<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K/A
AMENDMENT No. 2
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported) June 24, 1997
Transworld HealthCare, Inc.
--------------------------------------------------
(Exact name of Registrant as specified in its charter)
New York
--------------------------------------------------
(State or other jurisdiction of incorporation)
1-11570 13-3098275
- ------------------------ ------------------------------------
(Commission File Number) (I.R.S. Employer Identification No.)
555 Madison Avenue, New York, New York 10022
- --------------------------------------------------------------------------------
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (212) 750-0064
--------------------------------------------------
(Former name or former address, if changed since last report.)
The registrant hereby amends the following items, financial statements,
exhibits or other portions of its Current Report on Form 8-K filed on or about
July 3, 1997 as set forth in the pages attached hereto: Item 7. Financial
Statements, Pro Forma Financial Information and Exhibits.
<PAGE> 2
ITEM 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND EXHIBITS.
The following are filed as part of this Form 8-K/A:
(a) Financial Statements of Ominicare plc.
Statement of Directors' Responsibilities 3
Auditors' Report 4
Consolidated Profit and Loss Accounts - Years Ended
December 31, 1996 and 1995 5
Statement of Movement on Reserves -
Year Ended December 31, 1996 6
Consolidated Balance Sheets - December 31, 1996 and 1995 7
Cash Flow Statements - Years Ended December 31, 1996
and 1995 8
Notes to the Accounts 9
(b) Unaudited Pro Forma Combined Condensed Financial Statements. 17
Pro Forma Combined Condensed Balance Sheet as of April 30,
1997 (Unaudited) 19
Pro Forma Combined Condensed Statement of Operations for
the Year Ended October 31, 1996 (Unaudited) 20
Pro Forma Combined Condensed Statement of Operations for
the Six Months Ended April 30, 1997 (Unaudited) 21
Notes to the Unaudited Pro Forma Combined Condensed
Financial Statements 22
Certain statements contained herein are forward-looking statements that
have been made pursuant to the safe harbor provisions of the Private
Securities Litigation Reform Act of 1995. Forward-looking statements
involve known and unknown risks and uncertainties which may cause the
actual results in the future periods or plans for future periods to
differ materially from those described herein as anticipated, believed
or estimated.
-2-
<PAGE> 3
OMNICARE PLC
STATEMENT OF DIRECTORS' RESPONSIBILITIES
The directors are required to prepare financial statements for each
financial year which give a true and fair view of the state of affairs of the
group as at the end of the financial year and of the profit or loss of the group
for that period. In preparing those financial statements, the directors are
required to:
- select suitable accounting policies and then apply them consistently;
- make judgements and estimates that are reasonable and prudent;
- state whether applicable accounting standards have been followed, subject
to any material departures disclosed and explained in the financial
statements;
- prepare the financial statements on the going concern basis unless it is
inappropriate to presume that the company will continue in business.
The directors are responsible for keeping proper accounting records which
disclose with reasonable accuracy at any time the financial position of the
group. They are also responsible for safeguarding the assets of the group and
hence for taking reasonable steps for the prevention and detection of fraud and
other irregularities.
-3-
<PAGE> 4
OMNICARE PLC
AUDITORS' REPORT
TO THE DIRECTORS OF OMNICARE PLC
We have audited the accompanying consolidated balance sheets of Omnicare
plc and subsidiaries as at 31 December 1996 and 1995 and the related
consolidated profit and loss accounts, statements of total recognised gains and
losses and group cash flow statement for the years then ended, all expressed in
pounds sterling, which have been prepared under the historical cost convention
and the accounting policies set out in the notes to the financial statements.
RESPECTIVE RESPONSIBILITIES OF DIRECTORS AND AUDITORS
As described on page 3, these financial statements are the responsibility
of the Company's Directors. It is our responsibility to form an independent
opinion, based on our audits, on these financial statements and to report our
opinion to you.
BASIS OF OPINION
We conducted our audit in accordance with generally accepted auditing
standards in the United Kingdom. Those standards require that we plan and
perform the audits to obtain reasonable assurance about whether the financial
statements are free of material misstatement, whether caused by fraud or other
irregularity or error. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. It also
includes an assessment of the significant estimates and judgements made by the
Directors, and of whether the accounting policies are appropriate to the
circumstances of the Group, consistently applied and adequately disclosed, as
well as evaluating the overall financial statement presentation. We believe that
our audits provide a reasonable basis for our opinion.
We planned and performed our audit so as to obtain all the information and
explanations which we considered necessary in order to provide us with
sufficient evidence to give reasonable assurance that the financial statements
are free from material misstatement, whether caused by fraud or other
irregularity or error. In forming our opinion we also evaluated the overall
adequacy of the presentation of information in the financial statements.
OPINION
In our opinion, the consolidated financial statements referred to above,
present fairly, in all material respects, the financial position of Omnicare plc
and subsidiaries as at 31 December 1996 and 1995 and the results of their
operations and their cash flows for the years then ended in conformity with
generally accepted accounting principles in the United Kingdom (which differ in
certain material respects from accounting principles generally accepted in the
United States of America -- see note 22).
/s/ Deloitte & Touche
---------------------
Deloitte & Touche
Chartered Accountants
Mountbatten House
1 Grosvenor Square
Southampton
SO15 2BE
August 12, 1997
-4-
<PAGE> 5
OMNICARE PLC
CONSOLIDATED PROFIT AND LOSS ACCOUNTS
YEARS ENDED 31 DECEMBER 1996 AND 1995
<TABLE>
<CAPTION>
CONTINUING CONTINUING
ACQUISITION OPERATIONS TOTAL OPERATIONS
1996 1996 1996 1995
NOTE [POUND STERLING] [POUND STERLING] [POUND STERLING] [POUND STERLING]
---- ---------------- ---------------- ---------------- ----------
<S> <C> <C> <C> <C> <C>
TURNOVER................................ 1 5,484,188 1,898,438 7,382,626 1,771,457
Cost of sales........................... (3,907,380) (696,256) (4,603,636) (568,687)
----------- ---------- ----------- ----------
GROSS PROFIT............................ 1,576,808 1,202,182 2,778,990 1,202,770
Administrative expenses................. (967,678) (703,109) (1,670,787) (598,844)
----------- ---------- ----------- ----------
OPERATING PROFIT........................ 3 609,130 499,073 1,108,203 603,926
----------- ----------
Interest receivable and similar
income................................ 22,638 9,285
Interest payable and similar charges.... 4 (2,924) (1,320)
----------- ----------
PROFIT ON ORDINARY ACTIVITIES BEFORE
TAXATION.............................. 1,127,917 611,891
Tax on profit on ordinary activities.... 5 (379,469) (188,367)
----------- ----------
PROFIT FOR THE FINANCIAL YEAR........... 748,448 423,524
Dividends............................... 6 (192,292) (34,167)
----------- ----------
Retained profit for the financial
year.................................. 15 556,156 389,357
========== =========
Earnings per share...................... 7 8.0p 6.6p
========== =========
</TABLE>
There are no recognized gains and losses for the current financial year and
preceding financial year other than as stated in the profit and loss account.
Accordingly no statement of total recognized gains and losses is presented.
-5-
<PAGE> 6
OMNICARE PLC
STATEMENT OF MOVEMENT ON RESERVES
<TABLE>
<CAPTION>
SHARE
PREMIUM GOODWILL OTHER PROFIT AND
ACCOUNT RESERVE RESERVES LOSS ACCOUNT TOTAL
[POUND STERLING] [POUND STERLING] [POUND STERLING] [POUND STERLING] [POUND STERLING]
---------------- ---------------- ---------------- ---------------- ----------------
<S> <C> <C> <C> <C> <C>
At 1 January 1996...................... 203,520 -- 25,306 440,933 669,759
Issue of shares........................ 4,775,604 -- -- -- 4,775,604
Profit retained for the year........... -- -- -- 556,156 556,156
Goodwill written off................... -- (4,787,040) -- -- (4,787,040)
--------- ---------- ------ ------- ----------
At 31 December 1996.................... 4,979,124 (4,787,040) 25,306 997,089 1,214,479
========= ========== ====== ======= ==========
</TABLE>
Details of the business acquisition are shown in note 2.
-6-
<PAGE> 7
OMNICARE PLC
CONSOLIDATED BALANCE SHEETS
31 DECEMBER 1996 AND 1995
<TABLE>
<CAPTION>
1996 1995
NOTE [POUND STERLING] [POUND STERLING]
---- ---------------- ----------------
<S> <C> <C> <C>
FIXED ASSETS
Tangible assets.............................................. 8 1,354,260 930,500
---------- ---------
CURRENT ASSETS
Stocks....................................................... 10 567,073 18,000
Debtors...................................................... 11 2,740,710 414,622
Cash at bank and in hand..................................... 594,853 619,994
---------- ---------
3,902,636 1,052,616
CREDITORS: amounts falling due within one year............... 12 (2,726,782) (534,568)
---------- ---------
NET CURRENT ASSETS........................................... 1,175,854 518,048
---------- ---------
TOTAL ASSETS LESS CURRENT LIABILITIES........................ 2,530,114 1,448,548
PROVISIONS FOR LIABILITIES AND CHARGES....................... 13 (132,302) (95,456)
---------- ---------
NET ASSETS................................................... 2,397,812 1,353,092
========== =========
CAPITAL AND RESERVES
Called up share capital...................................... 14 1,183,333 683,333
Share premium account........................................ 4,979,124 203,520
Goodwill reserve............................................. (4,787,040) --
Other reserves............................................... 25,306 25,306
Profit and loss account...................................... 997,089 440,933
---------- ---------
TOTAL EQUITY SHAREHOLDERS' FUNDS................... 15 2,397,812 1,353,092
========== =========
</TABLE>
-7-
<PAGE> 8
OMNICARE PLC
CASH FLOW STATEMENTS
YEARS ENDED 31 DECEMBER 1996 AND 1995
<TABLE>
<CAPTION>
1996 1995
NOTE [POUND STERLING] [POUND STERLING]
---- ---------------- ----------------
<S> <C> <C> <C>
Net cash inflow from operating activities..................... 20 726,087 750,279
---------- --------
Returns on investment and servicing of finance
Interest received............................................. 22,638 9,285
Interest paid................................................. (2,924) (1,320)
---------- --------
19,714 7,965
---------- --------
Taxation
UK corporation tax paid....................................... (163,548) (56,179)
---------- --------
Capital expenditure and financial investment
Payments to acquire tangible fixed assets..................... (331,679) (398,404)
Receipts from sales of tangible fixed assets.................. 25,628 17,301
---------- --------
(306,051) (381,103)
---------- --------
Acquisitions and disposals
Purchase of business.......................................... 17 (5,468,821) --
---------- --------
Equity dividends paid......................................... (108,126) --
---------- --------
Cash (outflow)/inflow before use of liquid resources and
financing................................................... (5,300,745) 320,962
Financing
Issue of ordinary share capital............................... 5,500,000 270,187
Expenses paid in connection with share issue.................. (224,396) --
---------- --------
5,275,604 270,187
---------- --------
(Decrease)/increase in cash in the year....................... 21 (25,141) 591,149
========== ========
</TABLE>
FRS 1 (revised) has been adopted in accordance with best practice. The
comparative figures have been adjusted to reflect these changes.
-8-
<PAGE> 9
OMNICARE PLC
NOTES TO THE ACCOUNTS
1. ACCOUNTING POLICIES
The financial statements have been prepared in accordance with applicable
accounting standards. The particular accounting policies adopted are described
below.
Accounting convention
The financial statements are prepared under the historical cost convention.
Basis of consolidated accounts
The accounts incorporate the audited assets and liabilities and results of
subsidiary undertakings. Transactions and balances between group companies have
been eliminated. The combination of Omnicare plc and The Omnicare Group Limited
has been accounted for under merger accounting rules. Amcare Limited is
consolidated using acquisition accounting.
Goodwill
On the acquisition of a business fair values are attributed to the net
assets acquired. Goodwill, which represents the difference between the purchase
consideration and the fair values of the net assets acquired, is written off
against reserves in the year of acquisition.
Tangible fixed assets
Depreciation is provided on cost in equal annual instalments over the
estimated useful lives of the assets. The rates of depreciation are as follows:
<TABLE>
<S> <C>
Freehold property...................................................... 50 years
Leasehold improvements................................................. 10 years
Motor vehicles......................................................... 4 years
Oxygen concentrators................................................... 7 years
Oxygen cylinders....................................................... 20 years
Other plant and machinery.............................................. 3 -- 7 years
Fixtures, fittings and computer equipment.............................. 3 -- 5 years
</TABLE>
Investments
Investments are stated at cost less provision for any permanent diminution
in value.
Stocks
Stocks are valued at the lower of cost and net realisable value, on a first
in first out basis.
Deferred taxation
Deferred taxation is provided on timing differences, arising from the
different treatment of items for accounts and taxation purposes, which are
expected to reverse in the future, calculated at rates at which it is estimated
that tax will arise.
Leases
Operating lease rentals are charged to income in equal annual amounts over
the lease term.
-9-
<PAGE> 10
OMNICARE PLC
NOTES TO THE ACCOUNTS -- (CONTINUED)
Pension costs
The group makes contributions to the personal pension schemes of certain
employees. The amount charged against profits represents the contributions
payable to these schemes in respect of the accounting period.
Turnover
Turnover represents amounts derived from the provision of goods and
services which fall within the group's ordinary activities after the deduction
of trade discounts and value added tax derived entirely within the UK.
2. DETAILS OF ACQUISITION
On 28 June 1996 a subsidiary, Amcare Limited (formerly Oval 1073 Limited, a
shell company) purchased the trade and net assets of Rock Head Developments
Limited (formerly Amcare Limited) for a cash consideration of [POUND
STERLING]5,011,000. The fair value of net assets acquired was [POUND
STERLING]681,781 (see note 17). The goodwill arising of [POUND
STERLING]4,787,040 has been written off against reserves in the accounts of
Amcare Limited. This was financed by the issue of share capital by Omnicare plc
on AIM as described in note 14.
3. OPERATING PROFIT
<TABLE>
<CAPTION>
1996 1995
[POUND STERLING] [POUND STERLING]
---------------- ----------------
<S> <C> <C>
Operating profit is after charging/(crediting):
Profit on disposal of fixed assets....................................... (6,391) (1,415)
Depreciation............................................................. 172,032 98,779
Operating lease rentals -- machinery..................................... 138,678 114,052
-- property...................................... 72,453 31,127
======= =======
</TABLE>
4. INTEREST PAYABLE AND SIMILAR CHARGES
<TABLE>
<CAPTION>
1996 1995
[POUND STERLING] [POUND STERLING]
----------------- ----------------
<S> <C> <C>
Bank loans, overdrafts and other loans repayable within five years....... 2,792 1,320
Finance leases and hire purchase contracts............................... 132 --
------- -------
2,924 1,320
======= =======
</TABLE>
5. TAX ON PROFIT ON ORDINARY ACTIVITIES
<TABLE>
<CAPTION>
1996 1995
[POUND STERLING] [POUND STERLING]
----------------- ----------------
<S> <C> <C>
United Kingdom corporation tax at 33% (1995 -- 33%) based on the profit
for the period......................................................... 345,370 166,295
Deferred tax............................................................. 36,846 22,072
Adjustment in respect of prior years..................................... (2,747) --
------- -------
379,469 188,367
======= =======
</TABLE>
-10-
<PAGE> 11
OMNICARE PLC
NOTES TO THE ACCOUNTS -- (CONTINUED)
6. DIVIDENDS
<TABLE>
<CAPTION>
1996 1995
[POUND STERLING] [POUND STERLING]
---------------- ----------------
<S> <C> <C>
Interim paid of 0.625p per ordinary share (1995 -- [POUND STERLING]nil)... 73,959 --
Final proposed dividend 1p per ordinary share (1995 -- 0.5p).............. 118,333 34,167
------- ------
192,292 34,167
======= ======
</TABLE>
7. EARNINGS PER SHARE
The calculation of earnings per share is based on profits of [POUND
STERLING]748,448 (1995 -- [POUND STERLING]423,524) and an average of 9,333,334
(1995 -- 6,361,110) ordinary shares in issue during the year.
If all outstanding share options were exercised then earnings would be 7.6p
per share. (1995 -- 6.6p per share)
8. TANGIBLE FIXED ASSETS
<TABLE>
<CAPTION>
OXYGEN PLANT,
CONCENTRATORS FIXTURES AND
FREEHOLD LEASEHOLD MOTOR AND COMPUTER
PROPERTY IMPROVEMENTS VEHICLES CYLINDERS EQUIPMENT TOTAL
[POUND STERLING] [POUND STERLING] [POUND STERLING] [POUND STERLING] [POUND STERLING] [POUND STERLING]
---------------- ---------------- ---------------- ---------------- ---------------- ----------------
<S> <C> <C> <C> <C> <C> <C>
Cost
At 1 January 1996........ -- 53,584 42,305 1,704,482 175,322 1,975,693
Additions................ -- -- 38,634 278,560 14,485 331,679
Business acquired........ 91,989 4,114 26,758 -- 160,489 283,350
Disposals................ -- -- (41,952) (3,028) (369) (45,349)
------ ------ ------- --------- ------- ---------
At 31 December 1996...... 91,989 57,698 65,745 1,980,014 349,927 2,545,373
------ ------ ------- --------- ------- ---------
Accumulated depreciation
At 1 January 1996........ -- 8,831 27,549 847,124 161,689 1,045,193
Charge for the year...... 974 6,879 13,982 104,847 45,350 172,032
Disposals................ -- -- (25,985) (91) (36) (26,112)
------ ------ ------- --------- ------- ---------
At 31 December 1996...... 974 15,710 15,546 951,880 207,003 1,191,113
------ ------ ------- --------- ------- ---------
Net book value
At 31 December 1996...... 91,015 41,988 50,199 1,028,134 142,924 1,354,260
====== ====== ======= ========= ======= =========
At 31 December 1995...... -- 44,753 14,756 857,358 13,633 930,500
====== ====== ======= ========= ======= =========
</TABLE>
The group had capital commitments contracted for but not provided at 31
December 1996 of [POUND STERLING]319,310 (1995 -- [POUND STERLING]25,500).
9. INVESTMENTS
The consolidation includes the following companies:
<TABLE>
<CAPTION>
PORTION OF
ORDINARY
COUNTRY OF SHARES HELD
REGISTRATION ACTIVITY %
------------ -------------------- -----------
<S> <C> <C> <C>
The Omnicare Group Limited............... England Healthcare Services 100
Medigas Limited.......................... England Healthcare Services 100
Amcare Limited........................... England Healthcare Services 100
Amcare Services Limited.................. England Dormant 100
</TABLE>
The investment in Amcare Limited and Amcare Services Limited was acquired
during the year.
-11-
<PAGE> 12
OMNICARE PLC
NOTES TO THE ACCOUNTS -- (CONTINUED)
10. STOCKS
<TABLE>
<CAPTION>
1996 1995
[POUND STERLING] [POUND STERLING]
---------------- ----------------
<S> <C> <C>
Goods for resale.......................................... 553,121 15,022
Maintenance materials..................................... 13,952 2,978
------- ------
567,073 18,000
======= ======
</TABLE>
11. DEBTORS
<TABLE>
<CAPTION>
1996 1995
[POUND STERLING] [POUND STERLING]
---------------- ----------------
<S> <C> <C>
Trade debtors.......................................... 2,589,270 388,165
Other debtors.......................................... 28,640 4,032
Prepayments and accrued income......................... 122,800 22,425
--------- -------
2,740,710 414,622
========= =======
</TABLE>
12. CREDITORS: AMOUNTS FALLING DUE WITHIN ONE YEAR
<TABLE>
<CAPTION>
1996 1995
[POUND STERLING] [POUND STERLING]
---------------- ----------------
<S> <C> <C>
Trade creditors........................................................ 1,964,873 229,137
Corporation tax........................................................ 330,591 166,295
Other taxation and social security..................................... 123,477 39,445
Other creditors........................................................ 37,301 14,913
Accruals and deferred income........................................... 152,207 50,611
Proposed dividends..................................................... 118,333 34,167
--------- -------
2,726,782 534,568
========= =======
</TABLE>
13. PROVISIONS FOR LIABILITIES AND CHARGES
<TABLE>
<CAPTION>
[POUND STERLING]
----------------
<S> <C>
Movements on deferred taxation in the year:
Balance at 1 January 1996.......................................................... 95,456
Charge for the year................................................................ 36,846
-------
Balance at 31 December 1996........................................................ 132,302
=======
</TABLE>
<TABLE>
<CAPTION>
PROVIDED PROVIDED
1996 1995
[POUND STERLING] [POUND STERLING]
---------------- ----------------
<S> <C> <C>
Depreciation in excess of capital allowances............................. 132,302 95,024
Other timing differences................................................. -- 432
------- ------
132,302 95,456
======= ======
</TABLE>
There is [POUND STERLING]140,106 (1995: [POUND STERLING]154,042) of
unprovided deferred tax asset within the group, resulting from capital losses.
-12-
<PAGE> 13
OMNICARE PLC
NOTES TO THE ACCOUNTS -- (CONTINUED)
14. CALLED UP SHARE CAPITAL
<TABLE>
<CAPTION>
1996 1995
[POUND STERLING] [POUND STERLING]
---------------- ----------------
<S> <C> <C>
Authorised 20,000,000 ordinary shares of 10p each...................... 2,000,000 800,000
========= =======
Called up, allotted and fully paid 11,833,333 (1995 -- 6,833,333)
ordinary shares of 10p each.......................................... 1,183,333 683,333
========= =======
</TABLE>
5,000,000 10p ordinary shares were allotted during the year. The
consideration received was 110p per share. The aggregate nominal value of shares
issued was [POUND STERLING]500,000. Standard voting rights at one vote per
ordinary share are attached to the shares allotted which rank pari passu with
the other shares in issue.
15. RECONCILIATION OF MOVEMENTS IN SHAREHOLDERS' FUNDS
<TABLE>
<CAPTION>
1996 1995
[POUND STERLING] [POUND STERLING]
---------------- ----------------
<S> <C> <C>
Profit for the financial year........................................ 748,448 423,524
Dividends............................................................ (192,292) (34,167)
---------- ---------
556,156 389,357
Issue of shares...................................................... 5,275,604 270,187
Goodwill written off................................................. (4,787,040) --
---------- ---------
Net addition to shareholders' funds.................................. 1,044,720 659,544
Opening shareholders' funds.......................................... 1,353,092 693,548
---------- ---------
Closing shareholders' funds.......................................... 2,397,812 1,353,092
========== =========
</TABLE>
16. OPERATING COMMITMENTS
At 31 December 1996 the Group was committed to making the following
payments during the next year in respect of operating leases:
<TABLE>
<CAPTION>
LAND AND
BUILDINGS OTHER TOTAL
[POUND STERLING] [POUND STERLING] [POUND STERLING]
---------------- ---------------- ----------------
<S> <C> <C> <C>
Leases which expire:
Within one year....................................... 33,576 12,523 46,099
Within two to five years.............................. -- 149,816 149,816
After five years...................................... 80,321 -- 80,321
------- ------- -------
113,897 162,339 276,236
======= ======= =======
</TABLE>
-13-
<PAGE> 14
OMNICARE PLC
NOTES TO THE ACCOUNTS -- (CONTINUED)
17. PURCHASE OF BUSINESS
<TABLE>
<CAPTION>
FAIR VALUE ADJUSTED
COST ADJUSTMENT COST
[POUND STERLING] [POUND STERLING] [POUND STERLING]
---------------- ---------------- ----------------
<S> <C> <C> <C>
AMCARE LIMITED
Net assets acquired:
Tangible fixed assets.................................... 283,350 -- 283,350
Stocks................................................... 497,245 -- 497,245
Debtors.................................................. 158,943 -- 158,943
Creditors................................................ (157,757) (100,000) (257,757)
-------- -------- ---------
781,781 (100,000) 681,781
-------- --------
Goodwill................................................. 4,787,040
---------
Cost of acquisition...................................... 5,468,821
=========
Satisfied by:
Consideration............................................ 5,011,000
Acquisition expenses..................................... 457,821
---------
Total cash....................................... 5,468,821
=========
</TABLE>
The business acquired during the year contributed [POUND STERLING]268,423
to the group's net operating cash flows, received [POUND STERLING]3,243 in
respect of net returns on investments and servicing of finance, paid [POUND
STERLING]nil in respect of taxation and used [POUND STERLING]7,760 for investing
activities.
No cash was acquired on the acquisition of Amcare Limited, therefore the
consideration and expenses represent the net outflow of cash in respect of the
purchase of the business.
The fair value adjustment has been made to reflect the expected cost of
certain onerous contracts purchased with the trade and assets.
18. PENSION SCHEME
The Group contributes to the personal pension schemes of certain employees.
The pension cost charge represents contributions payable by the company to these
schemes during the year. No contributions were outstanding at the year end.
19. CONTINGENT LIABILITIES
Certain group companies have entered into cross guarantees in respect of
the bank facilities of group undertakings secured by charges over the assets of
those group undertakings. At 31 December 1996 the amounts drawn down under the
facilities by group undertakings was [POUND STERLING]nil (1995 -- [POUND
STERLING]nil).
-14-
<PAGE> 15
OMNICARE PLC
NOTES TO THE ACCOUNTS -- (CONTINUED)
20. RECONCILIATION OF OPERATING PROFIT TO OPERATING CASH FLOWS
<TABLE>
<CAPTION>
1996 1995
[POUND STERLING] [POUND STERLING]
---------------- ----------------
<S> <C> <C>
Operating profit...................................................... 1,108,203 603,926
Depreciation........................................................ 172,032 98,779
Profit on sale of fixed assets...................................... (6,391) (1,415)
(Increase)/decrease in stocks....................................... (51,828) 298
(Increase) in debtors............................................... (2,181,924) (40,799)
Increase in creditors............................................... 1,685,995 89,490
---------- -------
Net cash inflow from operating activities........................... 726,087 750,279
========== =======
</TABLE>
21. ANALYSIS OF CHANGES IN CASH DURING THE YEAR
<TABLE>
<CAPTION>
1996 1995
[POUND STERLING] [POUND STERLING]
---------------- ----------------
<S> <C> <C>
Balance at beginning of year.................................. 619,994 28,845
Net cash (outflow)/inflow..................................... (25,141) 591,149
------- -------
Balance at end of year........................................ 594,853 619,994
======= =======
</TABLE>
<TABLE>
<CAPTION>
CHANGE IN
1996 1995 THE YEAR
[POUND STERLING] [POUND STERLING] [POUND STERLING]
---------------- ---------------- ----------------
<S> <C> <C> <C>
Cash at bank and in hand...................................... 594,853 619,994 (25,141)
======= ======= =======
</TABLE>
22. SUMMARY OF DIFFERENCES BETWEEN GENERALLY ACCEPTED ACCOUNTING PRINCIPLES IN
THE UNITED KINGDOM AND THE UNITED STATES OF AMERICA
The financial statements are prepared in accordance with generally accepted
accounting principles in the United Kingdom ("UK GAAP"), which differ in certain
material respects from those generally accepted accounting principles in the
United States of America ("US GAAP"). The differences that are material to
Omnicare plc relate to the following items and the necessary adjustments are
shown in the tables that follow:
Deferred Taxation
Under UK GAAP, deferred taxation is provided at the rates at which the
taxation is expected to become payable. No provision is made for amounts which
are not expected to become payable in the foreseeable future. Under US GAAP,
deferred taxation is provided on all temporary differences under the liability
method at rates at which the taxation would be payable in the relevant future
years.
Goodwill
Under UK GAAP, it is acceptable to eliminate purchased goodwill directly
against reserves. Under US GAAP goodwill is recorded as an asset and amortised
to earnings over its estimated life.
Dividends payable
Under UK GAAP, dividends are recorded in the financial statements for the
year to which they pertain.
Under US GAAP, dividends are recorded in the financial statements in the
period in which they are declared.
-15-
<PAGE> 16
OMNICARE PLC
NOTES TO THE ACCOUNTS -- (CONTINUED)
Statement of Cash Flows
The group's statement of cash flows is prepared in accordance with UK
Financial Reporting Standard 1 (FRS 1), the objectives and principles of which
are similar to those set out in US GAAP under Statement of Financial Accounting
Standard No. 95, "Statement of Cash Flows" (SFAS 95). The significant
differences between FRS 1 and SFAS 95 relate to classification. Under FRS 1, a
reconciliation of profit from operations to flows from operating activities is
presented in a note, and cash paid for interest and income taxes are presented
separately from cash flows from operating activities. Under SFAS 95, cash flows
from operating activities are based on net profit, include interest and income
taxes, and are presented on the face of the statement. UK GAAP requires cash and
cash equivalents to be presented net of overdrafts, SFAS 95 treats overdrafts
within financing activities.
The approximate effect of the differences between UK GAAP and US GAAP on
profit for the financial year, equity shareholders' funds and total assets are
as follows:
<TABLE>
<CAPTION>
1996 1995
[POUND STERLING] [POUND STERLING]
---------------- ----------------
<S> <C> <C>
Profit for the financial year under UK GAAP.................. 748,448 423,524
Items (decreasing) profit:
Goodwill amortisation...................................... (75,935) (8,048)
---------- ---------
Net income under US GAAP..................................... 672,513 415,476
========== =========
Equity shareholders' funds under UK GAAP..................... 2,397,812 1,353,092
Items increasing shareholders' equity:
Deferred taxation.......................................... 140,000 140,000
Goodwill................................................... 5,346,933 635,828
Dividends payable.......................................... 118,333 34,167
---------- ---------
Stockholders' equity under US GAAP........................... 8,003,078 2,163,087
========== =========
Total assets under UK GAAP................................... 5,256,896 1,983,116
Items increasing total assets:
Deferred taxation.......................................... 7,698 44,544
Goodwill................................................... 5,346,933 635,828
---------- ---------
Total assets under US GAAP................................... 10,611,527 2,663,488
========== =========
</TABLE>
-16-
<PAGE> 17
UNAUDITED PRO FORMA COMBINED CONDENSED
FINANCIAL STATEMENTS
The following Unaudited Pro Forma Combined Condensed Financial
Statements give effect to: (A) the Company's acquisition effective July 1, 1997,
of Omnicare plc ("Omnicare"); (B) the Company's acquisition effective June 23,
1997, of Allied Medicare Limited ("Allied"); and (C) borrowings under the
Company's $100 million senior secured revolving credit facility (the "Credit
Facility") to fund the acquisition and related financing fees (collectively
referred to as the "Transactions").
The Unaudited Pro Forma Combined Condensed Balance Sheet presents the
Company's historical unaudited balance sheet as of April 30, 1997 and the
Transactions as if they had occurred on April 30, 1997. The Pro Forma Balance
Sheet data for Omnicare was derived from the Omnicare Consolidated Condensed
Balance Sheet as of June 30, 1997. The Pro Forma Balance Sheet data for Allied
was derived from the Allied Consolidated Balance Sheet as of March 31, 1997.
The Unaudited Pro Forma Combined Condensed Statement of Operations for
the year ended October 31, 1996 presents the historical operations of the
Company and the Transactions as if they had occurred on November 1, 1995. The
Pro Forma Statement of Operations of Omnicare was derived from Omnicare's
audited historical Statement of Operations for the year ended December 31, 1996.
The Pro Forma Statement of Operations of Allied was derived from Allied's
historical Statement of Operations for the fifty-two (52) weeks ended October
13, 1996 (unaudited). Such statement was derived by taking Allied's audited
historical Statement of Operations for the year ended March 31, 1996,
subtracting the historical operations for the twenty-eight (28) weeks ended
October 8, 1995 and adding the historical operations for the twenty-eight (28)
weeks ended October 13, 1996.
The Unaudited Pro Forma Combined Condensed Statement of Operations for
the six months ended April 30, 1997 presents the historical operations of the
Company (unaudited) and the Transactions as if they had occurred on November 1,
1995. The Pro Forma Statement of Operations of Omnicare was derived from
Omnicare's historical Statement of Operations (unaudited) for the six months
ended June 30, 1997. The Pro Forma Statement of Operations of Allied was derived
from Allied's historical Statement of Operations (unaudited) for the twenty-four
(24) weeks ended March 31, 1997.
The Pro Forma financial statements of Omnicare and Allied have been
prepared in accordance with U.S. GAAP and have been translated into U.S. dollars
using the exchange rate at each balance sheet date for assets and liabilities
and weighted average exchange rates for each period for income and expense
items. This presentation differs from Allied's historical financial statements
which are included in this Form 8-K and Omnicare's historical financial
statements which are included in the Company's Report on Form 8-K filed on
September 8, 1997.
Pro forma adjustments include fair value adjustments required under
purchase accounting for the acquired assets and liabilities of Omnicare and
Allied and are subject to revision when final analysis of such values are
completed. The final allocations of purchase price and the resulting
amortization expense in the accompanying Unaudited Pro Forma Combined Condensed
Statement of Operations will differ from the preliminary estimates due to the
final allocations being based on: (i) actual closing date amounts of assets and
liabilities; (ii) actual closing date conversion rates; and (iii) final
appraised value of assets and liabilities.
17
<PAGE> 18
UNAUDITED PRO FORMA COMBINED CONDENSED
FINANCIAL STATEMENTS - (CONTINUED)
Pro forma adjustments are based on Management's estimates of the
financial effects of the acquisitions and related financing on the operations of
the combined companies for the periods presented. The Unaudited Pro Forma
Combined Condensed Financial Statements should be read in conjunction with the
accompanying notes and the Company's historical consolidated financial
statements and notes thereto and "Management's Discussion and Analysis of
Financial Condition and Results of Operations" contained in the Company's Annual
Report on Form 10-K for the fiscal year ended October 31, 1996, the Company's
Quarterly Report on Form 10-Q for the quarter ended April 30, 1997, the
historical consolidated financial statements of Allied and notes thereto which
are included in this Form 8-K and the historical consolidated financial
statements of Omnicare and notes thereto which are included in the Company's
Report on Form 8-K filed on September 8, 1997. The Unaudited Pro Forma Combined
Condensed Statement of Operations does not purport to present the results of
operations of the Company as if the transactions assumed herein occurred at the
beginning of fiscal 1996, nor is it indicative of the results of operations
which may be achieved in the future.
18
<PAGE> 19
TRANSWORLD HEALTHCARE, INC.
PRO FORMA COMBINED CONDENSED BALANCE SHEET
April 30, 1997
(In thousands, except per share data)
(Unaudited)
<TABLE>
<CAPTION>
Transworld Allied Medicare Omnicare
HealthCare, Inc. Limited plc Transworld
April 30, March 31, June 30, Pro Forma HealthCare, Inc.
1997 1997 1997 Adjustments Pro Forma
======== ======= ====== ======== ========
<S> <C> <C> <C> <C> <C>
ASSETS
Current assets:
Cash and temporary investments ................ $ 37,263 $ 884 $ 872 $(32,650)(a) $ 6,369
Accounts receivable, less allowance
for doubtful accounts ..................... 32,599 6,028 4,205 -- 42,832
Inventories ................................... 1,985 50 1,242 -- 3,277
Prepaid income taxes .......................... 62 -- -- -- 62
Prepaid expenses and other current assets ..... 7,337 1,648 372 -- 9,357
-------- ------- ------ -------- --------
Total current assets ................. 79,246 8,610 6,691 (32,650) 61,897
Property & equipment, net ......................... 4,084 2,186 2,979 -- 9,249
Advances to and investment in HMI ................. 31,508 -- -- -- 31,508
Intangible assets, net of accumulated amortization 43,658 1,249 -- 84,833 (b) 129,740
Other assets ...................................... 7,001 -- 214 1,000 (c) 8,215
-------- ------- ------ -------- --------
Total assets ......................... $165,497 $12,045 $9,884 $ 53,183 $240,609
======== ======= ====== ======== ========
LIABILITIES AND
STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable,accrued expenses
and other current liabilities ............. $ 10,045 $ 6,448 $3,819 $ 731 (d) $ 21,043
Income taxes payable .......................... -- 1,015 984 -- 1,999
Acquisitions payable .......................... 96 -- -- -- 96
-------- ------- ------ -------- --------
Total current liabilities ............ 10,141 7,463 4,803 731 23,138
Long-term debt, including obligations
under capital leases ........................ 35,494 91 -- 61,924 (e) 97,509
Deferred income taxes and other ................... 651 -- 100 -- 751
-------- ------- ------ -------- --------
Total liabilities .................... 46,286 7,554 4,903 62,655 121,398
-------- ------- ------ -------- --------
Stockholders' equity:
Preferred stock, $.01 par value;
authorized 2,000 shares, issued
outstanding - none ........................ -- -- -- -- --
Common stock, $.01 par value;
authorized 30,000 shares, issued
and outstanding - 15,104 shares ........... 151 141 1,981 (2,122)(f) 151
Additional paid-in capital .................... 112,799 -- 355 (355)(g) 112,799
Retained earnings ............................. 6,261 4,350 2,645 (6,995)(h) 6,261
-------- ------- ------ -------- --------
Total stockholders' equity ............... 119,211 4,491 4,981 (9,472) 119,211
-------- ------- ------ -------- --------
Total liabilities and stockholders' equity $165,497 $12,045 $9,884 $ 53,183 $240,609
======== ======= ====== ======== ========
</TABLE>
See notes to pro forma combined condensed financial statements
19
<PAGE> 20
TRANSWORLD HEALTHCARE, INC.
PRO FORMA COMBINED CONDENSED STATEMENT OF OPERATIONS
Year Ended October 31, 1996
(In thousands, except per share data)
(Unaudited)
<TABLE>
<CAPTION>
Fifty-Two
Year Ended Weeks Ended Year Ended
October 31, October 13, December 31,
1996 1996 1996 Transworld
Transworld Allied Medicare Omnicare Pro Forma HealthCare, Inc.
HealthCare, Inc. Limited plc Adjustments Pro Forma
================ =============== ============= ============ ===============
<S> <C> <C> <C> <C> <C>
Net revenues ....................................... $ 76,304 $11,950 $ 12,108 $ -- $ 100,362
Cost of revenues ................................... 34,680 3,442 7,550 -- 45,672
-------- ------- -------- ------- ---------
Gross profit ....................................... 41,624 8,508 4,558 -- 54,690
Selling, general and administrative expenses ....... 33,552 6,000 2,865 119 (a) 42,536
-------- ------- -------- ------- ---------
Operating income ................................... 8,072 2,508 1,693 (119) 12,154
Interest income .................................... (75) -- (37) -- (112)
Interest expense ................................... 4,427 15 5 4,687 (b) 9,134
-------- ------- -------- ------- ---------
Income before income taxes and extraordinary
loss ............................................. 3,720 2,493 1,725 (4,806) 3,132
Provision for income taxes ......................... 1,702 788 622 (1,914)(c) 1,198
-------- ------- -------- ------- ---------
Income before extraordinary loss ......... $ 2,018 $ 1,705 $ 1,103 $(2,892) $ 1,934
======== ======= ======== ======= =========
Income per share of common stock before
extraordinary loss:
Primary ........................................ $ 0.26 -- -- -- $ 0.25
Fully diluted .................................. $ 0.26 -- -- -- $ 0.25
Weighted average number of shares outstanding:
Primary ........................................ 7,741 -- -- -- 7,741
Fully diluted .................................. 7,833 -- -- -- 7,833
</TABLE>
See notes to pro forma combined condensed financial statements
20
<PAGE> 21
TRANSWORLD HEALTHCARE, INC.
PRO FORMA COMBINED CONDENSED STATEMENT OF OPERATIONS
Six Months Ended April 30, 1997
(In thousands, except per share data)
(Unaudited)
<TABLE>
<CAPTION>
Six Months Twenty-Four Six Months
Ended Weeks Ended Ended
April 30, March 31, June 30,
1997 1997 1997 Transworld
Transworld Allied Medicare Omnicare Pro Forma HealthCare, Inc.
HealthCare, Inc. Limited plc Adjustments Pro Forma
================ =============== ============= =========== ============
<S> <C> <C> <C> <C> <C>
Net revenues ................................. $ 40,966 $7,173 $ 10,586 $ -- $ 58,725
Cost of revenues ............................. 19,739 2,001 7,058 -- 28,798
-------- ------ -------- ------- --------
Gross profit ................................. 21,227 5,172 3,528 -- 29,927
Selling, general and administrative expenses . 17,004 3,796 2,549 96 (a) 23,445
-------- ------ -------- ------- --------
Operating income ............................. 4,223 1,376 979 (96) 6,482
Interest income .............................. (1,108) -- (26) 47 (b) (1,087)
Interest expense ............................. 2,113 34 -- 2,343 (c) 4,490
Equity in losses of Health Management, Inc ... 296 -- -- -- 296
-------- ------ -------- ------- --------
Income before income taxes ................... 2,922 1,342 1,005 (2,486) 2,783
Provision for income taxes ................... 1,566 509 383 (987)(d) 1,471
-------- ------ -------- ------- --------
Net income ......................... $ 1,356 $ 833 $ 622 $(1,499) $ 1,312
======== ====== ======== ======= ========
Net income per share of common stock:
Primary .................................. $ 0.12 -- -- -- $ 0.12
Fully diluted ............................ $ 0.12 -- -- -- $ 0.12
Weighted average number of shares outstanding:
Primary .................................. 11,360 -- -- -- 11,360
Fully diluted ............................ 11,360 -- -- -- 11,360
</TABLE>
See notes to pro forma combined condensed financial statements
21
<PAGE> 22
TRANSWORLD HEALTHCARE, INC.
NOTES TO PRO FORMA COMBINED CONDENSED BALANCE SHEET
APRIL 30, 1997
(IN THOUSANDS, EXCEPT PER SHARE DATA)
(UNAUDITED)
<TABLE>
<S> <C> <C>
(a) Cash and temporary investments:
To record acquisition of Omnicare . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ (31,243)
To record payment of Omnicare and Allied acquisition related costs (legal, accounting and
fInancial advisory) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (1,407)
---------
$ (32,650)
=========
(b) Intangible assets, net of accumulated amortization:
Omnicare:
To record goodwill on the acquisition of Omnicare as follows:
Purchase price in cash (pound sterling 17,485 at 1.6235 at April 30, 1997 plus $2,856) . $ 31,243
Acquisition related costs (legal, accounting and financial advisory;
legal and tax contingencies) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,084
Liabilities assumed . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4,903
---------
Total cost of acquisition . . . . . . . . . . . . . . . . . . . . . . . . . . . 37,230
Less assets at fair value. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9,884
---------
Goodwill on the acquisition of Omnicare (forty year amortization). . . . . . . . $ 27,346
Allied:
To record goodwill and covenants not to compete on the acquisition of
Allied as follows:
Purchase price in cash . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 60,183
Acquisition related costs (legal and accounting; legal and tax contingencies) . . . . . 1,795
Liabilities assumed . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7,554
----------
Total cost of acquisition . . . . . . . . . . . . . . . . . . . . . . . . . . . 69,532
Less assets at fair value. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12,045
----------
Excess of cost over net tangible assets acquired . . . . . . . . . . . . . . . 57,487
Non - compete agreements associated with the acquistion (3 year amortization) . . . . . . . $ 731
Goodwill on the acquisition of Allied (forty year amortization) . . . . . . . . . . . . . . 56,756
---------
$ 57,487
========= ---------
$ 84,833
=========
The Company has selected the forty-year amortization period for
goodwill based on the likely period of time over which the related
economic benefit will be realized. The Company believes its estimated
goodwill life is reasonable given the continuing movement of patient
care to noninstitutional settings, expanding demand due to demographic
trends, the emphasis of the Company on establishing significant
coverage in its local and regional markets, the consistent practice
with other alternate site health care companies and other factors. At
the balance sheet date, management assesses whether there has been
permanent impairment in the value of goodwill and the amount of any
impairment by comparing anticipated undiscounted future cash flows
from operating activities with the carrying value of goodwill The
factors considered by management in deriving future cash flows include
current operating results, trends and prospects of acquired businesses
as well as the effect of demand, competition, market, and other
economic factors.
The value of the non - compete agreements reflect management's
estimates and are based on similar acquisitions made by the Company.
Such amounts will be adjusted, if necessary, based on independent
valuations to be made and are not expected to be materially different.
(c) Other assets:
Financing fee related to the acquisition of Allied . . . . . . . . . . . . . . . $ 1,000
=========
</TABLE>
22
<PAGE> 23
TRANSWORLD HEALTHCARE, INC.
NOTES TO PRO FORMA COMBINED CONDENSED BALANCE SHEET - CONTINUED
APRIL 30, 1997
(IN THOUSANDS, EXCEPT PER SHARE DATA)
(UNAUDITED)
<TABLE>
<S> <C>
(d) Accrued expenses and other current liabilities:
Accrual of unpaid acquisition related costs (legal and tax contingencies) . . . . . . . . . . . . . . . $ 731
========
(e) Long-term debt, including obligations under capital leases:
Borrowings under the Credit Agreement to fund the acquisition of Allied . . . . . . . . . . . . . . . . $ 60,183
Borrowings under the Credit Agreement to fund the fee for the Amendment to the Credit Agreement . . . . 1,000
Borrowings under the Credit Agreement to fund a portion of the Allied acquisition related costs . . . . 741
--------
$ 61,924
========
(f) Common stock:
To eliminate Omnicare's historical common stock. . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ (1,981)
To eliminate Allied's historical common stock. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (141)
--------
$ (2,122)
========
(g) Additional paid-in capital:
To eliminate Omnicare's historical additional paid-in capital. . . . . . . . . . . . . . . . . . . . . . $ (355)
========
(h) Retained earnings:
To eliminate Omnicare's historical retained earnings . . . . . . . . . . . . . . . . . . . . . . . . . . $ (2,645)
To eliminate Allied's historical retained earnings . . . . . . . . . . . . . . . . . . . . . . . . . . . (4,350)
--------
$ (6,995)
========
</TABLE>
23
<PAGE> 24
TRANSWORLD HEALTHCARE, INC.
NOTES TO PRO FORMA COMBINED
CONDENSED STATEMENT OF OPERATIONS
FOR THE YEAR ENDED OCTOBER 31, 1996
(IN THOUSANDS, EXCEPT PER SHARE DATA)
(UNAUDITED)
<TABLE>
<S> <C>
(a) Selling, general and administrative expenses:
Amortization of non-compete agreements associated with the acquisition of Allied ($731) straight line
over three years .................................................................................... $ 244
To record the amortization of goodwill associated with the acquisition of Omnicare ($27,346) straight
line over forty years ............................................................................... 684
To record the amortization of goodwill associated with the acquisition of Allied ($56,756) straight line
over forty years .................................................................................... 1,419
Elimination of Allied's historical former owner/sellers salaries and benefits ............................... (2,228)
----------
$ 119
==========
(b) Interest expense:
To book adjustments to interest expense at 7.19% (rate at April 30, 1997, net of .5% unused
commitment fee) to reflect interest charged on borrowings under the Credit Facility as
follows:
Interest expense on cash borrowed to effect the acquisition of Allied ........................ $ 4,452
Amortization under the interest method of the fee for the Amendment to the Credit Agreement .. 235
----------
$ 4,687
==========
A change in interest rates by one-eighth of a percent (1/8%) would
impact interest expense by $77.
(c) Provision for taxes:
To book tax benefit attributable to pro forma adjustments of $119 at the UK statutory rate of 33% .......... $ (39)
To book tax benefit attributable to pro forma adjustments of $4,687 at the US statutory rate of 40% ........ (1,875)
----------
$ (1,914)
==========
</TABLE>
24
<PAGE> 25
TRANSWORLD HEALTHCARE, INC.
NOTES TO PRO FORMA COMBINED
CONDENSED STATEMENT OF OPERATIONS
FOR THE SIX MONTHS ENDED APRIL 30, 1997
(IN THOUSANDS, EXCEPT PER SHARE DATA)
(UNAUDITED)
<TABLE>
<S> <C>
(a) Selling, general and administrative expenses:
Amortization of non-compete agreements associated with the acquisition of Allied ($731) straight line
over three years . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 122
To record the amortization of goodwill associated with the acquisition of Omnicare ($27,346) straight
line over forty years . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 342
To record the amortization of goodwill associated with the acquisition of Allied ($56,756) straight line
over forty years . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 710
Elimination of Allied's historical former owner/sellers salaries and benefits. . . . . . . . . . . . . . . . . (1,078)
--------
$ 96
========
(b) Interest income:
To book reduction in interest income at 5.2% on Company funds utilized for acquisitions and
related costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 47
========
(c) Interest expense:
To book adjustments to interest expense at 7.19% (rate at April 30, 1997, net of .5% unused
commitment fee) to reflect interest charged on borrowings under the Credit Facility as
follows:
Interest expense on cash borrowed to effect the acquisition of Allied . . . . . . . . . . . . $ 2,226
Amortization under the interest method of the fee for the Amendment to the Credit Agreement . 117
--------
$ 2,343
========
A change in interest rates by one-eighth of a percent (1/8%) would
impact interest expense by $39.
(d) Provision for taxes:
To book tax benefit attributable to pro forma adjustments of $96 at the UK statutory rate of 32.7% . . . . . $ (31)
To book tax benefit attributable to pro forma adjustments of $2,390 at the US statutory rate of 40% . . . . . (956)
--------
$ (987)
========
</TABLE>
25
<PAGE> 26
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the Registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
Transworld HealthCare, Inc.
---------------------------
(Registrant)
Date: September 8, 1997 By: /s/ Wayne A. Palladino
----------------------------------
Wayne A. Palladino
Senior Vice President and
Chief Financial Officer
-26-
