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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K/A
(Amendment No. 2)
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): September 12, 1997
OMNICARE, INC.
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(Exact name of registrant as specified in its charter)
Delaware
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(State or other jurisdiction of incorporation)
1-8269 31-1001351
- -------------------------------------------------------------------------------
(Commission File Number) (IRS Employer Identification No.)
50 East RiverCenter Boulevard, Covington, Kentucky 41011
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(Address of principal executive offices) (zip code)
Registrant's telephone number, including area code: (606) 291-6800
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Omnicare, Inc. hereby files its amended Form 8-K/A, reflecting changes to the
Financial Statements and Exhibits - Pro forma financial information section
(Item 7(b)) of the Form 8-K/A originally filed with the Securities and Exchange
Commission on September 29, 1997.
Item 7. Financial Statement and Exhibits
--------------------------------
(b) Pro Forma financial information.
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UNAUDITED PRO FORMA CONSOLIDATED FINANCIAL INFORMATION
The unaudited Pro Forma Consolidated Balance Sheet of Omnicare, Inc. (the
"Company") as of June 30, 1997 gives effect to the acquisition of American
Medserve Corporation ("AMC") as if it had occurred as of June 30, 1997. The
unaudited Pro Forma Consolidated Statements of Income of the Company for the
year ended December 31, 1996 and for the six months ended June 30, 1997 give
effect to the acquisition of AMC as if it had occurred on January 1, 1996.
The acquisition of AMC was accounted for under the purchase method of
accounting. The total purchase price was allocated to the tangible and
identifiable intangible assets, and liabilities based on the Company's
management's estimate of their fair values. The excess of cost over the fair
value of the net assets acquired was recorded as goodwill. The allocation of the
purchase price may be adjusted in accordance with Statement of Financial
Accounting Standards No. 38, "Accounting for Preacquisition Contingencies of
Purchased Enterprises," to the extent that actual amounts differ from
management's current estimates. Management does not expect that any such
adjustment would have a material impact on the pro forma information.
The pro forma information has been prepared by the Company based on the
consolidated financial statements of the Company and AMC included in their
respective 1996 Forms 10-K and June 30, 1997 Forms 10-Q. The pro forma
information is presented for illustration purposes only and does not purport to
be indicative of the combined financial condition or results of operations that
actually would have occurred if the acquisition of AMC had been effected at the
dates indicated or to project future financial condition or results of
operations for any future period. The pro forma information gives effect only to
the adjustments set forth in the accompanying notes and does not reflect any
synergies anticipated by the Company's management as a result of the
acquisition, in particular improvements in gross margin attributable to the
Company's purchasing leverage associated with purchases of pharmaceuticals and
the elimination of duplicate payroll and other operating expenses. Therefore,
management believes that the pro forma financial information is not necessarily
indicative of future performance. The pro forma information should be read in
conjunction with the Company's consolidated financial statements and related
notes thereto included in its 1996 Form 10-K (as amended on Form 10-K/A dated
August 6, 1997) and its June 30, 1997 Form 10-Q, and the consolidated financial
statements of AMC and related notes thereto included in its 1996 Form 10-K and
June 30, 1997 Form 10-Q, which have been incorporated by reference in the
Company's current report on Form 8-K dated September 12, 1997.
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<TABLE>
<CAPTION>
Omnicare, Inc. and Subsidiary Companies
Pro Forma Consolidated Balance Sheet
Unaudited
June 30, 1997
(In thousands)
Historical
----------------------------
American Pro Forma Pro Forma
ASSETS Omnicare Medserve Adjustments Adjusted
-------- -------- ----------- ----------
Current assets:
<S> <C> <C> <C> <C>
Cash and cash equivalents $ 102,995 $ 3,231 $ 480 (b) $ 106,706
Accounts receivable, less allowances 154,616 30,960 -- 185,576
Inventories 67,997 10,572 -- 78,569
Deferred income tax benefits 7,691 -- -- 7,691
Other current assets 13,481 2,971 -- 16,452
Due from related parties -- 1,563 -- 1,563
----------- ----------- ----------- -----------
Total current assets 346,780 49,297 480 396,557
Properties and equipment, at cost less
accumulated depreciation 66,814 7,599 -- 74,413
Goodwill, less accumulated amortization 383,901 73,078 218,677 (a) 602,578
(73,078)(d)
Other assets 19,671 3,534 (1,702)(c) 21,503
----------- ----------- ----------- -----------
Total assets $ 817,166 $ 133,508 $ 144,377 $ 1,095,051
=========== =========== =========== ===========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 30,076 $ 7,329 $ -- $ 37,405
Amounts payable pursuant to acquisition
agreements 16,588 -- -- 16,588
Current portion of long-term debt 1,871 8,900 (7,034)(b) 3,737
Accrued employee compensation 11,448 -- -- 11,448
Other current liabilities 15,606 3,683 8,200 (e) 27,489
----------- ----------- ----------- -----------
Total current liabilities 75,589 19,912 1,166 96,667
Long-term debt 1,211 13,219 (9,486)(b) 254,944
250,000 (b)
Deferred income taxes 6,521 1,102 -- 7,623
Amounts payable pursuant to acquisition
agreements 9,098 -- -- 9,098
Other noncurrent liabilities 9,073 1,972 -- 11,045
----------- ----------- ----------- -----------
Total liabilities 101,492 36,205 241,680 379,377
----------- ----------- ----------- -----------
Stockholders' equity:
Common stock 80,354 122 (122)(f) 80,354
Paid-in capital 492,018 97,347 (97,347)(f) 492,018
Retained earnings (deficit) 163,184 (166) 166 (f) 163,184
----------- ----------- ----------- -----------
735,556 97,303 (97,303) 735,556
Treasury stock, at cost (2,058) -- -- (2,058)
Deferred compensation (16,675) -- -- (16,675)
Unallocated stock of ESOP (1,149) -- -- (1,149)
----------- ----------- ----------- -----------
Total stockholders' equity 715,674 97,303 (97,303) 715,674
----------- ----------- ----------- -----------
Contingencies
Total liabilities and stockholders' equity $ 817,166 $ 133,508 $ 144,377 $ 1,095,051
=========== =========== =========== ===========
</TABLE>
See notes to unaudited pro forma financial information.
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Omnicare, Inc. and Subsidiary Companies
Pro Forma Consolidated Statement of Income
Unaudited
For The Six Months Ended June 30, 1997
<TABLE>
<CAPTION>
(In thousands, except per share data)
Historical
----------------------
American Pro Forma Pro Forma
Omnicare Medserve Adjustments Adjusted
-------- -------- ----------- ----------
<S> <C> <C> <C> <C>
Sales $ 384,668 $ 75,563 $ -- $ 460,231
Cost of sales 273,037 54,484 737(k) 328,258
--------- -------- ------- ---------
Gross profit 111,631 21,079 (737) 131,973
Selling, general and administrative expenses 64,764 17,413 2,733 (g) 83,061
(914)(h)
(198)(j)
(737)(k)
Acquisition expenses, pooling-of-interests 1,671 -- -- 1,671
--------- -------- ------- ---------
Operating income 45,196 3,666 (1,621) 47,241
Investment income 3,055 -- -- 3,055
Interest expense (483) (389) (7,029)(i) (7,901)
Other, net -- 239 -- 239
--------- -------- ------- ---------
Income before income taxes 47,768 3,516 (8,650) 42,634
Income taxes 19,187 1,499 (2,403)(l) 18,283
--------- -------- ------- ---------
Net income $ 28,581 $ 2,017 $(6,247) $ 24,351
========= ======== ======= =========
Earnings per share:
Primary $ .36 $ .31
========= =========
Fully diluted $ .36 $ .31
========= =========
Weighted average number of common shares outstanding:
Primary 79,239 79,239
========= =======
Fully diluted 79,335 79,335
========= =======
</TABLE>
See notes to unaudited pro forma financial information.
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Omnicare, Inc. and Subsidiary Companies
Pro Forma Consolidated Statement of Income
Unaudited
For The Year Ended December 31, 1996
<TABLE>
<CAPTION>
(In thousands, except per share data)
Historical
----------------------
American Pro Forma Pro Forma
Omnicare Medserve Adjustments Adjusted
-------- -------- ----------- --------
<S> <C> <C> <C> <C>
Sales $ 536,604 $ 82,027 $ -- $ 618,631
Cost of sales 381,768 58,807 716 (k) 441,291
--------- -------- --------- ----------
Gross profit 154,836 23,220 (716) 177,340
Selling, general and administrative expenses 89,636 19,605 5,467 (g) 112,770
(987)(h)
(235)(j)
(716)(k)
Acquisition expenses, pooling-of-interests 690 -- -- 690
Nonrecurring charge -- 3,019(m) -- 3,019
--------- -------- --------- ----------
Operating income 64,510 596 (4,245) 60,861
Investment income 11,285 -- -- 11,285
Interest expense (3,652) (2,741) (12,258)(i) (18,651)
Other, net -- 173 -- 173
--------- -------- --------- ----------
Income (loss) before extraordinary
item and income taxes 72,143 (1,972) (16,503) 53,668
Income taxes 28,693 162 (4,454)(l) 24,401
--------- -------- --------- ----------
Income (loss) before extraordinary item $ 43,450 $ (2,134) $ (12,049) $ 29,267
========= ======== ========= ==========
Earnings per share before extraordinary item:
Primary $ .64 $ .43
========= ==========
Fully diluted $ .61 $ .42
========= ==========
Weighted average number of common
shares outstanding:
Primary 67,388 67,388
========= ==========
Fully diluted 75,429 75,429
========= ==========
</TABLE>
See notes to unaudited pro forma financial information.
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Notes to Unaudited Pro Forma Financial Information
(dollars in thousands)
Balance Sheet
- -------------
(a) On September 16, 1997, Omnicare, Inc. (the "Company") completed the
acquisition of all outstanding shares of American Medserve Corporation
("AMC") for a cash purchase price of approximately $223,000. The
acquisition was accounted for under the purchase method of accounting and
the total consideration to be paid, including estimated transaction costs
of $10,000, was allocated to the tangible and identifiable intangible
assets and liabilities acquired based on their estimated fair values at
the date of acquisition. The excess of the acquisition cost over the fair
value of the net assets acquired was recorded as goodwill. For purposes
of the unaudited pro forma balance sheet, the acquisition and related
purchase accounting is assumed to have been recorded as of June 30, 1997.
(b) On the closing date, the Company drew down $250,000 from its $400,000
revolving credit agreement to fund the cash purchase price for the AMC
stock, the related estimated transaction costs and the repayment of
approximately $16,700 of AMC's debt on the closing date. As of June 30,
1997, such debt totalled $16,520 and for purposes of the pro forma
balance sheet, that amount is assumed to have been repaid as of June 30,
1997. Accordingly, the total cash paid as of June 30, 1997 is assumed to
have been $249,520, which results in $480 of additional cash balances as
of June 30, 1997.
(c) To eliminate the AMC deferred debt issuance costs as of June 30, 1997
relating to the debt repaid by the Company at closing.
(d) To eliminate AMC's existing goodwill as of June 30, 1997.
(e) To record the estimated AMC employees' severance cost liability accrued
in accordance with EITF 95-3 ($5,500) and the estimated transaction costs
incurred by AMC that became payable on the closing date ($2,700).
(f) To eliminate the stockholders' equity accounts of AMC.
Income Statement
- ----------------
(g) To reflect amortization of the goodwill of $218,677 recorded in
connection with the purchase of AMC on a straight-line basis over 40
years.
(h) To eliminate AMC's historical goodwill amortization.
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(i) To adjust interest expense to
<TABLE>
<CAPTION>
1996 1997
12 Months 6 Months
--------- --------
<S> <C> <C>
(i) eliminate historical interest expense on the AMC debt repaid
at closing $ (2,586) $ (393)
(ii) record interest expense at 5.9375% (the current actual rate
on the borrowing) on the $250 million of debt drawn down
by the Company at closing (annual interest expense would
change by approximately $313 for each 1/8% change in
the interest rate). 14,844 7,422
-------- ---------
$ 12,258 $ 7,029
======== =========
</TABLE>
(j) To eliminate AMC's historical amortization of debt issuance costs,
included in selling, general and administrative expenses.
(k) To reclassify certain general and administrative expenses of AMC to cost
of sales in order to reflect cost of sales consistently with the Company.
(l) Tax effect of pro forma adjustments, excluding the portion of goodwill
amortization that is not tax deductible, at the Company's effective tax
rate of approximately 40% which is not materially different than the
combined federal and state statutory rates.
(m) Represents (1) a noncash, nonrecurring charge of $2,500 (with no tax
benefit) related to the sale of 310,208 shares of common stock of AMC to
certain directors and officers at a price less than the initial public
offering price of the common stock on November 13, 1996, and the
conversion of options to purchase shares of common stock of certain
subsidiaries into options to purchase 146,635 shares of common stock of
AMC at a weighted average exercise price less than the initial public
offering price of the common stock on November 13, 1996, (2) a charge of
$300 ($200 net of tax) related to the termination of a professional
services agreement with an affiliate of AMC's principal stockholder and
(3) a charge of $200 ($100 net of tax) related to special bonuses paid to
management in connection with AMC's initial public offering.
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SIGNATURE
Pursuant to the requirements of the Securities and Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
Omnicare, Inc.
(Registrant)
Date: December 4, 1997 By: /s/ David W. Froesel, Jr.
------------------------- -------------------------------------
David W. Froesel, Jr.
Senior Vice President and
Chief Financial Officer
(Principal Financial and
Accounting Officer)
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