<PAGE> 1
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 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): June 1, 1999
NOVACARE, INC.
(Exact name of registrant as specified in its charter)
DELAWARE 1-10875 13-3247827
(State or other jurisdiction (Commission (I.R.S. Employer
of incorporation) file number) Identification No.)
1016 W. NINTH AVENUE, KING OF PRUSSIA, PA 19406
(Address of principal executive office) (Zip code)
Registrant's telephone number: (610) 992-7200
(Former name, former address and former fiscal year, if changed since
last report.)
Page 1 of 11
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NOVACARE, INC. AND SUBSIDIARIES
NovaCare, Inc., (the "Registrant") is amending its Form 8-K
filed June 16, 1999 to revise certain income tax adjustments included in
Item 7(b). Pro Forma Financial Information. The revised adjustments do
not affect the historical information for any period presented. Amounts
in the "Pro Forma Adjustments" and "Pro Forma As Adjusted" columns in the
Unaudited Pro Forma Condensed Consolidated Statements of Operations have
been revised for income taxes, income (loss) from continuing operations
and income (loss) from continuing operations per share in each of the
nine-months ended March 31, 1999 and 1998 and the years ended June 30,
1998, 1997 and 1996.
ITEM 7(b). PRO FORMA FINANCIAL INFORMATION.
The following unaudited Pro Forma Condensed Consolidated
Statements of Operations for the fiscal years ended June 30, 1998, 1997,
and 1996 and the nine months ended March 31, 1999 and 1998 and unaudited
Pro Forma Consolidated Balance Sheet as of March 31, 1999 are based on
the historical consolidated financial statements of the Registrant
adjusted to give effect to the disposition of the Registrant's Long-term
Care Services business. The Pro Forma Condensed Consolidated Statements
of Operations have been prepared assuming the above disposition occurred
as of the beginning of the respective periods presented and the Pro Forma
Consolidated Balance Sheet has been prepared assuming that the
disposition occurred as of March 31, 1999.
The Pro Forma Financial Information does not purport to present
what the Registrant's results of operations or financial position would
have been had the disposition occurred as of the beginning of the
respective periods or March 31, 1999, as the case may be, or to project
the Registrant's results of operations or financial position for any
future period or date, nor does it give effect to any matters other than
those described in the notes thereto.
The Pro Forma Financial Information should be read in
conjunction with the Registrant's Consolidated Financial Statements.
2
<PAGE> 3
NOVACARE, INC. AND SUBSIDIARIES
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
FOR THE NINE MONTHS ENDED MARCH 31, 1999
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
HISTORICAL RESULTS
FOR THE NINE MONTHS PRO FORMA
ENDED PRO FORMA AS
MARCH 31, 1999 ADJUSTMENTS ADJUSTED
-------------- ----------- --------
<S> <C> <C> <C>
NET REVENUES............................... $1,398,830 $317,417 (a) $1,081,413
COST OF SERVICES........................... 1,183,863 257,824 (a) 926,039
---------- -------- ----------
GROSS PROFIT.......................... 214,967 59,593 155,374
SELLING, GENERAL AND
ADMINISTRATIVE EXPENSES.................. 158,223 34,311 (a) 109,433
14,479 (b)
PROVISION FOR UNCOLLECTIBLE
ACCOUNTS................................. 23,439 5,105 (a) 18,334
AMORTIZATION OF EXCESS COST
OF NET ASSETS ACQUIRED................... 18,789 1,730 (a) 17,059
PROVISION FOR RESTRUCTURE.................. 129,747 98,647 (a) 31,100
---------- -------- ----------
(LOSS) FROM OPERATIONS................ (115,231) (94,679) (20,552)
GAIN FROM ISSUANCE OF
SUBSIDIARY STOCK......................... 1,506 -- 1,506
INVESTMENT INCOME.......................... 423 94 (a) 329
INTEREST EXPENSE........................... (28,373) -- (28,373)
MINORITY INTEREST.......................... (2,355) -- (2,355)
---------- -------- ----------
(LOSS) FROM CONTINUING OPERATIONS
BEFORE INCOME TAXES................. (144,030) (94,585) (49,445)
INCOME TAXES............................... (19,163) (12,008)(c) (7,155)
---------- -------- ----------
(LOSS) FROM CONTINUING OPERATIONS..... $ (124,867) $(82,577) $ (42,290)
========== ======== ==========
(LOSS) FROM CONTINUING OPERATIONS
PER SHARE:
BASIC................................. $ (1.99) $ (.67)
========== ==========
ASSUMING DILUTION..................... $ (1.99) $ (.67)
========== ==========
WEIGHTED AVERAGE NUMBER OF
SHARES OUTSTANDING:
BASIC................................. 62,738 62,738
========== ==========
ASSUMING DILUTION..................... 62,738 62,738
========== ==========
</TABLE>
3
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NOVACARE, INC. AND SUBSIDIARIES
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
FOR THE NINE MONTHS ENDED MARCH 31, 1998
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
HISTORICAL RESULTS
FOR THE NINE MONTHS PRO FORMA
ENDED PRO FORMA AS
MARCH 31, 1998 ADJUSTMENTS ADJUSTED
-------------- ----------- --------
<S> <C> <C> <C>
NET REVENUES............................... $1,207,283 $480,452 (a) $726,831
COST OF SERVICES........................... 948,985 346,808 (a) 602,177
---------- -------- ---------
GROSS PROFIT......................... 258,298 133,644 124,654
SELLING, GENERAL AND
ADMINISTRATIVE EXPENSES.................. 147,589 42,106 (a) 88,306
17,177 (b)
PROVISION FOR UNCOLLECTIBLE
ACCOUNTS................................. 15,957 2,279 (a) 13,678
AMORTIZATION OF EXCESS COST
OF NET ASSETS ACQUIRED................... 14,495 1,729 (a) 12,766
PROVISION FOR RESTRUCTURE.................. 23,500 23,500 (a) --
---------- -------- ---------
INCOME FROM OPERATIONS................ 56,757 46,853 9,904
GAIN FROM ISSUANCE OF
SUBSIDIARY STOCK......................... 38,128 -- 38,128
INVESTMENT INCOME.......................... 617 202 (a) 415
INTEREST EXPENSE........................... (20,117) -- (20,117)
MINORITY INTEREST.......................... (887) -- (887)
---------- -------- ---------
INCOME FROM CONTINUING OPERATIONS
BEFORE INCOME TAXES................. 74,498 47,055 27,443
INCOME TAXES............................... 31,057 15,226 (c) 15,831
---------- -------- ---------
INCOME FROM CONTINUING
OPERATIONS.......................... $ 43,441 $ 31,829 $ 11,612
========== ======== =========
INCOME FROM CONTINUING OPERATIONS
PER SHARE:
BASIC................................. $ .71 $ .19
========== =========
ASSUMING DILUTION..................... $ .69 $ .18
========== =========
WEIGHTED AVERAGE NUMBER OF
SHARES OUTSTANDING:
BASIC................................. 61,275 61,275
========== =========
ASSUMING DILUTION..................... 63,226 63,226
========== =========
</TABLE>
4
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NOVACARE, INC. AND SUBSIDIARIES
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
FOR THE YEAR ENDED JUNE 30, 1998
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
HISTORICAL RESULTS PRO FORMA
FOR THE YEAR ENDED PRO FORMA AS
JUNE 30, 1998 ADJUSTMENTS ADJUSTED
------------- ----------- --------
<S> <C> <C> <C>
NET REVENUES............................... $1,671,925 $634,354 (a) $1,037,571
COST OF SERVICES........................... 1,317,266 459,848 (a) 857,418
---------- -------- ----------
GROSS PROFIT......................... 354,659 174,506 180,153
SELLING, GENERAL AND
ADMINISTRATIVE EXPENSES.................. 199,293 55,291 (a) 120,837
23,165 (b)
PROVISION FOR UNCOLLECTIBLE
ACCOUNTS................................. 21,907 3,620 (a) 18,287
AMORTIZATION OF EXCESS COST
OF NET ASSETS ACQUIRED................... 20,269 2,304 (a) 17,965
PROVISION FOR RESTRUCTURE.................. 23,500 23,500 (a) --
---------- -------- ----------
INCOME FROM OPERATIONS................ 89,690 66,626 23,064
GAIN FROM ISSUANCE OF
SUBSIDIARY STOCK......................... 38,805 -- 38,805
INVESTMENT INCOME.......................... 830 236 (a) 594
INTEREST EXPENSE........................... (28,285) -- (28,285)
MINORITY INTEREST.......................... (1,494) -- (1,494)
---------- -------- ----------
INCOME FROM CONTINUING OPERATIONS
BEFORE INCOME TAXES................. 99,546 66,862 32,684
INCOME TAXES............................... 41,631 21,707 (c) 19,924
---------- -------- ----------
INCOME (LOSS) FROM CONTINUING
OPERATIONS.......................... $ 57,915 $ 45,155 $ 12,760
========== ======== ==========
INCOME (LOSS) FROM CONTINUING OPERATIONS
PER SHARE:
BASIC................................. $ .94 $ (.21)
========== ==========
ASSUMING DILUTION..................... $ .91 $ (.20)
========== ==========
WEIGHTED AVERAGE NUMBER OF
SHARES OUTSTANDING:
BASIC................................. 61,742 61,742
========== ==========
ASSUMING DILUTION..................... 63,584 63,584
========== ==========
</TABLE>
5
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NOVACARE, INC. AND SUBSIDIARIES
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
FOR THE YEAR ENDED JUNE 30, 1997
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
HISTORICAL RESULTS PRO FORMA
FOR THE YEAR ENDED PRO FORMA AS
JUNE 30, 1997 ADJUSTMENTS ADJUSTED
------------------ ----------- ---------
<S> <C> <C> <C>
NET REVENUES.................................. $ 1,066,451 $ 549,526(a) $ 516,925
COST OF SERVICES.............................. 806,365 401,009(a) 405,356
----------- ----------- -----------
GROSS PROFIT............................ 260,086 148,517 111,569
SELLING, GENERAL AND
ADMINISTRATIVE EXPENSES..................... 146,289 49,781(a) 76,467
20,041(b)
PROVISION FOR UNCOLLECTIBLE
ACCOUNTS.................................... 19,708 6,194(a) 13,514
AMORTIZATION OF EXCESS COST
OF NET ASSETS ACQUIRED...................... 13,548 2,304(a) 11,244
----------- ----------- -----------
INCOME FROM OPERATIONS................... 80,541 70,197 10,344
INVESTMENT INCOME............................. 1,740 366(a) 1,374
INTEREST EXPENSE.............................. (15,244) -- (15,244)
MINORITY INTEREST............................. (236) -- (236)
----------- ----------- -----------
INCOME (LOSS) FROM CONTINUING
OPERATIONS BEFORE INCOME TAXES......... 66,801 70,563 (3,762)
INCOME TAXES.................................. 27,891 25,270(c) 2,621
=========== =========== ===========
INCOME (LOSS) FROM CONTINUING
OPERATIONS............................. $ 38,910 $ 45,293 $ (6,383)
=========== =========== ===========
INCOME (LOSS) FROM CONTINUING OPERATIONS
PER SHARE:
BASIC.................................... $ .64 $ (.10)
=========== ===========
ASSUMING DILUTION........................ $ .62 $ (.10)
=========== ===========
WEIGHTED AVERAGE NUMBER OF
SHARES OUTSTANDING:
BASIC.................................... 61,031 61,031
=========== ===========
ASSUMING DILUTION........................ 62,455 62,455
=========== ===========
</TABLE>
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NOVACARE, INC. AND SUBSIDIARIES
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
FOR THE YEAR ENDED JUNE 30, 1996
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
HISTORICAL RESULTS PRO FORMA
FOR THE YEAR ENDED PRO FORMA AS
JUNE 30, 1996 ADJUSTMENTS ADJUSTED
------------------ ----------- ---------
<S> <C> <C> <C>
NET REVENUES................................. $ 793,038 $ 500,385(a) $ 292,653
COST OF SERVICES............................. 584,956 363,356(a) 221,600
--------- --------- ---------
GROSS PROFIT............................ 208,082 137,029 71,053
SELLING, GENERAL AND
ADMINISTRATIVE EXPENSES.................... 130,980 63,070(a) 60,698
7,212(b)
PROVISION FOR UNCOLLECTIBLE
ACCOUNTS................................... 16,359 8,262(a) 8,097
AMORTIZATION OF EXCESS COST
OF NET ASSETS ACQUIRED..................... 9,874 2,267(a) 7,607
PROVISION FOR RESTRUCTURE.................... 13,370 -- 13,370
--------- --------- ---------
INCOME (LOSS) FROM OPERATIONS.......... 37,499 56,218 (18,719)
INVESTMENT INCOME............................ 4,999 150(a) 4,849
INTEREST EXPENSE............................. (12,536) -- (12,536)
MINORITY INTEREST............................ (96) -- (96)
--------- --------- ---------
INCOME (LOSS) FROM CONTINUING
OPERATIONS BEFORE INCOME TAXES....... 29,866 56,368 (26,502)
INCOME TAXES................................. 14,585 23,828(c) (9,243)
--------- --------- =========
INCOME (LOSS) FROM CONTINUING
OPERATIONS............................ $ 15,281 $ 32,540 $ (17,259)
========= ========= =========
INCOME (LOSS) FROM CONTINUING OPERATIONS
PER SHARE:
BASIC................................... $ .24 $ (.27)
========= =========
ASSUMING DILUTION....................... $ .24 $ (.27)
========= =========
WEIGHTED AVERAGE NUMBER OF
SHARES OUTSTANDING:
BASIC................................... 63,459 63,459
========= =========
ASSUMING DILUTION....................... 63,918 63,918
========= =========
</TABLE>
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NOVACARE, INC. AND SUBSIDIARIES
NOTES TO THE UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(IN THOUSANDS, EXCEPT PER SHARE DATA)
(a) To eliminate results of operations of the Long-term Care Services
business for the entire period.
(b) To eliminate support costs directly attributable to the Long-term Care
Services business that will not continue.
(c) To reflect the adjustment to income tax expense based on pro forma
income before income taxes.
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NOVACARE, INC. AND SUBSIDIARIES
UNAUDITED PRO FORMA CONSOLIDATED BALANCE SHEET
AS OF MARCH 31, 1999
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
HISTORICAL
AS OF PRO FORMA PRO FORMA AS
MARCH 31, 1999 ADJUSTMENTS ADJUSTED
----------- ----------- -----------
<S> <C> <C> <C>
ASSETS
CURRENT ASSETS:
CASH AND CASH EQUIVALENTS ............................ $ 23,804 $ -- $ 23,804
ACCOUNTS RECEIVABLE .................................. 301,369 (93,877)(b) 207,492
INVENTORIES .......................................... 45,135 -- 45,135
INCOME TAX RECEIVABLE ................................ 27,869 (60)(b) 27,809
DEFERRED INCOME TAXES ................................ 14,580 -- 14,580
OTHER CURRENT ASSETS ................................. 27,771 (4,121)(b) 23,650
NET ASSETS OF DISCONTINUED OPERATIONS................. -- 82,944 (b) 82,944
----------- ----------- -----------
TOTAL CURRENT ASSETS ............................. 440,528 (15,114) 425,414
PROPERTY AND EQUIPMENT, NET ............................ 64,541 (1,572)(b) 62,969
EXCESS COST OF NET ASSETS ACQUIRED, NET................. 719,592 -- 719,592
INVESTMENTS IN JOINT VENTURE ........................... 15,203 -- 15,203
OTHER ASSETS, NET ...................................... 49,965 (17,720)(b) 32,245
----------- ----------- -----------
$ 1,289,829 $ (34,406) $ 1,255,423
=========== =========== ===========
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES:
CURRENT PORTION OF FINANCING ARRANGEMENTS ............ $ 540,696 $ 30,000 (a) $ 570,696
ACCOUNTS PAYABLE AND ACCRUED EXPENSES ................ 160,796 (28,653)(b) 132,143
----------- ----------- -----------
TOTAL CURRENT LIABILITIES ........................ 701,492 1,347 702,839
FINANCING ARRANGEMENTS, NET OF CURRENT PORTION.......... 55,267 -- 55,267
DEFERRED INCOME TAXES .................................. 41,684 -- 41,684
OTHER .................................................. 6,200 -- 6,200
----------- ----------- -----------
TOTAL LIABILITIES ................................ 804,643 1,347 805,990
----------- ----------- -----------
MINORITY INTEREST ...................................... 27,501 -- 27,501
COMMITMENTS AND CONTINGENCIES .......................... -- -- --
SHAREHOLDERS' EQUITY:
COMMON STOCK ......................................... 684 -- 684
ADDITIONAL PAID-IN CAPITAL ........................... 274,285 -- 274,285
RETAINED EARNINGS .................................... 225,388 (30,000)(a) 189,635
(5,753)(b)
----------- ----------- -----------
500,357 (35,753) 464,604
LESS: COMMON STOCK IN TREASURY ................... (42,672) -- (42,672)
----------- ----------- -----------
TOTAL SHAREHOLDERS' EQUITY .............. 457,685 (35,753) 421,932
----------- ----------- -----------
$ 1,289,829 $ (34,406) $ 1,255,423
=========== =========== ===========
</TABLE>
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NOVACARE, INC. AND SUBSIDIARIES
NOTES TO THE UNAUDITED PRO FORMA CONSOLIDATED BALANCE SHEET
(IN THOUSANDS, EXCEPT PER SHARE DATA)
(a) Adjustment to reflect the Registrant's liability and related
loss as a result of the $30 million working capital guarantee
provided to the Purchaser.
(b) Adjustments to reflect the elimination of the Long-term Care
Services assets and liabilities classified as Net Assets of
Discontinued Operations. As a result of the Transaction and the
Selected Markets Exit, the Registrant classified all of the
accounts receivable, net of allowance, entitled to the
Registrant, certain other assets retained by the Registrant and
current liabilities assumed by the Registrant as a result of the
Transaction and the Selected Markets Exit accounts receivable,
net of allowance, and liabilities as Net Assets of Discontinued
Operations. Assets and liabilities transferred as a result of
the Transaction have been eliminated and a loss of $5,753
recorded.
(c) Net Assets of Discontinued Operations consist of the following:
<TABLE>
<CAPTION>
Selected Markets Transaction Total
Exit
-------------------- -------------------- ---------------------
<S> <C> <C> <C>
Accounts receivable, net of $ 41,907 $ 51,970 $ 93,877
allowances...............................
Other receivables, net of allowances....... 17,258 462 17,720
Accounts payable and accrued liabilities... (17,027) (11,626) (28,653)
-------------------- -------------------- ---------------------
Net Assets of Discontinued $ 42,138 $ 40,806 $ 82,944
Operations.......................... ==================== ==================== =====================
</TABLE>
10
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NOVACARE, INC. AND SUBSIDIARIES
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.
NOVACARE, INC.
(Registrant)
June 29, 1999 By /s/ Robert E. Healy, Jr.
---------------------------------
Robert E. Healy, Jr.,
Senior Vice President,
Finance & Administration and
Chief Financial Officer
June 29, 1999 By /s/ Barry E. Smith
---------------------------------
Barry E. Smith
Vice President,
Controller and
Chief Accounting Officer
11
