EX-99.3 4 x99-3.txt PRO-FORMA FINANCIAL STATEMENTS Exhibit 99.3 MIM CORPORATION UNAUDITED PRO FORMA COMBINED CONDENSED FINANCIAL INFORMATION On January 31, 2002, MIM Corporation (the "Company") acquired from Marc Wiener and Barbara Kammerer all of the issued and outstanding common stock of Vitality Home Infusion Services, Inc., a New York corporation ("Vitality"), pursuant to a Stock Purchase Agreement dated as of January 9, 2002 (the "Purchase Agreement") among Vitality, Marc Wiener, Barbara Kammerer and the Company. Vitality, located in Roslyn Heights, New York, distributes specialty pharmaceutical services, on a national basis, to chronically ill and genetically impaired patients, particularly focusing on oncology, infectious disease, immunology and rheumatory disease. The aggregate purchase price for Vitality was $45,000,000, consisting of $35,000,000 in cash and the balance in Company common stock, a portion of which is being held in escrow to secure potential indemnification claims for breaches of Vitality and/or the individual seller's representations and warranties and covenants under the Purchase Agreement. The cash portion of the purchase price was funded through borrowings under the Company's existing $45,000,000 revolving credit facility. The transaction was accounted for as a purchase. The following unaudited pro forma combined condensed financial statements are based on the respective historical consolidated financial statements of the Company and Vitality. The unaudited pro forma combined condensed balance sheet assumes the acquisition was completed on December 31, 2001. The unaudited pro forma combined condensed statement of income assumes the acquisition was completed on January 1, 2001. The unaudited pro forma combined condensed financial statements are based on the estimates and assumptions set forth in the notes to such statements. The pro forma adjustments made in connection with the development of the pro forma information are preliminary and have been made solely for purposes of developing such pro forma information for illustrative purposes. The purchase price of the acquisition was allocated to the net assets acquired based on management's estimates of their fair values at the date of acquisition. Although the Company does not expect that the final allocation will be materially different from these estimates, there can be no assurances that such differences, if any, will not be material. The unaudited pro forma combined condensed financial statements do not purport to be indicative of the results of operations for future periods or the combined financial position or the results that actually would have resulted had the entity been a single entity during these periods. These unaudited pro forma combined condensed financial statements should be read in conjunction with the historical financial statements and the related notes thereto of the Company and Vitality.
MIM Corporation Unaudited Pro Forma Combined Condensed Balance Sheet (In Thousands) As of December 31, 2001 ----------------------------------------------------------- MIM Vitality Pro Forma MIM (Historical) (Historical) Adjustments Pro Forma ---------------- ---------- ---------- ------------ ASSETS Cash and cash equivalents $ 12,487 $ 4,080 $ - $ 16,567 Marketable securities - 107 - 107 Accounts receivable, net of allowance for doubtful accounts 70,089 5,205 - 75,294 Inventory 3,726 4,534 - 8,260 Prepaid expenses and other current assets 1,439 98 - 1,537 ---------------- ---------- ---------- ------------ Total current assets 87,741 14,024 - 101,765 Property, plant and equipment, net 9,287 80 - 9,367 Due from officer 2,132 - - 2,132 Other assets 1,650 3 - 1,653 Intangible assets, net 39,009 - 38,828 (1) 77,837 ---------------- ---------- ---------- ------------ TOTAL ASSETS $ 139,819 $ 14,107 $ 38,828 $ 192,754 ================ ========== ========== ============ LIABILITIES AND STOCKHOLDERS' EQUITY Current portion of capital lease obligations $ 594 $ 7 $ - $ 601 Line of credit - - 35,000 (1) 35,000 Accounts payable 4,468 5,323 - 9,791 Claims payable 46,564 - - 46,564 Payables to plan sponsors 21,063 - - 21,063 Accrued expenses and other current liabilities 5,745 1,267 961 (1) 7,973 ---------------- ---------- ---------- ------------ Total current liabilities 78,434 6,597 35,961 120,992 Capital lease obligations, net of current portion 1,031 11 - 1,042 Other non-current liabilities 58 - - 58 ---------------- ---------- ---------- ------------ Total liabilities 79,523 6,608 35,961 122,092 Stockholders' Equity: Preferred stock - - - Common stock 2 2 (2)(1) 2 Additional paid-in capital 105,424 - 10,000 (1) 115,779 355 (1) (Accumulated deficit)/Retained earnings (42,196) 7,486 (7,486)(1) (42,196) Treasury stock (2,934) - - (2,934) Accumulated other comprehensive income - 11 - 11 ---------------- ---------- ---------- ------------ Total stockholders' equity 60,296 7,499 2,867 70,662 ---------------- ---------- ---------- ------------ TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 139,819 $ 14,107 $ 38,828 $ 192,754 ================ ========== ========== ============ MIM Corporation Unaudited Pro Forma Combined Condensed Statement of Income (In Thousands, Except Per Share Amounts) Year ended December 31, 2001 ----------------------------------------------------------------- MIM Vitality Pro Forma MIM (Historical) (Historical) Adjustments Pro Forma ------------ ----------- ---------- ------------ Revenue $ 456,646 $ 74,770 $ - $ 531,416 Cost of revenue 403,243 63,396 - 466,639 ------------ ----------- ---------- ------------ Gross profit 53,403 11,374 - 64,777 General and administrative expenses 38,489 7,078 126 (5) 45,693 Amortization of goodwill and other intangibles 2,200 - (2,065) (2) 928 793 (3) Special credits (2,476) - - (2,476) ------------ ----------- ---------- ------------ Income from operations 15,190 4,296 1,146 20,632 Other expense, net (56) (1,562) (1,488) (4) (3,106) ------------ ----------- ---------- ------------ Income (loss) before provision for income taxes 15,134 2,734 (342) 17,526 Provision for income taxes 932 57 90 (6) 1,079 ------------ ----------- ---------- ------------ Net income $ 14,202 $ 2,677 $ (432) $ 16,447 ============ =========== ========== ============ Basic income per common share $ 0.67 $ 0.75 ============ ============ Diluted income per common share $ 0.64 $ 0.72 ============ ============ Weighted average common shares used in computing basic income per share 21,273 592 (1) 21,865 ============ ========== ============ Weighted average common shares used in computing diluted income per share 22,289 592 (1) 22,881 ============ ========== ============
MIM Corporation Notes to Unaudited Pro Forma Combined Condensed Financial Information (In Thousands) The unaudited pro forma combined condensed statement of income has been prepared to reflect the acquisition of Vitality as if the acquisition occurred on January 1, 2001, utilizing the purchase method of accounting. The unaudited pro forma combined condensed balance sheet was prepared to reflect the acquisition as of December 31, 2001, utilizing the purchase method of accounting. The following is a summary of the adjustments reflected in the unaudited pro forma combined condensed balance sheet and income statement: (1) Represents the elimination of Vitality's historical equity and the preliminary estimates of the excess of the purchase price over the fair value of the net tangible assets acquired: Purchase price: Funded from the Company's line of credit $35,000 Common stock value 10,000 Transaction costs 1,316 ----- Total purchase price 46,316 Less - Net tangible assets as of December 31, 2001 7,488 ----- Excess of purchase price over net tangible assets acquired $38,828 ======= Preliminary allocation of excess purchase price and amortizable life: Customer relationships (20 years) $11,000 Trademarks (Indefinite) 4,700 Non-compete agreements (3 years) 730 Goodwill 22,398 ------ $38,828 ======= The total estimated purchase price of the acquisition has been allocated on a preliminary basis to assets and liabilities based on management's best estimates of fair value. These allocations are subject to change pending a final appraisal of the total purchase price and the fair value of the assets acquired and liabilities assumed. On January 31, 2002, the Company acquired from Marc Wiener and Barbara Kammerer all of the issued and outstanding common stock of Vitality, pursuant to a Stock Purchase Agreement dated as of January 9, 2002 (the "Purchase Agreement") among Vitality, Marc Wiener, Barbara Kammerer and the Company. Vitality, located in Roslyn Heights, New York, distributes specialty pharmaceutical products, on a national basis, to the chronically ill and genetically impaired, particularly focusing on oncology, infections disease, immunology and rheumatory disease. The aggregate purchase price for Vitality was $45,000 consisting of $35,000 in cash and the balance in the Company's common stock, a portion of which is being held in escrow to secure potential indemnification claims for breaches of Vitality and/or the individual seller's representations and warranties and covenants under the Purchase Agreement. The cash portion of the purchase price was funded through borrowings under the Company's existing $45,000 revolving credit facility. Included in the purchase price is an accrual for transaction costs for certain merger legal, accounting and other miscellaneous expenses associated with the acquisition totaling approximately $1,316. Included in this amount is approximately $355 common stock provided for these services. (2) Represents the reversal of amortization of goodwill incurred in 2001. On January 1, 2002, the Company adopted the provisions of Statement of Financial Accounting Standards No. 142, "Goodwill and Other Intangible Assets," and is no longer amortizing goodwill and intangible assets with indefinite lives. (3) Represents amortization expense related to intangible assets, with definite lives, based on preliminary estimates of the allocation of the purchase price. (4) Represents interest expense on amounts to fund the acquisition under the Company's line of credit. The interest expense was calculated using the Company's borrowing rate (4.25% on December 31, 2001). (5) Represents rent expense for use of the facility owned by the former stockholders of Vitality. (6) Represents the state income tax effect of the pro forma adjustments related to the acquisition. There was available Federal net operating loss carryforwards to offset Federal taxable income.