<PAGE>
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K/A
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 15, 1998
BORON, LePORE & ASSOCIATES, INC.
(Exact name of Registrant as specified in its charter)
Delaware 000-23093 22-2365997
(State or other jurisdiction (Commission (I.R.S. Employer
of incorporation) File Number) Identification No.)
17-17 Route 208 North, Fair Lawn, NJ 07410
(Address of principal executive offices and zip code)
(201) 791-7272
(Registrant's telephone number, including area code)
<PAGE>
Item 7. Financial Statements, Pro Forma Financial Information and Exhibits
- ------- ------------------------------------------------------------------
(a) Financial Statements of Businesses Acquired
(i) Report of Independent Public Accountants
(ii) Balance Sheets of Medical Education Systems, Inc. as of December
31, 1997 and 1996 and as of March 31, 1998 (unaudited).
(iii) Statements of Operations, Stockholders' Deficit and Cash Flows
for the years ended December 31, 1997 and 1996 and for the three
months ended March 31, 1998 and 1997 (unaudited).
(iv) Statements of Stockholders' Deficit as of December 31, 1997 and
March 31, 1998 (unaudited).
(v) Statements of Cash Flows for the years ended December 31, 1997
and 1996 and for the three months ended March 31, 1998 and 1997
(unaudited).
(vi) Notes to the financial statements.
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
----------------------------------------
To the Board of Directors of
Medical Education Systems, Inc.:
We have audited the accompanying balance sheets of Medical Education Systems,
Inc. (a Pennsylvania corporation) as of December 31, 1997 and 1996, and the
related statements of operations, stockholders' deficit and cash flows for the
years 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 audits.
We conducted our audits 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 audits provide 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 Medical Education Systems, Inc.
as of December 31, 1997 and 1996 and the results of its operations and its cash
flows for the years then ended in conformity with generally accepted accounting
principles.
Roseland, New Jersey
April 24, 1998
<PAGE>
MEDICAL EDUCATION SYSTEMS, INC.
-------------------------------
BALANCE SHEETS
--------------
AS OF MARCH 31, 1998 (UNAUDITED) AND DECEMBER 31, 1997 AND 1996
---------------------------------------------------------------
<TABLE>
<CAPTION>
AS OF DECEMBER 31,
MARCH 31, -----------------------------
ASSETS 1998 1997 1996
------ ----------- ---------- ----------
(UNAUDITED)
<S> <C> <C> <C>
CURRENT ASSETS:
Cash and cash equivalents $1,353,493 $1,056,216 $1,168,603
Accounts receivable 1,536,203 603,073 821,680
Note receivable 0 0 70,317
Costs in excess of billings 189,025 175,531 54,731
Prepaid expenses 26,393 22,972 15,644
---------- ---------- ----------
Total current assets 3,105,114 1,857,792 2,130,975
---------- ---------- ----------
PROPERTY AND EQUIPMENT:
Computer and other equipment 385,001 364,146 273,271
Furniture and fixtures 160,194 160,194 125,447
---------- ---------- ----------
545,195 524,340 398,718
Less - Accumulated depreciation and amortization (355,770) (333,145) (252,887)
---------- ---------- ----------
189,425 191,195 145,831
---------- ---------- ----------
OTHER ASSETS 15,751 11,541 13,483
---------- ---------- ----------
Total assets $3,310,290 $2,060,528 $2,290,289
========== ========== ==========
LIABILITIES AND STOCKHOLDERS' DEFICIT
-------------------------------------
CURRENT LIABILITIES:
Current portion of long-term debt $ 19,744 $ 19,528 $ 18,703
Accounts payable and accrued liabilities 506,563 493,854 459,037
Billings in excess of costs 3,233,137 1,676,896 2,111,106
---------- ---------- ----------
Total current liabilities 3,759,444 2,190,278 2,588,846
---------- ---------- ----------
LONG-TERM DEBT, net of current portion 41,860 46,881 66,368
---------- ---------- ----------
COMMITMENTS AND CONTINGENCIES
STOCKHOLDERS' DEFICIT:
Common stock, no par value; authorized 1,000 shares;
issued and outstanding 935 shares at March 31, 1998,
December 31, 1997 and 1996 935 935 935
Additional paid-in capital 114,765 114,765 114,765
Accumulated deficit (516,465) (202,082) (390,376)
Less - 230 shares of treasury stock, at cost (90,249) (90,249) (90,249)
---------- ---------- ----------
Total stockholders' deficit (491,014) (176,631) (364,925)
---------- ---------- ----------
Total liabilities and stockholders' deficit $3,310,290 $2,060,528 $2,290,289
========== ========== ==========
</TABLE>
The accompanying notes to financial statements are an integral part of these
balance sheets.
<PAGE>
MEDICAL EDUCATION SYSTEMS, INC.
-------------------------------
STATEMENTS OF OPERATIONS
------------------------
FOR THE THREE MONTHS ENDED MARCH 31, 1998 AND 1997 (UNAUDITED)
--------------------------------------------------------------
AND FOR THE YEARS ENDED DECEMBER 31, 1997 AND 1996
--------------------------------------------------
<TABLE>
<CAPTION>
THREE MONTHS
ENDED MARCH 31, YEARS ENDED DECEMBER 31,
--------------------------- --------------------------
1998 1997 1997 1996
----------- ----------- ------------ -----------
(UNAUDITED)
<S> <C> <C> <C> <C>
CONTRACT REVENUE $1,962,357 $3,845,169 $15,786,257 $8,525,520
COST OF CONTRACT REVENUE 1,018,865 2,138,528 7,939,942 4,354,309
----------- ---------- ----------- ----------
Gross profit 943,492 1,706,641 7,846,315 4,171,211
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES 1,259,516 1,461,435 7,685,242 4,042,078
----------- ---------- ----------- ----------
Income (loss) from operations (316,024) 245,206 161,073 129,133
----------- ---------- ----------- ----------
OTHER INCOME (EXPENSE):
Interest income 3,096 7,620 34,212 26,381
Interest expense (1,455) (1,870) (6,991) (8,140)
----------- ---------- ----------- ----------
1,641 5,750 27,221 18,241
----------- ---------- ----------- ----------
Net income (loss) $ (314,383) $ 250,956 $ 188,294 $ 147,374
=========== ========== =========== ==========
</TABLE>
The accompanying notes to financial statements are an integral part of these
statements.
<PAGE>
MEDICAL EDUCATION SYSTEMS, INC
------------------------------
STATEMENTS OF STOCKHOLDERS' DEFICIT
-----------------------------------
FOR THE THREE MONTHS ENDED MARCH 31, 1998 (UNAUDITED)
-----------------------------------------------------
AND FOR THE YEARS ENDED DECEMBER 31, 1997 AND 1996
--------------------------------------------------
<TABLE>
<CAPTION>
Common Stock Treasury Stock
---------------------- -----------------------
Number of Additional Retained Earnings Number of
Shares Amount Paid-In Capital (Deficit) Shares Amount Total
---------- --------- ----------------- ----------------- ----------- --------- ---------
<S> <C> <C> <C> <C> <C> <C> <C>
BALANCE, December 31, 1995 935 $935 $114,765 $ 153,492 110 ($24,249) $244,943
Net Income 0 0 0 147,374 0 0 147,374
Distributions 0 0 0 (691,242) 0 0 (691,242)
Treasury stock purchase 0 0 0 0 120 (66,000) (66,000)
---- ---- -------- --------- ---- -------- ---------
BALANCE, December 31, 1996 935 935 114,765 (390,376) 230 (90,249) (364,925)
Net income 0 0 0 188,294 0 0 188,294
---- ---- -------- --------- ---- -------- ---------
BALANCE, December 31, 1997 935 935 114,765 (202,082) 230 (90,249) (176,631)
Net loss 0 0 0 (314,383) 0 0 (314,383)
---- ---- -------- --------- ---- -------- ---------
BALANCE, March 31, 1998
(unaudited) 935 $935 $114,765 ($516,465) 230 ($90,249) ($491,014)
==== ==== ======== ========= ==== ======== =========
</TABLE>
The accompanying notes to financial statements are an integral part of these
statements.
<PAGE>
MEDICAL EDUCATION SYSTEMS, INC.
------------------------------
STATEMENTS OF CASH FLOWS
------------------------
FOR THE THREE MONTHS ENDED MARCH 31, 1998 AND 1997 (UNAUDITED) AND
------------------------------------------------------------------
FOR THE YEARS ENDED DECEMBER 31, 1997 AND 1996
----------------------------------------------
<TABLE>
<CAPTION>
THREE MONTHS ENDED MARCH 31, YEARS ENDING DECEMBER 31,
----------------------------- -----------------------------
1998 1997 1997 1996
------------ ------------ ------------ ------------
(UNAUDITED)
<S> <C> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income ($314,383) $ 250,956 $188,294 $147,374
Adjustments to reconcile net income (loss) to net
cash provided by (used in) operating activities-
Depreciation and amortization 22,762 12,785 81,109 51,082
Changes in operating assets and liabilities-
(Increase) decrease in accounts receivable (933,130) (1,321,006) 218,607 124,536
Decrease (increase) in other assets (4,347) (78) 1,392 (7,446)
Collections of note receivable 0 70,317 70,317 2,113
(Increase) decrease in costs in excess of billings (13,494) (301,189) (120,800) 42,062
Increase in prepaid expenses (3,421) (102,796) (7,328) (5,520)
Increase (decrease) in accounts payable and
accrued liabilities 12,709 (138,127) 34,817 (103,018)
(Decrease) increase in billings in excess of costs 1,556,241 1,940,665 (434,210) 1,185,190
---------- ---------- ---------- ----------
Net cash provided by (used in)
operating activities 322,937 411,527 32,198 1,436,373
---------- ---------- ---------- ----------
CASH FLOWS FROM INVESTING ACTIVITIES- -
Purchases of property and equipment (20,855) (67,571) (125,923) (105,492)
---------- ---------- ---------- ----------
CASH FLOWS FROM FINANCING ACTIVITIES:
Stockholders' loans 0 0 0 9,092
Proceeds from long-term debt 0 0 0 50,000
Repayment of bank note 0 0 0 (110,000)
Repayment of long-term debt (4,805) (4,604) (18,662) (14,096)
Stockholder distributions 0 0 0 (691,242)
Treasury stock purchase 0 0 0 (66,000)
---------- ---------- ---------- ----------
Net cash used in financing activities (4,805) (4,604) (18,662) (822,246)
---------- ---------- ---------- ----------
Net (decrease) increase in cash and cash
equivalents 297,277 339,352 (112,387) 508,635
CASH AND CASH EQUIVALENTS, beginning of period 1,056,216 1,168,603 1,168,603 659,968
---------- ---------- ---------- ----------
CASH AND CASH EQUIVALENTS, end of period $1,353,493 $1,507,955 $1,056,216 $1,168,603
========== ========== ========== ==========
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:
Cash paid during the period for interest $1,755 $1,937 $7,135 $8,808
========== ========== ========== ==========
</TABLE>
The accompanying notes to financial statements are an integral part of
these statements.
<PAGE>
MEDICAL EDUCATION SYSTEMS, INC.
-------------------------------
NOTES TO FINANCIAL STATEMENTS
-----------------------------
(1) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:
-------------------------------------------
Description of Business-
------------------------
Medical Education Systems, Inc. (the "Company") provides healthcare,
research, educational and training services. The Company extends credit
in the normal course of business to its customers, which consist
principally of pharmaceutical companies.
Unaudited Interim Financial Information-
----------------------------------------
The accompanying financial statements are unaudited and have been
prepared in accordance with generally accepted accounting principles.
The foregoing financial information reflects all adjustments which are,
in the opinion of management, necessary for a fair presentation of the
results for the periods presented. All such adjustments are of a
normal, recurring nature. These results, however, are not necessarily
indicative of the results to be expected for the full fiscal year.
Cash and Cash Equivalents-
--------------------------
The Company considers all money market accounts and investment
instruments purchased with an original maturity of three months or less
to be cash equivalents.
The Company maintains its cash in bank deposit accounts and a brokerage
account, which at times may exceed Federally insured limits. The
Company has not experienced any losses in such accounts.
Property and Equipment-
-----------------------
Property and equipment are stated at cost. Depreciation and
amortization are provided by the use of the straight-line method over
the estimated useful lives of the related assets, generally a five to
seven year period.
Revenue Recognition-
--------------------
Revenue is recognized as services are performed. For conferencing
services, revenue is recognized upon completion of the meeting or
symposia. Revenue for multiple-meeting projects is attributed to
individual meetings, based on an average amount per meeting, and is
recognized as individual meetings are completed. Revenues for product
marketing services is recognized in the period contractual benchmarks
are achieved and confirmed by the client.
Customers are invoiced according to agreed-upon billing terms. Items
which are invoiced prior to performance of the related services are
recorded as billings in excess of costs and are not recognized as
revenue until the required service is provided, in accordance with the
Company's revenue recognition policy.
Income Taxes-
-------------
The Company has elected S Corporation status for Federal and state
income tax purposes. Consequently, taxable income flows through and is
taxed to the stockholders on their individual tax returns. Accordingly,
no provision for Federal and state income taxes is included in the
accompanying financial statements.
<PAGE>
Use of Estimates-
-----------------
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates
and assumptions that affect certain reported amounts and disclosures.
While actual results could differ from those estimates, management
believes that the estimates are reasonable.
(2) NOTE RECEIVABLE:
----------------
In connection with the sale of the Company's previously owned building,
the Company received a mortgage note in the amount of $75,000, payable in
35 equal payments of $627, including interest at 8% and a final payment
of $70,466 in April 1997.
(3) REVOLVING CREDIT FACILITY:
--------------------------
During 1995, the Company entered into a borrowing agreement with a bank.
As of December 31, 1996, the agreement provided for maximum borrowings of
$200,000 due on demand, with monthly interest payments calculated at
prime plus 1%.
The borrowing agreement was amended and restated in June 1997. The
amended and restated agreement provides for maximum borrowings of
$500,000, principal due on demand, with monthly interest payments
calculated at the prime rate.
There were no borrowings outstanding as of March 31, 1998, December 31,
1997 and 1996.
Available borrowings are calculated based upon a percentage of eligible
accounts receivable. As of December 31, 1997, the Company had
approximately $355,000 available for borrowings under the revolving
credit facility.
Borrowings are collateralized by substantially all corporate assets and
the personal guarantee of a stockholder.
(4) LONG-TERM DEBT:
---------------
Long-term debt consists of the following-
<TABLE>
<CAPTION>
March 31, December 31,
----------- -----------------------
1998 1997 1996
(UNAUDITED)
----------- -------- --------
<S> <C> <C> <C>
Note payable in monthly installments of $833 plus interest at
the bank's prime rate plus 1%; final payment due November 2000;
collateralized by substantially all corporate assets and the
personal guarantee of a stockholder $26,667 $29,167 $39,167
Note payable in monthly installments of $1,041 including
interest at 9%; final payment due June 2001; collateralized
by substantially all corporate assets and the personal
guarantee of a stockholder 34,937 37,242 45,904
------- ------- -------
61,604 66,409 85,071
Less - Current portion 19,744 19,528 18,703
------- ------- -------
$41,860 $46,881 $66,368
======= ======= =======
</TABLE>
<PAGE>
Aggregate annual maturities are as follows-
Year ending December 31-
1998 $19,528
1999 20,432
2000 20,578
2001 5,871
-------
$66,409
=======
(5) COMMITMENTS AND CONTINGENCIES:
------------------------------
Operating Leases-
-----------------
The Company leases office space under two noncancellable leases which
expire in 2002 and 2008.
Future minimum lease payments as of December 31, 1997 are as follows-
Year ending December 31-
1998 $ 225,000
1999 230,000
2000 235,000
2001 244,000
2002 240,000
Thereafter 1,139,000
----------
$2,313,000
==========
Total rent expense aggregated $31,486, $22,555, $129,811 and $85,785
for the three months ended March 31, 1998 and 1997 and the years ended
December 31, 1997 and 1996, respectively, and is included in general
and administrative expenses.
Litigation-
-----------
The Company, from time to time, is involved in legal proceedings
incurred in the normal course of business. The Company believes none of
these proceedings will have a material adverse effect on the financial
condition or liquidity of the Company.
(6) PURCHASE OF TREASURY STOCK:
--------------------------
In January 1996, the Company entered into stock redemption agreements
with two minority stockholders ("stockholders") to purchase 120 shares
(60 from each shareholder) at a total cost of $66,000.
The Company also entered into one year consulting agreements with each
stockholder, commencing on January 1, 1996. Under these agreements, each
stockholder received $100,000 in 1996.
<PAGE>
(7) RETIREMENT PLAN:
---------------
The Company has a 401(k) plan covering substantially all employees. The
maximum allowable employee contribution is based upon applicable Internal
Revenue Service regulations. Employer contributions are funded annually and
are at the sole discretion of the Board of Directors. Employer
contributions to the plan were $69,291 and $53,641 for the years ended
December 31, 1997 and 1996, respectively.
(8) SUBSEQUENT EVENT (UNAUDITED):
----------------------------
In May 1998, substantially all of the assets and certain liabilities of the
Company were acquired by Boron LaPore & Associates, Inc. The purchase price
is $10,000,000 in cash and 160,103 shares of common stock of BLP. In
addition, BLP may be required to pay up to $10,000,000 in contingent cash
payments based on certain operating income goals of the acquired business
during the twelve-month period subsequent to the acquisition date. The
acquisition will be accounted for using the purchase method of accounting.
<PAGE>
(b) Pro Forma Financial Information
(i) Report of Independent Public Accountants.
(ii) Pro Forma Condensed Balance Sheet as of March 31, 1998.
(iii) Related Pro Forma Statements of Income for the three months
ended March 31, 1998 and the year ended December 31, 1997.
(iv) Notes to the Unaudited Pro Forma Condensed Financial Statements.
UNAUDITED PRO FORMA CONDENSED FINANCIAL STATEMENTS
The following unaudited pro forma condensed financial statements give
effect to the acquisition of Medical Education Systems, Inc. (MES) by Boron,
LePore & Associates, Inc. (BLP) (the Transaction). These pro forma financial
statements are presented for illustrative purposes only, and therefore are not
necessarily indicative of the operating results and financial position that
might have been achieved had the Transaction occurred on an earlier date, nor
are they necessarily indicative of operating results and financial position
which may occur in the future.
The condensed historical financial statements of operations for the periods
presented are derived from the historical financial statements of BLP and MES.
These condensed financial statements should be read in conjunction with the BLP
December 31, 1997 Annual Report on Form 10-K and the quarterly report as of
March 31, 1998 on Form 10-Q in addition to the historical financial statements
of MES, attached hereto. The historical financial statements as of March 31,
1998 and for the three months ended March 31, 1997 and 1998 have been prepared
in accordance with generally accepted accounting principles applicable to
interim financial information and, in the opinion of BLP's and MES's management,
includes all adjustments necessary for a fair presentation of information for
such periods.
A pro forma condensed balance sheet is provided as of March 31, 1998 giving
effect to the Transaction as though it had been consummated on that date. Pro
forma condensed statements of operations are provided for the three months ended
March 31, 1998 and the year ending December 31, 1997, giving effect to the
Transaction as though it had occurred at the beginning of the earliest period
presented.
<PAGE>
PRO FORMA CONDENSED BALANCE SHEET
As of March 31, 1998
<TABLE>
<CAPTION>
Historical
---------------------------------- Pro Forma combined Boron, LePore
Boron, LePore & Medical & Associates, Inc. and Medical
Associates Education Systems Pro Forma Adjustments Education Systems
--------------- ------------------ ----------------------- ---------------------------------
<S> <C> <C> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents $ 16,631,864 $ 1,353,493 $ (10,000,000) (b) $ 7,985,357
Accounts receivable, net 35,207,755 1,536,203 36,743,958
Prepaid expense and other current
assets 3,304,702 215,418 3,520,120
--------------------------------------------------------------------------------------------
Total current assets 55,144,321 3,105,114 48,249,435
Furniture, fixtures and
equipment, at cost,
net of accumulated depreciation 6,353,859 189,425 6,543,284
Intangibles 9,086,729 - $ 15,300,508 (b) 24,387,237
Other assests 185,797 15,751 201,548
----------------------------------- -----------------------------------
Total assets $ 70,770,706 $ 3,310,290 $ 79,381,504
=================================== ===================================
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
Current liabilities:
Accounts payable and accrued
expenses $ 15,692,021 $ 506,563 $ 16,198,584
Current portion of long term
debt - 19,744 19,744
Deferred revenue 13,023,926 - 13,023,926
Billings in excess of costs 629,500 3,233,137 3,862,637
-------------------------------- ----------------------------------
Total current liabilities 29,345,447 3,759,444 33,104,891
Long term debt, net of current
portion - 41,860 41,860
Deferred income taxes 2,559,000 - 2,559,000
Stockholder's equity (deficit): $ 1,601 (b)
Common stock 150,875 935 $ (935) (a) 152,476
Treasury stock (24,349,992) (90,249) $ 90,249 (a) (24,349,992)
Additional paid-in capital 68,323,819 114,765 $ 4,807,893 (a) 73,131,712
$ (114,765) (b)
Accumulated deficit (5,258,443) (516,465) $ 516,465 (a) (5,258,443)
------------- ---------------- ----------------------------------
Total stockholders' equity (deficit) 38,866,259 (491,014) 43,675,753
------------- ---------------- ----------------------------------
Total liabilities and stockholders'
equity (deficit) $ 70,770,706 $ 3,310,290 $ 79,381,504
============= =============== ==================================
</TABLE>
<PAGE>
PRO FORMA STATEMENT OF INCOME
For the three months ended March 31, 1998
<TABLE>
<CAPTION>
Historical
-------------------------------------- Pro Forma Combined Boron,
Boron, LePore & Medical Pro Forma LePore & Associates, Inc. and
Associates, Inc. Education Systems Adjustments Medical Education Systems
-------------------------------------- ----------- --------------------------------
<S> <C> <C> <C>
Revenues $ 32,153,876 $ 1,962,357 $ 34,116,233
Cost of sales 23,756,673 1,018,865 24,775,538
-------------------------------------- --------------------------------
Gross profit 8,397,203 943,492 9,340,695
Selling, general and administrative
expenses 5,780,408 1,259,516 191,196 (d) 7,231,120
-------------------------------------- --------------------------------
Operating income (loss) 2,616,795 (316,024) 2,109.575
Interest (income) expense, net (308,207) (1,640) (309,847)
-------------------------------------- --------------------------------
Income (loss) before provision
for income taxes 2,925,002 (314,384) 2,419,422
Provision for income taxes 1,050,000 - - (f) 1,050,000
-------------------------------------- --------------------------------
Net income (loss) $ 1,875,002 $ (314,384) $ 1,369,422
====================================== ================================
Earnings per share-basic $ 0.17 $ 0.13
=============== ================================
Weighted average common shares
outstanding-basic 10,769,416 160,103 (b) 10,929,519
=============== ================================
Earnings per share-diluted $ 0.17 $ 0.12
=============== ================================
Weighted average common and common
equivalent shares outstanding-diluted 11,173,588 160,103 (b) 11,333,691
=============== ================================
</TABLE>
<PAGE>
PRO FORMA CONDENSED STATEMENT OF INCOME
For the year ended 12/31/97
<TABLE>
<CAPTION>
Historical
---------------------------------------- Pro Forma Combined Boron,
Boron, Lepore & Medical Pro Forma LePore & Associates, Inc. and
Associates, Inc. Education Systems Adjustments Medical Education Systems
------------------ ----------------- ----------- ------------------------------
<S> <C> <C> <C> <C>
Revenues $ 72,907,104 $ 15,786,257 $ 88,693,361
Cost of Sales 51,579,923 7,939,942 59,519,865
--------------------------------------- -----------------------------
Gross Profit 21,327,181 7,846,315 29,173,496
Selling, general and administrative
expenses 12,443,944 7,685,242 $ 764,785(c) 20,893,971
--------------------------------------- -----------------------------
Operating income 8,883,237 161,073 8,279,525
Interest (income) expense, net 1,071,062 (27,221) 1,043,841
--------------------------------------- -----------------------------
Income before provision for
income taxes 7,812,175 188,294 7,235,684
Provision for income taxes 1,700,000 - $ 41,000(e) 1,741,000
Net income --------------------------------------- -----------------------------
$ 6,112,175 $ 188,294 $ 5,494,684
====================================== =============================
Earnings per-share - basis $ 1.07 $ 0.91
======================= =============================
Weighted average common shares
outstanding - basic 4,947,018 160,103(b) 5,107,121
======================= =============================
Earnings per share - diluted $ 0.72 0.63
======================= =============================
Weighted average common and
common equivalent shares
outstanding - diluted 8,507,293 160,103(b) 8,667,396
======================= =============================
</TABLE>
<PAGE>
NOTES TO UNAUDITED PRO FORMA CONDENSED FINANCIAL STATEMENTS
1. BASIS OF PRESENTATION
The unaudited pro forma condensed financial statements are presented for
illustrative purposes only, giving effect to the Transaction. In accordance
with SEC reporting rules, the pro forma condensed statements of operations, and
the historical statements from which they are derived, present only income from
continuing operations and, therefore, do not include discontinued operations,
extraordinary items and the cumulative effect of accounting changes, as
applicable.
The pro forma condensed balance sheets as of March 31, 1998 includes, in
accordance with SEC reporting rules, the impact of all transactions, whether of
a recurring or nonrecurring nature, that can be reasonably estimated and should
be reflected at that date.
The accompanying pro forma condensed financial statements give effect to the
acquisition of Medical Education Systems, Inc. (MES) by Boron LePore &
Associates, Inc. (BLP). The purchase price was $10 million in cash and 160,103
of common stock of BLP. In addition BLP may be required to pay up to an
additional $10 million in contingent cash payments based on certain operating
goals during the subsequent twelve month period. Such contingent payments have
been excluded from the pro forma presentation due to the uncertainty of their
payout.
2. PRO FORMA ADJUSTMENTS
The following pro forma adjustments have been made to the unaudited condensed
statements of operations and balance sheet, as applicable-
(a) - As the Transaction has been accounted for as a purchase,
entry is to eliminate the historical equity accounts of MES.
(b) - To record the purchase of MES for $10 million in cash and
160,103 shares of BLP $.01 par value common stock valued at
$30.04 per share. The resulting goodwill will be amortized
over 20 years.
(c) - To record the amortization of goodwill for the year ended
December 31, 1997.
(d) - To record the amortization of goodwill for the three
months ended March 31, 1998.
(e) - To record the pro forma tax provision for the income
generated by MES. The tax rate utilized was approximately
21.7%, BLP's effective tax rate for the year ended December
31, 1997.
(f) - No pro forma tax provision is required for the three
months ended March 31, 1998 as MES generated a net loss for
that period.
<PAGE>
(c) Exhibits
Exhibit No. Description
- ----------- -----------
2.1 Asset Purchase Agreement, dated as of May 4, 1998, by and among
Boron, LePore & Associates, Inc., Medical Education Systems,
Inc., MES Acquisition Corp. and certain stockholders
(incorporated by reference to Amendment No. 1 to the
Registrant's Registration Statement on Form S-1 filed with the
Securities and Exchange Commission on May 5, 1998
(Reg. No. 333-51101)).
23.1 Consent of Arthur Andersen LLP.
<PAGE>
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.
Dated: July 28, 1998 BORON, LePORE & ASSOCIATES INC.
By: /s/ Gregory F. Boron
-------------------------------------
Gregory F. Boron
Chief Operating Officer
<PAGE>
EXHIBIT INDEX
Exhibit No. Description
- ----------- -----------
2.1 Asset Purchase Agreement, dated as of May 4, 1998, by and among
Boron, LePore & Associates, Inc., Medical Education Systems,
Inc., MES Acquisition Corp. and certain stockholders
(incorporated by reference to Amendment No. 1 to the Boron,
LePore & Associates, Inc. Registration Statement on Form S-1
filed with the Securities and Exchange Commission on May 5, 1998
(Reg. No. 333-51101)).
23.1 Consent of Arthur Andersen LLP.
<PAGE>
EXHIBIT 23.1
[LETTERHEAD OF ARTHUR ANDERSEN LLP APPEARS HERE]
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
-----------------------------------------
As independent public accountants, we hereby consent to the incorporation
by reference in this Form 8-K/A of our report dated February 10, 1998 on the
financial statements of Boron LePore & Associates, Inc. as of December 31, 1997
included in Registration Statement File No. 333-51101. It should be noted that
we have not audited any financial statements of the company subsequent to
December 31, 1997 or performed any audit procedures subsequent to the date of
our report.
ARTHUR ANDERSEN LLP
Roseland, New Jersey
July 28, 1998
