-----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, RAXMhnVpx6DjXco/orXbSdV1YHGo6TVWJGYh/z1nlRCb2yehS2S3MGXY3SzRrDO1 lJ3VwxWnSq+tZt02JtDj8g== 0000950144-96-003888.txt : 19960702 0000950144-96-003888.hdr.sgml : 19960702 ACCESSION NUMBER: 0000950144-96-003888 CONFORMED SUBMISSION TYPE: 8-K/A PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 19960501 ITEM INFORMATION: Other events FILED AS OF DATE: 19960701 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: 96589737 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 CORP. FORM 8-K/A 1 UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 8-K/A (Amendment No. 1) CURRENT REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934 Date of report (Date of earliest event reported): MAY 1, 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 May 1, 1996, the Registrant filed a Current Report on Form 8-K reporting the consummation of the acquisition by its 54% owned subsidiary, Response Oncology, Inc., of Knoxville Hematology Oncology Associates. The Registrant hereby files this Amendment No. 1 to the previously filed Form 8-K in order to provide the following financial statements and pro forma financial information. 3 INDEPENDENT AUDITORS' REPORT The Partners Knoxville Hematology Oncology Associates: We have audited the accompanying balance sheet of Knoxville Hematology Oncology Associates as of December 31, 1995, and the related statements of income, partners' 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 Knoxville Hematology Oncology Associates 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 Nashville, Tennessee March 22, 1996 except for Note 6 which is as of April 16, 1996 1 4 KNOXVILLE HEMATOLOGY ONCOLOGY ASSOCIATES Balance Sheets December 31, 1995 and March 31, 1996 (unaudited)
DECEMBER 31, MARCH 31, ASSETS 1995 1996 ------ ----------- ----------- (UNAUDITED) Current assets: Cash $ 31,851 166,362 Accounts receivable, less allowance for contractual adjustments and uncollectible amounts of $570,502 in 1995 and $505,345 (unaudited) in 1996 1,128,993 998,657 Supplies 109,350 109,350 ---------- --------- Total current assets 1,270,194 1,274,369 Property and equipment, at cost (notes 3 and 4) 2,350,593 2,477,603 Less accumulated depreciation 720,024 779,124 ---------- --------- Net property and equipment 1,630,569 1,698,479 Other assets 3,794 -- ---------- --------- $2,904,557 2,972,848 ========== ========= LIABILITIES AND PARTNERS' EQUITY -------------------------------- Current liabilities: Accounts payable and accrued expenses $ 264,405 245,001 Current portion of long-term debt (note 4) 1,591,646 1,713,757 Current portion of capital lease obligations (note 6) 46,947 46,947 ---------- --------- Total current liabilities 1,902,998 2,005,705 Long-term debt, less current portion (note 4) 221,605 23,131 Capital lease obligations, less current portion (note 6) 58,865 48,865 ---------- --------- Total liabilities 2,183,468 2,077,701 Partners' equity 721,089 895,147 ---------- --------- Commitments and contingencies (notes 5 and 6) $2,904,557 2,972,848 ========== =========
See accompanying notes to financial statements. 2 5 KNOXVILLE HEMATOLOGY ONCOLOGY ASSOCIATES Statements of Income For the year ended December 31, 1995 and the three-month period ended March 31, 1996 (unaudited)
1995 1996 ---------- ----------- (UNAUDITED) Net patient service revenue $6,712,255 1,566,635 Other income 297,195 50,851 ---------- --------- 7,009,450 1,617,486 Expenses: Operating 3,025,441 563,890 General and administrative 1,090,113 150,868 Depreciation and amortization 237,622 59,100 Interest and other 244,629 23,328 ---------- --------- 4,597,805 797,186 ---------- --------- Net income to partners $2,411,645 820,300 ========== =========
See accompanying notes to financial statements. 3 6 KNOXVILLE HEMATOLOGY ONCOLOGY ASSOCIATES Statements of Partners' Equity For the year ended December 31, 1995 and the three-month period ended March 31, 1996 (unaudited)
GENERAL PARTNERS ----------- Partners' equity, January 1, 1995 $ 634,437 Contributions from partners 15,100 Distributions to partners (2,340,093) Net income to partners 2,411,645 ----------- Partners' equity, December 31, 1995 721,089 Distributions to partners (unaudited) (646,242) Net income to partners (unaudited) 820,300 ----------- Partners' equity, March 31, 1996 (unaudited) $ 895,147 ===========
See accompanying notes to financial statements. 4 7 KNOXVILLE HEMATOLOGY ONCOLOGY ASSOCIATES Statements of Cash Flows For the year ended December 31, 1995 and the three-month period ended March 31, 1996 (unaudited)
1995 1996 ----------- --------- (UNAUDITED) Cash flows from operating activities: Net income to partners $ 2,411,645 820,300 Adjustments to reconcile net income to partners to net cash provided by operating activities: Depreciation and amortization 237,622 59,100 Management fees 41,009 -- Loss on sale of furniture, fixtures and equipment 19,674 -- Changes in operating assets and liabilities: Accounts receivable (4,014) 130,336 Other assets (3,744) 3,794 Accounts payable and accrued expenses (161,284) (19,404) ----------- -------- Total adjustments 129,263 173,826 ----------- -------- Net cash provided by operating activities 2,540,908 994,126 ----------- -------- Cash flows from investing activities-capital expenditures (25,702) (127,010) ----------- --------- Cash flows from financing activities: Repayment of long-term debt (641,148) (76,363) Proceeds from the issuance of debt 520,000 -- Principal payments on capital lease obligations (38,917) (10,000) Contributions from partners 15,100 -- Distributions to partners (2,340,093) (646,242) ----------- --------- Net cash used in financing activities (2,485,058) (732,605) ----------- --------- Net increase in cash 30,148 134,511 Cash at beginning of the period 1,703 31,851 ----------- --------- Cash at end of the period $ 31,851 166,362 =========== ========= SUPPLEMENTAL DISCLOSURES: Interest paid $ 146,110 23,328 =========== =========
1995 disclosures: The Company originated a $41,009 short-term note payable for management fees incurred during the year (note 3). The Company obtained a $33,059 note payable for the purchase of an automobile (note 3). The Company originated $127,857 in capital lease obligations for the purchase of equipment (note 5). See accompanying notes to financial statements. 5 8 KNOXVILLE HEMATOLOGY ONCOLOGY ASSOCIATES Notes to Financial Statements December 31, 1995 and March 31, 1996 (unaudited) UNAUDITED INTERIM FINANCIAL INFORMATION --------------------------------------- The balance sheet as of March 31, 1996 and the statements of income, partners' equity and cash flows for the three-month period ended March 31, 1996 (1996 interim financial information) have been prepared by Knoxville Hematology Oncology Associates (the Company) and are unaudited. In the opinion of the company, the 1996 interim financial information includes all adjustments, consisting of only normal recurring adjustments, necessary for a fair statement of the results of the 1996 interim period. Certain information and footnote disclosures normally included in financial statements prepared in accordance with generally accepted accounting principles have been condensed or omitted from the 1996 interim financial information. The 1996 interim financial information should be read in conjunction with the Company's December 31, 1995 audited financial statements appearing herein. The results for the three-month period ended March 31, 1996 may not be indicative of operating results for the full year. (1) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES AND PRACTICES -------------------------------------------------------- (A) DESCRIPTION OF BUSINESS ----------------------- Knoxville Hematology Oncology Associates (the Company) was established on December 10, 1979 in the State of Tennessee and is a general partnership. The Company's four physician partners do not receive compensation from the Company other than partnership distributions. Distributions are based on the Company's operating results. The Company is a medical group practice whose physicians specialize in providing services to patients with cancer and/or blood diseases. (B) NET PATIENT SERVICE REVENUE --------------------------- Net patient service 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 allowances or policy discounts. Net patient service revenue is net of contractual adjustments and policy discounts of approximately $3,030,000 for the year ended December 31, 1995 and approximately $707,200 (unaudited) for the three months ended March 31, 1996. (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 Knoxville 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. (D) SUPPLIES -------- Supplies are recorded at the lower of cost (first-in, first-out) or market. (Continued) 6 9 KNOXVILLE HEMATOLOGY ONCOLOGY ASSOCIATES Notes to Financial Statements (E) PROPERTY AND EQUIPMENT ---------------------- Property and equipment are stated at cost. Furniture, fixtures and equipment under capital leases are stated at the lower of the present value of minimum lease payments at the beginning of the lease term or fair value at the inception of the lease. Leasehold improvements are amortized over the lesser of the asset's estimated life or the lease term. Furniture, fixtures and equipment held under capital leases are amortized on the straight-line method over the shorter of the respective lease term or estimated useful live of the asset. Depreciation for furniture, fixtures and equipment is calculated using the straight-line method over the estimated useful lives of the assets, as follows: Estimated useful lives Furniture, fixtures and equipment 5-7 years Automobiles 5 years Leasehold improvements 11-14 years (F) INCOME TAXES ------------ No provision for income taxes has been made in the accompanying financial statements since, as a partnership, income and losses for income tax purposes are allocated to the partners for inclusion in their respective income tax returns. (G) 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 revenues and expenses during the reporting period. Actual results could differ from those estimates. (2) FAIR VALUE OF FINANCIAL INSTRUMENTS ----------------------------------- The carrying amounts of all asset and liability financial instruments approximate their estimated fair values at December 31, 1995. Fair value of a financial instrument is defined as the amount at which the instrument could be exchanged in a current transaction between willing parties. (2) PROPERTY AND EQUIPMENT ---------------------- Property and equipment consists of the following at December 31, 1995: Furniture, fixtures and equipment $ 520,705 Automobiles 151,742 Leasehold improvements 1,678,146 ---------- 2,350,593 Less accumulated depreciation 720,024 ---------- $1,630,569 ========== (Continued) 7 10 KNOXVILLE HEMATOLOGY ONCOLOGY ASSOCIATES Notes to Financial Statements (4) LONG-TERM DEBT -------------- Long-term debt consists of the following: Note payable, with interest at 7.625%, payable in monthly installments of $24,775 including interest, personally guaranteed by partners, final principal payment due March 1996 $ 1,195,997 Note payable, with variable interest rate at prime plus 1/4%, (8.50% at December 31, 1995) interest payments monthly beginning February 1996 with principal payment due July 1996, personally guaranteed by partners 200,000 Note payable, with variable interest rate at prime plus 1/2%, (8.75% at December 31, 1995) interest payments monthly with principal payment due January 1997, personally guaranteed by partners 200,000 Note payable, with variable interest rate at prime plus 1/2%, (8.75% at December 31, 1995) payable in monthly installments of $11,932 including interest, personally guaranteed by partners, final principal payment due January 1997 147,346 Note payable at 5%, payable in monthly installments of $6,935 including interest, personally guaranteed by partners, final principal payment due June 1996 41,009 Non-interest bearing note payable, payable in monthly principal payments of $1,102, secured by automobile, final payment due October 1997 23,131 Note payable at 9%, payable in monthly installments of $1,000 with interest, personally guaranteed by partners, final principal payment due May 1996 5,768 ----------- Total long-term debt 1,813,251 Less current installments (1,591,646) ----------- Long-term debt excluding current installments $ 221,605 ===========
Maturities of long-term debt as of December 31, 1995 are as follows: 1996 $1,591,646 1997 221,605 ---------- $1,813,251 ==========
(5) EMPLOYEE BENEFIT PLAN --------------------- 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 contributions over six years. The Company's discretionary contribution for the year ended December 31, 1995 to the Plan was $15,000 and such amount is payable at December 31, 1995. (Continued) 8 11 KNOXVILLE HEMATOLOGY ONCOLOGY ASSOCIATES Notes to Financial Statements (6) Commitments and Contingencies ----------------------------- (a) Leases ------ The partnership is obligated under various capital leases for laboratory and office equipment that expire at various dates within the next three years. The gross amount of capital leases included in furniture, fixtures and equipment for the year ended December 31, 1995 was $151,036, with related accumulated depreciation of $34,434. The partnership also has operating leases for equipment and office space. The office space lease is with a company in which the Company's physicians have an ownership interest. Total expense was approximately $150,000 for the year ended December 31, 1995. Future minimum lease payments under noncancelable operating leases and the present value of minimum capital lease payments as of December 31, 1995 are as follows:
CAPITAL OPERATING LEASES LEASES ------- --------- Year ending: 1996 $54,140 140,056 1997 54,140 138,355 1998 7,930 134,336 1999 -- 132,485 2000 -- 121,791 2001 and following -- 525,071 ------- --------- 116,210 1,192,094 ========= Less amount representing interest (at an 8.5% rate) (10,398) ------- 105,812 Less current installments of obligations under capital leases (46,947) ------- Obligations under capital leases excluding current installments $58,865 =======
(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 have 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. (Continued) 9 12 KNOXVILLE HEMATOLOGY ONCOLOGY ASSOCIATES Notes to Financial Statements (C) LEGAL MATTERS ------------- The Company is involved in a dispute with an insurance company concerning alleged overpayment by the insurance company. No lawsuit has been filed. The Company is, however, attempting to negotiate a settlement and repay a portion of the $102,000 amount claimed. The Company has offered $80,000 as a settlement for the overpayment. This amount has been accrued in the accompanying financial statements. The Company is also involved in a civil action with a former partner in the partnership for damages and amounts allegedly owed by the Partnership to the former partner as a result of his termination. The former partner seeks damages not to exceed $300,000. The Company's position is that the former partner has been paid all sums to which he is entitled. The Company is vigorously defending the claim. (7) SUBSEQUENT EVENTS ----------------- On April 16, 1996, all outstanding partnership interests of the Company were acquired by Response Oncology, Inc. (Response). Simultaneous with the asset acquisition, the physicians moved their medical practice to a separate limited liability company and executed a service agreement whereby Response will provide the physicians with offices and facilities, equipment, supplies, support personnel, and management of financial advisory services. In turn 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 March 31, 1996 and the related pro forma consolidated statements of operations for the year ended December 31, 1995 and the three months ended March 31, 1996 give effect to the acquisitions of Knoxville Hematology Oncology Associates ("KHOA") and Oncology Hematology Group of South Florida, P.A. ("OHG"), (collectively referred to as the "Groups") as if the acquisitions of the Groups 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 Groups, giving effect to the acquisitions 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 entities. 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, is likely to result in profitable operations for the Groups. 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 March 31, 1996 (Unaudited)
PRO FORMA PRO FORMA COMBINED HISTORICAL KHOA ADJUSTMENTS TOTALS ----------- ---------- ----------- ------------ Cash $ 483,191 $ 166,362 $ 1,546,933 $ 2,196,486 Short-term investments 361,718 361,718 Accounts receivable, net 15,100,543 998,657 (198,657) 15,900,543 Supplies 1,090,643 109,350 1,199,993 Prepaids 525,882 525,882 Advances to affiliated physician groups 3,112,552 3,112,552 Other current assets 2,089,590 2,089,590 -------------------------------------------------------- Total current assets 22,764,119 1,274,369 1,348,276 25,386,764 Property and equipment, net 3,695,637 1,698,479 (148,479) 5,245,637 Deferred charges, net 325,733 325,733 Intangible assets 11,656,558 11,656,558 Management Service Agreement 7,091,050 7,091,050 Other assets 176,805 176,805 -------------------------------------------------------- Total assets $ 38,618,852 $2,972,848 $ 8,290,847 $ 49,882,547 Accounts payable $ 5,696,496 $ 245,001 $ 318,294 $ 6,259,791 Accrued expenses 1,891,482 1,891,482 Notes payable 3,607,711 3,607,711 Capital lease obligations 57,622 46,947 (46,947) 57,622 Current portion of long term note 396,997 1,713,757 (1,713,757) 396,997 -------------------------------------------------------- Total current liabilities 11,650,308 2,005,705 (1,442,410) 12,213,603 Capital lease obligations 0 48,865 (48,865) 0 Notes Payable 6,265,369 23,131 10,126,869 16,415,369 Minority Interest 261,425 261,425 Stockholders' equity 0 Preferred stock 27,833 27,833 Common stock 73,782 73,782 Paid-in capital 60,137,024 550,400 60,687,424 Retained earnings (accumulated deficit) (39,796,889) 895,147 (895,147) (39,796,889) -------------------------------------------------------- Total liabilities and stockholders equity $ 38,618,852 $2,972,848 $ 8,290,847 $ 49,882,547 ========================================================
See accompanying notes to pro forma consolidated financial information. 15 Response Oncology, Inc. and Subsidiaries Pro Forma Consolidated Statement of Operations Year Ended December 31, 1995 (Unaudited)
PREVIOUS ACQUISITION HISTORICAL SUBSEQUENT TO PRO FORMA PRO FORMA COMPANY DECEMBER 31, 1995 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: Operating expenses 32,892,728 7,395,423 (2,802,902)(a) 37,485,249 General and administrative 5,512,308 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 ============================================================================== PRO FORMA TOTAL KHOA ADJUSTMENTS PRO FORMA PRO FORMA ------------------------------------------------------------------------------ Revenue: Net revenue $4,577,171 (b) $4,577,171 $53,553,884 Other Income $ 297,195 (297,195) 0 282,011 Net patient service revenue 6,712,255 (6,712,255)(a) 0 0 ------------------------------------------------------------------------------ Total Revenue 7,009,450 (2,432,279) 4,577,171 53,835,895 Expenses: Operating expenses 3,025,441 (178,359)(a) 2,847,082 40,332,331 General and administrative 1,090,113 1,090,113 6,602,419 Depreciation and amortization 237,622 177,276 (d) 414,898 2,530,648 Interest 244,629 712,871 (c) 957,500 1,589,242 Provision for doubtful accounts 0 2,182,762 ------------------------------------------------------------------------------ Total Expenses 4,597,805 711,788 5,309,593 53,237,402 Earnings before minority interest 2,411,645 (3,144,067) (732,422) 598,492 Minority interest 0 1,806 ------------------------------------------------------------------------------ Earnings before income taxes 2,411,645 (3,144,067) (732,422) 596,686 Income tax expense 0 0 ------------------------------------------------------------------------------ Net earnings 2,411,645 (3,144,067) (732,422) 596,686 Common stock dividend to preferred stockholders 0 3,825 ------------------------------------------------------------------------------ Net earnings to common stockholders $ 2,411,645 ($3,144,067) ($732,422) $ 592,861 ==============================================================================
See accompanying notes to pro forma consolidated financial information. 16 Response Oncology, Inc. and Subsidiaries Pro Forma Consolidated Statement of Operations Period Ended March 31, 1996 (Unaudited)
HISTORICAL PRO FORMA COMPANY KHOA ADJUSTMENTS PRO FORMA ----------------------------------------------------------- Revenue: Net Revenue $13,340,885 $ 1,056,218 (b) $14,397,103 Other Income 16,729 $ 50,851 (50,851) 16,729 Net patient service revenue 1,566,635 (1,566,635)(a) 0 ----------------------------------------------------------- Total Revenue 13,357,614 1,617,486 (561,268) 14,413,832 Expenses: Operating expenses 10,344,781 563,890 (25,889)(a) 10,882,782 General and administrative 1,266,840 150,868 1,417,708 Depreciation and amortization 570,965 59,100 44,319 (d) 674,384 Interest 192,281 23,328 216,047 (c) 431,656 Provision for doubtful account 372,100 0 372,100 ----------------------------------------------------------- Total Expenses 12,746,967 797,186 234,477 13,778,630 Earnings before minority interest 610,647 820,300 (795,745) 635,202 Minority interest 94,369 94,369 ----------------------------------------------------------- Net Earnings to common stockholders $ 516,278 $ 820,300 $ (795,745) $ 540,833 ===========================================================
See accompanying notes to pro forma consolidated financial information. 17 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 March 31, 1996 and the results of their operations for the year ended December 31, 1995 and the three months ended March 31, 1996. On April 15, 1996, the Company acquired from unaffiliated individual sellers 100% of the issued and outstanding general partnership interest ("the Acquired Interests") of Knoxville Hematology Oncology Associates ("KHOA"). In connection with the acquisition of KHOA, the Company procured a $10 million loan from the Company's parent, Seafield Capital Corporation ("Seafield") to be used to finance the acquisition. The loan has a maturity date of December 31, 1998, bears interest at the rate of prime plus 1%, is unsecured, and after August 1, 1996, is convertible at the option of Seafield into shares of Response common stock at a conversion price equal to the market price of the common stock at the time of the conversion. The accompanying pro forma consolidated balance sheet includes the acquired assets, assumed liabilities and effects of financing, as if KHOA had been acquired on March 31, 1996. The accompanying pro forma consolidated statements of operations reflect the pro forma results of operations, as adjusted, as if all acquisition practices held by the Company 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 KHOA; to reflect the issuance of long-term debt and cash payment to complete the acquisition; and to reflect the recording of intangible assets required. PRO FORMA CONSOLIDATED STATEMENT OF OPERATIONS The adjustments reflected in the pro forma consolidated statement of operations are as follows: (a) To eliminate certain revenues and expenses of KHOA that would not constitute revenue to the Company or be the responsibility of the Company pursuant to the Service Agreement. (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 annual rates ranging from 5% to 9.5%. (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. 18 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 BY: /s/ Steven K. Fitzwater ----------------------------------------- Steven K. Fitzwater Vice President, Chief Accounting Officer and Secretary Dated: July 1, 1996 -----END PRIVACY-ENHANCED MESSAGE-----