1
UNITED STATES
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):
January 25, 2000
HealthTronics, Inc.
(Exact name of the Registrant as specified in its charter)
Georgia 001-14921 58-2210668
(State or other jurisdiction of (Commission File Number) (I.R.S. Employer
incorporation and organization) identification No.)
- --------------------------------------------------------------------------------
1841 West Oak Parkway, Suite A
Marietta, Georgia 30062
(Address of Principal Executive Offices) (Zip Code)
Registrant's telephone number, including area code:
770-419-0691
2
Item 2. Acquisition or Disposition of Assets.
On January 24, 2000, HealthTronics, Inc. (the "Company"), pursuant to
an Asset Purchase Agreement dated December 10, 1999, completed the acquisition
of the assets of Health Horizons (E.S.W.L.) L.P. for $850,000 in cash and the
assumption of certain liabilities, including a lease, trade and accounts payable
and obligations under regulatory permits. The assets purchased included a
lithotripter and related medical equipment, other furniture, equipment, patient
records and other related assets used in New Jersey Kidney Stone Treatment
Center. The purchase price was determined and negotiated by the parties based on
the expected annual cash flow to be generated by the assets purchased. The
Company has pre-negotiated (subject to negotiation of final agreement terms) to
sell the assets purchased to a partnership which will be managed by the Company
and of which the Company will own less than 20%. The remaining partners will be
independent of the Company. The Company financed the acquisition with working
capital generated by its business. Although financial information is included in
this report on a pro forma basis as though the entity purchased had been owned
by the Company for the year ended December 31, 1999 and for the three months
ended March 31, 2000 and 1999 this information is not indicative of financial
results that should be expected in the future. The Company never intended to
retain these assets.
Item 7. Financial Statements, Pro Forma Financial Information and Exhibits.
a. Financial Statements of Business Acquired
The following audited financial statements of Health Horizons
(E.S.W.L.) L.P. as of and for the years ended December 31, 1999
and 1998 are provided herein:
(1) Independent Auditor's Report dated February 14, 2000
(2) Balance sheets as of December 31, 1999 and 1998
(3) Statements of Income for the years ended December 31,
1999 and 1998
(4) Statements of Changes in Partners' Capital for the
years ended December 31, 1999 and 1998
(5) Statements of Cash Flows for the years ended December
31, 1999 and 1998
(6) Notes to Financial Statements for the years ended
December 31, 1999 and 1998
(7) Schedules of Cost of Revenues for the years ended
December 31, 1999 and 1998
(8) Schedules of General and Administrative Expenses for
the years ended December 31, 1999 and 1998
3
b. Pro Forma Financial Information
The following unaudited combined pro forma financial statements
relative to the acquisition is provided herein as follows:
(1) Pro Forma Combined Condensed Balance Sheet as of
December 31, 1999
(2) Pro Forma Combined Condensed Statements of Income
for the year ended December 31, 1999
(3) Pro Forma Combined Condensed Statements of Income
for the three months ended March 31, 2000
(4) Pro Forma Combined Condensed Statements of Income
for the three months ended March 31, 1999
The unaudited combined pro forma Statements of income give effect to
the acquisition by the Company of certain assets of Health Horizons
(E.S.W.L.) L.P., as if the acquisition had occurred on January 1 of the
periods presented. The unaudited proforma balance sheet give effect to
the acquisition by the Company of certain assets of Health Horizons
(E.S.W.L.) L.P., as if the acquisition had occurred on December 31,
1999. The pro forma adjustments are based upon estimates, currently
available information and certain assumptions management deems
appropriate. The unaudited combined pro forma financial data presented
herein are not necessarily indicative of the results that the Company
would have obtained had such events occurred at the beginning of the
periods, as assumed, or of the future results of the Company.
Furthermore the Company never intended to retain these assets for an
extended period of time. The Company had pre-negotiated (subject to
negotiation of final agreement terms) the sale of the assets at the
time they were purchased.
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c. Exhibits
2.1 Asset Purchase Agreement dated December 10, 1999
23.1 Consent of Withum, Smith & Brown
5
INDEPENDENT AUDITORS' REPORT
To the Board of Directors,
Health Horizons (E.S.W.L.) L.P.:
We have audited the accompanying balance sheets of Health Horizons (E.S.W.L.)
L.P., as of December 31, 1999 and 1998, and the related statements of income,
changes in partners' capital and cash flows for the years then ended. These
financial statements are the responsibility of the Partnership's management. Our
responsibility is to express an opinion on these financial statements based on
our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Health Horizons (E.S.W.L.) L.P.
as of December 31, 1999 and 1998, and the results of its operations and its cash
flows for the years then ended in conformity with generally accepted accounting
principles.
Our audits were made for the purpose of forming an opinion on the basic
financial statements taken as a whole. The schedules of cost of revenues and
general and administrative expenses are presented for purposes of additional
analysis and are not a required part of the basic financial statements. Such
information has been subjected to the auditing procedures applied in the audits
of the basic financial statements and, in our opinion, are fairly stated in all
material respects in relation to the basic financial statements taken as a
whole.
WithumSmith+Brown
New Brunswick, New Jersey
February 14, 2000
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HEALTH HORIZONS (E.S.W.L.) L.P.
BALANCE SHEETS
DECEMBER 31, 1999 AND 1998
1999 1998
---------- ----------
ASSETS
Current Assets:
Cash and cash equivalents $ 937,081 $ 499,656
Patient accounts receivable, less allowance for doubtful
accounts of $134,429 in 1999 and $150,828 in 1998 634,749 596,348
Interest receivable 4,361 2,502
Prepaid expenses 15,846 24,298
Inventory 10,632 14,436
Advances to affiliate - CJHCC 51,849 60,940
---------- ----------
Total Current Assets 1,654,518 1,198,180
Property and Equipment - Net 391,298 475,823
---------- ----------
TOTAL ASSETS $2,045,816 $1,674,003
========== ==========
LIABILITIES AND PARTNERS' CAPITAL
Current Liabilities:
Accounts payable $ 406,771 $ 212,566
Accrued liabilities 80,377 11,401
Advances from affiliate - CJHCC 137,917 73,780
Advances from RWJUH 30,772 30,483
---------- ----------
Total Current Liabilities 655,837 328,230
Partners' Capital 1,389,979 1,345,773
---------- ----------
TOTAL LIABILITIES AND PARTNERS' CAPITAL $2,045,816 $1,674,003
========== ==========
The Notes to Financial Statements are an integral part of these statements.
2
7
HEALTH HORIZONS (E.S.W.L.) L.P.
STATEMENTS OF INCOME
FOR THE YEARS ENDED DECEMBER 31, 1999 AND 1998
1999 1998
----------- -----------
Revenues:
Net patient service revenue $ 3,491,061 $ 3,365,340
Other revenue 311 1,714
----------- -----------
Total Revenues 3,491,372 3,367,054
Cost of Revenues 433,825 442,621
----------- -----------
Gross Profit 3,057,547 2,924,433
General and Administrative Expenses 1,596,698 1,464,520
----------- -----------
Income From Operations 1,460,849 1,459,913
Other (Income) Expense:
Interest income (34,822) (31,958)
Loss on disposal of property and equipment 54,965 --
----------- -----------
Total Other (Income) Expense - Net 20,143 (31,958)
----------- -----------
Net Income $ 1,440,706 $ 1,491,871
=========== ===========
The Notes to Financial Statements are an integral part of these statements.
3
8
HEALTH HORIZONS (E.S.W.L.) L.P.
STATEMENTS OF CHANGES IN PARTNERS' CAPITAL
FOR THE YEARS ENDED DECEMBER 31, 1999 AND 1998
General Limited
Partner Partners Total
--------- ----------- -----------
Partners' Capital - January 1, 1998 $ 186,996 $ 1,183,106 $ 1,370,102
Net Income - 1998 372,968 1,118,903 1,491,871
Distribution to Partners - 1998 (379,050) (1,137,150) (1,516,200)
--------- ----------- -----------
Partners' Capital - December 31, 1998 180,914 1,164,859 1,345,773
Net Income - 1999 360,177 1,080,529 1,440,706
Distribution to Partners - 1999 (349,125) (1,047,375) (1,396,500)
--------- ----------- -----------
Partners' Capital - December 31, 1999 $ 191,966 $ 1,198,013 $ 1,389,979
========= =========== ===========
The Notes to Financial Statements are an integral part of these statements.
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9
HEALTH HORIZONS (E.S.W.L.) L.P.
STATEMENTS OF CASH FLOWS
FOR THE YEARS ENDED DECEMBER 31, 1999 AND 1998
1999 1998
----------- -----------
Cash Flows From Operating Activities:
Net income $ 1,440,706 $ 1,491,871
Adjustments to reconcile net income to
net cash provided by operating activities:
Loss on disposal of property and equipment 54,965 --
Depreciation and amortization 73,985 101,641
Change in:
Patient accounts receivable (38,401) 96,704
Interest receivable (1,859) 195
Prepaid expenses 8,452 (5,459)
Inventory 3,804 (7,729)
Advances to affiliate - CJHCC 9,091 19,090
Accounts payable 194,205 98,965
Accrued liabilities 68,976 (8,821)
Advances from affiliate - CJHCC 64,137 (80,012)
Advances from RWJUH 289 2,759
----------- -----------
Net Cash Provided By Operating Activities 1,878,350 1,709,204
Cash Flows From Investing Activities:
Purchases of property and equipment (44,425) (6,975)
Cash Flows From Financing Activities:
Distributions to partners (1,396,500) (1,516,200)
----------- -----------
Net Increase In Cash and Cash Equivalents 437,425 186,029
Cash and Cash Equivalents at Beginning of Year 499,656 313,627
----------- -----------
Cash and Cash Equivalents at End of Year $ 937,081 $ 499,656
=========== ===========
The Notes to Financial Statements are an integral part of these statements.
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10
HEALTH HORIZONS (E.S.W.L.) L.P.
NOTES TO FINANCIAL STATEMENTS
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:
Significant accounting policies followed by the Partnership in the
preparation of the accompanying financial statements are summarized
below:
NATURE OF BUSINESS OPERATIONS
Health Horizons (E.S.W.L.) L.P. is organized under the Uniformed
Limited Partnership Act of the State of New Jersey. It was formed on or
about July 23, 1986. The Partnership was formed to provide a regional
health care facility for kidney stone treatment using Extracorporeal
Shock Wave Lithotripsey, (E.S.W.L.). The Partnership is located in New
Brunswick, New Jersey.
CASH AND CASH EQUIVALENTS
Cash and cash equivalents include cash on hand and in the bank, as well
as all short-term securities held for the primary purpose of general
liquidity. Such securities normally mature within three months from the
date of acquisition.
INVENTORY
Inventory consists of electrodes and medical supplies and is carried at
the lower of cost or market, with cost being determined on the
first-in, first-out basis.
PROPERTY AND EQUIPMENT
Property and equipment is recorded at cost. Depreciation and
amortization is provided on the straight-line method over the estimated
useful lives of the respective assets, generally thirty-one and a half
years for leasehold improvements and seven years for equipment.
Maintenance and repairs are charged to expense as incurred; major
renewals and betterments are capitalized. When items of property or
equipment are sold or retired, the related cost and accumulated
depreciation are removed from the accounts and the resulting gain or
loss is included in income.
INCOME TAXES
The income of the Partnership is included in the current taxable income
of the partners. Consequently, Partnership net income is presented
without a provision for income taxes.
NET PATIENT SERVICE REVENUE
The partnership has agreements with third-party payors that provide for
payments to the Organization at amounts different from its established
rates. Payment arrangements include prospectively determined rates per
discharge, reimbursed costs, discounted charges, and per diem payments.
Net patient service revenue is reported at the estimated net realizable
amounts from patients, third-party payors, and others for services
rendered, including estimated retroactive adjustments under
reimbursement agreements with third-party payors. Retroactive
adjustments are accrued on an estimated basis in the period the related
services are rendered and adjusted in future periods as final
settlements are determined.
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11
HEALTH HORIZONS (E.S.W.L.) L.P.
NOTES TO FINANCIAL STATEMENTS
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED):
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.
RECLASSIFICATIONS
Certain amounts reported in the 1998 financial statements have been
reclassified to conform to the 1999 presentations.
NOTE 2 - PARTNERSHIP AGREEMENT:
From the inception of the Partnership, any income or loss generated was
to be allocated 95 percent to the limited partners and 5 percent to the
general partner until the limited partners' accumulated distributions
were equal to their capital contributions. Thereafter, any income or
loss generated will be allocated 75 percent to the limited partners and
25 percent to the general partner. As of 1990, the limited partners'
cumulative distributions were in excess of their capital contributions.
Therefore, income generated in 1999 and 1998 was allocated 25% to the
general partner and 75% to the limited partners.
NOTE 3 - INVENTORY:
At December 31, inventory consisted of the following:
1999 1998
------- -------
Electrodes $ 116 $ 5,365
Medical supplies 10,516 9,071
------- -------
Total $10,632 $14,436
======= =======
NOTE 4 - PROPERTY AND EQUIPMENT:
The major classifications of property and equipment are summarized as
follows at December 31:
1999 1998
---------- ----------
Property and Equipment:
Equipment $ 606,745 $ 562,321
Leasehold improvements 481,792 560,422
---------- ----------
1,088,537 1,122,743
Less Accumulated Depreciation
and Amortization 697,239 646,920
---------- ----------
Property and Equipment - Net $ 391,298 $ 475,823
========== ==========
Depreciation and amortization expense charged to operations amounted to
$73,985 in 1999 and $101,641 in 1998.
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12
HEALTH HORIZONS (E.S.W.L.) L.P.
NOTES TO FINANCIAL STATEMENTS
NOTE 5 - COMMITMENTS:
The principal types of property leased by the Partnership are office
and operating space. The most significant obligations under this lease
are insurance, utilities, repairs and maintenance. The lease expired in
December of 1999, and will be paid on a month to month basis.
Total rent expense for the Partnership was $107,105 in 1999 and $92,328
in 1998.
NOTE 6 - RELATED PARTY TRANSACTIONS:
The Partnership has entered into a management agreement with its
general partner, Central Jersey Health Care Corporation (CJHCC). The
general partner has agreed to provide an established level of staffing,
certain designated medical equipment and certain office furnishings.
The compensation relating to this agreement amounted to $862,353 and
$863,566 for 1999 and 1998, respectively.
At December 31, 1999 and 1998, the Partnership had net advances due to
the general partner (CJHCC) in the amount of $86,068 and $12,840,
respectively. The net advances are unsecured and non-interest bearing.
At December 31, 1999 and 1998, the Partnership is liable to Robert Wood
Johnson University Hospital (RWJUH), a member of the general partner,
which is a non-profit organization and whose parent company is a
limited partner, in the amount of $30,772 and $30,483, respectively,
for purchase of supplies and services. The total amount of purchases
and services included as a charge to operations amounted to
approximately $330,000 and $347,000 for the years ended December 31,
1999 and 1998, respectively.
NOTE 7 - CONCENTRATION OF CREDIT RISK:
The Kidney Stone Treatment center is located in New Brunswick, New
Jersey. The Center grants credit in the form of accounts receivable to
users of its center without collateral, most of whom are local
residents and are insured under third party payor agreements.
The Organization maintains cash balances at one financial institution
in excess of amounts insured by the Federal Deposit Insurance
Corporation. Management monitors the soundness of this institution and
considers the Organization's risk negligible.
NOTE 8 - SUBSEQUENT EVENT (UNAUDITED):
On January 24, 2000, the Partnership consummated an agreement to sell
substantially all of the assets of the Partnership, excluding cash and
receivables for $850,000 to Healthtronics, Inc. As of January 25, 2000,
the Partnership no longer has any operations. The Partnership will
terminate after all liabilities have been satisfied and the remaining
assets are distributed.
8
13
HEALTH HORIZONS (E.S.W.L.) L.P.
SCHEDULES OF COST OF REVENUES
FOR THE YEARS ENDED DECEMBER 31, 1999 AND 1998
1999 1998
-------- --------
Inventory at Beginning of Year $ 14,436 $ 6,706
Add: Pharmacy 16,624 27,474
Radiology 19,668 18,924
Anesthesia 12,000 12,195
Stents 28,502 27,992
Electrodes 121,232 120,447
Other Medical Supplies 30,474 28,565
Operating Room Rental 37,487 32,315
Stone Analysis Expense 1,178 7,580
Industrial Account Expense 1,154 1,187
Depreciation 44,902 65,696
Repairs and Maintenance Equipment 102,643 96,414
Parking 14,157 11,562
-------- --------
444,457 457,057
Less: Inventory at End of Year 10,632 14,436
-------- --------
Total Cost of Revenues $433,825 $442,621
======== ========
See Independent Auditors' Report.
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14
HEALTH HORIZONS (E.S.W.L.) L.P.
SCHEDULES OF GENERAL AND ADMINISTRATIVE EXPENSES
FOR THE YEARS ENDED DECEMBER 31, 1999 AND 1998
1999 1998
---------- ----------
Management Fee $ 862,353 $ 863,566
Marketing 65,081 103,305
Professional Fees 185,895 12,934
Financial Service Charge 75,000 72,000
Accounting Fees 9,300 7,764
Bad Debts 108,381 89,810
Collection and Application Fees 6,473 12,775
Dues and Subscriptions 842 812
Meetings and Seminars 4,050 2,893
Educational Programs 2,575 1,000
Telephone 7,966 7,671
Repairs and Maintenance 226 445
Office Supplies 34,294 37,668
Depreciation and Amortization 29,083 35,945
Office Rental 69,618 60,013
Purchase Labor 32,625 44,768
Utilities 15,016 20,556
Insurance 46,635 49,574
Licenses 3,625 2,684
Support Services 34,837 33,809
Miscellaneous 2,823 4,528
---------- ----------
Total General and Administrative Expenses $1,596,698 $1,464,520
========== ==========
See Independent Auditors' Report.
10
15
Item 7(b) - Pro Forma Financial Information
HealthTronics, Inc. and Subsidiaries
Pro Forma Combined Condensed Balance Sheets
AS OF DECEMBER 31, 1999
(UNAUDITED)
HISTORICAL
-------------
HEALTHTRONICS, HEALTH HORIZONS PRO FORMA PRO FORMA
INC. (E.S.W.L.) L.P.(1) ADJUSTMENTS COMBINED
------------- ------------------ -------------- ------------
CURRENT ASSETS
Cash and cash equivalents $ 5,024,890 $ (850,000)(2) $ 4,174,890
Trade accounts receivable, net 4,426,973 4,426,973
Inventory 1,195,743 16,550 1,212,293
Due from affiliated partnerships 162,523 162,523
Vendor deposits 802,009 802,009
Prepaid expenses 48,778 7,927 56,705
Deferred income taxes 375,751 375,751
------------ -------- ---------- ------------
TOTAL CURRENT ASSETS 12,036,667 24,477 (850,000) 11,211,144
Property and equipment, at cost:
Medical devices placed in service 9,085,000 51,490 9,136,490
Office equipment, furniture and fixtures 129,942 20,766 150,708
Vehicles and accessories 1,340,420 1,340,420
------------ -------- ---------- ------------
10,555,362 72,256 10,627,618
Less accumulated depreciation (2,376,510) (2,376,510)
------------ -------- ---------- ------------
NET PROPERTY AND EQUIPMENT 8,178,852 72,256 8,251,108
Partnership investments 318,150 318,150
Goodwill, net 2,905,540 753,207(2) 3,658,809
Patent license 55,007 55,007
Other assets 40,465 40,465
------------ -------- ---------- ------------
TOTAL ASSETS $ 23,534,681 $ 96,733 $ (96,733) $ 23,534,681
============ ======== ========== ============
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HISTORICAL
-------------
HEALTHTRONICS, HEALTH HORIZONS PRO FORMA PRO FORMA
INC. (E.S.W.L.) L.P.(1) ADJUSTMENTS COMBINED
------------- ------------------- ----------- -------------
CURRENT LIABILITIES
Trade accounts payable $1,131,142 $1,131,142
Customer deposits 903,352 903,352
Income taxes payable 141,652 748,272
Warranty accrual 513,305 513,305
Other accrued expenses 1,099,751 1,099,751
Deferred profit on service contracts 90,155 90,155
Current portion of long-term debt 1,287,054 1,287,054
------------- --------- ---------- -------------
TOTAL CURRENT LIABILITIES 5,166,411 5,773,031
Long-term debt, less current portion 1,759,126 1,759,126
Deferred income taxes 12,977 12,977
Deferral of profit on medical device sales to
related parties 244,194 244,194
Minority interest 2,224,087 2,224,087
------------- --------- ---------- -------------
TOTAL LIABILITIES 9,406,795 10,013,415
Shareholders' equity:
Common stock 12,309,181 12,309,181
Retained earnings 1,818,705 96,733 (96,733)(2) 1,161,865
------------- --------- ---------- -------------
TOTAL LIABILITIES & SHAREHOLDERS' EQUITY $ 23,534,681 $ 96,733 $ (96,733) $ 23,534,681
============= ========= ========== =============
1. Represents the assets purchased and liabilities assumed of
Health Horizons (E.S.W.L.) L.P. on January 25, 2000. There were no
liabilities assumed as of the acquisition date as trade payables were
paid off prior to the acquisition.
2. Represents the adjustment required to record the purchase of the assets
of Health Horizons (E.S.W.L.) L.P. on January 25, 2000.
17
HealthTronics, Inc. and Subsidiaries
Pro Forma Combined Condensed Statements of Income
FOR THE YEAR ENDED DECEMBER 31, 1999
(UNAUDITED)
HISTORICAL
--------------------------------------
HEALTHTRONICS, HEALTH HORIZONS PRO FORMA PRO FORMA
INC. (E.S.W.L.) L.P.(1) ADJUSTMENTS COMBINED
-------------- ------------------ ----------- ------------
Net Revenue $ 24,414,179 $3,491,372 $ 27,905,551
Cost of goods sold, rentals
and services provided 10,213,821 433,825 10,647,646
------------ ---------- --------- ------------
14,200,358 3,057,547 17,257,905
General and administrative expenses 6,492,909 1,596,698 50,218 (2) 8,139,825
------------ ---------- --------- ------------
7,707,449 1,460,849 (50,218) 9,118,080
Equity in earnings of
unconsolidated partnerships 117,711 117,711
Partnership distributions
from cost based investments 147,252 147,252
Gain on sale of partnership
investment interest 151,637 151,637
Loss on disposal of property
and equipment (54,965) (54,965)
Interest expense (315,694) (315,694)
Interest income 54,546 34,822 89,368
------------ ---------- --------- ------------
Income before minority
interest and income taxes 7,862,901 1,440,706 (50,218) 9,253,389
Minority interest (5,076,045) (5,076,045)
------------ ---------- --------- ------------
Income before income taxes 2,786,856 1,440,706 (50,218) 4,177,344
Provision for income taxes (1,189,638) (606,620)(3) (1,796,258)
------------ ---------- --------- ------------
Net income $ 1,597,218 $1,440,706 $(656,838) $ 2,381,086
============ ========== ========= ============
Basic and diluted income
per common share:
Basic $ 0.16 $ 0.24
============ ============
Diluted $ 0.16 $ 0.23
============ ============
Weighted average common
shares outstanding:
Basic 10,036,851 10,036,851
============ ============
Diluted 10,238,379 10,238,379
============ ============
1. The historical amounts represent the results of Health Horizons
(E.S.W.L.) L.P. for the year ended December 31, 1999 adjusted to
conform with HealthTronics' presentation of revenue and expenses.
2. Adjustment represents additional amortization resulting from goodwill
reported as a part of the purchase of Health Horizons (E.S.W.L.) L.P.
on January 25, 2000 as if the acquisition had occurred on January 1,
2000.
3. Adjustment represents additional income tax expense as a result of the
addition of Health Horizons (E.S.W.L.) L.P. on January 25, 2000
reported as if the acquisition had occurred on January 1, 2000.
18
HealthTronics, Inc. and Subsidiaries
Pro Forma Combined Condensed Statements of Income
FOR THE THREE MONTHS ENDED MARCH 31, 2000
(UNAUDITED)
HISTORICAL
--------------------------------------------
HEALTHTRONICS, HEALTH HORIZONS PRO FORMA PRO FORMA
INC. (E.S.W.L.) L.P. (1) ADJUSTMENTS COMBINED
------------ ------------------- ------------ ------------
Net Revenue $ 7,623,520 $ 235,272 $ 7,858,792
Cost of goods sold, rentals
and services provided 3,411,119 30,132 3,441,251
------------ ------------ ------------ ------------
4,212,401 205,140 4,417,541
General and administrative
expenses 2,134,258 132,554 4,185 (2) 2,270,997
------------ ------------ ------------ ------------
2,078,143 72,586 (4,185) 2,146,544
Equity in earnings of
unconsolidated partnership 40,508 40,508
Partnership distributions
from cost based investments 37,592 37,592
Interest expense (81,905) (81,905)
Interest income 58,274 5,732 64,006
------------ ------------ ------------ ------------
Income before minority
interest and income taxes 2,132,612 78,318 (4,185) 2,206,745
Minority interest (1,227,074) (1,227,074)
------------ ------------ ------------ ------------
Income before income taxes 905,538 78,318 (4,185) 979,671
Provision for income taxes (398,804) (32,251)(3) (431,055)
------------ ------------ ------------ ------------
Net income $ 506,734 $ 78,318 $ (36,436) $ 548,616
============ ============ ============ ============
Basic and diluted income
per common share:
Basic $ 0.05 $ 0.05
============ ============
Diluted $ 0.05 $ 0.05
============ ============
Weighted average common
shares outstanding:
Basic 10,719,822 10,719,822
============ ============
Diluted 11,163,469 11,163,469
============ ============
1. The historical amounts represent the results of Health Horizons
(E.S.W.L.) L.P. for the three months ended March 31, 2000 adjusted to
conform with HealthTronics' presentation of revenue and expenses.
2. Adjustment represents additional amortization resulting from goodwill
reported as a part of the purchase of Health Horizons (E.S.W.L.) L.P.
on January 25, 2000, as if the acquisition had occurred on January 1,
1999.
3. Adjustment represents income tax expense reported as a result of the
addition of Health Horizons (E.S.W.L.) L.P. net income before income
taxes on January 25, 2000, as if the acquisition had occurred on
January 1, 1999.
19
HealthTronics, Inc. and Subsidiaries
Pro Forma Combined Condensed Statements of Income
FOR THE THREE MONTHS ENDED MARCH 31, 1999
(UNAUDITED)
HISTORICAL
--------------------------------------------
HEALTHTRONICS, HEALTH HORIZONS PRO FORMA PRO FORMA
INC. (E.S.W.L.) L.P. (1) ADJUSTMENTS COMBINED
-------------- ------------------- ----------- -----------
Net Revenue $ 4,646,327 $ 796,029 $ 5,442,356
Cost of goods sold, rentals
and services provided 1,858,045 103,098 1,961,143
----------- ----------- ----------- -----------
2,788,282 692,931 3,481,213
General and administrative
expenses 1,343,134 343,178 12,555 (2) 1,698,867
----------- ----------- ----------- -----------
1,445,148 349,753 (12,555) 1,782,346
Equity in earnings of
unconsolidated partnerships 20,787 20,787
Partnership distributions
from cost based investments 19,241 19,241
Interest expense (105,104) (105,104)
Interest income 8,434 9,645 18,079
----------- ----------- ----------- -----------
Income before minority
interest and income taxes 1,388,506 359,398 (12,555) 1,735,349
Minority interest (895,326) (895,326)
----------- ----------- ----------- -----------
Income before income taxes 493,180 359,398 (12,555) 840,023
Provision for income taxes (177,141) (124,579)(3) (301,720)
----------- ----------- ----------- -----------
Net income $ 316,039 $ 359,398 $ (137,134) $ 538,303
=========== =========== =========== ===========
Basic and diluted income
per common share:
Basic $ 0.03 $ 0.05
=========== ===========
Diluted $ 0.03 $ 0.05
=========== ===========
Weighted average common
shares outstanding:
Basic 9,665,342 9,665,342
=========== ===========
Diluted 9,979,175 9,979,175
=========== ===========
1. The historical amounts represent the results of Health Horizons
(E.S.W.L.) L.P. for the three months ended March 31, 1999 adjusted to
conform with HealthTronics' presentation of revenue and expenses.
2. Adjustment represents additional amortization resulting from goodwill
reported as a part of the purchase of Health Horizons (E.S.W.L.) L.P.
on January 25, 2000, as if the acquisition had occurred on January 1,
1999.
3. Adjustment represents income tax expense reported as a result of the
addition of Health Horizons (E.S.W.L.) L.P. net income before income
taxes on January 25, 2000, as if the acquisition had occurred on
January 1, 1999.
20
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.
HealthTronics, Inc.
Dated:
May 15, 2000 By: /s/ Victoria W. Beck
------------------------------------
Victoria W. Beck
Chief Financial Officer
21
EXHIBIT INDEX
EXHIBIT DESCRIPTION
- ------- -----------
2.1 Asset Purchase Agreement dated December 10, 1999
23.1 Consent of Withum, Smith & Brown