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: October 4, 1996
Seafield Capital Corporation
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(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 AND DISPOSITION OF ASSETS.
On October 21, 1996, the Registrant filed a Current Report on Form 8-K dated
October 4, 1996 reporting the consummation of the acquisition by its 55% owned
subsidiary, Response Oncology, Inc. (Response), of The Center for
Hematology-Oncology, P.A.
The Registrant hereby files amendment No. 1 to the previously filed Form 8-K
to provide the audited financial statements required to be filed pursuant to
Rule 3-05 of Regulation S-X.
Item 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND EXHIBITS
(a) Financial Statements
Audited Balance Sheet as of December 31, 1995 and Statement of
Income, Statement of Shareholders' Equity, and Statement of Cash
Flows for the period from September 15, 1995 through December 31,
1995 for The Center for Hematology-Oncology, P.A.
INDEPENDENT AUDITORS' REPORT
The Board of Directors
The Center for Hematology and Oncology, P.A.:
We have audited the accompanying balance sheet of The Center for Hematology
and Oncology, P.A. as of December 31, 1995, and the related statements of
income, shareholders' equity, and cash flows for the period from September 15,
1995 through December 31, 1995. 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 The Center for Hematology
and Oncology, P.A. as of December 31, 1995, and the results of its operations
and its cash flows for the period from September 15, 1995 through December 31,
1995 in conformity with generally accepted accounting principles.
KPMG PEAT MARWICK LLP
Miami, Florida
May 30, 1996
THE CENTER FOR HEMATOLOGY AND ONCOLOGY, P.A.
BALANCE SHEETS
<TABLE>
<CAPTION>
DECEMBER 31, MARCH 31,
1995 1996
------------ -----------
(UNAUDITED)
<S> <C> <C>
ASSETS
Current assets:
Cash............................................................... $ -- $ 16,784
Patient accounts receivables, net of allowance for contractual
adjustments of $711,838 and $730,373 at December 31, 1995 and
March 31, 1996 (unaudited)...................................... 716,610 826,767
Supplies........................................................... 154,000 204,000
Other.............................................................. 1,793 1,393
------------ -----------
Total current assets....................................... 872,403 1,048,944
------------ -----------
Equipment:
Computer equipment................................................. 22,033 41,415
Medical equipment.................................................. 12,053 12,053
------------ -----------
34,086 53,468
Less accumulated depreciation...................................... 9,705 15,747
------------ -----------
Equipment, net............................................. 24,381 37,721
------------ -----------
$896,784 $ 1,086,665
========== =========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable and accrued expenses.............................. $593,880 $ 661,896
Bank overdraft..................................................... 50,209 --
Line of credit..................................................... -- 55,606
Current portion of long-term debt.................................. 15,584 15,584
Current portion of obligations under capital leases................ -- 6,800
Payroll taxes payable.............................................. 5,791 171
------------ -----------
Total current liabilities.................................. 665,464 740,057
Obligations under capital leases, less current portion............... -- 9,520
Long-term debt, less current portion................................. 65,166 60,916
------------ -----------
Total liabilities.......................................... 730,630 810,493
Shareholders' equity:
Common stock, $1 par value. Authorized 7,500 shares;
subscribed 300 shares........................................... 300 300
Due from shareholders.............................................. (63,740) (225,112)
Stock subscription receivable...................................... (300) (300)
Retained earnings.................................................. 229,894 501,284
------------ -----------
Total shareholders' equity................................. 166,154 276,172
------------ -----------
Commitment and contingencies
$896,784 $ 1,086,665
========== =========
</TABLE>
See accompanying notes to financial statements.
THE CENTER FOR HEMATOLOGY AND ONCOLOGY, P.A.
STATEMENTS OF INCOME
<TABLE>
<CAPTION>
FOR THE PERIOD
FROM
SEPTEMBER 15, THREE MONTHS
1995 THROUGH ENDED
DECEMBER 31, MARCH 31,
1995 1996
-------------- ------------
(UNAUDITED)
<S> <C> <C>
Net patient service revenue......................................... $1,541,646 $1,612,212
Expenses:
Operating......................................................... 823,055 1,098,487
General and administrative expenses............................... 435,934 266,851
Depreciation...................................................... 9,705 6,042
Interest.......................................................... 2,131 3,914
-------------- ------------
1,270,825 1,375,294
-------------- ------------
Operating income.......................................... 270,821 236,918
Other income........................................................ 22,040 34,472
Other expenses...................................................... (62,967) --
-------------- ------------
Net income................................................ $ 229,894 $ 271,390
========== ==========
</TABLE>
See accompanying notes to financial statements.
THE CENTER FOR HEMATOLOGY AND ONCOLOGY, P.A.
STATEMENTS OF SHAREHOLDERS' EQUITY
<TABLE>
<CAPTION>
STOCK DUE TOTAL
CAPITAL SUBSCRIPTION FROM RETAINED SHAREHOLDERS'
STOCK RECEIVABLE SHAREHOLDERS EARNINGS EQUITY
------- ------------ ------------ -------- -------------
<S> <C> <C> <C> <C> <C>
From inception, September 15, 1995......... $ -- $ -- $ -- $ -- $ --
Net income............................... -- -- -- 229,894 229,894
Issuance of common stock from
subscription.......................... 300 (300) -- -- --
Due from shareholders.................... -- -- (63,740) -- (63,740)
------- ------------ ------------ -------- -------------
Balance, December 31, 1995................. 300 (300) (63,740) 229,894 166,154
Net income (unaudited)................... -- -- -- 271,390 271,390
Due from shareholders (unaudited)........ -- -- (161,372) -- (161,372)
------- ------------ ------------ -------- -------------
Balance, March 31, 1996 (unaudited)........ $ 300 $ (300) $ (225,112) $501,284 $ 276,172
===== ========= ========= ======== =========
</TABLE>
See accompanying notes to financial statements.
THE CENTER FOR HEMATOLOGY AND ONCOLOGY, P.A.
STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
FOR THE
PERIOD FROM
SEPTEMBER 15, THREE MONTHS
1995 THROUGH ENDED
DECEMBER 31, MARCH 31,
1995 1996
------------- ------------
(UNAUDITED)
<S> <C> <C>
Cash flows from operating activities:
Net income........................................................ $ 229,894 $ 271,390
Adjustments to reconcile net income to net cash provided by
operating activities:
Depreciation................................................... 9,705 6,042
Write-down of equipment........................................ 62,967 --
Changes in operating assets and liabilities:
Accounts receivable.......................................... (716,610) (110,157)
Other current assets......................................... (1,793) 400
Supplies..................................................... (154,000) (50,000)
Accounts payable and accrued expenses........................ 593,880 68,016
Payroll taxes payable........................................ 5,791 (5,620)
------------- ------------
Total adjustments......................................... (200,060) (91,319)
------------- ------------
Net cash provided by operating activities................. 29,834 180,071
------------- ------------
Cash flows from investing activities:
Expenditures for equipment........................................ (97,053) (3,062)
------------- ------------
Net cash used in investing activities..................... (97,053) (3,062)
------------- ------------
Cash flows from financing activities:
Repayment of long-term debt....................................... (4,250) (4,250)
Proceeds from line of credit...................................... -- 190,261
Repayment of line of credit....................................... -- (134,655)
Proceeds from the issuance of debt................................ 85,000 --
Due from shareholders............................................. (63,740) (161,372)
Bank overdraft.................................................... 50,209 (50,209)
------------- ------------
Net cash provided by (used in) financing activities....... 67,219 (160,225)
------------- ------------
Net increase in cash...................................... -- 16,784
Cash, beginning of period........................................... -- --
------------- ------------
Cash, end of period................................................. $ -- $ 16,784
========== ==========
Supplemental disclosures of cash flow information:
Cash paid for interest............................................ $ 2,131 $ 3,914
========== ==========
Supplemental disclosures of noncash investing and financing
activities:
Capital lease obligations......................................... $ -- $ 16,320
========== ==========
Receipt of subscription receivable for issuance of common stock... $ 300 $ 300
========== ==========
</TABLE>
See accompanying notes to financial statements.
THE CENTER FOR HEMATOLOGY AND ONCOLOGY, P.A.
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1995 AND MARCH 31, 1996 (UNAUDITED)
UNAUDITED INTERIM FINANCIAL INFORMATION
The balance sheet at March 31, 1996 and the related statements of income,
shareholders' equity and cash flows for the three-month period ended March 31,
1996 (1996 interim financial information) have been prepared by the Center for
Hematology and Oncology, 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 Center for Hematology and Oncology, P.A. (the "Company") was
incorporated on July 21, 1995 in the state of Florida and operations commenced
on September 15, 1995. The Company is a medical group practice whose physicians
specialize in providing services, including drug therapy, 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.
(c) Accounts Receivable
Accounts receivable consists primarily of receivables from patients and
third-party payors. In the course of providing health care services, the Company
grants credit to patients, substantially all of whom are residents 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 such as Medicare,
Medicaid, health maintenance organizations, preferred provider organizations and
commercial insurance policies.
The majority of the Company's net patient revenue is derived from
third-party payment programs. At December 31, 1995, approximately 97 percent of
total receivables consists of amounts due from Medicare (70 percent) and various
commercial plans (27 percent). The remaining 3 percent of net patient service
revenue is derived from self-pay patients.
(d) Supplies
Supplies, consisting primarily of pharmaceutical and medical supplies, are
stated at the lower of cost or market.
THE CENTER FOR HEMATOLOGY AND ONCOLOGY, P.A.
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
(e) 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:
<TABLE>
<CAPTION>
ESTIMATED
USEFUL LIVES
------------
<S> <C>
Computer equipment............................................ 5 years
Medical equipment............................................. 7 years
</TABLE>
(f) Income Taxes
The Company has elected to be taxed under subchapter "S" of the Internal
Revenue Code. Accordingly, there is no provision for income taxes since they are
the responsibility of the shareholders.
(g) Fair Value of Financial Instruments
The carrying amounts of patients' accounts receivable, accounts payable,
accrued expenses, payroll taxes payable and other assets approximate fair value
because of their short-term nature.
(h) 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) NET PATIENT SERVICE REVENUE
The Company has agreements with third-party payors that provide for
payments to the Company at amounts different from established rates. A summary
of the payment arrangements with major third-party payors follows:
(a) Medicare
The Medicare program pays the Company for outpatient services rendered to
Medicare patients on the basis of either cost or fee schedules as determined by
regulations of the Medicare program.
(b) Other
The Company has also entered into payment agreements with certain
commercial insurance carriers, health maintenance organizations and preferred
provider organizations. The basis for payments to the Company under these
agreements includes discounts from established charges.
THE CENTER FOR HEMATOLOGY AND ONCOLOGY, P.A.
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
(3) LONG-TERM DEBT AND DUE TO BANK
Long-term debt consists of the following:
<TABLE>
<CAPTION>
FOR THE
PERIOD FROM
SEPTEMBER THREE
15, MONTHS
1995 THROUGH ENDED
DECEMBER 31, MARCH 31,
1995 1996
------------ -----------
(UNAUDITED)
<S> <C> <C>
Note payable, interest is fixed (9.6% at December 31, 1995),
due in monthly installments of $1,417 plus interest with the
last payment due October 1, 2000............................ $ 80,750 $76,500
Less current portion.......................................... 15,584 15,584
------------ -----------
$ 65,166 $60,916
========== =========
</TABLE>
Maturities for the next five fiscal years are as follows:
<TABLE>
<CAPTION>
YEAR ENDING
DECEMBER 31, AMOUNT
- - ------------ -------
<S> <C> <C>
1996............................................................. $15,584
1997............................................................. 17,000
1998............................................................. 17,000
1999............................................................. 17,000
2000............................................................. 14,166
-------
Total.................................................. $80,750
=======
</TABLE>
(4) BORROWINGS UNDER LINE OF CREDIT
At December 31, 1995, the Company has a $300,000 line of credit agreement.
Interest is charged at the rate of one percent over the prime rate. The
agreement is collateralized by all accounts, chattel paper, contract rights,
inventory, equipment, fixtures, intangibles and deposit accounts of the Company.
No balance was drawn as of December 31, 1995 and $55,606 was drawn as of March
31, 1996 (unaudited).
(5) COMMITMENTS AND CONTINGENCIES
(a) Leases
At December 31, 1995, the Company maintained its main office space in
Delray Beach, Florida. Such space is owned by an area hospital, for which the
practice has paid no rent. The Company also leases space in the West Boca Raton
area. Such space is leased on a month-to-month basis per verbal agreement with
an independent physician who owns the space. Future minimum lease payments under
the noncancelable operating leases (with initial or remaining lease terms in
excess of one year) as of December 31, 1995 are as follows:
<TABLE>
<CAPTION>
YEAR ENDING
DECEMBER 31, AMOUNT
- - ------------ --------
<S> <C> <C>
1996............................................................ $ 51,336
1997............................................................ 51,336
1998............................................................ 51,336
1999............................................................ 47,224
2000............................................................ 12,400
--------
Total minimum lease payments.......................... $213,632
========
</TABLE>
THE CENTER FOR HEMATOLOGY AND ONCOLOGY, P.A.
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
Total rental expense for operating leases was $39,000 for the period from
September 15, 1995 through December 31, 1995 and $13,500 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 $1,000,000 per claim and $1,000,000 in the aggregate. Incidents and
claims reported during the policy period are anticipated to be covered by the
malpractice carrier.
At December 31, 1995 and March 31, 1996 (unaudited), 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 incurred but not reported claims.
(6) SUBSEQUENT EVENTS
In May 1996, the Company entered into a purchase agreement to acquire
computer software which replaced the existing software. As a result, the
existing software was written down by approximately $63,000 at December 31,
1995.
(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
January 31, 1996 and $14,813 for the three-month period ended April 30, 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 January 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 January 31, 1995 and April 31, 1996 (unaudited) for
incurred, but not reported, claims.
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 7, 1996 By: /s/ Steven K. Fitzwater
---------------------------
Steven K. Fitzwater
Vice President, Chief Accounting
Officer and Secretary
