-----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, A5lC1oek35KkB+xcHvv/tVkyhaxmewCMTMaShDb0EaFLIhxdvuxAoxdNgaZjVXvG UYSzztjBs2y+Wwh01HzBLg== 0000950144-96-001052.txt : 19960321 0000950144-96-001052.hdr.sgml : 19960321 ACCESSION NUMBER: 0000950144-96-001052 CONFORMED SUBMISSION TYPE: 8-K/A PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 19960117 ITEM INFORMATION: Other events FILED AS OF DATE: 19960320 SROS: NASD FILER: COMPANY DATA: COMPANY CONFORMED NAME: SEAFIELD CAPITAL CORP CENTRAL INDEX KEY: 0000830158 STANDARD INDUSTRIAL CLASSIFICATION: SERVICES-MEDICAL LABORATORIES [8071] IRS NUMBER: 431039532 STATE OF INCORPORATION: MO FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 8-K/A SEC ACT: 1934 Act SEC FILE NUMBER: 000-16946 FILM NUMBER: 96536626 BUSINESS ADDRESS: STREET 1: 2600 GRAND AVE STE 500 STREET 2: P O BOX 410949 CITY: KANSAS CITY STATE: MO ZIP: 64141 BUSINESS PHONE: 8168427000 MAIL ADDRESS: STREET 1: P.O. BOX 410949 STREET 2: 2600 GRAND AVENUE, SUITE 500 CITY: KANSAS CITY STATE: MO ZIP: 64141 FORMER COMPANY: FORMER CONFORMED NAME: BMA CORP /MO/ DATE OF NAME CHANGE: 19910520 FORMER COMPANY: FORMER CONFORMED NAME: SEAFIELD CAPTIAL CORP DATE OF NAME CHANGE: 19910520 FORMER COMPANY: FORMER CONFORMED NAME: BMA PROPERTIES INC DATE OF NAME CHANGE: 19880411 8-K/A 1 SEAFIELD CAPITAL CORPORATION FORM 8-K/A 1 UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 8-K/A (Amendment No. 2) Current Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 Date of report (Date of earliest event reported): JANUARY 17, 1996 SEAFIELD CAPITAL CORPORATION (Exact name of registrant as specified in its charter) MISSOURI (State or other jurisdiction of incorporation) 0-16946 43-1039532 (Commission File Number) (I.R.S. Employer Identification No.) 2600 GRAND AVE., SUITE 500, P.O. BOX 410949, KANSAS CITY, MO 64141 (Address of principal executive offices, including Zip Code) (816) 842-7000 (Registrant's telephone number, including Area Code) NOT APPLICABLE (Former name or former address, if changed since last report) 2 ITEM 5. OTHER EVENTS. On January 22, 1996, the Registrant filed a Current Report on Form 8-K/A reporting the consummation of the acquisition by its 56% owned subsidiary, Response Oncology, Inc., of Oncology Hematology Group of South Florida, P.A. The Registrant hereby files this Amendment No. 2 to the previously filed Form 8-K/A in order to provide the following financial statements and pro forma financial information. 3 INDEPENDENT AUDITORS' REPORT The Board of Directors Oncology Hematology Group of South Florida, P.A.: We have audited the accompanying balance sheet of Oncology Hematology Group of South Florida, P.A. as of December 31, 1995, and the related statements of income, shareholders' equity, and cash flows for the year then ended. These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion. In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Oncology Hematology Group of South Florida, P.A. as of December 31, 1995, and the results of its operations and its cash flows for the year then ended in conformity with generally accepted accounting principles. KPMG Peat Marwick LLP March 12, 1996 Miami, Florida -1- 4 ONCOLOGY HEMATOLOGY GROUP OF SOUTH FLORIDA, P.A. BALANCE SHEET December 31, 1995 Assets ------ Current assets: Cash $ 3,042 Accounts receivables, net of allowance for contractual adjustments and uncollectible amounts of $716,015 1,670,701 Due from related parties 15,365 Prepaid expenses and other current assets 73,149 ----------- Total current assets 1,762,257 ----------- Property and equipment: Office equipment 160,960 Medical equipment 163,413 ----------- 324,373 Less accumulated depreciation 193,256 ----------- 131,117 ---------- Other assets 5,222 ---------- $1,898,596 ========== Liabilities and Shareholders' Equity ------------------------------------ Current liabilities: Current portion of long-term debt 98,435 Due to bank 88,709 Accounts payable and accrued expenses 550,623 Accrued payroll 20,900 Payroll taxes payable 11,103 Profit-sharing contribution payable 49,788 Deferred income tax liability 354,300 ---------- Total current liabilities 1,173,858 Long-term debt, less current portion 181,739 ---------- 1,355,597 ---------- Shareholders' equity: Common stock, $1 par value. Authorized 5,000 shares; issued and outstanding 80 shares 80 Additional paid-in capital 26,140 Retained earnings 516,779 ---------- 542,999 Commitments and contingencies ---------- $1,898,596 ==========
See accompanying notes to financial statements. -2- 5 ONCOLOGY HEMATOLOGY GROUP OF SOUTH FLORIDA, P.A. STATEMENT OF INCOME For the year ended December 31, 1995 Net revenue $ 8,010,763 Expenses: Physicians' expense 2,802,902 Operating expenses 4,592,521 Depreciation and amortization 104,534 Provision for doubtful accounts 77,066 Interest 24,485 ------------ 7,601,508 ------------ Income before income taxes 409,255 ------------ Income tax expense 210,000 ------------ Net Income $ 199,255 ============
See accompanying notes to financial statements. -3- 6 ONCOLOGY HEMATOLOGY GROUP OF SOUTH FLORIDA, P.A. STATEMENT OF SHAREHOLDERS' EQUITY For the year ended December 31, 1995
Total Capital Additional Retained shareholders' stock paid-in capital earnings equity ----- --------------- -------- ------ Balance, December 31, 1994 $ 80 - 317,524 317,604 Net income - - 199,255 199,255 Capital contributions - 26,140 - 26,140 ----- ------ ------- ------- Balance, December 31, 1995 $ 80 26,140 516,779 542,999 ===== ====== ======= =======
See accompanying notes to financial statements. -4- 7 ONCOLOGY HEMATOLOGY GROUP OF SOUTH FLORIDA, P.A. STATEMENT OF CASH FLOWS For the year ended December 31, 1995 Cash flows from operating activities: Net income $ 199,255 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation 104,534 Deferred income taxes 210,000 Changes in operating assets and liabilities: Accounts receivables, net (638,618) Prepaid expenses and other current assets 10,427 Due from related parties (15,365) Other assets 21,863 Due to bank 70,175 Accounts payable and accrued expenses 106,445 Accrued payroll (33,090) Payroll taxes payable 11,103 Profit-sharing contribution payable 49,788 ------------ Net cash provided by operating activities 96,517 ------------ Cash flows from investing activities: Expenditures for property and equipment (143,183) ------------ Net cash used in investing activities (143,183) ------------ Cash flows from financing activities: Repayment of long-term debt (87,592) Proceeds from the issuance of debt 134,769 ------------ Net cash provided by financing activities 47,177 ------------ Net increase in cash 511 Cash, beginning of year 2,531 ------------ Cash, end of year $ 3,042 ============ Supplemental disclosures of cash flow information: Cash paid during the year for interest $ 24,485 ============ Contribution of additional paid-in capital through forgiveness of debt $ 26,140 ============
See accompanying notes to financial statements. -5- 8 ONCOLOGY HEMATOLOGY GROUP OF SOUTH FLORIDA, P.A. NOTES TO FINANCIAL STATEMENTS December 31, 1995 (1) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES AND PRACTICES (a) DESCRIPTION OF BUSINESS Oncology Hematology Group of South Florida, P.A. (the Company) was incorporated on March 12, 1993 in the state of Florida. The Company is a medical group practice whose physicians specialize in providing services to patients with cancer. (b) NET REVENUE Net revenue primarily consists of charges for patient services rendered by the physicians based on established billing rates less allowance and discounts for patients covered by contractual programs. Payments received under these programs, which are generally based on predetermined rates, are generally less than the established billing rates, and the differences are recorded as contractual allowance or policy discounts. Net patient service revenue is net of contractual adjustments and policy discounts of approximately $2,297,000 for the year ended December 31, 1995. (c) ACCOUNTS RECEIVABLE Accounts receivable consists primarily of receivables from patients and third-party payors. In the normal course of providing healthcare services, the Company grants credit to patients, substantially all of whom are resident in the South Florida area. The Company does not generally require collateral or other security in extending credit to patients; however, it routinely obtains assignments of (or is otherwise entitled to receive) patients' benefits payable under their health insurance programs, plans or policies (for example, Medicare, Medicaid, health maintenance organizations, preferred provider organizations and commercial insurance policies). The majority of the Company's net revenue is derived from third-party payment programs. At December 31, 1995, approximately 99 percent of total receivables consists of amounts due from Medicare (26 percent), Medicaid (2 percent), and various commercial plans (71 percent). (d) PROPERTY AND EQUIPMENT Property and equipment are stated at cost. Depreciation for equipment is calculated using an accelerated depreciation method over the estimated useful lives of the assets, as follows: Estimated useful lives ---------------------- Office equipment 5-7 years Medical equipment 5-7 years -6- 9 ONCOLOGY HEMATOLOGY GROUP OF SOUTH FLORIDA, P.A. NOTES TO FINANCIAL STATEMENTS (e) INCOME TAXES The Company adopted Statement of Financial Accounting Standards No. 109, Accounting for Income Taxes ("FAS 109") at its inception in 1993. Under FAS 109, the liability method is used in accounting for income taxes. Under this method, deferred tax assets and liabilities are determined based on differences between financial reporting and tax bases of assets and liabilities, and are measured using the enacted tax rates and laws that will be in effect when the differences are expected to reverse. (f) USE OF ESTIMATES The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reporting period. Actual results could differ from those estimates. (2) FAIR VALUE OF FINANCIAL INSTRUMENTS The carrying amounts of patients' accounts receivable, due from related parties, current portion of long-term debt, due to bank, due to related parties, accounts payable, and accrued expenses approximate fair value because of the short maturity of those instruments. The fair value of the Company's long-term debt is estimated by discounting the future cash flows of each instrument at rates currently offered to the Company for similar debt instruments of comparable maturities by the Company's bankers. (3) LONG-TERM DEBT AND DUE TO BANK Long-term debt consists of the following: Dadeland Bank, interest is variable, (8.75% at December 31, 1995), due in monthly installments of $2,000 plus interest with the last payment due in August 1998; collateralized by computer and medical equipment $61,970 Dadeland Bank, interest is variable, (8.75% at December 31, 1995), due in monthly installments of $2,778 plus interest with the last payment due in October 1997; collateralized by computer and medical equipment 61,111 Dadeland Bank, 8%, due in monthly installments of $1,533 with the last payment due in April 1998; collateralized by computer equipment 37,907
-7- 10 ONCOLOGY HEMATOLOGY GROUP OF SOUTH FLORIDA, P.A. NOTES TO FINANCIAL STATEMENTS Dadeland Bank, 10%, due in monthly installments of $1,993 with the last payment due in February 1998; collateralized by medical equipment $46,186 Baptist Medical Arts Building East Tower, Inc., 8%, due in monthly installments of $886 with the last payment due in December 2005; collateralized by furniture and equipment 73,000 -------- 280,174 Less current portion 98,435 -------- $181,739 ========
Year ending December 31, Amount ------------ ------ 1996 $ 98,435 1997 96,729 1998 28,185 1999 6,310 2000 6,834 Thereafter through 2005 43,681 ---------- Total $ 280,174 ----------
All debt to Dadeland Bank was paid off on February 21, 1996. Due to bank consists of amounts due to Dadeland Bank for checks written in excess of available cash balances totaling $88,709 as of December 31, 1995. (4) EMPLOYEE BENEFIT PLANS Beginning in 1995 the Company maintains a 401(k) Profit Sharing Plan (the "Plan"), which covers substantially all employees. Employees who complete one year of service and attain age 21 may participate in the Plan. The Company's contributions to the Plan are discretionary. Eligible employees ratably vest in the Company's contribution over seven years. At December 31, 1995 the Company's discretionary contribution payable to the Plan is $49,788. (5) INCOME TAXES Income tax expense attributed to income from continuing operations consists of:
Current Deferred Total ------- -------- ----- U.S. federal $ - 166,000 166,000 State and local - 44,000 44,000 ---------- ------- ------- $ - 210,000 210,000 ========== ======= =======
-8- 11 ONCOLOGY HEMATOLOGY GROUP OF SOUTH FLORIDA, P.A. NOTES TO FINANCIAL STATEMENTS Income tax expense attributable to income from continuing operations was $210,000 for the year ended December 31, 1995, and differed from the amounts computed by applying the U.S. federal income tax rate of 34 percent to pretax income from continuing operations as a result of the following: Computed "expected" tax expense $ 139,000 34.0% Increase in income taxes resulting from: Changes in the beginning-of-the year balance of the valuation allowance for deferred tax assets allocated to income tax expense 51,000 12.5% State and local income taxes, net of federal income tax benefit 15,000 3.6% Other, net 5,000 1.2% ---------- ---- $ 210,000 51.3% ========== ====
The effect of temporary differences that give rise to a significant portion of the deferred tax assets and deferred tax liabilities at December 31, 1995, are as follows: Deferred tax assets: Depreciation $ 7,700 Accounts payable 205,000 Net operating loss 54,000 Accrued payroll 8,000 --------- Total gross deferred taxes 274,700 Less valuation allowance - --------- Net deferred tax assets 274,700 --------- Deferred tax liabilities: Accounts receivable (629,000) --------- Total gross deferred tax liability (629,000) --------- Net deferred tax liability $(354,300) =========
Pursuant to FAS 109, a valuation allowance must be established if it is more likely than not that all or some portion of the deferred tax asset will not be realized. At December 31, 1995 no valuation allowance was recorded. -9- 12 ONCOLOGY HEMATOLOGY GROUP OF SOUTH FLORIDA, P.A. NOTES TO FINANCIAL STATEMENTS (6) COMMITMENTS AND CONTINGENCIES (a) LEASES The Company, at December 31, 1995, maintained its office space in Baptist Medical Arts Building in Miami. Such space is subleased from a partnership owned by four physician shareholders who leased the space from an independent third party. The lease expires in 2005. Future minimum lease payments under the noncancelable operating lease (with initial or remaining lease terms in excess of one year) as of December 31, 1995 are as follows:
Year ended December 31, Amount ------------ ------ 1996 $ 210,372 1997 210,372 1998 210,372 1999 210,372 2000 210,372 Thereafter through 2005 981,736 ---------- Total minimum lease payments $2,033,596 ==========
Total rental expense for operating leases was $264,641 for the year ended December 31, 1995. (b) MEDICAL MALPRACTICE AND PROFESSIONAL LIABILITY INSURANCE The Company maintains professional liability insurance on a claims-made basis. Incidents and claims reported during the policy period are anticipated to be covered by the malpractice carrier. At December 31, 1995, there are no asserted claims against the Company, nor has the Company identified any incident which may have occurred but has yet to be identified under its incident reporting systems. Accordingly, the Company has made no accruals at December 31, 1995 for incurred but not reported claims. (7) SUBSEQUENT EVENTS On January 2, 1996, the stock of the Company was acquired by Response Oncology, Inc. ("Response"). Simultaneous with the stock acquisition, the physicians moved their medical practice to a separate corporation and executed a service agreement whereby Response will provide the physicians with offices and facilities, equipment, supplies, support personnel, and management and financial advisory services. In return for providing the services, Response will receive service fees from the physician group. -10- 13 RESPONSE ONCOLOGY, INC. AND SUBSIDIARIES UNAUDITED PRO FORMA CONSOLIDATED FINANCIAL INFORMATION BASIS OF PRESENTATION The accompanying pro forma consolidated balance sheet as of December 31, 1995 and the related pro forma consolidated statement of operations for the year then ended give effect to the acquisition of Oncology Hematology Group of South Florida, P.A. (the "Group") as if the acquisition of the Group had occurred on January 1, 1995. The pro forma information is based on the historical audited financial statements of Response Oncology, Inc. and subsidiaries (the "Company") and the Group, giving effect to the acquisition under the purchase method of accounting, and the assumptions and adjustments in the accompanying notes to the pro forma consolidated financial information. The pro forma statements have been prepared by the Company's management based on the audited financial statements of the acquired entity. These pro forma statements may not be indicative of the results that would have occurred if the acquisitions had been in effect on the dates indicated or which may be obtained in the future. The pro forma statements do not reflect the effect of expense reductions and other operational changes, which, in the opinion of the Company, are likely to result in profitable operations for the Group. The pro forma financial statements should be read in conjunction with the consolidated financial statements and notes of Response Oncology, Inc. and subsidiaries. 14 RESPONSE ONCOLOGY, INC. AND SUBSIDIARIES PRO FORMA CONSOLIDATED BALANCE SHEET DECEMBER 31, 1995 (UNAUDITED)
Assets Effects of Acquired Acquisition Pro Forma and Liabilities and Related Combined Historical Assumed Financing Totals ------------------------------------------------------------- Cash $ 4,204,558 $ 3,042 $(5,343,750) $ (1,136,150) Short-term investments 361,718 361,718 Accounts receivable, net 13,934,810 1,670,701 15,605,511 Supplies 1,119,671 1,119,671 Prepaids 550,287 73,149 623,436 Other current assets 465,738 15,365 481,103 ------------------------------------------------------------- Total current assets $ 20,636,782 $1,762,257 $(5,343,750) $ 17,055,289 Property and equipment, net $ 3,822,425 $ 131,117 $ 3,953,542 Intangible assets 11,006,423 11,006,423 Other assets 306,064 5,222 311,286 ------------------------------------------------------------ Total assets $ 24,765,271 $1,898,596 $ 5,662,673 $ 32,326,540 Accounts payable $ 3,690,937 $ 639,332 $ 4,330,269 Accrued expenses 1,134,688 81,791 1,216,479 Notes payable 98,435 547,331 645,766 Capital lease obligations 58,501 58,501 Deferred income tax liability 354,300 (354,300) 0 ------------------------------------------------------------ Total current liabilities $ 4,884,126 $1,173,858 $ 193,031 $ 6,251,015 Capital lease obligations 15,492 15,492 Notes Payable 181,739 6,012,641 6,194,380 Minority Interest 23,056 23,056 Stockholders equity Preferred stock 27,833 27,833 Common stock 73,716 80 (80) 73,716 Paid-in capital 60,054,215 26,140 (26,140) 60,054,215 Retained earnings (accumulated deficit) (40,313,167) 516,779 (516,779) (40,313,167) ------------------------------------------------------------ Total liabilities and stockholders equity $ 24,765,271 $1,898,596 $ 5,662,673 $ 32,326,540 ============================================================
See accompanying notes to pro forma consolidated financial information. 15 RESPONSE ONCOLOGY, INC. AND SUBSIDIARIES PRO FORMA CONSOLIDATED STATEMENT OF OPERATIONS DECEMBER 31, 1995 (UNAUDITED)
Operations of Acquired Combined Historical Business Adjustments Results ------------------------------------------------------------- Revenue: Net revenue $44,297,798 $ 4,678,915 (b) $48,976,713 Other income 282,011 282,011 Net patient service revenue 8,010,763 (8,010,763)(a) 0 ------------------------------------------------------------- Total Revenue 44,579,809 8,010,763 (3,331,848) 49,258,724 Expenses: Physician compensation 2,802,902 (2,802,902)(a) 0 Operating expenses 32,892,728 4,592,521 37,485,249 General and administrative 5,512,206 5,512,306 Depreciation and amortization 1,736,055 104,534 275,161 (d) 2,115,750 Interest 16,860 24,485 590,397 (c) 631,742 Provision for doubtful accounts 2,105,696 77,066 2,182,762 ------------------------------------------------------------- Total Expenses 42,263,645 7,601,508 (1,937,344) 47,927,809 Earnings before minority interest 2,316,164 409,255 (1,394,504) 1,330,915 Minority interest 1,806 1,806 ------------------------------------------------------------- Earnings before income taxes 2,314,358 409,255 (1,394,504) 1,329,109 Income tax expense 210,000 (210,000)(e) 0 ------------------------------------------------------------- Net earnings 2,314,358 199,255 (1,184,504) 1,329,109 Common stock dividend to preferred stockholders 3,825 3,825 ------------------------------------------------------------- Net earnings to common stockholders $ 2,310,533 $ 199,255 $(1,184,504) $ 1,325,284 =============================================================
See accompanying notes to pro forma consolidated financial information. 16 RESPONSE ONCOLOGY, INC. AND SUBSIDIARIES NOTES TO PRO FORMA CONSOLIDATED FINANCIAL INFORMATION The accompanying pro forma consolidated financial information presents the pro forma financial condition of Response Oncology, Inc. and subsidiaries (the "Company") as of December 31, 1995 and the results of their operations for the year then ended. On January 2, 1996, the Company acquired from unaffiliated individual sellers 100% of the issued and outstanding common stock of Oncology Hematology Group of South Florida, P.A. (the "Group"). The accompanying pro forma consolidated balance sheet includes the acquired assets, assumed liabilities and effects of financing, as if the Group had been acquired on December 31, 1995. The accompanying pro forma consolidated statement of operations reflect the pro forma results of operations, as adjusted, as if the Group had been acquired on January 1, 1995. PRO FORMA CONSOLIDATED BALANCE SHEET The adjustments reflected in the pro forma consolidated balance sheet are to reflect the values of assets acquired and liabilities assumed in connection with the acquisition of the Group; to reflect the issuance of long-term debt and cash payment to complete the acquisition; to reflect the consolidated effect of deferred tax assets and liabilities; and to reflect the recording of intangible assets acquired. PRO FORMA CONSOLIDATED STATEMENT OF OPERATIONS The adjustments reflected in the pro forma consolidated statement of operations are as follows: (a) To eliminate net patient service revenue and physician compensation and benefits in total as such will be retained by the physician group. (b) To accrue net revenue resulting from service agreements related to the acquisition of the Group. Amounts were calculated based upon actual operating results for the period, as adjusted, under the terms of the related service agreement. (c) To reflect interest on the long-term debt issued. Interest was calculated at an annual rate of 9%. (d) To record amortization of the intangible asset related to the service agreement. The asset is amortized over the service agreement period, or 40 years. (e) To remove the effect of federal income taxes as the Company would have utilized tax net operating loss carryforwards to fully offset the Group's 1995 taxable income. 17 SIGNATURES 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. SEAFIELD CAPITAL CORPORATION Dated: March 20, 1996 By: /s/ Steven K. Fitzwater ----------------------------------------- Steven K. Fitzwater Vice President, Chief Accounting Officer and Secretary -----END PRIVACY-ENHANCED MESSAGE-----