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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
______________________
FORM 10-K
(Mark One) Annual Report Pursuant to Section 13 or 15(d) of
the Securities Exchange Act of 1934 (Fee
/X/ Required)
For the fiscal year ended December 31, 1995
OR
/ / Transition Report Pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934 (No Fee
Required)
For the transition period from __________ to __________.
Commission file number 1-8269
OMNICARE, INC.
(Exact name of registrant as specified in its charter)
DELAWARE 31-1001351
(State of Incorporation) (I.R.S. Employer Identification No.)
OMNICARE, INC.
2800 CHEMED CENTER, 255 E. FIFTH STREET
CINCINNATI, OHIO 45202-4728
(Address of principal executive offices)
Registrant's telephone number, including area code: 513-762-6666
Securities registered pursuant to Section 12(b) of the Act:
NAME OF EACH EXCHANGE
TITLE OF EACH CLASS ON WHICH REGISTERED
--------------------------- -----------------------
Common Stock ($1 Par Value) New York Stock Exchange
5-3/4% Convertible Subordinated
Notes Due 2003 New York Stock Exchange
Securities registered pursuant to Section 12(g) of the Act: None
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
l934 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 requirements for the past 90 days. Yes x No
---- ----.
Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K is not contained herein, and will not be contained, to
the best of registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-K or any
amendment to this Form 10-K. X
----
Aggregate market value of the Registrant's voting stock held by
non-affiliates, based upon the closing price of said stock on the New York
Stock Exchange Composite Transaction Listing on February 29, 1996 ($47.375 per
share): $1,257,763,091.
As of February 29, 1996, 26,549,089 shares of the Common Stock, $1.00 par
value, of the Registrant were outstanding.
DOCUMENTS INCORPORATED BY REFERENCE
Portions of the Registrant's definitive Proxy Statement for its 1996 Annual
Meeting of Stockholders, to be held May 20, 1996, are incorporated by reference
into Part III of this report. Definitive copies of its 1996 Proxy Statement
will be filed with the Securities and Exchange Commission within 120 days of
the end of the Company's fiscal year.
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OMNICARE, INC.
1995 FORM 10-K ANNUAL REPORT
TABLE OF CONTENTS
PART I
<TABLE>
<CAPTION>
Page
<S> <C> <C>
Item 1. Business . . . . . . . . . . . . . . . . . 3
Item 2. Properties . . . . . . . . . . . . . . . . 12
Item 3. Legal Proceedings . . . . . . . . . . . . 14
Item 4. Submission of Matters to a Vote of
Security Holders . . . . . . . . . . . . 14
Executive Officers of the Company . . . . 15
PART II
Item 5. Market for the Company's Common Stock
and Related Stockholder Matters . . . . 15
Item 6. Selected Financial Data . . . . . . . . . 16
Item 7. Management's Discussion and Analysis of
Financial Condition and
Results of Operations. . . . . . . . . . 18
Item 8. Financial Statements and Supplementary
Data . . . . . . . . . . . . . . . . . . 21
Item 9. Changes in and Disagreements with
Accountants on Accounting and
Financial Disclosure . . . . . . . . . . 41
PART III
Item 10. Directors and Executive Officers of
the Registrant . . . . . . . . . . . . . 41
Item 11. Executive Compensation . . . . . . . . . . 41
Item 12. Security Ownership of Certain Beneficial
Owners and Management . . . . . . . . . 41
Item 13. Certain Relationships and Related
Transactions . . . . . . . . . . . . . . 41
PART IV
Item 14. Exhibits, Financial Statement Schedule and
Reports on Form 8-K . . . . . . . . . . 41
</TABLE>
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PART I
ITEM 1 - BUSINESS
BACKGROUND
Omnicare, Inc. (the "Company" or "Omnicare") was incorporated in Delaware
on May 19, 1981 to conduct certain health care businesses contributed to it by
W. R. Grace & Co. and Chemed Corporation, and in July 1981 public trading of
the Company's Common Stock commenced. As part of a multi-year restructuring
program undertaken in 1985, the Company, through a series of divestitures and
acquisitions, redeployed all of its capital in the long-term pharmacy business.
As a result, Omnicare is today a leading independent provider of pharmacy
services to long-term care institutions such as nursing homes, retirement
centers and other institutional health care facilities. The Company operates
principally in one business segment--institutional pharmacy services for the
long-term care market. At December 31, 1995, Omnicare provided these services
to approximately 216,500 residents in 2,500 nursing facilities located
principally in the States of Alabama, Connecticut, Georgia, Illinois, Indiana,
Kansas, Kentucky, Massachusetts, Michigan, Missouri, New York, North
Carolina, Ohio, Oklahoma, Oregon, South Carolina, Virginia, Washington, and
West Virginia. The Company does not make any export sales.
The Company entered the long-term care pharmacy industry in December 1988
with the acquisition of its first institutional pharmacy provider. By December
31, 1995, the Company had completed a total of 33 acquisitions in the long-term
care pharmacy market at a total capital investment of approximately $290
million. In 1995 the Company acquired nine institutional pharmacy providers at
an aggregate capital cost of approximately $64 million and expended an
additional $11 million in cash payments relating to acquisitions completed
prior to 1995.
On March 22, 1996, the Company sold 5,750,000 shares of its Common Stock
in a public offering generating gross proceeds of $298,281,000 (before
underwriting discounts and offering expenses). The proceeds will be used to
fund business acquisitions and for general corporate purposes.
PHARMACY SERVICES
Omnicare purchases, repackages and dispenses prescription and
non-prescription medication in accordance with physician orders and delivers
such prescriptions at least daily to the nursing facility for administration to
individual patients by the facility's nursing staff. Omnicare typically
services nursing homes within a 150-mile radius of its pharmacy locations.
Omnicare maintains a 24-hour, on-call pharmacist service 365 days per year for
emergency dispensing and delivery or for consultation with the facility's staff
or attending physician.
Upon receipt of a prescription, the relevant patient information is
entered into Omnicare's computerized dispensing and billing systems. At that
time, the dispensing system will check the prescription for any potentially
adverse drug interactions or patient sensitivity. When required and/or
specifically requested by the physician or patient, branded drugs are
dispensed; generic drugs are substituted in accordance with applicable state
and federal laws and as requested by the physician or patient. The Company
also provides therapeutic interchange, with physician approval, in accordance
with the Company's pharmaceutical care guidelines. See "Omnicare Guidelines"
below.
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Omnicare provides a "unit dose" distribution system. Most of its
prescriptions are filled utilizing specialized unit-of-use packaging and
delivery systems. Maintenance medications are typically provided in 30-day
supplies utilizing either a box unit dose system or unit dose punch card
system. The unit dose system, preferred over the bulk delivery systems
employed by retail pharmacies, improves control over drugs in the nursing
facility and improves patient compliance with drug therapy by increasing the
accuracy and timeliness of drug administration.
Integral to Omnicare's drug distribution system is its computerized
medical records and documentation system. Omnicare provides to the facility
computerized medication administration records and physician's order sheets and
treatment records for each patient. Data extracted from these computerized
records are also formulated into monthly management reports on patient care and
quality assurance. The computerized documentation system in combination with
the unit dose drug delivery system results in greater efficiency in nursing
time, improved control, reduced drug waste in the facility and lower error
rates in both dispensing and administration. These benefits improve drug
efficacy and result in fewer drug-related hospitalizations.
CONSULTANT PHARMACIST SERVICES
Federal and state regulations mandate that nursing facilities, in addition
to providing a source of pharmaceuticals, retain consultant pharmacist services
to monitor and report on prescription drug therapy in order to maintain and
improve the quality of patient care. The Omnibus Budget Reconciliation Act
("OBRA") implemented in 1990 seeks to further upgrade and standardize care by
setting forth more stringent standards relating to planning, monitoring and
reporting on the progress of prescription drug therapy as well as facility-wide
drug usage.
Omnicare provides consultant pharmacist services which help clients comply
with such federal and state regulations applicable to nursing homes. The
services offered by Omnicare's consultant pharmacists include: (i)
comprehensive, monthly drug regimen reviews for each patient in the facility to
assess the appropriateness and efficacy of drug therapies, including a review
of the patient's medical records, monitoring drug reactions to other drugs or
food, monitoring lab results and recommending alternate therapies or
discontinuing unnecessary drugs; (ii) participation on the Pharmacy and
Therapeutics, Quality Assurance and other committees of client nursing
facilities as well as periodic involvement in staff meetings; (iii) monthly
inspection of medication carts and storage rooms; (iv) monitoring and monthly
reporting on facility-wide drug usage and drug administration systems and
practices; (v) development and maintenance of pharmaceutical policy and
procedures manuals; and (vi) assistance to the nursing facility in complying
with state and federal regulations as they pertain to patient care.
Additionally, Omnicare offers a specialized line of consulting services
which help nursing facilities to enhance care and reduce and contain costs as
well as to comply with state and federal regulations. Under this service line,
Omnicare provides: (i) data required for OBRA and other regulatory purposes,
including reports on psychotropic drug usage (chemical restraints), antibiotic
usage (infection control) and other drug usage; (ii) Plan of Care programs
which assess each patient's state of
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health upon admission and monitor progress and outcomes using data on drug
usage as well as dietary, physical therapy and social service inputs; (iii)
counseling related to appropriate drug usage and implementation of drug
protocols; (iv) on-site educational seminars for the nursing facility staff on
topics such as drug information relating to clinical indications, adverse drug
reactions, drug protocols and special geriatric considerations in drug therapy,
and information and training on intravenous drug therapy and updates on OBRA
and other regulatory compliance issues; (v) mock regulatory reviews for nursing
staffs; and (vi) nurse consultant services and consulting for dietary, social
services and medical records.
OMNICARE GUIDELINES
In June 1994, to enhance the pharmaceutical care management services that
it offers, Omnicare introduced to its client nursing facilities and their
attending physicians the Omnicare GERIATRIC PHARMACEUTICAL CARE GUIDELINES(TM)
(THE OMNICARE GUIDELINES(TM)) which it believes is the first clinically-based
formulary for the elderly residing in long-term care institutions. THE
OMNICARE GUIDELINES presents an analysis ranking specific drugs in therapeutic
classes as Preferred, Acceptable or Unacceptable based solely on their
disease-specific clinical effectiveness in treating the elderly in nursing
facilities. The formulary takes into account such factors as pharmacology,
safety and toxicity, efficacy, drug administration, quality of life and other
considerations specific to the frail elderly population residing in nursing
facilities. The clinical evaluations and rankings were developed exclusively
for the Company by the Philadelphia College of Pharmacy and Science, an
academic institution recognized for its expertise in geriatric long-term care.
In addition, THE OMNICARE GUIDELINES provides relative cost information
comparing the prices of the drugs to patients, their insurers or other payors
of the pharmacy bill.
As THE OMNICARE GUIDELINES focuses on health benefits, rather than solely
on cost, in assigning rankings the Company believes that use of THE OMNICARE
GUIDELINES will assist physicians in making the best clinical choices of drug
therapy for the patient at the lowest cost to the payor of the pharmacy bill.
The Company also believes that the development of and subsequent compliance
with THE OMNICARE GUIDELINES will lower costs for the patients it serves and
strengthen the Company's purchasing power with pharmaceutical manufacturers.
ANCILLARY SERVICES
Omnicare provides the following ancillary products and services to nursing
facilities:
Infusion Therapy Products and Services. With cost containment pressures in
health care, nursing facilities are increasingly providing subacute care as a
means of treating moderately acute but stabilized patients more
cost-effectively than hospitals, provided that the nursing staff and pharmacy
are capable of supporting higher degrees of acuity. Omnicare provides infusion
therapy support services for such residents in its client nursing facilities
and, to a lesser extent, hospice and home care patients. Infusion therapy
consists of the product (a nutrient, antibiotic, chemotherapy or other drugs in
solution) and the intravenous administration of the product.
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Omnicare prepares the product to be administered using proper equipment in
a sterile environment and then delivers the product to the nursing home for
administration by the nursing staff. Proper administration of intravenous
("IV") drug therapy requires a highly trained nursing staff. Omnicare's
consultant pharmacists and nurse consultants operate an education and
certification program on IV therapy to assure proper staff training and
compliance with regulatory requirements in client facilities offering an IV
program.
By providing an infusion therapy program, Omnicare enables its client
nursing facilities to admit and retain patients who otherwise would need to be
cared for in an acute-care facility. The Company believes that by providing
these high acuity pharmacy services it has a competitive advantage over other
pharmacy providers. The most common infusion therapies Omnicare provides are
total parenteral nutrition, antibiotic therapy, chemotherapy, pain management
and hydration.
Wholesale Medical Supplies/Medicare Part B Billing. Omnicare distributes
disposable medical supplies, including urological, ostomy, nutritional support
and wound care products and other disposables needed in the nursing home
environment. In addition, Omnicare provides direct Medicare billing services
for certain of these product lines for patients eligible under the Medicare
Part B program. As part of this service, Omnicare determines patient
eligibility, obtains certifications, orders products and maintains inventory on
behalf of the nursing facility. Omnicare also contracts to act as billing
agent for certain nursing homes that supply these products directly to the
patient.
Other Services. Omnicare also provides respiratory therapy products and
durable medical equipment for its clients in certain of its market areas.
Omnicare continues to review the expansion of these as well as other products
and services that may further enhance the ability of its client nursing
facilities to care for their residents in a cost-effective manner.
PRODUCT AND MARKET DEVELOPMENT
Omnicare's pharmacy business engages in a continuing program for the
development of new services and the marketing thereof. While new service and
new market development are important factors for the growth of this business,
Omnicare does not expect that any new service or marketing effort, including
those in the developmental stage, will require the investment of a material
portion of Omnicare's assets.
MATERIALS/SUPPLY
Omnicare purchases pharmaceuticals through a wholesale distributor with
whom it has a prime vendor contract and, on an increasing basis, under
contracts negotiated directly with pharmaceutical manufacturers. The Company
also is a member of industry buying groups which contract with manufacturers
for discounted prices based on volume which are passed through to the Company
by its wholesale distributor. The Company has numerous sources of supply
available to it and has not experienced any difficulty in obtaining
pharmaceuticals or other products and supplies used in the conduct of its
business.
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PATENTS, TRADEMARKS AND LICENSES
Omnicare's business operations are not dependent upon any material
patents, trademarks or licenses.
INVENTORIES
Omnicare's pharmacies maintain adequate onsite inventories of
pharmaceuticals and supplies to ensure prompt delivery service to its
customers. Inventories on hand are not considered to be high by industry
standards. The Company's primary wholesale distributor also maintains local
warehousing in most major geographic markets in which the Company operates.
COMPETITION
By its nature, the long-term care pharmacy business is highly regionalized
and, within a given geographic region of operations, highly competitive. In the
geographic regions it serves, Omnicare competes with numerous local retail
pharmacies, local and regional institutional pharmacies and pharmacies owned by
long-term care facilities. Omnicare competes in this market on the basis of
quality, cost-effectiveness and the increasingly comprehensive and specialized
nature of its services along with the clinical expertise, pharmaceutical
technology and professional support it offers.
In its program of acquiring institutional pharmacy providers, the Company
competes with several other companies with similar acquisition strategies, some
of which may have greater resources than the Company.
No individual customer or market group is critical to the total sales of
the Company's long-term care pharmacy business.
GOVERNMENT REGULATION
Institutional pharmacies, as well as the long-term care facilities they
serve, are subject to extensive federal, state and local regulation. These
regulations cover required qualifications, day-to-day operations, reimbursement
and the documentation of activities. Omnicare continuously monitors the
effects of regulatory activity on its operations.
Licensure, Certification and Regulation. States generally require that
companies operating a pharmacy within the state be licensed by the state board
of pharmacy. The Company currently has pharmacy licenses in each state in
which it operates a pharmacy. In addition, the Company currently delivers
prescription products from its licensed pharmacies to 5 states in which the
Company does not operate a pharmacy. These states regulate out-of-state
pharmacies, however, as a condition to the delivery of prescription products to
patients in such states. Omnicare's pharmacies hold the requisite licenses
applicable in these states. In addition, Omnicare's pharmacies are registered
with the appropriate state and federal authorities pursuant to statutes
governing the regulation of controlled substances.
Client nursing facilities are also separately required to be
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licensed in the states in which they operate and, if serving Medicare or
Medicaid patients, must be certified to be in compliance with applicable
program participation requirements. Client nursing facilities are also subject
to the nursing home reforms of the Omnibus Budget Reconciliation Act of 1987,
which imposed strict compliance standards relating to quality of care for
nursing home operations, including vastly increased documentation and reporting
requirements. In addition, pharmacists, nurses and other health care
professionals who provide services on the Company's behalf are in most cases
required to obtain and maintain professional licenses and are subject to state
regulation regarding professional standards of conduct.
Federal and State Laws Affecting the Repacking, Labelling, and Interstate
Shipping of Drugs. Federal and state laws impose certain repackaging,
labelling, and package insert requirements on pharmacies that repackage drugs
for distribution beyond the regular practice of dispensing or selling drugs
directly to patients at retail. A drug repackager must register with the Food
and Drug Administration. The Company holds all required registrations and
licenses, and its repackaging operations are in compliance with applicable
state and federal requirements.
Medicare and Medicaid. The nursing home pharmacy business has long
operated under regulatory and cost containment pressures from state and federal
legislation primarily affecting Medicaid and, to a lesser extent, Medicare.
As is the case for nursing home services generally, Omnicare receives
reimbursement from the Medicaid and Medicare programs, directly from individual
residents (private pay), and from other payors such as third-party insurers.
The Company believes that its reimbursement mix is in line with nursing home
expenditures nationally. For the year ended December 31, 1995, Omnicare's
payor mix was approximately as follows: 53% private pay and nursing homes, 42%
Medicaid, 4% Medicare and 1% insurance and other private sources.
For those patients who are not covered by government-sponsored programs
or private insurance, Omnicare generally directly bills the patient or the
patient's responsible party on a monthly basis. Depending upon local market
practices, Omnicare may alternatively bill private patients through the nursing
facility. Pricing for private pay patients is based on prevailing regional
market rates or "usual and customary" charges.
The Medicaid program is a cooperative federal-state program designed to
enable states to provide medical assistance to aged, blind, or disabled
individuals, or members of families with dependent children whose income and
resources are insufficient to meet the costs of necessary medical services.
State participation in the Medicaid program is voluntary. To become eligible
to receive federal funds, a state must submit a Medicaid "state plan" to the
Secretary of the Department of Health and Human Services ("HHS") for approval.
The federal Medicaid statute specifies a variety of requirements which the
state plan must meet, including requirements relating to eligibility, coverage
of services, payment and administration.
Federal law and regulations contain a variety of requirements relating to
the furnishing of prescription drugs under Medicaid. First,
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states are given broad authority, subject to certain standards, to limit or
specify conditions to the coverage of particular drugs. Second, federal
Medicaid law establishes standards affecting pharmacy practice. These
standards include general requirements relating to patient counseling and drug
utilization review and more specific requirements for nursing facilities
relating to drug regimen reviews for Medicaid patients in such facilities.
Recent regulations clarify that, under federal law, a pharmacy is not required
to meet the general standards for drugs dispensed to nursing facility residents
if the nursing facility complies with the drug regimen review requirements.
However, the regulations indicate that states may nevertheless require
pharmacies to comply with the general standards, regardless of whether the
nursing facility satisfies the drug regimen review requirement, and the states
in which the Company operates currently do require its pharmacies to comply
therewith.
Third, federal regulations impose certain requirements relating to
reimbursement for prescription drugs furnished to Medicaid patients. In
addition to requirements imposed by federal law, states have substantial
discretion to determine administrative, coverage, eligibility and payment
policies under their state Medicaid programs which may affect the Company's
operations. For example, some states have enacted "freedom of choice"
requirements which may prohibit a nursing facility from requiring its residents
to purchase pharmacy or other ancillary medical services or supplies from
particular providers that deal with the nursing home. Such limitations may
increase the competition which the Company faces in providing services to
nursing facility patients.
The Medicare program is a federally funded and administered health
insurance program for individuals age 65 and over or who are disabled. The
Medicare program consists of two parts: Part A, which covers, among other
things, inpatient hospital, skilled nursing facility, home health care and
certain other types of health care services; and Medicare Part B, which covers
physicians' services, outpatient services, and certain items and services
provided by medical suppliers. Medicare Part B also covers a limited number of
specifically designated prescription drugs. The Medicare program establishes
certain requirements for participation of providers and suppliers in the
Medicare program. Pharmacies are not subject to such certification
requirements. Skilled nursing facilities and suppliers of medical equipment
and supplies, however, are subject to specified standards. Failure to comply
with these requirements and standards may adversely affect an entity's ability
to participate in the Medicare program and receive reimbursement for services
provided to Medicare beneficiaries.
The Medicare and Medicaid programs are subject to statutory and
regulatory changes, retroactive and prospective rate adjustments,
administrative rulings, and freezes and funding reductions, all of which may
adversely affect the Company's business. There can be no assurance that
payments for pharmaceutical supplies and services under governmental
reimbursement programs will continue to be based on the current methodology or
remain comparable to present levels. In this regard, the Company may be
subject to rate reductions as a result of federal budgetary legislation related
to the Medicare and Medicaid programs. In addition, various state Medicaid
programs periodically experience budgetary shortfalls which may result in
Medicaid payment delays to the Company. To date, the Company has not
experienced any material adverse effect due to any such budgetary shortfall.
In addition, the failure, even if
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inadvertent, of Omnicare and/or its client institutions to comply with
applicable reimbursement regulations could adversely affect Omnicare's
business. Additionally, changes in such reimbursement programs or in
regulations related thereto, such as reductions in the allowable reimbursement
levels, modifications in the timing or processing of payments and other changes
intended to limit or decrease the growth of Medicaid and Medicare expenditures,
could adversely affect the Company's business.
Referral Restrictions. The Company is subject to federal and state laws
which govern financial and other arrangements between health care providers.
These laws include the federal anti-kickback statute, which was originally
enacted in 1977 and amended in 1987, and which prohibits, among other things,
knowingly and willfully soliciting, receiving, offering or paying any
remuneration directly or indirectly in return for or to induce the referral of
an individual to a person for the furnishing of any item or service for which
payment may be made in whole or in part under Medicare or Medicaid. Many
states have enacted similar statutes which are not necessarily limited to items
and services for which payment is made by Medicare or Medicaid. Violations of
these laws may result in fines, imprisonment, and exclusion from the Medicare
and Medicaid programs or other state-funded programs. Federal and state court
decisions interpreting these statutes are limited, but have generally construed
the statutes to apply if "one purpose" of remuneration is to induce referrals
or other conduct within the statute.
Federal regulations establish "safe harbors," which give immunity from
criminal or civil penalties to parties in good faith compliance. While the
failure to satisfy all criteria for a safe harbor does not mean that an
arrangement violates the statute, it may subject the arrangement to review by
the HHS Office of Inspector General ("OIG"), which is charged with
administering the federal anti-kickback statute. There are no procedures for
obtaining binding interpretations or advisory opinions from the OIG on the
application of the federal anti-kickback statue to an arrangement or its
qualification for a safe harbor upon which the Company can rely.
The OIG issues "Fraud Alerts" identifying certain questionable
arrangements and practices which it believes may implicate the federal
anti-kickback statute. The OIG has issued a Fraud Alert providing its views on
certain joint venture and contractual arrangements between health care
providers. The OIG also issued a Fraud Alert concerning prescription drug
marketing practices that could potentially violate the federal statute.
Pharmaceutical marketing activities may implicate the federal anti-kickback
statute because drugs are often reimbursed under the Medicaid program.
According to the Fraud Alert, examples of practices that may implicate the
statute include certain arrangements under which remuneration is made to
pharmacists to recommend the use of a particular pharmaceutical product.
In addition, a number of states have recently undertaken enforcement
actions against pharmaceutical manufacturers involving pharmaceutical marketing
programs, including programs containing incentives to pharmacists to dispense
one particular product rather than another. These enforcement actions arose
under state consumer protection laws which generally prohibit false
advertising, deceptive trade practices, and the like.
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The Company believes its contract arrangements with other health care
providers, its pharmaceutical suppliers and its pharmacy practices are in
compliance with these laws. There can be no assurance that such laws will not,
however, be interpreted in the future in a manner inconsistent with the
Company's interpretation and application.
Health Care Reform and Federal Budget Legislation. The Clinton
administration and members of Congress have proposed plans to reform the health
care system. Currently, Congress is considering such reforms in the context of
federal budget reconciliation legislation. This legislation could result in
significant reductions in payments to providers under the Medicare program and
a complete restructuring and reduced payments to providers under the Medicaid
program. With respect to Medicare, proposals include establishment of a
prospective payment system for Skilled Nursing Facilities ("SNFs"); limits on
payments to Medicare SNFs for certain non-routine services, including, among
others, prescription drugs, diagnostic services, and physical therapy and other
rehabilitative services; requiring consolidated billing by a SNF for all Part A
and B claims for SNF residents; and other limits on reimbursement of costs for
Medicare SNF services. If enacted, there can be no assurance that such
proposals could not have a material adverse effect on the business of Omnicare.
While budget negotiations are continuing, the future of any reform proposals in
Congress is unknown.
In addition, a number of states have enacted and are considering various
health care reforms, including reforms through Medicaid demonstration projects.
Federal law allows HHS to authorize waivers of federal Medicaid program
requirements, including requirements relating to coverage, free choice of
providers and payment for health care services, in connection with state
demonstration projects that promote Medicaid program objectives. HHS published
procedures and public notice requirements designed to open the waiver approval
process to public comment and to expedite processing. Legal actions have been
initiated challenging the waiver process and the authority of HHS to approve
waivers for broad-based Medicaid managed care programs. The federal budget
legislation restructuring the Medicaid program would effectively eliminate
Medicaid managed care demonstration projects.
Several state Medicaid programs have established mandatory statewide
managed care programs for Medicaid beneficiaries to control costs through
negotiated or capitated rates, as opposed to traditional cost-based
reimbursement for Medicaid services, and propose to use savings achieved through
these programs to expand coverage to those not previously eligible for Medicaid.
HHS has approved waivers for statewide managed care demonstration projects in
several states, and are pending for several other states. These demonstration
projects generally exempt institutionalized care, including nursing facility
services, from the programs, and the Company's operations have not been
adversely affected in the one state (Oregon) with a managed care demonstration
project in effect. The Company is unable to predict what impact, if any, future
projects might have on the Company's operations. Because there are currently
various reform proposals under consideration at the federal and state levels, it
is uncertain at this time what health care reform initiatives, if any, will be
implemented, or whether there will be other changes in the administration of
governmental health care programs or interpretations of governmental policies or
other changes affecting the health care system. There can be no assurance that
future health care or budget legislation or other changes will not have an
adverse effect on the business of the Company.
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ENVIRONMENTAL MATTERS
In operating its facilities, Omnicare makes every effort to comply with
pollution control laws. No major difficulties have been encountered in
effecting compliance. No material capital expenditures for environmental
control facilities are expected. While Omnicare cannot predict the effect
which any future legislation, regulations, or interpretations may have upon its
operations, it does not anticipate any changes that would have a material
adverse impact on its operations.
EMPLOYEES
At December 31, 1995, Omnicare employed a total of 3,247 persons
(including 741 part-time employees), all of whom were located within the United
States.
ITEM 2 - PROPERTIES
Omnicare has offices and distribution centers in various locations in the
United States. A list of the major facilities operated by Omnicare follows.
The "owned" property is held in fee and is not subject to any material
encumbrance. Omnicare considers all of these facilities to be in good
operating condition and generally to be adequate for present and anticipated
needs.
<TABLE>
<CAPTION>
Leased
Owned --------------------------
Location Type Area Area Expiration Date
- -------- ---- ----- ---- ---------------
<S> <C> <C> <C> <C>
Cincinnati, Offices and -- 24,375 sq. ft. September 30,
Ohio distribution 1999
center
Dayton, Offices and -- 22,000 sq. ft. January 31,
Ohio distribution 1998
center
Prattville, Offices and -- 4,331 sq. ft. August 29,
Alabama distribution 2001
center
Louisville, Offices and -- 37,400 sq. ft. September 30,
Kentucky distribution 1996
center
Oklahoma City, Offices and -- 28,000 sq. ft. September 30,
Oklahoma distribution 1998
center
Florissant, Offices and -- 37,753 sq. ft. November 10,
Missouri distribution 2003
center
Belleville, Offices and -- 8,300 sq. ft. March 31,
Illinois distribution 1997
center
</TABLE>
12
<PAGE> 13
<TABLE>
<CAPTION>
Leased
Owned --------------------------
Location Type Area Area Expiration Date
- -------- ---- ----- ---- ---------------
<S> <C> <C> <C> <C>
Indianapolis, Offices and -- 4,640 sq. ft. December 31,
Indiana distribution 1999
center
Griffith, Offices and -- 10,600 sq. ft. March 31,
Indiana distribution 2002
center
Perrysburg, Offices and 23,200 sq. ft. -- --
Ohio distribution
center
Overland Park, Offices and -- 17,409 sq. ft. April 30,
Kansas distribution 1999
center
Decatur, Offices and 23,274 sq. ft. -- --
Illinois distribution
center
Skokie, Offices and -- 29,200 sq. ft. November 30,
Illinois distribution 2000
center
Dover, Offices and -- 12,000 sq. ft. December 31,
Ohio distribution 2008
center
Wadsworth, Offices and -- 21,000 sq. ft. June 1,
Ohio distribution 2004
center
Kirkland, Offices and -- 43,107 sq. ft. April 5,
Washington distribution 2003
center
Livonia, Offices and -- 28,524 sq. ft. May 1,
Michigan distribution 2002
center
Springfield, Offices and -- 8,745 sq. ft. February 28,
Missouri distribution 1998
center
Yakima, Offices and -- 11,000 sq. ft. February 28,
Washington distribution 2000
center
</TABLE>
13
<PAGE> 14
<TABLE>
<CAPTION>
Leased
Owned --------------------------
Location Type Area Area Expiration Date
- -------- ---- ----- ---- ---------------
<S> <C> <C> <C> <C>
Plainview, Offices and -- 17,550 sq. ft. June 30,
New York distribution 2005
center
Peabody, Offices and -- 8,510 sq. ft. February 1,
Massachusetts distribution 1998
center
Clarksburg, Offices amd -- 4,335 sq. ft. December 31,
West Virginia distribution 1998
center
</TABLE>
ITEM 3 - LEGAL PROCEEDINGS
There are no material pending legal proceedings, other than ordinary
routine litigation incidental to the business, to which Omnicare or any of its
subsidiaries is a party or of which any of their property is the subject, and
no such proceedings are known to be contemplated by governmental authorities.
ITEM 4 - SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
None.
14
<PAGE> 15
ADDITIONAL ITEM - EXECUTIVE OFFICERS OF THE COMPANY
The executive officers of the Company as of March 8, 1996 are as follows:
<TABLE>
<CAPTION>
Name Age Office First Elected
---- --- ------ -------------
<S> <C> <C> <C>
Edward L. Hutton 76 Chairman May 20, 1981
Joel F. Gemunder 56 President May 20, 1981
Kenneth W. Chesterman 55 Executive Vice August 2, 1984
President
Cheryl D. Hodges 44 Senior Vice President August 4, 1982
and Secretary
Patrick E. Keefe 50 Senior Vice President- April 11, 1993
Operations
David W. Froesel, Jr. 44 Senior Vice President March 4, 1996
and Chief Financial
Officer
Thomas R. Marsh 49 Vice President, March 5, 1987
Controller and
Acting Treasurer
</TABLE>
All of the executive officers listed above have been actively engaged in
the business of the Company or its predecessors for the past five years, with
the exception of Mr. Keefe and Mr. Froesel. Mr. Keefe served as Vice President
of Diagnostek, Inc. from April 1992 to April 1993. From September 1990 to
April 1992, he was President of HPI Health Care Services, Inc. ("HPI"), a
subsidiary of Diagnostek which it acquired from Omnicare in August 1989. He
served as Executive Vice President of HPI from August 1984 until September
1990. Mr. Froesel was Vice President of Finance and Administration at
Mallinckrodt Veterinary Inc. from May 1993 to February 1996. From July 1989 to
April 1993, he was worldwide corporate controller of Mallinckrodt Medical Inc.
Executive officers are elected for one-year terms at the annual
organizational meeting of the Board of Directors which follows the annual
meeting of stockholders each year.
PART II
ITEM 5 - MARKET FOR THE COMPANY'S COMMON STOCK AND
RELATED STOCKHOLDER MATTERS
PRICE RANGE OF COMMON STOCK; HOLDERS OF RECORD
The Company's Common Stock is listed on the New York Stock Exchange. The
following table sets forth the ranges of high and low closing prices
15
<PAGE> 16
for the Common Stock on the New York Stock Exchange during each of the calendar
quarters of l995 and l994. All prices shown have been adjusted to reflect the
two-for-one stock split in June 1995.
1995 1994
--------------- --------------
High Low High Low
---- --- ---- ---
First Quarter $26.69 $20.63 $17.50 $14.50
Second Quarter 28.13 22.44 17.07 13.50
Third Quarter 39.00 26.88 20.07 16.82
Fourth Quarter 44.75 34.13 22.56 18.25
The number of holders of record of Omnicare Common Stock on February 29,
l996 was 1,840. This figure does not include stockholders with shares held
under beneficial ownership in nominee name or within clearinghouse positions of
brokerage houses and banks.
DIVIDENDS
Reflecting the Company's financial position and operating performance, on
February 8, 1994 and on February 1, 1995 the Board of Directors elected to
increase the quarterly cash dividend to $.0225 and $.025 per share,
respectively, for an indicated annual rate of $.09 and $.10, respectively. On
February 7, 1996, the quarterly cash dividend was increased to $.03 per share,
for an indicated annual rate of $.12 per share in 1996. It is presently
intended that cash dividends will continue to be paid on a quarterly basis;
however, future dividends are necessarily dependent upon the Company's earnings
and financial condition and other factors not currently determinable.
ITEM 6 - SELECTED FINANCIAL DATA
The following table summarizes certain selected financial data, which
should be read in conjunction with the Company's Consolidated Financial
Statements and related Notes and "Management's Discussion and Analysis of
Financial Condition and Results of Operations" included elsewhere herein.
16
<PAGE> 17
FIVE YEAR SUMMARY OF SELECTED FINANCIAL DATA
(in thousands except per share data)
<TABLE>
<CAPTION>
For the years ended and at December 31,
1995 1994 1993 1992 1991
-------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
INCOME STATEMENT DATA: (a)(b)
Sales $399,636 $307,655 $223,129 $157,406 $ 80,005
======== ======== ======== ======== ========
Income from continuing
operations $ 24,760(c) $ 13,531(d) $ 10,970(e) $ 5,873 $ 2,497
Discontinued operations (a) - - - 8,710(f) 3,238
Cumulative effect of
accounting change - - 280(g) - -
-------- -------- -------- -------- --------
Net income $ 24,760(c) $ 13,531(d) $ 11,250(e) $ 14,583 $ 5,735
======== ======== ======== ======== ========
Earnings per share data
Primary:
Income from continuing
operations $ .94(c) $ .60(d) $ .52(e) $ .28 $ .12
Discontinued operations (a) - - - .42(f) .16
Cumulative effect of
accounting change - - .01(g) - -
-------- -------- -------- -------- --------
Net income $ .94(c) $ .60(d) $ .53(e) $ .70 $ .28
======== ======== ======== ======== ========
Fully diluted:
Continuing operations .86(c) $ .59(d) $ .52(e) $ .28 $ .12
Discontinued operations (a) - - - .42(f) .16
Cumulative effect of
accounting change - - .01(g) - -
-------- -------- -------- -------- --------
Net income $ .86(c) $ .59(d) $ .53(e) $ .70 $ .28
======== ======== ======== ======== ========
Dividends per share $ .10 $ .09 $ .08 $ .07 $ .06
======== ======== ======== ======== ========
BALANCE SHEET DATA:
Working capital $106,384 $125,550 $ 80,570 $ 25,792 $ 34,444
Total assets 360,836 317,205 241,318 151,403 122,445
Long-term debt (h) 82,692 85,323 86,477 7,087 8,565
Stockholders' equity (i) 214,761 180,104 102,750 94,333 77,806
</TABLE>
[FN]
(a) As a result of the December 1992 sale of the Veratex Group of businesses
and the divestiture of Labtronics, Inc. which was completed in 1993,
results have been restated to include these entities' results of operations
as well as any gain or loss on dispositions as "Discontinued
Operations."
(b) The Company has had an active acquisition program in effect since 1989.
See Note 2 of the Notes to Consolidated Financial Statements for
information concerning these acquisitions.
(c) Includes acquisition expenses related to the specialized pooling of
interests transaction of $1,292,000. Such expenses, on an aftertax basis,
were $989,000, or $.04 per primary share ($.03 fully diluted). Net income,
excluding these expenses, was $25,749,000, or $.98 per primary share ($.89
fully diluted).
(d) Includes acquisition expenses related to the Evergreen pooling of
interests transaction of $2,380,000. Such expenses, on an aftertax basis,
were $1,860,000, or $.08 per primary share ($.07 fully diluted). Net
income, excluding these expenses, was $15,391,000, or $.68 per primary
share ($.66 fully diluted).
(e) Includes a one-time cumulative tax benefit of $450,000, or $.02 per share,
arising from a change in tax laws enacted in August of 1993 relating to
amortization of intangibles.
(f) Includes aftertax gain of $5,198,000, or $.25 per share, related to the
sale of the Veratex Group and the divestiture of Labtronics.
(g) Aftertax gain representing the cumulative effect of a change in accounting
for income taxes.
(h) In 1993, the Company issued $80.5 million of convertible subordinated
notes due 2003 (see Note 6 of the Notes to Consolidated Financial
Statements).
(i) In 1994, the Company sold 3,247,482 shares of common stock, in a public
offering, resulting in net proceeds of $59,211,000 (see Note 7 of the
Notes to Consolidated Financial Statements).
17
<PAGE> 18
ITEM 7 - MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
RESULTS OF OPERATIONS
(All share and per share data included in Management's Discussion and
Analysis of Financial Condition and Results of Operations have been
adjusted for the June 1995 two-for-one stock split.)
On June 30, 1995, the Company issued 403,185 shares of its Common Stock for
all the outstanding common stock of Specialized Pharmacy Services, Inc.
("Specialized"). Specialized is a leading provider of institutional pharmacy
services for long-term care facilities in Michigan with $32 million in sales
for the year ended December 31, 1994. On September 30, 1994, the Company
issued 2,222,644 shares of its Common Stock for all the outstanding common
stock of Kirkland, Washington-based Evergreen Pharmaceutical, Inc., and an
affiliated company (collectively, "Evergreen"). Evergreen had $34 million in
sales for the year ended December 31, 1993. These acquisitions were accounted
for as poolings of interests and, accordingly, the Company's consolidated
financial statements have been restated for all periods to include the results
of operations, financial position and cash flow of Specialized and Evergreen
(See Note 2 to the Consolidated Financial Statements). In accordance with
accounting rules for pooling of interests transactions, charges to operating
income for acquisition-related expenses were recorded upon completion of these
acquisitions. These pooling of interests expenses totaled $1,292,000, or
$989,000 after taxes, for the Specialized acquisition and $2,380,000, or
$1,860,000 after taxes, for the Evergreen acquisition.
The following table presents the Company's results of operations excluding
certain unusual items of income and expense, which are comprised of pooling of
interests expenses, the cumulative effect of an accounting change and a
one-time favorable tax adjustment (in thousands except per share amounts):
<TABLE>
<CAPTION>
For the years ended December 31,
1995 1994 1993
------- ------- -------
<S> <C> <C> <C>
Net income, as reported $24,760 $13,531 $11,250
Acquisition expenses-pooling
of interests, net of taxes 989 1,860 -
Cumulative effect of accounting
change - - (280)
Favorable tax adjustment - - (450)
------- ------- -------
Pro forma net income $25,749 $15,391 $10,520
======= ======= =======
Pro forma earnings per share:
Net income, as reported $ .94 $ .60 $ .53
Acquisition expenses-pooling
of interests, net of taxes .04 .08 -
Cumulative effect of accounting
change - - (.01)
Favorable tax adjustment - - (.02)
------- ------- -------
Primary $ .98 $ .68 $ .50
======= ======= =======
Fully diluted $ .89 $ .66 $ .50
======= ======= =======
</TABLE>
18
<PAGE> 19
Excluding the impact of charges taken for acquisitions accounted for as
pooling of interests transactions, net income for the year ended December 31,
1995 increased 67% over net income earned in 1994. Primary earnings per share,
on this basis, for the full year 1995 increased 44% over 1994, and fully
diluted earnings per share increased 35%.
Pro forma net income for the year ended December 31, 1994 increased 46% over
1993. Primary earnings per share, on a pro forma basis, increased 36% over
1993, and fully diluted earnings per share increased 32%. The 1994 pro forma
adjustment consisted of the Evergreen pooling of interests expenses. The 1993
pro forma adjustments were comprised of $450,000 arising from a change in tax
laws related to the amortization of intangibles and $280,000 related to the
change in accounting for income taxes.
Net income as reported for 1995 was $24,760,000, or $.94 per
primary share ($.86 fully diluted), while 1994 net income was $13,531,000, or
$.60 per primary share ($.59 fully diluted), and 1993 net income was
$11,250,000, or $.53 per primary and fully diluted share.
Sales for 1995 were 30% higher than in 1994. For 1994, sales were 38%
higher than in 1993. Omnicare entered the long-term pharmacy business with its
first acquisition of an institutional pharmacy provider in December 1988.
Omnicare has completed a total of 33 institutional pharmacy provider
acquisitions - one in 1988, two in 1990, three in 1991, seven in 1992, four in
1993, seven in 1994 and nine in 1995. Except for the acquisitions of
Specialized, Evergreen and Lo-Med Prescription Services, Inc. ("Lo-Med"),
purchase accounting was used to record the acquisitions. The acquisitions of
Specialized and Evergreen are included in the financial results of all years
presented as these acquisitions were accounted for as poolings of interests.
The acquisition of Lo-Med in 1994 was also accounted for as a pooling of
interests; however, its operations were immaterial to the Company's results
prior to 1994 and, therefore, prior year financial statements were not restated
for this business combination. The sales increases were caused by
acquisitions, (described in detail in Note 2 of the Consolidated Financial
Statements), coupled with the internal growth of the businesses previously
acquired.
Increases in gross profit over the three-year period have generally remained
in line with or exceeded increases in sales, with margins of 25.7%, 26.0% and
28.0% for 1993, 1994 and 1995, respectively. Such increases were caused
primarily by changes in sales mix and the Company's increasing purchasing
leverage. Additionally, after excluding the aforementioned pro forma
adjustments, operating income as a percent of sales has increased from 8.6% to
9.8% to 11.2% in 1993, 1994 and 1995, respectively, reflecting the increased
gross profit margins.
Over the past few years, political debate over health care reform has
increasingly focused attention on containing and reducing health care costs.
While the processes by which federal or state governments may pursue alternate
proposals for reform of the health care system are uncertain, market forces in
the form of managed care have and will continue to challenge health care
providers to maintain the high quality of care provided while reducing costs.
In this environment, the need to lower health care costs will drive industry
consolidation, which should continue to provide the impetus for the Company's
acquisition program. The Company's development of regional market positions
provides opportunities for economies of scale to lower overall costs. In
addition, Omnicare's proprietary geriatric formulary not only lowers costs for
payors and patients, but also enhances the quality of care for the elderly.
Moreover, demographic trends indicate that demand for long-term care will
increase well into the middle of the next century. Pharmaceutical therapy is
generally the most cost-effective form of treatment for chronic ailments
19
<PAGE> 20
afflicting the elderly and, as such, is an essential part of long-term care.
Omnicare believes that it is well-positioned to be an integral part of the
solution to escalating health care costs among the elderly through careful
product selection (including drug formulary management), cost-effective drug
purchasing and efficient delivery systems. This, coupled with Omnicare's
pharmacy consulting services for nursing homes which identify, resolve and
prevent drug therapy-related problems, reduces costs to the health care system
while also promoting optimal patient outcomes. Thus, Omnicare should continue
to show solid growth in sales and earnings in 1996, benefiting from a full
year's contribution from businesses acquired in 1995, from internal growth and
from the completion of additional acquisitions.
NON-OPERATING INCOME AND EXPENSE
Investment income increased by 120% to $3,475,000 in 1995, as the Company
received the full-year benefit of invested cash during 1995 due to receipt of
$59.2 million of cash proceeds from the November 1994 stock offering.
Investment income increased by 149% to $1,580,000 in 1994 from $635,000 in 1993
due to the increase in invested cash during 1994 resulting from the cash
proceeds from the October 1993 offering of $80.5 million in 5.75% Convertible
Subordinated Notes due 2003 ("Notes").
Interest expense decreased by 9% from $6,533,000 in 1994 to $5,954,000 in
1995, due to reductions in outstanding debt associated with Specialized and
Evergreen prior to acquisition by the Company. Interest expense increased by
$3,709,000 in 1994 as a result of a full year's interest on the Notes as
compared to only three months in 1993.
INCOME TAXES
The Company's effective tax rates for 1993, 1994 and 1995 were 35.4%, 40.3%
and 39.9%, respectively. The 1995 and 1994 effective tax rates are slightly
higher than statutory rates due to the nondeductibility of certain acquisition
costs. As a result of the Omnibus Budget Reconciliation Act of 1993, the
Company was permitted to deduct from taxable income amortization of intangibles
arising from certain business acquisitions retroactive to July 1991.
Accordingly, the Company's effective tax rate in 1993 was favorably impacted by
the tax benefit of amortization of intangibles.
IMPACT OF INFLATION
Inflation has not materially affected Omnicare's profitability inasmuch as
price increases have generally been obtained to cover inflationary drug cost
increases.
LIQUIDITY AND CAPITAL RESOURCES
In November 1994, the Company completed a public offering of 3,247,482
shares of Common Stock, resulting in net proceeds of $59,211,000.
In line with Omnicare's plan to invest in the long-term pharmacy market,
acquisitions completed during 1995 required an aggregate capital investment of
approximately $63.7 million. Such acquisitions were financed with cash and
cash equivalents on hand as well as Common Stock of the Company. Shares of
Common Stock with a market value of approximately $22.7 million (879,919
shares) were issued in connection with the 1995 acquisitions. Additionally,
$10.6 million of other acquisition-related payments were made during 1995
related to businesses
20
<PAGE> 21
acquired prior to 1995. Additional amounts totaling $11.2 million may become
payable through the year 2000 pursuant to the terms of various acquisition
agreements. Omnicare ended the year with $40,137,000 in cash and cash
equivalents and marketable securities as compared to $79,798,000 at year-end
1994.
At December 31, 1995, the Company had invested $32,522,000 in U.S.
Treasury-backed repurchase agreements which represent investments under
agreements to resell, usually overnight, but in no case greater than 30 days.
The Company has a collateralized interest in the underlying securities which
are segregated in the accounts of the counterparty bank. Management believes
these investments do not create any exposure to the Company's liquidity.
Omnicare's current ratio decreased to 2.9 to 1 at December 31, 1995 from 3.8 to
1 at December 31, 1994, and working capital at December 31, 1995 decreased to
$106,384,000 from year-end 1994 working capital of $125,550,000. This decrease
is attributable to the cash outlays required for the Company's 1995
acquisitions net of cash generated from 1995 operations. Book value per common
share increased to $8.16 per share as of December 31, 1995 from $7.01 per share
at the prior year-end, primarily attributable to current year net income, less
dividends paid.
On February 7, 1996, Omnicare's Board of Directors elected to increase the
quarterly cash dividend by 20% to 3 cents per share for an indicated annual
rate of 12 cents per share for 1996.
In February 1995, the Company entered into an agreement with a consortium of
six banks for a five-year $135 million revolving credit facility, replacing the
prior $50 million facility. Interest rates and commitment fees for this new
facility are based on the Company's level of performance under certain debt
covenants. No amounts were outstanding at December 31, 1995 under the credit
facility.
The Company believes that its sources of liquidity and capital are adequate
for its operating needs. There are no material commitments outstanding, other
than additional acquisition-related payments to be made (see Note 2 of the
Consolidated Financial Statements). If needed, other external sources of
financing are readily available to the Company.
ITEM 8 - FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
Index to Financial Statements
<TABLE>
<CAPTION>
Page
----
<S> <C>
Financial Statements:
Report of Independent Accountants 22
Consolidated Statement of Income 24
Consolidated Balance Sheet 25
Consolidated Statement of Cash Flow 26
Consolidated Statement of Stockholders'
Equity 27
Notes to Consolidated Financial
Statements 28
Financial Statement Schedule:
II - Valuation and Qualifying Accounts S-1
</TABLE>
All other financial statement schedules are omitted because they are not
applicable or because the required information is shown in the Consolidated
Financial Statements or notes thereto.
21
<PAGE> 22
REPORT OF INDEPENDENT ACCOUNTANTS
------------------------------------------
To the Stockholders and
Board of Directors of Omnicare, Inc.
In our opinion, based on our audits and the report of other auditors with
respect to 1993, the consolidated financial statements listed in the
accompanying index present fairly, in all material respects, the financial
position of Omnicare, Inc. and its subsidiaries at December 31, 1995 and 1994,
and the results of their operations and their cash flow for each of the three
years in the period ended December 31, 1995, in conformity with generally
accepted accounting principles. 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 did not audit
the combined financial statements of Evergreen Pharmaceutical, Inc. and
Evergreen Pharmaceutical East, Inc. (collectively, "Evergreen") for the year
ended December 31, 1993, which statements reflect 1993 revenues of $34,130,000.
Those statements were audited by other auditors whose report thereon has been
furnished to us, and our opinion expressed herein, insofar as it relates to the
1993 amounts included for Evergreen, is based solely on the report of the other
auditors. We conducted our audits of these statements in accordance with
generally accepted auditing standards 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 and the report of other auditors
provide a reasonable basis for the opinion expressed above.
/s/Price Waterhouse LLP
Price Waterhouse LLP
Cincinnati, Ohio
February 5, 1996
22
<PAGE> 23
REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
---------------------------------------------------------
Evergreen Pharmaceutical, Inc. and
Evergreen Pharmaceutical East, Inc.
Kirkland, Washington
We have audited the combined balance sheets of Evergreen Pharmaceutical, Inc.
and Evergreen Pharmaceutical East, Inc. as of December 31, 1993, and the
related combined statements of income, shareholders' equity and cash flows for
the year then ended, not presented separately herein. These financial
statements are the responsibility of management. Our responsibility is to
express an opinion on these statements based upon our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audits 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. An audit
also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.
In our opinion, the financial statements, not presented separately herein,
present fairly, in all material respects, the combined financial position of
Evergreen Pharmaceutical, Inc. and Evergreen Pharmaceutical East, Inc. as of
December 31, 1993, and the results of their operations and their cash flows
for the year then ended in conformity with generally accepted accounting
principles.
/s/BDO Seidman, LLP
BDO Seidman, LLP
Seattle, Washington
July 29, 1994
23
<PAGE> 24
CONSOLIDATED STATEMENT OF INCOME
Omnicare, Inc. and Subsidiary Companies
(In thousands except per share data)
<TABLE>
<CAPTION>
For the years ended December 31,
1995 1994 1993
------------------------------
<S> <C> <C> <C>
Sales $399,636 $307,655 $223,129
Cost of sales 287,715 227,533 165,714
-------- -------- --------
Gross profit 111,921 80,122 57,415
Selling, general and administrative
expenses
Acquisition expenses-pooling 66,970 50,111 38,243
of interests
1,292 2,380 -
-------- -------- --------
Operating income
Investment income 43,659 27,631 19,172
Interest expense 3,475 1,580 635
(5,954) (6,533) (2,824)
Income before income taxes and -------- -------- --------
cumulative effect of accounting change
Income taxes 41,180 22,678 16,983
16,420 9,147 6,013
Income before cumulative effect of -------- -------- --------
accounting change
Cumulative effect of accounting change 24,760 13,531 10,970
- - 280
-------- -------- --------
Net income
$ 24,760 $ 13,531 $ 11,250
======== ======== ========
Earnings per share data
Primary:
Income before cumulative effect of
accounting change
Cumulative effect of accounting change $ .94 $ .60 $ .52
- - .01
Net income -------- -------- --------
$ .94 $ .60 $ .53
Fully diluted: ======== ======== ========
Income before cumulative effect of
accounting change
Cumulative effect of accounting change $ .86 $ .59 $ .52
- - .01
Net income -------- -------- --------
$ .86 $ .59 $ .53
======== ======== ========
Weighted average number of
common shares outstanding: 26,198 22,479 21,253
Primary ======== ======== ========
32,642 28,429 22,861
Fully diluted ======== ======== ========
</TABLE>
The Notes to Consolidated Financial Statements
are an integral part of this statement.
24
<PAGE> 25
CONSOLIDATED BALANCE SHEET
Omnicare, Inc. and Subsidiary Companies
<TABLE>
<CAPTION>
(In thousands except share data)
December 31,
ASSETS 1995 1994
--------- ---------
<S> <C> <C>
Current assets:
Cash and cash equivalents $ 40,137 $ 34,553
Marketable securities - 45,245
Accounts receivable, less allowances
of $4,761 (1994-$3,681) 80,247 60,083
Inventories 28,841 21,116
Deferred income tax benefits 6,600 5,818
Other current assets 5,247 3,445
-------- --------
Total current assets 161,072 170,260
Properties and equipment, at cost
less accumulated depreciation 32,458 23,452
Goodwill, less accumulated amortization
of $10,448 (1994-$6,832) 157,843 114,376
Other assets 9,463 9,117
-------- --------
Total assets $360,836 $317,205
======== ========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 22,020 $ 17,666
Amounts payable pursuant to acquisition agreements 13,642 4,576
Current portion of long-term debt 1,051 5,549
Accrued employee compensation 5,338 3,230
Liabilities relating to discontinued operations 1,547 2,399
Other current liabilities 11,090 11,290
-------- --------
Total current liabilities 54,688 44,710
Long-term debt 82,692 85,323
Deferred income taxes 2,621 1,616
Amounts payable pursuant to acquisition agreements 1,418 2,910
Other noncurrent liabilities 4,656 2,542
-------- --------
Total liabilities 146,075 137,101
-------- --------
Stockholders' equity:
Preferred stock-authorized 1,000,000 shares
without par value; none issued
Common stock-authorized 44,000,000 shares
$1 par; 26,344,588 shares issued
(1994-15,336,025 pre stock split shares) 26,345 15,336
Paid-in capital 99,686 129,971
Retained earnings 93,598 71,475
-------- --------
219,629 216,782
Treasury stock, at cost-24,268 shares
(1994-2,488,274 pre stock split shares) (482) (33,060)
Deferred compensation (2,126) (858)
Unallocated stock of ESOP (2,260) (2,760)
-------- --------
Total stockholders' equity 214,761 180,104
-------- --------
Total liabilities and stockholders' equity $360,836 $317,205
======== ========
</TABLE>
The Notes to Consolidated Financial Statements are
an integral part of this statement.
25
<PAGE> 26
CONSOLIDATED STATEMENT OF CASH FLOW
Omnicare, Inc. and Subsidiary Companies
<TABLE>
<CAPTION>
(In thousands) For the years ended December 31,
1995 1994 1993
--------------------------------------------
<S> <C> <C> <C>
Cash flow from operating activities:
Income before cumulative effect of accounting change $ 24,760 $ 13,531 $ 10,970
Adjustments to reconcile income before cumulative
effect of accounting change to net cash flow from
operating activities:
Depreciation and amortization 11,117 8,264 5,908
Provision for doubtful accounts 3,086 2,298 2,296
Deferred tax provision 1,750 917 811
Cumulative effect of a change in accounting principle - - 280
Changes in assets and liabilities, net of effects
from acquisition/disposal of businesses:
Accounts receivable (19,286) (14,192) (10,867)
Inventories (4,930) (3,652) 511
Current and noncurrent assets (1,402) (443) (4,126)
Income taxes payable (857) 428 (6,917)
Payables and accrued liabilities 4,335 2,785 2,694
Current and noncurrent liabilities 1,301 2,701 (251)
-------- -------- --------
Net cash flow from operating activities 19,874 12,637 1,309
-------- -------- --------
Cash flow from investing activities:
Acquisition of businesses (35,373) (40,084) (24,656)
Capital expenditures (13,603) (9,659) (5,670)
Marketable securities 45,245 (45,245) -
Proceeds from sales of properties and equipment 261 606 120
Cash flow from discontinued operations (852) (1,370) (11)
-------- -------- --------
Net cash flow from investing activities (4,322) (95,752) (30,217)
-------- -------- --------
Cash flow from financing activities:
Net borrowings on line-of-credit (3,670) (215) 1,789
Proceeds from long-term borrowings 5,343 141 92,290
Principal payments on long-term obligations (9,130) (3,426) (12,086)
Net proceeds from stock offering - 59,211 -
Proceeds from exercise of stock options and warrants,
net of stock tendered in payment 70 1,291 (7)
Dividends paid (2,581) (2,756) (2,928)
-------- -------- --------
Net cash flow from financing activities (9,968) 54,246 79,058
-------- -------- --------
Net increase (decrease) in cash and cash equivalents 5,584 (28,869) 50,150
Cash and cash equivalents at beginning of period 34,553 63,422 13,272
-------- -------- --------
Cash and cash equivalents at end of period $ 40,137 $ 34,553 $ 63,422
======== ======== ========
</TABLE>
The Notes to Consolidated Financial Statements
are an integral part of this statement.
26
<PAGE> 27
CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY
Omnicare, Inc. and Subsidiary Companies
<TABLE>
<CAPTION>
(In thousands except per share data)
Total
Common Paid-in Retained Treasury Deferred Unallocated Stockholders'
Stock Capital Earnings Stock Compensation Stock of ESOP Equity
------- ------- -------- -------- ------------ ------------- -------
<S> <C> <C> <C> <C> <C> <C> <C>
Balance at December 31, 1992
As previously reported $12,843 $ 63,761 $50,005 $(30,077) $ - $(3,460) $ 93,072
Specialized pooling of interests
(Note 2) 202 (194) 1,253 - - - 1,261
------- -------- ------- -------- ------- ------- --------
Balance as restated 13,045 63,567 51,258 (30,077) - (3,460) 94,333
Net income - - 11,250 - - - 11,250
Dividends paid ($.08 per share) - - (1,472) - - - (1,472)
Dividends to former owners
of Evergreen - - (1,654) - - - (1,654)
Exercise of stock options 51 902 - (1,049) - - (96)
Stock awards 2 87 - - - - 89
Decrease in unallocated stock
of ESOP - - - - - 300 300
------- -------- ------- -------- ------- ------- --------
Balance at December 31, 1993 13,098 64,556 59,382 (31,126) - (3,160) 102,750
Lo-Med pooling of interests
(Note 2) 371 (341) 1,120 - - - 1,150
Net income - - 13,531 - - - 13,531
Dividends paid ($.09 per share) - - (1,759) - - - (1,759)
Dividends to former owners
of Evergreen - - (397) - - - (397)
Dividends to former owners
of Lo-Med - - (402) - - - (402)
Stock issued in public offering 1,624 57,587 - - - - 59,211
Stock and warrants issued in
connection with acquisitions 75 3,616 - - - - 3,691
Exercise of warrants - 529 - 658 - - 1,187
Exercise of stock options 117 2,432 - (2,592) - - (43)
Stock awards, net of amortization 51 1,592 - - (858) - 785
Decrease in unallocated stock
of ESOP - - - - - 400 400
------- -------- ------- -------- ------- ------- --------
Balance at December 31, 1994 15,336 129,971 71,475 (33,060) (858) (2,760) 180,104
Net income - - 24,760 - - - 24,760
Dividends paid ($.10 per share) - - (2,581) - - - (2,581)
Two-for-one stock split 10,429 (45,524) - 35,095 - - -
Conversion of subordinated debt 4 49 - - - - 53
Stock and warrants issued in
connection with acquisitions 254 10,632 - - - - 10,886
Exercise of warrants - 298 - (298) - - -
Exercise of stock options 82 1,760 - (1,902) - - (60)
Stock awards, net of amortization 52 2,636 - (317) (1,268) - 1,103
Decrease in unallocated stock
of ESOP - - - - - 500 500
Other 188 (136) (56) - - - (4)
------- -------- ------- -------- ------- ------- --------
Balance at December 31, 1995 $26,345 $ 99,686 $93,598 $ (482) $(2,126) $(2,260) $214,761
======= ======== ======= ======== ======= ======= ========
</TABLE>
The Notes to Consolidated Financial Statements are an integral part of this
statement.
27
<PAGE> 28
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
PRINCIPLES OF CONSOLIDATION
Omnicare, Inc. ("Company") operates in one business segment which includes
the distribution of pharmaceuticals, related pharmacy management services and
medical supplies to long-term care institutions and their residents in the U.S.
The consolidated financial statements include the accounts of the Company and
all majority-owned subsidiaries as well as 50% of the accounts of Heartland
Healthcare Services, a 50/50 partnership between the Company and Health Care
and Retirement Corporation. All significant intercompany transactions are
eliminated.
CASH EQUIVALENTS AND MARKETABLE SECURITIES
The Company considers all investments in highly liquid instruments with
maturities of three months or less at the date purchased to be cash
equivalents. Investments in cash equivalents are carried at cost which
approximates market value with any associated purchase discount or premium
amortized over the period to maturity.
Effective January 1, 1994, the Company adopted Statement of Financial
Accounting Standards ("SFAS") No. 115, "Accounting for Certain Investments in
Debt and Equity Securities." Under these rules, debt securities that the
Company has both the intent and ability to hold to maturity are carried at
amortized cost. Debt securities that the Company does not have the intent and
ability to hold to maturity are classified either as "available-for-sale" or as
"trading" and are carried at fair value. At December 31, 1995 and 1994, the
Company had no investments that qualified as available-for-sale or trading.
Marketable securities at December 31, 1994 consist of U.S. Treasury obligations
which matured in 1995 and are stated at cost, which approximates fair value.
The fair values are based on quoted market prices.
INVENTORIES
Inventories consist primarily of purchased pharmaceuticals and medical
supplies held for sale to customers and are stated at the lower of cost or
market. Cost is generally determined using the average cost and first-in,
first-out methods.
PROPERTIES AND EQUIPMENT
Properties and equipment are stated at cost. Expenditures for
maintenance, repairs, renewals and betterments that do not materially prolong
the useful lives of the assets are charged to expense. Depreciation of
properties and equipment is computed using the straight-line method over the
estimated useful lives of the assets. Leasehold improvements are amortized
over the lesser of the lease terms, including renewal options, or their useful
lives.
GOODWILL, INTANGIBLES AND OTHER ASSETS
Intangible assets, comprised primarily of goodwill, arising from business
combinations accounted for as purchase transactions are amortized using the
straight-line method over their estimated useful lives, not in excess of forty
years.
On an annual basis, the Company reviews the recoverability of goodwill. The
measurement of possible impairment is based primarily on the ability to recover
the balance of the goodwill from expected future operating cash flow on an
28
<PAGE> 29
undiscounted basis. In management's opinion, no such impairment exists at
December 31, 1995 or 1994.
Debt issuance costs are included in other assets and are amortized using the
straight-line method over the life of the related debt.
REVENUE RECOGNITION
Revenue is recognized when products or services are provided to the
customer. A significant portion of the Company's revenues from sales of
pharmaceutical and medical products are reimbursable from Medicaid and Medicare
programs. The Company monitors its receivables from these reimbursement
sources under policies established by management and reports such revenues at
the net realizable amount expected to be received from these third-party
payors.
INCOME TAXES
The provision for income taxes includes federal, state and
local income taxes currently payable and those deferred because of differences
between income for financial reporting and income for tax purposes.
Effective January 1, 1993, the Company adopted SFAS No. 109, "Accounting for
Income Taxes," on a prospective basis; SFAS No. 109 requires the use of an
asset and liability method of accounting for deferred income taxes.
PER SHARE DATA
Primary earnings per share are computed based on the weighted average number
of shares of common stock outstanding during the period and common stock
equivalents, if material. Fully diluted earnings per share include common
stock equivalents and assume the conversion of the 5.75% Convertible
Subordinated Notes due 2003 into common stock. Additionally, interest expense
and amortization of debt issuance costs arising from these convertible
securities are added, net of related income taxes, to income for the purpose of
calculating fully diluted earnings per share.
The Board of Directors declared a two-for-one split of the Company's $1 par
value common stock effective June 21, 1995. As a result of the split,
12,944,180 additional shares were issued including 2,514,994 from treasury
stock. Additional paid-in capital and treasury stock were reduced by
$45,524,000 and $35,095,000, respectively. All references in the financial
statements to share and per share amounts have been adjusted to reflect the
stock split.
USE OF ESTIMATES IN THE PREPARATION OF FINANCIAL STATEMENTS
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 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.
NEW ACCOUNTING PRONOUNCEMENTS
Effective January 1, 1996, the Company will adopt provisions of SFAS No.
123, "Accounting for Stock-Based Compensation." This statement establishes
financial accounting and reporting standards for stock-based employee
29
<PAGE> 30
compensation plans. As permitted by SFAS No. 123, the Company will continue to
follow the measurement principles prescribed by APB Opinion No. 25,
"Accounting for Stock Issued to Employees," and will disclose the pro forma
impact of using the fair value measurement principles of SFAS No. 123.
Effective January 1, 1996, the Company will adopt provisions of SFAS No.
121, "Accounting for the Impairment of Long-Lived Assets and Long-Lived Assets
to be Disposed of." This statement establishes accounting standards for
recording the impairment of long-lived assets. The Company expects that
adoption of this statement will not have a material impact on its results of
operations or financial position.
RECLASSIFICATIONS
Certain reclassifications of prior year amounts have been made to conform
with the current year presentation.
NOTE 2 - ACQUISITIONS
Since 1989, 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.
On June 30, 1995, the Company issued 403,185 shares of its Common Stock for
all of the outstanding common stock of Specialized Pharmacy Services, Inc.
("Specialized"). On September 30, 1994, the Company issued 2,222,644 shares of
its Common Stock for all the outstanding common stock of Evergreen
Pharmaceutical, Inc. and Evergreen Pharmaceutical East, Inc. ("EPE")
(collectively, "Evergreen"). These acquisitions were accounted for as poolings
of interests and, accordingly, the Company's consolidated financial statements
have been restated for all periods prior to the acquisitions to include the
results of operations, financial position and cash flow of Specialized and
Evergreen. In accordance with accounting rules for pooling of interests
transactions, charges to operating income for acquisition-related expenses were
recorded upon completion of the acquisitions. These acquisition-related
expenses totaled $1,292,000, or $989,000 after taxes, for the Specialized
transaction and $2,380,000, or $1,860,000 after taxes, for the Evergreen
transaction. Net sales and net income for Omnicare and Evergreen prior to the
Evergreen transaction and Omnicare and Specialized prior to the Specialized
transaction are as follows (in thousands):
<TABLE>
<CAPTION>
Omnicare Specialized Evergreen
-------- ----------- ---------
<S> <C> <C> <C>
Six months ended June 30, 1995:
Sales $171,211 $16,441 (a)
Net income 9,861 286 (a)
Year ended December 31, 1994:
Sales $275,663 $31,992 (a)
Net income 13,406 125 (a)
Nine months ended
September 30, 1994:
Sales $172,876 $23,748 $25,324
Net income 7,091 66 1,877
Year ended December 31, 1993:
Sales $159,574 $29,425 $34,130
Net income 9,014 (141) 2,377
</TABLE>
[FN]
(a) The results of operations of Evergreen are included in the
consolidated results of Omnicare for these periods.
30
<PAGE> 31
During 1995, the Company completed acquisitions of the following
institutional pharmacy businesses: Shore Pharmaceutical Providers, Inc. in
Westbury, New York, in January; North Shore Pharmacy Services, Inc. in Boston,
Massachusetts, Genrex Nursing Home Pharmacy Division of Genovese Drug Stores,
Inc. in Melville, New York and Consulting and Pharmaceutical Services, Inc. in
Yakima, Washington, in March; Pioneer I.V., Ltd. in Moline, Illinois, in May;
Specialized in Livonia, Michigan, in June; CPM Datascript, Corp. in Hollis, New
York, in July; the nursing home pharmacy business of Rite Aid Corp. in
September; and Apex Long-Term Care Pharmacy, Inc. in Hamden, Connecticut, in
December. Also in September, the Company acquired a care planning software
developer and marketer, the Dynatran Computer Systems Division of Health
Spectrum, Inc. in Portland, Oregon.
During 1994, the Company completed the acquisitions of Care Pharmaceutical
Services, Inc. in Griffith, Indiana and Schaufler Prescription Pharmacy in
Belleville, Illinois, in March; Weber Medical Systems, Inc. in Skokie, Illinois
and Lo-Med Prescription Services, Inc. ("Lo-Med") in Wadsworth, Ohio, in June;
UniCare, Inc. in Montgomery, Alabama, in August; and Lawrence Medical Supply,
Inc. in Deerfield, Illinois and Evergreen in Kirkland, Washington, in
September.
During 1993, the Company completed the acquisitions of Freed's Pharmacy,
Inc. in Overland Park, Kansas, in March; Kansas City Nursing Services, Inc. in
Kansas City, Kansas, Enloe Drugs, Inc. in Decatur, Illinois and Anderson
Medical Services, Inc., in Dover, Ohio, all in the fourth quarter.
The Specialized, Evergreen and Lo-Med acquisitions were accounted for as
pooling of interests transactions. Prior period financial statements have been
restated to include the historical results of Specialized and Evergreen. The
impact of the Lo-Med transaction on the Company's historical financial
statements is not significant; consequently, prior period financial statements
have not been restated for this transaction. All other acquisitions have been
accounted for as purchase transactions. The purchase prices have been
allocated to the estimated fair value of the tangible and intangible net assets
acquired. The following table summarizes the aggregate purchase price for all
businesses acquired which have been accounted for under the purchase method (in
thousands):
<TABLE>
<CAPTION>
Businesses acquired in
----------------------
1995 1994 1993
---- ---- ----
<S> <C> <C> <C>
Cash $21,309 $17,954 $16,100
Amounts payable in the future
(through 1998) 4,797 3,107 10,900
Common stock 10,856 2,819 -
Warrants 30 872 -
Assumption of indebtedness 197 2,027 600
------- ------- -------
$37,189 $26,779 $27,600
======= ======= =======
Amounts contingently payable $ 3,569 $ 4,809 $ 6,900
======= ======= =======
</TABLE>
Amounts payable in the future are subject to set-off for claims of
indemnity. Amounts contingently payable totaled $11.2 million at December 31,
1995 and, if paid, will be recorded as additional purchase price, serving to
increase goodwill in the period in which the contingencies are resolved. The
1995 acquisitions carry certain pre-acquisition contingencies which will be
resolved within one year of the transaction and which aggregate $3.6 million at
December 31, 1995. The pre-acquisition contingencies for the 1994 acquisitions
totaled $1.3 million at December 31, 1994.
31
<PAGE> 32
Cash in the above table represents payments made in the year of acquisition.
This amount differs from cash paid for the acquisition of the businesses in the
Consolidated Statement of Cash Flow due primarily to purchase price payments
made during the year pursuant to acquisition agreements entered into in prior
years.
Warrants outstanding as of December 31, 1995 represent the right to purchase
516,000 shares of common stock and were issued in connection with certain
acquisitions. These warrants can be exercised at any time through 1998 at
prices ranging from $13.43 to $23.64 per share. Warrants to purchase 34,000
shares of common stock, issued in prior years, were exercised in 1995.
The results of operations of the companies acquired in purchase
transactions have been included in the consolidated results of operations of
the Company from the dates of acquisition. Unaudited pro forma data (net of
the cost of capital related to the cash purchase prices) as though the Company
had acquired these businesses at the beginning of each of the years are set
forth below and include the pooling transactions with Specialized, Evergreen
and Lo-Med (in thousands except per share data):
<TABLE>
<CAPTION>
For the years ended December 31,
1995 1994 1993(a)
--------------------------------
<S> <C> <C> <C>
Pro Forma
- ---------
Sales $414,938 $365,392 $269,667
Net income 25,045 15,245 13,042
Earnings per share:
Primary $ .95 $ .66 $ .59
Fully diluted $ .86 $ .64 $ .59
</TABLE>
(a) 1993's pro forma data do not include any businesses acquired in 1995
and, therefore, are not comparable to the 1995 and 1994 pro forma data.
The pro forma information does not purport to be indicative of operating
results which would have occurred had the acquisitions been made at the
beginning of the respective periods or of results which may occur in the
future.
NOTE 3 - CASH AND CASH EQUIVALENTS AND MARKETABLE SECURITIES
A summary of cash and cash equivalents and marketable securities follows
(in thousands):
<TABLE>
<CAPTION>
December 31,
1995 1994
-----------------
<S> <C> <C>
Cash and cash equivalents:
Cash $ 7,418 $ 3,042
Money market funds 197 251
U.S. Treasury-backed repurchase
agreements 32,522 31,260
------- -------
$40,137 $34,553
======= =======
Marketable securities $ - $45,245
======= =======
</TABLE>
Repurchase agreements represent investments in U.S. Treasury bills under
agreements to resell, usually overnight, but in no case longer than 30 days.
The Company has a collateralized interest in the underlying securities, which
are segregated in the accounts of the bank counterparty. At December 31, 1994,
Fifth Third Bank of Cincinnati, Ohio was the counterparty for $19,446,000 of
the repurchase agreements, which matured on January 3, 1995.
32
<PAGE> 33
NOTE 4 - PROPERTIES AND EQUIPMENT
A summary of properties and equipment follows (in thousands):
<TABLE>
<CAPTION>
December 31,
1995 1994
--------------------
<S> <C> <C>
Land $ 247 $ 257
Buildings 1,496 1,458
Machinery and equipment 27,487 19,883
Furniture, fixtures
and leasehold improvements 22,264 15,126
-------- --------
51,494 36,724
Accumulated depreciation (19,036) (13,272)
-------- --------
$ 32,458 $ 23,452
======== ========
</TABLE>
NOTE 5 - LEASING ARRANGEMENTS
The Company has operating leases which cover various real and personal
property. In most cases, the Company expects that these leases will be renewed
or replaced by other leases in the normal course of business. There are no
contingent rentals in the Company's operating leases.
The following is a schedule of future minimum rental payments required under
operating leases that have initial or remaining noncancellable terms in excess
of one year at December 31, 1995 (in thousands):
1996 $ 2,951
1997 2,760
1998 2,426
1999 1,784
2000 1,352
Later years 3,404
-------
Total minimum
payments required $14,677
=======
Total rent expense under operating leases follows (in thousands):
For the years ended December 31,
1993 $3,035
1994 3,470
1995 4,567
NOTE 6 - LONG-TERM DEBT
A summary of long-term debt follows (in thousands):
<TABLE>
<CAPTION>
December 31,
1995 1994
---------------------
<S> <C> <C>
Convertible Subordinated Notes due 2003 $80,445 $80,500
Employee Stock Ownership Plan
Loan Guarantee 2,260 2,760
Line of credit (Specialized) - 3,670
Notes payable (Specialized) - 3,155
Capitalized lease obligations 1,038 787
------- -------
83,743 90,872
Less current portion (1,051) (5,549)
------- -------
$82,692 $85,323
======= =======
</TABLE>
33
<PAGE> 34
On October 1, 1993, the Company issued $80,500,000 principal amount of 5.75%
Convertible Subordinated Notes ("Notes") due 2003. The Notes are convertible
into common stock at any time at the option of the holder at a price of $14.44
per share. The Notes are redeemable at the option of the Company beginning in
October 1996, at redemption prices ranging from 103.83% of the principal amount
in 1996 to 100.64% in 2001 and 100% thereafter. Absent conversion of the Notes
into common stock or redemption by the Company at its election as described
above, the Notes are due on October 1, 2003. Interest on the notes is payable
semiannually, due in October and April of each year, until conversion or
redemption. Debt issuance costs are included in other assets and amortized
using the straight-line method over the 10 year life of the Notes. The Company
amortized $310,000 of deferred debt issuance costs in both 1995 and 1994.
Based on the market value of the Notes in the last over-the-counter trade
prior to year-end, the estimated fair value of the Notes at December 31, 1995
was $250,000,000. The fair value of all other financial instruments of the
Company approximates the amounts presented on the consolidated balance sheet.
In 1988, the Company established an Employee Stock Ownership Plan ("ESOP")
which currently covers certain acquired entities' employees and corporate
headquarters employees. The ESOP used proceeds from a $4 million bank loan to
purchase 986,874 shares of the Company's common stock on the open market at
prices ranging from $3.88 to $4.25 per share. Inasmuch as the Company has
guaranteed the repayment of this obligation, it has recorded the ESOP's bank
debt as long-term debt and also as a reduction of stockholders' equity in the
accompanying consolidated balance sheet.
The ESOP services its debt with Company contributions, which were previously
made to the Company's Employee Savings and Investment Plan, and dividends
received on shares held by the ESOP. Principal and interest payments on the
bank debt are made in increasing quarterly installments over a ten-year period,
the final payment being due on December 31, 1998. The loan bears interest at
the per annum rate of 7% and is secured by the unallocated shares of common
stock held by the ESOP trust. These unallocated shares had a fair market value
equal to $18,230,000 at December 31, 1995.
The Company funds ESOP expense as accrued. The components of
total ESOP expense are as follows (in thousands):
<TABLE>
<CAPTION>
For the years ended December 31,
1995 1994 1993
--------------------------------
<S> <C> <C> <C>
Interest expense $ 182 $ 214 $ 238
Principal payments 500 400 300
Dividends on ESOP stock (76) (70) (64)
----- ----- -----
$ 606 $ 544 $ 474
===== ===== =====
</TABLE>
At December 31, 1994, $3,670,000 was outstanding and $1,330,000 was
available for borrowing under the Specialized line of credit. The interest
rate charged equaled 1.75% over the bank's prime rate (10.25% at December 31,
1994). The weighted average interest rate charged on the Specialized line of
credit was 10.25% for 1995 and 1994 and 7.75% for 1993. Amounts outstanding
under the line of credit were repaid and the line was closed during 1995.
Specialized notes payable represented various obligations incurred specific
to Specialized operations. The weighted average interest rate on the notes
approximated 10.1%, 10.7% and 8.8% for 1995, 1994 and 1993, respectively.
Included in Specialized notes payable are notes due to the former owners of
Specialized for $379,000 as of December 31, 1994. All of these obligations
were repaid in 1995.
34
<PAGE> 35
In February 1995, the Company reached an agreement with a consortium of six
banks for a five-year $135 million revolving line of credit. Borrowings under
this agreement bear interest based upon the bank's cost of funds plus a spread
of 25 to 75 basis points, dependent upon the Company's performance under
certain debt covenants, or the prime rate. Additionally, a commitment fee on
the unused portion of the facility is required which ranges from 10 to 25 basis
points, and is also based upon the Company's performance under certain debt
covenants. No amounts were outstanding under this agreement at December 31,
1995.
The following is a schedule by year of required long-term debt payments as
of December 31, 1995 (in thousands):
1996 $ 1,051
1997 984
1998 1,100
1999 163
2000 -
Later years 80,445
------
$83,743
======
Total interest payments made in 1995, 1994 and 1993 amounted to $5,421,000,
$6,145,000 and $1,684,000, respectively.
NOTE 7 - PUBLIC OFFERING OF COMMON STOCK
In November 1994, the Company completed a public offering of 8,280,000
shares of common stock of which 3,247,482 shares were sold by the Company
resulting in net proceeds of $59,211,000 after deducting issuance costs.
NOTE 8 - STOCK INCENTIVE PLANS
The Company has stock incentive plans under which it may grant stock awards
or options to purchase its common stock at a price equal to the market value at
the date of grant. These options become exercisable beginning one year
following the date of grant in four approximately equal annual installments.
The changes in stock options outstanding relating to these plans are
summarized below:
<TABLE>
<CAPTION>
Number of Average
Shares Price
--------- -------
<S> <C> <C>
Balance at December 31, 1992 970,992 $ 7.82
Options granted 217,000 8.14
Options exercised (101,480) 7.62
Options terminated or cancelled (88,500) 9.19
---------
Balance at December 31, 1993 998,012 7.79
Options granted - -
Options exercised (235,076) 6.82
Options terminated or cancelled - -
---------
Balance at December 31, 1994 762,936 8.09
Options granted 529,000 24.37
Options exercised (163,050) 7.29
Options terminated or cancelled (8,000) 24.25
---------
Balance at December 31, 1995 1,120,886 15.77
=========
</TABLE>
35
<PAGE> 36
At December 31, 1995, options for 373,886 shares (1994-363,186;
1993-424,512) were exercisable and 405,986 shares (1994-5,424; 1993-107,680)
were available for granting of additional stock options and awards.
During 1995, the Company's Board of Directors and stockholders approved the
1995 Premium-Priced Stock Option Plan, providing options to purchase 1,260,000
shares of Company common stock available for grant at an exercise price of 125%
of the stock's fair market value at the date of grant. No options have been
issued under this plan.
In 1995 and 1994, the Company granted restricted stock awards to certain key
employees covering 99,472 and 98,656 shares, respectively, of common stock. No
such stock awards were granted in 1993. These shares vest over a five-to
seven-year period and are restricted as to the transfer of ownership.
In 1995, 1994 and 1993, the Company granted unrestricted stock awards
covering 3,200, 3,600 and 4,200 shares, respectively, of its common stock to
members of the Board of Directors of the Company.
NOTE 9 - RELATED PARTY TRANSACTIONS
The Company contracted with a subsidiary of Chemed Corporation (Chemed), a
2% stockholder, to assist in the development of a new data processing system to
integrate and standardize all operational and financial reporting functions.
The Company also subleases its corporate offices from Chemed and is charged
for the occasional use of Chemed's corporate aviation department and other
incidental expenses based on Chemed's cost. The Company believes that the
method by which such charges are determined is reasonable and that the charges
are essentially equal to that which would have been incurred if the Company had
operated as an unaffiliated entity. Charges to the Company for these services
were $4,535,000, $2,951,000 and $1,624,000 in 1995, 1994 and 1993,
respectively. Net amounts owed by the Company to Chemed were $667,000 and
$845,000 at December 31, 1995 and 1994, respectively.
Included in accounts receivable are amounts due from companies affiliated
with the former owners of Evergreen. These amounts, net of payables, totaled
$479,000 and $850,000 at December 31, 1995 and 1994, respectively.
Effective May 1, 1993, Evergreen leased one of its facilities from a
partnership, a partner of which is a former owner of Evergreen. Rent expense
of $549,000, $569,000 and $437,000 was paid under this lease in 1995, 1994 and
1993, respectively.
NOTE 10 - EMPLOYEE BENEFIT PLANS
The Company has a non-contributory, defined benefit pension plan covering
certain corporate headquarters employees and the employees of a company sold by
Omnicare in 1992, for which benefits ceased accruing upon the sale. Benefits
accruing under this plan to corporate headquarters employees were fully vested
and frozen as of January 1, 1994.
Retirement benefits are based primarily on an employee's years of service
and compensation near retirement. Plan assets are invested in U.S. Treasury
obligations. The Company's policy is to fund pension costs in accordance with
the funding provisions of the Employee Retirement Income Security Act.
36
<PAGE> 37
The funded status of the plan was as follows (in thousands):
<TABLE>
<CAPTION>
December 31,
Actuarial present value of: 1995 1994
---------------
<S> <C> <C>
Unvested benefit obligation $ 5 $ 5
Vested benefit obligation 1,718 1,385
------ ------
Accumulated benefit obligation 1,723 1,390
Effect of projected future
salary increases - -
------ ------
Projected benefit obligation 1,723 1,390
Plan assets at fair market value 2,117 1,762
------ ------
Plan assets greater than
projected benefit obligation 394 372
Unrecognized net gain (247) (262)
------ ------
Prepaid pension asset $ 147 $ 110
====== ======
</TABLE>
The components of the Company's pension (income) cost follow
(in thousands):
<TABLE>
<CAPTION>
For the years ended
December 31,
1995 1994 1993
----------------------
<S> <C> <C> <C>
Service costs - benefits earned
during the period, net $ - $ - $ 81
Interest cost on projected benefit
obligation and service costs 112 103 133
Expected return on plan assets (149) (158) (104)
----- ----- -----
Pension (income) cost $ (37) $ (55) $ 110
===== ===== =====
</TABLE>
Actuarial assumptions used to calculate the prepaid pension asset and
pension (income) cost include a 7.25% discount rate as of December 31, 1995 (8%
at December 31, 1994 and 1993), an expected long-term rate of return on assets
of 8% and a 6% rate of increase in compensation levels in years prior to 1994.
Expenses relating to the Company's defined contribution and other similar
plans (including the ESOP described in Note 6) were $1,700,000, $1,536,000 and
$940,000 in 1995, 1994 and 1993, respectively.
In 1994, the Company adopted SFAS No. 112, "Employers' Accounting for
Postemployment Benefits." The adoption did not have a material impact on the
Company's financial position or results of operations.
37
<PAGE> 38
NOTE 11 - INCOME TAXES
The provision for income taxes is comprised of the following (in thousands):
<TABLE>
<CAPTION>
For the years
ended December 31,
1995 1994 1993
---------------------------
<S> <C> <C> <C>
Current:
Federal $13,197 $7,158 $ 4,282
State and local 1,473 1,072 920
------- ------ -------
14,670 8,230 5,202
------- ------ -------
Deferred:
Federal 1,272 802 1,109
State 478 115 (298)
------- ------ ------
1,750 917 811
------- ------ ------
Income taxes $16,420 $9,147 $6,013
======= ====== ======
</TABLE>
Tax benefits related to the exercise of stock options and stock awards have
been credited to paid-in capital in amounts of $1,357,000, $947,000 and
$234,000 for 1995, 1994 and 1993, respectively.
The difference between the Company's reported income tax expense and the
federal income tax expense computed at the statutory rates of 35% for 1995 and
1994 and 34% for 1993 is explained in the following table (in thousands):
<TABLE>
<CAPTION>
For the years ended December 31,
1995 1994 1993
-------------- ------------- -------------
<S> <C> <C> <C> <C> <C> <C>
Federal income tax at the
statutory rate $14,413 35.0% $7,937 35.0% $5,774 34.0%
Amortization of nondeductible
intangible assets 408 1.0 372 1.6 42 .2
State and local income taxes,
net of federal income tax benefit 1,268 3.1 772 3.4 412 2.4
Tax effect of EPE S Corporation
income - - (345) (1.5) (280) (1.6)
Other 331 .8 411 1.8 65 .4
------- ---- ------ ---- ------ ----
Income taxes $16,420 39.9% $9,147 40.3% $6,013 35.4%
======= ==== ====== ==== ====== ====
</TABLE>
The Omnibus Budget Reconciliation Act of 1993 permitted the Company to
deduct from taxable income the amortization of intangibles arising from certain
business acquisitions occurring subsequent to July 1991. The effect of this
change in tax law was to reduce 1993 income tax expense by $310,000 for the
period July 1991 through December 31, 1992 and by an additional $140,000 for
the portion of 1993 prior to enactment of the law.
Effective January 1, 1993, the Company adopted SFAS No. 109, which requires
the use of an asset and liability method of accounting for income taxes. The
cumulative effect of this adoption resulted in a gain of $280,000 ($.01 per
share) and was otherwise not material to the Company's financial position or
results of operations.
Income tax payments made in 1995, 1994 and 1993 amounted to $14,014,000,
$5,569,000 and $11,412,000, respectively.
38
<PAGE> 39
A summary of deferred tax assets and liabilities follows (in thousands):
<TABLE>
<CAPTION>
December 31,
1995 1994
------ ------
<S> <C> <C>
Accounts receivable reserves $4,469 $3,183
Accrued liabilities 4,929 3,944
Other 104 5
------ ------
Gross deferred tax assets $9,502 $7,132
====== ======
Fixed assets and depreciation methods $ 973 $ 611
Amortization of intangibles 3,798 1,954
Other 752 365
------ ------
Gross deferred tax liabilities $5,523 $2,930
====== ======
</TABLE>
The Company has evaluated its net deferred tax asset position and has
concluded that a valuation allowance is not required as these net assets are
more likely than not to be realized.
39
<PAGE> 40
NOTE 12 - SUMMARY OF QUARTERLY RESULTS (UNAUDITED)
The following table presents the Company's quarterly financial information
for 1995 and 1994 (in thousands except per share data):
<TABLE>
<CAPTION>
First Second Third Fourth Full
Quarter Quarter Quarter Quarter Year
----------------------------------------------------------------
1995(b)
<S> <C> <C> <C> <C> <C>
Sales $90,527 $97,125 $102,145 $109,839 $399,636
Cost of sales 65,879 70,168 73,198 78,470 287,715
------- ------- -------- -------- --------
Gross profit 24,648 26,957 28,947 31,369 111,921
Selling, general and
administrative expenses 15,413 16,549 16,789 18,219 66,970
Acquisition expenses-pooling
of interests - 1,292(c) - - 1,292(c)
------- ------- -------- -------- --------
Operating income 9,235 9,116(c) 12,158 13,150 43,659(c)
Interest expense, net of
investment income (535) (591) (638) (715) (2,479)
------- ------- -------- -------- --------
Income before income taxes 8,700 8,525(c) 11,520 12,435 41,180(c)
Income taxes 3,449 3,629 4,585 4,757 16,420
------- ------- -------- -------- --------
Net income $ 5,251 $ 4,896(c) $ 6,935 $ 7,678 $ 24,760(c)
======= ======= ======== ======== ========
Earnings per share data:
Primary $ .20 $ .19(c) $ .26 $ .28 $ .94(a)(c)
======= ======= ======== ======== ========
Fully diluted $ .19 $ .18(c) $ .24 $ .26 $ .86(a)(c)
======= ======= ======== ======== ========
1994(b)
Sales $68,215 $73,901 $ 79,832 $ 85,707 $307,655
Cost of sales 50,998 54,828 58,924 62,783 227,533
------- ------- -------- -------- --------
Gross profit 17,217 19,073 20,908 22,924 80,122
Selling, general and
administrative expenses 10,550 11,959 13,173 14,429 50,111
Acquisition expenses-pooling
of interests - - 2,380(d) - 2,380(d)
------- ------- -------- -------- --------
Operating income 6,667 7,114 5,355(d) 8,495 27,631(d)
Interest expense, net of
investment income (1,225) (1,310) (1,337) (1,081) (4,953)
------- ------- -------- -------- --------
Income before income taxes 5,442 5,804 4,018(d) 7,414 22,678(d)
Income taxes 2,033 2,241 1,956 2,917 9,147
------- ------- -------- -------- --------
Net income $ 3,409 $ 3,563 $ 2,062(d) $ 4,497 $ 13,531(d)
======= ======= ======== ======== ========
Earnings per share data:
Primary $ .16 $ .16 $ .09(d) $ .19 $ .60(a)(d)
======= ======= ======== ======== ========
Fully diluted $ .15 $ .16 $ .09(d) $ .18 $ .59(a)(d)
======= ======= ======== ======== ========
</TABLE>
[FN]
(a) Earnings per share is calculated independently for each quarter and the
sum of the quarters may not necessarily be equal to the full year earnings
per share amount.
(b) The quarterly information presented above for periods prior to the
pooling of interests with Specialized on June 30, 1995 has been restated
to include Specialized's results of operations.
(c) Includes pooling of interests expenses of $1,292,000 pretax, or $989,000
after taxes ($.04 per primary share and $.03 fully diluted). Net income,
excluding this charge, for the year ended December 31, 1995 was $25,749,000
($.98 per primary share and $.89 fully diluted).
(d) Includes pooling of interests expenses of $2,380,000 pretax, or $1,860,000
after taxes ($.08 per primary share and $.07 fully diluted). Net income,
excluding this charge, for the year ended December 31, 1994 was $15,391,000
($.68 per primary share and $.66 fully diluted).
40
<PAGE> 41
ITEM 9 - CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON
ACCOUNTING AND FINANCIAL DISCLOSURE
None.
PART III
ITEM 10 - DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
Except for information regarding the Company's executive officers included
in Part I of this Form 10-K, the information required under this Item is set
forth in the Company's 1996 Proxy Statement which is incorporated herein by
reference.
ITEM 11 - EXECUTIVE COMPENSATION
Information required under this Item is set forth in the Company's 1996
Proxy Statement which is incorporated herein by reference.
ITEM 12 - SECURITY OWNERSHIP OF CERTAIN BENEFICIAL
OWNERS AND MANAGEMENT
Information required under this Item is set forth in the Company's 1996
Proxy Statement which is incorporated herein by reference.
ITEM 13 - CERTAIN RELATIONSHIPS AND RELATED
TRANSACTIONS
Information required under this Item is set forth in the Company's 1996
Proxy Statement which is incorporated herein by reference.
PART IV
ITEM 14 - EXHIBITS, FINANCIAL STATEMENT SCHEDULE AND
REPORTS ON FORM 8-K
(a)(1) Financial Statements
The 1995 Consolidated Financial Statements of Omnicare are included
in Part II, Item 8.
(a)(2) Financial Statement Schedule
See Index to the Financial Statement Schedule at page 21 of this
Report.
(a)(3) Exhibits
See Index to Exhibits at page E-1 of this Report.
(b) Reports on Form 8-K
During the quarter ended December 31, 1995, the Company did not file
any Report on Form 8-K.
41
<PAGE> 42
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the Company has duly caused this report to be signed on
its behalf by the undersigned thereunto duly authorized, on this 25 day of
March 1996.
OMNICARE, INC.
March 25, 1996 /s/Joel F. Gemunder
----------------------------
Joel F. Gemunder, President
Pursuant to the requirements of the Securities Exchange Act of 1934, this
Report has been signed below by the following persons on behalf of the Company
and in the capacities and on the dates indicated.
Signature Title Date
/s/Edward L. Hutton Chairman and Director ----------
- ------------------- |
|
Edward L. Hutton (Principal Executive Officer) |
|
/s/Joel F. Gemunder President and Director |
- ------------------- |
Joel F. Gemunder (Principal Executive Officer) |
|
/s/David W. Froesel, Jr. Senior Vice President and |
- ------------------------ |
David W. Froesel, Jr. Chief Financial Officer |
(Principal Financial Officer) |
|
/s/Thomas R. Marsh Vice President and Controller |
- ------------------ |
Thomas R. Marsh (Principal Accounting Officer) |
|
Ronald K. Baur, Director* --- |
Kenneth W. Chesterman, Director* | |
Charles H. Erhart, Jr., Director* | |
Mary Lou Fox, Director* | |
Thomas C. Hutton, Director* | March 25, 1996
Patrick E. Keefe, Director* | |
Sandra E. Laney, Director* | |
Andrea R. Lindell, Director* | |
Sheldon Margen, M.D., Director* | |
Kevin J. McNamara, Director* | |
John M. Mount, Director* | |
Timothy S. O'Toole, Director* | |
D. Walter Robbins, Jr., Director* --- ----------
* Cheryl D. Hodges, by signing her name hereto, signs this document on
behalf of herself as a director and on behalf of each person indicated above
pursuant to a power of attorney duly executed by such person and filed with the
Securities and Exchange Commission.
/s/Cheryl D. Hodges
--------------------------
Cheryl D. Hodges
(Attorney-in-Fact)
42
<PAGE> 43
Schedule II
OMNICARE, INC. AND SUBSIDIARY COMPANIES
Valuation and Qualifying Accounts
(in thousands)
<TABLE>
<CAPTION>
Additions
Balance at charged Write-offs Balance
beginning of to cost net of at end
period and expenses Acquisitions Adjustments recoveries of period
----------- ------------ ------------ ----------- ---------- ---------
<S> <C> <C> <C> <C> <C> <C>
Allowance for
uncollectible
accounts receivable
Year ended
December 31,
1995 $3,681 $3,086 $ 239 $ - $(2,245) $4,761
1994 3,187 2,298 722 - (2,526) 3,681
1993 4,005 2,296 283 - (3,397) 3,187
</TABLE>
<TABLE>
<CAPTION>
Allowance for
uncollectible accounts
receivable of
discontinued operations
Year ended
December 31,
<S> <C> <C> <C> <C> <C> <C>
1995 $ 282 $ - $ - $ - $ - $ 282
1994 288 - - - (6) 282
1993 481 - - - (193) 288
</TABLE>
S-1
<PAGE> 44
INDEX OF EXHIBITS
-----------------
Previous Document
or Location Herein
------------------
Number Refers to Item 601
Exhibit Regulation S-K and Type of Filing Previous Exhibit
Sequence Description of Exhibit and Filing Date Page Number
- -------- ----------------------- --------------- ----------------
1 ( 3) Restated Certificate of Form S-3 E-2 - E-6
Incorporation of Omnicare, Registration
Inc. No. 33-59689
2 (3.1) By-Laws of Omnicare, Inc., Form 10-K E-4 - E-13
as amended March 26, 1993
3 (4.1) Indenture dated as of Form 8-K E-1 - E-95
October 1, 1993 October 20, 1993
between Omnicare, Inc.
and NBD Bank, N.A.,
Trustee, as amended
October 20, 1993, for
the 5-3/4% Convertible
Subordinated Notes
due 2003.
4 (5.1) Revolving Credit Agreement Form 10-Q 14
dated April 7, 1995 August 14, 1995
5 (10.1) Executive Salary Protec- E-3 - E-8
tion Plan, as amended,
May 22, 1981
6 (10.2) 1981 Stock Incentive Plan, Form 10-K E-3 - E-14
as amended March 25, 1988
7 (10.3) 1989 Stock Incentive Plan Proxy Statement A-1 - A-6
for 1989 Annual
Meeting of Stock-
holders dated
April 10, 1989
8 (10.4) 1992 Long-Term Stock Proxy Statement A-1 - A-9
Incentive Plan for 1992 Annual
Meeting of Stock-
holders dated
April 6, 1992
9 (10.5) 1995 Premium-Priced Proxy Statement A-1 - A-6
Stock Option Plan for 1995 Annual
Meeting of Stock-
holders dated
April 10, 1995
10 (10.6) Excess Benefits Plan Form 10-K E-22 - E-32
March 25, 1988
11 (10.7) Asset Purchase Agreement Form 8-K E-1 - E-68
dated as of March 18, April 7, 1993
1993 between Omnicare, Inc.
and Clar-Ron, Inc.
12 (10.8) Asset Purchase Agreement Form 8-K E-1 - E-87
dated as of September 2, September 2, 1994
1994 between Omnicare, Inc.
and Evergreen Pharmaceu-
tical, Inc.
E-1
<PAGE> 45
INDEX OF EXHIBITS
------------------
Previous Document
or Location Herein
------------------
Number Refers to Item 601
Exhibit Regulation S-K and Type of Filing Previous Exhibit
Sequence Description of Exhibit and Filing Date Page Number
- -------- ------------------------- --------------- ----------------
13 (10.9) Form of Indemnification Proxy Statement A-1 - A-4
Agreement with Directors for 1987 Annual
and Officers Meeting of Stock-
holders dated
April 14, 1987
14 (10.10) Employment Agreements Form 10-K E-83 - E-126
with J. F. Gemunder and March 29, 1989
C. D. Hodges dated
August 4, 1988
15 (10.11) Amendment to Employment Form 10-K E-32 - E-35
Agreements with J. F. March 25, 1994
Gemunder and C. D. Hodges
dated May 17, 1993
16 (10.12) Employment Agreement Form 10-K E-36 - E-52
with T. R. Marsh dated March 25, 1994
August 4, 1988 and Amendment
dated May 17, 1993
17 (10.13) Employment Agreement with Form 10-K E-4 - E-18
P. E. Keefe dated March March 25,1994
4, 1993
18 (10.14) Employment Agreement with Form 10-K E-19 - E-31
K. W. Chesterman dated March 25, 1994
May 17, 1993
19 (10.15) Amendment to Employment Form 10-K E-3 - E-7
Agreements with J. F. March 25, 1995
Gemunder, K. W. Chesterman,
P. E. Keefe, C. D. Hodges
and T. R. Marsh dated
May 16, 1994
20 (10.16) Amendment to Employment E-9 - E-12
Agreements with J. F. Gemunder,
K. W. Chesterman, P. E. Keefe and
C. D. Hodges dated May 15, 1995
21 (10.17) Split Dollar Agreement E-13 - E-24
with E. L. Hutton dated
June 1, 1995 (Agreement in the
same Form exists with J. F.
Gemunder)
22 (10.18) Split Dollar Agreement E-25 - E-35
with K. W. Chesterman dated
June 1, 1995 (Agreements in the
same Form exists with the
following Executive Officers:
C. D. Hodges and P. E. Keefe)
23 (11) Statement re: Computation E-36
of Earnings per Common Share
24 (12) Statement of Computation of Ratio E-37
of Earnings to Fixed Charges
25 (21) Subsidiaries of Omnicare, Inc. E-38
26 (23.1) Consent of Price Waterhouse LLP E-39
27 (23.2) Consent of BDO Seidman, LLP E-40
28 (24) Powers of Attorney E-41 - E-53
E-2
<PAGE> 1
OMNICARE, INC.
EXECUTIVE SALARY PROTECTION AGREEMENT
This Agreement is made and entered into as of July 1, 1981, by and
between Omnicare, Inc., a Delaware corporation (hereinafter sometimes referred
to as the "Company"), and Joel F. Gemunder (hereinafter referred to as
"Employee").
In consideration of the past and future services of the Employee, it
is hereby mutually agreed as follows:
SECTION 1 - PAYMENT OF DEATH BENEFITS
- -------------------------------------
(a) If Employee dies (from causes other than suicide within two
years from the date hereof) while an active employee of the Company or a
Subsidiary before reaching age 65, the Company, or the Subsidiary by which the
Employee is employed, will pay to Employee's beneficiary (as defined herein),
as a death benefit, the percentages of his Recognized Compensation (as stated
in Schedule A attached hereto) for the number of months set forth below:
(i) 100% of Employee's Recognized Compensation for the first
twelve (12) months following death;
(ii) 50% of Employee's Recognized Compensation for the next one
hundred eight (108) months provided that, in the event the Employee
dies at age 56 or thereafter, the payments referred to in this
sub-paragraph (ii) shall continue for the following periods:
Age at Death Number of Monthly Payments
56 96
57 84
58 72
59 60
60 48
61 48
62 48
63 48
64 48
(b) As used herein the term "Beneficiary" of Employee shall mean
the person or persons (which may include, without limitation, the Employee's
estate or one or more trusts or other entities) designated by Employee in a
"Designation of Beneficiary" filed with the Company. Such "Designation of
Beneficiary" shall be in such form as the Committee may from time to time
E-3
<PAGE> 2
prescribe or accept. Employee may at any time change any such Designation of
Beneficiary by filing a new form with the Company. If Employee has not made
any such designation, or if any such designation shall not be effective,
"Beneficiary" shall mean the Employee's estate or other person or persons
entitled to receive the payments herein provided for under the laws of testate
or intestate succession, as the case may be. In the event the Company has any
doubt as to the proper person or persons entitled to receive payments due
hereunder, the Company shall have the right to withhold such payments until the
matter is decided by a court of competent jurisdiction.
(c) In the event the Federal tax laws and regulations applicable
to the payments herein provided for or to any life insurance the Company may
take on Employee's life pursuant to Section 5 of the Company's Executive Salary
Protection Plan ("ESP Plan") are hereafter changed or interpreted so as to
increase the presently anticipated aftertax cost to the Company of the payments
herein provided for, the Company may, in accordance with such procedures as
shall be approved by the Committee, reduce the payments herein provided for
commensurately.
SECTION 2 - TERMINATIONS
- ------------------------
(a) All rights of Employee hereunder shall terminate upon his
reaching age 65 or thirty (30) days following the date upon which he retires or
otherwise (except by reason of death) ceases to be an active employee of the
Company or a Subsidiary, whichever is earlier. Neither a leave of absence (if
approved by the Committee) nor a cessation of employment by reason of total
disability shall constitute a cessation of employment within the meaning of
this paragraph. For the purposes of this paragraph:
(i) "Total disability" shall mean a disability which (1) results
from bodily injuries or disease, (2) wholly prevents Employee from
engaging in an occupation for remuneration or profit, and (3) results
from a cause not excluded from coverage under any insurance policy
that the Company may obtain on Employee's life pursuant to Section 5
of the ESP Plan. Subject to clause (3) above, the entire and
irrevocable loss of the sight of both eyes, or the use of both hands,
or both feet, or of one hand and one foot, shall be considered total
disability.
E-4
<PAGE> 3
(ii) "Occupation" shall mean (1) during the first twenty-four (24)
months of disability, Employee's regular occupation, and (2)
thereafter any occupation for which he is, or may be, reasonably
fitted by education, training or experience.
(b) Subject to the provisions of Section 6 (e) of the ESP Plan,
this Agreement shall terminate or be deemed amended if the ESP Plan is
terminated or amended, as the case may be.
(c) If prior to the execution of this Agreement, Employee made a
material misrepresentation, or omitted to state a material fact upon request,
relating to his age, physical condition or medical history, and the Company
relied on such representation or omission in entering into this Agreement, the
Company may terminate this Agreement:
(i) If Employee is alive at the time of termination, by giving
thirty (30) days' written notice of termination to Employee, such
notice to be given within sixty (60) days following discovery by the
Company of such material misrepresentation or omission or within two
years from the date hereof, whichever is earlier.
(ii) If Employee is dead at the time of termination and died from a
cause which would have been disclosed had the material
misrepresentation or omission not been made and such cause was not and
could not reasonably have been expected to have been disclosed by a
physical examination of the Employee made prior to the date hereof, by
giving thirty (30) days' written notice to the Beneficiary, such
notice to be given within sixty (60) days following discovery by the
Company of such material misrepresentation or omission or within five
years from the date hereof, whichever is earlier.
Notwithstanding the foregoing, the Company may terminate this Agreement if the
issuer of any insurance policy, which the Company may take on the life of
Employee pursuant to Section 5 of the ESP Plan, shall cancel such policy (or
the coverage extended to Employee's life) by reason of a misrepresentation made
by Employee prior to the date hereof relating to his age, physical condition or
medical history. Such termination shall be effected by giving thirty (30)
days' written notice to Employee within sixty (60) days following such
cancellation by the insurer.
E-5
<PAGE> 4
(d) Employee may terminate this Agreement at any time upon thirty
(30) days' written notice to the Company.
SECTION 3 - GENERAL
(a) All rights and incidents of ownership in any life insurance
policies that the Company may take out on Employee pursuant to Section 5 of the
ESP Plan shall belong to the Company; and neither Employee, nor any Beneficiary
or other person claiming under or through him, shall have any right, title or
interest in or to any such insurance policies or other assets of the Company.
(b) Subject to Section 6 (c) of the ESP Plan, Employee shall not
be obligated to contribute towards the costs of the benefits herein provided
for.
(c) This Agreement is issued pursuant to the ESP Plan which is
hereby incorporated by reference. Each term defined in the ESP Plan shall have
the same meaning herein as therein, unless the context otherwise requires.
This Agreement is subject to the terms and conditions of the ESP Plan and shall
be construed to conform to such Plan.
(d) Any notice required or permitted to be given under this
Agreement shall be in writing and shall be deemed properly given if sent by
registered or certified mail, addressed as follows:
(i) Notices to Employee:
Joel F. Gemunder
Omnicare, Inc.
511 Walnut Street
Cincinnati, Ohio 45202
(ii) Notices to the Company:
Mr. J. L. Kenrich, Secretary
Omnicare, Inc.
511 Walnut Street
Cincinnati, Ohio 45202
Either party may, from time to time, change the address to which notices to it
shall be mailed by giving notice of such new address in the matter provided
herein.
E-6
<PAGE> 5
IN WITNESS WHEREOF, Employee and the Company have executed this
Agreement as of the date first above written.
OMNICARE, INC.
/s/ Joel F. Gemunder By /s/ John L. Kenrich
- ------------------- -------------------
Joel F. Gemunder John L. Kenrich
E-7
<PAGE> 6
SCHEDULE A
---------------
EXECUTIVE SALARY PROTECTION AGREEMENT
FOR JOEL F. GEMUNDER
For the purpose of this Agreement
Employee's Recognized Compensation is
$500,000
E-8
<PAGE> 1
EIGHTH
AMENDMENT TO EMPLOYMENT AGREEMENT
---------------------------------
JOEL F. GEMUNDER of Cincinnati, Ohio ("Employee"), and OMNICARE
MANAGEMENT COMPANY, a Delaware corporation with its principal place of business
in Cincinnati, Ohio (the "Company"), hereby agree as follows:
1. Recitals
--------
(a) The Company is an indirect subsidiary of Omnicare, Inc. as a
result of a corporate restructuring of Omnicare, Inc. and its affiliates.
(b) In connection with such restructuring certain assets and
liabilities of Omnicare, Inc. were transferred to the Company effective
December 31, 1988, including an Employment Agreement between Omnicare, Inc. and
Employee dated August 4, 1988 (the "Employment Agreement").
(c) The Company, as assignee, and Employee amended the Employment
Agreement by mutual written agreement on December 31, 1988, May 23, 1989, May
22, 1990, May 21, 1991, May 19, 1992, May 17, 1993 and May 16, 1994 (the "Prior
Amendments").
2. Amendments
----------
(a) Section 1.2 of the Employment Agreement is amended by deleting
the year "1999" from the third line of Section 1.2 and substituting the year
"2000" therefor.
(b) Section 2.1 of the Employment Agreement is amended by deleting
"$342,500" from the second line thereof and substituting "$500,000" therefor.
(c) The amount of unrestricted stock award recognized in lieu of
incentive compensation in 1994 is $200,455.
(d) Section 3.1(b) is hereby deleted and 3.1(c) is renumbered as
3.1(b) reading as follows:
3.1(b) The termination by the Company of the Employee's employment
for Cause pursuant to Section 3.3. The termination by the Company of
Employee's employment hereunder for any reason other than those
specified in paragraphs (a) and (b) above shall hereinafter be
referred to as a termination "Without Cause". Any
disability of an Employee shall not be grounds for termination.
(e) Section 3.2 is hereby deleted.
3. General
-------
Except as previously changed by the Prior Amendments and as
specifically amended herein, the Employment Agreement will remain in full force
and effect in accordance with its original terms, conditions and provisions.
IN WITNESS WHEREOF, the parties have duly executed this amendatory
agreement as of May 15, 1995.
OMNICARE MANAGEMENT COMPANY
/s/Joel F. Gemunder By: /s/Cheryl D. Hodges
- ------------------- -------------------
JOEL F. GEMUNDER
E-9
<PAGE> 2
SECOND
AMENDMENT TO EMPLOYMENT AGREEMENT
---------------------------------
KENNETH W. CHESTERMAN of Cincinnati Ohio ("Employee") and
OMNICARE MANAGEMENT COMPANY, a Delaware corporation with its principal place of
business in Cincinnati, Ohio (the "Company"), hereby agree as follows:
1. Recitals
--------
(a) The Company is an indirect subsidiary of Omnicare, Inc.
as a result of a corporate restructuring of Omnicare, Inc. and its affiliates.
(b) In connection with such restructuring certain assets and
liabilities of Omnicare, Inc. were transferred to the Company effective
December 31, 1988. The Employment Agreement between Omnicare, Inc. and
Employee dated May 17, 1993 (the "Employment Agreement") was transferred
pursuant to the Assignment and Assumption Agreement dated May 16, 1994 among
the company, Employee and Omnicare, Inc. (the "Assignment and Assumption
Agreement").
(c) The Company, as assignee, and Employee amended the
Employment Agreement by mutual written agreement on May 16, 1994.
2. Amendments
----------
(a) Section 1.2 of the Employment Agreement is hereby amended
by deleting the year "1999" from the third line of Section 1.2 and substituting
the year "2000" therefor.
(b) Section 2.1 of the Employment Agreement is hereby amended
by deleting "$176,800" from the second line thereof and substituting $193,300"
therefor.
(c) The amount of unrestricted stock award recognized in lieu
of incentive compensation in 1994 is $89,744.
(d) Section 3.1(b) is hereby deleted and 3.1(c) is renumbered
as 3.1(b) reading as follows:
3.1(b) The termination by the Company of the Employee's
employment for Cause pursuant to Section 3.3. The termination
by the Company of Employee's employment hereunder for any
reason other than those specified in paragraphs (a) and (b)
above shall hereinafter be referred to as a termination
"Without Cause". Any disability of an Employee shall not be
grounds for termination.
(e) Section 3.2 is hereby deleted.
3. General
-------
Except as specifically amended herein the Employment Agreement
will remain in full force and effect in accordance with its original terms,
conditions and provisions and those of the Assignment and Assumption Agreement.
IN WITNESS WHEREOF, the parties have duly executed this
amendatory agreement as of May 15, 1995.
OMNICARE MANAGEMENT COMPANY
/s/Kenneth W. Chesterman By: /s/Joel F.Gemunder
- ------------------------- ------------------
KENNETH W. CHESTERMAN
E-10
<PAGE> 3
SECOND
AMENDMENT TO EMPLOYMENT AGREEMENT
---------------------------------
PATRICK E. KEEFE of Cincinnati Ohio ("Employee") and OMNICARE
MANAGEMENT COMPANY, a Delaware corporation with its principal place of business
in Cincinnati, Ohio (the "Company"), hereby agree as follows:
1. Recitals
--------
(a) The Company is an indirect subsidiary of Omnicare, Inc.
as a result of a corporate restructuring of Omnicare, Inc. and its affiliates.
(b) In connection with such restructuring certain assets and
liabilities of Omnicare, Inc. were transferred to the Company effective
December 31, 1988. The Employment Agreement between Omnicare, Inc. and
Employee dated March 4, 1993 (the "Employment Agreement") was transferred
pursuant to the Assignment and Assumption Agreement dated May 16, 1994 among
the company, Employee and Omnicare, Inc. (the "Assignment and Assumption
Agreement").
(c) The Company, as assignee, and Employee amended the
Employment Agreement by mutual written agreement on May 16, 1994.
2. Amendments
----------
(a) Section 1.2 of the Employment Agreement is hereby amended
by deleting the year "1999" from the third line of Section 1.2 and substituting
the year "2000" therefor.
(b) Section 2.1 of the Employment Agreement hereby amended by
deleting "$120,000" from the second line thereof and substituting "$168,500"
thereof.
(c) Section 3.1(b) is hereby deleted and 3.1(c) is renumbered
as 3.1(b) reading as follows:
3.1(b) The termination by the Company of the Employee's
employment for Cause pursuant to Section 3.3. The termination
by the Company of Employee's employment hereunder for any
reason other than those specified in paragraphs (a) and (b)
above shall hereinafter be referred to as a termination
"Without Cause". Any disability of an Employee shall not be
grounds for termination.
(e) Section 3.2 is hereby deleted.
3. General
-------
Except as specifically amended herein the Employment Agreement
will remain in full force and effect in accordance with its original terms,
conditions and provisions and those of the Assignment and Assumption Agreement.
IN WITNESS WHEREOF, the parties have duly executed this
amendatory agreement as of May 15, 1995.
OMNICARE MANAGEMENT COMPANY
/s/Patrick E. Keefe By: /s/Joel F.Gemunder
- ------------------- -------------------
PATRICK E. KEEFE
E-11
<PAGE> 4
EIGHTH
AMENDMENT TO EMPLOYMENT AGREEMENT
---------------------------------
CHERYL D. HODGES of Cincinnati, Ohio ("Employee"), and
OMNICARE MANAGEMENT COMPANY, a Delaware corporation with its principal place of
business in Cincinnati, Ohio (the "Company"), hereby agree as follows:
1. Recitals
--------
(a) The Company is an indirect subsidiary of Omnicare, Inc.
as a result of a corporate restructuring of Omnicare, Inc. and its affiliates.
(b) In connection with such restructuring certain assets and
liabilities of Omnicare, Inc. were transferred to the Company effective
December 31, 1988, including an Employment Agreement between Omnicare, Inc. and
Employee dated August 4, 1988 (the "Employment Agreement").
(c) The Company, as assignee, and Employee amended the
Employment Agreement by mutual written agreement on December 31, 1988, May 23,
1989, May 22, 1990, May 21, 1991, May 19, 1992, May 17, 1993 and May 16, 1994
(the "Prior Amendments").
2. Amendments
----------
(a) Section 1.2 of the Employment Agreement is amended by
deleting the year "1999" from the third line of Section 1.2 and substituting
the year "2000" therefor.
(b) Section 2.1 of the Employment Agreement is amended by
deleting "$112,050" from the second line thereof and substituting "$135,000"
therefor.
(c) The amount of unrestricted stock award recognized in lieu
of incentive compensation in 1994 is $49,704.
(d) Section 3.1(b) is hereby deleted and 3.1(c) is renumbered
as 3.1(b) reading as follows:
3.1(b) The termination by the Company of the Employee's
employment for Cause pursuant to Section 3.3. The termination
by the Company of Employee's employment hereunder for any
reason other than those specified in paragraphs (a) and (b)
above shall hereinafter be referred to as a termination
"Without Cause". Any disability of an Employee shall not be
grounds for termination.
(e) Section 3.2 is hereby deleted.
3. General
-------
Except as previously changed by the Prior Amendments and as
specifically amended herein, the Employment Agreement will remain in full force
and effect in accordance with its original terms, conditions and provisions.
IN WITNESS WHEREOF, the parties have duly executed this
amendatory agreement as of May 15, 1995.
OMNICARE MANAGEMENT COMPANY
/s/Cheryl D. Hodges By: /s/Joel F.Gemunder
- ------------------- ------------------
CHERYL D. HODGES
E-12
<PAGE> 1
SPLIT DOLLAR AGREEMENT
This Agreement, made as of June 1, 1995, by and between Omnicare
Management Company ("the Corporation"), a Delaware corporation with offices at
2800 Chemed Center, 255 E. Fifth Street, Cincinnati, Ohio 45202, and Edward A.
Hutton, Thomas C. Hutton and Jennie Hutton Jacoby ("the Trustees"), as Trustees
under The Kathryn J. Hutton and Edward L. Hutton Irrevocable Insurance Trust
Agreement dated January 25, 1990 ("the Trust").
1. PREMISES
1.1 Edward L. Hutton (the "Employee") is an employee of the
Corporation and has created the Trust. The Trustees wish to
insure the joint lives of Edward L. Hutton and his wife,
Kathryn J. Hutton (the "Insureds"), for the benefit and
protection of Mr. Hutton's family. The Corporation will
help the Trustees provide this insurance coverage by payment
of part of the premiums under a split dollar arrangement,
whereby the Trustees will be the owner of a life insurance
policy which will be collaterally assigned to the
Corporation as security for amounts the Corporation
will contribute for the premium payments.
E-13
<PAGE> 2
2. APPLICATION FOR INSURANCE
2.1 The Trustees have applied to Phoenix Home Life Mutual
Insurance Company for an Executive Equity Life Insurance
Plan on the joint lives of the Insureds for $3,000,000 (the
"Policy").
3. POLICY OWNERSHIP
3.1 The Trustees shall own the Policy and may exercise all
rights of ownership with respect to it, subject only to the
security interest of the Corporation as expressed in this
Agreement and the collateral assignment of the Policy to the
Corporation.
4. PAYMENT OF PREMIUMS
4.1 On or before the due date of each annual premium on the
Policy, the Corporation will pay to Phoenix Home Life
Mutual Insurance Company an amount equal to the greater of
80 percent of the annual premium or the annual premium less the
cost (calculated by application of Internal Revenue Service
Table PS-58) of the portion of the insurance which the
beneficiary or beneficiaries named by the Trustees or their
transferee would be entitled to receive if the
E-14
<PAGE> 3
Insureds died during the policy year for which the annual
premium is paid.
4.2 On or before the due date of each annual premium on the
Policy, the Corporation will pay to the Employee compensation in
the form of a bonus. The bonus payment shall be equal to the
sum of the remainder of the annual premium and an amount
sufficient to pay all federal, state and local income and
employment taxes incurred by the Employee as a result of the
total bonus payment. The bonus payment shall be calculated
assuming that the Employee is in the highest marginal tax
bracket for the applicable tax and that state and local
taxes are not deductible for federal purposes. The bonus
payment will be calculated as follows: the remainder of the
annual premium plus ((the remainder of the annual premium)
times (the sum of the highest marginal tax rates for each of
the applicable federal, state and local income and
employment taxes for individuals)) divided by (one minus
the sum of the highest marginal tax rates for each of the
applicable federal, state and local income and employment
taxes for individuals).
E-15
<PAGE> 4
4.3 On or before the due date of each annual premium on the
Policy, the Trustees will pay to Phoenix Home Mutual Insurance
Company the remainder of the annual premium. The Corporation may
pay the entire premium to Phoenix Home Life Mutual Insurance
Company for convenience, in which case the Trustees will
reimburse the Corporation for the remainder of the annual
premium.
4.4 These premium advances by the Corporation shall apply
specifically to annual premiums due under the Policy up to March
1, 2005 (10 years). However, additional premium advances may be
made by mutual agreement of the parties.
5. ASSIGNMENT OF POLICY
5.1 The Trustees shall collaterally assign the Policy to the
Corporation so as to reflect the respective interests of the
parties under this Agreement, said collateral assignment
("Assignment") having been executed by the parties on the date
of this Split Dollar Agreement, and thus made a part of such
Policy and this Agreement.
E-16
<PAGE> 5
6. USE OF DIVIDENDS
6.1 The dividends declared by Phoenix Home Life Mutual Insurance
Company on the Policy will be used to purchase Option Term with the
balance used to purchase paid-up insurance.
6.2 The dividend option which is specified in paragraph 6.1 of this
Article will not be terminated or changed without a conforming
amendment to this Agreement and unless such change is done in accordance
with the provisions of Part D "Joint Rights" section of the Assignment.
7. SURRENDER OF POLICY
7.1 The Trustees shall have the sole and exclusive right to surrender
the Policy.
7.2 If the Policy is surrendered, the Trustees shall direct the
insurance company in writing to draw a check payable to the Corporation
in an amount equal to the "Assignee's Cash Value Rights", as defined
within the provisions of Part A "Definitions" section of the Assignment.
7.3 If there is a delay in the surrender of the Policy by either party
to this Agreement, and if such delay results in diminished policy
values
E-17
<PAGE> 6
being available to either party, neither party to this Agreement
shall hold the insurance company liable for such diminution in
policy values.
8. DEATH CLAIMS
8.1 Upon the death of the Insureds, the Corporation shall have
an interest in the proceeds of the Policy equal to the
"Assignee's Death Benefit Share", as defined within the
provisions of Part A "Definitions" section of the Assignment.
The balance of proceeds remaining shall be paid directly by the
insurance company to the beneficiary or beneficiaries designated
in the Policy.
9. TERMINATION OF AGREEMENT
9.1 This Agreement shall terminate upon the first to occur of
(i) surrender of the Policy by the Trustees, (ii) written notice
of termination given by the Trustees to the Corporation, and
(iii) March 1, 2005.
9.2 Prior to termination of this Agreement, the Trustees shall
direct the insurance company in writing to draw a check payable
to the Corporation for an amount equal to the
E-18
<PAGE> 7
"Assignee's Cash Value Interest", as defined within the
provisions of Part A "Definitions" section of the Assignment.
Upon receipt of this amount, the Corporation shall release the
security interest of the Corporation expressed in this
Agreement and the Assignment.
10. SPECIAL PROVISIONS
The following provisions are part of this Plan and are intended
to meet the requirements of the Employee Retirement Income
Security Act of 1974:
10.01 -- The named fiduciary: The Secretary of the Company
10.02 -- The funding policy under this Plan is that all
premiums on the Policy be remitted to the Insurer
when due.
10.03 -- Direct payment by the Insurer is the basis of
payment of benefits under this Plan, with those
benefits in turn being based on the payment of
premiums as provided in the Plan.
E-19
<PAGE> 8
10.04 - For claims procedure purposes, the "Claims Manager" shall be
the Secretary of the Company.
(a) If for any reason a claim for benefits under this Plan
is denied by the Company, the Claims Manager shall
deliver to the claimant a written explanation setting
forth the specific reasons for the denial, pertinent
references to the Plan section on which the denial is
based, such other data as may be pertinent and
information on the procedures to be followed by the
claimant in obtaining a review of his claim, all written
in a manner calculated to be understood by the claimant.
For this purpose:
(1) The claimant's claim shall be deemed filed when
presented orally or
E-20
<PAGE> 9
in writing to the Claims Manager.
(2) The Claims Manager's explanation shall be in writing
delivered to the claimant within 90 days of the date
the claim is filed.
(b) The claimant shall have 60 days following his/her receipt of
the denial of the claim to file with the Claims Manager a
written request for review of the denial. For such review,
the claimant or his/her representative may submit pertinent
documents and written issues and comments.
(c) The Claims Manager shall decide the issue on review and furnish
the claimant with a copy within 60 days of receipt of the
claimant's request for review of his/her claim. The decision on
review shall be in
E-21
<PAGE> 10
writing and shall include specific reasons for the
decision written in a manner calculated to be understood
by the claimant, as well as specific references to the
pertinent Plan provisions on which the decision is
based. If a copy of the decision is not so furnished to
the claimant within such 60 days, the claims shall be
deemed denied on review.
11. AMENDMENT AND BINDING EFFECT
11.1 This embodies all agreements by the parties made with
respect to the Policy. The Agreement shall not be modified or
amended except by a writing signed by the parties. The Agreement
shall be binding upon the parties, their heirs, legal
representatives, successors and assigns.
E-22
<PAGE> 11
12. GOVERNING LAW
12.1 This Agreement shall be subject to and shall be construed
under the laws of the State of Ohio.
Executed by the parties at Cincinnati, Ohio, as of June 1, 1995.
OMNICARE MANAGEMENT COMPANY
/s/ Richard F. Doggett By: /s/ Cheryl D. Hodges
- ----------------------------- -------------------------
Witness Signature, Corporate Title
/s/ Sandra E. Laney By: /s/ Edward A. Hutton
- ----------------------------- --------------------------
Witness Edward A. Hutton
Trustee
/s/ Joan P. Chard By: /s/ Thomas C. Hutton
- ----------------------------- --------------------------
Witness Thomas C. Hutton
Trustee
/s/ Jessica L. Wise By: /s/ Jennie Hutton Jacoby
- ----------------------------- --------------------------
Witness Jennie Hutton Jacoby
Trustee
E-23
<PAGE> 12
EXHIBIT A
OMNICARE, INC.
SPLIT DOLLAR AGREEMENT
"Change of Control" shall mean: The Corporation obtains actual
knowledge that any of the following events has occurred: (i) any person other
than the Corporation or any Subsidiary has become the beneficial owner of 15%
or more of the combined voting power of the Corporation's then outstanding
voting securities; (ii) the stockholders of the Corporation have approved: (1)
an agreement to merge or consolidate with or into another corporation and the
Corporation or another corporation wholly-owned by the Corporation, is not the
surviving corporation, or (2) an agreement to sell or otherwise dispose of all
or substantially all of the assets of the Corporation (including a plan of
liquidation); or (iii) during any period of two consecutive years, individuals
who at the beginning of such period constitute the Board of Directors cease for
any reason to constitute at least a majority of the Board of Directors, unless
the nomination for the election by the Corporation's stockholders of each new
director was approved by a vote of at least one-half of the persons who were
directors at the beginning of the two-year period.
For purposes of this definition, a person shall be deemed the
"beneficial owner" of any securities (i) which such person or any of its
Affiliates or Associates beneficially owns, directly or indirectly; or (ii)
which such person or any of its Affiliates or Associates has, directly or
indirectly, (1) the right to acquire (whether such right is exercisable
immediately or only after the passage of time), pursuant to any agreement,
arrangement or understanding or upon the exercise of conversion rights,
exchange rights, warrants or options, or otherwise, or (2) the right to vote
pursuant to any agreement, arrangement or understanding, or (iii) which are
beneficially owned, directly or indirectly, by any other person with which such
person or any of its Affiliates or Associates has any agreement, arrangement or
understanding for the purpose of acquiring, holding, voting or disposing of
any securities.
For purposes of this definition, a "person" shall mean any individual,
firm, company, partnership, other entity or group, and the terms "Affiliate" or
"Associate" shall have the respective meanings ascribed to such terms in Rule
12b-2 of the General Rules and Regulations promulgated by the Securities and
Exchange Commission under the Securities Exchange Act of 1934, as in effect on
June 1, 1995.
E-24
<PAGE> 1
SPLIT DOLLAR AGREEMENT
This Agreement, made as of June 1, 1995, by and between Omnicare
Management Company ("the Corporation"), a Delaware corporation with offices at
2800 Chemed Center, 255 E. Fifth Street, Cincinnati, Ohio 45202 and Kenneth W.
Chesterman (the "Employee"), who is an employee of the Corporation.
1. PREMISES
1.1 The Employee is a valuable employee of the Corporation.
He wishes to provide adequate protection for his family by
insuring his life. The Corporation will assist the Employee
in providing this insurance coverage by payment of part of the
premiums under a split dollar arrangement, whereby the
Employee will be the owner of a life insurance policy which
will be collaterally assigned to the Corporation as
security for amounts the Corporation will contribute for
the premium payments.
2. APPLICATION FOR INSURANCE
2.1 The Employee has applied to Phoenix Home Life Mutual
Insurance Company for an Executive Equity Life Insurance
Plan on the life of the Employee for $1,300,000.00 (the
"Policy").
E-25
<PAGE> 2
3. POLICY OWNERSHIP
3.1 The Employee shall own the Policy and may exercise all
rights of ownership with respect to it, subject only to the
security interest of the Corporation as expressed in this
Agreement and the collateral assignment of the Policy to the
Corporation.
4. PAYMENT OF PREMIUMS
4.1 On or before the due date of each annual premium on the
Policy, the Corporation will pay to Phoenix Home Life Mutual
Insurance Company an amount equal to the greater of 80 percent
of the annual premium or the annual premium less the economic
benefit cost received by the Employee (as measured by the
Phoenix Home Life term insurance rates) for the portion of the
insurance which the beneficiary or beneficiaries named by the
Employee or his transferee would be entitled to receive if the
Employee died during the policy year for which the annual
premium is paid.
4.2 On or before the due date of each annual premium on the
Policy, the Corporation will pay to Phoenix Home Life Mutual
Insurance Company,
E-26
<PAGE> 3
on behalf of the Employee, the remainder of the annual premium.
This payment will constitute compensation to the Employee in the
form of a bonus and will be considered paid by the Employee for
purposes of the Assignment (as defined in Article 5).
4.3 These premium advances by the Corporation shall apply
specifically to annual premiums due under the Policy up to the
Employee's age of 65. However, additional premium advances may
be made by mutual agreement of the parties.
5. ASSIGNMENT OF POLICY
5.1 The Employee shall collaterally assign the Policy to the
Corporation so as to reflect the respective interests of the
parties under this Agreement, said collateral assignment
("Assignment") having been executed by the parties on the date
of this Split Dollar Agreement, and thus made a part of such
Policy and this Agreement.
6. USE OF DIVIDENDS
6.1 The dividends declared by Phoenix Home Life Mutual
Insurance Company on the Policy will be
E-27
<PAGE> 4
used to purchase Option Term with the balance used to purchase paid-up
insurance.
6.2 The dividend option which is specified in paragraph 6.1 of this
Article will not be terminated or changed without a conforming amendment
to this Agreement and unless such change is done in accordance with the
provisions of Part D "Joint Rights" section of the Assignment.
7. SURRENDER OF POLICY
7.1 The Employee shall have the sole and exclusive right to surrender
the Policy.
7.2 If the Policy is surrendered, the Employee shall direct the
insurance company in writing to draw a check payable to the Corporation
in an amount equal to the "Assignee's Cash Value Rights", as defined
within the provisions of Part A "Definitions" section of the
Assignment.
7.3 If there is a delay in the surrender of the Policy by either party
to this Agreement, and if such delay results in diminished policy values
being available to either party, neither party to this Agreement shall
hold the insurance
E-28
<PAGE> 5
company liable for such diminution in Policy values.
8. DEATH CLAIMS
8.1 Upon the death of the Employee, the Corporation shall have an
interest in the proceeds of the Policy equal to the "Assignee's Death
Benefit Share", as defined within the provisions of Part A "Definitions"
section of the Assignment. The balance of proceeds remaining shall be
paid directly by the insurance company to the beneficiary or
beneficiaries designated in the Policy.
9. TERMINATION OF AGREEMENT
9.1 This Agreement shall terminate upon the first to occur of (i)
surrender of the Policy by the Employee, (ii) written notice of
termination given by the Employee to the Corporation, and (iii)
termination of the Employee's employment with the Corporation for any
reason other than death; provided however that if a Change of Control
(as defined in Exhibit A to this Agreement) occurs, this Agreement shall
not terminate until the earlier of the Employee's reaching age 65 years
and the Employee's death.
E-29
<PAGE> 6
9.2 Prior to termination of this Agreement, the Employee shall
direct the insurance company in writing to draw a check payable
to the Corporation for an amount equal to the "Assignee's Cash
Value Interest", as defined within the provisions of Part A
"Definitions" section of the Assignment. Upon receipt of this
amount, the Corporation shall release the security interest of
the Corporation expressed in this Agreement and the Assignment.
10. SPECIAL PROVISIONS
The following provisions are part of this Plan and are intended to
meet the requirements of the Employee Retirement Income Security
Act of 1974:
10.01 - The named fiduciary: The Secretary of the Company.
10.02 - The funding policy under this Plan is that all
premiums on the Policy be remitted to the Insurer
when due.
10.03 - Direct payment by the Insurer is the basis of
payment of benefits under this Plan, with those
benefits in turn being based on the
E-30
<PAGE> 7
payment of premiums as provided in the Plan.
10.04 - For claims procedure purposes, the "Claims Manager"
shall be the Secretary of the Company.
(a) If for any reason a claim for benefits under
this Plan is denied by the Company, the Claims
Manager shall deliver to the claimant a written
explanation setting forth the specific reasons
for the denial, pertinent references to the
Plan section on which the denial is based,
such other data as may be pertinent and
information on the procedures to be followed
by the claimant in obtaining a review of his
claim, all written in a manner calculated
to be understood by the claimant. For this
purpose:
(1) The claimant's claim shall be deemed
filed
E-31
<PAGE> 8
when presented orally or in writing to the
Claims Manager.
(2) The Claims Manager's explanation shall be
in writing delivered to the claimant
within 90 days of the date the claim
is filed.
(b) The claimant shall have 60 days following his
receipt of the denial of the claim to file
with the Claims Manager a written request for
review of the denial. For such review, the
claimant or his representative may submit
pertinent documents and written issues and
comments.
(c) The Claims Manager shall decide the issue on
review and furnish the claimant with a copy
within 60 days of receipt of the claimant's
request for review of his claim. The
E-32
<PAGE> 9
decision on review shall be in writing and shall include
specific reasons for the decision written in a manner
calculated to be understood by the claimant, as well as
specific references to the pertinent Plan provisions on
which the decision is based. If a copy of the decision
is not so furnished to the claimant within such 60 days,
the claims shall be deemed denied on review.
11. AMENDMENT AND BINDING EFFECT
11.1 This embodies all agreements by the parties made with
respect to the Policy. The Agreement shall not be modified or
amended except by a writing signed by the parties. The Agreement
shall be binding upon the parties, their heirs, legal
representatives, successors and assigns.
E-33
<PAGE> 10
12. GOVERNING LAW
12.1 This Agreement shall be subject to and shall be construed
under the laws of the State of Ohio.
Executed by the parties at Cincinnati, Ohio, as of June 1, 1995.
OMNICARE MANAGEMENT COMPANY
/s/ Janie Frye By: /s/ J.F. Gemunder
- ----------------------------- --------------------------
Witness Signature, Corporate Title
/s/ Janie Frye By: /s/ Kenneth W. Chesterman
- ----------------------------- --------------------------
Witness Kenneth W. Chesterman
E-34
<PAGE> 11
EXHIBIT A
OMNICARE, INC.
SPLIT DOLLAR AGREEMENT
"Change of Control" shall mean: The Corporation obtains actual
knowledge that any of the following events has occurred: (i) any person other
than the Corporation or any Subsidiary has become the beneficial owner of 15%
or more of the combined voting power of the Corporation's then outstanding
voting securities; (ii) the stockholders of the Corporation have approved: (1)
an agreement to merge or consolidate with or into another corporation and the
Corporation or another corporation wholly-owned by the Corporation, is not the
surviving corporation, or (2) an agreement to sell or otherwise dispose of all
or substantially all of the assets of the Corporation (including a plan of
liquidation); or (iii) during any period of two consecutive years, individuals
who at the beginning of such period constitute the Board of Directors cease for
any reason to constitute at least a majority of the Board of Directors, unless
the nomination for the election by the Corporation's stockholders of each new
director was approved by a vote of at least one-half of the persons who were
directors at the beginning of the two-year period.
For purposes of this definition, a person shall be deemed the
"beneficial owner" of any securities (i) which such person or any of its
Affiliates or Associates beneficially owns, directly or indirectly; or (ii)
which such person or any of its Affiliates or Associates has, directly or
indirectly, (1) the right to acquire (whether such right is exercisable
immediately or only after the passage of time), pursuant to any agreement,
arrangement or understanding or upon the exercise of conversion rights,
exchange rights, warrants or options, or otherwise, or (2) the right to vote
pursuant to any agreement, arrangement or understanding, or (iii) which are
beneficially owned, directly or indirectly, by any other person with which such
person or any of its Affiliates or Associates has any agreement, arrangement or
understanding for the purpose of acquiring, holding, voting or disposing of any
securities.
For purposes of this definition, a "person" shall mean any individual,
firm, company, partnership, other entity or group, and the terms "Affiliate" or
"Associate" shall have the respective meanings ascribed to such terms in Rule
12b-2 of the General Rules and Regulations promulgated by the Securities and
Exchange Commission under the Securities Exchange Act of 1934, as in effect on
June 1, 1995.
E-35
<PAGE> 1
Exhibit 11 Omnicare, Inc. and Subsidiary Companies
Computation of Earnings Per Common Share
(in thousands, except per share data)
<TABLE>
<CAPTION>
For the years ended December 31,
1995 1994 1993
------- ------- -------
<S> <C> <C> <C>
PRIMARY EARNINGS*
Income before cumulative effect of
accounting change $24,760 $13,531 $10,970
Aftertax expense related to preferred stock
dividend payable to minority interest in subsidiary 10 - -
Minority interest in net income of subsidiary (38) - -
------- ------- -------
Income before accounting change as adjusted 24,732 13,531 10,970
Cumulative effect of accounting change - - 280
------- ------- -------
Net income applicable to common stock $24,732 $13,531 $11,250
======= ======= =======
Shares
Weighted average number of common
shares outstanding 26,198 22,479 21,253
Additional shares assuming conversion of:
Stock options and stock warrants 765 344 180
------- ------- -------
Average common shares outstanding and
equivalents as adjusted 26,963 22,823 21,433
======= ======= =======
Primary earnings per common share:
Income before cumulative effect of
accounting change $ 0.92 $ 0.59 $ 0.51
Cumulative effect of accounting change - - 0.01
------- ------- -------
Net income as adjusted $ 0.92 $ 0.59 $ 0.52
======= ======= =======
FULLY DILUTED EARNINGS
Income before cumulative effect of
accounting change $24,760 $13,531 $10,970
Aftertax expense related to preferred stock
dividend payable to minority interest in subsidiary 10 - -
Minority interest in net income of subsidiary (38) - -
Aftertax interest expense related to
5-3/4% convertible subordinated debentures 3,209 3,218 756
------- ------- -------
Income before accounting change as adjusted 27,941 16,749 11,726
Cumulative effect of accounting change - - 280
------- ------- -------
Net income as adjusted $27,941 $16,749 $12,006
======= ======= =======
Shares
Weighted average number of common
shares outstanding 26,198 22,479 21,253
Additional shares assuming conversion of:
Stock options and stock warrants 870 374 180
Convertible subordinated debentures 5,574 5,576 1,428
------- ------- -------
Average common shares outstanding and
equivalents as adjusted 32,642 28,429 22,861
======= ======= =======
Fully diluted earnings per common share:
Income before cumulative effect of
accounting change $ 0.86 $ 0.59 $ 0.52
Cumulative effect of accounting change - - 0.01
------- ------- -------
Net income as adjusted $ 0.86 $ 0.59 $ 0.53
======= ======= =======
</TABLE>
[FN]
*This calculation is submitted in accordance with Regulation S-K Item
601(b)(11) although not required by APB Opinion No. 15 because it results in
dilution of less than 3%.
E-36
<PAGE> 1
Exhibit 12
Omnicare, Inc.
Computation of Ratio of Earnings to Fixed Charges
(in thousands)
<TABLE>
<CAPTION>
For the Years Ended
1995 1994 1993
------- ------- -------
<S> <C> <C> <C>
Income before Income Taxes and Cumulative
Effect of Accounting Change $41,180 $22,678 $16,983
Add:
Interest on Indebtedness 5,644 6,223 2,747
Amortization of Debt Expense 310 310 77
Interest Portion of Rent Expense 1,522 1,157 1,012
------- ------- -------
Income as Adjusted $48,656 $30,368 $20,819
======= ======= =======
Fixed Charges
Interest on Indebtedness $ 5,644 $ 6,223 $ 2,747
Amortization of Debt Expense 310 310 77
Capitalized Interest 158 49 -
Interest Portion of Rent Expense 1,522 1,157 1,012
------- ------- -------
Fixed Charges $ 7,634 $ 7,739 $ 3,836
======= ======= =======
Ratio of Earnings to Fixed Charges (1) 6.37x 3.92x 5.43x
======= ======= =======
</TABLE>
[FN]
(1)The ratio of earnings to fixed charges has been computed by dividing
earnings before income taxes and cumulative effect of accounting change plus
fixed charges (excluding capitalized interest expense) by fixed charges. Fixed
charges consist of interest expense on debt (including capitalized interest)
and one-third (the proportion deemed representative of the interest portion) of
rent expense.
E-37
<PAGE> 1
Subsidiaries of Omnicare, Inc.
- ------------------------------
The following is a list of subsidiaries of the Company as of December 31,
1995. Other subsidiaries which have been omitted from the list would not, when
considered in the aggregate, constitute a significant subsidiary. Each of the
companies is incorporated under the laws of the state following its name.
All of the companies listed below are included in the consolidated
financial statements of the Company as of December 31, 1995 and were 100% owned
at December 31, 1995, with the exception of Shore Pharmaceutical Providers,
Inc. which has outstanding convertible preferred stock held by two individuals.
Anderson Medical Services, Inc. (Delaware, 100%)
Apex Long Term Care Pharmacy, Inc. (Delaware, 100%)
Beeber Pharmacies, Inc. (Ohio, 100%)
Care Pharmaceutical Services, Inc. (Delaware, 100%)
Consulting and Pharmaceutical Services, Inc. (Delaware, 100%)
Datascript Corp. (Delaware, 100%)
D&R Pharmaceutical Services, Inc. (Kentucky, 100%)
Dynatran Computer Systems, Inc. (Delaware, 100%)
Enloe Drugs, Inc. (Delaware, 100%)
Evergreen Pharmaceutical East, Inc. (Washington, 100%)
Evergreen Pharmaceutical, Inc. (Washington 100%)
Evergreen Pharmaceutical Supply, Inc. (Washington, 100%)
Freed's Pharmacy, Inc. (Delaware, 100%)
Genrex Pharmacy Services, Inc. (Delaware, 100%)
Home Care Pharmacy, Inc. (Delaware, 100%)
Home Pharmacy Services, Inc. (Missouri, 100%)
Interlock Pharmacy Systems, Inc. (Missouri, 100%)
Langsam Health Services, Inc. (DBA Sequoia
Health Services) (Delaware, 100%)
Langsam Medical Products, Inc. (DBA Sequoia
Medical Products) (Delaware, 100%)
Lawrence Medical Supply, Inc. (Delaware, 100%)
Lo-Med Prescription Services, Inc. (Ohio, 100%)
North Shore Pharmacy Services, Inc. (Delaware, 100%)
OCR-RA Acquisition Corp. (Delaware, 100%)
OCR Services Corporation (Delaware, 100%)
Omnicare Holding Company (Delaware, 100%)
Omnicare Management Company (Delaware, 100%)
PRN Pharmaceutical Services, Inc. (Delaware, 100%)
Shore Pharmaceutical Providers, Inc. (Delaware, 90%)
Specialized Pharmacy Services, Inc. (Michigan, 100%)
UC Acquisition Corp. (DBA UniCare, Inc.) (Delaware, 100%)
Weber Medical Systems, Inc. (Delaware, 100%)
Westhaven Services Co. (Ohio, 100%)
E-38
<PAGE> 1
CONSENT OF INDEPENDENT ACCOUNTANTS
----------------------------------
We hereby consent to the incorporation by reference in the Prospectus
constituting part of the Registration Statement on Form S-8 (Nos. 2-78161,
33-34635, 33-48209 and 33-88856) and Form S-3 (Nos. 333-01203, 33-81644,
33-83752, 33-59689 and 33-62975) of Omnicare, Inc. of our report dated February
5, 1996 appearing on page 22 of this Form 10-K. Such report refers to our
reliance on other auditors with respect to the results of operations and cash
flows of Evergreen Pharmaceutical, Inc. and Evergreen Pharmaceutical East, Inc.
for the year ended December 31, 1993.
/s/Price Waterhouse LLP
Price Waterhouse LLP
Cincinnati, Ohio
March 22, 1996
E-39
<PAGE> 1
CONSENT OF INDEPENDENT ACCOUNTANTS
----------------------------------
We hereby consent to the incorporation by reference in the Prospectus
constituting part of the Registration Statement on Form S-8 (Nos. 2-78161,
33-34635, 33-48209 and 33-88856) and Form S-3 (Nos. 33-81644, 33-83752,
33-59689, 333-01203 and 33-62975) of our report dated July 29, 1994 relating to
the combined financial statements of Evergreen appearing on page 23 of the
Company's Form 10-K.
/s/BDO Seidman, LLP
BDO Seidman, LLP
Cincinnati, Ohio
March 20, 1996
E-40
<PAGE> 1
POWER OF ATTORNEY
The undersigned director of OMNICARE, INC. ("Company") hereby appoints
EDWARD L. HUTTON, JOEL F. GEMUNDER and CHERYL D. HODGES as his true and lawful
attorneys-in-fact for the purpose of signing the Company's Annual Report on
Form 10-K for the year ended December 31, 1995, and all amendments thereto, to
be filed with the Securities and Exchange Commission. Each of such
attorneys-in-fact is appointed with full power to act without the other.
Dated: March 11, 1996
/s/ Ronald K. Baur
------------------------------------
Ronald K. Baur
E-41
<PAGE> 2
POWER OF ATTORNEY
The undersigned director of OMNICARE, INC. ("Company") hereby appoints
EDWARD L. HUTTON, JOEL F. GEMUNDER and CHERYL D. HODGES as his true and lawful
attorneys-in-fact for the purpose of signing the Company's Annual Report on
Form 10-K for the year ended December 31, 1995, and all amendments thereto, to
be filed with the Securities and Exchange Commission. Each of such
attorneys-in-fact is appointed with full power to act without the other.
Dated: March 19, 1996
/s/ Kenneth W. Chesterman
------------------------------------
Kenneth W. Chesterman
E-42
<PAGE> 3
POWER OF ATTORNEY
The undersigned director of OMNICARE, INC. ("Company") hereby appoints
EDWARD L. HUTTON, JOEL F. GEMUNDER and CHERYL D. HODGES as his true and lawful
attorneys-in-fact for the purpose of signing the Company's Annual Report on
Form 10-K for the year ended December 31, 1995, and all amendments thereto, to
be filed with the Securities and Exchange Commission. Each of such
attorneys-in-fact is appointed with full power to act without the other.
Dated: March 9, 1996
/s/ Charles H. Erhart
------------------------------------
Charles H. Erhart
E-43
<PAGE> 4
POWER OF ATTORNEY
The undersigned director of OMNICARE, INC. ("Company") hereby appoints
EDWARD L. HUTTON, JOEL F. GEMUNDER and CHERYL D. HODGES as his true and lawful
attorneys-in-fact for the purpose of signing the Company's Annual Report on
Form 10-K for the year ended December 31, 1995, and all amendments thereto, to
be filed with the Securities and Exchange Commission. Each of such
attorneys-in-fact is appointed with full power to act without the other.
Dated: March 19, 1996
/s/ Mary Lou Fox
------------------------------------
Mary Lou Fox
E-44
<PAGE> 5
POWER OF ATTORNEY
The undersigned director of OMNICARE, INC. ("Company") hereby appoints
EDWARD L. HUTTON, JOEL F. GEMUNDER and CHERYL D. HODGES as his true and lawful
attorneys-in-fact for the purpose of signing the Company's Annual Report on
Form 10-K for the year ended December 31, 1995, and all amendments thereto, to
be filed with the Securities and Exchange Commission. Each of such
attorneys-in-fact is appointed with full power to act without the other.
Dated: March 15, 1996
/s/ Thomas C. Hutton
------------------------------------
Thomas C. Hutton
E-45
<PAGE> 6
POWER OF ATTORNEY
The undersigned director of OMNICARE, INC. ("Company") hereby appoints
EDWARD L. HUTTON, JOEL F. GEMUNDER and CHERYL D. HODGES as his true and lawful
attorneys-in-fact for the purpose of signing the Company's Annual Report on
Form 10-K for the year ended December 31, 1995, and all amendments thereto, to
be filed with the Securities and Exchange Commission. Each of such
attorneys-in-fact is appointed with full power to act without the other.
Dated: March 11, 1996
/s/ Patrick E. Keefe
------------------------------------
Patrick E. Keefe
E-46
<PAGE> 7
POWER OF ATTORNEY
The undersigned director of OMNICARE, INC. ("Company") hereby appoints
EDWARD L. HUTTON, JOEL F. GEMUNDER and CHERYL D. HODGES as his true and lawful
attorneys-in-fact for the purpose of signing the Company's Annual Report on
Form 10-K for the year ended December 31, 1995, and all amendments thereto, to
be filed with the Securities and Exchange Commission. Each of such
attorneys-in-fact is appointed with full power to act without the other.
Dated: March 18, 1996
/s/ Sandra E. Laney
------------------------------------
Sandra E. Laney
E-47
<PAGE> 8
POWER OF ATTORNEY
The undersigned director of OMNICARE, INC. ("Company") hereby appoints
EDWARD L. HUTTON, JOEL F. GEMUNDER and CHERYL D. HODGES as his true and lawful
attorneys-in-fact for the purpose of signing the Company's Annual Report on
Form 10-K for the year ended December 31, 1995, and all amendments thereto, to
be filed with the Securities and Exchange Commission. Each of such
attorneys-in-fact is appointed with full power to act without the other.
Dated: March 11, 1996
/s/ Andrea R. Lindell
------------------------------------
Andrea R. Lindell
E-48
<PAGE> 9
POWER OF ATTORNEY
The undersigned director of OMNICARE, INC. ("Company") hereby appoints
EDWARD L. HUTTON, JOEL F. GEMUNDER and CHERYL D. HODGES as his true and lawful
attorneys-in-fact for the purpose of signing the Company's Annual Report on
Form 10-K for the year ended December 31, 1995, and all amendments thereto, to
be filed with the Securities and Exchange Commission. Each of such
attorneys-in-fact is appointed with full power to act without the other.
Dated: March 10, 1996
/s/ Sheldon Margen
------------------------------------
Sheldon Margen
E-49
<PAGE> 10
POWER OF ATTORNEY
The undersigned director of OMNICARE, INC. ("Company") hereby appoints
EDWARD L. HUTTON, JOEL F. GEMUNDER and CHERYL D. HODGES as his true and lawful
attorneys-in-fact for the purpose of signing the Company's Annual Report on
Form 10-K for the year ended December 31, 1995, and all amendments thereto, to
be filed with the Securities and Exchange Commission. Each of such
attorneys-in-fact is appointed with full power to act without the other.
Dated: March 19, 1996
/s/ Kevin J. McNamara
------------------------------------
Kevin J. McNamara
E-50
<PAGE> 11
POWER OF ATTORNEY
The undersigned director of OMNICARE, INC. ("Company") hereby appoints
EDWARD L. HUTTON, JOEL F. GEMUNDER and CHERYL D. HODGES as his true and lawful
attorneys-in-fact for the purpose of signing the Company's Annual Report on
Form 10-K for the year ended December 31, 1995, and all amendments thereto, to
be filed with the Securities and Exchange Commission. Each of such
attorneys-in-fact is appointed with full power to act without the other.
Dated: March 19, 1996
/s/ John M. Mount
------------------------------------
John M. Mount
E-51
<PAGE> 12
POWER OF ATTORNEY
The undersigned director of OMNICARE, INC. ("Company") hereby appoints
EDWARD L. HUTTON, JOEL F. GEMUNDER and CHERYL D. HODGES as his true and lawful
attorneys-in-fact for the purpose of signing the Company's Annual Report on
Form 10-K for the year ended December 31, 1995, and all amendments thereto, to
be filed with the Securities and Exchange Commission. Each of such
attorneys-in-fact is appointed with full power to act without the other.
Dated: March 11, 1996
/s/ Timothy S. O'Toole
------------------------------------
Timothy S. O'Toole
E-52
<PAGE> 13
POWER OF ATTORNEY
The undersigned director of OMNICARE, INC. ("Company") hereby appoints
EDWARD L. HUTTON, JOEL F. GEMUNDER and CHERYL D. HODGES as his true and lawful
attorneys-in-fact for the purpose of signing the Company's Annual Report on
Form 10-K for the year ended December 31, 1995, and all amendments thereto, to
be filed with the Securities and Exchange Commission. Each of such
attorneys-in-fact is appointed with full power to act without the other.
Dated: March 11, 1996
/s/ D. Walter Robbins, Jr.
------------------------------------
D. Walter Robbins, Jr.
E-53
