SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 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 (Date of earliest event reported) April 30, 1996
EMCARE HOLDINGS INC.
- --------------------------------------------------------------------------------
(Exact Name of Registrant as Specified in Charter)
Delaware 0-24986 13-3645287
- --------------------------------------------------------------------------------
(State or Other (Commission (IRS Employer
Jurisdiction File Number) Identification No.)
of Incorporation)
1717 Main Street, Suite 5200, Dallas, Texas 75201
- --------------------------------------------------------------------------------
(Address of Principal Executive Offices) (Zip Code)
Registrant's telephone number, including area code (214) 712-2000
- --------------------------------------------------------------------------------
(Former Name or Former Address, if Changed Since Last Report)
Exhibit Index on Page 3
1
<PAGE>
Item 7. Financial Statements and Exhibits
(a) Financial Statements of Business Acquired
Audited Consolidated Financial Statements of Medical Emergency
Service Associates (MESA), S.C. and Subsidiaries (See page 4)
(1) Report of Ernst & Young LLP, Independent Auditors
(2) Consolidated Balance Sheet as of September 30, 1995
(3) Consolidated Statement of Operations for the year ended
September 30, 1995
(4) Consolidated Statement of Changes in Shareholders' Equity
(Deficit) for the year ended September 30, 1995
(5) Consolidated Statement of Cash Flows for the year ended
September 30, 1995
(6) Notes to Consolidated Financial Statements
Unaudited Interim Consolidated Financial Statements of Medical
Emergency Service Associates (MESA), S.C. and Subsidiaries
(See page 18)
(1) Consolidated Balance Sheet as of March 31, 1996
(2) Consolidated Statements of Operations for the six months ended
March 31, 1996 and 1995
(3) Consolidated Statements of Cash Flows for the six months ended
March 31, 1996 and 1995.
(b) Pro Forma Financial Information
(1) EmCare Holdings Inc. Pro Forma Consolidated Statement of Income
(unaudited) for the year ended December 31, 1995. (See page 22)
(2) EmCare Holdings Inc. Pro Forma Consolidated Statement
of Income (unaudited) for the three months ended March 31, 1996
(See page 23)
(3) EmCare Holdings Inc. Pro Forma Condensed Consolidated Balance
Sheet (unaudited) as of March 31, 1996 (See page 24)
(4) Notes to Unaudited Pro Forma Consolidated Financial Statements
2
<PAGE>
(c) Exhibits
The following exhibit is included as part of this Report:
Exhibit No. Description
----------- -----------
2.1* Stock Purchase Agreement, dated
as of April 1, 1996, among EmCare, Inc.,
Medical Emergency Service Associates
(MESA), S.C. and its stockholders.
*Previously filed.
3
<PAGE>
Medical Emergency Service Associates (MESA), S.C. and Subsidiaries
Consolidated Financial Statements
Year ended September 30, 1995
Contents
Report of Independent Auditors............................................. 5
Consolidated Financial Statements
Consolidated Balance Sheet................................................. 6
Consolidated Statement of Operations....................................... 7
Consolidated Statement of Changes in Stockholders' Equity (Deficit)........ 8
Consolidated Statement of Cash Flows....................................... 9
Notes to Consolidated Financial Statements................................ 10
4
<PAGE>
Report of Independent Auditors
The Board of Directors
Medical Emergency Service Associates (MESA), S.C. and Subsidiaries
We have audited the accompanying consolidated balance sheet of Medical Emergency
Service Associates (MESA), S.C. and Subsidiaries as of September 30, 1995, and
the related consolidated statements of operations, 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 consolidated financial position of Medical Emergency
Service Associates (MESA), S.C. and Subsidiaries at September 30, 1995, and the
consolidated results of their operations and their cash flows for the year then
ended in conformity with generally accepted accounting principles.
Ernst & Young LLP
5
<PAGE>
Medical Emergency Service Associates (MESA), S.C. and Subsidiaries
Consolidated Balance Sheet
September 30, 1995
Assets
Current assets:
Cash and cash equivalents ................................... $ 599,221
Accounts receivable ......................................... 1,196,689
Refundable income taxes ..................................... 21,000
Prepaid expenses and other assets ........................... 180,242
Deferred income taxes ....................................... 692,345
-----------
Total current assets ........................................... 2,689,497
Property and equipment, less accumulated depreciation .......... 74,840
Deferred tax asset ............................................. 578,971
Investment in limited partnership .............................. 139,829
===========
Total assets ................................................... $ 3,483,137
===========
Liabilities and Stockholders' Equity (Deficit)
Current liabilities:
Accounts payable, trade ..................................... $ 21,194
Accrued expenses ............................................ 634,430
Current portion of long-term debt ........................... 140,083
Short-term borrowings ....................................... 500,000
Professional liability reserve .............................. 1,425,000
-----------
Total current liabilities ...................................... 2,720,707
Pledge payable ................................................. 31,700
Deferred tax liability ......................................... 319,350
Long-term debt ................................................. 107,713
Professional liability reserve ................................. 1,400,000
Commitments and contingencies
Stockholders' equity (deficit):
Preferred stock; authorized 5,000 shares of non-voting,
no par value; redeemable at $333.33 per share;
issued and outstanding 1,800 shares ....................... 600,000
Common stock; authorized 100,000 shares; $10 par
value; issued and outstanding 3,150 shares ................ 31,500
Additional paid-in capital .................................. 255,672
Retained deficit ............................................ (1,983,505)
-----------
Total stockholders' equity (deficit) ........................... (1,096,333)
-----------
Total liabilities and stockholders' equity (deficit) ........... $ 3,483,137
===========
See accompanying notes.
6
<PAGE>
Medical Emergency Service Associates (MESA), S.C. and Subsidiaries
Consolidated Statement of Operations
Year ended September 30, 1995
Revenue .................................................. $ 13,388,031
Cost of revenue .......................................... 11,889,523
------------
Gross profit ............................................. 1,498,508
Operating expenses:
Administrative ........................................ 1,830,940
Employee benefit plan contribution .................... 415,000
------------
Loss from operations ..................................... (747,432)
Interest income .......................................... 46,639
Interest expense ......................................... (18,310)
Other income ............................................. 24,836
Loss from limited partnership ............................ (2,698)
------------
Loss before income taxes ................................. (696,965)
Income tax provision (benefit):
Current ............................................... 23,588
Deferred .............................................. (310,703)
------------
(287,115)
------------
Net loss ................................................. $ (409,850)
============
See accompanying notes.
7
<PAGE>
Medical Emergency Service Associates (MESA), S.C. and Subsidiaries
Consolidated Statement of Changes in Stockholders' Equity (Deficit)
Additional Retained
Preferred Common Paid-In Subscription Earnings
----------------------------
Shares Dollars Shares Dollars Capital Receivable (Deficit) Total
-----------------------------------------------------------------------
Balance at
October 1,
1994 1,800 $600,000 2,700 $27,000 $167,500 $(15,000) $(1,573,655)$ (794,155)
Net loss -- -- -- -- -- -- ( 409,850) (409,850)
Stock
sales -- -- 450 4,500 88,172 -- -- 92,672
Subscription
payments
received -- -- -- -- -- 15,000 -- 15,000
-------------------------------------------------------------------------
1,800 $600,000 3,150 $31,500 $255,672 $ -- $(1,983,505)$(1,096,333)
=========================================================================
See accompanying notes.
8
<PAGE>
Medical Emergency Service Associates (MESA), S.C. and Subsidiaries
Consolidated Statement of Cash Flows
Year ended September 30, 1995
Operating Activities
Net loss ............................................................ $(409,850)
Adjustments to reconcile net loss to net
cash used in operating activities:
Depreciation and amortization ................................... 29,193
Loss on investment in limited partnership ....................... 2,698
Deferred income taxes ........................................... (310,703)
Changes in operating assets and liabilities:
Accounts receivable .......................................... 238,195
Prepaid expenses and other assets ............................ 53,557
Refundable income taxes ...................................... 378
Accounts payable, trade ...................................... 6,078
Accrued expenses ............................................. (47,433)
Professional liability reserve ............................... 330,000
Income taxes payable ......................................... (5,037)
Pledge payable ............................................... (11,853)
---------
Net cash used in operating activities ............................... (124,777)
---------
Investing Activities
Purchases of property, plant, and equipment ......................... (7,075)
Proceeds from sale of subsidiary .................................... 90,401
---------
Net cash provided by investing activities ............................ 83,326
---------
Financing Activities
Borrowings under line of credit ..................................... 500,000
Payment on long-term debt ........................................... (43,933)
Proceeds from issuance of stock ..................................... 92,672
Subscription receivable paid ........................................ 15,000
---------
Net cash provided by financing activities ........................... 563,739
---------
Net increase in cash and cash equivalents ........................... 522,288
Cash and cash equivalents at beginning of year ...................... 76,933
=========
Cash and cash equivalents at end of year ............................ $ 599,221
=========
Supplemental Disclosure of Cash Flow Information Cash paid during the year for:
Interest ........................................................ $ 18,310
Income taxes .............. ..................................... 43,457
See accompanying notes.
9
<PAGE>
Medical Emergency Service Associates, S.C. and Subsidiaries
Notes to Consolidated Financial Statements
September 30, 1995
1. Business and Summary of Significant Accounting Policies
Business
Medical Emergency Service Associates (MESA), S.C. (MESA or the Company) provides
medical services through various hospitals and clinics. The medical services are
provided by physicians who are licensed or legally authorized to render medical
services under the laws of the state where the medical services are provided.
The Company's operations are principally in the Chicago, Illinois area.
The consolidated financial statements include the accounts of the Company
and its subsidiaries Safe Harbor Insurance Company, Ltd. and Medi-Mouse,
Inc. All significant intercompany accounts have been eliminated in
consolidation.
Cash and Cash Equivalents
The Company considers all highly liquid investments purchased with an original
maturity date of three months or less to be cash equivalents.
Property and Equipment
Furniture and office equipment are stated at cost and depreciated over the
estimated useful lives of the assets ranging from five to twelve years using
straight line and accelerated methods. Leasehold improvements are stated at cost
and depreciated over the life of the lease using the straight line method.
Accounts Receivable and Revenues
The Company provides professional services to emergency room patients under
contracts with various hospitals. Collections are received directly from the
hospitals with which it has contracted. Four Chicago area hospitals accounted
for approximately 35%, 14%, 11%, and 10% of the Company's revenues for the year
ended September 30, 1995.
Income Taxes
The Company provides for income taxes using the liability method pursuant to
Statement of Financial Accounting Standards No. 109 "Accounting for Income
Taxes." Deferred income taxes are provided for temporary differences arising
between the tax basis of assets and liabilities and their book basis as reported
in the consolidated financial statements. For purposes of filing federal and
state income tax returns, MESA and its subsidiaries utilize the cash method of
accounting; that is, tax basis revenue consists of revenue collected during the
period and tax basis expenses consists of expenses paid during the period.
10
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Medical Emergency Service Associates (MESA), S.C. and Subsidiaries
Notes to Consolidated Financial Statements (continued)
1. Business and Summary of Significant Accounting Policies (continued)
Fair Value of Financial Instruments
The company considers cash and cash equivalents, notes receivable,
long-term debt and pledge payable to be financial instruments as defined by
Statement of Financial Accounting Standards No. 107 "Disclosures About Fair
Value of Financial Instruments." The amount of these assets and liabilities as
presented in the balance sheet approximates their fair value.
Investments
The Company accounts for its investments in Medi-Mouse Limited Partnership
and Kirchoff Limited Partnership using the equity method of accounting. This
method provides that the initial investment be recorded at cost. Each year, the
investment is increased or decreased by the Company's share of the annual income
or loss. In addition, Partnership distributions reduce the investment. The
Company limits recognized losses to the extent of its investment.
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 amounts reported in the financial statements and accompanying notes.
Actual results could differ from those estimates.
2. Property and Equipment
Property and equipment at September 30, 1995, was as follows:
Furniture ................... $ 65,747
Equipment ................... 9,122
Computer equipment .......... 50,711
Leasehold improvements ...... 54,462
---------
180,042
Less accumulated depreciation (105,202)
---------
$ 74,840
=========
11
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Medical Emergency Service Associates (MESA), S.C. and Subsidiaries
Notes to Consolidated Financial Statements (continued)
3. Investments
Medi-Mouse Limited Partnership
The Company's wholly-owned subsidiary, Medi-Mouse, Inc. is the general partner
of Medi-Mouse Limited Partnership (Medi-Mouse). The Partnership was formed to
design, develop and market an automated patient charting system. The Company and
its subsidiary invested approximately $362,000 in Medi-Mouse, representing an
ownership of approximately 41%. Since its inception Medi-Mouse has continued to
experience operating losses, for which the Company has recorded its portion of
such losses. The Company did not record any such loss for the year ended
September 30, 1995 as no investment remained at the beginning of the year ended
September 30, 1995.
During the year the Company continued to finance the operations of Medi-Mouse.
The Company has expensed such financing when provided.
Kirchoff Limited Partnership
The Company is the general partner of Kirchoff Limited Partnership. The
Partnership owns the real estate which the Company leases for use in its
operations. The terms of the lease are described in Note 5. The limited partners
consist of certain of the Company's present and former shareholders.
Under the terms of the Partnership agreement, the Company receives a priority
return of 9% of its capital contribution in addition to 10% of remaining
profits.
The Partnership uses a calendar year for accounting purposes, while the Company
uses a fiscal year ending September 30. During each fiscal year, the Company
reports its share of the partnership income or loss for the calendar year ending
within its fiscal year. The unrecorded amount of the Company's share of
allocable income and expense for the period January 1 through September 30 for
the fiscal year ended September 30, 1995 is not considered to be material to the
Company's financial statements.
12
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Medical Emergency Service Associates (MESA), S.C. and Subsidiaries
Notes to Consolidated Financial Statements (continued)
4. Income Taxes
Significant components of the federal income tax provision (benefit) were as
follows for the year ended September 30, 1995:
Current:
Federal .... $ 19,352
State ...... 4,236
---------
Total current 23,588
Deferred:
Federal .... (260,837)
State ...... (49,866)
---------
Total deferred (310,703)
=========
$(287,115)
=========
Significant components of the Company's deferred tax liabilities and assets as
of September 30, 1995 are as follows:
Current Long-Term
-------- ---------
Deferred income tax liabilities:
Investment in Medi-Mouse LP, deductions taken
for taxes in excess of book losses..................... $ -- $(206,144)
Deferred gain on sale of Mesa Care ...................... -- (32,107)
Investment in Safe Harbor ............................... -- (81,099)
-------- ---------
Total deferred tax liabilities ............................. -- (319,350)
Deferred income tax assets:
Cash basis tax income in excess
of accrual basis book income .......................... 125,345 --
Professional liability reserves ......................... 567,000 567,000
Other ................................................... -- 11,971
-------- ---------
Total deferred tax assets .................................. 692,345 578,971
-------- ---------
Net deferred tax assets .................................... $692,345 $ 259,621
======== =========
13
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Medical Emergency Service Associates (MESA), S.C. and Subsidiaries
Notes to Consolidated Financial Statements (continued)
4. Income Taxes (continued)
The reconciliation of income tax (benefit) computed at the federal statutory tax
rate to income tax (benefit) is as follows for the year ended December 31, 1995:
Amount Percent
--------- ---
Tax benefit at U.S. statutory rate ........................... $(236,968) (34)%
State income tax ............................................. (54,663) (8)
Other ........................................................ 4,516 1
--------- ---
$(287,115) (41)%
========= ===
5. Commitments
The Company leases certain office equipment and office space under operating
lease arrangements. The Company leases the office space from Kirchoff Limited
Partnership, which is affiliated through common ownership. The lease provides
for annual rental adjustments for the Company's share of increases in taxes,
insurance and maintenance expenses. Rent expense paid to Kirchoff Limited
Partnership totaled approximately $46,000 for the year ended September 30, 1995.
Future minimum payments under such operating leases at September 30, 1995
consist of the following:
Year ending September 30:
1996 $ 59,111
1997 51,321
1998 21,466
1999 571
--------
Total $132,469
========
Rental expense for the year ended September 30, 1995 was to approximately
$54,000.
6. Short-Term Borrowings
The Company has a revolving line of credit in the amount of $500,000, which
matures on March 31, 1996. The line of credit is secured by the Company's
accounts receivable and property and equipment. Interest is payable monthly at
prime (8.75% at September 30, 1995). Interest expense for the year ended
September 30, 1995 was $500.
14
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Medical Emergency Service Associates (MESA), S.C. and Subsidiaries
Notes to Consolidated Financial Statements (continued)
7. Long-Term Debt and Pledge Payable
Long-term debt at September 30, 1995 consists of:
Note payable to former shareholder in annual
installments of $19,500 including interest at
7%, payable through January 1999 $66,571
Note payable to former shareholder in annual
installments of $15,500 including interest at
7%, payable through May 1998 40,823
Note payable to former shareholder in annual
installments of $15,400 including interest at
6.78%, payable through December 1997 40,697
Note payable to former shareholder in annual
installments of $13,400 including interest at
8.68%, payable through January 1996 13,498
Other 6,207
-------------
167,796
Less current portion 60,083
-------------
$107,713
=============
Prior to the year ended September 30, 1995 the Company received an $80,000 loan
from a hospital for the financing of start-up costs related to a medical
treatment center. The loan bears interest, which is payable monthly, at 8% per
annum. Principal is payable from the profits of the treatment center. To date no
principal payments have been made, as there have been no profits from the
treatment center.
Principal payments for the long-term notes payable are as follows:
Year ending September 30:
1996 $140,083
1997 43,176
1998 46,169
1999 18,368
--------------
Total $247,796
==============
The Company has a pledge payable due to a hospital for reconstruction and
expansion of its emergency department. As of September 30, 1995 the Company had
five $10,000 payments due under the pledge. The balance has been presented at
its present value.
15
<PAGE>
Medical Emergency Service Associates (MESA), S.C. and Subsidiaries
Notes to Consolidated Financial Statements (continued)
8. Employee Stock Option Plan and Purchase Commitments
The Company is obligated under buy / sell agreements with its stockholders to
purchase each stockholder's preferred and common stock upon death, disability or
termination of employment. The purchase price is the greater of the price set by
the Board of Directors or the stockholder's proportionate share of the book
value of the Company.
No shares were purchased by the Company during the year ended September 30,
1995.
9. Professional Liability Insurance
The Company's professional liability insurance coverage is provided on a
claims-made basis with limits of $100,000 per occurrence and $3,000,000 in the
aggregate. The policy for the period December 1, 1994 through November 30, 1995,
contains a self-insured retention of $250,000 per occurrence and $650,00 in the
aggregate. The Company The Company self-insures this risk through a wholly-owned
subsidiary created December 1, 1994, Safe Harbor Insurance Company, Ltd.
The Company has accrued $750,000 for the settlement of an uninusred claim
incurred prior to 1995. The related litigation was settled in 1996. The Company
estimates incurred but not reported claims based on historical experience.
10. Contingencies
The Company is a defendant in various legal proceedings arising in the ordinary
course of business. Although the results of litigation cannot be predicted with
certainty, management believes the outcome of pending litigation will not have a
material adverse effect on the Company's financial statements.
11. Pension and Profit Sharing Plan
All employees meeting certain eligibility requirements are covered under the
Company's defined contribution profit sharing plan. The plan includes a deferred
compensation feature in accordance with Internal Revenue Code Section 401(k).
Employees may contribute a portion of their salary to the Plan with the Company
matching the contribution in accordance with a schedule. The Plan also provides
for additional Company contributions in such amounts as the Board of Directors
may determine. During the year ended September 30, 1995, the Company incurred
expenses of $415,000 for retirement plan contributions.
16
<PAGE>
Medical Emergency Service Associates (MESA), S.C. and Subsidiaries
Notes to Consolidated Financial Statements (continued)
12. Subsequent Events
Effective April 1, 1996, all outstanding shares of all classes of the Company's
common stock were acquired by EmCare Holdings Inc. (EmCare), which provides
certain emergency department services and other health care related services,
for a total purchase price of $11.1 million, including $7.8 million cash, $1.8
million in long-term obligations, 56,355 shares of EmCare common stock, and
certain future compensation based upon the continuation of existing contracts
with hospitals and achieving certain financial results.
In connection with this merger the Board of Directors approved the transfer of
ownership of Medi-Mouse, Inc. and Kirchoff Limited Partnership to the
stockholders of the Company.
Effective April 1, 1996, the Company's Retirement Plans and stockholder's
buy-sell agreements for preferred and common stock were terminated.
17
<PAGE>
Medical Emergency Service Associates (MESA), S.C. and Subsidiaries
Unaudited Consolidated Balance Sheet
March 31, 1996
(Dollars in thousands)
Assets
Current assets:
Cash and cash equivalents ............................. $ 983
Accounts receivable ................................... 1,282
Refundable income taxes ............................... 34
Prepaid expenses and other assets ..................... 115
Deferred income taxes ................................. 1,413
-------
Total current assets ....................................... 3,827
Property and equipment, less accumulated depreciation ...... 61
Investment in limited partnership .......................... 139
-------
Total assets ............................................... $ 4,027
=======
Liabilities and Stockholders' Equity (Deficit)
Current liabilities:
Accounts payable, trade ............................... $ 83
Accrued expenses ...................................... 848
Current portion of long-term debt ..................... 152
Short-term borrowings ................................. 500
Deferred tax liability ................................ 473
Professional liability reserve ........................ 1,575
-------
Total current liabilities .................................. 3,631
Pledge payable ............................................. 76
Long-term debt ............................................. 138
Professional liability reserve ............................. 1,400
Commitments and contingencies
Stockholders' equity (deficit):
Preferred stock; authorized 5,000 shares of non-voting,
no par value; redeemable at $333.33 per share;
issued and outstanding 1,800 shares ............... 550
Common stock; authorized 100,000 shares; $10 par
value; issued and outstanding 3,000 shares ........ 30
Additional paid-in capital ............................ 217
Retained deficit ...................................... (2,015)
-------
Total stockholders' equity (deficit) ....................... (1,218)
-------
Total liabilities and stockholders' equity (deficit) ....... $ 4,027
=======
18
<PAGE>
Medical Emergency Service Associates (MESA), S.C. and Subsidiaries
Unaudited Consolidated Statement of Operations
(Dollars in thousands)
Six Months Ended
March 31,
----
1996 1995
------ ----
Net revenue .............................................. $6,754 $6,541
Professional expenses ...................................... 5,587 5,563
------ ----
Gross profit ............................................... 1,167 978
Administrative ............................................. 1,305 943
------ ----
Income (loss) from operations .............................. (138) 35
Interest income ............................................ 61 10
Other income ............................................... 24 10
------ ----
Income (loss) before income taxes .......................... (53) 55
Income tax provision (benefit).............................. (22) 23
------ ----
Net(loss)income ......................................... $ (31) $ 32
====== ====
19
<PAGE>
Medical Emergency Service Associates (MESA), S.C. and Subsidiaries
Unaudited Consolidated Statement of Cash Flows
(Dollars in thousands)
Six Months Ended
March 31,
-----
1996 1995
----- -----
Operating Activities
Net income .............................................. $ (31) $ 32
Adjustments to reconcile net loss to net cash used in
operating activities:
Depreciation and amortization............................ 14 10
Deferred income taxes ................................... 11 (112)
Changes in operating assets and liabilities:
Accounts receivable................................ 85 184
Prepaid expenses and other assets .................... 65 25
Refundable income taxes .............................. (13) (77)
Accounts payable ..................................... 62 24
Accrued expenses ..................................... 214 293
Professional liability reserve ....................... 150 287
Pledge payable ......................... ........... 44 1
----- -----
Net cash provided in operating activities ........................ 431 667
----- -----
Investment activities
Proceeds from sale of subsidiary ......................... -- 90
----- -----
Net cash provided by investing activities .......................... -- 90
----- -----
Financing activities:
Payment on long-term debt ..................................... -- (41)
Proceeds from borrowings ......................................... 43 65
Subcription receivable paid .................................. -- 3
Purchase of treasury stock ......................................... (90) --
----- -----
Net cash provided (used) by financing activities .................. (47) 27
----- -----
Net increase in cash and cash equivalents ........................ 384 784
Cash and cash equivalents at beginning of year ................... 599 70
----- -----
Cash and cash equivalents at end of year .................. $ 983 $ 854
===== =====
20
<PAGE>
PRO FORMA FINANCIAL INFORMATION (UNAUDITED)
The accompanying Unaudited Pro Forma Consolidated Statements of Income for the
year ended December 31, 1995, and three months ended March 31, 1996, represent
the results of operations of EmCare Holdings Inc. (the "Company") for such
periods giving effect, with the adjustments described in the accompanying note,
to the April 1, 1996 acquisition of Medical Emergency Service Associates, Inc.
("MESA") by a wholly owned subsidiary of the Company (the "Acquisition") as if
such transaction had occurred as of January 1, 1995. The accompanying unaudited
pro forma condensed consolidated balance sheet as of March 31, 1996 reflects the
MESA acquisition as if it occurred on March 31, 1996. The transaction has been
accounted for as a purchase.
The pro forma financial information is not necessarily indicative of the results
of operations or the financial position which would have been attained had the
acquisition been consummated at either of the foregoing dates or which may be
attained in the future. The pro forma financial information should be read in
conjunction with the historical consolidated financial statements of the Company
and MESA.
21
<PAGE>
EmCare Holdings Inc.
Unaudited Pro Forma Consolidated Statement
of Income For the Year Ended
December 31, 1995
(Dollars in thousands,except per share data)
Historical Pro Forma
-------------
The Pro Forma After the
Company MESA(G) Adjustments Acquisition
--------- --------- ------------ -------------
Net revenue ........... $ 156,826 $ 13,388 $ 170,214
Professional
expenses .............. 123,935 11,890 135,825
-------- --------- ------------ -------------
Gross profit ............ 32,891 1,498 34,389
General and adminstrative
expenses .............. 16,760 2,246 $ (706) (B) 18,300
Depreciation and
amortization ........ 2,503 831 (C) 3,334
-------- --------- ------------ -------------
Income from operations. 13,628 (748) (125) 12,755
Interest expense ......... (652) (18) (644) (D) (1,314)
Interest income ........ 933 69 1,002
-------- --------- ------------ -------------
Income (loss) before
income taxes ......... 13,909 (697) (769) 12,443
Income tax expense
(benefit) ............ 5,216 (287) (263) (E) 4,666
--------- --------- ------------ -------------
Net income (loss) ....... $ 8,693 $ (410) $ (506) $ 7,777
========= ========= ============ =============
Net income per share .... $ 1.05 $ 0.94
========= =============
Weighted average
shares outstanding ..... 8,251 56 (A) 8,307
See Notes to Unaudited Pro Forma Consolidated Financial Statements.
22
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EmCare Holdings Inc.
Unaudited Pro Forma Consolidated Statement of Income
For the Three Months Ended March 31, 1996
(in thousands, except per share data)
Historical Pro Forma
-------------
The Pro Forma After the
Company MESA Adjustments Acquisition
-------- -------- ------------ -----------
Net revenue ..................... $ 44,235 $ 3,405 $ 47,640
Professional
expenses ....................... 35,315 2,794 38,109
-------- -------- ------------ -----------
Gross profit .................. 8,920 611 9,531
General and adminstrative
expenses ......................... 4,245 652 $ (496)(B) 4,401
Depreciation and
amortization ................... 809 154 (C) 963
-------- -------- ------------ -----------
Income from operations........... 3,866 (41) 342 4,167
Interest expense ................ (172) (147)(D) (319)
Interest income ............. 72 14 86
-------- -------- ------------ -----------
Income (loss) before
income taxes ................... 3,766 (27) 195 3,934
Income tax expense
(benefit) ...................... 1,431 (11) 75 (E) 1,495
-------- -------- ----------- -----------
Net income (loss) ............... $ 2,335 $ (16) $ 120 $ 2,439
======== ======== =========== ===========
Net income per share .......... $ 0.28 $ 0.29
========= ===========
Weighted average shares
outstanding .................. 8,433 56 (A) 8,489
See Notes to Unaudited Pro Forma Consolidated Financial Statements.
23
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EmCare Holdings Inc.
Unaudited Pro Forma Condensed Consolidated Balance Sheet
March 31, 1996
(Dollars in thousands)
Historical Financial
Statements
-----------
Pro Forma
Pro Forma After the
The Company MESA Adjustments Acquisition
-------- -------- --------- -----------
Assets
Current assets
Cash & cash equivalents $ 7,103 $ 983 $ 8,086
Accounts receivable, net 31,049 1,282 32,331
Prepaids and other
current assets 6,159 1,562 7,721
-------- -------- -------- ----------
Total current assets 44,311 3,827 48,138
Furniture & equipment, net 3,681 61 3,742
Intangible and other
assets, net 37,204 139 $ 13,353 (C) 50,696
-------- -------- -------- ----------
Total assets $ 85,196 $ 4,027 $ 13,353 $ 102,576
======== ======== ======== ==========
Liabilities & Stockholders' Equity
Current liabilities
Accounts payable and
accrued expenses $ 15,780 $ 2,979 $ 700 (C) $ 19,459
Short-term debt & current
portion of long-term
obligations 5,820 652 7,816 (D) 15,310
1,022 (D)
-------- -------- -------- ----------
Total current liabilities 21,600 3,631 9,538 34,769
Long term debt and other
liabilities 6,978 1,614 1,097 (D) 9,689
Stockholders' equity
Capital stock 81 580 (580)(F) 81
Additional paid in capital 42,577 217 (217)(F) 44,077
1,500 (A)
Retained earnings 13,960 (2,015) 2,015 (F) 13,960
-------- -------- -------- ----------
Total stockholders' equity 56,618 (1,218) 2,718 58,118
-------- -------- -------- ----------
Total liabilities &
stockholders' equity $ 85,196 $ 4,027 $ 13,353 $ 102,576
======== ======== ======== ===========
See Notes to Unaudited Pro Forma Consolidated Financial Statements.
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EmCare Holdings Inc.
Notes to Unaudited Pro Forma Consolidated Financial Statements
A description of the adjustments included in the pro forma consolidated
financial statements are as follows:
(A) Under the terms of the Acquisition, the acquisition price of MESA
consisted of 56,355 shares of the Company's common stock valued
at $26.617 per share, or $1.5 million, plus cash consideration of $7.8
million and an obligation to MESA shareholders of $2.1 million.
(B) MESA's historical financial statements include a write-off of a note
receivable to a Limited Partnership for the year ended December 31,
1995 and the three months ended March 31, 1996 in the amount of
$706,000 and $496,000, respectively. However, the Limited Partnership
was not included in the Acquisition. Therefore, if the Acquisition
had occurred as of January 1, 1995 a note receivable to the Limited
Partnership would not have occurred.
(C) The Acquisition of MESA by the Company is estimated to create
approximately $13.4 million of intangible assets calculated as follows:
Stock purchase price (See A above) $1,500,000
Cash Purchase Price (See A above) 7,816,000
Obligations to MESA shareholders (See A
above) 2,119,000
---------
Total Purchase price 11,435,000
Less: Net tangible liabilities acquired ( 1,218,000)
------------
12,653,000
Purchase accounting adjustment:
Increase in deferred tax liabilities 700,000
-------
Intangible assets acquired $13,353,000
===========
The identifiable intangible assets acquired have been allocated to
goodwill, contracts, and non-competition agreements with values of $10.7
million, $2.0 million and $650,000, respectively. Goodwill and contracts
are being amortized on a straight line basis over forty and twelve
years, respectively. The non-competition agreements are being amortized
over three years on an accelerated basis. The pro forma amortization and
depreciation expense for the year ended December 31, 1995 and the three
months ended March 31, 1996 is $831,000 and $154,000, respectively.
25
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EmCare Holdings Inc.
Notes to Unaudited Pro Forma Consolidated Financial Statements (continued)
(D) Represents letter of credit borrowings of $7.8 million at a 6.0% rate
per annum and a $2.1 million long-term debt obligation with imputed
interest of 9% per annum related to the Acquisition. The pro forma
interest expense for the year ended December 31, 1995 and the three
months ended March 31, 1996 is $644,000 and $147,000, respectively.
(E) Amount represents a pro forma effective tax rate of 37.5% and 38%,
respectively, to reflect the incremental combined federal and state
taxes for the year ended December 31, 1995, and the three months ended
March 31, 1996.
(F) Represents elimination of MESA's capital stock and equity upon
consolidation.
(G) Represents historical operations for MESA for the year ended September
30, 1995. The pro forma consolidated statements of income exclude the
historical operations of MESA for the period October 1, 1995 through
December 31, 1995.
26
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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.
EMCARE HOLDINGS INC.
(Registrant)
Date: July 12, 1996 By: /s/ Robert F. Anderson II
-------------------------
Name: Robert F. Anderson II
Title: Chief Financial Officer,
Senior Vice President,
Treasurer, and Secretary
27
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