EX-99 5 ex99-3.txt EXHIBIT 99.3 Exhibit 99.3 UNAUDITED PRO FORMA CONSOLIDATED FINANCIAL INFORMATION The unaudited Pro Forma Consolidated Balance Sheet of the Company as of December 31, 2002 gives effect to the acquisition of NCS as if it had occurred as of December 31, 2002. The unaudited Pro Forma Consolidated Statement of Income of the Company for the year ended December 31, 2002 gives effect to the acquisition of NCS as if it had occurred on January 1, 2002. The acquisition of NCS was accounted for under the purchase method of accounting. For purposes of this pro forma financial information, the total purchase price was allocated to the tangible and identifiable intangible assets and liabilities based on the historical NCS December 31, 2002 balance sheet and the Company's estimate of certain fair values. The excess of cost over the fair value of the net assets acquired was recorded as goodwill. The Company has engaged an independent valuation firm to perform an appraisal to determine the fair value of the net assets acquired. The allocation of the purchase price will be adjusted in accordance with Statement of Financial Accounting Standards No. 141, "Business Combinations," to the extent that actual amounts differ from the amounts included in the pro forma financial information. Based on the historical December 31, 2002 NCS balance sheet and certain preliminary fair value estimates, the purchase price allocation would be as follows: Current assets $132,086 Property and equipment 24,899 Other noncurrent assets 5,124 Intangible assets 11,000 Goodwill 389,015 Current liabilities (68,669) Noncurrent liabilities (455) -------- Total net assets acquired $493,000 ========
The pro forma information has been prepared by the Company based on the consolidated financial statements of the Company, included in its Form 10-K for the fiscal year ended December 31, 2002, and NCS, included in its Form 10-K for the fiscal year ended June 30, 2002 and from financial information contained in Item 7(a) of this current report on Form 8-K/A. The pro forma information is presented for illustration purposes only and does not purport to be indicative of the combined financial condition or results of operations that actually would have occurred if the acquisition of NCS had been effected at the dates indicated or to project future financial condition or results of operations for any future period. The pro forma information gives effect only to the adjustments set forth in the accompanying notes and does not reflect any synergies anticipated by the Company's management as a result of the acquisition. The pro forma information should be read in conjunction with the Company's consolidated financial statements and related notes thereto included in its Form 10-K for the fiscal year ended December 31, 2002, and the consolidated financial statements of NCS and related notes thereto included in its Form 10-K for the fiscal year ended June 30, 2002, which have been incorporated by reference in this current report on Form 8-K/A.
OMNICARE, INC. AND SUBSIDIARY COMPANIES PRO FORMA CONSOLIDATED BALANCE SHEET UNAUDITED DECEMBER 31, 2002 (In thousands) (1) (2) Historical ------------------------- NCS Pro Forma Omnicare HealthCare Adjustments Pro Forma ----------- ----------- ----------- ----------- ASSETS Current assets: Cash and cash equivalents $ 137,936 $ 30,651 $ 493,000 (b) $ 155,352 (324,052) (c) (143,683) (d) (38,500) (e) Restricted cash 3,147 -- -- 3,147 Accounts receivable, less allowances 522,857 82,410 -- 605,267 Unbilled receivables 25,062 -- -- 25,062 Inventories 190,464 28,714 -- 219,178 Deferred income tax benefits 18,621 -- -- 18,621 Other current assets 103,471 3,546 (13,000) (e) 94,017 ----------- ----------- ----------- ----------- Total current assets 1,001,558 145,321 (26,235) 1,120,644 Properties and equipment, at cost less accumulated depreciation 139,908 24,899 -- 164,807 Goodwill 1,188,907 84,398 84,398 (f) 1,577,922 132,699 (j) 735 (i) 143,683 (d) 38,500 (e) (84,398) (g) (11,000) (h) Other noncurrent assets 97,212 5,859 11,000 (h) 113,336 (735) (i) ----------- ----------- ----------- ----------- Total assets $ 2,427,585 $ 260,477 $ 288,647 $ 2,976,709 =========== =========== =========== =========== LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities: Accounts payable $ 175,648 $ 45,770 $ (13,000) (e) $ 208,418 Line of credit in default -- 206,130 (206,130) (c) -- Convertible subordinated debentures in default -- 102,514 (102,514) (c) -- Current debt 110 -- 274 (a) 384 Accrued employee compensation 22,627 -- 6,284 (a) 28,911 Deferred revenue 25,254 -- 1,052 (a) 26,306 Income tax payable 6,837 -- 1,106 (a) 7,943 Other current liabilities 66,174 38,307 (15,408) (c) 80,357 (8,716) (a) ----------- ----------- ----------- ----------- Total current liabilities 296,650 392,721 (337,052) 352,319 Long-term debt 187 416 493,000 (b) 493,603 5.0% convertible subordinated debentures, due 2007 345,000 -- -- 345,000 8.125% senior subordinated notes, due 2011 375,000 -- -- 375,000 Deferred income tax liabilities 84,071 -- -- 84,071 Other noncurrent liabilities 51,615 39 -- 51,654 ----------- ----------- ----------- ----------- Total liabilities 1,152,523 393,176 155,948 1,701,647 ----------- ----------- ----------- ----------- Stockholders' equity Preferred stock -- -- -- -- Common stock 95,441 237 (237) (j) 95,441 Paid-in capital 737,421 272,018 (272,018) (j) 737,421 Retained earnings (deficit) 498,856 (404,954) 404,954 (j) 498,856 ----------- ----------- ----------- ----------- 1,331,718 (132,699) 132,699 1,331,718 Treasury stock, at cost (23,471) -- -- (23,471) Deferred compensation (29,018) -- -- (29,018) Accumulated other comprehensive income (4,167) -- -- (4,167) ----------- ----------- ----------- ----------- Total stockholders' equity (deficit) 1,275,062 (132,699) 132,699 1,275,062 ----------- ----------- ----------- ----------- Total liabilities and stockholders' equity $ 2,427,585 $ 260,477 $ 288,647 $ 2,976,709 =========== =========== =========== =========== The Notes to Unaudited Pro Forma Consolidated Financial Information are an integral part of these statements.
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OMNICARE, INC. AND SUBSIDIARY COMPANIES PRO FORMA CONSOLIDATED STATEMENT OF INCOME UNAUDITED FOR THE TWELVE MONTHS ENDED DECEMBER 31, 2002 (In thousands, except per share data) (1) (2) Historical ------------------------- NCS Pro Forma Omnicare HealthCare Adjustments Pro Forma ----------- ----------- ----------- ----------- Sales $ 2,606,450 $ 655,797 $ (15,517) (a) $ 3,246,730 Reimbursable out-of-pockets 26,304 -- -- 26,304 ----------- ----------- ----------- ----------- Total net sales 2,632,754 655,797 (15,517) 3,273,034 ----------- ----------- ----------- ----------- Cost of sales 1,915,397 550,086 (15,517) (a) 2,449,966 Reimbursed out-of-pocket expenses 26,304 -- -- 26,304 ----------- ----------- ----------- ----------- Total direct costs 1,941,701 550,086 (15,517) 2,476,270 ----------- ----------- ----------- ----------- Gross profit 691,053 105,711 -- 796,764 Selling, general and administrative expenses 411,272 107,663 (720) (k) 520,965 2,750 (l) Restructuring and other related charges 23,195 -- -- 23,195 ----------- ----------- ----------- ----------- Operating income (loss) 256,586 (1,952) (2,030) 252,604 Investment income 3,276 -- 1,433 (a) 4,709 Interest expense (56,811) (24,512) (10,549) (m) (93,305) (1,433) (a) ----------- ----------- ----------- ----------- Income (loss) before income taxes 203,051 (26,464) (12,579) 164,008 Income taxes 77,145 270 (4,780) (n) 62,323 (270) (o) (10,042) (p) ----------- ----------- ----------- ----------- Net income (loss) $ 125,906 $ (26,734) $ 2,513 $ 101,685 =========== =========== =========== =========== Earnings per share: Basic $ 1.34 $ 1.08 =========== =========== Diluted $ 1.33 $ 1.07 =========== =========== Weighted average number of common shares outstanding: Basic 94,168 94,168 =========== =========== Diluted 94,905 94,905 =========== =========== The Notes to Unaudited Pro Forma Consolidated Financial Information are an integral part of these statements.
3 OMNICARE, INC. AND SUBSIDIARY COMPANIES NOTES TO UNAUDITED PRO FORMA CONSOLIDATED FINANCIAL INFORMATION UNAUDITED (In thousands) (1) This column is derived from the audited consolidated financial statements of Omnicare, Inc. (the "Company") as of and for the year ended December 31, 2002. (2) This column is derived from the unaudited financial statements of NCS HealthCare, Inc. ("NCS") as of and for the twelve months ended December 31, 2002. Reclassifications ----------------- (a) To reclassify historical NCS balances to conform with the Company's presentation. Balance Sheet ------------- (b) The Company funded the cash consideration and transaction costs for the NCS acquisition of approximately $493,000 through a drawdown on its $500,000 revolving credit facility. (c) In connection with the acquisition, the Company repaid all NCS debt in default, plus accrued interest of $15,408 (including a 1.64% call premium on the NCS convertible debentures) totaling $324,052 at December 31, 2002. (d) On January 15, 2003, the Company completed the acquisition of all outstanding shares of NCS for a cash purchase price of approximately $143,683 (including payment for outstanding "in the money" stock options previously granted by NCS). (e) To record estimated transaction costs of $38,500 expected to be paid in connection with the acquisition. As of December 31, 2002, $13,000 of these costs were accrued in the Company's consolidated financial statements. These amounts are being shown as paid in the pro forma balance sheet with the offset being recorded as additional goodwill. (f) To record goodwill for the net effect of the NCS acquisition. (g) To eliminate NCS' existing goodwill as of December 31, 2002. (h) To reduce goodwill and to record estimated identifiable intangible assets (e.g., customer relationship assets, etc.) associated with the NCS acquisition. (i) To eliminate the NCS deferred debt issuance costs as of December 31, 2002 relating to the debt which was repaid in full by the Company at closing. (j) To eliminate the stockholders' equity accounts of NCS. Income Statement ---------------- (k) To eliminate NCS' historical amortization of debt issuance costs, included in selling, general and administrative expenses. (l) To record amortization expense relating to the $11,000 of identifiable intangible assets resulting from the acquisition, based preliminarily on an average estimated useful life of four years. (m) To adjust interest expense to:
Twelve Months Ended December 31, 2002 ----------------- (i) eliminate historical interest expense on the NCS debt repaid at closing $(22,359) (ii) eliminate commitment fees on the Company's line of credit facility, assuming drawn at a $493,000 level beginning January 1, 2002 (1,602) (iii) record interest expense at 7% (the estimated average long-term rate on the borrowings) on the $493,000 of cash consideration and transaction costs financed by the Company through a drawdown on its $500,000 revolving credit facility, and assumed to be outstanding at January 1, 2002 (annual interest expense would change by approximately $616 for each 1/8% change in the interest rate) 34,510 -------- $ 10,549 ========
(n) Tax effect of all pretax pro forma adjustments at the Company's effective tax rate of 38%, which is not materially different than the combined federal and state statutory rates. (o) To eliminate NCS' historical tax provision. (p) To establish NCS tax provision at the Company's 38% effective tax rate level. 4