AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON JUNE 8, 2001
REGISTRATION NO. 333-
________________________________________________________________________________
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
-------------------
FORM S-4
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
-------------------
OMNICARE, INC.
AND THE GUARANTORS IDENTIFIED IN FOOTNOTE (1) ON THE FOLLOWING PAGES
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
DELAWARE 5912 31-1001351
(STATE OR OTHER JURISDICTION OF (PRIMARY STANDARD INDUSTRIAL (I.R.S. EMPLOYER IDENTIFICATION NO.)
INCORPORATION OR ORGANIZATION) CLASSIFICATION CODE NUMBER)
100 EAST RIVERCENTER BLVD., SUITE 1600
COVINGTON, KENTUCKY 41011
(859) 392-3300
(ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER,
INCLUDING AREA CODE, OF REGISTRANT'S PRINCIPAL EXECUTIVE OFFICES)
-------------------
CHERYL D. HODGES
SENIOR VICE PRESIDENT AND SECRETARY
100 EAST RIVERCENTER BLVD., SUITE 1600
COVINGTON, KENTUCKY 41011
(859) 392-3300
(NAME, ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER,
INCLUDING AREA CODE, OF AGENT FOR SERVICE)
-------------------
COPIES TO:
MORTON A. PIERCE, ESQ.
DEWEY BALLANTINE LLP
1301 AVENUE OF THE AMERICAS
NEW YORK, NEW YORK 10019
(212) 259-8000
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE OF THE SECURITIES TO THE
PUBLIC: As soon as practicable after this Registration Statement becomes
effective.
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 of 1933, check the following
box and list the Securities Act of 1933 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 of 1933, check the following box and list the
Securities Act of 1933 registration statement number of the earlier effective
registration statement for the same offering. [ ]
CALCULATION OF REGISTRATION FEE
===========================================================================================================================
PROPOSED
MAXIMUM PROPOSED
AMOUNT OFFERING MAXIMUM
TITLE OF EACH CLASS OF TO BE PRICE PER AGGREGATE AMOUNT OF
SECURITIES TO BE REGISTERED REGISTERED(1) NOTE OFFERING PRICE(1) REGISTRATION FEE
- --------------------------------------------------------------------------------------------------------------------------
8 1/8% Series B Senior Subordinated Notes due
2011................................................ $375,000,000 100% $375,000,000 $93,750
- --------------------------------------------------------------------------------------------------------------------------
Guarantees of 8 1/8% Series B Senior Subordinated
Notes due 2011...................................... $375,000,000 (2) (2) (2)
===========================================================================================================================
(1) Estimated solely for purposes of calculating the registration fee pursuant
to Rule 457(f).
(2) No additional consideration for the Guarantees of the 8.125% Series B Senior
Subordinated Notes due 2011 will be furnished. Pursuant to Rule 457(n), no
separate fee is payable with respect to such Guarantees.
-------------------
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE TIME 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 SEC, ACTING PURSUANT TO SAID SECTION 8(a), MAY
DETERMINE.
________________________________________________________________________________
(1) The following domestic subsidiaries of Omnicare, Inc. are guarantors of the
exchange notes and are co-registrants:
PRIMARY
STANDARD
STATE OF OR OTHER INDUSTRIAL
JURISDICTION OF CLASSIFICATION I.R.S. EMPLOYER
INCORPORATION OR CODE IDENTIFICATION
EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER ORGANIZATION NUMBER NUMBER
- ---------------------------------------------------- ------------ ------ ------
AAHS Acquisition Corp............................ DELAWARE 5912 31-1567104
Accu-Med Services, Inc........................... DELAWARE 7372 31-1482519
ACP Acquisition Corp............................. DELAWARE 7372 31-1568818
AMC -- New York, Inc............................. DELAWARE 5912 36-4091917
AMC -- Tennessee, Inc............................ DELAWARE 5912 62-1696813
Bach's Pharmacy Services, LLC.................... DELAWARE 5912 61-1346690
Badger Acquisition of Brooksville, LLC........... DELAWARE 5912 52-2119870
Badger Acquisition of Kentucky, LLC.............. DELAWARE 5912 52-2119911
Badger Acquisition of Minnesota, LLC............. DELAWARE 5912 52-2119871
Badger Acquisition of Ohio, LLC.................. DELAWARE 5912 52-2119875
Badger Acquisition of Orlando, LLC............... DELAWARE 5912 52-2119896
Badger Acquisition of Tampa, LLC................. DELAWARE 5912 52-2119893
Badger Acquisition of Texas, LLC................. DELAWARE 5912 52-2119915
Badger Acquisition, LLC.......................... DELAWARE 5912 52-2119866
Bio-Pharm International, Inc..................... DELAWARE 8731 23-2794725
BPNY Acquisition Corp............................ DELAWARE 5912 31-1563804
BPTX Acquisition Corp............................ DELAWARE 5912 31-1563806
Campo Medical Pharmacy, Inc...................... LOUISIANA 5912 72-1039948
Care Pharmaceutical Services, Inc................ DELAWARE 5912 31-1399042
CHP Acquisition Corp............................. DELAWARE 5912 31-1483612
CIP Acquisition Corp............................. DELAWARE 5912 31-1486402
CompScript -- Boca, Inc.......................... FLORIDA 5912 65-0286244
CompScript -- Mobile, Inc........................ DELAWARE 5912 59-3248505
CompScript, Inc.................................. FLORIDA 5912 65-0506539
CP Acquisition Corp.............................. OKLAHOMA 5912 61-1317566
Creekside Managed Care Pharmacy, Inc............. DELAWARE 5912 61-1349188
CTLP Acquisition Corp............................ DELAWARE 5912 61-1318902
D & R Pharmaceutical Services, Inc............... KENTUCKY 5912 61-0955886
Electra Acquisition Corp......................... DELAWARE 5912 31-1465189
Enloe Drugs, Inc................................. DELAWARE 5912 31-1362346
Euro Bio-Pharm -- ATS............................ DENMARK 8731
Euro Bio-Pharm Clinical Services, Inc............ DELAWARE 8731 23-2770328
Evergreen Pharmaceutical of California, Inc...... CALIFORNIA 5912 61-1321151
Evergreen Pharmaceutical, Inc.................... WASHINGTON 5912 91-0883397
Hardardt Group, Inc., The........................ DELAWARE 8731 22-3470357
HMIS, Inc........................................ DELAWARE 5912 36-4124072
Home Care Pharmacy, Inc.......................... DELAWARE 5912 31-1255845
Home Pharmacy Services, Inc...................... MISSOURI 5912 37-0978331
(table continued on next page)
(table continued from previous page)
PRIMARY
STANDARD
STATE OF OR OTHER INDUSTRIAL
JURISDICTION OF CLASSIFICATION I.R.S. EMPLOYER
INCORPORATION OR CODE IDENTIFICATION
EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER ORGANIZATION NUMBER NUMBER
- ---------------------------------------------------- ------------ ------ ------
Hytree Pharmacy, Inc............................. OHIO 5912 34-1090853
Interlock Pharmacy Systems, Inc.................. MISSOURI 5912 43-0951332
JHC Acquisition, Inc............................. DELAWARE 5912 31-1494762
Langsam Health Services, Inc..................... DELAWARE 5912 73-1391198
LCPS Acquisition, LLC............................ DELAWARE 5912 61-1347084
Lo-Med Prescription Services, Inc................ OHIO 5912 34-1396063
LPI Acquisition Corp............................. DELAWARE 5912 31-1501535
Managed Healthcare, Inc.......................... DELAWARE 5912 31-1450845
Med World Acquisition Corp....................... DELAWARE 5912 61-1322120
Medical Arts Health Care, Inc.................... GEORGIA 5912 58-1640672
Medical Services Consortium, Inc................. FLORIDA 5912 65-0357177
MOSI Acquisition Corp............................ DELAWARE 5912 31-1528353
Nihan & Martin, Inc.............................. DELAWARE 5912 36-4004491
NIV Acquisition Corp............................. DELAWARE 5912 31-1501415
North Shore Pharmacy Services, Inc............... DELAWARE 5912 31-1428484
OCR-RA Acquisition Corp.......................... DELAWARE 5912 31-1442830
OFL Corp......................................... DELAWARE 5912 61-1357682
Omnibill Services, LLC........................... DELAWARE 5912 61-1365732
Omnicare Clinical Research, Inc.................. DELAWARE 8731 52-1670189
Omnicare Clinical Research, LLC.................. DELAWARE 8731 14-1723594
Omnicare Management Company...................... DELAWARE 5912 31-1256520
Omnicare Pennsylvania Med Supply, LLC............ DELAWARE 5912 61-1347895
Omnicare Pharmaceutics, Inc...................... DELAWARE 8731 23-2745806
Omnicare Pharmacies of PA East, LLC.............. DELAWARE 5912 61-1347894
Omnicare Pharmacies of PA West, Inc.............. PENNSYLVANIA 5912 25-1213193
Omnicare Pharmacies of the Great Plains Holding
Company, Inc................................... DELAWARE 5912 61-1386242
Omnicare Pharmacy and Supply Services, Inc....... SOUTH DAKOTA 5912 41-1730324
Omnicare Pharmacy of Colorado, LLC............... DELAWARE 5912 61-1347085
Omnicare Pharmacy of Maine Holding Company, Inc... DELAWARE 5912 61-1365280
Omnicare Pharmacy of Maine LLC................... DELAWARE 5912 61-1339662
Omnicare Pharmacy of Massachusetts, LLC.......... DELAWARE 5912 61-1347087
Omnicare Pharmacy of Nebraska, LLC............... DELAWARE 5912 61-1386244
Omnicare Pharmacy of South Dakota, LLC........... DELAWARE 5912 61-1386243
Omnicare Pharmacy of Tennessee, LLC.............. DELAWARE 5912 61-1347088
Omnicare Pharmacy of the Midwest, Inc............ DELAWARE 5912 31-1374275
PBM Plus......................................... WISCONSIN 5912 39-1789830
(table continued on next page)
(table continued from previous page)
PRIMARY
STANDARD
STATE OF OR OTHER INDUSTRIAL
JURISDICTION OF CLASSIFICATION I.R.S. EMPLOYER
INCORPORATION OR CODE IDENTIFICATION
EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER ORGANIZATION NUMBER NUMBER
- ---------------------------------------------------- ------------ ------ ------
Pharmacon Corp................................... NEW YORK 5912 13-3498399
Pharmacy Associates of Glens Falls, Inc.......... NEW YORK 5912 14-1554120
Pharmacy Consultants, Inc........................ SOUTH CAROLINA 5912 57-0640737
Pharm-Corp of Maine, LLC......................... DELAWARE 5912 61-1339663
Pharmed Holdings, Inc............................ DELAWARE 5912 36-4060882
PRN Pharmaceutical Services, Inc................. DELAWARE 5912 35-1855784
Roeschen's Healthcare Corp....................... WISCONSIN 5912 39-1084787
Royal Care of Michigan LLC....................... DELAWARE 5912 38-3529444
SHC Acquisition Co., LLC......................... DELAWARE 5912 61-1346763
Shore Pharmaceutical Providers, Inc.............. DELAWARE 5912 31-1425144
Southside Apothecary, Inc........................ NEW YORK 5912 61-1340804
Specialized Home Infusion of Michigan LLC........ DELAWARE 5912 38-3529442
Specialized Patient Care Services, Inc........... ALABAMA 5912 63-1159534
Specialized Pharmacy Services, Inc............... MISSOURI 5912 38-2143132
Sterling Healthcare Services, Inc................ DELAWARE 5912 36-4031863
Superior Care Pharmacy, Inc...................... DELAWARE 5912 31-1543728
Swish, Inc....................................... DELAWARE 8731 52-2005933
TCPI Acquisition Corp............................ DELAWARE 5912 31-1508476
THG Acquisition Corp............................. DELAWARE 5912 31-1567102
Three Forks Apothecary, Inc...................... KENTUCKY 5912 61-0995656
UC Acquisition Corp.............................. DELAWARE 5912 31-1414594
Value Health Care Services, Inc.................. DELAWARE 5912 31-1485530
Value Pharmacy, Inc.............................. MASSACHUSETTS 5912 04-2894741
Vital Care Infusions, Inc........................ NEW YORK 5912 61-1336267
Weber Medical Systems, Inc....................... DELAWARE 5912 31-1409572
Westhaven Services Co............................ OHIO 5912 34-1151322
Williamson Drug Company, Incorporated............ VIRGINIA 5912 54-0590067
Winslow's Pharmacy............................... NEW JERSEY 5912 21-0692005
THE INFORMATION IN THIS PRELIMINARY PROSPECTUS IS NOT COMPLETE AND MAY BE
CHANGED. WE MAY NOT EXCHANGE THESE SECURITIES UNTIL THE REGISTRATION STATEMENT
FILED WITH THE SECURITIES AND EXCHANGE COMMISSION IS EFFECTIVE. THIS PRELIMINARY
PROSPECTUS IS NOT AN OFFER TO EXCHANGE THESE SECURITIES AND IS NOT SOLICITING
OFFERS TO EXCHANGE THESE SECURITIES IN ANY STATE WHERE THE EXCHANGE IS NOT
PERMITTED.
SUBJECT TO COMPLETION DATED JUNE 8, 2001
PRELIMINARY PROSPECTUS
OMNICARE, INC.
OFFER TO EXCHANGE 8 1/8% SERIES B SENIOR SUBORDINATED NOTES DUE 2011
WHICH HAVE BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933 FOR ANY AND ALL
OUTSTANDING 8 1/8% SENIOR SUBORDINATED NOTES DUE 2011
$375,000,000 AGGREGATE PRINCIPAL AMOUNT OUTSTANDING
-------------------
The exchange offer expires 5:00 p.m., New York City time, on , 2001,
unless extended.
We will exchange your validly tendered unregistered notes (the 'old notes') for
an equal principal amount of registered exchange notes (the 'exchange notes')
with substantially identical terms.
The exchange offer is not subject to any condition other than the condition
that the exchange offer not violate applicable law or any applicable
interpretation of the staff of the Securities and Exchange Commission and
certain other customary conditions.
You may withdraw your tender of old notes at any time prior to the expiration
of the exchange offer.
The exchange of notes should not be a taxable exchange for U.S. federal income
tax purposes.
We will not receive any proceeds from the exchange offer.
The terms of the exchange notes to be issued are substantially identical to the
old notes, except for certain transfer restrictions and registration rights
relating to the old notes.
You may tender outstanding old notes only in denominations of $1,000 and
multiples of $1,000.
Affiliates of our company may not participate in the exchange offer.
-------------------
PLEASE REFER TO 'RISK FACTORS' BEGINNING ON PAGE 17 OF THIS DOCUMENT
FOR CERTAIN IMPORTANT INFORMATION.
NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES
COMMISSION HAS APPROVED OR DISAPPROVED OF THE NOTES TO BE ISSUED IN THE EXCHANGE
OFFER OR PASSED UPON THE ADEQUACY OR ACCURACY OF THIS PROSPECTUS. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
-------------------
Prospectus dated , 2001.
PROSPECTUS SUMMARY
This summary highlights selected information appearing elsewhere in this
prospectus and may not contain all of the information that is important to you.
This prospectus includes the specific terms of the exchange notes, as well as
information regarding our business and detailed financial data. In this
prospectus, the terms 'we,' 'us,' 'our,' 'our company' and 'Omnicare' refer to
the business of Omnicare, Inc. and its consolidated subsidiaries, unless
otherwise specified or the context otherwise requires. We encourage you to read
this prospectus in its entirety.
THE COMPANY
Omnicare is a leading geriatric pharmaceutical services company. We are the
nation's largest independent provider of pharmaceuticals and related pharmacy
services to long-term care institutions such as skilled nursing facilities,
assisted living facilities, retirement centers and other institutional health
care facilities. As of December 31, 2000 we provided our services to
approximately 636,500 residents in approximately 8,400 long-term care facilities
in 43 states. We purchase, repackage and dispense pharmaceuticals, both
prescription and non-prescription, and provide computerized medical record
keeping and third-party billing for residents in those facilities. We also
provide 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. In addition, we provide ancillary services, such as infusion
therapy, dialysis and medical supplies, and clinical care planning and financial
software information systems to our client facilities. We also provide
comprehensive clinical research services for the pharmaceutical and
biotechnology industries. For the year ended December 31, 2000, we generated
total revenue of approximately $2.0 billion and earnings before interest, taxes,
depreciation and amortization of $231.9 million, excluding restructuring and
other related charges.
We believe that we are well positioned to benefit from favorable demographic
trends. Based on U.S. Census Bureau projections, the fastest growing segment of
the population is the group over 65 years of age, which is expected to increase
14% to 40 million persons (or one of every 7.5 United States citizens) by 2010
and grow to 70 million persons by 2030 (or one of every 5 United States
citizens). This age group currently has the largest requirement for
pharmaceutical services in the United States, with health expenditures for
persons over the age of 65 averaging nearly four times that of people under 65,
according to the Pharmaceutical Research and Manufacturers of America.
Furthermore, the oldest age bracket, people aged 85 and above, is expected to
see the most growth over the next 30 years according to the U.S. Census Bureau.
This age group generally is the most likely to be in need of some form of
long-term care or assisted living.
OUR BUSINESS
Our primary line of business is the distribution of pharmaceuticals, related
pharmacy consulting, data management services and medical supplies to long-term
care facilities through our network, as of December 31, 2000, of 134
specialized, institutional pharmacies that are strategically located throughout
the United States. We typically service long-term care facilities within a
150-mile radius of our pharmacy locations and maintain a 24-hour, seven-day per
week, on-call pharmacist service for emergency dispensing and delivery and for
consultations with the facility's staff or attending physicians. We utilize a
unit dose delivery system that differs from the bulk delivery system typically
used by retail pharmacies. Our unit dose delivery system is intended to improve
control over pharmaceutical distribution and patient compliance with drug
therapy by increasing the accuracy and timeliness of drug administration. In
conjunction with the unit dose delivery system, our record keeping/documentation
system is designed to result in greater efficiency in nursing time, improved
control and reduced waste in client facilities, and lower error rates in both
dispensing and administration. We also furnish infusion therapy and dialysis
services. We believe we distinguish ourselves from many of our competitors by
also providing proprietary clinical programs, such as formulary management,
health and outcomes management programs, and integrated electronic database
management services for the large base of elderly patients we serve. In
2
particular, our proprietary formulary, the nation's first clinically-based
formulary tailored to the geriatric patient in the long-term care setting, is
designed to aid us in improving patient outcomes while lowering the overall cost
to health care payors.
We have been able to leverage our core pharmacy services capabilities
through our contract research organization services. Our Contract Research
Organization is a leading international provider of comprehensive product
development and research services to client companies in the pharmaceutical,
biotechnology, medical device and diagnostics industries. As of December 31,
2000, our Contract Research Organization had operations in 23 countries and
provides support for the design of regulatory strategy and clinical development
(phases I through IV) of pharmaceuticals by offering comprehensive and fully
integrated clinical, quality assurance, data management, medical writing and
regulatory support for our clients' drug development programs.
COMPETITIVE STRENGTHS
We believe that our strong competitive position is attributable to a number
of factors, including the following:
MARKET LEADING POSITION
As the nation's largest independent provider of pharmaceuticals, related
pharmacy consulting and data management services and medical supplies to both
the skilled nursing facilities and assisted living facilities markets, our
market leading position provides the following benefits:
Our broad geographic scope allows us to serve a broad spectrum of
customers, from small independent facilities to large national chains;
As one of the largest purchasers of pharmaceuticals for the elderly in
long-term care institutions in the United States, we are able to generate
economies of scale in the purchase of pharmaceuticals and supplies; and
We believe we have significantly lower operating costs than our competitors
due to the size and scope of our operations.
STRONG FINANCIAL POSITION AND CONSERVATIVE CAPITAL STRUCTURE
We have implemented disciplined financial policies that have helped us to
generate consistent annual revenue growth and strong cash flow and to maintain a
strong balance sheet. Despite the regulatory environment which adversely
affected the long-term care industry in late 1998 through 2000, we were able to
increase our operating cash flow and reduce our debt. Cash flow from operations
grew by 13% to $101.1 million in 1999 versus 1998 and by 31% to $132.7 million
in 2000 versus 1999. Free cash flow (operating cash flow minus capital
expenditures and cash dividends) was $92.0 million in 2000, compared to $34.2
million generated in 1999. Our total debt as a percent of total capitalization
was 42.3% at December 31, 2000, down 190 basis points from 44.2% at
December 31, 1999.
PROPRIETARY FORMULARY AND HEALTH MANAGEMENT PROGRAMS
We offer a complete portfolio of traditional institutional pharmacy services
to our customers and believe we have further distinguished our services from our
competitors through our proprietary clinical programs. In 1994, we introduced
the Omnicare Guidelines'r', a proprietary, clinically based formulary developed
in conjunction with the Philadelphia College of Pharmacy. The Omnicare
Guidelines'r' ranks nearly 850 drugs across 185 therapeutic classifications
based on their relative clinical effectiveness in the elderly and by cost to the
payor. The Omnicare Guidelines'r' assist us in purchasing drugs at a lower cost
and in more effectively managing patient care and costs, which can result in
significant savings for payors and enhanced health outcomes for the residents we
serve. We offer eight major proprietary health management programs targeted at
some of the most prevalent diseases affecting the elderly: congestive heart
failure, depression, osteoporosis, atrial fibrillation, Alzheimer's disease,
dementia, urinary health and pain management. Such programs can help identify
patients who are candidates for more effective drug
3
therapy as well as identifying formerly undiagnosed disease states which may be
treatable through appropriate drug therapy. Our consultant pharmacists can then
recommend clinically more appropriate preventative and corrective medications to
the patient's physician. By promoting more appropriate therapy, costs of
inappropriate therapy such as increased nursing time, lab tests, physician
visits and hospitalizations can be reduced. These programs can help our
customers to lower overall health care costs and improve patient outcomes.
WELL POSITIONED CONTRACT RESEARCH ORGANIZATION
Our Contract Research Organization is one of the leading contract research
organizations in the world and we believe our Contract Research Organization has
several competitive advantages. Because of our market position as the nation's
largest independent institutional pharmacy organization and our significant
relationships with major pharmaceutical manufacturers, we believe our Contract
Research Organization has access to important business opportunities. We believe
our Contract Research Organization business is well positioned to help
pharmaceutical manufacturers conduct research on drugs targeted at diseases of
the elderly through our access to over 600,000 elderly residing in skilled
nursing facilities and assisted living facilities, which can serve as clinical
investigative sites for needed geriatric pharmaceutical research. Our access to
a large pool of potential participants can allow us to rapidly inform and
recruit patients with existing diseases and risk profiles who are willing to
participate, or could benefit from clinical trials. As a result, our Contract
Research Organization is able to provide efficient geriatric pharmaceutical
research in long-term care facilities. Equally important, access to our
databases, which include extensive clinical data on a significant number of
geriatric patients, allows analysis by biostatisticians, which reveals
correlations between drug regimen and outcomes. Also drug comparisons can be
made, identifying the best drugs to be used under specific conditions. Such
studies containing aggregate data are valuable to pharmaceutical manufacturers
as they attempt to match the medication needs of the elderly with their product
development.
PROVEN MANAGEMENT TEAM WITH SIGNIFICANT INDUSTRY EXPERIENCE
Our management team has successfully developed Omnicare into the leading
independent provider of pharmacy services to long-term care providers. Our
management team has successfully integrated more than 80 acquisitions since
1988, implementing our financial, purchasing and regulatory controls. Our senior
management team, led by President Joel Gemunder, who has been with us since we
were founded in 1981, has extensive experience in the health care industry.
Through the leadership of our senior management team, our revenue has grown from
less than $56 million in 1990 to approximately $2 billion in 2000, through a
combination of acquisitions and internal growth.
Our management team has demonstrated an ability to operate our business in a
difficult reimbursement environment. For example, in mid-1999, we initiated a
restructuring program geared toward significantly streamlining operations,
reducing costs and increasing the efficiency of our operating units by
standardizing around best practices. We merged or closed 67 pharmacy locations
and four Contract Research Organization and software locations and opened 12 new
pharmacies. Headcount was reduced by approximately 1,800, or 16% of our total
workforce of approximately 11,100. We completed this restructuring effort in
December 2000.
BUSINESS STRATEGY
Our strategy is to enhance our strong market position and to increase
revenue and cash flow by capitalizing on our position as a leading provider of
pharmacy services. Our business strategy focuses on the pursuit of the following
key initiatives:
GROW CORE PHARMACY DISTRIBUTION BUSINESS
An important element of our strategy is to continue to grow our core
institutional pharmacy business by increasing market penetration in the
long-term care market. Much of our growth from 1989 to 1999 was through
acquisitions. We intend to continue to grow our business both through internal
growth and
4
selected acquisitions. We believe skilled nursing facilities continue to present
opportunities for us to increase market presence, particularly since the
financial condition of many of our competitors has been adversely affected by
recent Medicare reimbursement changes, especially the Prospective Payment
System. Moreover, we believe further growth can be generated through expansion
in the assisted living facilities market, where the number of facilities has
been growing at a more rapid pace than skilled nursing facilities. As residents
in assisted living facilities age, they generally require increasing levels of
pharmaceutical care both for prevention as well as treatment of chronic
illnesses; as a result, the acuity level of the residents has been rising,
causing greater drug utilization. Moreover, in contrast to skilled nursing
facilities, assisted living facilities receive most of their reimbursement from
private pay sources. In both the skilled nursing facilities and assisted living
facilities markets, we believe there is an opportunity to increase our number of
residents served.
EXPANSION OF SERVICES
Our strategy includes leveraging our core pharmacy distribution business by
expanding our services within the facilities we serve. We believe that there are
significant opportunities to increase our revenue and margins by providing
additional services such as infusion therapy, dialysis and health management to
our skilled nursing facilities, assisted living facilities and other customers.
Due to recent favorable Medicare reimbursement changes affecting skilled nursing
facilities, particularly with respect to high acuity residents, we intend to
expand our infusion therapy business. We recently introduced an onsite dialysis
program for residents of skilled nursing facilities who suffer from end stage
renal disease (or kidney failure). This service allows residents with end stage
renal disease to be cared for onsite at the skilled nursing facility rather than
being transported to a clinic, typically three times per week for a total of
12 hours of treatment per week. We are currently serving over 200 end stage
renal disease patients in twenty-five facilities. We are also expanding our
health management programs, which utilize a case management approach to dealing
with underdiagnosis and undertreatment in the elderly. Generally, such programs
seek to foster the optimization of drug therapy and often require increases in
utilization of certain drugs. Through these programs, we believe overall health
care costs, including increased hospitalizations, staffing time, lab tests and
ambulance transfers, can be reduced and patient outcomes enhanced.
EXTEND OUR SERVICES TO BROADER GERIATRIC MARKETS
There are more than 30 million Americans, representing approximately 90% of
the population over the age of 65, living independently. We believe this
represents the largest potential market into which we can extend our clinical
expertise and services. Seniors often receive care and prescriptions from
multiple health care practitioners. As a result, we believe seniors are highly
susceptible to medication errors and drug-related problems. With our geriatric
formulary expertise and health management capabilities, we believe we can
provide significant value to this broad-based elderly population and to those
financially responsible for their care. For example, we presently are acting as
a third-party pharmaceutical case management partner for certain retiree health
benefit plans of a Fortune 10 company. This program, which serves more than
30,000 retirees, was launched in early 2000. This program involves medical
information analysis along with employing the Omnicare Guidelines'r'
outcomes-based algorithm technology and our proprietary clinical data and
expertise to make recommendations to improve the effectiveness of drug therapy
in seniors, including identifying potentially underdiagnosed and undertreated
conditions. The goal is to enhance the care of these retirees while lowering the
employer's overall health care costs. We believe our geriatric outcomes
management will be of interest to managed care organizations, large employer-
funded benefit plan sponsors, insurers, pension plans and state Medicaid
programs.
REGULATORY ENVIRONMENT
In recent years Congress has passed a number of federal laws that have
effected major changes in the health care system. The Balanced Budget Act of
1997 sought to achieve a balanced federal budget by, among other things,
changing the reimbursement policies applicable to various health care providers
through the introduction in 1998 of the Prospective Payment System for
Medicare-eligible residents of skilled nursing facilities. Prior to the
Prospective Payment System, skilled nursing facilities under Medicare
5
received cost-based reimbursement. Under the Prospective Payment System,
Medicare pays skilled nursing facilities a fixed fee per patient per day based
upon the acuity level of the resident, covering substantially all items and
services furnished during a Medicare-covered stay, including pharmacy services.
The Prospective Payment System resulted in a significant reduction of
reimbursement to skilled nursing facilities. Admissions of Medicare residents,
particularly those requiring complex care, declined in many skilled nursing
facilities due to concerns relating to the adequacy of reimbursement under the
Prospective Payment System. This caused a weakness in Medicare census leading to
a significant reduction of overall occupancy in the skilled nursing facilities
we serve. This decline in occupancy and acuity levels adversely impacted our
results beginning in 1999, as we experienced lower utilization of our services,
coupled with the Prospective Payment System related pricing pressure from our
skilled nursing facility customers. In 1999, Congress enacted the 1999 Balanced
Budget Refinement Act which gave skilled nursing facilities a 20% rate increase
for high-acuity patients, and an overall 4% across the board increase in
payments otherwise determined under the Balanced Budget Act of 1997 for all
patients. These rate increases went into effect in April 2000 and are expected
to partially restore the reduction of reimbursement caused by the Prospective
Payment System. In December 2000 the Medicare, Medicaid and SCHIP Benefits
Improvement and Protection Act of 2000 was signed into law. Medicare, Medicaid
and SCHIP Benefits Improvement and Protection Act of 2000, effective
April 2001, will further increase reimbursement by means of a 6.7% rate increase
for certain high-acuity rehabilitation patients, a 16.66% across the board
increase in the nursing component of the rate for all patients, and for fiscal
year 2001 a 3.16% rate increase for all patients. For the year ended
December 31, 2000, our payor mix was approximately 46% private pay and long-term
care facilities (including payments from skilled nursing facilities on behalf of
their Medicare-eligible residents), 43% Medicaid, 3% Medicare (including direct
billing for medical supplies) and 8% other private sources (including the
Contract Research Organization business).
PRINCIPAL EXECUTIVE OFFICES
Our principal executive offices are located at 100 East RiverCenter Blvd.,
Suite 1600, Covington, Kentucky 41011, and our phone number is (859) 392-3300.
Our corporate Website address is http:/www.omnicare.com. Information contained
on our Website is not part of this prospectus.
THE EXCHANGE OFFER
On March 20, 2011, we issued $375,000,000 aggregate principal amount of our
8 1/8% Senior Subordinated Notes due 2011 in a private offering. The old notes
are guaranteed by certain of our domestic subsidiaries.
We and the guarantors entered into a registration rights agreement with the
initial purchasers in the private offering in which we agreed, among other
things, to deliver to you this prospectus and to complete the exchange offer on
or prior to , 2001. You are entitled to exchange in the exchange offer your
old notes for registered exchange notes with substantially identical terms. If
the exchange offer is not completed on or prior to , 2001, liquidated
damages will accrue on the old notes at a rate of .25% over the stated interest
rate on the old notes for the first 90 days immediately following such date, and
will increase by an additional .25% at the beginning of each subsequent 90-day
period up to a maximum of 1.0% in the aggregate, until the exchange offer is
completed. You should read the discussion under the headings 'Summary of Terms
of the Exchange Notes' and 'Description of the Notes' for further information
regarding the registered exchange notes.
We believe that the exchange notes issued in the exchange offer may be
resold by you without compliance with the registration and prospectus delivery
requirements of the Securities Act of 1933, subject to certain conditions and
limited exceptions. Following the exchange offer, any old notes held by you that
are not exchanged in the exchange offer will continue to be subject to the
existing restrictions on transfer on the old notes and, except in certain
limited circumstances, we will have no further obligation to you to provide for
registration under the Securities Act of 1933 of transfers of outstanding old
notes held by you. You should read the discussions under the headings 'Summary
of the Exchange Offer' and 'The Exchange Offer' for further information
regarding the exchange offer and the resale of old notes.
6
SUMMARY OF THE EXCHANGE OFFER
Issuer....................................... Omnicare, Inc.
The Exchange Offer........................... We previously issued $375 million aggregate principal
amount of our 8 1/8% Senior Subordinated Notes due
2011 in a private offering. These securities were not
registered under the Securities Act of 1933. At the
time we issued the old notes, we entered into a
registration rights agreement in which we agreed to
offer to exchange your unregistered old notes for new
exchange notes which have been registered under the
Securities Act of 1933. This exchange offer is
intended to satisfy that obligation. We are offering
to exchange $1,000 principal amount of registered
exchange notes for each $1,000 principal amount of
your unregistered old notes. After the exchange offer
is completed, except in certain limited
circumstances, you will no longer be entitled to any
registration rights with respect to your old notes.
Under certain circumstances, certain holders of
outstanding old notes may require us to file a shelf
registration statement under the Securities Act of
1933.
As of this date, there is $375 million aggregate
principal amount of old notes outstanding.
Required Representation...................... In order to participate in this exchange offer, you
will be required to make certain representations to
us in a letter of transmittal, including that:
any exchange notes will be acquired by you in the
ordinary course of your business;
you have not engaged in, do not intend to engage
in, and do not have an arrangement or
understanding with any person to participate in,
a distribution of the exchange notes; and
you are not an affiliate of our company.
Resale....................................... We believe that, subject to limited exceptions, the
exchange notes issued in the exchange offer may be
freely traded by you without compliance with the
registration and prospectus delivery provisions of
the Securities Act of 1933 provided that:
the exchange notes issued in the exchange offer
are being acquired in the ordinary course of your
business;
you are not participating, do not intend to
participate and have no arrangement or
understanding with any person to participate in
the distribution of the exchange notes issued to
you in the exchange offer; and
you are not an 'affiliate' of our company.
If our belief is inaccurate and you transfer any
exchange note issued to you in the exchange offer
without delivering a prospectus meeting the
requirements of the Securities Act of
7
1933 or without an exemption from registration of
your exchange notes from such requirements, you may
incur liability under the Securities Act of 1933. We
do not assume, or indemnify you against, such
liability.
Each broker-dealer that is issued exchange notes in
the exchange offer for its own account in exchange
for old notes which were acquired by such
broker-dealer as a result of market-making or other
trading activities, must acknowledge that it will
deliver a prospectus meeting the requirements of the
Securities Act of 1933 in connection with any resale
of the exchange notes issued in the exchange offer.
We have agreed in the registration rights agreement
that a broker-dealer may use this prospectus until
for an offer to resell, resale or other
retransfer of the exchange notes issued to it in the
exchange offer.
Expiration Date.............................. The exchange offer will expire at 5:00 p.m., New York
City time, on , 2001, unless
extended, in which case the term 'expiration date'
shall mean the latest date and time to which we
extend the exchange offer.
Conditions to the Exchange Offer............. The exchange offer is subject to certain customary
conditions, which may be waived by us. The exchange
offer is not conditioned upon any minimum principal
amount of old notes being tendered.
Procedures for Tendering Old Notes........... If you wish to tender your old notes for exchange
pursuant to the exchange offer, you must transmit to
SunTrust Bank, as exchange agent, on or before the
expiration date:
either:
a properly completed and duly executed letter of
transmittal, which accompanies this prospectus,
or a facsimile of the letter of transmittal,
together with your old notes and any other
required documentation, to the exchange agent at
the address set forth in this prospectus under
the heading 'The Exchange Offer -- Exchange
Agent,' and on the front cover of the letter of
transmittal; or
a computer generated message transmitted by means
of The Depository Trust Company's Automated
Tender Offer Program system and received by the
exchange agent and forming a part of a
confirmation of book entry transfer in which you
acknowledge and agree to be bound by the terms of
the letter of transmittal.
If either of these procedures cannot be satisfied on
a timely basis then you should comply with the
guaranteed delivery procedures described below. By
executing the letter of transmittal, each holder of
old notes will make certain representations to us
described under 'The Exchange Offer-Procedures for
Tendering.'
Special Procedures for
Beneficial Owners.......................... If you are a beneficial owner whose old notes are
registered in the name of a broker, dealer,
commercial bank, trust
8
company or other nominee and you wish to tender your
old notes in the exchange offer, you should contact
such registered holder promptly and instruct such
registered holder to tender on your behalf. If you
wish to tender on your own behalf, you must, prior to
completing and executing the letter of transmittal
and delivering your old notes, either make
appropriate arrangements to register ownership of the
old notes in your name or obtain a properly completed
bond power from the registered holder.
The transfer of registered ownership may take
considerable time and may not be able to be completed
prior to the expiration date.
Guaranteed Delivery Procedures............... If you wish to tender your old notes and time will
not permit the documents required by the letter of
transmittal to reach the exchange agent prior to the
expiration date, or the procedure for book-entry
transfer cannot be completed on a timely basis, you
must tender your old notes according to the
guaranteed delivery procedures described under 'The
Exchange Offer -- Guaranteed Delivery Procedures.'
Acceptance of Old Notes and Delivery of
Exchange Notes............................. Subject to the conditions described under 'The
Exchange Offer -- Conditions to the Exchange Offer',
we will accept for exchange any and all old notes
which are validly tendered in the exchange offer and
not withdrawn, prior to 5:00 p.m., New York City
time, on the expiration date.
Withdrawal Rights............................ You may withdraw the tender of your old notes at any
time prior to 5:00 p.m., New York City time, on the
expiration date, subject to compliance with the
procedures for withdrawal described in this
prospectus under the heading 'The Exchange
Offer -- Withdrawal of Tenders.'
Federal Income Tax Considerations............ For a discussion of the material federal income tax
considerations relating to the exchange of old notes
for the exchange notes, see 'Material Federal Income
Tax Considerations.'
Exchange Agent............................... SunTrust Bank, the trustee under the indenture
governing the old notes, is serving as the exchange
agent. The address, telephone number and facsimile
number of the exchange agent are set forth in this
prospectus under the heading 'The Exchange
Offer -- Exchange Agent.'
Consequences of Failure to Exchange Old
Notes...................................... If you do not exchange your old notes for exchange
notes pursuant to the exchange offer, you will
continue to be subject to the restrictions on
transfer provided in the old notes and in the
indenture governing the old notes. In general, the
unregistered old notes may not be offered or sold,
unless they are registered under the Securities Act
of 1933, except pursuant to an exemption from, or in
a transaction not subject to, the Securities Act of
1933 and applicable state securities laws. We do not
currently intend to register the old notes under the
Securities Act of 1933.
9
SUMMARY OF TERMS OF THE EXCHANGE NOTES
This exchange offer relates to the exchange of up to $375,000,000 aggregate
principal amount of exchange notes for up to an equal principal amount of the
unregistered outstanding old notes. The form and terms of the exchange notes are
substantially the same as the form and terms of the outstanding old notes,
except that the exchange notes will be registered under the Securities Act of
1933, and therefore, the exchange notes generally will not be subject to
transfer restrictions or registration rights, and the provisions of the
registration rights agreement relating to liquidated damages on the outstanding
old notes under certain circumstances will be eliminated. The exchange notes
issued in the exchange offer will evidence the same debt as the outstanding old
notes, which they replace, and both the outstanding old notes and the exchange
notes are governed by the same indenture. We sometimes refer to the old notes
and the exchange notes collectively in this prospectus as the notes.
Exchange Notes Offered....................... We are offering $375,000,000 aggregate principal
amount of our 8 1/8% Series B Senior Subordinated
Notes due 2011. The exchange notes will be issued
under an indenture dated as of March 20, 2001.
Interest..................................... Interest on the exchange notes will accrue from the
last interest payment date on which interest was paid
on the old notes surrendered in exchange therefor or,
if no interest has been paid on the old notes, from
the issue date of the old notes. Interest on the
exchange notes will be payable semi-annually on
March 15 and September 15 of each year, commencing
September 15, 2001.
Maturity Date................................ March 15, 2011.
Guarantees................................... Certain of our current and future domestic
subsidiaries will guarantee the exchange notes on a
senior subordinated basis. See 'Description of
Notes.'
Ranking...................................... The exchange notes will be unsecured senior
subordinated obligations and will be subordinated to
all our existing and future senior debt. The exchange
notes will rank equally with all our other existing
and future senior subordinated debt and will rank
senior to all our subordinated debt, including our
outstanding 5% Convertible Subordinated Debentures
due 2007 (the 'Convertible Notes').
Our subsidiaries' guarantees with respect to the
exchange notes will be general unsecured senior
subordinated obligations of such guarantor
subsidiaries and will be subordinated to all of such
guarantor subsidiaries' existing and future senior
debt. The guarantees will rank equally with any
senior subordinated indebtedness of the guarantor
subsidiaries and will rank senior to such guarantor
subsidiaries' subordinated debt, if any.
Because the exchange notes are subordinated, in the
event of bankruptcy, liquidation or dissolution, or
certain other events, including certain defaults on
senior debt, we may be prevented from making payments
on the exchange notes. The term 'senior debt' is
defined in the 'Description of Notes' section of this
prospectus.
10
At March 31, 2001, we and our guarantor subsidiaries
had approximately $62 million of senior debt
outstanding on a consolidated basis.
Optional Redemption.......................... We may redeem the exchange notes, in whole or part,
at any time on or after March 15, 2006 at a
redemption price equal to 100% of the principal
amount thereof plus a premium declining ratably to
par plus accrued interest.
In addition, at any time prior to March 15, 2004, we
may redeem up to 35% of the aggregate principal
amount of the notes and any additional notes issued
under the indenture with the net cash proceeds of
certain equity offerings at a redemption price equal
to 108.125% of the principal amount thereof, plus
accrued interest, provided that:
at least 65% of the aggregate principal amount of
the notes and any such additional notes remains
outstanding immediately after the occurrence of
such redemption; and
such redemption occurs within 60 days of the date
of the closing of any such equity offering.
For more information, see 'Description of
Notes -- Optional Redemption.'
Change of Control............................ Upon certain change of control events, each holder of
exchange notes may require us to repurchase all or a
portion of its exchange notes at a purchase price
equal to 101% of the principal amount thereof, plus
accrued interest. Our ability to repurchase the
exchange notes upon a change of control event will be
limited by the terms of our debt agreements,
including our senior credit facilities. We cannot
assure you that we will have the financial resources
to repurchase the exchange notes. See 'Description of
Notes -- Repurchase at the Option of
Holders -- Change of Control.'
Certain Covenants............................ The indenture governing the exchange notes will
contain covenants that, among other things, will
limit our ability and the ability of our restricted
subsidiaries to:
incur additional indebtedness;
pay dividends on, redeem or repurchase our
capital stock;
make investments;
engage in transactions with affiliates;
create certain liens; and
consolidate, merge or transfer all or
substantially all our assets and the assets of
our subsidiaries on a consolidated basis.
These covenants are subject to important exceptions
and qualifications, which are described in the
'Description of Notes' section in this prospectus.
11
Form of Exchange Notes....................... The exchange notes issued in the exchange offer will
be represented by one or more permanent global
certificates, in fully registered form, deposited
with a custodian for, and registered in the name of a
nominee of, The Depository Trust Company, as
depositary. You will not receive exchange notes in
certificated form unless one of the events set forth
under 'Description of Notes -- Book Entry; Delivery
and Form' occurs. Instead, beneficial interests in
the exchange notes will be shown on, and transfers of
these exchange notes will be effected through,
records maintained in book-entry form by The
Depository Trust Company and its participants.
Use of Proceeds.............................. We will not receive any proceeds from the exchange
offer.
12
SUMMARY CONSOLIDATED FINANCIAL DATA
The following summary consolidated financial data should be read in
conjunction with our historical consolidated financial statements and related
notes and 'Management's Discussion and Analysis of Financial Condition and
Results of Operations' included elsewhere in this prospectus.
We derived the income statement data for the years ended December 31, 1998,
1999 and 2000 from our audited financial statements, which are included
elsewhere in this prospectus. We derived the income statement data for the three
months ended March 31, 2000 and 2001 and the balance sheet data as of March 31,
2001 from our unaudited financial statements, which are included elsewhere in
this prospectus. In the opinion of management, the unaudited financial
statements from which the data below is derived contain all adjustments, which
consist only of normal recurring adjustments, necessary to present fairly our
financial position and results of operations as of the applicable dates and for
the applicable periods. Historical results are not necessarily indicative of the
results to be expected in the future.
AUDITED UNAUDITED
------------------------------------ ---------------------
YEARS ENDED THREE MONTHS ENDED
DECEMBER 31, MARCH 31,
------------------------------------ ---------------------
1998 1999 2000 2000 2001
---- ---- ---- ---- ----
(IN THOUSANDS, EXCEPT RATIOS AND PER SHARE DATA)
INCOME STATEMENT DATA:(a)(b)
Sales......................... $1,517,370 $1,861,921 $1,971,348 $493,026 $523,645
---------- ---------- ---------- -------- --------
---------- ---------- ---------- -------- --------
Net income.................... $ 80,379 $ 57,721 $ 48,817 $ 14,393 $ 18,044
---------- ---------- ---------- -------- --------
---------- ---------- ---------- -------- --------
Dividends per share........... $ 0.08 $ 0.09 $ 0.09 $ 0.0225 $ 0.0225
---------- ---------- ---------- -------- --------
---------- ---------- ---------- -------- --------
RATIOS AND OTHER FINANCIAL DATA
(UNAUDITED):
EBITDA(adjusted)(c)........... $ 222,825 $ 241,008 $ 231,859 $ 59,561 $ 62,484
Ratio of EBITDA (adjusted) to
interest(c)................. 11.0x 5.4x 4.4x 4.7x 4.7x
Ratio of earnings to fixed
charges(d).................. 6.5x 3.3x 2.7x 2.8x 3.0x
Ratio of total debt to EBITDA
(adjusted)(c)............... 2.9x 3.4x 3.4x 3.5x(f) 3.3x(f)
Total debt to total
capitalization.............. 40.4% 44.2% 42.3% 43.6% 41.8%
Capital expenditures(e)....... $ 53,179 $ 58,749 $ 32,423 $ 8,444 $ 4,606
UNAUDITED
MARCH 31,
2001
----
BALANCE SHEET DATA:(a)
Cash and cash equivalents (including restricted cash)... $ 121,662
Working capital......................................... 577,346
Total assets............................................ 2,216,006
Long-term debt (excluding current portion).............. 780,852
Stockholders' equity.................................... 1,089,392
- ---------
(a) We have had an active acquisition program in effect since 1989. See Note 2
of the Notes to the 2000 Consolidated Financial Statements for information
concerning these acquisitions.
(footnotes continued on next page)
13
(footnotes continued from previous page)
(b) Included in the full year 1998, 1999 and 2000, as well as the three months
ended March 31, 2000 and 2001, net income amounts are the following
aftertax charges (credits) (in thousands):
AUDITED UNAUDITED
------------------------------- -----------------
THREE MONTHS
YEARS ENDED ENDED
DECEMBER 31, MARCH 31,
------------------------------- -----------------
1998 1999 2000 2000 2001
---- ---- ---- ---- ----
Acquisition expenses,
pooling-of-interests............... $13,869(1) $ (376)(1) $ -- (1) $ -- $ --
Restructuring and other related
charges............................ 2,689(2) 22,698(2) 17,135(2) 2,695(3) --
Other expenses....................... -- -- -- -- 1,127(4)
------- ------- ------- ------ ------
Total............................ $16,558 $22,322 $17,135 $2,695 $1,127
------- ------- ------- ------ ------
------- ------- ------- ------ ------
- ---------
(1) See Note 2 of the Notes to the 2000 Consolidated Financial Statements.
(2) See Note 12 of the Notes to the 2000 Consolidated Financial Statements.
(3) See Note 3 of the first quarter 2001 Consolidated Financial Statements.
(4) See Note 5 of the first quarter 2001 Consolidated Financial Statements.
(c) EBITDA represents earnings before interest, income taxes and depreciation
and amortization, excluding special items. Special items include
pooling-of-interests expenses, restructuring and other related charges and
other expenses and represent charges or expenses which management believes
are either one-time occurrences or otherwise not related to ongoing
operations. We believe that certain investors find EBITDA to be a useful
tool for measuring a company's ability to service its debt; however, EBITDA
does not represent cash flow from operations, as defined by generally
accepted accounting principles, and should not be considered as a
substitute for net earnings as an indicator of our operating performance or
cash flow as a measure of liquidity. We also believe that the ratio of
EBITDA to interest is an accepted measure of debt service ability; however,
such ratio should not be considered a substitute for the ratio of earnings
to fixed charges as a measure of debt service ability. Our calculation of
EBITDA may differ from the calculation of EBITDA by others.
(d) The ratio of earnings to fixed charges is computed by dividing fixed
charges into earnings from continuing operations before income taxes and
extraordinary items plus fixed charges. Fixed charges include interest
(expensed or capitalized), amortization of debt issuance costs and the
estimated interest component of rent expense. Giving effect to the offering
of the old notes and the refinancing of our existing credit facilities and
application of the net proceeds from the offering of the old notes and
borrowings under our new credit facility to repay indebtedness, as if these
transactions occurred on the first day of the relevant period, our pro
forma ratios of earnings to fixed charges for the year ended December 31,
2000 and the three months ended March 31, 2001 would have been 2.5x and
2.7x respectively.
(e) Primarily represents the purchase of computer hardware/software, machinery
and equipment, and furniture, fixtures and leasehold improvements.
(f) The adjusted EBITDA amounts used in this calculation are for the twelve
months periods ended March 31, 2000 and 2001.
14
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.
These 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. These
forward-looking statements and trends include those relating to expectations
concerning our financial performance, internal growth trends, expansion of
clinical programs, drug price inflation, purchasing leverage, the leveraging of
costs, the impact of our formulary compliance and health management programs,
the positioning of our Contract Research Organization, the impact of our
productivity and consolidation program, our operating environment, the impact of
the Prospective Payment System, the impact of legislation, nursing home
admission and occupancy trends, census and length of stay trends, the impact of
demographic trends, the impact of new drug development, the impact of delayed
decision-making and project cancellation by pharmaceutical manufacturers, the
impact of the financial condition of long-term care facilities on our
performance, our capital requirements, improved management of working capital,
and the adequacy and availability of our sources of liquidity and capital. Such
risks, uncertainties, contingencies, assumptions and other factors, many of
which are beyond our control, include without limitation:
overall economic, financial and business conditions;
delays in reimbursement by the government and other payors to us and our
customers;
the overall financial condition of our customers;
the ability to assess and react to the financial condition of customers;
the impact of consolidation in the pharmaceutical and long-term health care
industries;
the impact of seasonality on our business;
the effect of new government regulation, executive orders and/or
legislative initiatives, including those relating to reimbursement and drug
pricing policies and in the interpretation and application of these
policies;
whether legislation giving further financial relief from the Prospective
Payment System will be passed;
our failure to obtain or maintain required regulatory approvals or
licenses;
the failure of the long-term care facilities we serve to maintain required
regulatory approvals;
loss or delay of Contract Research Organization contracts for regulatory or
other reasons;
the ability to attract and retain needed management;
the ability to implement opportunities for lowering costs and to realize
related anticipated benefits;
the impact and pace of technological advances;
the ability to obtain or maintain rights to data, technology and other
intellectual property;
trends for the continued growth of our business;
volatility in our stock price;
access to capital and financing;
pricing and other competitive factors in our industry;
variations in costs or expenses;
variations in our operating results;
the continued availability of suitable acquisition candidates and the
successful integration of acquired companies;
15
the demand for our products and services;
changes in tax law and regulation; and
other risks and uncertainties described in 'Risk Factors' and elsewhere in
this prospectus, including the documents incorporated by reference.
Should one or more of these risks or uncertainties materialize or should
underlying assumptions prove incorrect, our actual results, performance or
achievements 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. We do 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.
16
RISK FACTORS
You should carefully consider the following factors in addition to all other
information contained in this prospectus.
GOVERNMENT-SPONSORED PROGRAMS AND THIRD PARTY PAYORS MAY REDUCE PAYMENTS TO US.
Approximately one-half of our pharmacy services billings are directly
reimbursed by government sponsored programs. These programs include Medicaid
and, to a lesser extent, Medicare. The remainder of our billings are paid or
reimbursed by individual residents, long-term care facilities and other third
party payors, including private insurers. The Medicaid and Medicare programs are
highly regulated. The failure, even if inadvertent, of us and/or our client
institutions to comply with applicable 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 LEGISLATION MAY REDUCE PAYMENTS TO US OR OUR CUSTOMERS.
In recent years Congress has passed a number of federal laws that have
effected major changes in the health care system. For example, the Balanced
Budget Act of 1997 sought to achieve a balanced federal budget by, among other
things, changing the reimbursement policies applicable to various health care
providers, including the introduction in 1998 of the Prospective Payment System
for Medicare-eligible residents of skilled nursing facilities. Prior to the
Prospective Payment System, skilled nursing facilities under Medicare were
reimbursed for services based upon actual costs incurred in providing services
subject to certain limits. Now, the Prospective Payment System requires skilled
nursing facilities to manage the cost of care for Medicare beneficiaries. Under
the Prospective Payment System, Medicare pays skilled nursing facilities a fixed
fee per patient day based on the acuity level of the resident, covering
substantially all items and services furnished during a Medicare-covered stay,
including pharmacy services. The Prospective Payment System resulted in a
reduction in admissions of Medicare residents, particularly those requiring
complex care, causing a weakness in Medicare census leading to a significant
reduction of overall occupancy in the skilled nursing facilities we serve. This
decline in occupancy and acuity levels adversely impacted our results beginning
in 1999, as we experienced lower utilization of our services, coupled with the
Prospective Payment System related pricing pressure from our skilled nursing
facility customers. The Balanced Budget Act of 1997 also imposes numerous other
cost savings measures affecting Medicare skilled nursing facility services.
Because of the significant reductions in reimbursement which occurred, the
impact of the Prospective Payment System has been to decrease census for some
facilities, to lower acuity levels of residents in some nursing homes, to lower
pricing and to produce an unfavorable payor mix for us.
With respect to Medicaid, the Balanced Budget Act of 1997 repealed the
'Boren Amendment' federal payment standard for payments to Medicaid nursing
facilities ('NF') effective October 1, 1997 giving states greater latitude in
setting payment rates for nursing facilities. 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 NF and institutional
pharmacy services, we cannot assure you that these programs ultimately will not
change the Medicaid reimbursement system for long-term care, including pharmacy
services from fee-for-service to managed care negotiated or capitated rates.
In 1999 and again in 2000, Congress enacted legislation intended to reduce
the impact of the Balanced Budget Act of 1997 on skilled nursing facilities.
This legislation includes increases in payment rates for certain services and
delays in the implementation of some Balanced Budget Act of 1997
17
requirements. While this legislation is intended to restore a portion of the
reimbursement which had been significantly reduced under the Balanced Budget Act
of 1997, we cannot assure you that these changes will materially improve the
financial condition of skilled nursing facilities or alter their admission
practices such that occupancy levels or acuity levels will increase from current
levels. Further, in order to rein in health care costs, we anticipate that
federal and state governments will continue to review and assess alternate
health care delivery systems, payment methodologies and operational requirements
for health care providers, including long-term care facilities and pharmacies.
It is not possible to predict what additional health care initiatives, if any,
will be implemented, the effect of potential legislation or regulation, or the
interpretation or administration of such legislation or regulation, including
the adequacy and timeliness of payment to or costs required to be incurred by
client facilities, on our business. Further, we cannot assure you that Medicare
and/or Medicaid payment rates for pharmaceutical supplies and services will
continue to be based on current methodologies or remain comparable to present
levels. Accordingly, there can be no assurance that any such future health care
legislation or regulation will not adversely affect our business. See
'Business -- Government Regulation.'
GOVERNMENT REGULATION MAY ADVERSELY AFFECT OUR BUSINESS.
Our pharmacy business is subject to extensive and often changing federal,
state and local regulations, and our pharmacies are required to be licensed in
the states in which they are located or do business. The failure to obtain or
renew any required regulatory approvals or licenses could adversely affect the
continued operation of our business. 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 long-term care facilities to comply with these or future regulations or
to obtain or renew any required licenses could result in our inability to
provide pharmacy services to these facilities and their residents. 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.
FEDERAL AND STATE LAWS THAT PROTECT PATIENT HEALTH INFORMATION MAY INCREASE OUR
COSTS AND LIMIT OUR ABILITY TO COLLECT AND USE THAT INFORMATION.
Numerous federal and state laws and regulations govern the collection,
dissemination, use and confidentiality of patient-identifiable health
information, including the federal Health Insurance Portability and
Accountability Act of 1996, referred to as Health Insurance Portability Act of
1996, and related rules. As part of our pharmaceutical dispensing, medical
record keeping, third party billing, contract research and other services, we
collect and maintain patient-identifiable health information. There can be no
assurance that our inability to comply with existing or new laws or regulations,
or incurring the costs necessary to comply with these laws or regulations, as to
the collection, dissemination, use and confidentiality of patient health
information, will not have a material adverse effect on us.
WE ARE SUBJECT TO RISKS RELATING TO OUR ACQUISITION STRATEGY.
One component of our strategy contemplates our making selected acquisitions.
Acquisitions involve 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:
consolidation of financial and managerial functions and elimination of
operational redundancies;
achievement of purchasing efficiencies;
the addition and integration of key personnel; and
the maintenance of existing business.
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Even though an acquired business may have enjoyed strong growth as an
independent company prior to an acquisition, we cannot be sure that the business
will continue to have strong growth after an acquisition.
We also may acquire businesses with unknown or contingent liabilities,
including liabilities for failure to comply with health care laws and
regulations. We have policies and procedures to conduct reviews of potential
acquisition candidates for compliance with health care laws and to conform the
practices of acquired businesses to our standards and applicable laws. We also
generally seek indemnification from sellers covering these matters. We may,
however, incur material liabilities for past activities of acquired businesses.
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.
WE OPERATE IN HIGHLY COMPETITIVE BUSINESSES.
The long-term care pharmacy business is highly regionalized and, within a
given geographic region of operations, highly competitive. 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 compete 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.
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 upon, among other reasons, reputation, references
from existing clients, the client's relationship with the 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 ARE DEPENDENT ON OUR SENIOR MANAGEMENT TEAM AND OUR PHARMACY PROFESSIONALS.
We are highly dependent upon the members of our senior management and our
pharmacists and other pharmacy professionals. Our business is managed by a small
number of key management personnel who have been extensively involved in the
success of our business. We cannot assure you that we will be able to retain
these key management personnel in the future. In addition, our continued success
depends on our ability to attract and retain pharmacists and other pharmacy
professionals. Competition for qualified pharmacists and other pharmacy
professionals is strong. The loss of pharmacy personnel or the inability to
attract, retain or motivate sufficient numbers of qualified pharmacy
professionals could adversely affect our business. Although we generally have
been able to meet our staffing requirements for pharmacists and other pharmacy
professionals in the past, our inability to do so in the future could have a
material adverse effect on us.
WE HAVE SUBSTANTIAL OUTSTANDING INDEBTEDNESS.
At December 31, 2000, after giving effect to the issuance of the old notes
and the refinancing of our bank credit facilities in the first quarter of 2001,
our total consolidated long-term debt (including current maturities), accounted
for approximately 43% of our total capitalization.
The degree to which we are leveraged could have important consequences to
you, including:
a substantial portion of our cash flow from operations will be required to
be dedicated to interest and principal payments and may not be available
for operations, working capital, capital expenditures, expansion,
acquisitions or general corporate or other purposes;
our ability to obtain additional financing in the future may be impaired;
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we may be more highly leveraged than our competitors, which may place us at
a competitive disadvantage;
our flexibility in planning for, or reacting to, changes in our business
and industry may be limited; and
our degree of leverage may make us more vulnerable in the event of a
downturn in our business or in our industry or the economy in general.
Our ability to make payments on and to refinance our debt, including the
notes, will depend on our ability to generate cash in the future. This, to a
certain extent, is subject to general economic, business, financial,
competitive, legislative, regulatory and other factors that are beyond our
control.
We cannot assure you that our business will generate sufficient cash flow
from operations or that future borrowings will be available to us under credit
facilities in an amount sufficient to enable us to pay our debt, including the
notes, or to fund our other liquidity needs. We may need to refinance all or a
portion of our debt, including the notes, on or before maturity. We cannot
assure you that we would be able to refinance any of our debt, including any
credit facilities and the notes, on commercially reasonable terms or at all.
DESPITE CURRENT INDEBTEDNESS LEVELS, WE AND OUR SUBSIDIARIES MAY STILL BE ABLE
TO INCUR SUBSTANTIALLY MORE DEBT WHICH COULD FURTHER EXACERBATE THE RISKS
ASSOCIATED WITH OUR LEVERAGE.
We and our subsidiaries may be able to incur substantial additional debt in
the future under the indenture governing the notes. As of December 31, 2000,
after giving effect to the issuance of the old notes and the refinancing of our
bank credit facilities in the first quarter of 2001, our new credit facility
would have permitted additional borrowings of up to $427 million and all of
those borrowings would be senior to the notes. If new debt is added to our and
our subsidiaries' current debt levels, the leverage-related risks that we and
they now face could intensify.
THE NOTES AND THE SUBSIDIARY GUARANTEES ARE SUBORDINATED TO SENIOR INDEBTEDNESS.
The notes are subordinated in right of payment to all of our current and
future senior indebtedness. The indenture governing the notes will not limit the
amount of additional indebtedness, including senior indebtedness, we or our
subsidiaries can create, incur, assume or guarantee, if we are in compliance
with the covenants contained in the indenture. By reason of the subordination of
the notes, in the event of insolvency, bankruptcy, liquidation, reorganization,
dissolution or winding up of our business, our assets will be available to pay
the amounts due on the notes only after all of our senior indebtedness has been
paid in full. In addition, upon default in payment with respect to certain of
our senior indebtedness or an event of default with respect to this indebtedness
permitting the acceleration thereof, we may be blocked from making payments on
the notes pursuant to the indenture. In addition, we conduct most of our
operations through our subsidiaries. The notes will be structurally subordinated
to indebtedness of our subsidiaries. Certain of our existing and future domestic
subsidiaries will guarantee, on a joint and several basis, our obligations under
the notes on a senior subordinated basis. However, the guarantees will be
subordinated to the senior indebtedness of these subsidiaries. In the event of
the insolvency, bankruptcy, liquidation, reorganization, dissolution or winding
up of the business of any of these subsidiaries, senior creditors of these
subsidiaries generally will have the right to be paid in full before any
distribution is made in respect of the guarantees. As of March 31, 2001, we and
our guarantor subsidiaries had approximately $62 million of senior indebtedness
on a consolidated basis. See 'Description of Notes.'
OUR ABILITY TO REPURCHASE THE NOTES UPON A CHANGE OF CONTROL OR IN CONNECTION
WITH AN ASSET SALE REPURCHASE MAY BE LIMITED.
In the event of certain changes of control involving us, you will have the
right, at your option, to require us to repurchase all or a portion of the notes
you hold at a purchase price equal to 101% of the aggregate principal amount of
your notes plus accrued interest thereon to the repurchase date. In addition,
under certain circumstances we may be required by the terms of the indenture to
make an offer to repurchase notes with proceeds from asset sales. Our ability to
repurchase the notes upon a change of
20
control or in connection with an asset sale repurchase may be limited by the
terms of our senior indebtedness and the subordination provisions of the
indenture relating to the notes. Further, our ability to repurchase the notes
upon a change of control or in connection with an asset sale repurchase will be
dependent on the availability of sufficient funds and our ability to comply with
applicable securities laws. Accordingly, there can be no assurance that we will
be in a position to repurchase the notes upon a change of control or in
connection with an asset sale repurchase. The term 'change of control' under the
indenture is limited to certain specified transactions and may not include other
events that might adversely affect our financial condition or result in a
downgrade of the credit rating (if any) of the notes, nor would the requirement
that we offer to repurchase the notes upon a change of control necessarily
afford holders of the notes protection in the event of a highly leveraged
reorganization.
YOUR ABILITY TO ENFORCE THE GUARANTEES OF THE NOTES MAY BE LIMITED.
Although the notes are obligations of Omnicare, Inc., they will be
unconditionally guaranteed on an unsecured senior subordinated basis by certain
of Omnicare's domestic subsidiaries. The performance by each subsidiary
guarantor of its obligations with respect to its guarantee may be subject to
review under relevant federal and state fraudulent conveyance and similar
statutes in a bankruptcy or reorganization case or lawsuit by or on behalf of
unpaid creditors of such subsidiary guarantor. Under these statutes, if a court
were to find under relevant federal or state fraudulent conveyance statutes that
a subsidiary guarantor did not receive fair consideration or reasonably
equivalent value for incurring its guarantee of the notes, and that, at the time
of such incurrence, the subsidiary guarantor: (i) was insolvent; (ii) was
rendered insolvent by reason of such incurrence or grant; (iii) was engaged in a
business or transaction for which the assets remaining with such subsidiary
guarantor constituted unreasonably small capital; or (iv) intended to incur, or
believed that it would incur, debts beyond its ability to pay such debts as they
matured, then the court, subject to applicable statutes of limitation, could
void the subsidiary guarantor's obligations under its guarantee, recover
payments made under the guarantee, subordinate the guarantee to other
indebtedness of the subsidiary guarantor or take other action detrimental to the
holders of the notes.
The measure of insolvency for these purposes will depend upon the governing
law of the relevant jurisdiction. Generally, however, a company will be
considered insolvent for these purposes if the sum of that company's debts is
greater than the fair value of all of that company's property or if the present
fair salable value of that company's assets is less than the amount that will be
required to pay its probable liability on its existing debts as they become
absolute and matured or if a company is not able to pay its debts as they become
due. Moreover, regardless of solvency, a court could avoid an incurrence of
indebtedness, including the guarantees, if it determined that such transaction
was made with the intent to hinder, delay or defraud creditors. In addition, a
court could subordinate the indebtedness, including the guarantees, to the
claims of all existing and future creditors on similar grounds. The guarantees
could also be subject to the claim that, since the guarantees were incurred for
the benefit of Omnicare (and only indirectly for the benefit of the subsidiary
guarantors), the obligations of the subsidiary guarantors under the guarantees
were incurred for less than reasonably equivalent value or fair consideration.
There can be no assurance as to what standard a court would apply in order
to determine whether a subsidiary guarantor was 'insolvent' upon the sale of the
notes or that, regardless of the method of valuation, a court would not
determine that the subsidiary guarantor was insolvent upon consummation of the
sale of the notes.
WE HAVE BROAD DISCRETION TO USE THE PROCEEDS FROM BORROWINGS UNDER OUR CREDIT
FACILITIES.
We used the proceeds from the private offering of the old notes to repay
outstanding indebtedness under our previous revolving credit facilities, at
which time the previous revolving credit facilities terminated. However, we will
be able to reborrow in the future under our new credit facility. We have
substantial flexibility and broad discretion with respect to these borrowings
and you will be relying on the judgment of our management regarding the
application of proceeds from these borrowings.
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THERE IS NO EXISTING PUBLIC MARKET FOR THE NOTES.
There is no existing public market for the notes and there can be no
assurance as to the liquidity of any markets that may develop for the notes, the
ability of the holders to sell their notes or the price at which holders of the
notes may be able to sell their notes. Future trading prices of the notes will
depend on many factors, including, among other things, prevailing interest
rates, our operating results and the market for similar securities. The initial
purchasers with respect to the offering of the old notes have informed us that
they intend to make a market in the notes; however, the initial purchasers are
not obligated to do so, and any market making activity may be terminated at any
time without notice to the holders of the notes. See 'Description of
Notes -- Registration Rights; Liquidated Damages' and 'Plan of Distribution.' We
do not intend to apply for listing of the notes on any securities exchange.
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THE EXCHANGE OFFER
PURPOSE AND EFFECT OF THE EXCHANGE OFFER
The old notes were originally sold to UBS Warburg LLC, Lehman Brothers Inc.,
Deutsche Banc Alex. Brown Inc., Banc One Capital Markets, Inc. and SunTrust
Equitable Securities Corporation as initial purchasers in a private offering by
Omnicare. In connection with the private offering of the old notes, we, the
guarantors and the initial purchasers entered into a registration rights
agreement in which we and the guarantors agreed to:
(1) file a registration statement no later than 90 days after the closing
date of the initial notes;
(2) use commercially reasonable efforts to cause the registration statement
to become effective no later than 180 days after the closing date of the
private offering of the old notes; and
(3) promptly upon the effectiveness of the registration statement, offer to
the holders of the old notes the opportunity to exchange their old notes
for a like principal amount of exchange notes, and to hold such exchange
offer open for at least 20 business days after the date notice of the
exchange offer is mailed to holders.
The exchange notes will be issued without a restrictive legend and may be
reoffered and resold by the holder without restrictions or limitations under the
Securities Act of 1933, except as described below. We have agreed in the
registration rights agreement to use commercially reasonable efforts to complete
the exchange offer and issue the exchange notes no later than 45 business days
after the registration statement is declared effective. This exchange offer is
intended to satisfy our exchange offer obligations under the registration rights
agreement.
For each old note surrendered to us pursuant to the exchange offer, the
holder of such old note will receive an exchange note having a principal amount
equal to that of the surrendered old note. The term 'holder' with respect to the
exchange offer means any person in whose name old notes are registered on our
books or any other person who has obtained a properly completed bond power from
the registered holder or any person whose old notes are held of record by The
Depository Trust Company ('DTC') who desires to deliver such old notes by
book-entry transfer through DTC.
Under existing interpretations of the staff of the SEC contained in several
no-action letters to third parties, the exchange notes, including the related
guarantees, would in general be freely transferable by holders thereof after the
exchange offer without further registration under the Securities Act of 1933.
However, any purchaser of old notes who is either an 'affiliate' of our company
within the meaning of Rule 405 of the Securities Act of 1933 or who intends to
participate in the exchange offer for the purpose of distributing the exchange
notes:
(1) will not be able to tender its old notes in the exchange offer;
(2) will not be able to rely on the interpretations of the staff of the SEC;
and
(3) must comply with the registration and prospectus delivery requirements
of the Securities Act of 1933 in connection with any sale or transfer of
the old notes, unless such sale or transfer is made pursuant to an
exemption from such requirements.
Each holder that wishes to exchange its old notes for exchange notes will be
required to represent in a letter of transmittal that:
any exchange notes received by it will be acquired in the ordinary course
of its business;
it has no arrangement or understanding with any person to participate in a
distribution of the exchange notes in violation of the Securities Act of
1933;
it is not an affiliate of our company;
if such holder is not a broker-dealer, that it is not engaged in, and does
not intend to engage in a distribution of the exchange notes; and
if such holder is a broker-dealer (a 'Participating Broker-Dealer') that
will receive exchange notes for its own account in exchange for old notes
that are acquired as a result of market-making or other trading activities,
that it will deliver a prospectus in connection with any resale of such
exchange notes.
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The SEC has taken the position that Participating Broker-Dealers may fulfill
their prospectus delivery requirements with respect to resales of the exchange
notes with the prospectus contained in the registration statement. Each of our
company and the guarantors has agreed in the registration rights agreement that
it will make available, during the period required by the Securities Act of
1933, a prospectus meeting the requirements of the Securities Act of 1933 for
use by Participating Broker-Dealers and other persons, if any, with similar
prospectus delivery requirements for use in connection with any resale of
exchange notes. We will keep the registration statement effective until ,
or until all restricted securities covered by the exchange offer registration
statement have been sold, whichever period is shorter, in order to permit
resales of exchange notes acquired by broker-dealers in after-market
transactions.
The SEC interpretations referred to above may be subject to change. If those
interpretations are changed prior to completion of this exchange offer, holders
of old notes may not be able to receive exchange notes pursuant to the exchange
offer. Rather, as described below, we and the guarantors may be required to
register the old notes pursuant to a shelf registration statement in connection
with resales by holders of the old notes. Holders of old notes may be required
to deliver a prospectus to purchasers and may be subject to certain of the civil
liability provisions under the Securities Act of 1933 in connection with such
resales.
If:
(1) the exchange offer is not permitted by law or policy;
(2) any holder of old notes notifies our company prior to that:
(a) such holder was prohibited by law or SEC policy from participating
in the exchange offer;
(b) such holder may not resell the exchange notes acquired by it in
the exchange offer to the public without a prospectus, and the
prospectus contained in the exchange offer registration
statement is not appropriate or available for such resales by
such holder; or
(c) such holder is a broker-dealer and owns old notes acquired
directly from us or an affiliate of our company,
then, in each case, we and the guarantors will, instead of, or in the case of
clause (2) above, in addition to, completing the exchange offer, file and use
commercially reasonable efforts to cause a registration statement under the
Securities Act of 1933 relating to a shelf registration of the old notes for
resale by holders (the 'Resale Registration') to become effective and to remain
effective until the earlier of two years following the effective date of the
shelf registration statement or such time as all securities covered by the shelf
registration statement have been sold pursuant to the shelf registration
statement or are eligible for resale under Rule 144(k) of the Securities Act of
1933.
We and the guarantors will, in the event of a Resale Registration:
(1) provide to the holders of the applicable old notes copies of the
prospectus that is a part of the shelf registration statement filed in
connection with the Resale Registration;
(2) notify each such holder when the shelf registration statement for the
applicable old notes has become effective; and
(3) take certain other actions as are required to permit unrestricted
resales of the old notes.
A holder that sells its old notes pursuant to the Resale Registration:
(1) will be required to be named as a selling security holder in the related
prospectus and to deliver a prospectus to the purchaser;
(2) will be subject to certain of the civil liability provisions under the
Securities Act of 1933 in connection with such sales; and
(3) will be bound by the provisions of the registration rights agreement
that are applicable to such holder, including certain indemnification
obligations.
The registration rights agreement provides, among other things, that if:
(1) we and the guarantors have not filed any of the registration statements
required by the registration rights agreement on or prior to the date
specified for such filing;
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(2) any of such registration statements is not declared effective on or
prior to the date specified for such effectiveness;
(3) the exchange offer is not consummated within 45 business days after the
effective date of the exchange offer registration statement; or
(4) the shelf registration statement or the exchange offer registration
statement is declared effective but, subject to limited exceptions,
thereafter ceases to be effective or fails to be usable for its intended
purpose without being succeeded immediately by a post-effective
amendment to such registration statement that cures such failure and
that is itself declared effective within 10 days of filing such
post-effective amendment to such registration statement (any such event
referred to in clauses (1) through (4), a 'Registration Default'),
then, from the date that a Registration Default or Defaults occurs through, but
excluding the date when all Registration Defaults are cured, liquidated damages
on the applicable old notes will
(1) accrue with respect to such notes at a rate of .25% for the first 90-day
period or portion thereof immediately following the occurrence of such
Registration Default or Defaults; and
(2) thereafter increase by an additional .25% at the beginning of each
subsequent 90-day period, or portion thereof, while a Registration
Default or Defaults is continuing.
The liquidated damages on any affected old notes may not exceed 1.0% in the
aggregate. Liquidated damages will not accrue and be payable as set forth above
during any period when a shelf registration statement is permitted to be
suspended under the registration rights agreement.
The above summary highlights the material provisions of the registration
rights agreement, but does not restate that agreement in its entirety. We urge
you to review all of the provisions of the registration rights agreement,
because it, and not this description, defines your rights as holders to exchange
your old notes for registered exchange notes. A copy of the registration rights
agreement has previously been filed with the SEC by us, and is incorporated by
reference to the registration statement of which this prospectus forms a part.
Following the consummation of the exchange offer, holders of old notes who
were eligible to participate in the exchange offer but who did not tender their
old notes will not have any further registration rights, and the old notes will
continue to be subject to certain restrictions on transfer. Accordingly, the
liquidity of the market for the old notes could be adversely affected.
TERMS OF THE EXCHANGE OFFER
This prospectus and the accompanying letter of transmittal contain the terms
and conditions for the exchange offer. Upon the terms and subject to the
conditions set forth in this prospectus and in the accompanying letter of
transmittal, we will accept for exchange all old notes which are properly
tendered and not withdrawn on or prior to 5:00 p.m., New York City time, on the
expiration date. After authentication of the exchange notes by the trustee or an
authentication agent, we will issue and deliver $1,000 principal amount of
exchange notes in exchange for each $1,000 principal amount of outstanding old
notes accepted in the exchange offer. Holders may tender some or all of their
old notes in the exchange offer in denominations of $1,000 and integral
multiples thereof.
The form and terms of the exchange notes are identical in all material
respects to the form and terms of the old notes, except that:
(1) the offering of the exchange notes has been registered under the
Securities Act of 1933;
(2) the exchange notes will generally not be subject to transfer
restrictions or registration rights; and
(3) certain provisions relating to Liquidated Damages on the old notes
provided for under certain circumstances will be eliminated.
The exchange notes will evidence the same debt as the old notes. The
exchange notes will be issued under and entitled to the benefits of the
indenture.
As of the date of this prospectus, $375,000,000 aggregate principal amount
of the old notes is outstanding. In connection with the issuance of the old
notes, arrangements were made for the old notes
25
to be issued and transferable in book-entry form through the facilities of DTC,
acting as a depositary. The exchange notes will also be issuable and
transferable in book-entry form through DTC.
This prospectus, together with the accompanying letter of transmittal, is
initially being sent to all registered holders of the old notes as of the close
of business on , 2001. The exchange offer is not conditioned upon any
minimum aggregate principal amount of old notes being tendered. However, our
obligation to accept old notes for exchange pursuant to the exchange offer is
subject to certain customary conditions that we describe under ' -- Conditions
to the Exchange Offer' below.
We shall be deemed to have accepted validly tendered old notes when, as and
if we have given oral or written notice thereof to the exchange agent. The
exchange agent will act as agent for the tendering holders for the purpose of
receiving exchange notes from us and delivering exchange notes to such holders.
If any tendered old notes are not accepted for exchange because of an
invalid tender or the occurrence of certain other events set forth herein,
certificates for any such unaccepted old notes will be returned, at our cost, to
the tendering holder thereof as promptly as practicable after the expiration
date.
Holders who tender old notes in the exchange offer will not be required to
pay brokerage commissions or fees or, subject to the instructions in the letter
of transmittal, transfer taxes with respect to the exchange of old notes
pursuant to the exchange offer. We will pay all charges and expenses, other than
certain applicable taxes, in connection with the exchange offer. See
' -- Solicitation of Tenders; Fees and Expenses' for more detailed information
regarding the expenses of the exchange offer.
By executing or otherwise becoming bound by the letter of transmittal, you
will be making the representations described under ' -- Procedures for
Tendering' below.
EXPIRATION DATE; EXTENSIONS; AMENDMENTS
The term 'expiration date' shall mean 5:00 p.m., New York City time, on,
2001, unless we, in our sole discretion, extend the exchange
offer, in which case the term 'expiration date' shall mean the latest date
to which the exchange offer is extended. We may extend the exchange offer
at any time and from time to time by giving oral or written notice to the
exchange agent and by timely public announcement.
We expressly reserve the right, at any time, to extend the period of time
during which the exchange offer is open, and thereby delay acceptance of
any old notes, by giving oral or written notice of such extension to the
exchange agent and notice of such extension to the holders as described
below. During any such extension, all old notes previously tendered will
remain subject to the exchange offer and may be accepted for exchange by
us. Any old notes not accepted for exchange for any reason will be returned
without expense to the tendering holder thereof as promptly as practicable
after the expiration or termination of the exchange offer.
We expressly reserve the right to amend or terminate the exchange offer,
and not to accept for exchange any old notes that we have not yet accepted
for exchange, if any of the conditions set forth herein under 'Conditions
to the Exchange Offer' shall have occurred and shall not have been waived
by us, if such conditions are permitted to be waived by us.
We will give oral or written notice of any such extension, amendment,
termination or non-acceptance described above to holders of the old notes
as promptly as practicable. If the exchange offer is amended in a manner
determined by us to constitute a material change, we will promptly disclose
such amendment in a manner reasonably calculated to inform the holders of
such amendment and we will extend the exchange offer to the extent required
by law.
Without limiting the manner in which we may choose to make public
announcements of any extension, amendment, termination or non-acceptance of
the exchange offer, and subject to applicable law, we will have no
obligation to publish, advertise or otherwise communicate any such public
announcement other than by issuing a timely release to the Dow Jones News
Service.
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INTEREST ON THE EXCHANGE NOTES
Interest on the exchange notes will accrue from the last interest payment
date on which interest was paid on the old notes surrendered in exchange
therefor or, if no interest has been paid on the old notes, from the issue date
of the old notes. Interest on the exchange notes will be payable semi-annually
on March 15 and September 15 of each year, commencing September 15, 2001.
PROCEDURES FOR TENDERING
WHAT TO SUBMIT AND HOW
Each holder of old notes wishing to accept the exchange offer must complete,
sign and date the letter of transmittal, or a facsimile thereof, in accordance
with the instructions contained herein and therein. Each holder should then mail
or otherwise deliver such letter of transmittal, or such facsimile, together
with the old notes to be exchanged and any other required documentation, to
SunTrust Bank., as exchange agent, at the address set forth below under
' -- Exchange Agent' on or prior to the expiration date. A holder may also
effect a tender of old notes pursuant to the procedures for book-entry transfer
as provided for herein and therein. By executing the letter of transmittal, each
holder will represent to our company that, among other things:
(1) the exchange notes acquired pursuant to the exchange offer are being
acquired in the ordinary course of business of the person receiving such
exchange notes, whether or not such person is the holder;
(2) that neither the holder nor any such other person has any arrangement or
understanding with any person to participate in the distribution of such
exchange notes; and
(3) that neither the holder nor any such other person is an 'affiliate,' as
defined in Rule 405 under the Securities Act of 1933, of our company.
Any financial institution that is a participant in DTC's Book-Entry Transfer
Facility system may make book-entry delivery of the old notes by causing DTC to
transfer such old notes into the exchange agent's account in accordance with
DTC's procedure for such transfer. Although delivery of old notes may be
effected through book-entry transfer into the exchange agent's account at DTC,
the letter of transmittal, or a facsimile thereof, with any required signature
guarantees and any other required documents, must, in any case, be transmitted
to and received by the exchange agent at its address set forth herein under
'Exchange Agent' prior to 5:00 p.m., New York City time, on the expiration date.
Delivery of documents to DTC in accordance with its procedures does not
constitute delivery to the exchange agent.
Only a holder may tender its old notes in the exchange offer. To tender in
the exchange offer, a holder must:
(1) complete, sign and date the letter of transmittal or a facsimile
thereof;
(2) have the signatures thereof guaranteed if required by the letter of
transmittal; and
(3) unless such tender is being effected pursuant to the procedure for
book-entry transfer, mail or otherwise deliver such letter of
transmittal or such facsimile, together with the old notes and other
required documents, to the exchange agent, prior to 5:00 p.m., New York
City time, on the expiration date.
The tender by a holder will constitute an agreement between such holder, our
company and the exchange agent in accordance with the terms and subject to the
conditions set forth herein and in the letter of transmittal. If less than all
of the old notes are tendered, a tendering holder should fill in the amount of
old notes being tendered in the appropriate box on the letter of transmittal.
The entire amount of old notes delivered to the exchange agent will be deemed to
have been tendered unless otherwise indicated.
The method of delivery of old notes and the letter of transmittal and all
other required documents to the exchange agent is at the election and risk of
the holders. Instead of delivery by mail, it is recommended that holders use an
overnight or hand delivery service. In all cases, sufficient time should be
allowed to ensure delivery to the exchange agent prior to the expiration date.
No letter of transmittal or old notes should be sent to Omnicare. Holders may
also request that their respective brokers, dealers,
27
commercial banks, trust companies or nominees effect such tender for holders. in
each case as set forth herein and in the letter of transmittal.
Any beneficial owner whose old notes are registered in the name of his
broker, dealer, commercial bank, trust company or other nominee and who wishes
to tender should contact such registered holder promptly and instruct such
registered holder to tender on his behalf. If such beneficial owner wishes to
tender on his own behalf, such beneficial owner must, prior to completing and
executing the letter of transmittal and delivering his old notes, either make
appropriate arrangements to register ownership of the old notes in such owner's
name or obtain a properly completed bond power from the registered holder. The
transfer of record ownership may take considerable time.
REQUIRED REPRESENTATIONS IN LETTER OF TRANSMITTAL
The letter of transmittal will include representations to our company that,
among other things:
(1) the exchange notes acquired pursuant to the exchange offer are being
acquired in the ordinary course of business of the person receiving such
exchange notes, whether or not such person is the holder;
(2) neither the holder nor any such other person is engaged in, intends to
engage in or has any arrangement or understanding with any person to
participate in the distribution of such exchange notes;
(3) neither the holder nor any such other person is an 'affiliate,' as
defined in Rule 405 under the Securities Act of 1933, of our company;
and
(4) if the tendering holder is a broker or dealer as defined in the Exchange
Act, then
(a) it acquired the old notes for its own account as a result of
market-making activities or other trading activities; and
(b) it has not entered into any arrangement or understanding with our
company or any 'affiliate' of our company within the meaning of
Rule 405 under the Securities Act of 1933 to distribute the exchange
notes to be received in the exchange offer.
In the case of a broker-dealer that receives exchange notes for its own
account in exchange for old notes which were acquired by it as a result of
market-making or other trading activities, the letter of transmittal will also
include an acknowledgement that the broker-dealer will deliver a copy of this
prospectus in connection with the resale by it of exchange notes received
pursuant to the exchange offer; however, by so acknowledging and by delivering a
prospectus, such holder will not be deemed to admit that it is an 'underwriter'
within the meaning of the Securities Act of 1933. See 'Plan of Distribution.'
HOW TO SIGN YOUR LETTER OF TRANSMITTAL AND OTHER DOCUMENTS
Signatures on a letter of transmittal or a notice of withdrawal, as the case
may be, must be guaranteed by a member firm of a registered national securities
exchange or of the National Association of Securities Dealers, Inc., a
commercial bank or trust company having an office or correspondent in the United
States or an 'eligible guarantor institution' within the meaning of Rule 17Ad-15
under the Exchange Act (each an 'Eligible Institution'), unless the old notes
tendered pursuant thereto are tendered
(1) by a registered holder who has not completed the box entitled 'Special
Registration Instructions' or 'Special Delivery Instruction' of the
letter of transmittal; or
(2) for the account of an Eligible Institution.
If the letter of transmittal is signed by a person other than the registered
holder of old notes, such old notes must be endorsed or accompanied by
appropriate bond powers which authorize such person to tender the old notes on
behalf of the registered holder, in either case signed as the name of the
registered holder or holders appears on the old notes. If the letter of
transmittal or any old notes or bond powers are signed or endorsed by trustees,
executors, administrators, guardians, attorneys-in-fact, officers of
corporations or others acting in a fiduciary or representative capacity, such
persons should so indicate when signing, and unless waived by us, evidence
satisfactory to us of their authority to so act must be submitted with such
letter of transmittal.
28
IMPORTANT RULES CONCERNING THE EXCHANGE OFFER
You should note that:
All questions as to the validity, form, eligibility, including time of
receipt, acceptance and withdrawal of the tendered old notes will be
determined by us in our sole discretion, which determination will be final
and binding;
We reserve the absolute right to reject any and all old notes not properly
tendered or any old notes the acceptance of which would, in our judgment or
the judgment of our counsel, be unlawful;
We also reserve the absolute right to waive any irregularities or
conditions of tender as to particular old notes. Our company's
interpretation of the terms and conditions of the exchange offer, including
the instructions in the letter of transmittal, will be final and binding on
all parties. Unless waived, any defects or irregularities in connection
with tenders of old notes must be cured within such time as we shall
determine;
Although we intend to notify holders of defects or irregularities with
respect to any tender of old notes, neither our company, the exchange agent
nor any other person shall be under any duty to give notification of any
defect or irregularity with respect to tenders of old notes, nor shall any
of them incur any liability for failure to give such notification; and
Tenders of old notes will not be deemed to have been made until such
irregularities have been cured or waived. Any old notes received by the
exchange agent that we determine are not properly tendered or the tender of
which is otherwise rejected by us and as to which the defects or
irregularities have not been cured or waived by us will be returned by the
exchange agent to the tendering holder unless otherwise provided in the
letter of transmittal, as soon as practicable following the expiration
date.
BOOK-ENTRY TRANSFER
The exchange agent will make a request promptly after the date of this
prospectus to establish accounts with respect to the old notes at the DTC for
the purpose of facilitating the exchange offer. Any financial institution that
is a participant in the DTC's system may make book-entry delivery of old notes
by causing the DTC to transfer such old notes into the exchange agent's account
with respect to the old notes in accordance with DTC's Automated Tender Offer
Program procedures for such transfer. However, the exchange for the old notes so
tendered will only be made after timely confirmation of such book-entry transfer
of old notes into the exchange agent's account, and timely receipt by the
exchange agent of an agent's message and any other documents required by the
letter of transmittal. The term 'agent's message' means a message, transmitted
by DTC and received by the exchange agent and forming a part of the confirmation
of a book-entry transfer, which states that DTC has received an express
acknowledgment from a participant that is tendering old notes that such
participant has received the letter of transmittal and agrees to be bound by the
terms of the letter of transmittal, and that we may enforce such agreement
against the participant.
Although delivery of old notes may be effected through book-entry transfer
into the exchange agent's account at DTC, an appropriate letter of transmittal
properly completed and duly executed with any required signature guarantee and
all other required documents must in each case be transmitted to and received or
confirmed by the exchange agent at its address set forth below on or prior to
the expiration date, or you must comply with the guaranteed delivery procedures
described below. Delivery of documents to DTC does not constitute delivery to
the exchange agent.
GUARANTEED DELIVERY PROCEDURES
If you are a registered holder of old notes and you wish to tender such old
notes but your intiial notes are not immediately available, or time will not
permit your old notes or other required documents to reach the exchange agent
before the expiration date, or the procedure for book-entry transfer cannot be
completed on a timely basis, you may effect a tender if:
(1) the tender is made through an Eligible Institution;
29
(2) prior to the expiration date, the exchange agent receives from such
Eligible Institution a properly completed and duly executed notice of
guaranteed delivery, by facsimile transmittal, mail or hand delivery
(a) stating the name and address of the holder, the certificate number
or numbers of such holder's old notes and the principal amount of
such old notes tendered;
(b) stating that the tender is being made thereby; and
(c) guaranteeing that, within three New York Stock Exchange trading days
after the expiration date, the letter of transmittal, or a facsimile
thereof, together with the certificate(s) representing the old notes
to be tendered in proper form for transfer, or confirmation of a
book-entry transfer into the exchange agent's account at DTC of old
notes delivered electronically, and any other documents required by
the letter of transmittal, will be deposited by the Eligible
Institution with the exchange agent; and
(3) such properly completed and executed letter of transmittal, or a
facsimile thereof, together with the certificate(s) representing all
tendered old notes in proper form for transfer, or confirmation of a
book-entry transfer into the exchange agent's account at DTC of old
notes delivered electronically and all other documents required by the
letter of transmittal are received by the exchange agent within three
NYSE trading days after the expiration date.
Upon request to the exchange agent, a notice of guaranteed delivery will be
sent to holders who wish to tender their old notes according to the guaranteed
delivery procedures set forth above.
WITHDRAWAL OF TENDERS
Except as otherwise provided herein, tenders of old notes may be withdrawn
at any time prior to 5:00 p.m., New York City time, on the expiration date.
For a withdrawal to be effective, a written or facsimile transmission notice
of withdrawal must be received by the exchange agent at its address set forth
herein prior to 5:00 p.m., New York City time, on the expiration date. Any such
notice of withdrawal must:
specify the name of the person having deposited the old notes to be
withdrawn (the 'Depositor'),
identify the old notes to be withdrawn, including the certificate number or
number and principal amount of such old notes or, in the case of old notes
transferred by book-entry transfer, the name and number of the account at
DTC to be credited,
be signed by the Depositor in the same manner as the original signature on
the letter of transmittal by which such old notes were tendered, including
any required signature guarantee, or be accompanied by documents of
transfer sufficient to permit the trustee with respect to the old notes to
register the transfer of such old notes into the name of the Depositor
withdrawing the tender, and
specify the name in which any such old notes are to be registered. if
different from that of the Depositor.
Please note that all questions as to the validity, form and eligibility,
including time of receipt, of such withdrawal notices will be determined by us,
and our determination shall be final and binding on all parties. Any old notes
so withdrawn will be deemed not to have been validly tendered for purposes of
the exchange offer, and no exchange notes will be issued with respect thereto
unless the old notes so withdrawn are validly retendered. Properly withdrawn old
notes may be retendered by following one of the procedures described above under
' -- Procedures for Tendering' at any time prior to the expiration date.
CONDITIONS TO THE EXCHANGE OFFER
Notwithstanding any other term of the exchange offer, we will not be
required to accept for exchange, or to issue exchange notes in exchange for, any
old notes, and may terminate or amend the
30
exchange offer as provided herein before the acceptance of such old notes if, in
our company's judgment, any of the following conditions has occurred or exists
or has not been satisfied:
(1) that the exchange offer, or the making of any exchange by a holder,
violates applicable interpretation of the staff of the SEC;
(2) that any action or proceeding shall have been instituted or threatened
in any court or by or before any governmental agency or body with
respect to the exchange offer; or
(3) that there has been proposed, adopted or enacted any law, statute, rule
or regulation that, in the sole judgment of our company, might
materially impair our ability to proceed with the exchange offer.
If we determine that we may terminate the exchange offer for any of the
reasons set forth above, we may:
(1) refuse to accept any old notes and return any old notes that have been
tendered to the holders thereof;
(2) extend the exchange offer and retain all old notes tendered prior to the
expiration date of the exchange offer, subject to the rights of such
holders of tendered old notes to withdraw their tendered old notes; or
(3) waive such termination event with respect to the exchange offer and
accept all properly tendered old notes that have not been withdrawn. If
such waiver constitutes a material change in the exchange offer, we will
disclose such change by means of a supplement to this prospectus that
will be distributed to each registered holder, and we will extend the
exchange offer for a period of five to ten business days, depending upon
the significance of the waiver and the manner of disclosure to the
registered holders, if the exchange offer would otherwise expire during
such period.
The above conditions are for our sole benefit and may be asserted by us
regardless of the circumstances giving rise to such condition. Our failure at
any time to exercise the foregoing rights shall not be deemed to be a waiver by
us of any such right and each such right shall be deemed an ongoing right which
may be asserted at any time and from time to time.
EXCHANGE AGENT
SunTrust Bank, the trustee under the indenture, has been appointed as
exchange agent for the exchange offer. All executed letters of transmittal
should be directed to the exchange agent at one of the addresses set forth
below. In such capacity, the exchange agent has no fiduciary duties and will be
acting solely on the basis of directions of our company. Questions, requests for
assistance and requests for additional copies of this prospectus or of the
letter of transmittal should be directed to the exchange agent addressed as
follows:
By Courier: SunTrust Bank
424 Church Street, 6th Fl.
Nashville, TN 37219
By Mail: SunTrust Bank
424 Church Street, 6th Fl.
Nashville, TN 37219
By Hand Delivery: SunTrust Bank
424 Church Street, 6th Fl.
Nashville, TN 37219
Facsimile for Eligible Institutions: (615) 748-5331
To Confirm by Telephone: (615) 748-5324
Delivery to an address or facsimile number other than those listed above
will not constitute a valid delivery.
31
SOLICITATION OF TENDERS; FEES AND EXPENSES
We will pay all expenses of soliciting tenders pursuant to the exchange
offer. The principal solicitation pursuant to the exchange offer is being made
by mail. Additional solicitations may be made by officers and regular employees
of our company and our affiliates in person, by telegraph, telephone or
telecopier.
We have not retained any dealer-manager in connection with the exchange
offer and will not make any payments to broker, dealers or other persons
soliciting acceptances of the exchange offer. We will, however, pay the exchange
agent reasonable and customary fees for its services and will reimburse the
exchange agent for its reasonable out-of-pocket costs and expenses in connection
therewith and will indemnify the exchange agent for all losses and claims
incurred by it as a result of the exchange offer.
We may also pay brokerage houses and other custodians, nominees and
fiduciaries the reasonable out-of-pocket expenses incurred by them in forwarding
copies of this prospectus, letters of transmittal and related documents to the
beneficial owners of the old notes and in handling or forwarding tenders for
exchange.
The expenses to be incurred in connection with the exchange offer, including
fees and expenses of the exchange agent and trustee and accounting and legal
fees and printing costs, will be paid by our company.
We will pay all transfer taxes, if any, applicable to the exchange of old
notes pursuant to the exchange offer. If, however, certificates representing
exchange notes or old notes for principal amounts not tendered or accepted for
exchange are to be delivered to, or are to be registered or issued in the name
of, any person other than the registered holder of the old notes tendered, or if
tendered old notes are registered in the name of any person other than the
person signing the letter of transmittal, or if the transfer tax is imposed for
any reason other than the exchange of old notes pursuant to the exchange offer,
then the amount of any such transfer taxes, whether imposed on the registered
holder or any other persons, will be payable by the tendering holder. If
satisfactory evidence of payment of such taxes or exemption therefrom is not
submitted with the letter of transmittal, the amount of such transfer taxes will
be billed by us directly to such tendering holder.
ACCOUNTING TREATMENT
The exchange notes will be recorded at the same carrying value as the old
notes, as reflected in our accounting records on the date of the exchange.
Accordingly, no gain or loss for accounting purposes will be recognized by us as
a result of the consummation of the exchange offer. The expenses of the exchange
offer will be amortized by us over the term of the exchange notes.
CONSEQUENCES OF FAILURE TO EXCHANGE
As a result of the making of, and upon acceptance for exchange of all
validly tendered old notes pursuant to the terms of, this exchange offer, we
will have fulfilled certain obligations contained in the registration rights
agreement. Holders of the old notes who do not tender their old notes in the
exchange offer will continue to hold such old notes and will be entitled to all
the rights, and subject to the limitations applicable thereto, under the
indenture and the registration rights agreement, except for any such rights
under the registration rights agreement that by their terms terminate or cease
to have further effect as a result of the making of this exchange offer. All
untendered old notes will continue to be subject to the restrictions on transfer
set forth in the Indenture. Accordingly, such old notes may be resold only:
(1) to Omnicare;
(2) pursuant to a registration statement which has been declared effective
under the Securities Act of 1933;
(3) in the United States to qualified institutional buyers within the
meaning of Rule 144A in reliance upon the exemption from the
registration requirements of the Securities Act of 1933 provided by
Rule 144A;
32
(4) in the United States to institutional 'accredited investors', as defined
in Rule 501(a)(1), (2), (3) or (7) promulgated under the Securities Act
of 1933, in transactions exempt from the registration requirements of
the Securities Act of 1933;
(5) outside the United States in transactions complying with the provisions
of Regulation S under the Securities Act of 1933; or
(6) pursuant to any other available exemption from the registration
requirements under the Securities Act of 1933.
To the extent that old notes are tendered and accepted in the exchange
offer, the liquidity of the trading market for untendered old notes could be
adversely affected.
33
USE OF PROCEEDS
The exchange offer is intended to satisfy certain of our obligations under
the registration rights agreement. We will not receive any cash proceeds from
the exchange offer.
CAPITALIZATION
This table sets forth our consolidated capitalization at March 31, 2001:
on an historical basis, reflecting the completion in March 2001 of the
private offering of the old notes and the refinancing of our credit
facilities that occurred concurrently with the offering of the old notes.
This table should be read in conjunction with the 'Selected Historical
Consolidated Financial Information' and 'Management's Discussion and Analysis of
Financial Condition and Results of Operations' included elsewhere in this
prospectus.
UNAUDITED
------------------
MARCH 31, 2001
ACTUAL
------
(IN THOUSANDS,
EXCEPT SHARE DATA)
Current portion of long-term debt........................... $ 1,378
----------
Long-term obligations, net of current portion:
Long-term bank debt..................................... 60,852
5% Convertible Subordinated Debentures, due 2007........ 345,000
8 1/8% Senior Subordinated Notes, due 2011.............. 375,000
----------
Total long-term obligations......................... 780,852
----------
Stockholders' equity:
Preferred Stock, no par value, 1,000,000 shares
authorized, none issued and outstanding as of March
31, 2001.............................................. --
Common stock, $1 par value, 200,000,000 shares
authorized, 93,919,000 shares issued as of March 31,
2001.................................................. 93,919
Paid-in capital......................................... 711,305
Retained earnings....................................... 331,599
Treasury stock -- at cost (820,000 shares at March 31,
2001)................................................. (16,214)
Deferred compensation................................... (28,422)
Accumulated other comprehensive income.................. (2,795)
----------
Total stockholders' equity.......................... 1,089,392
----------
Total capitalization................................ $1,871,622
----------
----------
34
SELECTED HISTORICAL CONSOLIDATED FINANCIAL INFORMATION
The following table summarizes our selected financial data, which should be
read in conjunction with our historical consolidated financial statements and
related notes and 'Management's Discussion and Analysis of Financial Condition
and Results of Operations' included elsewhere in this prospectus.
We derived the income statement data for the years ended December 31, 1998,
1999 and 2000 from our audited financial statements, which are included
elsewhere in this prospectus. We derived the income statement data for the years
ended December 31, 1996 and 1997 from audited financial statements not included
in this prospectus. We derived the income statement data for the three months
ended March 31, 2000 and 2001 and the balance sheet data as of March 31, 2001
from our unaudited financial statements, which are included elsewhere in this
prospectus. In the opinion of management, the unaudited financial statements
from which the data below is derived contain all adjustments, which consist only
of normal recurring adjustments, necessary to present fairly our financial
position and results of operations as of the applicable dates and for the
applicable periods. Historical results are not necessarily indicative of the
results to be expected in the future.
AUDITED UNAUDITED
---------------------------------------------------------------- ---------------------
YEARS ENDED THREE MONTHS
DECEMBER 31, ENDED MARCH 31,
---------------------------------------------------------------- ---------------------
1996 1997 1998 1999 2000 2000 2001
---- ---- ---- ---- ---- ---- ----
(IN THOUSANDS, EXCEPT RATIOS AND PER SHARE DATA)
INCOME STATEMENT DATA: (a)(b)
Sales..................... $641,440 $1,034,384 $1,517,370 $1,861,921 $1,971,348 $493,026 $523,645
-------- ---------- ---------- ---------- ---------- -------- --------
-------- ---------- ---------- ---------- ---------- -------- --------
Income from continuing
operations............... $ 43,663 $ 54,105 $ 80,379 $ 57,721 $ 48,817 $ 14,393 $ 18,044
Loss from discontinued
operations............... (389)(c) (2,154)(c) -- -- -- -- --
-------- ---------- ---------- ---------- ---------- -------- --------
Net income................ $ 43,274 $ 51,951 (c) $ 80,379 $ 57,721 $ 48,817 $ 14,393 $ 18,044
-------- ---------- ---------- ---------- ---------- -------- --------
-------- ---------- ---------- ---------- ---------- -------- --------
EARNINGS PER SHARE DATA:
Basic:
Income from continuing
operations............... $ 0.62 $ 0.63 $ 0.90 $ 0.63 $ 0.53 $ 0.16 $ 0.20
Loss from discontinued
operations............... -- (c) (0.02)(c) -- -- -- -- --
-------- ---------- ---------- ---------- ---------- -------- --------
Net income................ $ 0.62 (c) $ 0.61 (c) $ 0.90 $ 0.63 $ 0.53 $ 0.16 $ 0.20
-------- ---------- ---------- ---------- ---------- -------- --------
-------- ---------- ---------- ---------- ---------- -------- --------
Diluted:
Income from continuing
operations............... $ 0.57 $ 0.62 $ 0.90 $ 0.63 $ 0.53 $ 0.16 $ 0.19
Loss from discontinued
operations............... -- (c) (0.02)(c) -- -- -- -- --
-------- ---------- ---------- ---------- ---------- -------- --------
Net income................ $ 0.57 (c) $ 0.60 (c) $ 0.90 $ 0.63 $ 0.53 $ 0.16 $ 0.19
-------- ---------- ---------- ---------- ---------- -------- --------
-------- ---------- ---------- ---------- ---------- -------- --------
Dividends per share......... $ 0.06 $ 0.07 $ 0.08 $ 0.09 $ 0.09 $ 0.0225 $ 0.0225
-------- ---------- ---------- ---------- ---------- -------- --------
-------- ---------- ---------- ---------- ---------- -------- --------
Weighted average number of
common shares outstanding:
Basic....................... 69,884 85,692 89,081 90,999 92,012 91,599 92,422
-------- ---------- ---------- ---------- ---------- -------- --------
-------- ---------- ---------- ---------- ---------- -------- --------
Diluted..................... 81,089 86,710 89,786 91,238 92,012 91,599 93,170
-------- ---------- ---------- ---------- ---------- -------- --------
-------- ---------- ---------- ---------- ---------- -------- --------
RATIOS AND OTHER FINANCIAL
DATA (UNAUDITED):
EBITDA (adjusted) (d)....... $ 85,537 $ 140,516 $ 222,825 $ 241,008 $ 231,859 $ 59,561 $ 62,484
Ratio of EBITDA (adjusted)
to interest (d)........... (11.0)x 168.1x 11.0x 5.4x 4.4x 4.7x 4.7x
Ratio of earnings to fixed
charges (e)............... (16.9)x 19.0x 6.5x 3.3x 2.7x 2.8x 3.0x
Ratio of total debt to
EBITDA (adjusted) (d)..... 0.1x 2.7x 2.9x 3.4x 3.4x 3.5x(g) 3.3x(g)
Total debt to total
capitalization............ 1.5% 31.0% 40.4% 44.2% 42.3% 43.6% 41.8%
Capital expenditures (f).... $ 30,234 $ 41,278 $ 53,179 $ 58,749 $ 32,423 $ 8,444 $ 4,606
AUDITED UNAUDITED
DECEMBER 31, MARCH 31,
------------------------------------------------------------ -----------------------
1996 1997 1998 1999 2000 2000 2001
---- ---- ---- ---- ---- ---- ----
BALANCE SHEET DATA: (a)
Cash and cash equivalents
(including restricted
cash)....................... $232,961 $ 138,062 $ 54,312 $ 97,267 $ 113,907 $ 86,221 $ 121,662
Working capital.............. 342,401 354,825 369,749 430,102 560,729 453,759 577,346
Total assets................. 828,309 1,412,146 1,903,829 2,167,973 2,210,218 2,169,709 2,216,006
Long-term debt (excluding
current portion) (h)........ 5,755 359,148 651,556 736,944 780,706 737,003 780,852
Stockholders' equity (i)..... 689,219 829,753 963,471 1,028,380 1,068,423 1,039,108 1,089,392
(footnotes on next page)
35
(footnotes from previous page)
(a) We have had an active acquisition program in effect since 1989. See Note 2
of the Notes to the 2000 Consolidated Financial Statements for information
concerning these acquisitions.
(b) Included in the full year 1996 and 1997 income from continuing operations
amounts, and the full-year 1998, 1999 and 2000, as well as the three months
ended March 31, 2000 and 2001, net income amounts, are the following
aftertax charges (credits) (in thousands):
UNAUDITED
AUDITED -----------------
------------------------------------------------------ THREE MONTHS
YEARS ENDED ENDED
DECEMBER 31, MARCH 31,
------------------------------------------------------ -----------------
1996 1997 1998 1999 2000 2000 2001
---- ---- ---- ---- ---- ---- ----
Acquisition expenses,
pooling-of-interests.................. $1,468 $ 3,935 $13,869(1) $ (376)(1) $ -- (1) $ -- $ --
Restructuring and other related
charges............................... -- 1,208 2,689(2) 22,698 (2) 17,135(2) 2,695(3) --
Other expenses......................... 510(5) 6,457(4) -- -- -- -- 1,127(6)
------ ------- ------- ------- ------- ------ ------
Total............................... $1,978 $11,600 $16,558 $22,322 $17,135 $2,695 $1,127
------ ------- ------- ------- ------- ------ ------
------ ------- ------- ------- ------- ------ ------
------------
(1) See Note 2 of the Notes to the 2000 Consolidated Financial Statements.
(2) See Note 12 of the Notes to the 2000 Consolidated Financial Statements.
(3) See Note 3 of the first quarter 2001 Consolidated Financial Statements.
(4) We settled with the U.S. Attorney's office in the Southern District of
Illinois regarding the government's investigation of our Belleville,
Illinois subsidiary, Home Pharmacy Services, Inc. In accordance with the
terms of the settlement, in 1997 we recorded an unusual charge of $6.3
million ($6.0 million after taxes) for the estimated costs, and legal and
other expenses, associated with resolving the investigation. In 1997,
CompScript, Inc. recorded a $0.8 million charge ($0.5 million after
taxes) relating to the write-down of a note receivable from a former
affiliate of CompScript.
(5) Represents the write-off (based on an independent appraisal) of acquired
research and development costs associated with IBAH, Inc.'s acquisition
of Research Biometrics, Inc. ('RBI').
(6) See Note 5 of the first quarter 2001 Consolidated Financial Statements.
(c) Represents the closure of the software commercialization unit of RBI. All
operating results of this business have been reclassified from continuing
operations to discontinued operations.
(d) EBITDA represents earnings before interest, income taxes and depreciation
and amortization, excluding special items. Special items include
pooling-of-interests expenses, restructuring and other related charges,
other expenses, and losses from discontinued operations, and represent
charges or expenses which management believes are either one-time
occurrences or otherwise not related to ongoing operations. We believe that
certain investors find EBITDA to be a useful tool for measuring a company's
ability to service its debt; however, EBITDA does not represent cash flow
from operations, as defined by generally accepted accounting principles,
and should not be considered as a substitute for net earnings as an
indicator of our operating performance or cash flow as a measure of
liquidity. We also believe that the ratio of EBITDA to interest is an
accepted measure of debt service ability; however, such ratio should not be
considered a substitute for the ratio of earnings to fixed charges as a
measure of debt service ability. Our calculation of EBITDA may differ from
the calculation of EBITDA by others.
(e) The ratio of earnings to fixed charges is computed by dividing fixed
charges into earnings from continuing operations before income taxes and
extraordinary items plus fixed charges. Fixed charges include interest
(expensed or capitalized), amortization of debt issuance costs and the
estimated interest component of rent expense. Giving effect to the offering
of the old notes and the refinancing of our existing credit facilities and
application of the net proceeds from the offering of the old notes and
borrowings under our new credit facility to repay indebtedness, as if these
transactions occurred on the
(footnotes continued on next page)
36
(footnotes continued from previous page)
first day of the relevant period, our pro forma ratios of earnings to fixed
charges for the year ended December 31, 2000 and the three months ended
March 31, 2001 would have been 2.5x and 2.7x respectively.
(f) Primarily represents the purchase of computer hardware/software, machinery
and equipment, and furniture, fixtures and leasehold improvements.
(g) The adjusted EBITDA amounts in this calculation are for the twelve month
periods ended March 31, 2000 and 2001.
(h) In 1997, we issued $345.0 million of Convertible Subordinated Debentures
due 2007 (See Note 6 of the Notes to the 2000 Consolidated Financial
Statements).
(i) In 1996, we and IBAH, Inc. sold approximately 6.2 million (pre-1996
Omnicare stock split) shares of Common Stock in public offerings, resulting
in net proceeds of $297.2 million.
37
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
The following discussion should be read in conjunction with the consolidated
financial statements, related notes and other financial information appearing
elsewhere in this prospectus. In addition, see 'Forward-Looking Information.'
RESULTS OF OPERATIONS
The following table presents our sales and results of operations, excluding
certain special items such as pooling-of-interests expenses, restructuring and
other related charges and other expenses (in thousands, except per share
amounts). Special items represent charges/expenses or credits which management
believes are either one-time occurrences or otherwise not related to ongoing
operations. Such items are described further below and in our Notes to
Consolidated Financial Statements, and have been shown separately in order to
facilitate analysis of our operating trends.
UNAUDITED
FOR THE THREE MONTHS
FOR THE YEARS ENDED DECEMBER 31, ENDED MARCH 31,
------------------------------------ ---------------------
1998 1999 2000 2000 2001
---- ---- ---- ---- ----
Sales................................. $1,517,370 $1,861,921 $1,971,348 $493,026 $523,645
---------- ---------- ---------- -------- --------
---------- ---------- ---------- -------- --------
Net income, as reported............... $ 80,379 $ 57,721 $ 48,817 $ 14,393 $ 18,044
Acquisition expenses, pooling-of-
interests (net of taxes)........ 13,869 (376) -- -- --
Restructuring and other related
charges (net of taxes).......... 2,689 22,698 17,135 2,695 --
Other expense (net of taxes)...... -- -- -- -- 1,127
---------- ---------- ---------- -------- --------
Pro forma net income.................. $ 96,937 $ 80,043 $ 65,952 $ 17,088 $ 19,171
---------- ---------- ---------- -------- --------
---------- ---------- ---------- -------- --------
Earnings per share:
Net income, as reported............... $ 0.90 $ 0.63 $ 0.53 $ 0.16 $ 0.20
Acquisition expenses, pooling-of-
interests (net of taxes)........ 0.16 -- -- -- --
Restructuring and other related
charges (net of taxes).......... 0.03 0.25 0.19 0.03 --
Other expense (net of taxes)...... -- -- -- -- 0.01
---------- ---------- ---------- -------- --------
Basic (pro forma)..................... $ 1.09 $ 0.88 $ 0.72 $ 0.19 $ 0.21
---------- ---------- ---------- -------- --------
Diluted (pro forma)................... $ 1.08 $ 0.88 $ 0.72 $ 0.19 $ 0.21
---------- ---------- ---------- -------- --------
---------- ---------- ---------- -------- --------
QUARTER ENDED MARCH 31, 2001 COMPARED TO QUARTER ENDED MARCH 31, 2000
CONSOLIDATED
As presented in the above table, diluted earnings per share for the three
months ended March 31, 2001 were $0.21, excluding the impact of a one-time other
expense item (further discussed below), as compared with $0.19 earned in the
prior year quarter, excluding restructuring and other related charges associated
with a productivity and consolidation initiative completed in 2000. Net income
for the 2001 quarter, on that basis, was $19.2 million versus the $17.1 million
earned in the comparable 2000 quarter. Earnings before interest, taxes,
depreciation and amortization ('EBITDA'), on the same basis, totaled $62.5
million for the three months ended March 31, 2001 as compared with EBITDA of
$59.6 million in the first quarter of 2000. Sales for the three months ended
March 31, 2001 rose to $523.6 million from the $493.0 million recorded in the
comparable prior year period.
Included in the 2001 quarterly results was a one-time charge of $1.8 million
pretax ($1.1 million aftertax, or 1 cent per diluted share) representing a
repayment to the Medicare Part B program of overpayments made to one of our
pharmacy units during the period from January 1997 through April 1998. As part
of our corporate compliance program, we learned of the overpayments, which
related to Medicare Part B claims that contained documentation errors, and
notified the Health Care Financing
38
Administration for review and determination of the amount of overpayment.
Included in the 2000 quarter was a charge of $4.3 million pretax ($2.7 million
aftertax, or 3 cents per diluted share) related to our previously reported
productivity and consolidation initiative (the 'Program'). Including these items
in both quarters, earnings per diluted share were 19 cents in 2001 versus 16
cents in 2000; EBITDA was $60.7 million versus $55.3 million, respectively; and
net income was $18.0 million versus $14.4 million, respectively.
PHARMACY SERVICES SEGMENT
Our Pharmacy Services segment recorded sales of $495.4 million for the
first quarter of 2001, ahead of the comparable prior year quarter by $34.5
million. Operating profit in this segment reached $49.2 million (excluding the
previously mentioned one-time charge), also ahead of the prior year quarter
amount of $43.3 million (excluding restructuring and other related charges).
Owing to the efforts of our National Sales & Marketing Group and pharmacy staff
in developing new contracts, solid new account growth (including additional
business under our contract with Marriott Senior Living Communities), net of the
elimination of certain high credit risk or uneconomic accounts, increased the
number of residents served to 645,100 as compared with 634,500 one year earlier.
Additionally, higher drug utilization, the expansion of clinical programs and
drug price inflation contributed to increased sales. Moreover, the increasing
market penetration of newer drugs, which often carry higher prices but are
significantly more effective in reducing overall healthcare costs than those
they replace, served to increase pharmacy sales. The increase in sales in
relation to a lower operating cost structure brought about by the completion of
the Program in December 2000, produced increased operating margins in the
Pharmacy Services segment as well. These factors, along with a gradually
improving operating environment in the skilled nursing facility market brought
about by the implementation of the Balanced Budget Refinement Act of 1999,
favorably impacted the performance of the Pharmacy Services segment during the
quarter.
CRO SERVICES SEGMENT
Omnicare's Clinical Research ('CRO Services') segment recorded revenues of
$28.2 million during the first quarter of 2001 as compared to $32.1 million
recorded in the same prior year period, representing a decline of $3.9 million.
This decline was primarily related to the continued impact of delays in decision
making by pharmaceutical manufacturers in commencing clinical studies
experienced throughout 2000, relating in part to merger activities, as well as
the cancellation of planned projects prior to commencement. Operating profit in
this segment for the first quarter of 2001 was $2.0 million, a decline of $0.7
million in comparison to the same prior year quarter operating profit of $2.7
million, reflecting staffing and other expenses related to the initiation of
projects that will not produce revenues until subsequent periods. Given an
improving operating environment in the CRO Services segment due, in part, to
reduced merger activity in the pharmaceutical industry, the backlog of new
projects increased to approximately $213 million at March 31, 2001, representing
an increase of $71 million as compared to the backlog of approximately $142
million at March 31, 2000.
CONSOLIDATED
Our consolidated gross profit as a percentage of sales of 26.8% in the first
quarter of 2001 was relatively consistent with the comparable prior year quarter
rate of 26.9%, and represented a year-to-year increase in gross profit of $7.6
million to $140.3 million. Positively impacting gross profit was our purchasing
leverage associated with the procurement of pharmaceuticals and benefits
realized from our formulary compliance program, as well as the leveraging of
fixed and variable overhead costs at our pharmacies, and the reduced cost
structure brought about by the Program. These favorable factors were more than
offset by the previously mentioned less favorable performance of the CRO
Services segment, along with the above-described shift in mix toward newer,
branded drugs which typically produce higher gross profit, but lower gross
profit margins.
Omnicare's selling, general and administrative ('operating') expenses for
the quarter ended March 31, 2001 of $95.9 million were higher than the
comparable prior year amount by $3.1 million due to the overall growth of the
business. Operating expenses as a percentage of sales, however, totaled 18.3% in
the
39
2001 first quarter, representing a decline from the 18.8% experienced in the
comparable prior year period. This decline is primarily due to the favorable
impact of the Program, which was successfully completed in 2000.
The Program was designed to gain maximum benefits from our acquisition
program and to respond to changes in the healthcare industry. The Program
eliminated redundant efforts, simplified work processes and applied technology
to maximize employee productivity and standardize operations around best
practices. As part of the initiative, the roster of pharmacies and other
operating locations was reconfigured through the consolidation, relocation,
closure and opening of sites, resulting in a net reduction of 59 locations. The
Program resulted in the reduction of 16% of our workforce or approximately 1,800
full and part-time employees, and annualized pretax savings in excess of $46
million upon completion. In connection with the Program, our recorded pretax
restructuring and other related expenses of $4.3 million in the first quarter of
2000, primarily comprised of employee severance, employment agreement buy-out
costs, lease termination costs, other assets and facility exit costs, and other
related charges.
Investment income and interest expense for the three months ended March 31,
2001 of $0.5 million and $13.9 million, respectively, were relatively consistent
with the comparable prior year quarter.
The increase in the effective tax rate to 38.0% in the first quarter of 2001
from 37.1% in the comparable prior year quarter is primarily attributable to the
full utilization in 2000 of certain benefits derived from our state tax planning
program. While other state tax planning benefits will continue, they will be
realized at a different magnitude than was the case in 2000. The effective tax
rates in the 2001 and 2000 first quarters are higher than the federal statutory
rate primarily due to state and local income taxes.
YEAR ENDED DECEMBER 31, 2000 COMPARED TO YEAR ENDED DECEMBER 31, 1999
CONSOLIDATED
As presented in the table above, excluding the impact of special items such
as restructuring and other related charges from both periods and
acquisition-related items in 1999, net income for the year ended December 31,
2000 decreased 18% in comparison to net income earned in 1999. Basic and diluted
earnings per share in 2000, on this basis, decreased 18% in comparison to 1999.
EBITDA for the year ended December 31, 2000 of $231.9 million, on the same
basis, decreased 4% in comparison to $241.0 million earned in the 1999
comparable period. Net income, and basic and diluted earnings per share,
declined 15% and 16%, respectively, in 2000 compared to 1999. Sales increased 6%
in 2000 compared to 1999.
PHARMACY SERVICES SEGMENT
Our Pharmacy Services segment recorded sales of $1,858.7 million for the
year ended December 31, 2000, an increase of $130.6 million, or 8%, over the
comparable prior year period. The increase in this segment's sales represents
the continued internal growth of the pharmacy services business and the
cumulative effect of prior year acquisitions of long-term care pharmacy
providers. We estimate that internal growth contributed approximately $105
million of this segment's increased sales in 2000 as compared to 1999. We
increased our revenues internally through the efforts of our National Sales and
Marketing Group and pharmacy staff in developing new pharmacy contracts with
long-term care facilities. Additionally, when pharmaceutical prices are
increased, we generally are able to obtain price increases to cover such drug
price inflation; therefore, such inflation increases sales. We estimate that
drug price inflation for our highest dollar volume products in 2000 was
approximately 5%. The factors favorably impacting sales were offset in part by a
decrease of $3.1 million in infusion therapy sales during the year, resulting
primarily from the reduction in servicing of higher acuity patients, utilization
and pricing, as further discussed below. In addition to internal growth, we
estimate that approximately $26 million of our Pharmacy Services sales growth in
2000 was attributable to the full-year impact of acquisitions made in the prior
year. The number of nursing facility residents served at December 31, 2000 was
636,500 as compared to 631,200 served one year earlier.
40
The operating results of the Pharmacy Services segment were unfavorably
impacted by the reduction in earnings brought about by the ongoing difficulty of
the operating environment in the long-term care industry throughout 2000,
resulting in operating profit (excluding restructuring and other related charges
and acquisition expenses) of $178.2 million for the year ended December 31,
2000, as compared to $181.1 million for the same prior year period. In
particular, the impact of the implementation of the federal government's
Prospective Payment System for Medicare residents of skilled nursing facilities,
as further discussed below under the caption 'Outlook', including lower
reimbursement which led to lower occupancy and acuity levels, continued to
weaken the financial condition of many skilled nursing facilities during 2000.
Congress attempted to remedy this situation by enacting the Balanced Budget
Reform Act of 1999, which act was intended to provide a temporary increase in
reimbursement rates, particularly for higher acuity residents, effective
April 1, 2000. However, many customers reported that payments at the new rates
were delayed and not received until the third quarter of 2000, exacerbating
already severe cash flow problems in some facilities. It was therefore necessary
for us to apply more stringent standards in accepting new business, and to
continue aggressively withdrawing from uneconomic accounts and those with an
unstable financial condition, which served to partially offset the addition of
new accounts, and had a dampening effect on earnings. Although these trends
appeared to be stabilizing in the latter part of 2000 due to the salutary impact
of higher reimbursement rates going into effect in the latter portion of 2000
under the 1999 Balanced Budget Refinement Act, they had an unfavorable impact on
year-to-year profitability.
CONTRACT RESEARCH ORGANIZATION SERVICES SEGMENT
Our Contract Research Organization Services segment recorded sales of $112.7
million for the year ended December 31, 2000 as compared to $133.9 million in
the comparable prior year period. This decline of approximately $21 million is
primarily the result of delays in decision making by pharmaceutical
manufacturers, as well as the cancellation of planned projects prior to
commencement, owing in part to merger activities in that industry. Operating
profit (excluding restructuring and other related charges and acquisition
expenses) for the full year 2000 was $7.2 million, a decrease of $9.3 million
when compared to the same period of 1999, owing primarily to the volatility in
sales arising from the aforementioned factors.
CONSOLIDATED
Our consolidated gross profit as a percentage of sales decreased to 26.7% in
2000 from 28.1% in 1999. The positive impact on gross profit relating to several
factors, including our purchasing leverage associated with purchases of
pharmaceuticals, the leveraging of fixed and variable overhead costs at our
pharmacies, benefits realized from our formulary compliance program and cost
reductions associated with the productivity and consolidation initiative, were
more than offset by several negative factors. Among the factors negatively
affecting gross profit were the aforementioned unfavorable impact of the
Prospective Payment System on the Pharmacy Services segment, in particular such
factors as Prospective Payment System-related pricing pressure, a reduction in
Medicare census at some skilled nursing facilities, a decline in the average
length of stay for Medicare residents and a shift in the mix of patients served
to lower acuity patients. These factors, coupled with the less favorable
performance of the Contract Research Organization Services segment, contributed
to reduced gross profit margin for us in 2000.
Our sales mix also impacts gross profit and includes primarily sales of
pharmaceuticals and, to a lesser extent, contract research services, infusion
therapy products and services, medical supplies and other miscellaneous
products/services. Sales of pharmaceuticals account for the majority of our
sales and gross profit. Contract research services, infusion therapy and medical
supplies gross profits are typically higher than gross profits associated with
sales of pharmaceuticals.
Increased leverage in purchasing favorably impacts gross profit and is
primarily derived through discounts from suppliers. Leveraging of fixed and
variable overhead costs primarily relates to generating higher sales volumes
from pharmacy facilities with no increase in fixed costs (e.g., rent) and
minimal increases in variable costs (e.g., utilities), as well as the
elimination of pharmacies through our productivity and consolidation initiative,
further discussed below. We believe we will be able to continue to leverage
fixed and variable overhead costs through internal growth.
41
As noted earlier herein, we are generally able to obtain price increases to
cover drug price inflation. In order to enhance our gross profit margins, we
strategically allocate our resources to those activities that will increase
internal sales growth and favorably impact sales mix or will lower costs. In
addition, through the ongoing development of our pharmaceutical purchasing
programs, we are able to obtain discounts and thereby manage our pharmaceutical
costs.
Operating expenses for the year ended December 31, 2000 totaled $367.5
million, an increase of 4.5% compared to 1999, due primarily to our overall
growth. Operating expenses as a percentage of sales of 18.6% in 2000 were less
than the 18.9% experienced in the comparable prior year period. Favorably
impacting the year-to-year comparison was the impact of initiatives implemented
through our productivity and consolidation program. This favorable impact,
however, was offset, in part, by an increase in our provision for doubtful
accounts (approximately 0.2 percentage points of sales) brought about by a
deterioration in the financial condition of certain skilled nursing facility
clients throughout 2000, partially as a result of the impact of the Prospective
Payment System on their business.
We completed our productivity and consolidation initiative in 2000. The
initiative, announced in June 1999, was implemented to allow us to gain maximum
benefit from our acquisition program and to respond to changes in the healthcare
industry. The program eliminated redundant efforts and simplified work processes
by maximizing employee productivity and standardizing around best practices. We
reconfigured our roster of pharmacies and other operating locations through
consolidation and relocation. At plan completion, we had closed or merged 67
pharmacy locations and four Contract Research Organization and software
locations, and opened a total of 12 new pharmacies. Headcount reductions of 16%
of our work force and pretax savings in excess of $46 million were achieved as
part of the initiative. We recorded pretax restructuring and other related
expenses associated with the program of $27.2 million and $35.4 million during
the years ended December 31, 2000 and 1999, respectively, primarily comprised of
employee severance, employment agreement buy-out costs, lease termination costs,
other assets and facility exit costs, and other related charges.
Investment income for the year ended December 31, 2000 was $1.9 million, an
increase of $0.4 million in comparison to the same period of 1999 due to a
higher average invested cash balance during 2000 as compared to 1999, as well as
an increase in interest rates during 2000 versus 1999.
Interest expense during 2000 was $55.1 million, an increase of $8.9 million
versus the comparable prior year period. The increase is primarily attributable
to the full-year impact of interest expense associated with a $170 million
increase in borrowings under our line of credit facilities during the first half
of 1999 (offset in part by subsequent repayments aggregating $40 million through
year end 2000), as well as an increase in interest rates throughout 2000 as
compared to the prior year. The increase in our line of credit borrowings in
1999 was primarily attributable to our acquisition program.
The effective tax rate of 37% during 2000 is consistent with that in 1999.
We realized benefits from our state tax planning programs in 2000 and 1999.
While state tax planning programs are ongoing, there can be no assurance
that benefits will be realized at the same level in 2001 and beyond as has been
the case in 2000 and 1999. The effective tax rates in 2000 and 1999 are higher
than the federal statutory rate largely as a result of the combined impact of
various nondeductible expenses (primarily intangible asset amortization and
acquisition costs), state and local income taxes and tax-accrual adjustments.
YEAR ENDED DECEMBER 31, 1999 COMPARED TO YEAR ENDED DECEMBER 31, 1998
As presented in the table above, excluding the impact of restructuring and
other related charges and acquisition-related items for pooling-of-interests
transactions from both periods, net income for the year ended December 31, 1999
decreased 17% in comparison to net income earned in 1998. Basic and diluted
earnings per share in 1999, on this basis, decreased 19% in comparison to 1998.
EBITDA for the year ended December 31, 1999 of $241.0 million, on this basis,
increased 8% as compared to the $222.8 million in the same prior year period.
Net income, and basic and diluted earnings per share, declined 28% and 30%,
respectively, in 1999 compared to 1998.
The reduction in earnings primarily reflected the difficult operating
environment in the long-term care industry. As discussed in greater detail
above, the implementation of the Prospective Payment System for
42
Medicare residents of skilled nursing facilities created an unsettled operating
environment during 1999. We experienced Prospective Payment System-related
pricing pressure along with lower occupancy and acuity levels in client skilled
nursing facilities.
Despite the difficult operating environment, sales increased 23% in 1999
versus 1998. The sales increase represents the cumulative effect of the
acquisition of long-term care pharmacy providers and the continued internal
growth of the pharmacy services and Contract Research Organization businesses.
During 1999, we completed five institutional pharmacy acquisitions (excluding
insignificant purchases of other assets). Also increasing sales was the
full-year impact of 1998 acquisitions. We also increased our revenues internally
through the efforts of our National Sales and Marketing Group and pharmacy staff
in developing new pharmacy contracts with long-term care facilities.
Additionally, we were able to increase internal growth through the efforts of
our Contract Research Organization sales personnel by obtaining contracts from
pharmaceutical, biotechnology and medical device manufacturers for new contract
research business.
Our consolidated sales increased by approximately $345 million in 1999
versus 1998. We estimate that approximately $200 million of our consolidated
sales growth in 1999 was attributable to acquisitions, of which $193 million and
$7 million related to the Pharmacy Services segment and Contract Research
Organization Services segment, respectively. We estimate that internal growth
contributed approximately $145 million of our increased sales in 1999 compared
to 1998, of which $141 million and $4 million related to the Pharmacy Services
segment and the Contract Research Organization Services segment, respectively.
Internally generated sales growth in the Pharmacy Services segment resulted
primarily from new contracts with long-term care facilities (obtained by the
National Sales and Marketing Group and by the pharmacy staff), and in the
Contract Research Organization Services segment largely through the efforts of
sales personnel in obtaining new contracts from pharmaceutical, biotechnology
and medical device manufacturers. These combined sales increases were offset, in
part, by a decrease of approximately $11 million in infusion therapy sales
during the year, resulting primarily from a reduction in the servicing of higher
acuity patients, pricing and utilization, as a result of the impact of the
Prospective Payment System.
On June 2, 1999, we announced the completion of the acquisition of the
institutional pharmacy operations of Life Care Pharmacy Services, Inc., an
affiliate of Life Care Centers of America, for $63 million in cash and 0.3
million warrants to purchase our common stock at $29.70 per share. The warrants
have a seven-year term and are first exercisable in June 2002. Life Care
Pharmacy Services, Inc. had, at the time of the acquisition, contracts to
provide dispensing services to approximately 17,000 residents in twelve states.
Acquisitions and internal growth brought the total number of nursing
facility residents served at December 31, 1999 to 631,200 as compared to 578,700
at December 31, 1998.
Gross profit as a percentage of sales decreased to 28.1% in 1999 from 30.2%
in 1998. Our purchasing leverage associated with purchases of pharmaceuticals,
the leveraging of fixed and variable overhead costs at our pharmacies, benefits
realized from our formulary compliance program, cost reductions associated with
the productivity and consolidation initiative, and changes in sales mix
including increased sales from contract research positively impacted gross
margins. However, these favorable factors were more than offset by the
aforementioned unfavorable impact of the Prospective Payment System on the
Pharmacy Services segment, in particular such factors as the Prospective Payment
System-related pricing pressure, a reduction in Medicare census at some skilled
nursing facilities, a decline in the average length of stay for Medicare
residents and a shift in the mix of patients served to lower acuity patients,
all of which contributed to reduced gross profit margin for us in 1999.
Operating expenses for the year ended December 31, 1999 increased 24% to
$351.6 million as compared to 1998 due primarily to our overall growth.
Operating expenses as a percentage of sales of 18.9% in 1999 were modestly
higher than the 18.7% experienced in the prior year. Unfavorably impacting the
year-to-year comparison was an increase in our provision for doubtful accounts
brought about by a deterioration in the financial condition of certain skilled
nursing facility clients as a result, in part, of the impact of the Prospective
Payment System on their business, causing an increase of approximately 0.4
percentage points of sales.
43
Acquisition expenses for 1999 of $0.8 million represent expenses related to
a pooling-of-interests transaction. Furthermore, during 1999, we recorded income
of $0.9 million relating to the net reversal of estimated CompScript, Inc. and
IBAH, Inc. acquisition-related expenses resulting from the finalization of those
costs during the year. Acquisition expenses for 1998 of $15.4 million represent
expenses primarily related to our pooling-of-interests transactions with
CompScript, Inc. and IBAH, Inc.
In connection with the previously discussed productivity and consolidation
initiative, we recorded restructuring and other related expenses of $35.4
million in 1999. Restructuring and other related charges of $3.6 million for
1998 represent costs related to the restructuring of the CompScript, Inc. mail
order business and the consolidation and restructuring of certain IBAH, Inc.
operations.
Investment income for 1999 was $1.5 million, a decrease of $1.8 million in
comparison with 1998 resulting primarily from a lower average invested cash
balance during 1999. This use of cash was largely attributable to our
acquisition program and, to a lesser extent, capital expenditures.
Interest expense during 1999 was $46.2 million, an increase of $22.6 million
versus the prior year, largely reflecting the impact of increased net borrowings
of $85 million and $75 million in 1999 under our five-year, $400 million
agreement and the 364-day, $400 million line of credit facility, respectively.
These increased borrowings were utilized primarily to fund our acquisition
program. Also impacting the comparison is the full-year effect in 1999 of
interest expense associated with a $250 million draw on our five-year, $400
million line of credit agreement late in the third quarter of 1998 in connection
with our acquisition of the pharmacy business of Extendicare, Inc.
The effective tax rate decreased to 37% in 1999 from 41% in 1998, primarily
due to a reduction from 1998 in nondeductible acquisition expenses relating to
pooling-of-interests transactions and a decrease in state and local income taxes
in 1999 due to our state tax planning programs. The effective tax rates in 1999
and 1998 are higher than the statutory rate primarily due to state and local
income taxes and various nondeductible expenses (e.g., acquisition costs, etc.).
IMPACT OF INFLATION
Inflation has not materially affected our profitability inasmuch as price
increases have generally been obtained to cover inflationary drug cost
increases.
LIQUIDITY AND CAPITAL RESOURCES
Cash and cash equivalents (including restricted cash) at March 31, 2001 were
$121.7 million compared to $113.9 million at December 31, 2000. We generated
positive net cash flows from operating activities of $32.1 million during the
three months ended March 31, 2001. Further, we generated positive cash flows
from operating activities of $132.7 million during the year ended December 31,
2000, compared to cash flows from operating activities of $101.1 million and
$89.5 million during the years ended December 31, 1999 and December 31, 1998,
respectively. These positive cash flows were used primarily for
acquisition-related payments (including amounts payable pursuant to acquisition
agreements relating to prior-years acquisitions), capital expenditures, debt
repayment, debt issuance costs and dividends. Improved management of working
capital contributed to the favorable operating cash flow results experienced in
2001 and 2000 as compared to prior years.
Acquisitions of businesses required cash payments of $5.2 million (including
amounts payable pursuant to acquisition agreements relating to prior-year
acquisitions) in the first quarter of 2001, which were funded by operating cash
flows. Acquisitions of businesses during 2000, 1999 and 1998 required $41.7
million, $144.1 million and $398.7 million, respectively, of cash payments
(including amounts payable pursuant to acquisition agreements relating to
pre-2000, pre-1999 and pre-1998 acquisitions, respectively) which were primarily
funded by a combination of operating cash flows and borrowings under our
revolving credit facilities. Acquisitions in 1999 and 1998 were also funded, in
part, with shares of our common stock having a market value of approximately $11
million (0.5 million shares) and $262 million (7.2 million shares),
respectively. Additional amounts contingently payable, totaling approximately
$15 million at March 31, 2001, may become payable through 2001 pursuant to the
terms of various acquisition agreements (primarily earnout payments).
44
On March 20, 2001, we completed the offering of $375.0 million of 8.125%
senior subordinated notes due 2011 (the 'Senior Notes'), issued at par through a
private placement. Concurrent with the issuance of the Senior Notes, we entered
into a new three-year syndicated $495.0 million revolving credit facility (the
'Revolving Credit Facility'), including a $25.0 million letter of credit
subfacility, with various lenders. Net proceeds from the offering of the Senior
Notes of approximately $365.0 million and borrowings under the new credit
facility of $70.0 million were used to repay outstanding indebtedness under our
then existing credit facilities, which totaled $435.0 million at December 31,
2000, and such existing facilities were terminated. Subsequent to the closing of
the Revolving Credit Facility, we received commitments from additional banks
that allowed it to increase the size of the Revolving Credit Facility to $500.0
million. As of March 31, 2001, the Revolving Credit Facility bears an interest
rate of LIBOR plus 1.375%.
Our capital requirements are primarily comprised of ongoing payments
originating from our acquisition program and capital expenditures, including
those related to investments in our information technology systems. There are no
material commitments and contingencies outstanding at March 31, 2001, other than
certain estimated acquisition-related payments to be made in the future (e.g.,
earnout provisions, deferred consideration, indemnification payments, etc.).
Our current ratio of 3.3 to 1.0 at March 31, 2001 was relatively consistent
with the 3.2 to 1.0 in existence at December 31, 2000.
On February 12, 2001, our Board of Directors declared a quarterly cash
dividend of 2.25 cents per share for an indicated annual rate of 9 cents per
share in 2001. Dividends of $2.1 million paid during the three months ended
March 31, 2001 were consistent with those paid in the comparable prior year
period. Dividends of $8.3 million paid during the year ended December 31, 2000
were comparable with the $8.2 million paid for the year ended December 31, 1999,
and $1.5 million greater than the $6.8 million paid during the comparable 1998
period. We believe our sources of liquidity and capital are adequate for our
ongoing operating needs. However, we may in the future, incur additional
indebtedness or issue additional equity. We believe that, if needed, external
sources of financing are readily available.
OUTLOOK
We derive approximately one-half of our revenues directly from government
sources, principally Medicaid and to a lesser extent Medicare, and one-half from
the private sector (including individual residents, third-party insurers and
skilled nursing facilities).
In recent years, Congress has passed a number of federal laws that have
effected major changes in the health care system. The Balanced Budget Act of
1997 sought to achieve a balanced federal budget by, among other things,
changing the reimbursement policies applicable to various health care providers
through the introduction in 1998 of the Prospective Payment System for
Medicare-eligible residents of skilled nursing facilities. Prior to the
Prospective Payment System, skilled nursing facilities under Medicare received
cost-based reimbursement. Under the Prospective Payment System, Medicare pays
skilled nursing facilities a fixed fee per patient per day based upon the acuity
level of the resident, covering substantially all items and services furnished
during a Medicare-covered stay, including pharmacy services. The Prospective
Payment System resulted in a significant reduction of reimbursement to skilled
nursing facilities. Admissions of Medicare residents, particularly those
requiring complex care, declined in many skilled nursing facilities due to
concerns relating to the adequacy of reimbursement under the Prospective Payment
System. This caused a weakness in Medicare census leading to a significant
reduction of overall occupancy in the skilled nursing facilities we serve. This
decline in occupancy and acuity levels adversely impacted our results beginning
in 1999, as we experienced lower utilization of our services, coupled with the
Prospective Payment System-related pricing pressure from our skilled nursing
facility customers. In 1999, Congress enacted the 1999 Balanced Budget
Refinement Act which gave skilled nursing facilities a 20% rate increase for
high-acuity patients, and an overall 4% across the board increase in payments
otherwise determined under the Balanced Budget Act of 1997 for all patients.
These rate increases went into effect in April 2000 and have partially restored
the reduction of reimbursement caused by the Prospective Payment System. In
December 2000, the Medicare, Medicaid and SCHIP Benefits Improvement and
Protection Act of 2000 was signed into law. The Medicare, Medicaid and SCHIP
Benefits Improvement and Protection Act of 2000, effective April 2001, will
further increase
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reimbursement by means of a 6.7% rate increase for certain high-acuity
rehabilitation patients, a 16.66% across the board increase in the nursing
component of the federal rate for all patients, and for fiscal year 2001, a
3.16% rate increase for all patients. While we expect that the impact of the
Prospective Payment System on the long-term care industry will continue to
affect Omnicare and its clients in 2001, it appears that the unfavorable
operating trends attributable to the Prospective Payment System have begun to
stabilize. Moreover, it is anticipated that both the 1999 Balanced Budget
Refinement Act and Medicare, Medicaid and SCHIP Benefits Improvement and
Protection Act of 2000 will help to improve the financial condition of skilled
nursing facilities and motivate them to increase admissions, particularly of
higher acuity residents.
Demographic trends indicate that demand for long-term care will increase
well into the middle of this century as the elderly population grows
significantly. Moreover, those over 65 consume a disproportionately high level
of health care services when compared with the under 65 population. There is
widespread consensus that appropriate pharmaceutical care is generally
considered the most cost-effective form of treatment for the chronic ailments
afflicting the elderly and also one which is able to improve the quality of
life. Further, the pace and quality of new drug development is yielding many
promising new drugs targeted at the diseases of the elderly. These new drugs may
be more expensive than older, less effective drug therapies due to rising
research costs. However, they are significantly more effective in curing or
ameliorating illness and in lowering overall health care costs by reducing among
other things, hospitalizations, physician visits, nursing time and lab tests.
These trends not only support long-term growth for the geriatric pharmaceutical
industry but also containment of health care costs and the well being of the
nation's growing elderly population.
In order to fund this growing demand, we anticipate that the government and
the private sector will continue to review, assess and possibly alter health
care delivery systems and payment methodologies. While it is not possible to
predict the effect of any further initiatives on our business, our management
believes that our expertise in geriatric pharmaceutical care and pharmaceutical
cost management position us to help meet the challenges of today's health care
environment. Further, the rate of new drug discovery continues to accelerate
fueled, in part, by the recently completed mapping of the human genome and the
science and discoveries that will likely emanate from this project.
Pharmaceutical manufacturers, in order to keep pace, will continue to turn to
contract research organizations to assist them in accelerating drug research
development and commercialization, providing a foundation for growth in our
Contract Research Organization business.
QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
We do not have any financial instruments held for trading purposes and do
not hedge any of our market risks with derivative instruments.
Our primary market risk exposure relates to interest rate risk exposure
through our borrowings. Our debt obligations at March 31, 2001 include $60.0
million outstanding under our three-year, $495.0 million variable-rate Revolving
Credit Facility at an interest rate of LIBOR plus 1.375%, or 6.5% at March 31,
2001 (a one-hundred basis point change in the interest rate would impact pretax
interest expense by approximately $0.2 million per quarter); $375.0 million
outstanding under the notes; and $345.0 million outstanding under convertible
subordinated debentures due in 2007 ('Convertible Debentures'), which accrue
interest at a fixed rate of 5.0%. The fair value of our Revolving Credit
Facility approximates its carrying value, and the fair value of the Convertible
Debentures and the notes is $302.3 million and $384.4, million, respectively, at
March 31, 2001.
On April 17, 2001 we increased the capacity of our $495.0 million
variable-rate, revolving line of credit facility to $500.0 million.
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BUSINESS
BACKGROUND
We are a leading provider of pharmacy services to long-term care
institutions such as skilled nursing facilities, assisted living facilities and
other institutional health care facilities. We also provide comprehensive
clinical research for the pharmaceutical and biotechnology industries.
We operate in two business segments. The largest segment, Pharmacy Services,
provides distribution of pharmaceuticals, related pharmacy consulting, data
management services and medical supplies to long-term care facilities. Pharmacy
Services purchases, repackages and dispenses pharmaceuticals, both prescription
and non-prescription, and provides computerized medical record-keeping and
third-party billing for residents in such facilities. We also provide consultant
pharmacist services, including evaluating residents' drug therapy, monitoring
the control, distribution and administration of drugs within the nursing
facility and assisting in compliance with state and federal regulations. In
addition, we provide ancillary services, such as infusion therapy and dialysis,
distribute medical supplies and offer clinical and financial software
information systems to our client long-term care facilities. At December 31,
2000, we provided these services to approximately 636,500 residents in
approximately 8,400 long-term care facilities in 43 states. The Pharmacy
Services segment provides no services outside of the United States. Our other
business segment is Contract Research Organization Services. Contract Research
Organization Services is a leading international provider of comprehensive
product development and research services to client companies in the
pharmaceutical, biotechnology, medical device and diagnostics industries, and as
of December 31, 2000, operated in 23 countries around the world. Financial
information regarding our business segments is presented in the notes to our
consolidated financial statements.
PHARMACY SERVICES
We purchase, repackage and dispense prescription and non-prescription
medication in accordance with physician orders and deliver such prescriptions to
the nursing facility for administration to individual residents by the
facility's nursing staff. We typically service nursing homes within a 150-mile
radius of our pharmacy locations. We maintain a 24-hour, seven-day per week,
on-call pharmacist service for emergency dispensing and delivery or for
consultation with the facility's staff or the resident's attending physician.
Upon receipt of a prescription, the relevant resident information is entered
into our computerized dispensing and billing systems. At that time, the
dispensing system checks the prescription for any potentially adverse drug
interactions or resident 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 resident. We also provide therapeutic
interchange, with physician approval, in accordance with our pharmaceutical care
guidelines. See 'The Omnicare Guidelines'r' below for further discussion.
We provide a 'unit dose' distribution system. Most of our 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. We believe the
unit dose system, preferred over the bulk delivery systems employed by retail
pharmacies, improves control over drugs in the nursing facility and improves
resident compliance with drug therapy by increasing the accuracy and timeliness
of drug administration.
Integral to our drug distribution system is our computerized medical records
and documentation system. We provide to the facility computerized medication
administration records and physician's order sheets and treatment records for
each resident. Data extracted from these computerized records is also formulated
into monthly management reports on resident care and quality assurance. We
believe the computerized documentation system, in combination with the unit dose
drug delivery system, results in greater efficiency in nursing time, improved
control, reduced drug waste in the facility and lower error rates in both
dispensing and administration. We believe these benefits improve drug efficacy
and result in fewer drug-related hospitalizations.
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CONSULTANT PHARMACIST SERVICES
Federal and state regulations mandate that long-term care 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 resident care. The Omnibus Budget Reconciliation Act
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.
We provide consultant pharmacist services which help clients comply with the
federal and state regulations applicable to nursing homes. The services offered
by our consultant pharmacists include:
comprehensive, monthly drug regimen reviews for each resident in the
facility to assess the appropriateness and efficacy of drug therapies,
including a review of the resident'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 facilities as well as periodic involvement in staff
meetings;
monitoring and monthly reporting on facility-wide drug usage;
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.
We have also developed a proprietary software system for the use of our
consultant pharmacists. The system, called OSC2OR'r' (Omnicare System of
Clinical and Cost Outcomes Retrieval), enables our pharmacists not only to
perform their above described functions efficiently but also provides the
platform for consistent data retrieval for outcomes research and management.
Additionally, we offer a specialized line of consulting services which help
long-term care facilities to enhance care and reduce and contain costs as well
as to comply with state and federal regulations. Under this service line, we
provide:
data required for the Omnibus Budget Reconciliation Act ('OBRA') and other
regulatory purposes, including reports on psychotropic drug usage (chemical
restraints), antibiotic usage (infection control) and other drug usage;
plan of care programs which assess each patient's state of health upon
admission and monitor progress and outcomes using data on drug usage as
well as dietary, physical therapy and social service inputs;
counseling related to appropriate drug usage and implementation of drug
protocols;
on-site educational seminars for the nursing facility staff on topics such
as drug information relating to clinical indications, adverse drug
reactions, drug protocols and special geriatric considerations in drug
therapy, and information and training on intravenous drug therapy and
updates on OBRA and other regulatory compliance issues;
mock regulatory reviews for nursing staffs; and
nurse consultant services and consulting for dietary, social services and
medical records.
THE OMNICARE GUIDELINES'r'
In June 1994, to enhance the pharmaceutical care management services that we
offer, we introduced to our client facilities and their attending physicians the
Omnicare Guidelines'r' which we believe is the first clinically-based formulary
for the elderly residing in long-term care institutions. The Omnicare
Guidelines'r' presents an analysis ranking specific drugs in therapeutic classes
as preferred, acceptable or unacceptable based solely on their disease-specific
clinical effectiveness in treating the elderly in long-term care facilities. The
formulary takes into account such factors as pharmacology, safety and toxicity,
efficacy, drug administration, quality of life and other considerations specific
to the frail elderly population residing in facilities. The clinical evaluations
and rankings were developed exclusively for us by the Philadelphia
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College of Pharmacy, an academic institution recognized for its expertise in
geriatric long-term care. In addition, the Omnicare Guidelines'r' provides
relative cost information comparing the prices of the drugs to patients, their
insurers or other payors of the pharmacy bill.
As the Omnicare Guidelines'r' focuses on health benefits, rather than solely
on cost, in assigning rankings, we believe that use of the Omnicare
Guidelines'r' assists physicians in making the best clinical choices of drug
therapy for the patient at the lowest cost to the payor of the pharmacy bill.
Accordingly, we believe that the development of and compliance with the Omnicare
Guidelines'r' is important in lowering costs for skilled nursing facilities
operating under the federal government's Prospective Payment System.
HEALTH AND OUTCOMES MANAGEMENT
We have expanded upon the data in the Omnicare Guidelines'r' to develop
health and outcomes management programs targeted at major categories of disease
commonly found in the elderly, such as congestive heart failure, osteoporosis
and atrial fibrillation. Such programs seek to identify patients who may be
candidates for more clinically efficacious drug therapy and to work with
physicians to optimize pharmaceutical care for these geriatric patients. We
believe these programs enhance the quality of care of elderly patients while
reducing costs to the health care system which arise from the adverse outcomes
of sub-optimal or inappropriate drug therapy.
OUTCOMES-BASED ALGORITHM TECHNOLOGY
Combining data provided by our proprietary systems, the Omnicare
Guidelines'r' and health management programs, our pharmacists seek to determine
the best clinical and most cost-effective drug therapies and make
recommendations for the most appropriate pharmaceutical treatment. Since late
1997, we have augmented their efforts with the development of proprietary,
outcomes-based algorithm technology which electronically screens and identifies
patients at risk for certain diseases and assists in determining treatment
protocols. This system combines pharmaceutical, clinical, care planning and
research data, and screens such data through approximately 3,000 diseased-based
algorithms, allowing our pharmacists to make recommendations to improve the
effectiveness of drug therapy in seniors, including identifying potentially
underdiagnosed and undertreated conditions.
ANCILLARY SERVICES
We provide the following ancillary products and services to long-term care
facilities:
Infusion Therapy Products and Services. With cost containment pressures in
health care, skilled nursing facilities and nursing facilities are called upon
to treat moderately acute but stabilized patients that would otherwise be
treated in the more costly hospital environment, provided that the nursing staff
and pharmacy are capable of supporting higher degrees of acuity. We provide
infusion therapy support services for such client 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.
We prepare the product to be administered using proper equipment in a
sterile environment and then deliver the product to the nursing home for
administration by the nursing staff. Proper administration of intravenous ('IV')
drug therapy requires a highly trained nursing staff. Our consultant pharmacists
and nurse consultants operate an education and certification program on IV
therapy to assure proper staff training and compliance with regulatory
requirements in client facilities offering an IV program.
By providing an infusion therapy program, we enable our client skilled
nursing facilities and nursing facilities to admit and retain patients who
otherwise would need to be cared for in an acute-care facility. The most common
infusion therapies we provide are total parenteral nutrition, antibiotic
therapy, chemotherapy, pain management and hydration.
Dialysis Services. We offer comprehensive dialysis services onsite in client
long-term care facilities for those residents with kidney failure or end stage
renal disease. We offer both hemodialysis and peritoneal dialysis for residents
who would otherwise be required to be transported to an off-site clinic for
49
dialysis treatment multiple times per week. Our onsite service eliminates travel
for the resident which can often be a disruptive and traumatic activity. For our
facility clients our dialysis services significantly reduce transportation and
staffing costs while providing added capability so that the available
populations of patients it can serve increases.
Wholesale Medical Supplies/Medicare Part B Billing. We distribute disposable
medical supplies, including urological, ostomy, nutritional support and wound
care products and other disposables needed in the nursing home environment. In
addition, we provide direct Medicare billing services for certain of these
product lines for patients eligible under the Medicare Part B program. As part
of this service, we determine patient eligibility, obtain certifications, order
products and maintain inventory on behalf of the nursing facility. We also
contract to act as billing agent for certain nursing homes that supply these
products directly to the patient.
Other Services. We also provide clinical care plan and financial information
systems to our client facilities to assist them in determining appropriate care
as well as in predicting and tracking costs. We also offer respiratory therapy
products and durable medical equipment. We continue to review the expansion of
these as well as other products and services that may further enhance the
ability of our client skilled nursing facilities and nursing facilities to care
for their patients in a cost-effective manner.
CONTRACT RESEARCH ORGANIZATION SERVICES
Our Contract Research Organization Services segment provides comprehensive
product development services globally to client companies in the pharmaceutical,
biotechnology, medical devices and diagnostics industries. Contract Research
Organization Services provides support for the design of regulatory strategy and
clinical development (phases I through IV) of pharmaceuticals by offering
comprehensive and fully integrated clinical, quality assurance, data management,
medical writing and regulatory support for our clients' drug development
programs. Contract Research Organization Services also provides pharmaceutics
services, in parallel with the stages described above. This process involves
product dose form development, including the formulation of placebo and active
drug, clinical manufacturing and process development for commercial
manufacturing, the development of analytical methodology, execution of a high
number of analytical tests, as well as stability testing and clinical packaging.
As of December 31, 2000, including the conduct of business in the United States,
Contract Research Organization Services operated in 23 countries.
We believe that our involvement in the Contract Research Organization
business is a logical adjunct to our core institutional pharmacy business and
will serve to leverage our assets and strengths, including our access to a large
geriatric population and our ability to collect data for health and outcomes
management. We believe such assets and strengths will be of significant value in
developing new drugs targeted at diseases of the elderly and in meeting the Food
and Drug Administration's geriatric dosing and labeling requirements for all
prescription drugs provided to the elderly, as well as in documenting health
outcomes to payors and plan sponsors in a managed care environment.
PRODUCT AND MARKET DEVELOPMENT
Our Pharmacy Services and Contract Research Organization Services businesses
engage in a continuing program for the development of new services and for
marketing these services. While new service and new market development are
important factors for the growth of these businesses, we do not expect that any
new service or marketing efforts, including those in the developmental stage,
will require the investment of a significant portion of our assets.
MATERIALS/SUPPLY
We purchase pharmaceuticals through a wholesale distributor with whom we
have a prime vendor contract, at prices based primarily upon contracts
negotiated by us directly with pharmaceutical manufacturers. We also are a
member of industry buying groups which contract with manufacturers for
discounted prices based on volume which are passed through to us by our
wholesale distributor. We have numerous sources of supply available to us and
have not experienced any difficulty in obtaining pharmaceuticals or other
products and supplies used in the conduct of our business.
50
PATENTS, TRADEMARKS, AND LICENSES
Our business operations are not dependent upon any material patents,
trademarks or licenses.
SEASONALITY
Our business operations are not significantly impacted by seasonality.
INVENTORIES
We seek to maintain adequate on-site inventories of pharmaceuticals and
supplies to ensure prompt delivery service to our customers. Our primary
wholesale distributor also maintains local warehousing in most major geographic
markets in which we operate.
COMPETITION
By its nature, the long-term care pharmacy business is highly regionalized
and, within a given geographic region of operations, highly competitive. We are
the nation's largest independent provider of pharmaceuticals and related
pharmacy services to long-term care institutions such as skilled nursing
facilities, assisted living facilities, retirement centers and other
institutional health facilities. 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 compete in
these markets 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. 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 other reasons, reputation, references from
existing clients, the client's relationship with the Contract Research
Organization, the Contract Research Organization's experience with the
particular type of project and/or therapeutic area of clinical development, the
Contract Research Organization's ability to add value to the client's
development plan, the Contract Research Organization's financial stability and
the Contract Research Organization's ability to provide the full range of
services required by the client. We believe that we compete favorably in these
respects.
BACKLOG
Our Contract Research Organization Services segment reports backlog based on
anticipated net revenue from uncompleted projects that have been authorized by
the customer, through signed contracts, letter agreements and certain verbal
commitments. Once work begins on a project, net revenue is recognized over the
duration of the project. Using this method of reporting backlog, at
December 31, 2000, backlog was approximately $187.7 million, as compared to
approximately $146.5 million at December 31, 1999.
We believe that backlog may not be a consistent indicator of future results
because it can be affected by a number of factors, including the variable size
and duration of projects, many of which are performed over several years.
Additionally, projects may be terminated by the customer or delayed by
regulatory authorities. Moreover, the scope of work can change during the course
of a project.
CUSTOMERS
At December 31, 2000, our Pharmacy Services segment served 636,500 residents
in approximately 8,400 long-term care facilities and other institutional health
care settings.
Our Contract Research Organization Services segment serves a broad range of
clients, including most of the major multinational pharmaceutical and many of
the major biotechnology companies as well as smaller companies in the
pharmaceutical and biotechnology industries.
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No single client comprised more than 10% of consolidated revenues during
1999 or 2000. Our business would not be materially or adversely affected by the
loss of any one customer or small group of customers.
GOVERNMENT REGULATION
Institutional pharmacies, as well as the long-term care facilities they
serve, are subject to extensive federal, state and local regulation. These
regulations cover required qualifications, day-to-day operations, reimbursement
and the documentation of activities. In addition, our Contract Research
Organization Services are subject to substantial regulation, both domestically
and abroad. We continuously monitor the effects of regulatory activity on our
operations.
Licensure, Certification and Regulation. States generally require that
companies operating a pharmacy within the state be licensed by the state board
of pharmacy. We currently have pharmacy licenses for each pharmacy we operate.
In addition, we currently deliver prescription products from our licensed
pharmacies to four states in which we do not operate a pharmacy. These states
regulate out-of-state pharmacies, however, as a condition to the delivery of
prescription products to patients in these states. Our pharmacies hold the
requisite licenses applicable in these states. In addition, our pharmacies are
registered with the appropriate state and federal authorities pursuant to
statutes governing the regulation of controlled substances.
Client long-term care facilities are also separately required to be licensed
in the states in which they operate and, if serving Medicare or Medicaid
patients, must be certified to be in compliance with applicable program
participation requirements. Client facilities are also subject to the nursing
home reforms of the Omnibus Budget Reconciliation Act of 1987, which imposed
strict compliance standards relating to quality of care for nursing home
operations, including vastly increased documentation and reporting requirements.
In addition, pharmacists, nurses and other health care professionals who provide
services on our behalf are in most cases required to obtain and maintain
professional licenses and are subject to state regulation regarding professional
standards of conduct.
Federal and State Laws Affecting the Repackaging, Labeling, and Interstate
Shipping of Drugs. Federal and state laws impose certain repackaging, labeling,
and package insert requirements on pharmacies that repackage drugs for
distribution beyond the regular practice of dispensing or selling drugs directly
to patients at retail outlets. A drug repackager must register with the Food and
Drug Administration as a manufacturing establishment, and is subject to Food and
Drug Administration inspection for compliance with relevant good manufacturing
practices. We hold all required registrations and licenses, and we believe our
repackaging operations are in compliance with applicable state and federal good
manufacturing practices requirements. In addition, we believe we comply with all
relevant requirements of the Prescription Drug Marketing Act for the transfer
and shipment of pharmaceuticals.
State Laws Affecting Access to Services. Some states have enacted 'freedom
of choice' or 'any willing provider' requirements as part of their state
Medicaid programs or in separate legislation. These laws and regulations may
prohibit a third-party payor from restricting the pharmacies from which their
participants may purchase pharmaceuticals. Similarly, these laws may preclude a
nursing facility from requiring their patients to purchase pharmacy or other
ancillary medical services or supplies from particular providers that deal with
the nursing home. Such limitations may increase the competition which we face in
providing services to nursing facility residents.
Medicare and Medicaid. The nursing home pharmacy business has long operated
under regulatory and cost containment pressures from state and federal
legislation primarily affecting Medicaid and, to a lesser extent, Medicare.
As is the case for nursing home services generally, we receive reimbursement
from the Medicaid and Medicare programs, directly from individual residents
(private pay), and from other payors such as third-party insurers. We believe
that our reimbursement mix is in line with nursing home expenditures nationally.
For the year ended December 31, 2000, our payor mix was approximately as
follows: 46% private pay and long-term care facilities (including payments from
skilled nursing facilities on behalf of their Medicare-eligible residents), 43%
Medicaid, 3% Medicare (including direct billing for medical supplies) and 8%
other private sources (including the Contract Research Organization business).
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For those patients who are not covered by government-sponsored programs or
private insurance, we generally directly bill the patient or the patient's
responsible party on a monthly basis. Depending upon local market practices, we
may alternatively bill private patients through the nursing facility. Pricing
for private pay patients is based on prevailing regional market rates or 'usual
and customary' charges.
The Medicaid program is a cooperative federal-state program designed to
enable states to provide medical assistance to aged, blind, or disabled
individuals, or members of families with dependent children whose income and
resources are insufficient to meet the costs of necessary medical services.
State participation in the Medicaid program is voluntary. To become eligible to
receive federal funds, a state must submit a Medicaid 'state plan' to the
Secretary of the Department of Health and Human Services for approval. The
federal Medicaid statute specifies a variety of requirements which the state
plan must meet, including requirements relating to eligibility, coverage of
services, payment and administration.
Federal law and regulations contain a variety of requirements relating to
the furnishing of prescription drugs under Medicaid. First, states are given
authority, subject to certain standards, to limit or specify conditions for the
coverage of particular drugs. Second, federal Medicaid law establishes standards
affecting pharmacy practice. These standards include general requirements
relating to patient counseling and drug utilization review and more specific
standards for skilled nursing facilities and nursing facilities relating to drug
regimen reviews for Medicaid patients in such facilities. Recent regulations
clarify that, under federal law, a pharmacy is not required to meet the general
requirements for drugs dispensed to nursing facility residents if the nursing
facility complies with the drug regimen review standards. However, the
regulations indicate that states may nevertheless require pharmacies to comply
with the general requirements, regardless of whether the nursing facility
satisfies the drug regimen review requirement, and the states in which we
operate currently do require our pharmacies to comply with these general
standards. Third, federal regulations impose certain requirements relating to
reimbursement for prescription drugs furnished to Medicaid patients. Among other
things, regulations establish 'upper limits' on payment levels. In addition to
requirements imposed by federal law, states have substantial discretion to
determine administrative, coverage, eligibility and payment policies under their
state Medicaid programs that may affect our operations. For example, some states
have enacted 'freedom of choice' requirements that may prohibit a nursing
facility from requiring residents to purchase pharmacy or other ancillary
medical services or supplies from particular providers that deal with the
nursing home. Such limitations may increase the competition that we face in
providing services to nursing facility patients.
The Medicare program is a federally funded and administered health insurance
program for individuals age 65 and over or who are disabled. The Medicare
program consists of three parts: Part A, which covers, among other things,
inpatient hospital, skilled nursing facility, home health care and certain other
types of health care services; Medicare Part B, which covers physicians'
services, outpatient services, items and services provided by medical suppliers,
and a limited number of specifically designated prescription drugs; and Medicare
Part C, established by the Balanced Budget Act of 1997, which generally allows
beneficiaries to enroll in additional types of Managed Care programs beyond the
traditional Medicare fee for service program. Part C is generally referred to as
'Medicare+ Choice.' Many Medicare beneficiaries are being served through such
Medicare+ Choice organizations. In addition to the limited Medicare coverage for
specified products described above, some Medicare+ Choice organizations
providing health care benefits to Medicare beneficiaries offer expanded drug
coverage. The Medicare program establishes certain requirements for
participation of providers and suppliers in the Medicare program. Pharmacies are
not subject to such certification requirements. Skilled nursing facilities and
suppliers of medical equipment and supplies, however, are subject to specified
standards. Failure to comply with these requirements and standards may adversely
affect an entity's ability to participate in the Medicare program and receive
reimbursement for services provided to Medicare beneficiaries.
Medicare and Medicaid providers and suppliers are subject to inquiries or
audits to evaluate their compliance with requirements and standards set forth
under these government-sponsored programs. Such audits and inquiries, as well as
our own internal compliance programs, from time to time have identified
overpayment and other billing errors resulting in repayment or self-reporting.
We believe that our billing practices materially comply with applicable state
and federal requirements. However, there can be no assurance that such
requirements will not be interpreted in the future in a manner inconsistent with
our interpretation and application.
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The Medicare and Medicaid programs are subject to statutory and regulatory
changes, retroactive and prospective rate adjustments, administrative rulings,
executive orders and freezes and funding reductions, all of which may adversely
affect our business. There can be no assurance that payments for pharmaceutical
supplies and services under the Medicare and Medicaid programs will continue to
be based on current methodologies or remain comparable to present levels. In
this regard, we may be subject to rate reductions as a result of federal
budgetary or other legislation related to the Medicare and Medicaid programs. In
addition, various state Medicaid programs periodically experience budgetary
shortfalls which may result in Medicaid payment reductions and delays in payment
to us.
In addition, the failure, even if inadvertent, of our and/or our client
institutions to comply with applicable reimbursement regulations could adversely
affect our business. Additionally, changes in such reimbursement programs or in
regulations related thereto, such as reductions in the allowable reimbursement
levels, modifications in the timing or processing of payments and other changes
intended to limit or decrease the growth of Medicaid and Medicare expenditures,
could adversely affect our business.
Referral Restrictions. We are subject to federal and state laws which govern
financial and other arrangements between health care providers. These laws
include the federal anti-kickback statute, which prohibits, among other things,
knowingly and willfully soliciting, receiving, offering or paying any
remuneration directly or indirectly in return for or to induce the referral of
an individual to a person for the furnishing of any item or service for which
payment may be made in whole or in part under federal health care programs. Many
states have enacted similar statutes which are not necessarily limited to items
and services for which payment is made by federal health care programs.
Violations of these laws may result in fines, imprisonment, and exclusion from
the federal programs or other state-funded programs. Federal and state court
decisions interpreting these statutes are limited, but have generally construed
the statutes to apply if 'one purpose' of remuneration is to induce referrals or
other conduct within the statute.
Federal regulations establish 'safe harbors,' which give immunity from
criminal or civil penalties under the federal anti-kickback statute to parties
meeting all of the safe harbor requirements. While the failure to satisfy all
criteria for a safe harbor does not mean that an arrangement violates the
statute, it may subject the arrangement to review by the Health and Human
Resources Office of Inspector General, which is charged with enforcing the
federal anti-kickback statute. In response to requests the Office of Inspector
General issues written advisory opinions regarding the applicability of certain
aspects of the anti-kickback statute to specific arrangements or proposed
arrangements. Advisory opinions are binding as to the Secretary and the party
requesting the opinion.
The Office of Inspector General issues 'Fraud Alerts' identifying certain
questionable arrangements and practices which it believes may implicate the
federal anti-kickback statute. The Office of Inspector General has issued a
Fraud Alert providing its views on certain joint venture and contractual
arrangements between health care providers. The Office of Inspector General also
issued a Fraud Alert concerning prescription drug marketing practices that could
potentially violate the federal statute. Pharmaceutical marketing activities may
implicate the federal anti-kickback statute because drugs are often reimbursed
under the Medicaid program and, to a lesser extent, under the Medicare program.
According to the Fraud Alert, examples of practices that may implicate the
statute include certain arrangements under which remuneration is made to
pharmacists to recommend the use of a particular pharmaceutical product.
The Ethics in Patient Referrals Act ('Stark I'), effective January 1, 1992,
generally prohibits physicians from referring Medicare patients to clinical
laboratories for testing if the referring physician (or a member of the
physician's immediate family) has a 'financial relationship,' through ownership
or compensation with the laboratory. The Omnibus Budget Reconciliation Act of
1993 contains provisions commonly known as 'Stark II' expanding Stark I by
prohibiting physicians from referring Medicare and Medicaid patients to an
entity with which a physician has a 'financial relationship' for the furnishing
of certain items set forth in a list of 'designated health services,' including
outpatient prescription drugs, durable medical equipment, enteral supplies and
equipment and other services. Subject to certain exceptions, if such a financial
relationship exists, the entity is generally prohibited from claiming payment
for such services under the Medicare or Medicaid programs, and civil monetary
penalties may be assessed for each prohibited claim submitted.
54
On January 4, 2001, the Health Care Financing Administration released the
first part of the Stark II final rule. This final rule is divided into two
phases. Phase I focuses on the provisions related to prohibited referrals, the
general exception to ownership and compensation arrangement prohibitions and the
related definitions. Most of Phase I of the rulemaking will become effective
January 4, 2002. Phase II will cover the remaining portions of the statute,
including those pertaining to Medicaid. Phase I of the final rule eases certain
of the restrictions in the proposed rule. The final rule also, among other
things: recognizes an exception for referrals for residents covered under a Part
A skilled nursing facility stay; conforms certain physician supervision
requirements to the Health Care Financing Administration coverage and payment
policies for the specific services; clarifies the definitions of designated
health services and indirect financial relationships; and creates new exceptions
for indirect compensation arrangements and fair market value transactions.
Other provisions in the Social Security Act and in other federal and state
laws authorize the imposition of penalties, including criminal and civil fines
and exclusions from participation in Medicare and Medicaid, for false claims,
improper billing and other offenses.
In addition, a number of states have undertaken enforcement actions against
pharmaceutical manufacturers involving pharmaceutical marketing programs,
including programs containing incentives to pharmacists to dispense one
particular product rather than another. These enforcement actions arose under
state consumer protection laws which generally prohibit false advertising,
deceptive trade practices, and the like.
We believe our contract arrangements with other health care providers, our
pharmaceutical suppliers and our pharmacy practices are in compliance with
applicable federal and state laws. There can be no assurance that such laws will
not, however, be interpreted in the future in a manner inconsistent with our
interpretation and application.
Health Care Reform and Federal Budget Legislation. In recent years, federal
legislation has resulted in major changes in the health care system, and
included other provisions which could significantly affect healthcare providers,
either nationally or at the state level. The Balanced Budget Act of 1997 signed
into law on August 5, 1997, sought 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 the
Prospective Payment System for skilled nursing facilities under which facilities
are paid a federal per diem rate for virtually all covered skilled nursing
facility services, including ancillary services such as pharmacy. Payment is
determined by one of 44 resource utilization group categories. The Prospective
Payment System was implemented for cost reporting periods beginning on or after
July 1, 1998. Prior to the Prospective Payment System, skilled nursing
facilities under Medicare received cost-based reimbursement. In the Conference
Report accompanying the Balanced Budget Act of 1997, the conferees specifically
noted that, to ensure that the frail elderly residing in skilled nursing
facilities receive needed and appropriate medication therapy, the Secretary of
the Department of Health and Human Services is to consider, as part of the
Prospective Payment System for skilled nursing facilities, the results of
studies conducted by independent organizations, including those which examine
appropriate payment mechanism and payment rates for medications therapy, and
develop case mix adjustments that reflect the needs of such patients.
With respect to Medicare suppliers, the Balanced Budget Act of 1997 also
imposes limits on annual updates in payments to Medicare skilled nursing
facilities for routine services, and institutes consolidated billing for items
and services furnished to skilled nursing facility residents in a Medicare Part
A covered stay and 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 was
delayed indefinitely and administratively. (Later, this provision was repealed
except for services furnished to residents in a Part A skilled nursing facility
stay and to therapy services covered under Part B below.)
The Balanced Budget Act of 1997 also imposed numerous other cost savings
measures affecting Medicare skilled nursing facility services. On November 29,
1999, Congress enacted the 1999 Balanced Budget Refinement Act which was
designed to mitigate the effects of the Balanced Budget Act of 1997. The 1999
Balanced Budget Refinement Act allows skilled nursing facilities to choose to
receive the full federal Prospective Payment System rates on or after December
15, 1999 (based upon the fiscal year-end
55
of the skilled nursing facility) rather than participating in the three-year
transition period. Also, effective April 1, 2000, the 1999 Balanced Budget
Refinement Act temporarily increased the Prospective Payment System per diem
rates by 20% for 15 patient acuity categories, including medically complex
patients with generally higher pharmacy costs, pending appropriate revisions to
the Prospective Payment System. The increases will continue until the Health
Care Financing Administration implements a refined Resource Utilization Group
system that better accounts for medically-complex patients. The revised rates
may be more or less than the temporary 20% increase under the 1999 Balanced
Budget Refinement Act. The 1999 Balanced Budget Refinement Act also provides for
a 4% increase in payments otherwise determined under the Balanced Budget Act of
1997 for all patient acuity categories for fiscal years 2001 and 2002 (in
addition to the 20% increase in the 15 high acuity categories). We believe these
changes should improve the financial condition of skilled nursing facilities and
provide incentives to increase occupancy and Medicare admissions, particularly
among the more acutely ill.
The Medicare, Medicaid and SCHIP Benefits Improvement and Protection Act of
2000, signed into law December 21, 2000, includes provisions designed to further
mitigate the effects of reimbursement cuts contained in the Balanced Budget Act
of 1997. Among other things, the Medicare, Medicaid and SCHIP Benefits
Improvement and Protection Act of 2000 eliminates the scheduled reduction in the
skilled nursing facility market basket update in fiscal year 2001, implemented
in two phases. Specifically, the update rate for October 1, 2000 through March
31, 2001 is the market basket index ('MBI') increase minus 1 percentage point;
the update for the period April 1, 2001 through September 30, 2001 is the MBI
increase plus 1 percentage point. This increase will not be included when
determining payment rates for the subsequent period. In fiscal years 2002 and
2003, payment updates will equal the MBI increase minus 0.5 percentage point.
Temporary increases in the federal per diem rates under the 1999 Balanced Budget
Refinement Act will be in addition to these payment increases. Medicaid and
SCHIP Benefits Improvement and Protection Act of 2000 also increases payment for
the nursing component of each Resource Utilization Group category by 16.66% for
services furnished after April 1, 2001 and before October 1, 2002. Moreover, the
Medicare, Medicaid and SCHIP Benefits Improvement and Protection Act of 2000
further refines the consolidated billing requirements. Specifically, effective
January 1, 2001, the law limits consolidated billing requirements to items and
services furnished to skilled nursing facility residents in a Medicare Part A
covered stay and to therapy services covered under Part B. In other words, for
residents not covered under a Part A stay, skilled nursing facilities may choose
to bill for non-therapy Part B services and supplies, or they may elect to have
suppliers continue to bill Medicare directly for these services. The Medicare,
Medicaid and SCHIP Benefits Improvement and Protection Act of 2000 also modifies
the treatment of the rehabilitation patient categories to ensure that Medicare
payments for skilled nursing facility residents with 'ultra high' and 'high'
rehabilitation therapy needs are appropriate in relation to payments for
residents needing 'medium' or 'low' levels of therapy. Specifically, effective
for services furnished on or after April 1, 2001 and before implementation of
the refined Resource Utilization Group system (discussed above), the law
increases by 6.7% the federal per diem payments for 14 rehabilitation
categories, effective April 1, 2001. The 20% additional payment under the 1999
Balanced Budget Refinement Act for three rehabilitation categories is removed to
make this provision budget neutral. The Medicare, Medicaid and SCHIP Benefits
Improvement and Protection Act of 2000 also permits the Secretary of the
Department of Health and Human Services to establish a process for geographic
reclassification of skilled nursing facilities based upon the method used for
inpatient hospitals.
The Balanced Budget Act of 1997 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.
In October 2000, the Health Care Financing Administration issued final
supplier standards, which expanded certain operational requirements for
suppliers. In the final rule, the Health Care Financing Administration decided
to delay the surety bond rule pending 'extensive changes' to this requirement.
The Health Care Financing Administration states that it will consider public
comments received on the surety bond, primarily relating to costs, along with
its experience with surety bonds for home health agencies and the General
Accounting Office study of Medicare surety bonds, when it issues a proposed rule
on
56
surety bonds in the future. Until the Health Care Financing Administration
issues a final rule on this provision, there is no surety bond requirement for
suppliers.
With respect to Medicaid, the Balanced Budget Act of 1997 repealed the
'Boren Amendment' federal payment standard for Medicaid payments to Medicaid
nursing facilities effective October 1, 1997, giving states greater latitude in
setting payment rates for such facilities. There can be no assurance that budget
constraints or other factors will not cause states to reduce Medicaid
reimbursement to nursing facilities or that payments to nursing facilities will
be made on a timely basis. The law also grants states greater flexibility to
establish Medicaid managed care programs without the need to obtain a federal
waiver. Although these waiver projects generally exempt institutional care,
including NF and institutional pharmacy services, no assurances can be given
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. Our operations have not been adversely
affected in states with managed care programs in effect. We are unable to
predict what impact, if any, future Medicaid managed care systems might have on
our operations.
On January 12, 2001, the Secretary of the Department of Health and Human
Services issued final regulations to implement changes to the Medicaid 'upper
payment limit' requirements. The purpose of the rule is to stop states from
using certain accounting techniques to inappropriately obtain extra federal
Medicaid matching funds that are not necessarily spent on health care services
for Medicaid beneficiaries. Although the rule will be phased in over eight years
to reduce the adverse impact on certain states, the rule eventually could result
in decreased federal funding to state Medicaid programs, which, in turn, could
prompt certain states to reduce Medicaid reimbursements to providers, such as
our client nursing facilities and us.
Although it is unclear what the long-term impact of the Prospective Payment
System will be, since implementation the impact of the Prospective Payment
System has been evidenced by an erosion of census for some facilities, lower
acuity levels of residents in some nursing homes, lower pricing and an
unfavorable payor mix for us. While we expect that the impact of the Prospective
Payment System on the long-term care industry will continue to affect us and our
clients, it appears that the unfavorable operating trends experienced to date
have begun to stabilize. We anticipate that federal and state governments will
continue to review and assess alternate health care delivery systems, payment
methodologies and operational requirements for health care providers including
protection of confidential patient information. It is not possible to predict
the effect of elements of potential legislation or regulation, or the
interpretation or administration of such legislation or regulation, including
the adequacy and timeliness of payment to or costs required to be incurred by
client facilities, on our business. Accordingly, there can be no assurance that
any such future health care legislation or regulation will not adversely affect
our business.
The Medicare, Medicaid and SCHIP Benefits Improvement and Protection Act of
2000 also clarifies the Health Care Financing Administration policy with regard
to coverage of drugs and biologicals, and addresses certain payment issues.
Among other things, the Act specifies that payment for drugs under Part B must
be made on the basis of assignment. In other words, the provider must accept the
Medicare fee schedule amount as payment in full; beneficiaries are not liable
for any out-of-pocket costs other than standard deductible and coinsurance
payments. The Medicare, Medicaid and SCHIP Benefits Improvement and Protection
Act of 2000 also mandates a study by the General Accounting Office on payment
for drugs and biologicals under Medicare Part B, and requires the General
Accounting Office to report to Congress and the Secretary of the Department of
Health and Human Services within nine months of enactment on specific
recommendations for revised payment methodologies.
The Medicare, Medicaid and SCHIP Benefits Improvement and Protection Act of
2000 also addresses the Health Care Financing Administration's attempts to
modify the calculation of average wholesale prices of drugs, upon which Medicare
and Medicaid reimbursement is based. The federal government has been actively
investigating whether pharmaceutical manufacturers have been manipulating
average wholesale prices. In May 2000, the Health Care Financing Administration
proposed using new Department of Justice pricing data for updating Medicare
payment allowances for drugs and biologicals, although the Health Care Financing
Administration withdrew this proposal in November 2000, citing the likelihood of
Congressional action in this area. The Act establishes a temporary moratorium on
direct or indirect
57
reductions (but not increases) in payment rates in effect on January 1, 2001,
until the Secretary reviews the General Accounting Office report.
It is uncertain at this time what additional health care reform initiatives,
including a Medicare prescription drug benefit, 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. There can be no assurance that future health
care or budget legislation or other changes will not have an adverse effect on
our business.
Contract Research Organization Service. The preclinical, clinical,
manufacturing, analytical and clinical trial supply services performed by our
Contract Research Organization Services are subject to various regulatory
requirements designed to ensure the quality and integrity of the data or
products of these services.
The industry standard for conducting preclinical and laboratory testing is
embodied in the good laboratory practice and Investigational New Drugs
regulations administered by the Food & Drug Administration. Research conducted
at institutions supported by funds from the National Institutes of Health must
also comply with multiple project assurance agreements and guidelines
administered by the National Institute of Health and the Health and Human
Services Office of Research Protection. The requirements for facilities engaging
in pharmaceutical, analytical, manufacturing, clinical trial, supply
preparation, labeling and distribution are set forth in the good manufacturing
practice regulations and in good clinical practice regulations and guidelines.
Good clinical practice, Investigational New Drugs and good manufacturing
practice regulations have been mandated by the Food & Drug Administration and
the European Medicines Evaluation Agency (the 'EMEA') and have been adopted by
similar regulatory authorities in other countries. Good clinical practice,
Investigational New Drugs and good manufacturing practice regulations stipulate
requirements for facilities, equipment, supplies and personnel engaged in the
conduct of studies to which these regulations apply. The regulations require
that written, standard operating procedures are followed during the conduct of
studies and for the recording, reporting and retention of study data and
records. To help assure compliance, our Contract Research Organization Services
has a worldwide staff of experienced quality assurance professionals which
monitor ongoing compliance with good clinical practice, Investigational New
Drugs and good manufacturing practice regulations by auditing study data and
conducting regular inspections of testing procedures and facilities. The Food &
Drug Administration and many other regulatory authorities require that study
results and data submitted to such authorities are based on studies conducted in
accordance with good clinical practice and Investigational New Drugs provisions.
These provisions include:
complying with specific regulations governing the selection of qualified
investigators;
obtaining specific written commitments from the investigators;
disclosure of conflicts of interest;
verifying that patient informed consent is obtained;
instructing investigators to maintain records and reports;
verifying drug or device accountability; and
permitting appropriate governmental authorities access to data for their
review.
Records for clinical studies must be maintained for specific periods for
inspection by the Food & Drug Administration, European Union ('EU') or other
authorities during audits. Non-compliance with good clinical practice or
Investigational New Drugs requirements can result in the disqualification of
data collected during the clinical trial and may lead to debarment of an
investigator or Contract Research Organization if fraud is detected.
Contract Research Organization Services' standard operating procedures
related to clinical studies are written in accordance with regulations and
guidelines appropriate to a global standard with regional variations in the
regions where they will be used, thus helping to ensure compliance with good
clinical practice. Contract Research Organization Services also complies with
International Congress of Harmonization, EU good clinical practice regulations
and U.S. good clinical practice regulations for North America.
58
Our United States manufacturing, analytical and other laboratories are
subject to licensing and regulation under federal, state and local laws relating
to maintenance of appropriate processes and procedures under the Clinical
Laboratories Improvement Act, hazard communication and employee right-to-know
regulations, the handling and disposal of medical specimens and hazardous waste
and radioactive materials, as well as the safety and health of laboratory
employees. All of our laboratories are operated in material compliance with
applicable federal and state laws and regulations relating to maintenance of
trained personnel, proper equipment processes and procedures required by
Clinical Laboratories Improvement Act regulations of Health and Human Services,
and the storage and disposal of all laboratory specimens including the
regulations of the Environmental Protection Agency and the Occupational Safety
and Health Administration. Certain of our facilities are engaged in drug
development activities involving controlled substances. The use of, and
accountability for, controlled substances are regulated by the United States
Drug Enforcement Administration. Our relevant employees receive initial and
periodic training to ensure compliance with applicable hazardous material
regulations and health and safety guidelines.
Although we believe that we are currently in compliance in all material
respects with such federal, state and local laws, failure to comply could
subject us to denial of the right to conduct business, fines, criminal penalties
and other enforcement actions.
Finally, new final rules have been adopted by Health and Human Services
related to the responsibilities of Contract Research Organizations, other
healthcare entities and their business associates to maintain the privacy of
patient identifiable medical information. These rules are discussed in more
detail in the following section. We intend to comply with these rules when they
become effective and when compliance is required on February 28, 2003, and to
obtain all required patient authorizations.
Health Information Practices. The federal Health Insurance Portability Act
of 1996 authorized the Secretary of the federal Department of Health and Human
Services to issue standards for the privacy and security of medical records and
other individually identifiable patient data. Health Insurance Portability Act
of 1996 requirements apply to health plans, healthcare providers and healthcare
clearinghouses that transmit health information electronically. Regulations
adopted to implement Health Insurance Portability Act of 1996 also require that
business associates acting for or on behalf of these Health Insurance
Portability Act of 1996-covered entities be contractually obligated to meet
Health Insurance Portability Act of 1996 standards. Regulations setting
standards for the format of electronic transactions became effective in October
2000.
Although Health Insurance Portability Act of 1996 was intended ultimately to
reduce administrative expenses and burdens faced within the healthcare industry,
we believe the law will initially bring about significant and, in some cases,
costly changes. Health and Human Services has released two rules to date
mandating the use of new standards with respect to certain healthcare
transactions and health information. The first rule requires the use of uniform
standards for common healthcare transactions, such as healthcare claims
information, including pharmacy claims, plan eligibility, referral certification
and authorization, claims status, plan enrollment and disenrollment, payment and
remittance advice, plan premium payments and coordination of benefits, and it
establishes standards for the use of electronic signatures. Health and Human
Services finalized the new transaction standards on August 17, 2000, and we, as
well as our nursing facility clients, will be required to comply with them by
October 16, 2002.
Second, Health and Human Services developed new standards relating to the
privacy of individually identifiable health information. In general, these
regulations restrict the use and disclosure of medical records and other
individually identifiable health information held or disclosed by health care
providers and other affected entities in any form, whether communicated
electronically, on paper, or orally, subject only to limited exceptions. In
addition, the regulations provide patients with significant new rights to
understand and control how their health information is used. These regulations
do not preempt more stringent state laws and regulations that may apply to us.
The privacy standards were issued on December 28, 2000, with an effective date
of April 14, 2001, and a compliance date of April 14, 2003. In addition, Health
and Human Services amended the final rule to allow additional public comment on
the rule prior to the April 14, 2001 effective date. Congress and the Bush
Administration are taking a careful look at the regulations, but we do not know
whether they will change the privacy standards or their compliance date.
59
Rules governing the security of health information have been proposed but
have not yet been issued in final form. Once issued in final form, affected
parties will have approximately two years to be fully compliant. Sanctions for
failing to comply with Health Insurance Portability Act of 1996 include criminal
penalties and civil sanctions.
We are evaluating the effect of Health Insurance Portability Act of 1996. At
this time, we anticipate that we will be able to fully comply with those Health
Insurance Portability Act of 1996 requirements that have been adopted. However,
we cannot at this time estimate the cost of such compliance, nor can we estimate
the cost of compliance with standards that have not yet been finalized by Health
and Human Services or which may be revised. The new and proposed health
information standards are likely to have a significant effect on the manner in
which we handle health data and communicate with payors. We cannot assure you
that any inability to comply with existing or future standards, or the cost of
our compliance with such standards, will not have a material adverse effect on
our business, financial condition or results of operations.
Compliance Program and Corporate Integrity Agreement. The Office of
Inspector General has issued guidance to various sectors of the healthcare
industry to help providers design effective voluntary compliance programs to
prevent fraud, waste and abuse in healthcare programs, including Medicare and
Medicaid. In 1998, Omnicare voluntarily adopted a compliance program to assist
us in complying with applicable government regulations. In addition, in April
1998, Home Pharmacy Services, Inc., one of our wholly-owned subsidiaries,
entered into a settlement agreement with the U.S. Department of Justice and the
State of Illinois regarding certain practices involving refunds for returned
drugs. Under the Settlement Agreement, Home Pharmacy Services, Inc. paid $5.3
million in fines and restitution to the United States and Illinois, and Omnicare
and Home Pharmacy Services, Inc. agreed to a corporate integrity program for
four years, which includes annual reporting obligations. If Omnicare fails to
meet a material obligation under the agreement, the Office of Inspector General
may initiate proceedings to suspend or exclude Omnicare from participation in
federal health programs, including Medicare and Medicaid. The terms of the
corporate integrity agreement expire in April 2002. Neither Omnicare nor any of
its other operating units were implicated in the government investigation.
ENVIRONMENTAL MATTERS
In operating our facilities, historically we have not encountered any major
difficulties in effecting compliance with applicable pollution control laws. No
material capital expenditures for environmental control facilities are expected.
While we cannot predict the effect which any future legislation, regulations, or
interpretations may have upon our operations, we do not anticipate any changes
that would have a material adverse impact on our operations.
EMPLOYEES
At December 31, 2000, we employed approximately 9,300 persons (including
3,700 part-time employees), approximately 8,900 and 400 of whom were located
within and outside the United States, respectively.
LEGAL PROCEEDINGS
There are no pending legal or governmental proceedings to which we are a
party or to which any of our property is subject that we believe would have a
material adverse effect on us.
On July 26, 1999, Neighborcare Pharmacy Services, Inc., a subsidiary of
Genesis Health Ventures, Inc., filed suit in the Circuit Court for Baltimore
County, Maryland, against us and Heartland Health Services ('HHS'), a joint
venture in which one of our subsidiaries is a partner (the 'Action'). The Action
relates to certain master service agreements ('MSAs') between Neighborcare and
HCR/Manorcare ('Manorcare'), on the one hand, and us or HHS and Manorcare, on
the other, under which pharmacy services are provided to nursing homes and other
long-term care facilities operated by Manorcare. Neighborcare alleges that we
and HHS tortiously interfered with Neighborcare's purported rights under its
MSAs, and seeks compensatory damages allegedly of not less than $100 million
annually, injunctive relief canceling our contracts and HHS's contracts with
Manorcare and punitive damages. Neighborcare and
60
Manorcare are involved in an arbitration (the 'Arbitration') to determine the
validity and enforceability of Neighborcare's MSAs and the extent to which
either of those parties has breached the MSAs. We are advised by Manorcare that
during the pendency of the Arbitration, Neighborcare is continuing to provide
and be paid for pharmacy services under the MSAs, and that the Arbitration
hearing is currently scheduled for the summer of 2001. On November 4, 1999, we
and HHS moved to dismiss or, in the alternative, to stay the Action in its
entirety on the grounds that the Arbitration between Neighborcare and Manorcare
should resolve many, if not all, of the issues raised in the Action. On November
12, 1999, the Baltimore County Circuit Court stayed the Action pending
conclusion of the Arbitration, and we withdrew our motion to dismiss. Although
the outcome of the Action cannot be ascertained at this time and the results of
legal proceedings cannot be predicted, we believe, based on our knowledge and
understanding of the facts and the advice of our counsel, that there is no
reasonable basis in law or in fact for concluding that we have any liability in
the Action. Consequently, we believe that the resolution of the Action is not
likely to have a material adverse effect on our financial condition or results
of operations.
PROPERTIES
We have offices, distribution centers and other key operating facilities in
various locations in and outside the United States. A list of the more
significant facilities we operated as of December 31, 2000 follows. The owned
properties are held in fee and are not subject to any material encumbrance. We
consider all of these facilities to be in good operating condition and generally
to be adequate for present and anticipated needs.
LEASED AREA
OWNED AREA ----------------------------
LOCATION TYPE (SQ. FT.) (SQ. FT.) EXPIRATION DATE
-------- ---- --------- --------- ---------------
King of Prussia,
Pennsylvania. Offices -- 150,000 June 30, 2010
Fort Washington,
Pennsylvania........... Offices and Laboratories -- 120,000 January 14, 2012
Offices and Distribution
Des Plaines, Illinois.... Center -- 47,971 May 31, 2008
Offices and Distribution
Kirkland, Washington..... Center -- 44,744 April 14, 2003
Covington, Kentucky...... Offices -- 42,400 December 31, 2012
Offices and Distribution
Milwaukee, Wisconsin..... Center -- 41,440 March 31, 2009
Offices and Distribution
Perrysburg, Ohio......... Center 40,500 -- --
Offices and Distribution
Cheshire, Connecticut.... Center -- 38,400 June 30, 2010
Offices and Distribution
Florissant, Missouri..... Center 38,014 -- --
Offices and Distribution
Louisville, Kentucky..... Center -- 37,400 September 30, 2001
Offices and Distribution
Livonia, Michigan........ Center -- 32,824 May 31, 2007
Offices and Distribution
Hunt Valley, Maryland.... Center -- 31,600 October 31, 2001
Offices and Distribution
St. Louis, Missouri...... Center -- 30,400 June 30, 2001
Offices and Distribution
Kansas City, Missouri.... Center -- 29,948 October 21, 2009
Offices and Distribution
Decatur, Illinois........ Center 20,000 9,000 Month-to-Month
Offices and Distribution
Salt Lake City, Utah..... Center -- 28,400 January 31, 2009
Offices and Distribution
Portland, Oregon......... Center -- 28,150 April 30, 2008
Troy, New York........... Offices -- 25,124 March 31, 2002
Offices and Distribution
Cincinnati, Ohio......... Center -- 24,375 September 30, 2009
Chestnut Ridge, Offices and Distribution
New York............... Center -- 24,000 April 30, 2010
Oklahoma City, Offices and Distribution
Oklahoma............... Center -- 24,000 Month-to-Month
Offices and Distribution
Crystal, Minnesota....... Center -- 23,752 January 31, 2008
Offices and Distribution
Wadsworth, Ohio.......... Center -- 22,960 June 30, 2001
Offices and Distribution
Henderson, Kentucky...... Center -- 20,000 January 31, 2002
Offices and Distribution
Mentor, Ohio............. Center -- 20,000 Month-to-Month
Fort Washington,
Pennsylvania........... Offices and Laboratories -- 20,000 December 31, 2002
Greensburg, Offices and Distribution
Pennsylvania........... Center -- 20,000 February 3, 2002
(table continued on next page)
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(table continued from previous page)
LEASED AREA
OWNED AREA ----------------------------
LOCATION TYPE (SQ. FT.) (SQ. FT.) EXPIRATION DATE
-------- ---- --------- --------- ---------------
Spartanburg, Offices and Distribution
South Carolina......... Center 9,500 10,000 July 8, 2001
Offices and Distribution
Indianapolis, Indiana.... Center -- 18,740 January 1, 2011
Pittsburgh, Offices and Distribution
Pennsylvania........... Center -- 18,334 January 31, 2009
Offices and Distribution
Springfield, Ohio........ Center -- 18,000 December 12, 2003
Offices and Distribution
Rockford, Illinois....... Center -- 18,000 November 30, 2009
Offices and Distribution
Milford, Ohio............ Center -- 18,000 December 12, 2008
Offices and Distribution
Peabody, Massachusetts... Center -- 17,500 April 30, 2002
Offices and Distribution
Plainview, New York...... Center -- 17,500 June 30, 2005
Offices and Distribution
Malta, New York.......... Center -- 17,400 December 31, 2005
Offices and Distribution
Griffith, Indiana........ Center -- 17,100 May 31, 2002
Offices and Distribution
Springfield, Missouri.... Center -- 17,000 September 30, 2003
Offices and Distribution
Miami, Florida........... Center -- 16,665 May 1, 2004
Offices and Distribution
Des Plaines, Illinois.... Center -- 16,173 May 31, 2008
Pompton Plains, Offices and Distribution
New Jersey............. Center -- 16,041 August 1, 2001
Offices and Distribution
Englewood, Ohio.......... Center -- 15,000 January 31, 2004
Offices and Distribution
West Seneca, New York.... Center -- 15,000 November 30, 2001
West Boylston, Offices and Distribution
Massachusetts.......... Center -- 14,800 May 3, 2003
Fort Wright, Kentucky.... Offices -- 14,237 March 31, 2008
Offices and Distribution
Spokane, Washington...... Center -- 14,025 October 31, 2006
Offices and Distribution
Ashland, Kentucky........ Center -- 14,000 October 31, 2003
Offices and Distribution
Boca Raton, Florida...... Center -- 13,950 December 31, 2002
St. Petersburg, Offices and Distribution
Florida................ Center -- 13,245 August 31, 2001
Offices and Distribution
Rochester, New York...... Center -- 13,000 December 31, 2003
Offices and Distribution
Hallowell, Maine......... Center -- 13,000 September 30, 2002
Wessex, United Kingdom... Offices -- 12,000 June 30, 2016
Offices and Distribution
Alexandria, Louisiana.... Center -- 12,000 May 7, 2004
Offices and Distribution
Omaha, Nebraska.......... Center -- 11,450 May 31, 2001
Thomasville, Offices and Distribution
North Carolina......... Center -- 11,325 January 15, 2004
Offices and Distribution
South Elgin, Illinois.... Center -- 11,175 August 1, 2002
Rockford, Illinois....... Offices and Retail Outlet -- 11,100 February 28, 2004
Offices and Distribution
Peoria, Illinois......... Center -- 11,022 June 30, 2001
Offices and Distribution
Louisville, Kentucky..... Center -- 11,000 August 31, 2001
Offices and Distribution
Van Nuys, California..... Center -- 10,400 February 28, 2003
Cherry Hill, New Offices and Distribution
Jersey................. Center -- 10,000 November 1, 2009
62
MANAGEMENT
DIRECTORS AND EXECUTIVE OFFICERS
Our directors and executive officers and their respective ages and positions
are as follows:
NAME AGE POSITION WITH OMNICARE
---- --- ----------------------
Edward L. Hutton.................... 82 Chairman, Director
Joel F. Gemunder.................... 61 President, Director
Patrick E. Keefe.................... 55 Executive Vice President -- Operations, Director
Timothy E. Bien..................... 50 Senior Vice President -- Professional Services and
Purchasing, Director
David W. Froesel, Jr................ 49 Senior Vice President and Chief Financial Officer,
Director
Cheryl D. Hodges.................... 49 Senior Vice President and Secretary, Director
Peter Laterza....................... 43 Vice President and General Counsel
Charles H. Erhart, Jr............... 75 Director
Sandra E. Laney..................... 57 Director
Andrea R. Lindell, DNSc, RN......... 57 Director
Sheldon Margen, M.D................. 81 Director
Kevin J. McNamara................... 47 Director
John H. Timoney..................... 67 Director
Mr. E. L. Hutton is Chairman of Omnicare and has held this position since
May 1981. Additionally, he is Chairman and Chief Executive Officer and a
director of Chemed Corporation, Cincinnati, Ohio (a diversified public
corporation with interests in plumbing and drain cleaning services, janitorial
supplies and health care services) and has held these positions since November
1993 and April 1970, respectively. Previously, he was President and Chief
Executive Officer of Chemed, positions he had held from April 1970 to November
1993.
Mr. Gemunder is President of Omnicare and has held this position since May
1981. From January 1981 until July 1981, he served as Chief Executive Officer of
the partnership organized as a predecessor to Omnicare for the purpose of owning
and operating certain health care businesses of Chemed and Daylin, Inc., each
then a subsidiary of W.R. Grace & Co. Mr. Gemunder was an Executive Vice
President of Chemed and Group Executive of its Health Care Group from May 1981
through July 1981 and a Vice President of Chemed from 1977 until May 1981.
Mr. Gemunder is a director of Chemed and Ultratech Stepper, Inc. (a manufacturer
of photolithography equipment for the computer industry).
Mr. Keefe is Executive Vice President -- Operations of Omnicare and has held
this position since February 1997. Previously he was Senior Vice
President -- Operations since February 1994. From April 1993 to February 1994,
he was Vice President -- Operations of Omnicare. From April 1992 to April 1993,
he served as Vice President -- Pharmacy Management Programs of Diagnostek, Inc.,
Albuquerque, New Mexico (mail-service pharmacy and health care services). From
September 1990 to April 1992, Mr. Keefe served as President of HPI Health Care
Services, Inc., a subsidiary of Diagnostek, which was acquired from Omnicare in
August 1989. From August 1984 to September 1990, he served as Executive Vice
President of HPI.
Mr. Bien is Senior Vice President -- Professional Services and Purchasing of
Omnicare, a position he has held since May 1996. From May 1992 until May 1996,
he served as Vice President of Professional Services and Purchasing of Omnicare.
Prior to that, he was Vice President and a former owner of Home Pharmacy
Services, Inc. Care Pharmacy, a wholly-owned subsidiary that Omnicare acquired
in December 1988.
Mr. Froesel is Senior Vice President and Chief Financial Officer of
Omnicare. He has held that position since joining Omnicare in March 1996.
Mr. Froesel was Vice President of Finance and Administration at Mallinckrodt
Veterinary, Inc. from May 1993 to February 1996. From July 1989 to April 1993,
he was worldwide Corporate Controller of Mallinckrodt Medical Inc.
Ms. Hodges is Senior Vice President and Secretary of Omnicare and has held
these positions since February 1994. From August 1986 to February 1994, she was
Vice President and Secretary of Omnicare. From August 1982 to August 1986, she
served as Vice President -- Corporate and Investor Relations.
63
Mr. Laterza is Vice President and General Counsel of Omnicare. He has held
that position since joining Omnicare in July 1998. Mr. Laterza was Assistant
General Counsel of The Pittston Company from October 1993 to June 1998. From
January 1992 until September 1993 he was associated with the law firm of Gibson,
Dunn & Crutcher, and from October 1985 until December 1991 he was associated
with the law firm of Cravath, Swaine & Moore.
Mr. Erhart retired as President of W.R. Grace & Co., Columbia, Maryland
(international specialty chemicals, construction and packaging) in August 1990.
He had held this position since July 1989. From November 1986 to July 1989, he
was Chairman of the Executive Committee of Grace. From May 1981 to November
1986, he served as Vice Chairman and Chief Administrative Officer of Grace.
Mr. Erhart is a director of Chemed.
Ms. Laney is Senior Vice President and Chief Administrative Officer of
Chemed and has held these positions since November 1993 and May 1991,
respectively. From May 1984 to November 1993, she was a Vice President of
Chemed. Ms. Laney is a director of Chemed.
Dr. Lindell is Dean and Professor in the College of Nursing at the
University of Cincinnati, a position she has held since December 1990.
Dr. Lindell is also Associate Senior Vice President for Interdisciplinary
Education Programs for the Medical Center at the University of Cincinnati, since
July 1998. She also serves as Interim Dean of the College of Allied Health
Sciences at the University of Cincinnati. From August 1981 to August 1990,
Dr. Lindell served as Dean and a Professor in the School of Nursing at Oakland
University, Rochester, Michigan.
Dr. Margen is a Professor Emeritus in the School of Public Health,
University of California, Berkeley, a position he has held since May 1989. He
had served as a Professor of Public Health at the University of California,
Berkeley, since 1979.
Mr. McNamara is President of Chemed and has held this position since August
1994. From November 1993 to August 1994, Mr. McNamara was Executive Vice
President, Secretary and General Counsel of Chemed. Previously, from May 1992 to
November 1993, he held the positions of Vice Chairman, Secretary and General
Counsel of Chemed. From August 1986 to May 1992, he served as Vice President,
Secretary and General Counsel of Chemed. From November 1990 to December 1992,
Mr. McNamara served as an Executive Vice President and Chief Operating Officer
of Omnicare. He is a director of Chemed.
Mr. Timoney is a retired executive of Applied Bioscience International Inc.
(research organization serving the pharmaceutical and biotechnology industries)
('Applied Bioscience'), at which he held a number of positions from 1986 through
1996. From December 1995 through September 1996, he was Chief Executive Officer
of Clinix International, Inc., a wholly owned subsidiary of Applied Bioscience.
From June 1992 to September 1996, Mr. Timoney was Senior Vice Present of Applied
Bioscience. From September 1986 through June 1992, he was Vice President, Chief
Financial Officer, Secretary and Treasurer of Applied Bioscience. In addition,
from September 1986 through June 1995 he was a director of Applied Bioscience.
Mr. Timoney has also held financial and executive positions with IMS Health
Incorporated (market research firm serving the pharmaceutical and healthcare
industries), Chemed and Grace.
64
DESCRIPTION OF NOTES
You can find the definitions of certain terms used in this description under
the subheading 'Certain Definitions.' In this description, the word 'Omnicare'
refers only to Omnicare, Inc. and not to any of its subsidiaries.
The old notes were issued, and the exchange notes will be issued, under an
indenture dated as of March 20, 2001 between Omnicare, the Guarantors named
therein and SunTrust Bank as trustee. The following summary highlights certain
material terms of the indenture. Because this is a summary, it does not contain
all of the information that is included in the indenture. You should read the
entire indenture, including the definitions of certain terms used below, because
it, and not this summary, defines your rights as holders of notes. The indenture
is subject to and governed by the Trust Indenture Act of 1939, as amended.
Omnicare has previously filed a copy of the indenture with the SEC, and the
indenture is incorporated by reference as an exhibit to the registration
statement of which this prospectus forms a part.
Copies of the indenture and the registration rights agreement are available
as set forth below under ' -- Additional Information.' Certain defined terms
used in this description but not defined below under ' -- Certain Definitions'
have the meanings assigned to them in the indenture. The registered Holder of a
note will be treated as the owner of it for all purposes. Only registered
Holders will have rights under the indenture.
BRIEF DESCRIPTION OF THE EXCHANGE NOTES AND THE GUARANTEES
THE EXCHANGE NOTES
The exchange notes:
are general unsecured obligations of Omnicare;
are subordinated in right of payment to all existing and future Senior Debt
of Omnicare;
are pari passu in right of payment with any future senior subordinated
Indebtedness of Omnicare;
are unconditionally guaranteed by the Guarantors;
are senior to our 5% Convertible Subordinated Debentures due 2007; and
have terms that are substantially identical to the old notes, except that
the exchange notes will be registered under the Securities Act of 1933, and
therefore, generally will not be subject to transfer restrictions or
registration rights, and the provisions of the registration rights
agreement relating to Liquidated Damages on the outstanding old notes under
certain circumstances will be eliminated.
THE GUARANTEES
The exchange notes, like the old notes, are guaranteed by all of Omnicare's
Domestic Subsidiaries except the Excluded Subsidiaries.
Each guarantee of the exchange notes:
is a general unsecured obligation of the Guarantor;
is subordinated in right of payment to all existing and future Senior Debt
of that Guarantor; and
is pari passu in right of payment with any future senior subordinated
Indebtedness of that Guarantor.
As of March 31, 2001, Omnicare and the Guarantors had total Senior Debt of
approximately $62 million on a consolidated basis. An additional $438 million
was available to Omnicare for borrowing under the Credit Agreement as of that
date. Payments on the notes and under these guarantees will be subordinated to
the payment of Senior Debt. The indenture will permit us and the Guarantors to
incur additional Senior Debt.
All our Subsidiaries are Restricted Subsidiaries, except for certain
Subsidiaries designated as Unrestricted Subsidiaries. These Unrestricted
Subsidiaries held approximately 3.4% of our total consolidated assets as of
December 31, 2000 and accounted for less than 1.4% of our total consolidated
revenues for the twelve months ended December 31, 2000. In addition, under the
circumstances described
65
below under the subheading ' -- Certain Covenants -- Designation of Restricted
and Unrestricted Subsidiaries,' we will be able to designate other subsidiaries
as Unrestricted Subsidiaries. Our Unrestricted Subsidiaries will not be subject
to many of the restrictive covenants in the indenture. Our Unrestricted
Subsidiaries will not guarantee the notes.
PRINCIPAL, MATURITY AND INTEREST
Omnicare may issue notes with a maximum aggregate principal amount of $500.0
million, of which $375.0 million were issued in the private offering of the old
notes. Omnicare may issue additional notes from time to time. Any offering of
additional notes is subject to the covenant described below under the caption
' -- Certain Covenants -- Incurrence of Indebtedness and Issuance of Preferred
Stock.' The notes and any additional notes subsequently issued under the
indenture will be treated as a single class for all purposes under the
indenture, including, without limitation, waivers, amendments, redemptions and
offers to purchase. Omnicare will issue notes in denominations of $1,000 and
integral multiples of $1,000. The notes will mature on March 15, 2011.
Interest on the notes accrues at the rate of 8 1/8% per annum and is payable
semi-annually in arrears on March 15 and September 15, commencing on
September 15, 2001. Omnicare will make each interest payment to the Holders of
record on the immediately preceding March 1 and September 1.
Interest on the exchange notes will accrue from the last interest payment
date on which interest was paid on the old notes surrendered in exchange
therefor or, if no interest has been paid on the old notes, from the issue date
of the old notes. Interest will be computed on the basis of a 360-day year
comprised of twelve 30-day months.
METHODS OF RECEIVING PAYMENTS ON THE NOTES
If a Holder has given wire transfer instructions to Omnicare and the
trustee, all principal, interest and premium and Liquidated Damages, if any, on
that Holder's notes will be paid in accordance with those instructions. All
other payments on notes will be made at the office or agency of the paying agent
and registrar unless Omnicare elects to make interest payments by check mailed
to the Holders at their address set forth in the register of Holders.
PAYING AGENT AND REGISTRAR FOR THE NOTES
The trustee is paying agent and registrar. Omnicare may change the paying
agent or registrar without prior notice to the Holders of the notes, and
Omnicare or any of its Subsidiaries may act as paying agent or registrar.
TRANSFER AND EXCHANGE
A Holder may transfer or notes in accordance with the indenture. The
registrar and the trustee may require a Holder to furnish appropriate
endorsements and transfer documents in connection with a transfer of notes.
Holders will be required to pay all taxes due on transfer. Omnicare is not
required to transfer or exchange any note selected for redemption. Also,
Omnicare is not required to transfer or exchange any note for a period of 15
days before a selection of notes to be redeemed.
SUBSIDIARY GUARANTEES
The notes are guaranteed by each of Omnicare's current and future Domestic
Subsidiaries except the Excluded Subsidiaries. These Subsidiary Guarantees are
joint and several obligations of the Guarantors. Each Subsidiary Guarantee is
subordinated to the prior payment in full of all Senior Debt of that Guarantor.
The obligations of each Guarantor under its Subsidiary Guarantee are limited as
necessary to prevent that Subsidiary Guarantee from constituting a fraudulent
conveyance under applicable law. See 'Risk Factors -- Your Ability to Enforce
the Guarantees of the Notes May Be Limited.'
66
A Guarantor may not sell or otherwise dispose of all or substantially all of
its assets to, or consolidate with or merge with or into (whether or not such
Guarantor is the surviving Person), another Person, other than Omnicare or
another Guarantor, unless:
(1) immediately after giving effect to that transaction, no Default or Event
of Default exists; and
(2) subject to the provisions of the following paragraph, the Person
acquiring the property in any such sale or disposition or the Person
formed by or surviving any such consolidation or merger assumes all the
obligations of that Guarantor under the indenture, its Subsidiary
Guarantee and the registration rights agreement pursuant to a
supplemental indenture satisfactory to the trustee.
The Subsidiary Guarantee of a Guarantor will be released, and any Person
acquiring assets (including by way of merger or consolidation) or Capital Stock
of a Guarantor shall not be required to assume the obligations of any such
Guarantor:
(1) in connection with any sale or other disposition of all or substantially
all of the assets of that Guarantor (including by way of merger or
consolidation) to a Person that is not (either before or after giving
effect to such transaction) a Restricted Subsidiary, if the sale or
other disposition complies with the 'Asset Sale' provisions of the
indenture;
(2) in connection with any sale of all of the Capital Stock of a Guarantor
to a Person that is not (either before or after giving effect to such
transaction) a Restricted Subsidiary, if the sale complies with the
'Asset Sale' provisions of the indenture;
(3) if Omnicare designates any Restricted Subsidiary that is a Guarantor to
be an Unrestricted Subsidiary or an Excluded Subsidiary in accordance
with the requirements of the indenture; or
(4) if any Guarantor is otherwise no longer obligated to provide a
Subsidiary Guarantee pursuant to the indenture.
SUBORDINATION
The payment of principal, interest and premium and Liquidated Damages, if
any, on the notes is subordinated to the prior payment in full of all Senior
Debt of Omnicare, including Senior Debt incurred after the date of the
indenture.
The holders of Senior Debt will be entitled to receive payment in full of
all Obligations due in respect of Senior Debt (including interest accruing after
the commencement of any bankruptcy proceeding at the rate specified in the
applicable Senior Debt, whether or not allowable as a claim in such proceeding)
before the Holders of notes will be entitled to receive any payment with respect
to the notes (except that Holders of notes may receive and retain Permitted
Junior Securities and payments made from the trust described under ' -- Legal
Defeasance and Covenant Defeasance'), in the event of any distribution to
creditors of Omnicare:
(1) in a liquidation or dissolution of Omnicare;
(2) in a bankruptcy, reorganization, insolvency, receivership or similar
proceeding relating to Omnicare or its property;
(3) in an assignment for the benefit of creditors; or
(4) in any marshaling of Omnicare's assets and liabilities.
Omnicare also may not make any payment in respect of the notes (except in
Permitted Junior Securities or from the trust described under ' -- Legal
Defeasance and Covenant Defeasance') if:
(1) a payment default on Designated Senior Debt occurs and is continuing
beyond any applicable grace period; or
(2) any other default occurs and is continuing on Designated Senior Debt
that permits holders of that Designated Senior Debt to accelerate its
maturity and the trustee receives a notice of such default (a 'Payment
Blockage Notice') from Omnicare or the holders of any Designated Senior
Debt.
Payments on the notes may and will be resumed:
67
(1) in the case of a payment default, upon the date on which such default is
cured or waived or such Designated Senior Debt is discharged or paid in
full; and
(2) in the case of a nonpayment default, upon the earlier of the date on
which such nonpayment default is cured or waived or such Designated
Senior Debt is discharged or paid in full or 179 days after the date on
which the applicable Payment Blockage Notice is received, unless the
maturity of any Designated Senior Debt has been accelerated.
No new Payment Blockage Notice may be delivered unless and until:
(1) 360 days have elapsed since the delivery of the immediately prior
Payment Blockage Notice; and
(2) all scheduled payments of principal, interest and premium and Liquidated
Damages, if any, on the notes that have come due have been paid in full
in cash.
No nonpayment default that existed or was continuing on the date of delivery
of any Payment Blockage Notice to the trustee will be, or be made, the basis for
a subsequent Payment Blockage Notice unless such default has been cured or
waived for a period of not less than 90 days.
If the trustee or any Holder of the notes receives a payment in respect of
the notes (except in Permitted Junior Securities or from the trust described
under ' -- Legal Defeasance and Covenant Defeasance') when the payment is
prohibited by these subordination provisions, the trustee or the Holder, as the
case may be, will hold the payment in trust for the benefit of the holders of
Senior Debt. Upon the proper written request of the holders of Senior Debt, the
trustee or the Holder, as the case may be, will deliver the amounts in trust to
the holders of Senior Debt or their proper representative.
Omnicare must promptly notify holders of Senior Debt if payment of the notes
is accelerated because of an Event of Default.
As a result of the subordination provisions described above, in the event of
a bankruptcy, liquidation or reorganization of Omnicare, Holders of notes may
recover less ratably than creditors of Omnicare who are holders of Senior Debt.
See 'Risk Factors -- The Notes and the Subsidiary Guarantees Are Subordinated to
Senior Indebtedness.'
Failure by Omnicare to make any required payment in respect of the notes
when due or within any applicable grace period, whether or not occurring during
a payment blockage period, will result in an Event of Default under the
indenture and, thereafter, Holders of the notes will have the right to
accelerate the maturity thereof.
OPTIONAL REDEMPTION
At any time prior to March 15, 2004, Omnicare may on any one or more
occasions redeem up to 35% of the aggregate principal amount of notes issued
under the indenture at a redemption price of 108.125% of the principal amount,
plus accrued interest and Liquidated Damages, if any, to the redemption date,
with the net cash proceeds of one or more Equity Offerings; provided that:
(1) at least 65% of the aggregate principal amount of notes issued under the
indenture remains outstanding immediately after the occurrence of such
redemption (excluding notes held by Omnicare and its Subsidiaries); and
(2) the redemption occurs within 60 days of the date of the closing of such
Equity Offering.
Except pursuant to the preceding paragraph, the notes will not be redeemable
at Omnicare's option prior to March 15, 2006.
On or after March 15, 2006, Omnicare may redeem all or a part of the notes
upon not less than 30 nor more than 60 days' notice, at the redemption prices
(expressed as percentages of principal amount) set forth below plus accrued and
unpaid interest and Liquidated Damages, if any, on the notes redeemed, to the
applicable redemption date, if redeemed during the twelve-month period beginning
on March 15 of the years indicated below:
68
YEAR PERCENTAGE
---- ----------
2006..................................................... 104.063%
2007..................................................... 102.708%
2008..................................................... 101.354%
2009 and thereafter...................................... 100.000%
MANDATORY REDEMPTION
Except as set forth below under 'Repurchase at the Option of Holders,'
Omnicare is not required to make mandatory redemption or sinking fund payments
with respect to the notes.
REPURCHASE AT THE OPTION OF HOLDERS
CHANGE OF CONTROL
If a Change of Control occurs, each Holder of notes will have the right to
require Omnicare to repurchase all or any part (equal to $1,000 or an integral
multiple of $1,000) of that Holder's notes pursuant to a Change of Control Offer
on the terms set forth in the indenture. In the Change of Control Offer,
Omnicare will offer a Change of Control Payment in cash equal to 101% of the
aggregate principal amount of notes repurchased plus accrued and unpaid interest
and Liquidated Damages, if any, on the notes repurchased, to the date of
purchase. Within 30 days following any Change of Control, Omnicare will mail a
notice to each Holder describing the transaction or transactions that constitute
the Change of Control and offering to repurchase notes on the Change of Control
Payment Date specified in the notice, which date will be no earlier than 30 days
and no later than 60 days from the date such notice is mailed, pursuant to the
procedures required by the indenture and described in such notice. Omnicare will
comply with the requirements of Rule 14e-1 under the Securities Exchange Act of
1934, as amended (the 'Exchange Act'), and any other securities laws and
regulations thereunder to the extent those laws and regulations are applicable
in connection with the repurchase of the notes as a result of a Change of
Control. To the extent that the provisions of any securities laws or regulations
conflict with the Change of Control provisions of the indenture, Omnicare will
comply with the applicable securities laws and regulations and will not be
deemed to have breached its obligations under the Change of Control provisions
of the indenture by virtue of such conflict.
On the Change of Control Payment Date, Omnicare will, to the extent lawful:
(1) accept for payment all notes or portions of notes properly tendered
pursuant to the Change of Control Offer;
(2) deposit with the paying agent an amount equal to the Change of Control
Payment in respect of all notes or portions of notes properly tendered;
and
(3) deliver or cause to be delivered to the trustee the notes properly
accepted together with an officers' certificate stating the aggregate
principal amount of notes or portions of notes being purchased by
Omnicare.
The paying agent will promptly mail to each Holder of notes properly
tendered the Change of Control Payment for such notes, and the trustee will
promptly authenticate and mail (or cause to be transferred by book entry) to
each Holder a new note equal in principal amount to any unpurchased portion of
the notes surrendered, if any; provided that each new note will be in a
principal amount of $1,000 or an integral multiple of $1,000.
Prior to complying with any of the provisions of this 'Change of Control'
covenant, but in any event within 90 days following a Change of Control,
Omnicare will either repay all outstanding Senior Debt or obtain the requisite
consents, if any, under all agreements governing outstanding Senior Debt to
permit the repurchase of notes required by this covenant. Omnicare will publicly
announce the results of the Change of Control Offer on or as soon as practicable
after the Change of Control Payment Date.
The provisions described above that require Omnicare to make a Change of
Control Offer following a Change of Control will be applicable whether or not
any other provisions of the indenture are applicable. Except as described above
with respect to a Change of Control, the indenture does not contain provisions
69
that permit the Holders of the notes to require that Omnicare repurchase or
redeem the notes in the event of a takeover, recapitalization or similar
transaction.
Omnicare will not be required to make a Change of Control Offer upon a
Change of Control if a third party makes the Change of Control Offer in the
manner, at the times and otherwise in compliance with the requirements set forth
in the indenture applicable to a Change of Control Offer made by Omnicare and
purchases all notes properly tendered and not withdrawn under the Change of
Control Offer.
The definition of Change of Control includes a phrase relating to the direct
or indirect sale, lease, transfer, conveyance or other disposition of 'all or
substantially all' of the properties or assets of Omnicare and its Restricted
Subsidiaries taken as a whole. Although there is a limited body of case law
interpreting the phrase 'substantially all,' there is no precise established
definition of the phrase under applicable law. Accordingly, the ability of a
Holder of notes to require Omnicare to repurchase its notes as a result of a
sale, lease, transfer, conveyance or other disposition of less than all of the
assets of Omnicare and its Restricted Subsidiaries taken as a whole to another
Person or group may be uncertain.
ASSET SALES
Omnicare will not, and will not permit any of the Restricted Subsidiaries
to, consummate an Asset Sale unless:
(1) Omnicare (or the Restricted Subsidiary, as the case may be) receives
consideration at the time of the Asset Sale at least equal to the fair
market value of the assets or Equity Interests issued or sold or
otherwise disposed of;
(2) the fair market value is determined by Omnicare's Board of Directors and
evidenced by a resolution of the Board of Directors; and
(3) at least 75% of the consideration received in the Asset Sale by Omnicare
or such Restricted Subsidiary is in the form of cash, Cash Equivalents
and/or Replacement Assets. For purposes of this provision, each of the
following will be deemed to be cash:
(a) any liabilities, as shown on Omnicare's or such Restricted
Subsidiary's most recent balance sheet, of Omnicare or any
Restricted Subsidiary (other than contingent liabilities and
liabilities that are by their terms subordinated to the notes or any
Subsidiary Guarantee) that are assumed by the transferee of any such
assets and from which Omnicare or such Restricted Subsidiary is
released from further liability; and
(b) any securities, notes or other obligations received by Omnicare
or any such Restricted Subsidiary from such transferee that are
converted by Omnicare or such Restricted Subsidiary into cash
within 60 days of receipt, to the extent of the cash received in
that conversion.
Within 360 days after the receipt of any Net Proceeds from an Asset Sale,
Omnicare may apply those Net Proceeds at its option:
(1) to repay Senior Debt;
(2) to acquire all or substantially all of the assets of, or a majority of
the Voting Stock of, another Permitted Business;
(3) to make a capital expenditure;
(4) to acquire Replacement Assets; or
(5) to acquire other long-term assets that are used or useful in a Permitted
Business.
Pending the final application of any Net Proceeds, Omnicare may temporarily
invest the Net Proceeds in any manner that is not prohibited by the indenture.
Any Net Proceeds from Asset Sales that are not applied or invested as
provided in the preceding paragraph will constitute 'Excess Proceeds.' When the
aggregate amount of Excess Proceeds exceeds $20.0 million, Omnicare will make an
Asset Sale Offer to all Holders of notes and all holders of other Indebtedness
that is pari passu with the notes containing provisions similar to those set
forth in the indenture with respect to offers to purchase or redeem with the
proceeds of sales of assets to purchase the
70
maximum principal amount of notes and such other pari passu Indebtedness that
may be purchased out of the Excess Proceeds. The offer price in any Asset Sale
Offer will be equal to 100% of principal amount plus accrued and unpaid interest
and Liquidated Damages, if any, to the date of purchase, and will be payable in
cash. If any Excess Proceeds remain after consummation of an Asset Sale Offer,
Omnicare may use those Excess Proceeds for any purpose not otherwise prohibited
by the indenture. If the aggregate principal amount of notes and other pari
passu Indebtedness tendered into such Asset Sale Offer exceeds the amount of
Excess Proceeds, the trustee will select the notes and such other pari passu
Indebtedness to be purchased on a pro rata basis. Upon completion of each Asset
Sale Offer, the amount of Excess Proceeds will be reset at zero.
Omnicare will comply with the requirements of Rule 14e-1 under the Exchange
Act and any other securities laws and regulations thereunder to the extent those
laws and regulations are applicable in connection with each repurchase of notes
pursuant to an Asset Sale Offer. To the extent that the provisions of any
securities laws or regulations conflict with the Asset Sale provisions of the
indenture, Omnicare will comply with the applicable securities laws and
regulations and will not be deemed to have breached its obligations under the
Asset Sale provisions of the indenture by virtue of such conflict.
Certain agreements governing Omnicare's outstanding Senior Debt generally
prohibit Omnicare from purchasing notes, and also provide that certain
transactions constituting a change of control or asset sale event with respect
to Omnicare would constitute a default under these agreements. Any future credit
agreements or other agreements relating to Senior Debt to which Omnicare becomes
a party may contain similar restrictions and provisions. In the event a Change
of Control or Asset Sale occurs at a time when Omnicare is prohibited from
purchasing notes, Omnicare could seek the consent of its senior lenders to the
purchase of notes or could attempt to refinance the borrowings that contain such
prohibition. If Omnicare does not obtain such a consent or repay such
borrowings, Omnicare will remain prohibited from purchasing notes. In such case,
Omnicare's failure to purchase notes would constitute an Event of Default under
the indenture which would, in turn, constitute a default under such Senior Debt.
In such circumstances, the subordination provisions in the indenture would
likely restrict payments to the Holders of notes.
SELECTION AND NOTICE
If less than all of the notes are to be redeemed at any time, the trustee
will select notes for redemption as follows:
(1) if the notes are listed on any national securities exchange, in
compliance with the requirements of the principal national securities
exchange on which the notes are listed; or
(2) if the notes are not listed on any national securities exchange, on a
pro rata basis, by lot or by such method as the trustee deems fair and
appropriate.
No notes of $1,000 or less can be redeemed in part. Notices of redemption
will be mailed by first class mail at least 30 but not more than 60 days before
the redemption date to each Holder of notes to be redeemed at its registered
address, except that redemption notices may be mailed more than 60 days prior to
a redemption date if the notice is issued in connection with a defeasance of the
notes or a satisfaction and discharge of the indenture. Notices of redemption
may not be conditional.
If any note is to be redeemed in part only, the notice of redemption that
relates to that note will state the portion of the principal amount of that note
that is to be redeemed. A new note in principal amount equal to the unredeemed
portion of the original note will be issued in the name of the Holder of notes
upon cancellation of the original note. Notes called for redemption become due
on the date fixed for redemption. On and after the redemption date, interest
ceases to accrue on notes or portions of them called for redemption.
CERTAIN COVENANTS
COVENANT REMOVAL
From and after the first date on which both (a) the notes are rated
Investment Grade by each of Moody's Investor Service, Inc. ('Moody's') and
Standard & Poor's Ratings Group ('S&P') and (b) there
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shall not exist a Default or Event of Default under the indenture (a 'Rating
Event'), Omnicare and the Restricted Subsidiaries will no longer be subject to
the covenants described under 'Restricted Payments,' 'Incurrence of Indebtedness
and Issuance of Preferred Stock,' 'Dividend and Other Payment Restrictions
Affecting Subsidiaries,' 'Transactions with Affiliates,' 'Additional Subsidiary
Guarantees,' clause (4) of the first paragraph under 'Merger, Consolidation and
Sale of Assets' and 'Repurchase at the Option of Holders -- Asset Sales.' Upon
the occurrence of a Rating Event, the Subsidiary Guarantees of each of the
Guarantors will be automatically released.
There can be no assurance that a Rating Event will occur or, if one occurs,
that the notes will continue to maintain an Investment Grade rating. In
addition, at no time after a Rating Event will the provisions and covenants
contained in the indenture at the time of issuance of the notes that cease to be
applicable after the Rating Event be reinstated.
In the event Moody's or S&P is no longer in existence or issuing ratings,
such organization may be replaced by a nationally recognized statistical rating
organization (as defined in Rule 436 under the Securities Act of 1933)
designated by Omnicare with notice to the trustee and the foregoing provisions
will apply to the rating issued by the replacement rating agency.
RESTRICTED PAYMENTS
Omnicare will not, and will not permit any of its Restricted Subsidiaries
to, directly or indirectly:
(1) declare or pay any dividend or make any other payment or distribution on
account of Omnicare's or any Restricted Subsidiary's Equity Interests
(including, without limitation, any payment in connection with any
merger or consolidation involving Omnicare or any of its Restricted
Subsidiaries) or to the direct or indirect holders of Omnicare's or any
of its Restricted Subsidiaries' Equity Interests in their capacity as
such (other than dividends or distributions payable in Equity Interests
(other than Disqualified Stock) of Omnicare or to Omnicare or a
Restricted Subsidiary);
(2) purchase, redeem or otherwise acquire or retire for value (including,
without limitation, in connection with any merger or consolidation
involving Omnicare) any Equity Interests of Omnicare or any direct or
indirect parent of Omnicare;
(3) make any payment on or with respect to, or purchase, redeem, defease or
otherwise acquire or retire for value any Indebtedness that is
subordinated to the notes or the Subsidiary Guarantees, except a payment
of interest or principal at the Stated Maturity thereof; or
(4) make any Restricted Investment (all such payments and other actions set
forth in these clauses (1) through (4) above being collectively referred
to as 'Restricted Payments'),
unless, at the time of and after giving effect to such Restricted
Payment:
(1) no Default or Event of Default has occurred and is continuing or would
occur as a consequence of such Restricted Payment; and
(2) Omnicare would, at the time of such Restricted Payment and after giving
pro forma effect thereto as if such Restricted Payment had been made at
the beginning of the applicable four-quarter period, have been permitted
to incur at least $1.00 of additional Indebtedness pursuant to the Fixed
Charge Coverage Ratio test set forth in the first paragraph of the
covenant described below under the caption ' -- Incurrence of
Indebtedness and Issuance of Preferred Stock;' and
(3) such Restricted Payment, together with the aggregate amount of all other
Restricted Payments made by Omnicare and its Restricted Subsidiaries
after the date of the indenture (excluding Restricted Payments permitted
by clauses (2), (3), (4), (6), (7), (8), (9) and (10) of the next
succeeding paragraph) is less than the sum, without duplication, of:
(a) 50% of the Consolidated Net Income of Omnicare for the period (taken
as one accounting period) from January 1, 2001 to the end of
Omnicare's most recently ended fiscal quarter for which internal
financial statements are available at the time of such Restricted
Payment (or, if such Consolidated Net Income for such period is a
deficit, less 100% of such deficit), plus
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(b) 100% of the aggregate net cash proceeds received by Omnicare since
the date of the indenture as a contribution to its common equity
capital or from the issue or sale of Equity Interests of Omnicare
(other than Disqualified Stock) or from the issue or sale of
convertible or exchangeable Disqualified Stock or convertible or
exchangeable debt securities of Omnicare that have been converted
into or exchanged for such Equity Interests (other than Equity
Interests (or Disqualified Stock or debt securities) sold to a
Restricted Subsidiary), plus
(c) 100% of the aggregate net increase to Omnicare's stockholders equity
as a result of the conversion of Omnicare's 5% Convertible
Subordinated Debentures due 2007 into common stock of Omnicare, plus
(d) to the extent that any Restricted Investment that was made after the
date of the indenture is sold for cash or Cash Equivalents (or a
combination thereof) or otherwise liquidated or repaid for cash or
Cash Equivalents (or a combination thereof), the lesser of (i) the
return of capital with respect to such Restricted Investment (less
the cost of disposition, if any) and (ii) the initial amount of such
Restricted Investment, plus
(e) an amount equal to the sum of (x) the net reduction in Investments in
Unrestricted Subsidiaries resulting from cash dividends, repayments
of loans or advances or other transfers of assets, in each case to
Omnicare or any Restricted Subsidiary from Unrestricted Subsidiaries,
plus (y) the portion (proportionate to Omnicare's equity interest in
such Subsidiary) of the fair market value of the net assets of an
Unrestricted Subsidiary at the time such Unrestricted Subsidiary is
designated a Restricted Subsidiary, in each case since the date of
the indenture (provided, however, that the foregoing sum shall not
exceed, in the case of any Unrestricted Subsidiary, the amount of
Investments made since the date of the indenture by Omnicare or any
Restricted Subsidiary that were treated as Restricted Payments, and
provided, further, that no amount will be included under this clause
(e) to the extent it is already included in clauses (a), (b), (c) or
(d) above).
So long as no Default has occurred and is continuing or would be caused
thereby, the preceding provisions will not prohibit:
(1) the payment of any dividend within 60 days after the date of
declaration of the dividend, if at the date of declaration the dividend
payment would have complied with the provisions of the indenture;
(2) the redemption, repurchase, retirement, defeasance or other acquisition
of any subordinated Indebtedness of Omnicare or any Restricted
Subsidiary or of any Equity Interests of Omnicare in exchange for, or
out of the net cash proceeds of the substantially concurrent sale
(other than to a Restricted Subsidiary) of, Equity Interests of
Omnicare (other than Disqualified Stock); provided that the amount of
any such net cash proceeds that are utilized for any such redemption,
repurchase, retirement, defeasance or other acquisition will be
excluded from clause (3)(b) of the preceding paragraph;
(3) the defeasance, redemption, repurchase or other acquisition of
subordinated Indebtedness of Omnicare or any Restricted Subsidiary with
the net cash proceeds from an incurrence of Permitted Refinancing
Indebtedness;
(4) the payment of any dividend by a Restricted Subsidiary to the holders
of its Equity Interests on a pro rata basis;
(5) the repurchase, redemption or other acquisition or retirement for value
of any Equity Interests of Omnicare or any Restricted Subsidiary held
by any officer, director or employee of Omnicare or any Subsidiary of
Omnicare in connection with any management equity subscription
agreement, any compensation, retirement, disability, severance or
benefit plan or agreement, any stock option or incentive plan or
agreement, any employment agreement or any other similar plans or
agreements; provided that the aggregate price paid for all such
repurchased, redeemed, acquired or retired Equity Interests may not
exceed $10.0 million in any twelve-month period;
(6) the payment of dividends by Omnicare on its common stock in an
aggregate annual amount of up to $20.0 million;
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(7) the repurchase of any class of Capital Stock of a Restricted Subsidiary
(other than Disqualified Stock) if such repurchase is made pro rata
among all holders of such class of Capital Stock;
(8) the payment of any scheduled dividend or similar distribution, and any
scheduled repayment of the stated amount, liquidation preference or any
similar amount at final maturity or on any scheduled redemption or
repurchase date, in respect of any series of preferred stock or similar
securities of Omnicare or any Restricted Subsidiary (including
Disqualified Stock), provided that (a) such series of preferred stock
or similar securities was issued in compliance with the 'Incurrence of
Indebtedness and Issuance of Preferred Stock' covenant and (b) such
payments were scheduled to be paid in the original documentation
governing such series of preferred stock or other securities (it being
understood that the foregoing provisions of this clause (8) shall not
be deemed to permit the payment of any dividend or similar
distribution, or the payment of the stated amount, liquidation
preference or any similar amount, prior to the date originally
scheduled for the payment thereof);
(9) payments in lieu of fractional shares; and
(10) additional Restricted Payments pursuant to this clause (10) in an
aggregate amount (taken together with all other Restricted Payments
made pursuant to this clause (10)) not to exceed 2.5% of Consolidated
Assets of Omnicare as of the end of Omnicare's most recently completed
fiscal quarter for which internal financial statements are available at
the time of such Restricted Payment (with each such Restricted Payment
being valued as of the date made and without regard to subsequent
changes in value).
The amount of all Restricted Payments (other than cash) will be the fair
market value on the date of the Restricted Payment of the asset(s) or securities
proposed to be transferred or issued by Omnicare or such Restricted Subsidiary,
as the case may be, pursuant to the Restricted Payment. The fair market value of
any assets or securities that are required to be valued by this covenant will be
determined by the Board of Directors in good faith, whose determination with
respect thereto will be conclusive.
INCURRENCE OF INDEBTEDNESS AND ISSUANCE OF PREFERRED STOCK
Omnicare will not, and will not permit any of its Restricted Subsidiaries
to, directly or indirectly, create, incur, issue, assume, guarantee or otherwise
become directly or indirectly liable, contingently or otherwise, with respect to
(collectively, 'incur') any Indebtedness (including Acquired Debt), and Omnicare
will not issue any Disqualified Stock and will not permit any of its Restricted
Subsidiaries to issue any shares of preferred stock; provided, however, that
Omnicare and any Restricted Subsidiary may incur Indebtedness (including
Acquired Debt) and Omnicare may issue Disqualified Stock and any Restricted
Subsidiary may issue preferred stock (including Disqualified Stock) if the Fixed
Charge Coverage Ratio for Omnicare's most recently ended four full fiscal
quarters for which internal financial statements are available immediately
preceding the date on which such additional Indebtedness is incurred or such
Disqualified Stock or preferred stock is issued would have been at least 2.0 to
1, determined on a pro forma basis (including a pro forma application of the net
proceeds therefrom), as if the additional Indebtedness had been incurred or the
Disqualified Stock or preferred stock had been issued, as the case may be, at
the beginning of such four-quarter period.
The first paragraph of this covenant will not prohibit the following
(collectively, 'Permitted Debt'):
(1) the incurrence by Omnicare and its Restricted Subsidiaries of
additional Indebtedness and letters of credit under Credit Facilities
in an aggregate principal amount at any one time outstanding under this
clause (1) (with letters of credit being deemed to have a principal
amount equal to the maximum potential liability of Omnicare and its
Restricted Subsidiaries thereunder) not to exceed $750.0 million;
(2) Existing Indebtedness;
(3) the incurrence by Omnicare and the Guarantors of Indebtedness
represented by the notes and the related Subsidiary Guarantees to be
issued on the date of the indenture and the exchange notes and the
related Subsidiary Guarantees to be issued pursuant to the registration
rights agreement;
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(4) the incurrence by Omnicare or any of its Restricted Subsidiaries of
Indebtedness represented by Capital Lease Obligations, mortgage
financings or purchase money obligations, in each case, incurred for
the purpose of financing all or any part of the purchase price or cost
of construction or improvement of property, plant or equipment used in
the business of Omnicare or such Subsidiary, in an aggregate principal
amount, including all Permitted Refinancing Indebtedness incurred to
refund, refinance or replace any Indebtedness incurred pursuant to this
clause (4), not to exceed $25.0 million at any time outstanding;
(5) the incurrence by Omnicare or any of its Restricted Subsidiaries of
Permitted Refinancing Indebtedness in exchange for, or the net proceeds
of which are used to refund, refinance or replace Indebtedness (other
than intercompany Indebtedness) that was permitted by the indenture to
be incurred under the first paragraph of this covenant or clauses (2),
(3), (4), (10), (13), (14) or this clause (5) of this paragraph;
(6) the incurrence by Omnicare or any of its Restricted Subsidiaries of
intercompany Indebtedness between or among Omnicare and any of its
Restricted Subsidiaries; provided, however, that (i) any subsequent
issuance or transfer of Equity Interests that results in any such
Indebtedness being held by a Person other than Omnicare or a Restricted
Subsidiary and (ii) any sale or other transfer of any such Indebtedness
to a Person that is not either Omnicare or a Restricted Subsidiary,
will be deemed, in each case, to constitute an incurrence of such
Indebtedness by Omnicare or such Restricted Subsidiary, as the case may
be, that was not permitted by this clause (6);
(7) the incurrence by Omnicare or any of its Restricted Subsidiaries of
Hedging Obligations that are incurred for the purpose of fixing or
hedging (a) interest rate risk with respect to any Indebtedness that is
permitted by the terms of the indenture to be outstanding or
(b) exchange rate risk with respect to obligations under any agreement
or Indebtedness, or with respect to any asset, of such Person that is
payable or denominated in a currency other than U.S. Dollars;
(8) the guarantee by Omnicare or any of the Restricted Subsidiaries of
Indebtedness of Omnicare or a Restricted Subsidiary that was permitted
to be incurred by another provision of this covenant;
(9) the accrual of interest, the accretion or amortization of original
issue discount, the payment of interest on any Indebtedness in the form
of additional Indebtedness with the same terms, and the payment of
dividends on preferred stock (including Disqualified Stock) in the form
of additional shares of the same class of preferred stock (including
Disqualified Stock) will not be deemed to be an incurrence of
Indebtedness or an issuance of preferred stock (including Disqualified
Stock) for purposes of this covenant; provided, in each such case, that
the amount thereof is included in Fixed Charges of Omnicare as accrued;
(10) The issuance of Convertible Subordinated Indebtedness and/or the
issuance of Convertible Preferred Stock in an aggregate principal
amount (with the liquidation value of the Convertible Preferred Stock
being treated as its principal amount for this purpose) not to exceed
$375.0 million at any one time outstanding pursuant to this clause
(10), plus the issuance of any related securities issued by a
subsidiary trust or similar financing vehicle in connection therewith;
(11) Indebtedness of Omnicare or any Restricted Subsidiary consisting of
guarantees, indemnities, hold backs or obligations in respect of
purchase price adjustments in connection with the acquisition or
disposition of assets, including, without limitation, shares of Capital
Stock of Restricted Subsidiaries, or contingent payment obligations
incurred in connection with the acquisition or disposition of assets
which are contingent on the performance of the assets acquired or
disposed of;
(12) Indebtedness represented by (a) letters of credit for the account of
Omnicare or any Restricted Subsidiary or (b) other obligations to
reimburse third parties pursuant to any surety bond or other similar
arrangements, to the extent that such letters of credit and other
obligations, as the case may be, are intended to provide security for
workers' compensation claims, payment obligations in connection with
self-insurance, in connection with participation in government
reimbursement or other programs or other similar requirements in the
ordinary course of business;
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(13) the incurrence by Omnicare or any Restricted Subsidiary of Indebtedness
to the extent the proceeds thereof are used to purchase notes pursuant
to a Change of Control offer; and
(14) the incurrence by Omnicare or any of its Restricted Subsidiaries of
additional Indebtedness (which may include, but is not limited to,
Indebtedness of the types referred to in the foregoing clauses (1)
through (13)) in an aggregate principal amount (or accreted value, as
applicable) at any time outstanding, including all Permitted
Refinancing Indebtedness incurred to refund, refinance or replace any
Indebtedness incurred pursuant to this clause (14), not to exceed $50.0
million.
For purposes of determining compliance with this 'Incurrence of Indebtedness
and Issuance of Preferred Stock' covenant, in the event that an item of proposed
Indebtedness meets the criteria of more than one of the categories of Permitted
Debt described in clauses (1) through (14) above, or is entitled to be incurred
pursuant to the first paragraph of this covenant, Omnicare will be permitted to
classify and reclassify such item of Indebtedness in any manner that complies
with this covenant. Indebtedness under Credit Facilities outstanding on the date
on which notes are first issued and authenticated under the indenture will be
deemed to have been incurred on such date in reliance on the exception provided
by clause (1) of the definition of Permitted Debt.
NO SENIOR SUBORDINATED DEBT
Omnicare will not incur, create, issue, assume, guarantee or otherwise
become liable for any Indebtedness that is subordinate or junior in right of
payment to any Senior Debt of Omnicare and senior in any respect in right of
payment to the notes. No Guarantor will incur, create, issue, assume, guarantee
or otherwise become liable for any Indebtedness that is subordinate or junior in
right of payment to the Senior Debt of such Guarantor and senior in any respect
in right of payment to such Guarantor's Subsidiary Guarantee.
LIENS
Omnicare will not, and will not permit any of its Restricted Subsidiaries
to, directly or indirectly, create, incur, assume or suffer to exist any Lien of
any kind securing pari passu or subordinated Indebtedness, or trade payables on
any asset now owned or hereafter acquired, except Permitted Liens, unless
(i) in the case of any Lien securing pari passu Indebtedness, the notes are
secured by a Lien that is senior in priority to or pari passu with such Lien and
(ii) in the case of any Lien securing subordinated Indebtedness, the notes are
secured by a Lien that is senior in priority to such Lien.
DIVIDEND AND OTHER PAYMENT RESTRICTIONS AFFECTING RESTRICTED SUBSIDIARIES
Omnicare will not, and will not permit any of its Restricted Subsidiaries
to, directly or indirectly, create or permit to exist or become effective any
consensual encumbrance or restriction on the ability of any Restricted
Subsidiary to:
(1) pay dividends or make any other distributions on its Capital Stock to
Omnicare or any of its Restricted Subsidiaries, or with respect to any
other interest or participation in, or measured by, its profits, or pay
any indebtedness owed to Omnicare or any of its Restricted
Subsidiaries;
(2) make loans or advances to Omnicare or any of its Restricted
Subsidiaries; or
(3) transfer any of its properties or assets to Omnicare or any of its
Restricted Subsidiaries.
However, the preceding restrictions will not apply to encumbrances or
restrictions existing under or by reason of:
(1) agreements governing Existing Indebtedness and Credit Facilities as in
effect on the date of the indenture or, if not in effect on the date of
the indenture, the Credit Agreement (provided, that the terms of the
Credit Agreement are not materially less favorable to the noteholders
than the Existing Credit Facilities) and any amendments, modifications,
restatements, renewals, increases, supplements, refundings,
replacements or refinancings of those agreements; provided that the
amendments, modifications, restatements, renewals, increases,
supplements, refundings,
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replacement or refinancings are not materially more restrictive, taken
as a whole, with respect to such dividend and other payment
restrictions than those contained in those agreements on the date of
the indenture or in the Credit Agreement;
(2) the indenture, the notes and the Subsidiary Guarantees (or the notes
and the related guarantees);
(3) applicable law;
(4) any instrument governing Indebtedness or Capital Stock of a Person
acquired by Omnicare or any of its Restricted Subsidiaries as in effect
at the time of such acquisition (except to the extent such Indebtedness
or Capital Stock was incurred in connection with or in contemplation of
such acquisition), which encumbrance or restriction is not applicable
to any Person, or the properties or assets of any Person, other than
the Person, or the property or assets of the Person, so acquired,
provided that, in the case of Indebtedness, such Indebtedness was
permitted by the terms of the indenture to be incurred;
(5) customary non-assignment provisions in leases entered into in the
ordinary course of business;
(6) purchase money obligations for property acquired in the ordinary course
of business that impose restrictions on that property of the nature
described in clause (3) of the preceding paragraph;
(7) any agreement for the sale or other disposition of a Restricted
Subsidiary or any assets thereof that restricts distributions by that
Restricted Subsidiary pending the sale or other disposition;
(8) Permitted Refinancing Indebtedness, provided that the restrictions
contained in the agreements governing such Permitted Refinancing
Indebtedness are not materially more restrictive, taken as a whole,
than those contained in the agreements governing the Indebtedness being
refinanced;
(9) Liens securing Indebtedness otherwise permitted to be incurred under
the provisions of the covenant described above under the caption
' -- Liens' that limit the right of the debtor to dispose of the assets
subject to such Liens;
(10) provisions with respect to the disposition or distribution of assets or
property in joint venture agreements, assets sale agreements, stock
sale agreements and other similar agreements entered into in the
ordinary course of business;
(11) restrictions imposed in connection with a financing transaction
involving a sale or other disposition of accounts receivable and
related assets (including, without limitation, in connection with a
securitization or similar financing) or in connection with a financing
involving a subsidiary trust or similar financing vehicle that is
permitted by the 'Incurrence of Indebtedness and Issuance of Preferred
Stock' covenant, provided, that such restrictions do not materially
adversely affect Omnicare's ability to pay interest and principal on
the notes when due; and
(12) restrictions on cash or other deposits or net worth imposed by
customers under contracts entered into in the ordinary course of
business or imposed by governmental agencies or authorities.
MERGER, CONSOLIDATION OR SALE OF ASSETS
Omnicare may not, directly or indirectly: (1) consolidate or merge with or
into another Person (whether or not Omnicare is the surviving corporation); or
(2) sell, assign, transfer, convey or otherwise dispose of all or substantially
all of the properties or assets of Omnicare and its Restricted Subsidiaries
taken as a whole, in one or more related transactions, to another Person;
unless:
(1) either: (a) Omnicare is the surviving corporation; or (b) the Person
formed by or surviving any such consolidation or merger (if other than
Omnicare) or to which such sale, assignment, transfer, conveyance or
other disposition has been made is a corporation organized or existing
under the laws of the United States, any state of the United States or
the District of Columbia;
(2) the Person formed by or surviving any such consolidation or merger (if
other than Omnicare) or the Person to which such sale, assignment,
transfer, conveyance or other disposition has been made assumes all the
obligations of Omnicare under the notes, the indenture and the
registration rights agreement pursuant to agreements reasonably
satisfactory to the trustee;
77
(3) immediately after such transaction, on a pro forma basis giving effect
to such transaction or series of transactions (and treating any
obligation of Omnicare or any Restricted Subsidiary incurred in
connection with or as a result of such transaction or series of
transactions as having been incurred at the time of such transaction),
no Default or Event of Default exists; and
(4) Omnicare or the Person formed by or surviving any such consolidation or
merger (if other than Omnicare), or to which such sale, assignment,
transfer, conveyance or other disposition has been made:
(a) will, on a pro forma basis giving effect to such transaction or
series of transactions, have Consolidated Net Worth immediately
after the transaction equal to or greater than the Consolidated Net
Worth of Omnicare immediately preceding the transaction; and
(b) will, on the date of such transaction after giving pro forma
effect thereto and any related financing transactions as if the
same had occurred at the beginning of the applicable four-
quarter period, be permitted to incur at least $1.00 of
additional Indebtedness pursuant to the Fixed Charge Coverage
Ratio test set forth in the first paragraph of the covenant
described above under the caption ' -- Incurrence of Indebtedness
and Issuance of Preferred Stock.'
In addition, Omnicare may not, directly or indirectly, lease all or
substantially all of the properties or assets of Omnicare and its Restricted
Subsidiaries, taken as a whole, in one or more related transactions, to any
other Person. This 'Merger, Consolidation or Sale of Assets' covenant will not
apply to a sale, assignment, transfer, conveyance or other disposition of assets
between or among Omnicare and any of the Guarantors.
Upon any consolidation or merger, or any sale, assignment, transfer,
conveyance, transfer or other disposition of all or substantially all of the
properties or assets of Omnicare and its Restricted Subsidiaries, taken as a
whole, in accordance with the foregoing provisions, the successor Person formed
by such consolidation or into which Omnicare is merged or to which such sale,
assignment, transfer, conveyance or other disposition is made, shall succeed to,
and be substituted for, and may exercise every right and power of, Omnicare
under the indenture with the same effect as if such successor had been named as
Omnicare therein. When a successor assumes all the obligations of its
predecessor under the indenture and the notes following a consolidation or
merger, or any sale, assignment, transfer, conveyance, transfer or other
disposition of 90% or more of the assets of the predecessor in accordance with
the foregoing provisions, the predecessor shall be released from those
obligations.
DESIGNATION OF RESTRICTED AND UNRESTRICTED SUBSIDIARIES
The Board of Directors may designate any Restricted Subsidiary to be an
Unrestricted Subsidiary if that designation would not cause a Default. If a
Restricted Subsidiary is designated as an Unrestricted Subsidiary, the aggregate
fair market value of all outstanding Investments owned by Omnicare and its
Restricted Subsidiaries in the Subsidiary so designated will be deemed to be an
Investment made as of the time of the designation and will reduce the amount
available for Restricted Payments under the first paragraph of the covenant
described above under the caption ' -- Restricted Payments' or Permitted
Investments, as determined by Omnicare. That designation will only be permitted
if the Investment would be permitted at that time and if the Restricted
Subsidiary otherwise meets the definition of an Unrestricted Subsidiary. The
Board of Directors may re-designate any Unrestricted Subsidiary to be a
Restricted Subsidiary if the redesignation would not cause a Default.
TRANSACTIONS WITH AFFILIATES
Omnicare will not, and will not permit any of its Restricted Subsidiaries
to, make any payment to, or sell, lease, transfer or otherwise dispose of any of
its properties or assets to, or purchase any property or assets from, or enter
into or make or amend any transaction, contract, agreement, understanding, loan,
advance or guarantee with, or for the benefit of, any Affiliate (each, an
'Affiliate Transaction'), unless:
(1) the Affiliate Transaction is on terms that are no less favorable to
Omnicare or the relevant Restricted Subsidiary than those that would
have been obtained in a comparable transaction by Omnicare or such
Restricted Subsidiary with an unrelated Person; and
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(2) Omnicare delivers to the trustee:
(a) with respect to any Affiliate Transaction or series of related
Affiliate Transactions involving aggregate consideration in excess
of $5.0 million, a resolution of the Board of Directors set forth in
an officers' certificate certifying that such Affiliate Transaction
complies with this covenant and that such Affiliate Transaction has
been approved by a majority of the disinterested members of the
Board of Directors; and
(b) with respect to any Affiliate Transaction or series of related
Affiliate Transactions involving aggregate consideration in
excess of $10.0 million, an opinion as to the fairness to the
Holders of such Affiliate Transaction from a financial point of
view issued by an accounting, appraisal or investment banking
firm of national standing in the United States.
The following items will not be deemed to be Affiliate Transactions and,
therefore, will not be subject to the provisions of the prior paragraph:
(1) directors' fees, indemnification and similar arrangements, consulting
fees, employee salaries, bonuses or employment agreements, compensation,
retirement, disability, severance or employee benefit arrangements and
incentive arrangements with, and loans and advances to, any officer,
director or employee in the ordinary course of business,
(2) performance of all agreements in existence on the date of the indenture
and any modification thereto or any transaction contemplated thereby in
any replacement agreement therefor so long as such modification or
replacement is not materially more disadvantageous to Omnicare or any of
its Restricted Subsidiaries than the original agreement in effect on the
date of the indenture;
(3) transactions in connection with a financing transaction involving a sale
or other disposition of accounts receivable and related assets
(including, without limitation, in connection with a securitization or
similar financing) or in connection with a financing involving a
subsidiary trust or similar financing vehicle that is permitted by the
'Incurrence of Indebtedness and Issuance of Preferred Stock' covenant;
(4) transactions in the ordinary course of business with any joint venture
that is otherwise permitted by the indenture; provided, that such joint
venture is between or among Omnicare and/or any of its Subsidiaries on
the one hand and third parties that are not otherwise Affiliates of
Omnicare on the other hand;
(5) transactions between or among Omnicare and/or its Restricted
Subsidiaries;
(6) transactions with a Person (other than an Unrestricted Subsidiary) that
is an Affiliate of Omnicare solely because Omnicare or a Restricted
Subsidiary owns an Equity Interest in, or controls, such Person;
(7) sales of Equity Interests (other than Disqualified Stock) to Affiliates
of Omnicare; and
(8) Restricted Payments that are permitted by the provisions of the
indenture described above under the caption ' -- Restricted Payments.'
ADDITIONAL SUBSIDIARY GUARANTEES
If Omnicare or any of its Restricted Subsidiaries acquires or creates
another Domestic Subsidiary after the date of the indenture, then that newly
acquired or created Domestic Subsidiary (other than an Excluded Subsidiary) will
become a Guarantor and execute a supplemental indenture and deliver an opinion
of counsel satisfactory to the trustee within 10 business days after the end of
the fiscal quarter in which it was acquired or created.
BUSINESS ACTIVITIES
Omnicare will not, and will not permit any Restricted Subsidiary to, engage
in any business other than Permitted Businesses, except to such extent as would
not be material to Omnicare and its Restricted Subsidiaries taken as a whole.
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REPORTS
Whether or not required by the SEC, so long as any notes are outstanding,
Omnicare will furnish to the Holders of notes, within the time periods specified
in the SEC's rules and regulations:
(1) all quarterly and annual financial information that would be required to
be contained in a filing with the SEC on Forms 10-Q and 10-K if Omnicare
were required to file such Forms, including a 'Management's Discussion
and Analysis of Financial Condition and Results of Operations' and, with
respect to the annual information only, a report on the annual financial
statements by Omnicare's certified independent accountants; and
(2) all current reports that would be required to be filed with the SEC on
Form 8-K if Omnicare were required to file such reports.
In addition, whether or not required by the SEC, Omnicare will file a copy of
all of the information and reports referred to in clauses (1) and (2) above with
the SEC for public availability within the time periods specified in the SEC's
rules and regulations (unless the SEC will not accept such a filing) and make
such information available to securities analysts and prospective investors upon
request. In addition, Omnicare and the Subsidiary Guarantors have agreed that,
for so long as any notes remain outstanding, they will furnish to the Holders
and to securities analysts and prospective investors, upon their request, the
information required to be delivered pursuant to Rule 144A(d)(4) under the
Securities Act of 1933.
EVENTS OF DEFAULT AND REMEDIES
Each of the following is an Event of Default:
(1) default for 30 days in the payment when due of interest on, or
Liquidated Damages with respect to, the notes whether or not prohibited
by the subordination provisions of the indenture;
(2) default in payment when due of the principal of, or premium, if any, on
the notes, whether or not prohibited by the subordination provisions of
the indenture;
(3) failure by Omnicare or any of its Restricted Subsidiaries to comply with
the provisions described under the captions ' -- Repurchase at the
Option of Holders -- Change of Control,' ' -- Repurchase at the Option
of Holders -- Asset Sales,' or ' -- Certain Covenants -- Merger,
Consolidation or Sale of Assets;'
(4) failure by Omnicare or any of its Restricted Subsidiaries for 60 days
after notice to comply with any of the other agreements in the
indenture;
(5) default under any mortgage, indenture or instrument under which there
may be issued or by which there may be secured or evidenced any
Indebtedness for money borrowed by Omnicare or any of its Restricted
Subsidiaries (or the payment of which is guaranteed by Omnicare or any
of its Restricted Subsidiaries) whether such Indebtedness or guarantee
now exists, or is created after the date of the indenture, if that
default:
(a) is caused by a failure to pay principal of, or interest or premium,
if any, on such Indebtedness prior to the expiration of the grace
period provided in such Indebtedness on the date of such default (a
'Payment Default'); or
(b) results in the acceleration of such Indebtedness prior to its
express maturity,
and, in each case, the principal amount of any such Indebtedness,
together with the principal amount of any other such Indebtedness
under which there has been a Payment Default or the maturity of
which has been so accelerated, aggregates $25.0 million or more;
(6) failure by Omnicare or any of its Restricted Subsidiaries to pay final,
non-appealable judgments aggregating in excess of $25.0 million that are
not covered by insurance or as to which an insurer has not acknowledged
coverage in writing, which judgments are not paid, discharged or stayed
for a period of 60 days;
(7) except as permitted by the indenture, any Subsidiary Guarantee shall be
held in any final, non-appealable judicial proceeding to be
unenforceable or invalid or shall cease for any reason to be in full
force and effect or any Guarantor, or any Person acting on behalf of any
Guarantor, shall
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deny or disaffirm its obligations under its Subsidiary Guarantee (unless
such Guarantor could be designated as an Excluded Subsidiary); and
(8) certain events of bankruptcy or insolvency described in the indenture
with respect to Omnicare or any of its Restricted Subsidiaries that is a
Significant Subsidiary.
In the case of an Event of Default arising from certain events of bankruptcy
or insolvency with respect to Omnicare, all outstanding notes will become due
and payable immediately without further action or notice. If any other Event of
Default occurs and is continuing, the trustee or the Holders of at least 25% in
principal amount of the then outstanding notes may declare all the notes to be
due and payable immediately.
Holders of the notes may not enforce the indenture or the notes except as
provided in the indenture. Subject to certain limitations, Holders of a majority
in principal amount of the then outstanding notes may direct the trustee in its
exercise of any trust or power. The trustee may withhold from Holders of the
notes notice of any continuing Default or Event of Default if it determines that
withholding notice is in their interest, except a Default or Event of Default
relating to the payment of principal or interest or Liquidated Damages.
The Holders of a majority in aggregate principal amount of the notes then
outstanding by notice to the trustee may on behalf of the Holders of all of the
notes waive any existing Default or Event of Default and its consequences under
the indenture except a continuing Default or Event of Default in the payment of
interest or premium or Liquidated Damages on, or the principal of, the notes.
Omnicare is required to deliver to the trustee annually a statement
regarding compliance with the indenture. Upon becoming aware of any Default or
Event of Default, Omnicare is required to deliver to the trustee a statement
specifying such Default or Event of Default.
NO PERSONAL LIABILITY OF DIRECTORS, OFFICERS, EMPLOYEES AND STOCKHOLDERS
No director, officer, employee, incorporator or stockholder of Omnicare or
any Guarantor, as such, will have any liability for any obligations of Omnicare
or the Guarantors under the notes, the indenture, the Subsidiary Guarantees, or
for any claim based on, in respect of, or by reason of, such obligations or
their creation. Each Holder of notes by accepting a note waives and releases all
such liability. The waiver and release are part of the consideration for
issuance of the notes. The waiver may not be effective to waive liabilities
under the federal securities laws.
LEGAL DEFEASANCE AND COVENANT DEFEASANCE
Omnicare may, at its option and at any time, elect to have all of its
obligations discharged with respect to the outstanding notes and all obligations
of the Guarantors discharged with respect to their Subsidiary Guarantees ('Legal
Defeasance') except for:
(1) the rights of Holders of outstanding notes to receive payments in
respect of the principal of, or interest or premium and Liquidated
Damages, if any, on such notes when such payments are due from the trust
referred to below;
(2) Omnicare's obligations with respect to the notes concerning issuing
temporary notes, registration of notes, mutilated, destroyed, lost or
stolen notes and the maintenance of an office or agency for payment and
money for security payments held in trust;
(3) the rights, powers, trusts, duties and immunities of the trustee, and
Omnicare's and the Guarantor's obligations in connection therewith; and
(4) the Legal Defeasance provisions of the indenture.
In addition, Omnicare may, at its option and at any time, elect to have the
obligations of Omnicare and the Guarantors released with respect to certain
covenants that are described in the indenture ('Covenant Defeasance') and
thereafter any omission to comply with those covenants will not constitute a
Default or Event of Default with respect to the notes. In the event Covenant
Defeasance occurs, certain events (not including non-payment, bankruptcy,
receivership, rehabilitation and insolvency events) described
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under ' -- Events of Default and Remedies' will no longer constitute an Event of
Default with respect to the notes.
In order to exercise either Legal Defeasance or Covenant Defeasance:
(1) Omnicare must irrevocably deposit with the trustee, in trust, for the
benefit of the Holders of the notes, cash in U.S. dollars, non-callable
Government Securities, or a combination of cash in U.S. dollars and
non-callable Government Securities, in amounts as will be sufficient, in
the opinion of a nationally recognized firm of independent public
accountants, to pay the principal of, or interest and premium and
Liquidated Damages, if any, on the outstanding notes on the stated
maturity or on the applicable redemption date, as the case may be, and
Omnicare must specify whether the notes are being defeased to maturity
or to a particular redemption date;
(2) in the case of Legal Defeasance, Omnicare has delivered to the trustee
an opinion of counsel reasonably acceptable to the trustee confirming
that (a) Omnicare has received from, or there has been published by, the
Internal Revenue Service a ruling or (b) since the date of the
indenture, there has been a change in the applicable federal income tax
law, in either case to the effect that, and based thereon such opinion
of counsel will confirm that, the Holders of the outstanding notes will
not recognize income, gain or loss for federal income tax purposes as a
result of such Legal Defeasance and will be subject to federal income
tax on the same amounts, in the same manner and at the same times as
would have been the case if such Legal Defeasance had not occurred;
(3) in the case of Covenant Defeasance, Omnicare has delivered to the
trustee an opinion of counsel reasonably acceptable to the trustee
confirming that the Holders of the outstanding notes will not recognize
income, gain or loss for federal income tax purposes as a result of such
Covenant Defeasance and will be subject to federal income tax on the
same amounts, in the same manner and at the same times as would have
been the case if such Covenant Defeasance had not occurred;
(4) no Default or Event of Default has occurred and is continuing on the
date of such deposit (other than a Default or Event of Default resulting
from the borrowing of funds to be applied to such deposit);
(5) such Legal Defeasance or Covenant Defeasance will not result in a breach
or violation of, or constitute a default under any material agreement or
instrument (other than the indenture) to which Omnicare or any of its
Subsidiaries is a party or by which Omnicare or any of its Subsidiaries
is bound;
(6) Omnicare must deliver to the trustee an officers' certificate stating
that the deposit was not made by Omnicare with the intent of preferring
the Holders of notes over the other creditors of Omnicare with the
intent of defeating, hindering, delaying or defrauding creditors of
Omnicare or others; and
(7) Omnicare must deliver to the trustee an officers' certificate and an
opinion of counsel, each stating that all conditions precedent relating
to the Legal Defeasance or the Covenant Defeasance have been complied
with or waived.
AMENDMENT, SUPPLEMENT AND WAIVER
Except as provided in the next three succeeding paragraphs, the indenture or
the notes may be amended or supplemented with the consent of the Holders of at
least a majority in principal amount of the notes then outstanding (including,
without limitation, consents obtained in connection with a purchase of, or
tender offer or exchange offer for, notes), and any existing default or
compliance with any provision of the indenture or the notes may be waived with
the consent of the Holders of a majority in principal amount of the then
outstanding notes (including, without limitation, consents obtained in
connection with a purchase of, or tender offer or exchange offer for, notes).
Without the consent of each Holder affected, an amendment or waiver may not
(with respect to any notes held by a non-consenting Holder):
(1) reduce the principal amount of notes whose Holders must consent to an
amendment, supplement or waiver;
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(2) reduce the principal of or change the fixed maturity of any note or
alter the provisions with respect to the redemption of the notes (other
than provisions relating to the covenants described above under the
caption ' -- Repurchase at the Option of Holders');
(3) reduce the rate of or change the time for payment of interest on any
note;
(4) waive a Default or Event of Default in the payment of principal of, or
interest or premium, or Liquidated Damages, if any, on the notes (except
a rescission of acceleration of the notes by the Holders of at least a
majority in aggregate principal amount of the notes and a waiver of the
payment default that resulted from such acceleration);
(5) make any note payable in money other than that stated in the notes;
(6) make any change in the provisions of the indenture relating to waivers
of past Defaults or the rights of Holders of notes to receive payments
of principal of, or interest or premium or Liquidated Damages, if any,
on the notes;
(7) waive a redemption payment with respect to any note (other than a
payment required by one of the covenants described above under the
caption ' -- Repurchase at the Option of Holders');
(8) release any Guarantor from any of its obligations under its Subsidiary
Guarantee or the indenture, except in accordance with the terms of the
indenture; or
(9) make any change in the preceding amendment and waiver provisions.
In addition, any amendment to, or waiver of, the provisions of the indenture
relating to subordination that adversely affects the rights of the Holders of
the notes will require the consent of the Holders of at least 66 2/3% in
aggregate principal amount of notes then outstanding.
Notwithstanding the preceding, without the consent of any Holder of notes,
Omnicare, the Guarantors and the trustee may amend or supplement the indenture
or the notes:
(1) to cure any ambiguity, defect or inconsistency;
(2) to provide for uncertificated notes in addition to or in place of
certificated notes;
(3) to provide for the assumption of Omnicare's or a Guarantor's obligations
to Holders of notes in the case of a merger or consolidation or sale of
all or substantially all of Omnicare's or a Guarantor's assets;
(4) to make any change that would provide any additional rights or benefits
to the Holders of notes or that does not adversely affect the legal
rights under the indenture of any such Holder;
(5) to comply with requirements of the SEC in order to effect or maintain
the qualification of the indenture under the Trust Indenture Act; or
(6) to allow any Guarantor to execute a supplemental indenture and/or a
Subsidiary Guarantee with respect to the notes.
SATISFACTION AND DISCHARGE
The indenture will be discharged and will cease to be of further effect as
to all notes issued thereunder, when:
(1) either:
(a) all notes that have been authenticated, except lost, stolen or
destroyed notes that have been replaced or paid and notes for whose
payment money has been deposited in trust and thereafter repaid to
Omnicare, have been delivered to the trustee for cancellation; or
(b) all notes that have not been delivered to the trustee for
cancellation have become due and payable by reason of the
mailing of a notice of redemption or otherwise or will become
due and payable within one year and Omnicare or any Guarantor
has irrevocably deposited or caused to be deposited with the
trustee as trust funds in trust solely for the benefit of the
Holders, cash in U.S. dollars, non-callable Government
Securities, or a combination of cash in U.S. dollars and
non-callable Government Securities, in amounts as will be
sufficient without consideration of any reinvestment of
interest, to pay and discharge the entire indebtedness on
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the notes not delivered to the trustee for cancellation for
principal, premium and Liquidated Damages, if any, and accrued
interest to the date of maturity or redemption;
(2) no Default or Event of Default has occurred and is continuing on the
date of the deposit or will occur as a result of the deposit and the
deposit will not result in a breach or violation of, or constitute a
default under, any other instrument to which Omnicare or any Guarantor
is a party or by which Omnicare or any Guarantor is bound;
(3) Omnicare or any Guarantor has paid or caused to be paid all sums payable
by it under the indenture; and
(4) Omnicare has delivered irrevocable instructions to the trustee under the
indenture to apply the deposited money toward the payment of the notes
at maturity or the redemption date, as the case may be.
In addition, Omnicare must deliver an officers' certificate and an opinion
of counsel to the trustee stating that all conditions precedent to satisfaction
and discharge have been satisfied or waived.
CONCERNING THE TRUSTEE
If the trustee becomes a creditor of Omnicare or any Guarantor, the
indenture limits its right to obtain payment of claims in certain cases, or to
realize on certain property received in respect of any such claim as security or
otherwise. The trustee will be permitted to engage in other transactions;
however, if it acquires any conflicting interest it must eliminate such conflict
within 90 days, apply to the SEC for permission to continue or resign.
The Holders of a majority in principal amount of the then outstanding notes
will have the right to direct the time, method and place of conducting any
proceeding for exercising any remedy available to the trustee, subject to
certain exceptions. The indenture provides that in case an Event of Default
occurs and is continuing, the trustee will be required, in the exercise of its
power, to use the degree of care of a prudent man in the conduct of his own
affairs. Subject to such provisions, the trustee will be under no obligation to
exercise any of its rights or powers under the indenture at the request of any
Holder of notes, unless such Holder has offered to the trustee security and
indemnity satisfactory to it against any loss, liability or expense.
ADDITIONAL INFORMATION
Anyone who receives this prospectus may obtain a copy of the indenture and
registration rights agreement without charge by writing to Omnicare, Inc. 100
East River Center Boulevard, Covington, KY, 41011, Attention: General Counsel.
BOOK-ENTRY, DELIVERY AND FORM
GENERAL
Except as set forth below, exchange notes will be issued in registered,
global form (each, a 'Global Note') in minimum denominations of $1,000 and
integral multiples of $1,000 in excess of $1,000.
Except as set forth below, Global Notes may be transferred, in whole and not
in part, only to another nominee of DTC or to a successor of DTC or its nominee.
Beneficial interests in Global Notes may not be exchanged for notes in
certificated form except in the limited circumstances described below. See
' -- Exchange of Global Notes for Certificated Notes.' Except in the limited
circumstances described below, owners of beneficial interests in the Global
Notes will not be entitled to receive physical delivery of exchange notes in
certificated form. In addition, transfers of beneficial interests in the Global
Notes will be subject to the applicable rules and procedures of DTC and its
direct or indirect participants, which may change from time to time.
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DEPOSITORY PROCEDURES
The following description of the operations and procedures of DTC is
provided solely as a matter of convenience. These operations and procedures are
solely within the control of the respective settlement systems and are subject
to changes by them. Omnicare takes no responsibility for these operations and
procedures and urges investors to contact DTC or their participants directly to
discuss these matters.
DTC has advised Omnicare that DTC is a limited-purpose trust company created
to hold securities for its participating organizations (collectively, the
'Participants') and to facilitate the clearance and settlement of transactions
in those securities between Participants through electronic book-entry changes
in accounts of its Participants. The Participants include securities brokers and
dealers (including the Initial Purchasers), banks, trust companies, clearing
corporations and certain other organizations. Access to DTC's system is also
available to other entities such as banks, brokers, dealers and trust companies
that clear through or maintain a custodial relationship with a Participant,
either directly or indirectly (collectively, the 'Indirect Participants').
Persons who are not Participants may beneficially own securities held by or on
behalf of DTC only through the Participants or the Indirect Participants. The
ownership interests in, and transfers of ownership interests in, each security
held by or on behalf of DTC are recorded on the records of the Participants and
Indirect Participants.
DTC has also advised Omnicare that, pursuant to procedures established by
it:
(1) upon deposit of the Global Notes, DTC will credit the accounts of
Participants designated by the Initial Purchaser with portions of the
principal amount of the Global Notes; and
(2) ownership of these interests in the Global Notes will be shown on, and
the transfer of ownership of these interests will be effected only
through, records maintained by DTC (with respect to the Participants) or
by the Participants and the Indirect Participants (with respect to other
owners of beneficial interest in the Global Notes).
All interests in a Global Note, may be subject to the procedures and
requirements of DTC. The laws of some states require that certain Persons take
physical delivery in definitive form of securities that they own. Consequently,
the ability to transfer beneficial interests in a Global Note to such Persons
will be limited to that extent. Because DTC can act only on behalf of
Participants, which in turn act on behalf of Indirect Participants, the ability
of a Person having beneficial interests in a Global Note to pledge such
interests to Persons that do not participate in the DTC system, or otherwise
take actions in respect of such interests, may be affected by the lack of a
physical certificate evidencing such interests.
Except as described below, owners of interest in the Global Notes will not
have exchange notes registered in their names, will not receive physical
delivery of exchange notes in certificated form and will not be considered the
registered owners or 'Holders' thereof under the indenture for any purpose.
Payments in respect of the principal of, and interest and premium, if any,
on a Global Note registered in the name of DTC or its nominee will be payable to
DTC in its capacity as the registered Holder under the indenture. Under the
terms of the indenture, Omnicare and the trustee will treat the Persons in whose
names the notes, including Global Notes, are registered as the owners of the
notes for the purpose of receiving payments and for all other purposes.
Consequently, neither Omnicare, the trustee nor any agent of Omnicare or the
trustee has or will have any responsibility or liability for:
(1) any aspect of DTC's records or any Participant's or Indirect
Participant's records relating to or payments made on account of
beneficial ownership interest in the Global Notes or for maintaining,
supervising or reviewing any of DTC's records or any Participant's or
Indirect Participant's records relating to the beneficial ownership
interests in the Global Notes; or
(2) any other matter relating to the actions and practices of DTC or any of
its Participants or Indirect Participants.
DTC has advised Omnicare that its current practice, upon receipt of any
payment in respect of securities such as the exchange notes (including principal
and interest), is to credit the accounts of the relevant Participants with the
payment on the payment date unless DTC has reason to believe it will not receive
payment on such payment date. Each relevant Participant is credited with an
amount proportionate to its beneficial ownership of an interest in the principal
amount of the relevant security as shown on the records of DTC. Payments by the
Participants and the Indirect Participants to the beneficial owners of
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exchange notes will be governed by standing instructions and customary practices
and will be the responsibility of the Participants or the Indirect Participants
and will not be the responsibility of DTC, the trustee or Omnicare. Neither
Omnicare nor the trustee will be liable for any delay by DTC or any of its
Participants in identifying the beneficial owners of the notes, and Omnicare and
the trustee may conclusively rely on and will be protected in relying on
instructions from DTC or its nominee for all purposes.
Transfers between Participants in DTC will be effected in accordance with
DTC's procedures, and will be settled in same-day funds.
DTC has advised Omnicare that it will take any action permitted to be taken
by a Holder of exchange notes only at the direction of one or more Participants
to whose account DTC has credited the interests in the Global Notes and only in
respect of such portion of the aggregate principal amount of the exchange notes
as to which such Participant or Participants has or have given such direction.
However, if there is an Event of Default under the notes, DTC reserves the right
to exchange Global Notes for notes in certificated form, and to distribute such
notes to its Participants.
Although DTC has agreed to the foregoing procedures to facilitate transfers
of interests in the exchange notes among participants in DTC they are under no
obligation to perform or to continue to perform such procedures, and may
discontinue such procedures at any time. Neither Omnicare nor the trustee nor
any of their respective agents will have any responsibility for the performance
by DTC, or their respective participants or indirect participants of their
respective obligations under the rules and procedures governing their
operations.
EXCHANGE OF GLOBAL NOTES FOR CERTIFICATED NOTES
A Global Note is exchangeable for definitive exchange notes in registered
certificated form ('Certificated Notes') if:
(1) DTC (a) notifies Omnicare that it is unwilling or unable to continue as
depositary for the Global Notes and Omnicare fails to appoint a
successor depositary or (b) has ceased to be a clearing agency
registered under the Exchange Act;
(2) Omnicare, at its option, notifies the trustee in writing that it elects
to cause the issuance of the Certificated Notes; or
(3) there has occurred and is continuing Event of Default with respect to
the notes.
In addition, beneficial interests in a Global Note may be exchanged for
Certificated Notes upon prior written notice given to the trustee by or on
behalf of DTC in accordance with the indenture. In all cases, Certificated Notes
delivered in exchange for any Global Note or beneficial interests in Global
Notes will be registered in the names, and issued in any approved denominations,
requested by or on behalf of the depositary (in accordance with its customary
procedures).
SAME DAY SETTLEMENT AND PAYMENT
Omnicare will make payments in respect of the notes represented by the
Global Notes (including principal, premium, if any, and interest) by wire
transfer of immediately available funds to the accounts specified by the Global
Note Holder. Omnicare will make all payments of principal, interest and premium,
if any, with respect to Certificated Notes by wire transfer of immediately
available funds to the accounts specified by the Holders of the Certificated
Notes or, if no such account is specified, by mailing a check to each such
Holder's registered address. The notes represented by Global Notes are expected
to be eligible to trade in DTC's Same-Day Funds Settlement System, and any
permitted secondary market trading activity in such exchange notes will,
therefore, be required by DTC to be settled in immediately available funds.
Omnicare expects that secondary trading in any Certificated Notes will also be
settled in immediately available funds.
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REGISTRATION RIGHTS; LIQUIDATED DAMAGES
The following description is a summary of the material provisions of the
registration rights agreement. It does not restate that agreement in its
entirety. We urge you to read the proposed form of registration rights agreement
in its entirety because it, and not this description, defines your registration
rights as Holders of the notes. See ' -- Additional Information.'
Omnicare, the Guarantors and the Initial Purchaser entered into the
registration rights agreement in connection with the private offering of the old
notes. Pursuant to the registration rights agreement, Omnicare and the
Guarantors agreed to file with the SEC the Exchange Offer Registration Statement
on the appropriate form under the Securities Act of 1933 with respect to the
Exchange Notes. Pursuant to the Registration Rights Agreement, Omnicare and the
Guarantors are offering to Holders of Transfer Restricted Securities who are
able to make certain representations the opportunity to exchange their Transfer
Restricted Securities for exchange notes.
If:
(1) Omnicare and the Guarantors are not permitted to consummate the Exchange
Offer because the Exchange Offer is not permitted by applicable law or
SEC policy; or
(2) any Holder of Transfer Restricted Securities notifies Omnicare prior to
the 20th day following consummation of the Exchange Offer that:
(a) it is prohibited by law or SEC policy from participating in the
Exchange Offer; or
(b) that it may not resell the Exchange Notes acquired by it in the
Exchange Offer to the public without delivering a prospectus and
the prospectus contained in the Exchange Offer Registration
Statement is not appropriate or available for such resales; or
(c) that it is a broker-dealer and owns old notes acquired
directly from Omnicare or an affiliate of Omnicare,
Omnicare and the Guarantors will file with the SEC a Shelf Registration
Statement to cover resales of the old notes by the Holders of the old notes who
satisfy certain conditions relating to the provision of information in
connection with the Shelf Registration Statement.
For purposes of the preceding, 'Transfer Restricted Securities' means each
note until:
(1) the date on which such note has been exchanged by a Person other than a
broker-dealer for an Exchange Note in the Exchange Offer;
(2) following the exchange by a broker-dealer in the Exchange Offer of a
note for an Exchange Note, the date on which such Exchange Note is sold
to a purchaser who receives from such broker-dealer on or prior to the
date of such sale a copy of the prospectus contained in the Exchange
Offer Registration Statement;
(3) the date on which such note has been effectively registered under the
Securities Act of 1933 and disposed of in accordance with the Shelf
Registration Statement; or
(4) the date on which such note may be distributed to the public pursuant to
Rule 144(k) under the Securities Act of 1933.
The registration rights agreement provides that:
(1) unless the Exchange Offer would not be permitted by applicable law or
SEC policy, Omnicare and the Guarantors will
(a) commence the Exchange Offer; and
(b) use commercially reasonable efforts to issue on or prior to 45
business days, or longer, if required by the federal securities
laws, after the date on which the Exchange Offer Registration
Statement was declared effective by the SEC, Exchange Notes in
exchange for all old notes tendered prior thereto in the
Exchange Offer; and
(2) if obligated to file the Shelf Registration Statement, Omnicare and the
Guarantors will use commercially reasonable efforts to file the Shelf
Registration Statement with the SEC on or prior to 45 days after such
filing obligation arises and use commercially reasonable efforts to
cause the
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Shelf Registration to be declared effective by the SEC on or prior to 90
days after such obligation arises.
If:
(1) Omnicare and the Guarantors fail to file any of the registration
statements required by the registration rights agreement on or before
the date specified for such filing; or
(2) any of such registration statements is not declared effective by the
Commission on or prior to the date specified for such effectiveness (the
'Effectiveness Target Date'); or
(3) Omnicare and the Guarantors fail to consummate the Exchange Offer within
45 business days of the Effectiveness Target Date with respect to the
Exchange Offer Registration Statement; or
(4) any required Shelf Registration Statement or the Exchange Offer
Registration Statement is declared effective but thereafter ceases to be
effective or usable in connection with resales of Transfer Restricted
Securities during the periods specified in the registration rights
agreement (each such event referred to in clauses (1) through (4) above,
a 'Registration Default'),
then Omnicare and the Guarantors will pay Liquidated Damages to each
Holder of old notes, with respect to the first 90-day period immediately
following the occurrence of the first Registration Default in an amount
equal to 0.25% per annum. The amount of the Liquidated Damages will
increase by an additional 0.25% per annum for each subsequent 90-day
period until such Registration Default is cured, up to a maximum
aggregate amount of liquidated damages of 1.00% per annum with respect
to all Registration Defaults. The Liquidated Damages will cease accruing
on such old notes when the Registration Default has been cured.
All accrued Liquidated Damages will be paid by Omnicare and the Guarantors
on each Damages Payment Date in the same manner as interest is paid on the old
notes.
Following the cure of all Registration Defaults, the accrual of Liquidated
Damages will cease.
As described elsewhere in this prospectus, holders of old notes are required
to make certain representations to Omnicare in order to participate in the
Exchange Offer and will be required to deliver certain information to be used in
connection with any Shelf Registration Statement and to provide comments on any
Shelf Registration Statement within the time periods set forth in the
registration rights agreement in order to have their old notes included in any
Shelf Registration Statement and benefit from the provisions regarding
Liquidated Damages set forth above. By acquiring Transfer Restricted Securities,
a Holder will be deemed to have agreed to indemnify Omnicare and the Guarantors
against certain losses arising out of information furnished by such Holder in
writing for inclusion in any Shelf Registration Statement. Holders of old notes
will also be required to suspend their use of the prospectus included in the
Shelf Registration Statement under certain circumstances upon receipt of written
notice to that effect from Omnicare.
CERTAIN DEFINITIONS
Set forth below are certain defined terms used in the indenture. Reference
is made to the indenture for a full disclosure of all such terms, as well as any
other capitalized terms used herein for which no definition is provided.
'5% Convertible Subordinated Debentures due 2007' means the $345.0 million
in aggregate principal amount of 5% Convertible Subordinated Debentures due 2007
issued by Omnicare on December 10, 1997.
'Acquired Debt' means, with respect to any specified Person:
(1) Indebtedness of any other Person existing at the time such other Person
is merged with or into or became a Restricted Subsidiary of such
specified Person, whether or not such Indebtedness is incurred in
connection with, or in contemplation of, such other Person merging with
or into, or becoming a Restricted Subsidiary of, such specified Person;
and
(2) Indebtedness secured by a Lien encumbering any asset acquired by such
specified Person (limited to the maximum amount of liability of the
specified Person with respect to such Lien).
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'Affiliate' of any specified Person means any other Person directly or
indirectly controlling or controlled by or under direct or indirect common
control with such specified Person. For purposes of this definition, 'control,'
as used with respect to any Person, means the possession, directly or
indirectly, of the power to direct or cause the direction of the management or
policies of such Person, whether through the ownership of voting securities, by
agreement or otherwise; provided that beneficial ownership of 10% or more of the
Voting Stock of a Person will be deemed to be control. For purposes of this
definition, the terms 'controlling,' 'controlled by' and 'under common control
with' have correlative meanings.
'Asset Sale' means:
(1) the sale, lease, conveyance or other disposition by Omnicare or any of
its Restricted Subsidiaries of any assets, other than sales of products
and services in the ordinary course of business consistent with past
practices; provided that the sale, conveyance or other disposition of
all or substantially all of the assets of Omnicare and its Restricted
Subsidiaries taken as a whole will be governed by the provisions of the
indenture described above under the caption ' -- Repurchase at the
Option of Holders -- Change of Control' and/or the provisions described
above under the caption ' -- Certain Covenants -- Merger, Consolidation
or Sale of Assets' and not by the provisions of the Asset Sale covenant;
and
(2) the issuance of Equity Interests by any Restricted Subsidiary or the
sale of Equity Interests in any Restricted Subsidiary.
Notwithstanding the preceding, the following items will not be deemed to be
Asset Sales:
(1) any single transaction or series of related transactions that involves
assets having a fair market value of less than $7.5 million;
(2) a transfer of assets between or among Omnicare and one or more
Restricted Subsidiaries,
(3) an issuance of Equity Interests by a Restricted Subsidiary to Omnicare
or to another Restricted Subsidiary;
(4) the sale, lease or other disposition of equipment, inventory, accounts
receivable or other assets in the ordinary course of business;
(5) the sale or other disposition of cash or Cash Equivalents;
(6) a Restricted Payment or Permitted Investment that is permitted by the
covenant described above under the caption ' -- Certain
Covenants -- Restricted Payments';
(7) the sale and leaseback of any assets within 90 days of the acquisition
of such assets;
(8) a sale or other disposition of accounts receivable and related assets
in connection with a financing transaction involving such assets
(including, without limitation, in connection with a securitization or
similar financing);
(9) any disposition of property in the ordinary course of business by
Omnicare or any Restricted Subsidiary that, in the good faith judgment
of management of Omnicare, has become obsolete, worn out, damaged or no
longer useful in the conduct of the business of Omnicare or the
Restricted Subsidiaries;
(10) any Asset Swap;
(11) any sale of securities constituting Equity Interests that are issued by
a subsidiary trust or similar financing vehicle in a transaction
permitted under the 'Incurrence of Indebtedness and Issuance of
Preferred Stock' covenant;
(12) any loans or other transfers of equipment to customers of Omnicare or
any Restricted Subsidiary in the ordinary course of business for use
with the products or services of Omnicare or any Restricted Subsidiary;
and
(13) the sale or issuance of a minimal number of Equity Interests in a
Restricted Subsidiary that is a foreign entity to a foreign national to
the extent required by local law or in a jurisdiction outside of the
United States.
'Asset Swap' means an exchange by Omnicare or any Restricted Subsidiary of
property or assets for property or assets of another Person; provided that
(i) Omnicare or the applicable Restricted Subsidiary, as
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the case may be, receives consideration at the time of such exchange at least
equal to the fair market value of the assets or other property sold, issued or
otherwise disposed of (as evidenced by a resolution of Omnicare's Board of
Directors), and (ii) at least 75% of the consideration received in such exchange
constitutes assets or other property of a kind usable by Omnicare and its
Restricted Subsidiaries in a Permitted Business; provided, further, that any
cash and Cash Equivalents received by Omnicare or any of its Restricted
Subsidiaries in connection with such an exchange shall constitute Net Proceeds
subject to the provisions under ' -- Asset Sales.'
'Beneficial Owner' has the meaning assigned to such term in Rule 13d-3 and
Rule 13d-5 under the Exchange Act, except that in calculating the beneficial
ownership of any particular 'person' (as that term is used in Section 13(d)(3)
of the Exchange Act), such 'person' will be deemed to have beneficial ownership
of all securities that such 'person' has the right to acquire by conversion or
exercise of other securities, whether such right is currently exercisable or is
exercisable only upon the occurrence of a subsequent condition. The terms
'Beneficially Owns' and 'Beneficially Owned' have a corresponding meaning.
'Board of Directors' means:
(1) with respect to a corporation, the board of directors of the corporation
(or any duly authorized committee thereof);
(2) with respect to a partnership, the Board of Directors (or any duly
authorized committee thereof) of the general partner of the partnership;
and
(3) with respect to any other Person, the board or committee of such Person
serving a similar function.
'Capital Lease Obligation' means, at the time any determination is to be
made, the amount of the liability in respect of a capital lease that would at
that time be required to be capitalized on a balance sheet in accordance with
GAAP.
'Capital Stock' means:
(1) in the case of a corporation, corporate stock;
(2) in the case of an association or business entity, any and all shares,
interests, participations, rights or other equivalents (however
designated) of corporate stock;
(3) in the case of a partnership or limited liability company, partnership
or membership interests (whether general or limited); and
(4) any other interest or participation that confers on a Person the right
to receive a share of the profits and losses of, or distributions of
assets of, the issuing Person.
'Cash Equivalents' means:
(1) United States dollars;
(2) securities constituting direct obligations of the United States or any
agency or instrumentality of the United States, the payment or guarantee
of which constitutes a full faith and credit obligation of the United
States, maturing in three years or less from the date of acquisition
thereof;
(3) securities constituting direct obligations of any State or municipality
within the United States maturing in three years or less from the date
of acquisition thereof which, in any such case, at the time of
acquisition by Omnicare or any Restricted Subsidiary, is accorded one of
the two highest long-term or short-term, as applicable, debt ratings by
S&P or Moody's or any other United States nationally recognized credit
rating agency of similar standing;
(4) certificates of deposit with a maturity of one year or less or bankers'
acceptances issued by a bank or trust company having capital, surplus
and undivided profits aggregating at least $500.0 million and having a
short-term unsecured debt rating of at least 'P-1' by Moody's or 'A-1'
by S&P;
(5) eurodollar time deposits with maturities of one year or less and
overnight bank deposits with any bank or trust company having capital,
surplus and undivided profits aggregating at least $500.0
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million and having a short-term unsecured debt rating of at least 'P-1'
by Moody's or 'A-1' by S&P;
(6) repurchase obligations with a term of not more than seven days for
underlying securities of the types described in clauses (2), (3), (4)
and (5) above entered into with any financial institution meeting the
qualifications specified in such clauses above;
(7) commercial paper maturing in 270 days or less from the date of issuance
which, at the time of acquisition by Omnicare or any Restricted
Subsidiary, is accorded a rating of 'A2' or better by S&P or 'P2' or
better by Moody's or any other United States nationally recognized
credit rating agency of similar standing; and
(8) any fund or other pooling arrangement at least 95% of the assets of
which constitute Investments described in clauses (1) through (7) of
this definition.
'Change of Control' means the occurrence of any of the following:
(1) the direct or indirect sale, transfer, conveyance or other disposition
(other than by way of merger or consolidation), in one or a series of
related transactions, of all or substantially all of the properties or
assets of Omnicare and its Restricted Subsidiaries taken as a whole to
any 'person' (as that term is used in Section 13(d)(3) of the Exchange
Act);
(2) the adoption of a plan relating to the liquidation or dissolution of
Omnicare;
(3) the consummation of any transaction (including, without limitation, any
merger or consolidation) the result of which is that any 'person' (as
defined above), other than one or more Principals and their Related
Parties, becomes the Beneficial Owner, directly or indirectly, of more
than 45% of the Voting Stock of Omnicare, measured by voting power
rather than number of shares; or
(4) the first day on which a majority of the members of the Board of
Directors of Omnicare are not Continuing Directors.
'Consolidated Assets' of any Person as of any date means the total assets of
such Person and its Restricted Subsidiaries on a consolidated basis at such
date, as determined in accordance with GAAP.
'Consolidated Cash Flow' means, with respect to any specified Person for any
period, the Consolidated Net Income of such Person for such period plus:
(1) an amount equal to any extraordinary, unusual or non-recurring loss plus
any net loss realized by such Person or any of its Restricted
Subsidiaries in connection with an Asset Sale, to the extent such losses
were deducted in computing such Consolidated Net Income; plus
(2) provision for taxes based on income or profits of such Person and its
Restricted Subsidiaries for such period, to the extent that such
provision for taxes was deducted in computing such Consolidated Net
Income; plus
(3) consolidated interest expense of such Person and its Restricted
Subsidiaries for such period, whether paid or accrued and whether or not
capitalized (including, without limitation, amortization of debt
issuance costs and original issue discount, non-cash interest payments,
the interest component of any deferred payment obligations, the interest
component of all payments associated with Capital Lease Obligations,
commissions, discounts and other fees and charges incurred in respect of
letter of credit or bankers' acceptance financings, and net of the
effect of all payments made or received pursuant to Hedging
Obligations), to the extent that any such expense was deducted in
computing such Consolidated Net Income; plus
(4) depreciation, amortization (including amortization of goodwill and other
intangibles but excluding amortization of prepaid cash expenses that
were paid in a prior period) and other non-cash expenses (excluding any
such non-cash expense to the extent that it represents an accrual of or
reserve for cash expenses in any future period or amortization of a
prepaid cash expense that was paid in a prior period) of such Person and
its Restricted Subsidiaries for such period to the extent that such
depreciation, amortization and other non-cash expenses were deducted in
computing such Consolidated Net Income; minus
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(5) non-cash items increasing such Consolidated Net Income for such period,
other than the accrual of revenue in the ordinary course of business, in
each case, on a consolidated basis and determined in accordance with
GAAP.
Notwithstanding the preceding, the provision for taxes based on the income
or profits of, and the depreciation and amortization and other non-cash expenses
of, a Restricted Subsidiary will be added to Consolidated Net Income to compute
Consolidated Cash Flow of Omnicare only to the extent that a corresponding
amount would be permitted at the date of determination to be dividended to
Omnicare by such Restricted Subsidiary without prior governmental approval (that
has not been obtained), and without direct or indirect restriction pursuant to
the terms of its charter and all agreements, instruments, judgments, decrees,
orders, statutes, rules and governmental regulations applicable to that
Restricted Subsidiary or its stockholders.
'Consolidated Net Income' means, with respect to any specified Person for
any period, the aggregate of the Net Income of such Person and its Restricted
Subsidiaries for such period, on a consolidated basis, determined in accordance
with GAAP; provided that:
(1) the Net Income (but not loss) of any Person that is not a Restricted
Subsidiary or that is accounted for by the equity method of accounting
will be included only to the extent of the amount of dividends or
distributions paid in cash to the specified Person or a Restricted
Subsidiary of the Person;
(2) the Net Income of any Restricted Subsidiary will be excluded to the
extent that the declaration or payment of dividends or similar
distributions by that Restricted Subsidiary of that Net Income is not at
the date of determination permitted without any prior governmental
approval (that has not been obtained) or, directly or indirectly, by
operation of the terms of its charter or any agreement, instrument,
judgment, decree, order, statute, rule or governmental regulation
applicable to that Restricted Subsidiary or its stockholders;
(3) for purposes of the 'Restricted Payments' covenant above, the Net Income
of any Person acquired in a pooling of interests transaction for any
period prior to the date of such acquisition will be excluded; and
(4) the cumulative effect of a change in accounting principles will be
excluded.
'Consolidated Net Worth' of any Person as of any date means the
stockholders' equity (including any preferred stock that is classified as equity
under GAAP, other than Disqualified Stock) of such Person and its Restricted
Subsidiaries (excluding any equity adjustment for foreign currency translation
for any period subsequent to the date of the indenture) on a consolidated basis
at such date, as determined in accordance with GAAP.
'Continuing Directors' means, as of any date of determination, any member of
the Board of Directors of Omnicare who:
(1) was a member of such Board of Directors on the date of the indenture; or
(2) was nominated for election or elected to such Board of Directors with
the approval of a majority of the Continuing Directors who were members
of such Board at the time of such nomination or election.
'Convertible Preferred Stock' means any convertible preferred stock or
similar securities of Omnicare or any subsidiary trust (or similar financing
vehicle) that are convertible at the option of the holder thereof into common
stock of Omnicare.
'Convertible Subordinated Indebtedness' means any Indebtedness of Omnicare
that is subordinated to the notes and that is convertible at the option of the
holder thereof into common stock of Omnicare (including, without limitation, any
Indebtedness incurred in connection with a transaction involving the sale by
Omnicare of purchase contracts to acquire Omnicare common stock at a future
date), and, if applicable, any related securities issued by a subsidiary trust
or similar financing vehicle in connection therewith.
'Credit Agreement' means that certain proposed Credit Agreement, as
contemplated by the related commitment letter dated as of March 5, 2001, by and
among Omnicare and Bank One, NA (having its
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principal office in Chicago, Illinois), as administrative agent, Banc One
Capital Markets, Inc., as joint lead arranger and sole book runner, UBS Warburg
LLC, as joint lead arranger and syndication agent, Lehman Commercial Paper Inc.,
as syndication agent, SunTrust Bank, as documentation agent, and Deutsche Bank
AG, New York branch, as documentation agent, providing for up to $500 million of
revolving credit borrowings, including any related notes, guarantees, collateral
documents, instruments and agreements executed in connection therewith, and in
each case as amended (including, without limitation, as to principal amount),
modified, renewed, refunded, replaced or refinanced from time to time (whether
or not with the original agents or lenders and whether or not contemplated under
the original agreement relating thereto).
'Credit Facilities' means, one or more debt facilities (including, without
limitation, the Credit Agreement (and, if they are not refinanced, the Existing
Credit Facilities)) or commercial paper facilities, in each case with banks or
other institutional lenders providing for revolving credit loans, term loans,
receivables financing (including through the sale of receivables to such lenders
or to special purpose entities formed to borrow from such lenders against such
receivables) or letters of credit, in each case, as amended (including, without
limitation, as to principal amount), restated, modified, renewed, refunded,
replaced or refinanced in whole or in part from time to time (whether or not
with the original agents or lenders and whether or not contemplated under the
original agreement relating thereto).
'Default' means any event that is, or with the passage of time or the giving
of notice or both would be, an Event of Default.
'Designated Senior Debt' means:
(1) any Indebtedness outstanding under the Credit Agreement (and, if they
are not refinanced, under the Existing Credit Facilities); and
(2) after payment in full of all Obligations under the Credit Agreement
(and, if they are not refinanced, under the Existing Credit Facilities),
any other Senior Debt permitted under the indenture the principal amount
of which is $35.0 million or more and that has been designated by
Omnicare as 'Designated Senior Debt.'
'Disqualified Stock' means any Capital Stock that, by its terms (or by the
terms of any security into which it is convertible, or for which it is
exchangeable, in each case at the option of the holder of the Capital Stock), or
upon the happening of any event, matures or is mandatorily redeemable, pursuant
to a sinking fund obligation or otherwise, or redeemable at the option of the
holder of the Capital Stock, in whole or in part, on or prior to the date that
is 91 days after the date on which the exchange notes mature. Notwithstanding
the preceding sentence, any Capital Stock that would constitute Disqualified
Stock solely because the holders of the Capital Stock have the right to require
Omnicare to repurchase such Capital Stock upon the occurrence of a change of
control or an asset sale will not constitute Disqualified Stock if the terms of
such Capital Stock provide that Omnicare may not repurchase or redeem any such
Capital Stock pursuant to such provisions unless such repurchase or redemption
complies with the covenant described above under the caption ' -- Certain
Covenants -- Restricted Payments.'
'Domestic Subsidiary' means any Restricted Subsidiary organized under the
laws of the United States or any state of the United States or the District of
Columbia.
'Equity Interests' means Capital Stock and all warrants, options or other
rights to acquire Capital Stock (but excluding any debt security that is
convertible into, or exchangeable for, Capital Stock).
'Equity Offering' means any public or private sale by Omnicare for cash (in
an amount resulting in gross proceeds of not less than $25.0 million) of its
common stock or preferred stock (excluding Disqualified Stock).
'Excluded Subsidiaries' means those Domestic Subsidiaries that are
designated by Omnicare as Domestic Subsidiaries that will not be Guarantors;
provided, however, that in no event will the Excluded Subsidiaries, either
individually or collectively, hold more than 10% of the consolidated assets of
Omnicare and its Domestic Subsidiaries as of the end of any fiscal quarter or
account for more than 10% of the consolidated revenue of Omnicare and its
Domestic Subsidiaries during the most recent four-quarter period (in each case
determined as of the most recent fiscal quarter for which Omnicare has internal
financial statements available); provided, further, that any Domestic Subsidiary
that guarantees other
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Indebtedness of Omnicare may not be designated as or continue to be an Excluded
Subsidiary. In the event any Domestic Subsidiaries previously designated as
Excluded Subsidiaries cease to meet the requirements of the previous sentence,
Omnicare will promptly cause one or more of such Domestic Subsidiaries to become
Guarantors so that the requirements of the previous sentence are complied with.
'Existing Credit Facilities' means that certain (i) $400 million revolving
credit facility, dated October 1996, by and among Omnicare, Bank One, NA and the
lenders thereto and (ii) $400 million 364-day credit facility, dated December
1998, by and among Bank One, NA and the lenders thereto, as amended in September
2000 to extend such credit facility through August 31, 2001 and reduce the
commitment to $300 million.
'Existing Indebtedness' means Indebtedness of Omnicare and its Restricted
Subsidiaries (other than Indebtedness under the Credit Agreement) in existence
on the date of the indenture, until such amounts are repaid.
'Fixed Charges' means, with respect to any specified Person for any period,
the sum, without duplication, of:
(1) the consolidated interest expense of such Person and its Restricted
Subsidiaries for such period, whether paid or accrued, including,
without limitation, amortization of debt issuance costs and original
issue discount, non-cash interest payments, the interest component of
any deferred payment obligations, the interest component of all payments
associated with Capital Lease Obligations, commissions, discounts and
other fees and charges incurred in respect of letter of credit or
bankers' acceptance financings, and net of the effect of all payments
made or received pursuant to Hedging Obligations; plus
(2) the consolidated interest of such Person and its Restricted Subsidiaries
that was capitalized during such period; plus
(3) any interest expense on Indebtedness of another Person that is
Guaranteed by such Person or one of its Restricted Subsidiaries or
secured by a Lien on assets of such Person or one of its Restricted
Subsidiaries, to the extent such Guarantee or Lien is called upon; plus
(4) the product of (a) all dividends, whether paid or accrued and whether or
not in cash, on any series of preferred stock of such Person or any of
its Restricted Subsidiaries, other than dividends on Equity Interests
payable solely in Equity Interests of Omnicare (other than Disqualified
Stock) or to Omnicare or a Restricted Subsidiary, times (b) a fraction,
the numerator of which is one and the denominator of which is one minus
the then current combined federal, state and local statutory tax rate of
such Person, expressed as a decimal, in each case, on a consolidated
basis and in accordance with GAAP.
'Fixed Charge Coverage Ratio' means with respect to any specified Person for
any period, the ratio of the Consolidated Cash Flow of such Person for such
period to the Fixed Charges of such Person for such period. In the event that
the specified Person or any of its Restricted Subsidiaries incurs, assumes,
Guarantees, repays, repurchases or redeems any Indebtedness (other than ordinary
working capital borrowings) or issues, repurchases or redeems preferred stock
subsequent to the commencement of the period for which the Fixed Charge Coverage
Ratio is being calculated and on or prior to the date on which the event for
which the calculation of the Fixed Charge Coverage Ratio is made (the
'Calculation Date'), then the Fixed Charge Coverage Ratio will be calculated
giving pro forma effect to such incurrence, assumption, Guarantee, repayment,
repurchase or redemption of Indebtedness, or such issuance, repurchase or
redemption of preferred stock, and the use of the proceeds therefrom as if the
same had occurred at the beginning of the applicable four-quarter reference
period.
In addition, for purposes of calculating the Fixed Charge Coverage Ratio pro
forma effect will be given to:
(1) acquisitions of any operations or businesses or assets (other than
assets acquired in the ordinary course of business) that have been made
by the specified Person or any of its Restricted Subsidiaries, including
through purchases or through mergers or consolidations and including any
related financing transactions, during the four-quarter reference period
or subsequent to such reference period and on or prior to the
Calculation Date, as if they had occurred on the first day of the
four-quarter reference period; and
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(2) the discontinuance of operations or businesses and dispositions of
operations or businesses or assets (other than assets disposed of in the
ordinary course of business) during the four quarter reference period or
subsequent to such reference period and on or prior to the Calculation
Date, as if they had occurred on the first day of the four quarter
reference period.
'GAAP' means generally accepted accounting principles set forth in the
opinions and pronouncements of the Accounting Principles Board of the American
Institute of Certified Public Accountants and statements and pronouncements of
the Financial Accounting Standards Board or in such other statements by such
other entity as have been approved by a significant segment of the accounting
profession, which are in effect on the date of determination.
'Guarantee' means a guarantee other than by endorsement of negotiable
instruments for collection in the ordinary course of business, direct or
indirect, in any manner including, without limitation, by way of a pledge of
assets or through letters of credit or reimbursement agreements in respect
thereof, of all or any part of any Indebtedness.
'Guarantors' means each of:
(1) the Domestic Subsidiaries of Omnicare as of the indenture date other
than Excluded Subsidiaries; and
(2) any other Subsidiary that executes a Subsidiary Guarantee in accordance
with the provisions of the indenture, and their respective successors
and assigns.
'Hedging Obligations' means, with respect to any specified Person, the
obligations of such Person under:
(1) interest rate swap agreements, interest rate cap agreements and interest
rate collar agreements; and
(2) other agreements or arrangements designed to protect such Person against
fluctuations in interest rates or foreign exchange rates.
'Indebtedness' means, with respect to any specified Person, any indebtedness
of such Person, whether or not contingent:
(1) in respect of borrowed money;
(2) evidenced by bonds, notes, debentures or similar instruments or letters
of credit (or reimbursement agreements in respect thereof);
(3) in respect of banker's acceptances;
(4) representing Capital Lease Obligations;
(5) representing the balance deferred and unpaid of the purchase price of
any property; or
(6) representing any Hedging Obligations,
if and to the extent any of the preceding items (other than letters of credit
and Hedging Obligations) would appear as a liability upon a balance sheet of the
specified Person prepared in accordance with GAAP. In addition, the term
'Indebtedness' includes all Indebtedness of others secured by a Lien on any
asset of the specified Person (whether or not such Indebtedness is assumed by
the specified Person) and, to the extent not otherwise included, the Guarantee
by the specified Person of any indebtedness of any other Person, in each case
limited to the maximum amount of liability of the specified Person with respect
to such Lien or Guarantee on the date in question. Notwithstanding anything in
the foregoing to the contrary, Indebtedness shall not include trade payables or
accrued expenses for property or services incurred in the ordinary course of
business.
The amount of any Indebtedness issued with original issue discount will be
the accreted value of such Indebtedness.
'Investment Grade' means (1) with respect to S&P, any of the rating
categories from and including AAA to and including BBB- and (2) with respect to
Moody's, any of the rating categories from and including Aaa to and including
Baa3.
'Investments' means, with respect to any Person, all direct or indirect
investments by such Person in other Persons (including Affiliates) in the forms
of loans (including Guarantees or other obligations),
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advances or capital contributions (excluding commission, travel and similar
advances to directors, officers and employees made in the ordinary course of
business), purchases or other acquisitions for consideration of Indebtedness,
Equity Interests or other securities, together with all items that are or would
be classified as investments on a balance sheet prepared in accordance with
GAAP. If Omnicare or any Restricted Subsidiary sells or otherwise disposes of
any Equity Interests of any direct or indirect Restricted Subsidiary such that,
after giving effect to any such sale or disposition, such Person is no longer a
Restricted Subsidiary, Omnicare will be deemed to have made an Investment on the
date of any such sale or disposition equal to the fair market value of the
Equity Interests of such Restricted Subsidiary not sold or disposed of in an
amount determined as provided in the final paragraph of the covenant described
above under the caption ' -- Certain Covenants -- Restricted Payments'; provided
that Omnicare shall not have been deemed to have made an Investment pursuant to
the foregoing if Omnicare shall have previously or concurrently therewith been
deemed to have made an Investment in connection with such Equity Interests. The
acquisition by Omnicare or any Restricted Subsidiary of a Person that holds an
Investment in a third Person will be deemed to be an Investment by Omnicare or
such Restricted Subsidiary in such third Person in an amount equal to the fair
market value of the Investment held by the acquired Person in such third Person
in an amount determined as provided in the final paragraph of the covenant
described above under the caption ' -- Certain Covenants -- Restricted
Payments'; provided, Omnicare or such Restricted Subsidiary shall not have been
deemed to have made an Investment pursuant to the foregoing if Omnicare or any
Restricted Subsidiary shall have previously or concurrently therewith been
deemed to have made an Investment in connection with such acquisition.
'Investments' shall exclude extensions of trade credit.
'Lien' means, with respect to any asset, any mortgage, lien, pledge, charge,
security interest or encumbrance of any kind in respect of such asset, whether
or not filed, recorded or otherwise perfected under applicable law, including
any conditional sale or other title retention agreement, any lease in the nature
thereof, any option or other agreement to sell or give a security interest in
and any filing of or agreement to give any financing statement under the Uniform
Commercial Code (or equivalent statutes) of any jurisdiction.
'Liquidated Damages' means all liquidated damages then owing pursuant to
Section 5 of the registration rights agreement.
'Net Income' means, with respect to any specified Person, the net income
(loss) of such Person, determined in accordance with GAAP and before any
reduction in respect of preferred stock dividends, excluding, however:
(1) any gain or loss, together with any related provision for taxes on such
gain or loss, realized in connection with: (a) any Asset Sale; or
(b) the disposition of any securities by such Person or any of its
Restricted Subsidiaries or the extinguishment of any Indebtedness of
such Person or any of its Restricted Subsidiaries; and
(2) any extraordinary, unusual or non-recurring gain, charge, expense or
loss, together with any related provision for taxes on such
extraordinary, unusual or non-recurring gain, charge, expense or loss.
'Net Proceeds' means the aggregate cash proceeds and Cash Equivalents
received by Omnicare or its Restricted Subsidiaries in respect of any Asset Sale
(including, without limitation, any cash received upon the sale or other
disposition of any non-cash consideration received in any Asset Sale), net of
the direct costs relating to such Asset Sale, including, without limitation,
legal, accounting and investment banking fees, sales commissions, any relocation
expenses incurred as a result of the Asset Sale, any taxes paid or payable as a
result of the Asset Sale, in each case, after taking into account any available
tax credits or deductions and any tax sharing arrangements, amounts required to
be applied to the repayment of Indebtedness, all distributions and other
payments required to be made to non-majority interest holders in subsidiaries or
joint ventures as a result of such Asset Sale and appropriate amounts to be
provided by Omnicare or any Restricted Subsidiary, as the case may be, as a
reserve required in accordance with GAAP against any liabilities associated with
such Asset Sale and retained by Omnicare or any Restricted Subsidiary, as the
case may be, after such Asset Sale, including, without limitation, pension and
other post-employment benefit liabilities, liabilities related to environmental
matters and liabilities under any indemnification obligations associated with
such Asset Sale.
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'Obligations' means any principal, interest, penalties, fees,
indemnifications, reimbursements, damages and other liabilities payable under
the documentation governing any Indebtedness.
'Permitted Business' means the definition assigned to the term 'Health Care
Company' in the Credit Agreement (or, if not refinanced, the Existing Credit
Facilities), plus any business that Omnicare or any Restricted Subsidiary is
engaged in on the date of the indenture.
'Permitted Investments' means:
(1) any Investment in Omnicare or in a Restricted Subsidiary;
(2) any Investment in Cash Equivalents;
(3) any Investment by Omnicare or any Restricted Subsidiary in a Person, if
as a result of such Investment:
(a) such Person becomes a Restricted Subsidiary; or
(b) such Person is merged, consolidated or amalgamated with or
into, or transfers or conveys substantially all of its assets
to, or is liquidated into, Omnicare or a Restricted Subsidiary;
(4) any Investment made as a result of the receipt of non-cash
consideration from an Asset Sale that was made pursuant to and in
compliance with the covenant described above under the caption
' -- Repurchase at the Option of Holders -- Asset Sales';
(5) any Investment received to the extent the consideration therefor was
the issuance of Equity Interests (other than Disqualified Stock) of
Omnicare;
(6) Hedging Obligations;
(7) intercompany Indebtedness to the extent permitted under the 'Incurrence
of Indebtedness and Issuance of Preferred Stock' covenant;
(8) Investments in prepaid expenses, negotiable instruments held for
collection and lease, utility and workers' compensation, performance
and other similar deposits made in the ordinary course of business and
Investments to secure participation in government reimbursement
programs;
(9) loans and advances to officers, directors and employees made in the
ordinary course of business;
(10) Investments represented by accounts and notes receivable created or
acquired in the ordinary course of business;
(11) Investments existing on the date on which the notes were originally
issued and any renewal or replacement thereof on terms and conditions
not materially less favorable than that being renewed or replaced;
(12) Investments by any qualified or nonqualified benefit plan established
by Omnicare or its Restricted Subsidiaries made in accordance with the
terms of such plan, or any Investments made by Omnicare or any
Restricted Subsidiary in connection with the funding thereof;
(13) Investments received in settlement of debts owed to Omnicare or any
Restricted Subsidiary, including, without limitation, as a result of
foreclosure, perfection or enforcement of any Lien or indebtedness or
in connection with any bankruptcy, liquidation, receivership or
insolvency proceeding;
(14) Investments as of the date of the indenture in Unrestricted
Subsidiaries so designated as of the date of the indenture;
(15) Investments in any Subsidiary that constitutes a special purpose entity
formed for the primary purpose of financing receivables or for the
primary purpose of issuing trust preferred or similar securities in a
transaction permitted by the 'Incurrence of Indebtedness and Issuance
of Preferred Stock' covenant; and
(16) other Investments in any Person having an aggregate fair market value
(measured on the date each such Investment was made and without giving
effect to subsequent changes in value), when taken together with all
other outstanding Investments made pursuant to this clause (16), not to
exceed 15.0% of Consolidated Assets in the aggregate at any one time
outstanding.
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'Permitted Junior Securities' means:
(1) Equity Interests in Omnicare or any Guarantor; or
(2) debt securities that are subordinated to all Senior Debt and any debt
securities issued in exchange for Senior Debt to substantially the same
extent as, or to a greater extent than, the exchange and the Subsidiary
Guarantees are subordinated to Senior Debt under the indenture.
'Permitted Liens' means:
(1) Liens securing Senior Debt;
(2) Liens in favor of Omnicare or its Restricted Subsidiaries;
(3) Liens on property of a Person existing at the time such Person is
merged with or into or consolidated with Omnicare or any Restricted
Subsidiary; provided that such Liens were in existence prior to the
contemplation of such merger or consolidation and do not extend to any
assets other than those of the Person merged into or consolidated with
Omnicare or the Restricted Subsidiary;
(4) Liens on property existing at the time of acquisition of the property
by Omnicare or any Restricted Subsidiary, provided that such Liens were
in existence prior to the contemplation of such acquisition;
(5) Liens to secure Indebtedness (including, without limitation, Capital
Lease Obligations) permitted by clause (4) of the second paragraph of
the covenant entitled ' -- Certain Covenants -- Incurrence of
Indebtedness and Issuance of Preferred Stock' covering only the assets
acquired with such Indebtedness;
(6) Liens existing on the date of the indenture;
(7) Liens for taxes, assessments or governmental charges or claims that are
not yet delinquent or that are being contested in good faith by
appropriate proceedings promptly instituted and diligently concluded,
provided that any reserve or other appropriate provision as is required
in conformity with GAAP has been made therefor;
(8) Liens securing any Hedging Obligations of Omnicare or any Restricted
Subsidiary,
(9) Liens securing any Indebtedness otherwise permitted to be incurred
under the indenture, the proceeds of which are used to refinance
Indebtedness of Omnicare or any Restricted Subsidiary, provided that
such Liens extend to or cover only the assets secured by the
Indebtedness being refinanced;
(10) Liens on property of a Person existing at the time such Person becomes
a Restricted Subsidiary; provided that such Liens were not incurred in
connection with, or in contemplation of, such Person becoming a
Restricted Subsidiary;
(11) statutory Liens and other Liens imposed by law incurred in the ordinary
course of business for sums not yet delinquent or being contested in
good faith, if Omnicare or any applicable Restricted Subsidiaries shall
have made any reserves or other appropriate provision required by GAAP;
(12) Liens incurred or deposits made in the ordinary course of business in
connection with workers' compensation, unemployment insurance and other
types of social security, or to secure the performance of tenders,
statutory obligations, surety and appeal bonds, bids, leases,
government contracts, performance, return-of-money bonds, participation
in government reimbursement programs and other similar obligations;
(13) judgment Liens not giving rise to an Event of Default, so long as any
appropriate legal proceedings which may have been duly initiated for
the review of such judgment shall not have been finally terminated or
the period within which such proceedings may be initiated shall not
have expired;
(14) easements, rights-of-way, zoning restrictions and other similar charges
or encumbrances in respect of real property not interfering in any
material respect with the conduct of the business of Omnicare or any of
its Restricted Subsidiaries;
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(15) any interest or title of a lessor in assets or property subject to
Capitalized Lease Obligations or an operating lease of Omnicare or any
Restricted Subsidiary;
(16) Liens incurred in connection with a financing involving the sale or
other disposition of accounts receivable and related assets (including,
without limitation, in connection with a securitization or similar
financing);
(17) leases or subleases granted to others not interfering with the ordinary
conduct of the business of Omnicare or any of the Restricted
Subsidiaries;
(18) bankers' liens with respect to the right of set-off arising in the
ordinary course of business against amounts maintained in bank accounts
or certificates of deposit in the name of Omnicare or any Restricted
Subsidiary;
(19) the interest of any issuer of a letter of credit in any cash or Cash
Equivalents deposited with or for the benefit of such issuer as
collateral for such letter of credit; provided that the Indebtedness so
collateralized is permitted to be incurred by the terms of the
indenture;
(20) any Lien consisting of a right of first refusal or option to purchase
an ownership interest in any Restricted Subsidiary or to purchase
assets of Omnicare or any Restricted Subsidiary, which right of first
refusal or option is entered into in the ordinary course of business or
is otherwise permitted under the indenture;
(21) any Lien granted to the Trustee pursuant to the terms of the indenture
and any substantially equivalent Lien granted to the respective
trustees under the indentures for other debt securities of Omnicare;
and
(22) Liens incurred in the ordinary course of business of Omnicare or any
Restricted Subsidiary with respect to obligations that do not exceed
$10.0 million at any one time outstanding.
'Permitted Refinancing Indebtedness' means any Indebtedness of Omnicare or
any Restricted Subsidiary issued in exchange for, or the net proceeds of which
are used to extend, refinance, renew, replace, defease or refund other
Indebtedness of Omnicare or any of its Restricted Subsidiaries (other than
intercompany Indebtedness); provided that:
(1) the principal amount of such Permitted Refinancing Indebtedness does
not exceed the principal amount of the Indebtedness extended,
refinanced, renewed, replaced, defeased or refunded (plus all accrued
interest on the Indebtedness and the amount of all fees, expenses and
premiums incurred in connection therewith);
(2) if the Indebtedness being extended, refinanced, renewed, replaced,
defeased or refunded is other than Senior Debt, such Permitted
Refinancing Indebtedness has a final maturity date not earlier than the
final maturity date of, and has a Weighted Average Life to Maturity
equal to or greater than, the Weighted Average Life to Maturity of, the
Indebtedness being extended, refinanced, renewed, replaced, defeased or
refunded;
(3) if the Indebtedness being extended, refinanced, renewed, replaced,
defeased or refunded is subordinated in right of payment to the notes,
such Permitted Refinancing Indebtedness is subordinated in right of
payment to, the notes on terms not materially less favorable to the
Holders of notes as those contained in the documentation governing the
Indebtedness being extended, refinanced, renewed, replaced, defeased or
refunded; and
(4) if the Indebtedness being extended, refinanced, renewed, replaced,
defeased or refunded was incurred by Omnicare, the obligor on the
Permitted Refinancing Indebtedness may not be a Restricted Subsidiary.
'Person' means any individual, corporation, partnership, joint venture,
association, joint-stock company, trust, unincorporated organization, limited
liability company or government or other entity.
'Principal' means Joel Gemunder, an entity controlled by Joel Gemunder
and/or a trust for his benefit or any employee benefit plan of Omnicare
(including plans for the benefit of employees of its Restricted Subsidiaries).
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'Related Party' means:
(1) any controlling stockholder, 80% (or more) owned Subsidiary, or
immediate family member (in the case of an individual) of any
Principal; or
(2) any trust, corporation, partnership or other entity, the beneficiaries,
stockholders, partners, owners or Persons beneficially holding an 80%
or more controlling interest of which consist of any one or more
Principals and/or such other Persons referred to in the immediately
preceding clause (1).
'Replacement Assets' mean properties or assets substantially similar to the
assets disposed of in a particular Asset Sale and acquired to replace the
properties or assets that were the subject of such Asset Sale or that are
otherwise useful in a Permitted Business.
'Restricted Investment' means an Investment other than a Permitted
Investment.
'Restricted Subsidiary' means any direct or indirect Subsidiary of Omnicare
other than an Unrestricted Subsidiary.
'Senior Debt' means:
(1) all obligations of Omnicare or any Guarantor related to the Credit
Agreement (and, if they are not refinanced, the Existing Credit
Facilities), whether for principal, premium, if any, interest,
including interest accruing after the filing of, or which would have
accrued but for the filing of, a petition by or against Omnicare or
such Guarantor under applicable bankruptcy laws, whether or not such
interest is lawfully allowed as a claim after such filing, and all
other amounts payable in connection therewith, including, without
limitation, any fees, premiums, penalties, expenses, reimbursements,
indemnities, damages and other liabilities; and
(2) the principal of, premium, if any, and interest on all other
Indebtedness of Omnicare or any Guarantor, other than the notes, and
all Hedging Obligations, in each case whether outstanding on the date
of the indenture or thereafter created, incurred or assumed, unless, in
the case of any particular Indebtedness or Hedging Obligation, the
instrument creating or evidencing the Indebtedness or Hedging
Obligation expressly provides that such Indebtedness or Hedging
Obligation shall not be senior in right of payment to the notes.
Notwithstanding the foregoing, 'Senior Debt' does not include:
(a) Indebtedness evidenced by the notes and the Subsidiary Guarantees;
(b) Indebtedness of Omnicare or any Guarantor that is expressly
subordinated in right of payment to any Senior Debt of Omnicare or
such Guarantor or the notes or the applicable Subsidiary Guarantee;
(c) Indebtedness of Omnicare or any Guarantor that by operation of law
is subordinate to any general unsecured obligations of Omnicare or
such Guarantor;
(d) Indebtedness of Omnicare or any Guarantor to the extent incurred in
violation of any covenant prohibiting the incurrence of Indebtedness
under the indenture;
(e) any liability for federal, state or local taxes or other taxes, owed
or owing by Omnicare or any Guarantor;
(f) accounts payable or other liabilities owed or owing by Omnicare or
any Guarantor to trade creditors, including guarantees thereof or
instruments evidencing such liabilities;
(g) amounts owed by Omnicare or any Guarantor for compensation to
employees or for services rendered to Omnicare or such Guarantor;
(h) Indebtedness of Omnicare or any Guarantor to any Restricted
Subsidiary or any other Affiliate of Omnicare or such Guarantor;
(i) Capital Stock of Omnicare or any Guarantor;
(j) Indebtedness which when incurred and without respect to any election
under Section 1111(b) of Title 11 of the U.S. Code is without
recourse to Omnicare or any Restricted Subsidiary; and
(k) the 5% Convertible Subordinated Debentures due 2007.
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'Significant Subsidiary' means any Subsidiary that would be a 'significant
subsidiary' as defined in Article 1, Rule 1-02 of Regulation S-X, promulgated
pursuant to the Securities Act of 1933, as such Regulation is in effect on the
date hereof.
'Stated Maturity' means, with respect to any installment of interest or
principal on any series of Indebtedness, the date on which the payment of
interest or principal was scheduled to be paid in the original documentation
governing such Indebtedness, and will not include any contingent obligations to
repay, redeem or repurchase any such interest or principal prior to the date
originally scheduled for the payment thereof.
'Subsidiary' means, with respect to any specified Person, (a) any
corporation more than 50% of the outstanding securities having ordinary voting
power of which shall at the time be owned or controlled, directly or indirectly,
by such Person or by one or more of its Restricted Subsidiaries or by such
Person and one or more of its Restricted Subsidiaries, or (b) any partnership,
limited liability company, association, joint venture or similar business
organization more than 50% of the ownership interests having ordinary voting
power of which shall at the time be so owned or controlled.
'Unrestricted Subsidiary' means any Subsidiary of Omnicare that is
designated by the Board of Directors as an Unrestricted Subsidiary pursuant to a
Board Resolution, but only to the extent that such Subsidiary:
(1) has no Indebtedness other than Indebtedness that is without recourse to
Omnicare or its Restricted Subsidiaries;
(2) is not party to any agreement, contract, arrangement or understanding
with Omnicare or any Restricted Subsidiary unless the terms of any such
agreement, contract, arrangement or understanding are not materially
less favorable to Omnicare or such Restricted Subsidiary than those
that might be obtained at the time from Persons who are not Affiliates
of Omnicare;
(3) is a Person with respect to which neither Omnicare nor any of its
Restricted Subsidiaries has any (a) continuing direct or indirect
obligation to subscribe for additional Equity Interests or (b) direct
or indirect obligation to maintain or preserve such Person's financial
condition or to cause such Person to achieve any specified levels of
operating results; and
(4) has not guaranteed or otherwise directly or indirectly provided credit
support for any Indebtedness of Omnicare or any of its Restricted
Subsidiaries.
In addition, any Subsidiary that constitutes a special purpose entity formed
for the primary purpose of financing receivables or for the primary purpose of
issuing trust preferred or similar securities in connection with a transaction
permitted by the 'Incurrence of Indebtedness and Issuance of Preferred Stock'
covenant, shall be an Unrestricted Subsidiary.
Any designation of a Subsidiary of Omnicare as an Unrestricted Subsidiary
after the date of the indenture will be evidenced to the Trustee by filing with
the Trustee a certified copy of the Board Resolution giving effect to such
designation and an officers' certificate certifying that such designation
complied with the preceding conditions and was permitted by the covenant
described above under the caption ' -- Certain Covenants -- Restricted
Payments.' If, at any time, any Unrestricted Subsidiary would fail to meet the
preceding requirements as an Unrestricted Subsidiary, it will thereafter cease
to be an Unrestricted Subsidiary for purposes of the indenture and any
Indebtedness of such Subsidiary will be deemed to be incurred by a Restricted
Subsidiary of Omnicare as of such date and, if such Indebtedness is not
permitted to be incurred as of such date under the covenant described under the
caption ' -- Certain Covenants -- Incurrence of Indebtedness and Issuance of
Preferred Stock,' Omnicare will be in default of such covenant. The Board of
Directors of Omnicare may at any time designate any Unrestricted Subsidiary to
be a Restricted Subsidiary; provided that such designation will be deemed to be
an incurrence of Indebtedness by a Restricted Subsidiary of any outstanding
Indebtedness of such Unrestricted Subsidiary and such designation will only be
permitted if (1) such Indebtedness is permitted under the covenant described
under the caption ' -- Certain Covenants -- Incurrence of Indebtedness and
Issuance of Preferred Stock,' calculated on a pro forma basis as if such
designation had occurred at the beginning of the four quarter reference period;
and (2) no Default or Event of Default would be in existence following such
designation.
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'Voting Stock' of any Person as of any date means the Capital Stock of such
Person that is at the time entitled to vote in the election of the Board of
Directors of such Person.
'Weighted Average Life to Maturity' means, when applied to any Indebtedness
at any date, the number of years obtained by dividing:
(1) the sum of the products obtained by multiplying (a) the amount of each
then remaining installment, sinking fund, serial maturity or other
required payments of principal, including payment at final maturity, in
respect of the Indebtedness, by (b) the number of years (calculated to
the nearest one-twelfth) that will elapse between such date and the
making of such payment; by
(2) the then outstanding principal amount of such Indebtedness.
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DESCRIPTION OF CERTAIN INDEBTEDNESS
NEW CREDIT FACILITY
Concurrently with the closing of the private offering of the old notes, we
entered into a new $495 million revolving credit facility, including a $25
million letter of credit subfacility, with Bank One, NA (having its principal
office in Chicago, Illinois) ('Bank One'), as administrative agent, Banc One
Capital Markets, Inc., as joint lead arranger and sole book runner, UBS Warburg
LLC, as joint lead arranger and syndication agent, Lehman Commercial Paper Inc.,
as syndication agent, SunTrust Bank, as documentation agent, and Deutsche Bank
AG, New York Branch, as documentation agent (the 'New Credit Facility').
Subsequent to the closing of the New Credit Facility, we closed on an additional
$5 million of commitments that has brought the total commitment to $500 million.
The New Credit Facility consists of a $500 million revolving loan commitment
that has a three-year final maturity and allows us to reduce the commitment in
increments of $5 million. The $25 million letter of credit subcommitment allows
for the issuance of letters of credit that have a maximum duration not to exceed
the maturity of the facility. The New Credit Facility is guaranteed by
subsidiaries that, together with Omnicare, Inc., in the aggregate account for at
least 90% of our consolidated assets and revenues. Loans under the New Credit
Facility bear interest, at our option, at a rate equal to either (i) the higher
of (a) Bank One's prime rate or (b) the federal funds rate plus 0.50% or (ii)
(a) the quotient of (A) the interest rate in the London interbank market for
loans of the same general interest period duration, divided by (B) one minus the
maximum aggregate reserves imposed on Eurocurrency liabilities, plus
(b) between one and one-quarter percent and two and one-half percent (depending
on certain senior long-term debt ratings).
The New Credit Facility limits, among other things, our ability to incur
contingent obligations, to make investments, to make additional acquisitions or
merge with another entity, to sell or to create or incur liens on assets, to
repay other indebtedness prior to its stated maturity (including the notes) and
to amend the indenture relating to the notes. In addition, the New Credit
Facility requires us to meet certain financial tests. We can reborrow amounts
repaid under the New Credit Facility prior to maturity.
The New Credit Facility replaced our two previous credit facilities that
existed prior to the closing of the private offering of the old notes.
CONVERTIBLE NOTES
We have outstanding $345 million aggregate principal amount of our
Convertible Notes. The Convertible Notes bear interest at a rate of 5% per
annum. Interest on the Convertible Notes is payable semi-annually on June 1 and
December 1. Principal on the Convertible Notes is payable on December 1, 2007.
The Convertible Notes are redeemable in whole or in part at a price, expressed
as a percentage of the principal amount, ranging from 103.5% during the period
beginning December 6, 2000 and ending on November 30, 2001 to 100.5% for the
period beginning December 1, 2006 and ending on November 30, 2007, in each case
plus accrued interest. The Convertible Notes are convertible at the option of
the holder, unless previously redeemed, into our common stock at a conversion
price of $39.60 per share, subject to adjustment in certain events. In the event
of a Fundamental Change (as defined below), each holder of Convertible Notes has
the right, at the holder's option, to require us to redeem all or any part of
the holder's Convertible Notes at a price, expressed as a percentage of the
principal amount, ranging from 103.5% during the period beginning December 6,
2000 and ending on November 30, 2001 to 100.5% for the period beginning
December 1, 2006 and ending on November 30, 2007, in each case plus accrued
interest. Our ability to repurchase the Convertible Notes following a
Fundamental Change is dependent upon our having sufficient funds and may be
limited by the terms of our other indebtedness or the subordination provisions
of the indenture relating to the Convertible Notes.
As defined in the indenture relating to the Convertible Notes, 'Fundamental
Change' means the occurrence of any transaction or event in connection with
which all of our common stock is exchanged for, converted into, is acquired for,
or constitutes in all material respects solely the right to receive,
consideration which is not all or substantially all common stock listed (or upon
consummation of or immediately following such transaction or event which will be
listed) on a United States national securities exchange or approved for
quotation on the Nasdaq National Market or any similar United States system of
automated dissemination of quotations of securities prices (whether by means of
an exchange
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offer, liquidation, tender offer, consolidation, merger, combination,
reclassification, recapitalization or otherwise).
The old notes and the exchange notes offered by this prospectus are senior
to the Convertible Notes.
MATERIAL FEDERAL INCOME TAX CONSIDERATIONS
The following is a discussion of the material U.S. federal income tax
considerations relevant to the exchange of notes for the exchange notes pursuant
to the exchange offer. This discussion is based upon currently existing
provisions of the Internal Revenue code of 1986, as amended, Treasury
regulations promulgated thereunder, and administrative and judicial
interpretations thereof, all as in effect on the date hereof and all of which
are subject to change, possibly on a retroactive basis. There can be no
assurance that the Internal Revenue Service will not take positions contrary to
those taken in this discussion, and no ruling from the Internal Revenue Service
has been or will be sought. This discussion does not address all of the U.S.
federal income tax considerations that may be relevant to particular holders of
exchange notes in light of their individual circumstances, not does it address
the U.S. federal income tax considerations that may be relevant to holders
subject to special rules, including, for example, banks and other financial
institutions, insurance companies, tax-exempt entities, dealers in securities,
and persons holding exchange notes as part of a hedging or conversion
transaction or a straddle.
Holders are urged to consult their own tax advisors as to the particular
U.S. federal income tax consequences to them of exchanging old notes for
exchange notes, as well as the tax consequences under state, local, foreign and
other tax laws, and the possible effects of changes in tax laws.
We believe that the exchange of old notes for the exchange notes pursuant to
the exchange offer will not be treated as an 'exchange' for U.S. federal income
tax purposes. Consequently, we believe that a holder that exchanges old notes
for exchange notes pursuant to the exchange offer will not recognize taxable
gain or loss on such exchange, such holder's adjusted tax basis in the exchange
notes will be the same as its adjusted tax basis in the old notes exchanged
therefor immediately before such exchange, and such holder's holding period for
the exchange notes will include the holding period for the old notes exchanged
therefor.
PLAN OF DISTRIBUTION
Each Participating Broker-Dealer that receives exchange notes for its own
account pursuant to the exchange offer must acknowledge that it will deliver a
prospectus in connection with any resale of such exchange notes. This
prospectus, as it may be amended or supplemented from time to time, may be used
by a Participating Broker-Dealer in connection with resales of exchange notes
received in exchange for old notes where such old notes were acquired as a
result of market-making activities or other trading activities. We have agreed
that, until , or until all restricted securities covered by the exchange
offer registration statement have been sold, whichever period is shorter, we
will make this prospectus, as it may be amended or supplemented, available to
any Participating Broker-Dealer for use in connection with any such resale.
We will not receive any proceeds from any sale of exchange notes by
Participating Broker-Dealers.
Exchange notes received by Participating Broker-Dealers for their own
account pursuant to the exchange offer may be sold from time to time in one or
more transactions
in the over-the-counter market,
in negotiated transactions,
through the writing of options on the exchange notes or
a combination of such methods of resale,
at market prices prevailing at the time of resale, at prices related to such
prevailing market prices or at negotiated prices.
Any such resale may be made
directly to purchasers or
104
to or through brokers or dealers who may receive compensation in the form
of commissions or concessions from any such Participating Broker-Dealer or
the purchasers of any such exchange notes.
Any Participating Broker-Dealer that resells exchange notes that were
received by it for its own account pursuant to the exchange offer and any broker
or dealer that participates in a distribution of such new notes may be deemed to
be an 'underwriter' within the meaning of the Securities Act of 1933 and any
profit on any such resale of exchange notes and any commission or concessions
received by any such persons may be deemed to be underwriting compensation under
the Securities Act of 1933. The letter of transmittal states that, by
acknowledging that it will deliver and by delivering a prospectus, a
Participating Broker-Dealer will not be deemed to admit that it is an
'underwriter' within the meaning of the Securities Act of 1933.
Up until , we will promptly send additional copies of this
prospectus and any amendment or supplement to this prospectus to any
Participating Broker-Dealer that requests such documents in the letter of
transmittal. We have agreed to pay all expenses incident to the exchange offer,
including the expenses of one counsel for the holders of the old notes, other
than commissions and concessions of any Participating Broker-Dealer and will
indemnify the holders of the old notes, including any Participating
Broker-Dealers, against certain liabilities, including liabilities under the
Securities Act of 1933.
LEGAL MATTERS
The validity of the exchange notes will be passed upon for us by Dewey
Ballantine LLP, New York, New York.
EXPERTS
The financial statements as of December 31, 2000 and 1999 and for each of
the three years in the period ended December 31, 2000 included in this
prospectus have been so included in reliance on the report of
PricewaterhouseCoopers LLP, independent accountants, given on the authority of
said firm as experts in auditing and accounting.
WHERE YOU CAN FIND MORE INFORMATION
We file annual, quarterly and special reports, proxy statements and other
information required by the Securities Exchange Act of 1934 with the SEC. You
may read and copy any document we file at the following SEC public reference
rooms:
450 5th Street, N.W. Seven World Trade Center Citicorp Center
Room 1024 Suite 1300 500 West Madison Street
Washington, D.C. 20549 New York, NY 10048 Suite 1400
Chicago, IL 60661
Please call the SEC at 1-800-SEC-0330 for further information on the public
reference rooms.
Our SEC filings are also available from the SEC'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
105
DOCUMENTS INCORPORATED BY REFERENCE INTO THIS PROSPECTUS
We are incorporating the following documents by reference into this
prospectus. The information in these documents is considered a part of this
prospectus, and documents filed later with the SEC will update and supercede
this information.
REPORT PERIOD
------ ------
Annual Report on Form 10-K....... Fiscal year ended December 31, 2000 (including those
portions of our Definitive Proxy Statement dated
April 10, 2001 incorporated by reference therein).
Current Reports on Form 8-K...... Current Reports dated March 6, 2001 (exclusive of
portions thereof, including exhibits, filed pursuant to
Item 9 of Form 8-K) and March 23, 2001.
Quarterly Report on Form 10-Q.... Quarterly period ended March 31, 2001
Any future filings we make with the SEC under Sections 13(a), 13(c), 14 or
15(d) of the Securities Exchange Act of 1934 until the exchange offer expires
will also be incorporated by reference in this prospectus.
You may request a copy of our filings by writing or telephoning us at the
following address:
Omnicare, Inc.
Attention: Peter Laterza -- Vice President and General Counsel
100 East RiverCenter Blvd., Suite 1600
Covington, Kentucky 41011
(859) 392-3300
Descriptions in this prospectus, including those contained in the documents
incorporated by reference, of contracts and other documents are not necessarily
complete and, in each instance, reference is made to the copies of these
contracts and documents filed as exhibits to the documents incorporated by
reference in this prospectus.
106
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
PAGE
AUDITED FINANCIAL STATEMENTS AS OF AND FOR THE THREE YEARS
ENDED DECEMBER 31, 2000
Report of Independent Accountants........................... F-2
Consolidated Statement of Income............................ 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
UNAUDITED FINANCIAL STATEMENTS AS OF AND FOR THE THREE MONTHS
ENDED MARCH 31, 2000 AND 2001
Consolidated Statement of Income............................ F-26
Consolidated Balance Sheet.................................. F-27
Consolidated Statement of Cash Flows........................ F-28
Notes to Consolidated Financial Statements.................. F-29
F-1
REPORT OF INDEPENDENT ACCOUNTANTS
[LOGO]
To the Stockholders and
Board of Directors of Omnicare, Inc.
In our opinion, the accompanying consolidated balance sheets and the
related consolidated statements of income and stockholders' equity and of cash
flows present fairly, in all material respects, the financial position of
Omnicare, Inc. and its subsidiaries at December 31, 2000 and 1999, and the
results of their operations and their cash flows for each of the three years in
the period ended December 31, 2000, in conformity with accounting principles
generally accepted in the United States of America. 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 audits. We
conducted our audits of these statements in accordance with auditing standards
generally accepted in the United States of America, 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 audits provide a reasonable basis for our opinion.
PricewaterhouseCoopers LLP
PricewaterhouseCoopers LLP
Cincinnati, Ohio
February 2, 2001, except for the
first paragraph of Note 6, as to which
the date is March 28, 2001
F-2
CONSOLIDATED STATEMENT OF INCOME
Omnicare, Inc. and Subsidiary Companies
(In thousands, except per share data)
For the years ended December 31,
2000 1999 1998
- -------------------------------------------------------------------------------------------------
Sales $1,971,348 $1,861,921 $1,517,370
Cost of sales 1,445,955 1,338,638 1,058,743
- -------------------------------------------------------------------------------------------------
Gross profit 525,393 523,283 458,627
Selling, general and administrative expenses 367,507 351,639 283,438
Acquisition expenses, pooling-of-interests (Note 2) -- (55) 15,441
Restructuring and other related charges (Note 12) 27,199 35,394 3,627
- -------------------------------------------------------------------------------------------------
Operating income 130,687 136,305 156,121
Investment income 1,910 1,532 3,356
Interest expense (55,074) (46,166) (23,611)
- -------------------------------------------------------------------------------------------------
Income before income taxes 77,523 91,671 135,866
Income taxes 28,706 33,950 55,487
- -------------------------------------------------------------------------------------------------
Net income $ 48,817 $ 57,721 $ 80,379
=================================================================================================
Earnings per share:
Basic $ 0.53 $ 0.63 $ 0.90
=================================================================================================
Diluted $ 0.53 $ 0.63 $ 0.90
=================================================================================================
Weighted average number of common shares outstanding:
Basic 92,012 90,999 89,081
=================================================================================================
Diluted 92,012 91,238 89,786
=================================================================================================
Comprehensive income $ 47,616 $ 56,673 $ 80,431
=================================================================================================
The Notes to Consolidated Financial Statements are an integral part of this
statement.
F-3
CONSOLIDATED BALANCE SHEET
Omnicare, Inc. and Subsidiary Companies
(In thousands, except share data)
December 31,
2000 1999
- --------------------------------------------------------------------------------------------------------------------------
ASSETS
Current assets:
Cash and cash equivalents $ 111,607 $ 97,267
Restricted cash 2,300 --
Accounts receivable, less allowances of $40,497 (1999-$36,883) 440,785 422,283
Unbilled receivables 18,933 18,450
Inventories 129,404 120,280
Deferred income tax benefits 26,338 17,336
Other current assets 88,371 76,729
- --------------------------------------------------------------------------------------------------------------------------
Total current assets 817,738 752,345
Properties and equipment, at cost less accumulated depreciation of $132,308 (1999-$106,022) 158,535 162,133
Goodwill, less accumulated amortization of $115,832 (1999-$83,243) 1,168,151 1,188,941
Other noncurrent assets 65,794 64,554
- --------------------------------------------------------------------------------------------------------------------------
Total assets $2,210,218 $2,167,973
==========================================================================================================================
LIABILITIES AND STOCKHOLDERS'EQUITY
Current liabilities:
Accounts payable $ 118,941 $ 108,189
Amounts payable pursuant to acquisition agreements 4,372 9,053
Current portion of long-term debt 1,619 77,413
Accrued employee compensation 30,113 50,498
Deferred revenue 28,333 24,321
Income taxes payable 14,238 --
Other current liabilities 59,393 52,769
- --------------------------------------------------------------------------------------------------------------------------
Total current liabilities 257,009 322,243
Long-term debt 435,706 391,944
5% convertible subordinated debentures, due 2007 345,000 345,000
Deferred income taxes 63,579 37,360
Amounts payable pursuant to acquisition agreements 12,675 13,878
Other noncurrent liabilities 27,826 29,168
- --------------------------------------------------------------------------------------------------------------------------
Total liabilities 1,141,795 1,139,593
Stockholders' equity:
Preferred stock, no par value, 1,000,000 shares authorized, none issued and outstanding -- --
Common stock, $1 par value, 200,000,000 shares authorized, 92,730,600 shares issued
and outstanding (1999-91,611,800 shares issued and outstanding) 92,731 91,612
Paid-in capital 692,695 684,419
Retained earnings 315,638 275,114
- --------------------------------------------------------------------------------------------------------------------------
1,101,064 1,051,145
Treasury stock, at cost-574,200 shares (1999-325,500 shares) (10,808) (6,950)
Deferred compensation (18,915) (14,098)
Accumulated other comprehensive income (2,918) (1,717)
- --------------------------------------------------------------------------------------------------------------------------
Total stockholders' equity 1,068,423 1,028,380
- --------------------------------------------------------------------------------------------------------------------------
Total liabilities and stockholders' equity $2,210,218 $2,167,973
==========================================================================================================================
The Notes to Consolidated Financial Statements are an integral part of this
statement.
F-4
CONSOLIDATED STATEMENT OF CASH FLOWS
Omnicare, Inc. and Subsidiary Companies
(In thousands)
For the years ended December 31,
2000 1999 1998
- -----------------------------------------------------------------------------------------------------------
Cash flows from operating activities:
Net income $ 48,817 $ 57,721 $ 80,379
Adjustments to reconcile net income to net cash
flows from operating activities:
Depreciation 32,211 32,682 22,977
Amortization 41,762 36,682 24,659
Provision for doubtful accounts 26,729 22,056 12,405
Deferred tax provision 19,767 23,073 7,579
Non-cash portion of restructuring charges 6,804 4,198 1,948
Unrealized appreciation in fair value of investments 493 -- --
Changes in assets and liabilities, net of effects
from acquisition of businesses:
Accounts receivable and unbilled receivables (44,314) (83,959) (84,276)
Inventories (8,988) 1,146 (18,786)
Current and noncurrent assets (11,203) (43,837) (15,466)
Accounts payable 11,115 29,072 27,413
Accrued employee compensation (14,436) 15,202 3,999
Deferred revenue 4,012 5,278 (3,190)
Current and noncurrent liabilities 19,932 1,800 29,866
- -----------------------------------------------------------------------------------------------------------
Net cash flows from operating activities 132,701 101,114 89,507
- -----------------------------------------------------------------------------------------------------------
Cash flows from investing activities:
Acquisition of businesses (41,664) (144,079) (398,686)
Capital expenditures (32,423) (58,749) (53,179)
Transfer of cash to trusts for employee health and severance costs,
net of payments out of the trust (2,300) -- --
Marketable securities -- -- 2,084
Other 271 (689) 63
- -----------------------------------------------------------------------------------------------------------
Net cash flows from investing activities (76,116) (203,517) (449,718)
- -----------------------------------------------------------------------------------------------------------
Cash flows from financing activities:
Borrowings on line of credit facilities -- 170,000 305,000
Payments on line of credit facilities (30,000) (10,000) --
Principal payments on long-term obligations (1,838) (3,502) (22,796)
Fees paid for financing arrangements (635) (641) (1,761)
(Payments) for and proceeds from exercise of stock options
and warrants, net of stock tendered in payment (1,011) (2,152) 3,050
Dividends paid (8,293) (8,203) (6,841)
- -----------------------------------------------------------------------------------------------------------
Net cash flows from financing activities (41,777) 145,502 276,652
- -----------------------------------------------------------------------------------------------------------
Effect of exchange rate changes on cash (468) (144) (191)
- -----------------------------------------------------------------------------------------------------------
Net increase (decrease) in cash and cash equivalents 14,340 42,955 (83,750)
Cash and cash equivalents at beginning of period 97,267 54,312 138,062
- -----------------------------------------------------------------------------------------------------------
Cash and cash equivalents at end of period $111,607 $ 97,267 $ 54,312
===========================================================================================================
The Notes to Consolidated Financial Statements are an integral part of this
statement.
F-5
CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY
Omnicare, Inc. and Subsidiary Companies
(In thousands, except per share data)
Accumulated
Unallocate Other Total
Common Paid-in Retained Treasury Deferred Stock of Comprehensive Stockholders'
Stock Capital Earnings Stock Compensation ESOP Income Equity
- ----------------------------------------------------------------------------------------------------------------------------------
Balance at December 31, 1997 $88,261 $609,117 $151,153 $ (2,926) $(14,807) $(940) $ (105) $ 829,753
Pooling-of-interests (Note 2) 549 803 1,245 -- -- -- -- 2,597
Net income -- -- 80,379 -- -- -- -- 80,379
Dividends paid ($0.08 per share) -- -- (6,841) -- -- -- -- (6,841)
Stock and warrants issued in
connection with acquisitions 868 39,312 -- (4,107) -- -- -- 36,073
Exercise of warrants 175 1,965 -- 518 -- -- -- 2,658
Exercise of stock options 232 894 -- 3,669 -- -- -- 4,795
Stock awards, net of
amortization 375 12,134 -- (1,320) 1,875 -- -- 13,064
Decrease in unallocated stock -- -- -- -- -- 940 -- 940
Cumulative translation
adjustment -- -- -- -- -- -- 52 52
Other -- -- 1 -- -- -- -- 1
- ----------------------------------------------------------------------------------------------------------------------------------
Balance at December 31, 1998 90,460 664,225 225,937 (4,166) (12,932) -- (53) 963,471
Pooling-of-interests (Note 2) 333 326 (297) -- -- -- -- 362
Net income -- -- 57,721 -- -- -- -- 57,721
Dividends paid ($0.09 per share) -- -- (8,203) -- -- -- -- (8,203)
Stock and warrants issued in
connection with acquisitions 151 3,799 -- (3) -- -- -- 3,947
Stock acquired for benefit plans -- -- -- (1,092) -- -- -- (1,092)
Exercise of warrants 52 697 -- -- -- -- -- 749
Exercise of stock options 14 (437) -- 806 -- -- -- 383
Stock awards, net of
amortization 602 15,809 -- (2,495) (1,166) -- -- 12,750
Cumulative translation
adjustment -- -- -- -- -- -- (1,664) (1,664)
Other -- -- (44) -- -- -- -- (44)
- ----------------------------------------------------------------------------------------------------------------------------------
Balance at December 31, 1999 91,612 684,419 275,114 (6,950) (14,098) -- (1,717) 1,028,380
Net income -- -- 48,817 -- -- -- -- 48,817
Dividends paid ($0.09 per share) -- -- (8,293) -- -- -- -- (8,293)
Stock acquired for benefit plans -- -- -- (88) -- -- -- (88)
Exercise of stock options 173 1,559 -- (1,882) -- -- -- (150)
Stock awards, net of
amortization 946 7,161 -- (1,840) (4,817) -- -- 1,450
Cumulative translation
adjustment -- -- -- -- -- -- (1,694) (1,694)
Unrealized appreciation in fair
value of investments -- -- -- -- -- -- 493 493
Other -- (444) -- (48) -- -- -- (492)
- ----------------------------------------------------------------------------------------------------------------------------------
Balance at December 31, 2000 $92,731 $692,695 $315,638 $(10,808) $(18,915) $ -- $(2,918) $ 1,068,423
==================================================================================================================================
The Notes to Consolidated Financial Statements are an integral part of this
statement.
F-6
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Note 1 - Summary of
Significant Accounting Policies
-------------------------------
Principles of Consolidation
The consolidated financial statements of Omnicare, Inc. ("Omnicare" or the
"Company") include the accounts of all wholly owned subsidiaries. All
significant intercompany accounts and transactions have been eliminated in
consolidation.
Translation of Foreign Financial Statements
Assets and liabilities of the Company's foreign operations are
translated at the year-end rate of exchange, and the income statements are
translated at the average rate of exchange for the year. Gains or losses from
translating foreign currency financial statements are accumulated in a separate
component of stockholders' equity.
Cash Equivalents
Cash equivalents include all investments in highly liquid instruments with
original maturities of three months or less.
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 using the first-in, first-out ("FIFO") method.
Properties and Equipment
Properties and equipment are stated at cost. Expenditures for maintenance,
repairs, renewals and betterments that do not materially prolong the useful
lives of the assets are charged to expense as incurred. Depreciation of
properties and equipment is computed using the straight-line method over the
estimated useful lives of the assets, ranging from three to forty years.
Leasehold improvements are amortized over the lesser of the lease terms,
including renewal options, or their useful lives.
Leases
Leases that substantially transfer all of the benefits and risks of
ownership of property to Omnicare or otherwise meet the criteria for
capitalizing a lease under generally accepted accounting principles are
accounted for as capital leases. An asset is recorded at the time a capital
lease is entered into together with its related long-term obligation to reflect
its purchase and financing. Property and equipment recorded under capital leases
are depreciated on the same basis as previously described. Rental payments under
operating leases are expensed as incurred.
Goodwill, Intangibles and Other Assets
Intangible assets, comprised primarily of goodwill arising from
business combinations accounted for as purchase transactions, are amortized
using the straight-line method over forty years.
At each balance sheet date, the Company reviews the recoverability of
goodwill. The measurement of possible impairment is based primarily on the
ability to recover the balance of the goodwill from expected future operating
cash flows on an undiscounted basis. In management's opinion, no such impairment
exists as of December 31, 2000 or 1999.
Debt issuance costs as of December 31, 2000 and 1999 are included in other
assets and are amortized using the straight-line method (which approximates the
effective interest method) over the life of the related debt.
Fair Value of Financial Instruments
The fair value of the Company's line of credit facilities approximates
their carrying value, and the fair value of the convertible subordinated
debentures was $277.7 million at December 31, 2000.
Revenue Recognition
Revenue is recognized when products or services are delivered or provided
to the customer. Asignificant portion of the Company's revenues from sales of
pharmaceutical and medical products is reimbursable from Medicaid and Medicare
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.
Additionally, a portion of the Company's revenues are earned by performing
services under contracts with various pharmaceutical, biotechnology, medical
device and diagnostics companies, based on contract terms. Most of the contracts
provide for services to be performed on a units of service basis. These
contracts specifically identify the units of service and unit pricing. Under
these contracts, revenue is generally recognized upon completion of the units of
service, unless the units of service are performed over an extended period of
time. For extended units of service, revenue is recognized based on labor hours
expended as a percentage of total labor hours expected to be expended. For
time-and-materials contracts, revenue is recognized at contractual hourly rates,
and for fixed-price contracts revenue is recognized using a method similar to
that used for extended units of service. The Company's contracts provide for
price renegotiations upon scope of work changes. The Company recognizes revenue
related to these scope changes when underlying services are performed and
realization is assured. In a number of cases, clients are required to make
termination payments in addition to payments for services already rendered. Any
anticipated losses resulting from contract performance are charged to earnings
in the period identified. Billings and payments are specified in each contract.
Revenue recognized in excess of billings is classified as unbilled receivables,
while billings in excess of revenue are classified as deferred revenue on the
accompanying balance sheets.
Income Taxes
The Company accounts for income taxes using the asset and liability 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.
F-7
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Earnings Per Share Data
Basic earnings per share are computed based on the weighted average number
of shares of common stock outstanding during the period. Diluted earnings per
share include the dilutive effect of stock options and warrants. The $345.0
million of 5.0% Convertible Subordinated Debentures due 2007 were not included
in the diluted earnings per share calculations during the three years ended
December 31, 2000 since the impact was antidilutive.
Comprehensive Income
Comprehensive income of the Company differs from net income due to foreign
currency translation adjustments and unrealized appreciation in the fair value
of investments.
Recently Issued Accounting Standards
Statement of Financial Accounting Standards ("SFAS") No. 133,
"Accounting for Derivative Instruments and Hedging Activities," as amended,
establishes accounting and reporting standards for derivative instruments and
hedging activities and requires recognition of all derivatives as either assets
or liabilities measured at fair value. The accounting for changes in the fair
value of a derivative depends on the intended use of the derivative and the
resulting designation. SFAS No. 133, as amended, is effective for fiscal years
beginning after June 15, 2000 and its adoption on January 1, 2001 did not have a
material effect on the Company's consolidated financial statements.
Use of Estimates in the
Preparation of Financial Statements
The preparation of 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 reported amounts of revenues and expenses
during the reporting periods, and amounts reported in the accompanying notes.
Actual results could differ from those estimates.
Reclassifications
Certain reclassifications of prior year amounts have been made to conform
with the current year presentation.
Note 2 - Acquisitions
---------------------
Since 1989, the Company has been involved in a program to acquire providers
of pharmaceutical products and related pharmacy management services and medical
supplies to long-term care facilities and their residents. The Company's
strategy has included the acquisition of freestanding institutional pharmacy
businesses as well as other assets, generally insignificant in size, which have
been combined with existing pharmacy operations to augment their internal
growth. From time to time, the Company may acquire other businesses such as
long-term care software companies, contract research organizations, pharmacy
consulting companies and medical supply companies, which complement the
Company's core business. No acquisitions of businesses were completed during the
year ended December 31, 2000.
During the year ended December 31, 1999, the Company completed five
acquisitions (excluding insignificant acquisitions), all of which were
institutional pharmacy businesses. Four of the acquisitions were accounted for
as purchases and one as a pooling-of-interests. The impact of the
pooling-of-interests transaction on the Company's historical consolidated
financial statements was not material. Consequently, prior period and current
year financial statements were not restated for this transaction.
During the year ended December 31, 1998, the Company completed 15
acquisitions (excluding insignificant acquisitions), including 12 institutional
pharmacy businesses, a long-term care software company and two contract research
organizations. Eleven of the acquisitions were accounted for as purchases and
four as poolings-of-interests. The impact of the CompScript, Inc. ("CompScript")
and IBAH, Inc. ("IBAH") pooling-of-interests transactions, discussed below in
the "Pooling-of-Interests" section, on the Company's historical consolidated
financial statements was material. Consequently, Omnicare's financial statements
were restated to include the accounts and results of operations of CompScript
and IBAH for all periods presented. The impact of the other two
pooling-of-interests transactions completed by Omnicare on the Company's
historical consolidated financial statements was not material. Consequently,
prior period and current year financial statements were not restated for these
transactions.
Purchases
For all acquisitions accounted for as purchases, including insignificant
acquisitions, the purchase price paid for each has been allocated to the fair
value of the assets acquired and liabilities assumed. Purchase price allocations
are subject to final determination within one year after the acquisition date.
On June 2, 1999, Omnicare announced the completion of the acquisition of
the institutional pharmacy operations of Life Care Pharmacy Services, Inc.
("Life Care"), an affiliate of Life Care Centers of America, for approximately
$63 million in cash and 300,000 warrants to purchase Omnicare common stock at
$29.70 per share. The warrants have a seven-year term and are first exercisable
in June 2002. Life Care had, at the time of the acquisition, contracts to
provide comprehensive pharmacy and related consulting services to approximately
17,000 residents in twelve states.
On September 17, 1998, Omnicare announced the completion of the acquisition
of the institutional pharmacy operations of Extendicare Health Services, Inc.
("EHSI"), a wholly owned subsidiary of Extendicare Inc., for approximately $250
million in cash, 125,000 shares of Omnicare common stock and 1.5 million
warrants to purchase Omnicare common stock at $48.00 per share. The warrants
have a seven-year term and are first exercisable in September 2001. Based in
Milwaukee, Wisconsin, the
F-8
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
pharmacy business of EHSI, operating under the name United Professional
Companies, Inc., had, at the time of the acquisition, contracts to provide
comprehensive pharmacy, related consulting and infusion therapy services to
approximately 55,000 residents in more than 550 facilities in 12 states.
The following table summarizes the aggregate purchase price for all
businesses acquired which have been accounted for as purchases (in thousands):
Businesses acquired in
1999 1998
- --------------------------------------------------------------------
Cash $ 95,058 $342,460
Amounts payable in the future 8,805 13,749
Common stock 2,482 22,314
Warrants 1,644 10,509
- --------------------------------------------------------------------
$107,989 $389,032
====================================================================
Cash in the above table represents payments made in the year of
acquisition, including retirement of indebtedness. This amount differs from cash
paid for acquisition of businesses in the Consolidated Statement of Cash Flows
due primarily to purchase price payments made during the year pursuant to
acquisition agreements entered into in prior years.
Warrants outstanding as of December 31, 2000, issued in prior years in
connection with acquisitions, represent the right to purchase 2.0 million shares
of Omnicare common stock. These warrants can be exercised at any time through
2006 at prices ranging from $14.25 to $48.00 per share. There were no warrants
to purchase shares of common stock exercised in 2000.
The purchase agreements for acquisitions generally include clauses whereby
the seller will or may be paid additional consideration at a future date
depending on the passage of time and/or whether certain future events occur. The
agreements also include provisions containing a number of representations and
covenants by the seller and provide that if those representations or covenants
are violated or found not to have been true, Omnicare may offset any payments
required to be made at a future date against any claims it may have under
indemnity provisions in the agreement. There are no significant anticipated
future offsets against acquisition related payables and/or contingencies under
indemnity provisions as of December 31, 2000 and 1999. Amounts contingently
payable (primarily earnout payments) through 2001 total approximately $15
million as of December 31, 2000 and, if paid, will be recorded as additional
purchase price, serving to increase goodwill in the period in which the
contingencies are resolved and payment is made.
The results of operations of the companies acquired in purchase
transactions have been included in the consolidated results of operations of the
Company from the dates of acquisition.
Unaudited pro forma combined results of operations of the Company for the
year ended December 31, 1999 are presented below. Such pro forma presentation
has been prepared assuming that the acquisitions had been made as of January 1,
1999 and includes pooling-of-interests expenses and restructuring and other
related charges (in thousands, except per share data).
For the year ended December 31,
1999
------------------------------------------
Pro Forma
Sales $1,883,987
Net income 57,522
Earnings per share:
Basic $ 0.63
Diluted $ 0.63
------------------------------------------
The pro forma information does not purport to be indicative of operating
results which would have occurred had the acquisitions been made at the
beginning of the period or of results which may occur in the future. The primary
pro forma adjustments reflect amortization of goodwill acquired on a
straight-line basis over 40 years and interest costs. The pro forma information
does not give effect to any synergies anticipated by the Company's management as
a result of the acquisitions, in particular improvements in gross margin
attributable to the Company's purchasing leverage associated with purchases of
pharmaceuticals and the elimination of duplicate payroll and other operating
expenses.
Pooling-of-Interests
On June 26, 1998, the Company completed the acquisition of CompScript in a
pooling-of-interests transaction. Pursuant to the terms of the merger agreement,
CompScript stockholders received .12947 of a share of Omnicare common stock for
each share owned of CompScript commonstock. Omnicare issued approximately 1.8
million shares of its common stock with a value of approximately $67 million in
this transaction.
CompScript is a Boca Raton, Florida-based provider of comprehensive
pharmacy management, infusion therapy and related consulting services to the
long-term care, alternate care and managed care markets. At the time of the
acquisition, CompScript served approximately 20,000 residents in 137 long-term
care facilities in five states.
On June 29, 1998, the Company completed the acquisition of IBAH in a
pooling-of-interests transaction. Pursuant to the terms of the merger agreement,
IBAH stockholders received .1638 of a share of Omnicare common stock for each
share owned of IBAH common stock.
Omnicare issued approximately 4.3 million shares of its common stock with a
value of approximately $159 million in this transaction. IBAH, then
headquartered in Blue Bell, Pennsylvania, is an international provider of
comprehensive product development services to client companies in the
F-9
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
pharmaceutical, biotechnology, medical device and diagnostics industries. IBAH
offers services for all stages of drug development that are intended to help
client companies to accelerate products from discovery through development and
commercialization more cost effectively.
Net sales and net income (including pooling-of-interests expenses and
restructuring and other related charges) for Omnicare, CompScript and IBAH for
the period prior to the transactions are as follows (in thousands):
Omnicare CompScript IBAH Total
- -----------------------------------------------------------------------
Six months ended
June 30, 1998
Sales $616,453 $28,237 $53,762 $698,452
Net income (loss) 35,085 (2,147) (4,426) 28,512
In connection with the CompScript and IBAH mergers, in the second quarter
of 1998, Omnicare recorded a charge to operating expenses of $17.7 million
($15.4 million after taxes) for direct and other merger-related costs pertaining
to the merger transactions and certain related restructuring actions.
Merger transaction costs consisted primarily of fees for investment
bankers, attorneys, accountants, financial printing and other related charges.
Restructuring costs include severance and exit costs. Details of these costs
follow (in thousands):
Balance at Balance at
Initial 1998 December 31, 1999 December 31,
Provision Activity 1998 Activity 1999
- --------------------------------------------------------------------------------
Merger
transaction
costs $14,096 $(7,536) $6,560 $(6,560) $ --
Restructuring
costs:
Employee
severance 1,413 (395) 1,018 (1,018) --
Exit costs 2,214 (1,502) 712 (712) --
- --------------------------------------------------------------------------------
Total $17,723 $(9,433) $8,290 $(8,290) $ --
================================================================================
Restructuring costs include the costs of restructuring the CompScript mail
order pharmacy business and the cancellation of agreements with certain
CompScript vendors, as well as severance and exit costs associated with the
consolidation of certain IBAH facilities and the restructuring of IBAH's
pharmaceutics business. Collectively, these actions resulted in the reduction of
approximately 20 employees. Included in the exit costs were $1.9 million of
non-cash items. All actions relating to these restructuring activities have been
completed.
In accordance with accounting rules for pooling-of-interests transactions,
charges to operating income for acquisition-related expenses were recorded upon
completion of the pooling acquisitions. There were no acquisition-related
expenses in 2000. Acquisition-related expenses totaled $0.8 million ($0.6
million aftertax) for the 1999 transactions and $15.4 million ($13.9 million
aftertax) for the 1998 transactions. During 1999, the Company recorded income of
$0.9 million ($1.0 million aftertax) relating to the net reversal of estimated
CompScript and IBAH acquisition-related expenses resulting from the finalization
of those costs.
Note 3 - Cash and Cash Equivalents
----------------------------------
A summary of cash and cash equivalents follows
(in thousands):
December 31,
2000 1999
- --------------------------------------------------------------------
Cash (including restricted cash) $ 64,899 $37,115
Money market funds 6,668 8,658
U.S. government-backed
repurchase agreements 42,340 51,494
- --------------------------------------------------------------------
$113,907 $97,267
====================================================================
Repurchase agreements represent investments in U.S. government-backed
securities (government agency and treasury issues at December 31, 2000 and 1999,
respectively), under agreements to resell the securities to the counterparty.
The term of the agreement usually spans overnight, but in no case is longer than
30 days. The Company has a collateralized interest in the underlying securities
of repurchase agreements, which are segregated in the accounts of the bank
counterparty.
Note 4 - Properties and Equipment
---------------------------------
Asummary of properties and equipment follows (in thousands):
December 31,
2000 1999
- ---------------------------------------------------------------------
Land $ 1,553 $ 1,553
Buildings and building improvements 6,347 6,246
Computer hardware and software 119,829 103,164
Machinery and equipment 95,621 92,925
Furniture, fixtures and
leasehold improvements 67,493 64,267
- ---------------------------------------------------------------------
290,843 268,155
Accumulated depreciation (132,308) (106,022)
- ---------------------------------------------------------------------
$ 158,535 $ 162,133
=====================================================================
Note 5 - Leasing Arrangements
-----------------------------
The Company has operating leases that cover various real and personal
property. In most cases, the Company expects that these leases will be renewed
or replaced by other leases in the normal course of business. There are no
significant contingent rentals in the Company's operating leases.
F-10
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
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, 2000 (in thousands):
2001 $ 19,406
2002 17,697
2003 15,109
2004 12,452
2005 9,799
Later years 36,059
- ------------------------------------------------------------
Total minimum payments required $110,522
============================================================
Total rent expense under operating leases for the years ended December 31,
2000, 1999 and 1998 were $27.9 million, $25.3 million and $20.5 million,
respectively.
Note 6 - Long-Term Debt
-----------------------
On March 20, 2001, the Company completed the issuance of $375.0 million of
8.125% senior subordinated notes due 2011 (the "Senior Notes"). Concurrent with
the issuance of the Senior Notes, the Company entered into a new three-year
syndicated $495.0 million revolving credit facility (the "Revolving Credit
Facility"), including a $25.0 million letter of credit subfacility, with various
lenders. Net proceeds from the Senior Notes of approximately $365 million and
borrowings under the new credit facility of approximately $70 million were used
to repay outstanding indebtedness under the Company's existing credit
facilities, which totaled $435.0 million at December 31, 2000, and such existing
facilities were terminated. Subsequent to the closing of the Revolving Credit
Facility, the Company received commitments from additional banks that will allow
it to increase the size of the Revolving Credit Facility to $500.0 million. The
Company has classified the $435.0 million as long-term debt at December 31, 2000
based on the transactions described above. The discussion which follows relates
to the long-term debt facilities in existence at December 31, 2000.
A summary of long-term debt follows (in thousands):
December 31,
2000 1999
- ------------------------------------------------------------
Revolving line-of-credit facilities $435,000 $465,000
5% Convertible Subordinated
Debentures due 2007 345,000 345,000
Capitalized lease obligations 2,325 4,357
- ------------------------------------------------------------
782,325 814,357
Less current portion (1,619) (77,413)
- ------------------------------------------------------------
$780,706 $736,944
============================================================
The following is a schedule of required long-term debt payments due during
each of the next five years and thereafter, as of December 31, 2000 (in
thousands):
2001 $ 1,619
2002 502
2003 80
2004 60,026
2005 98
Later years 720,000
- ----------------------------------------------
$782,325
==============================================
Total interest payments made for the years ended December 31, 2000, 1999
and 1998 were $54.0 million, $46.2 million and $22.1 million, respectively.
Revolving Credit Facilities
In 1996, the Company negotiated a five-year, $400.0 million line of credit
agreement with a consortium of sixteen banks. Borrowings under this agreement
bear interest based upon LIBOR plus a spread of 90 to 125 basis points,
depending on the Company's fixed charge coverage ratio, or other rates
negotiated with the banks. Additionally, a commitment fee on the unused portion
of the agreement ranges from 20 to 35 basis points, and is also based on the
Company's fixed charge coverage ratio. A utilization fee also applies to this
agreement and requires an additional spread of 10 to 25 basis points whenever
borrowings exceed 50% of the $400.0 million line of credit. The agreement
contains covenants which include a fixed charge coverage ratio and minimum
consolidated net worth levels. The Company is in compliance with these
covenants. The total amount outstanding under the five-year agreement as of
December 31, 2000 was $390.0 million.
In 1998, the Company amended its five-year, $400.0 million line of credit
agreement to, among other modifications, permit an additional 364-day, $400.0
million line of credit facility, which is convertible at maturity into a
one-year term loan. During 2000, Omnicare renewed this 364-day, line of credit
facility until the third quarter of 2001, at a $300.0 million level. Borrowings
under this facility bear interest at a rate based on LIBOR plus a spread of 100
to 200 basis points, dependent on the Company's debt ratings from Moody's
Investors Service, Inc. ("Moody's") and Standard & Poors Ratings Group ("S&P").
A commitment fee on the unused portion of the facility ranges from 20 to 50
basis points, and is also based on the Company's debt ratings from Moody's and
S&P. The facility contains covenants which include a fixed charge coverage ratio
and minimum consolidated net worth levels. The Company is in compliance with
these covenants. The total amount outstanding under the 364-day credit facility
at December 31, 2000 was $45.0 million.
In connection with the amended five-year, $400.0 million credit agreement
and the renewed 364-day, $300.0 million line of credit facility, the Company has
deferred $3.4 million in debt issuance costs which is being amortized over the
life
F-11
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
of the agreements. The Company amortized approximately $1.2 million and $0.9
million of deferred debt issuance costs relating to the revolving credit
facilities in 2000 and 1999, respectively, and none in 1998.
Convertible Subordinated Debentures
On December 10, 1997, the Company issued $345.0 million principal amount of
5.0% Convertible Subordinated Debentures ("Debentures") due 2007. The Debentures
are convertible into common stock at any time after March 4, 1998 at the option
of the holder at a price of $39.60 per share. In connection with the issuance of
the Debentures in 1997, the Company deferred $8.5 million in debt issuance
costs. The Company amortized $0.9 million of this deferred debt issuance costs
relating to the Debentures in each of the three years ended December 31, 2000.
ESOP Loan Guarantee
In 1988, the Company established an Employee Stock Ownership Plan ("ESOP")
which covers certain acquired entities' employees and corporate headquarter's
employees. The ESOP used proceeds from a $4 million bank loan to purchase
approximately 2.0 million shares of the Company's common stock on the open
market at prices ranging from $1.94 to $2.13 per share. The Company guaranteed
the repayment of this obligation. Accordingly, the ESOP bank debt was recorded
as long-term debt with a corresponding reduction of stockholders' equity in the
consolidated balance sheet. The final installment payment on the ESOP debt was
made in 1998.
The ESOP serviced its debt with Company contributions made on behalf of its
employees, which were previously made to the Company's Employee Savings and
Investment Plan, and dividends received on shares held by the ESOP trust.
Principal and interest payments on the ESOP debt were made in increasing
quarterly installments over a ten-year period.
The ESOP debt bore interest at a rate of 7% per annum and was secured by
the unallocated shares of common stock held by the ESOP trust. There were no
unallocated shares at December 31, 2000 and 1999. The Company funded ESOP
expense as accrued. The components of total ESOP expense for the year ended
December 31, 1998 were as follows (in thousands):
Interest expense $ 30
Principal payments 940
Dividends on ESOP stock (102)
- ---------------------------------------------------------
$ 868
=========================================================
Note 7 - Stock Incentive Plans
------------------------------
The Company has three stock incentive plans under which it may grant
stock-based incentives to key employees.
Under the 1992 Long-Term Stock Incentive Plan, the Company may grant stock
awards, and stock options may be granted at a price equal to the fair market
value at the date of grant. Under this plan, stock options generally become
exercisable beginning one year following the date of grant and vest in four
equal annual installments. As of December 31, 2000, approximately 0.9 million
shares were available for grant under this plan.
During 1995, the Company's Board of Directors and stockholders
approved the 1995 Premium-Priced Stock Option Plan, providing options to
purchase 2.5 million shares of Company common stock available for grant at an
exercise price of 125% of the stock's fair market value at the date of grant. As
of December 31, 2000, no shares were available for grant under this plan.
During 1998, the Company's Board of Directors approved the 1998 Long-Term
Employee Incentive Plan (the "1998 Plan"), under which the Company was
authorized to grant stock-based incentives to employees (excluding executive
officers and directors of the Company) in an amount initially aggregating up to
1.0 million shares of Company common stock for non-qualified options, stock
awards and stock appreciation rights. In March 2000, the Company's Board of
Directors amended the 1998 Plan to increase the shares available for granting to
3.5 million. As of December 31, 2000, approximately 2.2 million shares were
available for grant under this plan.
In connection with the 1998 pooling-of-interests business combinations
described in Note 2 to the Consolidated Financial Statements, the Company
converted all outstanding options to purchase common stock of CompScript and
IBAH into options to acquire 0.9 million shares of the Company's common stock at
exercise prices of $0.73 to $77.24 per share.
Summary information for stock options is presented below (in thousands,
except exercise price data):
2000
- ------------------------------------------------------------------
Weighted Average
Shares Exercise Price
- ------------------------------------------------------------------
Options outstanding,
beginning of year 6,692 $18.42
Options granted 1,675 16.34
Options exercised (172) 6.30
Options forfeited (399) 21.41
- ------------------------------------------------------------------
Options outstanding, end of year 7,796 $18.06
- ------------------------------------------------------------------
Options exercisable, end of year 3,035 $19.48
==================================================================
1999
- ------------------------------------------------------------------
Weighted Average
Shares Exercise Price
- ------------------------------------------------------------------
Options outstanding,
beginning of year 3,137 $23.03
Options granted 3,793 14.59
Options exercised (114) 11.74
Options forfeited (124) 32.72
- ------------------------------------------------------------------
Options outstanding, end of year 6,692 $18.42
- ------------------------------------------------------------------
Options exercisable, end of year 2,721 $17.16
==================================================================
F-12
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1998
- ------------------------------------------------------------------
Weighted Average
Shares Exercise Price
- ------------------------------------------------------------------
Options outstanding,
beginning of year 3,206 $17.85
Options granted 804 36.10
Options exercised (531) 12.66
Options forfeited (342) 26.19
- ------------------------------------------------------------------
Options outstanding, end of year 3,137 $23.03
- ------------------------------------------------------------------
Options exercisable, end of year 1,598 $16.13
==================================================================
The following summarizes information about stock options outstanding and
exercisable as of December 31, 2000 (in thousands, except exercise price data):
OPTIONS OUTSTANDING
- ----------------------------------------------------------------
Weighted Average
Number Remaining Weighted
Range of Outstanding Contractual Average
Exercise Prices at 12/31/00 Life (in years) Exercise Price
- ----------------------------------------------------------------
$ 3.00 - $12.34 2,023 5.92 $10.45
13.35 - 15.26 31 4.42 13.48
15.42 - 15.42 2,515 8.50 15.42
16.53 - 18.32 1,573 9.18 16.61
18.41 - 77.24 1,654 6.68 32.85
- ----------------------------------------------------------------
$ 3.00 - $77.24 7,796 7.57 $18.06
================================================================
OPTIONS EXERCISABLE
- ----------------------------------------------------------------
Number Weighted
Range of Exercisable Average
Exercise Prices at 12/31/00 Exercise Price
- ----------------------------------------------------------------
$ 3.00 - $12.34 1,162 $ 9.23
13.35 - 15.26 31 13.48
15.42 - 15.42 629 15.42
16.53 - 18.32 39 18.12
18.41 - 77.24 1,174 32.01
- ----------------------------------------------------------------
$ 3.00 - $77.24 3,035 $19.48
================================================================
Nonvested stock awards that are granted to key employees at the discretion
of the Compensation and Incentive Committee of the Board of Directors are
restricted as to the transfer of ownership and generally vest over a seven-year
period with a greater proportion vesting in the latter years. Unrestricted stock
awards are granted annually to members of the Board of Directors. The fair value
of a stock award is equal to the fair market value of a share of Company stock
at the grant date.
Summary information relating to stock award grants is
presented below:
For the years ended December 31,
2000 1999 1998
- --------------------------------------------------------------
Nonvested shares 947,438 596,630 369,651
Unrestricted shares 5,200 5,308 5,600
Weighted-average grant
date fair value $ 9.85 $ 26.63 $ 31.75
- --------------------------------------------------------------
When granted, the cost of nonvested stock awards is deferred and amortized
over the vesting period. Unrestricted stock awards are expensed during the year
granted. During 2000, 1999 and 1998, the amount of compensation expense related
to stock awards was $3.9 million, $3.8 million and $2.1 million, respectively.
As permitted by SFAS No. 123, "Accounting for Stock-Based Compensation,"
the Company accounts for stock-based incentives granted under these plans
according to Accounting Principles Board Opinion No. 25, "Accounting for Stock
Issued to Employees." As a result, no compensation cost has been recognized for
the stock options granted under the incentive plans. The fair value of each
option at grant date is estimated using the Black-Scholes option-pricing model
with the following weighted-average assumptions used for grants in 2000, 1999
and 1998: risk-free interest rate of 5.0% in 2000 (6.75% in 1999 and 5.75% in
1998), volatility of 61% in 2000 (41% in 1999 and 36% in 1998), dividend yield
of 0.4% in 2000 (0.8% in 1999 and 0.2% in 1998) and expected life of 4.0 years
in 2000 (4.0 years in 1999 and 4.2 years in 1998). Based on these assumptions,
the weighted average fair value of employee stock options granted during 2000,
1999 and 1998 was $8.36, $4.06 and $13.38, respectively.
Pro forma data (including pooling-of-interests expenses and restructuring
and other related charges) as though the Company had accounted for stock-based
compensation cost in accordance with SFAS No. 123 are as follows (in thousands,
except per share data):
For the years ended December 31,
2000 1999 1998
- ---------------------------------------------------------------
Pro Forma
Net income $43,182 $53,604 $77,707
Earnings per share:
Basic $ 0.47 $ 0.59 $ 0.87
Diluted $ 0.47 $ 0.59 $ 0.87
- ---------------------------------------------------------------
The above pro forma information includes only stock options granted in 1995
and thereafter, and does not purport to be representative of the effect of SFAS
No. 123 on net income or earnings per share in future years.
F-13
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Note 8 - Related Party Transactions
-----------------------------------
The Company subleases offices from Chemed Corporation ("Chemed"), a
stockholder, and is charged for consulting services pertaining to information
systems development, the occasional use of Chemed's corporate aviation
department, rent, and other incidental expenses based on Chemed's cost. The
Company believes that the method by which such charges are determined is
reasonable and that the charges are essentially equal to that which would have
been incurred if the Company had operated as an unaffiliated entity. Charges to
the Company for these services for the years ended December 31, 2000, 1999 and
1998 were $1.4 million, $1.9 million and $2.2 million, respectively. Net amounts
owed by the Company to Chemed as of December 31, 2000 and 1999 were $0.1 million
and $0.4 million, respectively.
Note 9 - Employee Benefit Plans
-------------------------------
The Company has various defined contribution savings plans under which
eligible employees can participate by contributing a portion of their salary for
investment, at the direction of each employee, in one or more investment funds.
Several of the plans were adopted in connection with certain of the Company's
acquisitions. The plans are tax-deferred arrangements pursuant to Internal
Revenue Code ("IRC") Section 401(k) and are subject to the provisions of the
Employee Retirement Income Security Act ("ERISA"). The Company matches employee
contributions in varying degrees based on the contribution levels of the
employees.
The Company has a non-contributory, defined benefit pension plan covering
certain corporate headquarters employees and the employees of several companies
sold by the Company in 1992, for which benefits ceased accruing upon the sale
(the "Qualified Plan"). Benefits accruing under this plan to corporate
headquarters employees were fully vested and frozen as of January 1, 1994. The
Company also has an excess benefits plan which provides retirement payments to
participants in amounts consistent with what they would have received under the
Qualified Plan if payments to them under the Qualified Plan were not limited by
the IRC and other restrictions. Retirement benefits are based primarily on an
employee's years of service and compensation near retirement. Plan assets are
invested primarily in a mutual fund holding U.S. Treasury obligations. The
Company's policy is to fund pension costs in accordance with the funding
provisions of ERISA.
In addition, the Company also has a supplemental pension plan ("SPP") in
which certain of its executive officers participate. Retirement benefits under
the SPPare calculated on the basis of a specified percentage of the executive's
covered compensation, years of credited service and a vesting schedule, as
specified in the plan document. The SPP terminated in 2000, resulting in benefit
payments of $2.4 million.
In November 1999, the Company's Board of Directors adopted the Omnicare
StockPlus Program, a non-compensatory employee stock purchase plan (the "ESPP").
Under the ESPP, employees and non-employee directors of the Company who elect to
participate may contribute up to 6% of eligible compensation (or an amount not
to exceed $20,000 for non-employee directors), to purchase shares of the
Company's common stock. For each share of stock purchased, the participant also
receives two options to purchase additional shares of the Company's stock. The
options are subject to a four-year vesting period and are generally subject to
forfeiture in the event the related shares are not held by the participant for a
minimum of two years. The options have a ten-year life from the date of
issuance. Amounts contributed to the ESPP are used by the plan administrator to
purchase the Company's stock on the open market. Options awarded under the
ESPP are issued out of the 1992 Long-Term Stock Incentive Plan and the 1998
Long-Term Employee Incentive Plan, and are included in the option activity
presented in Note 7 to the Consolidated Financial Statements.
Actuarial assumptions used to calculate the benefit obligations and
expenses include a 7.75% interest rate as of December 31, 2000 (7.75% and 6.75%
at December 31, 1999 and 1998, respectively), an expected long-term rate of
return on assets of 8% and a 6% rate of increase in compensation levels.
The aggregate assets invested for settlement of the Company's pension
obligations ("plan assets") as of December 31, 2000 and 1999 are greater (less)
than the aggregate Accumulated Benefit Obligation by $2.9 million and $(1.1)
million, respectively. The plan assets as of December 31, 2000 and 1999 are
greater (less) than the aggregate Projected Benefit Obligation ("PBO") by $2.2
million and $(6.6) million, respectively. The decrease in the net PBO from the
prior year of $8.8 million primarily relates to an actuarial gain of $5.1
million, a net increase in plan assets of $3.7 million and benefit payments of
$2.4 million, offset in part by interest expense of $1.4 million and service
costs of $1.0 million. Plan assets amounted to $17.0 million and $13.3 million
at December 31, 2000 and 1999, respectively.
Expense relating to the Company's defined benefit plans for the years ended
December 31, 2000, 1999 and 1998 was $4.0 million, $3.4 million and $2.5
million, respectively. Expense relating to the Company's defined contribution
plans (including the ESOP described in Note 6 to the Consolidated Financial
Statements) for the years ended December 31, 2000, 1999 and 1998 was $4.0
million, $2.5 million and $1.6 million, respectively.
Note 10 - Income Taxes
----------------------
The provision for income taxes is comprised of the following (in
thousands):
F-14
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
For the years ended December 31,
2000 1999 1998
- ------------------------------------------------------------
Current Provision:
Federal $ 8,304 $ 8,161 $44,958
State and local 575 2,615 2,940
Foreign 60 101 10
- ------------------------------------------------------------
8,939 10,877 47,908
- ------------------------------------------------------------
Deferred Provision:
Federal 17,967 23,134 7,131
State 1,800 (61) 448
- ------------------------------------------------------------
19,767 23,073 7,579
- ------------------------------------------------------------
Total income tax provision $28,706 $33,950 $55,487
============================================================
Tax benefits related to the exercise of stock options, stock awards and
stock warrants have been credited to paid-in capital in amounts of $0.9 million
and $6.4 million for 1999 and 1998, respectively. These amounts were not
significant during 2000.
The difference between the Company's reported income tax expense and the
federal income tax expense computed at the statutory rate of 35% is explained in
the following table (in thousands):
For the years ended December 31,
2000 1999 1998
- --------------------------------------------------------------------------------
Federal income
tax at the
statutory
rate $27,133 35.0% $32,085 35.0% $47,553 35.0%
State and local
income taxes,
net of federal
income tax
benefit 1,123 1.5 1,660 1.8 3,012 2.2
Amortization of
nondeductible
intangible
assets 3,037 3.9 1,998 2.2 1,894 1.4
Nondeductible
pooling-of-
interest/merger
and acquisition
costs (622) (0.8) (1,197) (1.3) 2,291 1.7
Impact of net
operating
loss (373) (0.5) -- -- -- --
Other, net
(including
tax accrual
adjustments) (1,592) (2.1) (596) (0.7) 737 0.5
- --------------------------------------------------------------------------------
Total
income tax
provision $28,706 37.0% $33,950 37.0% $55,487 40.8%
================================================================================
Income tax (refunds) payments, net, amounted to $(6.8) million, $18.6
million and $27.3 million in 2000, 1999 and 1998, respectively.
A summary of deferred tax assets and liabilities follows (in thousands):
December 31,
2000 1999
- ---------------------------------------------------------
Accounts receivable reserves $ 9,474 $ 5,387
Accrued liabilities 36,997 34,086
Other 424 1,118
- ---------------------------------------------------------
Gross deferred tax assets $46,895 $40,591
=========================================================
Fixed assets and depreciation methods $23,203 $17,004
Amortization of intangibles 53,614 38,187
Other current and noncurrent assets 5,863 5,361
Other 1,456 63
- ---------------------------------------------------------
Gross deferred tax liabilities $84,136 $60,615
=========================================================
Note 11 - Earnings Per Share Data
---------------------------------
The following is a reconciliation of the numerators and
denominators of the basic and diluted earnings per share ("EPS") computations
(in thousands, except per share data):
For the year ended December 31, 2000
Income Shares Per Share
(Numerator) (Denominator) Amounts
- -----------------------------------------------------------------
Basic EPS
Net income $48,817 92,012 $0.53
=========
Effect of Dilutive
Securities
Stock options and
stock warrants -- --
- ----------------------------------------------------
Diluted EPS
Net income plus
assumed conversions $48,817 92,012 $0.53
==================================================== =========
For the year ended December 31, 1999
Income Shares Per Share
(Numerator) (Denominator) Amounts
- -----------------------------------------------------------------
Basic EPS
Net income $57,721 90,999 $0.63
=========
Effect of Dilutive
Securities
Stock options and
stock warrants -- 239
- ----------------------------------------------------
Diluted EPS
Net income plus
assumed conversions $57,721 91,238 $0.63
==================================================== =========
F-15
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
For the year ended December 31, 1998
Income Shares Per Share
(Numerator) (Denominator) Amounts
- -----------------------------------------------------------------
Basic EPS
Net income $80,379 89,081 $0.90
=========
Effect of Dilutive
Securities
Stock options and
stock warrants -- 705
- ----------------------------------------------------
Diluted EPS
Net income plus
assumed conversions $80,379 89,786 $0.90
==================================================== =========
The $345.0 million of Debentures that are convertible into approximately8.7
million shares at $39.60 per share were outstanding during 2000, 1999 and 1998,
but were not included in the computation of diluted EPS because the impact
during these periods was anti-dilutive.
Note 12 - Restructuring and
Other Related Charges
---------------------
In the second quarter of 1999, the Company announced a comprehensive
restructuring plan to streamline company-wide operations through the
implementation of a productivity and consolidation program. This program, which
was finalized in the fourth quarter of 2000, was in response to changes in the
healthcare industry and complemented Omnicare's ability to gain maximum benefits
from its acquisition program. The productivity and consolidation initiatives
have eliminated redundant efforts, simplified work processes and applied
technology to maximize employee productivity, and standardize operations around
best practices. Facilities in overlapping geographic territories were
consolidated to better align pharmacies around customers to improve efficiency
and enhance the Company's ability to deliver innovative services and programs to
its customers. Productivity initiatives were also introduced at the majority of
the Company's pharmacy and other operating locations, which totaled
approximately 220 sites at the commencement of the program. As part of the
initiative, the roster of pharmacies and other operating locations was
reconfigured through the consolidation, relocation, closure and opening of
sites, resulting in a net reduction of 59 locations. The plan resulted in the
reduction of the Company's work force by 16%, or approximately 1,800 full- and
part-time employees, and annualized pretax savings in excess of $46 million upon
completion.
In connection with this program, Omnicare recorded a total of $62.6 million
($39.8 million after taxes) for restructuring and other related charges, of
which $27.2 million ($17.1 million after taxes) and $35.4 million ($22.7 million
after taxes) were recorded during the years ended December 31, 2000 and 1999,
respectively. The restructuring charges include severance pay, the buy-out of
current employment agreements, the buy-out of lease obligations, the write-off
of other assets (representing a project-to-date cumulative amount of $11.0
million of pretax non-cash items, through December 31, 2000) and facility exit
costs. The other related charges are primarily comprised of consulting fees and
duplicate costs associated with the program, as well as the write-off of certain
non-core health care investments. Details of the restructuring and other related
charges relating to the productivity and consolidation program follow (in
thousands):
Utilized Balance at
2000 during December 31,
Provision 2000 2000
- -------------------------------------------------------------------
Restructuring charges:
Employee severance $ 3,296 $ (8,367) $ 3,390
Employment
agreement buy-outs 1,048 (3,735) 676
Lease terminations 1,881 (3,811) 2,593
Other assets and
facility exit costs 10,627 (9,737) 2,538
- -------------------------------------------------------------------
Total restructuring
charges 16,852 $(25,650) $ 9,197
===========================
Other related charges 10,347
- -------------------------------------
Total restructuring
and other related
charges $27,199
=====================================
Utilized Balance at
1999 during December 31,
Provision 1999 1999
- -------------------------------------------------------------------
Restructuring charges:
Employee severance $12,178 $ (3,717) $ 8,461
Employment
agreement buy-outs 6,740 (3,377) 3,363
Lease terminations 5,612 (1,089) 4,523
Other assets and
facility exit costs 8,310 (6,662) 1,648
- -------------------------------------------------------------------
Total restructuring
charges 32,840 $(14,845) $17,995
===========================
Other related charges 2,554
- -------------------------------------
Total restructuring
and other related
charges $ 35,394
=====================================
F-16
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
As of December 31, 2000, the Company had incurred approximately $19.2
million of severance and other employee-related costs relating to the reduction
of approximately 1,800 employees. The remaining liabilities at December 31, 2000
represent amounts not yet paid relating to actions taken in connection with the
program (primarily severance payments, lease payments and professional fees),
and will be adjusted as these matters are settled.
In connection with the 1998 pooling-of-interests transactions with
CompScript and IBAH, the Company recorded a restructuring charge of $3.6 million
before taxes ($2.7 million after taxes), as further discussed at Note 2 to the
Consolidated Financial Statements.
Note 13 - Shareholders'Rights Plan
----------------------------------
In May 1999, the Company's Board of Directors declared a dividend, payable
on June 2, 1999, of one preferred share purchase right (a "Right") for each
outstanding share of the Company's $1.00 per share par value common stock, that,
when exercisable, entitles the registered holder to purchase from the Company
one ten-thousandth of a share of Series AJunior Participating Preferred Stock of
the Company, without par value (the "Preferred Shares"), at a price of $135 per
one ten-thousandth of a share, subject to adjustment. Upon certain events
relating to the acquisition of, commencement or announcement of, or announcement
of an intention to make a tender offer or exchange offer that would result in
the beneficial ownership of 15% or more of the Company's outstanding common
stock by an individual or group of individuals (the "Distribution Date"), the
Rights not owned by the 15% stockholder will entitle its holder to purchase, at
the Right's then current exercise price, common shares having a market value of
twice such exercise price. Additionally, if after any person has become a 15%
stockholder, the Company is involved in a merger or other business combination
with any other person, each Right will entitle its holder (other than the 15%
stockholder) to purchase, at the Right's then current exercise price, common
shares of the acquiring company having a value of twice the Right's then current
exercise price. The Rights will expire on May 17, 2009, unless redeemed earlier
by the Company at $0.01 per Right until the Distribution Date.
Note 14 - Segment Information
-----------------------------
Based on the "management approach" as defined by SFAS No. 131, Omnicare has
two business segments. The Company's largest segment is Pharmacy Services.
Pharmacy Services provides distribution of pharmaceuticals, related pharmacy
consulting, data management services and medical supplies to long-term care
facilities in 43 states in the United States of America ("USA"). The Company's
other reportable segment is Contract Research Organization ("CRO") Services,
which provides comprehensive product development services to client companies in
pharmaceutical, biotechnology, medical devices and diagnostics industries in 23
countries around the world, including the USA.
The table below presents information about the reportable segments as of
and for the years ended December 31, 2000, 1999 and 1998 (in thousands):
Corporate
Pharmacy CRO and Consolidated
2000: Services Services Consolidating Totals
- -----------------------------------------------------------------------------------------------------------------
Sales $1,858,697 $112,651 $ -- $1,971,348
Depreciation and amortization 69,346 3,458 1,169 73,973
Operating income (expense), excluding restructuring
and other related charges 178,204 7,248 (27,566) 157,886
Restructuring and other related charges (21,615) (5,584) -- (27,199)
Operating income (expense) 156,589 1,664 (27,566) 130,687
Total assets 1,960,870 117,212 132,136 2,210,218
Expenditures for additions to long-lived assets 26,866 3,119 2,438 32,423
=================================================================================================================
1999:
- -----------------------------------------------------------------------------------------------------------------
Sales $1,728,055 $133,866 $ -- $1,861,921
Depreciation and amortization 62,589 5,734 1,041 69,364
Operating income (expense), excluding acquisition
expenses and restructuring and other related charges 181,087 16,550 (25,993) 171,644
Acquisition (expenses)/income 352 (297) -- 5
Restructuring and other related charges (32,216) (3,178) -- (35,394)
Operating income (expense) 149,223 13,075 (25,993) 136,305
Total assets 1,889,763 125,122 153,088 2,167,973
Expenditures for additions to long-lived assets 52,560 3,113 3,076 58,749
=================================================================================================================
F-17
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Corporate
Pharmacy CRO and Consolidated
1998: Services Services Consolidating Totals
- -----------------------------------------------------------------------------------------------------------------
Sales $1,394,768 $122,602 $ -- $1,517,370
Depreciation and amortization 41,994 5,091 551 47,636
Operating income (expense), excluding acquisition
expenses and restructuring and other related charges 185,305 12,725 (22,841) 175,189
Acquisition expenses (10,172) (5,269) -- (15,441)
Restructuring and other related charges (1,245) (2,382) -- (3,627)
Operating income (expense) 173,888 5,074 (22,841) 156,121
Total assets 1,686,643 120,693 96,493 1,903,829
Expenditures for additions to long-lived assets 45,789 5,306 2,084 53,179
=================================================================================================================
The following summarizes sales and long-lived assets by geographic area as
of and for the years ended December 31, 2000, 1999 and 1998 (in thousands):
Sales Long-Lived Assets
- ----------------------------------------------------------------------------------------------------
2000 1999 1998 2000 1999 1998
- ----------------------------------------------------------------------------------------------------
United States $1,941,220 $1,821,083 $1,483,443 $156,610 $159,530 $133,173
Foreign 30,128 40,838 33,927 1,925 2,603 3,198
- ----------------------------------------------------------------------------------------------------
Total $1,971,348 $1,861,921 $1,517,370 $158,535 $162,133 $136,371
- ----------------------------------------------------------------------------------------------------
Foreign sales are based on the country in which the sales originate. No
individual foreign country's sales were material to the consolidated sales of
Omnicare.
Note 15 - Summary of Quarterly Results (Unaudited)
--------------------------------------------------
The following table presents the Company's quarterly financial information
for 2000 and 1999 (in thousands, except per share data):
First Second Third Fourth Full
Quarter Quarter Quarter Quarter Year
- ----------------------------------------------------------------------------------------------------
2000(a)
Sales $493,026 $480,510 $491,262 $506,550 $1,971,348
Cost of sales 360,409 353,716 361,141 370,689 1,445,955
- ----------------------------------------------------------------------------------------------------
Gross profit 132,617 126,794 130,121 135,861 525,393
Selling, general and
administrative expenses 92,768 90,424 90,687 93,628 367,507
Restructuring and other related charges 4,278 6,150 4,263 12,508 27,199
- ----------------------------------------------------------------------------------------------------
Operating income 35,571 30,220 35,171 29,725 130,687
Investment income 459 357 472 622 1,910
Interest expense (13,165) (13,634) (14,204) (14,071) (55,074)
- ----------------------------------------------------------------------------------------------------
Income before income taxes 22,865 16,943 21,439 16,276 77,523
Income taxes 8,472 6,267 7,930 6,037 28,706
- ----------------------------------------------------------------------------------------------------
Net income $ 14,393 $ 10,676 $ 13,509 $ 10,239 $ 48,817
====================================================================================================
Earnings per share:
Basic $ 0.16 $ 0.12 $ 0.15 $ 0.11 $ 0.53
====================================================================================================
Diluted $ 0.16 $ 0.12 $ 0.15 $ 0.11 $ 0.53
====================================================================================================
Weighted average number of common
shares outstanding:
Basic 91,599 92,155 92,160 92,132 92,012
====================================================================================================
Diluted 91,599 92,155 92,160 92,587 92,012
====================================================================================================
Comprehensive income $ 14,081 $ 10,283 $ 13,040 $ 10,212 $ 47,616
====================================================================================================
F-18
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Note 15 - Summary of Quarterly Results (Unaudited)-Continued
------------------------------------------------------------
First Second Third Fourth Full
Quarter Quarter Quarter Quarter Year
- -----------------------------------------------------------------------------------------------------------------
1999(a)
Sales $445,688 $454,645 $474,007 $487,581 $1,861,921
Cost of sales 309,893 322,607 348,007 358,131 1,338,638
- -----------------------------------------------------------------------------------------------------------------
Gross profit 135,795 132,038 126,000 129,450 523,283
Selling, general and
administrative expenses 81,983 85,546 90,888 93,222 351,639
Acquisition expenses,
pooling-of-interests -- 822 (877) -- (55)
Restructuring and other related charges -- 26,713 2,144 6,537 35,394
- -----------------------------------------------------------------------------------------------------------------
Operating income 53,812 18,957 33,845 29,691 136,305
Investment income 282 367 266 617 1,532
Interest expense (9,981) (10,848) (12,629) (12,708) (46,166)
- -----------------------------------------------------------------------------------------------------------------
Income before income taxes 44,113 8,476 21,482 17,600 91,671
Income taxes 16,306 3,598 7,538 6,508 33,950
- -----------------------------------------------------------------------------------------------------------------
Net income $ 27,807 $ 4,878 $ 13,944 $ 11,092 $ 57,721
=================================================================================================================
Earnings per share:
Basic $ 0.31 $ 0.05 $ 0.15 $ 0.12 $ 0.63
=================================================================================================================
Diluted $ 0.31 $ 0.05 $ 0.15 $ 0.12 $ 0.63
=================================================================================================================
Weighted average number of common
shares outstanding:
Basic 90,526 90,890 91,276 91,292 90,999
=================================================================================================================
Diluted 90,881 91,073 91,276 91,292 91,238
=================================================================================================================
Comprehensive income $ 27,303 $ 4,524 $ 14,083 $ 10,763 $ 56,673
=================================================================================================================
(a) Included in the 2000 and 1999 net income amounts are the following aftertax
pooling-of-interests expenses and restructuring and other related charges (in
thousands):
First Second Third Fourth Full
Quarter Quarter Quarter Quarter Year
- ------------------------------------------------------------------------------------------------------------------------
2000
Restructuring and other related charges (Note 12) $2,695 $ 3,874 $2,686 $7,880 $17,135
========================================================================================================================
1999
Acquisition expenses, pooling-of-interests
(Note 2) $ -- $ 586 $ (962) $ -- $ (376)
- ------------------------------------------------------------------------------------------------------------------------
Restructuring and other related charges (Note 12) -- 17,229 1,351 4,118 22,698
- ------------------------------------------------------------------------------------------------------------------------
Total $ -- $17,815 $ 389 $4,118 $22,322
========================================================================================================================
F-19
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 16 - GUARANTOR SUBSIDIARIES
The Company's Senior Notes are fully and unconditionally guaranteed on an
unsecured, joint and several basis by certain wholly owned subsidiaries of the
Company (the 'Guarantor Subsidiaries'). The following condensed consolidating
financial data illustrates the composition of Omnicare, Inc. ('Parent'), the
Guarantor Subsidiaries and the Non-Guarantor Subsidiaries as of December 31,
2000 and 1999 for the balance sheet, as well as the statement of income and cash
flows for each of the three year periods ended December 31, 2000, 1999 and 1998
(in thousands). Separate complete financial statements of the respective
Guarantor Subsidiaries would not provide additional information which would be
useful in assessing the financial condition of the Guarantor Subsidiaries and
thus are not presented. No eliminations column is presented for the condensed
consolidating statement of cash flows since there were no significant
eliminating amounts during the periods presented.
SUMMARY CONSOLIDATING STATEMENT OF INCOME
Year ended December 31,
------------------------------------------------------------------------
Omnicare, Inc.
Guarantor Non-Guarantor and
2000: PARENT SUBSIDIARIES SUBSIDIARIES ELIMINATIONS SUBSIDIARIES
- -----------------------------------------------------------------------------------------------------------------
Sales $ -- $1,875,791 $155,611 $(60,054) $1,971,348
Cost of sales -- 1,373,297 132,712 (60,054) 1,445,955
- -----------------------------------------------------------------------------------------------------------------
Gross profit -- 502,494 22,899 -- 525,393
Selling, general and administrative
expenses 13,383 326,415 27,709 -- 367,507
Restructuring and other related charges -- 25,052 2,147 -- 27,199
- -----------------------------------------------------------------------------------------------------------------
Operating income (13,383) 151,027 (6,957) -- 130,687
Investment income 1,774 (274) 410 -- 1,910
Interest expense (54,126) (767) (181) -- (55,074)
- -----------------------------------------------------------------------------------------------------------------
Income before income taxes (65,735) 149,986 (6,728) -- 77,523
Income taxes (24,322) 53,990 (962) -- 28,706
Equity in net income of subsidiaries 90,230 -- -- (90,230) --
- -----------------------------------------------------------------------------------------------------------------
Net income $ 48,817 $ 95,996 $ (5,766) $(90,230) $ 48,817
=================================================================================================================
1999:
- -----------------------------------------------------------------------------------------------------------------
Sales $ -- $1,746,239 $181,845 $(66,163) $1,861,921
Cost of sales -- 1,254,627 150,174 (66,163) 1,338,638
- -----------------------------------------------------------------------------------------------------------------
Gross profit -- 491,612 31,671 -- 523,283
Selling, general and administrative
expenses 9,903 309,041 32,695 -- 351,639
Acquisition expenses, pooling of
interests -- (55) -- -- (55)
Restructuring and other related charges -- 35,394 -- -- 35,394
- -----------------------------------------------------------------------------------------------------------------
Operating income (9,903) 147,232 (1,024) -- 136,305
Investment income 1,432 (185) 285 -- 1,532
Interest expense (44,605) (1,487) (74) -- (46,166)
- -----------------------------------------------------------------------------------------------------------------
Income before income taxes (53,076) 145,560 (813) -- 91,671
Income taxes (19,638) 53,771 (183) -- 33,950
Equity in net income of subsidiaries 91,159 -- -- (91,159) --
- -----------------------------------------------------------------------------------------------------------------
Net income $ 57,721 $ 91,789 $ (630) $(91,159) $ 57,721
=================================================================================================================
F-20
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
SUMMARY CONSOLIDATING STATEMENT OF INCOME-CONTINUED
Year ended December 31,
------------------------------------------------------------------------
Omnicare, Inc.
Guarantor Non-Guarantor and
1998: Parent Subsidiaries Subsidiaries Eliminations Subsidiaries
- -----------------------------------------------------------------------------------------------------------------
Sales $ -- $1,398,405 $157,874 $ (38,909) $1,517,370
Cost of sales -- 975,715 121,937 (38,909) 1,058,743
- -----------------------------------------------------------------------------------------------------------------
Gross profit -- 422,690 35,937 -- 458,627
Selling, general and administrative
expenses 13,588 240,910 28,940 -- 283,438
Acquisition expenses, pooling of
interests -- 15,441 -- -- 15,441
Restructuring and other related charges -- 3,627 -- -- 3,627
- -----------------------------------------------------------------------------------------------------------------
Operating income (13,588) 162,712 6,997 -- 156,121
Investment income 2,990 200 166 -- 3,356
Interest expense (22,986) (516) (109) -- (23,611)
- -----------------------------------------------------------------------------------------------------------------
Income before income taxes (33,584) 162,396 7,054 -- 135,866
Income taxes (12,426) 64,439 3,474 -- 55,487
Equity in net income of subsidiaries 101,537 -- -- (101,537) --
- -----------------------------------------------------------------------------------------------------------------
Net income $ 80,379 $ 97,957 $ 3,580 $(101,537) $ 80,379
=================================================================================================================
F-21
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
CONDENSED CONSOLIDATING BALANCE SHEET
Omnicare, Inc.
Guarantor Non-Guarantor and
DECEMBER 31, 2000 Parent Subsidiaries Subsidiaries Eliminations Subsidiaries
- -----------------------------------------------------------------------------------------------------------------
ASSETS
Cash and cash equivalents $ 48,663 $ 59,274 $ 3,670 $ -- $ 111,607
Restricted cash -- 2,300 -- -- 2,300
Accounts receivable, net (including
intercompany) -- 433,061 30,150 (22,426) 440,785
Inventories -- 120,519 8,885 -- 129,404
Other current assets 580 127,341 5,721 -- 133,642
- -----------------------------------------------------------------------------------------------------------------
Total current assets 49,243 742,495 48,426 (22,426) 817,738
- -----------------------------------------------------------------------------------------------------------------
Properties and equipment, net 4,277 141,429 12,829 -- 158,535
Goodwill, net -- 1,101,120 67,031 -- 1,168,151
Other noncurrent assets 29,640 35,251 903 -- 65,794
Investment in subsidiaries 1,778,655 -- -- (1,778,655) --
- -----------------------------------------------------------------------------------------------------------------
Total assets $1,861,815 $2,020,295 $129,189 $(1,801,081) $2,210,218
=================================================================================================================
LIABILITIES AND STOCKHOLDERS' EQUITY
Other current liabilities (including
intercompany) $ 12,716 $ 230,415 $ 36,304 $ (22,426) $ 257,009
- -----------------------------------------------------------------------------------------------------------------
Total current liabilities 12,716 230,415 36,304 (22,426) 257,009
- -----------------------------------------------------------------------------------------------------------------
Long-term debt 435,000 633 73 -- 435,706
5.0% convertible subordinated
debentures, due 2007 345,000 -- -- -- 345,000
Other noncurrent liabilities 676 102,405 999 -- 104,080
Stockholders' equity 1,068,423 1,686,842 91,813 (1,778,655) 1,068,423
- -----------------------------------------------------------------------------------------------------------------
Total liabilities and
stockholders' equity $1,861,815 $2,020,295 $129,189 $(1,801,081) $2,210,218
=================================================================================================================
F-22
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
CONDENSED CONSOLIDATING BALANCE SHEET-CONTINUED
Omnicare, Inc.
Guarantor Non-Guarantor and
DECEMBER 31, 1999 Parent Subsidiaries Subsidiaries Eliminations Subsidiaries
- -----------------------------------------------------------------------------------------------------------------
ASSETS
Cash and cash equivalents $ 52,009 $ 39,274 $ 5,984 $ -- $ 97,267
Accounts receivable, net (including
intercompany) -- 430,201 40,426 (48,344) 422,283
Inventory -- 110,967 9,313 -- 120,280
Other current assets 314 104,420 7,781 -- 112,515
- -----------------------------------------------------------------------------------------------------------------
Total current assets 52,323 684,862 63,504 (48,344) 752,345
- -----------------------------------------------------------------------------------------------------------------
Properties and equipment, net 2,418 147,301 12,414 -- 162,133
Goodwill, net -- 1,118,729 70,212 -- 1,188,941
Other noncurrent assets 23,059 40,302 1,193 -- 64,554
Investment in subsidiaries 1,783,270 -- -- (1,783,270) --
- -----------------------------------------------------------------------------------------------------------------
Total assets $1,861,070 $1,991,194 $147,323 $(1,831,614) $2,167,973
=================================================================================================================
LIABILITIES AND STOCKHOLDERS' EQUITY
Current debt $ 75,000 $ 2,030 $ 383 $ -- $ 77,413
Other current liabilities (including
intercompany) 22,363 215,520 55,291 (48,344) 244,830
- -----------------------------------------------------------------------------------------------------------------
Total current liabilities 97,363 217,550 55,674 (48,344) 322,243
- -----------------------------------------------------------------------------------------------------------------
Long-term debt 390,000 1,848 96 -- 391,944
5.0% convertible subordinated
debentures, due 2007 345,000 -- -- -- 345,000
Other noncurrent liabilities 327 77,872 2,207 -- 80,406
Stockholders' equity 1,028,380 1,693,924 89,346 (1,783,270) 1,028,380
- -----------------------------------------------------------------------------------------------------------------
Total liabilities and
stockholders' equity $1,861,070 $1,991,194 $147,323 $(1,831,614) $2,167,973
=================================================================================================================
F-23
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
CONDENSED CONSOLIDATING STATEMENT OF CASH FLOWS
Year ended December 31,
--------------------------------------------------------
Omnicare, Inc.
Guarantor Non-Guarantor and
2000: PARENT SUBSIDIARIES SUBSIDIARIES SUBSIDIARIES
- ---------------------------------------------------------------------------------------------------------------
Cash flows from operating activities:
Provision for doubtful accounts $ -- $ 22,604 $ 4,125 $ 26,729
Other (57,558) 158,883 4,647 105,972
- ---------------------------------------------------------------------------------------------------------------
Net cash flows from operating activities (57,558) 181,487 8,772 132,701
- ---------------------------------------------------------------------------------------------------------------
Cash flows from investing activities:
Acquisition of businesses -- (36,018) (5,646) (41,664)
Capital expenditures (1,859) (26,423) (4,141) (32,423)
Transfer of cash to trusts for employee health and
severance costs, net of payments out of the trust -- (2,300) -- (2,300)
Other -- 1,044 (773) 271
- ---------------------------------------------------------------------------------------------------------------
Net cash flows from investing activities (1,859) (63,697) (10,560) (76,116)
- ---------------------------------------------------------------------------------------------------------------
Cash flows from financing activities:
Payments on line of credit facilities (30,000) -- -- (30,000)
Fees paid for financing arrangements -- (635) -- (635)
Other 86,071 (97,155) (58) (11,142)
- ---------------------------------------------------------------------------------------------------------------
Net cash flows from financing activities 56,071 (97,790) (58) (41,777)
- ---------------------------------------------------------------------------------------------------------------
Effect of exchange rate changes on cash -- -- (468) (468)
- ---------------------------------------------------------------------------------------------------------------
Net (decrease) increase in cash and cash equivalents (3,346) 20,000 (2,314) 14,340
Cash and cash equivalents at beginning of period --
unrestricted 52,009 39,274 5,984 97,267
- ---------------------------------------------------------------------------------------------------------------
Cash and cash equivalents at end of period --
unrestricted $ 48,663 $ 59,274 $ 3,670 $ 111,607
===============================================================================================================
1999:
- ---------------------------------------------------------------------------------------------------------------
Cash flows from operating activities:
Provision for doubtful accounts $ -- $ 20,194 $ 1,862 $ 22,056
Other (39,127) 110,540 7,645 79,058
- ---------------------------------------------------------------------------------------------------------------
Net cash flows from operating activities (39,127) 130,734 9,507 101,114
- ---------------------------------------------------------------------------------------------------------------
Cash flows from investing activities:
Acquisition of businesses -- (140,351) (3,728) (144,079)
Capital expenditures (1,107) (53,602) (4,040) (58,749)
Other -- (565) (124) (689)
- ---------------------------------------------------------------------------------------------------------------
Net cash flows from investing activities (1,107) (194,518) (7,892) (203,517)
- ---------------------------------------------------------------------------------------------------------------
Cash flows from financing activities:
Borrowing on line of credit facilities 170,000 -- -- 170,000
Payments on line of credit facilities (10,000) -- -- (10,000)
Other (83,374) 68,876 -- (14,498)
- ---------------------------------------------------------------------------------------------------------------
Net cash flows from financing activities 76,626 68,876 -- 145,502
- ---------------------------------------------------------------------------------------------------------------
Effect of exchange rate changes on cash -- -- (144) (144)
- ---------------------------------------------------------------------------------------------------------------
Net increase in cash and cash equivalents 36,392 5,092 1,471 42,955
Cash and cash equivalents at beginning of period --
unrestricted 15,617 34,182 4,513 54,312
- ---------------------------------------------------------------------------------------------------------------
Cash and cash equivalents at end of period --
unrestricted $ 52,009 $ 39,274 $ 5,984 $ 97,267
===============================================================================================================
F-24
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
CONDENSED CONSOLIDATING STATEMENT OF CASH FLOWS-CONTINUED
Year ended December 31,
---------------------------------------------------------
Omnicare, Inc.
Guarantor Non-Guarantor and
1998: Parent Subsidiaries Subsidiaries Subsidiaries
- ----------------------------------------------------------------------------------------------------------------
Cash flows from operating activities:
Provision for doubtful accounts $ -- $ 11,855 $ 550 $ 12,405
Other (19,708) 95,395 1,415 77,102
- ----------------------------------------------------------------------------------------------------------------
Net cash flows from operating activities (19,708) 107,250 1,965 89,507
- ----------------------------------------------------------------------------------------------------------------
Cash flows from investing activities:
Acquisition of businesses -- (398,686) -- (398,686)
Capital expenditures (1,105) (49,413) (2,661) (53,179)
Other -- 2,157 (10) 2,147
- ----------------------------------------------------------------------------------------------------------------
Net cash flows from investing activities (1,105) (445,942) (2,671) (449,718)
- ----------------------------------------------------------------------------------------------------------------
Cash flows from financing activities:
Borrowings on line of credit facilities 305,000 -- -- 305,000
Other (363,565) 334,988 229 (28,348)
- ----------------------------------------------------------------------------------------------------------------
Net cash flows from financing activities (58,565) 334,988 229 276,652
- ----------------------------------------------------------------------------------------------------------------
Effect of exchange rate changes on cash -- -- (191) (191)
- ----------------------------------------------------------------------------------------------------------------
Net (decrease) in cash and cash equivalents (79,378) (3,704) (668) (83,750)
Cash and cash equivalents at beginning of period --
unrestricted 94,995 37,886 5,181 138,062
- ----------------------------------------------------------------------------------------------------------------
Cash and cash equivalents at end of period --
unrestricted $ 15,617 $ 34,182 $ 4,513 $ 54,312
================================================================================================================
F-25
CONSOLIDATED STATEMENT OF INCOME
Omnicare, Inc. and Subsidiary Companies
(In thousands, except per share data)
Unaudited
Three Months Ended
March 31,
2001 2000
- -------------------------------------------------------------------------------------------
Sales $523,645 $493,026
Cost of sales 383,381 360,409
- -------------------------------------------------------------------------------------------
Gross profit 140,264 132,617
Selling, general and administrative expenses 95,916 92,768
Other expense (Note 5) 1,817 --
Restructuring and other related charges (Note 3) -- 4,278
- -------------------------------------------------------------------------------------------
Operating income 42,531 35,571
Investment income 474 459
Interest expense (13,909) (13,165)
- -------------------------------------------------------------------------------------------
Income before income taxes 29,096 22,865
Income taxes 11,052 8,472
- -------------------------------------------------------------------------------------------
Net income $ 18,044 $ 14,393
===========================================================================================
Earnings per share:
Basic $ 0.20 $ 0.16
===========================================================================================
Diluted $ 0.19 $ 0.16
===========================================================================================
Weighted average number of common shares outstanding:
Basic 92,422 91,599
===========================================================================================
Diluted 93,170 91,599
===========================================================================================
Comprehensive income $ 18,167 $ 14,081
===========================================================================================
The Notes to Consolidated Financial Statements are an integral part of this
statement.
F-26
CONSOLIDATED BALANCE SHEET
Omnicare, Inc. and Subsidiary Companies
(In thousands, except share data)
Unaudited
March 31, December 31,
2001 2000
- -------------------------------------------------------------------------------------------
ASSETS
Current assets:
Cash and cash equivalents $ 115,266 $ 111,607
Restricted cash 6,396 2,300
Accounts receivable, less allowances of $42,216
(2000-$40,497) 446,968 440,785
Unbilled receivables 21,589 18,933
Inventories 116,038 129,404
Deferred income tax benefits 28,692 26,338
Other current assets 88,594 88,371
- -------------------------------------------------------------------------------------------
Total current assets 823,543 817,738
Properties and equipment, at cost less accumulated
depreciation of $138,579 (2000-$132,308) 155,030 158,535
Goodwill, less accumulated amortization of $123,488
(2000-$115,832) 1,159,725 1,168,151
Other noncurrent assets 77,708 65,794
- -------------------------------------------------------------------------------------------
Total assets $2,216,006 $2,210,218
===========================================================================================
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 114,254 $ 118,941
Amounts payable pursuant to acquisition agreements 4,597 4,372
Current debt 1,378 1,619
Accrued employee compensation 21,761 30,113
Deferred revenue 22,549 28,333
Income taxes payable 16,721 14,238
Other current liabilities 64,937 59,393
- ------------------------------------------------------------------------------------------
Total current liabilities 246,197 257,009
Long-term debt 60,852 435,706
5.0% convertible subordinated debentures, due 2007 345,000 345,000
8.125% senior subordinated notes, due 2011 375,000 --
Deferred income taxes 61,403 63,579
Amounts payable pursuant to acquisition agreements 9,001 12,675
Other noncurrent liabilities 29,161 27,826
- -------------------------------------------------------------------------------------------
Total liabilities 1,126,614 1,141,795
Stockholders' equity:
Preferred stock, no par value, 1,000,000 shares
authorized, none issued and outstanding -- --
Common stock, $1 par value, 200,000,000 shares authorized,
93,919,000 shares issued (2000-92,730,600 shares issued) 93,919 92,731
Paid-in capital 711,305 692,695
Retained earnings 331,599 315,638
- -------------------------------------------------------------------------------------------
1,136,823 1,101,064
Treasury stock, at cost-820,000 shares (2000-574,200
shares) (16,214) (10,808)
Deferred compensation (28,422) (18,915)
Accumulated other comprehensive income (2,795) (2,918)
- -------------------------------------------------------------------------------------------
Total stockholders' equity 1,089,392 1,068,423
- -------------------------------------------------------------------------------------------
Total liabilities and stockholders' equity $2,216,006 $2,210,218
===========================================================================================
The Notes to Consolidated Financial Statements are an integral part of this
statement.
F-27
CONSOLIDATED STATEMENT OF CASH FLOWS
Omnicare, Inc. and Subsidiary Companies
(In thousands)
Unaudited
Three Months Ended
March 31,
2001 2000
- -------------------------------------------------------------------------------------------
Cash flows from operating activities:
Net income $ 18,044 $ 14,393
Adjustments to reconcile net income to net cash flows from
operating activities:
Depreciation 8,266 8,859
Amortization 9,870 10,853
Provision for doubtful accounts 7,219 7,006
Deferred tax (benefit) provision (3,058) 1,248
Non-cash portion of restructuring charges -- 724
Changes in assets and liabilities, net of effects from
acquisition of businesses:
Accounts receivable and unbilled receivables (9,132) (11,380)
Inventories 13,590 (7,835)
Current and noncurrent assets (3,045) (3,932)
Accounts payable (4,474) (8,825)
Accrued employee compensation (6,283) (6,867)
Deferred revenue (5,784) (1,806)
Current and noncurrent liabilities 6,895 25,043
- -------------------------------------------------------------------------------------------
Net cash flows from operating activities 32,108 27,481
- -------------------------------------------------------------------------------------------
Cash flows from investing activities:
Acquisition of businesses (5,154) (16,912)
Capital expenditures (4,606) (8,444)
Transfer of cash to trusts for employee health and
severance costs, net of payments out of the trust (4,096) (4,900)
Other 286 58
- -------------------------------------------------------------------------------------------
Net cash flows from investing activities (13,570) (30,198)
- -------------------------------------------------------------------------------------------
Cash flows from financing activities:
Borrowings on line of credit facilities 70,000 --
Payments on line of credit facilities (445,000) (10,000)
Proceeds from long-term borrowings 375,000 --
Fees paid for financing arrangements (14,314) --
Proceeds from and (payments) for exercise of stock
options, net of stock tendered in payment 1,964 (762)
Dividends paid (2,083) (2,074)
Other (350) (353)
- -------------------------------------------------------------------------------------------
Net cash flows from financing activities (14,783) (13,189)
- -------------------------------------------------------------------------------------------
Effect of exchange rate changes on cash (96) (40)
- -------------------------------------------------------------------------------------------
Net increase (decrease) in cash and cash equivalents 3,659 (15,946)
Cash and cash equivalents at beginning of period 111,607 97,267
- -------------------------------------------------------------------------------------------
Cash and cash equivalents at end of period $115,266 $ 81,321
===========================================================================================
The Notes to Consolidated Financial Statements are an integral part of this
statement.
F-28
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. The interim financial data is unaudited; however, in the opinion of the
management of Omnicare, Inc., the interim data includes all adjustments (which
include only normal adjustments, except as described in Notes 3 and 5)
considered necessary for a fair presentation of the consolidated financial
position, results of operations and cash flows of Omnicare, Inc. and its
consolidated subsidiaries ('Omnicare' or the 'Company'). These financial
statements should be read in conjunction with the Consolidated Financial
Statements and related notes included in Omnicare's Annual Report on Form 10-K
for the year ended December 31, 2000. Certain reclassifications of prior year
amounts have been made to conform with the current year presentation.
2. Based on the 'management approach,' as defined by Statement of Financial
Accounting Standards (SFAS) No. 131, Omnicare has two business segments. The
Company's largest segment is Pharmacy Services. Pharmacy Services provides
distribution of pharmaceuticals, related pharmacy consulting, data management
services and medical supplies to long-term care facilities in 43 states in the
United States of America ('USA'). The Company's other reportable segment is
Contract Research Organization ('CRO') Services, which provides comprehensive
product development services to client companies in pharmaceutical,
biotechnology, medical devices and diagnostics industries in 26 countries around
the world, including the USA.
The table below presents information about the reportable segments as of and
for the three months ended March 31, 2001 and 2000 (in thousands):
Three Months Ended March 31,
----------------------------------------------------
Corporate
Pharmacy CRO and Consolidated
2001: Services Services Consolidating Totals
- ----------------------------------------------------------------------------------------------------------------
Sales $ 495,401 $ 28,244 $ -- $ 523,645
Depreciation and amortization 16,624 1,137 375 18,136
Operating income (expense), excluding other (expense) 49,222 2,012 (6,886) 44,348
Other (expense) (1,817) -- -- (1,817)
Operating income (expense) 47,405 2,012 (6,886) 42,531
Total assets 1,955,775 111,299 148,932 2,216,006
Expenditures for additions to long-lived assets 4,310 77 219 4,606
================================================================================================================
2000:
- ----------------------------------------------------------------------------------------------------------------
Sales $ 460,946 $ 32,080 $ -- $ 493,026
Depreciation and amortization 18,465 1,005 242 19,712
Operating income (expense), excluding restructuring and
other related charges 43,341 2,732 (6,224) 39,849
Restructuring and other related charges (4,278) -- -- (4,278)
Operating income (expense) 39,063 2,732 (6,224) 35,571
Total assets 1,935,327 120,178 114,204 2,169,709
Expenditures for additions to long-lived assets 7,378 1,013 53 8,444
================================================================================================================
F-29
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
3. In 2000, the Company completed its previously disclosed productivity and
consolidation program (the 'Program'). As part of the Program, the roster of
pharmacies and other operating locations was reconfigured through the
consolidation, relocation, closure and opening of sites, resulting in a net
reduction of 59 locations. The Program also resulted in the reduction of the
Company's work force by 16%, or approximately 1,800 full and part-time
employees, and annualized pretax savings in excess of $46 million upon
completion.
Details of the year-to-date March 31, 2001 and December 31, 2000 activity
relating to the Program follow (in thousands):
Balance at Utilized Balance at
December 31, during March 31,
2000 2001 2001
- ---------------------------------------------------------------------
Restructuring charges:
Employee severance $3,390 $(1,734) $1,656
Employment
agreement buy-outs 676 (453) 223
Lease terminations 2,593 (746) 1,847
Other assets and facility
exit costs 2,538 (1,340) 1,198
- ---------------------------------------------------------------------
Total restructuring
charges $9,197 $(4,273) $4,924
=====================================================================
Balance at Utilized Balance at
December 31, 2000 during December 31,
1999 Provision 2000 2000
- --------------------------------------------------------------------------
Restructuring
charges:
Employee severance $ 8,461 $ 3,296 $ (8,367) $ 3,390
Employment agreement
buy-outs 3,363 1,048 (3,735) 676
Lease terminations 4,523 1,881 (3,811) 2,593
Other assets and
facility exit
costs 1,648 10,627 (9,737) 2,538
- --------------------------------------------------------------------------
Total restructuring
charges $17,995 16,852 $(25,650) $ 9,197
============= =========================
Other related charges 10,347
- ----------------------- -------------
Total restructuring
and other related
charges $27,199
======================= =============
In connection with the Program, Omnicare expensed a total of $4.3 million
pretax ($2.7 million after taxes) in the first quarter of 2000, and $62.6
million pretax ($39.8 million after taxes) for restructuring and other related
charges over the duration of the entire Program (including 1999 activity). The
restructuring charges included severance pay, the buy-out of employment
agreements, the buy-out of lease obligations, the write-off of other assets
(representing approximately $11.0 million of pretax non-cash items over the life
of the Program) and facility exit costs. The other related charges were
primarily comprised of consulting fees and duplicate costs associated with the
Program, as well as the write-off of certain non-core health care investments.
As of March 31, 2001, the Company had paid approximately $21.4 million of
severance and other employee-related costs relating to the employee reductions.
The remaining liabilities at March 31, 2001 represent amounts not yet paid
relating to actions taken in connection with the Program (primarily severance
payments, lease payments and professional fees), and will be adjusted as these
matters are settled.
4. On March 20, 2001, the Company completed the offering of $375.0 million
of 8.125% senior subordinated notes due 2011 (the 'Senior Notes'), issued at par
through a private placement. Concurrent with the issuance of the Senior Notes,
the Company entered into a new three-year syndicated $495.0 million revolving
credit facility (the 'Revolving Credit Facility'), including a $25.0 million
letter of credit subfacility, with various lenders. Net proceeds from the Senior
Notes of approximately $365.0 million and borrowings under the new credit
facility of $70.0 million were used to repay outstanding indebtedness under the
Company's existing credit facilities, which totaled $435.0 million at
December 31, 2000, and such existing facilities were terminated. Subsequent to
the closing of the Revolving Credit Facility, the Company received commitments
from additional banks that allowed it to increase the size of the Revolving
Credit Facility to $500.0 million. The Revolving Credit Facility bears interest
at the Company's option at a rate equal to either (i) the higher of (a) the
administrative agent's prime rate and (b) the sum of the federal funds rate plus
0.50%, or (ii) LIBOR plus a margin that varies depending on certain ratings on
the Company's senior long-term debt. The current interest rate is LIBOR plus
1.375%. The Company is also charged a commitment fee, currently 0.375%, on the
unused portion of the Revolving Credit Facility that also varies depending on
such ratings. There is no utilization fee associated with the Revolving Credit
Facility. The Company classified the $435.0 million as long-term debt at
December 31, 2000 based on the transactions described above.
5. Included in the 2001 first quarter results is an other expense item
totaling $1.8 million pretax ($1.1 million aftertax, or 1 cent per diluted
share). This one-time charge represents a repayment to the Medicare Part B
program of overpayments made to one of the Company's pharmacy units during the
period from January 1997 through April 1998. As part of its corporate compliance
program, the Company learned of the overpayments, which related to Medicare
Part B claims that contained documentation errors, and notified the Health Care
Financing Administration for review and determination of the amount of
overpayment.
F-30
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
6. The Company's Senior Notes are fully and unconditionally guaranteed on an
unsecured, joint and several basis by certain wholly owned subsidiaries of the
Company (the 'Guarantor Subsidiaries'). The following condensed consolidating
financial data illustrates the composition of Omnicare, Inc. ('Parent'), the
Guarantor Subsidiaries and the Non-Guarantor Subsidiaries as of March 31, 2001
and December 31, 2000 for the balance sheet, as well as the statement of income
and cash flows for each of the three month periods ended March 31, 2001 and 2000
(in thousands). Separate complete financial statements of the respective
Guarantor Subsidiaries would not provide additional information which would be
useful in assessing the financial condition of the Guarantor Subsidiaries and
thus are not presented. No eliminations column is presented for the condensed
consolidating statement of cash flows since there were no significant
eliminating amounts during the periods presented.
SUMMARY CONSOLIDATING STATEMENT OF INCOME
Three Months Ended March 31,
-----------------------------------------------------------------------
Omnicare, Inc.
Guarantor Non-Guarantor and
2001: PARENT SUBSIDIARIES SUBSIDIARIES ELIMINATIONS SUBSIDIARIES
- -----------------------------------------------------------------------------------------------------------------
Sales $ -- $500,536 $42,721 $(19,612) $523,645
Cost of sales -- 365,583 37,410 (19,612) 383,381
- -----------------------------------------------------------------------------------------------------------------
Gross profit -- 134,953 5,311 -- 140,264
Selling, general and administrative
expenses 3,893 85,671 6,352 -- 95,916
Other expense -- 1,817 -- -- 1,817
- -----------------------------------------------------------------------------------------------------------------
Operating income (3,893) 47,465 (1,041) -- 42,531
Investment income 395 11 68 -- 474
Interest expense (13,402) (139) (368) -- (13,909)
- -----------------------------------------------------------------------------------------------------------------
Income before income taxes (16,900) 47,337 (1,341) -- 29,096
Income taxes (6,422) 17,854 (380) -- 11,052
Equity in net income of subsidiaries 28,522 -- -- (28,522) --
- -----------------------------------------------------------------------------------------------------------------
Net income $ 18,044 $ 29,483 $ (961) $(28,522) $ 18,044
=================================================================================================================
2000:
- -----------------------------------------------------------------------------------------------------------------
Sales $ -- $467,997 $39,453 $(14,424) $493,026
Cost of sales -- 341,826 33,007 (14,424) 360,409
- -----------------------------------------------------------------------------------------------------------------
Gross profit -- 126,171 6,446 -- 132,617
Selling, general and administrative
expenses 3,097 82,245 7,426 -- 92,768
Restructuring and other related charges -- 4,278 -- -- 4,278
- -----------------------------------------------------------------------------------------------------------------
Operating income (3,097) 39,648 (980) -- 35,571
Investment income 444 (36) 51 -- 459
Interest expense (13,209) 114 (70) -- (13,165)
- -----------------------------------------------------------------------------------------------------------------
Income before income taxes (15,862) 39,726 (999) -- 22,865
Income taxes (5,869) 14,505 (164) -- 8,472
Equity in net income of subsidiaries 24,386 -- -- (24,386) --
- -----------------------------------------------------------------------------------------------------------------
Net income $ 14,393 $ 25,221 $ (835) $(24,386) $ 14,393
=================================================================================================================
F-31
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
CONDENSED CONSOLIDATING BALANCE SHEET
Omnicare, Inc.
Guarantor Non-Guarantor and
MARCH 31, 2001 Parent Subsidiaries Subsidiaries Eliminations Subsidiaries
- -----------------------------------------------------------------------------------------------------------------
ASSETS
Cash and cash equivalents $ 77,232 $ 32,033 $ 6,001 $ -- $ 115,266
Restricted cash -- 6,396 -- -- 6,396
Accounts receivable, net (including
intercompany) -- 443,517 27,520 (24,069) 446,968
Inventories -- 109,131 6,907 -- 116,038
Other current assets 883 132,466 5,526 -- 138,875
- -----------------------------------------------------------------------------------------------------------------
Total current assets 78,115 723,543 45,954 (24,069) 823,543
- -----------------------------------------------------------------------------------------------------------------
Properties and equipment, net 4,242 138,670 12,118 -- 155,030
Goodwill, net -- 1,093,625 66,100 -- 1,159,725
Other noncurrent assets 44,205 32,698 805 -- 77,708
Investment in subsidiaries 1,763,055 -- -- (1,763,055) --
- -----------------------------------------------------------------------------------------------------------------
Total assets $1,889,617 $1,988,536 $124,977 $(1,787,124) $2,216,006
=================================================================================================================
LIABILITIES AND STOCKHOLDERS' EQUITY
Other current liabilities (including
intercompany) $ 19,490 $ 216,821 $ 33,955 $ (24,069) $ 246,197
- -----------------------------------------------------------------------------------------------------------------
Total current liabilities 19,490 216,821 33,955 (24,069) 246,197
- -----------------------------------------------------------------------------------------------------------------
Long-term debt 60,000 705 147 -- 60,852
5.0% convertible subordinated
debentures, due 2007 345,000 -- -- -- 345,000
8.125% senior subordinated notes, due
2011 375,000 -- -- -- 375,000
Other noncurrent liabilities 735 97,602 1,228 -- 99,565
Stockholders' equity 1,089,392 1,673,408 89,647 (1,763,055) 1,089,392
- -----------------------------------------------------------------------------------------------------------------
Total liabilities and
stockholders' equity $1,889,617 $1,988,536 $124,977 $(1,787,124) $2,216,006
=================================================================================================================
December 31, 2000
- -----------------------------------------------------------------------------------------------------------------
ASSETS
Cash and cash equivalents $ 48,663 $ 59,274 $ 3,670 $ -- $ 111,607
Restricted cash -- 2,300 -- -- 2,300
Accounts receivable, net (including
intercompany) -- 433,061 30,150 (22,426) 440,785
Inventories -- 120,519 8,885 -- 129,404
Other current assets 580 127,341 5,721 -- 133,642
- -----------------------------------------------------------------------------------------------------------------
Total current assets 49,243 742,495 48,426 (22,426) 817,738
- -----------------------------------------------------------------------------------------------------------------
Properties and equipment, net 4,277 141,429 12,829 -- 158,535
Goodwill, net -- 1,101,120 67,031 -- 1,168,151
Other noncurrent assets 29,640 35,251 903 -- 65,794
Investment in subsidiaries 1,778,655 -- -- (1,778,655) --
- -----------------------------------------------------------------------------------------------------------------
Total assets $1,861,815 $2,020,295 $129,189 $(1,801,081) $2,210,218
=================================================================================================================
LIABILITIES AND STOCKHOLDERS' EQUITY
Other current liabilities (including
intercompany) $ 12,716 $ 230,415 $ 36,304 $ (22,426) $ 257,009
- -----------------------------------------------------------------------------------------------------------------
Total current liabilities 12,716 230,415 36,304 (22,426) 257,009
- -----------------------------------------------------------------------------------------------------------------
Long-term debt 435,000 633 73 -- 435,706
5.0% convertible subordinated
debentures, due 2007 345,000 -- -- -- 345,000
Other noncurrent liabilities 676 102,405 999 -- 104,080
Stockholders' equity 1,068,423 1,686,842 91,813 (1,778,655) 1,068,423
- -----------------------------------------------------------------------------------------------------------------
Total liabilities and
stockholders' equity $1,861,815 $2,020,295 $129,189 $(1,801,081) $2,210,218
=================================================================================================================
F-32
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
CONDENSED CONSOLIDATING STATEMENT OF CASH FLOWS
Three Months Ended March 31,
---------------------------------------------------------
Omnicare, Inc.
Guarantor Non-Guarantor and
2001: Parent Subsidiaries Subsidiaries Subsidiaries
- ----------------------------------------------------------------------------------------------------------------
Cash flows from operating activities:
Provision for doubtful accounts $ -- $ 6,805 $ 414 $ 7,219
Other (18,478) 45,525 (2,158) 24,889
- ----------------------------------------------------------------------------------------------------------------
Net cash flows from operating activities (18,478) 52,330 (1,744) 32,108
- ----------------------------------------------------------------------------------------------------------------
Cash flows from investing activities:
Acquisition of businesses -- (5,154) -- (5,154)
Capital expenditures -- (4,011) (595) (4,606)
Transfer of cash to trusts for employee health and
severance costs, net of payments out of the trust -- (4,096) -- (4,096)
Other -- 9 277 286
- ----------------------------------------------------------------------------------------------------------------
Net cash flows from investing activities -- (13,252) (318) (13,570)
- ----------------------------------------------------------------------------------------------------------------
Cash flows from financing activities:
Borrowings on line of credit facilities 70,000 -- -- 70,000
Payments on line of credit facilities (445,000) -- -- (445,000)
Proceeds from long-term obligations 374,930 -- 70 375,000
Fees paid for financing arrangements (14,314) -- -- (14,314)
Other 61,431 (66,319) 4,419 (469)
- ----------------------------------------------------------------------------------------------------------------
Net cash flows from financing activities 47,047 (66,319) 4,489 (14,783)
- ----------------------------------------------------------------------------------------------------------------
Effect of exchange rate changes on cash -- -- (96) (96)
- ----------------------------------------------------------------------------------------------------------------
Net increase (decrease) in cash and cash equivalents 28,569 (27,241) 2,331 3,659
Cash and cash equivalents at beginning of period --
unrestricted 48,663 59,274 3,670 111,607
- ----------------------------------------------------------------------------------------------------------------
Cash and cash equivalents at end of period --
unrestricted $ 77,232 $ 32,033 $ 6,001 $ 115,266
================================================================================================================
2000:
- ----------------------------------------------------------------------------------------------------------------
Cash flows from operating activities:
Provision for doubtful accounts $ -- $ 6,689 $ 317 $ 7,006
Other (7,743) 31,370 (3,152) 20,475
- ----------------------------------------------------------------------------------------------------------------
Net cash flows from operating activities (7,743) 38,059 (2,835) 27,481
- ----------------------------------------------------------------------------------------------------------------
Cash flows from investing activities:
Acquisition of businesses -- (16,912) -- (16,912)
Capital expenditures (61) (7,178) (1,205) (8,444)
Transfer of cash to trusts for employee health and
severance costs, net of payments out of the trust -- (4,900) -- (4,900)
Other -- 42 16 58
- ----------------------------------------------------------------------------------------------------------------
Net cash flows from investing activities (61) (28,948) (1,189) (30,198)
- ----------------------------------------------------------------------------------------------------------------
Cash flows from financing activities:
Payments on line of credit facilities (10,000) -- -- (10,000)
Other 1,274 (4,467) 4 (3,189)
- ----------------------------------------------------------------------------------------------------------------
Net cash flows from financing activities (8,726) (4,467) 4 (13,189)
- ----------------------------------------------------------------------------------------------------------------
Effect of exchange rate changes on cash -- -- (40) (40)
- ----------------------------------------------------------------------------------------------------------------
Net (decrease) increase in cash and cash equivalents (16,530) 4,644 (4,060) (15,946)
Cash and cash equivalents at beginning of period --
unrestricted 52,009 39,274 5,984 97,267
- ----------------------------------------------------------------------------------------------------------------
Cash and cash equivalents at end of period --
unrestricted $ 35,479 $ 43,918 $ 1,924 $ 81,321
================================================================================================================
F-33
____________________________________ ___________________________________
ALL TENDERED OLD NOTES, EXECUTED LETTERS OF TRANSMITTAL AND OTHER RELATED
DOCUMENTS SHOULD BE DIRECTED TO THE EXCHANGE AGENT. QUESTIONS AND REQUESTS FOR
ASSISTANCE AND REQUESTS FOR ADDITIONAL COPIES OF THE PROSPECTUS, THE LETTER OF
TRANSMITTAL AND OTHER RELATED DOCUMENTS SHOULD BE ADDRESSED TO THE EXCHANGE
AGENT AS FOLLOWS:
By Courier:
SunTrust Bank
424 Church Street, 6th Floor
Nashville, TN 37219
By Mail:
SunTrust Bank
424 Church Street, 6th Floor
Nashville, TN 37219
By Hand:
SunTrust Bank
424 Church Street, 6th Floor
Nashville, TN 37219
Facsimile for Eligible Institutions:
(615) 748-5331
To Confirm by Telephone:
(615) 748-5324
ORIGINALS OF ALL DOCUMENTS SUBMITTED BY FACSIMILE SHOULD BE SENT PROMPTLY BY
HAND, OVERNIGHT DELIVERY, OR REGISTERED BY CERTIFIED MAIL.
NO DEALER, SALESPERSON OR OTHER PERSON IS AUTHORIZED TO GIVE ANY INFORMATION
TO OR TO REPRESENT ANYTHING NOT CONTAINED IN THIS PROSPECTUS. YOU MUST NOT RELY
ON ANY UNAUTHORIZED INFORMATION OR REPRESENTATIONS. THIS PROSPECTUS IS AN OFFER
TO EXCHANGE OLD NOTES ONLY FOR THE EXCHANGE NOTES OFFERED HEREBY, BUT ONLY UNDER
CIRCUMSTANCES AND IN JURISDICTIONS WHERE IT IS LAWFUL TO DO SO. THE INFORMATION
CONTAINED IN THIS PROSPECTUS IS CURRENT ONLY AS OF ITS DATE.
____________________________________ ___________________________________
OMNICARE, INC.
$375,000,000
8 1/8% SERIES B SENIOR
SUBORDINATED NOTES DUE 2011
----------------
PROSPECTUS
----------------
TABLE OF CONTENTS
PROSPECTUS SUMMARY.......................................... 2
SUMMARY OF THE EXCHANGE OFFER............................... 7
SUMMARY OF TERMS OF THE EXCHANGE NOTES...................... 10
SUMMARY CONSOLIDATED FINANCIAL DATA......................... 13
FORWARD-LOOKING INFORMATION................................. 15
RISK FACTORS................................................ 17
THE EXCHANGE OFFER.......................................... 23
USE OF PROCEEDS............................................. 34
CAPITALIZATION.............................................. 34
SELECTED HISTORICAL CONSOLIDATED FINANCIAL INFORMATION...... 35
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS................................. 38
BUSINESS.................................................... 47
MANAGEMENT.................................................. 63
DESCRIPTION OF NOTES........................................ 65
DESCRIPTION OF CERTAIN INDEBTEDNESS......................... 103
MATERIAL FEDERAL INCOME TAX CONSIDERATIONS.................. 104
PLAN OF DISTRIBUTION........................................ 104
LEGAL MATTERS............................................... 105
EXPERTS..................................................... 105
WHERE YOU CAN FIND MORE INFORMATION......................... 105
DOCUMENTS INCORPORATED BY REFERENCE INTO THIS PROSPECTUS.... 106
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS.................. F-1
, 2001
____________________________________ ___________________________________
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 20. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
The Restated Certificate of Incorporation of Omnicare, Inc. provides that a
director of Omnicare, Inc. will not be liable to Omnicare, Inc. 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, Inc. Restated Certificate of Incorporation states
that Omnicare, Inc. 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,
Inc. may, to the extent permitted by the DGCL, indemnify agents of Omnicare,
Inc. 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 proceeding, 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,
Inc. maintains a directors' and officers' liability insurance policy.
ITEM 21. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES.
(a) Exhibits
EXHIBIT NO. DESCRIPTION
- ----------- -----------
3.1 -- Restated Certificate of Incorporation of Omnicare, Inc.
(incorporated herein by reference to our Annual Report on
Form 10-K for the year ended December 31, 1996).
3.2 -- By-Laws of Omnicare, Inc., as amended (incorporated by
reference herein by reference to our registration
statement on Form S-3 dated September 28, 1998).
4.1 -- Indenture dated as of March 20, 2001, by and among
Omnicare, Inc., the Guarantors named therein and SunTrust
Bank, as trustee, relating to the Company's $375.0 million
8.125% Senior Subordinated Notes due 2011 (incorporated
herein by reference to our Current Report on Form 8-K
dated March 23, 2001).
4.2 -- Registration Rights Agreement dated as of March 20, 2001
by and among Omnicare, Inc., the Guarantors named therein
and the Initial Purchasers named therein, relating to the
Registrant's 8 1/8% Senior Subordinated Notes due 2011
(incorporated herein by reference to our Current Report on
Form 8-K dated March 23, 2001).
5.1 -- Opinion of Dewey Ballantine LLP regarding the validity of
the exchange notes.
5.2 -- Opinion of Thompson Hine LLP regarding the validity of
the exchange guarantees.
12 -- Statement of Computation of Ratio of Earnings to Fixed
Charges.
23.1 -- Consent of PricewaterhouseCoopers LLP.
23.2 -- Consent of Dewey Ballantine LLP (included in its opinion
filed as Exhibit 5.1 hereto).
23.3 -- Consent of Thompson Hine LLP (included in its opinion
filed as Exhibit 5.2 hereto).
24 -- Powers of Attorney (included on page II-3).
25 -- Statement of Eligibility of Trustee.
99.1 -- Form of Letter of Transmittal.
99.2 -- Form of Notice of Guaranteed Delivery.
99.3 -- Form of Letter to Clients.
99.4 -- Form of Letter to Brokers.
99.5 -- Form of Instructions to Registered Holders.
II-1
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:
(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 SEC 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; and
(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. 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.
4. 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.
5. 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-2
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, 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 June 8, 2001.
OMNICARE, INC.
By: /S/ CHERYL D. HODGES
..................................
(CHERYL D. HODGES)
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.
SIGNATURE TITLE DATE
--------- ----- ----
/s/ EDWARD L. HUTTON Chairman; Director June 8, 2001
.........................................
(EDWARD L. HUTTON)
/s/ JOEL F. GEMUNDER President; Director June 8, 2001
.........................................
(JOEL F. GEMUNDER)
/s/ PATRICK E. KEEFE Executive Vice President -- June 8, 2001
......................................... Operations; Director
(PATRICK E. KEEFE)
/s/ TIMOTHY E. BIEN Senior Vice President -- June 8, 2001
......................................... Professional Services
(TIMOTHY E. BIEN) and Purchasing; Director
/s/ DAVID W. FROESEL, JR. Senior Vice President and Chief June 8, 2001
......................................... Financial Officer; Director
(DAVID W. FROESEL, JR.)
/s/ CHERYL D. HODGES Senior Vice President and Secretary; June 8, 2001
......................................... Director
(CHERYL D. HODGES)
/s/ CHARLES H. ERHART, JR. Director June 8, 2001
.........................................
(CHARLES H. ERHART, JR.)
/s/ SANDRA E. LANEY Director June 8, 2001
.........................................
(SANDRA E. LANEY)
/s/ ANDREA R. LINDELL, DNSc, RN Director June 8, 2001
.........................................
(ANDREA R. LINDELL, DNSc, RN)
II-3
/s/ SHELDON MARGEN, M.D. Director June 8, 2001
.........................................
(SHELDON MARGEN, M.D.)
/s/ KEVIN J. MCNAMARA Director June 8, 2001
.........................................
(KEVIN J. MCNAMARA)
/s/ JOHN T. TIMONEY Director June 8, 2001
.........................................
(JOHN T. TIMONEY)
II-4
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, 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 June 8, 2001.
CHP ACQUISITION CORP.
By: /s/ ROBERT A. FUSCO
..................................
ROBERT A. FUSCO
PRESIDENT
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.
SIGNATURE TITLE DATE
--------- ----- ----
/s/ ROBERT A. FUSCO President June 8, 2001
.........................................
ROBERT A. FUSCO
/s/ BRADLEY S. ABBOTT Treasurer June 8, 2001
.........................................
BRADLEY S. ABBOTT
/s/ THOMAS R. MARSH Director June 8, 2001
.........................................
THOMAS R. MARSH
/s/ CATHERINE I. GREANY Director June 8, 2001
.........................................
CATHERINE I. GREANY
II-5
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, 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 June 8, 2001.
MED WORLD ACQUISITION CORP.
By: /s/ MICHAEL ROSENBLUM
..................................
MICHAEL ROSENBLUM
PRESIDENT
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.
SIGNATURE TITLE DATE
--------- ----- ----
/s/ MICHAEL ROSENBLUM President June 8, 2001
.........................................
MICHAEL ROSENBLUM
/s/ BRADLEY S. ABBOTT Treasurer June 8, 2001
.........................................
BRADLEY S. ABBOTT
/s/ THOMAS R. MARSH Director June 8, 2001
.........................................
THOMAS R. MARSH
/s/ CATHERINE I. GREANY Director June 8, 2001
.........................................
CATHERINE I. GREANY
II-6
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, 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 June 8, 2001.
NIHAN & MARTIN, INC.
By: /s/ JODY FENELON
..................................
JODY FENELON
PRESIDENT
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.
SIGNATURE TITLE DATE
--------- ----- ----
/s/ JODY FENELON President June 8, 2001
.........................................
JODY FENELON
/s/ BRADLEY S. ABBOTT Treasurer June 8, 2001
.........................................
BRADLEY S. ABBOTT
/s/ THOMAS R. MARSH Director June 8, 2001
.........................................
THOMAS R. MARSH
/s/ CATHERINE I. GREANY Director June 8, 2001
.........................................
CATHERINE I. GREANY
II-7
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, 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 June 8, 2001.
OMNICARE PHARMACIES OF PENNSYLVANIA
WEST, INC.
By: /s/ DANIEL CARTO
..................................
DANIEL CARTO
PRESIDENT
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.
SIGNATURE TITLE DATE
--------- ----- ----
/s/ DANIEL CARTO President June 8, 2001
.........................................
DANIEL CARTO
/s/ BRADLEY S. ABBOTT Treasurer June 8, 2001
.........................................
BRADLEY S. ABBOTT
/s/ THOMAS R. MARSH Director June 8, 2001
.........................................
THOMAS R. MARSH
/s/ CATHERINE I. GREANY Director June 8, 2001
.........................................
CATHERINE I. GREANY
II-8
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, 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 June 8, 2001.
PRN PHARMACEUTICAL SERVICES, INC.
By: /s/ CAROLYN COPEN
..................................
CAROLYN COPEN
PRESIDENT
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.
SIGNATURE TITLE DATE
--------- ----- ----
/s/ CAROLYN COPEN President June 8, 2001
.........................................
CAROLYN COPEN
/s/ BRADLEY S. ABBOTT Treasurer June 8, 2001
.........................................
BRADLEY S. ABBOTT
/s/ THOMAS R. MARSH Director June 8, 2001
.........................................
THOMAS R. MARSH
/s/ CATHERINE I. GREANY Director June 8, 2001
.........................................
CATHERINE I. GREANY
II-9
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, 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 June 8, 2001.
AAHS ACQUISITION CORP.
EVERGREEN PHARMACEUTICAL, INC.
EVERGREEN PHARMACEUTICAL OF
CALIFORNIA, INC.
THG ACQUISITION CORP.
By: /s/ CARL E. WOOD, JR.
..................................
CARL E. WOOD, JR.
PRESIDENT
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.
SIGNATURE TITLE DATE
--------- ----- ----
/s/ CARL E. WOOD, JR. President June 8, 2001
.........................................
CARL E. WOOD, JR.
/s/ BRADLEY S. ABBOTT Treasurer June 8, 2001
.........................................
BRADLEY S. ABBOTT
/s/ THOMAS R. MARSH Director June 8, 2001
.........................................
THOMAS R. MARSH
/s/ CATHERINE I. GREANY Director June 8, 2001
.........................................
CATHERINE I. GREANY
II-10
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, 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 June 8, 2001.
CREEKSIDE MANAGED CARE PHARMACY, INC.
By: /s/ DAVID W. MEDINA
..................................
DAVID W. MEDINA
PRESIDENT
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.
SIGNATURE TITLE DATE
--------- ----- ----
/s/ DAVID W. MEDINA President; Director June 8, 2001
.........................................
DAVID W. MEDINA
/s/ BRADLEY S. ABBOTT Treasurer June 8, 2001
.........................................
BRADLEY S. ABBOTT
/s/ THOMAS R. MARSH Director June 8, 2001
.........................................
THOMAS R. MARSH
/s/ CATHERINE I. GREANY Director June 8, 2001
.........................................
CATHERINE I. GREANY
/s/ CARL E WOOD, JR. Director June 8, 2001
.........................................
CARL E WOOD, JR.
II-11
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, 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 June 8, 2001.
ACCU-MED SERVICES, INC.
By: /s/ THOMAS LUDEKE
..................................
THOMAS LUDEKE
PRESIDENT
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.
SIGNATURE TITLE DATE
--------- ----- ----
/s/ THOMAS LUDEKE President; Director June 8, 2001
.........................................
THOMAS LUDEKE
/s/ BRADLEY S. ABBOTT Treasurer June 8, 2001
.........................................
BRADLEY S. ABBOTT
/s/ THOMAS R. MARSH Director June 8, 2001
.........................................
THOMAS R. MARSH
/s/ CATHERINE I. GREANY Director June 8, 2001
.........................................
CATHERINE I. GREANY
II-12
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, 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 June 8, 2001.
AMC-NEW YORK, INC.
ELECTRA ACQUISITION CORP.
HOME PHARMACY SERVICES, INC.
NORTH SHORE PHARMACY SERVICES, INC.
OCR-RA ACQUISITION CORP.
OMNICARE PHARMACIES OF MAINE HOLDING
COMPANY
PHARMACY ASSOCIATES OF GLENN FALLS,
INC.
VALUE PHARMACY, INC.
WILLIAMSON DRUG COMPANY, INCORPORATED
WINSLOW'S PHARMACY
By: /s/ JEFFREY M. STAMPS
..................................
JEFFREY M. STAMPS
PRESIDENT
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.
SIGNATURE TITLE DATE
--------- ----- ----
/s/ JEFFREY M. STAMPS President June 8, 2001
.........................................
JEFFREY M. STAMPS
/s/ BRADLEY S. ABBOTT Treasurer June 8, 2001
.........................................
BRADLEY S. ABBOTT
/s/ THOMAS R. MARSH Director June 8, 2001
.........................................
THOMAS R. MARSH
/s/ CATHERINE I. GREANY Director June 8, 2001
.........................................
CATHERINE I. GREANY
II-13
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, 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 June 8, 2001.
AMC-TENNESSEE, INC
By: /s/ JULIE FRAZIER
..................................
JULIE FRAZIER
PRESIDENT
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.
SIGNATURE TITLE DATE
--------- ----- ----
/s/ JULIE FRAZIER President June 8, 2001
.........................................
JULIE FRAZIER
/s/ BRADLEY S. ABBOTT Treasurer June 8, 2001
.........................................
BRADLEY S. ABBOTT
/s/ THOMAS R. MARSH Director June 8, 2001
.........................................
THOMAS R. MARSH
/s/ CATHERINE I. GREANY Director June 8, 2001
.........................................
CATHERINE I. GREANY
/s/ JEFFREY M. STAMPS Director June 8, 2001
.........................................
JEFFREY M. STAMPS
II-14
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, 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 June 8, 2001.
CARE PHARMACEUTICAL SERVICES, INC.
By: /s/ JOHN A. SCHREINER
..................................
JOHN A. SCHREINER
PRESIDENT
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.
SIGNATURE TITLE DATE
--------- ----- ----
/s/ JOHN A. SCHREINER President June 8, 2001
.........................................
JOHN A. SCHREINER
/s/ BRADLEY S. ABBOTT Treasurer June 8, 2001
.........................................
BRADLEY S. ABBOTT
/s/ THOMAS R. MARSH Director June 8, 2001
.........................................
THOMAS R. MARSH
/s/ CATHERINE I. GREANY Director June 8, 2001
.........................................
CATHERINE I. GREANY
/s/ JEFFREY M. STAMPS Director June 8, 2001
.........................................
JEFFREY M. STAMPS
II-15
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, 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 June 8, 2001.
ACP ACQUISITION CORP.
BPNY ACQUISITION CORP.
BPTX ACQUISITION CORP.
HMIS, INC.
OFL CORP.
PHARMACY CONSULATANTS, INC.
By: /s/ L. TRACY FINN
..................................
L. TRACY FINN
PRESIDENT
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.
SIGNATURE TITLE DATE
--------- ----- ----
/s/ L. TRACY FINN President June 8, 2001
.........................................
L. TRACY FINN
/s/ BRADLEY S. ABBOTT Treasurer June 8, 2001
.........................................
BRADLEY S. ABBOTT
/s/ THOMAS R. MARSH Director June 8, 2001
.........................................
THOMAS R. MARSH
/s/ CATHERINE I. GREANY Director June 8, 2001
.........................................
CATHERINE I. GREANY
II-16
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, 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 June 8, 2001.
HOME CARE PHARMACY, INC.
By: /s/ MICHAEL J. ARNOLD
..................................
MICHAEL J. ARNOLD
PRESIDENT
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.
SIGNATURE TITLE DATE
--------- ----- ----
/s/ MICHAEL J. ARNOLD President June 8, 2001
.........................................
MICHAEL J. ARNOLD
/s/ BRADLEY S. ABBOTT Treasurer June 8, 2001
.........................................
BRADLEY S. ABBOTT
/s/ THOMAS R. MARSH Director June 8, 2001
.........................................
THOMAS R. MARSH
/s/ CATHERINE I. GREANY Director June 8, 2001
.........................................
CATHERINE I. GREANY
/s/ JEFFREY M. STAMPS Director June 8, 2001
.........................................
JEFFREY M. STAMPS
II-17
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, 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 June 8, 2001.
MOSI ACQUISITION CORP.
By: /s/ LINDA BUTLER
..................................
LINDA BUTLER
PRESIDENT
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.
SIGNATURE TITLE DATE
--------- ----- ----
/s/ LINDA BUTLER President June 8, 2001
.........................................
LINDA BUTLER
/s/ BRADLEY S. ABBOTT Treasurer June 8, 2001
.........................................
BRADLEY S. ABBOTT
/s/ THOMAS R. MARSH Director June 8, 2001
.........................................
THOMAS R. MARSH
/s/ CATHERINE I. GREANY Director June 8, 2001
.........................................
CATHERINE I. GREANY
/s/ JEFFREY M. STAMPS Director June 8, 2001
.........................................
JEFFREY M. STAMPS
II-18
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, 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 June 8, 2001.
PHARMACON CORP.
By: /s/ WILLIAM J. LYONS
..................................
WILLIAM J. LYONS
PRESIDENT
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.
SIGNATURE TITLE DATE
--------- ----- ----
/s/ WILLIAM J. LYONS President June 8, 2001
.........................................
WILLIAM J. LYONS
/s/ BRADLEY S. ABBOTT Treasurer June 8, 2001
.........................................
BRADLEY S. ABBOTT
/s/ THOMAS R. MARSH Director June 8, 2001
.........................................
THOMAS R. MARSH
/s/ CATHERINE I. GREANY Director June 8, 2001
.........................................
CATHERINE I. GREANY
/s/ JEFFREY M. STAMPS Director June 8, 2001
.........................................
JEFFREY M. STAMPS
II-19
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, 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 June 8, 2001.
SHORE PHARMACEUTICAL PROVIDERS, INC.
By: /s/ PAUL B. MEYEROFF
..................................
PAUL B. MEYEROFF
PRESIDENT
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.
SIGNATURE TITLE DATE
--------- ----- ----
/s/ PAUL B. MEYEROFF President June 8, 2001
.........................................
PAUL B. MEYEROFF
/s/ BRADLEY S. ABBOTT Treasurer June 8, 2001
.........................................
BRADLEY S. ABBOTT
/s/ THOMAS R. MARSH Director June 8, 2001
.........................................
THOMAS R. MARSH
/s/ CATHERINE I. GREANY Director June 8, 2001
.........................................
CATHERINE I. GREANY
/s/ JEFFREY M. STAMPS Director June 8, 2001
.........................................
JEFFREY M. STAMPS
II-20
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, 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 June 8, 2001.
SOUTHSIDE APOTHECARY, INC.
By: /s/ MARK MALAHOSKY
..................................
MARK MALAHOSKY
PRESIDENT
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.
SIGNATURE TITLE DATE
--------- ----- ----
/s/ MARK MALAHOSKY President June 8, 2001
.........................................
MARK MALAHOSKY
/s/ BRADLEY S. ABBOTT Treasurer June 8, 2001
.........................................
BRADLEY S. ABBOTT
/s/ THOMAS R. MARSH Director June 8, 2001
.........................................
THOMAS R. MARSH
/s/ CATHERINE I. GREANY Director June 8, 2001
.........................................
CATHERINE I. GREANY
/s/ JEFFREY M. STAMPS Director June 8, 2001
.........................................
JEFFREY M. STAMPS
II-21
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, 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 June 8, 2001.
THREE FORKS APOTHECARY, INC.
By: /s/ SCARLET GRUBBS
..................................
SCARLET GRUBBS
PRESIDENT
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.
SIGNATURE TITLE DATE
--------- ----- ----
/s/ SCARLET GRUBBS President June 8, 2001
.........................................
SCARLET GRUBBS
/s/ BRADLEY S. ABBOTT Treasurer June 8, 2001
.........................................
BRADLEY S. ABBOTT
/s/ THOMAS R. MARSH Director June 8, 2001
.........................................
THOMAS R. MARSH
/s/ CATHERINE I. GREANY Director June 8, 2001
.........................................
CATHERINE I. GREANY
/s/ JEFFREY M. STAMPS Director June 8, 2001
.........................................
JEFFREY M. STAMPS
II-22
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, 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 June 8, 2001.
VALUE HEALTH CARE SERVICES, INC.
By: /s/ LAWRENCE SOBEL
..................................
LAWRENCE SOBEL
PRESIDENT
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.
SIGNATURE TITLE DATE
--------- ----- ----
/s/ LAWRENCE SOBEL President June 8, 2001
.........................................
LAWRENCE SOBEL
/s/ BRADLEY S. ABBOTT Treasurer June 8, 2001
.........................................
BRADLEY S. ABBOTT
/s/ THOMAS R. MARSH Director June 8, 2001
.........................................
THOMAS R. MARSH
/s/ CATHERINE I. GREANY Director June 8, 2001
.........................................
CATHERINE I. GREANY
/s/ JEFFREY M. STAMPS Director June 8, 2001
.........................................
JEFFREY M. STAMPS
II-23
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, 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 June 8, 2001.
VITAL CARE INFUSION SUPPLY, INC.
By: /s/ STANLEY KAPLAN
..................................
STANLEY KAPLAN
PRESIDENT
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.
SIGNATURE TITLE DATE
--------- ----- ----
/s/ STANLEY KAPLAN President June 8, 2001
.........................................
STANLEY KAPLAN
/s/ BRADLEY S. ABBOTT Treasurer June 8, 2001
.........................................
BRADLEY S. ABBOTT
/s/ THOMAS R. MARSH Director June 8, 2001
.........................................
THOMAS R. MARSH
/s/ CATHERINE I. GREANY Director June 8, 2001
.........................................
CATHERINE I. GREANY
/s/ JEFFREY M. STAMPS Director June 8, 2001
.........................................
JEFFREY M. STAMPS
II-24
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, 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 June 8, 2001.
BIO-PHARM INTERNATIONAL, INC.
EURO BIO-PHARM CLINICAL SERVICES, INC.
OMNICARE CLINICAL RESEARCH, INC.
OMNICARE PHARMACEUTICALS, INC.
THE HARDARDT GROUP, INC.
By: /s/ DAVID MORRA
..................................
DAVID MORRA
CHIEF EXECUTIVE OFFICER
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.
SIGNATURE TITLE DATE
--------- ----- ----
/s/ DAVID MORRA Chief Executive Officer; Director June 8, 2001
.........................................
DAVID MORRA
/s/ BRADLEY S. ABBOTT Treasurer June 8, 2001
.........................................
BRADLEY S. ABBOTT
/s/ THOMAS R. MARSH Director June 8, 2001
.........................................
THOMAS R. MARSH
/s/ CATHERINE I. GREANY Director June 8, 2001
.........................................
CATHERINE I. GREANY
II-25
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, 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 June 8, 2001.
ENLOE DRUGS, INC.
JHC ACQUISITION, INC.
LPI ACQUISITION CORP.
NIV ACQUISITION CORP.
OMNICARE PHARMACY OF THE MIDWEST, INC.
WEBER MEDICAL SYSTEMS, INC.
By: /s/ A. SAMUEL ENLOE
..................................
A. SAMUEL ENLOE
PRESIDENT
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.
SIGNATURE TITLE DATE
--------- ----- ----
/s/ A. SAMUEL ENLOE President June 8, 2001
.........................................
A. SAMUEL ENLOE
/s/ BRADLEY S. ABBOTT Treasurer June 8, 2001
.........................................
BRADLEY S. ABBOTT
/s/ THOMAS R. MARSH Director June 8, 2001
.........................................
THOMAS R. MARSH
/s/ CATHERINE I. GREANY Director June 8, 2001
.........................................
CATHERINE I. GREANY
II-26
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, 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 June 8, 2001.
CTLP ACQUISITION CORP.
By: /s/ THOMAS D. MACPHERSON
..................................
THOMAS D. MACPHERSON
PRESIDENT
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.
SIGNATURE TITLE DATE
--------- ----- ----
/s/ THOMAS D. MACPHERSON President June 8, 2001
.........................................
THOMAS D. MACPHERSON
/s/ BRADLEY S. ABBOTT Treasurer June 8, 2001
.........................................
BRADLEY S. ABBOTT
/s/ THOMAS R. MARSH Director June 8, 2001
.........................................
THOMAS R. MARSH
/s/ CATHERINE I. GREANY Director June 8, 2001
.........................................
CATHERINE I. GREANY
/s/ A. SAMUEL ENLOE Director June 8, 2001
.........................................
A. SAMUEL ENLOE
II-27
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, 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 June 8, 2001.
HOME PHARMACY SERVICES, INC.
INTERLOCK PHARMACY SYSTEMS, INC.
By: /s/ MARK E. PRICE
..................................
MARK E. PRICE
PRESIDENT
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.
SIGNATURE TITLE DATE
--------- ----- ----
/s/ MARK E. PRICE President June 8, 2001
.........................................
MARK E. PRICE
/s/ BRADLEY S. ABBOTT Treasurer June 8, 2001
.........................................
BRADLEY S. ABBOTT
/s/ THOMAS R. MARSH Director June 8, 2001
.........................................
THOMAS R. MARSH
/s/ CATHERINE I. GREANY Director June 8, 2001
.........................................
CATHERINE I. GREANY
/s/ A. SAMUEL ENLOE Director June 8, 2001
.........................................
A. SAMUEL ENLOE
II-28
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, 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 June 8, 2001.
PBM-PLUS, INC.
By: THOMAS LUDEKE
..................................
THOMAS LUDEKE
CHIEF EXECUTIVE OFFICER
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.
SIGNATURE TITLE DATE
--------- ----- ----
/s/ THOMAS LUDEKE Chief Executive Officer June 8, 2001
.........................................
THOMAS LUDEKE
/s/ BRADLEY S. ABBOTT Treasurer June 8, 2001
.........................................
BRADLEY S. ABBOTT
/s/ THOMAS R. MARSH Director June 8, 2001
.........................................
THOMAS R. MARSH
/s/ CATHERINE I. GREANY Director June 8, 2001
.........................................
CATHERINE I. GREANY
/s/ A. SAMUEL ENLOE Director June 8, 2001
.........................................
A. SAMUEL ENLOE
II-29
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, 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 June 8, 2001.
ROESCHEN'S HEALTHCARE CORP.
By: /s/ PETER HOVIS
..................................
PETER HOVIS
PRESIDENT
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.
SIGNATURE TITLE DATE
--------- ----- ----
/s/ PETER HOVIS President June 8, 2001
.........................................
PETER HOVIS
/s/ BRADLEY S. ABBOTT Treasurer June 8, 2001
.........................................
BRADLEY S. ABBOTT
/s/ THOMAS R. MARSH Director June 8, 2001
.........................................
THOMAS R. MARSH
/s/ CATHERINE I. GREANY Director June 8, 2001
.........................................
CATHERINE I. GREANY
/s/ A. SAMUEL ENLOE Director June 8, 2001
.........................................
A. SAMUEL ENLOE
II-30
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, 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 June 8, 2001.
CAMPO'S MEDICAL PHARMACY, INC.
LANGSAM HEALTH SERVICERS, INC.
PHARMED HOLDINGS, INC.
STERLING HEALTHCARE SERVICES, INC.
By: /s/ JOSEPH L. DUPUY
..................................
JOSEPH L. DUPUY
PRESIDENT
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.
SIGNATURE TITLE DATE
--------- ----- ----
/s/ JOSEPH L. DUPUY President June 8, 2001
.........................................
JOSEPH L. DUPUY
/s/ BRADLEY S. ABBOTT Treasurer June 8, 2001
.........................................
BRADLEY S. ABBOTT
/s/ THOMAS R. MARSH Director June 8, 2001
.........................................
THOMAS R. MARSH
/s/ CATHERINE I. GREANY Director June 8, 2001
.........................................
CATHERINE I. GREANY
II-31
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, 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 June 8, 2001.
SPECIALIZED PATIENT CARE SERVICES,
INC.
By: /s/ L. TRACY FINN
..................................
L. TRACY FINN
PRESIDENT
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.
SIGNATURE TITLE DATE
--------- ----- ----
/s/ L. TRACY FINN President June 8, 2001
.........................................
L. TRACY FINN
/s/ BRADLEY S. ABBOTT Treasurer June 8, 2001
.........................................
BRADLEY S. ABBOTT
/s/ THOMAS R. MARSH Director June 8, 2001
.........................................
THOMAS R. MARSH
/s/ CATHERINE I. GREANY Director June 8, 2001
.........................................
CATHERINE I. GREANY
/s/ JOSEPH L. DUPUY Director June 8, 2001
.........................................
JOSEPH L. DUPUY
II-32
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, 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 June 8, 2001.
OMNICARE PHARMACIES OF THE GREAT
PLAINS HOLDING COMPANY
OMNICARE PHARMACY AND SUPPLY SERVICES,
INC.
TCPI ACQUISITION CORP.
WESTHAVEN SERVICES COMPANY,
INCORPORATED
By: /s/ GARY W. KADLEC
..................................
GARY W. KADLEC
PRESIDENT
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.
SIGNATURE TITLE DATE
--------- ----- ----
/s/ GARY W. KADLEC President; Director June 8, 2001
.........................................
GARY W. KADLEC
/s/ BRADLEY S. ABBOTT Treasurer June 8, 2001
.........................................
BRADLEY S. ABBOTT
/s/ THOMAS R. MARSH Director June 8, 2001
.........................................
THOMAS R. MARSH
/s/ CATHERINE I. GREANY Director June 8, 2001
.........................................
CATHERINE I. GREANY
II-33
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, 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 June 8, 2001.
LO-MED PRESCRIPTION SERVICES, INC.
By: /s/ ANTHONY SOLARO
..................................
ANTHONY SOLARO
PRESIDENT
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.
SIGNATURE TITLE DATE
--------- ----- ----
/s/ ANTHONY SOLARO President June 8, 2001
.........................................
ANTHONY SOLARO
/s/ BRADLEY S. ABBOTT Treasurer June 8, 2001
.........................................
BRADLEY S. ABBOTT
/s/ THOMAS R. MARSH Director June 8, 2001
.........................................
THOMAS R. MARSH
/s/ CATHERINE I. GREANY Director June 8, 2001
.........................................
CATHERINE I. GREANY
/s/ GARY W. KADLEC Director June 8, 2001
.........................................
GARY W. KADLEC
II-34
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, 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 June 8, 2001.
SPECIALIZED PHARMACY SERVICES, INC.
By: /s/ DANIEL E. LOHMEIER
..................................
DANIEL E. LOHMEIER
PRESIDENT
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.
SIGNATURE TITLE DATE
--------- ----- ----
/s/ DANIEL E. LOHMEIER President June 8, 2001
.........................................
DANIEL E. LOHMEIER
/s/ BRADLEY S. ABBOTT Treasurer June 8, 2001
.........................................
BRADLEY S. ABBOTT
/s/ THOMAS R. MARSH Director June 8, 2001
.........................................
THOMAS R. MARSH
/s/ CATHERINE I. GREANY Director June 8, 2001
.........................................
CATHERINE I. GREANY
/s/ GARY W. KADLEC Director June 8, 2001
.........................................
GARY W. KADLEC
II-35
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, 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 June 8, 2001.
UC ACQUISITION CORP.
By: /s/ JOHN B. DUNBAR III
..................................
JOHN B. DUNBAR III
PRESIDENT
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.
SIGNATURE TITLE DATE
--------- ----- ----
/s/ JOHN B. DUNBAR III President; Director June 8, 2001
.........................................
JOHN B. DUNBAR III
/s/ BRADLEY S. ABBOTT Treasurer June 8, 2001
.........................................
BRADLEY S. ABBOTT
/s/ THOMAS R. MARSH Director June 8, 2001
.........................................
THOMAS R. MARSH
/s/ CATHERINE I. GREANY Director June 8, 2001
.........................................
CATHERINE I. GREANY
II-36
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, 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 June 8, 2001.
CIP ACQUISITION CORP.
By: /s/ BUDDY CARTER
..................................
BUDDY CARTER
PRESIDENT
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.
SIGNATURE TITLE DATE
--------- ----- ----
/s/ BUDDY CARTER President June 8, 2001
.........................................
BUDDY CARTER
/s/ BRADLEY S. ABBOTT Treasurer June 8, 2001
.........................................
BRADLEY S. ABBOTT
/s/ THOMAS R. MARSH Director June 8, 2001
.........................................
THOMAS R. MARSH
/s/ CATHERINE I. GREANY Director June 8, 2001
.........................................
CATHERINE I. GREANY
/s/ JOHN B. DUNBAR III Director June 8, 2001
.........................................
JOHN B. DUNBAR III
II-37
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, 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 June 8, 2001.
MEDICAL ARTS HEALTH CARE, INC.
By: /s/ HAL J. HENDERSON
..................................
HAL J. HENDERSON
PRESIDENT
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.
SIGNATURE TITLE DATE
--------- ----- ----
/s/ HAL J. HENDERSON President; Director June 8, 2001
.........................................
HAL J. HENDERSON
/s/ BRADLEY S. ABBOTT Treasurer June 8, 2001
.........................................
BRADLEY S. ABBOTT
/s/ THOMAS R. MARSH Director June 8, 2001
.........................................
THOMAS R. MARSH
/s/ CATHERINE I. GREANY Director June 8, 2001
.........................................
CATHERINE I. GREANY
/s/ JOHN B. DUNBAR III Director June 8, 2001
.........................................
JOHN B. DUNBAR III
II-38
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, 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 June 8, 2001.
MANAGED HEALTHCARE, INC.
By: /s/ JOHN E. SHERWOOD
..................................
JOHN E. SHERWOOD
PRESIDENT
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.
SIGNATURE TITLE DATE
--------- ----- ----
/s/ JOHN E. SHERWOOD President; Director June 8, 2001
.........................................
JOHN E. SHERWOOD
/s/ BRADLEY S. ABBOTT Treasurer June 8, 2001
.........................................
BRADLEY S. ABBOTT
/s/ THOMAS R. MARSH Director June 8, 2001
.........................................
THOMAS R. MARSH
/s/ CATHERINE I. GREANY Director June 8, 2001
.........................................
CATHERINE I. GREANY
II-39
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, 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 June 8, 2001.
SUPERIOR CARE PHARMACY, INC.
By: /s/ OWEN E. WOOD
..................................
OWEN E. WOOD
PRESIDENT
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.
SIGNATURE TITLE DATE
--------- ----- ----
/s/ OWEN E. WOOD President; Director June 8, 2001
.........................................
OWEN E. WOOD
/s/ BRADLEY S. ABBOTT Treasurer June 8, 2001
.........................................
BRADLEY S. ABBOTT
/s/ THOMAS R. MARSH Director June 8, 2001
.........................................
THOMAS R. MARSH
/s/ CATHERINE I. GREANY Director June 8, 2001
.........................................
CATHERINE I. GREANY
II-40
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, 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 June 8, 2001.
COMPSCRIPT, INC.
COMPSCRIPT - BOCA, INC.
COMPSCRIPT - MOBILE, INC.
HYTREE PHARMACY, INC.
MEDICAL SERVICES CONSORTIUM, INC.
By: /s/ ROBERT J. GARDNER
..................................
ROBERT J. GARDNER
PRESIDENT
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.
SIGNATURE TITLE DATE
--------- ----- ----
/s/ ROBERT J. GARDNER President June 8, 2001
.........................................
ROBERT J. GARDNER
/s/ BRADLEY S. ABBOTT Treasurer June 8, 2001
.........................................
BRADLEY S. ABBOTT
/s/ L. TRACY FINN Director June 8, 2001
.........................................
L. TRACY FINN
/s/ CATHERINE I. GREANY Director June 8, 2001
.........................................
CATHERINE I. GREANY
II-41
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, 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 June 8, 2001.
CP ACQUISITION CORP.
By: /s/ L. TRACY FINN
..................................
L. TRACY FINN
PRESIDENT
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.
SIGNATURE TITLE DATE
--------- ----- ----
/s/ L. TRACY FINN President; Director June 8, 2001
.........................................
L. TRACY FINN
/s/ BRADLEY S. ABBOTT Treasurer June 8, 2001
.........................................
BRADLEY S. ABBOTT
/s/ CATHERINE I. GREANY Director June 8, 2001
.........................................
CATHERINE I. GREANY
II-42
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, 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 June 8, 2001.
OMNICARE MANAGEMENT COMPANY
By: /s/ JOEL F. GEMUNDER
..................................
JOEL F. GEMUNDER
PRESIDENT
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.
SIGNATURE TITLE DATE
--------- ----- ----
/s/ JOEL F. GEMUNDER President; Director June 8, 2001
.........................................
JOEL F. GEMUNDER
/s/ BRADLEY S. ABBOTT Treasurer June 8, 2001
.........................................
BRADLEY S. ABBOTT
/s/ DAVID W. FROESEL Director June 8, 2001
.........................................
DAVID W. FROESEL
/s/ CHERYL D. HODGES Director June 8, 2001
.........................................
CHERYL D. HODGES
II-43
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, 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 June 8, 2001.
BACH'S PHARMACY SERVICES, LLC
By: Sole Member:
BACH'S PHARMACY (EAST), INC.
By: /s/ JEFFREY M. STAMPS
..................................
JEFFREY M. STAMPS
PRESIDENT
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.
SIGNATURE TITLE DATE
--------- ----- ----
/s/ L. TRACY FINN President June 8, 2001
.........................................
L. TRACY FINN
/s/ BRADLEY S. ABBOTT Treasurer June 8, 2001
.........................................
BRADLEY S. ABBOTT
/s/ TOM R. MARSH Director June 8, 2001
.........................................
TOM R. MARSH
/s/ CATHERINE I. GREANY Director June 8, 2001
.........................................
CATHERINE I. GREANY
II-44
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, 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 June 8, 2001.
BADGER ACQUISITION LLC
By: Sole Member:
OMNICARE HOLDING COMPANY
By: /s/ CHERYL D. HODGES
..................................
CHERYL D. HODGES
VICE PRESIDENT
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.
SIGNATURE TITLE DATE
--------- ----- ----
/s/ L. TRACY FINN President; Director June 8, 2001
.........................................
L. TRACY FINN
/s/ BRADLEY S. ABBOTT Vice President June 8, 2001
.........................................
BRADLEY S. ABBOTT
/s/ THOMAS R. MARSH Treasurer June 8, 2001
.........................................
THOMAS R. MARSH
II-45
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, 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 June 8, 2001.
OMNIBILL SERVICES LLC
By: Sole Member:
OMNICARE HOLDING COMPANY
By: /s/ CHERYL D. HODGES
..................................
CHERYL D. HODGES
VICE PRESIDENT
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.
SIGNATURE TITLE DATE
--------- ----- ----
/s/ GARY W. KADLEC President June 8, 2001
.........................................
GARY W. KADLEC
/s/ BRADLEY S. ABBOTT Treasurer June 8, 2001
.........................................
BRADLEY S. ABBOTT
/s/ THOMAS R. MARSH Director June 8, 2001
.........................................
THOMAS R. MARSH
/s/ CATHERINE I. GREANY Director June 8, 2001
.........................................
CATHERINE I. GREANY
II-46
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, 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 June 8, 2001.
BADGER ACQUISITION OF BROOKSVILLE LLC
By: Sole Member:
BADGER ACQUISITION LLC
By: /s/ L. TRACY FINN
..................................
L. TRACY FINN
PRESIDENT
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.
SIGNATURE TITLE DATE
--------- ----- ----
/s/ L. TRACY FINN President June 8, 2001
.........................................
L. TRACY FINN
/s/ BRADLEY S. ABBOTT Vice President June 8, 2001
.........................................
BRADLEY S. ABBOTT
/s/ THOMAS R. MARSH Treasurer June 8, 2001
.........................................
THOMAS R. MARSH
II-47
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, 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 June 8, 2001.
BADGER ACQUISITION OF KENTUCKY LLC
By: Sole Member:
BADGER ACQUISITION LLC
By: /s/ L. TRACY FINN
..................................
L. TRACY FINN
PRESIDENT
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.
SIGNATURE TITLE DATE
--------- ----- ----
/s/ L. TRACY FINN President June 8, 2001
.........................................
L. TRACY FINN
/s/ BRADLEY S. ABBOTT Vice President June 8, 2001
.........................................
BRADLEY S. ABBOTT
/s/ THOMAS R. MARSH Treasurer June 8, 2001
.........................................
THOMAS R. MARSH
II-48
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, 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 June 8, 2001.
BADGER ACQUISITION OF MINNESOTA LLC
By: Sole Member:
BADGER ACQUISITION LLC
By: /s/ L. TRACY FINN
..................................
L. TRACY FINN
PRESIDENT
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.
SIGNATURE TITLE DATE
--------- ----- ----
/s/ L. TRACY FINN President June 8, 2001
.........................................
L. TRACY FINN
/s/ BRADLEY S. ABBOTT Vice President June 8, 2001
.........................................
BRADLEY S. ABBOTT
/s/ THOMAS R. MARSH Treasurer June 8, 2001
.........................................
THOMAS R. MARSH
II-49
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, 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 June 8, 2001.
BADGER ACQUISITION OF OHIO LLC
By: Sole Member:
BADGER ACQUISITION LLC
By: /s/ L. TRACY FINN
..................................
L. TRACY FINN
PRESIDENT
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.
SIGNATURE TITLE DATE
--------- ----- ----
/s/ JEFFREY M. STAMPS President June 8, 2001
.........................................
JEFFREY M. STAMPS
/s/ DOUGLAS ACKLEY Vice President June 8, 2001
.........................................
DOUGLAS ACKLEY
/s/ BRADLEY S. ABBOTT Treasurer June 8, 2001
.........................................
BRADLEY S. ABBOTT
II-50
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, 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 June 8, 2001.
BADGER ACQUISITION OF ORLANDO LLC
By: Sole Member:
BADGER ACQUISITION LLC
By: /s/ L. TRACY FINN
..................................
L. TRACY FINN
PRESIDENT
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.
SIGNATURE TITLE DATE
--------- ----- ----
/s/ L. TRACY FINN President June 8, 2001
.........................................
L. TRACY FINN
/s/ BRADLEY S. ABBOTT Vice President June 8, 2001
.........................................
BRADLEY S. ABBOTT
/s/ THOMAS R. MARSH Treasurer June 8, 2001
.........................................
THOMAS R. MARSH
II-51
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, 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 June 8, 2001.
BADGER ACQUISITION OF TAMPA LLC
By: Sole Member:
BADGER ACQUISITION LLC
By: /s/ L. TRACY FINN
..................................
L. TRACY FINN
PRESIDENT
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.
SIGNATURE TITLE DATE
--------- ----- ----
/s/ L. TRACY FINN President June 8, 2001
.........................................
L. TRACY FINN
/s/ BRADLEY S. ABBOTT Vice President June 8, 2001
.........................................
BRADLEY S. ABBOTT
/s/ THOMAS R. MARSH Treasurer June 8, 2001
.........................................
THOMAS R. MARSH
II-52
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, 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 June 8, 2001.
BADGER ACQUISITION OF TEXAS LLC
By: Sole Member:
BADGER ACQUISITION LLC
By: /s/ L. TRACY FINN
..................................
L. TRACY FINN
PRESIDENT
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.
SIGNATURE TITLE DATE
--------- ----- ----
/s/ L. TRACY FINN President June 8, 2001
.........................................
L. TRACY FINN
/s/ BRADLEY S. ABBOTT Vice President June 8, 2001
.........................................
BRADLEY S. ABBOTT
/s/ THOMAS R. MARSH Treasurer June 8, 2001
.........................................
THOMAS R. MARSH
II-53
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, 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 June 8, 2001.
LCPS ACQUISITION, LLC
By: Sole Member:
LANGSAM HEALTH SERVICES, INC.
By: /s/ JOSEPH L. DUPUY
..................................
JOSEPH L. DUPUY
PRESIDENT
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.
SIGNATURE TITLE DATE
--------- ----- ----
/s/ L. TRACY FINN President June 8, 2001
.........................................
L. TRACY FINN
/s/ BRADLEY S. ABBOTT Vice President June 8, 2001
.........................................
BRADLEY S. ABBOTT
/s/ THOMAS R. MARSH Treasurer June 8, 2001
.........................................
THOMAS R. MARSH
II-54
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, 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 June 8, 2001.
OMNICARE CLINICAL RESEARCH, LLC
By: Sole Member:
OMNICARE, INC.
By: /s/ CHERYL D. HODGES
..................................
CHERYL D. HODGES
SENIOR VICE PRESIDENT
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.
SIGNATURE TITLE DATE
--------- ----- ----
/s/ DALE B. EVANS President; Director June 8, 2001
.........................................
DALE B. EVANS
/s/ BRADLEY S. ABBOTT Treasurer June 8, 2001
.........................................
BRADLEY S. ABBOTT
/s/ THOMAS R. MARSH Director June 8, 2001
.........................................
THOMAS R. MARSH
/s/ CATHERINE I. GREANY Director June 8, 2001
.........................................
CATHERINE I. GREANY
II-55
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, 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 June 8, 2001.
OMNICARE PENNSYLVANIA MED SUPPLY, LLC
By: Sole Member:
OMNICARE PHARMACIES OF PENNSYLVANIA
WEST, INC.
By: /s/ DANIEL CARTO
..................................
DANIEL CARTO
PRESIDENT
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.
SIGNATURE TITLE DATE
--------- ----- ----
/s/ DANIEL CARTO President; Director June 8, 2001
.........................................
DANIEL CARTO
/s/ BRADLEY S. ABBOTT Treasurer June 8, 2001
.........................................
BRADLEY S. ABBOTT
/s/ THOMAS R. MARSH Director June 8, 2001
.........................................
THOMAS R. MARSH
/s/ CATHERINE I. GREANY Director June 8, 2001
.........................................
CATHERINE I. GREANY
II-56
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, 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 June 8, 2001.
OMNICARE PHARMACIES OF PENNSYLVANIA
EAST, LLC
By: Sole Member:
OMNICARE PHARMACIES OF PENNSYLVANIA
WEST, INC.
By: /s/ DANIEL CARTO
..................................
DANIEL CARTO
PRESIDENT
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.
SIGNATURE TITLE DATE
--------- ----- ----
/s/ DANIEL CARTO President; Director June 8, 2001
.........................................
DANIEL CARTO
/s/ BRADLEY S. ABBOTT Treasurer June 8, 2001
.........................................
BRADLEY S. ABBOTT
/s/ THOMAS R. MARSH Director June 8, 2001
.........................................
THOMAS R. MARSH
/s/ CATHERINE I. GREANY Director June 8, 2001
.........................................
CATHERINE I. GREANY
II-57
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, 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 June 8, 2001.
OMNICARE PHARMACY OF COLORADO LLC
By: Sole Member:
LCPS ACQUISITION, LLC
By: /s/ L. TRACY FINN
..................................
L. TRACY FINN
PRESIDENT
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.
SIGNATURE TITLE DATE
--------- ----- ----
/s/ L. TRACY FINN President June 8, 2001
.........................................
L. TRACY FINN
/s/ BRADLEY S. ABBOTT Vice President June 8, 2001
.........................................
BRADLEY S. ABBOTT
/s/ THOMAS R. MARSH Treasurer June 8, 2001
.........................................
THOMAS R. MARSH
II-58
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, 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 June 8, 2001.
OMNICARE PHARMACY OF MASSACHUSETTS LLC
By: Sole Member:
LCPS ACQUISITION, LLC
By: /s/ L. TRACY FINN
..................................
L. TRACY FINN
PRESIDENT
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.
SIGNATURE TITLE DATE
--------- ----- ----
/s/ L. TRACY FINN President June 8, 2001
.........................................
L. TRACY FINN
/s/ BRADLEY S. ABBOTT Vice President June 8, 2001
.........................................
BRADLEY S. ABBOTT
/s/ THOMAS R. MARSH Treasurer June 8, 2001
.........................................
THOMAS R. MARSH
II-59
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, 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 June 8, 2001.
OMNICARE PHARMACY OF TENNESSEE LLC
By: Sole Member:
LCPS ACQUISITION, LLC
By: /s/ L. TRACY FINN
..................................
L. TRACY FINN
PRESIDENT
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.
SIGNATURE TITLE DATE
--------- ----- ----
/s/ L. TRACY FINN President June 8, 2001
.........................................
L. TRACY FINN
/s/ BRADLEY S. ABBOTT Vice President June 8, 2001
.........................................
BRADLEY S. ABBOTT
/s/ THOMAS R. MARSH Treasurer June 8, 2001
.........................................
THOMAS R. MARSH
II-60
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, 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 June 8, 2001.
OMNICARE PHARMACY OF MAINE LLC
By: Sole Member:
OMNICARE PHARMACIES OF MAINE HOLDING
COMPANY
By: /s/ JEFFREY M. STAMPS
..................................
JEFFREY M. STAMPS
PRESIDENT
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.
SIGNATURE TITLE DATE
--------- ----- ----
/s/ JEFFREY M. STAMPS President June 8, 2001
.........................................
JEFFREY M. STAMPS
/s/ BRADLEY S. ABBOTT Treasurer June 8, 2001
.........................................
BRADLEY S. ABBOTT
/s/ THOMAS R. MARSH Director June 8, 2001
.........................................
THOMAS R. MARSH
/s/ CATHERINE I. GREANY Director June 8, 2001
.........................................
CATHERINE I. GREANY
II-61
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, 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 June 8, 2001.
PHARM-CORP OF MAINE LLC
By: Sole Member:
OMNICARE PHARMACIES OF MAINE HOLDING
COMPANY
By: /s/ JEFFREY M. STAMPS
..................................
JEFFREY M. STAMPS
PRESIDENT
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.
SIGNATURE TITLE DATE
--------- ----- ----
/s/ MONICA LEVOIE President June 8, 2001
.........................................
MONICA LEVOIE
/s/ BRADLEY S. ABBOTT Treasurer June 8, 2001
.........................................
BRADLEY S. ABBOTT
/s/ THOMAS R. MARSH Director June 8, 2001
.........................................
THOMAS R. MARSH
/s/ CATHERINE I. GREANY Director June 8, 2001
.........................................
CATHERINE I. GREANY
II-62
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, 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 June 8, 2001.
OMNICARE PHARMACY OF NEBRASKA LLC
By: Sole Member:
OMNICARE PHARMACIES OF THE GREAT
PLAINS HOLDING COMPANY
By: /s/ GARY W. KADLEC
..................................
GARY W. KADLEC
PRESIDENT
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.
SIGNATURE TITLE DATE
--------- ----- ----
/s/ GARY W. KADLEC President June 8, 2001
.........................................
GARY W. KADLEC
/s/ BRADLEY S. ABBOTT Treasurer June 8, 2001
.........................................
BRADLEY S. ABBOTT
/s/ THOMAS R. MARSH Director June 8, 2001
.........................................
THOMAS R. MARSH
/s/ CATHERINE I. GREANY Director June 8, 2001
.........................................
CATHERINE I. GREANY
II-63
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, 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 June 8, 2001.
OMNICARE PHARMACY OF SOUTH DAKOTA LLC
By: Sole Member:
OMNICARE PHARMACIES OF THE GREAT
PLAINS HOLDING COMPANY
By: /s/ GARY W. KADLEC
..................................
GARY W. KADLEC
PRESIDENT
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.
SIGNATURE TITLE DATE
--------- ----- ----
/s/ GARY W. KADLEC President June 8, 2001
.........................................
GARY W. KADLEC
/s/ BRADLEY S. ABBOTT Treasurer June 8, 2001
.........................................
BRADLEY S. ABBOTT
/s/ THOMAS R. MARSH Director June 8, 2001
.........................................
THOMAS R. MARSH
/s/ CATHERINE I. GREANY Director June 8, 2001
.........................................
CATHERINE I. GREANY
II-64
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, 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 June 8, 2001.
ROYAL CARE OF MICHIGAN LLC
By: Sole Member:
SPECIALIZED PHARMACY SERVICES, INC.
By: /s/ DANIEL E. LOHMEIER
..................................
DANIEL E. LOHMEIER
PRESIDENT
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.
SIGNATURE TITLE DATE
--------- ----- ----
/s/ DANIEL E. LOHMEIER President; Director June 8, 2001
.........................................
DANIEL E. LOHMEIER
/s/ BRADLEY S. ABBOTT Treasurer June 8, 2001
.........................................
BRADLEY S. ABBOTT
/s/ THOMAS R. MARSH Director June 8, 2001
.........................................
THOMAS R. MARSH
/s/ CATHERINE I. GREANY Director June 8, 2001
.........................................
CATHERINE I. GREANY
II-65
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, 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 June 8, 2001.
SPECIALIZED HOME INFUSION OF MICHIGAN
LLC
By: Sole Member:
SPECIALIZED PHARMACY SERVICES, INC.
By: /s/ DANIEL E. LOHMEIER
..................................
DANIEL E. LOHMEIER
PRESIDENT
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.
SIGNATURE TITLE DATE
--------- ----- ----
/s/ DANIEL E. LOHMEIER President; Director June 8, 2001
.........................................
DANIEL E. LOHMEIER
/s/ BRADLEY S. ABBOTT Treasurer June 8, 2001
.........................................
BRADLEY S. ABBOTT
/s/ THOMAS R. MARSH Director June 8, 2001
.........................................
THOMAS R. MARSH
/s/ CATHERINE I. GREANY Director June 8, 2001
.........................................
CATHERINE I. GREANY
II-66
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, 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 June 8, 2001.
SHC ACQUISITION CO, LLC
By: Sole Member:
HMIS, INC.
By: /s/ L. TRACY FINN
..................................
L. TRACY FINN
PRESIDENT
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.
SIGNATURE TITLE DATE
--------- ----- ----
/s/ EDWIN M. LEWIS President June 8, 2001
.........................................
EDWIN M. LEWIS
/s/ BRADLEY S. ABBOTT Treasurer June 8, 2001
.........................................
BRADLEY S. ABBOTT
/s/ THOMAS R. MARSH Director June 8, 2001
.........................................
THOMAS R. MARSH
/s/ CATHERINE I. GREANY Director June 8, 2001
.........................................
CATHERINE I. GREANY
II-67
INDEX TO EXHIBITS
EXHIBIT NO. DESCRIPTION
- ----------- -----------
3.1 -- Restated Certificate of Incorporation of Omnicare, Inc.
(incorporated herein by reference to our Annual Report on
Form 10-K for the year ended December 31, 1996).
3.2 -- By-Laws of Omnicare, Inc., as amended (incorporated
herein by reference to our registration statement on
Form S-3 dated September 28, 1998).
4.1 -- Indenture dated as of March 20, 2001, by and among
Omnicare, Inc., the Guarantors named therein and SunTrust
Bank, as trustee, relating to the Company's $375.0 million
8.125% Senior Subordinated Notes due 2011 (incorporated
herein by reference to our Current Report on Form 8-K
dated March 23, 2001).
4.2 -- Registration Rights Agreement dated as of March 20, 2001
by and among Omnicare, Inc., the Guarantors named therein
and the Initial Purchasers named therein, relating to the
Registrant's 8 1/8% Senior Subordinated Notes due 2011
(incorporated herein by reference to our Current Report on
Form 8-K dated March 23, 2001).
5.1 -- Opinion of Dewey Ballantine LLP regarding the validity of
the exchange notes.
5.2 -- Opinion of Thompson Hine LLP regarding the validity of
the exchange guarantees.
12 -- Statement of Computation of Ratio of Earnings to Fixed
Charges.
23.1 -- Consent of PricewaterhouseCoopers LLP.
23.2 -- Consent of Dewey Ballantine LLP (included in its opinion
filed as Exhibit 5.1 hereto).
23.3 -- Consent of Thompson Hine LLP (included in its opinion
filed as Exhibit 5.2 hereto).
24 -- Powers of Attorney (included on page II-3).
25 -- Statement of Eligibility of Trustee.
99.1 -- Form of Letter of Transmittal.
99.2 -- Form of Notice of Guaranteed Delivery.
99.3 -- Form of Letter to Clients.
99.4 -- Form of Letter to Brokers.
99.5 -- Form of Instructions to Registered Holders.
STATEMENT OF DIFFERENCES
------------------------
The registered trademark symbol shall be expressed as.................. 'r'