<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
December 14, 1994
-----------------------
Date of Report
(Date of earliest event reported)
Beverly Enterprises, Inc.
- --------------------------------------------------------------------------------
(Exact name of Registrant as specified in its charter)
Delaware
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(State or other jurisdiction of incorporation)
1-9550 95-4100309
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(Commission file number) (IRS employer identification no.)
1200 South Waldron Road, No. 155
Fort Smith, Arkansas 72903
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(Address of principal executive offices) (Zip code)
(501) 452-6712
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(Registrant's telephone number, including area code)
<PAGE> 2
ITEM 5. Other Events
On December 26, 1994, Beverly Enterprises, Inc., a Delaware
corporation ("Beverly"), Beverly Acquisition Corporation, a Delaware
corporation ("Acquisition"), a wholly-owned subsidiary of Beverly, and Pharmacy
Management Services, Inc., a Florida corporation ("PMSI"), entered into an
Agreement and Plan of Merger (the "Merger Agreement") whereby PMSI will be
merged with and into Acquisition (the "Merger"). Acquisition will be the
surviving corporation in the Merger. The favorable vote of the holders of a
majority of the outstanding shares of PMSI Common Stock is required for
approval of the Merger and Merger Agreement. The stockholders of Beverly are
not required to and will not vote on the Merger, the Merger Agreement or the
transactions contemplated thereby.
At the Effective Time (as defined) of the Merger: (i) PMSI will be
merged with and into Acquisition, with Acquisition remaining a wholly-owned
subsidiary of Beverly and with all of the assets and liabilities of PMSI
becoming assets and liabilities of Acquisition; (ii) Acquisition will change
its name to "Pharmacy Management Services, Inc.;" (iii) each issued and
outstanding share of common stock of PMSI will be converted into the right to
receive shares of Beverly common stock equal to the quotient of $16.50 divided
by the mean arithmetic average of the daily closing sales price per share
(rounded to the nearest whole cent) of the common stock of Beverly during the
ten (10) consecutive trading days ending on the second trading day immediately
preceding the Effective Time, as reported on the NYSE (such arithmetic mean is
hereinafter defined as the "Beverly Share Closing Price") subject to certain
ceiling and floor adjustments as further described in a Prospectus/Consent
Solicitation Statement to be filed with respect to the Merger; and (iv) each
PMSI Option (as defined) outstanding as of the Effective Time will be assumed
by Beverly and converted into the right to receive a number of Beverly Shares
adjusted in accordance with the Option Exchange Ratio (as defined). Fractional
shares will not be issued in connection with the Merger. A PMSI shareholder
otherwise entitled to a fractional share will be paid cash in lieu of such
fractional share in an amount equal to the product of the Beverly Share Closing
Price of a share of common stock of Beverly multiplied by the fractional
percentage of a share of common stock of Beverly to which such holder would
otherwise be entitled.
PMSI is a leading independent nationwide provider of medical cost
containment and managed care services to workers compensation payors and
claimants. PMSI offers services that address essentially all of an injured
worker's health care related needs, from the time of job-related injury through
return to employment, or home care as needed. Its services include first
notice of injury reporting, case management, a preferred provider organization
and pharmacy benefit management through both a national retail pharmacy network
and home delivery of prescription drugs, medical supplies and medical
equipment. PMSI believes that these services enhance the quality of care for
the injured worker while containing the cost of care for the insurer or other
payor of worker's compensation benefits.
PMSI's executive offices are located at 3611 Queen Palm Drive, Tampa,
Florida 33619. PMSI's telephone number is (813) 626- 7788.
2
<PAGE> 3
ITEM 7. Financial Statements and Exhibits
a) FINANCIAL STATEMENTS OF BUSINESS ACQUIRED. Not Applicable.
b) PRO FORMA FINANCIAL INFORMATION. As permitted by Item 7(b)(2),
the Registrant hereby amends this Form 8-K in order to include pro forma
financial information with respect to the transactions previously reported
herein.
c) EXHIBITS.
7.1 Unaudited Pro Forma Combined Financial Statements.
3
<PAGE> 4
SIGNATURE
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.
BEVERLY ENTERPRISES, INC.
/s/ SCOTT M. TABAKIN
--------------------------
Scott M. Tabakin
Vice President, Controller and
Chief Accounting Officer
Date: February 10, 1995
4
<PAGE> 1
EXHIBIT 7.1
UNAUDITED PRO FORMA COMBINED FINANCIAL STATEMENTS
The following Unaudited Pro Forma Combined Financial Statements are
presented to show the effects of (i) the November 15, 1994 acquisition of
Insta-Care, Inc. and its subsidiaries ("Insta-Care") and the December 14, 1994
acquisition of three subsidiaries of Synetic ("Synetic"), together referred to
as the "acquired businesses" and accounted for using the purchase method of
accounting and (ii) the contemplated merger with PMSI (the "Merger") using the
pooling-of-interests method of accounting.
Beverly and Insta-Care have December 31 year ends, Synetic has a June
30 year end and PMSI has a July 31 year end. Synetic's results of operations,
adjusted to a calendar-year basis, are reflected in the Unaudited Pro Forma
Combined Statements of Income. The combined operating results for Beverly,
Insta-Care and Synetic, as adjusted based on the accompanying notes, are
further combined with PMSI's operating results for the year ended July 31, 1993
and nine-month period ended April 30, 1994 in the Unaudited Pro Forma Combined
Statements of Income for the year ended 1993 and for the nine months ended
1994, respectively. The Unaudited Pro Forma Combined Statements of Income do
not reflect expenses expected to be incurred by Beverly and PMSI in connection
with the Merger nor do they give effect to the cost savings, if any, which may
be realized by Beverly after the consummation of the Merger.
The Unaudited Pro Forma Combined Balance Sheet for 1994 combines
Beverly's, Insta-Care's and Synetic's historical balance sheets as of September
30, 1994, with PMSI's balance sheet as of April 30, 1994, giving effect to the
adjustments described in the accompanying notes. Certain amounts in the
historical financial statements of Insta-Care, Synetic and PMSI have been
reclassified to conform with Beverly's presentation.
These pro forma statements are not necessarily indicative of the
financial position or results of operations which actually would have been
obtained if the transactions, as described herein, had been consummated in the
past or of results which may be obtained in the future.
<PAGE> 2
UNAUDITED PRO FORMA COMBINED STATEMENT OF INCOME
FOR THE YEAR ENDED 1993
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
INSTA-CARE & PRO FORMA
BEVERLY SYNETIC COMBINED PMSI PRO FORMA
HISTORICAL HISTORICAL ADJUSTMENTS SUBTOTAL HISTORICAL TOTAL
----------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Net operating revenues $2,884,451 $186,285 ($2,578)a) $3,068,158 $109,934 $3,178,092
Interest income 15,269 434 (62)b) 15,641 158 15,799
----------------------------------------------------------------------------
Total revenues 2,899,720 186,719 (2,640) 3,083,799 110,092 3,193,891
Costs and expenses:
Operating and administrative:
Wages and related 1,593,410 41,487 (7,850)c) 1,626,487 30,885 1,657,372
(560)a)
Other 1,069,536 133,324 (1,780)c) 1,198,467 70,202 1,268,669
(2,613)a)
Interest 62,453 1,952 16,610 d) 79,063 1,192 80,255
(1,952)b)
Depreciation and amortization 86,681 2,528 4,886 e) 94,017 2,967 96,984
(78)a)
----------------------------------------------------------------------------
2,812,080 179,291 6,663 2,998,034 105,246 3,103,280
----------------------------------------------------------------------------
Income before extraordinary charge and
provision for income taxes 87,640 7,428 (9,303) 85,765 4,846 90,611
Provision for income taxes 29,684 3,125 (3,721)f) 29,088 2,064 31,152
----------------------------------------------------------------------------
Income before extraordinary charge $57,956 $ 4,303 ($5,582) $ 56,677 $ 2,782 $ 59,459
============================================================================
Income per share of common stock before
extraordinary charge $.41 $.40 $.38
========== ========== ==========
Shares used to compute income per share
before extraordinary charge 81,207 81,207 91,451
========== ========== ==========
</TABLE>
See Notes to Unaudited Pro Forma Combined Financial Statements.
<PAGE> 3
UNAUDITED PRO FORMA COMBINED STATEMENT OF INCOME
FOR THE NINE MONTHS ENDED 1994
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
INSTA-CARE & PRO FORMA
BEVERLY SYNETIC COMBINED PMSI PRO FORMA
HISTORICAL HISTORICAL ADJUSTMENTS SUBTOTAL HISTORICAL TOTAL
-------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Net operating revenues $2,204,527 $143,009 $2,347,536 $84,137 $2,431,673
Interest income 10,709 289 (26)b) 10,972 74 11,046
-------------------------------------------------------------------------------
Total revenues 2,215,236 143,298 (26) 2,358,508 84,211 2,442,719
Costs and expenses:
Operating and administrative:
Wages and related 1,183,900 31,811 (5,888)c) 1,209,823 23,765 1,233,588
Other 832,969 100,989 (1,335)c) 932,623 52,904 985,527
Interest 43,974 1,495 12,458 d) 56,432 544 56,976
(1,495)b)
Depreciation and amortization 68,359 2,289 3,665 e) 74,313 2,516 76,829
-------------------------------------------------------------------------------
2,129,202 136,584 7,405 2,273,191 79,729 2,352,920
-------------------------------------------------------------------------------
Income before extraordinary charge and
provision for income taxes 86,034 6,714 (7,431) 85,317 4,482 89,799
Provision for income taxes 28,391 2,711 (2,972)f) 28,130 1,839 29,969
-------------------------------------------------------------------------------
Income before extraordinary charge $57,643 $4,003 ($4,459) $57,187 $2,643 $59,830
===============================================================================
Income per share of common stock before
extraordinary charge $.59 $.59 $.55
========== ========== ==========
Shares used to compute income per share
before extraordinary charge 87,014 87,014 97,270
========== ========== ==========
</TABLE>
See Notes to Unaudited Pro Forma Combined Financial Statements.
<PAGE> 4
UNAUDITED PRO FORMA COMBINED BALANCE SHEET
1994
(IN THOUSANDS)
<TABLE>
<CAPTION>
INSTA-CARE & PRO FORMA
BEVERLY SYNETIC COMBINED PMSI PRO FORMA
HISTORICAL HISTORICAL ADJUSTMENTS SUBTOTAL HISTORICAL ADJUSTMENTS TOTAL
---------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
BALANCE SHEET
Current assets:
Cash and cash equivalents $69,344 $4,891 $225,000 g) $77,117 $873 $77,990
(219,314)h)
(2,804)h)
Accounts receivable - patient, net 361,384 41,948 (3,000)h) 400,332 19,589 419,921
Accounts receivable - nonpatient, net 51,817 616 52,433 451 52,884
Notes receivable 3,091 246 3,337 112 3,449
Operating supplies 61,065 12,824 73,889 3,912 77,801
Deferred income taxes 24,576 - 24,576 548 25,124
Prepaid expenses and other 36,874 575 37,449 742 38,191
---------------------------------------------------------------------------------------
Total current assets 608,151 61,100 (118) 669,133 26,227 695,360
Property and equipment, net 1,169,140 8,643 (1,655)h) 1,176,128 8,522 1,184,650
Other assets:
Notes receivable, net 41,209 - 41,209 72 41,281
Designated and restricted funds 41,637 - 41,637 - 41,637
Goodwill, net 70,529 6,152 168,377 h) 245,058 15,467 260,525
Operating and leasehold rights and
licenses, net 23,310 - 23,310 - 23,310
Other, net 111,118 315 500 h) 114,670 3,645 118,315
(263)h)
3,000 i)
---------------------------------------------------------------------------------------
Total other assets 287,803 6,467 171,614 465,884 19,184 485,068
---------------------------------------------------------------------------------------
$2,065,094 $76,210 $169,841 $2,311,145 $53,933 $2,365,078
=======================================================================================
Current liabilities:
Accounts payable $124,029 $4,686 $128,715 $4,057 $132,772
Accrued wages and related liabilities 128,209 2,930 131,139 1,902 133,041
Accrued interest 8,859 - 8,859 39 8,898
Other accrued liabilities 75,092 1,659 8,784 h) 88,511 1,235 89,746
(24)h)
3,000 i)
Current portion of long-term obligations 37,336 77 22,500 g) 59,836 8,064 67,900
(77)h)
Income taxes payable 5,865 2,846 (2,846)h) 5,865 - 5,865
---------------------------------------------------------------------------------------
Total current liabilities 379,390 12,198 31,337 422,925 15,297 438,222
Long-term obligations 724,181 3,343 202,500 g) 926,681 1,792 928,473
(3,343)h)
Deferred income taxes payable 74,130 1,044 (1,044)h) 74,130 213 74,343
Other liabilities and deferred items 76,806 26,179 (26,163)h) 76,822 - 76,822
PMSI redeemable preferred stock 1,200 (1,200)j) -
Stockholders' equity:
Preferred stock 150,000 - 150,000 2 (2)j) 150,000
Common stock 8,954 842 (842)h) 8,954 87 970 j) 10,011
Additional paid-in capital 607,909 27,580 (27,580)h) 607,909 26,493 232 j) 634,634
Retained earnings 83,859 5,024 (5,024)h) 83,859 8,849 92,708
Treasury stock (40,135) - (40,135) - (40,135)
---------------------------------------------------------------------------------------
810,587 33,446 (33,446) 810,587 35,431 1,200 847,218
---------------------------------------------------------------------------------------
$2,065,094 $76,210 $169,841 $2,311,145 $53,933 - $2,365,078
=======================================================================================
</TABLE>
See Notes to Unaudited Pro Forma Combined Financial Statements.
<PAGE> 5
NOTES TO UNAUDITED PRO FORMA COMBINED FINANCIAL STATEMENTS
a) Reflects elimination of the operations for an Insta-Care pharmacy
location that was disposed of during 1993. Included in this
adjustment are revenues and expenses directly attributable to the
operations of such pharmacy.
b) Reflects elimination of interest income and interest expense on
intercompany receivables/payables recorded in Insta-Care's historical
financial statements.
c) Reflects elimination of costs incurred by certain acquired facilities
which duplicate facilities previously operated by Pharmacy Corporation
of America ("PCA"), an indirect wholly-owned subsidiary of Beverly.
PCA will operate the acquired businesses and, as such, performed a
study to assess the operations of each acquired location and determine
which locations were in close proximity with those previously operated
by PCA, and whose business could be consolidated into one location,
thereby, reducing overhead and other costs. Such eliminated costs are
directly attributable to the duplicate facilities to be merged.
d) Reflects additional interest expense resulting from the issuance of a
$225,000,000 variable interest rate term loan, the proceeds from which
were used to finance the acquisitions. This adjustment assumes an
annual interest rate of 7.38% which was the average interest rate for
the term loan on December 31, 1994.
e) Reflects amortization of goodwill (40 years straight-line) and a
covenant not to compete (5 years straight- line) resulting from the
acquisitions and the amortization of debt issue costs (5 years
accelerated) incurred from the issuance of the $225,000,000 term loan
used to finance the acquisitions.
f) Reflects the income tax effect of the pro forma adjustments using an
estimated effective tax rate of 40%.
g) Reflects the issuance of a $225,000,000 term loan, the proceeds from
which were used to finance the acquisitions.
h) Reflects allocation of the purchase price for the acquired businesses,
as follows (in thousands):
<TABLE>
<S> <C> <C>
Cash purchase price . . . . . . . . . . . . . . . . . . . . . . . . . . . . $219,314
Cash paid for tax liability of Synetic . . . . . . . . . . . . . . . . . . . 2,804
Estimated acquisition costs . . . . . . . . . . . . . . . . . . . . . . . . 8,784
--------
230,902
Adjustments to acquired businesses' balance sheets:
Accounts receivable - patient, net . . . . . . . . . $ 3,000
Property and equipment, net . . . . . . . . . . . . 1,655
Other, net . . . . . . . . . . . . . . . . . . . . . 263
Other accrued liabilities . . . . . . . . . . . . . (24)
Current portion of long-term obligations . . . . . . (77)
Income taxes payable . . . . . . . . . . . . . . . . (2,846)
Long-term obligations . . . . . . . . . . . . . . . (3,343)
Deferred income taxes payable . . . . . . . . . . . (1,044)
Other liabilities and deferred items . . . . . . . . (26,163)
Common stock . . . . . . . . . . . . . . . . . . . . (842)
Additional paid-in capital . . . . . . . . . . . . . (27,580)
Retained earnings . . . . . . . . . . . . . . . . . (5,024)
--------
(62,025)
--------
168,877
Less: Covenant not to compete . . . . . . . . . . . . . . . . . . . . . . . 500
--------
Excess cost over fair market value of net assets acquired . . . . . . . . . $168,377
========
</TABLE>
Beverly believes that the recorded values of the acquired businesses'
assets and liabilities approximates their fair values.
i) Reflects the estimated costs associated with issuing the $225,000,000
term loan used to finance the acquisitions.
j) Reflects the merger of PMSI and Beverly using a conversion rate of
1.17857 shares of Beverly common stock for each share of PMSI stock on
an as-if-converted to PMSI Common Stock basis.
