-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, FhJwGbdfoqKqNFNBCqgB+xZ8qJ7A5+PwS9Ycpp1+o1oGK4Xn7nv6WEVStCKmW5MR dSmIQ875AbiqQY2Q57xGgA== 0000950117-99-002357.txt : 19991117 0000950117-99-002357.hdr.sgml : 19991117 ACCESSION NUMBER: 0000950117-99-002357 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 4 CONFORMED PERIOD OF REPORT: 19990930 FILED AS OF DATE: 19991115 FILER: COMPANY DATA: COMPANY CONFORMED NAME: OMNICARE INC CENTRAL INDEX KEY: 0000353230 STANDARD INDUSTRIAL CLASSIFICATION: RETAIL-DRUG STORES AND PROPRIETARY STORES [5912] IRS NUMBER: 311001351 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: SEC FILE NUMBER: 001-08269 FILM NUMBER: 99754379 BUSINESS ADDRESS: STREET 1: 100 E RIVERCENTER BLVD STREET 2: STE 1600 CITY: COVINGTON STATE: KY ZIP: 41011 BUSINESS PHONE: 6063923300 MAIL ADDRESS: STREET 1: 100 E RIVERCENTER BLVD STREET 2: STE 1600 CITY: COVINGTON STATE: KY ZIP: 41011 10-Q 1 OMNICARE, INC. 10-Q FORM 10-Q SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 Quarterly Report Under Section 13 or 15(d) of The Securities Exchange Act of 1934 For Quarter Ended September 30, 1999 Commission File Number 1-8269 OMNICARE, INC. -------------- Incorporated under the laws of the I.R.S. Employer Identification State of Delaware No. 31-1001351
100 East RiverCenter Boulevard, Covington, Kentucky 41011 --------------------------------------------------------- (Address of principal executive offices) (Zip code) Registrant's telephone number, including area code: (606) 392-3300 Indicate by check mark whether the registrant: 1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports) and 2) has been subject to such filing requirement for the past 90 days. Yes x No --- --- COMMON STOCK OUTSTANDING - ------------------------
Number of Shares Date ------ ---- Common Stock, $1 par value 91,295,522 September 30, 1999
OMNICARE, INC. AND ------------------ SUBSIDIARY COMPANIES -------------------- INDEX
PAGE Part I. Financial Information: Item 1. Financial Statements Consolidated Balance Sheet - September 30, 1999 and December 31, 1998 3 Consolidated Statement of Income - Three and nine months ended - September 30, 1999 and 1998 4 Consolidated Statement of Cash Flows - Nine months ended - September 30, 1999 and 1998 5 Notes to Consolidated Financial Statements 6 Item 2. Management's Discussion and Analysis of Results of Operations and Financial Condition 11 Item 3. Quantitative and Qualitative Disclosures About Market Risk 17 Part II. Other Information: Item 6. Exhibits and Reports on Form 8-K 18
PART I -- FINANCIAL INFORMATION Item 1. Financial Statements -------------------- OMNICARE, INC. AND SUBSIDIARY COMPANIES Consolidated Balance Sheet UNAUDITED (In thousands, except share data)
September 30, December 31, 1999 1998 --------------- --------------- ASSETS Current assets: Cash and cash equivalents $93,632 $54,312 Accounts receivable, less allowances of $34,122 (1998-$31,417) 404,516 363,796 Unbilled receivables 21,272 15,828 Inventories 135,081 117,936 Deferred income tax benefits 23,006 12,348 Other current assets 65,251 39,078 --------------- --------------- Total current assets 742,758 603,298 Properties and equipment, at cost less accumulated depreciation of $98,064 (1998-$76,854) 160,564 136,371 Goodwill, less accumulated amortization of $74,825 (1998-$51,861) 1,195,146 1,110,254 Other assets 65,771 53,906 -------------- --------------- Total assets $2,164,239 $1,903,829 =============== =============== LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities: Accounts payable $98,479 $82,029 Amounts payable pursuant to acquisition agreements 11,677 10,230 Current bank debt 87,953 2,844 Accrued employee compensation 55,407 48,073 Deferred revenue 19,439 19,043 Other current liabilities 60,966 71,330 --------------- --------------- Total current liabilities 333,921 233,549 Long-term bank debt 391,976 306,556 5% convertible subordinated notes, due 2007 345,000 345,000 Deferred income taxes 30,928 16,230 Amounts payable pursuant to acquisition agreements 14,228 13,564 Other noncurrent liabilities 28,924 25,459 --------------- --------------- Total liabilities 1,144,977 940,358 Stockholders' equity: Preferred stock-authorized 1,000,000 shares without par value; none issued Common stock-authorized 200,000,000 shares $1 par; 91,612,000 shares issued (1998-90,459,800 shares issued) 91,612 90,460 Paid-in capital 684,436 664,225 Retained earnings 265,885 225,937 --------------- --------------- 1,041,933 980,622 Treasury stock, at cost - 316,000 shares (1998-194,900 shares) (6,676) (4,166) Deferred compensation (14,801) (12,932) Cumulative translation adjustment (1,194) (53) --------------- --------------- Total stockholders' equity 1,019,262 963,471 --------------- --------------- Total liabilities and stockholders' equity $2,164,239 $1,903,829 =============== ===============
The Notes to Consolidated Financial Statements are an integral part of this statement. 3 OMNICARE, INC. AND SUBSIDIARY COMPANIES Consolidated Statement of Income UNAUDITED (In thousands, except per share data)
Three Months Ended Nine Months Ended September 30, September 30, ---------------------------------- ---------------------------------------- 1999 1998 1999 1998 --------------- --------------- ------------------ ------------------ Sales $474,007 $383,647 $1,374,340 $1,082,099 Cost of sales 348,007 267,168 980,507 755,719 --------------- --------------- ------------------ ------------------ Gross profit 126,000 116,479 393,833 326,380 Selling, general and administrative expenses 90,888 71,708 258,417 202,652 Acquisition expenses, pooling-of-interests (877) - (55) 14,587 Restructuring costs 2,144 - 28,857 3,627 --------------- --------------- ------------------ ------------------ Operating income 33,845 44,771 106,614 105,514 Investment income 266 623 915 3,046 Interest expense (12,629) (5,301) (33,458) (14,507) --------------- --------------- ------------------ ------------------ Income before income taxes 21,482 40,093 74,071 94,053 Income taxes 7,538 14,353 27,442 39,801 --------------- --------------- ------------------ ------------------ Net income $ 13,944 $ 25,740 $ 46,629 $ 54,252 =============== =============== ================== ================== Earnings per share: Basic $ 0.15 $ 0.29 $ 0.51 $ 0.61 =============== =============== ================== ================== Diluted $ 0.15 $ 0.29 $ 0.51 $ 0.61 =============== =============== ================== ================== Weighted average number of common shares outstanding: Basic 91,276 89,493 90,900 88,815 =============== =============== ================== ================== Diluted 91,276 90,054 91,175 89,647 =============== =============== ================== ================== Comprehensive income $ 14,083 $ 25,527 $ 45,910 $ 54,217 =============== =============== ================== ==================
The Notes to Consolidated Financial Statements are an integral part of this statement. 4 OMNICARE, INC. AND SUBSIDIARY COMPANIES Consolidated Statement of Cash Flows UNAUDITED (In thousands)
Nine Months Ended September 30, -------------------------------- 1999 1998 --------------- --------------- Cash flows from operating activities: Net income $ 46,629 $ 54,252 Adjustments to reconcile net income to net cash flows from operating activities: Depreciation and amortization 50,990 34,176 Provision for doubtful accounts 15,581 8,357 Deferred tax provision 14,598 7,061 Non-cash portion of restructuring costs 3,489 1,948 Changes in assets and liabilities, net of effects from acquisition of businesses: Accounts receivable and unbilled receivables (57,593) (50,199) Inventories (13,076) (2,560) Current and noncurrent assets (36,557) (11,953) Payables and accrued liabilities 17,134 52,103 Accrued employee compensation 18,603 604 Deferred revenue 396 (7,835) Current and noncurrent liabilities 3,530 1,007 --------------- --------------- Net cash flows from operating activities 63,724 86,961 --------------- --------------- Cash flows from investing activities: Acquisition of businesses (135,652) (366,632) Capital expenditures (48,369) (38,724) Other (749) 2,144 --------------- --------------- Net cash flows from investing activities (184,770) (403,212) --------------- --------------- Cash flows from financing activities: Borrowings on line of credit facilities 170,000 290,000 Principal payments on long-term obligations (1,490) (22,082) Exercise of stock options and warrants, net of stock tendered in payment (2,148) (334) Dividends paid (6,148) (5,056) Effect of exchange rate changes on cash and other 152 (299) --------------- --------------- Net cash flows from financing activities 160,366 262,229 --------------- --------------- Net increase (decrease) in cash and cash equivalents 39,320 (54,022) Cash and cash equivalents at beginning of period 54,312 138,062 --------------- --------------- Cash and cash equivalents at end of period $ 93,632 $ 84,040 =============== =============== Supplemental disclosures of cash flow information: Income taxes paid, net $ 17,408 $ 16,328 Interest paid 27,933 9,744
The Notes to Consolidated Financial Statements are an integral part of this statement. 5 OMNICARE, INC. AND SUBSIDIARY COMPANIES Notes to Consolidated Financial Statements 1. The interim financial data are unaudited; however, in the opinion of the management of Omnicare, Inc., the interim data include all adjustments (which include only normal adjustments, except as discussed in Notes 2 and 4) considered necessary for a fair presentation of the consolidated financial position, results of operations and cash flows of Omnicare, Inc. and its consolidated subsidiaries ("Omnicare" or the "Company"). Certain reclassifications of prior year amounts have been made to conform with the current year presentation. 2. The Company has been involved in a program to acquire providers of pharmaceutical and related pharmacy management services and medical supplies to long-term care facilities and their residents. The Company's strategy includes acquisitions of freestanding institutional pharmacy businesses as well as other assets, generally insignificant in size, which are combined with existing pharmacy operations to augment their internal growth. The Company may, from time to time, acquire certain non-pharmaceutical companies which complement the Company's core business. Since January 1, 1999, the Company has completed five acquisitions (excluding insignificant purchases of other assets) of institutional pharmacy businesses, four of which were accounted for as purchase transactions and one as a pooling-of-interests transaction. These transactions added approximately $65.5 million in revenues on an annualized basis. For all acquisitions accounted for as purchases, including insignificant purchases of other assets, the purchase price paid has been allocated to the fair value of the assets acquired and liabilities assumed, and the results of operations of the acquired entities have been included in the consolidated results of the Company from the effective dates of the acquisitions. Pooling-of-Interests Transactions On June 26, 1998, Omnicare completed the acquisition of CompScript, Inc. ("CompScript"). Pursuant to the terms of the merger agreement, CompScript stockholders received .12947 of a share of Omnicare common stock for each share owned of CompScript common stock. Omnicare issued approximately 1.8 million shares of its common stock with a value of approximately $67 million in this transaction, which was accounted for as a pooling-of-interests and a tax free reorganization. CompScript is a Boca Raton, Florida-based provider of comprehensive pharmacy management, infusion therapy and related consulting services to the long-term care, alternate care and managed care markets. CompScript served approximately 20,000 residents in 137 long-term care facilities in five states at the time of the acquisition. On June 29, 1998, Omnicare completed the acquisition of IBAH, Inc. ("IBAH"). Pursuant to the terms of the merger agreement, IBAH stockholders received .1638 of a share of Omnicare common stock for each share owned of IBAH common stock. Omnicare issued 6 approximately 4.3 million shares of common stock with a value of approximately $159 million in this transaction, which was accounted for as a pooling-of-interests and a tax free reorganization. IBAH, headquartered in Blue Bell, Pennsylvania, is an international provider of comprehensive product development services to client companies in the pharmaceutical, biotechnology, medical device and diagnostics industries. IBAH offers services for all stages of drug development that are intended to help client companies to accelerate products from discovery through development and commercialization more cost-effectively. In connection with the CompScript and IBAH mergers, in the 1998 second quarter, Omnicare recorded a charge to operating expenses of $17,723,000 ($15,391,000 after taxes) for direct and other merger-related costs pertaining to the merger transactions and certain related restructuring actions. During the quarter ended September 30, 1999, the Company recorded income of $877,000 ($962,000 after taxes) relating to the net reversal of estimated CompScript and IBAH acquisition related expenses resulting from the finalization of those costs during the quarter. The aftertax net income impact of these adjustments exceeds the pretax impact as a result of the CompScript merger transaction costs reversal, which had no tax effect due to the nature of these expenses. Merger transaction costs consisted primarily of fees for investment bankers, attorneys, accountants, financial printing and other related charges. Restructuring costs include severance and exit costs. Details of these costs follow (in thousands):
Utilized as of Third Quarter Balance at Initial September 30, 1999 September 30, Provision 1999 Adjustment 1999 ---------- --------------- --------------- ------------- Merger transaction costs $ 14,096 $ (13,219) $ (877) $ - Restructuring costs: Employee severance 1,413 (1,218) - 195 Exit costs 2,214 (1,541) - 673 ---------- -------------- --------------- ------------- Total $ 17,723 $ (15,978) $ (877) $ 868 ========== ============== =============== =============
Restructuring costs include the costs of restructuring the CompScript mail order pharmacy business and the cancellation of certain of its vendor agreements along with severance and exit costs associated with the consolidation of certain IBAH facilities and the restructuring of its pharmaceutics business. These actions resulted in the reduction of approximately 20 employees. Included in the exit costs are $1,948,000 of non-cash items. At September 30, 1999, all remaining liabilities relating to these actions were classified as current liabilities. 3. Based on the "management approach," as defined by Statement of Financial Accounting Standards (SFAS) No. 131, Omnicare has two business segments. The Company's largest segment is Pharmacy Services. Pharmacy Services provides distribution of pharmaceuticals, related pharmacy consulting, data management services and medical supplies to long-term care facilities. The Company's other reportable segment is Contract Research Organization ("CRO") 7 Services, which provides comprehensive product development services to client companies in pharmaceutical, biotechnology, medical devices and diagnostics industries. The table below presents information about the reportable segments as of and for the three and nine months ended September 30, 1999 and 1998 (in thousands):
Three Months Ended September 30, ------------------------------------------------------------ Corporate Pharmacy CRO and Consolidated 1999: Services Services Consolidating Totals - --------------------------------------------------------------------------------------------------------------------------- Sales $ 440,608 $ 33,399 $ - $ 474,007 Depreciation and amortization 16,552 1,412 292 18,256 Operating income (expense), excluding acquisition expenses and restructuring costs 37,695 3,663 (6,246) 35,112 Acquisition income (expenses) 1,174 (297) - 877 Restructuring (costs) (2,040) (104) - (2,144) Operating income (expense) 36,829 3,262 (6,246) 33,845 Total assets 1,900,127 122,313 141,799 2,164,239 Expenditures for additions to long-lived assets 13,532 991 511 15,034 - --------------------------------------------------------------------------------------------------------------------------- 1998: - --------------------------------------------------------------------------------------------------------------------------- Sales $ 352,387 $ 31,260 $ - $ 383,647 Depreciation and amortization 10,783 962 159 11,904 Operating income (expense) 46,824 3,724 (5,777) 44,771 Total assets 1,567,180 101,153 160,280 1,828,613 Expenditures for additions to long-lived assets 13,053 1,504 671 15,228 - ---------------------------------------------------------------------------------------------------------------------------
8
Nine Months Ended September 30, ---------------------------------------------------------------- Corporate Pharmacy CRO and Consolidated 1999: Services Services Consolidating Totals - ------------------------------------------------------------------------------------------------------------------------------- Sales $ 1,271,460 $ 102,880 $ - $ 1,374,340 Depreciation and amortization 45,728 4,519 743 50,990 Operating income (expense), excluding acquisition expenses and restructuring costs 141,156 12,818 (18,558) 135,416 Acquisition income (expenses) 352 (297) - 55 Restructuring (costs) (26,023) (2,834) - (28,857) Operating income (expense) 115,485 9,687 (18,558) 106,614 Total assets 1,900,127 122,313 141,799 2,164,239 Expenditures for additions to long-lived assets 42,978 2,544 2,847 48,369 - ------------------------------------------------------------------------------------------------------------------------------- 1998: - ------------------------------------------------------------------------------------------------------------------------------- Sales $ 992,661 $ 89,438 $ - $ 1,082,099 Depreciation and amortization 29,884 3,905 387 34,176 Operating income (expense), excluding acquisition expenses and restructuring costs 132,008 8,738 (17,018) 123,728 Acquisition (expenses) (9,318) (5,269) - (14,587) Restructuring (costs) (1,245) (2,382) - (3,627) Operating income (expense) 121,445 1,087 (17,018) 105,514 Total assets 1,567,180 101,153 160,280 1,828,613 Expenditures for additions to long-lived assets 32,078 4,764 1,882 38,724 - -------------------------------------------------------------------------------------------------------------------------------
4. In the second quarter of 1999, the Company announced a comprehensive restructuring plan to streamline company-wide operations through the implementation of a productivity and consolidation program. This program is in response to the recent changes in the healthcare industry and will complement Omnicare's ability to gain maximum benefits from the existing acquisition program. The productivity and consolidation initiatives are expected to eliminate redundant efforts, simplify work processes and apply technology to maximize employee productivity, and standardize operations around best practices. Facilities in overlapping geographic territories are being consolidated to better align pharmacies around customers to improve efficiency and enhance the Company's ability to deliver innovative services and programs to its customers. Productivity initiatives are being introduced at the majority of the Company's 220 pharmacy and other operating locations. Also as part of the initiative, the roster of pharmacies and other operating locations is being reconfigured through consolidations, relocations, the creation of nine new sites, and the closing of approximately 20 sites. These strategic measures are expected to lead to the net reduction of approximately 1,700 full- and part-time positions upon completion of the plan. 9 In connection with this program, Omnicare expects to recognize total restructuring costs of $32,354,000 ($20,783,000 after taxes). During the second and third quarters of 1999, Omnicare recorded charges to operating expenses totaling $28,857,000 ($18,580,000 after taxes) for restructuring activities. The remaining costs will be expensed over the next five quarters, at such time the amounts are required to be recognized per generally accepted accounting principles. The restructuring charge includes severance pay, the buy-out of current employee contract agreements, the buy-out of lease obligations, the write-off of other assets (representing $3,489,000 of non-cash items) and facility exit costs. Details of these costs follow (in thousands):
Third Quarter Utilized as of Balance at Initial 1999 September 30, September 30, Provision Provision 1999 1999 ---------- --------------- --------------- ------------- Productivity and consolidation programs: Employee severance $ 11,555 $ - $ (1,370) $ 10,185 Employee contract agreement buy-outs 6,445 263 (2,028) 4,680 Lease terminations 5,536 - (447) 5,089 Other assets and facility exit costs 3,177 1,881 (3,250) 1,808 ---------- --------------- --------------- ------------- Total $ 26,713 $ 2,144 $ (7,095) $ 21,762 ========== =============== =============== =============
As of September 30, 1999, the Company had incurred approximately $3.4 million of severance and other employee-related costs relating to the reduction of approximately 280 employees. All remaining liabilities recorded at September 30, 1999 were classified as current liabilities since the Company anticipates that these activities will be finalized within the next year. The Company expects that the overall restructuring program will be completed by the end of the year 2000. 10 Item 2. Management's Discussion and Analysis of Results of Operations and Financial Condition Results of Operations Quarter Ended September 1999 vs. 1998 Diluted earnings per share for the three months ended September 30, 1999 were $.16 as compared with $.29 earned in the prior year quarter, excluding from the 1999 period a restructuring charge of $2,144,000 ($1,351,000 after taxes, or $0.01 per share) relating to the Company's previously announced productivity and consolidation initiative, and the net reversal of estimated acquisition expenses relating to the finalization of prior year pooling-of-interests transactions totaling $877,000 ($962,000 after taxes, or $0.01 per share). The aftertax net income impact of these adjustments exceeds the pretax impact as a result of the CompScript merger transaction costs reversal, which had no tax effect due to the nature of these expenses. Net income for the 1999 quarter, on this basis, was $14,333,000 versus the $25,740,000 earned in the 1998 quarter. Revenues for the three months ended September 30, 1999 rose 24% to $474,007,000 from the $383,647,000 recorded in the comparable prior year period. The increase in the Company's sales represents the cumulative effect of its acquisitions of long-term care pharmacy providers, and continued internal growth of the pharmacy services and contract research organization businesses. The reduction in earnings primarily reflects the very difficult operating environment in the long-term care industry. The implementation of the Prospective Payment System ("PPS") for Medicare residents of skilled nursing facilities continues to create a very unsettled operating environment. While Omnicare experienced PPS-related pricing pressure from skilled nursing facility customers late in 1998 and to a greater extent in 1999, much of this pressure was offset by the addition of new business, the benefits of increased compliance with Omnicare's proprietary geriatric formulary, the Omnicare Geriatric Pharmaceutical Care Guidelines'r', and reduced operating costs. However, the continued reluctance on the part of skilled nursing facilities to admit Medicare residents, particularly those requiring complex care, owing to concerns relating to the adequacy of reimbursement under PPS has caused the continuation of weaker Medicare census in many areas. Moreover, for many skilled nursing facilities, the average length of stay for Medicare residents has decreased. These factors have had the effect of significantly reducing overall occupancy in the facilities Omnicare serves. Moreover, the mix of residents in skilled nursing facilities also has adversely affected Omnicare's results as these facilities have attempted to avoid high acuity patients which impacts overall utilization of drugs. Reimbursement concerns have increasingly driven many nursing facilities to admit residents funded by payors other than Medicare. These trends continued during the third quarter and had an unfavorable impact on sales, profit margins and net income. Despite the operating environment, Omnicare continued to see solid revenue growth, reflecting the impact of prior-period acquisitions as well as internal growth. The number of residents served at September 30, 1999 was 628,000, up 11% over the number served one year earlier. This addition of new accounts is net of the elimination of certain uneconomic PPS contracts and those client facilities from which Omnicare has withdrawn due to the deterioration in their financial condition. Internal growth resulted primarily from the efforts of the Company's National Sales and Marketing Group and pharmacy staff in developing new pharmacy contracts, drug price inflation and changes in sales mix. 11 Omnicare's CRO Services segment experienced modest revenue growth during the quarter and operating profit which, while up significantly on a year-to-date basis, was essentially even with the comparable prior year quarter, excluding acquisition expenses and restructuring costs. During the quarter, a slowdown was observed in the commencement rate of several new projects resulting in a temporary underutilization of resources. A number of these projects have commenced in the fourth quarter. Gross profit as a percentage of sales decreased to 26.6% in 1999 from 30.4% in 1998. The positive impact on gross profit relating to the Company's purchasing leverage associated with purchases of pharmaceuticals, leveraging fixed and variable overhead costs at the Company's pharmacies, benefits realized from the Company's formulary compliance program and productivity and consolidation initiative, and changes in sales mix were more than offset by the aforementioned unfavorable impact of PPS on the Pharmacy Services segment and the less favorable performance of the CRO Services segment. Selling, general and administrative ("operating") expenses for the quarter ended September 30, 1999 increased 27% to $90,888,000 as compared to 1998 due primarily to the overall growth of the Company. Operating expenses as a percentage of sales of 19.2% in 1999 were greater than the 18.7% experienced in the comparable prior year period due primarily to an increase in the Company's provision for doubtful accounts due to a deterioration in the financial condition of several of the Company's Pharmacy Services customers as a result of the current PPS environment. Investment income for the three months ended September 30, 1999 was $266,000, a decrease of $357,000 in comparison to the same period of 1998 due to a lower average invested cash balance during the third quarter of 1999 than in the third quarter of 1998. The use of cash is primarily attributable to the Company's acquisition program and capital expenditures. Interest expense during the three months ended September 30, 1999 was $12,629,000, an increase of $7,328,000 versus the comparable prior year period primarily due to the impact of interest expense associated with the $100 million and $85 million increases, respectively, in borrowings under the Company's five-year $400 million and 364-day $400 million line of credit facilities from September 30, 1998 to September 30, 1999. These increases are primarily attributable to the Company's acquisition program. Also impacting the quarterly comparison is the full quarter impact in the third quarter of 1999 of interest expense associated with a $250 million draw on the Company's five-year $400 million line of credit facility late in the third quarter of 1998 in connection with the Company's acquisition of the pharmacy business of Extendicare, Inc. The decrease in the effective tax rate to 35.1% in the third quarter of 1999 from 35.8% in the comparable prior year quarter is primarily attributable to the favorable tax effect associated with the Company's reversal of estimated acquisition-related expenses for prior year pooling-of-interests transactions, based on the finalization of these transaction costs. 12 Year-to-Date September 1999 vs. 1998 Diluted earnings per share for the nine months ended September 30, 1999 were $.71 versus the $.78 per diluted share earned in the same period of 1998, net of acquisition expenses related to pooling-of-interests transactions and restructuring charges from both periods. Net income, on this basis, for the first nine months of 1999 was $64,833,000 as compared to the $70,058,000 earned in the comparable 1998 period. Revenues of $1,374,340,000 in the first nine months of 1999 were 27% higher than the $1,082,099,000 recorded in the comparable prior year period. The first nine months of 1999 include restructuring charges and net pooling-of-interests expenses, totaling $28,802,000 before taxes ($18,204,000 after taxes, or $0.20 per diluted share). The comparable 1998 period includes pooling-of-interests expenses and restructuring charges totaling $18,214,000 before taxes ($15,806,000 after taxes, or $0.18 cents per diluted share). The increase in sales represents the cumulative effect of the Company's acquisitions of long-term care pharmacy providers, and continued internal growth of the pharmacy services and contract research organization businesses. The favorable impact of these factors on sales was partially offset by the aforementioned unfavorable impact of PPS, which is also responsible for the decline in gross profit as a percentage of sales and net income in comparison to the prior year. During the first three quarters of 1999, the Company acquired five institutional pharmacy providers (excluding insignificant purchases of other assets) which, when combined with internal growth, brought the total number of nursing facility residents served to 628,000 at September 30, 1999. These transactions added approximately $65.5 million in revenues on an annualized basis. Internal growth resulted from the efforts of the Company's National Sales and Marketing Group and pharmacy staff in developing new pharmacy contracts, drug price inflation, significant growth in other complementary non-pharmaceutical service businesses (primarily the CRO Services segment, as previously discussed) and other changes in sales mix. Gross profit as a percentage of sales decreased to 28.7% in 1999 from 30.2% in 1998. The positive impact on gross profit relating to the Company's purchasing leverage associated with purchases of pharmaceuticals, leveraging fixed and variable overhead costs at the Company's pharmacies, benefits realized from the Company's formulary compliance program and productivity and consolidation initiative, and changes in sales mix including increased sales from contract research organizations were more than offset by the aforementioned unfavorable impact of PPS on the Pharmacy Services segment. Operating expenses for the nine months ended September 30, 1999 increased 28% to $258,417,000 as compared to 1998 due primarily to the overall growth of the Company. Operating expenses as a percentage of sales of 18.8% in 1999 were relatively consistent with the 18.7% experienced in the prior year. Investment income for the nine months ended September 30, 1999 was $915,000, a decrease of $2,131,000 in comparison to the same period of 1998 due to a lower average invested cash balance during the first three quarters of 1999 as compared to 1998. The use of 13 cash is primarily attributable to the Company's acquisition program and, to a lesser extent, capital expenditures. Interest expense during the nine months ended September 30, 1999 was $33,458,000, an increase of $18,951,000 versus the comparable prior year period primarily due to the impact of interest expense associated with the $100 million and $85 million increases, respectively, in borrowings under the Company's five-year $400 million and 364-day $400 million line of credit facilities from September 30, 1998 to September 30, 1999. These increases are primarily attributable to the Company's acquisition program. Also impacting the period-to-period comparison is the nine month effect in 1999 of interest expense associated with a $250 million draw on the Company's five-year $400 million line of credit facility late in the third quarter of 1998 in connection with the Company's acquisition of the pharmacy business of Extendicare, Inc. The decrease in the effective tax rate to 37.0% during the first three quarters of 1999 from 42.3% in the comparable prior year period is primarily attributable to a reduction in nondeductible acquisition expenses relating to the 1999 pooling-of-interests transaction as compared to the 1998 pooling-of-interests transactions, and a decrease in state and local income taxes in 1999 due to the Company's state tax planning programs. The Company expects the benefit realized from the state tax planning programs to continue. The effective tax rates in the 1999 and 1998 periods are higher than the statutory rate primarily due to state and local income taxes and various nondeductible expenses (e.g., acquisition costs, etc.). Liquidity and Capital Resources Cash and cash equivalents at September 30, 1999 were $93.6 million versus $54.3 million at December 31, 1998. Acquisitions of businesses through September 30, 1999 required $135.7 million of cash payments (including amounts payable pursuant to acquisition agreements relating to pre-1999 acquisitions) which were primarily funded by borrowings from the Company's revolving credit facilities during the first half of 1999. In October 1996, the Company entered into a five-year agreement with a consortium of sixteen banks for a $400 million revolving credit facility available through 2001. In December 1998, the Company amended this five-year $400 million line of credit to permit an additional 364-day $400 million line of credit, which is convertible at maturity into a one-year term loan. During the third quarter of 1999, Omnicare renewed this 364-day $400 million revolving line of credit through September 2, 2000, with no change in pricing or terms. Interest rates and commitment fees for the five-year $400 million line of credit facility are based on the Company's level of performance under certain financial ratios, debt covenants and the amount of borrowings under the line of credit. The total amount outstanding under this facility as of September 30, 1999 was $390 million. Interest rates and commitment fees under the 364-day $400 million line of credit are based on the Company's debt ratings. The amount outstanding at September 30, 1999 under the 364-day facility was $85 million. The Company generated positive net cash flows from operating activities of $63.7 million during the nine months ended September 30, 1999, $33.0 million of which was generated in the third quarter. Improved management of working capital significantly contributed to the favorable third quarter 1999 operating cash flow results. 14 The Company's capital requirements are primarily related to its acquisition program and, to a lesser extent, capital expenditures, including those related to investments in the Company's information technology systems such as its Year 2000 compliance initiative. During the nine months ended September 30, 1999, the Company made five acquisitions (excluding insignificant purchases of other assets), as well as payments relating to individually insignificant purchases of other assets and disbursements relating to amounts payable pursuant to acquisition agreements relating to pre-1999 acquisitions. Such acquisition activity was financed from cash and cash equivalents and the issuance of approximately 483,000 shares of common stock. There are no material commitments outstanding at September 30, 1999, other than estimated future acquisition-related payments to be made in accordance with purchase agreements. The Company's current ratio at September 30, 1999 and December 31, 1998 was 2.2 to 1.0 and 2.6 to 1.0, respectively. The decrease in the current ratio is primarily attributable to current liabilities recorded relating to the September 2, 2000 maturity date for the $85 million borrowed under the 364-day $400 million line of credit, as well as the remaining reserve of approximately $22 million recorded in connection with the Company's aforementioned productivity and consolidation initiative. On February 3, 1999, the Company's Board of Directors increased the quarterly cash dividend by 13% to 2.25 cents per share for an indicated annual rate of 9 cents per share in 1999. Dividends of $ 6.1 million were paid during the nine months ended September 30, 1999 versus the $5.1 million paid in the comparable prior year period. The Company believes its sources of liquidity and capital are adequate for its ongoing operating needs. If needed, other external sources of financing are readily available to the Company. Impact of Year 2000 The Company utilizes information systems throughout its business to carry out its day-to-day operations. Further, the Company has and will continue to invest in financial and operational systems to support its growth strategy. Incorporated in this process is the continuing assessment of the Company's Year 2000 compliance. The Company currently considers its internal information technology ("IT") systems to be substantially Year 2000 compliant. For those systems that are not Year 2000 compliant, Omnicare is currently correcting, upgrading or replacing those systems with, among other systems, its new proprietary information system, which is Year 2000 compliant. The Company believes it will be able to modify or replace its affected systems in time to avoid any interruptions in its operations and anticipates that such remediation will be completed during the latter part of 1999. The system remediation is being completed using both internal resources and external consultants. The Company estimates that the total costs associated with this project will range from approximately $7.7 million to $8.4 million (with hardware accounting for approximately 30 percent of these costs and software and implementation approximating 70 percent of these costs). Approximately $6.5 million has been spent to date. The cost of this project is being funded from the Company's operating cash flows. No IT projects with high priority have been significantly delayed due to the Year 2000 initiatives. The Company does not anticipate any significant implications with respect to Year 2000 issues relating to non-IT systems. 15 While the Company believes its plan for Year 2000 compliance will be completed on a timely basis and within the foregoing estimates, there can be no assurance that the remedial actions being implemented by the Company will be completed in a timely manner; nor can assurance be given that any inability to complete remedial action in a timely manner will not impact adversely operations or financial results. Moreover, there can be no assurance that the costs associated with the remediation will not exceed the foregoing estimates. The failure by third parties with whom the Company has dealings, particularly the Medicaid and Medicare programs, to adequately address their Year 2000 issues could adversely affect the Company, and claims to these third party payors could be unjustifiably denied and/or delayed. As a result, the Company's accounts receivable balance could increase, unfavorably impacting operating cash flows. The Company is communicating with each of these programs to determine the extent to which it may be impacted by any Year 2000 issues not yet resolved by these programs. The Company has developed a contingency plan which, if necessary, would call for the submission of reimbursement claims using universal claim (paper) forms to the programs in the event that computerized processing is not feasible in the year 2000. While it is management's current belief that this contingency plan would satisfactorily address the risk associated with any absence of readiness experienced by these programs, there can be no assurance that implementation of such plan will mitigate in whole or in part such risk. Safe Harbor Statement under the Private Securities Litigation Reform Act of 1995 Regarding Forward-Looking Information In addition to historical information, this report contains forward-looking statements and performance trends that are subject to certain known and unknown risks, uncertainties, contingencies and other factors that could cause actual results, performance or achievements to differ materially from those stated. Such forward-looking statements and trends include those relating to Omnicare's acquisition program, internal growth trends, nursing home admission trends, census and length of stay trends, the expected benefits from the Company's state tax planning programs, the adequacy and availability of Omnicare's sources of liquidity and capital, and the impact of the Year 2000 issue. Such risks, uncertainties, contingencies and other factors, many of which are beyond the control of Omnicare, include, but are not limited to: overall economic, financial and business conditions, the continued availability of suitable acquisition candidates and the successful integration of acquired companies, whether there will be passage of legislation giving financial relief under PPS, the effect of new government regulation and/or legislative initiatives including those relating to reimbursement policies and in the interpretation and application of such policies, the failure of Omnicare to obtain or maintain required regulatory approvals or licenses, loss or delay of contracts pertaining to Omnicare's CRO business for regulatory or other reasons, the ability to implement the productivity and consolidation program and to realize anticipated benefits, changes in tax law and regulation, trends for the continued growth of the businesses of Omnicare, volatility in Omnicare's stock price, the demand for Omnicare's products and services, pricing and other competitive factors in the industry, variations in costs or expenses, changes in the scope of Year 2000 initiatives, and delays or problems in the implementation of Year 2000 initiatives by Omnicare and/or its suppliers and customers and other payors. 16 Item 3. Quantitative and Qualitative Disclosures About Market Risk The Company does not have any financial instruments held for trading purposes and does not hedge any of its market risks with derivative instruments. The Company's primary market risk exposure relates to interest rate risk exposure through its borrowings. The Company's debt obligations at September 30, 1999 includes $390 million outstanding under its five-year $400 million variable-rate revolving line of credit facility at an approximate average rate of 6.4% at September 30, 1999 (a one-hundred basis point change in interest rates would impact interest expense by approximately $1.0 million per quarter), $85 million outstanding under its 364-day $400 million variable-rate revolving line of credit facility at an approximate average rate of 6.4% at September 30, 1999 (a one-hundred basis point change in interest rates would impact interest expense by approximately $0.2 million per quarter) and $345 million outstanding under convertible subordinated notes due in 2007, which accrue interest at a fixed rate of 5%. The fair value of the Company's debt obligations approximates their carrying value. 17 PART II. -- OTHER INFORMATION Item 6. Exhibits and Reports on Form 8-K (a) Exhibits
Exhibit Number Exhibit ------ ------- 4 Amendment No. 1 to 364-Day $400 Million Credit Agreement dated as of September 3, 1999 11 Computation of Earnings Per Common Share 27 Financial Data Schedule
(b) Reports on Form 8-K - The Company did not file any Reports on Form 8-K during the quarter ended September 30, 1999. 18 SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. Omnicare, Inc. -------------- Registrant Date November 15, 1999 By: /s/ David W. Froesel, Jr. ------------------------ ----------------------- David W. Froesel, Jr. Senior Vice President and Chief Financial Officer (Principal Financial and Accounting Officer) 19 STATEMENT OF DIFFERENCES ------------------------ The registered trademark symbol shall be expressed as.................. 'r' EX-4 2 EXHIBIT 4 AMENDMENT NO. 1 TO CREDIT AGREEMENT This Amendment No. 1 (the "Amendment") is entered into as of September 3, 1999 by and among OMNICARE, INC., a Delaware corporation (the "Borrower"), the undersigned lenders (collectively, the "Lenders") and THE FIRST NATIONAL BANK OF CHICAGO, as one of the Lenders and in its capacity as contractual representative (the "Agent") on behalf of itself and the other Lenders. RECITALS: WHEREAS, the Borrower, the Lenders and the Agent have entered into that certain 364-Day Credit Agreement dated as of December 21, 1998 (the "Credit Agreement"); WHEREAS, the Borrower seeks to amend the Credit Agreement to extend the maturity thereof; and WHEREAS, the Lenders and the Agent are willing to amend the Credit Agreement on the terms and conditions herein set forth; NOW, THEREFORE, for good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto hereby agree as follows: 1. Defined Terms. Capitalized terms used herein and not otherwise defined herein shall have the meanings attributed to such terms in the Credit Agreement. 2. Amendments to Credit Agreement. Upon the effectiveness of this Amendment in accordance with the provisions of Section 3 below, the Credit Agreement is hereby amended as follows: (a) Section 1.1 of the Credit Agreement is hereby amended by amending the definition of "Commitment" in its entirety to read as follows: "Commitment" means, for each Lender, the obligation of such Lender to make Loans not exceeding the amount set forth opposite such Lender's name on Schedule IV hereto or as set forth in any Notice of Assignment relating to any assignment that has become effective pursuant to Section 12.3.2, as such amount may be modified from time to time pursuant to the terms hereof. (b) Section 1.1 of the Credit Agreement is hereby amended by deleting from the definition of "Revolving Credit Termination Date" the date "December 20, 1999" and substituting therefor the date "September 2, 2000". (c) Section 1.1 of the Credit Agreement is hereby amended by deleting from the definition of "Facility Termination Date" the date "December 20, 2000" and substituting therefor the date "September 2, 2001". (d) Section 2.2 of the Credit Agreement is hereby amended by deleting from the third sentence thereof the dates "March 20, 2000, June 20, 2000, September 20, 2000" and substituting therefor the dates "December 2, 2000, March 2, 2001, June 2, 2001". (e) The Credit Agreement is amended by adding thereto a new Schedule IV in the form attached hereto. 3. Exiting Lenders. 3.1 On the Effective Date, the Borrower shall pay to the Agent for the account of each of the following Lenders (the "Exiting Lenders") all accrued and unpaid commitment fees to but excluding the Effective Date, all accrued and unpaid interest on the outstanding Loans of such Exiting Lenders to but excluding the Effective Date and all amounts owing to such Exiting Lenders pursuant to Section 3.4 of the Credit Agreement: Banca CRT, S.p.A. Bank Hapoalim, B.M. Bankers Trust Company National City Bank of Kentucky Upon receipt of such amounts from the Borrower, the Agent shall promptly pay such amounts to the respective Exiting Lenders. 3.2 As of the Effective Date, the Borrower shall be deemed to have requested Loans pursuant to the Credit Agreement from only those Lenders whose Commitments are to be increased pursuant to this Amendment (the "Increasing Lenders"), the proceeds of which shall be used to repay the principal amount of the outstanding Loans of the Exiting Lenders as of the Effective Date. The respective amounts of such requested Loans shall be determined by the Agent such that, after the making of such Loans by the Increasing Lenders and the repayment of the Loans of the Exiting Lenders, the outstanding Loans on the Effective Date shall be held by the Lenders (other than the Exiting Lenders) pro rata in accordance with their respective Commitments after giving effect to this Amendment. The Agent shall give each Increasing Lender reasonable notice of the amount of its respective Loan to be made on the Effective Date, and each Increasing Lender shall make its Loan available to the Agent prior to 12:00 noon (Chicago time) on the Effective Date. Upon receipt thereof, the Agent shall promptly use the proceeds of such Loans to repay the principal amount of the outstanding Loans of the Exiting Lenders. 3.3 From and after the Effective Date and upon payment to each Exiting Lender of all principal of and interest on such Exiting Lender's outstanding Loans, all commitment fees owing to such Exiting Lender and all funding indemnification owing to such Exiting Lender in accordance with Section 3.1 and Section 3.2, each such Exiting Lender shall not be a Lender under the Credit Agreement, as amended hereby, and shall be released from all obligations thereunder, whether heretofore or hereafter arising. 3.4 On the Effective Date, the Borrower shall pay to the Agent for the account of each of the Increasing Lenders all amounts owing to such Increasing Lenders pursuant to Section 3.4 of the Credit Agreement. Upon receipt of such amounts from the Borrower, the Agent shall promptly pay such amounts to the respective Increasing Lenders. 4. Conditions of Effectiveness. This Amendment shall become effective and be deemed effective as of the date hereof (the "Effective Date") if, and only if, the Agent shall have received each of the following: (a) duly executed originals of this Amendment from the Borrower and each of the Lenders; and (b) the Reaffirmation attached hereto duly executed on behalf of each of the Initial Guarantors and Supplemental Guarantors. 5. Representations and Warranties of the Borrower. The Borrower represents and warrants to the Lenders that, as of the Effective Date: (a) there exists no Default or Unmatured Default; and (b) the representations and warranties contained in Article V of the Credit Agreement are true and correct as of the Effective Date except to the extent any such representation or warranty is stated to relate solely to an earlier date, in which case such representation or warranty was true and correct on and as of such earlier date. 6. Reference to and Effect on the Credit Agreement. 6.1 Upon the effectiveness of this Amendment pursuant to Section 3 hereof, on and after the Effective Date each reference in the Credit Agreement to "this Agreement," "hereunder," "hereof," "herein" or words of like import and each reference to the Credit Agreement in each Loan Document shall mean and be a reference to the Credit Agreement as modified hereby. 6.2 Except as specifically waived or amended herein, all of the terms, conditions and covenants of the Credit Agreement and the other Loan Documents shall remain in full force and effect and are hereby ratified and confirmed. 6.3 The execution, delivery and effectiveness of this Amendment shall not, except as expressly provided herein, operate as a waiver of (a) any right, power or remedy of any Lender or the Agent under the Credit Agreement or any of the Loan Documents, or (b) any Default or Unmatured Default under the Credit Agreement. 7. CHOICE OF LAW. THIS AMENDMENT SHALL BE CONSTRUED IN ACCORDANCE WITH THE INTERNAL LAWS (INCLUDING 735 ILCS 105/5-1 ET SEQ. BUT OTHERWISE WITHOUT REGARD TO THE CONFLICT OF LAWS PROVISIONS) OF THE STATE OF ILLINOIS, BUT GIVING EFFECT TO FEDERAL LAWS APPLICABLE TO NATIONAL BANKS. 8. Counterparts. This Amendment may be executed in any number of counterparts, each of which when so executed shall be deemed an original and all of which taken together shall constitute one and the same agreement. 9. Headings. Section headings in this Amendment are included herein for convenience of reference only and shall not constitute a part of this Amendment for any other purpose. IN WITNESS WHEREOF, the Borrower, the Agent and the Lenders have executed this Amendment No. 1 as of the date first above written. OMNICARE, INC. By: --------------------------------- Name: David W. Froesel, Jr. Title: Chief Financial Officer THE FIRST NATIONAL BANK OF CHICAGO, as a Lender and as Administrative Agent By: --------------------------------- Name: Title: DEUTSCHE BANK AG NEW YORK BRANCH AND/OR CAYMAN ISLANDS BRANCH, as a Lender and as Co-Documentation Agent By: --------------------------------- Name: Title: By: --------------------------------- Name: Title: BANK OF AMERICA, N.A., f/k/a NationsBank, N.A. as a Lender and as Co-Documentation Agent By: --------------------------------- Name: Title: CREDIT SUISSE FIRST BOSTON, as a Lender By: --------------------------------- Name: Title: By: --------------------------------- Name: Title: FLEET NATIONAL BANK, as a Lender By: --------------------------------- Name: Title: CITICORP USA, INC. as a Lender By: --------------------------------- Name: Title: COMERICA BANK, as a Lender By: --------------------------------- Name: Title: SUNTRUST BANK, NASHVILLE, N.A., as a Lender By: --------------------------------- Name: Title: BANQUE NATIONALE DE PARIS, as a Lender By: --------------------------------- Name: Title: FIRSTAR BANK, N.A. (as successor to Star Bank), as a Lender By: --------------------------------- Name: Title: FIFTH THIRD BANK, as a Lender By: --------------------------------- Name: Title: BW CAPITAL MARKETS, INC., as a Lender By: --------------------------------- Name: Title: HARRIS TRUST AND SAVINGS BANK, as a Lender By: --------------------------------- Name: Title: EXITING LENDERS: UNICREDITO ITALIANO (as successor to Banca CRT, S.p.A.), as an Exiting Lender By: --------------------------------- Name: Title: By: --------------------------------- Name: Title: BANK HAPOALIM, B.M., as an Exiting Lender By: --------------------------------- Name: Title: By: --------------------------------- Name: Title: BANKERS TRUST COMPANY, as an Exiting Lender By: --------------------------------- Name: Title: NATIONAL CITY BANK OF KENTUCKY, as an Exiting Lender By: --------------------------------- Name: Title: SCHEDULE IV COMMITMENTS
Lender Commitment ------ ---------- The First National Bank of Chicago $ 45,000,000 Bank of America, N.A. 65,000,000 Deutsche Bank AG New York Branch and/or Cayman Islands Branch 65,000,000 Citicorp USA, Inc. 50,000,000 Suntrust Bank, Nashville, N.A. 40,000,000 Banque Nationale de Paris 25,000,000 Comerica Bank 25,000,000 Credit Suisse First Boston 25,000,000 Fleet National Bank 25,000,000 Firstar Bank, N.A. 15,000,000 BW Capital Markets, Inc. 10,000,000 Harris Trust and Savings Bank 5,000,000 Fifth Third Bank 5,000,000 ------------ Total $400,000,000
REAFFIRMATION Each of the undersigned hereby acknowledges receipt of a copy of the foregoing Amendment No. 1 to the 364-Day Credit Agreement dated as of December 21, 1998 by and among Omnicare, Inc., a Delaware corporation (the "Borrower"), the lenders from time to time parties thereto (collectively, the "Lenders") and The First National Bank of Chicago, as one of the Lenders and in its capacity as contractual representative (the "Agent") on behalf of itself and the other Lenders (as amended and as the same may be amended, restated, supplemented or otherwise modified from time to time, the "Credit Agreement") which Amendment No. 1 is dated as of September 3, 1999 (the "Amendment"). Capitalized terms used in this Reaffirmation and not defined herein shall have the meanings given to them in the Credit Agreement. Without in any way establishing a course of dealing by the Agent or any Lender, each of the undersigned reaffirms the terms and conditions of the Guaranty executed by it and acknowledges and agrees that such agreement and each and every other Loan Document executed by the undersigned in connection with the Credit Agreement remain in full force and effect and are hereby reaffirmed, ratified and confirmed. All references to the Credit Agreement contained in the above-referenced documents shall be a reference to the Credit Agreement as so modified by the Amendment and as the same may from time to time hereafter be amended, modified or restated. AAHS ACQUISITION CORP. ACCU-MED SERVICES, INC. ACP ACQUISITION CORP. AMC-NEW YORK, INC. AMC REGIONAL HOLDINGS, INC. AMC TENNESSEE, INC. AMERICAN MEDSERVE CORPORATION ANDERSON MEDICAL SERVICES, INC. APEX LONG TERM CARE PHARMACY, INC. BEEBER PHARMACIES, INC. BPNY ACQUISITION CORP. BPTX ACQUISITION CORP. CAMPO'S MEDICAL PHARMACY, INC. CARE PHARMACEUTICAL SERVICES, INC. CP ACQUISITION CORP. CHP ACQUISITION CORP. CIP ACQUISITION CORP. CMCP ACQUISITION LLC CMD ACQUISITION CORP. COMPSCRIPT, INC. COMPSCRIPT-BOCA, INC. COMPSCRIPT-MOBILE, INC. CONSULTING AND PHARMACEUTICAL SERVICES, INC. CTLP ACQUISITION CORP. D&R PHARMACEUTICAL SERVICES, INC. DATASCRIPT CORP. DIXON PHARMACY, INC. DOWNEAST PHARMACY, INC. DYNATRAN COMPUTER SYSTEMS, INC. EHIS ACQUISITION CORP. ELECTRA ACQUISITION CORP. ENLOE DRUGS, INC. EVERGREEN PHARMACEUTICAL, INC. EVERGREEN PHARMACEUTICAL EAST, INC. EVERGREEN PHARMACEUTICAL SUPPLY, INC. EVERGREEN SPOKANE, INC. FREED'S PHARMACY, INC. GATTI LTC SERVICES, INC. HCC MEDICAL SUPPLY, INC. HMIS, INC. HOME CARE PHARMACY, INC. HOME PHARMACY SERVICES, INC. HOWARD'S PHARMACY, INC. HYTREE PHARMACY, INC. I.V. SERVICES OF OKLAHOMA, INC. INTERLOCK PHARMACY SYSTEMS, INC. JHC ACQUISITION CORP. KONSULT, INC. LANGSAM HEALTH SERVICES, INC. LANGSAM MEDICAL PRODUCTS, INC. LAWRENCE MEDICAL SUPPLY, INC. LPI ACQUISITION CORP. LO-MED PRESCRIPTION SERVICES, INC. MANAGED HEALTH CARE, INC. MED WORLD ACQUISITION CORP. MEDICAL ARTS HEALTH CARE, INC. MEDICAL COMMUNICATIONS SOFTWARE, INC. MEDICAL SERVICES CONSORTIUM, INC. MOSI ACQUISITION CORP. MSD ACQUISITION CORP. NIHAN & MARTIN, INC. NIV ACQUISITION CORP. NORTH SHORE PHARMACY SERVICES, INC. NORTHWEST PHARMACEUTICAL, INC. OCR-RA ACQUISITION CORP. OKLAHOMA CONSULTING SERVICES, INC. OMNICARE PHARMACY & SUPPLY, INC. PBM-PLUS, INC. PHARMACON CORP. PHARMACY ACQUISITION, INC. PHARMACY ASSOCIATES OF GLENS FALLS, INC. PHARMED HOLDINGS, INC. PIP ACQUISITION CORP. POMPTON NURSING HOME SUPPLIERS, INC. PRN PHARMACEUTICAL SERVICES, INC. PROFESSIONAL PHARMACY GROUP, INC. ROBBY ACQUISITION CORP. ROESCHEN'S HEALTHCARE CORP. RDSI ACQUISITION CORP. SA ACQUISITION CORP. SALTD ACQUISITION CORP. SC ACQUISITION CORP. SHORE PHARMACEUTICAL PROVIDERS, INC. SPECIALIZED PATIENT CARE SERVICES, INC. SPECIALIZED PHARMACY SERVICES, INC. SCP ACQUISITION CORP. SRMS ACQUISITION LLC STERLING HEALTH CARE SERVICES, INC. SUPERIOR CARE PHARMACY, INC. TCPI ACQUISITION CORP. THG ACQUISITION CORP. THREE FORKS APOTHECARY, INC. UC ACQUISITION CORP. UNITED HEALTH CARE, INC. UNITED HEALTH REFERRAL, INC. UNITED SKIN THERAPEUTICS, INC. VALUE HEALTHCARE SERVICES, INC. VALUE PHARMACY, INC. VITAL CARE INFUSION SUPPLY, INC. WEBER MEDICAL SYSTEMS, INC. WESTHAVEN SERVICES CO. WEST-VAL CARE, INC. WILLIAMSON DRUG COMPANY, INCORPORATED WINSLOW'S PHARMACY By: ____________________________________ Bradley S. Abbott, Treasurer BADGER ACQUISITION LLC BADGER ACQUISITION OF WASHINGTON LLC BADGER ACQUISITION OF MINNESOTA LLC BADGER ACQUISITION OF WISCONSIN LLC BADGER ACQUISITION OF INDIANA LLC BADGER ACQUISITION OF KENTUCKY LLC BADGER ACQUISITION OF MICHIGAN LLC BADGER ACQUISITION OF ORLANDO LLC BADGER ACQUISITION OF TAMPA LLC BADGER ACQUISITION OF BROOKSVILLE LLC BADGER ACQUISITION OF PITTSBURGH LLC BADGER ACQUISITION OF ALLENTOWN LLC BADGER ACQUISITION OF OHIO LLC BADGER ACQUISITION OF TEXAS LLC BACH'S PHARMACY SERVICES, LLC LCPS ACQUISITION, LLC LIFE CARE OF COLORADO, LLC LIFE CARE OF MASSACHUSETTS, LLC LIFE CARE OF TENNESSEE, LLC OCR SERVICES CORPORATION OMNICARE PENNSYLVANIA MED SUPPLY, LLC OMNICARE PHARMACIES OF PENNSYLVANIA EAST, LLC OMNICARE PHARMACY OF MAINE LLC PCI ACQUISITION, LLC PHARMACY CONSULTANTS, INC. PHARM-CORP OF MAINE LLC SYNERGY HEALTHCARE SERVICES, LLC By: __________________________________ Catherine I. Greany, Secretary HOSPICE OF THE HEARTLAND, LLC By: HOSPICE ACQUISITION ONE CORP., Member By: ___________________________________________ Bradley S. Abbott, Treasurer and By: HOSPICE ACQUISITION TWO CORP., Member By: ___________________________________________ Bradley S. Abbott, Treasurer HOSPICE CARE OF OKLAHOMA, LLC By: HOSPICE ACQUISITION ONE CORP., Member By: ___________________________________________ Bradley S. Abbott, Treasurer and By: HOSPICE ACQUISITION TWO CORP., Member By: ___________________________________________ Bradley S. Abbott, Treasurer IBAH, INC. IBAH PHARMACEUTICS SERVICES, INC. By: ___________________________________________ John Imperato, Vice President COROMED, INC. By: ___________________________________________ Dale Evans, President OMNICARE MANAGEMENT COMPANY By: ___________________________________________ David W. Froesel, Jr., Treasurer EX-11 3 EXHIBIT 11 OMNICARE, INC. AND SUBSIDIARY COMPANIES Computation of Earnings Per Common Share (EPS) (in thousands, except per share data)
Three Months Ended Nine Months Ended September 30, September 30, ------------------------ ----------------------- 1999 1998 1999 1998 ----------- --------- ---------- ---------- BASIC EARNINGS: Net income $ 13,944 $ 25,740 $ 46,629 $54,252 ======== ======== ======== ======= Shares Weighted average number of common shares outstanding 91,276 89,493 90,900 88,815 ======== ======== ======== ======= Basic earnings per common share $ 0.15 $ 0.29 $ 0.51 $ 0.61 ======== ======== ======== ======= DILUTED EARNINGS (a): Net income $ 13,944 $ 25,740 $ 46,629 $54,252 ======== ======== ======== ======= Shares Weighted average number of common shares outstanding 91,276 89,493 90,900 88,815 Additional shares assuming conversion of stock options and stock warrants -- 561 275 832 -------- -------- -------- ------- Weighted average common shares outstanding as adjusted 91,276 90,054 91,175 89,647 ======== ======== ======== ======= Diluted earnings per common share $ 0.15 $ 0.29 $ 0.51 $ 0.61 ======== ======== ======== =======
(a) The $345,000,000 of 5.0% Convertible Subordinated Notes due 2007 which are convertible into 8,712,121 shares at $39.60 per share were outstanding during the three and nine months ended September 30, 1999 and 1998, but were not included in the computation of diluted EPS because the impact was anti-dilutive. EX-27 4 EXHIBIT 27
5 1 9-MOS DEC-31-1999 JAN-01-1999 SEP-30-1999 93,632 0 459,910 34,122 135,081 742,758 258,628 98,064 2,164,239 333,921 0 0 0 91,612 927,650 2,164,239 1,374,340 1,374,340 980,507 980,507 287,219 15,581 33,458 74,071 27,442 46,629 0 0 0 46,629 .51 .51
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