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): January 31, 1997
INTERNATIONAL NURSING SERVICES, INC.
(Exact Name of Registrant as specified in its charter)
Colorado 0-24768 84-1123311
(State or other jurisdiction (Commission file number) (IRS Employer
of incorporation) Identification No.)
360 South Garfield, Suite 400, Denver, Colorado 80209
(Address of principal executive offices) (ZIP Code)
(303) 393-1515
(Registrant's telephone number, including area code)
Not applicable
(Former name or former address, if changed since last report)
Item 7. Financial Statements, Pro Forma Financial Information and Exhibits
a) In accordance with Item 7(a)(1), the Registrant is filing the
required financial statements of the business acquired as an
amendment to the Form 8-K.
b) The following exhibits are furnished herewith in accordance with
the provisions of Item 601 of Regulation S-K.
Reg. S-K
Exhibit No. Description Item No.
*2.1 Asset Purchase Agreement
dated as of January 31, 1997 by and
among Colorado Therapists On
Call, Inc., Professional HealthCare
Providers, Inc., CoreStaff, Inc., and
International Nursing Services, Inc. 2
*99.1 Press Release of the Registrant dated
February 4, 1997 99
x99.2 Pro Forma Financial Statements 99
x99.3 Financial Statements of TherAmerica, Inc. 99
* Previously filed
x Filed herewith
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.
INTERNATIONAL NURSING SERVICES, INC.
(Registrant)
Dated: April 4, 1997 /s/John P. Yeros
By: John P. Yeros
Title: Chief Executive Officer
UNAUDITED PRO FORMA COMBINED STATEMENT OF OPERATIONS
AND
UNAUDITED PRO FORMA COMBINED BALANCE SHEET
The following unaudited pro forma combined statement of operations
for the year ended December 29, 1996 and the unaudited pro forma
combined balance sheet as of December 29, 1996 give effect to the
business combination of International Nursing Services, Inc. and
TherAmerica, Inc. effective January 1, 1996, including the related
pro forma adjustments described in the notes thereto. The
transaction between International Nursing Services, Inc. and
TherAmerica, Inc. has been accounted for as a combination of
companies under the purchase method. The unaudited pro forma
statement of operations have been prepared as if the proposed
transaction occurred on January 1, 1996. The unaudited pro forma
balance sheet has been prepared as of the proposed transaction
occurred December 29, 1996. These pro forma statements are not
necessarily indicative of the results of operations or the financial
positions as they may be in the future or as they might have been had
the transaction become effective on the above mentioned date.
The pro forma combined statement of operations for the year ended
December 29, 1996 includes the results of operations of International
Nursing Services, Inc. and TherAmerica, Inc..
The unaudited pro forma combined statement of operations and the
unaudited pro forma combined balance sheet should be read in
conjunction with the separate historical financial statements and
notes thereto of International Nursing Services, Inc. and
TherAmerica, Inc.
<TABLE>
<CAPTION>
International
Nursing TherAmerica
Services, Inc. Inc. Total
<S> <C> <C> <C>
Assets
Cash $ - $ 817,000 $ 817,000
Accounts receivable 4,458,000 987,000 5,445,000
Prepaid expenses and other 19,000 30,000 49,000
Total current assets 4,477,000 1,834,000 6,311,000
Property and equipment 355,000 137,000 492,000
Intangibles 4,080,000 2,919,000 6,999,000
Other long-term assets - 12,000 12,000
Total $8,912,000 $4,902,000 $13,814,000
Liabilities and Stockholders' Equity
Checks written in excess of bank $ 65,000 $ - $ 65,000
balance
Current portion of LTD 145,000 - 145,000
Current portion of capital lease
obligations 50,000 - 50,000
Advances under financing
agreement 3,318,000 - 3,318,000
Advances from parent - 2,110,000 2,110,000
Accounts payable 617,000 48,000 665,000
Accrued liabilities 1,620,000 87,000 1,707,000
Total current liabilities 5,815,000 2,245,000 8,060,000
Long-term debt
Notes payable - - -
Current portion of capital lease 50,000 - 50,000
Deferred income taxes - 13,000 13,000
Stockholders' equity
Preferred stock 1,234,000 - 1,234,000
Common stock 6,000 6,000 12,000
Dividends payable 66,000 - 66,000
Additional paid-in capital 8,965,000 2,490,000 11,455,000
Accumulated (deficit) earnings (7,224,000) 148,000 (7,076,000)
Total stockholders' equity 3,047,000 2,644,000 5,691,000
Total $8,912,000 $4,902,000 $13,814,000
</TABLE>
Table continued below
<TABLE>
<CAPTION>
Pro Forma Adjustments
Debit Credit Combined
<S> <C> <C> <C>
Assets
Cash $ - (3) $ 817,000 $ -
Accounts receivable (1) 44,000 (3) 987,000 4,502,000
Prepaid expenses and other - (3) 30,000 19,000
Total current assets (1) 44,000 1,834,000 4,521,000
Property and equipment 104,000 (3) 137,000 459,000
Intangibles (1) 50,000 (3) 2,919,000 6,095,000
(1) 1,965,000
Other long-term assets (1) 12,000 (3) 12,000 12,000
Total 2,175,000 4,902,000 11,087,000
Liabilities and Stockholders' Equity
Checks written in excess of bank
balance $ - $ - $ 65,000
Current portion of LTD - - 145,000
Current portion of capital lease
obligations - - 50,000
Advances under financing arrangement - - 3,318,000
Advances from parent (3) 2,110,000 - -
Accounts payable (3) 48,000 (1) 61,000 678,000
Accrued liabilities (3) 87,000 (1) 114,000 1,734,000
Total current liabilities 2,245,000 175,000 5,990,000
Long-term debt
Notes payable - (1) 428,000 428,000
Current portion of capital lease - - 50,000
Deferred income taxes (3) 13,000 - -
Stockholders' equity
Preferred stock - (1) 1,572,000 2,806,000
Common stock (3) 6,000 - 6,000
Dividends payable - - 66,000
Additional paid-in capital (3) 2,490,000 - 8,965,000
Accumulated (deficit) earnings (3) 148,000 - (7,224,000)
Total stockholders' equity 2,644,000 1,572,000 4,619,000
Total $4,902,000 $2,175,000 $11,087,000
</TABLE>
<TABLE>
<CAPTION>
Nursing TherAmerica
Services, Inc. Inc. Total
<S> <C> <C> <C>
Revenues $14,259,000 $8,378,000 $22,637,000
Direct cost of services 10,831,000 6,380,000 17,211,000
Gross margin 3,428,000 1,998,000 5,426,000
Operating expenses 4,083,000 1,805,000 9,888,000
Management fees from parent - 63,000 63,000
Overhead allocation from parent - 151,000 151,000
Loss from operations (655,000) (21,000) (676,000)
Interest expense 552,000 117,000 669,000
Interest income - (90,000) (90,000)
Net loss before income taxes (1,207,000) (48,000) (1,255,000)
Income taxes - 15,000 15,000
Net loss (1,207,000) (63,000) (1,270,000)
Preferred stock dividends 349,000 - 349,000
Net loss applicable to common
stockholders $ (858,000) $ (63,000) $(921,000)
Pro forma loss per common share $ (.19)
Weighted average number of shares 4,517,111
</TABLE>
Table continued below.
<TABLE>
<CAPTION>
Pro Forma Adjustments
Debit Credit Combined
<S> <C> <C> <C>
Revenues $22,637,000
Direct cost of services 17,211,000
Gross margin 5,426,000
Operating expenses (2) $ 134,000 (5) $ 79,000 5,843,000
(5) 100,000
Management fees from parent (5) 63,000
Overhead allocation from parent - (5) 151,000 -
Loss from operations (134,000) (393,000) (417,000)
Interest expense (4) 54,000 (7) 117,000 606,000
Interest income (8) 90,000 - -
Net loss before income taxes (278,000) (510,000) (1,023,000)
Income taxes - (6) 15,000 -
Net loss (278,000) (525,000) (1,023,000)
Preferred stock dividends - - 349,000
Net loss applicable to common
stockholders $(278,000) $(525,000) $ (674,000)
Pro forma loss per common share $ (.15)
Weighted average number of shares 4,517,111
</TABLE>
Notes to Unaudited Pro Forma Combined Financial Statements
The following adjustments are related to the business combination
between International Nursing Services, Inc. (INS) and Professional
Healthcare Providers, Inc. (PHP) and wholly owned subsidiary Colorado
Therapists On-Call, Inc. (CTOC) d/b/a TherAmerica, Inc..
1. To record the acquisition of TherAmerica, Inc. accounts
receivable, property and equipment, lease deposits, non-compete
agreement and goodwill for $2,175,000. To finance the acquisition,
INS issued 167.15 preferred stock units, each unit consisting of one
share of convertible preferred stock, $10,000 par value, and a
warrant to purchase $10,000 shares of common stock at $1.00 per
share, which raised net proceeds of $1,572,000. The Company also
issued a note payable bearing interest at 12 1/2% to fund the remainder
of the purchase price. In conjunction with the acquisition, INS
assumed $175,000 of current liabilities from TherAmerica, Inc.. The
purchase price has been allocated as follows:
<TABLE>
<CAPTION>
Asset Category Valuation
<S> <C> <C>
Accounts receivable $ 44,000
Property and equipment 104,000
Lease deposits 12,000
Non-compete agreement 50,000
Goodwill 1,965,000
$2,175,000
</TABLE>
2. To reflect amortization of the $2,015,000 of acquired
intangibles over 15 years.
3. To eliminate assets and liabilities that will not be assumed by
INS.
4. To record interest expense on acquisition debt.
5. To eliminate expenses that will not be incurred after the
combination.
<TABLE>
<CAPTION>
Expense Amount
<S> <C> <C>
Amortization of PHP and CTOC goodwill $ 79,000
Officer salaries* 100,000
Overhead allocation from parent 151,000
Management fee from parent 63,000
$ 393,000
</TABLE>
* After the business combination was completed, an officer of the
Company was terminated.
6. No pro forma income tax effect is recognized as INS has
approximately $4,900,000 of net operating loss carryforwards.
7. To eliminate the interest expense associated with long-term debt
not assumed by INS in the purchase.
8. To eliminate interest income on cash balances not acquired by
INS.
F-1
INDEPENDENT AUDITORS' REPORT
Board of Directors and Stockholders
International Nursing Services, Inc.
Denver, Colorado
We have audited the consolidated balance sheet of Professional
Healthcare Providers, Inc. and wholly owned subsidiary Colorado
Therapists On-Call, Inc. d/b/a TherAmerica, Inc. as of December 31,
1996 and the related consolidated statements of operations, changes
in stockholder's equity, and cash flows for the years ended December
31, 1996 and 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 audits 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 audits provide a
reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to
above present fairly, in all material respects, the financial
position of TherAmerica, Inc. as of December 31, 1996, and the
results of their operations and their cash flows for the years
December 31, 1996 and 1995 in conformity with generally accepted
accounting principles.
/s/ Ehrhardt Keefe Steiner & Hottman PC
Ehrhardt Keefe Steiner & Hottman PC
March 21, 1997
Denver, Colorado
THERAMERICA, INC.
Consolidated Balance Sheet
December 31, 1996
<TABLE>
<CAPTION>
Assets
<S> <C>
Current assets
Cash $ 816,607
Accounts receivable, net of allowance of $24,000 987,595
Prepaid expenses 30,073
1,834,275
Property and equipment 136,980
Intangible assets 2,918,750
Deposits 12,313
Total Assets $4,902,318
Liabilities and Stockholder's Equity
Current liabilities
Accounts payable $ 48,268
Accrued expenses 86,889
Due to parent 2,109,838
2,244,995
Deferred income taxes 12,831
Total liabilities 2,257,826
Commitments
Stockholder's equity
Common stock; 100,000 shares authorized,
1,161 issued and outstanding 6,126
Additional paid-in capital 2,489,857
Retained earnings 148,509
Total stockholder's equity 2,644,492
Total liabilities and stockholders'
equity $4,902,318
</TABLE>
THERAMERICA, INC.
Consolidated Statements of Operations
<TABLE>
<CAPTION>
For the Years Ended
December 31,
1996 1995
<S> <C> <C>
Net revenues $8,378,421 $9,652,955
Direct patient care expenses 6,380,057 7,477,307
Gross margin 1,998,364 2,175,648
General and administrative expenses 1,804,964 2,140,497
Management fees from parent 62,838 71,404
Overhead allocation from parent 151,000 -
Loss from operations (20,438) (36,253)
Interest expense 117,236 367,051
Interest income (90,416) (213,659)
Loss before income taxes (47,258) (189,645)
Income tax expense (benefit) 14,759 (45,040)
Net loss $ (62,017) $(144,605)
</TABLE>
THERAMERICA, INC.
Consolidated Statements of Changes in Stockholder's Equity
December 31, 1996 and 1995
<TABLE>
<CAPTION>
Additional
Common Stock Paid-in Retained
Shares Amount Capital Earnings Total
<S> <C> <C> <C> <C> <C>
Balance - December 31,
1994 1,161 $6,126 $484,871 $355,131 $846,128
Net loss - - - (144,605) (144,605)
Balance - December 31,
1995 1,161 6,126 484,871 210,526 701,523
Capital contribution
from parent - - 2,004,986 - 2,004,986
Net loss - - - (62,017) (62,017)
Balance - December 31,
1996 1,161 $6,126 $2,489,857 $148,509 $2,644,492
</TABLE>
THERAMERICA, INC.
Consolidated Statements of Cash Flows
<TABLE>
<CAPTION>
For the Years Ended
December 31,
1996 1995
<S> <C> <C>
Cash flows from operating activities
Net loss $ (62,017) $ (144,605)
Adjustments to reconcile net loss to net
cash provided by (used in) operating
activities -
Depreciation and amortization 122,154 148,704
(Gain) loss on disposal of fixed
assets (377) 11,687
Change in assets and liabilities -
Accounts receivable 202,499 (153,506)
Other assets 22,849 15,493
Accounts payable and accrued expenses (31,086) (27,684)
Deferred income taxes (80,283) (79,536)
235,756 (84,842)
Net cash provided (used) in
operating activities 175,739 (229,447)
Cash flows from investing activities
Purchase of property and equipment (6,883) (56,620)
Sale of property and equipment 1,502 -
Business acquisition - (75,000)
Net cash provided by investing
activities (5,381) (131,620)
Cash flows from financing activities
Advances from parent 621,477 745,839
Payment on note payable (180,000) (180,000)
Net cash provided by financing
activities 441,477 565,839
Net increase in cash 611,835 204,772
Cash - beginning of year 204,772 -
Cash - end of year $816,607 $204,772
</TABLE>
Supplemental disclosure of cash flow information
Cash paid during the year for interest was $14,400 and $28,800
for December 31, 1996 and 1995, respectively.
During 1996, $2,004,984 of the balance payable to the parent
was forgiven and included as an increase to additional paid-in-
capital.
THERAMERICA, INC.
Notes to Financial Statements
Note 1 - Organization and Significant Accounting Policies
Organization
TherAmerica, Inc. (the Company) provides temporary physical
therapists and assistants, occupational therapists and assistants,
speech and language pathologists, respiratory care practitioners and
radiologic technologists to hospitals and healthcare facilities. The
Company has offices located in Colorado and California.
Basis of Presentation
The accompanying consolidated financial statements include the
accounts of Professional Healthcare Providers, Inc. (PHP) and its
wholly owned subsidiary Colorado Therapists On-Call, Inc. (CTOC)
after elimination of all intercompany accounts and transactions.
Concentration of Credit Risk
Financial instruments which potentially subject the Company to
concentrations of credit risk consist primarily of accounts
receivable. The Company grants credit to health-care facilities
primarily in Colorado and California. The Company periodically
performs credit analysis and monitors the financial condition of its
clients in order to minimize credit risk.
The Company has cash balances in excess of FDIC limits of $750,000 at
December 31, 1996.
Property and Equipment
Property and equipment are stated at cost. Depreciation is
calculated using the straight-line method over the estimated useful
lives of the related assets which range from five to seven years.
Intangibles
Intangibles consist of goodwill related to PHP's acquisition of CTOC
in 1993 and the pushdown of goodwill from the parent related to the
acquisition of PHP in 1993. Goodwill (excess of cost of acquired
companies over equity) is amortized over 40 years by the straight-
line method.
The Company reviews its long-lived assets for impairment whenever
events or changes in circumstances indicate that the carrying amount
of the asset may not be recovered. The Company looks primarily to
the undiscounted future cash flows of its acquisition in its
assessment of whether or not goodwill has been impaired.
Income Taxes
Deferred tax assets and liabilities are determined based on
differences between the financial reporting and tax basis of assets
and liabilities and are measured by applying enacted tax rates and
laws to taxable years in which such differences are expected to
reverse.
Financial Instruments
The carrying value of the Company's accounts receivable, accounts
payable and accrued expenses approximate their fair values due to the
short-term nature of these financial instruments.
Revenue Recognition
Revenue is recognized when services are rendered at the net
realizable amounts expected to be received from payors, patients and
others. Major third party reimbursement programs would only include
non-governmental insurance providers. Management believes there are
no material claims, retroactive adjustments, or disputes with any
third party payors.
Net Loss Per Share
Loss per share is based upon the weighted average number of shares
outstanding.
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
revenues and expenses during the reporting period. Actual results
could differ from those estimates.
Note 2 - Property and Equipment
Property and equipment and December 31, 1996 consist of the
following:
<TABLE>
<CAPTION>
<S> <C>
Furniture and equipment $220,380
Computer and software 87,719
308,099
Less accumulated depreciation (171,119)
$136,980
</TABLE>
Depreciation expense was $42,792 and $70,742 for the years ended
December 31, 1996 and 1995, respectively.
Note 3 - Related Party Transactions
The Company is allocated certain corporate expenses and charged for
direct costs paid by the parent. The parent allocates workers
compensation insurance costs, general corporate overhead, interest
expense on acquisition debt, and charges a monthly management fee of
.75% of revenues.
The following table presents expenses allocated from the parent:
<TABLE>
<CAPTION>
December 31,
1996 1995
<S> <C> <C>
Workers compensation insurance costs $101,147 $ 85,533
Corporate overhead 151,000 -
Interest expense 106,646 341,880
Management fees 62,838 71,404
$421,631 $498,817
</TABLE>
In addition, during 1996, the parent forgave $2,004,984 of
acquisition debt which was recorded as additional paid-in-capital.
Note 4 - Income Taxes
The Company files a consolidated return with its parent Corestaff,
Inc. Income taxes are provided for in the accompanying financial
statements as if the Company filed its own separate tax return.
Income tax expense (benefit) consists of the following:
<TABLE>
<CAPTION>
December 31,
1996 1995
<S> <C> <C>
Current tax expense $ 93,977 $ 34,496
Deferred tax benefit (79,220) (79,536)
$ 14,759 $(45,040)
</TABLE>
Components of the Company's deferred tax assets and liabilities are
as follows:
<TABLE>
<CAPTION>
<S> <C>
Deferred tax assets
Workers compensation expenses
deferred $63,471
Allowance for uncollectible accounts 6,800
Vacation accrual 18,212
88,483
Deferred tax liabilities
Cash to accrual adjustment 99,809
Intangibles 1,505
101,314
$ 12,831
</TABLE>
Note 5 - Operating Leases
The Company leases office facilities and equipment under non-
cancelable operating leases. One of the office leases is personally
guaranteed by an officer, director and stockholder. Rent expense for
the years ended December 31, 1996 and 1995 was $93,000 and $73,400,
respectively.
Future minimum lease payments under these leases are as follows:
<TABLE>
<CAPTION>
<S> <C>
Fiscal Year Ended December 31,
1997 $ 86,667
1998 51,369
1999 19,817
2000 11,833
2001 -
$ 169,686
</TABLE>
Note 6 - Sale of Assets - Subsequent Event
In January of 1997, the Company has entered into an agreement to sell
certain assets and transfer certain liabilities to International
Nursing Services, Inc. for a total purchase price of $2,000,000 in
cash and approximately $175,000 of liabilities assumed. The purchase
price has been allocated as follows:
<TABLE>
<CAPTION>
<S> <C>
Net tangible assets $ 160,000
Non-compete agreement 50,000
Goodwill 1,965,000
$2,175,000
</TABLE>
