EXHIBIT 99.4
PAR PHARMACEUTICAL COMPANIES, INC.
UNAUDITED CONDENSED CONSOLIDATED PRO FORMA FINANCIAL INFORMATION
JULY 4, 2004
- --------------------------------------------------------------------------------
1. BASIS OF PRO FORMA PRESENTATION
The following unaudited condensed consolidated pro forma financial
statements have been prepared to give effect to Par Pharmaceutical Companies,
Inc. ("Par" or the "Company") acquisition of Kali Laboratories, Inc. ("Kali").
These pro forma statements are presented for illustrative purposes only.
The pro forma adjustments are based upon available information and
assumptions that Par believes are reasonable. A preliminary allocation of the
purchase price for the above transaction has not been completed. A determination
of the fair value of the underlying assets acquired and liabilities assumed is
in process. It is expected that a significant portion of the allocation will be
made to in-process research and development, which will be expensed upon
recognition. The unaudited condensed consolidated pro forma financial statements
do not purport to represent what the consolidated results of operations or
financial position of Par would actually have been if the acquisition had
occurred on the dates referred to below, nor do they purport to project the
results of operations or financial position of Par for any future period.
The unaudited condensed consolidated pro forma statements of operations for
the year ended December 31, 2003 and for the six month period ended July 4, 2004
were prepared by combining Par's statement of operations for the respective
periods with Kali's statement of operations for the similar respective periods,
giving effect to the acquisition as though it occurred on the first day of the
respective fiscal year. Par's statements for the six months ended July 4, 2004
include the results of Kali from the acquisition date. The accompanying combined
financial statements of Kali include the accounts of VGS Holdings, Inc. ("VGS"),
which are under common control.
These unaudited condensed consolidated pro forma statements of operations
do not give effect to any restructuring costs or any potential cost savings or
other operating efficiencies that could result from the acquisition, or any
non-recurring charges or credits resulting from the transaction such as
in-process research and development charges.
The unaudited condensed consolidated pro forma financial statements should
be read in conjunction with the historical financial statements of Par included
in its Annual Report on Form 10-K for the year ended December 31, 2003 (filed
March 15, 2004).
On June 10, 2004, the Company completed its acquisition of Kali for
$140,430 in cash and $2,530 in warrants. The purchase price included forgiving a
$10,000 loan made by the Company to Kali in March 2004. The estimated fair value
of the Kali assets acquired was not readily determinable at July 4, 2004.
Therefore, the net purchase price of Kali is currently being reflected on Par's
balance sheet as unallocated purchase price of $142,960.
2. INCOME STATEMENT ADJUSTMENTS
FOR THE SIX MONTHS ENDED JULY 4, 2004
(a) Represents the unaudited condensed statement of operations of Par at July
4, 2004.
(b) Represents the unaudited condensed combined statement of operations of Kali
at July 4, 2004.
(c) Represents accounts of VGS (research and development $52, selling, general
and administrative $(2) and interest expense $14), which was not acquired
with the purchase of Kali, the results of Kali (revenues $(431), research
and development $(277), selling, general and administrative $(195) and
interest expense $(2)) from the acquisition date to July 4, 2004 and
intercompany revenues and cost of goods sold related to a product
development agreement $(465).
(d) Represent the tax benefit from including Kali's operating results in the
consolidated results of Par.
1
FOR THE TWELVE MONTHS ENDED DECEMBER 31, 2003
(a) Represents the unaudited condensed statement of operations of Par at
December 31, 2003.
(b) Represents the unaudited condensed combined statement of operations of Kali
at December 31, 2003.
(c) Represents accounts of VGS (research and development $144, selling, general
and administrative $(2) and interest expense $93), which was not acquired
with the purchase of Kali, and intercompany revenues and cost of goods sold
related to a product development agreement $(395).
(d) Represent the tax benefit from including Kali's operating results in the
consolidated results of Par.
2
PAR PHARMACEUTICAL COMPANIES, INC.
UNAUDITED CONDENSED CONSOLIDATED PRO FORMA STATEMENTS OF OPERATIONS
SIX MONTHS ENDED JULY 4, 2004
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
(UNAUDITED)
PAR (A) KALI (B) ADJUSTMENTS PRO FORMA
------- -------- ----------- ---------
Total revenues $424,298 $1,680 $(896)(c) $425,082
Cost of goods sold 280,629 - (465)(c) 280,164
------- ------ ------- -------
Gross margin 143,669 1,680 (431) 144,918
Operating expenses (income):
Research and Development 16,662 6,381 (225)(c) 22,818
Selling, general and administrative 30,736 343 (197)(c) 30,882
Settlements (2,846) - - (2,846)
------- ------ ------- -------
Total operating expenses 44,552 6,724 (422) 50,854
Operating income (loss) 99,117 (5,044) (9) 94,064
Other (expense) income, net (75) 40 (2) (37)
Interest expense, net (573) (40) 12 (c) (601)
------- ------ ------- -------
Income (loss) before provision
(benefit)for income taxes 98,469 (5,044) 1 93,426
Provision (benefit) for income taxes 38,403 1 (1,968)(d) 36,436
------- ------ ------- -------
NET INCOME (LOSS) $60,066 $(5,045) $1,969 $56,990
====== ===== ===== ======
Net income per share of common
stock:
Basic $1.75 $1.66
==== ====
Diluted $1.70 $1.62
==== ====
Weighted average number of
common shares outstanding:
Basic 34,359 34,359
====== ======
Diluted 35,247 35,247
====== ======
3
PAR PHARMACEUTICAL COMPANIES, INC.
UNAUDITED CONDENSED CONSOLIDATED PRO FORMA STATEMENTS OF OPERATIONS
YEAR ENDED DECEMBER 31, 2003
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
(UNAUDITED)
PAR (A) KALI (B) ADJUSTMENTS PRO FORMA
------- -------- ----------- ---------
Total revenues $661,688 $1,402 $(395)(c) $662,695
Cost of goods sold 378,513 - (395)(c) 378,118
------- ----- ----- -------
Gross margin 283,175 1,402 - 284,577
Operating expenses:
Research and Development 24,581 2,672 144 (c) 27,397
Selling, general and
administrative 57,575 447 (2)(c) 58,020
------- ----- ----- -------
Total operating expenses 82,156 3,119 142 85,417
Operating income 201,019 (1,717) (142) 199,160
Other expense, net (95) (378) - (473)
Interest expense, net (281) (174) 93 (c) (362)
------- ----- ----- -------
Income (loss) before provision
(benefit) for income taxes 200,643 (2,269) (49) 198,325
Provision (benefit) for income
taxes 78,110 (6) (904)(d) 77,200
------- ----- ----- -------
NET INCOME (LOSS) $122,533 $(2,263) $855 $121,125
======= ===== === =======
Net income per share of common
stock:
Basic $3.66 $3.62
==== ====
Diluted $3.54 $3.50
==== ====
Weighted average number of
common shares outstanding:
Basic 33,483 33,483
====== ======
Diluted 34,638 34,638
====== ======
4