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U N I T E D S T A T E S
S E C U R I T I E S A N D E X C H A N G E C O M M I S S I O N
W A S H I N G T O N, D C 2 0 5 4 9
FORM 8-K/A
AMENDMENT NO. 2
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)
<TABLE>
<S> <C> <C>
DELAWARE 1-10875 13-3247827
(State or other jurisdiction of (Commission file number) (I.R.S. Employer Identification No.)
incorporation)
</TABLE>
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.)
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NOVACARE, INC. AND SUBSIDIARIES
NovaCare, Inc., (the "Registrant" or the "Company") is amending its Form
8-K/A filed June 29, 1999 to revise certain disclosures included in Item 7(b).
Pro Forma Financial Information and deletion of unaudited Pro Forma Condensed
Consolidated Statements of Operations for the fiscal years ended June 30, 1997
and 1996 and for the nine months ended March 31, 1998. This amendment also
includes the elimination of the pro forma adjustments for support costs
previously assigned to the Long-term Care Services business and changes to the
resultant income tax expense.
ITEM 7(b). PRO FORMA FINANCIAL INFORMATION.
The following unaudited Pro Forma Condensed Consolidated Statements of
Operations for the fiscal year ended June 30, 1998 and the nine months ended
March 31, 1999 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 reflect 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 Condensed
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.
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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) 123,912
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) (80,200) (35,031)
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) (80,106) (63,924)
Income taxes...................................... (19,163) (6,756)(b) (12,407)
--------------------- ---------------------- --------------------
(Loss) from continuing operations.......... $ (124,867) $ (73,350) $ (51,517)
===================== ====================== ====================
(Loss) from continuing operations
per share:
Basic...................................... $ (1.99) $ (.82)
===================== ====================
Assuming dilution.......................... $ (1.99) $ (.82)
===================== ====================
Weighted average number of
shares outstanding:
Basic...................................... 62,738 62,738
===================== ====================
Assuming dilution.......................... 62,738 62,738
===================== ====================
</TABLE>
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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) 144,002
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 89,791 (101)
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 90,027 9,519
Income taxes.............................................. 41,631 30,309 (b) 11,322
---------------------- --------------------- ---------------------
Income (loss) from continuing
operations....................................... $ 57,915 $ 59,718 $ (1,803)
====================== ===================== =====================
Income (loss) from continuing operations
per share:
Basic.............................................. $ .94 $ (.03)
====================== =====================
Assuming dilution.................................. $ .91 $ (.03)
====================== =====================
Weighted average number of
shares outstanding:
Basic.............................................. 61,742 61,742
====================== =====================
Assuming dilution.................................. 63,584 63,584
====================== =====================
</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. The hospital contracting business, which is
immaterial, previously classified in the Company's Long-term Care Services
segment disclosure was not transferred as part of the sale.
(b) To reflect the adjustment to income tax expense based on Long-term Care
Services' ratio of income before income taxes plus permanent differences to
the Company's consolidated income before income taxes plus permanent
differences multiplied by the Company's income tax expense.
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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 (c) 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 Company's liability and related loss as a result
of the $30,000 working capital guarantee provided to the purchaser of
the Long-term Care Services business. This loss will be reported in
discontinued operations in the Company's June 30, 1999 financial statements
and all prior periods will be restated to reflect this presentation.
(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 sale of the Long-term Care Services business (the
"Transaction") and the exit from Selected Long-term Care Services Markets
(the "Selected Markets Exit"), the Company classified all of the accounts
receivable, net of allowance, to which the Company was entitled, certain
other assets retained by the Company and current liabilities assumed by the
Company as a result of the Transaction and accounts receivable, net of
allowance, and liabilities attributable to the Selected Markets Exit 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. The aggregate loss of $35,753, $30,000 from the working capital
guarantee and $5,753 from the assets and liabilities transferred, will be
reported as discontinued operations in the Company's fiscal year 1999
financial statements.
The hospital contracting business, which is immaterial, previously
classified in the Company's Long-Term Care Services segment disclosure
was not transferred as part of the sale.
(c) Net Assets of Discontinued Operations consist of the following:
<TABLE>
<CAPTION>
Selected
Markets Exit Transaction Total
-------------------- --------------------- ---------------------
<S> <C> <C> <C>
Accounts receivable, net of
allowances........................................ $ 41,907 $ 51,970 $ 93,877
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
Operations.................................. $ 42,138 $ 40,806 $ 82,944
==================== ===================== =====================
</TABLE>
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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)
August 13, 1999 By /s/ Robert E. Healy, Jr.
-----------------------------------
Robert E. Healy, Jr.,
Senior Vice President,
Finance & Administration and
Chief Financial Officer
August 13, 1999 By /s/ Barry E. Smith
----------------------------------
Barry E. Smith
Vice President,
Controller and
Chief Accounting Officer
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