SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
FORM 8-K/A
(Amendment No. 1)
CURRENT REPORT
Pursuant to Section 13 or 15(d) of
the Securities Exchange Act of 1934
Date of Report: September 3, 1996
Seafield Capital Corporation
------------------------------------------------------
(Exact name of registrant as specified in its charter)
Missouri 0-16946 43-1039532
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(State of other (Commission File Number) (IRS Employer
jurisdiction of Identification
incorporation) Number)
2600 Grand Ave. Suite 500
P. O. Box 410949
Kansas City, MO 64141
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(Address of principal executive offices) (Zip code)
(816) 842-7000
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(Registrant's telephone number, including area code)
Item 2. Acquisition or Disposition of Assets.
On September 18, 1996, the Registrant filed a Current Report on Form 8-K
dated September 3, 1996 reporting the consummation of the acquisition by its
55% owned subsidiary, Response Oncology, Inc. (Response), of Rosenberg &
Kalman, M.D., P.A. (the Tamarac Practice).
The Registrant hereby files amendment No. 1 to the previously filed Form 8-K to
provide the audited financial statements of Rosenberg & Kalman, M.D., P.A. and
the Registrant's pro forma financial information.
Item 7. Financial Statements, Pro Forma Financial Information and Exhibits.
(a) Financial Statements
Audited Balance Sheet, Statement of Income, Statement of
Shareholders' Equity and the Statement of Cash Flows, including footnotes, as
of and for the year ended December 31, 1995 for Rosenberg and Kalman, M.D.,
P.A.
(b) Pro Forma Financial Information
Pro Forma Consolidated Balance Sheet for Seafield Capital Corporation
(Seafield) and the Tamarac practice as of June 30, 1996 and Pro Forma
Consolidated Statements of Operations for Seafield and the Tamarac practice for
the six months ended June 30, 1996 and the year ended December 31, 1995.
(c) Exhibits
10(a) Form of the Stock Purchase Agreement among Response Oncology,
Inc., Alfred M. Kalman, M.D. and Abraham Rosenberg, M.D. dated as of September
1, 1996 (filed as Exhibit 10(a) to Registrant's Form 8-K dated September 3,
1996 and incorporated herein by reference).
10(b) Form of the Service Agreement among Response Oncology, Inc.,
Rosenberg & Kalman, M.D., P.A., R&K, M.D., P.A. and Stockholders of R&K, M.D.,
P.A. dated as of September 1, 1996. (filed as Exhibit 10(b) to Registrant's
Form 8-K dated September 3, 1996 and incorporated herein by reference).
INDEPENDENT AUDITORS' REPORT
The Board of Directors
Rosenberg and Kalman, M.D., P.A.:
We have audited the accompanying balance sheet of Rosenberg and Kalman,
M.D., P.A. as of December 31, 1995, and the related statements of operations,
stockholders' 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 Rosenberg and Kalman, M.D.,
P.A. 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.
KPMG PEAT MARWICK LLP
Miami, Florida
June 7, 1996
ROSENBERG AND KALMAN, M.D., P.A.
BALANCE SHEETS
<TABLE>
<CAPTION>
DECEMBER 31, MARCH 31,
1995 1996
------------ -----------
(UNAUDITED)
<S> <C> <C>
ASSETS
Current assets:
Cash............................................................... $ 744 $ 37,506
Accounts receivable, net of allowance for contractual adjustments
and uncollectible amounts of $534,000 and $320,000 in 1995 and
in 1996 (unaudited), respectively............................... 536,069 763,137
Supplies........................................................... 122,701 97,621
Prepaid expenses................................................... 42,058 43,455
------------ -----------
Total current assets....................................... 701,572 941,719
------------ -----------
Furniture and equipment:
Furniture and fixtures............................................. 183,097 183,097
Medical equipment.................................................. 78,460 78,460
Transportation equipment........................................... 35,841 35,841
------------ -----------
297,398 297,398
Less accumulated depreciation...................................... 219,920 225,182
------------ -----------
Net furniture and equipment..................................... 77,478 72,216
Deferred income taxes................................................ 10,188 --
Other assets......................................................... 7,049 7,049
------------ -----------
$796,287 $ 1,020,984
========== =========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable and accrued expenses.............................. $671,076 $ 280,084
Accrued employee compensation...................................... 25,222 15,218
Current portion of long-term debt.................................. 9,990 10,364
Income taxes payable............................................... -- 8,783
------------ -----------
Total current liabilities.................................. 706,288 314,449
------------ -----------
Long-term debt....................................................... 19,981 18,138
Deferred income taxes................................................ -- 226,243
Stockholders' equity:
Common stock, $1 par value. Authorized 1,000 shares; issued and
outstanding 100 shares.......................................... 100 100
Retained earnings.................................................. 69,918 462,054
------------ -----------
Total stockholders' equity................................. 70,018 462,154
Commitments and contingencies
------------ -----------
$796,287 $ 1,020,984
========== =========
</TABLE>
See accompanying notes to financial statements.
ROSENBERG AND KALMAN, M.D., P.A.
STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
FOR THE
THREE-MONTH
YEAR ENDED PERIOD ENDED
DECEMBER 31, MARCH 31,
1995 1996
------------ ------------
(UNAUDITED)
<S> <C> <C>
Net patient service revenue.......................................... $4,196,802 $ 1,298,572
Expenses:
Operating.......................................................... 4,160,583 582,302
Depreciation....................................................... 22,807 5,262
Other.............................................................. 330,794 73,658
------------ ------------
4,514,184 661,222
------------ ------------
Income (loss) before income taxes.......................... (317,382) 637,350
Income tax provision (benefit)....................................... (113,092) 245,214
------------ ------------
Net income (loss).......................................... $ (204,290) $ 392,136
========== =========
</TABLE>
See accompanying notes to financial statements.
ROSENBERG AND KALMAN, M.D., P.A.
STATEMENTS OF STOCKHOLDERS' EQUITY
<TABLE>
<CAPTION>
TOTAL
COMMON RETAINED STOCKHOLDERS'
STOCK EARNINGS EQUITY
------ --------- -------------
<S> <C> <C> <C>
Balances, December 31, 1994................................... $100 $ 274,208 $ 274,308
Net loss............................................ -- (204,290) (204,290)
------ --------- -------------
Balances, December 31, 1995................................... 100 69,918 70,018
Net income (unaudited).............................. -- 392,136 392,136
------ --------- -------------
Balances, March 31, 1996 (unaudited).......................... $100 $ 462,054 $ 462,154
====== ========= =========
</TABLE>
See accompanying notes to financial statements.
ROSENBERG AND KALMAN, M.D., P.A.
STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
FOR THE
THREE-MONTH
YEAR ENDED PERIOD ENDED
DECEMBER 31, MARCH 31,
1995 1996
------------ ------------
(UNAUDITED)
<S> <C> <C>
Cash flows from operating activities:
Net income (loss)................................................... $ (204,290) $ 392,136
Adjustments to reconcile net income to net cash provided by
operating activities:
Depreciation..................................................... 22,807 5,262
Loss on disposition of operating asset........................... 10,372 --
Deferred income taxes............................................ (130,340) 236,431
Changes in operating assets and liabilities:
Accounts receivable, net....................................... (152,152) (227,068)
Supplies....................................................... (3,197) 25,080
Prepaid expenses............................................... (13,069) (1,397)
Accounts payable and accrued expenses.......................... 473,217 (390,992)
Income tax payable............................................. -- 8,783
Accrued employee compensation.................................. 3,906 (10,004)
------------ ------------
Net cash provided by operating activities................... 7,254 38,231
------------ ------------
Cash flows from investing activities:
Expenditures for furniture and equipment............................ (5,870) --
Proceeds from sale of investments................................... 2,282 --
------------ ------------
Net cash used in investing activities....................... (3,588) --
------------ ------------
Cash flows from financing activity:
Repayment of debt................................................... (6,189) (1,469)
------------ ------------
Net cash used in financing activity......................... (6,189) (1,469)
------------ ------------
Net increase (decrease) in cash............................. (2,523) 36,762
Cash at beginning of period........................................... 3,267 744
------------ ------------
Cash at end of period................................................. $ 744 $ 37,506
========== =========
Supplemental disclosure of cash flow information:
Cash payments for interest.......................................... $ 3,203 $ 430
========== =========
Cash payments for taxes............................................. $ 34,635 $ 1,954
========== =========
Supplemental schedule of noncash investing and financing activities:
Acquisition of automobile........................................... $ 35,841 $ --
========== =========
Borrowings incurred in connection with acquisition of automobile.... $ 29,971 $ --
========== =========
</TABLE>
See accompanying notes to financial statements.
ROSENBERG AND KALMAN, M.D., P.A.
NOTES TO FINANCIAL STATEMENTS
UNAUDITED INTERIM FINANCIAL INFORMATION
The balance sheet as of March 31, 1996 and the related statements of
operations, shareholders' equity and cash flows for the three-month period ended
March 31, 1996 (1996 interim financial information) have been prepared by
Rosenberg and Kalman, M.D., P.A. (the "Company") and are unaudited. In the
opinion of the Company, the 1996 interim financial information includes all
adjustments, consisting of only normal recurring adjustments, necessary for a
fair statement of the results of the 1996 interim period.
Certain information and footnote disclosures normally included in financial
statements prepared in accordance with generally accepted accounting principles
have been condensed or omitted from the 1996 interim financial information. The
1996 interim financial information should be read in conjunction with the
Company's December 31, 1995 audited financial statements appearing herein. The
results for the three months ended March 31, 1996 may not be indicative of
operating results for the full year.
(1) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES AND PRACTICES
(a) Description of Business
The Company was incorporated on November 24, 1982 in the state of Florida.
The Company is a medical group practice whose physicians specialize in providing
services to patients with cancer.
(b) Net Revenue
Net revenue primarily consists of charges for patient services rendered by
the physicians based on established billing rates less allowance and discounts
for patients covered by contractual programs. Payments received under these
programs, which are generally based on predetermined rates, are generally less
than the established billing rates, and the differences are recorded as
contractual allowances or policy discounts. Net patient service revenue is net
of contractual adjustments and policy discounts of approximately $1,100,000 for
the year ended December 31, 1995 and $242,000 for the three-month period ended
March 31, 1996 (unaudited).
(c) Accounts Receivable
Accounts receivable consists primarily of receivables from patients and
third-party payors. In the normal course of providing health care services, the
Company grants credit to patients, substantially all of whom are residents of
the South Florida area. The Company does not generally require collateral or
other security in extending credit to patients; however, it routinely obtains
assignments of (or is otherwise entitled to receive) patients' benefits payable
under their health insurance programs, plans or policies (such as, Medicare,
Medicaid, health maintenance organizations, preferred provider organizations and
commercial insurance policies).
The majority of the Company's net revenue and receivables is from
third-party payment programs. At December 31, 1995, approximately 97 percent of
total revenue and receivables consists of amounts from Medicare (26 percent),
various commercial plans (37 percent) and private pay patients (34 percent).
(d) Supplies
Supplies consist of pharmaceuticals and medications which are stated at the
lower of cost or market on a first-in, first-out basis.
ROSENBERG AND KALMAN, M.D., P.A.
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
(e) Property and Equipment
Property and equipment are stated at cost. Depreciation for equipment is
calculated using the straight-line method over the estimated useful lives of the
assets, as follows:
<TABLE>
<CAPTION>
ESTIMATED
USEFUL LIVES
------------
<S> <C>
Office equipment.............................................. 7 years
Medical equipment............................................. 5-7 years
Transportation equipment...................................... 5 years
</TABLE>
(f) Income Taxes
The Company accounts for income taxes under the Financial Accounting
Standards Board's Statement of Financial Accounting Standards No. 109,
"Accounting for Income Taxes" ("Statement 109"). Statement 109 requires the
asset and liability method of accounting for income taxes. Under the asset and
liability method of Statement 109, deferred tax assets and liabilities are
recognized for the future tax consequences attributable to differences between
the financial statement carrying amounts of existing assets and liabilities and
their respective tax basis. Deferred tax assets and liabilities are measured
using enacted tax rates expected to apply to taxable income in the years in
which those temporary differences are expected to be recovered or settled. Under
Statement 109, the effect on deferred tax assets and liabilities of a change in
tax rates is recognized in income in the period that includes the enactment
date.
(g) Use of 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 revenue and expenses during the reporting
period. Actual results could differ from those estimates.
(2) FAIR VALUE OF FINANCIAL INSTRUMENTS
The carrying amounts of patients' accounts receivable, investments,
accounts payable, notes payable, accrued expenses and accrued employee
compensation approximate fair value because of the short maturity of these
instruments.
(3) EMPLOYEE BENEFIT PLANS
The Company has a Qualified Pension and Profit Sharing Plan (the "Plan"),
which covers substantially all employees. Employees who complete one year of
service and attain age 21 may participate in the Plan. The Company's
contributions to the Plan are discretionary and include separate components for
annual profit-sharing and retirement benefits. For the year ended December 31,
1995 and the three-month period ended March 31, 1996 (unaudited), the Company
did not make any contributions to the Plan.
ROSENBERG AND KALMAN, M.D., P.A.
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
(4) DEBT
Long-term obligation consists of the following:
<TABLE>
<CAPTION>
DECEMBER 31, MARCH 31,
1995 1996
------------ -----------
(UNAUDITED)
<S> <C> <C>
Chase Automotive Finance interest is fixed at 8.5% per annum,
due in monthly installments including interest, due December
27, 1998.................................................... $ 29,971 $ 28,502
Less current portion.......................................... (9,990) (10,364)
------------ -----------
$ 19,981 $ 18,138
========== =========
</TABLE>
(5) INCOME TAXES
Income tax (benefit) expense for the year ended December 31, 1995 and the
three-month period ended March 31, 1996 is as follows:
<TABLE>
<CAPTION>
DECEMBER 31, MARCH 31,
1995 1996
------------ -----------
(UNAUDITED)
<S> <C> <C>
Current:
Federal..................................................... $ 15,294 $ 7,780
State....................................................... 1,954 1,003
------------ -----------
17,248 8,783
------------ -----------
Deferred:
Federal..................................................... (118,276) 203,216
State....................................................... (12,064) 33,215
------------ -----------
130,340 236,431
------------ -----------
$ (113,092) $ 245,214
========== =========
</TABLE>
The tax effects of temporary differences that give rise to a significant
portion of the deferred tax assets and deferred tax liabilities at December 31,
1995 and March 31, 1996 are as follows:
<TABLE>
<CAPTION>
DECEMBER 31, MARCH 31,
1995 1996
------------ -----------
(UNAUDITED)
<S> <C> <C>
Deferred tax assets:
Revenue and expenses recognized for financial reporting
purposes in a different period than for income tax
purposes................................................. $ 10,188 $ --
------------ -----------
Deferred tax liabilities:
Revenue and expenses recognized for financial reporting
purposes in a different period than for income tax
purposes................................................. -- (226,243)
------------ -----------
Net deferred tax assets (liabilities)............... $ 10,188 $(226,243)
========== =========
</TABLE>
ROSENBERG AND KALMAN, M.D., P.A.
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
A reconciliation of the effective income tax rate is as follows:
<TABLE>
<CAPTION>
DECEMBER 31, MARCH 31,
1995 1996
------------ -----------
(UNAUDITED)
<S> <C> <C>
Computed "expected" tax expense (benefit)..................... (35.00)% 35.00%
State income tax, net of federal benefit...................... (3.57) 3.47
Permanent adjustments......................................... 2.94 --
------------ -----------
(35.63)% 38.47%
========== =========
</TABLE>
(6) COMMITMENTS AND CONTINGENCIES
(a) Leases
The Company leases its operating facilities and certain transportation
equipment on a month-to-month basis.
Total rental expense for operating leases was $68,194 for the year ended
December 31, 1995 and $14,813 for the three-month period ended March 31, 1996.
(b) Medical Malpractice and Professional Liability Insurance
The Company maintains professional liability insurance on a claims-made
basis at $500,000 per claim and $1,500,000 in the aggregate. Incidents and
claims reported during the policy period are anticipated to be covered by the
malpractice carrier.
At December 31, 1995, there are no asserted claims against the Company, nor
has the Company identified any incident which may have occurred but has yet to
be identified under its incident-reporting system. Accordingly, the Company has
made no accruals at December 31, 1995 and March 31, 1996 (unaudited) for claims
incurred but not reported.
SEAFIELD CAPITAL CORPORATION AND SUBSIDIARIES
Unaudited Pro Forma Consolidated Financial Information
Basis of Presentation
The accompanying pro forma consolidated balance sheet as of June 30,1996 and
the related pro forma consolidated statements of operations for the year ended
December 31, 1995 and the six months ended June 30, 1996 give effect to the
acquisitions by Response Oncology, Inc.(Response), a 55% owned subsidiary of
Seafield Capital Corporation (Seafield), of Rosenberg & Kalman, M.D., P.A. (the
Tamarac Practice), Rymer, Zaravinos & Faig, M.D., P.A. (d/b/a/ Southeast
Florida Hematology Oncology Group, P.A.) (Fort Lauderdale practice), Jeffrey L.
Paonessa, M.D., P.A. (Paonessa), Knoxville Hematology Oncology Associates
(KHOA) and Oncology Hematology Group of South Florida, P.A. (OHGSF),
(collectively referred to as the "Groups") as if the acquisitions of the Groups
had occurred on January 1, 1995. The pro forma information is based on the
historical audited financial statements of Seafield and the Groups, giving
effect to the acquisitions under the purchase method of accounting, and the
assumptions and adjustments described in the accompanying notes to the pro
forma consolidated financial information.
The pro forma statements have been prepared by Seafield's management based on
the audited financial statements of the Groups. These pro forma statements may
not be indicative of the results that would have occurred if the acquisitions
had been in effect on the dates indicated or which may be obtained in the
future. The pro forma statements do not reflect the effect of expense
reductions and other operational changes, which, in the opinion of Response, is
likely to result in profitable operations for the Groups. The pro forma
financial statements should be read in conjunction with the consolidated
financial statements and notes of Seafield.
SEAFIELD CAPITAL CORPORATION AND SUBSIDIARIES
Pro Forma Consolidated Balance Sheet
June 30, 1996
(Unaudited)
<TABLE>
<CAPTION>
Historical Previous Pro forma Tamarac Pro Forma Total
Company Acquisitions Adjustments Subtotal Practice Adjustments Pro Forma
----------------------------------------------------------------------------------------
(in thousands)
<S> <C> <C> <C> <C> <C> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents $ 6,274 36 (36) 6,274 41 (41) 6,274
Short-term investments 65,752 65,752 65,752
Accounts and notes receivable 28,911 625 135 29,671 722 228 30,621
Current income tax receivable 5,407 5,407 5,407
Deferred income taxes 1,130 (69) 69 1,130 1,130
Other current assets 11,040 179 (74) 11,145 150 (24) 11,271
-------------------------------------------------------------------------------------
Total current assets 118,514 771 94 119,379 913 163 120,455
Property, plant and equipment 22,256 19 22,275 82 (33) 22,324
Investments:
Securities 7,220 7,220 7,220
Oil and gas 2,453 2,453 2,453
Intangible assets 61,429 11,234 72,663 15,685 88,348
Other assets 975 975 19 (19) 975
Net assets of discontinued real
estate operations 37,648 37,648 37,648
-------------------------------------------------------------------------------------
$ 250,495 771 11,347 262,613 1,014 15,796 279,423
=====================================================================================
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 7,277 394 (197) 7,474 366 4 7,844
Notes payable 636 250 (250) 636 10 (10) 636
Other current liabilities 7,899 7,899 10 469 8,378
-------------------------------------------------------------------------------------
Total current liabilities 15,812 644 (447) 16,009 386 463 16,858
Notes payable 23,378 6,443 29,821 17 9,983 39,821
Deferred income taxes 2,851 4,299 7,150 5,961 13,111
Other liabilities 2,440 2,440 2,440
-------------------------------------------------------------------------------------
Total liabilities 44,481 644 10,295 55,420 403 16,407 72,230
-------------------------------------------------------------------------------------
Minority interests 23,033 1,179 24,212 24,212
-------------------------------------------------------------------------------------
Stockholders' equity:
Preferred stock of $1 par value.
Authorized 3,000,000 shares;
none issued -- -- --
Common stock of $1 par value.
Authorized 24,000,000 shares;
issued 7,500,000 shares 7,500 1 (1) 7,500 7,500
Paid-in capital 1,763 1,763 1,763
Equity adjustment from foreign (466) (466) (466)
currency translation
Retained earnings 204,287 126 (126) 204,287 611 (611) 204,287
-------------------------------------------------------------------------------------
213,084 127 (127) 213,084 611 (611) 213,084
Less:
Cost of 1,017,924 shares
of treasury stk 30,103 30,103 30,103
-------------------------------------------------------------------------------------
Total stockholders' equity 182,981 127 (127) 182,981 611 (611) 182,981
-------------------------------------------------------------------------------------
$ 250,495 771 11,347 262,613 1,014 15,796 279,423
=====================================================================================
</TABLE>
See accompanying notes to pro forma consolidated financial information.
SEAFIELD CAPITAL CORPORATION AND SUBSIDIARIES
Pro Forma Consolidated Statements of Operations
Six months ended June 30, 1996
(Unaudited)
<TABLE>
<CAPTION>
Historical Previous Pro Forma Tamarac Pro Forma Total
Company Acquisitions Adjustments Subtotal Practice Adjustments Pro Forma
-----------------------------------------------------------------------------------------
(in thousands)
<S> <C> <C> <C> <C> <C> <C> <C>
REVENUES
Healthcare services $ 31,981 8,741 (3,167)a,b 37,555 2,191 (646) a,b 39,100
Insurance services 24,505 24,505 24,505
Other 1,086 1,086 1,086
---------------------------------------------------------------------------------------
Total revenues 57,572 8,741 (3,167) 63,146 2,191 (646) 64,691
COSTS AND EXPENSES
Healthcare services 28,419 6,077 (1,545)a,d 32,951 1,650 (516) a,d 34,085
Insurance services 10,864 10,864 10,864
Other 1,241 1,241 1,241
Selling, general, administrative 17,431 17,431 17,431
---------------------------------------------------------------------------------------
Earnings (loss) from operations (383) 2,664 (1,622) 659 541 (130) 1,070
Investment income - net 2,415 2,415 2,415
Interest expense (471) (32) (397) c (900) (333) c (1,233)
Other income/(loss) 247 79 (79) 247 247
---------------------------------------------------------------------------------------
Earnings before income taxes 1,808 2,711 (2,098) 2,421 541 (463) 2,499
Income taxes 891 891 891
---------------------------------------------------------------------------------------
Earnings before minority interest 917 2,711 (2,098) 1,530 541 (463) 1,608
Minority interest 845 845 845
---------------------------------------------------------------------------------------
NET EARNINGS (LOSS) $ 72 2,711 (2,098) 685 541 (463) 763
=======================================================================================
</TABLE>
See accompanying notes to pro forma consolidated financial information.
SEAFIELD CAPITAL CORPORATION AND SUBSIDIARIES
Pro Forma Consolidated Statements of Operations
Twelve Months ended December 31, 1995
(Unaudited)
<TABLE>
<CAPTION>
Historical Previous Pro Forma Tamarac Pro Forma Total
Company Acquisitions Adjustments Subtotal Practice Adjustments Pro Forma
-----------------------------------------------------------------------------------------
(in thousands)
<S> <C> <C> <C> <C> <C> <C> <C>
REVENUES
Healthcare services $ 56,410 27,550 (9,306)a,b 74,654 4,197 (1,238)a,b 77,613
Insurance services 55,862 55,862 55,862
Other 7,272 7,272 7,272
---------------------------------------------------------------------------------------
Total revenues 119,544 27,550 (9,306) 137,788 4,197 (1,238) 140,747
COSTS AND EXPENSES
Healthcare services 52,838 21,242 (4,860)a,d 69,220 4,514 (1,929)a,d 71,805
Insurance services 23,598 23,598 23,598
Other 6,357 6,357 6,357
Selling, general, administrative 42,300 42,300 42,300
---------------------------------------------------------------------------------------
Earnings (loss) from operations (5,549) 6,308 (4,446) (3,687) (317) 691 (3,313)
Investment income - net 4,401 4,401 4,401
Interest expense (124) (269) (1,929) c (2,322) (665) (2,987)
Other income/(loss) (4,564) 352 (352) (4,564) (4,564)
---------------------------------------------------------------------------------------
Earnings (loss) before income taxes (5,836) 6,391 (6,727) (6,172) (317) 26 (6,463)
Income taxes (6,563) 262 (262) e (6,563) (113) 113 (6,563)
---------------------------------------------------------------------------------------
Earnings before minority interest 727 6,129 (6,465) 391 (204) (87) 100
Minority interest 1,475 1,475 1,475
---------------------------------------------------------------------------------------
EARNINGS (LOSS) FROM
CONTINUING OPERATIONS $ (748) 6,129 (6,465) (1,084) (204) (87) (1,375)
=======================================================================================
</TABLE>
See accompanying notes to pro forma consolidated financial information.
SEAFIELD CAPITAL CORPORATION AND SUBSIDIARIES
Notes to Pro Forma Consolidated Financial Information
The accompanying pro forma consolidated financial information presents the pro
forma financial condition of Seafield Capital Corporation and subsidiaries
(Seafield) as of June 30, 1996 and the results of their operations for the year
ended December 31, 1995 and the six months ended June 30, 1996.
On September 3, 1996, Seafield's 55% owned subsidiary, Response Oncology, Inc.
(Response), acquired from unaffiliated individual sellers 100% of the issued
and outstanding common stock of Rosenberg & Kalman, M.D., P.A. (the Tamarac
Practice).
The accompanying pro forma consolidated balance sheet includes the acquired
assets, assumed liabilities and effects of financing as if the Tamarac
practice had been acquired on June 30, 1996. The accompanying pro forma
consolidated statements of operations reflect the pro forma results of
operations, as adjusted, as if all acquisition practices held by Response had
been acquired on January 1, 1995.
PRO FORMA CONSOLIDATED BALANCE SHEET
The adjustments reflected in the pro forma consolidated balance sheet are to
reflect the fair values of assets acquired and liabilities assumed in
connection with the acquisition of the Tamarac practice, to reflect the
issuance of long-term debt and cash payment to complete the acquisition; and
to reflect the recording of management service agreements acquired.
PRO FORMA CONSOLIDATED STATEMENTS OF OPERATIONS
The adjustments reflected in the pro forma consolidated statements of
operations are as follows:
(a) To eliminate certain revenues and expenses that would not constitute
revenue to Response or be the responsibility of Response pursuant to the
service agreements.
(b) To accrue net revenue resulting from service agreements related to the
acquisition of the practices. Amounts were calculated based upon actual
operating results for the period, as adjusted, under the terms of the related
service agreements.
(c) To reflect interest on the long-term debt issued. Interest was
calculated at the annual rates ranging from 5% to 9.5%.
(d) To record amortization of the intangible asset related to the service
agreements. The assets are amortized over the service agreement period (40
years).
(e) To remove the effect of federal income taxes as Response would have
utilized tax net operating loss carryforwards to fully offset the acquired
practice's 1995 taxable income.
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 officer.
Seafield Capital Corporation
Date: November 13, 1996 By: /s/ Steven K. Fitzwater
---------------------------
Steven K. Fitzwater
Vice President, Chief Accounting
Officer and Secretary
