SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
Current Report Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report: April 10, 1996
CONSECO, INC.
State of Incorporation:
Indiana
Commission File Number IRS Employer Id. Number
No. 1-9250 No. 35-1468632
Address of Principal Executive Offices:
11825 North Pennsylvania Street
Carmel, Indiana 46032
Telephone No.
(317) 817-6100
<PAGE>
CONSECO, INC. AND SUBSIDIARIES
ITEM 5. OTHER EVENTS.
The unaudited pro forma consolidated financial statements of Conseco, Inc.
and its consolidated subsidiaries ("Conseco" or the "Company"), attached as
Exhibit 99.1, present Conseco's financial position and results of operations as
of and for the year ended December 31, 1995, giving pro forma effect to several
transactions which occurred during 1995 and the first quarter of 1996, as
described in the notes accompanying the pro forma consolidated financial
statements.
The pro forma consolidated financial statements are not necessarily
indicative of what the financial position or results of operations actually
would have been if the transactions had occurred at the dates indicated.
Furthermore, the pro forma consolidated financial statements are not intended to
be indicative of Conseco's future financial position or future results of
operations and should be read in conjunction with the historical consolidated
financial statements and related notes thereto included in Conseco's Form 10-K
for the year ended December 31, 1995.
2
<PAGE>
CONSECO, INC. AND SUBSIDIARIES
ITEM 7(c). EXHIBIT.
99.1 Pro forma Consolidated Financial Statements of Conseco, Inc. and
Subsidiaries
3
<PAGE>
CONSECO, INC. AND SUBSIDIARIES
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
Date: April 10, 1996
CONSECO, INC.
By:/s/ROLLIN M. DICK
---------------------------
Rollin M. Dick
Executive Vice President
and Chief Financial Officer
4
CONSECO, INC. AND SUBSIDIARIES
PRO FORMA CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
The following unaudited pro forma consolidated financial statements of
Conseco, Inc. and its consolidated subsidiaries ("Conseco" or the "Company")
present Conseco's financial position and results of operations as of and for the
year ended December 31, 1995, giving pro forma effect to several transactions
which occurred during 1995 and the first quarter of 1996, as described in the
notes accompanying the pro forma consolidated financial statements.
The pro forma consolidated financial statements are not necessarily
indicative of what the financial position or results of operations actually
would have been if the transactions had occurred at the dates indicated.
Furthermore, the pro forma consolidated financial statements are not intended to
be indicative of Conseco's future financial position or future results of
operations and should be read in conjunction with the historical consolidated
financial statements and related notes thereto included in Conseco's Form 10-K
for the year ended December 31, 1995.
<PAGE>
<TABLE>
<CAPTION>
CONSECO, INC. AND SUBSIDIARIES
PRO FORMA CONSOLIDATED STATEMENT OF OPERATIONS
for the year ended December 31, 1995
(Dollars in millions)
(unaudited)
Pro forma Pro forma Conseco
Conseco adjustments adjustments pro forma
as reported Pro forma reflecting reflecting totals
for the year adjustments additional various (before
ended reflecting the ownership other LPG
12/31/95 CCP Merger of BLH transactions Merger)
-------- ---------- ------ ------------ -------
<S> <C> <C> <C> <C> <C>
Revenues:
Insurance policy income $ 1,465.0 $ - $ (0.1)(11) $ - $ 1,464.9
Investment activity:
Net investment income 1,142.6 (0.7) (1) (0.2)(11) 1,138.5
(2.7) (2) (0.5)(9)
Net trading income 2.5 2.5
Net realized gains 186.4 (0.7)(11) 185.7
Fee revenue 33.9 33.9
Restructuring income 15.2 15.2
Other income 9.7 (0.3)(11) 9.4
--------- --------- ------- ------- --------
Total revenues 2,855.3 (3.4) (1.8) 2,850.1
--------- --------- ------- ------- --------
Benefits and expenses:
Insurance policy benefits 1,075.5 1,075.5
Change in future policy benefits 32.0 (1.1)(11) 30.9
Interest expense on annuities and financial products 585.4 (0.2)(11) 585.2
Interest expense on notes payable 119.4 15.6 (3) (0.8)(11) (5.1)(14) 110.7
(0.9) (4) 7.1 (10) (18.4)(15)
(6.2)(16)
Interest expense on investment borrowings 22.2 22.2
Amortization related to operations 203.6 1.5 (5) 2.7 (11) 207.8
Amortization related to realized gains 126.6 (0.6)(11) 126.0
Other operating costs and expenses 272.1 0.3 (11) 272.4
--------- --------- ------- ------- --------
Total benefits and expenses 2,436.8 16.2 7.4 (29.7) 2,430.7
--------- --------- ------- ------- --------
Income before income taxes, minority interest
and extraordinary charge 418.5 (19.6) (9.2) 29.7 419.4
Income tax expense 87.0 (6.9) (6) (2.1)(13) 10.4(17) 163.3
8.4 (7) 66.5 (12)
--------- --------- ------- ------- --------
Income before minority interest and
extraordinary charge 331.5 (21.1) (73.6) 19.3 256.1
Less minority interest 109.0 (23.2) (8) (15.3)(11) 2.5(18) 72.5
(0.5)(18)
--------- --------- ------- ------- --------
Income before extraordinary charge $ 222.5 $ 2.1 $ (57.8) $ 16.8 $ 183.6
========= ========= ======= ======= ========
Earnings per common share and common equivalent share:
Primary:
Weighted average shares outstanding 43.0 7.5(19) 50.5
========= ======= ========
Income before extraordinary charge $4.74 $3.27
========= ========
Fully diluted:
Weighted average shares outstanding 52.2 7.5(19) 59.7
========= ======= ========
Income before extraordinary charge $4.26 $3.07
========= ========
<FN>
The accompanying notes are an integral part of the pro forma
consolidated financial statements.
</FN>
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
CONSECO, INC. AND SUBSIDIARIES
PRO FORMA CONSOLIDATED BALANCE SHEET
December 31, 1995
(Unaudited)
(Dollars in millions)
Conseco
Pro forma pro forma
adjustments totals
reflecting (before
Conseco various LPG
as reported transactions merger)
----------- ------------ -------
<S> <C> <C> <C>
Assets:
Investments:
Actively managed fixed maturity securities
at fair value $12,963.3 $ - $ 12,963.3
Equity securities at fair value 36.6 36.6
Mortgage loans 339.9 339.9
Credit - tenant loans 259.1 259.1
Policy loans 307.6 307.6
Other invested assets 91.2 91.2
Short - term investments 189.9 258.0 (15) 172.8
(247.6)(15)
306.3 (16)
(179.7)(16)
(110.5)(16)
(43.6)(16)
Assets held in separate accounts 227.0 227.0
--------- ------- ---------
Total investments 14,414.6 (17.1) 14,397.5
Accrued investment income 207.8 207.8
Cost of policies purchased 1,030.7 1,030.7
Cost of policies produced 391.0 391.0
Reinsurance receivables 84.8 84.8
Goodwill, net of accumulated amortization 894.1 29.8(16) 923.9
Property and equipment at cost, net of accumulated
depreciation 88.7 88.7
Securities segregated for the future redemption of
redeemable preferred stock of a subsidiary 39.2 39.2
Other assets 146.6 146.6
---------- ------- ----------
Total assets $ 17,297.5 $ 12.7 $ 17,310.2
========== ======= ==========
(continued on next page)
<FN>
The accompanying notes are an integral part of the pro forma
consolidated financial statements.
</FN>
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
CONSECO, INC. AND SUBSIDIARIES
PRO FORMA CONSOLIDATED BALANCE SHEET, continued
December 31, 1995
(Unaudited)
(Dollars in millions)
Conseco
Pro forma pro forma
adjustments totals
reflecting (before
Conseco various LPG
as reported transactions merger)
----------- ------------ -------
<S> <C> <C> <C>
Liabilities:
Insurance liabilities $ 13,378.4 $ - $ 13,378.4
Income tax liabilities 93.3 (6.1)(15),(16) 87.2
Investment borrowings 298.1 298.1
Other liabilities 329.6 (2.6)(15) 319.9
(7.1)(16)
Liabilities related to separate accounts 227.0 227.0
Notes payable of Conseco 871.4 (242.7)(15) 628.7
Notes payable of Partnership II entities, not direct
obligations of Conseco 283.2 283.2
Notes payable of Bankers Life Holding Corp., not direct
obligations of Conseco 301.5 306.3 (16) 340.0
(110.0)(16)
(157.8)(16)
--------- --------- ----------
Total liabilities 15,782.5 (220.0) 15,562.5
--------- --------- ----------
Minority interest 403.3 (1.0)(16) 388.5
(13.8)(16)
Shareholders' equity:
Preferred stock 283.5 283.5
PRIDES 267.1 (15) 267.1
Common stock and additional paid-in capital 157.2 (9.1)(15) 148.1
Unrealized appreciation of securities, net:
Fixed maturity securities 112.6 112.6
Equity securities 0.1 0.1
Retained earnings 558.3 (1.5)(15) 547.8
(9.0)(16)
---------- --------- ----------
Total shareholders' equity 1,111.7 247.5 1,359.2
---------- --------- ----------
Total liabilities and shareholders' equity $ 17,297.5 $ 12.7 $ 17,310.2
========== ========= ==========
<FN>
The accompanying notes are an integral part of the pro forma
consolidated financial statements.
</FN>
</TABLE>
<PAGE>
CONSECO, INC. AND SUBSIDIARIES
NOTES TO PRO FORMA CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
BASIS OF PRESENTATION
The unaudited pro forma consolidated statement of operations for the year
ended December 31, 1995, of Conseco is presented as if the following
transactions had occurred on January 1, 1995: (i) the acquisition of all of the
outstanding common stock of CCP Insurance, Inc. ("CCP"), not owned by Conseco
and related transactions (including the repayment of the existing $250.0 million
revolving credit agreement); (ii) the increase in Conseco's ownership of Bankers
Life Holding Corporation ("BLH") to 90.5 percent, as a result of purchases of
common shares of BLH by Conseco and BLH during 1995 and the first three months
of 1996; (iii) the issuance of 4.37 million shares of Preferred Redeemable
Increased Dividend Equity Securities, 7% Convertible Preferred Stock ("PRIDES")
in January 1996; (iv) the BLH tender offer for its senior subordinated notes due
2002 and related financing transactions completed in March 1996; and (v) the
debt restructuring of American Life Group, Inc. ("AGP") in the fourth quarter of
1995.
The unaudited pro forma consolidated balance sheet of Conseco is presented
as if the following transactions, all of which occurred in 1996, had occurred on
December 31, 1995: (i) the issuance of the PRIDES; (ii) the 1996 repurchase of
BLH common stock by BLH; and (iii) the BLH tender offer and related financing
transactions.
The pro forma consolidated financial statements are based on the historical
financial statements of Conseco, CCP and BLH and should be read in conjunction
with their respective financial statements and notes. The unaudited pro forma
consolidated financial statements should be read in conjunction with the
consolidated financial statements and notes included in Conseco's Annual Report
on Form 10-K for the year ended December 31, 1995. The pro forma data are not
necessarily indicative of the results of operations or financial condition of
Conseco had those transactions occurred as presented, nor the results of future
operations, nor do they reflect additional benefits (such as cost savings) that
might have resulted if the transactions had occurred on January 1, 1995.
In March 1996, Conseco and Life Partners Group, Inc. ("LPG") signed a
definitive merger agreement, whereby LPG would become a wholly owned subsidiary
of Conseco (the "Merger"). These pro forma consolidated financial statements do
not include the pro forma effect of the Merger.
PRO FORMA ADJUSTMENTS
Transactions relating to the acquisition of all of the outstanding common
stock of CCP
Effective August 31, 1995, Conseco acquired all of the common stock of CCP,
not previously owned by Conseco, in a transaction pursuant to which CCP was
merged with and into Conseco, with Conseco being the surviving corporation. In
the transaction, CCP's former shareholders, other than Conseco, received $23.25
in cash per common share. This transaction and the related financing transaction
are referred to herein as the "CCP Merger." Conseco entered into a credit
agreement (the "Conseco Credit Facility") to finance the CCP Merger. Hereinafter
"CCP" refers to CCP or the former subsidiaries of CCP which are wholly owned
subsidiaries of Conseco after the CCP Merger.
The sources and uses of the financing to complete the CCP Merger are
summarized below (dollars in millions):
<TABLE>
<S> <C>
Sources of funds:
Conseco Credit Facility................................... $530.0
Cash on hand.............................................. 9.7
------
Total sources.......................................... $539.7
======
Uses of funds:
Purchase of all outstanding common stock of
CCP, not owned by Conseco.............................. $281.8
Repayment of revolving credit facility of Conseco......... 250.0
Debt issuance and other transaction costs................. 7.9
------
Total uses............................................. $539.7
======
</TABLE>
<PAGE>
CONSECO, INC. AND SUBSIDIARIES
NOTES TO PRO FORMA CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
The pro forma adjustments are applied to the historical consolidated
statement of operations of Conseco and CCP using the step acquisition method of
accounting. Under this method, the total purchase cost of the common stock of
CCP not already owned by Conseco is allocated to the assets and liabilities
acquired based on their relative fair values as of the date of acquisition, with
any excess of the total purchase cost over the fair value of the assets acquired
less the fair value of the liabilities assumed recorded as goodwill. The total
purchase cost of the ownership interests in CCP acquired by Conseco in previous
acquisitions was allocated to the assets and liabilities acquired based on the
relative fair values as of the dates of their respective acquisitions.
Therefore, the values of the assets and liabilities of CCP included in Conseco's
pro forma consolidated financial statements represent the combination of the
following values: (i) the portion of CCP's net assets acquired by Conseco in the
initial acquisitions of CCP's subsidiaries made by Conseco Capital Partners,
L.P. is valued as of those respective acquisition dates; and (ii) the portion of
CCP's net assets acquired in the CCP Merger is valued as of the date of
acquisition.
Adjustments to give effect to the CCP Merger as though it occurred on
January 1, 1995, are summarized below:
(1) Net investment income is reduced to reflect the reduction in
short-term investments for cash used to complete the CCP Merger and
for the purchase of CCP's common stock by CCP in 1995 as if such
transactions were completed on January 1, 1995.
(2) Net investment income related to the ownership acquired in the CCP
Merger is adjusted to reflect the changes in cost basis of: (i) fixed
maturity investments; (ii) mortgage loan investments; (iii)
credit-tenant loans; and (iv) short-term investments, as a result of
recording such investments at their estimated fair value as of
January 1, 1995, reflecting the interest rate environment which
existed at the date of the CCP Merger.
(3) Interest expense is increased to reflect the borrowings made under
the Conseco Credit Facility at an interest rate of 7.5 percent,
partially offset by a reduction in interest expense due to the
repayment of the revolving credit agreement of Conseco. Interest
expense also reflects the amortization of debt issuance costs.
A change in interest rates on the Conseco Credit Facility of .5
percent would result in: (i) an increase (or decrease) in pro forma
interest expense of $1.4 million for the year ended December 31,
1995, and (ii) a decrease (or increase) in pro forma net income of
$.9 million for the same period.
(4) Interest expense on notes payable of CCP is adjusted to reflect the
interest rate environment which existed at the date of the CCP
Merger.
(5) The amortization of cost of policies produced related to the
ownership interest acquired in the CCP Merger is replaced with the
amortization of the cost of policies purchased (amortized in relation
to estimated profits on the policies purchased with interest equal to
the liability or contract rates averaging approximately 5.5 percent).
Such adjustment reflects the interest rate environment which existed
at the date of the CCP Merger. In addition, amortization of goodwill
is adjusted to reflect goodwill recorded in connection with the
CCP Merger.
(6) All pro forma adjustments are tax affected based on the appropriate
rate for the specific item.
(7) The tax benefit of $8.4 million recognized as a result of the release
of deferred tax previously accrued on income related to CCP is
eliminated. Such deferred tax is no longer required because the CCP
Merger was completed without incurring additional tax.
(8) Minority interest is adjusted to reflect Conseco's increased
ownership interest in AGP as a result of its increased interest in
CCP.
<PAGE>
CONSECO, INC. AND SUBSIDIARIES
NOTES TO PRO FORMA CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
Transactions relating to acquisition of additional shares of BLH
During the first six months of 1995, Conseco purchased 12.8 million common
shares of BLH for $262.4 million in open market and negotiated transactions. The
shares purchased represented 24 percent of the outstanding shares of BLH common
stock, increasing Conseco's ownership of BLH to 82 percent (85 percent including
shares of BLH owned by CCP). The acquisition was funded with available cash,
proceeds from revolving credit agreements and a $32.0 million loan from CCP. In
addition, during 1995 and the first three months of 1996, BLH repurchased 3.5
million shares of its common stock at a cost of $69.6 million, resulting in an
increase in Conseco's ownership interest in BLH to 90.5 percent as of March 31,
1996. The acquisition was accounted for using the step acquisition method of
accounting. Under this method, the total purchase cost of the BLH common stock
acquired by Conseco was allocated to the assets and liabilities acquired based
on their relative fair values as of the date of acquisition with any excess of
the total purchase cost over the fair value of the assets acquired less the fair
value of the liabilities assumed recorded as goodwill. The total purchase cost
of the ownership interest in BLH acquired by Conseco in previous acquisitions
was allocated to those assets and liabilities acquired based on their relative
fair values as of the dates of the respective acquisitions. Therefore, the
values of the assets and liabilities of BLH included in Conseco's historical
consolidated financial statements represent the combination of the following
values: (i) the portion of BLH's net assets acquired by Conseco in the initial
acquisition made by Conseco Capital Partners, L.P. on October 31, 1992, is
valued as of that acquisition date; (ii) the portion of BLH's net assets
acquired by Conseco on September 30, 1993, is valued as of that acquisition
date; (iii) the portion of BLH's net assets acquired during 1995 is valued as of
the date of their purchase (June 30, 1995, for accounting convenience); and (iv)
the portion of BLH's net assets owned by minority interests is valued based on a
combination of (i) above and the historical bases of the net assets acquired in
the initial acquisition in 1992.
Adjustments to give effect to the acquisition of additional shares of BLH
are summarized below:
(9) Net investment income is reduced to reflect the reduction in
short-term investments as if BLH common stock purchases made using
available cash were completed on January 1, 1995.
(10) Interest expense is adjusted to reflect the increase in notes payable
as if BLH common stock purchases made using the proceeds of notes
payable were completed on January 1, 1995.
(11) As described above, the purchase of additional shares of BLH is
accounted for as a step acquisition. The accounts for BLH are
adjusted to reflect the step acquisition method of accounting as if
the purchases of BLH common stock during 1995 were completed on
January 1, 1995.
(12) The tax benefit of $66.5 million recognized as a result of the
release of deferred tax previously accrued on income related to BLH
is eliminated. Such deferred tax is no longer required since Conseco
is permitted to file a consolidated tax return with BLH and the
income to which this tax relates can be distributed to Conseco
without the payment of tax.
(13) All pro forma adjustments are tax affected based on the appropriate
rate for the specific item.
Pro Forma Adjustments for Various Other Transactions
(14) In the fourth quarter of 1995, AGP made a $30.0 million unscheduled
principal payment on its existing senior term loan using the proceeds
from the issuance of common stock in a private placement transaction.
In addition, a wholly owned subsidiary of AGP executed a $225 million
credit facility (the "AGP Credit Facility") and simultaneously
borrowed $125.0 million under the AGP Credit Facility. Such proceeds
were used to repay the remaining principal balance under the existing
senior term loan. Interest expense is adjusted to reflect the
unscheduled $30.0 million payment on the senior term loan and the
more favorable interest rate structure of the AGP Credit Facility.
(15) On January 23, 1996, Conseco completed the offering of 4.37 million
shares of PRIDES. Proceeds from the offering of approximately $258
million (after underwriting and other associated costs) were used to
repay amounts outstanding under the Conseco Credit Facility.
<PAGE>
CONSECO, INC. AND SUBSIDIARIES
NOTES TO PRO FORMA CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
Each share of PRIDES will pay dividends at the annual rate of 7
percent of the $61.125 liquidation preference per share (equivalent
to an annual amount of $4.279 per share), payable quarterly. On
February 1, 2000, unless either previously redeemed by Conseco or
converted at the option of the holder, each share of PRIDES will
mandatorily convert into two shares of Conseco common stock, subject
to adjustment in certain events. Shares of PRIDES are not redeemable
prior to February 1, 1999. During the period February 1, 1999 through
February 1, 2000, Conseco may redeem any or all of the outstanding
shares of PRIDES. Upon such redemption, each holder will receive, in
exchange for each share of PRIDES, the number of shares of Conseco
common stock equal to (A) the sum of (i) $62.195, declining to
$61.125 after February 1, 1999, and (ii) accrued and unpaid dividends
divided by (B) the market price of Conseco common stock at such date,
but in no event less than 1.71 shares of Conseco common stock. The
following summarizes the sources and uses of funds related to this
transaction (dollars in millions):
<TABLE>
<S> <C>
Sources of funds:
Gross proceeds from issuance of PRIDES................................................... $267.1
Underwriting and other transaction expenses (charged to paid-in capital)................. (9.1)
------
Net proceeds..................................................................... 258.0
Uses of funds:
Principal repaid on Conseco Credit Facility.............................................. (245.0)
Payment of accrued interest.............................................................. (2.6)
------
Funds available.................................................................. $ 10.4
======
</TABLE>
Interest expense is adjusted to reflect the repayment of a portion of
the Conseco Credit Facility using a portion of the proceeds from the
issuance of the PRIDES. In addition, retained earnings and income tax
liabilities are adjusted to reflect an extraordinary charge of $1.5
million (net of a $.8 million tax benefit) related to the early
retirement of the debt.
(16) In March 1996, BLH completed a tender offer pursuant to which it
repurchased $148.3 million principal amount of its 13 percent senior
subordinated notes for $173.2 million. The repurchase was made using
the proceeds from a revolving credit facility entered into in
February 1996. Maximum principal amounts which can be borrowed under
the agreement total $400 million (including a competitive bid
facility in the aggregate principal amount of up to $100 million).
Amounts borrowed under the new facility are due in 2001 and accrue
interest at a rate of LIBOR plus an applicable margin of between 50
and 75 basis points, depending on BLH's ratio of consolidated net
worth. Additional proceeds were borrowed under the agreement to repay
the existing $110 million principal balance due under the bridge loan
facility and for other corporate purposes. The following summarizes
the sources and uses of funds related to the tender offer and related
financing transactions:
<TABLE>
<S> <C>
Sources of funds:
Amounts borrowed under $400 million revolving credit agreement................ $310.0
======
Uses of funds:
Related to 13 percent senior subordinated notes:
Principal tendered......................................................... $148.3
Premium paid in tender offer............................................... 24.8
Payment of accrued interest................................................ 6.6
Related to bridge loan facility:
Principal repaid .......................................................... 110.0
Payment of accrued interest................................................ .5
Debt issuance costs........................................................... 3.7
Other corporate purposes, including repayment
of amounts borrowed to purchase BLH common stock........................... 16.1
------
Total uses........................................................ $310.0
======
</TABLE>
<PAGE>
CONSECO, INC. AND SUBSIDIARIES
NOTES TO PRO FORMA CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
Interest expense is adjusted to reflect reduced interest expense on
the $148.3 million principal balance of BLH's senior subordinated
notes which were tendered, offset by interest expense on amounts
borrowed under the BLH revolving credit facility. In addition,
retained earnings, minority interest and income tax liabilities are
adjusted to reflect an extraordinary charge on the early retirement
of the debt.
During the first three months of 1996, BLH repurchased shares of its
common stock increasing Conseco's ownership in BLH to 90.5 percent.
Such repurchases were made using available cash and a loan from a
subsidiary which was repaid using a portion of the proceeds from the
BLH revolving credit facility. Goodwill is adjusted to reflect the
excess of the cost to purchase such shares over the net book value of
BLH.
(17) All pro forma adjustments to operations are tax affected based on the
appropriate rate for the specific item.
(18) The deduction for the minority interests' share of the pro forma
adjustments is recognized.
(19) Primary and fully diluted weighted average shares outstanding
are adjusted to reflect the issuance of the PRIDES.
