SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(D) OF
THE SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported) December 19, 1997
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Renal Treatment Centers, Inc.
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(Exact name of registrant as specified in its charter)
Delaware 1-14142 23-2518331
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(State or other (Commission (I.R.S. Employer
jurisdiction File Number) Identification No.)
of incorporation)
1180 W. Swedesford Road, Building 2, Suite 300, Berwyn, PA 19312
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (610) 644-4796
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Not Applicable
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(Former name or former address, if changed since last report.)
ITEM 5. OTHER EVENTS
On November 18, 1997, Renal Treatment Centers, Inc. ("RTC" or the "Company")
entered into an Agreement and Plan of Merger dated as of November 18, 1997 (the
"Merger Agreement") among RTC, Total Renal Care Holdings, Inc. ("TRCH") and
Nevada Acquisition Corp. ("Newco"). Pursuant to and subject to the terms and
conditions of the Merger Agreement, Newco will be merged with and into RTC, in
connection with which each share of RTC common stock will be converted into
1.335 shares of TRCH common stock (the "Merger"). The Merger will require the
approval of the shareholders of RTC and TRCH and is subject to other customary
closing conditions. The Merger is expected to be consummated in the first
quarter of 1998; however, no assurance can be given that the consummation of the
Merger will occur on this timetable.
The accompanying unaudited pro forma combined financial information is filed for
the sole purpose of incorporation by reference into the Joint Proxy
Statement/Prospectus of TRCH and RTC, included in the Registration Statement on
Form S-4 of TRCH, which is being filed on the date hereof.
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS.
(b) PRO FORMA FINANCIAL INFORMATION.
Unaudited Pro Forma Financial Statements F-1
2
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.
RENAL TREATMENT CENTERS, INC.
Dated: December 19, 1997 By:/s/ Ronald H. Rodgers, Jr.
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Ronald H. Rodgers, Jr.
CFO and Vice President - Finance
3
RENAL TREATMENT CENTERS, INC.
UNAUDITED PRO FORMA FINANCIAL INFORMATION
The accompanying unaudited pro forma condensed combined balance sheet as of
September 30, 1997 and the pro forma condensed combined statements of income for
the nine months ended September 30, 1997 and 1996 and the year ended December
31, 1996, are based upon, and should be read in conjunction with, the historical
unaudited financial statements of RTC included in RTC's Quarterly Report on Form
10-Q for the quarter ended September 30, 1997 also incorporated by reference in
the Joint Proxy Statement/Prospectus, after giving effect to the Current Report
on Form 8-K dated October 6, 1997 of RTC (the "October 6th Form 8-K") and
additional unaudited historical financial information regarding certain acquired
companies as described below. These unaudited pro forma condensed combined
financial statements are not necessarily indicative of the operating results
that would have been achieved had the acquisitions described below been
consummated as of the beginning of the periods presented and should not be
construed as representative of future operating results. These unaudited pro
forma condensed combined financial statements give effect to the respective
acquisitions using the purchase method of accounting.
The unaudited pro forma condensed combined balance sheet as of September 30,
1997 and the unaudited pro forma condensed combined statement of income for the
nine months ended September 30, 1997 give effect to the acquisition by RTC of
substantially all of the non-current and certain other assets of California
Kidney Centers, California Kidney Centers, Orange, LLC, California Kidney
Centers, Inpatient Services, LLC, Dialysis Systems, LLC and Dialysis Systems,
Inpatient Services, LLC (collectively, the "Satellite Affiliated Companies") as
if the acquisition had occurred on January 1, 1997. The historical financial
information presented for the Satellite Affiliated Companies is based on the
unaudited combined balance sheet of the Satellite Affiliated Companies as of
September 30, 1997 and the unaudited combined statements of income for the nine
months ended September 30, 1997, as provided to RTC by the Satellite Affiliated
Companies.
The unaudited pro forma condensed statements of income for the nine months ended
September 30, 1996 and the year ended December 31, 1996 give effect to the
acquisitions by RTC of substantially all of the non-current and certain other
assets of (i) the Satellite Affiliated Companies, (ii) Kidney Center of Delaware
County, Ltd. and Kidney Center of Chester County, Ltd. (collectively,
"KCDC/KCCC") and (iii) Columbus Regional Dialysis Center, Inc. and Phenix City
Nephrology Referral Center, Inc. (collectively, "CRDC/PCNRC"), as if each of the
acquisitions had occurred on January 1, 1996. The historical financial
information presented for the Satellite Affiliated Companies is based on the
unaudited combined statements of income of the Satellite Affiliated Companies
for the nine months ended September 30, 1996, as provided to RTC by the
Satellite Affiliated Companies, and the audited combined statements of income of
the Satellite Affiliated Companies for the year ended December 31, 1996,
included in the October 6th Form 8-K. The historical financial information
presented for KCDC/KCCC is for the five months ended May 31, 1996, based on the
unaudited combined statements of operations of KCDC/KCCC for the three months
ended March 31, 1996, as provided to RTC by KCDC/KCCC, and includes estimated
amounts for the two months ended May 31, 1996. KCDC/KCCC is included in the
historical statements of income for RTC beginning June 1, 1996. The historical
financial information presented for CRDC/PCNRC is for the eight months ended
August 31, 1996, based on the unaudited combined statements of income of
CRDC/PCNRC for the six months ended June 30, 1996, as provided to RTC by
CRDC/PCNRC, and includes estimated amounts for the two months ended August 31,
1996. CRDC/PCNRC is included in the historical statements of income for RTC
beginning September 1, 1996.
The unaudited pro forma financial information included herein is based on
certain assumptions and adjustments described in the Notes thereto and should be
read in conjunction therewith and with "Management's Discussion and Analysis of
Financial Condition and Results of Operations," and the consolidated financial
statements of RTC and the related Notes thereto, in RTC's Annual Report on Form
10-K for the fiscal year ended December 31, 1996 and the condensed consolidated
financial statements in RTC's Quarterly Reports on Form 10-Q for the quarters
ended March 31, June 30 and September 30, 1997, each of which is also
incorporated by reference in the Joint Proxy Statement/Prospectus.
F-1
RENAL TREATMENT CENTERS, INC.
Unaudited Pro Forma Condensed Combined Balance Sheet
September 30, 1997
(in thousands)
The Satellite
Company Affiliated Pro Forma
(Historical) Companies Adjustments Combined
Cash and cash equivalents $ 8,767 $ 2,991 $ (2,891)(a) $ 8,767
Accounts receivable, net 109,311 11,188 (11,188)(a) 109,311
Other current assets 11,387 1,919 (1,195)(a) 12,111
-------- --------- --------- --------
Total current assets 129,465 16,098 (15,374) 130,189
Property & equipment, net 62,613 5,284 558 (a) 68,453
Intangible assets, net 232,855 12,012 98,224 (a) 343,091
Other assets 2,807 - - 2,807
-------- --------- --------- --------
$427,740 $ 33,394 $ 83,406 $544,540
======== ========= ========= ========
Current liabilities $ 35,071 $ 7,575 $ (7,575)(a) $ 35,071
Long-term debt 229,228 4,259 112,541 (b) 346,028
Common stock 250 7,124 (7,124)(c) 250
Additional paid-in capital 94,153 7,607 (7,607)(c) 94,153
Retained earnings 69,426 6,829 (6,829)(c) 69,426
Less: Treasury Stock (388) - - (388)
-------- --------- --------- --------
$427,740 $ 33,394 $ 83,406 $544,540
======== ========= ========= ========
See accompanying notes to unaudited pro forma condensed combined financial statements.
F-2
RENAL TREATMENT CENTERS, INC.
Unaudited Pro Forma Condensed Combined Statement of Income
Nine months ended September 30, 1997
(in thousands except per share amounts)
Satellite
Affliated
The Company Companies
9 months ended 9 months ended
Septemer 30, 1997 September 30, 1997 Pro Forma
(Historical) (Historical) Adjustments Combined
Net operating revenues $ 234,940 $ 35,291 $ - $ 270,231
Operating expenses 196,143 28,084 3,037 (a) 226,264
--------- --------- --------- ---------
Operating income 39,797 7,207 (3,037) 43,967
Interest expense, net 7,095 236 5,724 (b) 13,055
--------- --------- --------- ---------
Income before income taxes 32,702 6,971 (8,761) 30,912
Income taxes 12,277 - (672)(c) 11,605
--------- --------- --------- ---------
Income $ 20,425 $ 6,971 $ (8,089) $ 19,307
========= ========= ========= =========
Income per share (d) $ 0.79 $ 0.75
========= =========
Weighted average number of common shares and
equivalents outstanding 25,706 25,706
========= =========
See accompanying notes to unaudited pro forma condensed combined financial statements.
F-3
RENAL TREATMENT CENTERS, INC.
Unaudited Pro Forma Condensed Combined Statement of Income
Nine months ended September 30, 1996
(in thousands except per share amounts)
Satellite
Afilliated
The Company Companies KCDC/KCCC CRDC/PCNRC
9 months ended 9 months ended 5 months ended 8 months ended
September 30, September 30, May 31, August 31,
1996 1996 1996 1996 Pro Forma
(Historical) (Historical) (Historical) (Historical) Adjustments Combined
Net operating revenues $ 169,248 $ 32,406 $ 5,451 $ 3,929 $ - $ 211,034
Operating expenses 144,879 26,172 5,284 3,037 4,794 (a) 184,166
--------- --------- --------- -------- -------- ----------
Operating income 24,369 6,234 167 892 (4,794) 26,868
Interest expense, net 2,978 276 55 (2) 7,069 (b) 10,376
--------- --------- --------- -------- -------- ----------
Income before income taxes 21,391 5,958 112 894 (11,863) 16,492
Income taxes 8,300 - - - (1,901)(c) 6,399
---------- --------- --------- -------- -------- ----------
Income $ 13,091 $ 5,958 $ 112 $ 894 $ (9,962) $ 10,093
========== ========= ========= ======== ======== ==========
Income per share (d) $ 0.52 $ 0.40
========== ==========
Weighted average number of common
shares and equivalents outstanding 25,018 25,018
========== ==========
See accompanying notes to unaudited proforma condensed combined financial
statements.
F-4
RENAL TREATMENT CENTERS, INC.
Unaudited Pro Forma Condensed Combined Statement of Income
Year ended December 31, 1996
(in thousands except per share amounts)
Satelite
Affilated
The Company Companies KCDC/KCCC
Year ended Year ended 5 months ended
December 31, 1996 December 31, 1996 May 31, 1996
(Historical) (Historical) (Historical)
Net operating revenues $235,397 $43,208 $5,451
Operating expenses 199,782 34,334 5,284
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Operating income 35,615 8,874 167
Interest expense, net 4,384 368 55
-------- ------- ------
Income before income taxes 31,231 8,506 112
Income taxes 11,941 - -
-------- ------- ------
Income $ 19,290 $ 8,506 $ 112
======== ======= ======
Income per share (d) $ 0.77
========
Weighted average number of common shares and
equivalents outstanding 25,068
========
CRDC/PCNRC
8 months ended
August 31, 1996 Pro Forma
(Historical) Adjustments Combined
Net operating revenues $3,929 $ - $287,985
Operating expenses 3,037 6,451 (a) 248,888
------ -------- --------
Operating income 892 (6,451) 39,097
Interest expense, net (2) 9,320 (b) 13,801
------ -------- --------
Income before income taxes 894 (15,447) 25,296
Income taxes - (2,269)(c) 9,672
------ -------- --------
Income $ 894 $(13,178) $ 15,624
====== ======== ========
Income per share (d) $ 0.62
========
Weighted average number of common shares and
equivalents outstanding $ 25,068
========
See accompanying notes to unaudited proforma condensed combined financial statements.
F-5
RENAL TREATMENT CENTERS, INC.
NOTES TO UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL STATEMENTS
1. General
In November 1997 the Company acquired substantially all of the non-current
and certain other assets of the Satellite Affiliated Companies. In June 1996
the Company acquired substantially all of the non-current and certain other
assets of KCDC/KCCC. And in August 1996 the Company acquired substantially
all of the non-current and certain other assets of CRDC/PCNRC. The Satellite
Affiliated Companies, KCDC/KCCC, and CRDC/PCNRC are hereinafter referred to
collectively as the "Sellers". All of the foregoing transactions were
accounted for under the purchase method of accounting. The results of the
acquisitions have been included in the historical results of operations for
the Company from the applicable acquisition dates.
2. Basis of Presentation
The Unaudited Pro Forma Financial Statements are presented to illustrate (i)
the pro forma effects on the Company's balance sheet as of September 30,
1997 as if the purchase of the Satellite Affiliated Companies occurred on
September 30, 1997 and (ii)the pro forma effects on the Company's results of
operations for the nine month period ended September 30, 1997 as if the
purchase of the Satellite Affiliated Companies occurred on January 1, 1997
and the nine month period ended September 30, 1996 and for the year ended
December 31, 1996 as if the purchase of the Satellite Affiliated Companies,
KCDC/KCCC and CRDC/PCNRC occurred on January 1, 1996. The unaudited pro
forma financial statements include adjustments resulting from the use of the
purchase method of accounting and are not necessarily indicative of what the
combined financial position or results of operations would have been had the
transactions occurred on January 1, 1997 or January 1, 1996, nor are they
necessarily indicative of future results of the combined entities.
Certain pro forma adjustments are based on preliminary estimates of the fair
values of assets acquired and are thus subject to change.
3. Adjustments to Pro Forma Condensed Combined Balance Sheet
a) Adjusts assets to fair market value and eliminates certain assets and
liabilities of the Satellite Affiliated Companies not assumed by the Company
in connection with the acquisition.
b) Reflects an increase in long-term debt to account for payment of the
purchase price.
c) To eliminate the equity of the acquired businesses.
4. Adjustments to Pro Forma Condensed Combined Statements of Operations
a) Reflects adjustment to eliminate management fees incurred by the Satellite
Facilities. In addition, reflects depreciation and amortization expense
resulting from the revaluation required by the purchase method of accounting
for fixed assets and intangible assets of $5,951,960, $7,891,017 and
$10,521,356, offset by the Sellers historical depreciation and amortization
of $1,523,538, $1,806,493 and $2,347,493 for the nine month periods ended
September 30, 1997 and 1996 and the year ended December 31, 1996,
respectively. Included in these amounts is amortization over a 25-year
period of the excess cost over net assets acquired of $2,325,945, $3,081,627
and $4,108,836 for the nine month periods ended September 30, 1997 and 1996
and the year ended December 31, 1996, respectively, as if the acquisitions
occurred on January 1, 1997 or January 1, 1996, respectively.
b) Reflects an adjustment to interest expense to account for long-term debt
incurred in connection with the acquisitions, as well as the elimination of
interest expense on borrowings not assumed by the Company.
c) Reflects the adjustments to income taxes which would have been provided on
pro forma income before taxes.
d) Pro forma net income per common and common stock equivalents is computed by
dividing pro forma net income by the weighted average number of common and
common stock equivalents outstanding during the period.
F-6