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Previous: SMITH INTERNATIONAL INC, 10-Q, 1996-05-15 |
Next: NOBEL EDUCATION DYNAMICS INC, S-3, 1996-05-15 |
<PAGE>
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-KA
AMENDMENT NO.3 TO CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): September 1, 1995
NOBEL EDUCATION DYNAMICS, INC.
(Exact name of registrant as specified in its charter)
The undersigned Registrant hereby amends the following items, financial
statements, exhibits or other portions of its Current Report on Form 8-K (date
of earliest event reported September 1, 1995) filed September 11, 1995, as set
forth in the pages attached hereto:
<PAGE>
Item 7. Financial Statements, Pro Forma Financial Information and Exhibits.
Page
----
(a) Financial Statements of Businesses Acquired.
1. Balance Sheet and Income Statement for Educo, Inc. for the
years ended August 31, 1995 and 1994 F-1
(c) Exhibits
Consent of Independent Accountants
<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 thereunto duly authorized.
NOBEL EDUCATION DYNAMICS, INC.
Date: May 15, 1996 By: /s/ Yvonne DeAngelo
----------------------------------------
Yvonne DeAngelo
Vice President Administration and Finance;
Secretary
<PAGE>
EDUCO INCORPORATED
REPORT ON AUDITS OF
FINANCIAL STATEMENTS
for the years ended
August 31, 1995 and 1994
F-1
<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS
To the Shareholders of
Educo Incorporated:
We have audited the accompanying consolidated balance sheets of Educo
Incorporated as of August 31, 1995 and 1994 and the related consolidated
statements of income, shareholders' equity 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 consolidated financial position of Educo Incorporated
as of August 31, 1995 and 1994, and the consolidated results of its operations
and its consolidated cash flows for the years then ended in conformity with
generally accepted accounting principles.
COOPERS & LYBRAND L.L.P.
2400 Eleven Penn Center
Philadelphia, Pennsylvania
December 15, 1995
F-2
<PAGE>
EDUCO INCORPORATED
Balance Sheets
<TABLE>
<CAPTION>
For the period ended
------------------------------
August 31, August 31,
ASSETS 1995 1994
------------- -------------
<S> <C> <C>
Cash $ 573,237 $ 645,600
Accounts receivable, less allowance for doubtful
accounts of $6,349 and $10,338 in 1995 and 1994, respectively 22,961 79,948
Notes receivable - 27,009
Prepaid and other current assets 152,675 92,427
Taxes Refundable 151,816
Deferred tax asset 20,096 -
------------- -------------
Total current assets 920,785 844,984
------------- -------------
Property and equipment, at cost 1,325,684 1,360,202
Accumulated depreciation (933,529) (891,111)
------------- -------------
Property and equipment, net 392,155 469,091
Cash surrender value of life insurance - 159,486
------------- -------------
Total assets $ 1,312,940 $ 1,473,561
============= =============
LIABILITIES AND SHAREHOLDERS' EQUITY
Accounts payable and other current liabilities 503,085 369,398
Deferred income 437,894 473,010
Income taxes payable - 104,858
------------- -------------
Total current liabilities 940,979 947,266
------------- -------------
Long-term obligations - 3,781
------------- -------------
Commitments and contingencies
Shareholders' equity:
Common stock, no par value, 100 shares 100 100
Additional paid-in capital 7,301 7,301
Treasury stock (123,371) -
Retained earnings 487,931 515,113
------------- -------------
Total shareholders' equity 371,961 522,514
------------- -------------
Total liabilities and shareholders' equity $ 1,312,940 $ 1,473,561
============= =============
</TABLE>
The accompanying notes are an integral
part of the financial statements.
F-3
<PAGE>
EDUCO INCORPORATED
STATEMENTS OF INCOME
<TABLE>
<CAPTION>
Year ended Year ended
August 31, August 31,
1995 1994
------------- -------------
<S> <C> <C>
Revenues $ 5,284,740 $ 5,370,911
------------- -------------
Operating expenses:
Center operating costs 4,801,181 4,598,483
General and administrative expenses 565,560 435,005
------------- -------------
5,366,741 5,033,488
------------- -------------
Operating income/(loss) (82,001) 337,423
------------- -------------
Other:
Interest income, net of expense 18,638 17,080
Other income 18,085 9,092
------------- -------------
Income before income taxes (45,278) 363,595
Income tax benefit (expense) 20,096 (168,260)
------------- -------------
Net (loss) income $ (25,182) $ 195,335
============= =============
</TABLE>
The accompanying notes are an integral
part of the financial statements.
F-4
<PAGE>
EDUCO INCORPORATED
STATEMENTS OF SHAREHOLDERS' EQUITY
<TABLE>
<CAPTION>
Additional
Common Stock Paid-In Paid-in Treasury Retained
Amount Shares Capital Stock Earnings Total
------------ ------- ---------- -------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C>
September 1, 1993 $100 100 $7,301 - $ 544,778 $ 552,179
Net income - - - - 195,335 195,335
Less dividends - - - - (225,000) (225,000)
---- ---- ------ --------- --------- ---------
August 31, 1994 100 100 7,301 515,113 522,514
Net loss - - - - (25,182) (25,182)
Purchase of remaining interest
in VB Joint Venture - - - $(123,371) - (123,371)
Less dividends - - - - (2,000) (2,000)
---- ---- ------ --------- -------- --------
August 31, 1995 $100 100 $7,301 $(123,371) $487,931 $371,961
==== ==== ====== ========= ======== ========
</TABLE>
The accompanying notes are an integral
part of the financial statements.
F-5
<PAGE>
EDUCO INCORPORATED
STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
Year ended Year ended
August 31, August 31,
1994 1995
-------------- ---------------
<S> <C> <C>
Cash flows from operating activities:
Net (loss) income $ (25,182) $ 195,335
Items not affecting cash flows:
Depreciation 55,938 60,378
Bad debts 6,349 10,388
Transfer of Life Insurance Policy 159,486 -
Loss on sale of assets 3,463 -
Changes in current assets and current liabilities
relating to operating activities:
Decrease in accounts receivable 56,987 343,995
(Increase) decrease in other receivables - 47,296
(Increase) decrease in prepaid and other current assets (212,064) 15,786
(Increase) in deferred tax asset (20,096) -
Increase (decrease) in accounts payable and
accrued liabilities 133,687 (15,545)
(Decrease) in deferred revenue (35,116) (322,342)
Increase (decrease) in provisions for income taxes (104,858) 104,858
-------------- ---------------
Net cash provided by (used in) operating activities 18,594 440,149
-------------- ---------------
Cash flows from investing activities:
(Purchases)/dispositions of property and equipment (32,455) (135,062)
Repayment of notes receivable 27,009 35,279
(Increase) in cash surrender value of life insurance - (13,015)
Decrease in investment - 14,350
Purchase of interest in VB (net of cash acquired of $80,270) (79,730) -
-------------- ---------------
Cash flows provided by (used in)
investing activities (85,176) (98,448)
-------------- ---------------
Cash flow from financing activities:
Decrease in notes payable (3,781) (6,330)
Payment of dividends (2,000) (225,000)
-------------- ---------------
Cash flows used in financing activities (5,781) (231,330)
-------------- ---------------
Net (decrease) increase in cash (72,363) 110,371
Cash, beginning of year 645,600 535,229
-------------- ---------------
Cash, end of year $ 573,237 $ 645,600
============== ===============
Supplemental cash flow information:
Cash paid during the year for:
Income taxes $ 10,144 $ 168,260
============== ===============
Supplemental Schedule of noncash investing activities:
Fair value of assets required $ 124,159 -
Contribution assumed (44,429) -
-------------- ---------------
$ 79,730 $
============== ===============
</TABLE>
The accompanying notes are an integral
part of the financial statements.
F-6
<PAGE>
EDUCO INCORPORATED
Notes to Consolidated Financial Statements
1. COMPANY BACKGROUND:
EDUCO Incorporated ("Educo"), a privately held Maryland corporation, was
founded in 1963. Educo is currently comprised of eight owned schools and
two schools operated in partnership with Valschool, Inc. of Virginia Beach
(VB Joint Venture).
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:
The consolidated financial statements reflect the accounts of Educo and VB
Joint Venture as these are the entities that were purchased by Nobel
Education Dynamics, Inc. (Nobel) on September 1, 1995.
As required under the acquisition agreement with Nobel, on August 28, 1995
Educo purchased the outstanding third party shares of the VB Joint Venture
for a purchase price of $160,000 (net book value of $26,629). This
transaction has been presented in the financial statements similar to a
purchase of treasury stock. All significant intercompany balances and
transactions have been eliminated. Certain reclassifications have been made
to 1994 amounts in order to conform to the 1995 presentation.
The Company maintained cash balances with financial institutions which
exceeded the federally insured limits of $100,000 per institution.
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 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 results.
RECOGNITION OF REVENUES:
Revenue is recognized as the services are performed. Expenses associated
with opening new centers are charged to expense as incurred.
PROPERTY AND EQUIPMENT:
Property and equipment are stated at cost less accumulated depreciation.
Depreciation is computed on a tax basis which approximates GAAP over the
estimated useful lives of the related assets as follows:
Leasehold improvements and The shorter of the lease-
assets under capital lease hold period or useful life
Furniture and equipment 3 to 5 years
Automobiles 5 years
F-7
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, CONTINUED
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, CONTINUED:
PROPERTY AND EQUIPMENT, CONTINUED:
Maintenance, repairs and minor renewals are expensed as incurred. Upon
retirement or other disposition of buildings and furniture and equipment,
the cost of the items and the related accumulated depreciation are removed
from the accounts and any gain or loss is included in operations.
INCOME TAXES:
The Company records income taxes in accordance with Statement of Financial
Accounting Standards (SFAS) No. 109, "Accounting for Income Taxes," which
requires an asset and liability method of accounting for income taxes.
Under the asset and liability method, deferred income taxes are recognized
for the tax consequences of "temporary differences" by applying enacted
statutory tax rates applicable to future years to differences between the
financial statement carrying amounts and the tax basis of existing assets
and liabilities. The effect on deferred taxes of a change in tax rate is
recognized in income in the period of enactment. A valuation allowance is
recorded based on the uncertainty regarding the ultimate realizability of
future deferred tax assets.
3. PROPERTY AND EQUIPMENT:
The balances of major property and equipment classes are as follows:
<TABLE>
<CAPTION>
August 31, August 31,
1995 1994
---------- ----------
<S> <C> <C>
Furniture and equipment $ 784,091 $ 818,609
Leasehold improvements 541,593 541,593
---------- ----------
1,325,684 1,360,202
Accumulated depreciation (933,529) (891,111)
---------- ----------
$ 392,155 $ 469,091
========== ==========
</TABLE>
4. LONG-TERM OBLIGATIONS:
Long-term obligations consists of various notes payable bearing interest
rates ranging from 8% to 12%. These notes were all paid prior to the
acquisition of the Company (see Note 9).
F-8
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, CONTINUED
5. ACCOUNTS PAYABLE AND OTHER CURRENT LIABILITIES:
Accounts payable and accrued expenses were as follows:
<TABLE>
<CAPTION>
August 31, August 31,
1995 1994
---------- ----------
<S> <C> <C>
Accounts payable and accrued expenses $239,442 $175,574
Accrued payroll and related items 229,043 145,418
Other liabilities 34,600 48,406
-------- --------
Total accounts payable and other liabilities $503,085 $369,398
======== ========
</TABLE>
6. LEASE OBLIGATIONS:
Future minimum rentals, for the real properties utilized by the Company by
year and in the aggregate, under noncancelable operating leases, consisted
of the following at August 31, 1995:
1996 $ 639,655
1997 474,120
1998 349,320
1999 350,520
2000 and
Thereafter 1,448,520
---------
Total $3,262,135
==========
Total rent expense for the year ended August 31, 1995 totaled approximately
$731,604. In connection with the acquisition (see Note 9) the leases were
subsequently renegotiated.
7. Income Taxes:
Taxes currently payable/(benefit):
<TABLE>
<CAPTION>
<S> <C> <C>
Year ended Year ended
August 31, 1995 August 31, 1994
--------------- ---------------
Federal:
Current - $120,117
Deferred $(16,751) -
-------- --------
(16,751) 120,117
State:
Current - 48,143
Deferred (3,345) -
-------- --------
(3,345) 48,143
-------- --------
Total $(20,096) $168,260
======== ========
</TABLE>
F-9
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, CONTINUED
7. INCOME TAXES, CONTINUED:
The difference between the actual income tax rate and the statutory federal
income tax rate is attributable to the following:
<TABLE>
<CAPTION>
August 31, August 31,
1995 1994
--------- ---------
<S> <C> <C>
U.S. Federal statutory rate (34)% 35%
State taxes, net of Federal tax benefit (7) 7
Other (3) 3
-- --
(44)% 45%
==== ==
</TABLE>
Deferred income taxes reflect the impact of temporary differences between
amounts of assets and liabilities for financial reporting purposes and
amounts as measured by tax laws; such differences for the Company are
immaterial.
8. COMMITMENTS:
At August 31, 1994, the Company along with others was a guarantor of
indebtedness owed by landlords of six of the Company's leased facilities.
All such guarantees were released on the acquisition date (see Note 9),
except for a $170,000 Small Business Administration loan which was assumed
by the acquirer, Nobel Education Dynamics Inc.
9. DEFINED CONTRIBUTION PLAN:
The Company sponsors a defined contribution plan for eligible employees.
Contributions to the plan are based upon hours worked during the plan year,
and participants may make voluntary contributions to the plan up to 16% of
their salary in the employees choice of an equity fund, a balanced fund or
a fixed income fund. The Company matches employees' contributions up to 4%.
Vesting accumulates ratably over a five-year period. Total 401-k expense
for the year ended August 31, 1995 and 1994 were approximately $33,300 and
$33,000, respectively.
10. Subsequent Event:
On September 1, 1995, Nobel Education Dynamics (Nobel) acquired all of the
outstanding shares of common stock of the Company. The purchase price
consisted of (i) $2,000,000 in cash and (ii) an agreement to issue to the
Educo stockholders an aggregate 1,250,000 shares of Nobel on January 15,
1996.
11. Related Party Transaction:
In 1995, the Company transferred the life insurance policy to the
President, valued at approximately $160,000, which was expensed to
operations.
F-10
<PAGE>
EXHIBIT 23
CONSENT OF INDEPENDENT ACCOUNTANTS
We consent to the incorporation by reference in the registration statements 0f
Nobel Education Dynamics, Inc. and subsidiaries on Form S-3 (File No. 33-73496)
and Forms S-8 (File Nos. 33-21859, 33-44888 and 33-64701) of our report, dated
December 15, 1995, on our audits of the consolidated financial statements of
Educo Incorporated as of August 31, 1995 and 1994 and for the years then ended,
which report is included in this Form 8-K(A) of Nobel Education Dynamics, Inc.
/s/Coopers & Lybrand, L.L.P.
2400 Eleven Penn Center
Philadelphia, Pennsylvania
May 15, 1996
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