<PAGE> 1
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):
February 29, 1996
CAPSTONE PHARMACY SERVICES, INC.
(Exact name of Registrant as specified in its charter)
<TABLE>
<S> <C> <C>
Delaware 0-20606 11-2310352
-------- ----------- ----------
(State or other (Commission File (Employer
jurisdiction of Number) Identification
incorporation) Number)
</TABLE>
2930 Washington Boulevard, Baltimore, Maryland 21230
----------------------------------------------------
(Address of principal executive offices)
(410) 646-7373
----------------------------------------------------
(Registrant's telephone number, including area code)
Not applicable
----------------------------------------------------
(Former name or former address,
if changed since last report)
<PAGE> 2
Item 7 Financial Statements and Exhibits
(a) Financial statements of businesses acquired.
(i) Audited balance sheets of IMD Corporation as
of December 31, 1995, 1994 and 1993 and the
related statements of income and retained
earnings and cash flows for the years then
ended.
(b) Pro forma financial information
(i) Introductory information.
(ii) Unaudited pro forma selected income statement
data of Capstone Pharmacy Services, Inc. for
the ten months ended December 31, 1995,
together with unaudited pro forma balance
sheet data as of December 31, 1995.
<PAGE> 3
IMD CORPORATION
Years Ended December 31, 1995, 1994 and 1993
================================================================================
C O N T E N T S
<TABLE>
<CAPTION>
Reference Page
--------- ----
<S> <C> <C>
Independent Auditor's Report 1
Balance Sheets Exhibit A 2
Statements of Income and Retained Earnings Exhibit B 3
Statements of Cash Flows Exhibit C 4
Notes to Financial Statements 5-9
Independent Auditor's Report on
Supplemental Information 10
Operating Expenses Schedule B-1 11
</TABLE>
<PAGE> 4
[BLACKMAN KALLICK CONSULTING GROUP LOGO]
INDEPENDENT AUDITOR'S REPORT
Board of Directors
IMD Corporation
Oak Brook, Illinois
We have audited the accompanying balance sheets of IMD CORPORATION as of
December 31, 1995, 1994 and 1993, and the related statements of income and
retained earnings 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 IMD CORPORATION as of December
31, 1995, 1994 and 1993, and the results of its operations and its cash flows
for the years then ended in conformity with generally accepted accounting
principles.
/s/ Blackman Kallick Bartelstein, LLP
Chicago, IL
March 20, 1996
<PAGE> 5
EXHIBIT A
IMD CORPORATION
Balance Sheets
December 31, 1995, 1994 and 1993
================================================================================
<TABLE>
<CAPTION>
ASSETS
1995 1994 1993
----------- ----------- -----------
<S> <C> <C> <C>
CURRENT ASSETS
Cash and cash equivalents (Note 3) $ 296,261 $ 422,153 $ 1,460,608
Accounts receivable (Notes 4 and 9) 5,029,680 4,965,723 2,837,897
Accounts receivable - Other 57,522 2,500 3,655
Allowance for doubtful accounts (Note 9) (250,000) (250,000) (80,000)
Inventories 853,879 907,779 704,953
----------- ----------- -----------
Total Current Assets 5,987,342 6,048,155 4,927,113
----------- ----------- -----------
PROPERTY AND EQUIPMENT, AT COST
Equipment 1,154,006 977,016 836,643
Furniture and fixtures 208,596 130,900 127,153
Computer 714,551 620,905 598,856
Leasehold improvements 287,619 71,791 71,791
Vehicles 80,641 80,641 80,641
Construction in progress - 30,990 -
----------- ----------- -----------
2,445,413 1,912,243 1,715,084
Less accumulated depreciation and amortization (1,690,330) (1,462,504) (1,233,156)
----------- ----------- -----------
Total Property and Equipment, Net 755,083 449,739 481,928
----------- ----------- -----------
OTHER ASSETS - Deposits 1,500 1,500 1,500
----------- ----------- -----------
$ 6,743,925 $ 6,499,394 $ 5,410,541
=========== =========== ===========
LIABILITIES AND STOCKHOLDER'S EQUITY
CURRENT LIABILITIES
Accounts payable $ 2,627,400 $ 1,398,878 $ 1,227,744
Accrued expenses 83,728 49,757 38,068
Accrued profit sharing (Note 8) 75,000 75,000 75,000
Income taxes payable 50,000 35,856 12,869
----------- ----------- -----------
Total Current Liabilities 2,836,128 1,559,491 1,353,681
----------- ----------- -----------
STOCKHOLDER'S EQUITY
Common stock - No par value; authorized
and issued - 1,000 shares 2,000 2,000 2,000
Retained earnings (Exhibit B) 3,906,808 4,938,914 4,055,871
Less treasury stock (1,011) (1,011) (1,011)
----------- ----------- -----------
Total Stockholder's Equity 3,907,797 4,939,903 4,056,860
----------- ----------- -----------
$ 6,743,925 $ 6,499,394 $ 5,410,541
=========== =========== ===========
</TABLE>
The accompanying notes are an integral part of the financial statements.
-2-
<PAGE> 6
IMD CORPORATION
Statements of Income and Retained Earnings
Years Ended December 31, 1995, 1994 and 1993
===============================================================================
<TABLE>
<CAPTION>
1995 1994
---------------------- ---------------------
% of % of
Amount Net Sales Amount Net Sales
----------- --------- ----------- ---------
<S> <C> <C> <C> <C>
NET SALES (Notes 4 and 9) $18,736,233 100.00% $15,065,748 100.00%
COST OF GOODS SOLD 10,603,413 56.59 9,088,490 60.32
----------- ------ ----------- ------
GROSS PROFIT 8,132,820 43.41 5,977,258 39.68
OPERATING EXPENSES 5,463,232 29.16 4,194,013 27.84
----------- ------ ----------- ------
OPERATING INCOME 2,669,588 14.25 1,783,245 11.84
----------- ------ ----------- ------
OTHER INCOME (EXPENSE)
Interest income 34,889 .19 22,410 .15
Other 337 - 5,975 .04
Consulting fees and other 75,395 .40 46,957 .31
Loss on abandoned property (67,130) (.36) - -
----------- ------ ----------- ------
Total Other Income, Net 43,491 .23 75,342 .50
----------- ------ ----------- ------
INCOME BEFORE INCOME TAXES 2,713,079 14.48 1,858,587 12.34
STATE REPLACEMENT TAX (Note 5) 51,178 .27 34,444 .23
----------- ------ ----------- ------
NET INCOME (Note 9) 2,661,901 14.21% 1,824,143 12.11%
----------- ====== ----------- ======
RETAINED EARNINGS, BEGINNING
OF YEAR - As originally restated 4,938,914 3,775,698
PRIOR PERIOD ADJUSTMENT (Note 9) - 280,173
----------- -----------
RETAINED EARNINGS, BEGINNING
OF YEAR - As restated 4,938,914 4,055,871
DIVIDENDS DECLARED (3,694,007) (941,100)
----------- -----------
RETAINED EARNINGS, END OF
YEAR (Exhibit A) $ 3,906,808 $ 4,938,914
=========== ===========
</TABLE>
The accompanying notes are an integral part of the financial statements.
- 3 -
<PAGE> 7
EXHIBIT B
================================================================================
<TABLE>
<CAPTION>
1993
----------------------------
% of
Amount Net Sales
------------ ---------
<S> <C>
$ 12,371,939 100.00%
7,152,706 57.81
------------ ------
5,219,233 42.19
4,279,247 34.59
------------ ------
939,986 7.60
------------ ------
15,190 .12
(1,575) (.01)
59,456 .48
- -
------------ ------
73,071 .59
------------ ------
1,013,057 8.19
9,257 .08
------------ ------
1,003,800 8.11%
------------ ======
3,209,507
220,564
------------
3,430,071
(378,000)
------------
$ 4,055,871
============
</TABLE>
-3a-
<PAGE> 8
EXHIBIT C
IMD CORPORATION
Statements of Cash Flows
Years Ended December 31, 1995, 1994 and 1993
================================================================================
<TABLE>
<CAPTION>
1995 1994 1993
----------- ----------- -----------
<S> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net income $ 2,661,901 $ 1,824,143 $ 1,003,800
----------- ----------- -----------
Adjustments to reconcile net income
to net cash provided by operating activities
Depreciation and amortization 236,154 229,348 227,660
Provision for bad debts 448,042 297,217 156,663
Loss on abandoned property 67,130 - -
(Increase) decrease in
Accounts receivable (511,999) (2,255,043) 312,558
Inventories 53,900 (202,826) (209,063)
Increase (decrease) in
Accounts payable 1,228,522 171,134 513,782
Accrued expenses 33,971 11,689 (222,091)
Accrued profit sharing - - 472
Income taxes payable 14,144 22,987 (8,131)
----------- ----------- -----------
Total Adjustments 1,569,864 (1,725,494) 771,850
----------- ----------- -----------
Net Cash Provided by
Operating Activities 4,231,765 98,649 1,775,650
----------- ----------- -----------
CASH FLOWS FROM INVESTING ACTIVITIES
Capital expenditures (608,628) (197,159) (156,878)
(Loans to) repayments from employees/officers (55,022) 1,155 (700)
----------- ----------- -----------
Net Cash Used in
Investing Activities (663,650) (196,004) (157,578)
----------- ----------- -----------
NET CASH USED IN FINANCING ACTIVITIES -
Dividends paid (3,694,007) (941,100) (378,000)
----------- ----------- -----------
NET (DECREASE) INCREASE IN CASH AND
CASH EQUIVALENTS (125,892) (1,038,455) 1,240,072
CASH AND CASH EQUIVALENTS, BEGINNING OF YEAR 422,153 1,460,608 220,536
----------- ----------- -----------
CASH AND CASH EQUIVALENTS, END OF YEAR $ 296,261 $ 422,153 $ 1,460,608
=========== =========== ===========
</TABLE>
The accompanying notes are an integral part of the financial statements.
-4-
<PAGE> 9
IMD CORPORATION
Notes to Financial Statements
Years Ended December 31, 1995, 1994 and 1993
================================================================================
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Cash Equivalents
For purposes of the statements of cash flows, the company considers money
market accounts to be cash equivalents.
Inventories
Inventories, consisting of pharmaceutical drugs and supplies, are valued at the
lower of cost (first-in, first-out) or market.
Property and Equipment
The company's policy is to depreciate property and equipment over the estimated
useful lives of the assets, as indicated in the following tabulation, by use of
accelerated methods used for tax purposes. Leasehold improvements are
amortized over the terms of the lease or their useful lives, if shorter.
<TABLE>
<CAPTION>
Years
-----
<S> <C>
Leasehold improvements 10
Equipment 5-7
Furniture and fixtures 5-7
Automobile 5
</TABLE>
Management 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.
Financial Instruments
A financial instrument is cash, evidence of an ownership interest in an entity
or certain contracts involving future conveyances of cash or other financial
instruments. The carrying values of the company's financial instruments
approximate their fair values.
-5-
<PAGE> 10
IMD CORPORATION
Notes to Financial Statements
Years Ended December 31, 1995, 1994 and 1993
================================================================================
NOTE 2 - NATURE OF OPERATIONS
IMD Corporation is a local pharmacy which services primarily Public Aid and
privately paying residents in nursing homes and extended care facilities in the
Chicagoland area. The company grants credit to its customers under normal
trade terms without security.
NOTE 3 - CASH AND CASH EQUIVALENTS
Cash and cash equivalents consist of the following:
<TABLE>
<CAPTION>
1995 1994 1993
--------- --------- -----------
<S> <C> <C> <C>
Cash $ 296,261 $ 414,177 $ 238,541
Money market funds - 7,976 1,222,067
--------- --------- -----------
$ 296,261 $ 422,153 $ 1,460,608
========= ========= ===========
</TABLE>
All of the company's cash and cash equivalents are held at Marquette National
Bank.
NOTE 4 - CONCENTRATIONS
For the years ended December 31, 1995, 1994 and 1993, sales to the Illinois
Department of Public Aid amounted to more than 10% of net sales. The amount of
net sales and accounts receivable for this customer are detailed below by year.
<TABLE>
<CAPTION>
Accounts
Receivable
Net Sales as of
During Year Year-End
----------- ----------
<S> <C> <C>
1993 $10,064,823 $1,103,121
1994 11,749,666 2,185,123
1995 16,539,776 2,037,953
</TABLE>
-6-
<PAGE> 11
IMD CORPORATION
Notes to Financial Statements
Years Ended December 31, 1995, 1994 and 1993
================================================================================
NOTE 5 - INCOME TAXES
The company has elected to be taxed as an S corporation under provisions of the
Internal Revenue Code. Accordingly, the accompanying financial statements do
not reflect income taxes, except for state replacement tax.
NOTE 6 - OPERATING LEASES
The company has entered into an agreement for its office and pharmacy space
with the stockholder of the company. The agreement was an informal
month-to-month arrangement, which terminated during 1995. In addition, another
lease for office and pharmacy space with the stockholder is also an informal
month-to-month arrangement. Total rental expenses for these leases are as
follows:
<TABLE>
<CAPTION>
1995 1994 1993
--------- --------- --------
<S> <C> <C> <C>
Rental expense $ 171,516 $ 132,248 $ 35,441
========= ========= ========
</TABLE>
NOTE 7 - CONTINGENCIES
In November 1992, the Illinois Department of Public Aid (IDPA) conducted an
audit with respect to billings to the Medicaid Program. The audit was resolved
in February 1994 with a $34,000 payment to IDPA. During 1995, the United
States Attorney for the Northern District advised the company that it was
considering filing a civil claim in connection with the IDPA audit. The
company believes all claims arising from the audit have been satisfied and, in
the opinion of legal counsel, any future lawsuit would be without merit and
without material liability to the company.
NOTE 8 - EMPLOYEE BENEFIT PLAN
The company sponsors a profit-sharing plan for all employees who are eligible
based upon age and length of service. The plan provides for contributions in
such amounts as the board of directors may determine. The company funds
profit-sharing costs accrued. Discretionary profit-sharing contributions were
$75,000 for the years ended December 31, 1995, 1994 and 1993.
-7-
<PAGE> 12
IMD CORPORATION
Notes to Financial Statements
Years Ended December 31, 1995, 1994 and 1993
================================================================================
NOTE 9 - CORRECTION OF ACCOUNTING ERROR
During 1995, the company began recording receivables for prescription charges
rejected by Public Aid and not yet rebilled, and for prescription charges for
patients pending Public Aid acceptance. Due to an accounting error, these
receivables were not recorded in previous years.
Also, during 1995, the company began recording a reduction of Public Aid
receivables based on discounts that Public Aid had taken in the past. Due to
an accounting error, this discount was not recorded in previous years.
Correspondingly, the allowance for doubtful accounts for the year ended
December 31, 1993 was understated.
Accordingly, the accompanying 1993 and 1994 financial statements have been
restated, the effect of which is presented below.
<TABLE>
<CAPTION>
1 9 9 3
Increase (Decrease)
-----------------------------------------------------------------------------
Allowance Bad Beginning
Accounts for Net Debt Retained
Receivable Bad Debts Sales Expense Earnings
---------- --------- -------- -------- ---------
<S> <C> <C> <C> <C> <C>
Unrecorded receivables $ 482,927 $ - $ 135 $ - $ 482,792
Unrecorded discounts (192,754) - 69,474 - (262,228)
Increase in allowance for bad debts - 10,000 - 10,000 -
--------- -------- -------- -------- ---------
$ 290,173 $ 10,000 $ 69,609 $ 10,000 $ 220,564
========= ======== ======== ======== =========
</TABLE>
<TABLE>
<CAPTION>
1 9 9 4
Increase (Decrease)
------------------------------------------------------------
Bad Beginning
Accounts Net Debt Retained
Receivable Sales Expense Earnings
---------- --------- --------- ---------
<S> <C> <C> <C> <C>
Unrecorded receivables $ 627,020 $ 144,093 $ - $ 482,927
Unrecorded discounts (308,956) (116,202) - (192,754)
Decrease in bad debt expense - - (10,000) (10,000)
--------- --------- --------- ---------
$ 318,064 $ 27,891 $ (10,000) $ 280,173
========= ========= ========= =========
</TABLE>
-8-
<PAGE> 13
IMD CORPORATION
Notes to Financial Statements
Years Ended December 31, 1995, 1994 and 1993
================================================================================
NOTE 10 - SUBSEQUENT EVENT - SALE OF COMPANY ASSETS
The company accepted an offer from an unrelated party to sell substantially all
of the assets of the company for approximately $15,000,000. The sale took
place on February 29, 1996.
NOTE 11 - OTHER CASH FLOW INFORMATION
Cash payments for interest and income taxes were as follows:
<TABLE>
<CAPTION>
1995 1994 1993
-------- -------- --------
<S> <C> <C> <C>
Interest $ - $ 1,575 $ 3,249
======== ======== ========
Income Taxes $ 15,000 $ 11,457 $ 17,388
======== ======== ========
</TABLE>
-9-
<PAGE> 14
[BLACKMAN KALLICK CONSULTING GROUP LOGO]
INDEPENDENT AUDITOR'S REPORT ON SUPPLEMENTAL INFORMATION
Board of Directors
IMD Corporation
Oak Brook, Illinois
Our audits were made for the purpose of forming an opinion on the basic
financial statements taken as a whole of IMD CORPORATION for the years ended
December 31, 1995, 1994 and 1993. The following supplemental schedule of
operating expenses is presented for analysis purposes and is not a required
part of the basic financial statements. Such information has been subjected to
the auditing procedures applied in the audits of the basic financial statements
and, in our opinion, is fairly stated in all material respects in relation to
the basic financial statements taken as a whole.
/s/ Blackman Kallick Bartelstein, LLP
Chicago, IL
March 20, 1996
-10-
<PAGE> 15
IMD CORPORATION
Operating Expenses
Years Ended December 31, 1995, 1994 and 1993
===============================================================================
<TABLE>
<CAPTION>
1995 1994
--------------------- ---------------------
% of % of
Amount Net Sales Amount Net Sales
---------- --------- ---------- ---------
<S> <C> <C> <C> <C>
Salaries $2,854,284 15.24% $2,248,116 14.92%
Officers' salaries 300,000 1.60 300,000 1.99
Advertising 93,137 .50 26,427 .18
Automobile 28,020 .15 21,218 .14
Bad debts 448,042 2.39 297,217 1.97
Data processing 4,011 .02 2,905 .02
Depreciation and amortization 236,154 1.26 229,348 1.52
Donations 13,269 .07 1,225 .01
Utilities 26,447 .14 16,548 .11
Education, dues and publications 36,561 .20 16,624 .11
Entertainment and promotion 26,887 .14 15,270 .10
Equipment leased 403 - 111 -
Freight-out and delivery 222,270 1.19 155,081 1.03
Casualty insurance 42,695 .23 32,505 .22
Group insurance 38,372 .20 28,240 .19
Legal and accounting 60,177 .32 81,157 .54
Miscellaneous 207 - (893) (.01)
Office 64,303 .34 50,636 .34
Outside services 129,903 .69 13,529 .09
Postage 12,872 .07 9,502 .06
Printing 111,677 .60 40,885 .27
Profit sharing 75,000 .40 75,000 .50
Rent
Chicago 33,516 .18 42,248 .28
Oak Brook 138,000 .74 90,000 .60
Repairs and maintenance 54,376 .29 34,943 .23
Seminars and conventions 1,225 .01 275 -
Travel and lodging 54,060 .29 42,889 .29
Other supplies 71,313 .38 99,407 .66
Payroll taxes 227,626 1.21 190,476 1.26
Telephone 51,478 .27 29,040 .19
Watch service 6,947 .04 4,084 .03
---------- ----- ---------- -----
Total Operating Expenses
(Exhibit B) $5,463,232 29.16% $4,194,013 27.84%
========== ===== ========== =====
</TABLE>
See independent auditor's report on supplemental information.
-11-
<PAGE> 16
Schedule B-1
================================================================================
<TABLE>
<CAPTION>
1993
----------------------------
% of
Amount Net Sales
----------- ---------
<S> <C>
$ 1,989,313 16.08%
1,041,000 8.41
38,619 .31
56,922 .46
156,663 1.27
795 .01
227,660 1.84
2,750 .02
14,253 .12
13,050 .10
12,387 .10
16,176 .13
82,850 .67
24,054 .19
39,325 .32
70,705 .57
(3,646) (.03)
33,247 .27
613 -
10,719 .09
66,176 .53
75,000 .61
35,441 .29
- -
46,741 .38
- -
774 .01
36,969 .30
162,567 1.31
26,042 .21
2,082 .02
----------- -----
$ 4,279,247 34.59%
=========== =====
</TABLE>
-11a-
<PAGE> 17
CAPSTONE PHARMACY SERVICES, INC.
PRO FORMA SELECTED FINANCIAL DATA
(unaudited)
Pursuant to an Asset Purchase Agreement dated February 29, 1996 (the
Agreement), the Registrant acquired a pharmacy business in Oak Brook, Illinois,
IMD Corporation, an Illinois corporation (IMD), for approximately $15,500,000
in cash. The acquired business was merged into a separate surviving subsidiary
of the Registrant. The Registrant intends to continue the acquired operations
through its subsidiary.
Also, on January 3, 1996, the Registrant closed on the acquisition of Geri-Care
Systems, Inc. and Scripts & Things, Inc., New York corporations (collectively
Geri-Care). A Form 8-K dated December 31, 1995, and a Form 8-K/A dated
December 31, 1995, have previously been filed related to these acquisitions.
The unaudited pro forma income statement data for the ten months ended December
31, 1995 has been prepared based on historical income statements of the
Registrant, as adjusted to reflect the acquisitions of IMD and Geri-Care as if
each such agreement and merger had been effective March 1, 1995. The pro forma
income statement data may not be indicative of the future results of operations
of or what the actual results of operations would have been had the
acquisitions described above been effective March 1, 1995. The assets and
liabilities of the IMD and Geri-Care acquisitions will be included in the
Registrant's balance sheet as of March 31, 1996, to be filed on Form 10-Q.
<PAGE> 18
CAPSTONE PHARMACY SERVICES, INC.
PRO FORMA INCOME STATEMENT DATA
FOR THE TEN MONTHS ENDED DECEMBER 31, 1995
(in thousands)
<TABLE>
<CAPTION>
Capstone Pharmacy
Services, Inc. Geri-Care
including Premier Systems, IMD Pro Forma
Pharmacy, Inc. (c) Inc. (d) Corporation(e) Adjustments Pro Forma
---------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Net Sales $ 54,834 $ 5,820 $ 18,736 $ - $ 79,390
Cost of Sales 34,531 3,805 10,603 - 48,939
-------------------------------------------------------------------------
Gross Profit 20,303 2,015 8,133 - 30,451
Operating Expenses:
Selling and Administrative Expenses 20,311 1,509 5,227 - 27,047
Depreciation and Amortization 1,285 86 236 392 (a) 1,999
Restructuring Costs 240 - - - 240
-------------------------------------------------------------------------
(Loss) Income from Operations (1,533) 420 2,670 (392) 1,165
-------------------------------------------------------------------------
Non-Operating Expense (Income):
Interest Expense, net 932 103 (35) 613 (b) 1,613
Other Income (438) (15) (8) - (461)
-------------------------------------------------------------------------
Total Non-Operating Expense (Income) 494 88 (43) 613 1,152
-------------------------------------------------------------------------
Income (Loss) before Income Taxes (2,027) 332 2,713 (1,005) 13
Provision (Benefit) for Income Taxes 2 25 51 - 78
-------------------------------------------------------------------------
(Loss) Income from Continuing Operations $ (2,029) $ 307 $ 2,662 $ (1,005) $ (65)
=========================================================================
Pro Forma Weighted Average Number of Common
Shares Outstanding 13,107,000
==========
Income (Loss) from Continuing Operations
Per Share $ (0.00)
==========
</TABLE>
<PAGE> 19
CAPSTONE PHARMACY SERVICES, INC.
PRO FORMA BALANCE SHEET DATA
AS OF DECEMBER 31, 1995
(in thousands)
<TABLE>
<CAPTION>
Geri-Care
Capstone Pharmacy Systems, IMD Pro Forma
Services, Inc. Inc. (f) Corporation Adjustments Pro Forma
--------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Current Assets:
Cash and cash equivalents $ 2,763 $ 128 $ 296 $ 1,891 (a) $ 5,078
Accounts Receivable, net of allowance
for doubtful accounts 12,646 2,083 4,837 - 19,566
Inventories 5,023 733 854 - 6,610
Other current assets 1,518 23 - - 1,541
----------------------------------------------------------------------
Total current assets 21,950 2,967 5,987 1,891 32,795
Property, equipment and other assets 5,600 873 757 (2,872)(a) 4,358
Goodwill, net of accumulated amortization 14,581 - - 18,856 (a) 33,437
----------------------------------------------------------------------
Total Assets $ 42,131 $ 3,840 $ 6,744 $ 17,875 $ 70,590
======================================================================
Current Liabilities:
Accounts payable $ 4,671 $ 1,001 $ 2,627 $ - $ 8,299
Other current liabilities 6,464 1,185 209 - 7,858
----------------------------------------------------------------------
Total current liabilities 11,135 2,186 2,836 - 16,157
----------------------------------------------------------------------
Other long-term liabilities 1,464 - - - 1,464
Long-term debt, net of current portion 2,692 303 - 9,803 (b) 12,798
----------------------------------------------------------------------
4,156 303 - 9,803 14,262
----------------------------------------------------------------------
Stockholders' equity:
Capital 39,121 400 2 13,935 (a) 53,458
Retained earnings (12,281) 951 3,906 (5,863)(a) (13,287)
----------------------------------------------------------------------
26,840 1,351 3,908 8,072 40,171
----------------------------------------------------------------------
Total liabilities and stockholders' equity $ 42,131 $ 3,840 $ 6,744 $ 17,875 $ 70,590
======================================================================
</TABLE>
<PAGE> 20
CAPSTONE PHARMACY SERVICES, INC.
NOTES TO PRO FORMA INCOME STATEMENT AND BALANCE SHEET DATA
FOR THE TEN MONTHS ENDED AND AS OF DECEMBER 31, 1995
(unaudited)
(a) Reflects adjustments related to the IMD and Geri-Care acquisitions,
including the write-down of intangibles to fair market value, the
retention of cash by selling shareholders and the elimination of
intercompany advances and equity accounts. The adjustments also
reflect the goodwill recorded in the IMD and Geri-Care acquisitions
and the amortization of the goodwill.
(b) Reflects additional long-term debt and additional funds raised through
a private placement offering incurred as a result of the IMD
acquisition and the interest expense on that debt.
(c) Reflects certain proforma adjustments, including amortization of
goodwill acquired and related income tax effects.
(d) Reflects Geri-Care results for the nine months ended September 30,
1995, which do not differ materially from ten month results.
(e) Reflects IMD results for the year ended December 31, 1995, which do
not differ materially from ten month results.
(f) Reflects the financial position of Geri-Care as of September 30, 1995,
which does not differ materially from its financial position at
December 31, 1995.
<PAGE> 21
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.
CAPSTONE PHARMACY SERVICES, INC.
By: /s/ Donald W. Hughes
-------------------------------
Vice-President and
Chief Financial Officer
Date: May 9, 1996
