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Previous: INTEGRATED HEALTH SERVICES INC, 10-Q, 1996-08-14 |
Next: ATEL CASH DISTRIBUTION FUND, 10-Q, 1996-08-14 |
<PAGE>
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report (Date of earliest event reported) July 30, 1996
------------------------------
INTEGRATED HEALTH SERVICES, INC.
- --------------------------------------------------------------------------------
(Exact name of registrant as specified in its charter)
Delaware 1-12306 23-2428312
-------- ------- ----------
(State or other jurisdiction (Commission (IRS Employer
of corporation) File Number) Identification No.)
10065 Red Run Boulevard, Owings Mills, Maryland 21117
----------------------------------------------- -----
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (410) 998-8400
---------------------------
Not Applicable
- --------------------------------------------------------------------------------
(Former name or former address, if changed since last report)
<PAGE>
Item 2. Acquisition or Disposition of Assets
On July 30, 1996 Integrated Health Services, Inc. ("the Company")
completed the sale of its pharmacy division, Symphony Pharmacy Services, Inc.
("Symphony Pharmacy"), to Capstone Pharmacy Services, Inc. ("Capstone").
Under the terms of the agreement, Capstone paid $150 million for
substantially all of the assets and business of Symphony Pharmacy. The purchase
price was comprised of $125 million in cash and $25 million in Capstone common
shares. The Company will use the net proceeds from the sale to repay borrowings
under its revolving credit facility. The Company expects to record an after tax
gain of approximately $12.0 million. In addition, the Company will periodically
value its $25 million investment in Capstone's common stock.
Symphony Pharmacy provides institutional pharmacy dispensing and
consulting services to approximately 40,000 residents in over 380 long-term care
facilities in eight states.
Capstone is a leading provider of extended care pharmacy services to
nursing homes, correctional facilities and HMOs. It provides services to long
term care facilities with 44,000 patients beds. It is also the largest provider
of pharmaceutical services to prisons in the U.S. correctional system, serving
110 prisons with 120,000 inmates.
<PAGE>
Item 7. Financial Statements, Pro Forma Financial Information and Exhibits
a. Financial Statements of Business Disposed of.
Not Applicable.
b. Pro Forma Financial Information.
The unaudited pro forma consolidated financial statements of Integrated
Health Services, Inc., reflecting the disposition of Symphony Pharmacy as of
June 30, 1996, and for the year ended December 31, 1995 and the six months ended
June 30, 1996 are included herein.
c. Exhibits.
2.01 Asset Purchase Agreement dated as of June 20, 1996 by and
among the Company, various subsidiaries of the Company and
Capstone Pharmacy Services, Inc., as amended.
<PAGE>
PRO FORMA CONSOLIDATED FINANCIAL STATEMENTS
The pro forma balance sheet at June 30, 1996 was prepared as if the
Pharmacy Sale was consummated as of June 30, 1996. The pro forma statement of
operations for the year ended December 31, 1995 and the six months ended June
30, 1996 were prepared as if the Pharmacy Sale was consummated on January 1,
1995.
The pro forma adjustments are based upon available information and
certain assumptions that management believes are reasonable. The unaudited pro
forma financial information set forth below is not necessarily indicative of the
Company's financial position or the results of operations that actually would
have occurred if the transactions had been consummated on the dates shown. In
addition, they are not intended to be a projection of results of operations that
may be obtained in the Company's future. The unaudited pro forma financial
information should be read in conjunction with the financial statements and
related notes thereto of the Symphony Pharmacy Services, Inc. included elsewhere
herein and the financial statements and related notes thereto of IHS filed with
the Securities and Exchange Commission.
<PAGE>
INTEGRATED HEALTH SERVICES, INC. AND SUBSIDIARIES
PRO FORMA CONSOLIDATED BALANCE SHEETS
JUNE 30, 1996
(UNAUDITED)
(dollars in thousands)
<TABLE>
<CAPTION>
Actual
------
Pharmacy Pro Forma
IHS Adjustments Consolidated
--- ----------- ------------
Increase
(Decrease)
<S> <C> <C> <C>
Assets
Current Assets:
Cash and cash equivalents $ 44,399 $ (878) $ 43,521
Temporary investments 2,290 0 2,290
Patient accounts and third-party payor settlements
receivable, less allowance for doubtful receivables 263,203 (17,867)(1) 245,336
Supplies, inventories, prepaid expenses
and other current assets 26,665 (6,457) 20,208
Income tax receivable 14,717 0 14,717
----------- ----------- -----------
Total current assets 351,274 (25,202) 326,072
----------- ----------- -----------
Property, plant and equipment, net 816,530 (9,529) 807,001
Intangible assets 338,051 (54,965) 283,086
Investments in and advances to affiliates 30,193 25,000 (2) 55,193
Other assets 84,333 0 84,333
----------- ----------- -----------
Total assets $ 1,620,381 $ (64,696) $ 1,555,685
=========== =========== ===========
Liabilities and Stockholders' Equity
Current Liabilities:
Current maturities of long-term debt $ 4,907 $ 0 $ 4,907
Accounts payable and accrued expenses 158,749 4,031 (1)(3) 162,780
----------- ----------- -----------
Total current liabilities 163,656 4,031 167,687
----------- ----------- -----------
Long-term Debt:
Convertible subordinated debentures 258,750 0 258,750
Other long-term debt less current maturities 645,089 0 554,089
(91,000)(4)
----------- ----------- -----------
Total long-term debt 903,839 (91,000) 812,839
----------- ----------- -----------
Deferred income taxes 54,730 0 54,730
Deferred gain on sale-leaseback transactions 6,733 0 6,733
Stockholders' equity:
Common stock, $0.001 par value. Authorized 150,000,000
shares 22 0 22
Additional paid-in capital 429,804 0 429,804
Division equity 0 0 0
Retained earnings 61,597 11,337 72,934
Unrealized gain on available for sale securities 0 10,936 (5) 10,936
----------- ----------- -----------
Net stockholders' equity 491,423 22,273 513,696
----------- ----------- -----------
Total liabilities and stockholders' equity $ 1,620,381 $ (64,696) $ 1,555,685
=========== =========== ===========
</TABLE>
<PAGE>
INTEGRATED HEALTH SERVICES, INC.
PRO FORMA STATEMENTS OF OPERATIONS
YEAR ENDED DECEMBER 31, 1995
(UNAUDITED)
(dollars in thousands)
<TABLE>
<CAPTION>
Pharmacy Pro
IHS Adjustments Forma
--- ----------- -----
<S> <C> <C> <C>
Net revenues:
Basic medical services $ 368,569 $ 0 $ 368,569
Specialty medical services 770,554 (73,566)(1) 696,988
Management services and other 39,765 0 39,765
------------ ------------ -------------
Total revenues 1,178,888 (73,566) 1,105,322
Costs and expenses:
Operating expenses 944,567 (63,082)(1) 881,485
Depreciation and amortization 39,961 (2,681) 37,280
Rent 66,125 (1,227) 64,898
Interest, net 38,977 (6,798)(1)(6) 32,179
Loss on impairment 109,106 0 109,106
Other non-recurring charges 23,854 0 23,854
------------ ------------ -------------
Total costs and expenses 1,222,590 (73,788) 1,148,802
Earnings before equity in earnings of affiliates
and income taxes (43,702) 222 (43,480)
Equity in earnings of affiliates 1,443 0 1,443
------------ ------------ -------------
Earnings before income taxes (42,259) 222 (42,037)
Federal and state income taxes (16,270) 86 (16,184)
------------ ------------ -------------
Earnings before extraordinary (25,989) 136 (25,853)
Extraordinary items 1,013 0 1,013
------------ ------------ -------------
Net Earnings $ (27,002) $ 136 $ (26,866)
============ ============ =============
Per Common Share:
Earnings before extraordinary item - primary (1.21) (1.20)
Earnings before extraordinary item - fully diluted (1.21) (1.20)
Net earnings - primary (1.26) (1.25)
Net earnings - fully diluted (1.26) (1.25)
========== =============
Weighted Average Sales
Primary 21,463 21,463
Fully - diluted 21,141 21,463
========== ============
</TABLE>
<PAGE>
INTEGRATED HEALTH SERVICES, INC.
PRO FORMA STATEMENTS OF OPERATIONS
SIX MONTHS ENDED JUNE 30, 1996
(UNAUDITED)
<TABLE>
<CAPTION>
Pharmacy Pro
IHS Adjustments Forma
--- ----------- -----
<S> <C> <C> <C>
Net revenues:
Basic medical services $ 195,279 $ 0 $ 195,279
Specialty medical services 446,393 (44,502)(1) 401,891
Management services and other 21,381 0 21,381
----------- ---------- -----------
Total revenues 663,053 (44,502) 618,551
Costs and expenses:
Operating expenses 532,291 (36,863)(1) 495,428
Depreciation and amortization 18,604 (1,555) 17,049
Rent 35,535 (702) 34,833
Interest, net 30,102 (3,176)(1)(6) 26,926
----------- ---------- -----------
Total costs and expenses 616,532 (42,296) 574,236
Earnings before equity in earnings of affiliates 46,521 (2,206) 44,315
and income taxes
Equity in earnings of affiliates 760 0 760
----------- ---------- -----------
Earnings before income taxes 47,281 (2,206) 45,075
Federal and state income taxes 18,203 (849) 17,354
----------- ---------- -----------
Earnings before extraordinary 29,078 (1,357) 27,721
Extraordinary 1,431 0 1,431
----------- ---------- -----------
Net Earnings $ 27,647 $ (1,357) $ 26,290
=========== ========== ===========
Per Common Share:
Earnings before extraordinary item - primary 1.26 1.20
Earnings before extraordinary item - fully diluted 1.10 1.05
Net earnings - primary 1.20 1.14
Net earnings - fully diluted 1.05 1.01
=========== ===========
Weighted Average Sales
Primary 23,039 23,039
Fully - diluted 31,028 31,028
=========== ===========
<PAGE>
Notes to Consolidated Pro Forma Financial Statements
For purposes of determining the effect of the sale of the Pharmacy Division, the
following estimates and adjustments have been made.
<FN>
1 Adjustments for intercompany activity
2 Represents the Company's interest in Capstone
3 Represents liabilities not assumed by the purchaser associated with the
disposal of the pharmacy division
4 Net proceeds from sale of pharmacy
5 Represents unrealized gain on Capstone shares valued at $25,000
6 Interest savings on remaining proceeds after paydown of parent company
debt.
</FN>
</TABLE>
<PAGE>
SIGNATURES
----------
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this amendment to be signed on its behalf by the
undersigned thereunto duly authorized.
INTEGRATED HEALTH SERVICES, INC.
Date: By /s/ W. Bradley Bennett
-------------------------------------
Name: W. Bradley Bennett
Title: Senior Vice President and
Chief Accounting Officer
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