<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K/A
Amendment to Application Report Filed
Pursuant to Section 13 or 15(d) of the
Securities and Exchange Act of 1934
Amendment No. 1 to Form 8-K Current Report Filed August 22, 1996
SUNRISE PRESCHOOLS, INC.
- -------------------------------------------------------------------------------
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
Delaware 0-16425 86-0532619
- ------------------------------ ----------------------- ----------------------
(STATE OR OTHER JURISDICTION (COMMISSION (I.R.S. EMPLOYER
OF INCORPORATION) FILE NUMBER) IDENTIFICATION NUMBER)
9128 East San Salvador Road, Suite 200, Scottsdale, Arizona 85258
- ----------------------------------------------------------------- ------------
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES) (Zip Code)
REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE (602) 860-1611
---------------------------
N/A
- -------------------------------------------------------------------------------
(FORMER NAME, FORMER ADDRESS AND FORMER FISCAL YEAR,
IF CHANGED SINCE LAST REPORT)
<PAGE> 2
The undersigned Registrant hereby amends the following items, financial
statements, exhibits or other portions of its Current Report on Form 8-K filed
with the Securities and Exchange Commission on August 22, 1996, as set forth
below.
ITEM 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND EXHIBITS
- --------------------------------------------------------------------------------
(a) Financial Statements
Audited financial statements for the selling parties for the year
ended December 31, 1995 are attached as Exhibit 1. Country Air, Inc. had no
operations during the year ended December 31, 1995. Country Air, Inc. had
assets of approximately $6,500 at December 31, 1995, which are included in
amounts due from related parties in the Calman Corporation and LKG, Inc.
financial statements due to immateriality.
- 2 -
<PAGE> 3
ITEM 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND EXHIBITS
- --------------------------------------------------------------------------------
(b) Pro Forma Financial Information
Sunrise Preschools, Inc. and Subsidiary
Unaudited Pro Forma Condensed Consolidated Balance Sheet
As of July 31, 1996
(In Thousands)
<TABLE>
<CAPTION>
Historical
-------------------
Selling Pro Forma Pro Forma
Sunrise Parties Adjustments Combined
------- -------- ----------- ---------
<S> <C> <C> <C> <C>
ASSETS
Current Assets
Cash and cash equivalents $2,630 $ 3 $ (3) $ 2,230
(400)
Accounts receivable, net 388 70 (70) 388
Prepaids and other 177 13 (13) 177
Deferred tax assets, current 138 -- -- 138
------ -------- --------- --------
Total current assets 3,333 86 (486) 2,933
Property and equipment, net 1,754 82 (82) 1,954
200
Deferred tax asset, net 557 -- -- 557
Note receivable from PSI 256 -- -- 256
Intangible assets, net 734 -- 625 1,359
Deposits and other 363 43 (43) 363
------- -------- --------- --------
Total assets $ 6,997 $ 211 $ 214 $ 7,422
======= ======== ========= ========
LIABILITIES AND
SHAREHOLDERS' EQUITY
Current Liabilities
Line of credit $ 100 $ -- $ -- $ 100
Accounts payable 273 21 (21) 273
Accrued expenses 429 30 (30) 429
Notes payable and capital
leases, current 133 3 (3) 133
Accrued rental reserve,
current 292 -- -- 292
Deferred rent, current 156 -- -- 156
Deferred gain, current 45 -- -- 45
------- -------- --------- ---------
Total current liabilities 1,428 54 (54) 1,428
Notes Payable and Capital
Leases, net 505 15 (15) 930
425
Accrued Rental Reserve, net 126 -- -- 126
Deferred Rent, net 304 -- -- 304
Deferred Gain, net 88 -- -- 88
Shareholders' Equity
Preferred stock 857 -- -- 857
Common stock 30 2 (2) 30
Paid-in capital 7,609 -- -- 7,609
Retained earnings (deficit) (3,950) 140 (140) (3,950)
------- -------- --------- --------
Total shareholders' equity 4,546 142 (142) 4,546
------- -------- --------- --------
Total liabilities and share-
holders' equity $ 6,997 $ 211 $ 214 $ 7,422
======= ======== ========= ========
See accompanying Note to Unaudited Pro Forma Condensed Consolidated Financial Statements.
</TABLE>
-3-
<PAGE> 4
ITEM 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND EXHIBITS
- --------------------------------------------------------------------------------
(b) Pro Forma Financial Information
Sunrise Preschools, Inc. and Subsidiary
Unaudited Pro Forma Condensed Consolidated Income Statement
For the Fiscal Year Ended July 31, 1996
(In thousands, except per share data)
<TABLE>
<CAPTION>
Historical
------------------
Selling Pro Forma Pro Forma
Sunrise Parties Adjustments Combined
------- ------- ----------- ---------
<S> <C> <C> <C> <C>
Operating Revenues $10,237 $1,366 $ -- $11,603
Operating Expenses
Payroll 5,055 639 (132) 5,562
Facilities and maintenance 4,478 277 32 4,787
General and administrative 1,638 289 -- 1,927
------- ------ ----- -------
Total operating expenses 11,171 1,205 (100) 12,276
------- ------ ----- -------
Income from Operations (934) 161 100 (673)
Non-operating Income (Expense)
Interest income (expense), net 71 -- (31) 40
Other income (expense), net 6 -- -- 6
------- ------ ----- -------
Total non-operating income
(expense) 77 -- (31) 46
------- ------ ----- -------
Net Income (Loss) $ (857) $ 161 $ 69 $ (627)
======= ====== ===== =======
Net Income (Loss) Available
for Common Stock $(1,202) $ (972)
======= =======
Net Income (Loss) per
Common Share and Common
Share Equivalent $ (0.40) $ (0.33)
======= =======
Average Shares Outstanding 2,970 2,970
======= =======
</TABLE>
See accompanying Note to Unaudited Pro Forma Condensed Consolidated Financial
Statements.
-4-
<PAGE> 5
ITEM 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND EXHIBITS
- --------------------------------------------------------------------------------
(b) Pro Forma Financial Information
Sunrise Preschools, Inc. and Subsidiary
Note to Unaudited Pro Forma Condensed Consolidated Financial Statements
(1) Pro forma adjustments to the unaudited pro forma condensed
consolidated balance sheet consisted of eliminating all Selling
Parties' balances, reducing cash and cash equivalents by $400,000
(cash portion of the purchase price plus other acquisition costs),
increasing property and equipment by $200,000 (the estimated fair
market value of the assets acquired), increasing goodwill and other
intangible assets by $625,000, and increasing notes payable by
$425,000.
Pro forma adjustments to the unaudited pro forma condensed
consolidated income statements consisted of reducing payroll costs
by the amount of salaries paid to the seller and increasing
facilities and maintenance costs for depreciation and amortization
of the acquired assets.
(c) Exhibits
(1) Financial statements for LKG, Inc., and Calman Corporation for the
year ended December 31, 1995. Country Air, Inc. had no operations
during the year ended December 31, 1995.
SIGNATURES
Pursuant to the requirements of the Securities and Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
Date: November 5, 1996 By: /s/ James R. Evans
----------------------------------
James R. Evans
Chairman of the Board of Directors
and President (Principal Executive
Officer)
-5-
<PAGE> 1
Exhibit 1
Report of Independent Auditors
Board of Directors
Sunrise Preschools, Inc.
We have audited the accompanying balance sheet of LKG, Inc., dba Tots Unlimited
VII (the Company), as of December 31, 1995, and the related statements of
operations, changes in shareholders' equity, and cash flows for the year 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 audit.
We conducted our audit 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 audit provides 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 LKG, Inc., dba Tots Unlimited
VII, as of December 31, 1995, and the results of its operations and its cash
flows for the year then ended, in conformity with generally accepted accounting
principles.
ERNST & YOUNG LLP
Phoenix, Arizona
October 14, 1996
<PAGE> 2
LKG, Inc.
dba Tots Unlimited VII
Balance Sheet
December 31, 1995
<TABLE>
<CAPTION>
ASSETS
<S> <C>
Current assets:
Cash $ 696
Accounts receivable, net of allowance for doubtful accounts of $3,600 22,468
Prepaids and other 5,447
-------
Total current assets 28,611
Due from related parties, net 7,535
Property and equipment, net 14,555
-------
Total assets $50,701
=======
LIABILITIES AND SHAREHOLDER'S EQUITY
Current liabilities:
Accounts payable $ 6,098
Accrued salaries and benefits 11,783
-------
Total current liabilities 17,881
Shareholder's equity:
Common stock, no par value, 100,000 shares
authorized, 100 shares issued and outstanding 1,000
Retained earnings 31,820
-------
Total shareholder's equity 32,820
-------
Total liabilities and shareholder's equity $50,701
=======
</TABLE>
See accompanying notes.
2
<PAGE> 3
LKG, Inc.
dba Tots Unlimited VII
Statement of Operations
Year Ended December 31, 1995
<TABLE>
<CAPTION>
<S> <C>
Revenues $514,122
Expenses:
Payroll 258,927
Facility and maintenance 158,854
General and administrative 53,775
--------
Total expenses 471,556
--------
Net income $ 42,566
========
</TABLE>
See accompanying notes.
3
<PAGE> 4
LKG, Inc.
dba Tots Unlimited VII
Statement of Changes in Shareholder's Equity
<TABLE>
<CAPTION>
Common Stock Total
Outstanding Retained Shareholder's
Shares Amount Earnings Equity
-------------------------------------------------------
<S> <C> <C> <C> <C>
Balance at January 1, 1995 100 $ 1,000 $13,268 $14,268
Net income - - 42,566 42,566
Distributions to shareholder - - (24,014) (24,014)
-------------------------------------------------------
Balance at December 31, 1995 100 $ 1,000 $31,820 $32,820
=======================================================
</TABLE>
See accompanying notes.
4
<PAGE> 5
LKG, Inc.
dba Tots Unlimited VII
Statement of Cash Flows
Year Ended December 31, 1995
<TABLE>
<CAPTION>
OPERATING ACTIVITIES
<S> <C>
Net income $ 42,566
Adjustments to reconcile net income to net cash provided by
operating activities:
Depreciation 3,445
Changes in assets and liabilities:
Accounts receivable (3,507)
Other assets 39
Accounts payable 3,889
Accrued expenses 3,484
Due to/from related parties (25,052)
--------
Net cash provided by operating activities 24,864
INVESTING ACTIVITIES
Purchases of property and equipment (3,082)
--------
Net cash used in financing activities (3,082)
FINANCING ACTIVITIES
Distributions to shareholder (24,014)
--------
Net cash used in financing activities (24,014)
--------
Net decrease in cash (2,232)
Cash at beginning of year 2,928
--------
Cash at end of year $ 696
========
</TABLE>
See accompanying notes.
5
<PAGE> 6
LKG, Inc.
dba Tots Unlimited VII
Notes to Financial Statements
December 31, 1995
1. ORGANIZATION
LKG, Inc. (the Company) operates a child care center that offers comprehensive
child care and preschool services primarily for children ages one to ten. The
Company is located in Tempe, Arizona.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
ESTIMATES AND ASSUMPTIONS
The preparation of financial statements in accordance with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities, disclosures of contingent
assets and liabilities, and the reported amounts of revenues and expenses in the
financial statements. Actual results could differ materially from those
estimates.
ACCOUNTS RECEIVABLE
Accounts receivable represent receivables from parents of enrolled children and
reimbursements from governmental agencies for tuition and a child care food
program.
PROPERTY AND EQUIPMENT
Property and equipment are stated at cost less accumulated depreciation and
amortization. Additions and betterments are capitalized and maintenance and
repairs are charged to current operations. Depreciation is computed on the
straight-line method. Estimated useful lives of the assets are as follows:
<TABLE>
<CAPTION>
<S> <C>
Furniture, fixtures and equipment 5 -7 years
Vehicles 5 years
</TABLE>
INCOME TAXES
The Company has elected to file as an S Corporation with the Internal Revenue
Service. As such, all income or loss of the Company is included in personal
individual income tax returns of the owner. Accordingly, no provision for income
taxes has been reflected in the accompanying financial statements.
6
<PAGE> 7
LKG, Inc.
dba Tots Unlimited VII
Notes to Financial Statements (continued)
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
FAIR VALUE OF FINANCIAL INSTRUMENTS
The carrying amounts reported in the balance sheet for cash and accounts
receivable approximate their fair values.
3. PROPERTY AND EQUIPMENT
Property and equipment consisted of the following at December 31, 1995:
<TABLE>
<CAPTION>
<S> <C>
Furniture, fixtures and equipment $10,553
Vehicles 9,998
-------
20,551
Less accumulated depreciation 5,996
-------
$14,555
=======
</TABLE>
4. OPERATING LEASE
The Company leases its facility under an operating lease which requires minimum
monthly payments of $5,624 through September 30, 1998. Future minimum rent
payments are as follows:
<TABLE>
<CAPTION>
<S> <C>
1996 $ 67,488
1997 67,488
1998 50,616
--------
$185,592
========
</TABLE>
Rental expense was $73,107 for the year ended December 31, 1995.
5. RELATED PARTY TRANSACTIONS
The sole shareholder of the Company is also the sole shareholder of various
other corporations. Various transactions occur among these corporations and the
sole shareholder due to working capital needs and the needs of the sole
shareholder. The net amount resulting from these transactions is a receivable of
$7,535 at December 31, 1995.
7
<PAGE> 8
LKG, Inc.
dba Tots Unlimited VII
Notes to Financial Statements (continued)
6. ADVERTISING
The Company expenses advertising costs as incurred which amounted to $7,056 for
the year ended December 31, 1995.
7. SUBSEQUENT EVENTS
Substantially all assets of the Company were purchased on August 22, 1996 by
Sunrise Preschools, Inc. In connection with the asset purchase, the sole
shareholder entered into an agreement not-to-compete with Sunrise Preschools,
Inc. for a period of five years.
8
<PAGE> 9
Report of Independent Auditors
Board of Directors
Sunrise Preschools, Inc.
We have audited the accompanying balance sheet of Calman Corporation, dba Tots
Unlimited V and VI (the Company), as of December 31, 1995, and the related
statements of operations, changes in shareholder's equity, and cash flows for
the year 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 audit.
We conducted our audit 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 audit provides 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 Calman Corporation, dba Tots
Unlimited V and VI as of December 31, 1995, and the results of its operations
and its cash flows for the year then ended, in conformity with generally
accepted accounting principles.
ERNST & YOUNG LLP
Phoenix, Arizona
October 14, 1996
<PAGE> 10
Calman Corporation
dba Tots Unlimited V and VI
Balance Sheet
December 31, 1995
<TABLE>
<CAPTION>
ASSETS
<S> <C>
Current assets:
Cash $ 1,813
Accounts receivable, net of allowance for doubtful accounts of $2,500 48,002
Prepaids and other 8,300
--------
Total current assets 58,115
Due from related parties, net 34,719
Property and equipment, net 66,778
--------
Total assets $159,612
========
LIABILITIES AND SHAREHOLDER'S EQUITY
Current liabilities:
Accounts payable $ 14,696
Accrued salaries and benefits 18,361
Current portion of long-term debt 3,172
--------
Total current liabilities 36,229
Long term debt, net of current portion 14,925
Shareholder's equity:
Common stock, no par value, 1,000,000 shares authorized, 100 shares
issued and outstanding 500
Retained earnings 107,958
--------
Total shareholder's equity 108,458
--------
Total liabilities and shareholder's equity $159,612
========
</TABLE>
See accompanying notes.
2
<PAGE> 11
Calman Corporation
dba Tots Unlimited V and VI
Statement of Operations
Year Ended December 31, 1995
<TABLE>
<CAPTION>
<S> <C>
Revenues $783,311
Expenses:
Payroll 362,714
Facility and maintenance 256,580
General and administrative 90,190
--------
Total expenses 709,484
--------
Net income $ 73,827
========
</TABLE>
See accompanying notes.
3
<PAGE> 12
Calman Corporation
dba Tots Unlimited V and VI
Statement of Changes in Shareholder's Equity
<TABLE>
<CAPTION>
Common Stock
----------------------------------- Total
Outstanding Retained Shareholder's
Shares Amount Earnings Equity
---------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Balance at January 1, 1995 100 $500 $ 76,110 $ 76,610
Net income - - 73,827 73,827
Distributions to shareholder - - (41,979) (41,979)
---------------------------------------------------------------------------
Balance at December 31, 1995 100 $500 $107,958 $108,458
===========================================================================
</TABLE>
See accompanying notes.
4
<PAGE> 13
Calman Corporation
dba Tots Unlimited V and VI
Statement of Cash Flows
Year Ended December 31, 1995
<TABLE>
<CAPTION>
OPERATING ACTIVITIES
<S> <C>
Net income $ 73,827
Adjustments to reconcile net income to net cash provided by
operating activities:
Depreciation 14,481
Changes in assets and liabilities:
Accounts receivable (5,765)
Other assets (66)
Accounts payable 11,981
Accrued expenses 6,579
Due from related parties, net (39,851)
--------
Net cash provided by operating activities 61,186
INVESTING ACTIVITIES
Purchases of property and equipment (34,277)
--------
Net cash used in financing activities (34,277)
FINANCING ACTIVITIES
Distributions to shareholder (41,979)
Proceeds from note payable 19,080
Principal payments on note payable (983)
--------
Net cash used in financing activities (23,882)
--------
Net decrease in cash 3,027
Cash at beginning of year (1,214)
--------
Cash at end of year $ 1,813
========
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION
Cash paid during the year for interest $ 763
========
</TABLE>
See accompanying notes.
5
<PAGE> 14
Calman Corporation
dba Tots Unlimited V and VI
Notes to Financial Statements
December 31, 1995
1. ORGANIZATION
Calman Corporation (the Company) operates two child care centers that offer
comprehensive child care and preschool services primarily for children ages one
to ten. The Company is located in Mesa, Arizona. The Company changed its fiscal
year during 1995 from July 31 to December 31. In connection with this change the
Company also changed its tax status from a C Corporation to an S Corporation.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
ESTIMATES AND ASSUMPTIONS
The preparation of financial statements in accordance with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities, disclosures of contingent
assets and liabilities, and the reported amounts of revenues and expenses in the
financial statements. Actual results could differ materially from those
estimates.
ACCOUNTS RECEIVABLE
Accounts receivable represent receivables from parents of enrolled children and
reimbursements from government agencies for tuition and a child care food
program.
PROPERTY AND EQUIPMENT
Property and equipment are stated at cost less accumulated depreciation and
amortization. Additions and betterments are capitalized and maintenance and
repairs are charged to current operations. Depreciation is computed on the
straight-line method. Estimated useful lives of the assets are as follows:
<TABLE>
<CAPTION>
<S> <C>
Furniture, fixtures and equipment 5 -7 years
Vehicles 5 years
</TABLE>
6
<PAGE> 15
Calman Corporation
dba Tots Unlimited V and VI
Notes to Financial Statements (continued)
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
INCOME TAXES
The Company has elected to file as an S Corporation with the Internal Revenue
Service. As such, all income or loss of the Company is included in personal
individual income tax returns of the owner. Accordingly, no provision for income
taxes has been reflected in the accompanying financial statements.
FAIR VALUE OF FINANCIAL INSTRUMENTS
The carrying amounts reported in the balance sheets of cash and accounts
receivables approximate their fair values.
3. PROPERTY AND EQUIPMENT
Property and equipment consisted of the following at December 31, 1995:
<TABLE>
<CAPTION>
<S> <C>
Furniture, fixtures and equipment $43,694
Vehicles 57,096
-------
100,790
Less accumulated depreciation 34,012
-------
$66,778
=======
</TABLE>
The Company has a note with a bank payable in monthly installments of principal
and interest of $416 through September 2000. The note bears interest 10.90%, and
is collateralized by a vehicle with a carrying value of $19,242. Future
principal maturities under this note are as follows:
<TABLE>
<CAPTION>
<S> <C>
1996 $ 3,172
1997 3,550
1998 3,959
1999 4,415
2000 3,001
-------
$18,097
=======
</TABLE>
7
<PAGE> 16
Calman Corporation
dba Tots Unlimited V and VI
Notes to Financial Statements (continued)
4. OPERATING LEASE
The Company leases two facilities under operating lease agreements which include
scheduled rent increases and are personally guaranteed by the sole shareholder.
The Company also leases a vehicle under an operating lease. Future minimum
payments related to these leases are as follows:
<TABLE>
<CAPTION>
<S> <C>
1996 $100,954
1997 99,697
1998 102,647
1999 102,983
2000 82,610
Thereafter 106,150
--------
$595,041
========
</TABLE>
Rental expense was $99,373 for the year ended December 31, 1995.
5. RELATED PARTY TRANSACTIONS
The sole shareholder of the Company is also the sole shareholder of various
other corporations. Various transactions occur between these corporations and
the sole shareholder due to working capital needs and the needs of the sole
shareholder. The net amount resulting from these transactions is a $34,719
receivable at December 31, 1995.
6. ADVERTISING
The Company expenses advertising costs as incurred which amounted to $9,804 for
the year ended December 31, 1995.
7. SUBSEQUENT EVENTS
Substantially all assets of the Company were purchased on August 22, 1996 by
Sunrise Preschools, Inc. In connection with the asset purchase, the sole
shareholder entered into an agreement not-to-compete with Sunrise Preschools,
Inc. for a period of five years.
8
