<PAGE>
<PAGE>
FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Quarterly Report Under Section 13 or 15(d) of
The Securities Exchange Act of 1934
For Quarter Ended March 31, 1999
Commission File Number 1-8269
OMNICARE, INC.
--------------
<TABLE>
<S> <C>
Incorporated under the laws of the I.R.S. Employer Identification
State of Delaware No. 31-1001351
</TABLE>
100 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) 392-3300
------------------------------------------------------------------
Indicate by check mark whether the registrant:
1) has filed all reports required to be filed by Section 13 or 15(d)
of the Securities Exchange Act of 1934 during the preceding 12
months (or for such shorter period that the registrant was
required to file such reports) and
2) has been subject to such filing requirement for the past 90 days.
Yes x No
--- ---
COMMON STOCK OUTSTANDING
<TABLE>
<CAPTION>
Number of
Shares Date
------ ----
<S> <C> <C>
Common Stock, $1 par value 90,683,017 March 31, 1999
</TABLE>
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<PAGE>
OMNICARE, INC. AND
SUBSIDIARY COMPANIES
Index
<TABLE>
<CAPTION>
Page
----
<S> <C> <C>
Part I. Financial Information:
Item 1. Financial Statements
Consolidated Balance Sheet -
March 31, 1999 and December 31, 1998 3
Consolidated Statement of Income -
Three months ended -
March 31, 1999 and 1998 4
Consolidated Statement of Cash Flows -
Three months ended -
March 31, 1999 and 1998 5
Notes to Consolidated Financial Statements 6
Item 2. Management's Discussion and Analysis of Results of
Operations and Financial Condition 9
Item 3. Quantitative and Qualitative Disclosures About Market Risk 13
Part II. Other Information:
Item 6. Exhibits and Reports on Form 8-K 14
</TABLE>
<PAGE>
<PAGE>
PART I -- FINANCIAL INFORMATION
Item 1. Financial Statements
OMNICARE, INC. AND SUBSIDIARY COMPANIES
Consolidated Balance Sheet
UNAUDITED
<TABLE>
<CAPTION>
(In thousands, except share data)
March 31, December 31,
1999 1998
---------- ------------
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents $71,440 $54,312
Accounts receivable, less allowances of
$31,459 (1998-$31,417) 388,494 379,624
Inventories 141,674 117,936
Deferred income tax benefits 19,129 12,348
Other current assets 45,512 39,078
---------- ------------
Total current assets 666,249 603,298
Properties and equipment, at cost less accumulated
depreciation of $83,843 (1998-$76,854) 143,742 136,371
Goodwill, less accumulated amortization
of $59,237 (1998-$51,861) 1,133,289 1,110,254
Other assets 59,760 53,906
---------- ------------
Total assets $2,003,040 $1,903,829
---------- ------------
---------- ------------
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $94,549 $82,029
Amounts payable pursuant to acquisition agreements 12,212 10,230
Current portion of long-term debt 2,415 2,844
Accrued employee compensation 39,923 48,073
Deferred revenue 19,111 19,043
Other current liabilities 69,029 71,330
---------- ------------
Total current liabilities 237,239 233,549
---------- ------------
Long-term debt 711,235 651,556
Deferred income taxes 15,963 16,230
Amounts payable pursuant to acquisition agreements 11,743 13,564
Other noncurrent liabilities 26,449 25,459
---------- ------------
Total liabilities 1,002,629 940,358
---------- ------------
Stockholders' equity:
Preferred stock-authorized 1,000,000 shares
without par value; none issued
Common stock-authorized 200,000,000 shares $1 par; 90,921,200 shares issued
(1998-90,459,800 shares issued) 90,921 90,460
Paid-in capital 676,443 664,225
Retained earnings 251,704 225,937
---------- ------------
1,019,068 980,622
Treasury stock, at cost - 238,200 shares (1998-194,900 shares) (5,452) (4,166)
Deferred compensation (12,352) (12,932)
Cumulative translation adjustment (853) (53)
---------- ------------
Total stockholders' equity 1,000,411 963,471
---------- ------------
Total liabilities and stockholders' equity $2,003,040 $1,903,829
---------- ------------
---------- ------------
</TABLE>
The Notes to Consolidated Financial Statements are an integral part of
this statement.
3
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OMNICARE, INC. AND SUBSIDIARY COMPANIES
Consolidated Statement of Income
UNAUDITED
(In thousands, except per share data)
<TABLE>
<CAPTION>
Three Months Ended
March 31,
----------------------
1999 1998
------- -------
<S> <C> <C>
Sales $445,688 $ 340,258
Cost of sales 309,893 238,936
-------- ---------
Gross profit 135,795 101,322
Selling, general and administrative expenses 81,983 63,536
Acquisition expenses, pooling-of-interests - 491
-------- ---------
Operating income 53,812 37,295
Investment income 282 1,446
Interest expense (9,981) (4,771)
-------- ---------
Income before income taxes 44,113 33,970
Income taxes 16,306 13,564
-------- ---------
Net income $ 27,807 $ 20,406
-------- ---------
-------- ---------
Earnings per share:
Basic $ 0.31 $ 0.23
-------- ---------
-------- ---------
Diluted $ 0.31 $ 0.23
-------- ---------
-------- ---------
Weighted average number of
common shares outstanding:
Basic 90,526 88,114
-------- ---------
-------- ---------
Diluted 90,881 89,085
-------- ---------
-------- ---------
Comprehensive income $ 27,303 $ 20,455
-------- ---------
-------- ---------
</TABLE>
The Notes to Consolidated Financial Statements are an integral part of this
statement.
4
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<PAGE>
OMNICARE, INC. AND SUBSIDIARY COMPANIES
Consolidated Statement of Cash Flows
UNAUDITED
<TABLE>
<CAPTION>
(In thousands) Three Months Ended
March 31,
-----------------------
1999 1998
------- -------
<S> <C> <C>
Cash flows from operating activities:
Net income $ 27,807 $ 20,406
Adjustments to reconcile net income to net cash
flows from operating activities:
Depreciation and amortization 15,735 10,741
Provision for doubtful accounts 3,841 2,608
Deferred tax provision 1,145 (1,133)
Changes in assets and liabilities, net of effects
from acquisition of businesses:
Accounts receivable (13,850) (4,284)
Inventories (23,182) (10,805)
Current and noncurrent assets (10,188) (1,110)
Payables and accrued liabilities 22,378 18,457
Deferred revenue 68 (3,462)
Current and noncurrent liabilities (6,379) 3,854
-------- --------
Net cash flows from operating activities 17,375 35,272
-------- --------
Cash flows from investing activities:
Acquisition of businesses (41,464) (29,415)
Capital expenditures (14,983) (9,392)
Marketable securities - 2,228
Other (786) (166)
-------- --------
Net cash flows from investing activities (57,233) (36,745)
-------- --------
Cash flows from financing activities:
Net borrowings on line-of-credit 60,000 -
Principal payments on long-term obligations (425) (2,081)
Exercise of stock options and warrants,
net of stock tendered in payment (1,253) (2,050)
Dividends paid (2,040) (1,623)
Effect of exchange rate changes on cash and other 704 175
-------- --------
Net cash flows from financing activities 56,986 (5,579)
-------- --------
Net increase (decrease) in cash and cash equivalents 17,128 (7,052)
Cash and cash equivalents at beginning of period 54,312 138,062
-------- --------
Cash and cash equivalents at end of period $ 71,440 $ 131,010
-------- --------
-------- --------
Supplemental disclosures of cash flow information:
Income taxes paid $ 6,592 $ 503
Interest paid 5,002 592
</TABLE>
The Notes to Consolidated Financial Statements are an integral part of this
statement.
5
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OMNICARE, INC. AND SUBSIDIARY COMPANIES
Notes to Consolidated Financial Statements
1. The interim financial data are unaudited; however, in the opinion of the
management of Omnicare, Inc., the interim data include all adjustments (which
include only normal adjustments) considered necessary for a fair presentation of
the consolidated financial position, results of operations and cash flows of
Omnicare, Inc. and its consolidated subsidiaries ("Omnicare" or the "Company").
Certain reclassifications of prior year amounts have been made to conform with
the current year presentation.
2. The Company has been involved in a program to acquire providers of
pharmaceutical and related pharmacy management services and medical supplies to
long-term care facilities and their residents. The Company's strategy includes
acquisitions of freestanding institutional pharmacy businesses as well as other
assets, generally insignificant in size, which are combined with existing
pharmacy operations to augment their internal growth. The Company may, from time
to time, acquire certain non-pharmaceutical companies which complement the
Company's core business.
Since January 1, 1999, the Company has completed one acquisition
(excluding insignificant purchases of other assets) of an institutional pharmacy
business which was accounted for as a purchase transaction. This transaction
added approximately $3.4 million in revenues on an annualized basis. For any
acquisition accounted for as a purchase, including insignificant purchases of
other assets, the purchase price paid has been allocated to the fair value of
the assets acquired and liabilities assumed and the results of operations of the
acquired entity have been included in the consolidated results of the Company
from the effective date of the acquisition.
Pooling-of-Interests Transactions
The consolidated financial statements have been restated for the first
quarter of 1998 to include the historical results of operations, financial
position and cash flows of the two entities acquired in June 1998 in
pooling-of-interests transactions, described as follows:
On June 26, 1998, Omnicare completed the acquisition of CompScript, Inc.
("CompScript"). Pursuant to the terms of the merger agreement, CompScript
stockholders received .12947 of a share of Omnicare common stock for each share
owned of CompScript common stock. Omnicare issued approximately 1.8 million
shares of its common stock with a value of approximately $67 million in this
transaction, which was accounted for as a pooling-of-interests and a tax free
reorganization.
CompScript is a Boca Raton, Florida-based provider of comprehensive
pharmacy management, infusion therapy and related consulting services to the
long-term care, alternate care and managed care markets. CompScript served
approximately 20,000 residents in 137 long-term care facilities in five states
at the time of the acquisition.
6
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<PAGE>
On June 29, 1998, Omnicare completed the acquisition of IBAH, Inc.
("IBAH"). Pursuant to the terms of the merger agreement, IBAH stockholders
received .1638 of a share of Omnicare common stock for each share owned of IBAH
common stock. Omnicare issued approximately 4.3 million shares of common stock
with a value of approximately $159 million in this transaction, which was
accounted for as a pooling-of-interests and a tax free reorganization.
IBAH, headquartered in Blue Bell, Pennsylvania, is an international
provider of comprehensive product development services to client companies in
the pharmaceutical, biotechnology, medical device and diagnostics industries.
IBAH offers services for all stages of drug development, that are intended to
help client companies to accelerate products from discovery through development
and commercialization more cost-effectively.
In connection with the CompScript and IBAH mergers, in the 1998 second
quarter, Omnicare recorded a charge to operating expenses of $17,723,000
($15,391,000 after taxes) for direct and other merger-related costs pertaining
to the merger transactions and certain related restructuring actions.
Merger transaction costs consisted primarily of fees for investment
bankers, attorneys, accountants, financial printing and other related charges.
Restructuring costs include severance and exit costs. Details of these costs
follow (in thousands):
<TABLE>
<CAPTION>
Initial Utilized as of Balance at
Provision March 31, 1999 March 31, 1999
--------- -------------- --------------
<S> <C> <C> <C>
Merger transaction costs $14,096 $9,577 $4,519
Restructuring costs:
Employee severance 1,413 987 426
Exit costs 2,214 1,525 689
------- ------- ------
Total $17,723 $12,089 $5,634
======= ======= ======
</TABLE>
Restructuring costs include the costs of restructuring the CompScript
mail order pharmacy business and the cancellation of certain of its vendor
agreements along with severance and exit costs associated with the consolidation
of certain IBAH facilities and the restructuring of its pharmaceutics business.
These actions resulted in the reduction of approximately 20 employees. Included
in the exit costs are $1,948,000 of non-cash items. At March 31, 1999, all
liabilities relating to these actions were classified as current liabilities.
3. Based on the "management approach" as defined by Statement of Financial
Accounting Standards (SFAS) No. 131, Omnicare has two business segments. The
Company's largest segment is Pharmacy Services. Pharmacy Services provides
distribution of pharmaceuticals, related pharmacy consulting, data management
services and medical supplies to long-term care facilities. The Company's other
reportable segment is Contract Research Organization ("CRO") Services, which
provides comprehensive product development services to client companies in
pharmaceutical, biotechnology, medical devices and diagnostics industries.
7
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The table below presents information about the reportable segments as of
and for the quarters ended March 31, 1999 and 1998 (in thousands):
<TABLE>
<CAPTION>
Corporate
Pharmacy CRO and Consolidated
1999: Services Services Consolidating Totals
- --------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Sales $411,710 $ 33,978 $ - $ 445,688
Depreciation and amortization 13,970 1,576 189 15,735
Operating income (expense) 55,488 4,424 (6,100) 53,812
Total assets 1,769,419 116,768 116,853 2,003,040
Expenditures for additions to long-lived assets 13,075 568 1,340 14,983
- --------------------------------------------------------------------------------------------------------------------------------
1998:
- --------------------------------------------------------------------------------------------------------------------------------
Sales $311,598 $ 28,660 $ - $ 340,258
Depreciation and amortization 9,232 1,406 103 10,741
Operating income (expense), excluding acquisition expenses 41,572 1,696 (5,482) 37,786
Acquisition expenses (491) - - (491)
Operating income (expense) 41,081 1,696 (5,482) 37,295
Total assets 1,205,930 98,724 150,410 1,455,064
Expenditures for additions to long-lived assets 7,781 1,143 468 9,392
- --------------------------------------------------------------------------------------------------------------------------------
</TABLE>
The following summarizes sales and long-lived assets by geographic area
as of and for the quarters ended March 31, 1999 and 1998 (in thousands):
<TABLE>
<CAPTION>
Sales Long-Lived Assets
- ----------------------------------------------------------------------------------------------------------------
1999 1998 1999 1998
- ----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
United States $ 434,920 $ 332,626 $ 1,972,298 $ 1,437,687
- ----------------------------------------------------------------------------------------------------------------
Foreign 10,768 7,632 30,742 17,377
- ----------------------------------------------------------------------------------------------------------------
Total $ 445,688 $ 340,258 $ 2,003,040 $ 1,455,064
- ----------------------------------------------------------------------------------------------------------------
</TABLE>
Foreign sales are based on the country in which the sales originate. No
individual foreign country's sales were material to the consolidated sales of
Omnicare.
8
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<PAGE>
Item 2. Management's Discussion and Analysis of Results of Operations and
Financial Condition
Results of Operations
Quarter Ended March 1999 vs. 1998
Diluted earnings per share for the three months ended March 31, 1999
were $.31, up 35% from the $.23 per share earned, excluding acquisition expenses
relating to a pooling-of-interests transaction, in the same period last year.
Net income for the 1999 quarter was up 34% to $27,807,000 from the $20,821,000
earned, excluding acquisition expenses, in the 1998 quarter. Revenues for the
three months ended March 31, 1999 rose 31% to $445,688,000 from the $340,258,000
recorded in the comparable prior year period.
The increases in the Company's sales and earnings represent the
cumulative effect of its acquisitions of long-term care pharmacy providers, and
continued internal growth of the pharmacy services and contract research
organization business. These results were achieved in an environment
characterized by volatility in the admission trends and census levels at skilled
nursing facilities along with significant efforts to reduce their operating
costs in response to Medicare's Prospective Payment System.
During the first quarter of 1999, the Company acquired one institutional
pharmacy provider (excluding insignificant purchases of other assets) which when
combined with internal growth, brought the total number of nursing facility
residents served to 591,950 at March 31, 1999. This transaction added
approximately $3.4 million in revenues on an annualized basis.
Internal growth resulted from the efforts of the Company's National
Sales and Marketing Group and pharmacy staff in developing new pharmacy
contracts, drug price inflation, modest infusion therapy growth, growth in other
complementary non-pharmaceutical service businesses and other changes in sales
mix.
Gross margin increased to 30.5% in 1999 from 29.8% in 1998. The
Company's purchasing leverage associated with purchases of pharmaceuticals,
leveraging fixed and variable overhead costs at the Company's pharmacies,
benefits realized from the Company's formulary compliance program and changes
in sales mix including increased sales from contract research organizations
positively impacted gross margins.
Operating expenses for the quarter ended March 31, 1999 increased 29% to
$81,983,000 as compared to 1998 due to the overall growth of the Company.
Operating expenses as a percentage of sales declined from 18.7% in 1998 to 18.4%
in 1999. Both segments showed a decline in operating expenses in relation to
sales as a result of leveraging fixed overhead costs through acquisitions and
internal growth.
Acquisition expenses for 1998 of $491,000 represent expenses related to
a pooling-of-interests transaction.
Investment income for the three months ended March 31, 1999 was
$282,000, a decrease of $1,164,000 in comparison to the same period of 1998 due
to a lower average invested cash
9
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<PAGE>
balance during the first quarter of 1999 than in the first quarter of 1998. The
use of cash is primarily attributable to the Company's acquisition program.
Interest expense during the three months ended March 31, 1999 was
$9,981,000, an increase of $5,210,000 versus the comparable prior year period
primarily due to the impact of interest expense associated with the $365 million
increase in borrowings on the Company's five-year $400 million line of credit
facility from March 31, 1998 to March 31, 1999, primarily relating to $250
million borrowed in the third quarter of 1998 in connection with the Company's
acquisition of the UPC pharmacy business of Extendicare, Inc.
The decrease in the effective tax rate to 37.0% in the first quarter of
1999 from 39.9% in the comparable prior year quarter is primarily attributable
to the existence of nondeductible acquisition expenses relating to the
pooling-of-interests transaction in the first quarter of 1998 and a decrease in
state and local income taxes in 1999 due to the Company's state tax planning
programs. The Company expects the benefit realized from the state tax planning
programs to continue. The effective tax rates of 37.0% and 39.9% in 1999 and
1998, respectively, are higher than the statutory rate primarily due to state
and local income taxes and various nondeductible expenses (e.g., acquisition
costs, etc.).
Liquidity and Capital Resources
Cash and cash equivalents at March 31, 1999 were $71.4 million versus
$54.3 million at December 31, 1998. Acquisitions of businesses through March 31,
1999 required $41.5 million of cash payments (including amounts payable pursuant
to acquisition agreements relating to pre-1999 acquisitions) which were funded
by first quarter borrowings from the Company's revolving credit facilities. In
October 1996, the Company entered into an agreement with a consortium of sixteen
banks for a $400 million revolving credit facility available through 2001. In
December 1998, the Company amended this five-year, $400 million line of credit
to permit an additional 364-day, $400 million line of credit through December
20, 1999, which can be converted at maturity into a one-year term loan. Interest
rates and commitment fees for the five-year $400 million line of credit facility
are based on the Company's level of performance under certain financial ratios,
debt covenants and the amount of borrowings under the line of credit. The total
amount outstanding under this facility as of March 31, 1999 was $365,000,000.
Interest rates and commitment fees under the 364-day, $400 million line of
credit are based on the Company's debt ratings. No amounts were outstanding at
March 31, 1999 under the 364-day facility. The Company generated positive net
cash flows from operating activities of $17.4 million. Inventories increased
during the first quarter of 1999 relating primarily to the purchase of $16.4
million of inventories in advance of pharmaceutical price increases from
manufacturers. Excluding these inventory purchases, net cash flows from
operating activities were $33.8 million during the three months ended March 31,
1999.
The Company's capital requirements are primarily related to its
acquisition program and, to a lesser extent, capital expenditures, including
those related to investments in the Company's information technology systems
such as the Year 2000 compliance initiative. During the three months ended March
31, 1999, the Company made one acquisition (excluding insignificant purchases of
other assets), as well as payments relating to individually insignificant
purchases of other assets and disbursements relating to amounts payable pursuant
to acquisition agreements relating to pre-1999 acquisitions. There are no
material commitments outstanding at March 31, 1999, other than estimated future
acquisition-related payments to be made in accordance with purchase agreements.
The Company's current ratio at March 31, 1999 and December 31, 1998 was
2.8 to 1.0 and 2.6 to 1.0, respectively. The increase in the current ratio is
primarily attributable to the aforementioned increase in inventories, as well as
an increase in cash and cash equivalents, relating to net cash flows from
operating activities and long-term borrowings on the line-of-credit during the
first quarter of 1999.
10
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<PAGE>
On February 3, 1999, the Company's Board of Directors increased the
quarterly cash dividend by 13% to 2.25 cents per share for an indicated annual
rate of 9 cents per share in 1999. Dividends of $2.0 million were paid during
the three months ended March 31, 1999 versus the $1.6 million paid in the
comparable prior year period.
The Company believes its sources of liquidity and capital are adequate
for its ongoing operating needs. If needed, other external sources of financing
are readily available to the Company.
Impact of Year 2000
The Company utilizes information systems throughout its business to
carry out its day-to-day operations. Further, the Company has and will continue
to invest in financial and operational systems to support its growth strategy.
Incorporated in this process is the continuing assessment of the Company's Year
2000 compliance. The Company currently considers its internal information
technology ("IT") systems to be substantially Year 2000 compliant. For those
systems that are not Year 2000 compliant, Omnicare is currently correcting,
upgrading or replacing those systems with, among other systems, its new
proprietary information system, which is Year 2000 compliant. The Company
believes it will be able to modify or replace its affected systems in time to
avoid any interruptions in its operations and anticipates that such remediation
will be completed during the second half of 1999. The system remediation is
being completed using both internal resources and external consultants. The
Company estimates that the total costs associated with this project will range
from approximately $5.6 million to $7.4 million (with hardware accounting for
approximately 40 percent of these costs and software and implementation
approximating 60 percent of these costs). Approximately $3.9 million has been
spent to date. The cost of this project will be funded from the Company's
operating cash flows. No IT projects with high priority have been significantly
delayed due to the Year 2000 initiatives. The Company does not anticipate any
significant implications with respect to Year 2000 issues relating to non-IT
systems.
While the Company believes its plan for Year 2000 compliance will be
completed on a timely basis and within the foregoing estimates, there can be no
assurance that the remedial actions being implemented by the Company will be
completed in a timely manner; nor can assurance be given that any inability to
complete remedial action in a timely manner will not impact adversely operations
or financial results. Moreover, there can be no assurance that the costs
associated with the remediation will not exceed the foregoing estimates.
The failure by third parties with whom the Company has dealings,
particularly the Medicaid and Medicare programs, to adequately address their
Year 2000 issues could adversely affect the Company, and claims to these third
party payors could be unjustifiably denied and/or delayed. As a result, the
Company's accounts receivable balance could increase, unfavorably impacting
operating cash flows. The Company is communicating with each of these programs
to determine the extent to which it may be impacted by any Year 2000 issues not
yet resolved by these programs. The Company has developed a contingency plan
which, if necessary, would call for the submission of reimbursement claims using
universal claim (paper) forms to the programs in the event that computerized
processing is not feasible in the year 2000. While it is
11
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<PAGE>
management's current belief that this contingency plan would satisfactorily
address the risk associated with any absence of readiness experienced by these
programs, there can be no assurance that implementation of such plan will
mitigate in whole or in part such risk.
Safe Harbor Statement under the Private Securities Litigation Reform Act of
1995 Regarding Forward-Looking Information
In addition to historical information, this report contains
forward-looking statements and performance trends that are subject to certain
known and unknown risks, uncertainties, contingencies and other factors that
could cause actual results, performance or achievements to differ materially
from those stated. Such forward-looking statements and trends include those
relating to Omnicare's acquisition program, internal growth trends, admission
trends and census levels, cost reduction efforts, the expected benefits from the
Company's state tax planning programs, the impact of drug price inflation,
expansion of services and growth of businesses, the impact of the Company's
formulary compliance programs, the impact of regulation including PPS on the
Company's business and its operating environment, the adequacy and availability
of Omnicare's sources of liquidity and capital, and the impact of the Year 2000
issue. Such risks, uncertainties, contingencies and other factors, many of which
are beyond the control of Omnicare, include, but are not limited to: overall
economic, financial and business conditions, the continued availability of
suitable acquisition candidates, the effect of new government regulation and/or
legislative initiatives including those relating to reimbursement policies and
in the interpretation and application of such policies, changes in tax law and
regulation, trends for the continued growth of the businesses of Omnicare, the
realization of anticipated revenues, profitability and cost synergies, the
demand for Omnicare's products and services, pricing and other competitive
factors in the industry, variations in costs or expenses, changes in the scope
of Year 2000 initiatives, and delays or problems in the implementation of Year
2000 initiatives by Omnicare and/or its suppliers and customers and other
payors.
12
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<PAGE>
Item 3. Quantitative and Qualitative Disclosures About Market Risk
The Company does not have any financial instruments held for trading
purposes and does not hedge any of its market risks with derivative instruments.
The Company's primary market risk exposure relates to interest rate risk
exposure through its borrowings. The Company's debt obligations at March 31,
1999 includes $365 million outstanding under its variable-rate revolving line of
credit facility due in 2001 at an approximate average rate of 6% at March 31,
1999 (a one-hundred basis point change in interest rates would impact interest
expense by approximately $900,000 per quarter) and $345 million outstanding
under convertible subordinated notes due in 2007, which accrue interest at a
fixed rate of 5%. The fair value of the Company's debt obligations approximates
their carrying value.
13
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PART II. -- OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
<TABLE>
<CAPTION>
Exhibit
Number Exhibit
------ -------
<S> <C>
11 Computation of Earnings Per Common Share
27 Financial Data Schedule
</TABLE>
(b) Reports on Form 8-K - The Company did not file any Reports on Form
8-K during the quarter ended March 31, 1999.
14
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<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
Omnicare, Inc.
--------------
Registrant
Date May 14, 1999 By /s/David W. Froesel, Jr.
------------------------ -------------------------
David W. Froesel, Jr.
Senior Vice President and
Chief Financial Officer
(Principal Financial and
Accounting Officer)
15
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<PAGE>
OMNICARE, INC. AND SUBSIDIARY COMPANIES
Computation of Earnings Per Common Share (EPS)
(in thousands, except per share data)
<TABLE>
<CAPTION>
Three Months Ended
March 31,
-----------------------
1999(a) 1998(a)(b)
--------- -----------
<S> <C> <C>
Basic Earnings:
Net income $ 27,807 $ 20,406
-------- --------
-------- --------
Shares
Weighted average number of common
shares outstanding 90,526 88,114
-------- --------
-------- --------
Basic earnings per common share $ 0.31 $ 0.23
-------- --------
-------- --------
Diluted Earnings:
Net income $ 27,807 $ 20,406
-------- --------
-------- --------
Shares
Weighted average number of common
shares outstanding 90,526 88,114
Additional shares assuming conversion of
stock options and stock warrants 355 971
-------- --------
Average common shares outstanding
as adjusted 90,881 89,085
-------- --------
-------- --------
Diluted earnings per common share $ 0.31 $ 0.23
-------- --------
-------- --------
</TABLE>
(a) The $345,000,000 of 5.0% Convertible Subordinated Notes due 2007 that are
convertible into 8,712,121 shares at $39.60 per share were outstanding
during the three months ended March 31, 1999 and 1998 but were not included
in the computation of diluted EPS because the impact was anti-dilutive.
(b) The consolidated financial statements have been restated as of and for the
three months ended March 31, 1998 to include the financial position and
results of operations of CompScript, Inc. and IBAH, Inc., both acquired in
June 1998 pooling-of-interests transactions.
<PAGE>
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<PERIOD-START> JAN-01-1999
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0
0
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