York, New York 10016-2204
+1-800-899-6726 / firstcall.com, multex.com, zacks.com and obewin.com
CONFERENCE UPDATE: ICN PHARMACEUTICALS INC., ICN, STRONG BUY(1) - MAY 2, 2002
------------------------------------------------------------------------------
4) This company has a convertible included in the CIBC World Markets Corp.
convertible universe.
-----------------------------
This report is issued and approved for distribution by (i) in the US, CIBC
World Markets Corp., a member of the NYSE and SIPC, (ii) in Canada, CIBC
World Markets Inc., a member of the IDA and CIPF, (iii) in the UK, CIBC
World Markets plc, which is regulated by the FSA, and (iv) in Australia,
CIBC World Markets Australia Limited, a member of the Australian Stock
Exchange and regulated by the ASIC (collectively, "CIBC World Markets").
Any questions should be directed to your local sales representative.
Every state in the United States, province in Canada and most countries
throughout the world have their own laws regulating the types of securities
and other investment products which may be offered to their residents, as
well as the process for doing so. As a result, some of the securities
discussed in this report may not be available to every interested investor.
Accordingly, this report is provided for informational purposes only, and
does not constitute an offer or solicitation to buy or sell any securities
discussed herein in any jurisdiction where such offer or solicitation would
be prohibited. No part of any report may be reproduced in any manner
without the prior written permission of CIBC World Markets.
This document and any of the products and information contained herein are
not intended for the use of private investors in the UK. Such investors
will not be able to enter into agreements or purchase products mentioned
herein from CIBC World Markets PLC.
The comments and views expressed in this document are meant for the general
interests of clients of CIBC World Markets Australia Limited.
The information and any statistical data contained herein were obtained
from sources that we believe to be reliable, but we do not represent that
they are accurate or complete, and they should not be relied upon as such.
All estimates, opinions and recommendations expressed herein constitute
CIBC World Markets' judgement as of the date of this report and are subject
to change without notice. The securities mentioned in this report may not
be suitable for all types of investors, their prices, value and/or income
they produce may fluctuate and/or be adversely affected by exchange rates.
Since the levels and bases of taxation can change, any reference in this
report to the impact of taxation should not be construed as offering tax
advice; as with any transaction having potential tax implications, clients
should consult with their own tax advisors. Past performance is no
guarantee of future results.
This report does not take into account the investment objectives, financial
situation and particular needs of any particular client of CIBC World
Markets. Before making an investment decision on the basis of any
recommendation made in this report, the recipient should consider whether
such recommendation is appropriate given the recipient's particular
investment needs, objectives and financial circumstances. To allow CIBC
World Markets to take into consideration a recipient's objectives,
financial situation and particular needs, CIBC World Markets suggests that
prior to acting on any of the recommendations herein, you contact one of
our client advisers in your jurisdiction to discuss your particular
circumstances.
A CIBC World Markets company or its shareholders, directors, officers
and/or employees, may have a long or short position or deal as principal in
the securities discussed herein, related securities or in options, futures
or other derivative instruments based thereon. A CIBC World Markets
company may (i) have acted as initial purchaser or placement agent for a
private placement of the securities of any company mentioned in this
report, (ii) from time to time solicit from or perform financial advisory,
investment banking or other services for any such company, or (iii) have
lending or other credit relationships with the same.
Although each company issuing this report is a wholly owned subsidiary of
Canadian Imperial Bank of Commerce ("CIBC"), each is solely responsible for
its contractual obligations and commitments, and any securities products
offered or recommended to or purchased or sold in any client accounts (i)
will not be insured by the Federal Deposit Insurance Corporation ("FDIC"),
the Canada Deposit Insurance Corporation or other similar deposit
insurance, (ii) will not be deposits or other obligations of CIBC, (iii)
will not be endorsed or guaranteed by CIBC, and (iv) will be subject to
investment risks, including possible loss of the principal invested. The
CIBC trademark is used under license.
2002 CIBC World Markets Corp, and CIBC World Markets Inc. All rights
reserved. Unauthorized use, duplication or disclosure is prohibited by law
and may result in prosecution.
3 CIBC World Markets
------------------------------------------------------------------------------
REPRINTED FROM THE WALL STREET JOURNAL.
------------------------------------------------------------------------------
THURSDAY, FEBRUARY 26, 1998 (C) Dow Jones & Company, Inc. All Rights
Reserved.
------------------------------------------------------------------------------
THE WALL STREET JOURNAL
--------------------------SHAREHOLDER SCOREBOARD------------------------------
THE QUEST FOR SHAREHOLDER VALUE
THIRD ANNUAL GUIDE TO AMERICA'S
BEST, WORST COMPANIES
HOW 1,000 U.S. COMPANIES MEASURE UP ON TOTAL RETURN TO THEIR INVESTORS
By C. Frederic Wiegold
-------------------------
(the following has been excerpted:)
NOBODY EVER SAID it was easy to track down shareholder value.
The most experienced professional investors often fail in their efforts
to discover hidden treasure as they trek through a forbidding jungle of
financial statements, market analyses and insider jargon.
Success, however, can be enormously rewarding. Even individuals who do
most of their investing through mutual funds often can benefit from
sprinkling their portfolios with a few well-chosen individual stocks.
But investors aren't the only people on the trail of shareholder value
these days. As companies across the U.S. increasingly tie executive
compensation to performance through stock options and other means, more and
more corporate managers are seeking this Holy Grail.
What both investors and managers need is a guide. That's the idea
behind The Wall Street Journal's third annual Shareholder Scoreboard, a
ranking of 1,000 U.S. companies in 94 industries.
The Scoreboard seeks to identify the best U.S. companies from the
perspective of investors and corporate executives. Investors can use the
information in this special section to see how the stocks in their own
portfolios measure up and, perhaps, identify potential investment
opportunities that warrant further research. Corporate managers can see
how their own companies -- and their competitors -- are doing in today's
frequently volatile market.
The yardstick used in the Shareholder Scoreboard is total return to
stockholders, including both changes in share prices and reinvested
dividends. There are, of course, many ways to rank companies. But in the
world of business and investing, how companies treat shareholders is one of
the most useful ways to keep score.
Indeed, Christopher C. Kenney, a vice president of LEK/Alcar
Consulting Group LLC, which ranked the companies included in this special
report, calls shareholder return "the single most important measure." It
is the measure "most relevant to shareholders and most relevant to managers
trying to manage for shareholder value," Mr. Kenney says. LEK/Alcar is an
international strategy-consulting firm. Mr. Kenney, who is based in the
firm's Chicago office, helped create the Shareholder Scoreboard and
directed the ranking project.
Each company on the Shareholder Scoreboard is given a letter grade
that reflects its stock-market performance over one-year, three-year,
five-year and 10-year periods through Dec. 31, 1997. An A means the
company was in the top 20% of the ranking. A grade of B is a
second-quintile showing, and so on through E, the bottom quintile.
TWO-STEP SELECTION PROCESS
The 1,000 companies on the Shareholder Scoreboard were selected by
LEK/Alcar in a two-step process. First, it incorporated all U.S. stocks
included at the end of 1997 in the Dow Jones Global Indexes, a family of
world-wide stock-market indexes calculated by Dow Jones & Co., publisher of
The Wall Street Journal. That produced a list of 718 companies with a
representative sampling in each of 94 industries. It then added the
largest 282 U.S. corporations, based on market capitalization, that weren't
included in the Dow Jones Global Indexes, relying on data from Media
General Financial Services Inc., a unit of Media General Inc., Richmond,
Va.
(over please)
------------------------------------------------------------------------------
THE PUBLISHER'S SALE OF THIS REPRINT DOES NOT CONSTITUTE OR IMPLY ANY
ENDORSEMENT OR SPONSORSHIP OF ANY PRODUCT, SERVICE, COMPANY OR
ORGANIZATION. JOURNAL REPRINTS (609) 520-4328 P.O. BOX 300 PRINCETON, N.J.
00543-0300. DO NOT EDIT OR ALTER REPRINTS-REPRODUCTIONS NOT PERMITTED
----------------------------DOW JONES-----------------------------------------
THE WALL STREET JOURNAL
--------------------------SHAREHOLDER SCOREBOARD------------------------------
Total market capitalization: $8,832 trillion -- more than 85% of the
market value of all publicly traded U.S. stocks as measured by the Wilshire
5000 index.
In creating the rankings, LEK/Alcar relied primarily on pricing
information from IDD/Tradeline, a Waltham, Mass., unit of Down Jones. To
assure accuracy, the consulting firm cross-checked the data againat
information from past years and a variety of other sources.
LEK/Alcar consultant Robert Rourke and associates Christopher C. Onan
and Todd R. Maxwell were in charge of data gathering and calculations.
Questions about the rankings can be addressed to LEK/Alcar's Boston office
(800-929-4535; dial zero as soon as you're connected).
One way to use the Shareholder Scoreboard is as a benchmark for
judging the performance of stocks in your own portfolio. To do that, you
need to know the break points:
o For calendar year 1997, it took a total return of at least 62.5% to earn
an A, 40.2% to earn a B, 24.6% to earn a C and 6.4% to earn a D. Less than
that and the company got an E.
o For the three years ended Dec. 31, 1997, it took an average compound
annual total return of at least 48.3% to get an A, 33.1% to get a B, 22.9%
to get a C and 13.3% to get a D.
o For the five years through 1997, a stock needed an average compound
annual total return of at least 31.6% to merit an A, 22.4% for a B, 15.5%
for a C and 9.3% for a D.
o Finally, for the 10 years through 1997, it took an average compound
annual total return of at least 26% to earn an A, 20% to earn a B, 15.7% to
earn a C and 11% to earn a D.
- Mr. Wiegold is The Wall Street Journals personal-finance editor.
ALPHABETICAL UST1NG OF 1,000 COMPANIES WITH 1-, 3-,5- AND 10-YEAR AVERAGE RETURNS
----------------------------------------------------------------------------------------------------------------------------------
1 YEAR 3 YEAR 5 YEAR 10 YEAR
COMPANY NAME INDUSTRY GROUP RETURN (RATING) RETURN (RATING) RETURN (RATING) RETURN (RATING)
----------------------------------------------------------------------------------------------------------------------------------
12 TECHNOLOGIES INC. Software +37.9 C N.A. -- N.A. -- N.A. --
----------------------------------------------------------------------------------------------------------------------------------
IBP INC. Food -13.3 E +11.9 E +16.5 C +14.9 D
----------------------------------------------------------------------------------------------------------------------------------
ICN PHARMACEUTICALS INC. Pharmaceuticals +1525 A +46.0 B +53.4 A +24.4 B
----------------------------------------------------------------------------------------------------------------------------------
IKON OFFICE SOLUTIONS Industrial Services -31.9 E +4.7 E +15.6 C +15.4 D
----------------------------------------------------------------------------------------------------------------------------------
ILLINOIS CENTRAL CORP. Railroads +9.3 D +21.7 D +18.9 C N.A. --
----------------------------------------------------------------------------------------------------------------------------------
ILLINOIS TOOL WORKS Industrial, Diversified +51.9 B +41.5 B +31.4 8 +23.6 B
----------------------------------------------------------------------------------------------------------------------------------
ILLINAVA CORP. Electric Utilities-Central +3.4 E +12.2 E +8.5 E +6.5 E
----------------------------------------------------------------------------------------------------------------------------------
IMC GLOBAL INC. Chemicals, Specialty -15.5 E +15.4 D +9.7 0 N.A. --
----------------------------------------------------------------------------------------------------------------------------------
IMMUNEX CORP. Biotechnology +176.9 A +53.7 A +13.6 D +20.4 B
----------------------------------------------------------------------------------------------------------------------------------
INFORMIX CORP. Software -76.7 E -33.4 E -12.1 E +4.6 E
----------------------------------------------------------------------------------------------------------------------------------
INGERSOLL-RAND CO. Industrial, Diversified +38.6 C +26.7 C +18.0 C +15.7 C
----------------------------------------------------------------------------------------------------------------------------------
INGRAM MICRO INC. CI A Specialty Retailers +26.6 C N.A. -- N.A. -- N.A. --
----------------------------------------------------------------------------------------------------------------------------------
INLAND STEEL INDUSTRIES LOT. Steel -13.6 E -20.7 E -5.0 E -4.3 E
----------------------------------------------------------------------------------------------------------------------------------
INTEL CORP. Semiconductors & Related +7.5 D +64.2 A +45.7 A +35.9 A
----------------------------------------------------------------------------------------------------------------------------------
INTERPUBLIC GROUP OF COS. Advertising +592 B +34.4 8 +10 C +23.8 B
----------------------------------------------------------------------------------------------------------------------------------
INTERSTATE BAKERIES Food +53.7 B +78.9 A +34.2 A N.A. --
----------------------------------------------------------------------------------------------------------------------------------
INTIMATE BRANDS INC. CI A Apparel Retailers +44.0 B N.A. -- N.A. -- N.A. --
----------------------------------------------------------------------------------------------------------------------------------
LNTI. BUSINESS MACHINES Computers +39.3 C +432 8 +35.1 A +9.4 E
CORP.
----------------------------------------------------------------------------------------------------------------------------------
INTL. FLAVORS A FRAGRANCES Cosmetics/Penonal Care +17.8 D +6.6 E +10.3 D +16.7 C
----------------------------------------------------------------------------------------------------------------------------------
INTL. GAME TECHNOLOGY Recreation-Other +39.3 C +18.0 D +0.5 E +47.8 A
----------------------------------------------------------------------------------------------------------------------------------
INTL. PAPER CO Paper Products +8.7 D +7.0 E +7.8 E +10.3 E
----------------------------------------------------------------------------------------------------------------------------------
INTUIT INC. Software +31.0 C +7.3 E N.A. -- N.A. 7
----------------------------------------------------------------------------------------------------------------------------------
LOMEGA CORP. Computers +43.2 B +258.0 A +90.8 A +60.7 A
----------------------------------------------------------------------------------------------------------------------------------
IPALCO ENTERPRISES INC Electric Utilities-Central +58.5 B +34.5 B +18.1 C +18.4 C
----------------------------------------------------------------------------------------------------------------------------------
ITT CORPORATION Lodging +90.5 A N.A. -- N.A. -- N.A. --
----------------------------------------------------------------------------------------------------------------------------------
ITT INDUSTRIES INC. Auto Parts & Equipment +30.9 C +25.0 C +22.5 8 +17.8 C
Sources: LEK/Alcar Consulting Group LLC, IDD/Tradeline, Media General Financial Services Inc.
THE WALL STREET JOURNAL
--------------------------SHAREHOLDER SCOREBOARD------------------------------
THE BEST PERFORMERS
1 YEAR
COMPANY NAME STOCK SYMBOL RETURN
----------------------------------------------------------------------------
Yahoo Inc. YH00 +511.0%
----------------------------------------------------------------------------
Arterial Vascular Engr. Inc. AVEI +420.0
----------------------------------------------------------------------------
Best Buy Co. Inc. BBY +247.1
----------------------------------------------------------------------------
Dell Computer Corp. DELL +216.2
----------------------------------------------------------------------------
Cablevision Systems CI A CVC +212.7
----------------------------------------------------------------------------
Heftel Broadcasting CI A HBCCA +196.8
----------------------------------------------------------------------------
Immunex Corp. IMNX +176.9
----------------------------------------------------------------------------
America Online Inc. AOL +172.2
----------------------------------------------------------------------------
Navistar International NAV +171.9
----------------------------------------------------------------------------
Airborne Freight Corp. ABF +167.7
----------------------------------------------------------------------------
US Airways Group Inc. U +167.4
----------------------------------------------------------------------------
Caliber Systems Inc. CBB +158.0
----------------------------------------------------------------------------
Keane Inc. KEA +155.9
----------------------------------------------------------------------------
CompuWare Corp. CPWR +155.4
----------------------------------------------------------------------------
ICN Pharmaceuticals Inc. ICN +152.5
----------------------------------------------------------------------------
Allied Waste Inds. Inc. AWIN +152.0
----------------------------------------------------------------------------
Barnes & Noble Inc. BKS +147.2
----------------------------------------------------------------------------
Royal Caribbean Cruises Ltd. RCL +131.6
----------------------------------------------------------------------------
Donaldsn Lufkin & Jenrette DLJ +123.2
----------------------------------------------------------------------------
National-Oilwell Inc. NOI +122.4
----------------------------------------------------------------------------
Rexall Sundown Inc. RXSD +122.1
----------------------------------------------------------------------------
Cincinnati Financial Corp. CINF +121.2
----------------------------------------------------------------------------
Coca-Cola Enterprises CCE +120.7
----------------------------------------------------------------------------
Clear Channel Communications CCU +119.9
----------------------------------------------------------------------------
Family Dollar Stores FDO +119.2
----------------------------------------------------------------------------
Sources: LEK/Alcar consulting Group, IDD/Tradeline, Media general Financial
Services
THE WALL STREET JOURNAL
--------------------------SHAREHOLDER SCOREBOARD------------------------------
INDUSTRY BY INDUSTRY
SURPLUS/ SURPLUS/ 10 YEAR SURPLUS/
1 YEAR DEFICIT RELATIVE 5 YEAR DEFICIT RELATIVE AVERAGE DEFICIT RELATIVE
COMPANY NAME RETURN TO INDUSTRY RETURN TO INDUSTRY RETURN TO INDUSTRY
-------------------------------------------------------------------------------------------------------------------------
PHARMACEUTICALS
-------------------------------------------------------------------------------------------------------------------------
ICN Pharmaceuticals Inc. +152.5 +94.4 +53.4 +29.9 +24.4 +2.4
-------------------------------------------------------------------------------------------------------------------------
Lilly (Eli) & Co. +93.5 +35.4 +40.1 +16.6 +25.4 +3.5
-------------------------------------------------------------------------------------------------------------------------
Pfizer Inc. +81.9 +23.8 +35.6 +12.0 +32.4 +10.5
-------------------------------------------------------------------------------------------------------------------------
Schering-Plough +95.0 +36.9 +34.6 +11.1 +29.8 +7.9
-------------------------------------------------------------------------------------------------------------------------
Warner-Lambert Co. +67.9 +9.8 +32.8 +9.2 +25.5 +3.5
-------------------------------------------------------------------------------------------------------------------------
Bristol Myers Squibb +77.1 +18.9 +28.1 +4.6 +21-0 -0.9
-------------------------------------------------------------------------------------------------------------------------
Johnson & Johnson +34.3 -23.9 +23.5 0 +24.0 +2.1
-------------------------------------------------------------------------------------------------------------------------
Merck & Co. +35.6 -22.5 +22.7 -0.8 +22.6 +0.7
-------------------------------------------------------------------------------------------------------------------------
American Home Products +33.5 -24.6 +22.2 -1.3 +20.0 -1.9
-------------------------------------------------------------------------------------------------------------------------
Pharmacia & Upjohn Inc. -4.8 -62.9 +14-7 -8.9 +9.6 -12.4
-------------------------------------------------------------------------------------------------------------------------
Forest Laboratories CI A +50.6 -7.6 +4.1 -19.4 +17.6 -4.3
-------------------------------------------------------------------------------------------------------------------------
Mylan Laboratories +27.1 -31.1 +0.8 -22.7 +23.5 +1.5
-------------------------------------------------------------------------------------------------------------------------
A1za Corp. +25.4 -32.7 -6.7 -30.2 +9.5 -12.5
-------------------------------------------------------------------------------------------------------------------------
Watson Pharmaceuticals Inc. +44.4 -13.8 NA -- N.A. --
-------------------------------------------------------------------------------------------------------------------------
PEER AVERAGE +58.2 -- +23.5 -- +21.9 --