<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K/A
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange
Act of 1934
Date of Report (Date of earliest event reported):
February 5, 1998
AMERICAN HOMEPATIENT, INC.
(Exact name of registrant as specified in its charter)
Delaware 0-19532 62-1474680
-------- ------- ----------
(State of other (Commission (I.R.S. Employer
jurisdiction of File Number) Identification
incorporation) Number)
5200 Maryland Way, Suite 400, Brentwood, Tennessee 37027
---------------------------------------------------------
(Address of principal executive offices)
(615) 221-8884
---------------------
(Registrant's telephone number, including area code)
Not applicable
---------------------
(Former name, former address and former fiscal year,
if changed since last report)
- -------------------------------------------------------------------------------
Page 1 of 22
<PAGE> 2
Those portions of Item 7 (Financial Statements and Exhibits) of the Current
Report on Form 8-K dated February 17, 1998 are amended and restated in their
entirety as follows:
<TABLE>
<CAPTION>
Page
Number:
------
<S> <C>
(a) Financial Statements of Business Acquired
(i) Audited balance sheet of National Medical Systems, Inc. as
of August 31, 1997 and the related statements of operations
and shareholders' equity and cash flows for the year then
ended. Unaudited balance sheet of National Medical
Systems, Inc. as of November 30, 1997 and related
unaudited statements of operations and cash flows for
the three months ended November 30, 1997 and 1996. 5
(b) Pro Forma Financial Information
(i) Introductory information 19
(ii) Unaudited pro forma selected income statement data of
American HomePatient, Inc. for year ended December
31, 1997. 20
</TABLE>
2
<PAGE> 3
Item 2. Acquisition or Disposition of Assets
The Registrant reports the following acquisition to inform its security holders:
Pursuant to a Stock Purchase Agreement, the Registrant's wholly-owned
subsidiary, American HomePatient, Inc., a Tennessee corporation (the
"Subsidiary"), consummated on February 5, 1998, through arm's-length
negotiations, the acquisition of the stock of National Medical Systems, Inc.
("NMS"), an Arkansas corporation. The stock was sold by James G. Mosley, his
sons James S. Mosley and William Kent Mosley, and certain affiliated limited
partnerships and trusts. The acquisition will be accounted for as a purchase.
The purchase price was approximately $35,350,000 consisting of $1,000,000 by
promissory note, approximately $17,785,000 by satisfaction or assumption of
outstanding debt obligations, and the remainder in cash. The cash portion of the
purchase price was funded through operations and an existing credit facility
with a consortium of financial institutions headed by Bankers Trust Company.
NMS had operated a home health care business in Arkansas, Oklahoma and Texas,
and the Registrant, through its subsidiary, intends to use the acquired assets
to continue to operate the home health business.
3
<PAGE> 4
Item 7. Financial Statements and Exhibits.
<TABLE>
<CAPTION>
Page
----
<S> <C>
a. Financial Statements of Business Acquired
i. Audited balance sheets of National Medical Systems,
Inc. as of August 31, 1997 and the related statements of
operations and shareholders' equity and cash flows for
the year then ended. Unaudited balance sheet of
National Medical Systems, Inc. as of November 30,
1997 and the related unaudited statements of
operations and cash flows for the three months
ended November 30, 1997 and 1996. 5
b. Pro Forma Financial Information
i. Introductory information 19
ii. Unaudited pro forma selected income statement data
of American HomePatient, Inc. for the year ended
December 31, 1997. 20
c. Exhibits. None
</TABLE>
4
<PAGE> 5
NATIONAL MEDICAL SYSTEMS, INC.
FINANCIAL STATEMENTS
AS OF AUGUST 31, 1997 AND NOVEMBER 30, 1997
TOGETHER WITH REPORT OF
INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
5
<PAGE> 6
REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
The Board of Directors
National Medical Systems, Inc.:
We have audited the consolidated balance sheet of National Medical Systems, Inc.
as of August 31, 1997 and the related consolidated 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 consolidated financial position of National Medical
Systems, Inc. as of August 31, 1997, and the consolidated results of its
operations and its consolidated cash flows for the year then ended, in
conformity with generally accepted accounting principles.
Hudson, Cisne & Company
January 13, 1998
6
<PAGE> 7
NATIONAL MEDICAL SYSTEMS, INC.
CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
AUGUST 31, NOVEMBER 30,
ASSETS 1997 1997
-------------------------------------------------- ------------ -------------
(unaudited)
<S> <C> <C>
CURRENT ASSETS:
Cash $ 194,628 $ 97,505
Marketable securities 881,727 893,294
Trade accounts receivable, net of allowance for
doubtful accounts of $3,018,000 and $2,896,000 7,945,756 7,847,554
Accounts receivable - related parties 763,940 964,538
Supplies inventory 2,512,207 2,762,278
Prepaid income taxes 136,134 280,761
Deferred income tax asset 1,194,717 1,250,000
------------ ------------
Total current assets 13,629,109 14,095,930
------------ ------------
RENTAL EQUIPMENT, NET OF ACCUMULATED
DEPRECIATION OF $7,487,976 AND $8,122,969,
RESPECTIVELY 13,323,624 13,293,884
------------ ------------
PROPERTY AND EQUIPMENT:
Leasehold improvements 3,545,131 3,610,350
Automobiles and trucks 2,013,484 1,955,202
Furniture, fixtures and equipment 4,761,375 4,799,445
------------ ------------
10,319,990 10,364,997
Accumulated depreciation and amortization (5,882,781) (5,962,819)
------------ ------------
Net property and equipment 4,437,209 4,402,178
------------ ------------
NOTE RECEIVABLE - RELATED PARTY 113,861 110,868
------------ ------------
OTHER ASSETS 1,148,668 976,178
------------ ------------
$ 32,652,471 $ 32,879,038
============ ============
</TABLE>
(Continued)
See accompanying notes.
7
<PAGE> 8
NATIONAL MEDICAL SYSTEMS, INC.
CONSOLIDATED BALANCE SHEETS
(Continued)
<TABLE>
<CAPTION>
AUGUST 31, NOVEMBER 30,
LIABILITIES AND SHAREHOLDERS' EQUITY 1997 1997
--------------------------------------------------- ----------- ------------
(unaudited)
<S> <C> <C>
CURRENT LIABILITIES:
Current portion of long-term debt $ 3,384,814 $ 3,215,573
Current portion of capital lease obligations 2,187,651 2,078,268
Accounts payable - trade 4,412,531 4,534,477
Accrued expenses 1,230,022 1,082,341
------------ ------------
Total current liabilities 11,215,018 10,910,659
------------ ------------
LONG-TERM DEBT, LESS CURRENT PORTION 9,473,945 9,758,128
------------ ------------
CAPITAL LEASE OBLIGATIONS, LESS CURRENT PORTION 4,811,456 4,570,883
------------ ------------
DEFERRED INCOME TAXES 2,534,724 2,860,871
------------ ------------
SHAREHOLDERS' EQUITY:
Common stock, $.10 par value; authorized
20,000,000 shares; issued and outstanding 1,371,600 137,160 137,160
Preferred stock, $.10 par value; authorized 1,000,000
shares; issued and outstanding - 363,540
and 348,660 shares, respectively 36,354 34,866
Guaranteed employee stock ownership plan
obligation (1,371,429) (1,342,857)
Retained earnings 5,815,243 5,949,328
------------ ------------
Total shareholders' equity 4,617,328 4,778,497
------------ ------------
$ 32,652,471 $ 32,879,038
============ ============
</TABLE>
See accompanying notes.
8
<PAGE> 9
NATIONAL MEDICAL SYSTEMS, INC.
CONSOLIDATED STATEMENTS OF INCOME
<TABLE>
<CAPTION>
THREE MONTHS ENDED
YEAR ENDED NOVEMBER 30,
AUGUST 31, --------------------------
1997 1996 1997
----------- ----------- -----------
(unaudited) (unaudited)
<S> <C> <C> <C>
REVENUES:
Equipment rental $ 23,312,168 $ 5,647,780 $ 6,016,184
Sales of rental equipment and supplies 10,132,286 2,636,941 2,518,604
Repairs and other 633,961 130,404 153,505
------------ ------------ ------------
Total revenues 34,078,415 8,415,125 8,688,293
------------ ------------ ------------
COST AND EXPENSES:
Cost of sales 4,933,559 1,369,344 1,265,937
Selling, general and administrative 22,440,680 5,377,952 5,710,239
Depreciation 3,242,788 745,298 917,468
Interest 1,780,446 428,428 467,109
------------ ------------ ------------
Total cost and expenses 32,397,473 7,921,022 8,360,753
------------ ------------ ------------
INCOME BEFORE INCOME TAXES 1,680,942 494,103 327,540
------------ ------------ ------------
INCOME TAX PROVISION (BENEFIT):
Current (66,697) 76,497 (135,427)
Deferred 411,455 100,824 270,864
------------ ------------ ------------
Total income tax provision (benefit) 344,758 177,321 135,437
------------ ------------ ------------
NET INCOME $ 1,336,184 $ 316,782 $ 192,103
============ ============ ============
</TABLE>
See accompanying notes.
9
<PAGE> 10
NATIONAL MEDICAL SYSTEMS, INC.
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
FOR THE YEAR ENDED AUGUST 31, 1997
<TABLE>
<CAPTION>
GUARANTEED
COMMON PREFERRED ESOP RETAINED
STOCK STOCK OBLIGATION EARNINGS TOTAL
-------- ---------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C>
BALANCE AT AUGUST 31, 1996 $ 137,160 $ 42,304 $(1,485,714) $ 4,711,142 $ 3,404,892
Decrease in ESOP obligation -- -- 114,285 -- 114,285
Redemption of preferred stock -- (5,950) -- (232,083) (238,033)
Net income -- -- -- 1,336,184 1,336,184
----------- ----------- ----------- ----------- -----------
BALANCE AT AUGUST 31, 1997 $ 137,160 $ 36,354 $(1,371,429) $ 5,815,243 $ 4,617,328
=========== =========== =========== =========== ===========
</TABLE>
See accompanying notes.
10
<PAGE> 11
NATIONAL MEDICAL SYSTEMS, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
THREE MONTHS ENDED
YEAR ENDED NOVEMBER 30,
AUGUST 31, ---------------------------
1997 1996 1997
----------- ----------- -----------
(unaudited) (unaudited)
<S> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss) $ 1,336,184 $ 316,782 $ 192,103
Adjustments to reconcile net income (loss) to net cash
provided by (used in) operating activities:
Depreciation and amortization 3,651,851 849,043 988,738
Increase in cash surrender value of life
insurance 5,011 - -
Change in provision for doubtful accounts (22,000) 100,000 (122,000)
Deferred income tax 411,463 100,824 270,864
Gain on sale of property and equipment (29,520) (5,636) (3,614)
Changes in assets and liabilities:
Trade accounts receivable (233,474) (548,514) 220,202
Accounts and note receivables - related
parties (439,531) (104,156) (197,605)
Supplies inventory (387,260) (13,765) (250,071)
Prepaid income taxes (136,134) 14,006 (144,627)
Rental equipment, net (5,168,991) (915,681) (660,617)
Other assets (371,233) (4,769) 105,722
Accounts payable - trade 1,788,905 893,122 121,946
Accounts payable - related party - - -
Accrued expenses 472,252 50,830 (147,681)
Income taxes payable (399,985) (179,572) -
----------- ----------- -----------
Net cash provided by (used in)
operating activities 477,538 552,514 373,360
----------- ----------- -----------
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of marketable securities (43,575) (10,787) (11,567)
Purchases of property and equipment (1,126,669) (337,666) (221,237)
Proceeds from sale of property and equipment 167,286 34,655 32,770
----------- ----------- -----------
Net cash used in investing activities (1,002,958) (313,798) (200,034)
----------- ----------- -----------
CASH FLOWS FROM FINANCING ACTIVITIES:
Net borrowings under line of credit 447,891 338,483 707,000
Proceeds from notes payable and capital leases 3,564,370 156,491 110,956
Payments on notes payable and capital lease
obligations (3,456,775) (826,042) (1,052,969)
Redemption of preferred stock (238,033) (59,508) (59,508)
Deferred loan fees (107,556) - (4,500)
Decrease in ESOP obligation 114,285 28,571 28,572
----------- ----------- -----------
Net cash provided by financing
activities 324,182 (362,005) (270,449)
----------- ----------- -----------
NET (DECREASE) INCREASE IN CASH (201,238) (123,289) (97,123)
CASH AT BEGINNING OF PERIOD 395,866 395,865 194,628
----------- ----------- -----------
CASH AT END OF PERIOD $ 194,628 $ 272,576 $ 97,505
=========== =========== ===========
</TABLE>
See accompanying notes.
11
<PAGE> 12
NATIONAL MEDICAL SYSTEMS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
NATURE OF OPERATIONS
National Medical Systems, Inc. (the "Company") rents (principally on a
weekly and monthly basis) and sells medical equipment and other home care
products to individuals in Arkansas, Texas and Oklahoma. These products
and services, which are typically prescribed by a physician, include
respiratory therapy equipment, convalescent medical equipment, and home
infusion therapy products. The Company's pricing policy and revenue mix
are significantly influenced by Medicare regulations.
PRINCIPLES OF CONSOLIDATION
The consolidated financial statements include the accounts of the Company
and its wholly-owned subsidiary, The National Medical Rentals, Inc. and
its wholly-owned subsidiary, National I.V., Inc. Significant intercompany
accounts and transactions have been eliminated in consolidation.
REVENUE RECOGNITION
Revenues are reported on the accrual basis in the period in which services
are provided at established rates.
SUPPLIES INVENTORY
Supplies inventory is carried at the lower of cost or market using the
first-in, first-out method.
RENTAL EQUIPMENT AND PROPERTY AND EQUIPMENT
Rental equipment and property and equipment are stated at cost.
Depreciation is computed for financial statement purposes over the
estimated useful lives of the assets using the straight-line method. The
estimated useful lives are as follows:
<TABLE>
<CAPTION>
YEARS
-------
<S> <C>
Rental equipment 8
Leasehold improvements 5-31.5
Automobiles and trucks 5
Furniture, fixtures and equipment 5-10
</TABLE>
12
<PAGE> 13
Depreciation is calculated for tax purposes using accelerated methods.
Amortization of equipment under capital leases is included in
depreciation.
INCOME TAXES
The Company and its wholly-owned subsidiaries file consolidated income tax
returns.
Income taxes are provided for the tax effects of transactions reported in
the financial statements and consist of taxes currently due plus deferred
taxes. Deferred taxes are recognized for differences between the basis of
assets and liabilities for financial statement and income tax purposes.
The differences relate primarily to depreciable assets, allowance for
doubtful accounts and vacation and bonus payable. The deferred tax assets
and liabilities represent the future tax return consequences of those
differences, which will either be taxable or deductible when the assets
and liabilities are recovered or settled.
STATEMENT OF CASH FLOWS
Investments with an original term of three months or less are considered
cash equivalents.
Cash payments for interest were $1,833,357 during the year ended August
31, 1997. During the year ended August 31, 1997, cash payments for income
taxes totaled $462,753.
Noncash investing and financing activities include the purchase of
equipment in exchange for notes payable of $4,684,761 for the year ended
August 31, 1997.
USE OF ESTIMATES
In preparing financial statements in conformity with generally accepted
accounting principles, management is required to make estimates and
assumptions that affect the reported amounts of assets and liabilities at
the date of the financial statements and revenues and expenses during the
reporting period. Actual results could differ from those estimates.
2. TRADE ACCOUNTS RECEIVABLE
Approximately 30%, 4%, 49% and 17% of the Company's trade accounts
receivable at August 31, 1997 are due from Medicare, Medicaid, health
insurance companies, and individuals, respectively.
3. OTHER ASSETS
Deferred loan costs of $571,876 at August 31, 1997 are being amortized
over the term of the loans. Accumulated amortization of the loan costs was
$467,716 at August 31, 1997. Other capitalized costs of $242,200 at August
1997 will be amortized over three to five years.
13
<PAGE> 14
4. LONG-TERM DEBT
<TABLE>
<S> <C>
Long-term debt at August 31, 1997 consists of the following:
Metlife Capital Corporation, interest at 7.76% to 9.01%, due
in monthly payments of $21,157 including interest through
May 8, 2001, secured by office equipment. $ 339,277
Merrill Lynch Business Financial Services, Inc., interest at
Wall Street Journal Prime Rate plus 1% (9.5% at August 31,
1997), due in monthly principal payments of $10,414 plus
interest through 1999, secured by rental equipment. 208,276
Merrill Lynch Business Financial Services, Inc., interest at
30 day commercial paper rate plus 3.15% (8.65% at August
31, 1997), due in monthly principal payments of $5,000
plus interest through April 19, 2001, secured by rental
equipment. 230,000
Notes payable to finance company, interest at 8% to 9.86%,
payable in monthly principal and interest payments totaling
$35,134, with various maturities through June 21, 2001,
secured by vehicles. 632,277
Union Planters National Bank, due in monthly interest payments
at the bank's prime rate (8.5% at August 31, 1997) with
balance due July 1, 1998, secured by investments. 780,000
Bank One, Texas N.A., $7,500,000 revolving credit note,
due in quarterly interest payments at the bank's base
rate plus .875% (9.375% in 1997), principal due July 14,
1999, secured by substantially all assets of the Company. 6,685,000
Bank One, Texas, N.A., $4,000,000 revolving credit note,
due in quarterly interest payments at the bank's base rate
plus .875% (9.375% in 1997) principal due July 14, 1998,
secured by substantially all assets of the Company. 675,000
Bank One, Texas, N.A., due in quarterly principal payments
of $28,571 plus interest at the bank's base rate plus .875%
(9.375% in 1997) with balance due July 14, 1999, secured
by substantially all assets of the Company. 571,429
Bank One, Texas, N.A., due in quarterly principal payments
of $242,187 plus interest at the bank's base rate plus
.875% (9.375% in 1997) with balance due July 14, 1999,
secured by substantially all assets of the Company. 1,937,500
</TABLE>
14
<PAGE> 15
<TABLE>
<S> <C>
10.25% stockholder note payable, due quarterly in 8
interest only payments and thereafter due in quarterly
payments of $40,000 plus interest through July
15, 2002, secured by common stock. 800,000
-----------
12,858,759
Less current portion 3,384,814
-----------
$ 9,473,945
===========
</TABLE>
The notes with Bank One, Texas, N.A. include certain financial covenants
which have been met by the Company or waived by the bank.
Future maturities of long-term debt at August 31, 1997 are as follows:
<TABLE>
<S> <C>
1998 $ 3,384,814
1999 8,671,579
2000 343,251
2001 265,208
2002 193,907
-----------
$12,858,759
===========
</TABLE>
5. CAPITAL LEASE OBLIGATIONS
The Company has various leased property under capital leases that are
included in rental equipment and property and equipment in the
accompanying financial statements as follows:
<TABLE>
<S> <C>
Rental equipment and property and equipment $11,213,096
Accumulated depreciation 2,659,277
-----------
$ 8,553,819
===========
</TABLE>
Future minimum lease payments under capital leases are as follows:
<TABLE>
<S> <C>
1998 $ 2,728,345
1999 2,457,332
2000 2,129,285
2001 764,203
-----------
8,079,165
Less amounts representing interest 1,080,058
-----------
Present value of future minimum lease payments
(including current portion of $2,187,651) $ 6,999,107
===========
</TABLE>
15
<PAGE> 16
6. INCOME TAXES
As of August 31, 1997, deferred tax liabilities recognized for taxable
temporary differences totaled $2,534,724. Deferred tax assets recognized
for deductible temporary differences totaled $1,194,717 as of August 31,
1997. There was no valuation allowance.
7. OPERATING LEASES
The Company leases its corporate offices, rental locations, and computer
processing time under operating leases expiring at various times through
the year 2007, with renewal options. The Company leases a substantial
portion of its facilities from MOCO Investment Limited Partnership, a real
estate partnership of directors and stockholders of the Company. A
schedule of minimum rental payments on noncancellable operating leases at
August 31, 1997 follows:
<TABLE>
<CAPTION>
RELATED PARTY OTHER TOTAL
------------- ---------- ----------
<S> <C> <C> <C>
1998 $ 747,667 $ 431,486 $1,179,153
1999 746,600 318,924 1,065,524
2000 746,600 233,022 979,622
2001 746,600 122,318 868,918
2002 746,600 99,242 845,842
Thereafter 248,867 41,329 290,196
---------- ---------- ----------
$3,982,934 $1,246,321 $5,229,255
========== ========== ==========
</TABLE>
Rent expense under operating leases was $2,037,941 in 1997. Of this
expense related party rental expense was $759,900 for the year ended
August 31, 1997.
8. RELATED PARTY TRANSACTIONS
The Company has a 6.5% installment note receivable from MOCO Investment
Limited Partnership originating from the sale of real estate to the
partnership. The balance of the note was $113,861 at August 31, 1997.
Interest income from this note was $7,810 for the year ended August 31,
1997.
The Company has related party accounts receivable and payable to MOCO
Investment Limited Partnership for various operating expenses. The net
accounts receivable balance was $308,369 at August 31, 1997.
The remaining accounts receivable - related parties balances consist
primarily of short-term cash advances to stockholders.
16
<PAGE> 17
9. BENEFIT PLANS
During 1993, the Company implemented a deferred compensation plan covering
substantially all full-time employees. Company contributions to the plan
are based on 50% of participants' contributions, with a maximum Company
contribution of $250 annually. Company contributions totaled $41,317 for
the year ended August 31, 1997.
The Company also has a non-qualified executive deferred compensation plan
which covers its management team. Amounts expensed under the plan were not
significant. The Company's policy is to make investments in life insurance
contracts which should cover future benefits due under the plan.
10. EMPLOYEE STOCK OWNERSHIP PLAN
On May 1, 1994, the Company implemented an employee stock ownership plan
(ESOP). On July 14, 1995, The National Medical Rentals, Inc. borrowed
$800,000 with a 10.25% bank note on behalf of the ESOP. The ESOP also
borrowed, on the same date, $800,000 with a 10.25% note payable to James
G. Mosley. Both loans are guaranteed by The National Medical Rentals, Inc.
The Company reports the total guaranteed ESOP borrowings as debt on its
balance sheet. A like amount of guaranteed ESOP obligations is recorded as
a reduction in shareholders' equity. As the principal payments are made,
the guaranteed ESOP obligation is reduced accordingly.
Contributions and related administrative expenses for the ESOP were
$114,386 for August 31, 1997.
11. PREFERRED STOCK
In connection with the 1993 reorganization of the Company, The National
Medical Rentals, Inc. approved an exchange of 628,400 shares of $.10 par
value common stock held by certain stockholders for an equal number of
shares of $.10 par value redeemable preferred stock. Redemption of the
preferred stock is at the option of the Company for a liquidation
preference of $4 per share. The Company plans, but is not obligated, to
redeem the preferred stock over a ten year period.
During 1997, the Company redeemed 59,508 shares, at the redemption rate of
$4 per share, for a total redemption cost of $238,033.
17
<PAGE> 18
12. SUBSEQUENT EVENT
Effective December 1, 1997, the Company was sold to American HomePatient,
Inc. The closing date has not been determined.
13. FINANCIAL STATEMENTS AT NOVEMBER 30, 1997 AND 1996 (UNAUDITED)
The unaudited financial statements included herein have been prepared,
without audit, pursuant to the rules and regulations of the Securities and
Exchange Commission ("SEC"). In the opinion of management, the
accompanying unaudited financial statements reflect all adjustments
(consisting of only normally recurring accruals) necessary to present
fairly the financial position as of November 30, 1997 and the results of
operations and cash flows for the three months ended November 30, 1996 and
1997.
18
<PAGE> 19
AMERICAN HOMEPATIENT, INC.
PRO FORMA SELECTED FINANCIAL DATA
(unaudited)
Pursuant to a Stock Purchase Agreement, the Registrant's wholly-owned
subsidiary, American HomePatient, Inc., a Tennessee corporation (the
"Subsidiary"), consummated on February 5, 1998, through arm's-length
negotiations, the acquisition of the stock of National Medical Systems, Inc.
("NMS"), an Arkansas corporation. The stock was sold by James G. Mosley, his
sons James S. Mosley and William Kent Mosley, and certain affiliated limited
partnerships and trusts. The acquisition will be accounted for as a purchase.
The purchase price was approximately $35,350,000 consisting of $1,000,000 by
promissory note, approximately $17,785,000 by satisfaction or assumption of
outstanding debt obligations, and the remainder in cash. The cash portion of the
purchase price was funded through operations and an existing credit facility
with a consortium of financial institutions headed by Bankers Trust Company.
In addition, effective during 1997, American HomePatient has acquired assets and
assumed liabilities of other home care businesses (the "Other Acquired
Operations"). None of the other acquisitions effective in 1997 have been
significant acquisitions under Regulation S-X of the Securities and Exchange
Commission.
The unaudited pro forma income statement data for the year ended December 31,
1997 has been prepared based on the historical income statement of the
Registrant, as adjusted to reflect the acquisitions of NMS and the Other
Acquired Operations as if such agreements had been effective as of January 1,
1997. The pro forma income statement data may not be indicative of the future
results of operations and what the actual results of operations would have been
had the acquisitions described above been effective January 1, 1997.
19
<PAGE> 20
AMERICAN HOMEPATIENT, INC.
PRO FORMA INCOME STATEMENT DATA
YEAR ENDED DECEMBER 31, 1997
(unaudited, in thousands, except share amounts)
<TABLE>
<CAPTION>
AMERICAN OTHER
HOMEPATIENT, ACQUIRED TOTAL
INC. NMS OPERATIONS ADJUSTMENTS COMPANY
----------- -------- ---------- ----------- --------
<S> <C> <C> <C> <C> <C>
NET REVENUES $ 387,277 $ 31,947 $ 23,838 $ - $ 443,062
--------- --------- --------- ------- ---------
EXPENSES:
Cost of sales 96,418 4,428 6,793 $ (180) (A) 107,459
Operating 217,532 18,083 9,845 (185) (A, B) 245,275
General and administrative 15,953 2,792 2,703 (3,698) (B, C) 17,750
Depreciation and amortization 33,736 3,130 1,140 512 (D) 38,518
Interest 16,494 1,668 596 2,707 (E) 21,465
Restructuring charge 33,829 - - - 33,829
Goodwill impairment 8,165 - - - 8,165
--------- --------- --------- ------- ---------
422,127 30,101 21,077 (844) 472,461
--------- --------- --------- ------- ---------
Income (loss) before income taxes (34,850) 1,846 2,761 844 (29,399)
Income taxes provision (benefit) (8,942) 738 1,105 338 (F) (6,761)
--------- --------- --------- ------- ---------
Net income (loss) $ (25,908) $ 1,108 $ 1,657 $ 506 $ (22,637)
========= ========= ========= ======= =========
Weighted average shares:
Basic 14,838 14,838
========= =========
Net loss per share:
Basic $ (1.75) $ (1.53)
========= =========
Diluted earnings per share is not presented
because it is anti-dilutive
</TABLE>
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AMERICAN HOMEPATIENT, INC.
NOTES TO PRO FORMA SELECTED FINANCIAL DATA
(UNAUDITED)
(a) Reflects the reduction of certain expenses as a result of renegotiated
vendor contracts entered into by certain of the acquired operations.
(b) Reflects additional general and administrative and operating expenses as a
result of integrating acquired operations. This adjustment includes
additional salaries and personnel expenses for certain acquisitions,
interim operating agreement management fees and other corporate expenses
expected to be incurred in connection with the acquisitions.
(c) Reflects the elimination of corporate overhead charges allocated to
certain of the acquired operations by the company's respective parent and
the elimination of expenses related to the officers of certain of the
acquired operations. The Company did not acquire the parent's operations
and therefore did not assume these liabilities and expenditures. In
addition, the Company did not hire certain officers of certain of the
acquired operations.
(d) Reflects the incremental depreciation and amortization resulting from the
step-up of property and equipment in accordance with purchase accounting
for the acquired operations and the adjustment of depreciation methods
associated with certain of the acquired operations.
(e) Reflects additional interest expense as a result of seller notes payable
and borrowings under the Line of Credit in order to fund the cash portion
of the acquisitions and the elimination of interest expenses of certain of
the acquired operations upon the repayment of debt by the Company
immediately following the acquisition where applicable.
(f) Reflects the adjustment to income taxes related to pro forma adjustments.
21
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SIGNATURE
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 thereunto duly authorized.
AMERICAN HOMEPATIENT, INC.
By: /s/Mary Ellen Rodgers
-------------------------------
Name: Mary Ellen Rodgers
Title: Principal Financial and Chief
Accounting Officer, Senior
Vice President
Date: April 15, 1998
22
