EX-99.1 2 q42013pressreleaseex991.htm EXHIBIT Q4 2013 Press Release (Ex. 99.1)


    
Exhibit 99.1
news release

Omnicare Reports Fourth-Quarter and Full-Year 2013 Financial Results; Company Provides Full-Year 2014 Guidance


CINCINNATI, February 19, 2014 - Omnicare, Inc. (NYSE:OCR) reported today financial results for its fourth quarter and full year ended December 31, 2013.

Fourth-Quarter Highlights:

•
Net sales increase of 5.1% to $1.54 billion
•
Adjusted EBITDA from continuing operations increased 12.3% to $172 million
•
Adjusted cash earnings per diluted share from continuing operations increased 8.8% to $0.87; GAAP earnings per share of $0.54
•
End-of-life hospice pharmacy and certain retail operations qualify as discontinued operations

Full-Year Highlights:

•
Net sales increase of 2.3% to $6.01 billion
•
Adjusted EBITDA from continuing operations increased 6.9% to $674 million
•
Adjusted cash earnings per diluted share from continuing operations increased 10% to $3.43; GAAP earnings per share of $0.78
•
Cash flows from continuing operations of $480 million, including settlement payments of $20 million

“We are pleased to have completed another successful year and to have generated another quarter of solid financial results,” said John L. Workman, Omnicare's Chief Executive Officer. "During 2013, we achieved a number of significant milestones, including attaining full-year net organic bed growth in our Long-Term Care Group, generating strong double-digit growth in our Specialty Care Group and returning over 50% of our operating cash flows to shareholders through share repurchases and dividends for a second consecutive year.”

Fourth-Quarter Results

Financial results from continuing operations for the quarter ended December 31, 2013, as compared with the same prior-year period, were as follows:





•
Net sales were $1.54 billion versus $1.46 billion
•
Gross profit was $360 million versus $355 million
•
GAAP earnings per diluted share from continuing operations was $0.54 versus $0.48
•
Adjusted cash earnings per diluted share from continuing operations was $0.87 versus $0.80
•
Adjusted EBITDA from continuing operations was $172 million versus $153 million

Cash flows from continuing operations for the quarter ended December 31, 2013 were $24 million versus $119 million in the comparable prior-year quarter. The year-over-year decline was largely attributable to increased inventory levels that is a timing issue and expected to substantially reverse in the first quarter of 2014.

“We are very pleased with our quarterly performance, which reflects the continued strength of our operations and the benefits of our ongoing operating plan,” said Nitin Sahney, Omnicare's President and Chief Operating Officer. "During the fourth quarter, we captured opportunities to operate more efficiently within our long-term care business, expanding the segment's adjusted gross margin rate, while also generating revenue growth from all four platforms within our Specialty Care Group. We intend to build on this momentum to generate continued growth across our business in 2014 and beyond."

Financial Position

Omnicare concluded the fourth quarter of 2013 with no borrowings outstanding on its revolving credit facility and $356 million in cash on its balance sheet.

In the fourth quarter, Omnicare repurchased approximately $130 million in common shares for an average of $56.25 per share. As of December 31, 2013, the Company had $500 million of availability under its current share repurchase authorization.

"While fourth quarter operating cash flows were impacted by increased inventory purchases, we returned nearly $150 million to our stockholders through share repurchases and dividends," said Rocky Kraft, Omnicare's Chief Financial Officer. "During the quarter we announced a record $500 million share repurchase authorization while also increasing the dividend by 43%. We believe these actions provide for increased flexibility in our efforts to optimally redeploy our robust cash flows to the benefit of our shareholders."

Full-Year Results

Financial results from continuing operations for the year ended December 31, 2013, as compared with the same prior-year period, were as follows:

•
Net sales were $6.01 billion versus $5.88 billion
•
Gross profit was $1.42 billion versus $1.40 billion
•
GAAP earnings per diluted share from continuing operations was $0.78 versus $1.52
•
Adjusted cash earnings per diluted share from continuing operations was $3.43 versus $3.12




•
Adjusted EBITDA from continuing operations was $674 million versus $630 million

Cash flows from continuing operations for the twelve months ended December 31, 2013 were $480 million versus $535 million in the comparable prior period. Excluding settlement payments, adjusted cash flows from continuing operations were $500 million and $585 million for 2013 and 2012, respectively.

To facilitate comparisons and to enhance the understanding of core operating performance, discussions in this news release include financial measures that are adjusted from the comparable amounts under GAAP to exclude the impact of the special items discussed elsewhere herein, and to present results on a continuing operations basis. For a detailed presentation of reconciling items and related definitions and components, please refer to the attached schedules or to reconciliation schedules posted at the Investor Relations section of Omnicare's website at http://ir.omnicare.com. Additionally, the Company will make supplemental slides available in the same section on its website today that will include the number of scripts dispensed, and other information relevant to Omnicare's operations.

Segment Information

Financial results for the Long-Term Care Group for the fourth quarter ended December 31, 2013 were as follows:

•
Net sales of $1,169 million were 0.1% less than $1,170 million in the same prior-year period
•
Adjusted operating income of $160.4 million increased 3.5% from $155.0 million in the same prior-year period

Financial results for the Specialty Care Group for the fourth quarter ended December 31, 2013 were as follows:

•
Net sales of $367 million were 26% higher than $292 million in the same prior-year period
•
Adjusted operating income of $31.2 million increased 16% from $27.0 million in the same prior-year period

Discontinued Operations

During the fourth quarter of 2013, the Company's end-of-life hospice pharmacy business ("Hospice") as well as certain retail operations ("Retail") qualified for discontinued operations treatment. As such, the results from operations for all periods presented have been revised to reflect the results of Hospice and Retail as discontinued operations, including an associated impairment loss and related expenses.

Special Items

The results for the fourth-quarter and full-years ended December 31, 2013 and 2012 include the impact of special items and cash EPS adjustments as follows:





 
Three months ended
December 31,
Year ended
December 31,
 
2013
2012
2013
2012
 
After-tax impact
Per diluted share
After-tax impact
Per diluted share
After-tax impact
Per diluted share
After-tax impact
Per diluted share
Special Items Adj.
$14.6M
$0.13
$12.1M
$0.11
$204.6M
$1.87
$91.7M
$0.81
Cash EPS Adj.
$21.0M
$0.19
$22.9M
$0.21
$85.9M
$0.78
$88.4M
$0.78

All special items and cash EPS adjustments have been described in further detail in the “Footnotes and Definitions to Financial Information” section elsewhere herein.

Outlook

For the full-year 2014, Omnicare expects the following results from continuing operations:
 
2013 Results
FY2014 Guidance
% Change
Revenue
$6.0B
$6.3B to $6.4B
5.0% to 6.7%
Adjusted cash earnings per diluted share (excluding special items)
$3.43
$3.64 to $3.72
6.1% to 8.5%
Cash flows from operations (2014 guidance excludes settlement payments)
$480M*
$475M to $550M
-1.0% to 14.6%
*after settlement payments of $20 million

The Company's full-year 2014 guidance is exclusive of its discontinued operations, which generated adjusted cash earnings of $19.3 million in 2013, and also assumes a year-over-year decline between $3 million and $4 million in cash EPS adjustments.

Mr. Workman continued, "Our growth expectations for the underlying business are strong due to the continued benefits of our restructured operations. We believe our ability to sustain organic growth across our platforms will become even more compelling in the future, especially as we move into 2015, which presents a more attractive year in terms of low-cost generic drug introductions. We believe our organization is well positioned for continued growth."

Webcast Today

Omnicare will hold a conference call to discuss its fourth-quarter and full-year 2013 financial results today, February 19, 2014, at 9:00 a.m. ET. A live webcast of the conference call and supplemental slides will be accessible from the Investor Relations section of Omnicare's website at http://ir.omnicare.com. An archived replay will be made available on the website following the conclusion of the conference call.






Upcoming Investor Events

•
RBC Capital Markets 2014 Global Healthcare Conference on Tuesday, February 25th at 2:05 p.m. ET in New York, NY
•
Cowen and Company 34th Annual Health Care Conference on Monday, March 3rd at 1:30 p.m. ET in Boston, MA
•
Barclays Global Healthcare Conference on Tuesday, March 11th at 1:30 p.m. ET in Miami, FL

At these events, Omnicare executives will discuss the company's recent financial performance and strategies for continued growth. Additional details and a link to the live webcast of each event will be accessible from the Investor Relations section of Omnicare's website at http://ir.omnicare.com. Following the live presentations, archived versions of the webcasts will be available.

About Omnicare

Omnicare, Inc., a Fortune 500 company based in Cincinnati, Ohio, provides comprehensive pharmaceutical services to patients and providers across the United States. As the market-leader in professional pharmacy, related consulting and data management services for skilled nursing, assisted living and other chronic care institutions, Omnicare leverages its unparalleled clinical insight into the geriatric market along with some of the industry's most innovative technological capabilities to the benefit of its long-term care customers. Omnicare also provides key commercialization services for the bio-pharmaceutical industry through its Specialty Care Group. For more information, visit www.omnicare.com.

Forward-looking Statements

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 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. Such forward-looking statements, together with other statements that are not historical, are based on management's current expectations and involve known and unknown risks, uncertainties, contingencies and other factors that could cause results, performance or achievements to differ materially from those stated. The most significant of these risks and uncertainties are described in the Company's Form 10-K, Form 10-Q and Form 8-K reports filed with the Securities and Exchange Commission and include, but are not limited to: overall economic, financial, political and business conditions; trends in the long-term healthcare and pharmaceutical industries; the ability to attract new clients and service contracts and retain existing clients and service contracts; the ability to consummate pending acquisitions on favorable terms or at all; trends for the continued growth of the Company's businesses; trends in drug pricing; delays and reductions in reimbursement by the government and other payors to customers and to the Company; the overall financial condition of the Company's customers and the ability of the Company to assess and react to such financial condition of its customers; the ability of vendors and business partners to continue to provide products and services to the Company; the successful integration of acquired companies and realization of contemplated synergies; the continued availability of suitable acquisition candidates; the ability to attract and retain needed management; competition for qualified staff in the healthcare industry; variations in 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 potential impact of legislation, government regulations, and other government action and/or executive orders, including those relating to Medicare Part




D, including its implementing regulations and any subregulatory guidance, reimbursement and drug pricing policies and changes in the interpretation and application of such policies, including changes in calculation of average wholesale price; discontinuation of reporting average wholesale price, and/or implementation of new pricing benchmarks; legislative and regulatory changes impacting long term care pharmacies; government budgetary pressures and shifting priorities; federal and state budget shortfalls; efforts by payors to control costs; changes to or termination of the Company's contracts with pharmaceutical benefit managers, Medicare Part D Plan sponsors and/or commercial health insurers or to the proportion of the Company's business covered by specific contracts; the outcome of disputes and litigation; potential liability for losses not covered by, or in excess of, insurance; the impact of executive separations; the impact of benefit plan terminations; the impact of differences in actuarial assumptions and estimates as compared to eventual outcomes; events or circumstances which result in an impairment of assets, including but not limited to, goodwill and identifiable intangible assets; the final outcome of divestiture activities; market conditions; the outcome of audit, compliance, administrative, regulatory, 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 tax laws and regulations; changes in accounting rules and standards; the impacts of potential cybersecurity risks and/or incidents; and costs to comply with the Company's Corporate Integrity Agreement. 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.



# # #

Contact:
Patrick C. Lee
(513) 719-1507
patrick.lee@omnicare.com






Omnicare, Inc. and Subsidiary Companies
Summary Consolidated Statements of Income (Loss), GAAP Basis
($000s, except per share amounts)
Unaudited
 
Three months ended
 
Year ended
 
December 31, 2013
 
December 31, 2012
 
December 31, 2013
 
December 31, 2012
Net sales
$
1,536,169

 
$
1,462,198

 
$
6,013,398

 
$
5,878,464

Cost of sales
1,176,497

 
1,106,722

 
4,592,536

 
4,483,042

Gross profit
359,672

 
355,476

 
1,420,862

 
1,395,422

Selling, general and administrative expenses
190,904

 
202,639

 
756,180

 
772,004

Provision for doubtful accounts
24,448

 
26,511

 
99,561

 
97,995

Settlement, litigation and other related (credits) charges
(2,150
)
 
11,148

 
167,465

 
49,375

Other charges
2,896

 
2,046

 
99,802

 
65,713

Operating income
143,574

 
113,132

 
297,854

 
410,335

Interest expense, net of investment income
(29,859
)
 
(29,659
)
 
(123,870
)
 
(135,103
)
Income from continuing operations before income taxes
113,715

 
83,473

 
173,984

 
275,232

Income tax provision
55,088

 
30,304

 
89,092

 
103,289

Income from continuing operations
58,627

 
53,169

 
84,892

 
171,943

Income (loss) from discontinued operations
(142,323
)
 
5,849

 
(128,324
)
 
22,931

Net income (loss)
(83,696
)
 
59,018

 
(43,432
)
 
194,874

 
 
 
 
 
 
 
 
Earnings (loss) per common share - Diluted:
 
 
 
 
 
 
 
Continuing Operations
$
0.54

 
$
0.48

 
$
0.78

 
$
1.52

Discontinued Operations
(1.31
)
 
0.05

 
(1.17
)
 
0.20

Net Income (loss)
(0.77
)
 
0.54

 
(0.39
)
 
1.73

 
 
 
 
 
 
 
 
Weighted average number of common shares outstanding:
 
 
 
 
 
 
 
Diluted
108,980

 
110,074

 
109,449

 
112,988






















The footnotes and definitions presented at the separate "Footnotes and Definitions to Financial Information" pages are an integral part of this financial information.




Omnicare, Inc and Subsidiary Companies
Consolidated Balance Sheets
(000s)
Unaudited

 
December 31,
2013
 
December 31,
2012
ASSETS
 
 
 
Current assets:
 
 
 
Cash and cash equivalents
$
356,001

 
$
444,620

Restricted cash
5

 
1,066

Accounts receivable, less allowances
695,684

 
822,055

Inventories
512,418

 
374,620

Deferred income tax benefits
135,094

 
136,186

Other current assets
265,531

 
252,498

Current assets of discontinued operations
49,995

 
57,814

Total current assets
2,014,728

 
2,088,859

Properties and equipment, at cost less accumulated depreciation     
305,888

 
272,860

Goodwill
4,057,456

 
4,061,303

Identifiable intangible assets, less accumulated amortization
129,974

 
165,099

Other noncurrent assets
96,722

 
163,264

Noncurrent assets of discontinued operations
87,078

 
237,879

Total noncurrent assets
4,677,118

 
4,900,405

Total assets
$
6,691,846

 
$
6,989,264

LIABILITIES AND STOCKHOLDERS' EQUITY
 

 
 

Current liabilities:
 

 
 

Accounts payable
$
181,022

 
$
192,080

Accrued employee compensation
50,240

 
71,401

Current debt
527,204

 
27,713

Other current liabilities
355,845

 
174,057

Current liabilities of discontinued operations
18,846


16,763

Total current liabilities
1,133,157

 
482,014

Long-term debt, notes and convertible debentures
1,418,819

 
2,030,030

Deferred income tax liabilities
1,012,733

 
914,660

Other noncurrent liabilities
53,835

 
53,874

Noncurrent liabilities of discontinued operations
1,398

 
2,974

Total noncurrent liabilities
2,486,785

 
3,001,538

Total liabilities
3,619,942

 
3,483,552

Convertible Debt
331,101

 
—

Stockholders' equity
2,740,803

 
3,505,712

Total liabilities and stockholders' equity
$
6,691,846

 
$
6,989,264







The footnotes and definitions presented at the separate "Footnotes and Definitions to Financial Information" pages are an integral part of this financial information.




Omnicare, Inc and Subsidiary Companies
Condensed Consolidated Statements of Cash Flows, GAAP Basis
(000s)
Unaudited
 
December 31, 2013
 
Three months ended
 
Year ended
Cash flows from operating activities:
 
 
 
Net income (loss)
$
(83,696
)
 
$
(43,432
)
Loss from discontinued operations
142,323

 
128,324

Adjustments to reconcile net income to net cash flows from operating activities:
 
 
 

Depreciation
14,370

 
56,013

Amortization
19,063

 
76,947

Write off of debt issuance costs
—

 
4,784

Debt redemption loss
628

 
51,496

Disposition of business, net
3,183

 
39,245

Deferred tax provision
(255
)
 
61,932

Changes in certain assets and liabilities, net of effects from acquisition and divestiture of businesses:
 
 
 
Accounts receivable, net of provision for doubtful accounts
7,334

 
77,441

Inventories
(100,455
)
 
(138,028
)
Current and noncurrent assets
59,241

 
65,138

Accounts payable
(34,366
)
 
(11,649
)
Accrued employee compensation
(2,660
)
 
(19,856
)
Current and noncurrent liabilities
(1,182
)
 
131,159

Net cash flows from operating activities of continuing operations
23,528

 
479,514

Net cash flows used in operating activities of discontinued operations
(11,133
)
 
(12,454
)
Net cash flows from operating activities
12,395

 
467,060

Cash flows from investing activities:
 
 
 
Acquisition of businesses, net of cash received
(97
)
 
(3,895
)
Divestiture of businesses, net
575

 
11,658

Marketable Securities
255

 
(365
)
Capital expenditures
(21,736
)
 
(95,015
)
Other
—

 
1,061

Net cash flows used in investing activities of continuing operations
(21,003
)
 
(86,556
)
Net cash flows used in investing activities of discontinued operations
(159
)
 
(1,007
)
Net cash flows used in Investings activities
(21,162
)
 
(87,563
)
Cash flows from financing activities:
 

 
 

Payments on term loans
(5,312
)
 
(21,250
)
Payments on long-term borrowings and obligations
(1,919
)
 
(192,322
)
Fees paid for financing activities
(809
)
 
(5,660
)
Increase in cash overdraft balance
11,963

 
473

Payments for Omnicare common stock repurchases
(129,712
)
 
(220,971
)
Proceeds (payments) for stock awards and exercise of stock options, net of stock tendered in payment
(2,115
)
 
15,819

Dividends paid
(19,917
)
 
(62,928
)
Other
3,034

 
5,262

Net cash flows used in financing activities of continuing operations
(144,787
)
 
(481,577
)
Net cash flows from financing activities of discontinued operations
3,868

 
3,868

Net cash flows used in financing activities
(140,919
)
 
(477,709
)
Net increase (decrease) in cash and cash equivalents
(149,686
)
 
(98,212
)
Less increase (decrease) in cash and cash equivalents of discontinued operations
(7,424
)
 
(9,593
)
Increase (decrease) in cash and cash equivalents of continuing operations
(142,262
)
 
(88,619
)
Cash and cash equivalents at beginning of year
$
498,263

 
$
444,620

Cash and cash equivalents at end of year
356,001

 
356,001

 
 
 
 

The footnotes and definitions presented at the separate "Footnotes and Definitions to Financial Information" pages are an integral part of this financial information.




Omnicare, Inc. and Subsidiary Companies
Reconciliation Statement and Definitions, Non-GAAP Basis
($000s, except per share amounts)
Unaudited
 
Three months ended
 
Fiscal year ended
 
December 31, 2013
 
December 31, 2012
 
December 31, 2013
 
December 31, 2012
Adjusted earnings per share ("EPS") from continuing operations:
 
 
 
 
 
 
 
Diluted earnings per share from continuing operations
$
0.54

 
$
0.48

 
$
0.78

 
$
1.52

 
 
 
 
 
 
 
 
Special Items: (a)
 
 
 
 
 
 
 
Settlement, litigation and other related charges
0.08

 
0.06

 
1.11

 
0.27

Other charges
0.02

 
0.01

 
0.59

 
0.34

Amortization of discount on convertible notes
0.04

 
0.03

 
0.14

 
0.13

Debt redemption costs
—

 
—

 
0.03

 
0.07

Total Special Items
0.13

 
0.11

 
1.87

 
0.81

Cash EPS Adjustments
0.19

 
0.21

 
0.78

 
0.78

Adjusted cash earnings per diluted share from continuing operations
$
0.87

 
$
0.80

 
$
3.43

 
$
3.12

 
 
 
 
 
 
 
 
Adjusted earnings before interest, income taxes ("EBIT", "Operating income"), depreciation and amortization ("EBITDA") from continuing operations:
 
 
 
 
 
 
 
EBIT from continuing operations
$
143,574

 
$
113,132

 
297,854

 
$
410,335

Depreciation and amortization
33,433

 
32,492

 
132,960

 
128,537

Amortization of discount on convertible notes
(6,093
)
 
(5,955
)
 
(24,567
)
 
(24,073
)
EBITDA from continuing operations
170,914

 
139,669

 
406,247

 
514,799

Special items (a)
746

 
13,194

 
267,267

 
115,088

Adjusted EBITDA from continuing operations
171,660

 
152,863

 
673,514

 
629,887

 
 
 
 
 
 
 
 
EBITDA from continuing operations to net cash flows from operating activities:
 
 
 
 
 
 
 
EBITDA from continuing operations
170,914

 
139,669

 
406,247

 
514,799

(Subtract)/Add:
 
 
 
 
 
 
 
Interest expense, net of investment income and amortization of discount on convertible notes
(23,766
)
 
(23,704
)
 
(99,303
)
 
(111,030
)
Income tax provision
(55,088
)
 
(30,304
)
 
(89,092
)
 
(103,289
)
Loss on disposition
3,183

 
—

 
39,245

 
—

Loss on debt extinguishment - net
628

 
—

 
56,280

 
47,558

Deferred tax provision
(255
)
 
58,358

 
61,932

 
95,327

Changes in certain assets and liabilities, net of effects from acquisition and
divestitures of businesses
(72,088
)
 
(24,561
)
 
104,205

 
91,264

Net cash flows from operating activities of continuing operations
$
23,528

 
$
119,458

 
$
479,514

 
$
534,629

 
 
 
 
 
 
 
 
Adjusted cash flows from from continuing operations:
 
 
 
 
 
 
 
Cash flows from continuing operations
 
 
 
 
$
479,514

 
$
534,629

Settlement payments
 
 
 
 
20,000

 
50,000

Adjusted cash flows from continuing operations
 
 
 
 
$
499,514

 
$
584,629

 
 
 
 
 
 
 
 
Segment Reconciliations - Long-Term Care Group ("LTC")
 
 
 
 
 
 
 
Adjusted Operating Income - LTC:
 
 
 
 
 
 
 
Operating income from continuing operations
$
160,693

 
$
142,875

 
$
420,646

 
$
562,379

Special items (a)
(265
)
 
12,132

 
213,415

 
51,743

Adjusted operating income from continuing operations - LTC
$
160,428

 
$
155,007

 
$
634,061

 
$
614,122

 
 
 
 
 
 
 
 
Segment Reconciliations - Specialty Care Group ("SCG")
 
 
 
 
 
 
 
Adjusted Operating Income - SCG:
 
 
 
 
 
 
 
Operating income from continuing operations
$
31,238

 
$
26,962

 
$
113,243

 
$
92,671

Special items (a)
—

 
—

 
—

 
200

Adjusted operating income from continuing operations - SCG
$
31,238

 
$
26,962

 
$
113,243

 
$
92,871

 
 
 
 
 
 
 
 
The footnotes and definitions presented at the separate "Footnotes and Definitions to Financial Information" pages are an integral part of this financial information.




Omnicare, Inc. and Subsidiary Companies
Footnotes and Definitions to Financial Information
(000s, except per share amounts and unless otherwise stated)
Unaudited


Footnotes:
Non-GAAP Information:
Omnicare, Inc. (“Omnicare” or the “Company”) management believes that presenting certain non-GAAP financial measures, which exclude items not considered part of the core operating results of the Company and certain non-cash charges and also includes certain tax deduction amounts ("Special Items"), enhances investors' understanding of how Omnicare management assesses the performance of the Company's business. Omnicare management uses non-GAAP measures for budgeting purposes, measuring actual results, allocating resources and in determining employee incentive compensation. Omnicare's method of calculating non-GAAP financial results may differ from those used by other companies and, therefore, comparability may be limited.

(a)
Financial results included Special Items and Cash EPS adjustments as described below:
 
 
Q4 2013
 
YTD 2013
 
Q4 2012
 
YTD 2012
 
 
Pretax
After Tax (11)
 
Pretax
After Tax (11)
 
Pretax
After Tax (11)
 
Pretax
After Tax (11)
EBIT:
 
 
 
 
 
 
 
 
 
 
 
 
Settlement, litigation and other related (credits) charges (1)
 
$
(2,150
)
$
8,596

 
$
167,465

$
121,756

 
$
11,148

$
6,937

 
$
49,375

$
30,351

 
 
 
 
 
 
 
 
 
 
 
 
 
Other charges
 
 
 
 
 
 
 
 
 
 
 
 
Acquisition and other related costs (2)
 
—

—

 
2,300

1,416

 
984

682

 
1,380

925

Disposition of businesses (3)
 
343

429

 
39,245

27,541

 
—

—

 
(1,777
)
(2,582
)
Separation costs (4)
 
1,924

1,194

 
6,760

4,156

 
—

—

 
21,000

12,863

Restructuring (5)
 
—

—

 
—

—

 
—

—

 
8,956

5,481

Loss on debt repurchase (6)
 
629

553

 
51,497

31,691

 
—

—

 
35,092

21,546

Loss on sale of plane (7) 
 
—

—

 
—

—

 
1,062

729

 
1,062

729

Subtotal - Other charges
 
2,896

2,176

 
99,802

64,804

 
2,046

1,411

 
65,713

38,962

Subtotal - EBIT Special Items
 
746

10,772

 
267,267

186,560

 
13,194

8,348

 
115,088

69,313

 
 
 
 
 
 
 
 
 
 
 
 
 
Interest Expense:
 
 
 
 
 
 
 
 
 
 
 
 
Amortization of discount on convertible notes (8)
 
6,093

3,822

 
24,567

15,134

 
5,955

3,728

 
24,073

14,826

Debt redemption costs (6)
 
—

—

 
4,784

2,929

 
—

—

 
12,363

7,572

Subtotal - Interest Expense Special Items
 
6,093

3,822

 
29,351

18,063

 
5,955

3,728

 
36,436

22,398

Subtotal - Special Items
 
6,839

14,594

 
296,618

204,623

 
19,149

12,076

 
151,524

91,711

 
 
 
 
 
 
 
 
 
 
 
 
 
Cash EPS Items:
 
 
 
 
 
 
 
 
 
 
 
 
Amortization of intangibles
 
7,933

4,969

 
32,987

20,293

 
9,338

5,768

 
38,710

23,760

Goodwill amortization tax deduction (9)
 
—

8,492

 
—

36,529

 
—

11,300

 
—

44,004

Convertible debt tax deduction (10)
 
—

7,557

 
—

29,038

 
—

5,877

 
—

20,624

Subtotal - Cash EPS Items
 
7,933

21,018

 
32,987

85,860

 
9,338

22,945

 
38,710

88,388

 
 
 
 
 
 
 
 
 
 
 
 
 
Grand Total - Special Items
 
$
14,772

$
35,612

 
$
329,605

$
290,483

 
$
28,487

$
35,021

 
$
190,234

$
180,099

(1)
Operating income includes settlement, litigation and other related (credits) charges for resolution of certain large customer disputes, regulatory matters with various states and regulatory agencies, qui tam lawsuits and purported class and derivative actions against the Company. Additionally, Omnicare has made, and will continue to make, disclosures to the applicable governmental agencies of amounts, if any, determined to represent over-payments from the respective programs and, where applicable, those amounts, as well as any amounts relating to certain inspections, audits, inquiries and investigations activity are included in the pretax special item reflected in the table.
The year ended December 31, 2013 include a settlement charge of $120 million, plus attorney fees related to an agreement in principle for a voluntary civil settlement dismissing a qui tam civil suit filed in 2010.
The agreement in principal with the relator, subject to final governmental approval, does not include any admission of wrongdoing or liability by Omnicare.
(2)
Operating income (loss) includes acquisition and other related costs primarily related to professional fees and acquisition related restructuring costs for acquisitions.




(3)
In 2013, the Company completed the disposition of certain assets, primarily in its medical supply services business and in 2012, completed the dispositions of its Canadian pharmacy and the Company's pharmacy operational software businesses, which were not considered, individually or in the aggregate, significant to the operations of Omnicare. The Company recorded charges (credits) related to the disposition of these assets in the three months and year ended ended December 31, 2013, and 2012.
(4)
Operating income includes separation related costs for certain former employees.
(5)
Operating income includes restructuring and other related charges primarily related to lease termination costs.
(6)
Operating income and interest expense includes charges for debt redemption losses and costs related to the Company’s previously announced refinancing transactions.
(7)
In the quarter ended December 31, 2012, a loss was recorded related to the sale of the Company's aircraft.
(8)
The Company recorded non-cash interest expense from the amortization of debt discount on its convertible notes.
(9)
The tax benefit of being able to deduct goodwill amortization.
(10)
The tax benefit of being able to deduct higher interest expense on our convertible debt than what is actually paid.
(11)
The tax effect was calculated by multiplying the tax-deductible pretax amounts by the appropriate effective tax rate.

Discontinued Operations:
During the fourth quarter of 2013, the Company's end-of-life hospice pharmacy business ("Hospice") as well as certain retail operations ("Retail") qualified for discontinued operations treatment. The Company recorded a pre-tax impairment loss of $144.7 million to reduce the carrying value of the Hospice and Retail businesses to fair value. As such, the results from continuing operations for all periods presented have been revised to reflect the results of these businesses as discontinued operations, including certain expenses of the Company related to the classification as discontinued operations.