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AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON JUNE 17, 1999
Registration No. 333- .
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM S-4
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
---------------------
OMNICARE, INC.
(Exact name of registrant as specified in its charter)
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<S> <C> <C>
DELAWARE 5912 31-1001351
(State or other jurisdiction of (Primary Standard Industrial (I.R.S. Employer
incorporation or organization) Classification Code Number) Identification No.)
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100 EAST RIVERCENTER BLVD. - SUITE 1600
COVINGTON, KENTUCKY 41011
(606) 392-3300
(Address, including zip code, and telephone number,
including area code, of registrant's principal executive offices)
---------------------
CHERYL D. HODGES
OMNICARE, INC.
100 EAST RIVERCENTER BLVD. - SUITE 1600
COVINGTON, KENTUCKY 41011
(606) 392-3300
(Name, address, including zip code, and telephone number,
including area code, of agent for service)
---------------------
Copies to:
MORTON A. PIERCE
RICHARD D. PRITZ
DEWEY BALLANTINE LLP
1301 AVENUE OF THE AMERICAS
NEW YORK, NEW YORK 10019
(212) 259-8000
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APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE OF THE SECURITIES TO THE
PUBLIC: As soon as practicable after this Registration Statement becomes
effective and the effective time of the merger (the "Merger") pursuant to the
Plan of Merger described in the prospectus included in this Registration
Statement.
If the securities being registered on this form are being offered in
connection with the formation of a holding company and there is compliance with
General Instruction G, check the following box. [ ]
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, check the following box and
list the Securities Act registration statement number of the earlier effective
registration statement for the same offering. [ ]
If this Form is a post-effective amendment filed pursuant to Rule 462(d)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [ ]
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CALCULATION OF REGISTRATION FEE
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Title of each class Amount to be Proposed maximum Proposed maximum Amount of
of securities to be registered(1) offering price per aggregate offering registration
registered share price(2) fee(2)
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Common Stock 85,243 shares N/A $209,698 $58.30
$1.00 par value
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(1) Represents the maximum number of Omnicare shares to be issued pursuant to
the Merger, based on an exchange ratio of 0.5047 of an Omnicare share in
exchange for each CompScript-Boca, Inc. ("Boca") share and a maximum of
168,902 Boca shares to be acquired in the Merger.
(2) Estimated solely for purposes of calculating the registration fee pursuant
to Rule 457(f)(2) of the Securities Act of 1933, based upon the estimated book
value of $2.46 per Boca share on March 31, 1999.
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THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR DATES
AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL FILE
A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION STATEMENT
SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(a) OF THE
SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(a),
MAY DETERMINE.
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ii
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PRELIMINARY PROSPECTUS, SUBJECT TO COMPLETION
COMPSCRIPT-BOCA, INC.
_____ __, 1999
Dear CompScript-Boca Shareholder:
We are pleased to inform you that a subsidiary of CompScript, Inc. has
adopted a plan of merger under which each of your Boca common shares will be
converted into the right to receive 0.5047 shares of Omnicare, Inc. common
stock, subject to the terms and conditions of the plan of merger.
Omnicare owns all of the shares of CompScript. CompScript owns
approximately 92% of the shares of CompScript-Boca. CompScript-Boca was
previously known as AldenCare, Inc. As a result of the merger, CompScript will
own all of the shares of CompScript-Boca. We expect that the merger will occur
on or about ________ __, 1999, 30 days from the mailing of this prospectus.
WE ARE NOT ASKING YOU FOR A PROXY AND YOU ARE REQUESTED NOT TO SEND US A
PROXY.
Omnicare shares are listed on the New York Stock Exchange under the symbol
"OCR", while Boca shares are not publicly traded.
YOU SHOULD CAREFULLY CONSIDER THE RISK FACTORS THAT WE DESCRIBE STARTING ON
PAGE 4 OF THIS PROSPECTUS. Please read the entire attached prospectus and the
accompanying Letter of Transmittal carefully for further information regarding
the merger.
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NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES
REGULATOR HAS APPROVED OR DISAPPROVED OF THE OMNICARE COMMON STOCK TO BE ISSUED
IN THE MERGER OR DETERMINED WHETHER THIS PROSPECTUS IS ACCURATE OR ADEQUATE. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
- --------------------------------------------------------------------------------
This prospectus is dated _____________ __, 1999, and was first mailed to
shareholders on ________________ __, 1999.
<PAGE>
QUESTIONS AND ANSWERS ABOUT THE MERGER
Q: HOW WILL I BENEFIT FROM THE MERGER?
A: Omnicare is a NYSE listed company with a substantial market capitalization.
The Omnicare shares you receive in the merger should provide you with a much
greater degree of liquidity than your Boca shares. There can, of course, be no
assurances as to the value or liquidity of the Omnicare shares.
On June 16, 1999, the closing price of an Omnicare share on the NYSE was
$16 1/16. You are encouraged to obtain a current market quotation for the
Omnicare shares.
Q: WHAT WILL I RECEIVE IN THE MERGER?
A: You will receive 0.5047 Omnicare shares for each Boca share you own.
Omnicare will not issue fractional shares in the merger. As a result, you
will receive a cash payment based on the closing market price of the Omnicare
shares on the last trading day before the merger multiplied by the fraction of a
share you would otherwise by entitled to receive.
Q: WHEN DO YOU EXPECT THE MERGER TO BE COMPLETED?
A: We expect to complete the merger on or about ____ __, 1999, approximately
30 days after the mailing of this prospectus. Florida law provides that the
merger may not be completed earlier than 30 days from the mailing to Boca
shareholders of the plan of merger included in this prospectus.
Q: AM I REQUIRED TO VOTE?
A: No, you are not required to vote on the merger. Omnicare and CompScript
will not solicit proxies from Boca shareholders.
Q: SHOULD I SEND IN MY STOCK CERTIFICATES NOW?
A: We have enclosed a letter of transmittal for use in exchanging your Boca
shares for Omnicare shares. Please complete the letter of transmittal and send
it, along with your Boca stock certificates, in accordance with the instructions
in the letter of transmittal.
We will not distribute Omnicare shares until the merger is completed. If
the merger is not completed, we will return your Boca stock certificates to you.
<PAGE>
Q: WHAT ARE THE FEDERAL INCOME TAX CONSEQUENCES OF THE MERGER TO ME?
A: The exchange of your shares for shares in Omnicare should generally be tax
free to you for federal income tax purposes. However, you will be subject to
taxation with respect to cash received for fractional shares. To review material
federal income tax consequences to shareholders in greater detail, see pages 18
through 19. Tax matters are very complicated, and the tax consequences of the
merger to you will depend on the facts of your particular situation. You are
urged to consult your own tax advisor as to the specific tax consequences to you
of the merger, including the applicable federal, state, local and foreign tax
consequences.
Q: DO I HAVE DISSENTER'S RIGHTS?
A: Yes. Shareholders who comply with the procedures specified in the Florida
Business Corporation Act are entitled to dissenter's rights.
Shareholders who exercise dissenter's rights will not be entitled to
receive any Omnicare shares in the merger (unless they withdraw their request
for dissenter's rights).
The procedures to follow to exercise dissenter's rights are described
starting on page 19 of this prospectus. The relevant provisions of Florida law
are reprinted in Appendix B. If you fail to follow these procedures you will
lose your right to dissent.
Q: WHO CAN HELP ANSWER MY QUESTIONS?
A: If you have more questions about the merger you should contact:
Peter Laterza
Omnicare, Inc.
100 East RiverCenter Blvd.
Suite 1600
Covington, Kentucky 41011
(606) 392-3300
<PAGE>
TABLE OF CONTENTS
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Summary.............................................2
Risk Factors........................................4
Risks Relating to the Merger...................4
Risks Relating to the Business of Omnicare.....4
Forward-Looking Information.........................9
Omnicare Summary Selected Financial Data...........11
Boca Summary Selected Financial Data...............13
Market Price Information...........................14
Comparative Historical Per Share Data..............15
The Merger.........................................16
Background of the Merger......................16
Reasons for the Merger........................16
Plan of Merger................................17
Material United States Federal Income Tax
Consequences of the Merger....................18
Dissenter's Rights.................................19
Comparison of Shareholder Rights...................22
Authorized Capital............................22
Election and Size of Board of Directors.......23
Removal of Directors..........................23
Vacancies on the Board of Directors...........24
Action By Written Consent.....................24
Amendments to Charter.........................25
Amendments to Bylaws..........................25
Special Meetings of Shareholders..............25
Inspection of Documents.......................26
Dividends.....................................26
Indemnification of Directors and Officers.....27
Limitation of Liability.......................28
Stockholder Rights Plan.......................29
Vote on Extraordinary Corporate
Transactions; Business Combination
Restrictions..................................29
Beneficial Ownership of Boca Shares................34
Business of Boca...................................35
Boca Management's Discussion and Analysis
of Financial Condition and
Results of Operations.........................38
Experts............................................42
Legal Opinions.....................................42
Where You Can Find More Information................42
CompScript-Boca, Inc. and Subsidiaries
Index to Financial Information...............F-1
Appendix A: Plan of Merger, dated as
of June 16, 1999.............................A-1
Appendix B: Sections 607.1301, 607.1302 and
607.1320 of the Florida Business
Corporation Act Regarding Dissenters'
Rights.......................................B-1
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SUMMARY
This summary highlights selected information from this prospectus and may
not contain all of the information that is important to you. To better
understand the merger and for a more complete description of the legal terms of
the merger, you should read carefully this entire document and the documents
to which you have been referred. See "Where You Can Find More Information"
(page 42).
THE COMPANIES
OMNICARE, INC.
100 East RiverCenter Blvd.
Suite 1600
Covington, Kentucky 41011
(606) 392-3300
Omnicare is a leading provider of pharmacy and related services to
long-term care institutions such as nursing homes, retirement centers and other
institutional health care facilities. Omnicare, through its subsidiaries:
purchases, repackages and dispenses pharmaceuticals, both prescription and
non-prescription;
provides computerized medical recordkeeping and third-party billing for
patients in its customer's facilities;
provides consultant pharmacist services, including evaluating monthly
patient drug therapy, monitoring the control, distribution and
administration of drugs within the nursing facility and assisting in
compliance with state and federal regulations; and
provides ancillary services, such as infusion therapy, distributes medical
supplies, and offers clinical care plan and financial software information
systems to its client nursing facilities.
As of the date of this prospectus, Omnicare provided these services to over
617,300 residents in approximately 8,600 skilled nursing facilities, assisted
living communities and other healthcare institutions in 43 states.
Omnicare also provides comprehensive clinical research services for the
pharmaceutical and biotechnology industries.
COMPSCRIPT-BOCA, INC.
1225 Broken Sound Parkway, N.W.
Boca Raton, Florida 33487
(561) 994-8585
CompScript-Boca, Inc. is a comprehensive provider of pharmacy management
services including institutional pharmacy, infusion therapy and consultant
pharmacist services.
CompScript-Boca, Inc. is usually referred to as "Boca" in this prospectus.
THE MERGER
EXCHANGE RATIO (SEE PAGE 16)
In April 1996, certain shareholders of Boca (then known as CompScript,
Inc.) exchanged their Boca shares for shares of CompScript (then known as
Capital Brands, Inc.) at an exchange ratio of 3.898373 CompScript shares for
each Boca share. In June 1998, a subsidiary of Omnicare merged with CompScript
and each CompScript share was converted into approximately 0.12947 Omnicare
shares.
<PAGE>
Accordingly, the April 1996 exchange ratio is the equivalent of approximately
0.5047 Omnicare shares for each Boca share.
CONSEQUENCES OF THE MERGER
Boca will become a wholly-owned subsidiary of CompScript and the
shareholders of Boca that do not dissent from the merger will become
shareholders of Omnicare.
CONDITIONS TO THE MERGER (SEE PAGE 17)
COMPSCRIPT WILL NOT BE OBLIGATED TO CLOSE THE MERGER UNDER SOME
CIRCUMSTANCES, INCLUDING IF THERE IS AN INJUNCTION OR LAW PROHIBITING THE MERGER
OR ANY LEGAL ACTION CHALLENGING THE MERGER.
GOVERNMENTAL AND REGULATORY APPROVALS
No federal or state regulatory approvals are required to close the merger.
ACCOUNTING TREATMENT OF THE MERGER
Omnicare will account for the merger as a purchase in accordance with
generally accepted accounting principles.
WHERE YOU CAN FIND MORE INFORMATION (SEE PAGE 42)
This prospectus incorporates important business and financial information
about Omnicare that is not included in or delivered with the document. This
information is available to you without charge if you contact Omnicare at the
following address:
Peter Laterza
Omnicare, Inc.
100 East RiverCenter Blvd.
Suite 1600
Covington, Kentucky 41011
(606) 392-3300
If you would like to request documents from Omnicare, please do so by
___________, 1999 to receive them before the completion of the merger.
YOU SHOULD RELY ONLY ON THE INFORMATION CONTAINED OR INCORPORATED BY
REFERENCE IN THIS PROSPECTUS. WE HAVE NOT AUTHORIZED ANYONE TO PROVIDE YOU WITH
INFORMATION THAT IS DIFFERENT FROM WHAT IS CONTAINED IN THIS PROSPECTUS. THIS
PROSPECTUS IS DATED _______ __, 1999. YOU SHOULD NOT ASSUME THAT THE INFORMATION
CONTAINED IN THIS PROSPECTUS IS ACCURATE AS OF ANY DATE OTHER THAN _________ __,
1999, AND NEITHER THE MAILING OF THE PROSPECTUS TO SHAREHOLDERS NOR THE ISSUANCE
OF OMNICARE SHARES IN THE MERGER SHALL CREATE ANY IMPLICATION TO THE CONTRARY.
3
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RISK FACTORS
In addition to general investment risks and those factors set forth
elsewhere in this prospectus (including under the caption "Forward-Looking
Information"), the following risks should be considered by shareholders of Boca.
RISKS RELATING TO THE MERGER
IF THE PRICE OF OMNICARE COMMON STOCK DECREASES, THEN THE VALUE OF THE
OMNICARE COMMON STOCK THAT BOCA SHAREHOLDERS WILL RECEIVE IN THE MERGER WILL
DECREASE. The number of Omnicare shares to be received in the merger for each
Boca share is fixed at 0.5047. Therefore, because the market price of Omnicare
shares is subject to fluctuation, the value at the time of the merger of the
consideration to be received by Boca shareholders will depend on the market
price of Omnicare at the time of the merger. There can be no assurance as to the
fair market value at the time of the merger of the consideration to be received
by Boca shareholders. If the price of the Omnicare shares decreases, the value
of the shares that Boca shareholders will receive will also decrease. For
historical and current market prices of Omnicare shares, see "Market Price
Information" and "Comparative Historical Per Share Data."
RISKS RELATING TO THE BUSINESS OF OMNICARE
WE MAY NOT BE ABLE TO ACQUIRE SUITABLE COMPANIES OR INTEGRATE ACQUIRED
COMPANIES INTO OUR BUSINESS. Our objective is to build our institutional
pharmacy business into a national organization dedicated to serving the
long-term care market. We have been engaged in a geographic expansion program
which includes an acquisition program in the long-term care pharmacy industry
and contract research industry. The success of our acquisition program and of
our underlying growth strategy will depend on the continued availability of
suitable acquisition candidates. Although we have not had difficulty identifying
suitable acquisition candidates in the past, there can be no assurance that we
will consummate any additional acquisitions in the future. This is due to the
potential for increased competition from other firms seeking to enhance their
institutional pharmacy or contract research businesses or enter this market
through acquisitions as well as volatility with respect to the valuation of
companies we may consider acquiring.
Our strategy also contemplates the continued internal growth of the
acquired businesses. However, any business acquisition that we consider involves
inherent uncertainties. These uncertainties include the effect on the acquired
businesses of integration into a larger organization and the availability of
management resources to oversee the operations of these businesses. The
successful integration of acquired businesses will require, among others, (1)
consolidation of financial and managerial functions and elimination of
operational redundancies, (2) achievement of purchasing efficiencies, (3) the
addition and integration of key personnel and (4) the maintenance of existing
business. Even though an acquired business may have enjoyed excellent growth as
an independent company prior to an acquisition, we cannot be sure that the
business will continue to have excellent growth after an acquisition.
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Historically, we have experienced no materially adverse consequences
arising from our integration activities. However, we cannot be sure of the
successful integration of any acquisition or that an acquisition will not have
an adverse impact on our results of operations or financial condition.
GOVERNMENT REGULATION MAY ADVERSELY AFFECT OUR BUSINESS. Our pharmacy
business is subject to federal, state and local regulations, and our pharmacies
are required to be licensed in the states in which they are located. The failure
to obtain or renew any required regulatory approvals or licenses could adversely
affect the continued operation of our business. In addition, the long-term care
facilities that contract for our services are also subject to federal, state and
local regulations and are required to be licensed in the states in which they
are located. The failure by these institutions to comply with these regulations
or to obtain or renew any required licenses could result in the loss of our
ability to provide pharmacy services to residents of the facilities. We are also
subject to federal and state laws that prohibit certain direct and indirect
payments between health care providers. These laws, commonly known as the fraud
and abuse laws, prohibit payments intended to induce or encourage the referral
of patients to, or the recommendation of, a particular provider of items or
services. Violation of these laws can result in loss of licensure, civil and
criminal penalties and exclusion from the Medicare, Medicaid and other federal
health care programs.
GOVERNMENT-SPONSORED PROGRAMS AND THIRD PARTY PAYORS MAY REDUCE PAYMENTS TO
US. Approximately one-half of our pharmacy services billings are reimbursed by
government sponsored programs. These programs include Medicaid and to a lesser
extent Medicare. The remainder of these bills are paid or reimbursed by
individual patients, long-term care facilities and other third party payors,
including private insurers. Medicaid and Medicare are highly regulated. The
failure, even if inadvertent, of us and/or our client institutions to comply
with these reimbursement regulations could adversely affect our business.
Our sales and profitability are affected by the efforts of all payors to
contain or reduce the cost of health care by lowering reimbursement rates,
limiting the scope of covered services, and negotiating reduced or capitated
pricing arrangements. Any changes which lower reimbursement levels under
Medicare, Medicaid or private pay programs, including managed care contracts,
could adversely affect us. Furthermore, other changes in these reimbursement
programs or in related regulations could adversely affect us. These changes may
include modifications in the timing or processing of payments and other changes
intended to limit or decrease the growth of Medicaid, Medicare or third party
expenditures.
HEALTH CARE REFORM AND FEDERAL BUDGET LEGISLATION MAY REDUCE PAYMENT TO US
OR OUR CUSTOMERS. In recent years, a number of legislative proposals have been
introduced in Congress that would effect major changes in the health care
system, either nationally or at the state level. The Balanced Budget Act signed
into law on August 5, 1997, seeks to achieve a balanced federal budget by, among
other things, reducing federal spending on the Medicare and Medicaid programs.
With respect to Medicare, the law mandates establishment of a prospective
payment system for Medicare skilled nursing facilities under which facilities
will be paid a federal per diem rate for virtually all covered skilled nursing
facility services, including ancillary services such as pharmacy. The
prospective payment system is being phased in over three cost reporting periods,
starting with cost reporting periods beginning on or after July 1, 1998. Prior
to the
5
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prospective payment system, skilled nursing facilities under Medicare received
cost-based reimbursement.
In the accompanying Conference Report, the conferees specifically noted
that the Secretary of the Department of Health and Human Services is to consider
the results of studies conducted by independent organizations, including those
which examine appropriate payment mechanism and payment rates for medications as
part of the prospective payment system for skilled nursing facilities. In
addition, the Secretary is to develop case mix adjustments that reflect the
needs of patients, particularly the frail elderly residing in skilled nursing
facilities. The Balanced Budget Act also imposes limits on annual updates in
payments to Medicare skilled nursing facilities for routine services. The
Balanced Budget Act institutes consolidated billing for skilled nursing facility
services for all non-physician Part B items and services for skilled nursing
facility residents no longer eligible for Part A skilled nursing facility care.
While this provision was to become effective July 1, 1998, it has been delayed
indefinitely.
The Balanced Budget Act also imposes numerous other cost savings measures
affecting Medicare skilled nursing facility services. On May 12, 1998, the
Health Care Financing Administration issued interim regulations to implement the
skilled nursing facility prospective payment system and consolidated billing
rules, including the rates that were in effect from July 1,1998 through
September 30, 1998. We believe the prospective payment system rates do not
adequately compensate skilled nursing facilities for the high medication costs
of some frail elderly Medicare beneficiaries. We, along with some other
companies, have submitted comments to the Health Care Financing Administration
on this issue recommending that the agency modify the payment system to account
for such costs.
The Balanced Budget Act also mandates that suppliers obtain a surety bond
as a condition of issuance or renewal of a Medicare Part B supplier number. In
January 1998, new rules were proposed to establish additional supplier
standards, including the requirement to obtain a surety bond. Under the
proposal, a supplier would be required to obtain a surety bond for each tax
identification number for which it has a Medicare supplier number.
The Balanced Budget Act also repealed the "Boren Amendment" federal payment
standard for Medicaid payments to Medicaid nursing facilities effective October
1, 1997. We are unable to predict whether budget constraints or other factors
will cause states to reduce Medicaid reimbursement to nursing facilities or
delay payments to nursing facilities. The law also grants states greater
flexibility to establish Medicaid managed care programs without the need to
obtain a federal waiver. Although these waiver programs generally exempt
institutional care, including nursing facility and institutional pharmacy
services, we cannot give assurances that these programs ultimately will not
change the reimbursement system for long-term care, including pharmacy services
from fee-for-service to managed care negotiated or capitated rates.
We anticipate that the federal and state governments will continue to
review and assess alternative health care delivery systems and payment
methodologies. While we have had only limited experience with the prospective
payment system, it has become increasingly apparent that the system has created
a much more turbulent environment for those serving skilled nursing facilities.
In particular, we have seen a weakening of Medicare census and, more
importantly, lower admissions of high acuity patients. This trend has adversely
impacted the outlook for Omnicare's near-term earnings. Over the long run we
believe that through continued implementation of our clinical programs, and
efforts to lower operating costs and increase efficiency, coupled with favorable
demographic trends, our prospects remain favorable. Nevertheless, it is not
possible to predict the ultimate effect of the prospective payment system and
other elements of the recent budget legislation or the interpretation or
administration of such legislation, including the adequacy and timeliness
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of payment to client facilities, on our business. Accordingly, we are unable to
predict whether these changes or any future health care legislation will
continue adversely to affect our business.
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. These states propose to use savings
achieved through these programs to expand coverage to those not previously
eligible for Medicaid. The Department of Health and Human Services has approved
waivers for statewide managed care demonstration projects in several states.
These demonstration projects generally exempt institutionalized care, including
nursing facility services, from the programs. Our operations have not been
adversely affected in states with managed care demonstration projects in effect.
We are unable to predict what impact, if any, future Medicaid managed care
systems might have on our operations.
It is uncertain at this time what additional 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. We
cannot predict whether future health care or budget legislation or other changes
will have an adverse effect on our business.
OMNICARE'S COMPETITION. The long-term care pharmacy business is highly
regionalized and highly competitive within each region. In the geographic
regions we serve, we compete with numerous local retail pharmacies, local and
regional institutional pharmacies and pharmacies owned by long-term care
facilities. We are the largest independent institutional pharmacy company in the
U.S. We compete in this market on the basis of quality, cost-effectiveness and
the increasingly comprehensive and specialized nature of our services along with
the clinical expertise, pharmaceutical technology and professional support we
offer.
In our program of acquiring institutional pharmacy providers and contract
research organizations, we compete with several other companies with similar
acquisition strategies, some of which may have substantial financial resources.
Our contract research organization business competes against other
full-service contract research organizations and client internal resources. The
contract research organization industry is highly fragmented with a number of
full-service contract research organizations and many small, limited-service
providers, some of which serve only local markets. Clients choose a contract
research organization based on, among others, reputation, references from
existing clients, the client's relationship with the such organization, the
organization's experience with the particular type of project and/or therapeutic
area of clinical development, the organization's ability to add value to the
client's development plan, the organization's financial stability and the
organization's ability to provide the full range of services required by the
client. We believe that we compete favorably in these respects.
7
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YEAR 2000 ISSUES COULD ADVERSELY AFFECT OMNICARE.
What is the Year 2000 Problem? Much of today's information technology
(e.g., computer systems) and embedded technology (e.g., microcontrollers)
identifies a particular year on the basis of the last two digits of the year.
For example, the year "1998" is recognized by the digits "98." The inability of
information technology and embedded technology to properly recognize a year that
begins with "20" instead of "19," if not corrected, may result in the failure of
systems (or the production of erroneous results) which rely on information
technology and embedded technology. This failure of systems, production of
erroneous results and the resulting damages is commonly known as the "Year 2000
Problem."
How does the Year 2000 Problem Impact Omnicare? We utilize information
systems throughout our business to carry out our day-to-day operations. Further,
we have and will continue to invest in financial and operational systems to
support our growth strategy. Incorporated in this process is the continuing
assessment of our Year 2000 compliance. We currently consider our internal
information technology systems to be substantially Year 2000 compliant. For
those systems that are not Year 2000 compliant, we are currently correcting,
upgrading or replacing those systems with, among other systems, our new
proprietary information system, which is Year 2000 compliant. We believe we will
be able to modify or replace our affected systems in time to avoid any
interruptions in our operations and anticipate 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. We estimate
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 through the first
quarter of 1999. The cost of this project will be funded from our operating cash
flows. No information technology projects with high priority have been
significantly delayed due to the Year 2000 initiatives. We do not anticipate any
significant implications with respect to Year 2000 issues relating to
non-information technology systems.
While we believe our plan for Year 2000 compliance will be completed on a
timely basis and within the foregoing estimates, we cannot predict whether the
remedial actions we are implementing will be completed in a timely manner; nor
can we give assurances that any inability to complete remedial action in a
timely manner will not impact adversely operations or financial results.
Moreover, we cannot give assurances that the costs associated with the
remediation will not exceed the foregoing estimates.
The failure by third parties with whom we have dealings, particularly the
Medicaid and Medicare programs, to adequately address their Year 2000 issues
could adversely affect us, and claims to these third party payors could be
unjustifiably denied and/or delayed. As a result, our accounts receivable
balance could increase, unfavorably impacting operating cash flows. We are
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. We
have 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 our management's current belief that this contingency plan
would
8
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satisfactorily address the risk associated with any absence of readiness
experienced by these programs, we cannot predict whether the implementation of
such a plan will mitigate in whole or in part this risk.
FORWARD-LOOKING INFORMATION
This prospectus contains and incorporates by reference certain statements
that constitute "forward-looking statements" within the meaning of the Private
Securities Litigation Reform Act of 1995. These forward-looking statements
include all statements regarding the intent, belief or current expectations
regarding the matters discussed or incorporated by reference in this prospectus
(including statements as to "beliefs," "expectations," "anticipations,"
"intentions" or similar words) and all statements which are not statements of
historical fact.
Such forward-looking statements involve known and unknown risks,
uncertainties, contingencies and other factors that could cause results,
performance or achievements to differ materially from those stated. Such risks,
uncertainties, contingencies, assumptions and other factors, many of which are
beyond the control of Omnicare, include without limitation:
overall economic, financial and business conditions,
the continued availability of suitable acquisition candidates, and the
consummation and successful integration of acquired companies,
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,
volatility in Omnicare's stock price,
the failure of Omnicare to obtain or maintain required regulatory approvals
or licenses,
the loss or delay of contracts pertaining to Omnicare's contract research
organization business for regulatory or other reasons,
the impact of consolidation in the pharmaceutical industry,
9
<PAGE>
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, and
other risks and uncertainties described in "Risk Factors" and Omnicare's
reports and filings with the SEC.
Should one or more of these risks or uncertainties materialize or should
underlying assumptions prove incorrect, Omnicare's actual results, performance
or achievements in 1999 and beyond could differ materially from those expressed
in, or implied by, such forward-looking statements. Readers are cautioned not to
place undue reliance on these forward-looking statements, which speak only as of
the date thereof. Omnicare does not undertake any obligation to publicly release
any revisions to these forward-looking statements to reflect events or
circumstances after the date hereof or to reflect the occurrence of
unanticipated events.
10
<PAGE>
OMNICARE SUMMARY SELECTED FINANCIAL DATA
OMNICARE AND SUBSIDIARIES
We derived the following summary selected financial data from Omnicare's
audited financial statements for 1994 through 1998 and unaudited financial
statements for the three months ended March 31, 1998 and 1999. References in the
notes to this table to Notes to Consolidated Financial Statements are to the
notes to consolidated financial statements included in our Annual Report on Form
10-K for the year ended December 31, 1998. The information is only a summary and
you should read it in conjunction with our historical financial statements (and
related notes) contained in the annual reports and other information we have
filed with the SEC. See "Where You Can Find More Information" on page 42.
<TABLE>
<CAPTION>
FOR THE THREE MONTHS
ENDED MARCH 31, FOR THE YEARS ENDED AND AT DECEMBER 31,
----------------------- ----------------------------------------------------------------
1999 1998 1998 1997 1996 1995 1994
---------- ---------- ---------- ---------- -------- -------- --------
INCOME STATEMENT DATA:(a)(b)(c) (in thousands, except per share data)
<S> <C> <C> <C> <C> <C> <C> <C>
Sales $ 445,688 $ 340,258 $1,517,370 $1,034,384 $641,440 $477,359 $365,640
========== ========== ========== ========== ======== ======== ========
Income (loss) from continuing
operations $ 27,807 $ 20,406 $ 80,379 $ 54,105 $ 43,663 $ 17,521 $ (6,557)
Loss from discontinued operations - - - (2,154)(d) (389)(d) (1,546)(d) (1,245)(d)
---------- ---------- ---------- ---------- -------- -------- --------
Net income (loss) 27,807 20,406 80,379 51,951(d) 43,274(d) 15,975(d) (7,802)(d)
Deemed dividend on preferred stock - - - - - (2,712)(e) -
---------- ---------- ---------- ---------- -------- -------- --------
Net income (loss) available to common
stockholders $ 27,807 $ 20,406 $ 80,379 $ 51,951(d) $ 43,274(d) $ 13,263(d)(e) $ (7,802)(d)
========== ========== ========== ========== ======== ======== ========
Earnings per share data:
Basic:
Income (loss) from continuing
operations available to common
stockholders $ 0.31 $ 0.23 $ 0.90 $ 0.63 $ 0.62 $ 0.26 $ (0.13)
Loss from discontinued operations - - - (0.02)(d) -(d) (0.02)(d) (0.03)(d)
---------- ---------- ---------- ---------- -------- -------- --------
Net income (loss) available to common
stockholders $ 0.31 $ 0.23 $ 0.90 $ 0.61(d) $ 0.62(d) $ 0.24(d)(e) $ (0.16)(d)
========== ========== ========== ========== ======== ======== ========
Diluted:
Income (loss) from continuing
operations available to common
stockholders $ 0.31 $ 0.23 $ 0.90 $ 0.62 $ 0.57 $ 0.26 $ (0.13)
Loss from discontinued operations - - - (0.02)(d) -(d) (0.02)(d) (0.03)(d)
---------- ---------- ---------- ---------- -------- -------- --------
Net income (loss) available to common
stockholders $ 0.31 $ 0.23 $ 0.90 $ 0.60(d) $ 0.57(d) $ 0.24(d)(e) $ (0.16)(d)
========== ========== ========== ========== ======== ======== ========
Dividends per share $ 0.0225 $ 0.0200 $ 0.08 $ 0.07 $ 0.06 $ 0.05 $ 0.045
========== ========== ========== ========== ======== ======== ========
Weighted average number of common
shares outstanding:
Basic 90,526 88,114 89,081 85,692 69,884 56,216 48,336
========== ========== ========== ========== ======== ======== ========
Diluted 90,881 89,085 89,786 86,710 81,089 69,406 60,509
========== ========== ========== ========== ======== ======== ========
BALANCE SHEET DATA: (a)(b)
Working capital $ 429,010 $ 364,801 $ 369,749 $ 354,825 $342,401 $112,091 $127,875
Total assets 2,003,040 1,455,064 1,903,829 1,412,146 828,309 405,312 359,886
Long-term debt (f)(g) 711,235 356,428 651,556 359,148 5,755 85,046 89,645
Stockholders' equity (h)(i) 1,000,411 868,651 963,471 829,753 689,219 228,853 194,074
</TABLE>
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<PAGE>
(a) The consolidated financial statements have been restated for the 1994 to
1997 periods to include the results of operations of CompScript, Inc.
("CompScript") and IBAH, Inc. ("IBAH"), acquired in June 1998
pooling-of-interests transactions.
(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) Included in the 1998 net income and 1997, 1996, 1995 and 1994 income from
continuing operations amounts are the following aftertax
pooling-of-interests expenses and nonrecurring and other charges (in
thousands):
<TABLE>
<CAPTION>
1998 1997 1996 1995 1994
-------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
Acquisition expenses, pooling-
of-interests $ 13,869(1) $ 3,935(1) $ 1,468(1) $ 989 $ 1,860
Nonrecurring expenses 2,689(2) 7,166(2) 510(2) - -
Other expense - 499(3) - - -
Goodwill impairment charge -
CompScript - - - 3,862 -
Write-off of acquired research
and development - IBAH - - - - 18,300
Loss on business start-up -
CompScript - - - - 368
-------- -------- ------- ------- --------
Total $ 16,558 $ 11,600 $ 1,978 $ 4,851 $ 20,528
======== ======== ======= ======= ========
</TABLE>
(1) See Note 2 of the Notes to Consolidated Financial Statements.
(2) See Note 13 of the Notes to Consolidated Financial Statements.
(3) See Note 14 of the Notes to Consolidated Financial Statements.
(d) Represents the closure of the software commercialization unit of Research
Biometrics, Inc., a subsidiary of IBAH, in 1997 and 1996 and the
divestiture of the Drug Delivery Services Division of IBAH in 1995 and
1994. All operating results of these businesses have been reclassified from
continuing operations to discontinued operations.
(e) On August 11, 1995, IBAH completed a private equity placement of
approximately 1,000 shares of convertible preferred stock, par value $.01
per share, at a purchase price of $7.003125 per share, for a total of
$6,935, net of transaction costs. Each share of convertible preferred stock
was convertible into three shares of common stock. All of the preferred
stock was converted to common stock before or in conjunction with the 1998
acquisition of IBAH by Omnicare. Since the convertible shares of preferred
stock were immediately convertible into common stock, the most beneficial
conversion discount was recorded analogous to a deemed dividend in the 1995
statement of income.
(f) In 1997, the Company issued $345,000 of Convertible Subordinated Notes due
2007 (See Note 6 of the Notes to Consolidated Financial Statements).
(g) In 1993, the Company issued $80,500 of Convertible Subordinated Notes due
2003 (See Note 6 of the Notes to Consolidated Financial Statements).
(h) In 1996, Omnicare and IBAH sold 6,241 (pre-1996 Omnicare stock split)
shares of common stock in public offerings, resulting in net proceeds of
$297,171 (See Note 7 of the Notes to Consolidated Financial Statements).
(i) In 1994, the Company sold approximately 6,495 shares of common stock in a
public offering, resulting in net proceeds of $59,211.
12
<PAGE>
BOCA SUMMARY SELECTED FINANCIAL DATA
The following summary selected financial data is only a summary and you
should read it in conjunction with the historical financial statements (and
related notes and other materials) we have included in this prospectus relating
to Boca, including "Business of Boca" (see pages 35 through 37), "Boca
Management's Discussion and Analysis of Financial Conditions and Results of
Operations" (see pages 38 through 41) and "Boca Financial Information" (see
pages F-1 through F-12).
<TABLE>
<CAPTION>
FOR THE THREE MONTHS ENDED FOR THE YEARS ENDED AND AT DECEMBER 31,
AND AT MARCH 31,
--------------------------- ---------------------------------------------------------------------
1999 1998 1998 1997 1996 1995 1994
- --------------------------------------------------------- ---------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
INCOME STATEMENT DATA:
Sales $ 3,600,898 $ 3,381,985 $ 14,197,047 $11,811,525 $ 11,451,246 $ 10,936,243 $8,903,089
- ---------------------------------------------------------------------------------------------------------------------------------
Income (loss) for 502,760 413,555 1,627,859 (45,139) (342,514) 389,348 (3,507,520)
operations
Net income (loss) 342,688 271,583 1,068,705 (3,956) (91,833) 106,790 (3,640,799)
- ---------------------------------------------------------------------------------------------------------------------------------
Earnings per share data:
Basic and Diluted $ 0.17 $ 0.13 $ 0.52 $ - $ (0.04) $ 0.05 $ (1.78)
- ---------------------------------------------------------------------------------------------------------------------------------
Dividends per share $ - $ - $ - $ - $ - $ - $ -
- ---------------------------------------------------------------------------------------------------------------------------------
Weighted average number
of common shares
outstanding:
Basic and Diluted 2,066,840 2,066,840 2,066,840 2,066,840 2,060,090 2,039,840 2,039,840
- ---------------------------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------------------------
BALANCE SHEET DATA:
- ---------------------------------------------------------------------------------------------------------------------------------
Working capital $ 3,972,427 $ 2,848,835 $ 3,753,344 $ 2,254,938 $ 2,821,407 $ 1,801,277 $1,802,694
Total assets 6,117,043 6,846,771 5,762,640 5,392,565 5,561,716 3,721,190 7,504,470
Stockholders' equity 5,060,558 3,920,768 4,717,890 3,649,185 3,653,141 3,527,235 3,420,445
- ---------------------------------------------------------------------------------------------------------------------------------
</TABLE>
13
<PAGE>
MARKET PRICE INFORMATION
The Omnicare shares are listed on the NYSE under the symbol "OCR". The Boca
shares are not traded in any established market. The following table shows the
closing price of the Omnicare shares on June 16, 1999, the last trading day
prior to the adoption of the Plan of Merger. The table also shows the market
value of the Omnicare shares that a Boca shareholder would have received for one
Boca share assuming the merger had taken place on that date. The number has been
calculated by multiplying 0.5047, the exchange ratio in the merger, by the
closing price per Omnicare share. The actual value of the Omnicare shares
received in the merger may be higher or lower.
<TABLE>
<CAPTION>
Equivalent Market
Omnicare Value of
Closing Price Boca Shares
------------- -----------
<S> <C> <C>
June 16, 1999 $16.0625 $8.1067
</TABLE>
The following table shows the high and low sales prices of Omnicare shares
on the NYSE and the cash dividends paid or declared per share for the periods
presented based on published financial sources. No dividends were paid on the
Boca shares during these periods.
<TABLE>
<CAPTION>
HIGH LOW DIVIDENDS
------ ----- ---------
<S> <C> <C> <C>
1997
First Quarter................................. $32 1/4 $23 1/2 $.0175
Second Quarter................................ 31 5/8 22 3/8 .0175
Third Quarter................................. 32 1/2 26 9/16 .0175
Fourth Quarter................................ 34 9/16 26 .0175
1998
First Quarter................................. 39 13/16 28 1/8 .02
Second Quarter ............................... 39 11/16 32 1/8 .02
Third Quarter ................................ 41 9/16 28 1/4 .02
Fourth Quarter ............................... 34 15/16 25 .02
1999
First Quarter................................. 36 3/16 16 1/8 .0225
Second Quarter (through June 15).............. 28 3/4 16 11/16 .0225
</TABLE>
14
<PAGE>
COMPARATIVE HISTORICAL PER SHARE DATA
The following table shows information on the net income, book value and
dividends declared per common share for Omnicare and Boca on a historical basis
and equivalent Boca basis. The Boca equivalent amounts were calculated by
multiplying the Omnicare per share amounts by 0.5047. Boca shareholders will
receive 0.5047 Omnicare shares in the merger in exchange for each Boca share.
The merger will have no pro forma effect on Omnicare which would affect the
amounts disclosed below.
<TABLE>
<CAPTION>
HISTORICAL
--------------------- BOCA
OMNICARE BOCA EQUIVALENT
-------- ---- ----------
<S> <C> <C> <C>
COMPARATIVE PER SHARE DATA:
Net Income:
Year ended December 31, 1998
Basic $0.90 $0.52 $0.45
Diluted 0.90 0.52 0.45
Three months ended March 31, 1999
Basic 0.31 0.17 0.16
Diluted 0.31 0.17 0.16
Book value per share:
December 31, 1998 10.67 2.29 5.39
March 31, 1999 11.03 2.46 5.57
Cash dividends declared per share:
Year ended December 31, 1998 0.08 0 0.04
Three months ended March 31, 1999 0.0225 0 0.0114
</TABLE>
15
<PAGE>
THE MERGER
BACKGROUND OF THE MERGER
During late 1995, representatives of CompScript (then known as Capital
Brands, Inc.) were introduced to the management of Boca (then known as
CompScript, Inc. and previously known as AldenCare, Inc.), with a view towards
consummating a business combination. These discussions led to the execution of
a letter of intent on January 2, 1996, followed by the execution of a definitive
Share Exchange Agreement on February 29, 1996.
The Share Exchange Agreement provided for the issuance of shares of
CompScript to certain shareholders of Boca in exchange for their Boca shares, at
an exchange ratio of 3.898373 shares of CompScript for each share of Boca.
Shareholders were selected to participate in the exchange so as to avoid the
necessity of registering the exchange with the SEC.
The Share Exchange Agreement closed on April 26, 1996. As a result of
the exchange, the shareholders of Boca who exchanged their shares became the
owners of approximately 80% of CompScript's shares and CompScript became the
owner of approximately 92% of the Boca shares.
In July 1997, CompScript filed a registration statement on Form S-4
with the SEC to register the exchange of CompScript shares for the remaining
Boca shares. The exchange ratio for this transaction would have been the
exchange ratio contemplated by the Share Exchange Agreement. Over the next
several months, CompScript responded to Commission comments on this registration
statement.
In February 1998, Omnicare and CompScript executed a merger agreement
which provided that a subsidiary of Omnicare would merge with CompScript, each
CompScript share would be converted into the right to receive Omnicare shares
and CompScript would become a wholly-owned subsidiary of Omnicare. As a result,
the contemplated exchange offer was abandoned. The merger of CompScript with a
subsidiary of Omnicare closed in late June 1998 at an exchange ratio of 0.12947
Omnicare shares for each CompScript share.
On ___________, 1999, the date of this prospectus, CompScript
contributed its Boca shares to a newly formed wholly-owned subsidiary, Boca
Acquisition Corp. ("Mergeco") and Mergeco adopted the Plan of Merger under which
each Boca share (other than those held by Mergeco or shareholders who properly
exercise dissenters rights under Florida law) will be exchanged for 0.5047
Omnicare shares.
REASONS FOR THE MERGER
As a result of the merger, holders of Boca shares (other than Mergeco
and Boca shareholders that properly exercise dissenters' rights) will become
holders of Omnicare shares. Omnicare is a NYSE listed company with a substantial
market capitalization. There is no active trading market for Boca shares. The
Omnicare shares holders receive in the merger should provide holders with a much
greater degree of liquidity than their Boca shares. However,
16
<PAGE>
there can be no assurances as to the value or liquidity of the Omnicare shares.
See "Risk Factors."
PLAN OF MERGER
This section highlights selected information from the Plan of Merger.
To better understand the merger and for a more complete description of the terms
of the merger, you should read carefully the Plan of Merger which is reprinted
as Appendix A to this prospectus and is incorporated herein by reference.
The Effective Time of the Merger. As required by Florida law, the
merger will be completed no earlier than 30 days after the mailing of this
prospectus and the Plan of Merger to Boca shareholders. The merger will be
complete when Mergeco files Articles of Merger with the Florida Department of
State and the Florida Department of State accepts the Articles of Merger. We
anticipate the Articles of Merger will be filed on ________ __, 1999.
Conditions to the Merger. CompScript will not be obligated to close
the merger if there is an injunction or law prohibiting the merger, any legal
action challenging the merger or any stop order or Commission proceeding for
such purpose. In addition, CompScript has the right to abandon the merger.
CompScript may exercise this right at any time prior to the closing of the
merger.
Exchange of Boca Shares for Omnicare Shares. Enclosed with this
prospectus is a letter of transmittal to be used to exchange your Boca share
certificates for Omnicare share certificates.
Upon surrender to the Exchange Agent of your certificate of Boca
shares, together with the properly completed and signed letter of transmittal,
you will be entitled to receive
(a) the number of Omnicare shares which you have the right to receive,
(b) any cash payable in lieu of fractional shares,
(c) any dividends or other distributions on the Omnicare shares with a
record date after the date the merger is completed and which are payable on
or prior to the date you surrender your Boca shares,
(d) less the amount of any applicable withholding taxes.
No interest will be paid to you on any of these amounts.
Holders of unexchanged Boca shares will not be entitled to receive any
dividends or other distributions payable by Omnicare until all of their
certificates are surrendered. Upon surrender, however, subject to applicable
laws, the holders will receive accumulated dividends and distributions, without
interest, together with cash in lieu of fractional shares, less the amount of
any applicable withholding taxes.
17
<PAGE>
No Omnicare shares will be distributed until the merger closes. If the
merger does not close, your Boca stock certificates will be returned to you.
MATERIAL UNITED STATES FEDERAL INCOME TAX CONSEQUENCES OF THE MERGER
The following discussion summarizes the material federal income tax
consequences generally applicable to holders of Boca shares who exchange their
Boca shares solely for Omnicare shares pursuant to the merger. There can be no
assurance that the Internal Revenue Service will not take a contrary view, and
neither Omnicare nor Boca has requested, or will request, a ruling from the
Internal Revenue Service on the tax consequences of the merger. The discussion
below is based on the Internal Revenue Code of 1986, as amended (the "Code"),
existing regulations issued under the Code, judicial authority and current
administrative rulings and practice, all as in effect as of the date hereof.
Future legislative, judicial or administrative changes or interpretations could
alter or modify the statements and conclusions set forth below. Any such changes
or interpretations could have retroactive effect and could affect the federal
income tax consequences of the merger to holders of Boca shares. The following
discussion does not address the consequences of the merger under state, local or
foreign law nor does the discussion address all aspects of federal income
taxation that may be important to you in light of your particular circumstances.
Further, the discussion does not address all aspects of federal income taxation
that may be applicable to certain holders of Boca shares that are subject to
special rules, such as:
holders who are not United States persons;
financial institutions;
tax-exempt organizations;
insurance companies;
dealers or brokers in securities;
holders who pledge their stock as part of a hedge, appreciated
financial position, straddle or conversion transaction; or
holders who acquired their Boca shares pursuant to the exercise of
employee stock options or otherwise as compensation.
Moreover, this discussion assumes that Boca shareholders hold their
Boca shares as capital assets.
Exchange Of Boca Shares For Omnicare Shares. Except as discussed below
under "Cash Received in Lieu of Fractional Shares," no gain or loss should be
recognized for federal income tax purposes by holders of Boca shares who
exchange their Boca shares solely for Omnicare shares pursuant to the merger.
The aggregate tax basis of Omnicare shares received as a result of the merger
should be the same as the shareholder's aggregate tax basis in the Boca shares
surrendered in the exchange (reduced by any tax basis allocable to fractional
shares for which cash is received) and the holding period of the Omnicare shares
received should include the holding period of the Boca shares surrendered
therefor.
Cash Received In Lieu Of Fractional Shares. The payment of cash to a
holder of Boca shares in lieu of a fractional share interest in Omnicare shares
should be treated as if the fractional share had been distributed as part of the
exchange and then redeemed by Omnicare.
18
<PAGE>
The cash payment should be treated as having been received as a distribution in
payment for the Omnicare shares hypothetically redeemed as provided in section
302 of the Code. This hypothetical redemption should generally result in the
recognition of capital gain or loss measured by the difference between the
amount of cash received and the portion of the tax basis of the Boca shares
allocable to such fractional share interest. In the case of individuals, capital
gains in respect of capital assets held for more than one year are eligible for
reduced rates of taxation.
Dissenters. A dissenting shareholder generally will recognize capital
gain or loss for U.S. federal income tax purposes, measured as the difference
between the shareholder's tax basis in the Boca shares and the amount of cash
received (other than the amount of cash received, if any, that is, or is deemed
to be, interest for federal income tax purposes (which amount will be taxed as
ordinary income)). In the case of individuals, capital gains in respect of
capital assets held for more than one year are eligible for reduced rates of
taxation.
Reporting Requirements. Holders of Boca shares receiving Omnicare
shares in the merger will be required to retain records and file with their
federal income tax returns a statement setting forth certain facts relating to
the merger.
Backup Withholding. Unless an exemption applies under the applicable
law and regulations, the Exchange Agent is required to withhold, and will
withhold, 31% of any cash payments to a Boca shareholder in the merger unless
the shareholder provides the appropriate form as described below. Unless an
applicable exemption exists and is proved in a manner satisfactory to Omnicare
and the Exchange Agent, each Boca shareholder should complete and sign the
Substitute Form W-9 included as part of the letter of transmittal to be sent to
each Boca shareholder, so as to provide the information (including the
shareholder's taxpayer identification number) and certification necessary to
avoid backup withholding.
THIS DISCUSSION OF THE MATERIAL FEDERAL INCOME TAX CONSEQUENCES OF THE
MERGER IS WITHOUT REFERENCE TO THE FACTS AND CIRCUMSTANCES OF ANY PARTICULAR
SHAREHOLDER AND IS NOT TAX ADVICE. THIS DISCUSSION DOES NOT ADDRESS ANY
NON-INCOME TAX OR ANY FOREIGN, STATE OR LOCAL TAX CONSEQUENCES OF THE MERGER.
MOREOVER, THIS DISCUSSION DOES NOT ADDRESS THE TAX CONSEQUENCES OF ANY
TRANSACTION OTHER THAN THE MERGER. ACCORDINGLY, EACH SHAREHOLDER IS URGED TO
CONSULT WITH SUCH SHAREHOLDER'S TAX ADVISOR TO DETERMINE THE PARTICULAR FEDERAL,
STATE, LOCAL OR FOREIGN INCOME OR OTHER TAX CONSEQUENCES OF THE MERGER TO SUCH
SHAREHOLDER.
DISSENTER'S RIGHTS
As a holder of Boca shares, you are entitled to dissenter's rights
under Florida law. The following discussion summarizes these rights. The full
text of the applicable provisions of the Florida Business Corporation Act has
been reprinted in Appendix B to this prospectus. The Florida Business
Corporation Act is sometimes referred to as the FBCA. If you are considering
exercising your dissenter's rights you should review carefully these provisions
since you will lose your dissenter's rights if you do not fully and precisely
satisfy the procedural requirements under these provisions of the FBCA.
19
<PAGE>
If you exercise dissenter's rights, you will not be entitled to
receive any Omnicare shares in the merger and will only be entitled to your
rights under the dissenters' rights provisions of the FBCA.
This prospectus serves as notice to you of your ability to dissent
from the merger and to receive "fair value" for your shares if you comply with
the provisions of Florida law regarding the rights of dissenting shareholders.
This is a summary of the dissenters' process:
WRITTEN DEMAND. If you elect to dissent, you must file with Boca a
notice of such election within 20 days of the day we send you this prospectus.
The notice must state your name and address, the number of Boca shares as to
which you dissent and a demand for payment of the fair value of your Boca
shares. If you file an election to dissent you must deposit your stock
certificates with Boca simultaneously with the filing of the election to
dissent.
ONLY A HOLDER OF RECORD OF BOCA SHARES IS ENTITLED TO ASSERT
DISSENTERS' RIGHTS for the Boca shares registered in that holder's name. A
notice of intent to demand payment for Boca shares must be exercised by or on
behalf of the holder of record, fully and correctly, as his name appears on his
stock certificates. If the Boca shares are owned of record in a fiduciary
capacity, such as by a trustee, guardian or custodian, execution of the notice
should be made in that capacity. If the Boca shares are owned of record by more
than one person, as in a joint tenancy or tenancy in common, the notice should
be executed by or on behalf of all joint owners. An authorized agent, including
one or two or more joint owners, may execute a notice on behalf of a holder of
record. However, the agent must identify the record owner or owners and
expressly disclose the fact that he is acting as agent for such owner or owners.
If a broker or other record holder holds Boca shares as nominee for several
beneficial owners he may exercise dissenters' rights with respect to some of the
shares held, while not exercising such rights with respect to others. In such
case, the notice should set forth the number of Boca shares as to which
dissenters' rights are sought. Where no number of Boca shares is expressly
mentioned, Boca will presume the demand covers all Boca shares held in the name
of the record owner.
If your Boca shares are held in brokerage accounts or other nominee
forms and you wish to exercise dissenters' rights, we urge you to consult with
your brokers to determine the appropriate procedures for the making of a notice
of intent to demand payment for the Boca shares held by your nominee.
WITHDRAWAL. You may withdraw your notice of election in writing at any
time before an offer is made by Boca to pay for your Boca shares. After the
offer, no notice of election may be withdrawn unless Boca consents to the
withdrawal. Since Boca is entitled to make an offer at any time, you should not
assume that you will be able to withdraw your demand for dissenter's rights.
BOCA OFFER. Within ten days after the expiration of the period in
which shareholders may file their notices of election to dissent, or within ten
days after the completion of the merger, whichever is later (but in no case
later than ___________, 1999, ninety days from
20
<PAGE>
the day before this prospectus was mailed), Boca will make a written offer to
each dissenting shareholder who has made a demand. The offer will be to pay an
amount Boca estimates to be the fair value for such Boca shares. The fair value
determined will reflect the value of the Boca shares prior to the merger. The
notice and offer will include a balance sheet of Boca as of the latest available
date, and a profit and loss statement of Boca for the 12-month period ended on
the date of the balance sheet.
ACCEPTING THE BOCA OFFER. If within thirty days after Boca makes an
offer, you accept the offer, Boca will pay you for your Boca shares within
ninety days after the making of the offer or the consummation of the merger,
whichever is later. Upon payment of the agreed value, you will cease to have
any interest in such Boca shares.
COURT ACTION. Boca may file an action in any court of competent
jurisdiction in Palm Beach County, Florida requesting the fair value of the Boca
shares to be determined. If Boca fails to institute such a proceeding, any
dissenting shareholder may do so in the name of Boca. The court will also
determine whether you are entitled to receive payment for your Boca shares.
Boca is required to file the action within thirty days after receipt
of written demand from you given within sixty days after the consummation of the
merger if
1. Boca fails to make an offer for the fair value of your Boca
shares within the period specified in "Boca Offer" above, or
2. Boca makes the offer and you fail to accept the offer within
the period of thirty days that follows.
In addition, at any time within sixty days after the consummation of
the merger Boca shall have the right to file the action.
All dissenting shareholders (whether or not residents of the State of
Florida), other than those who have agreed with Boca as to the value of their
Boca shares, will be made parties to the proceeding. Boca must pay to each
dissenting shareholder the amount found to be due him within ten days after
final determination of the proceedings. Upon payment of the judgement, the
dissenting shareholders will cease to have any interest in such Boca shares.
FAIR VALUE. If you are considering seeking dissenters' rights you
should be aware that the fair value of your Boca shares as determined under
Section 607.1320 of the FBCA could be more than, the same as, or less than the
consideration you would receive pursuant to the Plan of Merger if you did not
seek to demand payment of your Boca shares.
Any judicial determination of the "fair value" of the Boca shares can
be based on numerous considerations, including, but not limited to, the market
value of the Boca shares prior to the merger and the net asset value and
earnings value of the Boca shares. The costs and expenses of any judicial
proceeding will be determined by the court and will be assessed against Boca.
However, if the court finds that the action of dissenting shareholders in
failing to accept an offer from Boca was arbitrary, vexatious, or not in good
faith, all or any part of these costs and
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expenses may be apportioned and assessed by the court against any or all of the
dissenting shareholders.
If you wish to exercise your right to dissent and you follow the
procedure set forth in Section 607.1320 of the FBCA you will be entitled to
receive payment of the "fair value" of your Boca shares. "Fair value" is defined
by the FBCA to be the value of the Boca shares at the close of business on
___________, 1999, the day before the mailing of this prospectus. Any
appreciation or depreciation of value in anticipation of the merger is excluded
from the definition of "fair value" unless exclusion would be inequitable.
TAX CONSEQUENCES. The receipt of cash pursuant to dissenter's rights
will be taxable. The receipt of Omnicare shares in the merger should not be
taxable (although cash in lieu of fractional shares should be taxable). See "The
Merger -- Certain Federal Income Tax Consequences of the Merger" for more
information.
TERMINATION. Dissenters' rights will terminate if the merger is not
completed. They will also terminate as to a shareholder if (1) the shareholder
properly withdraws a demand for dissenters' rights, (2) no actions are filed
with a court as provided by the FBCA or (3) a court of competent jurisdiction
determines the shareholder is not entitled to dissenter's rights.
COMPARISON OF SHAREHOLDER RIGHTS
Omnicare is incorporated under the laws of the State of Delaware. Boca
is incorporated under the laws of the State of Florida. The holders of Boca
shares whose rights as shareholders are currently governed by Florida law, the
Articles of Incorporation of Boca, as amended, and the Bylaws of Boca, as
amended, will, upon the exchange of their shares pursuant to the merger, become
holders of Omnicare shares, and their rights as such will be governed by
Delaware law, the Restated Certificate of Incorporation of Omnicare, as amended
and the Amended Bylaws of Omnicare. The material differences between the rights
of holders of Boca shares and the rights of holders of Omnicare shares, which
result from differences in their governing corporate documents and differences
in Delaware and Florida corporate law, are summarized below.
The following summary is not intended to be complete and is qualified
in its entirety by reference to the FBCA, the Delaware General Corporation Law,
the Boca Articles, the Boca Bylaws, the Omnicare Certificate and the Omnicare
Bylaws, as appropriate. The Delaware General Corporation Law is sometimes
referred to as the DGCL. The identification of specific differences is not meant
to indicate that other equally or more significant differences do not exist.
Copies of the Boca Articles, the Boca Bylaws, the Omnicare Certificate and the
Omnicare Bylaws are incorporated by reference herein and will be sent to holders
of Boca shares upon request. See "Where You Can Find More Information."
AUTHORIZED CAPITAL
The Boca Articles provide for authorized stock consisting of
10,000,000 Boca shares, no par value.
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The Omnicare Certificate provides for authorized stock consisting of
200,000,000 Omnicare shares, $1.00 par value, and 1,000,000 shares of Omnicare
Preferred Stock, without par value.
ELECTION AND SIZE OF BOARD OF DIRECTORS
The FBCA requires that a board of directors consist of one or more
natural persons who are at least 18 years of age, with the precise number
specified in or fixed by a corporation's articles of incorporation or bylaws.
The FBCA permits staggered boards of directors of up to three separate classes
if authorized in the articles of incorporation. Neither the Boca Articles nor
the Boca Bylaws provide for a classified board of directors.
The Boca Bylaws provide that the number of Directors shall be three or
such larger number as may be agreed upon by the Board.
Under Delaware law, directors, unless their terms are staggered, are
elected at each annual shareholder meeting. Vacancies on the board of directors
may be filled by the shareholders or directors, unless the certificate of
incorporation or a bylaw provides otherwise. The certificate of incorporation
may authorize the election of certain directors by one or more classes or series
of shares, and the certificate of incorporation, an initial bylaw or a bylaw
adopted by a vote of the shareholders may provide for staggered terms for the
directors. The certificate of incorporation or the bylaws also may allow the
shareholders or the board of directors to fix or change the number of directors,
but a corporation must have at least one director. Under Delaware law,
shareholders do not have cumulative voting rights unless the certificate of
incorporation so provides.
The Omnicare Bylaws provide that directors are elected by a vote of a
majority of the directors then in office (whether or not sufficient in number to
constitute a quorum), or by a sole remaining director, or by a plurality of the
votes cast at the meeting of shareholders held for that purpose.
The Omnicare Bylaws provide for a non-staggered Board of Directors
which shall consist of not less than 3 nor more than 30 directors, each serving
one year terms. The exact number shall be fixed by resolution of the Board of
Directors. The Omnicare Board is currently comprised of 13 directors each
serving until the next annual meeting of shareholders and until their respective
successors are elected or appointed. The Omnicare Bylaws provide that the size
of the Omnicare Board may be increased by the vote of a majority of directors
then in office, although less than a quorum, or by the affirmative vote of the
holders of a majority of the outstanding shares of all classes of stock entitled
to vote on the increase.
REMOVAL OF DIRECTORS
The FBCA entitles shareholders to remove directors either for cause or
without cause, unless the articles of incorporation provide that removal may be
only for cause. Directors elected by a particular voting group may only be
removed by the shareholders of that voting group. The Boca Bylaws provide that
any director may be removed, with or without cause at an annual or at a special
shareholders meeting called for that purpose.
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Under the DGCL, a director of a corporation that does not have a
classified board of directors or cumulative voting may be removed (with or
without cause) with the approval of a majority of the outstanding shares
entitled to vote. The Omnicare Certificate provides that a director may be
removed without cause only by the holders of two-thirds of the shares then
entitled to vote at the election of directors. The term "cause" means (a)
negligence or misconduct in the director's performance if he did not act in good
faith and in a manner which he reasonably believed to be in the best interests
of Omnicare, or (b) the commission of an unlawful act which he had reasonable
cause to believe was unlawful.
VACANCIES ON THE BOARD OF DIRECTORS
The FBCA provides that, unless the articles provide otherwise,
vacancies arising on the board of directors may be filled by a majority of the
remaining directors, even if no quorum remains, or by the shareholders. When
directors are divided into classes, vacancies may be filled by the shareholders
or, if at least one director remains in the class, by the remaining directors of
that class. Where a vacancy will be known to occur at some point in the future,
it may be filled in advance, although the new director will not take office
until the vacancy actually occurs. The Boca Bylaws provide that any vacancies on
the Boca board resulting from an increase in the authorized number of directors
may be filled by a majority of shareholders. Vacancies resulting from any other
cause may be filled by a majority of directors then in office whether or not
sufficient to constitute a quorum and the directors so chosen shall hold office
until the next annual meeting and until their successors are elected and
qualified. If there are no directors in office, then an election of directors
may be held in the manner provided by statute.
Under Delaware law, the board of directors of a corporation may fill
any vacancy on the board, including vacancies resulting from an increase in the
number of directors. The Omnicare Bylaws provide that any vacancy whether caused
by resignation, removal, death or any other reason, and newly created
directorships resulting from any increase in the authorized number of directors,
may be filled either by a majority vote of the directors then remaining in
office (whether or not sufficient in number to constitute a quorum), or by a
sole remaining director, or by a plurality of the votes cast at the meeting of
shareholders held for that purpose. In the event that one or more directors
shall resign from the Omnicare board, effective at a future date, a majority of
the directors then in office, including those who have so resigned effective at
a future date, shall have power to fill the vacancy or vacancies which will
result when such resignation or resignations become effective, the vote thereon
to take effect when such resignation or resignations become effective.
ACTION BY WRITTEN CONSENT
The Boca Bylaws provide that action of shareholders may be taken
without a meeting if signed written consents are obtained from all shareholders
entitled to vote on the issue.
The Omnicare Bylaws allow any action required or permitted to be taken
at a meeting of shareholders to be taken without a meeting, without prior notice
and without a vote, if consents in writing, setting forth the action so taken,
are signed by the holders of record of shares
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having not less than the minimum voting power that would have been necessary to
take such action at a meeting at which all common stock entitled to vote thereon
were present and voted.
AMENDMENTS TO CHARTER
Amendments to all sections of the Boca Articles are governed by the
FBCA, which generally requires approval by a majority of directors and by
holders of a majority of the shares entitled to vote on the amendment. The board
of directors must recommend the amendment to the shareholders, unless the board
of directors determines that because of conflict of interest or other special
circumstances it should make no recommendation and communicates the basis for
its determination to the shareholders with the amendment.
Under Delaware law, unless a higher vote is required in the
certificate of incorporation, an amendment to the certificate of incorporation
of a corporation may be approved by a majority of the outstanding shares
entitled to vote upon the proposed amendment. The Omnicare Certificate provides
that the provisions of the Omnicare Certificate may be amended or repealed in
the manner provided by law, except that the approval of two-thirds of each class
entitled to vote thereon is required to amend or repeal the provisions of the
Omnicare Certificate relating to (a) the power of the Omnicare board to amend or
repeal the Omnicare Bylaws, (b) business combinations with interested
shareholders described in "Vote on Extraordinary Corporate Transactions;
Business Combination Restrictions" below, (c) removal of directors without
cause, (d) directors' liability, and (e) indemnification of directors, officers
and employees.
AMENDMENTS TO BYLAWS
Under the FBCA, bylaws may be amended by the directors or the
shareholders unless the articles of incorporation expressly provide that only
shareholders may do so. Bylaws adopted by the shareholders may provide that they
may not be amended or repealed by the directors. The Boca Bylaws may be repealed
or amended and new bylaws may be adopted by an action of the whole board or by
affirmative vote of the shareholders representing a majority of the voting
stock, at an annual or special meeting of the shareholders or the board provided
notice of the proposed alteration, amendment, repeal or adoption is contained in
the notice of the annual or special meeting.
The DGCL provides that a corporation's bylaws may be amended by that
corporation's shareholders, or, if so provided in the corporation's certificate
of incorporation, the power to amend the corporation's bylaws may also be
conferred on the corporation's directors. The Omnicare Certificate permits the
Omnicare board to make, alter or repeal the Omnicare Bylaws. The Omnicare Bylaws
permit the bylaws to be altered, amended or repealed and new bylaws to be made
and adopted by action of a majority of the whole Omnicare board or by the
shareholders.
SPECIAL MEETINGS OF SHAREHOLDERS
Under the FBCA, a special meeting of shareholders may be called by a
corporation's board of directors or any other person authorized to do so in the
articles of
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incorporation or bylaws. Special meetings may also be called on demand of at
least 10% of all shares eligible to vote on the matter to be considered,
although this percentage may be increased in the articles of incorporation to a
maximum of 50%. Only business within the purpose of the special meeting notice
may be conducted at such meeting. The Boca Bylaws provide that special meetings
may be called by the board at the request in writing of a majority of the board
or by the shareholders entitled to cast at least 20% of all votes entitled to be
cast at such meeting.
Delaware law provides that special meetings of the shareholders of a
corporation may be called by the corporation's board of directors or by such
other persons as may be authorized in the corporation's certificate of
incorporation or bylaws. The Omnicare Bylaws state that special shareholders'
meetings may be called at any time by the Chairman, the President or the
Secretary and must be called by the aforementioned upon the written request of
the majority of the Omnicare board or of the holders of record of a majority of
the stock then entitled to vote for the election of directors.
INSPECTION OF DOCUMENTS
Under the FBCA, a shareholder is entitled to inspect and copy the
articles of incorporation, bylaws, certain board and shareholder resolutions,
certain written communications to shareholders, a list of the names and business
addresses of the corporation's directors and officers, and the corporation's
most recent annual report, during regular business hours if the shareholder
gives at least five business days' prior written notice to the corporation. In
addition, a shareholder of a Florida corporation is entitled to inspect and copy
other books and records of the corporation during regular business hours if the
shareholder gives at least five business days' prior written notice to the
corporation and (a) the shareholder's demand is made in good faith and for a
proper purpose, (b) the shareholder describes with particularity his or her
purpose and the records to be inspected or copied and (c) the requested records
are directly connected with such purpose. The FBCA also provides that a
corporation may deny any demand for inspection if the demand was made for an
improper purpose or if the demanding shareholder has, within two years preceding
such demand, sold or offered for sale any list of shareholders of the
corporation or any other corporation, has aided or abetted any person in
procuring a list of shareholders for such purpose or has improperly used any
information secured through any prior examination of the records of the
corporation or any other corporation.
The DGCL allows any shareholder, upon written demand under oath
stating the purpose thereof, the right during the usual hours for business to
inspect for any proper purpose the corporation's stock ledger, a list of its
shareholders, and its other books and records, and to make copies or extracts
therefrom. A proper purpose means a purpose reasonably related to such person's
interest as a shareholder.
DIVIDENDS
The FBCA permits a corporation's board of directors to make
distributions to its shareholders so long as the corporation is not left unable
to pay its debts as they become due in the usual course of business, or the
corporation is not left with total assets that are less than the sum of the
corporation's total liabilities plus its obligations upon dissolution to satisfy
preferred
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shareholders whose preferential rights are superior to those receiving the
distribution. Under the FBCA, a corporation's redemption of its own capital
stock is deemed to be a distribution.
The Boca Bylaws provide that the Boca board may from time to time
declare and pay dividends on its outstanding shares in cash, property, or its
own shares pursuant to law and subject to provisions of it's the Boca Articles.
Subject to any restrictions contained in a corporation's certificate
of incorporation, Delaware law generally provides that a corporation may declare
and pay dividends out of "surplus" (defined as the excess, if any, of net assets
(total assets less total liabilities) over capital) or, when no surplus exists,
out of net profits for the fiscal year in which the dividend is declared and/or
the preceding fiscal year, except that dividends may not be paid out of net
profits if the capital of the corporation is less than the amount of capital
represented by the issued and outstanding stock of all classes having a
preference upon the distribution of assets. In accordance with the DGCL,
"capital" is determined by the board of directors and shall not be less than the
aggregate par value of the outstanding capital stock of the corporation having
par value.
INDEMNIFICATION OF DIRECTORS AND OFFICERS
The FBCA permits a corporation to indemnify officers, directors,
employees and agents for actions taken in good faith and in a manner they
reasonably believed to be in, or not opposed to, the best interests of the
corporation, and with respect to any criminal action, which they had no
reasonable cause to believe was unlawful. The FBCA provides that a corporation
may advance reasonable expenses of defense (upon receipt of an undertaking to
reimburse the corporation if indemnification is ultimately determined not to be
appropriate) and must reimburse a successful defendant for expenses, including
attorneys' fees, actually and reasonably incurred. The FBCA also permits a
corporation to purchase liability insurance for its directors, officers,
employees and agents. The FBCA provides that indemnification may not be made for
any claim, issue or matter as to which a person has been adjudged by a court of
competent jurisdiction to be liable to the corporation, unless and only to the
extent a court determines that the person is entitled to indemnity for such
expenses as the court deems proper. The Boca Bylaws provide for indemnification
for any present or former director, officer, employee, or agent to the fullest
extent permitted by the law.
Under Delaware law, a corporation may indemnify any person made a
party or threatened to be made a party to any type of proceeding (other than an
action by or in the right of the corporation) because he is or was an officer,
director, employee or agent of the corporation or was serving at the request of
the corporation as a director, officer, employee or agent of another corporation
or entity, against expenses, judgments, costs and amounts paid in settlement
actually and reasonably incurred in connection with such proceeding: (a) if he
acted in good faith and in a manner he reasonably believed to be in or not
opposed to the best interests of the corporation, or (b) in the case of a
criminal proceeding, he had no reasonable cause to believe that his conduct was
unlawful. A corporation may indemnify any person made a party or threatened to
be made a party to any threatened, pending or completed action or suit brought
by or in the right of the corporation because he was an officer, director,
employee or agent of the corporation, or is or was serving at the request of the
corporation as a director, officer, employee or agent of another
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corporation or other entity, against expenses actually and reasonably incurred
in connection with such action or suit if he acted in good faith and in a manner
he reasonably believed to be in or not opposed to the best interests of the
corporation, except that there may be no such indemnification if the person is
found liable to the corporation unless, in such a case, the court determines the
person is entitled thereto. A corporation must indemnify a director, officer,
employee or agent against expenses actually and reasonably incurred by him who
successfully defends himself in a proceeding to which he was a party because he
was a director, officer, employee or agent of the corporation. Expenses incurred
by an officer or director (or other employees or agents as deemed appropriate by
the board of directors) in defending a civil or criminal proceeding may be paid
by the corporation in advance of the final disposition of such proceeding upon
receipt of an undertaking by or on behalf of such director or officer to repay
such amount if it shall ultimately be determined that he is not entitled to be
indemnified by the corporation. The Delaware law indemnification and expense
advancement provisions are not exclusive of any other rights which may be
granted by the bylaws, a vote of shareholders or disinterested directors,
agreement or otherwise.
The Omnicare Certificate provides for the indemnification of its
directors to the fullest extent permitted by law.
LIMITATION OF LIABILITY
The FBCA provides that a director is not personally liable for
monetary damages to the corporation or any other person for any statement, vote,
decision, or failure to act, regarding corporate management or policy unless the
director breached or failed to perform his statutory duties as a director and
such breach or failure (a) constitutes a violation of criminal law, unless the
director had reasonable cause to believe his conduct was lawful or had no
reasonable cause to believe his conduct was unlawful, (b) constitutes a
transaction from which the director derived an improper personal benefit, (c)
results in an unlawful distribution, (d) in a derivative action or an action by
a shareholder, constitutes conscious disregard for the best interests of the
corporation or willful misconduct or (e) in a proceeding other than a derivative
action or an action by a shareholder, constitutes recklessness or an act or
omission which was committed in bad faith or with malicious purpose or in a
manner exhibiting wanton and willful disregard of human rights, safety or
property.
Delaware law permits a corporation to adopt a provision in its
certificate of incorporation eliminating or limiting the personal liability of a
director to the corporation or its shareholders for monetary damages for beach
of fiduciary duty as a director, except that such provision shall not limit the
liability of a director for (a) any breach of the director's duty of loyalty to
the corporation or its shareholders, (b) acts or omissions not in good faith or
which involve intentional misconduct or a knowing violation of law, (c)
liability under Section 174 of the DGCL for unlawful payment of dividends or
stock purchases or redemption's, or (d) any transaction from which the director
derived an improper personal benefit. The Omnicare Certificate provides that no
director of Omnicare shall be liable to it or its shareholders for monetary
damages for breach of fiduciary duty as a director, except to the extent such an
exemption from liability or limitation thereof is not permitted under the DGCL.
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STOCKHOLDER RIGHTS PLAN
On May 17, 1999, the Omnicare Board authorized and declared the
issuance of one preferred share purchase right for each common share of Omnicare
outstanding as of the close of business on June 2, 1999. Each right entitles the
registered holder to purchase from Omnicare one ten-thousandth of a share of
Series A Junior Participating Preferred Stock of Omnicare, at a price of
$135.00, subject to adjustment. The description and terms of the rights are set
forth in a Rights Agreement between Omnicare and First Chicago Trust Company of
New York as Rights Agent. The rights are triggered when either of the following
events occur:
a public announcement that a person or group of affiliated or
associated persons has acquired beneficial ownership of 15% or
more of the outstanding common shares or
the commencement of, or announcement of an intention to make, a
tender offer or exchange offer the consummation of which would
result in the beneficial ownership by a person or group of 15% or
more of the outstanding common shares.
The Omnicare Board may redeem all, but not less than all, of the
then-outstanding rights at a price of $0.01 per right at any time until 10 days
following the date a person acquires or has the right to acquire 15% or more of
the Omnicare shares, or a tender or exchange offer is commenced. The rights
expire on June 2, 2009.
Boca does not have a Stockholder Rights Plan.
VOTE ON EXTRAORDINARY CORPORATE TRANSACTIONS; BUSINESS COMBINATION
RESTRICTIONS
FLORIDA AFFILIATED TRANSACTIONS. Under the FBCA, and subject to the
exceptions discussed below, the approval of a merger, plan of liquidation or
sale of all or substantially all of a corporation's assets other than in the
regular course of business requires the recommendation of the corporation's
board of directors and an affirmative vote of holders of a majority of the
corporation's outstanding shares.
Section 607.0901 of the FBCA provides that the approval of the holders
of two-thirds of the voting shares of a corporation, other than the shares
beneficially owned by an Interested Shareholder (as defined below), would be
required to effectuate certain transactions, including, without limitation, a
merger, consolidation, certain sales of assets, certain sales of shares,
liquidation or dissolution of the corporation, and reclassification of
securities involving a corporation and an Interested Shareholder (an "Affiliated
Transaction"). An "Interested Shareholder" is defined as the beneficial owner of
more than 10% of the outstanding voting shares of the corporation. The foregoing
special voting requirement is in addition to the vote required by any other
provision of the FBCA or any other provisions of the Boca Articles.
The special voting requirement does not apply in any of the following
circumstances:
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(a) the Affiliated Transaction is approved by a majority of the
corporation's disinterested directors,
(b) the Interested Shareholder has owned at least 80% of the
corporation's voting stock for five years preceding the date on which the
Affiliated Transaction is first publicly announced or communicated generally to
the corporation's shareholders,
(c) the Interested Shareholder owns more than 90% of the corporation's
voting shares,
(d) the corporation has not had more than 300 shareholders of record
at any time during the three years preceding the announcement of the event,
(e) the corporation is an investment company registered under the
Investment Company Act of 1940, or
(f) all of the following conditions are met:
the cash and fair value of other consideration to be paid per
share to all holders of voting shares equals the highest per
share price paid by the Interested Shareholder,
the consideration to be paid in the Affiliated Transaction is in
cash or in the same form as previously paid by the Interested
Shareholder (or certain alternative benchmarks if higher),
during the portion of the three years proceeding the announcement
date that the Interested Shareholder has been an Interested
Shareholder, except as approved by a majority of the
disinterested directors, there shall have been no failure to
declare and pay at the regular date any full periodic dividends,
no decrease in common stock dividends, and no increase in the
voting shares owned by the Interested Shareholder,
during such three-year period, except as approved by a majority
of the disinterested directors, no benefit to the Interested
Shareholder in the form of loans, guaranties or other financial
assistance or tax advantages provided by the corporation, and
unless approved by a majority of the disinterested directors, a
proxy or information statement describing the Affiliated
Transaction shall have been mailed to holders of voting shares at
least 25 days prior to the consummation of the Affiliated
Transaction. Because the Boca Board unanimously approved the Plan
of Merger and the merger, this provision will not be applicable.
THIS SPECIAL VOTING REQUIREMENT DOES NOT APPLY TO THE MERGER OF BOCA
AND MERGECO BECAUSE COMPSCRIPT OWNS 92% OF THE BOCA SHARES.
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CONTROL SHARE ACQUISITIONS. Boca is governed by Section 607.0902 of
the FBCA, which provides that the voting rights to be accorded Control Shares
(as defined below) of a Florida corporation that has (a) 100 or more
shareholders, (b) its principal place of business, its principal office, or
substantial assets in Florida, and (c) either (1) more than 10% of its
shareholders residing in Florida, (2) more than 10% of its shares owned by
Florida residents, or (3) 1,000 shareholders residing in Florida must be
approved by a majority of each class of voting securities of the corporation,
excluding those shares held by interested persons, before the Control Shares
will be granted any voting rights.
SECTION 607.0902 DOES NOT APPLY TO THIS TRANSACTION BECAUSE BOCA HAS
FEWER THAN 100 SHAREHOLDERS.
The FBCA defines "Control Shares" as shares acquired in a Control
Share Acquisition (as defined below) that, when added to all other shares of the
issuing corporation owned by such person, would entitle such person to exercise,
either directly or indirectly, voting power within any of the following ranges:
(a) one-fifth or more, but less than one-third, of all voting power of
the corporation's voting securities;
(b) one-third or more, but less than a majority of all voting power of
the corporation's voting securities, or
(c) a majority or more of all of the voting power or the corporation's
voting securities.
A "Control Share Acquisition" is defined as an acquisition, either
directly or indirectly, by any person of ownership of, or the power to direct
the exercise of voting power with respect to, outstanding Control Shares.
Section 607.0902 provides that any person who proposes to make a Control Share
Acquisition must follow certain procedures, including giving notice of the
intent to acquire shares and calling a meeting of shareholders at which such
Control Share Acquisition must be approved by resolution of a majority of each
class entitled to vote thereon. Otherwise, any Control Shares acquired will be
divested of voting rights. If authorized in the articles of incorporation or
bylaws of a corporation prior to their acquisition, Control Shares may be
redeemed by the corporation for fair value in certain circumstances. Unless
otherwise provided in a corporation's articles of incorporation or bylaws prior
to a Control Share Acquisition, in the event Control Shares are accorded full
voting rights and the acquiring person has acquired Control Shares with a
majority or more of all voting power, all shareholders shall have dissenters'
rights to receive the fair value of their shares. The Boca Articles and Boca
Bylaws are silent concerning Control Share Acquisitions.
Section 607.0902 further provides that, in certain circumstances, an
acquisition of shares that otherwise would be governed by its provisions does
not constitute a Control Share Acquisition. Among such circumstances are
acquisition of shares approved by the corporation's board of directors and
mergers effected in compliance with the applicable provisions of the FBCA, if
the corporation is a party to the agreement of merger.
The DGCL does not have a comparable Control Share statute.
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DELAWARE BUSINESS COMBINATIONS. The DGCL generally provides that,
unless otherwise specified in a corporation's certificate of incorporation or
unless the provisions of the DGCL relating to business combinations indicated
herein are applicable, a sale or other disposition of all or substantially all
of the corporation's assets, a merger or consolidation of the corporation with
another corporation or a dissolution of the corporation requires the affirmative
vote of the board of directors plus the affirmative vote of a majority of the
outstanding stock entitled to vote thereon.
In general, Section 203 of the DGCL prevents an "Interested
Stockholder" (defined generally as a person with 15% or more of a corporation's
outstanding voting stock, with the exception of any person who owned and has
continued to own shares in excess of the 15% limitation since December 23, 1987)
from engaging in a Business Combination with a Delaware corporation for three
years following the date such person became an Interested Stockholder.
The term "Business Combination" includes mergers or consolidations
with an Interested Stockholder and certain other transactions with an Interested
Stockholder, including, without limitation:
(a) any sale, lease, exchange, mortgage, pledge, transfer or other
disposition (except proportionately as a shareholder of such corporation) to or
with the Interested Stockholder of assets (except proportionately as a
shareholder of the corporation) having an aggregate market value equal to 10% or
more of the aggregate market value of all assets of the corporation or of
certain subsidiaries thereof determined on a consolidated basis or the aggregate
market value of all the outstanding stock of the corporation,
(b) any transaction which results in the issuance or transfer by the
corporation or by certain subsidiaries thereof of stock of the corporation or
such subsidiary to the Interested Stockholder, except pursuant to certain
transfers in a conversion or exchange or pro rata distribution to all
shareholders of the corporation or certain other transactions, none of which
increase the Interested Stockholder's proportionate ownership of any class or
series of the corporation's or such subsidiary's stock,
(c) any transaction involving the corporation or certain subsidiaries
thereof which has the effect, directly or indirectly, of increasing the
proportionate share of the stock of any class or series, or securities
convertible into stock of the corporation or any subsidiary which is owned by
the Interested Stockholder (except as a result of immaterial changes due to
fractional share adjustments or as a result of any purchase or redemption of any
shares of stock not caused directly or indirectly by the Interested
Stockholder), or
(d) any receipt by the Interested Stockholder of the benefit (except
proportionately as a shareholder of such corporation) of any loans, advances,
guarantees, pledges, or other financial benefits provided by or through the
corporation or certain subsidiaries.
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The three-year moratorium may be avoided if
(a) before such person became an Interested Stockholder, the board of
directors of the corporation approved either the Business Combination or the
transaction in which the Interested Stockholder became an Interested
Stockholder, or
(b) upon consummation of the transaction which resulted in the
shareholder becoming an Interested Stockholder, the shareholder owned at least
85% of the voting stock of the corporation outstanding at the time the
transaction commenced (excluding shares held by directors who are also officers
of the corporation and by employee stock ownership plans that do not provide
employees with the right to determine confidentially whether shares held subject
to the plan will be tendered in a tender or exchange offer), or
(c) on or following the date on which such person became an Interested
Stockholder, the Business Combination is approved by the board of directors of
the corporation and authorized at an annual or special meeting of shareholders
(not by written consent) by the affirmative vote of the shareholders of at least
66 2/3% of the outstanding voting stock of the corporation not owned by the
Interested Stockholder.
The Business Combination restrictions described above do not apply if,
among other things:
(a) the corporation's original certificate of incorporation contains a
provision expressly electing not to be governed by the statute,
(b) the corporation by action by the holders of a majority of the
voting stock of the corporation approves an amendment to its certificate of
incorporation or bylaws expressly electing not to be governed by the statute
(effective 12 months after the amendment's adoption), which amendment shall not
be applicable to any business combination with a person who was an Interested
Stockholder at or prior to the time of the amendment, or
(c) the corporation does not have a class of voting stock that is (1)
listed on a national securities exchange, (2) authorized for quotation on Nasdaq
or a similar quotation system, or (3) held of record by more than 2,000
shareholders.
The statute also does not apply to certain Business Combinations with
an Interested Stockholder when such combination is proposed after the public
announcement of, and before the consummation or abandonment of, a merger or
consolidation, a sale of 50% or more of the aggregate market value of the assets
of the corporation on a consolidated basis or the aggregate market value of all
outstanding shares of the corporation, or a tender offer for 50% or more of the
outstanding voting shares of the corporation, if the triggering transaction is
with or by a person who either was not an Interested Stockholder during the
previous three years or who became an Interested Stockholder with Board of
Director approval, and if the transaction is approved or not opposed by a
majority of the current directors who were also directors prior to any person
becoming an Interested Stockholder during the previous three years.
OMNICARE MERGER PROVISIONS. Pursuant to the Omnicare Certificate, a
merger or consolidation of Omnicare with, a disposition of a substantial part of
Omnicare's assets to or with, the transfer of Omnicare securities in exchange
for assets or securities with a fair market value of $5 million or more to, or
the transfer of Omnicare securities for cash to, a person or
33
<PAGE>
entity beneficially owning 10% or more of the outstanding shares of Omnicare
capital stock entitled to vote in the election of directors, requires the
approval of the holders of a majority of the outstanding shares of Omnicare
capital stock not beneficially owned by such person or entity. No such approval
is required for a transaction:
(a) with another corporation of which Omnicare is the majority
shareholder,
(b) with another person or entity, if the Omnicare Board approved a
memorandum of understanding with such person or entity before such person or
entity became a 10% shareholder of Omnicare, or
(c) approved unanimously by the Omnicare Board prior to the
consummation thereof.
BENEFICIAL OWNERSHIP OF BOCA SHARES
As of March 31, 1999 there were 2,066,840 Boca shares outstanding.
CompScript beneficially owns 1,897,938 Boca shares, representing approximately
92% of the outstanding Boca shares. An aggregate of 168,902 Boca shares are
held by shareholders other than CompScript.
Omnicare owns 100% of the shares of CompScript.
34
<PAGE>
BUSINESS OF BOCA
COMPANY OVERVIEW
Boca is a comprehensive provider of pharmacy management services
equipped to both lower costs and improve the quality of care to its customers.
Boca offers a broad range of pharmacy, infusion therapy, consulting services
and mail order to managed care networks and their patients, long-term and
subacute care facilities and home health patients. Boca's proprietary pharmacy
management capabilities combine sophisticated clinical tools with the latest
technologies in databases and drug profiles.
Boca presently operates an institutional pharmacy that serves
long-term and subacute facilities in Florida.
PRODUCTS AND SERVICES
Institutional Pharmacy. Boca purchases, repackages and dispenses
prescription and non-prescription medication in accordance with physician orders
and delivers such prescriptions at least daily to the nursing facilities for
administration to individual patients by the facility's nursing staff. Boca
typically services nursing homes within a 150-mile radius of its pharmacy
locations. Boca 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 Boca's computerized proprietary 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. Boca also provides
therapeutic interchange, with physician approval, in accordance with
pharmaceutical care guidelines.
Boca provides a "modified 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 doses 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 Boca's drug distribution system is its proprietary
computerized medical records and documentation system. Boca 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 modified unit-dose drug delivery system results in greater
efficiency in nursing time, improved control,
35
<PAGE>
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 failures and 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.
Boca provides consultant pharmacist services which help clients comply
with such federal and state regulations applicable to nursing homes. Consultant
pharmacists work on a proprietary laptop program to offer institutions patient
specific clinical data. The services offered by Boca's consultant pharmacists
include:
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;
participation on the Pharmacy and Therapeutics, Quality Assurance and other
committees of client nursing facilities as well as periodic involvement in
staff meetings;
monthly inspection of medication carts and storage rooms;
monitoring and monthly reporting on facility-wide drug usage and drug
administration systems and practices;
development and maintenance of pharmaceutical policy and procedures
manuals; and
assistance to the nursing facility in complying with state and federal
regulations as they pertain to patient care.
Additionally, Boca offers a specialized line of consulting services
which help nursing facilities enhance care and reduce and contain costs as well
as to comply with state and federal regulations.
Infusion Therapy Products and Services. Boca provides infusion therapy
support services for moderately acute but stabilized patients 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.
Boca 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 drug
therapy requires a highly trained nursing staff.
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<PAGE>
Boca's consultant pharmacists and nurse consultants operate an education and
certification program on intravenous therapy to assure proper staff training and
compliance with regulatory requirements in client facilities offering an
intravenous program.
The most common infusion therapies Boca provides in the nursing home
environment are total parenteral nutrition, antibiotic therapy, chemotherapy,
pain management and hydration.
Home Infusion Therapy Services. Boca has established a Joint
Commission on Accreditation of Healthcare Organization accredited home infusion
company to serve homebound patients. Boca offers outcomes management with an
emphasis on diagnosis of level of severity, specialized management reporting,
and statewide coverage, which makes Boca particularly attractive to managed care
companies. Boca offers managed care companies a full continuum of coverage for
their clients, from hospitals to subacute units to long-term care facilities to
the patient's homes.
Mail Service Pharmacy Benefits. Boca operates a mail service pharmacy
in Florida that provides members with convenient access to maintenance
medications, and enables Boca and its clients to control drug costs through
purchasing efficiencies and other economies of scale. In addition, through its
mail service pharmacy, Boca is able to be directly involved with the prescriber
and member, and is generally able to achieve a higher level of generic and
therapeutic substitution than can be achieved through the retail pharmacy
network, which further reduces the client's costs.
37
<PAGE>
BOCA MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
GENERAL
Boca is a comprehensive provider of pharmacy management services
including institutional pharmacy, infusion therapy, mail order and consultant
pharmacist services. Boca was formerly known as AldenCare, Inc., which was
incorporated under the laws of the State of Florida on October 3, 1991.
On April 26, 1996, shareholders who previously owned approximately 92%
of Boca, then known as CompScript, Inc. and formerly known as AldenCare, Inc.,
exchanged their shares of Boca's common stock for 7,394,982 common shares
(representing an 80% interest) of Capital Brands, Inc., a publicly-held company.
This 1996 Acquisition was structured as a tax-free reorganization. This 1996
Acquisition was accounted for as a reverse purchase of Capital Brands by
Boca pursuant to which Boca was recapitalized to include the assets and
liabilities of Capital Brands revalued to reflect the market value of Capital
Brand's net tangible assets at the date of the Acquisition, consisting of cash
and marketable equity securities. On July 5, 1996, Capital Brands changed its
name to CompScript, Inc.
On June 26, 1998, CompScript, Inc. was acquired by Omnicare through a
merger with a wholly-owned subsidiary of Omnicare. Upon completion of the
merger, each outstanding common share of CompScript, Inc. was converted into
$4.50 market value of Omnicare common shares. Omnicare Inc. issued approximately
$63.3 million of its stock. The transaction was structured as a pooling of
interests and as a tax-free reorganization.
RESULTS OF OPERATIONS
Three months ended March 31, 1999 compared with Three Months Ended
March 31, 1998
Sales for the three months ended March 31, 1999 increased 6.5% to
$3,600,898 from $3,381,985 for the three months ended March 31, 1998. The growth
is primarily attributable to additional sales made to existing clients and
contracting of new clients for services.
Gross profits for the three months ended March 31, 1999 increased
16.7% to $1,967,562 from $1,685,666 for the three months ended March 31, 1998.
The increase in gross profit margin is the result of more favorable purchasing
discounts based on the increase in volumes and participation in Omnicare's
purchasing programs.
Selling, general and administration expenses as a percentage of sales
for the three months ended March 31, 1999 and 1998 were 38.9% and 36.5%,
respectively. This increase is primarily attributable to Boca's increased
professional and consulting fees paid in connection with Boca's Y2K assessment
plan.
Boca's provision for doubtful accounts increased approximately 74.6%
or $27,335 in the three months ended March 31, 1999, primarily due to the
increase in reserves attributable to the increase in sales and the aging of
certain specific accounts receivable.
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Interest and other income increased $24,576 to $46,859 during the
three months ended March 31, 1999, as a result of interest earned on higher cash
and equivalent balances.
As a result of the items previously discussed, net income for the
three months ended March 31, 1999 was $342,668 compared to net income of
$271,583 for the three months ended March 31, 1998. Net income per share
increased $0.04 to $.17 for the three months ended March 31, 1999 as compared to
$.13 for the three months ended March 31, 1998.
Fiscal Year 1998 compared with Fiscal Year 1997
Sales for the year ended December 31, 1998 increased 20.2% to
$14,197,047 from $11,811,525 for the year ended December 31, 1997. The growth is
attributable to marketing efforts to new clients and growth in sales made to
existing clients.
Gross profit increased to $7,450,643 in 1998 from $5,860,190 in 1997,
an increase of $1,590,453 or 27.1%. Gross profit margin increased to 52.5% in
1998 from 49.6% in 1997 primarily as a result of more favorable purchasing
discounts based on the increase in volumes and participation in Omnicare's
purchasing programs for part of 1998.
Selling, general and administration expenses as a percentage of sales
for 1998 and 1997 were 38.0% and 46.6%, respectively. This decrease is
attributable to Boca's ability to maintain relatively constant selling, general
and administration expenses while increasing sales.
Boca's provision for doubtful accounts increased approximately 8.3% or
$32,701 in the year ended December 31, 1998, primarily due to the increase in
reserves attributable to the increase in sales.
Interest and other income increased $45,037 to $91,629 during 1998,
compared to 1997, as a result of interest earned on higher cash and cash
equivalents balances.
As a result of the items previously discussed, net income for the year
ended December 31, 1998 was $1,068,705 compared to a net loss of $3,956 in 1997.
Net income per share was $.52 in 1998 compared to $.00 in 1997.
Fiscal Year 1997 compared with Fiscal Year 1996
Sales for the year ended December 31, 1997 increased 3.1% to
$11,811,525 from $11,451,246 for the year ended December 31, 1996. The growth is
primarily attributable to additional sales made to existing clients.
Gross profits increased to $5,860,190 in 1997 from $5,339,329 in 1996,
an increase of $520,861 or 9.8%. Gross profit margin increased to 49.6% in 1997
from 46.6% in 1996 primarily as a result of more favorable purchasing discounts
based on the increase in volumes.
Selling, general and administration expenses as a percentage of sales
for 1997 and 1996 were 46.7% and 46.8%, respectively. This decrease is
attributable to Boca's ability to maintain relatively constant selling, general
and administration expenses while increasing sales.
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<PAGE>
Boca's provision for doubtful accounts increased approximately 21.5%
or $69,743 in the year ended December 31, 1997, primarily due to the increase in
reserves attributable to the increase in sales and the aging of certain specific
accounts receivable.
Interest and other income decreased $155,729 to $46,592 during 1997,
compared to 1996, due to decreased cash and cash equivalents throughout the
year.
As a result of the items previously discussed, net loss for the year
ended December 31, 1997 was $3,956 compared to net loss of $91,833 in 1996. Net
income per share was $.00 in 1997 compared to net loss per share of $.04 in
1996.
LIQUIDITY AND CAPITAL RESOURCES
Boca has funded its operating requirements to date primarily through
operations and cash borrowings from related parties. At March 31, 1999, December
31, 1998 and 1997, Boca had working capital of $3,972,427, $3,753,344 and
$2,254,938, respectively, and a current ratio of 4.89 to 1.00, 4.58 to 1.00 and
2.33 to 1.00, respectively.
Net cash provided by operating activities for the year ended 1998
decreased as compared to net cash provided by operations during 1997, primarily
due to the decrease of accounts payable.
Net cash used in investing activities was $229,645 for the year ended
December 31, 1998 primarily a result of capital expenditures of $215,789. Net
cash used in investing activities was $813,302 for the year ended December 31,
1997 primarily for purchases of property and equipment related to Boca's
expansion of its Boca Raton office. Net cash used in investing activities was
$627,521 for the year ended December 31, 1996 of which $557,157 was used to
purchase property and equipment related to Boca's expansion of its Boca Raton
Office.
Boca has had no borrowings since 1997.
Except for the historical information contained herein, the matters
set forth in this Form S-4 are forward looking and involve a number of risks and
uncertainties that could cause actual results to differ materially from these
statements and trends. Such factors include, but are not limited to: overall
economic, financial and business conditions, 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 business of Boca, the demand for Boca'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 Boca and/or its suppliers and
customers or other payors, and the failure of Boca to obtain or maintain
required regulatory licenses and approvals.
QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
Boca does not have any financial instruments held for trading purposes
and does not hedge any of its market risks with derivative instruments.
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IMPACT OF THE YEAR 2000
Boca believes Year 2000 issues are not applicable in any material way
to its own computer systems, and Boca intends to confirm that any computer
systems that Boca may purchase or lease in the future will have addressed the
Year 2000 issue. Boca believes that 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. Boca estimates that the total costs associated with
this project will approximate $280,000 (with hardware accounting for
approximately 70 percent of these costs and software implementation
approximating 30 percent of these costs). The cost of this project will be
funded from Boca's operating cash flows. No information technology projects with
high priority have been significantly delayed due to the Year 2000 initiatives.
Boca does not anticipate any significant implications with respect to Year 2000
issues relating to non information technology systems.
While Boca 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 Boca 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 Boca has dealings, particularly
the Medicaid and Medicare programs, to adequately address their Year 2000 issues
could adversely affect Boca, and claims to these third party payors could be
unjustifiably denied and/or delayed. Boca 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. Boca 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 Boca'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 the implementation of such plan will mitigate in whole or in part
such risk.
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EXPERTS
The consolidated balance sheet of CompScript-Boca, Inc. as of December
31, 1998 and the related consolidated statements of operations, shareholders
equity, and cash flows for the year ended December 31, 1998 included in this
prospectus and the related Registration Statement have been included herein in
reliance on the report of PricewaterhouseCoopers LLP, independent accountants,
given on the authority of that firm as experts in accounting and auditing.
The audited financial statements incorporated in this prospectus by
reference to Omnicare's Annual Report on Form 10-K for the year ended December
31, 1998 have been so incorporated in reliance on the report of
PricewaterhouseCoopers LLP whose report is incorporated herein, to the extent
and for the periods appearing therein, given on the authority of that firm as
experts in auditing and accounting.
The consolidated financial statements of CompScript, Inc. appearing in
Omnicare, Inc.'s Annual Report (Form 10-K) for the year ended December 31, 1998,
have been audited by Ernst & Young LLP, independent auditors, as set forth in
their report thereon included therein and incorporated herein by reference. Such
consolidated financial statements are incorporated herein by reference in
reliance upon such report given on the authority of such firm as experts in
accounting and auditing.
The Report of Independent Public Accountants on IBAH, Inc.'s December
31, 1997 and 1996 financial statements incorporated by reference in this
prospectus and elsewhere in the registration statement is from Arthur Andersen
LLP, independent public accountants, as indicated in their report with respect
thereto, and is included herein in reliance upon the authority of said firm as
experts in giving said report.
LEGAL OPINION
The validity of the Omnicare shares to be issued in the merger will be
passed upon by Dewey Ballantine LLP.
WHERE YOU CAN FIND MORE INFORMATION
Omnicare files annual, quarterly and special reports, proxy statements
and other information required by the Securities Exchange Act of 1934, with the
Commission. You may read and copy any document Omnicare files at the following
Commission public reference rooms:
<TABLE>
<S> <C> <C>
450 5th Street, N.W. Seven World Trade Center Northwest Atrium Center
Room 1024 Suite 1300 500 West Madison Street
Washington, D.C. 20549 New York, New York 10048 Suite 1400
Chicago, Illinois 60661-2511
</TABLE>
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<PAGE>
Please call the Commission at 1-800-SEC-0330 for further information
on the public reference rooms.
Our Commission filings are also available to the public from the
Commission's web site at: http://www.sec.gov.
Copies of these reports, proxy statements and other information also
can be inspected at the following address:
New York Stock Exchange
20 Broad Street
New York, New York 10005.
This prospectus is part of a registration statement on Form S-4
Omnicare filed with the Commission. This prospectus does not include all the
information contained in the registration statement and its exhibits. For
further information with respect to the Omnicare shares, you should consult the
registration statement and its exhibits. There are statements contained in this
prospectus concerning the provisions of other documents. These statements are
necessarily summaries of those documents, and each statement is qualified in its
entirety by reference to the copy of the document filed with the Commission. The
registration statement, including exhibits filed as a part of the registration
statement or an amendment to the registration statement, are available for
inspection and copying at the locations listed above.
The Commission allows Omnicare to incorporate by reference the
information Omnicare files with them, which means Omnicare can disclose
important information to you by referring to those documents. The information
incorporated by reference is considered to be a part of this prospectus, and
later information filed with the Commission will update and supersede this
information. Omnicare incorporates by reference the documents listed below:
(a) Annual Report on Form 10-K for the fiscal year ended December
31, 1998;
(b) Quarterly Report on Form 10-Q for the quarter ended March 31,
1999;
(c) Current Report on Form 8-K dated May 18, 1999; and
(d) Form 8-A Registration Statements filed September 14, 1993
(containing a description of Omnicare's common stock) and May 18, 1999
(containing a description of Omnicare's Series A Junior Preferred
Stock).
Omnicare is also incorporating by reference additional documents that
it files with the SEC between the date of the prospectus and the date of the
consummation of the merger.
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With respect to the documents listed above, if a statement in this
prospectus conflicts with a statement in a document incorporated by reference in
this prospectus, the statement in the prospectus will modify or supersede it.
The statement will constitute a part of this prospectus only in its modified or
superseded form.
Omnicare has supplied all information contained or incorporated by
reference in this prospectus relating to Omnicare and Boca has supplied all such
information relating to Boca.
You may request a copy of these filings, at no cost, by writing or
telephoning us at the following address:
Peter Laterza
Omnicare, Inc.
100 East RiverCenter Blvd., Suite 1600
Covington, Kentucky 41011
(606) 392-3300
If you would like to request documents from Omnicare, please do so by
________ __, 1999 to receive them before the consummation of the merger.
Boca does not file reports with the Commission.
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COMPSCRIPT-BOCA, INC. AND SUBSIDIARIES
INDEX TO FINANCIAL INFORMATION
<TABLE>
<S> <C>
Report of Independent Accountants ...........................................F-2
Consolidated Statement of Operations........................................F-3
Consolidated Balance Sheet ..................................................F-4
Consolidated Statement of Cash Flows ........................................F-5
Consolidated Statement of Stockholders' Equity ..............................F-6
Notes to Consolidated Financial Statements...................................F-7
</TABLE>
F-1
<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS
To the Stockholders of
CompScript-Boca, Inc.
In our opinion, the accompanying consolidated balance sheet as of December 31,
1998 and the related consolidated statements of income, stockholders' equity and
cash flows present fairly, in all material respects, the financial position of
CompScript-Boca, Inc., (the "Company") at December 31, 1998, and the results of
its operations and its cash flows for the year then ended, 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 audit. We conducted our audit
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 audit provides a
reasonable basis for the opinion expressed above.
The accompanying balance sheet of CompScript-Boca, Inc. as of March 31, 1999 and
December 31, 1997 and the related statements of income, stockholders' equity and
cash flows for the three months ended March 31, 1999 and 1998 and the years
ended December 31, 1997 and 1996 were not audited by us and accordingly, we do
not express an opinion on them.
PricewaterhouseCoopers LLP
Cincinnati, Ohio
February 1, 1999
F-2
<PAGE>
COMPSCRIPT-BOCA, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
For the three months ended For the year ended
March 31, December 31,
-------------------------- --------------------------------------------------
1999 1998 1998 1997 1996
(unaudited) (unaudited) (unaudited) (unaudited)
----------- ----------- ------------ ------------ ------------
<S> <C> <C> <C> <C> <C>
Sales $ 3,600,898 $ 3,381,985 $ 14,197,047 $ 11,811,525 $ 11,451,246
Cost of goods sold 1,633,336 1,696,319 6,746,404 5,951,335 6,111,917
----------- ----------- ------------ ------------ ------------
Gross Profit 1,967,562 1,685,666 7,450,643 5,860,190 5,339,329
Selling, general and
administrative expenses 1,400,845 1,235,489 5,395,306 5,510,552 5,356,809
Provision for doubtful
accounts 63,957 36,622 427,478 394,777 325,034
----------- ----------- ------------ ------------ ------------
Total operating expenses 1,464,802 1,272,111 5,822,784 5,905,329 5,681,843
----------- ----------- ------------ ------------ ------------
Operating income (loss) 502,760 413,555 1,627,859 (45,139) (342,514)
Interest and other income 46,859 22,283 91,629 46,592 202,321
----------- ----------- ------------ ------------ ------------
Income (loss) before
provision for income taxes 549,619 435,838 1,719,488 1,453 (140,193)
Income tax provision/(benefit) 206,951 164,255 650,783 5,409 (48,360)
----------- ----------- ------------ ------------ ------------
Net income (loss) 342,668 271,583 $ 1,068,705 $ (3,956) $ (91,833)
=========== =========== ============ ============ ============
Weighted average shares
outstanding 2,066,840 2,066,840 2,066,840 2,066,840 2,060,090
=========== =========== ============ ============ ============
Earnings per share $ 0.17 $ 0.13 $ 0.52 $ 0.00 $ (0.04)
=========== =========== ============ ============ ============
</TABLE>
The accompanying notes are an integral part of these financial statements.
F-3
<PAGE>
COMPSCRIPT-BOCA, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEET
<TABLE>
<CAPTION>
March 31, December 31,
---------- -----------------------------
1999 1998 1997
(unaudited) (unaudited)
---------- ---------- -----------
<S> <C> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents $ 654,873 $ 643,756 $ 245
Account receivable,
less allowances of $365,028
(1998-$457,721 -- 1997-$222,663) 3,471,861 3,242,119 2,793,184
Accounts receivable, related parties -- -- 242,779
Inventories 556,644 572,617 600,761
Deferred tax asset 179,326 162,192 --
Prepaid expenses and other current assets 130,000 130,000 310,005
---------- ---------- -----------
Total current assets 4,992,704 4,750,684 3,946,974
Property and equipment, net 986,846 959,935 1,412,245
Other assets 137,493 52,021 33,346
---------- ---------- -----------
Total assets $6,117,043 $5,762,640 $ 5,392,565
========== ========== ===========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities:
Accounts payable $ 245,574 $ 293,734 $ 1,196,518
Accounts payable, related parties 285,258 77,764 --
Accrued salaries and benefits 201,712 127,851 78,768
Accrued expenses 244,817 455,075 357,959
Deferred tax liability -- -- 5,953
Current portion of capital lease obligations 42,916 42,916 52,838
---------- ---------- -----------
Total current liabilities 1,020,277 997,340 1,692,036
Capital lease obligations 36,208 47,410 51,344
---------- ---------- -----------
Total liabilities 1,056,485 1,044,750 1,743,380
Stockholders' equity:
Common stock $0 par value- 10,000,000 shares
authorized, 2,060,840 shares issued and
outstanding -- -- --
Additional paid in capital 5,716,892 5,716,892 5,716,892
Accumulated deficit (656,334) (999,002) (2,067,707)
---------- ---------- -----------
Total stockholders' equity 5,060,558 4,717,890 3,649,185
========== ========== ===========
Total liabilities and stockholders' equity $6,117,043 $5,762,640 $ 5,392,565
========== ========== ===========
</TABLE>
The accompanying notes are an integral part of these financial statements.
F-4
<PAGE>
COMPSCRIPT-BOCA, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF CASH FLOWS
<TABLE>
<CAPTION>
FOR THE THREE MONTHS ENDED FOR THE YEAR ENDED
MARCH 31 DECEMBER 31,
-------------------------- ------------------------------------------
1999 1998 1998 1997 1996
(unaudited) (unaudited) (unaudited) (unaudited)
--------- ----------- ----------- ---------- ----------
<S> <C> <C> <C> <C> <C>
Cash flows from operating activities
Net income/(loss) $ 342,668 $ 271,583 $ 1,068,705 $ (3,956) $ (91,833)
Adjustments to reconcile net income/(loss) to net cash
provided/(used) from operating activities:
Depreciation 89,386 51,304 360,738 287,320 245,805
Changes in operating assets and liabilities:
Account receivable (229,742) 34,465 (448,935) (1,469,352) 236,046
Related parties 207,494 (1,674,169) 320,543 1,521,900 (1,725,114)
Transfer of PP&E (from)/to related parties (83,341) 234,207 307,361 301,715 --
Inventories 15,973 (23,396) 28,144 345,769 (463,511)
Deferred tax asset (17,134) (73,699) (162,192) 21,124 (21,124)
Prepaid expenses and other assets (85,472) 3,681 161,330 1,043 665,314
Accounts payable (48,160) 1,488,519 (902,784) 462,589 424,202
Accrued salaries and benefits 73,861 25,350 49,083 37,404 (49,391)
Accrued expenses (210,258) (302,397) 97,116 (23,269) 375,825
Deferred tax liability -- (5,953) (5,953) 5,953 --
--------- --------- ---------- ---------- ----------
NET CASH PROVIDED BY /(USED IN) OPERATING ACTIVITIES 55,275 29,495 873,156 1,488,240 (403,781)
--------- --------- ---------- ---------- ----------
Cash flows from investing activities:
Capital expenditures (32,956) -- (215,789) (813,302) (557,157)
Capital lease payments (11,202) (22,897) (13,856) -- (70,364)
--------- --------- ---------- ---------- ----------
NET CASH USED IN INVESTING ACTIVITIES (44,158) (22,897) (229,645) (813,302) (627,521)
--------- --------- ---------- ---------- ----------
Cash flows from financing activities:
Borrowings -- -- -- -- 550,730
Repayment of debt -- -- -- (674,693) --
Stock warrants exercised -- -- -- -- 217,739
--------- --------- ---------- ---------- ----------
NET CASH (USED IN)/PROVIDED BY FINANCING ACTIVITIES -- -- -- (674,693) 768,469
--------- --------- ---------- ---------- ----------
Net increase/(decrease) in cash and cash equivalents 11,117 6,598 643,511 245 (262,833)
--------- --------- ---------- ---------- ----------
Cash and cash equivalents at beginning of year 643,756 245 245 -- 262,833
--------- --------- ---------- ---------- ----------
Cash and cash equivalents at end of year $ 654,873 $ 6,843 $ 643,756 $ 245 $ --
========= ========= ========== ========== ==========
</TABLE>
The accompanying notes are an integral part of these financial statements.
F-5
<PAGE>
COMPSCRIPT-BOCA, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY
<TABLE>
<CAPTION>
COMMON STOCK ADDITIONAL RETAINED TOTAL
--------------------------- PAID-IN EARNINGS/ STOCKHOLDERS'
SHARES AMOUNT CAPITAL (DEFICIT) EQUITY
- --------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Balance at December 31, 1995 2,039,840 $ -- $ 5,499,153 $(1,971,918) $ 3,527,235
Net (loss) - (unaudited) -- -- -- (91,833) (91,833)
Exercise of warrants -
(unaudited) 27,000 -- 217,739 -- 217,739
- --------------------------------------------------------------------------------------------------------------
Balance at December 31, 1996 2,066,840 -- 5,716,892 (2,063,751) 3,653,141
Net (loss) - (unaudited) -- -- -- (3,956) (3,956)
- --------------------------------------------------------------------------------------------------------------
Balance at December 31, 1997 2,066,840 -- 5,716,892 (2,067,707) 3,649,185
Net Income -- -- -- 1,068,705 1,068,705
- --------------------------------------------------------------------------------------------------------------
Balance at December 31, 1998 2,066,840 -- 5,716,892 (999,002) 4,717,890
Net Income - (unaudited) -- -- -- 342,668 342,668
- --------------------------------------------------------------------------------------------------------------
Balance at March 31, 1999 2,066,840 $ -- $ 5,716,892 $ (656,334) $ 5,060,588
- --------------------------------------------------------------------------------------------------------------
</TABLE>
The accompanying notes are an integral part of these financial statements.
F-6
<PAGE>
COMPSCRIPT-BOCA, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. THE COMPANY
CompScript Boca, Inc. (CompScript Boca or the Company), f/k/a Aldencare, Inc,
which was incorporated under the laws of the State of Florida on October 3,
1991, is 92% owned by CompScript, Inc. a wholly-owned subsidiary of Omnicare,
Inc. CompScript Boca is a comprehensive provider of pharmacy management services
including institutional pharmacy, infusion therapy, consultant pharmacist
services and mail order.
On April 26, 1996, CompScript Boca shareholders owning approximately 92% of the
Company (then known as CompScript, Inc.), exchanged their shares of CompScript
Boca's Common Stock for 7,394,982 common shares (representing 80% interest) of
Capital Brands, Inc. (Capital), a publicly-held company (the Acquisition). This
exchange was structured as a tax-free reorganization. The Acquisition was
accounted for as a reverse purchase of Capital by CompScript Boca pursuant to
which CompScript Boca was recapitalized to include the assets and liabilities
of Capital revalued to reflect the market value of Capital's net tangible assets
at the date of the Acquisition, consisting of cash and marketable equity
securities. On July 5, 1996, Capital changed its name to CompScript, Inc.
On June 26, 1998, CompScript, Inc. was acquired through a merger with a
wholly-owned subsidiary of Omnicare, Inc. Upon completion of the merger, each
outstanding common share of CompScript, Inc. was converted into $4.50 market
value of Omnicare, Inc. common shares. Omnicare Inc. issued approximately $63.3
million of its stock. The transaction was structured as a pooling of interests
and as a tax-free reorganization.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
CASH AND CASH EQUIVALENTS
The Company considers all investments with an original maturity of less than
three months, when acquired, to be cash equivalents.
CONCENTRATION OF CREDIT RISK
The Company's customers are primarily long-term and alternative care
providers in Florida. The Company directly bills its customers or third-party
payers, which are primarily Medicaid, Medicare and private insurers. Credit is
extended based on an evaluation of the customer's financial condition, and
collateral is not required. Credit losses are provided for in the consolidated
financial statements and consistently have been within management's
expectations.
F-7
<PAGE>
COMPSCRIPT-BOCA, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
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 determined by the first-in, first-out method.
PROPERTY AND EQUIPMENT
Property and equipment is recorded at cost and depreciated using the
straight-line method over the estimated useful lives of the related assets.
Furniture and equipment and vehicles are depreciated over a five to seven year
period. Leasehold improvements and assets under capital leases are amortized
over the useful lives of the underlying assets or the term of the lease,
whichever is shorter. Expenditures for maintenance and repairs that do not
materially prolong the useful lives of the assets are charged to expense as
incurred.
REVENUE RECOGNITION
Revenues are recognized when services are provided or products are delivered to
the customer. A significant portion of the Company's revenues from sale of
pharmaceuticals and medical products are reimbursable from Medicare and Medicaid
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 Company does not file a consolidated income tax return as all taxes are
filed with CompScript, Inc. Provisions for income taxes of CompScript Boca have
been calculated on a separate return basis using the assets and liabilities
method under which deferred income taxes are recognized for the tax consequences
of temporary differences by applying enacted statutory tax rates to differences
between the tax bases of assets and liabilities and their reported amounts in
the consolidated financial statements. As such, income taxes payable at March
31, 1999, December 31, 1998 and 1997 of $1,007,977, $770,024 and ($48,904),
respectively, have been netted against accounts receivable related parties on
the Consolidated Balance Sheet.
F-8
<PAGE>
COMPSCRIPT-BOCA, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
USE OF ESTIMATES
The preparation of consolidated 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 at
the date of the financial statements, the preparation of financial statements
and the reported amounts of revenue and expenses during the reporting period.
Actual results could differ from those estimates.
3. PROPERTY AND EQUIPMENT
Property and equipment at March 31, 1999 and December 31, 1998 and 1997 consists
of the following:
<TABLE>
<CAPTION>
March 31, December 31,
---------------- ------------------------------------
1999 1998 1997
---------------- ------------------------------------
<S> <C> <C> <C>
Furniture and equipment $ 1,809,393 $ 1,692,409 $ 1,895,264
Vehicles 171,714 157,788 141,756
Leasehold improvements 237,438 228,770 226,859
Assets under capital leases 364,246 352,816 251,512
---------------- ------------------------------------
2,582,791 2,431,783 2,515,391
Less accumulated depreciation (1,595,945) (1,471,848) (1,103,146)
================ ====================================
$ 986,846 $ 959,935 $ 1,412,245
================ ====================================
</TABLE>
4. DUE TO/FROM RELATED PARTIES AND ALLOCATED EXPENSES
Due (to)/from related parties represents the net transfer of funds or assets
between CompScript Boca's parent and CompScript Boca.
Net due (to)/from related parties at March 31, 1999 and December 31, 1998 and
1997 consists of the following:
<TABLE>
<CAPTION>
March 31, December 31,
---------------- ------------------------------------
1999 1998 1997
---------------- ------------------------------------
<S> <C> <C> <C>
Due to Omnicare, Inc. $ (285,258) $ (77,764) $ -
Due from CompScript, Inc. - - 242,779
---------------- ------------------------------------
$ (285,258) $ (77,764) $ 242,779
================ ====================================
</TABLE>
As described in Note 1, the Company is 92% owned by CompScript, Inc. a wholly
owned subsidiary of Omnicare, Inc. For purposes of presenting stand-alone
financial statements of the Company, certain general expenses that have been
paid by CompScript, Inc. for the benefit of the Company have been allocated
and reflected in the results of operations of the Company based upon CompScript
Boca's percentage of CompScript, Inc.'s total net revenue.
F-9
<PAGE>
COMPSCRIPT-BOCA, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
CompScript, Inc. leases the building in which CompScript Boca operates. A
portion of the rent expense and real estate taxes associated with the operating
lease of the shared building have been allocated to CompScript Boca based upon
CompScript Boca's utilization percentage of the building's total square footage.
Prior to the Acquisition as described in Note 1, CompScript Boca maintained a
mail order pharmacy business. On August 19, 1996, CompScript, Inc., in a
transaction accounted for as a pooling-of-interest, acquired SECURx, Inc.
(SECURx). Subsequent to the merger of SECURx with CompScript, Inc., the
operations of SECURx were consolidated into the mail order pharmacy operations
of CompScript Boca. The results of operations of CompScript Boca include a
portion of the mail order business, allocated based on the percentage of revenue
represented by CompScript Boca's mail order business at the time of the SECURx
transaction.
The Company believes that the methods by which the above charges are determined
are reasonable and that the charges are essentially equal to that which would
have been incurred if the Company had operated as an unaffiliated entity.
5. PREPAID EXPENSES AND OTHER CURRENT ASSETS
Prepaid expenses and other current assets at March 31, 1999 and December 31,
1998 and 1997 consists of the following
<TABLE>
<CAPTION>
March 31, December 31,
----------- ----------------------------
1999 1998 1997
----------- ----------------------------
<S> <C> <C> <C>
Other Receivables $ 130,000 $ 130,000 $ 301,013
Miscellaneous Prepaid Expenses - - 8,992
----------- ----------------------------
$ 130,000 $ 130,000 $ 310,005
=========== ============================
</TABLE>
At March 31, 1999 and December 31, 1998, other receivables represent
inventory rebates to be received from vendors. At December 31, 1997, other
receivables represent deposits held by vendors.
F-10
<PAGE>
COMPSCRIPT-BOCA, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
6. CAPITAL LEASES
The Company leases certain equipment under long-term capital leases. Future
obligations are as follows:
<TABLE>
<CAPTION>
December 31,
-------------------------------
1998 1997
-------------------------------
<S> <C> <C>
Year ending December 31,
1998 $ - $ 55,753
1999 50,016 27,653
2000 50,016 -
100,032 83,406
-------------------------------
Less interest (9,706) (6,841)
-------------------------------
$ 90,326 $ 76,565
===============================
</TABLE>
As of March 31, 1999, the Company's capital lease commitments, including the
future minimum rental payments under capital lease agreements, have not changed
significantly from those as of December 31, 1998.
7. LEASE COMMITMENTS
The Company has various operating leases, primarily relating to office and
warehouse facilities. The leases have various renewal options and escalation
clauses and often require the Company to make additional payments for
maintenance costs. Total rent expense for the years ended December 31, 1998,
1997, and 1996 amounted to $144,486, $154,307, and $96,900, respectively.
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 as of December 31, 1998:
<TABLE>
<S> <C>
1999 $ 109,200
2000 115,752
2001 122,687
2002 130,059
2003 137,862
---------------
Total minimum payments required $ 615,560
===============
</TABLE>
Total rent expense for the three months ended March 31, 1999 and 1998 amounted
to $37,934 and $27,680, respectively.
As of March 31, 1999, the Company's operating lease commitments, including the
future minimum rental payments under operating lease agreements, have not
changed significantly from those at December 31, 1998.
F-11
<PAGE>
COMPSCRIPT-BOCA, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
8. INCOME TAXES
The provision for income taxes is comprised of the following:
<TABLE>
<CAPTION>
For the three months ended March 31, For the year ended December 31,
------------------------------------ -------------------------------
1999 1998 1998 1997
------------------------------------ -------------------------------
<S> <C> <C> <C> <C>
Current:
Federal $ 202,467 $ 214,999 $ 739,930 $ (19,578)
State 21,616 22,955 78,998 (2,090)
------------------------------------ -------------------------------
224,083 237,954 818,928 (21,668)
------------------------------------ -------------------------------
Deferred:
Federal (15,480) (66,590) (151,925) 24,466
State (1,652) (7,109) (16,220) 2,611
------------------------------------ -------------------------------
(17,132) (73,699) (168,145) 27,077
------------------------------------ -------------------------------
Income taxes $ 206,951 $ 164,255 $ 650,783 $ 5,409
==================================== ===============================
</TABLE>
The difference between the Company's reported income tax expense and the federal
income tax expense computed at the statutory rate of 34% is explained in the
following tables:
<TABLE>
<CAPTION>
For the years ended December 31, For the three months ended March 31,
---------------------------------------------------------------------------------------------------------
1998 1997 1996 1999 1998
---------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Federal income tax
at the statutory
rate $584,626 34.0% $ 494 34.0% $(47,666) $186,871 34.0% $148,185 34.0%
State income taxes,
net of federal
income tax benefit 62,418 3.6 53 3.6 (5,089) 19,786 3.6 15,690 3.6
Effect of non
deductible expenses 3,739 0.2 4,862 334.6 4,395 294 0.1 380 0.1
---------------------------------------------------------------------------------------------------------
Total income taxes
$650,783 37.8% $ 5,409 372.2% $(48,360) $206,951 37.7% $164,255 37.7%
=========================================================================================================
</TABLE>
F-12
<PAGE>
APPENDIX A
Plan of Merger, adopted as of June 17, 1999
WHEREAS, Boca Acquisition Corp. ("Mergeco") is a Florida corporation and a
wholly owned subsidiary of CompScript, Inc. ("CompScript"), which is a Florida
corporation and a wholly owned subsidiary of Omnicare, Inc. ("Omnicare"), a
Delaware corporation,
WHEREAS, Mergeco is a transitory corporation formed solely to effectuate
the Merger (as defined below),
WHEREAS, solely for the purpose of effectuating the Merger (as defined
below), CompScript has contributed to Mergeco 1,897,938 shares of common
stock, no par value (the "Boca Shares"), of CompScript-Boca, Inc. ("Boca"),
representing approximately 92% of the outstanding Boca Shares,
WHEREAS, Mergeco wishes to merge (the "Merger") with Boca in accordance
with Section 607.1104 of the Florida Business Corporation Act (the "FBCA"),
WHEREAS, it is intended for federal income tax purposes that the transitory
existence of Mergeco be disregarded and the Merger be treated as a direct
acquisition by CompScript of the outstanding Boca shares not formerly owned by
CompScript (the "Acquisition"),
WHEREAS, it is intended for Federal income tax purposes that the
Acquisition be treated as a reorganization described in Section 368(a) of the
Internal Revenue Code of 1986, as amended.
NOW, THEREFORE, Mergeco hereby adopts this Plan of Merger in accordance
with Section 607.1104 of the FBCA.
1. Parties. The name of the parent corporation is "Boca Acquisition Corp." The
name of the subsidiary corporation is "CompScript-Boca, Inc."
2. The Merger.
(a) Upon the terms and subject to the conditions of this Plan of Merger and
in accordance with the FBCA, at the Effective Time (as defined below), Mergeco
shall be merged with and into Boca, the separate existence of Mergeco shall
cease and Boca shall be the surviving corporation (sometimes referred to as the
"Surviving Corporation").
(b) At such time as Mergeco shall determine, which shall be no earlier than
30 days after this plan of merger is mailed to each shareholder of Boca, Mergeco
shall file Articles of Merger with the Florida Department of State. The Merger
shall become effective at such time as the Articles of Merger are filed with the
Florida Department of State, or as of such other time as may be specified
therein (the "Effective Time").
3. Effects of the Merger.
<PAGE>
(a) The Merger shall have the effects specified in the FBCA.
(b) As a result of the Merger, the Surviving Corporation shall be a wholly
owned subsidiary of CompScript.
(c) The Articles of Incorporation and Bylaws of Boca as of immediately
prior to the Effective Time shall be the initial Articles of Incorporation and
Bylaws of the Surviving Corporation.
(d) The directors and officers of Boca as of immediately prior to the
Effective Time shall be the initial directors and officers of the Surviving
Corporation.
4. Conversion of Shares.
As of the Effective Time, by virtue of the Merger and without any action by the
holders thereof:
(a) Each Boca Share issued and outstanding immediately prior to the
Effective Time (other than shares referred to in Sections 4(b), (c) and (d)
below) shall be converted into the right to receive 0.5047 shares of Omnicare
common stock, $1.00 par value (the "Omnicare Shares").
(b) Each Boca Share held by Mergeco or by any subsidiary of Mergeco shall
be cancelled.
(c) Each share of common stock of Mergeco shall be converted into one share
of common stock of the Surviving Corporation.
(d) Each Boca Share held by a holder who shall exercise the rights of a
dissenting shareholder pursuant to and in accordance with the provisions of
Section 607.1320 of the FBCA shall be entitled to receive only the payment
from Boca therein provided for and shall not be entitled to receive Omnicare
Shares or other consideration specified herein.
(e) Each Boca Share shall be canceled and retired, and each certificate
representing such share shall thereafter represent only the right to receive the
consideration specified herein issuable in exchange for such share pursuant to
the procedures specified in Section 5, except as otherwise provided in this
Section 4.
5. Surrender and Payment.
(a) Mergeco shall designate an exchange agent (the "Exchange Agent") for
the purposes of exchanging certificates representing Boca Shares for the
consideration specified herein.
(b) CompScript shall make available to the Exchange Agent certificates
representing the Omnicare Shares required to effect the exchange referred to in
section 5(c) below. Omnicare shall make available to the Exchange Agent the cash
required to make the cash payments in lieu of fractional shares referred to in
section 5(d) below.
(c) This Plan of Merger and a letter of transmittal shall be distributed to
each record holder of an outstanding certificate or certificates which
immediately prior to the Effective Time represented Boca Shares (the
"Certificates"). Upon surrender to the Exchange Agent of a Certificate, together
with such letter of transmittal duly executed, the holder of such Certificate
shall be entitled to receive in exchange therefor that number of Omnicare Shares
which such holder has the right to receive under this Plan of Merger (and any
amount of cash payable in lieu of fractional shares), less the amount of any
withholding taxes which may be required thereon under any provision of federal,
state, local or foreign tax Law, and such Certificate shall forthwith be
canceled. If any Omnicare
A-2
<PAGE>
Shares are to be issued to a person other than the person in whose name the
Certificate surrendered in exchange therefor is registered, it shall be a
condition of exchange that the Certificate so surrendered shall be properly
endorsed or otherwise in proper form for transfer and that the person requesting
such exchange shall pay any transfer or other taxes required by reason of the
exchange to a person other than the registered holder of the Certificate
surrendered or such person shall establish to the satisfaction of the Surviving
Corporation that such tax has been paid or is not applicable.
(d) No dividends or other distributions with respect to the Omnicare Shares
shall be paid to the holder of any unsurrendered Certificate until such
Certificate is surrendered as provided for in this Section 5. Subject to the
effect of applicable laws, following such surrender, there shall be paid,
without interest, to the record holder of the Omnicare Certificates (i) at the
time of such surrender, the amount of dividends or other distributions with a
record date after the Effective Time payable prior to or on the date of such
surrender with respect to such whole Omnicare Shares, and not paid, and the
amount of cash payable in lieu of any fractional shares, less the amount of any
withholding taxes which may be required thereon under any provision of federal,
state, local or foreign tax law, and (ii) at the appropriate payment date, the
amount of dividends or other distributions with a record date after the
Effective Time, but prior to the date of surrender and a payment date subsequent
to the date of surrender payable with respect to such whole Omnicare Shares,
less the amount of any withholding taxes which may be required thereon under any
provision of federal, state, local or foreign tax Law.
(e) Any portion of the Omnicare Shares or cash made available to the
Exchange Agent pursuant to this Section 5 that remains unclaimed by the holders
of Boca Shares six months after the Effective Time shall be returned to or at
the direction of Omnicare, upon demand, and any such holder who has not
exchanged Boca Shares for Omnicare Shares in accordance with this Section 5
prior to that time shall thereafter look only to the Surviving Corporation for
such holder's claim for Omnicare Shares, any cash in lieu of fractional shares
and certain dividends or other distributions. Neither Omnicare, CompScript nor
any affiliate thereof shall be liable to any holder of Boca Shares with respect
to any Omnicare Shares (or cash) delivered to a public official pursuant to any
applicable abandoned property, escheat or similar law.
(f) If any Certificate shall have been lost, stolen or destroyed, upon the
making of an affidavit of that fact by the person claiming such Certificate to
be lost, stolen or destroyed and, if required by Omnicare, the posting by such
person of a bond in such reasonable amount as Omnicare or the Exchange Agent may
direct as indemnity against any claim that may be made against it with respect
to such Certificate, the Exchange Agent shall issue in exchange for such lost,
stolen or destroyed Certificate the consideration payable under this Plan of
Merger.
(g) Notwithstanding any other provision of this Plan of Merger, (x) no
fractional Omnicare Shares shall be issued hereunder, (y) each holder of Boca
Shares who upon surrender of Certificates therefor would otherwise be entitled
to receive a fraction of an Omnicare Share shall receive, in lieu of such
fractional share, cash in an amount equal to such fraction multiplied by closing
price of the Omnicare Shares, as reported in The Wall Street Journal, as of the
trading day immediately preceding the Effective Time, less the amount of any
withholding taxes which may be required thereon under any provision of federal,
state, local or foreign tax law and (z) no interest will be paid on any amounts
payable hereunder.
A-3
<PAGE>
(h) From and after the Effective Time, there shall be no transfers on the
stock transfer books of Boca or the Surviving Corporation of Boca Shares. If,
after the Effective Time, Certificates are presented to the Surviving
Corporation, they shall be canceled and exchanged as provided in this Section 5.
6. Conditions to the Merger.
(a) Mergeco shall have the right not to consummate the Merger if (x) any
statute, rule, regulation, order, injunction, writ or decree shall have been
enacted, entered, ordered, promulgated or enforced by any governmental authority
which prohibits the consummation of the Merger, (y) any legal action shall be
pending or threatened which challenges the Merger or (z) the Registration
Statement on Form S-4 to be filed by Omnicare with respect to the Omnicare
Shares to be issued in the Merger shall not be effective or shall be subject to
any stop order or any proceeding for such purpose shall be pending or threatened
by the Securities and Exchange Commission.
(b) Mergeco may abandon the Merger, and terminate this Plan of Merger, at
any time prior to the Effective Time in its sole discretion. Mergeco may amend
any of the provisions of this Plan of Merger at any time prior to the Effective
Time in its sole discretion. Mergeco may waive any of its rights hereunder at
any time in its sole discretion.
7. Dissenters Rights. The shareholders of Boca who, except for the applicability
of Section 607.1104 of the FBCA , would be entitled to vote on the Merger and
who dissent from the Merger pursuant to Section 607.1320 of the FBCA, may be
entitled, if they comply with the provisions of the FBCA regarding the rights of
dissenting shareholders, to be paid the fair value of their shares.
A-4
<PAGE>
APPENDIX B
607.1301 DISSENTER'S RIGHTS; DEFINITIONS. -- The following definitions
apply to 'SS''SS' 607.1302 and 607.1320:
(1) "Corporation" means the issuer of the shares held by a dissenting
shareholder before the corporate action or the surviving or acquiring
corporation by merger or share exchange of that issuer.
(2) "Fair value," with respect to a dissenter's shares, means the value of
the shares as of the close of business on the day prior to the shareholders'
authorization date, excluding any appreciation or depreciation in anticipation
of the corporate action unless exclusion would be inequitable.
(3) "Shareholders' authorization date" means the date on which the
shareholders' vote authorizing the proposed action was taken, the date on which
the corporation received written consents without a meeting from the requisite
number of shareholders in order to authorize the action, or, in the case of a
merger pursuant to 'SS' 607.1104, the day prior to the date on which a copy of
the plan of merger was mailed to each shareholder of record of the subsidiary
corporation.
607.1302 RIGHT OF SHAREHOLDERS TO DISSENT. --
(1) Any shareholder of a corporation has the right to dissent from, and
obtain payment of the fair value of his or her shares in the event of, any of
the following corporate actions:
(a) Consummation of a plan of merger to which the corporation is a party:
1. If the shareholder is entitled to vote on the merger, or
2. If the corporation is a subsidiary that is merged with its parent under
s. 607.1104, and the shareholders would have been entitled to vote on action
taken, except for the applicability of s. 607.1104;
(b) Consummation of a sale or exchange of all, or substantially all, of the
property of the corporation, other than in the usual and regular course of
business, if the shareholder is entitled to vote on the sale or exchange
pursuant to 'SS' 607.1202, including a sale in dissolution but not including a
sale pursuant to court order or a sale for cash pursuant to a plan by which all
or substantially all of the net proceeds of the sale will be distributed to the
shareholders within 1 year after the date of sale;
(c) As provided in 'SS' 607.0902(11), the approval of a control-share
acquisition;
<PAGE>
(d) Consummation of a plan of share exchange to which the corporation is a
party as the corporation the shares of which will be acquired, if the
shareholder is entitled to vote on the plan;
(e) Any amendment of the articles of incorporation if the shareholder is
entitled to vote on the amendment and if such amendment would adversely affect
such shareholder by:
1. Altering or abolishing any preemptive rights attached to any of his or
her shares;
2. Altering or abolishing the voting rights pertaining to any of his or her
shares, except as such rights may be affected by the voting rights of new shares
then being authorized of any existing or new class or series of shares;
3. Effecting an exchange, cancellation, or reclassification of any of his
or her shares, when such exchange, cancellation, or reclassification would alter
or abolish the shareholder's voting rights or alter his or her percentage of
equity in the corporation, or effecting a reduction or cancellation of accrued
dividends or other arrearages in respect to such shares;
4. Reducing the stated redemption price of any of the shareholder's
redeemable shares, altering or abolishing any provision relating to any sinking
fund for the redemption or purchase of any of his or her shares, or making any
of his or her shares subject to redemption when they are not otherwise
redeemable;
5. Making noncumulative, in whole or in part, dividends of any of the
shareholder's preferred shares which had theretofore been cumulative;
6. Reducing the stated dividend preference of any of the shareholder's
preferred shares; or
7. Reducing any stated preferential amount payable on any of the
shareholder's preferred shares upon voluntary or involuntary liquidation; or
(f) Any corporate action taken, to the extent the articles of incorporation
provide that a voting or nonvoting shareholder is entitled to dissent and obtain
payment for his or her shares.
(2) A shareholder dissenting from any amendment specified in paragraph
(1)(e) has the right to dissent only as to those of his or her shares which are
adversely affected by the amendment.
(3) A shareholder may dissent as to less than all the shares registered in
his or her name. In that event, the shareholder's rights shall be determined as
if the shares as to which he or she has dissented and his or her other shares
were registered in the names of different shareholders.
B-2
<PAGE>
(4) Unless the articles of incorporation otherwise provide, this section
does not apply with respect to a plan of merger or share exchange or a proposed
sale or exchange of property, to the holders of shares of any class or series
which, on the record date fixed to determine the shareholders entitled to vote
at the meeting of shareholders at which such action is to be acted upon or to
consent to any such action without a meeting, were either registered on a
national securities exchange or designated as a national market system security
on an interdealer quotation system by the National Association of Securities
Dealers, Inc., or held of record by not fewer than 2,000 shareholders.
(5) A shareholder entitled to dissent and obtain payment for his or her
shares under this section may not challenge the corporate action creating his or
her entitlement unless the action is unlawful or fraudulent with respect to the
shareholder or the corporation.
607.1320 PROCEDURE FOR EXERCISE OF DISSENTERS' RIGHTS. --
(1)(a) If a proposed corporate action creating dissenters' rights under
'SS' 607.1302 is submitted to a vote at a shareholders' meeting, the meeting
notice shall state that shareholders are or may be entitled to assert
dissenters' rights and be accompanied by a copy of 'SS''SS' 607.1301,
607.1302, and 607.1320. A shareholder who wishes to assert dissenters'
rights shall:
1. Deliver to the corporation before the vote is taken written notice of
the shareholder's intent to demand payment for his or her shares if the proposed
action is effectuated, and
2. Not vote his or her shares in favor of the proposed action. A proxy or
vote against the proposed action does not constitute such a notice of intent to
demand payment.
(b) If proposed corporate action creating dissenters' rights under 'SS'
607.1302 is effectuated by written consent without a meeting, the corporation
shall deliver a copy of ss. 607.1301, 607.1302, and 607.1320 to each shareholder
simultaneously with any request for the shareholder's written consent or, if
such a request is not made, within 10 days after the date the corporation
received written consents without a meeting from the requisite number of
shareholders necessary to authorize the action.
(2) Within 10 days after the shareholders' authorization date, the
corporation shall give written notice of such authorization or consent or
adoption of the plan of merger, as the case may be, to each shareholder who
filed a notice of intent to demand payment for his or her shares pursuant to
paragraph (1)(a) or, in the case of action authorized by written consent, to
each shareholder, excepting any who voted for, or consented in writing to, the
proposed action.
(3) Within 20 days after the giving of notice to him or her, any
shareholder who elects to dissent shall file with the corporation a notice of
such election, stating the shareholder's name and address, the number, classes,
and series of shares as to which he dissents, and a demand for payment of the
fair value of his or her shares. Any shareholder failing to file such election
to dissent within the period set forth shall be bound by the terms of the
proposed corporate action. Any shareholder filing an election to dissent shall
deposit his or her certificates for certificated shares with the corporation
simultaneously with the filing of the
B-3
<PAGE>
election to dissent. The corporation may restrict the transfer of uncertificated
shares from the date the shareholder's election to dissent is filed with the
corporation.
(4) Upon filing a notice of election to dissent, the shareholder shall
thereafter be entitled only to payment as provided in this section and shall not
be entitled to vote or to exercise any other rights of a shareholder. A notice
of election may be withdrawn in writing by the shareholder at any time before an
offer is made by the corporation, as provided in subsection (5), to pay for his
or her shares. After such offer, no such notice of election may be withdrawn
unless the corporation consents thereto. However, the right of such shareholder
to be paid the fair value of his or her shares shall cease, and the shareholder
shall be reinstated to have all his or her rights as a shareholder as of the
filing of his or her notice of election, including any intervening preemptive
rights and the right to payment of any intervening dividend or other
distribution or, if any such rights have expired or any such dividend or
distribution other than in cash has been completed, in lieu thereof, at the
election of the corporation, the fair value thereof in cash as determined by the
board as of the time of such expiration or completion, but without prejudice
otherwise to any corporate proceedings that may have been taken in the interim,
if:
(a) Such demand is withdrawn as provided in this section;
(b) The proposed corporate action is abandoned or rescinded or the
shareholders revoke the authority to effect such action;
(c) No demand or petition for the determination of fair value by a court
has been made or filed within the time provided in this section; or
(d) A court of competent jurisdiction determines that such shareholder is
not entitled to the relief provided by this section.
(5) Within 10 days after the expiration of the period in which shareholders
may file their notices of election to dissent, or within 10 days after such
corporate action is effected, whichever is later (but in no case later than 90
days from the shareholders' authorization date), the corporation shall make a
written offer to each dissenting shareholder who has made demand as provided in
this section to pay an amount the corporation estimates to be the fair value for
such shares. If the corporate action has not been consummated before the
expiration of the 90-day period after the shareholders' authorization date, the
offer may be made conditional upon the consummation of such action. Such notice
and offer shall be accompanied by:
(a) A balance sheet of the corporation, the shares of which the dissenting
shareholder holds, as of the latest available date and not more than 12 months
prior to the making of such offer; and
(b) A profit and loss statement of such corporation for the 12-month period
ended on the date of such balance sheet or, if the corporation was not in
existence throughout such 12-month period, for the portion thereof during which
it was in existence.
(6) If within 30 days after the making of such offer any shareholder
accepts the same, payment for his or her shares shall be made within 90 days
after the making of such
B-4
<PAGE>
offer or the consummation of the proposed action, whichever is later. Upon
payment of the agreed value, the dissenting shareholder shall cease to have any
interest in such shares.
(7) If the corporation fails to make such offer within the period specified
therefor in subsection (5) or if it makes the offer and any dissenting
shareholder or shareholders fail to accept the same within the period of 30 days
thereafter, then the corporation, within 30 days after receipt of written demand
from any dissenting shareholder given within 60 days after the date on which
such corporate action was effected, shall, or at its election at any time within
such period of 60 days may, file an action in any court of competent
jurisdiction in the country in this state where the registered office of the
corporation is located requesting that the fair value of such shares be
determined. The court shall also determine whether each dissenting shareholder,
as to whom the corporation requests the court to make such determination, is
entitled to receive payment for his or her shares. If the corporation fails to
institute the proceeding as herein provided, any dissenting shareholder may do
so in the name of the corporation. All dissenting shareholders (whether or not
residents of this state), other than shareholders who have agreed with the
corporation as to the value of their shares, shall be made parties to the
proceeding as an action against their shares. The corporation shall serve a copy
of the initial pleading in such proceeding upon each dissenting shareholder who
is a resident of this state in the manner provided by law for the service of a
summons and complaint and upon each nonresident dissenting shareholder either by
registered or certified mail and publication or in such other manner as is
permitted by law. The jurisdiction of the court is plenary and exclusive. All
shareholders who are proper parties to the proceeding are entitled to judgment
against the corporation for the amount of the fair value of their shares. The
court may, if it so elects, appoint one or more persons as appraisers to receive
evidence and recommend a decision on the question of fair value. The appraisers
shall have such power and authority as is specified in the order of their
appointment or an amendment thereof. The corporation shall pay each dissenting
shareholder the amount found to be due him or her within 10 days after final
determination of the proceedings. Upon payment of the judgment, the dissenting
shareholder shall cease to have any interest in such shares.
(8) The judgment may, at the discretion of the court, include a fair rate
of interest, to be determined by the court.
(9) The costs and expenses of any such proceeding shall be determined by
the court and shall be assessed against the corporation, but all or any part of
such costs and expenses may be apportioned and assessed as the court deems
equitable against any or all of the dissenting shareholders who are parties to
the proceeding, to whom the corporation has made an offer to pay for the shares,
if the court finds that the action of such shareholders in failing to accept
such offer was arbitrary, vexatious, or not in good faith. Such expenses shall
include reasonable compensation for, and reasonable expenses of, the appraisers,
but shall exclude the fees and expenses of counsel for, and experts employed by,
any party. If the fair value of the shares, as determined, materially exceeds
the amount which the corporation offered to pay therefor or if no offer was
made, the court in its discretion may award to any shareholder who is a party to
the proceeding such sum as the court determines to be reasonable compensation to
any attorney or expert employed by the shareholder in the proceeding.
B-5
<PAGE>
(10) Shares acquired by a corporation pursuant to payment of the agreed
value thereof or pursuant to payment of the judgment entered therefor, as
provided in this section, may be held and disposed of by such corporation as
authorized but unissued shares of the corporation, except that, in the case of a
merger, they may be held and disposed of as the plan of merger otherwise
provides. The shares of the surviving corporation into which the shares of such
dissenting shareholders would have been converted had they assented to the
merger shall have the status of authorized but unissued shares of the surviving
corporation.
B-6
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 20. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
The Omnicare Certificate of Incorporation, as amended (the "Omnicare
Certificate") provides that a director of Omnicare will not be liable to
Omnicare or its stockholders for monetary damages for breach of fiduciary duty
as a director, to the full extent permitted by the Delaware General Corporation
Law (the "DGCL"), as amended or interpreted from time to time.
In addition, the Omnicare Certificate states that Omnicare shall, to
the full extent permitted by the DGCL, as amended or interpreted from time to
time, indemnify all directors, officers and employees whom it may indemnify
pursuant thereto and in addition, Omnicare may, to the extent permitted by the
DGCL, indemnify agents of Omnicare or other persons.
Section 145 of the DGCL permits indemnification against expenses,
fines, judgments and settlements incurred by any director, officer or employee
of a company in the event of pending or threatened civil, criminal,
administrative or investigative proceedings, if such person was, or was
threatened to be made, a party by reason of the fact that he or she is or was a
director, officer, or employee of the company. Section 145 also provides that
the indemnification provided for therein shall not be deemed exclusive of any
other rights to which those seeking indemnification may otherwise be entitled.
In addition, Omnicare maintains a directors' and officers' liability insurance
policy.
ITEM 21. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES.
(A) EXHIBITS
See Exhibit Index.
(B) FINANCIAL STATEMENTS SCHEDULES
All financial statement schedules of the Registrant which are required
to be included herein are incorporated herein by reference to Registrant's
Annual Report on Form 10-K for the year ended December 31, 1998.
(C) OPINIONS
None.
ITEM 22. UNDERTAKINGS.
1. The undersigned registrant hereby undertakes:
(a) To file, during any period in which offers or sales are being
made, a post-effective amendment to this registration statement:
<PAGE>
(i) To include any prospectus required by section 10(a)(3) of the
Securities Act of 1933;
(ii) To reflect in the prospectus any facts or events arising
after the effective date of the registration statement (or the most recent
post-effective amendment thereof) which, individually or in the aggregate,
represent a fundamental change in the information set forth in the registration
statement. Notwithstanding the foregoing, any increase or decrease in volume of
securities offered (if the total dollar value of securities offered would not
exceed that which was registered) and any deviation from the low or high end of
the estimated maximum offering range may be reflected in the form of prospectus
filed with the Commission pursuant to Rule 424(b) if, in the aggregate, the
changes in volume and price represent no more than a 20% change in the maximum
aggregate offering price set forth in the "Calculation of Registration Fee"
table in the effective registration statement.
(iii) To include any material information with respect to the
plan of distribution not previously disclosed in the registration statement or
any material change to such information in the registration statement;
(b) That, for the purpose of determining any liability under the
Securities Act of 1933, each such post-effective amendment shall be deemed to be
a new registration statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the initial bona
fide offering thereof.
(c) To remove from registration by means of a post-effective
amendment any of the securities being registered which remain unsold at the
termination of the offering.
2. The undersigned registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act of 1933, each filing of the
registrant's annual report pursuant to section 13(a) or section 15(d) of the
Securities Exchange Act of 1934 (and, where applicable, each filing of an
employee benefit plan's annual report pursuant to section 15(d) of the
Securities Exchange Act of 1934) that is incorporated by reference in the
registration statement shall be deemed to be a new registration statement
relating to the securities offered therein, and the offering of such securities
at that time shall be deemed to be the initial bona fide offering thereof.
3. The undersigned registrant hereby undertakes as follows: that prior
to any public reoffering of the securities registered hereunder through use of a
prospectus which is a part of this registration statement, by any person or
party who is deemed to be an underwriter within the meaning of Rule 145(c), the
issuer undertakes that such reoffering prospectus will contain the information
called for by the applicable registration form with respect to reofferings by
persons who may be deemed underwriters, in addition to the information called
for by the other Items of the applicable form.
4. The registrant undertakes that every prospectus: (i) that is filed
pursuant to paragraph (3) immediately preceding, or (ii) that purports to meet
the requirements of section 10(a)(3) of the Securities Act of 1933 and is used
in connection with an offering of securities
II-2
<PAGE>
subject to Rule 415, will be filed as a part of an amendment to the registration
statement and will not be used until such amendment is effective, and that, for
purposes of determining any liability under the Securities Act of 1933, each
such post-effective amendment shall be deemed to be a new registration statement
relating to the securities offered therein, and the offering of such securities
at that time shall be deemed to be the initial bona fide offering thereof.
5. Insofar as indemnification for liabilities arising under the
Securities Act of 1933 may be permitted to directors, officers and controlling
persons of the registrant pursuant to the foregoing provisions, or otherwise,
the registrant has been advised that in the opinion of the Securities and
Exchange Commission such indemnification is against public policy as expressed
in the Act and is, therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment by the
registrant of expenses incurred or paid by a director, officer or controlling
person of the registrant in the successful defense of any action, suit or
proceeding) is asserted by such director, officer or controlling person in
connection with the securities being registered, the registrant will, unless in
the opinion of its counsel the matter has been settled by controlling precedent,
submit to a court of appropriate jurisdiction the question whether such
indemnification by it is against public policy as expressed in the Securities
Act of 1933 and will be governed by the final adjudication of such issue.
6. The undersigned registrant hereby undertakes to respond to requests
for information that is incorporated by reference into the prospectus pursuant
to Items 4, 10(b), 11 or 13 of this Form, within one business day of receipt of
such request, and to send the incorporated documents by first class mail or
other equally prompt means. This includes information contained in documents
filed subsequent to the effective date of the registration statement through the
date of responding to the request.
7. The undersigned registrant hereby undertakes to supply by means of
post-effective amendment all information concerning a transaction, and the
company being acquired involved therein, that was not the subject of and
included in the registration statement when it became effective.
II-3
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act, the Registrant has
duly caused this Registration Statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in the City of Covington, Commonwealth
of Kentucky, on this 17th day of June, 1999.
OMNICARE, INC.
/s/ Cheryl D. Hodges
-----------------------------
Cheryl D. Hodges, Senior Vice
President and Secretary
KNOW ALL PERSONS BY THESE PRESENTS, that each person whose signature
appears below hereby severally constitutes and appoints Edward L. Hutton, Joel
F. Gemunder and Cheryl D. Hodges, and each of them, his or her true and lawful
attorney-in-fact and agent, with full power of substitution and resubstitution
for him or her and in his or her name, place and stead, in any and all
capacities to sign any and all amendments (including post-effective amendments)
to the Registration Statement, and to file the same, with all exhibits thereto,
and other documents in connection therewith, with the Securities and Exchange
Commission, granting unto said attorney-in-fact and agents, and each of them,
full power and authority to do and perform each and every act and thing
requisite or necessary fully to all intents and purposes as he or she might or
could do in person, hereby ratifying and confirming all that each said
attorneys-in-fact and agents or any of them or their or his or her substitute or
substitutes, may lawfully do or cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities and on the dates indicated.
<TABLE>
<CAPTION>
Signatures Title Date
---------- ----- ----
<S> <C> <C>
/s/ Edward L. Hutton
- --------------------------------- Chairman and Director (Principal June 17, 1999
Edward L. Hutton Executive Officer)
/s/ Joel F. Gemunder
- --------------------------------- President and Director (Principal
Joel F. Gemunder Executive Officer) June 17, 1999
/s/ David W. Froesel, Jr. Senior Vice President and Chief
- --------------------------------- Financial Officer (Pricipal
David W. Froesel, Jr. Financial Officer and Principal
Accounting Officer) June 17, 1999
</TABLE>
<PAGE>
<TABLE>
<S> <C> <C>
/s/ Timothy E. Bien
- ---------------------------------
Timothy E. Bien Director June 17, 1999
/s/ Charles H. Erhart, Jr.
- ---------------------------------
Charles H. Erhart, Jr. Director June 17, 1999
- ---------------------------------
Mary Lou Fox Director June 17, 1999
/s/ Geraldine A. Henwood
- ---------------------------------
Geraldine A. Henwood Director June 17, 1999
/s/ Cheryl D. Hodges
- ---------------------------------
Cheryl D. Hodges Director June 17, 1999
/s/ Thomas C. Hutton
- ---------------------------------
Thomas C. Hutton Director June 17, 1999
/s/ Patrick E. Keefe
- ---------------------------------
Patrick E. Keefe Director June 17, 1999
/s/ Sandra E. Laney
- ---------------------------------
Sandra E. Laney Director June 17, 1999
/s/ Andrea R. Lindell
- ---------------------------------
Andrea R. Lindell Director June 17, 1999
/s/ Sheldon Margen
- ---------------------------------
Sheldon Margen Director June 17, 1999
/s/ Kevin J. McNamara
- ---------------------------------
Kevin J. McNamara Director June 17, 1999
</TABLE>
<PAGE>
EXHIBIT INDEX
<TABLE>
<CAPTION>
Exhibit No. Description
- ----------- -----------
<S> <C>
2.1 - Plan of Merger, adopted as of June 17, 1999 (attached as Appendix A to the
Prospectus included in this Registration Statement).
3.1 - Restated Certificate of Incorporation of Omnicare (incorporated herein by
reference to Registrant's Annual Report on Form 10-K for the year ended December
31, 1996).
3.2 - Certificate of Amendment of the Restated Certificate of Incorporation of
Omnicare (incorporated herein by reference to Omnicare's Registration Statement
on Form S-4 (File No. 333-53749), filed with the SEC on May 27, 1998).
3.3 - Amended Bylaws of Omnicare (incorporated herein by reference to Omnicare's
Registration Statement on Form S-3 (File No. 333-64441), filed with the SEC on
September 28, 1998).
4.1 - Rights Agreement, dated as of May 17, 1999, by and between Omnicare, Inc. and
First Chicago Trust Company of New York, as Rights Agent. The Rights Agreement
includes the Form of Certificate of Designations of Series A Junior
Participating Preferred Stock as Exhibit A, Form of Rights Certificate as
Exhibit B and Summary of Rights as Exhibit C (incorporated by reference to
Exhibit 4.1 to the Company's Current Report on Form 8-K dated May 18, 1999).
4.2 - Credit Agreement among Omnicare, The First National Bank of Chicago, agent, and
certain banks, dated as of October 22, 1996, as amended (incorporated herein by
reference to Registrant's Annual Report on Form 10-K for the year ended December
31, 1996).
4.3 - Amendment No. 1 to the Credit Agreement dated as of December 23, 1997
(incorporated herein by reference to Registrant's Annual Report on Form 10-K for
the year ended December 31, 1998).
4.4 - Amendment No. 2 to the Credit Agreement dated as of December 21, 1998
(incorporated herein by reference to Registrant's Current Report on Form 8-K
dated December 29, 1998).
4.5 - 364-Day Credit Agreement among Omnicare, The First National Bank of Chicago,
agent, and certain banks, dated as of December 21, 1998 (incorporated herein by
reference to Registrant's Current Report on Form 8-K dated December 29, 1998).
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Exhibit No. Description
- ----------- -----------
<S> <C>
4.6 - Indenture, dated as of December 10, 1997, between Omnicare and The First
National Bank of Chicago, as trustee (incorporated herein by reference to
Registrant's Registration Statement on Form S-3, dated February 6, 1998).
5.1 - Opinion of Dewey Ballantine LLP.*
8.1 - Opinion of Dewey Ballantine LLP as to certain federal income tax matters.*
10.1 - Executive Salary Protection Plan, as amended, May 22, 1981 (incorporated herein
by reference to Registrant's Annual Report on Form 10-K for the year ended
December 31, 1995).
10.2 - 1981 Stock Incentive Plan, as amended (incorporated herein by reference to
Registrant's Annual Report on Form 10-K for the year ended December 31, 1987).
10.3 - 1989 Stock Incentive Plan (incorporated herein by reference to Registrant's
Proxy Statement dated April 10, 1989 for Registrant's 1989 Annual Meeting of
Stockholders).
10.4 - 1992 Long-Term Stock Incentive Plan (incorporated herein by reference to
Registrant's Proxy Statement dated March 31, 1997 for Registrant's 1997 Annual
Meeting of Stockholders).
10.5 - 1995 Premium-Priced Stock Option Plan (incorporated herein by reference to
Registrant's Proxy Statement dated April 10, 1995 for Registrant's 1995 Annual
Meeting of Stockholders).
10.6 - 1998 Long-Term Employee Incentive Plan (incorporated herein by reference to
Registrant's Annual Report on Form 10-K for the year ended December 31, 1998).
10.7 - Excess Benefits Plan (incorporated herein by reference to Registrant's Annual
Report on Form 10-K for the year ended December 31, 1987).
10.8 - Form of Indemnification Agreement with Directors and Officers (incorporated
herein by reference to Registrant's Annual Report on Form 10-K for the year
ended December 31, 1998).
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Exhibit No. Description
- ----------- -----------
<S> <C>
10.9 - Employment Agreements with J.F. Gemunder and C.D. Hodges, dated August 4, 1988
(incorporated herein by reference to Registrant's Annual Report on Form 10-K for
the year ended December 31, 1988).
10.10 - Employment Agreement with P.E. Keefe, dated March 4, 1993 (incorporated herein
by reference to Registrant's Annual Report on Form 10-K for the year ended
December 31, 1993).
10.11 - Split Dollar Agreement with E.L. Hutton, dated June 1, 1995 (Agreement in the
same form exists with J.F. Gemunder) (incorporated herein by reference to
Registrant's Annual Report on Form 10-K for the year ended December 31, 1995).
10.12 - Split Dollar Agreement, dated June 1, 1995 (Agreements in the same form exists
with the following Executive Officers: C.D. Hodges, P.E. Keefe and T.E. Bien)
(incorporated herein by reference to Registrant's Annual Report on Form 10-K for
the year ended December 31, 1995).
10.13 - Annual Incentive Plan for Senior Executive Officers (incorporated herein by
reference to Registrant's Proxy Statement dated May 20, 1996 for Registrant's
1996 Annual Meeting of Stockholders).
10.14 - Employment Agreement with T.E. Bien, dated January 1, 1994 (incorporated herein
by reference to Registrant's Annual Report on Form 10-K for the year ended
December 31, 1996).
10.15 - Employment Agreement with D.W. Froesel, dated February 17, 1996 (incorporated
herein by reference to Registrant's Annual Report on Form 10-K for the year
ended December 31, 1996).
10.16 - Employment Agreement with M.L. Fox, dated April 4, 1996 (incorporated herein by
reference to Registrant's Annual Report on Form 10-K for the year ended December
31, 1996).
10.17 - Consulting Agreement with MLF Co., dated April 4, 1996 (incorporated herein by
reference to Registrant's Annual Report on Form 10-K for the year ended December
31, 1996).
10.18 - Amendment to Employment Agreement with J.F. Gemunder, dated March 3, 1999
(Amendments in the same form exist with the following Executive Officers: P.E.
Keefe and C.D. Hodges) (incorporated herein by reference to Registrant's Annual
Report on Form 10-K for the year ended December 31, 1998).
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Exhibit No. Description
- ----------- -----------
<S> <C>
11.1 - Statement of Computation of Earnings per common shares of Omnicare (incorporated
herein by reference to Registrant's Annual Report on Form 10-K for the year
ended December 31, 1998).
12.1 - Statement of Computation of Ratio of Earnings to Fixed Charges (incorporated
herein by reference to Registrant's Annual Report on Form 10-K for the year
ended December 31, 1998).
21.1 - Subsidiaries of Omnicare (incorporated herein by reference to Registrant's
Annual Report on Form 10-K for the year ended December 31, 1998).
23.1 - Consent of Dewey Ballantine LLP (included as part of its opinion filed as
Exhibit 5.1 hereto).
23.2 - Consent of Dewey Ballantine LLP (included as part of its opinion filed as
Exhibit 8.1 hereto).
23.3 - Consent of PricewaterhouseCoopers LLP.*
23.4 - Consent of Ernst & Young LLP.*
23.5 - Consent of Arthur Andersen LLP.*
24.1 - Power of Attorney, included as part of the Signature page in this Registration
Statement.
</TABLE>
- --------------------
* Filed herewith
<PAGE>
Exhibit 5.1
[Letterhead of Dewey Ballantine LLP]
June 17, 1999
Omnicare, Inc.
100 East RiverCenter Blvd., Suite 1600
Covington, Kentucky 41011
Ladies and Gentlemen:
We have acted as special counsel to Omnicare, Inc., a Delaware
corporation (the "Company"), in connection with the Registration Statement on
Form S-4 (the "Registration Statement") filed by the Company under the
Securities Act of 1933 (the "Act"), for the purpose of registering under the Act
up to 85,243 shares (the "Shares") of the Company's common stock, par value
$1.00 per share, proposed to be issued in connection with the merger (the
"Merger") between CompScript-Boca, Inc. ("CompScript-Boca") and Boca Acquisition
Corp. ("Mergeco"), contemplated by the Plan of Merger, dated as of June 17,
1999 (the "Plan of Merger") attached as Appendix A to the Prospectus included
in the Registration Statement. CompScript-Boca is a Florida corporation and a
92% owned subsidiary of CompScript, Inc. ("CompScript"), Mergeco is a Florida
corporation and a wholly owned subsidiary of CompScript, and CompScript is a
Florida corporation and a wholly owned subsidiary of the Company.
In connection with this opinion, we have examined originals or copies,
certified or otherwise identified to our satisfaction, of such certificates and
other documents as we deemed necessary or advisable for the purpose of
expressing the opinion contained herein, including, without limitation, the
following: the Restated Certificate of Incorporation of the Company, as amended,
the Amended Bylaws of the Company, the Registration Statement and resolutions
adopted by the Executive Committee of the Board of Directors of the Company.
With respect to all of the documents reviewed, we have assumed, without
investigation, the genuineness of all signatures, the authenticity of all
documents submitted to us as originals and the conformity to originals of all
documents submitted to us as certified or reproduced copies.
We are admitted to the Bar of the State of New York and express no
opinion as to the laws of any other jurisdiction other than the General
Corporation Law of the State of Delaware.
<PAGE>
Based upon and subject to the foregoing, we are of the opinion that
the Shares, when issued in accordance with the terms and conditions of the Plan
of Merger, will be validly issued, fully paid and nonassessable.
This opinion is rendered solely to you in connection with the above
matter, and may not be relied upon by you for any other purpose or relied upon
by or furnished to any other person without our prior written consent.
We hereby consent to the filing of this opinion as an exhibit to the
Registration Statement and to the reference to this Firm under the caption
"Legal Opinions" in the Prospectus constituting a part of the Registration
Statement. In giving this consent, we do not thereby admit that we come within
the category of persons whose consent is required under Section 7 of the Act or
the rules and regulations of the Securities and Exchange Commission thereunder.
Very truly yours,
/s/ Dewey Ballantine LLP
<PAGE>
Exhibit 8.1
[Letterhead of Dewey Ballantine LLP]
June 17, 1999
Omnicare, Inc.
100 East RiverCenter Boulevard
Suite 1600
Covington, Kentucky 41011
Re: Merger of Boca
Ladies and Gentlemen:
We have acted as your counsel in connection with the proposed merger
(the "Merger") of Boca Acquisition Corp., a newly formed Florida corporation
("Mergeco") with CompScript-Boca, Inc., a Florida corporation ("Boca") as
contemplated by the Plan of Merger dated as of June 17, 1999 (the "Merger
Plan"). In that connection, we have participated in the preparation of a
registration statement under the Securities Act of 1933 on Form S-4, including
a Prospectus (the "Prospectus") of Omnicare, Inc., a Delaware corporation
("Omnicare").
You have requested our opinion as to the accuracy of the description
in the Prospectus of certain federal income tax consequences to holders of
shares of Boca common stock ("Boca Common Stock"). In rendering our opinion, we
have examined the Merger Plan, the Prospectus, the representation letter of
Omnicare dated today which has been delivered to us for purposes of this opinion
(the "Officer's Certificate"), and such other documents and corporate records as
we have deemed necessary or appropriate for purposes of this opinion. In
addition, we have assumed (i) the Merger will be consummated in the manner
contemplated in the Prospectus and in accordance with the provisions of the
Merger Plan, (ii) the statements concerning the Merger set forth in the
Prospectus are accurate and complete, (iii) the representations set forth in the
Officer's Certificate are accurate and complete and (iv) any representations in
the Officer's Certificate that are qualified by the phrases "to the best of the
knowledge," "has no knowledge," or similar such phrases are, in each case,
correct without such qualification.
On the basis and subject to (i) the accuracy of the statements and
representations contained in the materials referred to above and the above
assumptions and (ii) our considerations of such other matters as we have deemed
necessary, it is our opinion that the description of the federal income tax
consequences to certain holders of Boca Common Stock contained in the Prospectus
under the heading "Material United States Federal Income Tax Consequences of the
Merger" correctly sets forth the material federal
<PAGE>
income tax consequences for such holders. You have not requested, and we do not
express, an opinion concerning any other tax consequences of the Merger.
This opinion is not to be used, circulated, quoted or otherwise
referred to for any purpose without our express written permission. We hereby
consent to the filing of this opinion as an exhibit to the Registration
Statement. In giving this consent we do not hereby admit that we come within the
category of persons whose consent is required under Section 7 of the Securities
Act of 1933, as amended, or the rules and regulations of the Securities and
Exchange Commission thereunder.
Very truly yours,
Dewey Ballantine LLP
<PAGE>
Exhibit 23.3
Consent of Independent Accountants
We hereby consent to the incorporation by reference in this Registration
Statement on Form S-4 of Omnicare, Inc. of our report dated January 29, 1999
relating to the financial statements and financial statement schedules,
appearing in Omnicare, Inc.'s Annual Report on Form 10-K for the year ended
December 31, 1998. We also consent to the use in this Registration Statement of
our report dated February 1, 1999 relating to the financial statements of
CompScript-Boca, Inc., which appears in the Registration Statement. We also
consent to the reference to us under the heading "Experts" in such Registration
Statement.
/s/ PricewaterhouseCoopers LLP
- -------------------------------
PricewaterhouseCoopers LLP
Cincinnati, Ohio
June 15, 1999
<PAGE>
Exhibit 23.4
Consent of Independent Certified Public Accountants
We consent to the reference to our firm under the caption "Experts" in
the Registration Statement (Form S-4) and related Prospectus of Omnicare, Inc.
for the registration of approximately 85,243 shares of its common stock and to
the incorporation by reference therein of our report dated March 6, 1998, with
respect to the consolidated financial statements of CompScript, Inc., included
in Omnicare, Inc.'s Annual Report (Form 10-K) for the year ended December 31,
1998, filed with the Securities and Exchange Commission.
/s/ Ernst & Young LLP
- -------------------------
Ernst & Young LLP
West Palm Beach, Florida
June 15, 1999
<PAGE>
Exhibit 23.5
Consent of Independent Public Accountants
As independent public accountants, we hereby consent to the
incorporation by reference in this registration statement on Form S-4 of our
report dated February 5, 1998 on IBAH, Inc.'s, 1997 and 1996 financial
statements included in Omnicare, Inc.'s Form 10-K for the year ended December
31, 1998 and to all references to our firm included in this registration
statement.
/s/ Arthur Andersen LLP
- ------------------------
Arthur Andersen LLP
Philadelphia, Pa.,
June 15, 1999
