EXHIBIT 10.1
ALPHARMA INC. AND SUBSIDIARIES
CONSOLIDATED CONDENSED PROFORMA BALANCE SHEET
AT SEPTEMBER 30, 2005
(in thousands, except share amounts)
(Unaudited)
Adjustment
Alpharma Inc. Less For Net
As Generics Sale Alpharma Inc.
Reported Business Proceeds Pro Forma
------------- -------- ---------- -------------
ASSETS
Current assets:
Cash and cash equivalents $ 59,028 $ -- $ 221,723 $ 280,751
Accounts receivable 217,188 125,826 91,362
Inventories 240,060 148,761 91,299
Prepaid expenses and other current assets 16,784 2,223 14,561
---------- -------- ---------- ----------
Total current assets 533,060 276,810 221,723 477,973
Property, plant and equipment, net 422,043 199,730 222,313
Goodwill 443,648 323,506 120,142
Intangible assets, net 282,304 100,918 181,386
Other assets and deferred charges 68,671 20,574 48,097
---------- -------- ---------- ----------
Total assets $1,749,726 $921,538 $ 221,723 $1,049,911
========== ======== ---------- ==========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Current portion of long-term debt $ 167,571 $ -- (167,571) $ --
Short-term debt 4 -- (4) --
Accounts payable 97,353 67,251 30,102
Accrued expenses 185,826 91,126 19,000 113,700
Accrued and deferred income taxes 53,894 22,383 31,511
---------- -------- ---------- ----------
Total current liabilities 504,648 180,760 (148,575) 175,313
Long-term debt 330,702 -- (330,702) --
Deferred income taxes 33,079 22,160 10,919
Other non-current liabilities 32,857 11,508 21,349
Stockholders' equity:
Common Stock 10,784 -- 10,784
Additional paid-in capital 1,084,689 -- 1,084,689
Unearned compensation (9,174) (11) (9,163)
Accumulated deficit (307,811) 659,226 $ 701,000 (266,037)
Accumulated other comprehensive income 77,596 47,895 29,701
Treasury stock, at cost (7,644) -- (7,644)
---------- -------- ---------- ----------
Total stockholders' equity 848,440 707,110 701,000 842,330
---------- -------- ---------- ----------
Total liabilities and stockholders' equity $1,749,726 $921,538 $ 221,723 $1,049,911
========== ======== ========== ==========
The Pro Forma Balance Sheet has been adjusted to include the estimated net
proceeds of approximately $720 million from the sale of the Generics business to
Actavis for $810 million. The adjustments include the repayment of all
outstanding debt with the net sale proceeds.
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ALPHARMA INC. AND SUBSIDIARIES
CONSOLIDATED PROFORMA STATEMENT OF OPERATIONS
FOR NINE MONTHS ENDED SEPTEMBER 30, 2005
(In thousands of dollars, except per share data)
(Unaudited)
Adjustment
Alpharma Inc. Less For Net
As Generics Sale Alpharma Inc.
Reported Business Proceeds Pro forma
------------- -------- ----------- -------------
Total revenue $1,095,155 $645,177 $449,978
Cost of sales 614,252 419,387 194,865
---------- -------- --------
Gross profit 480,903 225,790 255,113
Selling, general and administrative expenses 303,581 136,858 166,723
Research and development 58,862 39,315 19,547
Goodwill impairment 815 815 --
---------- -------- --------
Operating income 117,645 48,802 68,843
Interest expense and amortization of
debt issuance costs (37,467) (328) $37,139 --
Loss on extinguishment of debt (2,373) -- (2,373)
Other income, net 2,711 1,686 1,025
---------- -------- -------- --------
Income before income taxes 80,516 50,160 37,137 67,495
Provision for income taxes 33,827 12,942 20,885
---------- -------- -------- --------
Net income $ 46,689 $ 37,218 $37,139 $ 46,610
========== ======== ======== ========
Earnings per common share:
Basic $ 0.89 $ 0.71 $ 0.71 $ 0.89
========== ======== ======== ========
Diluted $ 0.88 $ 0.70 $ 0.70 $ 0.88
========== ======== ======== ========
Weighted average shares:
Basic 52,421 52,421 52,421 52,421
========== ======== ======== ========
Diluted 52,800 52,800 52,800 52,800
========== ======== ======== ========
The above Pro Forma Statement of Operations has been adjusted to reflect the
impact on results of operations that would result from the use of the estimated
net sale proceeds of approximately $720 million to repay all outstanding debt.
The use of proceeds to repay all debt would serve to eliminate the associated
interest expenses, the estimated effect of which is reflected in the Pro Forma
Statement of Operations.
The provision for Generic income taxes represents estimated income taxes for the
associated foreign entities, plus estimated U.S. state tax provisions. As part
of the American Jobs Creation Act of 2004, the Company has provided for federal
income taxes of approximately $9.4 million on the repatriation of accumulated
income earned outside the U.S. This amount is included in the provision for
income taxes within the "Pro Forma" column above.
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ALPHARMA INC. AND SUBSIDIARIES
CONSOLIDATED PROFORMA STATEMENT OF OPERATIONS
FOR YEAR ENDED DECEMBER 31, 2004
(In thousands of dollars, except per share data)
(Unaudited)
Adjustment
Alpharma Inc. Less For Net
As Generics Sale Alpharma Inc.
Reported Business Proceeds Proforma
------------- --------- ---------- -------------
Total revenue $1,339,480 $ 749,221 $ 590,259
Cost of sales 806,442 529,452 276,990
---------- --------- ---------
Gross profit 533,038 219,769 313,269
Selling, general and administrative 384,959 179,863 205,096
Research and development 81,466 56,035 25,431
Asset impairments and other 29,742 18,632 11,110
Goodwill impairment 260,000 260,000 --
---------- --------- ---------
Operating income (223,129) (294,761) 71,632
Interest expense and amortization of
debt issuance costs (59,061) (299) $53,895 (4,867)
Loss on extinguishment of debt (2,795) -- (2,795)
Other income, net 31,387 30,149 1,238
---------- --------- ---------
Income (loss) before income taxes (253,598) (264,911) 53,895 65,208
Provision (benefit) for income taxes 61,139 2,325 58,814
---------- --------- ------- ---------
Net income (loss) $ (314,737) $(267,236) $53,895 $ 6,394
========== ========= ======= =========
Earnings (loss) per common share:
Basic $ (6.05) $ (5.13) $ 1.04 $ 0.12
========== ========= ======= =========
Diluted $ (6.05) $ (5.13) $ 1.04 $ 0.12
========== ========= ======= =========
Weighted average shares:
Basic 52,060 52,060 52,060 52,060
Diluted 52,060 52,060 52,060 52,060
The above Pro Forma Statement of Operations has been adjusted to reflect the
impact on results of operations that would result from the use of the estimated
net sale proceeds of approximately $720 million to repay outstanding debt. The
use of proceeds to repay debt would serve to reduce the associated interest
expense, the estimated effect of which is reflected in the Pro Forma Statement
of Operations.
The provision for Generic income taxes represents estimated income taxes for the
associated foreign entities, plus estimated U.S. state tax provisions. The
Company recorded an allowance related to deferred tax assets for its U.S.
operations in the fourth quarter of 2004 and has included this amount in the
provision for income taxes within the "Proforma" column above.
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