SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
____________
FORM 8-K/A-1
CURRENT REPORT
Pursuant to Section 12 or 15(d) of
The Securities Exchange Act of 1934
Date of Report (Date of earliest event reported) December 21, 1994
-----------------
WHITMAN MEDICAL CORP.
------------------------------------------------------
(Exact name of registrant as specified in its charter)
New Jersey
----------------------------------------------
(State or other jurisdiction of incorporation)
1-13722 22-2246554
- --------------------- ----------------------------------
(Commission File No.) (IRS Employer Identification No.)
485E U.S. Highway One South, Iselin, New Jersey 08830
------------------------------------------------------
(Address of principal executive offices) (Zip Code)
(908) 636-3640
----------------------------------------------------
(Registrant's telephone number, including area code)
Item 7. Financial Statements, Pro Forma Financial
Information and Exhibits
(a) Financial Statements of Business Acquired
Sanford-Brown College, Inc. audited balance sheet as of October 31, 1994,
1993 and 1992 and the related statements of earnings, shareholder's equity
and cash flows for the years then ended.
Report of Independent Auditors. . . . . . . . . . . . . . . 3
Balance Sheet . . . . . . . . . . . . . . . . . . . . . . . 4
Statement of Earnings . . . . . . . . . . . . . . . . . . . 5
Statement of Shareholder's Equity . . . . . . . . . . . . . 6
Statement of Cash Flows . . . . . . . . . . . . . . . . . . 7
Notes to Financial Statements . . . . . . . . . . . . . . . 8
(b) Pro Forma Financial Information.
Whitman Medical Corp. and Sanford-Brown College, Inc. Unaudited Pro Forma
condensed consolidated balance sheet as of September 30,1994 and
condensed consolidated statements of operations for year ended
March 31,1994 and the six months ended September 30, 1994.
Pro Forma Financial Information (unaudited) . . . . . . . . 12
Condensed Consolidated Balance Sheets . . . . . . . . . . . 13
Condensed Consolidated Statement of Operations
for twelve months ended March 31,1994 . . . . . . . . . . . 14
2
Condensed Consolidated Statement of
Operations for six months ended September 30, 1994. . . . . 15
Notes to unaudited Pro Forma condensed Consolidated
Financial Statements. . . . . . . . . . . . . . . . . . . . 16
3
Independent Auditors' Report
The Shareholder
Sanford-Brown College, Inc.:
We have audited the accompanying balance sheet of Sanford-Brown College, Inc.
as of October 31, 1994 and 1993, and the related statements of earnings,
shareholder's equity, and cash flows for each of the years in the three-year
period ended October 31, 1994. These financial statements are the
responsibility of Sanford-Brown College, Inc.'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 Sanford-Brown College, Inc. as
of October 31, 1994 and 1993, and the results of its operations and its cash
flows for each of the years in the three-year period ended October 31, 1994 in
conformity with generally accepted accounting principles.
November 28, 1994
4
SANFORD-BROWN COLLEGE, INC.
Balance Sheet
October 31, 1994 and 1993
<TABLE>
<CAPTION>
Assets 1994 1993
- ------ ---- ----
<S> <C> <C>
Current assets:
Cash and cash equivalents $ 669,436 298,285
Restricted cash 237,342 -
Perkins Loan program cash 15,613 -
Accounts receivable - students, less allowance
for doubtful accounts of $1,000,051 and $822,751,
respectively 5,331,094 6,253,974
Inventory 101,881 66,439
Receivable from shareholder 50,000 88,439
Prepaid and other current assets 318,802 270,707
---------- ---------
Total current assets 6,724,168 6,977,844
Property and equipment, net of accumulated deprecia-
tion and amortization of $1,228,611 and $945,179,
respectively 1,651,092 1,755,029
Student loans 394,268 421,083
Accounts receivable - students, less current portion - 102,264
----------- ---------
$ 8,769,528 9,256,220
=========== =========
Liabilities and Shareholder's Equity
Current liabilities:
Accounts payable 731,520 598,651
Accrued expenses 397,870 461,812
Accrued management fees 25,000 25,000
Unearned tuition 4,866,488 5,454,287
---------- ---------
Total current liabilities 6,020,878 6,539,750
Unearned tuition, less current portion - 88,200
Due to U.S. government 423,995 476,630
---------- ---------
6,444,873 7,104,580
---------- ---------
Shareholder's equity:
Common stock, $1 par value, 30,000 shares authorized,
15,000 shares issued and outstanding 15,000 15,000
Retained earnings 2,309,655 2,136,640
---------- ---------
Total shareholder's equity 2,324,655 2,151,640
---------- ---------
$ 8,769,528 9,256,220
=========== =========
</TABLE>
See accompanying notes to financial statements.
5
SANFORD-BROWN COLLEGE, INC.
Statements of Earnings
Years ended October 31, 1994, 1993, and 1992
<TABLE>
<CAPTION>
1994 1993 1992
---- ---- ----
<S> <C> <C> <C>
Revenues:
Tuition $ 12,848,955 10,925,372 7,557,976
Registration and activities fees 468,232 444,696 387,760
Bookstore operations, net 198,131 184,628 125,538
------------ ---------- ---------
13,515,318 11,554,696 8,071,274
------------ ---------- ---------
Operating expenses:
Instructional 3,168,785 2,427,619 1,657,049
Student recruitment 2,125,556 2,051,303 1,833,612
Administrative 2,443,493 1,837,229 1,381,166
Occupancy 1,047,632 1,024,566 825,816
Financial assistance 225,490 193,583 166,980
Management fees 300,000 300,000 300,000
Student personnel services 270,496 215,383 107,975
Corporate expenses 2,274,181 1,811,863 1,275,813
Depreciation and amortization 283,431 144,295 129,384
------------ --------- ---------
12,139,064 10,005,841 7,677,795
------------ --------- ---------
Income from operations 1,376,254 1,548,855 393,479
------------ --------- ---------
Other income (expense):
Interest income 20,979 22,221 53,615
Interest expense (18) (300) (7,451)
Other (24,200) 24,711 (104,923)
------------ --------- ---------
(3,239) 46,632 (58,759)
------------ --------- ---------
Net income $ 1,373,015 1,595,487 334,720
============ ========= =========
</TABLE>
See accompanying notes to financial statements.
6
SANFORD-BROWN COLLEGE, INC.
Statements of Shareholder's Equity
Years ended October 31, 1994, 1993, and 1992
<TABLE>
<CAPTION>
Total
Common Retained shareholder's
stock earnings equity
------ -------- -------------
<S> <C> <C> <C>
Balance at October 31, 1991 $ 15,000 1,381,433 1,396,433
Dividend to shareholder - (350,000) (350,000)
Net income - 334,720 334,720
-------- --------- ---------
Balance at October 31, 1992 15,000 1,366,153 1,381,153
Dividend to shareholder - (825,000) (825,000)
Net income - 1,595,487 1,595,487
-------- --------- ---------
Balance at October 31, 1993 15,000 2,136,640 2,151,640
Dividend to shareholder - (1,200,000) (1,200,000)
Net income - 1,373,015 1,373,015
-------- --------- ---------
Balance at October 31, 1994 $ 15,000 2,309,655 2,324,655
======== ========= =========
</TABLE>
See accompanying notes to financial statements.
7
SANFORD-BROWN COLLEGE, INC.
Statements of Cash Flows
Years ended October 31, 1994, 1993, and 1992
<TABLE>
<CAPTION>
1994 1993 1992
---- ---- ----
<S> <C> <C> <C>
Cash flows from operating activities:
Net income $ 1,373,015 1,595,487 334,720
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation and amortization 283,431 144,295 129,384
Amortization of deferred charges - 92,903 104,489
Loss on disposal of property and equipment 35,000 - 592
Provision for credit losses 1,486,116 952,605 714,398
Increase (decrease) in cash from changes in
working capital:
Accounts receivable - students, net (434,156) (2,675,270) (2,393,046)
Inventory (35,442) (23,795) (8,765)
Prepaid and other current assets (48,095) (38,992) (162,604)
Accounts payable 132,869 (92,025) 413,924
Accrued expenses (63,943) 244,951 71,710
Accrued management fees - - 25,000
Unearned tuition (675,999) 384,219 1,617,677
Other, net (52,635) (68,729) (122,256)
----------- ------- ----------
627,146 (1,079,838) 390,503
----------- ------- ----------
Net cash provided by operating
activities 2,000,161 515,649 725,223
----------- ------- ----------
Cash flows from investing activities:
Purchases of property and equipment (214,494) (601,388) (276,529)
Proceeds from the sale of property and equipment - 46,100 5,403
----------- ------- ----------
Net cash used in investing
activities (214,494) (555,288) (271,126)
----------- ------- ----------
Cash flows from financing activities:
Repayments of note payable - - (138,000)
Net decrease (increase) in notes receivable from
shareholder 38,439 294,994 (306,889)
Repayments of note payable to shareholder - (20,000) (60,000)
Dividend to shareholder (1,200,000) (825,000) (350,000)
----------- ------- ----------
Net cash used in financing
activities (1,161,561) (550,006) (854,889)
----------- ------- ----------
Net increase (decrease) in cash
and cash equivalents 624,106 (589,645) (400,792)
Cash and cash equivalents, beginning of year 298,285 887,930 1,288,722
----------- ------- ----------
Cash and cash equivalents, end of year $ 922,391 298,285 887,930
=========== ======== =========
Supplemental disclosure of cash flow information -
cash paid during the year for interest $ 18 (300) (7,451)
=========== ======== =========
</TABLE>
See accompanying notes to financial statements.
8
SANFORD-BROWN COLLEGE, INC.
Notes to Financial Statements
October 31, 1994 and 1993
(1) Summary of Significant Accounting Policies
The accounting and financial reporting policies of Sanford-Brown
College, Inc. (the College) conform to generally accepted accounting
principles. The following summarizes the significant policies:
Organization
The College is a proprietary school which offers a wide variety of
business and health care educational programs.
The College has elected to be taxed as a small business corporation
pursuant to Subchapter S of the Internal Revenue Code. Under this election,
the College does not provide for income taxes. Rather, the items of income and
expense are deemed distributed to the shareholder and will be taxable at the
shareholder level.
Cash Restricted for Student Refunds
Cash invested in U.S. government securities is restricted for payment
of Title IV student refunds, as required by the Department of Education (ED).
While the funds are immediately available for refunds, they are invested and
are treated as cash equivalents.
Accounts Receivable and Unearned Tuition
Upon enrollment by a student, the College records accounts receivable
for the academic year with a comparable entry to unearned tuition. The
accounts receivable balance is reduced as cash payments are received. Unearned
tuition is reduced and recognized as income on a straight-line basis over the
length of the course being attended by the student.
Allowance for Doubtful Accounts
For financial statement purposes, the College accounts for
uncollectible receivables under the allowance method.
Inventory
Inventory is stated at the lower of cost (first-in, first-out method)
or market value.
Property and Equipment
Property and equipment are stated at cost, less accumulated
depreciation. Expenditures for maintenance and repairs, which do not add to
the value of the related assets or materially extend their original lives, are
expensed as incurred.
Depreciation of property and equipment is calculated using accelerated
and straight-line methods over the estimated useful lives of the assets ranging
from 5 to 31.5 years. Leasehold improvements are amortized over the term of
the related leases, which approximates the estimated useful lives.
9
SANFORD-BROWN COLLEGE, INC.
Notes to Financial Statements
October 31, 1994 and 1993
Statement of Cash Flows
For purposes of the statement of cash flows, the College considers all
highly liquid debt instruments with a maturity of three months or less at the
time of purchase to be cash equivalents.
Regulatory Authority
As an educational institution, the College is subject to licensure and
other regulatory requirements of the ED and various state authorities. The
College monitors its performance and believes that it is in compliance with
appropriate laws and regulations governing its operations.
(2) Property and Equipment
A summary of property and equipment at October 31, 1994 and 1993 is as
follows:
Years 1994
1993
----- ----
- ----
Land - $ 50,000
50,000
Building 31-1/2 575,000
575,000
Furniture and equipment 5-7 1,140,950
957,853
Leasehold improvements 5-7 1,049,989
1,038,603
Software 5 63,764
78,752
====== ---------
- ---------
2,879,703
2,700,208
Less accumulated depreciation
and amortization 1,228,611
945,179
-----------
- ----------
$ 1,651,092
1,755,029
===========
=========
(3) Leases
The College leases certain campus buildings and equipment under various
operating lease agreements. Certain buildings and equipment are leased from
the sole shareholder. Future minimum lease payments at October 31, 1994 are as
follows:
Amount
------
Year ended October 31:
1995 $
629,801
1996
192,928
1997
115,818
1998
110,556
1999
79,328
Thereafter
9,450
- -----------
$
1,137,881
===========
Total rent expense for all operating leases was $647,361, $709,849, and
$514,471 in 1994, 1993, and 1992, respectively. Of these amounts, $341,784,
$321,348, and $315,171 represent rentals paid to the sole shareholder in 1994,
1993, and 1992, respectively.
10
SANFORD-BROWN COLLEGE, INC.
Notes to Financial Statements
October 31, 1994 and 1993
(4) Receivable From Shareholder
At October 31, 1993, the receivable from shareholder consisted of a
demand note with an imputed interest rate of 6% annually and a October 31, 2011
maturity.
(5) Related Party Transactions
Management and consulting fees paid to JLC Consulting, a related party,
totaled $300,000 and $120,000, respectively for the year ended October 31,
1994. Management fees paid to JLC Consulting, a related party, totaled
$300,000 for the fiscal years ended October 31, 1993 and 1992.
(6) Student Loans
The College participates in the U.S. Department of Education (ED)
Perkins Loan program, which makes funds available for low-interest loans to
qualified students in need of financial assistance to pursue a course of study
on at least a half-time basis. The College is required to contribute a portion
of the total loan amount disbursed to students by ED pursuant to the
regulations governing these funds. The College's cumulative contribution under
this program is approximately $41,000.
The College has recognized the cumulative outstanding student loans
under this program as an asset on its balance sheet. The College, at its
option, has the funds advanced by the ED administered by an independent third-
party servicer who is responsible for the servicing and collection of payments
from student loans under the program. The internal controls of this third-
party servicer are reviewed each year by an independent accountant who reports
on the overall effectiveness of the controls over Perkins Loan program funds.
Had the College elected not to have the third-party servicer administer these
funds, the student receivables would be serviced and collected by the College.
The College has reported amounts advanced by the ED under the Perkins
Loan program as a liability on its balanced sheet for several years. The
primary reason for this accounting treatment is to recognize the College's
obligation to the U.S. government for funds under this program which the
College is ultimately responsible to remit if it ceases to exist or stops
making loans available to students.
(7) 401(k) Program
The College has established an employees' 401(k) plan for the benefit
of substantially all employees. The College has received a favorable tax
determination letter approving the plan under Section 401(k) of the Internal
Revenue Code. The College may also make discretionary contributions to the
plan and for the 1994 and 1993 calendar years elected to match 50% of employee
contributions up to 4% of an employee's salary. Contributions by the College
in fiscal years 1994 and 1993 totaled $33,228 and $32,671, respectively.
11
SANFORD-BROWN COLLEGE, INC.
Notes to Financial Statements
October 31, 1994 and 1993
(8) Commitments and Contingent Liabilities
During the normal course of business, various legal claims have arisen
which, in the opinion of management after
discussion with legal counsel, will not result in any material liability to the
College.
The College participates in various Student Financial Aid (SFA)
programs. These programs are subject to
retrospective periodic review by the ED. Disbursements under each program are
subject to disallowance and repayment by the College.
(9) Subsequent Event
On November 28, 1994, the shareholder entered into an agreement with a
strategic buyer to sell substantially all net
assets of the College for cash and common stock of the buyer. Subject to
satisfactory completion of due diligence by the buyer and compliance by the
seller with the specific terms of the agreement, the transaction is expected to
close during December 1994.
12
<PAGE>
WHITMAN MEDICAL CORP.
PRO FORMA FINANCIAL INFORMATION (Unaudited)
The following unaudited pro forma condensed consolidated financial
information gives effect to the December 21, 1994 acquisition of all of the
assets and assumption of certain liabilities of Sanford-Brown College Inc. by
Whitman Medical Corp. The pro forma information is based on the historical
financial statements of Sanford-Brown College Inc. and Whitman Medical Corp.
giving effect to the transaction under the purchase method of accounting and
the assumptions and adjustments in the accompanying notes to the pro forma
financial statements.
The unaudited pro forma condensed consolidated balance sheet combines
Sanford-Brown College Inc. as of September 30, 1994 with Whitman Medical Corp.
as of September 30, 1994. The unaudited pro forma condensed consolidated
statements of operations for the year ended March 31, 1994 and the six months
ended September 30, 1994 have been prepared assuming the acquisition of
Sanford-Brown College Inc. had taken place on April 1, 1993 and April 1, 1994
respectively. These pro forma statements may not be indicative of the results
that actually would have occurred if the combination had been in effect on the
dates indicated or which may be obtained in the future.
13
<PAGE>
Whitman Medical Corp.
Condensed Consolidated Balance Sheets
September 30, 1994
Unaudited Pro Forma
<TABLE>
<CAPTION>
Whitman
Historical Condensed
Whitman SBC Adjustments/ Consolidated
9/30/94 9/30/94 Eliminations at 9/30/94
------- ------- ------------ -------------
<S> <C> <C> <C> <C>
Assets
Current Assets: $1,044,425 $604,257 $125,000 (5,7) $1,773,682
Cash and cash equivalents
Accounts Receivable less allowance for
doubtful accounts 6,585,792 4,883,835 11,469,627
Other current assets 149,376 440,577 (50,000) (7) 539,953
---------- ---------- ---------- ----------
Total current assets 7,779,593 5,928,669 75,000 13,783,262
Equipment and leasehold improvements
cost less accumulated depreciation
and amortization 2,023,295 1,699,437 (560,000) (12) 3,162,732
Marketable securities 585,000 585,000
Deferred costs net of accumulated
amortization 341,835 25,000 (1) 366,835
Patents net of accumulated amortization 29,243 29,243
Deposits and other assets 213,389 213,389
Goodwill net of accumulated amortization 71,574 2,300,520 (6) 2,372,094
Cash - restricted 2,400,000 (2) 2,400,000
Noncurrent assets 166,680 166,680
------------ ---------- ---------- ----------
Total Assets $11,043,929 $7,794,786 $4,240,520 $23,079,235
</TABLE>
See notes to condensed consolidated unaudited pro forma financial statements
14
<PAGE>
Whitman Medical Corp.
Condensed Consolidated Balance Sheets - Continued
September 30, 1994
Unaudited Pro Forma
<TABLE>
<CAPTION>
Whitman
Historical Condensed
Whitman SBC Adjustments/ Consolidated
9/30/94 9/30/94 Eliminations at 9/30/94
------- ------- ------------ ------------
<S> <C> <C> <C> <C>
Liabilities and stockholders' equity
Current Liabilities:
Accounts payable $112,835 $500,644 $613,479
Accrued expenses 243,839 352,794 100,000 (4) 696,633
Income taxes payable 101,424 7,878 109,302
Current portion of capitalized
lease obligations 221,161 221,161
Deferred revenue 4,292,978 4,573,990 8,866,968
------------ ---------- ----------- -----------
Total current liabilities 4,972,237 5,435,306 100,000 10,507,543
Long-term debt 6,000,000 (1) 6,000,000
Capitalized lease obligations 1,412,293 1,412,293
Stockholders' equity:
Common stock 5,505,936 15,000 485,000 (3) 6,005,936
Retained earnings (48,537) 2,344,480 (2,344,480) (3) (48,537)
Treasury stock (430,500) (430,500)
Net unrealized loss on noncurrent
marketable securities (367,500) (367,500)
------------ ---------- ----------- -----------
Total stockholder's equity 4,659,399 2,359,480 (1,859,480) 5,159,399
Total Liabilities and Stockholder's Equity $11,043,929 $7,794,786 $4,240,520 $23,079,235
</TABLE>
See notes to condensed consolidated unaudited pro forma financial statements
15
<PAGE>
Whitman Medical Corp.
Condensed Consolidated Statements of Operations
For the twelve months ended March 31, 1994
Unaudited Pro Forma
<TABLE>
<CAPTION>
Whitman
Historical Condensed
Whitman SBC Consolidated
twelve months twelve months Adjustments/ twelve months
ended 3/31/94 ended 3/31/94 Eliminations ended 3/31/94
------------- ------------- ------------ -------------
<S> <C> <C> <C> <C>
Revenues
Tuition $6,158,203 $12,698,498 $18,856,701
Other educational 1,197,168 1,197,168
Interest and other income 58,335 184,910 243,245
------------ ------------ ------------
Total revenues 6,216,538 14,080,576 20,297,114
Costs and expenses
Cost of educational services 3,123,092 6,408,486 9,531,578
Student and administrative services 2,719,864 5,600,592 76,300 (9) 8,396,756
Interest expense 79,627 18 210,000 (8) 289,645
------------ ------------ ------------ ------------
Total costs and expenses 5,922,583 12,009,096 286,300 18,217,979
Income (loss) before taxes 293,955 2,071,480 (286,300) 2,079,135
Income taxes 80,394 2,849 589,435 (10) 672,678
------------ ---------- ---------- ----------
Net income (loss) $213,561 $2,068,631 (875,735) $1,406,457
============ ========== =========== ==========
Net (loss) income per share of
common stock $0.06 $0.36
============ =========
Average number of common and common
equivalent shares outstanding 3,645,886 303,885 (11) 3,949,771
============ ========== ==========
</TABLE>
See notes to condensed consolidated unaudited pro forma financial statements
16
<PAGE>
Whitman Medical Corp.
Condensed Consolidated Statements of Operations
For the six months ended September 30, 1994
Unaudited Pro Forma
<TABLE>
<CAPTION>
Whitman
Historical Condensed
Whitman SBC Consolidated
six months six months Adjustments/ six months
ended 9/30/94 ended 9/30/94 Eliminations ended 9/30/94
------------- ------------- ------------ --------------
<S> <C> <C> <C> <C>
Revenues
Tuition $3,401,432 $6,675,527 $10,076,959
Other educational 98,474 607,481 705,955
Interest and other income 24,428 92,021 116,449
------------ ------------ ------------
Total revenues 3,524,334 7,375,029 10,899,363
Costs and expenses
Cost of educational services 2,039,999 3,527,406 5,567,405
Student and administrative services 1,466,659 3,373,151 38,100 (9) 4,877,910
Interest expense 46,578 135,000 (8) 181,578
------------ ------------ ------------ ------------
Total costs and expenses 3,553,236 6,900,557 173,100 10,626,893
Income (loss) before taxes (28,902) 474,472 (173,100) 272,470
Income taxes 49,632 5,190 69,458 (10) 124,280
------------ ---------- ---------- ----------
Net income (loss) ($78,534) $469,282 (242,558) $148,190
============= ========== =========== ==========
Net (loss) income per share of
common stock ($0.02) $0.04
============= ==========
Average number of common and common
equivalent shares outstanding 3,493,802 98,232 (11) 3,592,034
============= ========== ==========
</TABLE>
See notes to condensed consolidated unaudited pro forma financial statements
17
<PAGE>
WHITMAN MEDICAL CORP.
NOTES TO UNAUDITED PRO FORMA CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
On December 21, 1994, the Company completed the purchase of Sanford-Brown
College, a privately held proprietary business and allied health care college.
Sanford-Brown was acquired for $4 million in cash and common stock and a
contingent consideration of $5 million in cash and stock held in escrow.
The acquisition has been accounted for as a purchase, and the net assets and
results of operations are included in the Company's Consolidated Financial
Statements. The purchase price has been allocated to the assets and liabilities
of Sanford-Brown based on their relative fair market value which approximated
their net book value. The purchase price and expenses associated with the
acquisition exceeded the fair value of Sanford-Brown's net assets by
approximately $2.4 million which has been assigned to goodwill.
Based on the terms of the escrow agreement, upon the occurrence of certain
events, the escrow agent will disburse cash and stock to either the seller or
the Company. If and when the cash and stock in escrow are released to the
seller, their value will be accounted for as an increase in goodwill.
The following unaudited pro-forma information combines the consolidated results
of operations of the Company and Sanford-Brown as if the acquisition had
occurred on March 31, 1994, after giving effect to amortization of goodwill and
increased interest expense on average long-term borrowings to finance the
acquisition. The pro forma information is not necessarily indicative of the
results of operations which would have actually been obtained during such
periods.
For the six months ended September 30,1994 and the year ended March 31, 1994
(1) Reflects increase in indebtedness to finance the acquisition of
Sanford-Brown College, Inc. by Whitman Medical Corp. and deferral of related
financing fees.
18
(2) Reflects cash portion of contingent purchase price being held in
escrow.
(3) Reflects elimination of Sanford-Brown's equity accounts, net
of additional Whitman stock issued in conjunction with the acquisition:
Additional stock issued $ 500,000
Eliminate Sanford-Brown stock (15,000)
---------
$485,000
(4) Reflects accrual for direct acquisition expenses.
(5) Reflects cash received from lender in excess of cash paid to seller
and held in escrow:
Financing proceeds received $5,975,000
Cash paid to seller (3,500,000)
Cash held in escrow (2,400,000)
-----------
$ 75,000
(6) To record goodwill on acquisition of Sanford-Brown as excess of
purchase price over fair value of assets acquired and liabilities assumed,
net of direct acquisition costs accrued. The Company amortizes the goodwill
associated with the acquisition of Sanford-Brown College using the straight-
line method, over a forty year period.
(7) Reflects collection of receivable from shareholder in conjunction
with the closing.
(8) Estimate for additional interest expense on the assumed average
outstanding acquisition loan balances at prime rate minus 1/2% (actual interest
rate on the SBC acquisition loan).
(9) Reflects amortization expense on deferred financing fees and
goodwill.
(10) Reflects pro forma tax expense attributable to Sanford-Brown's
income under provisions of FAS 109, net of acquisition entries. Sanford-Brown
was treated historically as an S-Corp for federal income tax purposes.
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(11) Reflects issuance of 98,232 shares of Whitman common stock in
conjunction with the purchase plus the dilutive effect of warrants issued in
conjunction with obtaining financing for the year ended March 31, 1994.
(12) Reflects elimination of historical cost of Sanford-Brown assets not
acquired by Whitman.
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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.
WHITMAN MEDICAL CORP.
Dated: January 19, 1996 By: /s/ Randy S. Proto
-----------------------
Randy S. Proto
President
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