UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K/A
Amendment No. 1 to Current Report on Form 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
March 4, 1998
(Date of Earliest Event reported)
SHERIDAN HEALTHCARE, INC.
(Exact name of registrant as specified in charter)
Delaware 0-26806 04-3252967
(State or other (Commission File Number) (IRS Employer ID Number)
jurisdiction of incorporation
4651 Sheridan Street
Suite 400
Hollywood, Florida 33021
(Address of principal executive office, including zip code)
954/987-5822
(Registrant's telephone number, including area code)
There are 17 pages in this Report.
There are no exhibits to this Report.
<PAGE>
<TABLE>
<CAPTION>
Item 7. Financial Statements, Pro Forma Financial Information and Exhibits
(a) Financial Statements of Businesses Acquired:
Page
<S> <C>
Michael Cavenee, M.D., P.A., and Kenneth Trimmer, M.D., P.A.
Report of Independent Certified Public Accountants........................ 3
Combined Balance Sheet as of December 31, 1997............................ 4
Combined Statement of Operations for the Year Ended
December 31, 1997..................................................... 5
Combined Statement of Stockholders' Equity
for the Year Ended December 31, 1997.................................. 6
Combined Statement of Cash Flows for the Year Ended
December 31, 1997..................................................... 7
Notes to Combined Financial Statements.................................... 8-11
(b) Pro Forma Financial Information:
Introduction to Unaudited Pro Forma Consolidated Financial Statements..... 12
Unaudited Pro Forma Consolidated Balance Sheet
as of December 31, 1997............................................... 13
Notes to Unaudited Pro Forma Consolidated Balance Sheet................... 14
Unaudited Pro Forma Consolidated Statement of Operations for the
year ended December 31, 1997.......................................... 15
Notes to Unaudited Pro Forma Consolidated Statement of Operations......... 16
</TABLE>
2
<PAGE>
REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
To the Stockholders of Michael Cavenee, M.D., P.A.
and Kenneth Trimmer, M.D., P.A.:
We have audited the accompanying combined balance sheet of Michael Cavenee,
M.D., P.A. (a Texas professional corporation) and Kenneth Trimmer, M.D., P.A. (a
Texas professional corporation) as of December 31, 1997, and the related
combined statements of operations, stockholders' equity and cash flows for the
year then ended. These financial statements are the responsibility of the
Companies' 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 combined financial position of Michael Cavenee, M.D.,
P.A. and Kenneth Trimmer, M.D., P.A. as of December 31, 1997, and the results of
their operations and their cash flows for the year then ended in conformity with
generally accepted accounting principles.
ARTHUR ANDERSEN LLP
Miami, Florida,
March 25, 1998.
3
<PAGE>
<TABLE>
<CAPTION>
MICHAEL CAVENEE, M.D., P.A. AND
KENNETH TRIMMER, M.D., P.A.
COMBINED BALANCE SHEET
DECEMBER 31, 1997
ASSETS
CURRENT ASSETS:
<S> <C>
Cash and cash equivalents $ 74,396
Accounts receivable, net of allowance for uncollectible
accounts of $92,954 522,403
Other receivables 3,773
Other current assets 11,500
-------------
Total current assets 612,072
PROPERTY AND EQUIPMENT, net 70,693
-------------
Total assets $ 682,765
=============
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts payable $ 234,743
Accrued liabilities 109,575
Current portion of long-term debt 27,398
-------------
Total current liabilities 371,716
-------------
LONG-TERM DEBT, net of current portion 27,416
-------------
COMMITMENTS AND CONTINGENCIES (Note 5)
STOCKHOLDERS' EQUITY:
Common stock, MC-M.D., $0.10 par value; 100,000 shares authorized;
1,000 shares issued and outstanding 100
Common stock, KT-M.D., $0.10 par value; 100,000 shares authorized;
1,000 shares issued and outstanding 100
Additional paid-in capital 1,800
Retained earnings 281,633
-------------
Total stockholders' equity 283,633
-------------
Total liabilities and stockholders' equity $ 682,765
=============
</TABLE>
The accompanying notes to combined financial
statements are an integral part of this
combined balance sheet.
4
<PAGE>
<TABLE>
<CAPTION>
MICHAEL CAVENEE, M.D., P.A. AND
KENNETH TRIMMER, M.D., P.A.
COMBINED STATEMENT OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 1997
<S> <C>
NET PATIENT SERVICE REVENUE $ 4,345,533
-------------
OPERATING COSTS AND EXPENSES:
Salaries and benefits 2,001,029
Laboratory, drugs and medical supplies 295,806
General and administrative 482,645
Provision for bad debts 9,736
Depreciation 69,949
Amortization 5,297
-------------
Total operating costs and expenses 2,864,462
-------------
Operating income 1,481,071
OTHER INCOME (EXPENSE) (8,194)
-------------
Income before pro forma tax provision 1,472,877
PRO FORMA TAX PROVISION (Note 3) 574,422
-------------
Pro forma net income $ 898,455
=============
</TABLE>
The accompanying notes to combined financial
statements are an integral part of this
combined statement.
5
<PAGE>
<TABLE>
<CAPTION>
MICHAEL CAVENEE, M.D., P.A. AND
-------------------------------
KENNETH TRIMMER, M.D., P.A.
---------------------------
COMBINED STATEMENT OF STOCKHOLDERS' EQUITY
------------------------------------------
FOR THE YEAR ENDED DECEMBER 31, 1997
------------------------------------
MC-M.D. KT-M.D. Additional
Common Stock Common Stock Paid-In Retained
-------------------------- -------------------------
Shares Amount Shares Amount Capital Earnings Total
------------ ------------ ------------ ------------ ------------ -------------- ------------
<S> <C> <C> <C> <C> <C> <C> <C>
BALANCE, December 31, 1996 1,000 $ 100 1,000 $ 100 $ 1,800 $ 322,725 $ 324,725
Distributions to
Stockholders - - - - - (1,513,969) (1,513,969)
Income before pro
forma tax provision - - - - - 1,472,877 1,472,877
------------ ----------- ------------ ------------ ------------ ------------ -----------
BALANCE, December 31, 1997 1,000 $ 100 1,000 $ 100 $ 1,800 $ 281,633 $ 283,633
============ =========== ============ ============ ============ ============= ===========
</TABLE>
The accompanying notes to combined financial statements are
an integral part of this combined statement.
6
<PAGE>
<TABLE>
<CAPTION>
MICHAEL CAVENEE, M.D., P.A. AND
-------------------------------
KENNETH TRIMMER, M.D., P.A.
---------------------------
COMBINED STATEMENT OF CASH FLOWS
--------------------------------
FOR THE YEAR ENDED DECEMBER 31, 1997
------------------------------------
<S> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Income before pro forma tax provision $ 1,472,877
Adjustments to reconcile net income before pro forma tax
provision to net cash provided by operating activities-
Depreciation 69,949
Amortization 5,297
Provision for bad debts 9,736
Changes in assets and liabilities:
Accounts receivable and other (67,600)
Other current assets 3,941
Accounts payable 54,204
Accrued liabilities (18,059)
-------------
Net cash provided by operating activities 1,530,345
-------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures (27,318)
-------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Payments on long-term debt (97,964)
Proceeds from long-term debt 2,659
Distributions to stockholders (1,513,969)
-------------
Net cash used in financing activities (1,609,274)
-------------
Net decrease in cash and cash equivalents (106,247)
CASH AND CASH EQUIVALENTS, beginning of year 180,643
-------------
CASH AND CASH EQUIVALENTS, end of year $ 74,396
=============
SUPPLEMENTAL DISCLOSURE OF NON-CASH INFORMATION:
Interest paid $ 7,817
=============
Capital expenditures financed with long-term debt $ 22,950
=============
</TABLE>
The accompanying notes to combined financial statements are
an integral part of this combined statement.
7
<PAGE>
MICHAEL CAVENEE, M.D., P.A. AND
-------------------------------
KENNETH TRIMMER, M.D., P.A.
---------------------------
NOTES TO COMBINED FINANCIAL STATEMENTS
--------------------------------------
DECEMBER 31, 1997
-----------------
1. SIGNIFICANT ACCOUNTING POLICIES:
--------------------------------
a. Operations-
-----------
Michael Cavenee, M.D., P.A. ("MC-M.D.", a Texas professional corporation) and
Kenneth Trimmer, M.D., P.A. ("KT-M.D.", a Texas professional corporation)
(collectively the "Companies") provide diagnostic, laboratory and surgical
procedures, consultations, medical management and delivery services to women
with high risk and/or complicated pregnancies, usually on a referral basis. The
Companies operate two main offices in the greater Dallas, Texas area.
b. Principles of Consolidation-
----------------------------
The accompanying combined financial statements include the financial statements
of the Companies and their collectively wholly-owned subsidiary, North Texas
Perinatal Associates, a Texas general partnership. All significant intercompany
amounts and transactions have been eliminated.
c. Cash and Cash Equivalents-
--------------------------
The Companies consider all highly liquid investments with an original maturity
of three months or less to be cash equivalents. Included in the cash and cash
equivalents balance at December 31, 1997, are interest-bearing accounts of
$4,844.
d. Accounts Receivable and Revenues-
---------------------------------
The Companies derive substantially all of their revenues from various
third-party payors including the Medicaid program, health maintenance
organizations, commercial insurers and others. The amount of the payments
received from such third-party payors is dependent upon mandated payment rates
in the case of the Medicaid program, and negotiated payment rates in the case of
other third-party payors, as well as the specific benefits included in each
patient's applicable health care coverage. The Companies record their revenues
net of an allowance for contractual adjustments which represents the difference
between billed charges and expected collections from third-party payors.
Accordingly, net revenue and accounts receivable are reflected in the combined
financial statements net of contractual allowances.
8
<PAGE>
e. Property and Equipment-
-----------------------
Property and equipment are stated at cost less accumulated depreciation.
Property and equipment are depreciated using straight-line and accelerated
methods over the estimated useful lives of the assets. Maintenance and repairs
are charged to expense when incurred and improvements are capitalized. Upon the
sale or retirement of assets, the cost and accumulated depreciation are removed
from the balance sheet and any gain or loss is recognized currently.
f. 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.
g. Fair Value of Financial Instruments-
------------------------------------
Statement of Financial Accounting Standards No. 107, "Disclosures About Fair
Value of Financial Instruments," requires disclosure of the fair value of
certain financial instruments. The carrying amounts of cash and cash
equivalents, accounts receivable, accounts payable and debt, are reflected in
the accompanying combined financial statements at cost which approximates fair
value.
2. PROPERTY AND EQUIPMENT:
-----------------------
Property and equipment consists of the following at December 31, 1997:
Useful Lives Amount
---------------- ---------
Medical equipment 5 - 7 years $ 359,674
Furniture and fixtures 5 - 7 years 141,295
Leasehold improvements Life of lease 108,386
---------
609,355
Less- accumulated depreciation (538,662)
---------
$ 70,693
=========
3. INCOME TAXES:
-------------
MC-M.D. and KT-M.D. are S Corporation's. Accordingly, the results of their
operations flow through to the stockholders' individual tax returns.
The pro forma tax provision reflects income taxes at an overall effective rate
of 39% as if the Companies had been C Corporations.
9
<PAGE>
4. LONG-TERM DEBT:
---------------
Long-term debt consists of the following at December 31, 1997:
<TABLE>
<CAPTION>
Amount
---------------
<S> <C>
Unsecured note payable to Columbia Medical Center of Plano Bearing
interest at 8.00%; monthly principal and interest payments of
$508 due through May 3, 2002 $ 22,950
Unsecured note payable to Presbyterian Hospital of Dallas bearing interest
at 8.50%; monthly principal and interest payments of $2,055
due through April 1, 1999 31,864
------------
54,814
Less - current portion (27,398)
------------
$ 27,416
============
</TABLE>
Following is a summary of annual maturities of long-term debt:
Year Amount
---- ------------
1998 $ 27,398
1999 13,948
2000 5,286
2001 5,688
2002 2,494
------------
$ 54,814
============
5. COMMITMENTS AND CONTINGENCIES:
------------------------------
a. Insurance-
----------
Each physician employed by the Companies maintains insurance coverage under a
claims-made policy for their professional malpractice claims. Such insurance
provides for coverage to the extent individual claims do not exceed $1,000,000
per incident and $3,000,000 in the aggregate per year. The Companies have
recorded an estimated liability related to claims incurred but not reported for
approximately $51,400 as of December 31, 1997, which is included as a component
of accrued liabilities in the accompanying combined balance sheet.
Due to the nature of their business, the Companies may from time to time become
involved as a defendant in medical malpractice lawsuits and are subject to the
attendant risk of substantial damage awards. The Companies maintain insurance in
amounts deemed appropriate by management, based upon the nature and risks of
their business. There can be no assurance, however, that a future claim or
claims will not exceed the limits of available insurance coverage, that any
insurer will remain solvent and able to meet its obligations to provide coverage
for any such claim or claims or that such coverage will continue to be available
with sufficient limits and at a reasonable cost to adequately and economically
insure the Companies' operations in the future. A judgment against the Companies
in excess of such coverage could have a material adverse effect on the
Companies.
10
<PAGE>
b. Lease Commitments-
------------------
The Companies lease medical office facilities and certain office equipment under
various operating leases. Rental expense under operating leases was
approximately $128,000 for the year ended December 31, 1997 and is included in
general and administrative expense in the accompanying combined statement of
operations.
Future annual minimum payments under operating leases are as follows:
Year Amount
---- ------------
1998 $ 123,471
1999 94,893
2000 68,248
2001 26,400
------------
$ 313,012
============
c. Government Regulation-
----------------------
The healthcare industry is highly regulated and there can be no assurance that
the regulatory environment in which the Companies operate will not change
significantly and adversely in the future. In general, regulation of healthcare
providers and companies is increasing.
Federal and state laws regulate the healthcare industry, the relationship
between practice management companies, and the relationship among physicians and
other providers of healthcare services.
Several laws, including fee-splitting, anti-kickback laws and prohibition of the
corporate practice of medicine, have civil and criminal penalties and have been
subject to limited judicial and regulatory interpretation. They are enforced by
regulatory agencies vested with broad discretion interpreting them. The
Companies agreements and business activities have not been examined by federal
and state authorities under these laws and regulations. Although the Companies
believe that their operations are conducted so as to comply with all of the
applicable laws, there can be no assurance such operations will not be
challenged as in violation of one or more of such laws.
There have been numerous initiatives at the federal and state levels for
comprehensive reforms affecting the availability of, and payment for,
healthcare. The Companies believe that such initiatives will continue during the
foreseeable future. Certain reforms previously proposed could, if adopted, have
a material effect on the Companies.
d. Subsequent Sale of the Companies-
---------------------------------
On March 4, 1998, an agreement was entered into between Sheridan Healthcare,
Inc. ("Sheridan") and the Companies whereby Sheridan purchased options to
acquire the Companies. Concurrent with the acquisition of the options, Sheridan
entered into long-term management agreements with the Companies.
11
<PAGE>
INTRODUCTION TO
UNAUDITED PRO FORMA CONSOLIDATED FINANCIAL STATEMENTS
GENERAL
The following unaudited pro forma consolidated balance sheet as of
December 31, 1997 and the unaudited pro forma consolidated statement of
operations for the year ended December 31, 1997 reflect adjustments to the
Company's historical financial position and results of operations to give effect
to the transactions discussed below as if such transactions had been consummated
at December 31, 1997, in the case of the balance sheet, and at January 1, 1997,
in the case of the statement of operations. The accompanying unaudited pro forma
consolidated financial statements should be read in connection with the
consolidated financial statements of the Company included in the Company's
Annual Report on Form 10-K for the year ended December 31, 1997.
The unaudited pro forma consolidated financial statements have been
prepared by the Company based, in part, on the audited financial statements of
the businesses acquired as required under the Securities Exchange Act of 1934,
which financial statements are included in this Form 8-K/A. These unaudited pro
forma consolidated financial statements are not intended to be indicative of the
results that would have occurred if the transactions had occurred on the dates
indicated or which may be realized in the future.
ACQUISITIONS COMPLETED IN 1998
On March 5, 1998, Sheridan Healthcorp, Inc., a wholly-owned subsidiary
of the Company, entered into a long-term management services agreement with
Michael Cavenee, M.D., P.A. ("Cavenee") and Kenneth Trimmer, M.D., P.A.
("Trimmer", and together with "Cavenee", "Perinatology").
In addition, the Company acquired options to purchase at any time the
stock of Cavenee and Trimmer at a specified exercise price. The aggregate
consideration paid for the options was approximately $4.0 million in cash and
885,000 shares of the Company's common stock. As a result of these transactions,
which have been accounted for as purchases, goodwill of approximately $16.9
million was recorded. This goodwill is being amortized over 25 years. The terms
of the long-term management services agreements between the Company and
Perinatology meet the requirement of EITF Issue 97-2, "Application of Physician
Entities", for demonstrating a controlling financial interest by the Company.
Accordingly, the operations of perinatology should be consolidated with the
operations of the Company. The unaudited pro forma consolidated statement of
operations for the year ended December 31, 1997 includes the operating results
of Perinatology for the year ended December 31, 1997.
12
<PAGE>
<TABLE>
<CAPTION>
SHERIDAN HEALTHCARE, INC.
UNAUDITED PRO FORMA CONSOLIDATED BALANCE SHEET
December 31, 1997
(in thousands)
Acquisition
Actual Perinatology Adjustments Pro Forma
----------- ----------- ----------- -----------
ASSETS
<S> <C> <C> <C> <C>
Current assets:
Cash and cash equivalents.................................. $ 427 $ 74 $ --- $ 501
Accounts receivable, net................................... 21,588 522 --- 22,110
Income tax refund receivables.............................. 1,280 --- --- 1,280
Deferred income taxes...................................... 1,417 --- --- 1,417
Other current assets....................................... 2,814 16 --- 2,830
----------- ----------- ----------- -----------
Total current assets..................................... 27,526 612 --- 28,138
Property and equipment, net................................... 3,538 71 --- 3,609
Goodwill, net................................................. 54,168 --- 16,855 (1) 71,023
Intangible assets, net........................................ 1,803 --- 2 (1) 1,805
----------- ----------- ----------- -----------
Total assets............................................. 87,035 683 16,857 104,575
=========== =========== =========== ===========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable........................................... 591 235 --- 826
Amounts due for acquisitions............................... 527 --- --- 527
Accrued salaries and benefits.............................. 2,686 --- --- 2,686
Self-insurance accruals.................................... 3,973 51 --- 4,024
Refunds payable............................................ 2,674 --- --- 2,674
Accrued lease obligations.................................. 338 --- --- 338
Accrued physician incentives............................... 744 --- --- 744
Other accrued expenses..................................... 1,897 59 --- 1,956
Current portion of long-term debt.......................... 446 27 --- 473
----------- ----------- ----------- -----------
Total current liabilities................................ 13,876 372 --- 14,248
Long-term debt, net of current portion........................ 29,833 27 3,977 (2) 33,837
Amounts due for acquisitions.................................. 1,976 --- --- 1,976
Stockholder's equity:
Preferred stock............................................ --- --- --- ---
Common stock:
Voting.................................................. 66 --- 1 67
Class A non-voting...................................... 3 --- --- 3
Additional paid-in capital................................. 61,352 2 13,163 (3) 74,515
(2)(4)
Excess purchase price distributed
to management stockholders.............................. (7,541) --- --- (7,541)
Accumulated deficit........................................ (12,530) 282 (282)(4) (12,530)
----------- ------------ ----------- ----------
Total stockholders' equity.............................. 41,350 284 12,880 54,514
----------- ------------ ----------- -----------
Total liabilities and stockholder's equity.............. $ 87,035 $ 683 $ 16,857 $ 104,575
=========== ============ =========== ===========
</TABLE>
See accompanying notes.
13
<PAGE>
SHERIDAN HEALTHCARE, INC.
NOTES TO UNAUDITED PRO FORMA CONSOLIDATED BALANCE SHEET
DECEMBER 31, 1997
The acquisition adjustments reflected on the unaudited pro forma consolidated
balance sheet are as follows:
(1) Represents the goodwill and intangible assets that would have been
recorded if the acquisition of Perinatology completed in 1998 had
occurred on December 31, 1997 as follows, (in thousands):
<TABLE>
<CAPTION>
<S> <C>
Aggregate purchase price............................................................ $ 17,141
Net assets acquired:
Working capital.................................................................. 267
Property and equipment........................................................... 71
Intangible assets................................................................ 2
Long-term debt................................................................... (54)
-----------
Net assets acquired............................................................ 286
-----------
Goodwill related to the acquisitions............................................. $ 16,855
===========
</TABLE>
(2) Represents the long-term debt incurred to finance the cash portion of the
purchase price of the acquisition of Perinatology completed in 1998.
(3) Represents the market value, as of March 4, 1998, of approximately
885,000 shares of the Company's common stock issued in connection with
the acquisition of Perinatology.
(4) Represents the elimination of the equity accounts of Perinatology.
14
<PAGE>
<TABLE>
SHERIDAN HEALTHCARE, INC.
UNAUDITED PRO FORMA CONSOLIDATED STATEMENT OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 1997
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<CAPTION>
Acquisition
Actual Perinatology Adjustments Pro Forma
----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
Net revenue................................................... $ 98,616 $ 4,346 $ --- $ 102,962
Operating expenses:
Direct facility expenses................................... 68,919 2,780 (1,061)(1) 70,638
Provision for bad debts.................................... 4,066 10 --- 4,076
Salaries and benefits...................................... 7,424 --- --- 7,424
General and administrative................................. 4,900 --- --- 4,900
Amortization............................................... 2,096 5 675(2) 2,776
Depreciation............................................... 689 70 --- 759
----------- ----------- ----------- -----------
Total operating expenses................................. 88,094 2,865 (386) 90,573
----------- ----------- ----------- -----------
Operating income.............................................. 10,522 1,481 386 12,389
Interest expense, net......................................... 2,461 8 308(3) 2,777
----------- ----------- ----------- ----------
Income before income taxes.................................... 8,061 1,473 78 9,612
Income tax expense (benefit).................................. 2,894 574 31(4) 3,499
----------- ----------- ----------- ----------
Net income (loss)............................................. $ 5,167 $ 899 $ 47 $ 6,113
=========== =========== =========== ==========
Net income (loss) per share
Basic.................................................... $ 0.77 $ 0.80
Diluted.................................................. $ 0.73 $ 0.77
Weighted average share of common stock
and common stock equivalents outstanding
Basic................................................... 6,722 --- 885(5) 7,607
Diluted................................................. 7,035 --- 885(5) 7,920
</TABLE>
See accompanying notes.
15
<PAGE>
SHERIDAN HEALTHCARE, INC.
NOTES TO UNAUDITED PRO FORMA CONSOLIDATED STATEMENT OF OPERATIONS
Year Ended December 31, 1997
The acquisition adjustments reflected on the unaudited pro forma consolidated
statement of operations are as follows:
(1) Represents the difference between the contracted physician compensation
rates that are effective post-acquisition and actual physician
compensation expense recorded by Perinatology.
(2) Represents amortization of the goodwill and intangibles resulting from
the acquisition of Perinatology as follows, (in thousands):
<TABLE>
<CAPTION>
Asset Amortizeable Annual
Amount Life Amortization
-------------- ------------ ------------
<S> <C> <C> <C>
Goodwill........................................... $ 16,855 25 years $ 674
Intangible assets.................................. $ 2 5 years $ 1
--------------
Total amortization.............................. $ 675
==============
</TABLE>
(3) Represents interest expense on the funds borrowed for the acquisition of
Perinatology.
(4) Represents income tax expense on the net earnings of Perinatology as
adjusted for items in Notes (1) through (3).
(5) Represents shares of the Company's common stock issued in connection with
the acquisition of Perinatology.
16
<PAGE>
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, thereunto duly authorized.
Sheridan Healthcare, Inc.
(Registrant)
Date: April 16,1998 By: /s/Mitchell Eisenberg
--------------------------------------
Mitchell Eisenberg, M.D.
President and Chief Executive Officer
17
<PAGE>
