-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, HpzuB7KkaOA5zJYBW55uLJEi2DR4L7EZAQC2H7YF800jBVcZURFFOaPcdgT31Un+ zLFDQtO31H+g6Kcbt8Xpqg== 0000930661-97-001873.txt : 19970812 0000930661-97-001873.hdr.sgml : 19970812 ACCESSION NUMBER: 0000930661-97-001873 CONFORMED SUBMISSION TYPE: 8-K/A PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 19970619 ITEM INFORMATION: Financial statements and exhibits FILED AS OF DATE: 19970811 SROS: NYSE FILER: COMPANY DATA: COMPANY CONFORMED NAME: VENCOR INC CENTRAL INDEX KEY: 0000740260 STANDARD INDUSTRIAL CLASSIFICATION: SERVICES-HOSPITALS [8060] IRS NUMBER: 611055020 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 8-K/A SEC ACT: 1934 Act SEC FILE NUMBER: 001-10989 FILM NUMBER: 97655339 BUSINESS ADDRESS: STREET 1: 3300 PROVIDIAN CENTER STREET 2: 400 WEST MARKET STREET CITY: LOUISVILLE STATE: KY ZIP: 40202 BUSINESS PHONE: 5025967300 MAIL ADDRESS: STREET 1: 3300 PROVIDIAN CENTER STREET 2: 400 WEST MARKET ST CITY: LOUISVILLE STATE: KY ZIP: 40202 8-K/A 1 FORM 8-K/A - -------------------------------------------------------------------------------- SECURITIES AND EXCHANGE COMMISSION WASHINGTON, DC 20549 -------------------------- FORM 8-K/A CURRENT REPORT Pursuant to Section 13 or 15(d) of the Securities Exchangce Act of 1934 Date of Report (Date of earliest event reported): June 19, 1997 -------------------------- VENCOR, INC. (Exact name of registrant as specified in its charter) Delaware 1-10989 61-1055020 (State or other jurisdiction of (Commission File Number) (IRS Employer incorporation or organization) Identification No.) 3300 Providian Center 400 West Market Street Louisville, KY 40202 (Address of principal executive offices) (ZIP CODE) Registrant's telephone number, including area code: (502) 596-7300 Not applicable (Former name or former address, if changed since last report) - -------------------------------------------------------------------------------- The undersigned Registrant (or the "Company") hereby amends Item 7 of its Current Report on Form 8-K, filed July 3, 1997, relating to the June 19, 1997 completion of the tender offer for the shares of common stock, par value $1.00 per share, of Transitional Hospitals Corporation ("Transitional") (the "Transitional Acquisition"). ITEM 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND EXHIBITS. (a) Financial Statements of Business Acquired. (i) The (i) consolidated audited balance sheet of Transitional as of November 30, 1996 and (ii) the consolidated audited statements of operations of Transitional for the fiscal years ended November 30, 1994, 1995 and 1996 have been filed with the Securities and Exchange Commission (the "Commission") as part of Transitional's Annual Report on Form 10-K (Comm. File No. 1-7008) for the fiscal year ended November 30, 1996 and are incorporated herein by reference. (ii) The (i) consolidated unaudited balance sheet of Transitional as of February 28, 1997 and (ii) the consolidated unaudited statement of income of Transitional for the three months ended February 28, 1997 have been filed with the Commission as part of Transitional's Quarterly Report on Form 10-Q (Comm. File No. 1-7008) for the quarterly period ended February 28, 1997 and are incorporated herein by reference. (iii) The (i) consolidated unaudited balance sheet of Transitional as of May 31, 1997 and (ii) the consolidated unaudited statement of operations of Transitional for the three months ended May 31, 1997 have been filed with the Commission as part of Transitional's Quarterly Report on Form 10-Q (Comm. File No. 1-7008) for the quarterly period ended May 31, 1997 and are incorporated herein by reference. (b) Pro Forma Financial Information. Pro forma financial information for the Company, including the unaudited pro forma condensed combined statement of operations for the periods ended June 30, 1997 and December 31, 1996, the unaudited condensed consolidated balance sheet at June 30, 1997 and the notes to unaudited pro forma condensed combined financial statements, is filed herewith. The unaudited pro forma condensed combined statement of operations gives effect to the following, as if each had occurred on January 1, 1996: (i) The acquisition of TheraTx, Incorporated ("TheraTx") (the "TheraTx Merger") on March 21, 1997 as previously reported on the Current Report on Form 8-K of the Registrant, dated March 18, 1997 and filed with the Commission. (ii) The May 12, 1997 repurchase of substantially all of the outstanding TheraTx $100 million 8% Convertible Subordinated Notes Due 2002 assumed in connection with the TheraTx Merger. (iii) The acquisition of Transitional, completed on June 24, 1997, is included in the Company's historical condensed consolidated statement of operations and condensed consolidated balance sheet from the date of acquisition. (iv) The related increase in borrowings under the Company's bank credit facility (the "Credit Agreement") related to the TheraTx Merger and the Transitional Acquisition. No pro forma adjustments are required for the unaudited condensed consolidated balance sheet at June 30, 1997 because the aforementioned events all occurred prior to that date. (c) Exhibits. Exhibit No. Description 2.1 Agreement and Plan of Merger, dated as of June 18, 1997, among Vencor, Inc., LV Acquisition Corp. and Transitional Hospitals Corporation. 23.1 Consent of Ernst & Young LLP. 23.2 Consent of Price Waterhouse LLP. 99.1 Annual Report on Form 10-K of Transitional for the fiscal year ended November 30, 1996 (Comm. File No. 1-7008) is incorporated herein by reference. 99.2 Quarterly Report on Form 10-Q of Transitional for the Quarterly Period ended February 28, 1997 (Comm. File No. 1-7008) is incorporated herein by reference. 99.3 Quarterly Report on Form 10-Q of Transitional for the Quarterly Period ended May 31, 1997 (Comm. File No. 1-7008) is incorporated herein by reference. 2 UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL STATEMENTS The following unaudited pro forma condensed combined statement of operations of the Company for the six months ended June 30, 1997 and the year ended December 31, 1996, give effect to the TheraTx Merger, the repurchase of certain TheraTx debt, the Transitional Acquisition, and the related increase in borrowings under the Credit Agreement, as if such events had occurred on January 1, 1996. The unaudited condensed consolidated balance sheet of the combined entity as of June 30, 1997 is also included herein. These financial statements are for informational purposes only and are not necessarily indicative of the results that would have been obtained had the TheraTx Merger, the repurchase of certain TheraTx debt, the Transitional Acquisition, and the related increase in borrowings under the Credit Agreement occurred on January 1, 1996. The unaudited pro forma financial statements should be read in conjunction with the respective historical audited consolidated financial statements of the Company and TheraTx for the year ended December 31, 1996 and Transitional for the year ended November 30, 1996. 3 VENCOR, INC., THERATX, INCORPORATED AND TRANSITIONAL HOSPITALS CORPORATION UNAUDITED PRO FORMA CONDENSED COMBINED STATEMENT OF OPERATIONS FOR THE SIX MONTHS ENDED JUNE 30, 1997 (IN THOUSANDS, EXCEPT FOR PER SHARE AMOUNTS)
THERATX TRANSITIONAL VENCOR THERATX PRO FORMA TRANSITIONAL PRO FORMA PRO FORMA HISTORICAL HISTORICAL ADJUSTMENTS HISTORICAL ADJUSTMENTS COMBINED ---------- ---------- ----------- ------------ ----------- ----------- Revenues........................... $1,458,991 $94,028 $ - $159,444 $(5,202)(d) $1,707,261 ---------- ------- ------- -------- ------- ---------- Salaries, wages and benefits....... 846,379 56,926 - 79,976 (2,751)(d) 980,530 Supplies........................... 143,361 7,783 - 16,739 (562)(d) 167,321 Rent............................... 40,731 2,759 - 4,857 (165)(d) 48,182 Other operating expenses........... 228,721 13,073 - 39,963 (1,295)(d) 280,462 Depreciation and amortization...... 53,851 2,645 1,162 (a) 6,969 4,026 (a) 68,409 (244)(d) Interest expense................... 31,334 3,108 4,461 (b) 606 23,271 (b) 62,161 (600)(b) (19)(d) Investment income.................. (3,313) - - (2,971) 137 (d) (6,147) ---------- ------- ------- -------- ------- ---------- 1,341,064 86,294 5,023 146,139 22,398 1,600,918 ---------- ------- ------- -------- ------- ---------- Income from operations before income taxes.................... 117,927 7,734 (5,023) 13,305 (27,600) 106,343 Provision for income tax........... 46,935 2,862 (1,915)(c) 5,189 (10,746)(c) 42,325 ---------- ------- ------- -------- ------- ---------- Income from operations............. $ 70,992 $ 4,872 $(3,108) $ 8,116 $(16,854) $ 64,018 ========== ======= ======= ======== ======== ========== Earnings per common and common equivalent share: Income from operations: Primary...................... $ 1.00 $ 0.91 Fully diluted................ $ 1.00 $ 0.90 Shares used in computing earnings per common and common equivalent share: Primary...................... 70,678 70,678 Fully diluted................ 71,037 71,037
See notes to unaudited pro forma condensed combined financial statements. 4 VENCOR, INC., THERATX, INCORPORATED AND TRANSITIONAL HOSPITALS CORPORATION UNAUDITED PRO FORMA CONDENSED COMBINED STATEMENT OF OPERATIONS FOR THE YEAR ENDED DECEMBER 31, 1996 (IN THOUSANDS, EXCEPT FOR PER SHARE AMOUNTS)
THERATX TRANSITIONAL VENCOR THERATX PRO FORMA TRANSITIONAL PRO FORMA PRO FORMA HISTORICAL HISTORICAL ADJUSTMENTS HISTORICAL ADJUSTMENTS COMBINED ---------- ---------- ----------- ------------ ----------- ---------- Revenues........................... $2,577,783 $391,155 $ (915)(e) $507,194 $ - $3,475,217 ---------- -------- -------- -------- -------- ---------- Salaries, wages and benefits....... 1,490,938 233,530 - 264,332 - 1,988,800 Supplies........................... 261,621 28,329 - 42,442 - 332,392 Rent............................... 77,795 11,146 - 9,016 - 97,957 Other operating expenses........... 405,797 58,033 (915)(e) 140,026 - 602,941 Depreciation and amortization...... 99,533 11,324 5,396 (a) 22,364 8,332 (a) 146,949 Interest expense................... 45,922 13,024 21,954 (b) 3,889 48,164 (b) 131,753 (1,200)(b) Investment income.................. (12,203) (312) - - - (12,515) Non-recurring transactions......... 125,200 - - 33,524 - 158,724 ---------- -------- -------- -------- -------- ---------- 2,494,603 355,074 25,235 515,593 56,496 3,447,001 ---------- -------- -------- -------- -------- ---------- Income (loss) from operations before income taxes............... 83,180 36,081 (26,150) (8,399) (56,496) 28,216 Provision for income tax........... 35,175 13,364 (8,136)(c) (3,047) (23,141)(c) 14,215 ---------- -------- -------- -------- -------- ---------- Income (loss) from operations...... $ 48,005 $ 22,717 $(18,014) $ (5,352) $(33,355) $ 14,001 ========== ======== ======== ======== ======== ========== Earnings per common and common equivalent share: Income from operations: Primary.......................... $ 0.68 $ 0.20 Fully diluted.................... $ 0.68 $ 0.20 Shares used in computing earnings per common and common equivalent share: Primary.......................... 70,702 64 (f) 70,766 Fully diluted.................... 70,702 64 (f) 70,766
See notes to unaudited pro forma condensed combined financial statements. 5 VENCOR, INC. CONDENSED CONSOLIDATED BALANCE SHEET (UNAUDITED) (IN THOUSANDS, EXCEPT SHARE AMOUNTS)
JUNE 30, 1997 ---------- ASSETS Current assets: Cash and cash equivalents......................................... $ 106,476 Accounts and notes receivable less allowance for loss of $52,687.. 639,889 Inventories....................................................... 36,525 Income taxes...................................................... 103,556 Other............................................................. 52,200 ---------- 938,646 Property and equipment, at cost.................................... 2,050,914 Accumulated depreciation........................................... (462,968) ---------- 1,587,946 Intangible assets less accumulated amortization of $29,238......... 699,671 Investments in affiliates.......................................... 85,974 Other.............................................................. 97,820 ---------- $3,410,057 ========== LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities: Accounts payable.................................................. $ 146,427 Salaries, wages and other compensation............................ 153,304 Other accrued liabilities......................................... 132,631 Long-term debt due within one year................................ 24,747 ---------- 457,109 Long-term debt..................................................... 1,935,019 Deferred credits and other liabilities............................. 97,503 Minority interests in equity of consolidated entities.............. 42,839 Stockholders' equity: Common stock, $.25 par value; authorized 180,000 shares; issued 72,859 shares............................................. 18,215 Capital in excess of par value.................................... 724,294 Retained earnings................................................. 218,013 ---------- 960,522 Common treasury stock; 3,528 shares............................... (82,935) ---------- 877,587 ---------- $3,410,057 ==========
See notes to unaudited pro forma condensed combined financial statements. 6 VENCOR, INC., THERATX, INCORPORATED AND TRANSITIONAL HOSPITALS CORPORATION NOTES TO UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL STATEMENTS NOTE 1 -- BASIS OF PRESENTATION The purchase method of accounting has been used in the preparation of the unaudited pro forma condensed combined financial statements. Under this method of accounting, the aggregate purchase price is allocated to assets acquired and liabilities assumed based on their estimated fair values. Accordingly, the excess of the purchase price over the fair value of net assets acquired has been reflected as goodwill. The purchase price and estimated fair values of assets and liabilities are preliminary and subject to change. For purposes of the unaudited pro forma condensed combined financial statements, the excess of the purchase price for the TheraTx Merger and the Transitional Acquisition over fair value of the net assets acquired is being amortized over 40 years using the straight-line method. Pro forma income from operations for 1997 excludes $10.3 million of non- recurring costs, in aggregate, incurred by both TheraTx and Transitional in connection with the TheraTx Merger and the Transitional Acquisition, respectively. A break-up fee of $19.4 million paid by Transitional in June 1997 in connection with the Transitional Acquisition is also excluded from pro forma income from operations. For the periods presented, unaudited pro forma financial data have been derived by combining the historical financial data of Vencor and TheraTx (based upon annual reporting periods ended December 31 and the six months ended June 30) and Transitional (based upon annual reporting periods ended November 30 and the six months ended May 31). Certain prior year historical TheraTx and Transitional amounts have been reclassified to conform to the Company's presentation. NOTE 2 -- PRO FORMA ADJUSTMENTS The adjustments included in the unaudited pro forma condensed combined financial statements follow (dollars in thousands): (a) To adjust amortization expense:
SIX MONTHS ENDED YEAR ENDED JUNE 30, 1997 DECEMBER 31, 1996 ------------- ----------------- THERATX MERGER: Record amortization related to the excess of the purchase price for TheraTx over net assets acquired.................................. $2,075 $ 8,300 Eliminate TheraTx historical amortization of the excess of purchase price over net assets acquired............................ (738) (2,904) Actual amortization recorded for the period March 21 through March 31.. (175) - ------ ------- $1,162 $ 5,396 ====== ======= TRANSITIONAL ACQUISITION: Record amortization related to the excess of the purchase price for Transitional over net assets acquired............................. $4,166 $ 8,332 Actual amortization recorded for the period June 24 through June 30.... (140) - ------ ------- $4,026 $ 8,332 ====== =======
7 VENCOR, INC., THERATX, INCORPORATED AND TRANSITIONAL HOSPITALS CORPORATION NOTES TO UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL STATEMENTS (CONTINUED) NOTE 2 -- PRO FORMA ADJUSTMENTS (CONTINUED) (b) To record additional interest expense related to the borrowings and refinancings for the TheraTx Merger and the Transitional Acquisition:
SIX MONTHS ENDED YEAR ENDED JUNE 30, 1997 DECEMBER 31, 1996 ------------- ----------------- THERATX MERGER: Interest expense related to acquisition debt......................... $ 5,632 $ 22,528 Eliminate interest expense related to TheraTx bank credit facility... (1,497) (4,510) Interest on Credit Agreement replacing TheraTx bank credit facility.. 1,352 3,936 Actual interest recorded for the period March 18 through March 31.... (1,026) - -------- -------- $ 4,461 $ 21,954 ======== ======== Interest expense on refinanced convertible notes..................... $ 3,400 $ 6,800 Eliminate interest expense on convertible notes...................... (4,000) (8,000) -------- -------- $ (600) $ (1,200) ======== ======== TRANSITIONAL ACQUISITION: Interest expense related to acquisition debt......................... $ 21,816 $ 43,732 Interest expense on $2.0 billion Credit Agreement.................... 35,012 65,066 Eliminate interest expense on $1.75 billion Credit Agreement......... (32,790) (60,634) Actual interest recorded for the period June 24 through June 30...... (767) - -------- -------- $ 23,271 $ 48,164 ======== ========
(c) To adjust the provision for income taxes for the increase in the effective tax rate of the Company as a result of the TheraTx Merger and the Transitional Acquisition and to record the tax provision related to the pro forma adjustments. (d) To eliminate historical Transitional operations consolidated with the Company for the period June 24, 1997 through June 30, 1997. (e) To eliminate transactions between the Company and TheraTx. (f) To adjust common equivalent shares to reflect the conversion of TheraTx stock options into stock options of the Company. 8 SIGNATURE Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized. VENCOR, INC. Dated: August 11, 1997 /s/ W. Bruce Lunsford - ----------------------- --------------------- W. Bruce Lunsford Chairman of the Board, President and Chief Executive Officer 9 -----END PRIVACY-ENHANCED MESSAGE-----