Alpharma Inc. Pro Forma Financial Statements Following Sale of Generics Business to Actavis

Summary

This document presents unaudited pro forma financial statements for Alpharma Inc. and its subsidiaries as of September 30, 2005, and for the periods ended September 30, 2005, and December 31, 2004. The statements reflect the financial impact of selling Alpharma's Generics business to Actavis for $810 million, with estimated net proceeds of $720 million used to repay all outstanding debt. The pro forma adjustments show how the company's balance sheet and income statements would appear after the transaction, including changes in assets, liabilities, and income.

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EX-10.1 2 y15957exv10w1.txt FINANCIAL INFORMATION 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. 1 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. 2 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. 3