<PAGE> 1
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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): JANUARY 17, 1996
SEAFIELD CAPITAL CORPORATION
(Exact name of registrant as specified in its charter)
MISSOURI
(State or other jurisdiction of incorporation)
0-16946 43-1039532
(Commission File Number) (I.R.S. Employer Identification No.)
2600 GRAND AVE., SUITE 500, P.O. BOX 410949, KANSAS CITY, MO 64141
(Address of principal executive offices, including Zip Code)
(816) 842-7000
(Registrant's telephone number, including Area Code)
NOT APPLICABLE
(Former name or former address, if changed since last report)
<PAGE> 2
ITEM 5. OTHER EVENTS.
On January 22, 1996, the Registrant filed a Current Report on Form
8-K/A reporting the consummation of the acquisition by its 56% owned
subsidiary, Response Oncology, Inc., of Oncology Hematology Group of
South Florida, P.A.
The Registrant hereby files this Amendment No. 2 to the previously
filed Form 8-K/A in order to provide the following financial statements and pro
forma financial information.
<PAGE> 3
INDEPENDENT AUDITORS' REPORT
The Board of Directors
Oncology Hematology Group
of South Florida, P.A.:
We have audited the accompanying balance sheet of Oncology Hematology Group of
South Florida, P.A. as of December 31, 1995, and the related statements of
income, 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 Oncology Hematology Group of
South Florida, 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
March 12, 1996
Miami, Florida
-1-
<PAGE> 4
ONCOLOGY HEMATOLOGY GROUP
OF SOUTH FLORIDA, P.A.
BALANCE SHEET
December 31, 1995
<TABLE>
<S> <C>
Assets
------
Current assets:
Cash $ 3,042
Accounts receivables, net of allowance for contractual adjustments and
uncollectible amounts of $716,015 1,670,701
Due from related parties 15,365
Prepaid expenses and other current assets 73,149
-----------
Total current assets 1,762,257
-----------
Property and equipment:
Office equipment 160,960
Medical equipment 163,413
-----------
324,373
Less accumulated depreciation 193,256
-----------
131,117
----------
Other assets 5,222
----------
$1,898,596
==========
Liabilities and Shareholders' Equity
------------------------------------
Current liabilities:
Current portion of long-term debt 98,435
Due to bank 88,709
Accounts payable and accrued expenses 550,623
Accrued payroll 20,900
Payroll taxes payable 11,103
Profit-sharing contribution payable 49,788
Deferred income tax liability 354,300
----------
Total current liabilities 1,173,858
Long-term debt, less current portion 181,739
----------
1,355,597
----------
Shareholders' equity:
Common stock, $1 par value. Authorized 5,000 shares; issued and
outstanding 80 shares 80
Additional paid-in capital 26,140
Retained earnings 516,779
----------
542,999
Commitments and contingencies
----------
$1,898,596
==========
</TABLE>
See accompanying notes to financial statements.
-2-
<PAGE> 5
ONCOLOGY HEMATOLOGY GROUP
OF SOUTH FLORIDA, P.A.
STATEMENT OF INCOME
For the year ended December 31, 1995
<TABLE>
<S> <C>
Net revenue $ 8,010,763
Expenses:
Physicians' expense 2,802,902
Operating expenses 4,592,521
Depreciation and amortization 104,534
Provision for doubtful accounts 77,066
Interest 24,485
------------
7,601,508
------------
Income before income taxes 409,255
------------
Income tax expense 210,000
------------
Net Income $ 199,255
============
</TABLE>
See accompanying notes to financial statements.
-3-
<PAGE> 6
ONCOLOGY HEMATOLOGY GROUP
OF SOUTH FLORIDA, P.A.
STATEMENT OF SHAREHOLDERS' EQUITY
For the year ended December 31, 1995
<TABLE>
<CAPTION> Total
Capital Additional Retained shareholders'
stock paid-in capital earnings equity
----- --------------- -------- ------
<S> <C> <C> <C> <C>
Balance, December 31, 1994 $ 80 - 317,524 317,604
Net income - - 199,255 199,255
Capital contributions - 26,140 - 26,140
----- ------ ------- -------
Balance, December 31, 1995 $ 80 26,140 516,779 542,999
===== ====== ======= =======
</TABLE>
See accompanying notes to financial statements.
-4-
<PAGE> 7
ONCOLOGY HEMATOLOGY GROUP
OF SOUTH FLORIDA, P.A.
STATEMENT OF CASH FLOWS
For the year ended December 31, 1995
<TABLE>
<S> <C>
Cash flows from operating activities:
Net income $ 199,255
Adjustments to reconcile net income to net cash provided by operating
activities:
Depreciation 104,534
Deferred income taxes 210,000
Changes in operating assets and liabilities:
Accounts receivables, net (638,618)
Prepaid expenses and other current assets 10,427
Due from related parties (15,365)
Other assets 21,863
Due to bank 70,175
Accounts payable and accrued expenses 106,445
Accrued payroll (33,090)
Payroll taxes payable 11,103
Profit-sharing contribution payable 49,788
------------
Net cash provided by operating activities 96,517
------------
Cash flows from investing activities:
Expenditures for property and equipment (143,183)
------------
Net cash used in investing activities (143,183)
------------
Cash flows from financing activities:
Repayment of long-term debt (87,592)
Proceeds from the issuance of debt 134,769
------------
Net cash provided by financing activities 47,177
------------
Net increase in cash 511
Cash, beginning of year 2,531
------------
Cash, end of year $ 3,042
============
Supplemental disclosures of cash flow information:
Cash paid during the year for interest $ 24,485
============
Contribution of additional paid-in capital through forgiveness of debt $ 26,140
============
</TABLE>
See accompanying notes to financial statements.
-5-
<PAGE> 8
ONCOLOGY HEMATOLOGY GROUP
OF SOUTH FLORIDA, P.A.
NOTES TO FINANCIAL STATEMENTS
December 31, 1995
(1) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES AND PRACTICES
(a) DESCRIPTION OF BUSINESS
Oncology Hematology Group of South Florida, P.A. (the Company)
was incorporated on March 12, 1993 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 allowance or policy
discounts. Net patient service revenue is net of contractual
adjustments and policy discounts of approximately $2,297,000
for the year ended December 31, 1995.
(c) ACCOUNTS RECEIVABLE
Accounts receivable consists primarily of receivables from
patients and third-party payors. In the normal course of
providing healthcare services, the Company grants credit to
patients, substantially all of whom are resident in 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 (for example,
Medicare, Medicaid, health maintenance organizations,
preferred provider organizations and commercial insurance
policies).
The majority of the Company's net revenue is derived from
third-party payment programs. At December 31, 1995,
approximately 99 percent of total receivables consists of
amounts due from Medicare (26 percent), Medicaid (2 percent),
and various commercial plans (71 percent).
(d) PROPERTY AND EQUIPMENT
Property and equipment are stated at cost. Depreciation for
equipment is calculated using an accelerated depreciation
method over the estimated useful lives of the assets, as
follows:
Estimated useful lives
----------------------
Office equipment 5-7 years
Medical equipment 5-7 years
-6-
<PAGE> 9
ONCOLOGY HEMATOLOGY GROUP
OF SOUTH FLORIDA, P.A.
NOTES TO FINANCIAL STATEMENTS
(e) INCOME TAXES
The Company adopted Statement of Financial Accounting
Standards No. 109, Accounting for Income Taxes ("FAS 109") at
its inception in 1993. Under FAS 109, the liability method is
used in accounting for income taxes. Under this method,
deferred tax assets and liabilities are determined based on
differences between financial reporting and tax bases of
assets and liabilities, and are measured using the enacted tax
rates and laws that will be in effect when the differences are
expected to reverse.
(f) 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, due from
related parties, current portion of long-term debt, due to bank, due
to related parties, accounts payable, and accrued expenses approximate
fair value because of the short maturity of those instruments.
The fair value of the Company's long-term debt is estimated by
discounting the future cash flows of each instrument at rates
currently offered to the Company for similar debt instruments of
comparable maturities by the Company's bankers.
(3) LONG-TERM DEBT AND DUE TO BANK
Long-term debt consists of the following:
<TABLE>
<S> <C>
Dadeland Bank, interest is variable, (8.75% at December 31, 1995),
due in monthly installments of $2,000 plus interest with the last
payment due in August 1998; collateralized by computer and
medical equipment $61,970
Dadeland Bank, interest is variable, (8.75% at December 31, 1995),
due in monthly installments of $2,778 plus interest with the last
payment due in October 1997; collateralized by computer and
medical equipment 61,111
Dadeland Bank, 8%, due in monthly installments of $1,533 with the
last payment due in April 1998; collateralized by computer
equipment 37,907
</TABLE>
-7-
<PAGE> 10
ONCOLOGY HEMATOLOGY GROUP
OF SOUTH FLORIDA, P.A.
NOTES TO FINANCIAL STATEMENTS
<TABLE>
<S> <C>
Dadeland Bank, 10%, due in monthly installments of $1,993 with
the last payment due in February 1998; collateralized by medical
equipment $46,186
Baptist Medical Arts Building East Tower, Inc., 8%, due in monthly
installments of $886 with the last payment due in December
2005; collateralized by furniture and equipment 73,000
--------
280,174
Less current portion 98,435
--------
$181,739
========
</TABLE>
<TABLE>
<CAPTION>
Year ending
December 31, Amount
------------ ------
<S> <C>
1996 $ 98,435
1997 96,729
1998 28,185
1999 6,310
2000 6,834
Thereafter through 2005 43,681
----------
Total $ 280,174
----------
</TABLE>
All debt to Dadeland Bank was paid off on February 21, 1996.
Due to bank consists of amounts due to Dadeland Bank for checks
written in excess of available cash balances totaling $88,709 as of
December 31, 1995.
(4) EMPLOYEE BENEFIT PLANS
Beginning in 1995 the Company maintains a 401(k) 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.
Eligible employees ratably vest in the Company's contribution over
seven years. At December 31, 1995 the Company's discretionary
contribution payable to the Plan is $49,788.
(5) INCOME TAXES
Income tax expense attributed to income from continuing operations
consists of:
<TABLE>
<CAPTION>
Current Deferred Total
------- -------- -----
<S> <C> <C> <C>
U.S. federal $ - 166,000 166,000
State and local - 44,000 44,000
---------- ------- -------
$ - 210,000 210,000
========== ======= =======
</TABLE>
-8-
<PAGE> 11
ONCOLOGY HEMATOLOGY GROUP
OF SOUTH FLORIDA, P.A.
NOTES TO FINANCIAL STATEMENTS
Income tax expense attributable to income from continuing operations
was $210,000 for the year ended December 31, 1995, and differed from
the amounts computed by applying the U.S. federal income tax rate of
34 percent to pretax income from continuing operations as a result of
the following:
<TABLE>
<S> <C> <C>
Computed "expected" tax expense $ 139,000 34.0%
Increase in income taxes resulting from:
Changes in the beginning-of-the year balance of
the valuation allowance for deferred tax assets
allocated to income tax expense 51,000 12.5%
State and local income taxes, net of federal
income tax benefit 15,000 3.6%
Other, net 5,000 1.2%
---------- ----
$ 210,000 51.3%
========== ====
</TABLE>
The effect of temporary differences that give rise to a significant
portion of the deferred tax assets and deferred tax liabilities at
December 31, 1995, are as follows:
<TABLE>
<S> <C>
Deferred tax assets:
Depreciation $ 7,700
Accounts payable 205,000
Net operating loss 54,000
Accrued payroll 8,000
---------
Total gross deferred taxes 274,700
Less valuation allowance -
---------
Net deferred tax assets 274,700
---------
Deferred tax liabilities:
Accounts receivable (629,000)
---------
Total gross deferred tax liability (629,000)
---------
Net deferred tax liability $(354,300)
=========
</TABLE>
Pursuant to FAS 109, a valuation allowance must be established if it
is more likely than not that all or some portion of the deferred tax
asset will not be realized. At December 31, 1995 no valuation
allowance was recorded.
-9-
<PAGE> 12
ONCOLOGY HEMATOLOGY GROUP
OF SOUTH FLORIDA, P.A.
NOTES TO FINANCIAL STATEMENTS
(6) COMMITMENTS AND CONTINGENCIES
(a) LEASES
The Company, at December 31, 1995, maintained its office space
in Baptist Medical Arts Building in Miami. Such space is
subleased from a partnership owned by four physician shareholders
who leased the space from an independent third party. The lease
expires in 2005. Future minimum lease payments under the
noncancelable operating lease (with initial or remaining lease
terms in excess of one year) as of December 31, 1995 are as
follows:
<TABLE>
<CAPTION>
Year ended
December 31, Amount
------------ ------
<S> <C>
1996 $ 210,372
1997 210,372
1998 210,372
1999 210,372
2000 210,372
Thereafter through 2005 981,736
----------
Total minimum lease payments $2,033,596
==========
</TABLE>
Total rental expense for operating leases was $264,641 for the
year ended December 31, 1995.
(b) MEDICAL MALPRACTICE AND PROFESSIONAL LIABILITY INSURANCE
The Company maintains professional liability insurance on a
claims-made basis. 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 systems. Accordingly, the Company has made no accruals
at December 31, 1995 for incurred but not reported claims.
(7) SUBSEQUENT EVENTS
On January 2, 1996, the stock of the Company was acquired by Response
Oncology, Inc. ("Response"). Simultaneous with the stock acquisition,
the physicians moved their medical practice to a separate corporation
and executed a service agreement whereby Response will provide the
physicians with offices and facilities, equipment, supplies, support
personnel, and management and financial advisory services. In return
for providing the services, Response will receive service fees from
the physician group.
-10-
<PAGE> 13
RESPONSE ONCOLOGY, INC. AND SUBSIDIARIES
UNAUDITED PRO FORMA CONSOLIDATED FINANCIAL INFORMATION
BASIS OF PRESENTATION
The accompanying pro forma consolidated balance sheet as of December 31, 1995
and the related pro forma consolidated statement of operations for the year then
ended give effect to the acquisition of Oncology Hematology Group of South
Florida, P.A. (the "Group") as if the acquisition of the Group had occurred on
January 1, 1995. The pro forma information is based on the historical audited
financial statements of Response Oncology, Inc. and subsidiaries (the "Company")
and the Group, giving effect to the acquisition under the purchase method of
accounting, and the assumptions and adjustments in the accompanying notes to the
pro forma consolidated financial information.
The pro forma statements have been prepared by the Company's management based
on the audited financial statements of the acquired entity. 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 the Company,
are likely to result in profitable operations for the Group. The pro forma
financial statements should be read in conjunction with the consolidated
financial statements and notes of Response Oncology, Inc. and subsidiaries.
<PAGE> 14
RESPONSE ONCOLOGY, INC. AND SUBSIDIARIES
PRO FORMA CONSOLIDATED BALANCE SHEET
DECEMBER 31, 1995
(UNAUDITED)
<TABLE>
<CAPTION>
Assets Effects of
Acquired Acquisition Pro Forma
and Liabilities and Related Combined
Historical Assumed Financing Totals
-------------------------------------------------------------
<S> <C> <C> <C> <C>
Cash $ 4,204,558 $ 3,042 $(5,343,750) $ (1,136,150)
Short-term investments 361,718 361,718
Accounts receivable, net 13,934,810 1,670,701 15,605,511
Supplies 1,119,671 1,119,671
Prepaids 550,287 73,149 623,436
Other current assets 465,738 15,365 481,103
-------------------------------------------------------------
Total current assets $ 20,636,782 $1,762,257 $(5,343,750) $ 17,055,289
Property and equipment, net $ 3,822,425 $ 131,117 $ 3,953,542
Intangible assets 11,006,423 11,006,423
Other assets 306,064 5,222 311,286
------------------------------------------------------------
Total assets $ 24,765,271 $1,898,596 $ 5,662,673 $ 32,326,540
Accounts payable $ 3,690,937 $ 639,332 $ 4,330,269
Accrued expenses 1,134,688 81,791 1,216,479
Notes payable 98,435 547,331 645,766
Capital lease obligations 58,501 58,501
Deferred income tax liability 354,300 (354,300) 0
------------------------------------------------------------
Total current liabilities $ 4,884,126 $1,173,858 $ 193,031 $ 6,251,015
Capital lease obligations 15,492 15,492
Notes Payable 181,739 6,012,641 6,194,380
Minority Interest 23,056 23,056
Stockholders equity
Preferred stock 27,833 27,833
Common stock 73,716 80 (80) 73,716
Paid-in capital 60,054,215 26,140 (26,140) 60,054,215
Retained earnings (accumulated deficit) (40,313,167) 516,779 (516,779) (40,313,167)
------------------------------------------------------------
Total liabilities and stockholders equity $ 24,765,271 $1,898,596 $ 5,662,673 $ 32,326,540
============================================================
</TABLE>
See accompanying notes to pro forma consolidated financial information.
<PAGE> 15
RESPONSE ONCOLOGY, INC. AND SUBSIDIARIES
PRO FORMA CONSOLIDATED STATEMENT OF OPERATIONS
DECEMBER 31, 1995
(UNAUDITED)
<TABLE>
<CAPTION>
Operations
of Acquired Combined
Historical Business Adjustments Results
-------------------------------------------------------------
<S> <C> <C> <C> <C>
Revenue:
Net revenue $44,297,798 $ 4,678,915 (b) $48,976,713
Other income 282,011 282,011
Net patient service revenue 8,010,763 (8,010,763)(a) 0
-------------------------------------------------------------
Total Revenue 44,579,809 8,010,763 (3,331,848) 49,258,724
Expenses:
Physician compensation 2,802,902 (2,802,902)(a) 0
Operating expenses 32,892,728 4,592,521 37,485,249
General and administrative 5,512,206 5,512,306
Depreciation and amortization 1,736,055 104,534 275,161 (d) 2,115,750
Interest 16,860 24,485 590,397 (c) 631,742
Provision for doubtful accounts 2,105,696 77,066 2,182,762
-------------------------------------------------------------
Total Expenses 42,263,645 7,601,508 (1,937,344) 47,927,809
Earnings before minority interest 2,316,164 409,255 (1,394,504) 1,330,915
Minority interest 1,806 1,806
-------------------------------------------------------------
Earnings before income taxes 2,314,358 409,255 (1,394,504) 1,329,109
Income tax expense 210,000 (210,000)(e) 0
-------------------------------------------------------------
Net earnings 2,314,358 199,255 (1,184,504) 1,329,109
Common stock dividend to
preferred stockholders 3,825 3,825
-------------------------------------------------------------
Net earnings to common stockholders $ 2,310,533 $ 199,255 $(1,184,504) $ 1,325,284
=============================================================
</TABLE>
See accompanying notes to pro forma consolidated financial information.
<PAGE> 16
RESPONSE ONCOLOGY, INC. AND SUBSIDIARIES
NOTES TO PRO FORMA CONSOLIDATED FINANCIAL INFORMATION
The accompanying pro forma consolidated financial information presents the pro
forma financial condition of Response Oncology, Inc. and subsidiaries (the
"Company") as of December 31, 1995 and the results of their operations for the
year then ended.
On January 2, 1996, the Company acquired from unaffiliated individual sellers
100% of the issued and outstanding common stock of Oncology Hematology Group of
South Florida, P.A. (the "Group"). The accompanying pro forma consolidated
balance sheet includes the acquired assets, assumed liabilities and effects of
financing, as if the Group had been acquired on December 31, 1995. The
accompanying pro forma consolidated statement of operations reflect the pro
forma results of operations, as adjusted, as if the Group 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 values of assets acquired and liabilities assumed in connection with
the acquisition of the Group; to reflect the issuance of long-term debt and cash
payment to complete the acquisition; to reflect the consolidated effect of
deferred tax assets and liabilities; and to reflect the recording of intangible
assets acquired.
PRO FORMA CONSOLIDATED STATEMENT OF OPERATIONS
The adjustments reflected in the pro forma consolidated statement of operations
are as follows:
(a) To eliminate net patient service revenue and physician compensation and
benefits in total as such will be retained by the physician group.
(b) To accrue net revenue resulting from service agreements related to the
acquisition of the Group. Amounts were calculated based upon actual
operating results for the period, as adjusted, under the terms of the
related service agreement.
(c) To reflect interest on the long-term debt issued. Interest was
calculated at an annual rate of 9%.
(d) To record amortization of the intangible asset related to the service
agreement. The asset is amortized over the service agreement period, or
40 years.
(e) To remove the effect of federal income taxes as the Company would have
utilized tax net operating loss carryforwards to fully offset the
Group's 1995 taxable income.
<PAGE> 17
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.
SEAFIELD CAPITAL CORPORATION
Dated: March 20, 1996 By: /s/ Steven K. Fitzwater
-----------------------------------------
Steven K. Fitzwater
Vice President, Chief Accounting
Officer and Secretary
