<PAGE>
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K/A
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report (date of earliest event reported):
December 21, 1999
ALBANY MOLECULAR RESEARCH, INC.
(Exact name of registrant as specified in its charter)
Delaware 000-25323 14-1742717
(State or other jurisdiction (Commission File (I.R.S. Employer
of incorporation) Number) Identification No.)
21 Corporate Circle, Albany, NY 12203
(Address of principal executive offices and zip code)
(518) 464-0279
(Registrant's telephone number, including area code)
<PAGE>
Item 2. Acquisition or Disposition of Assets
As previously reported, Albany Molecular Research, Inc., a Delaware
corporation (the "Registrant"), made an equity investment in Organichem
Corporation, a Delaware corporation ("Organichem"), pursuant to a Stock Purchase
Agreement dated as of December 21, 1999 (the "Stock Purchase Agreement") and
acquired convertible subordinated debentures of Organichem pursuant to a
Debenture Purchase Agreement dated as of December 21, 1999 (the "Debenture
Purchase Agreement"). Pursuant to the terms of the Stock Purchase Agreement, the
Registrant acquired 600 shares of Common Stock of Organichem, representing 37.5%
of Organichem's outstanding capital stock, for an aggregate purchase price of
$15,000,000. In addition, the Registrant acquired convertible subordinated
debentures due December 21, 2005 in the principal amount of $15,000,000. The
source of funds for both the equity and subordinated debt investment came from
the proceeds of the Registrant's initial public offering on February 4, 1999.
Item 7. Financial Statements and Exhibits
(a) Financial statements of businesses acquired
The balance sheets of Organichem Corporation as of December 21, 1999,
December 31, 1998 and December 31, 1997, and statements of operations,
changes in equity, and cash flows for the period January 1, 1999 to
December 21, 1999 and each of the years ended December 31, 1998 and 1997
contained in Exhibit 99.2 attached hereto are incorporated herein by
reference.
(b) Pro Forma financial information
The unaudited Pro Forma Condensed Combined Financial Statements for Albany
Molecular Research, Inc. contained in Exhibit 99.3 attached hereto are
incorporated by reference.
<PAGE>
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 hereunto duly authorized.
Dated: March 6, 2000 ALBANY MOLECULAR RESEARCH, INC.
By: /s/ David P. Waldek
-----------------------
David P. Waldek
Chief Financial Officer
EXHIBIT INDEX
Exhibit No. Description of Exhibit
- - ---------- ----------------------
2.1* Stock Purchase Agreement dated as of December 21, 1999 by and among
the Registrant, Organichem and certain Stockholders named therein.
2.2* Debenture Purchase Agreement dated as of December 21, 1999 by and
between the Registrant and Organichem.
99.1* Press release announcing the investment in Organichem to facilitate
financing of a management buyout of the Nycomed Amersham, plc
chemical manufacturing facility in Rensselaer, New York.
99.2 The balance sheets of Organichem Corporation as of December 21,
1999, December 31, 1998 and December 31, 1997, and statements of
operations, changes in equity, and cash flows for the period
January 1, 1999 to December 21, 1999 and each of the years ended
December 31, 1998 and 1997.
99.3 The unaudited Pro Forma Condensed Combined Financial Statements for
Albany Molecular Research, Inc.
* Previously filed.
<PAGE>
Exhibit 99.2
ORGANICHEM CORPORATION
(formerly known as Nycomed Inc. - Rensselaer,
a division of Nycomed Inc.)
FINANCIAL STATEMENTS
(and Report of Independent Accountants)
For the Period
January 1, 1999 through December 21, 1999
and the Years Ended December 31, 1998 and 1997
<PAGE>
Table of Contents
Page
----
REPORT OF INDEPENDENT ACCOUNTANTS 1
FINANCIAL STATEMENTS
Balance Sheets 2
Statements of Operations 3
Statements of Changes in Equity 4
Statements of Cash Flows 5
Notes to Financial Statements 6-10
<PAGE>
1
Report of Independent Accountants
To the Board of Directors of
Organichem Corporation
In our opinion, the accompanying balance sheets and the related statements of
operations, changes in equity and cash flows present fairly, in all material
respects, the financial position of Organichem Corporation (formerly known as
Nycomed Inc. - Rensselaer, a division of Nycomed Inc.) at December 21, 1999, and
December 31, 1998 and 1997, and the results of its operations and its cash flows
for the period January 1, 1999 through December 21, 1999 and the years ended
December 31, 1998 and 1997 in conformity with accounting principles generally
accepted in the United States. These financial statements are the responsibility
of the Company's management; our responsibility is to express an opinion on
these financial statements based on our audits. We conducted our audits of these
statements in accordance with auditing standards generally accepted in the
United States, which require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements, assessing the
accounting principles used and significant estimates made by management, and
evaluating the overall financial statement presentation. We believe that our
audits provide a reasonable basis for the opinion expressed above.
As discussed in Note 9, the management of Nycomed Inc. - Rensselaer purchased
substantially all of the assets of the Company from Nycomed Inc. in December
1999.
As discussed in Note 2, the Company has significant transactions with related
parties.
PRICEWATERHOUSECOOPERS LLP
February 21, 2000
1
<PAGE>
Organichem Corporation (formerly known as
Nycomed Inc. - Rensselaer, a division of Nycomed Inc.)
Balance Sheets
December 21, 1999 and December 31, 1998 and 1997
<TABLE>
<CAPTION>
1999 1998 1997
<S> <C> <C> <C>
ASSETS
Current assets:
Cash $ 1,928 $ 15,413 $ 6,330
Trade receivables 3,547,168 2,765,009 856,342
Inventories 19,085,171 19,454,734 19,914,777
Due from affiliates 6,334,066 16,298,186 10,525,772
Prepaid expenses 388,046 456,918 371,117
Other receivables 564,704 19,083 515,909
----------- ----------- -----------
Total current assets 29,921,083 39,009,343 32,190,247
Property, plant and equipment, net 52,121,604 51,211,746 49,208,079
----------- ----------- -----------
Total assets $82,042,687 $90,221,089 $81,398,326
=========== =========== ===========
LIABILITIES AND EQUITY
Current liabilities:
Bank overdraft $ 2,341,810 $ 1,586,957 $ 1,503,298
Accounts payable 2,358,895 4,280,934 3,319,944
Accrued expenses 228,951 638,919 1,066,937
Due to affiliates -- -- 9,887,078
----------- ----------- -----------
Total current liabilities 4,929,656 6,506,810 15,777,257
Accrued environmental costs 2,552,995 2,920,487 3,225,079
----------- ----------- -----------
Total liabilities 7,482,651 9,427,297 19,002,336
----------- ----------- -----------
Commitments and contingencies
Equity:
Contributed capital 48,024,141 56,496,703 47,518,747
Retained earnings 26,535,895 24,297,089 14,877,243
----------- ----------- -----------
Total equity 74,560,036 80,793,792 62,395,990
----------- ----------- -----------
Total liabilities and equity $82,042,687 $90,221,089 $81,398,326
=========== =========== ===========
</TABLE>
The accompanying notes are an integral part of these financial statements.
2
<PAGE>
Organichem Corporation (formerly known as
Nycomed Inc. - Rensselaer, a division of Nycomed Inc.)
Statements of Operations
For the Period January 1, 1999 through December 21, 1999 and
Years Ended December 31, 1998 and 1997
<TABLE>
<CAPTION>
1999 1998 1997
<S> <C> <C> <C>
Sales to affiliates $31,879,541 $45,841,681 $39,327,785
Sales to customers 14,559,780 16,016,354 9,393,488
----------- ----------- -----------
Total sales 46,439,321 61,858,035 48,721,273
Cost of sales 38,421,111 43,226,384 39,128,272
----------- ----------- -----------
Gross profit 8,018,210 18,631,651 9,593,001
General and administrative expenses 1,532,547 1,146,605 1,072,787
Selling expenses 482,035 515,780 288,399
Research and development expenses 2,421,539 1,877,143 1,464,201
----------- ----------- -----------
Income before income taxes 3,582,089 15,092,123 6,767,614
Income taxes 1,343,283 5,672,277 2,537,855
----------- ----------- -----------
Net income $ 2,238,806 $ 9,419,846 $ 4,229,759
=========== =========== ===========
</TABLE>
The accompanying notes are an integral part of these financial statements.
3
<PAGE>
Organichem Corporation (formerly known as
Nycomed Inc. - Rensselaer, a division of Nycomed Inc.)
Statements of Changes in Equity
For the Period January 1, 1999 through December 21, 1999 and the
Years Ended December 31, 1998 and 1997
Contributed Retained
Capital Earnings Total
------------ ------------ ------------
Balance at January 1, 1997 $ 49,558,149 $ 10,647,484 $ 60,205,633
Net income -- 4,229,759 4,229,759
Amount contributed to affiliate (2,039,402) -- (2,039,402)
------------ ------------ ------------
Balance at December 31, 1997 47,518,747 14,877,243 62,395,990
Net income -- 9,419,846 9,419,846
Amount contributed from affiliate 8,977,956 -- 8,977,956
------------ ------------ ------------
Balance at December 31, 1998 56,496,703 24,297,089 80,793,792
Net income -- 2,238,806 2,238,806
Amount contributed to affiliate (8,472,562) -- (8,472,562)
------------ ------------ ------------
Balance at December 21, 1999 $ 48,024,141 $ 26,535,895 $ 74,560,036
============ ============ ============
The accompanying notes are an integral part of these financial statements.
4
<PAGE>
Organichem Corporation (formerly known as
Nycomed Inc. - Rensselaer, a division of Nycomed Inc.)
Statements of Cash Flows
For the Period January 1, 1999 through December 21, 1999 and the
Years Ended December 31, 1998 and 1997
<TABLE>
<CAPTION>
1999 1998 1997
<S> <C> <C> <C>
Cash flows from operating activities:
Net income $ 2,238,806 $ 9,419,846 $ 4,229,759
Adjustments to reconcile net income to net cash
provided by (used in) operating activities:
Depreciation 4,915,823 4,219,927 4,087,854
Loss on disposal of plant and equipment 848,159 37,104 100,719
Changes in operating assets and liabilities:
Trade receivables (782,159) (1,908,667) (584,513)
Inventories 369,563 460,043 (5,117,609)
Due from affiliates 9,964,120 (5,772,414) (6,109,921)
Prepaid expenses 68,872 (85,801) 492,565
Other receivables (545,621) 496,826 2,541,497
Accounts payable (1,922,039) 960,990 (1,974,873)
Accrued expenses (409,968) (428,018) 14,780
Due to affiliates -- (9,887,078) 9,887,078
Accrued environmental costs (367,492) (304,592) (979,954)
------------ ------------ ------------
Net cash provided by (used in) operating activities 14,378,064 (2,791,834) 6,587,382
------------ ------------ ------------
Cash flows from investing activities:
Additions to property, plant and equipment (6,673,840) (6,260,698) (4,860,456)
------------ ------------ ------------
Net cash used in investing activities (6,673,840) (6,260,698) (4,860,456)
------------ ------------ ------------
Cash flows from financing activities:
Bank overdraft 754,853 83,659 314,386
Contribution (to) from affiliate (8,472,562) 8,977,956 (2,039,402)
------------ ------------ ------------
Net cash (used in) provided by financing activities (7,717,709) 9,061,615 (1,725,016)
------------ ------------ ------------
Decrease in cash (13,485) 9,083 1,910
Cash, beginning of year 15,413 6,330 4,420
------------ ------------ ------------
Cash, end of year $ 1,928 $ 15,413 $ 6,330
============ ============ ============
</TABLE>
The accompanying notes are an integral part of these financial statements.
5
<PAGE>
Organichem Corporation (formerly known as
Nycomed Inc. - Rensselaer, a division of Nycomed Inc.)
Notes to Financial Statements
1. Summary of Significant Accounting Policies
Description of business:
OrganichemCorporation (the Company) operates a chemical manufacturing
operation in Rensselaer, New York, and is in the business of
manufacturing and supplying pharmaceutical intermediates and active
ingredients. The Company provides a wide range of third-party
development to the chemical and pharmaceutical industry and is
regulated by the Food and Drug Administration (FDA).
The Company was formerly known as Nycomed Inc. - Rensselaer
(Rensselaer), a division of Nycomed Inc. (Princeton), which is located
in Princeton, New Jersey. Princeton is a wholly owned subsidiary of
Nycomed Imaging ASA (the Parent), which is located in Norway. On
December 22, 1999 management of Rensselaer purchased the facility from
Princeton and named the new company Organichem Corporation
Use of estimates:
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates
and assumptions that affect the reported amounts of assets and
liabilities and disclosure of contingent assets and liabilities at the
date of the financial statements and the reported amounts of revenues
and expenses during the reporting period. Actual results could differ
from those estimates.
Revenue recognition:
Sales are recognized upon shipment to customers.
Cash:
The Company classifies deposits in banks as cash for purposes of the
statement of cash flows.
Inventories:
Inventories are stated at the lower of cost or market. Cost includes
material, labor, and manufacturing overhead and is determined using
the first-in, first-out (FIFO) method.
Property, plant and equipment:
Property, plant and equipment are recorded at cost. Depreciation is
provided on a straight-line basis over the estimated useful lives of
the assets.
6
<PAGE>
Organichem Corporation (formerly known as
Nycomed Inc. - Rensselaer, a division of Nycomed Inc.)
Notes to Financial Statements, Continued
1. Summary of Significant Accounting Policies, Continued
Property, plant and equipment, continued:
The following table shows estimated useful lives:
Buildings 40 years
Building equipment 15-20 years
Machinery and equipment 10 years
Furniture and fixtures 10 years
Office equipment 5 years
Automobiles and trucks 3-5 years
Expenditures for maintenance, repairs and minor renewals are charged
to expense as incurred; betterments and major renewals are
capitalized. When assets are retired or otherwise disposed of, the
costs and related allowances for depreciation are removed from the
accounts, and the resulting gain or loss is recognized.
The Company reviews the carrying value of property, plant and
equipment for impairment whenever events and circumstances indicate
that the carrying value of an asset may not be recoverable. In cases
where an impairment is noted, an impairment loss is recognized by an
amount by which the carrying amount exceeds the fair value of assets.
Environmental costs:
In the ordinary course of business the Company is subject to
environmental laws and regulations, and has made provisions for the
estimated financial impact of environmental cleanup related costs.
The quantification of environmental exposures requires an assessment
of many factors, including changing laws and regulations,
advancements in environmental technologies, the quality of
information available related to specific sites, the assessment stage
of each site investigation, preliminary findings and the length of
time involved in remediation or settlement. The Company's policy is
to accrue environmental cleanup related costs when those costs are
believed to be probable and can be reasonably estimated.
Due to/due from affiliates and contributed capital:
Due to/due from affiliates arise from sales to affiliates, receipts
from unaffiliated customers and other operating activities, including
costs allocated by Princeton. In January of each year, the due to
affiliates has been contributed to the capital of the Company and due
from affiliates has been contributed to Princeton.
Income taxes:
As a division of Princeton, the Company provides income taxes at the
combined federal and state statutory rate of 37.5%. Such payable is
included in the caption "due to/due from affiliates" and is adjusted
to contributed capital in the subsequent year as if such amount is
contributed to the Company by Princeton.
Research and development:
Research and development costs are expensed as incurred.
7
<PAGE>
Organichem Corporation (formerly known as
Nycomed Inc. - Rensselaer, a division of Nycomed Inc.)
Notes to Financial Statements, Continued
2. Related Party Transactions
Rensselaer supplied Nycomed Imaging A.S. (Norway) and Nycomed Puerto Rico
Inc. (Puerto Rico) with finished goods under various supply agreements.
Both Norway and Puerto Rico are wholly owned subsidiaries of the Parent.
Sales to these two entities for the period January 1, 1999 through
December 21, 1999 and the years ended December 31, 1998 and 1997 are
included in the caption "sales to affiliates" on the statements of
operations.
Princeton allocated insurance costs and costs associated with various
employee benefit plans to Rensselaer. Total costs allocated to Rensselaer
for the period January 1, 1999 through December 21, 1999 and the years
ended December 31, 1998 and 1997 are:
1999 1998 1997
Employee benefit plans $ 2,010,908 $ 1,862,440 $ 1,674,578
Insurance 220,215 257,606 232,011
Due from affiliates consists of the following at December 21, 1999 and
December 31, 1998 and 1997.
1999 1998 1997
Norway $ 2,344,782 $ 7,816,551 $10,525,772
Princeton 3,989,284 8,472,562 --
Other affiliates -- 9,073 --
----------- ----------- -----------
$ 6,334,066 $16,298,186 $10,525,772
=========== =========== ===========
Due to affiliates consists of the following at December 31, 1997:
1997
Princeton $ 8,977,956
Puerto Rico 832,819
Other affiliates 76,303
-----------
$ 9,887,078
===========
3. Inventories
Inventories consist of the following at December 21, 1999, December 31,
1998 and 1997:
1999 1998 1997
Raw materials $ 2,105,064 $ 4,740,864 $ 3,413,273
Work in process 12,750,648 10,992,062 11,011,554
Finished goods 4,229,459 3,721,808 5,489,950
----------- ----------- -----------
$19,085,171 $19,454,734 $19,914,777
=========== =========== ===========
8
<PAGE>
Organichem Corporation (formerly known as
Nycomed Inc. - Rensselaer, a division of Nycomed Inc.)
Notes to Financial Statements, Continued
4. Property, Plant and Equipment
Property, plant and equipment consists of the following at December 21,
1999 and December 31, 1998 and 1997:
<TABLE>
<CAPTION>
1999 1998 1997
<S> <C> <C> <C>
Land $ 510,000 $ 510,000 $ 510,000
Buildings 11,341,361 11,341,361 11,341,361
Building equipment 9,290,337 9,100,197 8,823,625
Machinery and equipment 42,619,890 40,772,964 34,195,033
Construction in progress 6,993,033 3,648,032 5,186,822
Furniture, fixtures and office equipment 2,757,204 2,631,124 1,867,635
Automobiles and trucks 148,993 121,769 106,593
------------ ------------ ------------
73,660,818 68,125,447 62,031,069
Less accumulated depreciation (21,539,214) (16,913,701) (12,822,990)
------------ ------------ ------------
$ 52,121,604 $ 51,211,746 $ 49,208,079
============ ============ ============
</TABLE>
Depreciation expense was $4,915,823, $4,219,927 and $4,087,854 for the
period January 1, 1999 through December 21, 1999 and the years ended
December 31, 1998 and 1997, respectively.
5. Employee Benefit Plans
Rensselaer employees participate in defined contribution and defined
benefit pension plans as well as a post retirement plan operated by the
Parent under an arrangement which has been separately established by
Princeton. In respect of the defined benefit plans, actuarial valuations
are made regularly and the contributions payable are adjusted as
appropriate. Pension costs are accounted for on the basis of charging the
expected cost of providing pensions over the period of the employees'
services. These costs and the costs of the other benefit plans are
included in the employee benefit plans allocation from Princeton
discussed in Note 2.
6. Commitments and Contingencies
The Company's operations are subject to extensive and evolving federal,
state and local environmental laws and regulations. Compliance with such
laws and regulations can be costly. Additionally, governmental
authorities may enforce the laws and regulations with a variety of civil
and criminal enforcement measures, including monetary penalties and
remediation requirements.
The Comprehensive Environmental Response, Compensation and Liability Act,
also known as "Superfund," imposes liability for the release of a
"hazardous substance" into the environment. Superfund liability is
imposed, without regard to fault, even if the waste disposal was in
compliance with the then current laws and regulations. With the joint and
several liability imposed under Superfund, a potentially responsible
party (PRP) may be required to pay more than its proportional share of
such costs. The Company has been named as a PRP for three "Superfund"
sites. Based upon information available, cleanup and monitoring costs
have been accrued in the caption accrued environmental costs on the
balance sheets. These costs are expected to be paid over several years.
During 1996, the Company deposited approximately $850,000 into an escrow
account to fulfill its responsibilities for one of these sites.
9
<PAGE>
Organichem Corporation (formerly known as
Nycomed Inc. - Rensselaer, a division of Nycomed Inc.)
Notes to Financial Statements, Continued
6. Commitments and Contingencies, Continued
Under a 1994 agreement, the Company has assumed a maximum liability of
$13,950,000 related to environmental remediation associated with the
Company's operations. The Company paid approximately $370,000, $320,000
and $180,000 for the period January 1, 1999 through December 21, 1999 and
the years ended December 31, 1998 and 1997, respectively, for
environmental remediation and monitoring.
Future information and developments, including legislative and
enforcement developments, will require the Company to continually
reassess the expected impact of these environmental matters. However, the
Company has evaluated its total environmental exposure based on currently
available data, including its potential joint and several liability, and
believes that compliance with all applicable laws and regulations will
not have a material adverse impact on the Company's financial position,
results of operations, or cash flows.
From time to time, the Company is involved in lawsuits, claims and
disputes that relate to health and safety, environmental or other
matters. Management does not believe that the resolution of any such
matters will have a material impact on the Company's financial position
or results of operations. (See also Note 8)
The Company has a purchase commitment with one vendor to purchase
approximately $3.9 million of a raw material during each of the years
ending December 31, 2000 and 2001.
7. Concentration of Credit Risk
Sales to three customers represented 90% of sales to customers during the
period January 1, 1999 to December 21, 1999, and sales to one customer
represented 78% of the trade receivables balance at December 21, 1999.
Sales to two customers represented 83% of sales to customers for the year
ended December 31, 1998, and 81% of the trade receivables balance at
December 31, 1998. Sales to four customers represented 95% of sales to
customers for the year ended December 31, 1997, and sales to one customer
represented 97% of the trade receivables balance at December 31, 1997.
Purchases from five vendors represented 64% of raw materials purchases
during the period January 1, 1999 to December 21, 1999. Purchases from
four vendors represented 57% and 66% of raw materials purchases for the
years ended December 31, 1998 and 1997, respectively.
8. Subsequent Event
In December 1999, pursuant to an asset purchase agreement, the management
of Nycomed, Inc. - Rensselaer, a division of Nycomed, Inc., purchased
substantially all of the assets of the Company, excluding cash and
accounts receivable, and assumed certain liabilities for approximately
$58 million, of which $53 million was in cash.
10
<PAGE>
Exhibit 99.3
ALBANY MOLECULAR RESEARCH, INC.
UNAUDITED PRO FORMA CONDENSED COMBINED
FINANCIAL INFORMATION
BASIS OF PRESENTATION
The following unaudited pro forma condensed combined financial statements give
effect to the equity investment in Organichem Corporation ("Organichem") and
convertible subordinated debenture issued to Organichem (collectively referred
to as "Transactions") by Albany Molecular Research, Inc. ("AMRI").
The September 30, 1999 unaudited pro forma condensed combined balance sheet
gives effect to the Transactions by Albany Molecular Research, Inc., which were
consummated on December 21, 1999. The unaudited pro forma condensed combined
balance sheet gives effect to the Transactions as if they had occurred on
September 30, 1999. The unaudited pro forma condensed combined statements of
income give effect to the Transactions as if they had occurred on January 1,
1998.
The unaudited pro forma condensed combined financial information includes the
historical consolidated financial statements of AMRI, and the respective pro
forma adjustments based on available information and management's assumptions to
reflect the Transactions. The historical AMRI condensed consolidated financial
statements have not been restated for the effects of AMRI's October, 1999 merger
with EnzyMed, Inc., which has been accounted for as a pooling-of-interests. The
pro forma financial information does not purport to represent what AMRI's
financial position or results of operations would actually have been had the
Transactions occurred on these dates and are not necessarily indicative of
AMRI's financial position or results of operations for any future period. The
unaudited pro forma condensed combined financial statements should be read in
conjunction with the other financial statements and notes thereto included
elsewhere herein.
<PAGE>
ALBANY MOLECULAR RESEARCH, INC. AND SUBSIDIARY
Unaudited Pro Forma Condensed Combined Balance Sheet
September 30, 1999
(in thousands)
<TABLE>
<CAPTION>
Pro Forma Pro Forma
AMRI Adjustments Combined
----------------------------------------------------------------
ASSETS
<S> <C> <C> <C>
Current assets:
Cash and cash equivalents $13,964 $ (2,632) (b) $11,332
Accounts receivable, net 4,695 -- 4,695
Royalty income receivable 5,788 -- 5,788
Investment securities, available-for-sale 35,733 (27,500) (b) 8,233
Inventory 1,082 -- 1,082
Unbilled services 37 -- 37
Prepaid expenses and current assets 889 -- 889
------------------------------------------------------------
Total current assets 62,188 (30,132) 32,056
Property and equipment, net 14,890 -- 14,890
Other assets:
Equity investment in unconsolidated affiliate -- 15,132 (a) 15,132
Subordinated debenture bond from affiliate -- 15,000 (a) 15,000
Other assets 1,415 -- 1,415
------------------------------------------------------------
Total other assets 1,415 30,132 31,547
------------------------------------------------------------
Total assets $78,493 $ -- $78,493
============================================================
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable and accrued expenses $ 2,242 $ -- $ 2,242
Unearned income 1,539 -- 1,539
Other current liabilities 346 -- 346
------------------------------------------------------------
Total current liabilities ,127 -- 4,127
Long-term liabilities:
Deferred income taxes 1,318 -- 1,318
------------------------------------------------------------
Total liabilities ,445 -- 5,445
Stockholders' equity:
Common stock 136 -- 136
Additional paid-in capital 46,616 -- 46,616
Retained earnings 26,309 -- 26,309
Accumulated other comprehensive loss (14) -- (14)
------------------------------------------------------------
Total stockholders' equity 3,048 -- 73,048
------------------------------------------------------------
Total liabilities and stockholders' equity $78,493 $ -- $78,493
============================================================
</TABLE>
The accompanying notes are an integral part of these unaudited pro forma
condensed combined financial statements.
<PAGE>
ALBANY MOLECULAR RESEARCH, INC. AND SUBSIDIARY
Unaudited Pro Forma Condensed Combined Statement of Income
(in thousands, except for per share data)
<TABLE>
<CAPTION>
For the Nine Months Ended September 30, 1999
----------------------------------------------------
Pro Forma Pro Forma
AMRI Adjustments Combined
----------------------------------------------------
<S> <C> <C> <C>
Net contract revenue $14,821 $ -- $14,821
Cost of contract revenue 8,373 -- 8,373
---------------------------------------------------
Gross profit from contract revenue 6,448 -- 6,448
---------------------------------------------------
Licensing fees, milestones and royalties, net 14,304 -- 14,304
Operating expenses:
Research and development 401 -- 401
Selling, general and administrative 4,071 -- 4,071
---------------------------------------------------
Total operating expenses 4,472 -- 4,472
---------------------------------------------------
Income from operations 16,280 -- 16,280
Other income (expense):
Equity in earnings of unconsolidated affiliate -- 162 (a) 387
225 (c)
Other income (expense), net 1,281 734 (b) 827
(1,188)(e)
---------------------------------------------------
Total other income (expense) 1,281 (67) 1,214
---------------------------------------------------
Income before income taxes 17,561 (67) 17,494
Income taxes 6,580 (170)(d) 6,410
---------------------------------------------------
Net income $10,981 103 $11,084
===================================================
Net income per share:
Basic $ 0.87 $ 0.88
Diluted $ 0.79 $ 0.80
Weighted average number of shares:
Basic 12,570 12,570
Diluted 13,889 13,889
</TABLE>
The accompanying notes are an integral part of these unaudited pro forma
condensed combined financial statements.
<PAGE>
ALBANY MOLECULAR RESEARCH, INC. AND SUBSIDIARY
Unaudited Pro Forma Condensed Combined Statement of Income
(in thousands, except for per share data)
<TABLE>
<CAPTION>
For the Year Ended December 31, 1998
------------------------------------------------------
Pro Forma Pro Forma
AMRI Adjustments Combined
------------------------------------------------------
<S> <C> <C> <C>
Net contract revenue $13,398 $ -- $ 13,398
Cost of contract revenue 7,504 -- 7,504
----------------------------------------------------
Gross profit from contract revenue 5,894 --
----------------------------------------------------
Licensing fees, milestones and royalties, net 17,823 -- 17,823
Operating expenses:
Research and development 723 -- 723
Selling, general and administrative 4,490 -- 4,490
----------------------------------------------------
Total operating expenses 5,213 -- 5,213
----------------------------------------------------
Income from operations 18,504 -- 18,504
Other income (expense):
Equity in earnings of unconsolidated affiliate -- 2,846 (a) 3,157
311 (c)
Other income (expense), net (80) 1,018 (b) (895)
(1,833)(e)
----------------------------------------------------
Total other income (expense) (80) 2,342 2,262
----------------------------------------------------
Income before income taxes 18,424 2,342 20,766
Income taxes 6,979 (306)(d) 6,673
----------------------------------------------------
Net income $11,445 2,648 14,093
====================================================
Net income per share:
Basic $ 1.07 $ 1.32
Diluted $ 0.95 $ 1.17
Weighted average number of shares:
Basic 10,683 10,683
Diluted 12,073 12,073
</TABLE>
The accompanying notes are an integral part of these unaudited pro forma
condensed combined financial statements.
<PAGE>
ALBANY MOLECULAR RESEARCH, INC. AND SUBSIDIARY
NOTES TO THE UNAUDITED PRO FORMA CONDENSED
COMBINED FINANCIAL STATEMENTS
1. GENERAL
Albany Molecular Research, Inc. ("AMRI" or "Company") is an integrated contract
chemistry organization that offers a broad range of chemistry research and
development services to pharmaceutical and biotechnology companies involved in
drug discovery and development. The Company offers services traditionally
provided by chemistry divisions within pharmaceutical companies, including
discovery (medicinal) chemistry, chemical development, analytical chemistry, and
active ingredient bulk manufacturing. The Company's objective is to be the
leading provider of comprehensive outsourced chemistry services to the
pharmaceutical and biotechnology industries.
On December 21, 1999, AMRI completed a strategic investment in Organichem
Corporation ("Organichem") to facilitate financing of a management buyout of the
Nycomed Amersham, plc ("Nycomed") chemical manufacturing facility in Rensselaer,
New York. Organichem was formed by the management team of the Nycomed chemical
manufacturing operation in Rensselaer, New York, who remain with the new company
as operating management. Under the terms of the Organichem management buyout
agreement, current customers, of which Nycomed is the most significant, have
agreed to multi-year contracts for manufacture and supply of pharmaceutical
intermediates and active ingredients. The 223,000 square-foot facility located
on 23 acres currently employs 174 persons.
In addition to the supply of bulk chemicals to current customers, Organichem
will continue its manufacturing relationships with other pharmaceutical and life
sciences companies, previously developed by this management team under the
Nycomed name.
AMRI's financing in the new company includes a $15 million equity investment for
a 37.5% interest in Organichem and $15 million in debentures, which are
convertible into additional equity of Organichem. In addition to the conversion
feature of the debentures, AMRI will have the option after three years to
purchase the remaining Organichem shares. At the current ownership percentage,
AMRI will use the equity method of accounting for its investment in Organichem.
2. UNAUDITED PRO FORMA CONDENSED COMBINED BALANCE SHEET ADJUSTMENTS
(a) Adjustment to record initial $15 million equity investment and
issuance of $15 million convertible subordinated debenture to
Organichem. AMRI incurred approximately $132,000 in direct costs
attributable to the Organichem equity investment.
(b) Funding of Organichem equity investment and convertible subordinated
debenture was accomplished through the sale of $27.5 million of
investment securities and the use of $2.5 million of operating cash.
The investment securities utilized for the Organichem were originally
purchased from proceeds of the Company's February 1999 initial public
offering.
<PAGE>
3. UNAUDITED PRO FORMA CONDENSED COMBINED STATEMENT OF INCOME ADJUSTMENTS
<TABLE>
<CAPTION>
Nine Months Ended Year Ended
September 30, 1999 December 31, 1998
-----------------------------------------------------
debit (credit)
(in thousands)
<S> <C> <C>
(a) Adjustment to equity earnings in
unconsolidated affiliate for operating
results for period, including amortization
of goodwill of $281 for the nine-month
period ended September 30, 1999 and $375
for the year ended December 31, 1998. $ (162) $ (2,846)
(b) Interest income on $15 million convertible
subordinated debenture. Interest rate on
obligation accrues at the three-month
London Interbank Offered Rate (LIBOR) plus
3.25%. This rate averaged 8.52% for the
nine-month period ended September 30, 1999
and 8.86% for the year ended December 31,
1998. (734) (1,018)
(c) Adjustment to equity earnings in
unconsolidated affiliate for elimination
of 37.5% of interest expense on
subordinated debenture instrument to AMRI
on Organichem's books, net of tax effect. (225) (311)
(d) Tax effect of interest income and expense
at an estimated 37.5% corporate tax rate.
Results from operations at Organichem
are already tax-effected at an estimated
37.5% corporate tax rate. (170) (306)
(e) Adjustments to eliminate interest income
during 1999 on investment balances used
to fund the Transactions (5.25% investment
rate assumed) and to reflect pro forma
interest expense on the Company's credit
facility at a rate of 6.11%, consistent
with the average interest rate available
on the facility. A 0.125% increase or
decrease in LIBOR would have resulted in
a $38 adjustment to interest expense for
the year ended December 31, 1998.
Reduced interest income 1,050 --
Additional interest expense 138 1,833
----- -----
Net interest effect 1,188 1,833
</TABLE>
The audited results from the statement of operations for Organichem have been
adjusted by additional interest expense, net of the related tax effect, payable
on AMRI's $15 million convertible subordinated debenture. The additional
interest expense to be recognized by Organichem, net of tax effect, was $599,000
for the nine-month period ended September 30, 1999, and $831,000 for the year
ended December 31, 1998
