UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
Date of Report: February 17, 2004
Date of earliest event reported: February 2, 2004
REHABCARE GROUP, INC.
(Exact name of registrant as specified in its charter)
Delaware 0-19294 51-0265872
(State or other (Commission File (I.R.S. Employer
jurisdiction of Number) Identification
incorporation) Number)
7733 Forsyth Boulevard
17th Floor
St. Louis, Missouri 63105
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (314) 863-7422
Item 2. Acquisition or Disposition of Assets.
On February 2, 2004, pursuant to a Stock Purchase and Sale Agreement dated
December 30, 2003 ("Agreement"), RehabCare Group, Inc. ("RehabCare") completed
the sale of its StarMed Staffing Division (StarMed Health Personnel, Inc. and
certain other assets relating to the "Business" as defined in the Agreement) to
InteliStaf Holdings, Inc. ("InteliStaf") in a stock for stock transaction. Under
the terms of the Agreement, RehabCare became a substantial shareholder in
InteliStaff holding approximately 25% of InteliStaf's outstanding equity.
Prior to the completion of the sale, no material relationship existed
between InteliStaf and RehabCare or any of its affiliates, any director or
officer of RehabCare or any associate of any such director or officer.
Subsequent to the transaction, pursuant to the terms of the Agreement, RehabCare
now holds two seats on the Board of Directors of InteliStaf. John H. Short
Ph.D., Interim President and CEO of RehabCare and C. Ray Holman, a director of
RehabCare are RehabCare's representatives on the InteliStaf Board of Directors.
The Stock Purchase and Sale Agreement dated December 30, 2003 by and among
InteliStaf Holdings, Inc., RehabCare Group, Inc., StarMed Health Personnel, Inc.
and StarMed Management, Inc. filed as Exhibit 2 to RehabCare's Form 8-K filed on
December 31, 2003 is incorporated herein by reference.
Item 7. Financial Statements, Pro Forma Financial Information and Exhibits.
(a) Financial statements of businesses acquired
Not applicable.
(b) Pro forma financial information
Unaudited pro forma condensed consolidated balance sheet at September
30, 2003 and unaudited pro forma condensed consolidated statements of
earnings for the nine months ended September 30, 2003 and the year
ended December 31, 2002.
Item 7(b)
RehabCare Group, Inc.
Pro Forma Condensed Consolidated Balance Sheet
September 30, 2003
Unaudited (Dollars in thousands)
Pro forma Pro forma
As reported Adjustments(3) Result
----------- -------------- ------
ASSETS
Current assets:
Cash and cash equivalents $ 22,420 $ (793) $ 21,627
Marketable securities,
available for sale 5,008 (8) 5,000
Accounts receivable, net 90,550 (27,057) 63,493
Income taxes receivable 1,856 - 1,856
Deferred tax assets 5,274 - 5,274
Other current assets 3,758 (1,503) 2,255
------- ------- -------
Total current assets 128,866 (29,361) 99,505
Marketable securities, trading 3,398 - 3,398
Investment in associated companies,
at equity - 40,000 40,000
Equipment and leasehold
improvements, net 18,403 (3,829) 14,574
Excess cost over net assets
acquired, net 101,685 (52,956) 48,729
Other 3,598 (467) 3,131
-------- -------- --------
Total assets $255,950 $(46,613) $209,337
======== ======== ========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $1,752 $(347) $1,405
Accrued salaries and wages 30,529 (5,887) 24,642
Accrued expenses 9,830 (1,039) 8,791
------- ------ -------
Total current liabilities 42,111 (7,273) 34,838
Deferred compensation 3,417 - 3,417
Deferred tax liabilities 7,220 (5,252) 1,968
------- ------- -------
Total liabilities 52,748 (12,525) 40,223
------- ------- -------
Stockholders' equity:
Preferred stock - - -
Common stock 201 - 201
Additional paid in capital 114,428 - 114,428
Retained earnings 143,276 (34,088) 109,188
Treasury stock (54,704) - (54,704)
Accumulated other comprehensive
earnings 1 - 1
------- ------- -------
Total stockholders' equity 203,202 (34,088) 169,114
------- ------- -------
Total liabilities and
stockholders' equity $255,950 $(46,613) $209,337
======== ======== ========
See accompanying explanatory notes
RehabCare Group, Inc.
Pro Forma Condensed Consolidated Statement of Earnings
Nine Months Ended September 30, 2003
Unaudited (Dollars and shares in thousands, except per share data)
Pro forma Pro forma
As reported Adjustments Result
----------- ----------- ------
Operating revenues $409,847 $(173,425) (1) $236,422
Costs and expenses:
Operating 310,486 (140,779) (1) 169,707
Selling, general &
administrative:
Divisions 51,213 (29,220) (1) 21,993
Corporate 20,288 - 20,288
Restructuring charge 1,286 - 1,286
Depreciation and amortization 6,429 (1,412) (1) 5,017
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Total costs and expenses 389,702 (171,411) 218,291
------- -------- -------
Operating earnings 20,145 (2,014) 18,131
Interest income 83 (7) (1) 76
Interest expense (532) - (532)
Other income (expense), net (63) 1 (1) (62)
-------- -------- -------
Earnings before income taxes
and equity in earnings of
affiliates 19,633 (2,020) 17,613
Income taxes 7,809 (803) (1) 7,006
Equity in earnings of affiliates - 29 (2) 29
------- ------- -------
Net earnings $11,824 $(1,188) $10,636
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Net earnings per common share:
Basic $0.74 $(0.07) $0.67
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Diluted $0.72 $(0.07) $0.65
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Weighted-average number of common shares outstanding:
Basic 15,962 15,962 15,962
====== ====== ======
Diluted 16,507 16,507 16,507
====== ====== ======
See accompanying explanatory notes
RehabCare Group, Inc.
Pro Forma Condensed Consolidated Statement of Earnings
Year Ended December 31, 2002
Pro forma Amounts Unaudited (Dollars and shares in thousands, except per share data)
Pro forma Pro forma
As reported Adjustments Result
----------- ----------- ------
Operating revenues $562,565 $(277,543) (1) $285,022
Costs and expenses:
Operating 413,081 (216,334) (1) 196,747
Selling, general &
administrative:
Divisions 74,621 (47,555) (1) 27,066
Corporate 26,832 - 26,832
Depreciation and amortization 8,334 (1,808) (1) 6,526
------- -------- --------
Total costs and expenses 522,868 (265,697) 257,171
------- -------- --------
Operating earnings 39,697 (11,846) 27,851
Interest income 319 (16) (1) 303
Interest expense (676) - (676)
Other income (expense), net 9 - 9
------- -------- --------
Earnings (loss) before income
Taxes and equity in earnings
of affiliates 39,349 (11,862) 27,487
Income taxes 14,954 (4,508) (1) 10,446
Equity in earnings of affiliates - 508 (2) 508
------- -------- --------
Net earnings $24,395 $(6,846) $17,549
======= ======== ========
Net earnings per common share:
Basic $1.45 $(0.41) $1.04
===== ====== =====
Diluted $1.38 $(0.39) $0.99
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Weighted-average number of common shares outstanding:
Basic 16,833 16,833 16,833
====== ====== ======
Diluted 17,642 17,642 17,642
====== ====== ======
See accompanying explanatory notes
RehabCare Group, Inc.
Pro Forma Condensed Financial Statements
Explanatory Notes
(1) The pro forma condensed consolidated statements of earnings for the nine
months ended September 30, 2003 and the year ended December 31, 2002
presented herein, reflect the results for RehabCare Group, Inc.
("RehabCare") as historically reported, adjusted for the sale of our
StarMed Staffing Division to InteliStaf Holdings, Inc. ("InteliStaf") in a
stock for stock transaction. Operating revenues, costs and expenses,
interest income, other income/expense and income taxes have been adjusted
to remove the period results of the StarMed Staffing Division. No
adjustments have been made to interest expense as no cash consideration was
paid in the transaction and RehabCare held no debt specific to the StarMed
Staffing Division in the periods presented.
(2) Equity in earnings from affiliates has been added to the pro forma
statements of earnings for the nine months ended September 30, 20003 and
the twelve months ended December 31, 2002 to reflect RehabCare's 25% post
transaction equity interest in InteliStaf. The pro forma adjustment amounts
represent 25% of InteliStaf's net income, as derived from their internally
prepared financial statements, for each of the respective periods.
(3) The pro forma balance sheet presented reflects the financial position of
RehabCare as of September 30, 2003, as historically reported, and as
adjusted for the transaction described in footnote 1, including an
adjustment to retained earnings for the estimated after tax loss on the
sale of the StarMed Division of approximately $29.1 million (assuming the
transaction had occurred on January 1, 2002). The value of RehabCare's
investment in InteliStaf was determined based on the estimated fair market
value of a 25% post transaction share of InteliStaf.
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.
Dated: February 17, 2004
REHABCARE GROUP, INC.
By: /s/ Vincent L. Germanese
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Vincent L. Germanese
Senior Vice President, Chief Financial
Officer and Secretary