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 22, 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 November 5, 1996, the Registrant filed a Current Report on Form 8-K dated
October 22, 1996 reporting the consummation of the acquisition by its 55% owned
subsidiary, Response Oncology, Inc. (Response), of Hematology Oncology
Associates of the Treasure Coast, 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, Statement of Income, Statement of
Shareholders' Equity and Statement of Cash Flows, including
footnotes, as of and for the year ended December 31, 1995 for
Hematology Oncology Associates of the Treasure Coast, P.A.
INDEPENDENT AUDITORS' REPORT
The Board of Directors
Hematology -- Oncology Associates of
the Treasure Coast, P.A.,
Alan S. Collin, M.D. and
Michael S. Wertheim, M.D.:
We have audited the accompanying balance sheet of Hematology Oncology
Associates of the Treasure Coast, P.A., Alan S. Collin, M.D. and Michael S.
Wertheim, M.D. (the "Company") as of December 31, 1995, and the related
statements of income, 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 Hematology Oncology
Associates of the Treasure Coast, P.A., Alan S. Collin, M.D. and Michael S.
Wertheim, M.D. 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 10, 1996
HEMATOLOGY -- ONCOLOGY ASSOCIATES OF THE TREASURE COAST, P.A.,
ALAN S. COLLIN, M.D. AND MICHAEL S. WERTHEIM, M.D.
BALANCE SHEETS
<TABLE>
<CAPTION>
DECEMBER 31, MARCH 31,
1995 1996
------------ -----------
(UNAUDITED)
<S> <C> <C>
ASSETS
Current assets:
Cash............................................................... $ 4,024 $ 197,771
Accounts receivable, net of allowance for contractual adjustments
of $343,916 and $346,106 (unaudited), at December 31, 1995 and
March 31, 1996, respectively.................................... 497,451 591,137
Supplies........................................................... 166,413 166,413
------------ -----------
Total current assets....................................... 667,888 955,321
Property and equipment:
Automobiles........................................................ 26,243 44,887
Computer equipment................................................. 71,215 71,215
Medical equipment.................................................. 40,813 40,813
Office equipment................................................... 85,010 85,010
Leasehold improvements............................................. 78,742 78,742
------------ -----------
302,023 320,667
Less accumulated depreciation...................................... 253,417 250,578
------------ -----------
Net property and equipment................................. 48,606 70,089
Other assets......................................................... 15,600 32,420
------------ -----------
$732,094 $ 1,057,830
========== =========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable and accrued expenses.............................. $117,286 $ 115,515
Note payable -- bank............................................... 2,842 --
Income tax payable................................................. 16,607 96,657
Payroll taxes payable.............................................. 497 --
------------ -----------
Total current liabilities.................................. 137,232 212,172
Deferred tax liability............................................... 196,974 239,627
Stockholders' equity:
Common stock, $1 par value. Authorized 10,000 shares; issued and
outstanding 500 shares.......................................... 500 500
Retained earnings.................................................. 397,388 605,531
------------ -----------
Total stockholders' equity................................. 397,888 606,031
Commitments and contingencies
------------ -----------
$732,094 $ 1,057,830
========== =========
</TABLE>
See accompanying notes to financial statements.
HEMATOLOGY -- ONCOLOGY ASSOCIATES OF THE TREASURE COAST, P.A.,
ALAN S. COLLIN, M.D. AND MICHAEL S. WERTHEIM, M.D.
STATEMENTS OF INCOME
<TABLE>
<CAPTION>
THREE MONTHS
YEAR ENDED ENDED
DECEMBER 31, MARCH 31,
1995 1996
------------ ------------
(UNAUDITED)
<S> <C> <C>
Net patient service revenue.......................................... $4,910,146 $1,430,669
Expenses:
Operating.......................................................... 3,894,134 794,015
Depreciation....................................................... 30,116 7,498
Interest........................................................... 888 55
General and administrative expenses................................ 1,117,131 279,716
------------ ------------
5,042,269 1,081,284
------------ ------------
(Loss) income...................................................... (132,123) 349,385
Other income (expense)............................................... 193,890 (1,932)
------------ ------------
Income before income taxes................................. 61,767 347,453
Provision for income taxes........................................... 35,670 139,310
------------ ------------
Net income................................................. $ 26,097 $ 208,143
========== ==========
</TABLE>
See accompanying notes to financial statements.
HEMATOLOGY -- ONCOLOGY ASSOCIATES OF THE TREASURE COAST, P.A.,
ALAN S. COLLIN, M.D. AND MICHAEL S. WERTHEIM, M.D.
STATEMENTS OF STOCKHOLDERS' EQUITY
<TABLE>
<CAPTION>
TOTAL
CAPITAL RETAINED STOCKHOLDERS'
STOCK EARNINGS EQUITY
------- -------- -------------
<S> <C> <C> <C>
Balances, December 31, 1994..................................... $ 500 $371,291 $ 371,791
Net income............................................ -- 26,097 26,097
------- -------- -------------
Balances, December 31, 1995..................................... 500 397,388 397,888
Net income (unaudited)................................ -- 208,143 208,143
------- -------- -------------
Balances, March 31, 1996 (unaudited)............................ $ 500 $605,531 $ 606,031
===== ======== =========
</TABLE>
See accompanying notes to financial statements.
HEMATOLOGY -- ONCOLOGY ASSOCIATES OF THE TREASURE COAST, P.A.,
ALAN S. COLLIN, M.D. AND MICHAEL S. WERTHEIM, M.D.
STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
THREE MONTHS
YEAR ENDED ENDED
DECEMBER 31, MARCH 31,
1995 1996
------------ ------------
(UNAUDITED)
<S> <C> <C>
Cash flows from operating activities:
Net income......................................................... $ 26,097 $208,143
Adjustments to reconcile net income to net cash provided by
operating activities:
Depreciation.................................................... 30,116 7,498
Deferred taxes.................................................. 19,063 42,653
Changes in operating assets and liabilities:
Accounts receivable........................................... (17,669) (93,686)
Other assets.................................................. 1,475 (16,820)
Accrued pension contribution.................................. (56,189) --
Accounts payable and accrued expenses......................... (46,217) (1,771)
Income tax payable............................................ 16,607 80,050
Payroll taxes payable......................................... 222 (497)
------------ ------------
Net cash provided by (used in) operating activities........ (26,495) 225,570
Cash flows from investing activities:
Expenditures for property and equipment............................ (831) (28,981)
------------ ------------
Net cash used in investing activities...................... (831) (28,981)
------------ ------------
Cash flows from financing activities:
Repayment of note payable -- bank.................................. (9,748) (2,842)
------------ ------------
Net cash used in financing activities...................... (9,748) (2,842)
------------ ------------
Net increase in cash....................................... (37,074) 193,747
Cash, beginning of period............................................ 41,098 4,024
------------ ------------
Cash, end of period.................................................. $ 4,024 197,771
========== ==========
Supplemental disclosures of cash flow information:
Cash paid during the period for interest........................... $ 888 $ 55
========== ==========
Cash paid during the period for income taxes....................... $ 4,222 $ 17,348
========== ==========
</TABLE>
See accompanying notes to financial statements.
HEMATOLOGY -- ONCOLOGY ASSOCIATES OF THE TREASURE COAST, P.A.,
ALAN S. COLLIN, M.D. AND MICHAEL S. WERTHEIM, M.D.
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1995 AND MARCH 31, 1996 (UNAUDITED)
UNAUDITED INTERIM FINANCIAL INFORMATION
The balance sheet as 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
Hematology Oncology Associates of the Treasure Coast, P.A., Alan S. Collin, M.D.
and Michael S. Wertheim, M.D. (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 June 5, 1986 in the state of Florida. The
Company is a medical group practice whose physicians specialize in providing
services to patients with cancer, including drug therapy in Port St. Lucie,
Stuart and Fort Pierce, Florida.
(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 $2,985,000 and
$839,500 for the year ended December 31, 1995 and for the three months ended
March 31, 1996 (unaudited), respectively.
(c) Accounts Receivable
Accounts receivable consist 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
Treasure Coast of 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 75 percent of
total receivables consists of amounts due from Medicare (49 percent), and
various commercial plans (26 percent). The remaining 25 percent of net patient
service revenue is derived from self-pay patients.
HEMATOLOGY -- ONCOLOGY ASSOCIATES OF THE TREASURE COAST, P.A.,
ALAN S. COLLIN, M.D. AND MICHAEL S. WERTHEIM, M.D.
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
(d) Supplies
Supplies, consisting primarily of pharmaceutical and medical supplies, are
stated at the lower of cost or market on a first-in, first-out basis.
(e) Property and Equipment
Property and equipment are stated at cost. Depreciation for equipment is
calculated using the straight-line depreciation method over the estimated useful
lives of the assets, and leasehold improvements are amortized on a straight-line
basis of over the shorter of the useful life of the improvement of the term of
the lease, as follows:
<TABLE>
<CAPTION>
ESTIMATED
USEFUL LIVES
------------
<S> <C>
Automobiles................................................... 5 years
Computer equipment............................................ 5 years
Medical equipment............................................. 7 years
Office equipment.............................................. 7 years
Leasehold improvement......................................... 3 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 accounts 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, accounts payable,
note payable, accounts payable and accrued expenses and payroll taxes payable
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
HEMATOLOGY -- ONCOLOGY ASSOCIATES OF THE TREASURE COAST, P.A.,
ALAN S. COLLIN, M.D. AND MICHAEL S. WERTHEIM, M.D.
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
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.
(4) 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.
(5) NOTE PAYABLE -- BANK
Note payable -- bank consists of the following at December 31, 1995:
<TABLE>
<S> <C>
Barnett Bank, interest is fixed, (10.75% at December 31, 1995), due
in monthly installments of $886.34 plus interest with the last
payment due in March 29, 1996..................................... $2,842
Less current portion................................................ 2,842
------
$ --
======
</TABLE>
(6) INCOME TAXES
Income tax expense for the year ended December 31, 1995 and the three-month
period ended March 31, 1996 is summarized as follows:
<TABLE>
<CAPTION>
MARCH 31,
DECEMBER 31, 1996
1995 -----------
------------ (UNAUDITED)
<S> <C> <C>
Current:
Federal..................................................... $ 14,489 $ 83,125
State....................................................... 2,118 13,532
------------ -----------
16,607 96,657
------------ -----------
Deferred:
Federal..................................................... 17,298 38,705
State....................................................... 1,765 3,948
------------ -----------
19,063 42,653
------------ -----------
$ 35,670 $ 139,310
========== =========
</TABLE>
HEMATOLOGY -- ONCOLOGY ASSOCIATES OF THE TREASURE COAST, P.A.,
ALAN S. COLLIN, M.D. AND MICHAEL S. WERTHEIM, M.D.
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
A reconciliation of the effective income tax rate 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>
Computed "expected" tax expense (benefit)..................... 35.00% 35.00%
State income tax, net of federal benefit...................... 3.57 3.57
Permanent adjustments......................................... 19.18 .99
------------ -----------
Total............................................... 57.75% 39.56%
========== =========
</TABLE>
The tax effects of temporary differences that give rise to a significant
portion of the deferred tax assets and deferred tax liabilities for the year
ended December 31, 1995 and the three-month period ended March 31, 1996 are as
follows:
<TABLE>
<CAPTION>
DECEMBER 31, MARCH 31,
1995 1996
------------ -----------
(UNAUDITED)
<S> <C> <C>
Deferred tax liabilities:
Revenue and expenses recognized for financial reporting
purposes in a different period than for income tax
purposes................................................. $196,974 $ 239,627
========== =========
</TABLE>
(7) COMMITMENTS AND CONTINGENCIES
(a) Leases
The Company, at December 31, 1995, maintained offices in Port St. Lucie,
Fort Pierce and Stuart, Florida. Such space is owned by two of the owner-doctors
and leased to the Company. On February 27, 1996, the Company renewed the leases
until December 31, 1999 on all three properties. Monthly rental is $12,298.
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 ENDED
DECEMBER 31, AMOUNT
------------------------------------------------------------------ --------
<S> <C>
1996............................................................ $143,715
1997............................................................ 147,516
1998............................................................ 147,516
1999............................................................ 147,516
--------
Total minimum lease payments...................................... $586,263
========
</TABLE>
Total rental expense for operating leases was $128,691 and $34,990 for the
year ended December 31, 1995 and the three month period ended March 31, 1996
(unaudited).
(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 and March 31, 1996 (unaudited), there is one asserted
claim against the Company, which is covered by malpractice insurance. The
Company has not identified any other incidents which may have occurred but have
yet to be identified under its incident-reporting system. Accordingly, the
Company has made no accruals at December 31, 1995 or March 31, 1996 (unaudited)
for claims incurred, but not reported.
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
