A.L. LABORATORIES, INC.
One Executive Drive
P.O. Box 1399
Fort Lee, New Jersey 07024
MAILING DATE
August 22, 1994
Proxy Statement for Special Meeting of Stockholders
To Be Held on September 27, 1994This proxy statement (the "Proxy Statement") is furnished in connection
with the solicitation of proxies by the Board of Directors of A.L.
Laboratories, Inc., a Delaware corporation (the "Company"), for use at the
Special Meeting of Stockholders (the "Special Meeting") to be held on
September 27, 1994, at The Clinton Inn Hotel, 145 Dean Drive, Tenafly, New
Jersey 07670, at 11:00 a.m., local time, and at any adjournment or
postponement thereof.
The Special Meeting has been called to consider and vote upon, among
other things, the approval of a Restructuring Agreement (the "Restructuring
Agreement") dated as of May 16, 1994 by and between the Company and
Apothekernes Laboratorium AS, a corporation organized and existing under the
laws of the Kingdom of Norway ("A.L. Oslo"), and the transactions
contemplated thereby, which generally provide for the combination of the
related businesses of the Company and A.L. Oslo. The transactions
contemplated by the Restructuring Agreement (such transactions, each one
conditioned on the others, being referred to as the "Transactions") are (i)
the acquisition (the "Acquisition") by the Company of the pharmaceutical,
animal health, aquatic animal health and bulk antibiotics businesses of A.L.
Oslo (the pharmaceutical, animal health, aquatic animal health and bulk
antibiotics businesses of A.L. Oslo, including certain of its subsidiaries,
being collectively referred to herein as the "Related Norwegian
Businesses"), and (ii) certain actions (the "A.L. Labs Actions") to change
the Company's name, to increase the percentage of directors elected by the
holders of the Company's Class A Common Stock, par value $0.20 per share (the
"Class A Stock"), and to transfer substantially all of the Company's
operations to a newly formed subsidiary of the Company. A.L. Oslo, as the
beneficial owner of 100% of the outstanding shares of the Company's Class B
Common Stock, par value $0.20 per share (the "Class B Stock"), is currently
entitled to elect 75% of the members of the Company's Board of Directors and
to cast in excess of a majority of the votes generally entitled to be cast on
matters presented to the stockholders of the Company. Accordingly, A.L. Oslo
is able to control the Company. The Restructuring Agreement and the
Transactions, however, are subject to approval of the holders of a majority
of the outstanding shares of Class A Stock, voting as a separate class.
The Restructuring Agreement provides that the Company will acquire the
Related Norwegian Businesses for a consideration ("Consideration") equal to
(i) a cash amount, which is subject to adjustment under certain
circumstances, of 170,000,000 Norwegian kroner ($24.6 million based on an
exchange rate as of June 30, 1994) and (ii) warrants (the "Warrants") to
purchase 3,600,000 shares of Class A Stock. The cash portion of the
Consideration has already been reduced to NOK 160,000,000 ($23.1 million
based on an exchange rate as of June 30, 1994) as a result of a NOK
10,000,000 cash dividend paid by A.L. Oslo to its shareholders on June 8,
1994. The Acquisition will be made pursuant to an offer (the "Exchange
Offer") by the Company to the holders of ordinary shares of A.L. Oslo capital
stock ("A.L. Oslo Shares") to exchange for each share of capital stock (the
"New A.L. Oslo Shares") of a new corporation to be organized under the laws
of the Kingdom of Norway ("New A.L. Oslo") to be issued to them upon
consummation of the Demerger (as defined below) a pro rata portion of the
Consideration. If the Company obtains more than 90% of the outstanding New
A.L. Oslo Shares upon consummation of the Exchange Offer, it intends to
compel, as permitted under Norwegian law, any remaining holders of New A.L.
Oslo Shares who did not accept the Exchange Offer to sell such shares to the
Company. Immediately prior to the consummation of the Exchange Offer, A.L.
Oslo will transfer all of the assets and liabilities of the Related Norwegian
Businesses to New A.L. Oslo in a demerger (the "Demerger") under the laws of
the Kingdom of Norway. A Norwegian demerger is similar to a spin-off in the
United States in that it divides one company (A.L. Oslo) into two companies
(A.L. Oslo and New A.L. Oslo). Upon consummation of the Demerger, each
holder of A.L. Oslo Shares will be entitled to receive one New A.L. Oslo
Share for each A.L. Oslo Share held by such holder and A.L. Oslo will be
renamed, "A.L. Industrier A.S," and will use its best efforts to permit New
A.L. Oslo to use the name, “Apothekernes Laboratorium AS."The Restructuring Agreement further provides that the Company will
transfer substantially all of its operations, consisting primarily of its
animal health business and its administrative personnel and facilities, to a
newly formed, wholly owned subsidiary to be named "A.L. Laboratories, Inc."
("New A.L. Labs") (such transfer to New A.L. Labs being referred to as the
"New A.L. Labs Transfer"). In addition, if the Transactions are approved,
the Company's Certificate of Incorporation will also be amended (such
amendment being referred to as the "Certificate of Incorporation Amendment")
to increase the percentage of directors elected by the holders of the Class A
Stock from 25% to 33'A% of the Company's Board of Directors (rounded to the
nearest whole number, but not less than two members of the Company's Board of
Directors) (such provision being referred to as the "Class A Board
Representation Increase Provision") and to change the name of the Company to
"A.L. Pharma Inc." (the "Name Change").
A detailed description of the Restructuring Agreement and the
Transactions is set forth in this Proxy Statement.
TABLE OF CONTENTS
Page
SUMMARY 1
The Special Meeting 1
The Transactions 3
Election of Directors 10
Certain Historical and Pro Forma Financial Data 11
THE SPECIAL MEETING 18
Date, Time and Place18
Purpose of the Special Meeting 18
Record Date 18
Quorum 18
Required Vote 19
Proxies 20
Manner of Solicitation 21
No Dissenters' Rights 21
THE TRANSACTIONS 21
The Parties to the Transactions 21
Benefits to be Obtained from the Transactions by Certain Interested Persons 22
Transactions Between the Company and A.L. Oslo 22
The Transactions 23
Financing of the Transactions and Refinancing of Indebtedness of the Related
Norwegian Businesses 26
Unaudited Pro Forma Condensed Combined Financial Statements 27
Conflicts of Interest 40
Background of the Transactions 40
Recommendations of the Company's Board of Directors; Reasons
for the Transactions 48
Opinion of the Special Committee's Financial Advisor 52
Accounting Treatment of the Transactions 56
Certain Federal Income Tax Consequences of the Transactions 56
Regulatory Approvals 57
Conduct of the Business and Management of the Company Following theClosing 57
Certain Information Regarding the Related Norwegian Businesses 58
DESCRIPTION OF WARRANTS AND CLASS A STOCK 74
Warrants 74
Class A Stock 76
DESCRIPTION OF CERTAIN AGREEMENTS 77
Certain Provisions of the Restructuring Agreement 77
The Demerger Agreement 83
Sk0ven Lease 83
Administrative Services Agreement 85
ELECTION OF DIRECTOR 85
Election of Director 85
Nominee for Class A Director 85
Members of the Companx's Board of Directors 86
Certain Relationships 87
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS 88
INDEPENDENT AUDITORS 90
STOCKHOLDERS' PROPOSALS FOR THE 1995 ANNUAL MEETING 90
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE 90
OTHER BUSINESS 91
EXHIBITS:
Exhibit A -Restructuring Agreement, dated as of May 16, 1994, between A.L. Laboratories, Inc. and Apothekernes Laboratorium A.S
Exhibit B -Form of Warrant Agreement between A.L. Pharma Inc. (formerly known as A.L. Laboratories, Inc.) and The First National Bank of
Boston, as warrant agent
Exhibit C -Form of Demerger Agreement between Apothekernes Laboratorium A.S
(to be renamed A.L. Industrier A.S) and Apothekernes Laboratorium AS
(under incorporation)
Exhibit D -Opinion of Lehman Brothers
Exhibit E -Combined Financial Statements of the Related Norwegian Businesses
SUMMARY
The following is a brief summary of certain information contained
elsewhere in this Proxy Statement. This summary is not intended to be a
complete description of the matters covered in this Proxy Statement and is
subject to and qua4fied in its entirety by reference to the more detailed
information and financial statements contained elsewhere in this Proxy
Statement, including the Exhibits hereto and the documents incorporated
herein by reference. Stockholders are urged to read carefully the entire
Proxy Statement, including the Exhibits. As used in this Proxy Statement,
the terms the "Company", "A.L. Oslo" and "New A.L. Oslo" refer to such
corporations respectively and, where the context requires, such entities and
their respective subsidiaries, except that for purposes of this Proxy
Statement the Company is not considered a subsidiary of A.L. Oslo. As used
in this Proxy Statement, "NOK" refers to Norwegian kroner and "$" or
"dollars" refers to United States dollars. Except as otherwise specified
herein, all Norwegian kroner amounts that are also expressed in United States
dollars have been translated into United States dollars using the June 30.
1994 currency exchange rate (or NOK 6. 9219 to $1.00).
The Special Meeting
Time, Date and Place. The Special Meeting will be held on Tuesday,
September 27, 1994 at The Clinton Inn Hotel, 145 Dean Drive, Tenafly, New
Jersey 07670, at 11:00 a.m., local time.
Purpose of the Special Meeting. The purpose of the Special Meeting is
to consider and act upon the following matters:
1. Approval of the Restructuring Agreement and the Transactions
(other than the Certificate of Incorporation Amendment). (Proposal #1) See
"The Transactions."
2. If Proposal # 1 is approved, approval of the Class A Board
Representation Increase Provision. (Proposal #2) See "The Transactions A.L.
Labs Actions."
3. If Proposal #1 is approved, approval of the Name Change.
(Proposal #3) See "The Transactions - A L. Labs Actions."
4. If Proposal # 1 is approved, election by the holders of Class A
Stock of one director to the Company's Board of Directors to hold office
effective upon consummation of the Acquisition until the 1995 Annual Meeting
of Stockholders and until such person's successor shall be elected and shall
qualify. (Proposal #4) See "Election of Director."
5. Transaction of such other business as may properly come before
the meeting or any adjournments or postponements thereof.
If Proposal #1 is not approved by the Company's stockholders, including
holders of a majority of the outstanding shares of Class A Stock voting as a
separate class, or the Acquisition is not consummated for any other reason,
the Certificate of Incorporation Amendment (Proposal #2 and Proposal #3) and
the election of a new director by the holders of Class A Stock will
not take effect as they are expressly conditioned upon the consummation of
the Acquisition.
Record Date. The close of business on August 18, 1994 (the "Record
Date") has been fixed as the record date for determining holders of
outstanding shares of Class A Stock and Class B Stock, entitled to notice of,
and entitled to vote at, the Special Meeting. As of the Record Date,
13,349,560 shares of Class A Stock and 8,226,562 shares of Class B Stock were
outstanding and entitled to vote. See "The Special Meeting-Record Date."
Quorum. For each matter to be voted upon at the Special Meeting, the
presence in person or by proxy, of holders of stock entitled to be voted with
respect to such matter representing a majority of the aggregate voting power
of all shares of stock entitled to be voted with respect to such matter is
necessary to constitute a quorum with respect to such matter and to transact
business with respect to such matter at the Special Meeting. Shares
abstaining on Proposal #1, Proposal #2 and Proposal #3, shares as to which
authority to vote on Proposal #4 is withheld and broker non-votes (where a
broker submits a proxy but does not have authority to vote a customer's
shares on one or more matters) on any of the Proposals will be considered
present at the Special Meeting for purposes of establishing a quorum. See
"The Special Meeting - Quorum."
Required Vote. The Transactions (other than the Certificate of
Incorporation Amendment) are being submitted to the stockholders as a single
matter as Proposal #1.
The two components of the Certificate of Incorporation Amendment, namely the
Class A Board Representation Increase Provision and the Name Change, are
being submitted to the stockholders as two separate matters as Proposal #2
and Proposal #3, respectively. Under the Company's Certificate of
Incorporation and applicable Delaware law, approval of Proposal # 1, Proposal
#2 and Proposal #3 requires the affirmative vote of a majority of the
aggregate number of votes cast by the holders of the Class A Stock and the
Class B Stock voting together as a single class, with the holders of the
Class A Stock casting one vote per share of Class A Stock held and the
holders of the Class B Stock casting four votes per share of Class B
Stock held. Pursuant to a resolution of the Company's Board of Directors and
the Restructuring Agreement, approval of Proposal #1, Proposal #2 and
Proposal #3 will also require the affirmative vote of the holders of a
majority of the outstanding shares of Class A Stock voting as a single class.
The affirmative vote of a majority of the aggregate number of votes cast by
the holders of the Class B Stock, voting as a separate class, is also
required under Delaware law to approve Proposal #2 since the Class A Board
Representation Increase Provision would have the effect of decreasing the
voting power of the holders of Class B Stock when voting for directors. A.L.
Oslo, the beneficial owner of 100% of the outstanding shares of Class B
Stock, has agreed to vote its shares in favor of Proposal #1, Proposal #2 and
Proposal #3.If Proposal # 1 is approved, one director will be elected by the
holders of Class A Stock. Under the Company's Certificate of Incorporation
as presently in effect, the holders of the Class A Stock are entitled, voting
as a separate class, to elect at least 25% of the Company's Board of
Directors (or if such 25% is not a whole number, the nearest higher whole
number of directors that is at least 25% of such membership), and the holders
of the Class B Stock are entitled, voting separately as a class, to elect the
remaining directors. At the Annual Meeting of the Company's stockholders
held on June 20, 1994 (the "1994 Annual Meeting"), the holders of Class A
Stock elected two directors (directors elected or to be elected by the
holders of Class A Stock being referred to as the "Class A Directors") and
the holders of Class B Stock elected six directors (directors elected by the
holders of Class B Stock being referred to as the "Class B Directors").
Prior to the Special Meeting, the Company's Board of Directors will adopt a
resolution to amend the Company's bylaws, effective upon consummation of the
Acquisition, to increase the size of the Company's Board of Directors from
eight members to nine members if and when Proposal #1 is approved.
Therefore, if Proposal #1 is approved, there will be a newly created
directorship which the holders of Class A Stock will be entitled to fill.
Such director will be elected by the affirmative vote of a plurality of the
votes cast at the Special Meeting by the holders of the Class A Stock voting
as a single class. (A plurality of the votes cast means the greatest number
of votes cast for a director.)
Proxies. Shares of Class A Stock represented by properly executed
proxies received at or prior to the Special Meeting and which have not been
revoked will be voted in accordance with the instructions indicated therein.
If no instructions are indicated, such proxies will be voted FOR: (i)
Proposal #1 and (ii) if Proposal #1 is approved, Proposal #2, Proposal #3 and
the election of the nominee for Class A Director nominated by the Company's
Board of Directors; and, in the discretion of the proxy holder, as to any
other matter which may properly come before the Special Meeting or any
adjournment or postponement thereof, including, without limitation, any
adjournment or postponement thereof and a motion to adjourn or postpone the
Special Meeting to another time and/or place, for the purpose of soliciting
additional proxies or otherwise; provided, however, that no proxy which is
voted against Proposal #1 will be voted in favor of any such adjournment or
postponement. See "The Special Meeting - Proxies" for a description of the
treatment of abstentions and broker non-votes.
YOUR VOTE IS IMPORTANT. APPROVAL OF PROPOSALS #1, #2 AND #3
REQUIRES, AMONG OTHER THINGS, THE AFFIRMATIVE VOTE OF THE HOLDERS OF A
MAJORITY OF THE OUTSTANDING SHARES OF CLASS A STOCK, VOTING AS A SINGLE
CLASS. IF A SHARE OF CLASS A STOCK IS NOT VOTED IT WILL HAVE THE EFFECT OF A
VOTE AGAINST SUCH PROPOSALS. THEREFORE, WHETHER OR NOT YOU PLAN TO ATTEND
THE SPECIAL MEETING, PLEASE COMPLETE, DATE AND SIGN YOUR PROXY IN ORDER TO
ENSURE THAT YOUR SHARES WILL BE REPRESENTED AT THE SPECIAL MEETING. THE
GIVING OF SUCH PROXY DOES NOT AFFECT YOUR RIGHT TO VOTE IN PERSON IN THE
EVENT YOU ATTEND THE SPECIAL MEETING .
The holders of the Class A Stock may revoke a proxy at any time prior
to exercise at the Special Meeting by giving notice of revocation to the
Secretary of the Company, properly submitting to the Company a duly executed
proxy bearing a later date, or by attending the Special Meeting and voting in
person. See "The Special Meeting - Proxies."The Transactions
The Parties to the Transactions The Company. The Company is a specialized international pharmaceutical
company engaged in developing, manufacturing and marketing specialty generic
and proprietary human pharmaceuticals, animal health products and bulk
antibiotics. The Company's mailing address for its principal executive
offices is One Executive Drive, P.O. Box 1399, Fort Lee, New Jersey 07024
and its telephone number at its principal executive offices is (201)
947-7774. Additional information concerning the Company is set forth under
"Security Ownership” of Certain Beneficial Owners" and is disclosed in
certain other documents which are incorporated herein by reference. See
"Incorporation of Certain Documents by Reference."
A.L. Oslo. A.L. Oslo is a Norwegian corporation that develops,
manufactures and markets finished generic and specialty pharmaceuticals,
animal, aquatic animal and human health products, bulk antibiotics, food
products and certain other products. Its antibiotic products are marketed on
a worldwide basis, and its pharmaceutical and other products are sold
primarily in Norway and the other Nordic countries. Immediately prior to the
consummation of the Exchange Offer, all of the assets and liabilities of the
Related Norwegian Businesses will be transferred to New A.L. Oslo in the
Demerger. After the Demerger, New A.L. Oslo will own A.L. Oslo's
pharmaceutical, animal health, aquatic animal health and bulk antibiotics
divisions and certain of its subsidiaries which are engaged in such
businesses. A.L. Oslo will retain ownership of the shares of Class B Stock,
the land and facility in Oslo, Norway where the Related Norwegian Businesses
principal administrative offices and fermentation plant for its bulk
antibiotics and animal health businesses are located (the "Skøyen Facility"),
its food businesses and its investments in various affiliates. The Skøyen
Facility will be leased to New A.L. Oslo on a long-term basis as more fully
described below.
A.L. Oslo established the Company in 1975, after acquiring S.B. Penick
& Co.'s bacitracin business. A.L. Oslo, as the beneficial owner of 100% of
the outstanding shares of Class B Stock, is able to control the Company
through its ability to elect more than a majority of the members of the
Company's Board of Directors and to cast in excess of a majority of the votes
generally entitled to be cast on matters presented to the stockholders of the
Company. Einar W. Sissener, a director and the Chairman and Chief Executive
Officer of the Company and the President and Chief Executive Officer of A.L.
Oslo, controls a total of 138,232 A.L. Oslo Shares (representing
approximately 34.6% of the outstanding A.L. Oslo Shares), consisting of
52,462 A.L. Oslo Shares he owns directly and 85,770 A.L. Oslo Shares owned by
A/S Swekk, his family-controlled private holding company ("Swekk"). In
addition, Mr. Sissener has the authority to vote most of the Sissener
family's 64,850 A.L. Oslo Shares, which shares represent approximately 16.2%
of the outstanding A.L. Oslo Shares.A.L. Oslo receives significant income from the Company from products
sold to the Company and in the form of royalties payable pursuant to certain
license agreements with the Company. See "The Transactions - Transactions
Between the Company and A.L. Oslo."
A.L. Oslo's principal executive offices are located at Harbitzalleen
3-5, 0275 Oslo, Norway and its telephone number is 47 22 52 90 00. Upon
consummation of the Transactions, New A.L. Oslo's principal executive offices
will be located at Harbitzalleen 3-5 0975 Oslo, Norway and its telephone
number will be 47 22 52 90 00. Additional information concerning the Related
Norwegian Businesses is set forth under "The Transactions - Certain
Information Regarding the Related Norwegian Businesses.?
The Transactions
The Acquisition. The Company will acquire the Related Norwegian
Businesses for the Cash Purchase price (as defined below) and the Warrants.
The cash portion of the Consideration has already been reduced to NOK
160,000,000 ($23.1 million based on an exchange rate as of June 30, 1994) as
a result of a NOK 10,000,000 cash dividend paid by A.L. Oslo to its
Shareholders on June 8, 1994. The Acquisition will be made by the Exchange
Offer, pursuant to which the Company will pay to each holder of A.L. Oslo
Shares who properly tenders the New A.L. Oslo Shares it is entitled to
receive upon consummation of the Demerger a pro rata portion (based upon the
number of New A.L. Oslo Shares outstanding on the date the Exchange Offer is
consummated) of the Cash Purchase Price and the Warrants. The Company will,
subject to the receipt of all governmental and regulatory approvals, commence
the Exchange Offer contemporaneously with or as soon as practicable after the
mailing of this Proxy Statement to its stockholders and, if the Transactions
are approved and all conditions to Closing (as defined below) are satisfied
or waived, will consummate the Exchange Offer after the Demerger is consummated.
The Demerger will occur immediately prior to the consummation of the
Exchange Offer. In the Demerger, A.L. Oslo will transfer to New A.L. Oslo
all of the assets and liabilities which comprise the Related Norwegian
Businesses. Upon consummation of the Demerger, the holders of A.L. Oslo
Shares will be entitled to receive one New A.L. Oslo Share for each A.L. Oslo
Share. After consummation of the Demerger, New A.L. Oslo will own A.L.
Oslo's pharmaceutical, animal health, aquatic animal health and bulk
antibiotics divisions and certain of its subsidiaries which are engaged in
such businesses. A.L. Oslo will retain ownership of the shares of Class B
Stock, the Skøyen Facility which will be leased on a long-term basis to New
A.L. Oslo, its food businesses and its investments in various affiliates.
Pursuant to the demerger agreement (the “Demerger Agreement") between A.L.
Oslo and New A.L. Oslo, the Demerger will be deemed effective for Norwegian
tax and accounting purposes as of January 1, 1994 so that the earnings and
operating results of the Related Norwegian Businesses from that date will be
for New A.L. Oslo's benefit.
The "Cash Purchase Price," which shall be paid in Norwegian kroner,
will be NOK 170,000,000 ($24.6 million). Such amount is subject to
adjustment if A.L. Oslo pays certain dividends to its shareholders and if the
exchange rate of Norwegian kroner to United States dollars (the "NOK Exchange
Rate") exceeds NOK 7.5 to $1.00 or is less than NOK 6.5 to $1.00 during the
10 business days prior to the fifth business day prior to the closing of the
Transaction. The NOK Exchange Rate on June 30. 1994 was NOK 6.92 19 to
$1.00. Since A.L. Oslo paid a cash dividend of NOK 10,000,000 on June 8,
1994, the Cash Purchase Price (assuming no adjustment for NOK Exchange Rate
fluctuations) has been reduced to NOK 160,000,000 ($23.1 million).The Warrants will constitute the right to purchase 3,600,000 shares of
Class A Stock at a specified price per share of Class A Stock (the "Exercise
Price") which will be equal to 140% of the arithmetic average of the daily
closing prices of the Class A Stock on the New York Stock Exchange for the
period beginning on the date this Proxy Statement is first mailed to the
Company's stockholders and ending on the last trading day which is at least
five trading days prior to the date of the Special Meeting (the "Average
Closing Price"), subject to certain adjustments. The Warrants will expire on
the later of December 31, 1998 and the date which is 51 months after the
Closing Date (as defined below). The Warrants generally will not be
exercisable and, except for certain permitted transfers, will not be
transferable until the earlier of the first anniversary of the Closing Date
or the date the registration statement covering the Warrants is declared
effective by the Securities and Exchange Commission (the "Commission"). In
addition, Warrants issued to or held by Einar W. Sissener and Swekk
(collectively, the "Sissener Parties"), and their permitted transferees will
not be exercisable and, except for certain permitted transfers, will not be
transferable until the third anniversary of the Closing Date. The Warrants
will be issued to the holders of New A.L. Oslo Shares pursuant to exemptions
from the registration requirements of the Securities Act of 1933, as amended
(the "Securities Act"), in reliance on Regulation S promulgated thereunder
and Section 4(2) thereof. The Company has agreed to register the Warrants
and the shares of Class A Stock to be issued upon exercise of the Warrants
(the "Warrant Shares") under the Securities Act on or before the first
anniversary of the consummation of the Transactions. To facilitate the
trading of the Warrants and the Warrant Shares, the Company has also agreed
to list such securities for trading or quotation on the New York Stock
Exchange (the "NYSE"), or if such listing is in the opinion of the Company
impracticable, on another appropriate national securities exchange or an
over-the-counter quotation system. See "Description of Warrants and Class A Stock--Warrants."
The Company will not be obligated to accept for payment and exchange
New A.L. Oslo Shares tendered pursuant to the Exchange Offer unless certain
conditions set forth in the Restructuring Agreement are met, including the
condition that holders of more than 90% of the New A.L. Oslo Shares accept
the Exchange Offer (the "Minimum Condition"). If the Minimum Condition is
satisfied, the Company would be permitted under Norwegian law and intends to
compel the non-tendering holders of New A.L. Oslo Shares to sell such shares
to the Company. If the Minimum Condition is not satisfied, the Company with
the approval of A.L. Oslo could waive such condition and make a determination
at that time to consummate the Acquisition anyway. Such a determination on
the part of the Company would be based upon a number of factors, including
the number of New A.L. Oslo Shares tendered in (and not withdrawn from) the
Exchange Offer, the Company's ability to obtain additional New A.L. Oslo
Shares from New A.L. Oslo or non-tendering holders of New A.L. Oslo Shares
and the impact of having minority shareholders of New A.L. Oslo. See
"Description of Certain Agreements-Certain Provisions of the Restructuring
Agreement-Conditions to Consummation of the Transactions."After the Closing, A.L. Oslo will lease the Skøyen Facility to New A.L.
Oslo for a term of 20 years, which term shall be renewable, at the option of
New A.L. Oslo, for four additional consecutive five year terms. Basic rent
during the initial 20-year term will be $1.00 per year and, during any
renewal term thereafter, basic rent will be the then prevailing fair rental
value of the premises. In addition to basic rent, New A.L. Oslo will pay all
documented expenses of ownership and operation of the Skøyen Facility, such
as taxes and maintenance expenses. New A.L. Oslo will have the right to
terminate the Skøyen Lease at any time during its term upon twelve months
written notice to A.L. Oslo. See "Description of Certain Agreements-Skøyen Lease."
Since A.L. Oslo will not retain any administrative personnel after the
Demerger, New A.L. Oslo will provide on a full cost basis certain
administrative services to A.L. Oslo pursuant to an administrative services
agreement (the "Administrative Services Agreement") to be entered into prior
to the effectiveness of the Demerger. See "Description of Certain
Agreements-Administrative Services Agreement." New A.L. Oslo will also
license to A.L. Oslo the "A. L." name and logo presently being used by A.L. Oslo.
Conditions to Consummation of the Transactions. In addition to the approval
of the stockholders of the Company, the obligations of the parties to
consummate the Transactions are subject to the satisfaction or, where legally
permissible, waiver of certain conditions, including, without limitation, the
acceptance of the Exchange Offer by holders of more than 90% of the New A.L.
Oslo Shares, the receipt of all regulatory approvals, the approval of the
Demerger by holders of at least 662A % of the A.L. Oslo Shares, the absence
of a material adverse change in the Company's business and the Related
Norwegian Businesses and the accuracy of the representations and warranties
of the Company and A.L. Oslo set forth in the Restructuring Agreement. See
"Description of Certain Agreements - Certain Provisions of the Restructuring
Agreement - Conditions to Consummation of the Transactions."
The Company has received a letter from Einar W. Sissener expressing
his agreement to vote, or cause to be voted, all 138,232 A.L. Oslo Shares
owned by the Sissener Parties (representing approximately 34.6% of the
outstanding A.L. Oslo Shares), in favor of the Transactions (including the
Demerger) and to tender, or cause to be tendered, to the Company pursuant to
the Exchange Offer all New A.L. Oslo Shares that the Sissener Parties are
entitled to receive upon consummation of the Demerger. In addition, Mr.
Sissener has advised the Company that he anticipates his wife and children
will vote in favor of the Demerger and will tender, or cause to be tendered,
to the Company pursuant to the Exchange Offer all New A.L. Oslo Shares that
they are entitled to receive upon consummation of the Demerger. Mr.
Sissener's wife and children own, in the aggregate, approximately 8.0% of the
outstanding A.L. Oslo Shares. A.L. Oslo has also agreed to use its
reasonable efforts to cause Nopal International AG, a wholly owned subsidiary
of A.L. Oslo, to tender to the Company pursuant to the Exchange Offer all
3,085 New A.L. Oslo Shares (representing approximately 0.8% of the
outstanding A.L. Oslo Shares) that it is entitled to receive upon
consummation of the Demerger.A.L. Labs Actions. At the Closing, the Company will transfer
substantially all of its personnel, and as soon as reasonably practicable
after the Closing, substantially all of its operating assets and liabilities,
consisting primarily of its animal health business and its administrative
facilities, to New A.L. Labs. Upon consummation of such transfer, the
Company will operate its current pharmaceutical, animal health and bulk
antibiotics businesses and the Related Norwegian Businesses through
subsidiaries. See "Conduct of the Business and Management of the Company
Following the Closing."
Prior to the Closing, the Company will amend its Certificate of
Incorporation to increase the representation of the holders of the Class A
Stock on the Company's Board of Directors from 25% to 331A% of the Company's
Board of Directors (rounded to the nearest whole number, but not less than
two members of the Company's Board of Directors) and to change its name to
"A.L. Pharma Inc."
Determination of consideration and Financing of the Transactions. In
negotiating the consideration to be paid for the Related Norwegian
Businesses, there was a significant gap between the consideration that A.L.
Oslo was seeking for the Related Norwegian Businesses and the consideration
which the Special Committee of the Company's Board of Directors, which was
established to evaluate the Transactions (the "Special Committee"), could
recommend to the Company's Board of Directors. It was determined that the
Company would pay a portion of the consideration in cash in an amount which
was approximately equal to the shareholders' equity of the Related Norwegian
Businesses and would issue the Warrants to bridge the gap in values. The
Warrants would give the A.L. Oslo shareholders additional value if and only
if the future value of the Class A Stock, which might be affected by the
acquisition of the Related Norwegian Businesses, significantly increased. In
addition, the Warrants would increase the incentive of Mr. Sissener, who
(together with his family interests) would receive a significant portion of
the Warrants, to take actions to assure that the benefits of the Transactions
would be maximized, would reduce the additional borrowings and/or dilution
that would result if cash, debt or common stock were offered in place of
Warrants and would provide a source of equity financing for the Company in
the future if the Warrants became “in the money” and were exercised prior to
their expiration. See "The Transactions - Background of the Transactions."
The Company believes that it will have sufficient liquidity from
internally generated and external sources (including borrowings under
existing bank lines) to consummate the Transactions. In addition, the
Company has negotiated the principal business terms of a new bank facility
with a bank syndicate led by Union Bank of Norway (the `UBN Facility"),
subject to definitive documentation. If the UBN Facility is obtained, the
proceeds thereof will be utilized, among other things, to refinance certain
of the Company's and New A.L. Oslo's indebtedness, pay the Cash Purchase
Price and provide general purpose financing for the Company and its
subsidiaries. The UBN Facility, if obtained, will provide for borrowings of
up to $185 million in multiple tranches for up to seven years. See "The
Transactions - Financing of the Transactions and Refinancing of Indebtedness
of the Related Norwegian Businesses."Reasons for the Transactions. There has been interest for some time in
combining the Related Norwegian Businesses with the Company because of their
related and complementary nature. The Transactions will provide
opportunities to utilize the resources of these complementary businesses to
put the Company in a stronger position to compete on a worldwide basis in its
specialized pharmaceuticals and animal health markets, to access new markets
for its products through established distribution channels and to add new
products to its product lines. The overlapping nature of certain of the
Company's businesses and the Related Norwegian Businesses will also create
opportunities to achieve synergies by eliminating duplicative functions and
coordinating efforts in various areas. The Transactions will eliminate
conflicts of interest that have arisen in connection with ongoing
transactions between the Company and A.L. Oslo regarding the Related
Norwegian Businesses and are expected to reduce potential conflicts of
interest between the Company and A.L. Oslo regarding the Related Norwegian
Businesses because the same stockholders will own 100% of all of the
businesses. In addition, the Company's Board of Directors believes that the
Acquisition has the potential to add to the earnings of the Company for 1994
and 1995. See "The Transactions - Background of the Transactions" and -
Recommendations of the Company's Board of Directors; Reasons for the Transactions."
Recommendations of the Company's Board of Directors. The Company's
Board of Directors believes that the Transactions are fair to, and in the
best interests of, the Company and fair to the holders of the Class A Stock.
On May 16, 1994, the Company's Board of Directors unanimously approved the
Transactions. THE COMPANY'S BOARD OF DIRECTORS RECOMMENDS THAT THE COMPANY'S
STOCKHOLDERS VOTE FOR THE PROPOSAL TO APPROVE THE RESTRUCTURING AGREEMENT AND
THE TRANSACTIONS. The recommendations of the Company's Board of Directors
are based upon a number of factors discussed in this Proxy Statement,
including the recommendation of the Special Committee and the opinion of
Lehman Brothers, the Special Committee's financial advisor. See "The
Transactions - Background of the Transactions" and "- Recommendations of the Company's
Board of Directors; Reasons for the Transactions."
Opinion of the Special Committee's Financial Advisor. Lehman Brothers
rendered its opinion on May 16, 1994 to the Special Committee and to the
Company's Board of Directors that the Consideration to be paid by the Company
in the Exchange Offer is fair, from a financial point of view, to the Company
and the holders of the Class A Stock. A copy of the written opinion of
Lehman Brothers, dated May 16, 1994, setting forth the assumptions made, the
matters considered, the scope and limitations on the review undertaken and
the procedures followed by Lehman Brothers in rendering its opinion is
attached to this Proxy Statement as Exhibit D. The Company's stockholders
should read carefully the opinion of Lehman Brothers in its entirety. See
"The Transactions - Opinion of the Special Committee's Financial Advisor."
Certain Consequences to Public Stockholders of the Company. Set forth
below is a summary of certain advantages and disadvantages of the
Transactions to public stockholders of the Company:
?. The Transactions are expected to put the Company in a stronger position to compete on a worldwide basis due to the potential synergies that
might be obtained from eliminating duplicative efforts and the increase
in the international scope of the operations of the Company. See "The
Transactions -Recommendations of the Company's Board of Directors;
Reasons for the Transactions."
?. The Transactions are expected to eliminate certain potential conflicts of interests that arise in connection with ongoing transactions between
the Company and A.L. Oslo regarding the Related Norwegian Businesses.
See "The Transactions - Recommendations of the Company's Board of
Directors; Reasons for the Transactions."
?. The Company's Board of Directors believes that the Acquisition has the potential to be accretive to the Company's earnings for 1994 and 1995.
See "The Transactions - Recommendations of the Company's Board of
Directors: Reasons for the Transactions."
?. If the Transactions are consummated, the Company would incur additional indebtedness which might increase the Company's borrowing costs and
could reduce the number and types of acquisitions and other investment
opportunities that might, in the future, become available to the
Company. See "The Transactions - Financing of the Transactions and
Refinancing of Indebtedness of the Related Norwegian Businesses" and "-
Recommendations of the Company's Board of Directors; Reasons for the Transactions"
?. The parties to the Transactions are related and, as a result of such relationship, there was a potential for conflicts of interest when the
Restructuring Agreement and the terms of the Transactions were being
negotiated. See "The Transactions - The Parties to the Transactions"
and "- Benefits to be Obtained from the Transactions by Certain
Interested Persons." However, as a consequence of such potential
conflicts of interest, the Company's Board of Directors established the
Special Committee and has required that the Transactions be approved by
the holders of a majority of the outstanding shares of Class A Stock
voting as a separate class. See "The Transactions - Conflicts of Interest."
?. Although it is not certain that the Warrants will ever be exercised or, if exercised, who will actually hold the Warrants at such time, the
holders of Warrants as a group will have the right to acquire
approximately 21.2% of the Class A Stock (assuming no other changes in
the number of outstanding shares of Class A Stock). If Einar W.
Sissener, Swekk and his relatives were to retain and exercise all of
the Warrants to be issued to them in the Exchange Offer, such persons
as a group would be able to control approximately 10.8% of the Class A
Stock (assuming no other changes in the number of outstanding shares of
Class A Stock).
Conflicts of Interest. The Board of Directors established the Special
Committee consisting solely of the directors elected by the holders of the
Class A Stock, authorized
the Special Committee to retain its own legal and financial advisors and to
evaluate and make a
recommendation with respect to any combination transaction with A.L. Oslo and
determined that any such transaction should be subject to approval by holders
of a majority of the outstanding shares of Class A Stock voting separately as
a class. These actions were taken to avoid all conflicts between the
interests of the holders of Class A Stock and the interests of
A.L. Oslo, as the owner of the Related Norwegian Businesses and the
controlling stockholder (through ownership of the Class B Stock) of the
Company, that could have been involved in the review, negotiation and
approval of any combination transaction with A.L. Oslo such as the
Transactions. Such conflicts of interest may be deemed to some extent to
have existed in the
review, negotiation and approval of the Transactions as a result of the
management of the Company and each of the directors of the Company (other
than the members of the Special Committee) participating in the review,
negotiation or approval of such Transactions being employed by or otherwise
receiving compensation from the Company, which is controlled
by A.L. Oslo, and/or being elected as a director of the Company by A.L. Oslo
as a holder of the
Class B Stock. See "The Transactions - Conflicts of Interest," "- Background
of the Transactions," Recommendations of the Company's Board of Directors;
Reasons for the Transactions" and ?-Opinion of the Special Committee's
Financial Advisor." Accounting Treatment. The Company intends to account for the
acquisition of all of the outstanding New A.L. Oslo Shares as a transfer and
exchange between companies under common control. Accordingly, the assets and
liabilities of New A.L. Oslo will be combined
with the Company at historical cost in a manner similar to a
pooling-of-interests; and the Company's historical financial statements will
be restated to reflect the combined results of operations, assets,
liabilities and net worth of the Company and the Related Norwegian
Businesses. The payment of the purchase price (cash and warrants) will be
reflected as a reduction of combined equity when the Transactions are
consummated. Expenses related to the combination will be charged to the
combined company's income statement at the time of
consummation of the Acquisition. See "The Transactions - Accounting Treatment."
Because the Transactions have not been completed and transition
plans are not finalized, and the benefits and costs of integrating certain
operations cannot be estimated with reasonable assurance, the pro forma
combined income statements included in this Proxy Statement exclude the
financial impact of benefits expected to be achieved upon combining the
resources of the companies and any special charges or other costs to achieve
these benefits. As a result of the Acquisition, there may be a restructuring
charge taken in
the fourth quarter of 1994. Such a charge and its magnitude have yet to be
determined. As more fully described in "The Transactions - Conduct of the
Business and Management of the Company Following the Closing," the Company
expects to operate as a pharmaceutical and animal health company and will be
managed on a global basis through decentralized strategic
business units (or divisions) ("SBU's"). It is anticipated that by the end
of August 1994 key executives will be named by the Chief Executive Officer of
the Company to head the various SBU's. Each SBU head will begin a study of
their business to determine what actions may be taken to realize potential
synergies of the Acquisition and to maximize both the SBU and the Company's
global competitive position. Such actions may include rationalization of the
combined businesses. At the conclusion of the studies, the head of each SBU
working with the Chief Executive Officer of the Company will make appropriate
recommendations to the Company's Board of Directors. It is anticipated that
the Company's Board of Directors will decide on the recommended actions by
December 31, 1994. Given the timing of this plan, the financial impact of
the actions that may be taken as a result of such studies and the related
actions of the Company's Board of Directors are not estimable at this time.
See Note 1 to Unaudited Pro Forma Condensed Combined Financial Statements
under "The Transactions
Unaudited Pro Forma Condensed Combined Financial Statements."Regulatory Approvals. Consummation of the Transactions is conditioned
upon, among other things, the Company and A.L. Oslo obtaining all
authorizations, consents and approvals of all third parties and governmental
authorities which are necessary to consummate the Transactions, including,
without limitation, all concessions and other approvals required under
Norwegian law to effectuate the Transactions (and in particular, the Demerger
and the Exchange Offer), except that certain authorizations, consents and
approvals the failure to obtain of which would not have a material adverse
effect on the financial condition, properties, business or results of
operations of the Company and its subsidiaries, taken as a whole as conducted
on the date of the Restructuring Agreement (a "Material Adverse Effect"), or
a material adverse
effect on the financial condition, properties, business or results of
operations of the Related Norwegian Businesses, taken as a whole as conducted
on the date of the Restructuring Agreement (an "RNB Material Adverse
Effect"), will not be required to be obtained prior to the Closing. See "The
Transactions Regulatory Approvals" and "Description of Certain Agreements -
Certain Provisions of the Restructuring Agreement - Conditions to
Consummation of the Transactions." Closing
The Restructuring Agreement provides that the closing of the
Transactions (the "Closing") will occur on the fifth business day after the
date on which the last to be fulfilled or waived of the conditions set forth
in the Restructuring Agreement shall have been fulfilled or waived, or such
other date as the Company and A.L. Oslo may agree. The time and date on
which the Closing occurs is referred to herein as the "Closing Date." See
"Description of Certain Agreements - Certain Provisions of the Restructuring
Agreement Conditions to Consummation of the Transactions" for a description
of such conditions.
Market Price Data
There is no established public trading market for A.L. Oslo Shares or
New A.L. Oslo Shares. The Class A Stock is listed on the NYSE. The
following table sets forth the high and low sales prices per share of Class A
Stock for the periods indicated. Sales Price
High Low
Calendar Year 1992
1st Quarter $26.00
$20.63
2nd Quarter 24.50
18.50
3rd Quarter 24.00
18.00
4th Quarter 28.50
18.63
Calendar Year 1993
1st Quarter $27.25
$20.00
2nd Quarter 29.38
20.00
3rd Quarter 27.50
13.75
4th Quarter 18.75
12.75
Calendar Year 1994
1st Quarter $16.88
$14.00
2nd Quarter 16.25
13.00
3rd Quarter (through August 19) 15.00 12.63
On May 16, 1994, the last full trading day preceding the public
announcement of the execution of the Restructuring Agreement, the high and
low sales prices per share of Class A Stock were $14.125 and $13.875,
respectively. On August 19, 1994, the last full trading day
preceding the date of this Proxy Statement, the high and low sales prices per
share of Class A Stock were $15.00 and $14.625, respectively.
Election of Directors
Subject to approval of Proposal #1, the Company's Board of Directors
intends to cause the nomination for election to the Company's Board of
Directors the individual identified in this Proxy Statement. If Proposal #1
is approved, proxies will he voted at the Special Meeting in
favor of the election, as director, of the nominee for Class A Director set
forth under "Election of
Director-Nominee for Class A Director," unless authority to do so is
specifically withheld. See "Election of Director."
The affirmative vote of a plurality of the votes cast at the Special
Meeting by the holders of the Class A Stock is necessary to elect the
director nominated as a Class A Director pursuant to Proposal #4.
The Company's Board of Directors unanimously recommends that, if
Proposal #1 is approved, stockholders vote FOR the election, as director, of
the individual listed under "Election of Director-Nominees for Class A Director."Certain Historical and Pro Forma Financial Data
Selected Historical Financial Data The Company. The following table sets forth selected historical
financial data of the Company as of and for each of the fiscal years in the
five-year period ended December 31, 1993 and as of and for each of the
six-month periods ended June 30, 1993 and 1994. Such selected historical
financial data as of and for each of the fiscal years in the five-year period
ended December 31, 1993 have been derived from the consolidated financial
statements of the Company audited by Coopers & Lybrand, independent public
accountants. The selected financial data as of and for the six-month periods
ended June 30, 1993 and 1994 are derived from unaudited consolidated
financial statements. In management's opinion, the Company's unaudited
consolidated financial statements as of and for the six-month periods ended
June 30, 1993 and 1994 include all adjustments (consisting of normal
recurring adjustments) necessary for a fair presentation.
This information is qualified in its entirety by, and should be read in
conjunction with, the Consolidated Financial Statements and Notes thereto of
the Company which are incorporated herein by reference. See ?Incorporation
of Certain Documents by Reference."
Company Historical Financial Data
(in thousands, except per share data)
Six Months Ended
Years Ended December 31, June 30,
1989 1990 1991 1992 1993 1993 1994 (unaudited)
Income Statement Data(1):
Total revenue $223,185 $241,375 $257,129 $295,112 $338,230 $159,541 $185,370
Cost of sates 24,274 131,121 144,283 166.947 207,573 93,091 114,591
Gross profit 98,911 110,254 112,846 128,165 130,657 66,450 70,779
Setting, general and administrative
expenses 69,877 78,063 99,156 99,671 109,733 52,560 59,018
Operating income 29,034 32,191 13,690 28,494 20,924 13,890 11,761
Interest expense (11,217) (11,652) (12,098) (10,134) (6,598) (3,255) (3,666)
Other income (loss), net 623 709 174 (785) 498 169 (64)
Income from continuing operations
before taxes 18,440 21,248 1,766 17,575 14,824 10,804 8,031
Provision for taxes 7,628 8,025 1,187 6,208 6,203 4,348 3,204
Income from continuing operations 10,812 13,223 579 11,367 8,621 6,456 4,827
Discontinued operations, net of tax 1,029 883 4,502 4,809 - - -
Net income 11,841 14,106 5,081 16,176 8,621 6,456 4,827
Average number of shares outstanding:
Primary 16,737 6,788 16,904 18,264 21,510 21,497 21,554
Fully diluted 19,311 21,434 21,611 21,568 21,581 21,622 21,590
Earnings per share: Primary:
Income from continuing
operations $.65 $.79 $.03 $.62 $.40 $.30 $.22
Net income .71 .84 .30 .89 .40 .30 .22 Fully diluted:
Income from continuing
operations .64 .76 .03 .64 .40 .30 .22
Net income .70 .80 .30 .87 .40 .30 .22 Cash dividends declared per share .087 .107 .16 .18 .18 .09 .09
As of December 31, As of June 30, 1989 1990 1991 1992 1993 1993 1994 (unaudited)
Balance Sheet Data(2):
Current assets $126,160 $148,396 $159,540 $155,372 $176,305 $152,463 $172,997
Non-current assets 163,490 180,099 199,290 216,352 246,897 234,790 259,680
Total assets 289,650 328,495 358,830 371,724 423,202 387,253 432,677
Current liabilities 78,092 95,747 105,720 87,490 124,857 84,333 129,270
Long-term debt, less current maturities 101,606 101,386 119,394 73,651 81,713 90,475 77,842
Deferred taxes and other non-current
liabilities 16,610 20,347 19,710 26,458 31,801 26,348 33,595
Stockholders' equity 93,342 111,015 114,006 184,125 184,831 186,097 191,970
Total liabilities and equity 289,650 328,495 358,830 37,724 423,202 387,253 432,677 ________________________
(1) Income statement data include results of operations from the date of acquisition of the
Lincolnton facility by Barre-National, Inc. ( ?Barre-National") in March 1993, Able
Laboratories, Inc. ("Able") in October 1992 and NMC Laboratories, Inc. ("NMC") in August
1990. Income
statement data for 1989 through 1992 reflect the human nutrition segment as a discontinued
operation. Income statement data reflect the adoption of Statement of Financial Accounting
Standards No. 109 and No. 106 effective January 1,1992 and January 1, 1993, respectively.
(2) Balance sheet data reflect the acquisition of the Lincolnton facility by Barre-National in
March 1993, Able in October 1992 and NMC in August 1990 and the conversion of the
Company's 73/4% Convertible Subordinated Debentures to shares of Class A Stock in 1992.
The Related Norwegian Businesses. The following table sets forth selected historical
combined financial data of the Related Norwegian Businesses as of and for each of the fiscal
years in the five-year period ended December 31, 1993 and as of and for each of the six-month
periods ended June 30, 1993 and 1994. Such data are expressed in Norwegian kroner, except
that a convenience translation into United States dollars has been provided in addition to the
Norwegian kroner presentation for the fiscal year ended December 31, 1993 and the six months
ended June 30, 1994. The balance sheet data as of December 31, 1993 and June 30, 1994 were
converted using the exchange rates in effect at the respective dates. The exchange rates of
Norwegian kroner into United States dollars as of December 31, 1993 and June 30, 1994 were
NOK 7.5290 to $1.00 and NOK 6.92 19 to $1.00, respectively. The income statement data for
the
year ended December 31, 1993 and for the six-month period ended June 30, 1994 were
converted by first converting the income statement data for each quarter in the period presented
using the average exchange rate for such quarter and then aggregating the converted income
statement data for all of the quarters in such period. See Note 3 to the Unaudited Pro Forma
Condensed Combined Financial Statements under "The Transactions - Unaudited Pro Forma
Condensed Combined Financial Statements" for the exchange rates used to convert such income
statement
data. Such income statement data for fiscal years ended December 31, 1990, 1991, 1992 and
1993 and such balance sheet data as of December 31, 1991, 1992 and 1993 have been taken or
derived from the historical combined financial statements of the Related Norwegian Businesses
and the notes thereto audited by Coopers & Lybrand AS. This information is qualified in its
entirety by, and should be read in conjunction with, the Combined Financial Statements and
Notes thereto prepared in accordance with United States generally accepted accounting
principles) of the Related Norwegian Businesses included elsewhere in this Proxy Statement.
See Exhibit E to this Proxy Statement. income statement data for the fiscal year ended
December 31, 1989 and the six-month periods ended June 30, 1993 and 1994, and balance sheet
data as of December 31, 1989 and 1990 and June 30, 1993 and 1994, are based on unaudited
combined financial statements of the Related Norwegian Businesses. In management's opinion,
the unaudited combined financial statements of the Related Norwegian Businesses include all
adjustments (consisting of normal recurring adjustments) necessary for a fair presentation.
For an explanation of the combination and presentation of the audited combined financial
statements of the Related Norwegian Businesses, see Note 1 of the Notes to the Combined
Financial Statements of the Related Norwegian Businesses included as Exhibit E to this Proxy
Statement.
Selected Historical Combined Financial Data of the Related Norwegian Businesses (in thousands)
(in NOK or $, as indicated)
Years Ended December 31, Six Months Ended June 30,
1989 1990 1991 1992 1993 1993 1993 1994 1994
(in NOK) (in S) (in NOK) (in $)
(unaudited) (unaudited)
Income Statement Data(1)(2):
Net sales 311,118 343,524 378,935 457,304 528,688 $74,578 267,551 290,631 $ 40,005
Other revenue 28,275 30,569 34,566 28,803 27,626 3,889 11,948 12,313 1,689
Total revenue 339,393 374,093 413,501 486,107 556,314 78,467 279,499 302,944 41,694
Cost of sales 162,736 186,561 207,058 248,200 268,575 37,890 135,675 144,090 19,839
Gross profit 176,657 187,532 206,443 237,907 287,739 40,577 143.824 158,854 21,855
Selling, general and
administrative expenses 162,607 160,165 179,022 192,910 226,822 31,978 112,181 118,862 16,363
Operating income 14,050 27,367 27,421 44,997 60,917 8,599 31,643 39,992 5,492
Interest expense (15,835)(10,653) (21,493)(51,846) (59,454) (8,398) (31,259)(23,147) (3,182)
Foreign exchange
gains (losses)(3) 2,090 3,295 44,239 20,506 1,770 244 620 (494) (67)
Other income (expense),
net 5,357 5,406 (2,138) 6,113 8,083 1,138 3,604 2,248 309
Equity in net earnings
of affiliated company 369 211 723 1,555 - - - - -
Income before provision for
income taxes, and cumulative
effect of change in accounting
principle 6,031 25,626 48,752 21,325 11,316 1,583 4,608 18,599 2,552
Provision for income taxes 320 9,555 16,994 6,400 4,120 575 1,553 5,629 773
Income before cumulative
effect of change in
accounting principle 5,711 16,071 31,758 14,925 7,196 1,008 3,055 12,970 1,779
Cumulative effect of
change in accounting
principle - - - 16,210 - - - - -
Net income 5,711 16,071 31,758 31,135 7,196 1,008 3,055 12,970 1,779
As of December 31, As of June 30, 1989 1990 1991 1992 1993 1993 1993 1994 1994
(in NOK) (in S) (in NOK) (in $)
(unaudited) (unaudited)
Balance Sheet Data(4):
Current assets 153,176 188,552 185,339 179,775 215,550 $ 28,630 231,843 217,099 $ 31,364
Non-current assets 139,811306,483 607,782 600,190 588,267 78,133 598,618 584,091 84,382
Total combined assets 292,987 495,035 793,121 779,965 803,817 106,763 830,461 801,190 115,746
Current liabilities 84,807 102,953 133,129 150,809 120,429 15,996 234,352 127,537 18,424
Long-term debt 92,597 241,709 457,759 415,333 471,597 62,637 381,369 451,010 65,157
Deferred taxes and other
non-current liabilities 25,064 34,013 52,148 48,390 62,700 8,328 54,322 70,596 10,199
Equity 90,519 116,360 150,085 165,433 149,091 19,802 160,418 152,047 21,966
Total combined liabilities
and equity 292,987 495,035 793,121 779,965 803,817 106.763 830,461 801,190 115,746 ______________
(1) The historical income statement data do not include per share data as the Demerger and
contemporaneous issuance of New A.L. Oslo Shares will not be accomplished until immediately
prior to the consummation of the Exchange Offer.
(2) Income statement data include results of operations from the date of acquisition of
Norgesplaster A/S ("Norgesplaster") in January 1993 and from product line purchases in
November 1991 and March 1992. Income statement data reflect the adoption of Statement of
Financial Accounting Standards No. 109 as of January 1, 1992.
(3) In 1991 and 1992, the Related Norwegian Businesses realized unusual foreign currency
gains of NOK 27.2 million and NOK 14.8 million, respectively. See "The Transactions -Certain
Information Regarding the Related Norwegian Businesses -Management's Discussion and
Analysis of Financial Condition and Results of Operations of the Related Norwegian
Businesses -Results of Operations." Such gains are not expected to recur.
(4) Balance sheet data include the accounts of Norgesplaster acquired in January 1993, and
assets related to product line purchases in November 1991 and March 1992.
Summary Unaudited Pro Forma Combined Financial DataThe following table sets forth summary unaudited pro forma financial data of the
Company, giving effect to the Acquisition and, in particular, assuming the acquisition of all of
the outstanding New A.L. Oslo Shares and is presented in accordance with United States
generally accepted accounting principles presented in United States dollars. Such unaudited pro
forma data assume that the Acquisition had occurred as of June 30, 1994 for the balance sheet
data dated as of June 30, 1994. Balance sheet data for prior years and all income statements are
restated to reflect the Acquisition as a transfer and exchange between companies under common
control (i.e., similar to a pooling of interests). The unaudited pro forma financial data set forth in
the following table have been derived from, and should be read in conjunction with, the
historical
consolidated financial statements of the Company and the historical combined financial
statements of the Related Norwegian Businesses, including the respective notes thereto, which
are included elsewhere in this Proxy Statement or are incorporated herein by reference. See
"The
Transactions -Unaudited Pro Forma Condensed Combined Financial Statements" for a
description of the adjustments to the historical financial data required to arrive at the unaudited
pro forma combined financial data of the Company. All financial information of the Related
Norwegian Businesses that is presented in its historical combined financial statements has been
converted from Norwegian kroner to United States dollars. The balance sheets of the Related
Norwegian Businesses as of December 31, 1991, 1992 and 1993 and as of June 30, 1993 and
1994 were converted using the exchange rate in effect at the respective dates. The income
statements of the Related Norwegian Businesses for each of the periods presented were
converted by first converting the income statements for each quarter in the period presented
using the average exchange rate for such quarter and then aggregating the converted income
statements for all of the quarters in such period. See Note 3 to the Unaudited Pro Forma
Condensed Combined Financial Statements under "The Transactions -Unaudited Pro Forma
Condensed Combined Financial Statements" for the exchange rates used to convert such data.
The following unaudited pro forma financial data are presented for informational purposes only,
are not necessarily indicative of the results that actually would have occurred had the
Transactions been consummated on the dates indicated or the results that may occur or be
obtained in the future. See Note 1 to the Unaudited Pro Forma Condensed Combined Financial
Statemen
