EXHIBIT 99.1
[Omnicare Letterhead]
Omnicare news release
- --------------------------------------------------------------------------------
CONTACT:
[LOGO] Cheryl D. Hodges
(859) 392-3331
Omnicare Reports Record First-Quarter 2004 Results
COVINGTON, Ky., April 29, 2004 -- Omnicare, Inc. (NYSE:OCR), a leading provider
of pharmaceutical care for the elderly, reported today financial results for its
first-quarter ended March 31, 2004 versus the comparable prior-year period, as
follows:
o Earnings per diluted share increased 45% to 61 cents
o Net income rose 57% to $63.5 million
o Earnings before interest, income taxes, depreciation and amortization
(EBITDA) increased 39% to $129.9 million
o Sales grew 22% to $982.3 million
"The first quarter of 2004 continued the strong trends we saw in 2003 with top
line momentum, earnings in line with expectations, solid cash flow and balance
sheet strength affording Omnicare the resources and flexibility to pursue its
growth initiatives," said Joel F. Gemunder, Omnicare president and chief
executive officer. "In fact, the first quarter marks our fifteenth consecutive
quarter of year-over-year as well as sequential growth. Highlights of our growth
this quarter included the contribution from pharmacy acquisitions made in 2003
and to date in 2004, the ongoing benefits of our acquisition integration efforts
as well as the emergence of a turnaround in our contract research business."
For a detailed presentation of reconciling items and related definitions and
components, please refer to the attached schedules or to reconciliation
schedules posted on the Company's Web site at www.omnicare.com.
Institutional Pharmacy Business
Omnicare's institutional pharmacy business generated record sales of
$948.5 million for the first quarter of 2004, 24% higher than the $763.2 million
reported in the comparable prior-year quarter of 2003. Operating income in this
business reached $123.4 million, 45% higher than the $85.4 million recorded in
the first quarter of 2003. At March 31, 2004, Omnicare served approximately
1,050,000
beds versus approximately 935,000 at March 31, 2003, an increase of
approximately 12%.
"The strong growth in our pharmacy business is the product of aggressive
execution of our acquisition strategy. Not only did we benefit from the
acquisitions and related integration efforts in 2003, we have also increased
the number of beds served through a number of smaller acquisitions throughout
the first quarter of 2004," said Gemunder. "It is important to note that roughly
half of the new beds added in the first quarter of 2004 were in alternative
institutional markets such as correctional facilities, mental health and
personal care or supportive living facilities. While these facilities tend to
provide lower revenues per bed than more traditional institutional markets such
as skilled nursing and assisted living facilities, they also typically carry
lower operating costs. So, we look upon further penetration of these markets as
another avenue of growth.
"Also contributing to growth was the expansion of our clinical and other service
programs and increasing occupancy in many areas. Further market penetration of
newer branded drugs and drug price inflation, offset in part by increasing use
of generic drugs, also contributed to the sales gain. Importantly, our
year-over-year sales increase was highly leveraged by the ongoing benefits of
our acquisition integration efforts as well as productivity initiatives
throughout the pharmacy organization."
CRO Business
Omnicare Clinical Research, the Company's contract research (CRO) business,
generated revenues of $33.8 million on a Generally Accepted Accounting
Principles ("GAAP") basis for the first quarter of 2004, versus the comparable
prior-year quarter's revenues of $42.7 million. Included in both periods were
reimbursable out-of-pocket expenses, totaling $4.5 million in the 2004 period
and $8.1 million in the 2003 period. Excluding these reimbursable out-of-pocket
expenses, adjusted revenues of $29.2 million were lower than the $34.6 million
recorded on this basis in the 2003 period. Operating income in the first quarter
of 2004 was $3.2 million versus the $4.7 million earned during the prior-year
period. Backlog in our CRO business at March 31, 2004 was approximately $197
million.
"Our CRO business performed in line with our expectations for the quarter," said
Gemunder. "While it continued to have tough year-over-year comparisons, the
improved performance of our CRO on a sequential basis reflects, we believe, the
emergence of a turnaround in this business. We were encouraged by the increase
in new business proposals, as well as actual new business wins in the quarter.
Also during the quarter, we entered into a new preferred provider agreement with
a major pharmaceutical manufacturer and our PeriApproval and Geriatric Clinical
Studies Unit, created in early 2003, is exceeding expectations. These factors,
combined with cost reduction efforts, led to improving profitability in this
business."
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Financial Position
"Our ongoing focus on enhancing cash flow continued during the quarter," said
Gemunder. "Cash flow from operations for the first-quarter ended March 31, 2004
was $23.8 million as compared with $5.4 million for the first quarter ended
March 31, 2003. During the first quarter of 2003, a slowdown in payments to all
providers by the Illinois Department of Public Aid (Illinois Medicaid) delayed
approximately $56 million in payments to us, and these funds were received
during the balance of the year. In the first quarter of 2004, another
broad-based slowdown occurred in Illinois, impacting cash flow by approximately
$29 million, but we are pleased to report that, similar to last year, we
recently have begun receiving a higher level of payments. Also, owing to a
change in payment terms under our new contract with our drug wholesaler, a
one-time deposit of $44 million was made during the first quarter of 2004 that
will not recur in subsequent quarters. Lastly, a statewide administrative backup
in the transfer of Medi-Cal provider numbers affecting California-based
pharmacies acquired in the SunScript acquisition and other acquisitions created
a temporary delay in cash receipts of approximately $19 million, which amount we
expect to receive in due course. Nonetheless, the strength of our cash flow
during the quarter allowed us to continue our capital deployment strategies in
both active acquisition efforts and advance purchases of pharmaceuticals
(pre-buys). Pre-buys for the first quarter ended March 31, 2004 were $25.6
million as compared with $32.6 million for the first quarter of last year."
Gemunder noted that, during the quarter, the Company maintained a strong
financial position with cash balances of approximately $180 million and
total-debt-to-total capitalization at 40.8%, down 690 basis points from the
comparable prior-year quarter.
Omnicare Outlook
"During the first quarter, we continued to experience relative stability in the
operating environment in the long-term care industry underscored by increasing
Medicare admissions and improving occupancy reported in many areas and we see
these positive trends continuing," said Gemunder.
"We continue to monitor key issues related to healthcare funding, including the
pressures on state Medicaid budgets arising from the economy coupled with growth
in enrollees as eligibility is expanded; the escalation in drug costs owing to
higher drug utilization among seniors and the introduction of new, more
efficacious, albeit more expensive, medications, offset somewhat by increasing
use of generic medications. Though the economy is not yet robust and healthcare
costs continue to escalate, many states are posting higher tax revenues, which
is a positive development as states work toward balancing their budgets for
fiscal 2005."
Continuing, Gemunder said, "Pharmaceuticals remain the most cost-effective means
of treating the chronic illnesses of the frailest members of our society and, as
such, should be considered nondiscretionary expenditures and should be
appropriately funded. The geriatric pharmaceutical business offers meaningful
solutions to
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containing healthcare costs while ensuring the well-being of the nation's
growing elderly population. Omnicare is positioned at the forefront of these
trends and has demonstrated to payors, including state Medicaid programs, that
our clinical programs can yield substantially lower drug costs while enhancing
quality of care."
Gemunder also noted that, since regulations governing the implementation of the
Medicare drug benefit, signed into law in December 2003 and effective in 2006,
are still under development, it remains difficult today to predict the impact or
outcome of this legislation or of any changes in healthcare policy relating to
the future funding of the Medicare and Medicaid programs. "We believe, however,
that our extensive experience in geriatric pharmaceutical care, the expertise we
have developed in pharmaceutical case management and our vast database on drug
utilization and outcomes in the elderly have positioned us well as the
implementation of the Medicare drug benefit develops," he added.
"We believe that our growth strategy, which has served us well in mitigating
reimbursement risks and strengthening our industry leading position, will allow
us to maximize cash flow, maintain a strong financial position, enhance the
efficiency of our operations and continue to develop our franchise in the
geriatric pharmaceutical market.
"Following this strategy has enabled us to dramatically increase the size of our
core pharmacy business. This significant expansion of our core business gives us
substantially greater ability to leverage our clinical services and information
businesses, thereby enhancing our cost advantages in the institutional pharmacy
market.
"While our CRO business at times experiences short-term volatility, we see a
positive long-term outlook in Omnicare Clinical Research as we benefit from the
streamlining and globalization of our business, our unique capabilities in the
geriatric market and the strength of our presence in the overall drug
development marketplace.
"Given our solid underlying fundamentals and our proven strategy, combined with
our financial strength and flexibility, we see numerous opportunities for future
growth," Gemunder concluded.
Webcast Today
Omnicare will hold a conference call to discuss first-quarter results today at
11:00 a.m. ET. The conference call will be available live via webcast at
Omnicare's Web site at www.omnicare.com by clicking on "Investors" and then on
"Conference Calls." An online replay will be available at www.omnicare.com
beginning approximately two hours after the completion of the live call and will
remain available for 14 days.
Omnicare, a Fortune 500 company based in Covington, Kentucky, is a leading
provider of pharmaceutical care for the elderly. Omnicare serves residents in
long-
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term care facilities comprising approximately 1,050,000 beds in 47 states and
the District of Columbia, making it the nation's largest provider of
professional pharmacy, related consulting and data management services for
skilled nursing, assisted living and other institutional healthcare providers.
Omnicare also provides clinical research services for the pharmaceutical and
biotechnology industries in 29 countries worldwide.
In addition to historical information, this report contains certain statements
that constitute "forward-looking statements" within the meaning of the Private
Securities Litigation Reform Act of 1995. These forward-looking statements are
made on the basis of management's views and assumptions regarding business
performance as of the time the statements are made, and management does not
undertake any obligation to update these statements. These forward-looking
statements include, but are not limited to, all statements regarding the intent,
belief or current expectations regarding the matters discussed or incorporated
by reference in this document (including statements as to "beliefs,"
"expectations," "anticipations," "intentions" or similar words) and all
statements which are not statements of historical fact. Forward-looking
statements in this report include, but are not limited to, the following:
expectations concerning the Company's financial performance, results of
operations, sales, earnings or business outlook; trends in the long-term
healthcare and contract research industries generally; expectations concerning
the Company's ability to leverage its core business; anticipated growth in
alternative institutional markets such as correctional facilities, mental health
and personal care or supportive living facilities; expectations concerning
continued relative stability in the operating environment in the long-term care
industry; the ability to leverage the Company's CRO business and its core
pharmacy business as anticipated; volatility in the CRO business; anticipated
business performance of the CRO; expectations in the CRO business resulting from
streamlining and globalization efforts, the Company's unique capabilities in the
geriatric market and strength of presence in the drug development marketplace;
trends in healthcare funding issues, including, but not limited to, state
Medicaid budgets, enrollee eligibility, escalating drug prices due to higher
utilization among seniors and the aging of the population; expectations
concerning increasing Medicare admissions and improving occupancy rates; the
introduction of more expensive medications and the increasing use of generic
medications; the impact of any changes in healthcare policy relating to the
future funding of the Medicaid and Medicare programs; the cost-effectiveness of
pharmaceuticals in treating chronic illnesses for the elderly; the impact of the
Medicare drug benefit, signed into law in December 2003 and effective in 2006,
and its implementing regulations; the effect of any changes and considerations
in long-term healthcare funding policies for Medicare and Medicaid programs; the
ability of the Company to utilize its expertise in geriatric pharmaceutical care
and pharmaceutical cost management and its database on drug utilization and
outcomes in the elderly to meet the anticipated challenges of the healthcare
environment and the implementation of the Medicare drug benefit; the
effectiveness of the Company's growth strategy in allowing the Company to
maximize cash flow, maintain a strong financial position, enhance the efficiency
of its operations and continue to develop the Company's franchise in the
geriatric pharmaceutical market; the ability of expansion in the Company's core
business to provide the Company greater ability to leverage its clinical
services and information business, thereby enhancing cost advantages in the
institutional pharmacy market; and expectations concerning opportunities for
future growth. These forward-looking statements, together with other statements
that are not historical, involve known and unknown risks, uncertainties,
contingencies and other factors that could cause results, performance or
achievements to differ materially from those stated. Such risks, uncertainties,
contingencies and other factors, many of which are beyond the control of the
Company, include, but are not limited to: overall economic, financial, political
and business conditions; trends in the long-term healthcare and contract
research industries; competition in the pharmaceutical, long-term care and
contract research industries; the impact of consolidation in the pharmaceutical
and long-term care industries; trends in long-term care occupancy rates and
demographics; the ability to attract new clients and service contracts and
retain existing clients and service contracts; trends for the continued growth
of the Company's businesses; expectations concerning the development and
performance of the Company's informatics business; the effectiveness of the
Company's formulary compliance program; trends in drug pricing, including
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the impact and pace of pharmaceutical price increases; delays and reductions
in reimbursement by the government and other payors to customers and to the
Company as a result of pressures on federal and state budgets or for other
reasons; the overall financial condition of the Company's customers; the
ability of the Company to assess and react to the financial condition of its
customers; the effectiveness of the Company's pharmaceutical purchasing programs
and its ability to obtain discounts and manage pharmaceutical costs; the ability
of vendors and business partners to continue to provide products and services to
the Company; the continued successful integration of acquired companies and the
ability to realize anticipated sales, economies of scale, cost synergies and
profitability; the continued availability of suitable acquisition candidates;
pricing and other competitive factors in the industry; increases or decreases in
reimbursement rates and the impact of other cost control measures; the impact on
the Company's sales, profits and margins resulting from market trends in the use
of newer branded drugs versus generic drugs; the number and usage of generic
drugs and price competition in the drug marketplace; the ability to attract and
retain needed management; competition for qualified staff in the healthcare
industry; the impact and pace of technological advances; the ability to obtain
or maintain rights to data, technology and other intellectual property; the
demand for the Company's products and services; variations in costs or expenses;
the ability to implement productivity, consolidation and cost reduction efforts
and to realize anticipated benefits; the ability of clinical research projects
to produce revenues in future periods; the ability to benefit from streamlining
and globalization efforts at the CRO; trends concerning CRO backlog; the
effectiveness of the Company's implementation and expansion of its clinical and
other service programs; the effect of new legislation, government regulations,
and/or executive orders, including those relating to reimbursement and drug
pricing policies and changes in the interpretation and application of such
policies; the impact of the Medicare drug benefit and its implementing
regulations; legislation and regulations affecting payment and reimbursement
rates for skilled nursing facilities; trends in federal and state budgets and
their impact on Medicaid reimbursement rates; government budgetary pressures and
shifting priorities; the Company's ability to adjust to federal and state budget
shortfalls; efforts by payors to control costs; the failure of the Company or
the long-term care facilities it serves to obtain or maintain required
regulatory approvals or licenses; loss or delay of contracts pertaining to the
CRO business for regulatory or other reasons; the outcome of litigation;
potential liability for losses not covered by, or in excess of, insurance; the
impact of differences in actuarial assumptions and estimates pertaining to
employee benefit plans; events or circumstances which result in an impairment of
goodwill; market conditions; the outcome of audit, compliance, administrative or
investigatory reviews; volatility in the market for the Company's stock and in
the financial markets generally; access to adequate capital and financing;
changes in international economic and political conditions and currency
fluctuations between the U.S. dollar and other currencies; changes in tax laws
and regulations; changes in accounting rules and standards; and other risks and
uncertainties described in the Company's reports and filings with the Securities
and Exchange Commission. Should one or more of these risks or uncertainties
materialize or should underlying assumptions prove incorrect, the Company's
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 hereof. Except as otherwise required by law, the
Company does not undertake any obligation to publicly release any revisions to
these forward-looking statements to reflect events or circumstances after the
date hereof or to reflect the occurrence of unanticipated events.
For more information on Omnicare, Inc., visit www.omnicare.com.
6
Omnicare, Inc. and Subsidiary Companies
Summary Consolidated Statements of Income, GAAP Basis
(000s, except per share amounts)
Unaudited
Three Months Ended
March 31,
----------------------------------
2004 2003
-------- ---------
Sales $977,742 $797,753
Reimbursable out-of-pockets (a) 4,537(a) 8,108(a)
-------- --------
Total net sales 982,279 805,861
-------- --------
Cost of sales 723,074 589,792
Reimbursed out-of-pocket expenses (a) 4,537(a) 8,108(a)
-------- --------
Total direct costs 727,611 597,900
-------- --------
Gross profit 254,668 207,961
Selling, general and administrative expenses 138,662 126,928
-------- --------
Operating income 116,006 81,033
Investment income 634 588
Interest expense (16,712) (16,456)
-------- --------
Income before income taxes 99,928 65,165
Income taxes 36,437 24,742
-------- --------
Net income $ 63,491 $ 40,423
======== ========
Earnings per share ("EPS"):
Basic $ 0.61 $ 0.43
======== ========
Diluted $ 0.61 $ 0.42(b)
======== ========
Weighted average number of common shares outstanding:
Basic 103,458 94,386
======== ========
Diluted 104,769 104,029(b)
======== ========
The footnotes presented at the separate "Footnotes to Financial
Information" page are an integral part of this financial information.
7
Omnicare, Inc. and Subsidiary Companies
Summary Segment Financial Data, Non-GAAP Basis (c)
Excluding EITF No. 01-14
(000s)
Unaudited
Corporate
Pharmacy CRO and Consolidated
Services Services Consolidating Totals
-------- -------- ------------- ------------
Three Months Ended March 31, 2004:
Adjusted sales $948,513 $29,229(d) $ - $977,742(d)
======== ======= ======== ========
Operating income $123,430 $ 3,208 $(10,632) $116,006
Depreciation and amortization 12,968 347 612 13,927
-------- ------- -------- --------
Earnings before interest, income taxes,
depreciation and amortization ("EBITDA")(e) $136,398 $ 3,555 $(10,020) $129,933
======== ======= ======== ========
Three Months Ended March 31, 2003:
Adjusted sales $763,154 $34,599(d) $ - $797,753(d)
======== ======= ======== ========
Operating income $ 85,370 $ 4,730 $ (9,067) $ 81,033
Depreciation and amortization 11,748 418 595 12,761
-------- ------- -------- --------
EBITDA (e) $ 97,118 $ 5,148 $ (8,472) $ 93,794
======== ======= ======== ========
The footnotes presented at the separate "Footnotes to Financial Information"
page are an integral part of this financial information.
8
Omnicare, Inc. and Subsidiary Companies
Condensed Consolidated Balance Sheets, GAAP Basis
(000s)
Unaudited
March 31, December 31,
2004 2003
---------- ----------
ASSETS
Cash and cash equivalents $174,069 $ 187,413
Restricted cash 5,777 714
Deposit with drug wholesaler 44,000 -
Accounts receivable, net 737,078 678,255
Unbilled receivables 10,312 15,281
Inventories 322,022 326,550
Deferred income tax benefits and other current assets 214,373 174,875
---------- ----------
Total current assets 1,507,631 1,383,088
---------- ----------
Properties and equipment, net 149,422 148,307
Goodwill 1,765,959 1,690,558
Other noncurrent assets 176,703 173,068
---------- ----------
Total assets $3,599,715 $3,395,021
========== ==========
LIABILITIES AND STOCKHOLDERS' EQUITY
Accounts payable $ 323,053 $ 296,089
Deferred revenue 18,540 22,454
Current debt 22,799 20,709
Other current liabilities 113,773 123,508
---------- ----------
Total current liabilities 478,165 462,760
---------- ----------
Long-term debt 214,651 135,855
8.125% senior subordinated notes, due 2011 375,000 375,000
6.125% senior subordinated notes, net, due 2013 237,735 226,822
4.0% contingent convertible notes, due 2033 345,000 345,000
Deferred income taxes and other noncurrent liabilities 197,280 173,560
---------- ----------
Total liabilities 1,847,831 1,718,997
---------- ----------
Stockholders' equity 1,751,884 1,676,024
---------- ----------
Total liabilities and stockholders' equity $3,599,715 $3,395,021
========== ==========
The footnotes presented at the separate "Footnotes to Financial
Information" page are an integral part of this financial information.
9
Omnicare, Inc. and Subsidiary Companies
Condensed Consolidated Statement of Cash Flows, GAAP Basis
(000s)
Unaudited
Three Months Ended
March 31, 2004
------------------
Cash flows from operating activities:
Net income $ 63,491
Adjustments to reconcile net income to net cash
flows from operating activities:
Depreciation 9,081
Amortization 4,846
Provision for doubtful accounts 10,476
Deferred tax provision 14,808
Changes in assets and liabilities, net of effects
from acquisition of businesses (78,944)
---------
Net cash flows from operating activities 23,758
---------
Cash flows from investing activities:
Acquisition of businesses (105,936)
Capital expenditures (5,068)
Other (5,028)
---------
Net cash flows from investing activities (116,032)
---------
Cash flows from financing activities:
Borrowings on line of credit facility 115,000
Payments on line of credit facility and term A loan (34,103)
Payments on long-term borrowings and obligations (52)
Proceeds from stock awards and exercise of stock options and
warrants, net of stock tendered in payment 1,072
Dividends paid (2,333)
---------
Net cash flows from financing activities 79,584
---------
Effect of exchange rate changes on cash (654)
---------
Net decrease in cash and cash equivalents (13,344)
Cash and cash equivalents at beginning
of period - unrestricted 187,413
---------
Cash and cash equivalents at
end of period - unrestricted $ 174,069
=========
The footnotes presented at the separate "Footnotes to Financial
Information" page are an integral part of this financial information.
10
Omnicare, Inc. and Subsidiary Companies
Reconciliation Statement and Definitions, Non-GAAP Basis (c)
(000s)
Unaudited
Three Months Ended
March 31,
-------------------------------
2004 2003
-------- --------
Earnings before interest, income taxes,
depreciation and amortization ("EBITDA"):(e)
Earnings before interest and income taxes ("EBIT") $116,006 $ 81,033
Depreciation and amortization 13,927 12,761
-------- --------
EBITDA(e) $129,933 $ 93,794
======== ========
Net cash flows from operating activities:
EBITDA(e) $129,933 $ 93,794
Subtract:
Interest expense, net of investment income (16,078) (15,868)
Income taxes (36,437) (24,742)
Changes in assets and liabilities, net of effects from
acquisition of businesses (78,944) (72,347)
Add:
Provision for doubtful accounts 10,476 11,045
Deferred tax provision 14,808 13,469
-------- --------
Net cash flows from operating activities $ 23,758 $ 5,351
======== ========
Free cash flow:(f)
Net cash flows from operating activities $ 23,758 $ 5,351
Capital expenditures (5,068) (3,990)
Dividends (2,333) (2,125)
-------- --------
Free cash flow(f) $ 16,357 $ (764)
======== ========
Segment Reconciliations - CRO Services
Adjusted Sales - CRO Services:
Total net sales(a) $ 33,766 $ 42,707
Reimbursable out-of-pockets(a) (4,537) (8,108)
-------- --------
Adjusted sales(d) $ 29,229 $ 34,599
======== ========
DEFINITIONS:
GAAP: Amounts that conform with U.S. Generally Accepted Accounting
Principles ("GAAP").
Non-GAAP: Amounts that do not conform with U.S. GAAP.
Pre-Buys: Cash outlays primarily comprised of purchases of
pharmaceuticals in advance of price increases.
The footnotes presented at the separate "Footnotes to Financial
Information" page are an integral part of this financial information.
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Omnicare, Inc. and Subsidiary Companies
Footnotes to Financial Information
(000s)
Unaudited
(a) In accordance with Emerging Issues Task Force ("EITF") Issue No. 01-14,
"Income Statement Characterization of Reimbursements Received for
'Out-of-Pocket' Expenses Incurred" ("EITF No. 01-14"), Omnicare has
recorded reimbursements received for "out-of-pocket" expenses on a
grossed-up basis in the income statement as revenues and direct costs. EITF
No. 01-14 relates solely to the Company's contract research services
business.
(b) The three month period ended March 31, 2003 includes the dilutive effect of
the 5% convertible subordinated debentures, which assumes conversion using
the "if converted" method. Under that method, the convertible debentures
are assumed to be converted to common shares (weighted for the number of
days assumed to be outstanding during the period), and interest expense,
net of taxes, related to the convertible debentures is added back to net
income. For purposes of the "if converted" calculation, 8,712 shares were
assumed to be converted for the three month period ended March 31, 2003.
Additionally, interest expense, net of taxes, of $2,922 for the three month
period ended March 31, 2003 was added back to net income for purposes of
calculating diluted earnings per share using this method.
(c) Omnicare believes that investors' understanding of Omnicare's performance
is enhanced by the Company's disclosure of certain non-GAAP financial
measures as presented in this financial information. Omnicare management
believes that the adjusted results provide added insight into the Company's
performance by focusing on the results generated by the Company's ongoing
core operations. Management uses the adjusted results for measurement
purposes. Omnicare's method of calculating these measures may differ from
those used by other companies and, therefore, comparability may be limited.
(d) The noted presentation excludes amounts that Omnicare is required to
record in its income statement relating to EITF No. 01-14, as discussed in
further detail at footnote (a) above.
(e) EBITDA represents earnings before interest expense (net of investment
income), income taxes, depreciation and amortization. Omnicare believes
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
net cash flows from operating activities, as defined by U.S. GAAP, and
should not be considered as a substitute for operating cash flows as a
measure of liquidity or net income as an indicator of Omnicare's operating
performance. Omnicare's calculation of EBITDA may differ from the
calculation of EBITDA by others.
(f) Free cash flow represents net cash flows from operating activities less
capital expenditures and dividends paid by the Company. Omnicare believes
that certain investors find free cash flow to be a helpful measure of cash
generated from current operations, net of cash used for its ongoing capital
expenditures and dividend payment requirements. Omnicare's calculation of
free cash flow may differ from the calculation of free cash flow by others.
12