UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K/A
CURRENT REPORT
Pursuant to Section 13 OR 15(d) of The Securities Exchange Act of 1934
Date of earliest event reported: October 1, 1997
-----------------------------------
UCI Medical Affiliates, Inc.
(Exact name of registrant as specified in its charter)
Delaware 0-13265 59-2225346
(State or other jurisdiction of incorporation) (Commission File Number) (IRS Employer Identification No.)
1901 Main Street, Suite 1200, Mail Code 1105, Columbia, South Carolina 29201
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (803) 252-3661
-----------------------
No Change
(Former name or former address, if changed since last report.)
This document contains a total of 22 pages.
This Form 8-K/A amends the Form 8-K filed with the Securities and Exchange
Commission on October 15, 1997 by UCI Medical Affiliates, Inc., a Delaware
corporation (the "Company"), and is filed to include the financial statements
required by Item 7 of Form 8-K.
Item 7. Financial Statements and Exhibits
a) Financial Statements of Business Acquired
The financial statements for Progressive Therapy Services,
P.A., the business acquired by the wholly-owned subsidiary of
the Company, are included in this report beginning on page
number three (3).
b) Pro Forma Financial Information
The pro forma financial information for Progressive Therapy
Services, P.A., the business acquired by the wholly-owned
subsidiary of the Company, is included in this report
following the financial information herein in response to Item
7(a) above.
c) Exhibits
The following exhibit is incorporated by reference to the
exhibit of the same number filed with the Company's Form 8-K
filed on October 15, 1997.
Exhibit 2.1 - Asset Purchase Agreement and Plan of
Reorganization (the "Agreement") executed on October
8, 1997, to be effective October 1, 1997, by, between
and among UCI Medical Affiliates, Inc., a Delaware
corporation ("UCI"); UCI Medical Affiliates of South
Carolina, Inc., a South Carolina corporation and
wholly-owned subsidiary of UCI ("UCI of SC"),
Doctor's Care, P.A., a South Carolina professional
corporation ("Doctor's Care"); Progressive Therapy
Services, P.A., a South Carolina professional
corporation ("Progressive"); Bar-Ed, Professional
Corporation, a South Carolina professional
corporation ("Bar-Ed"); Barry E. Fitch, PT ("Fitch");
H. Edward Wimberly, PT ("Wimberly"); Walter Kris
Merschat, OTR/L ("Merschat"); and Michael B. Norton,
DC ("Norton").
Report on Audits of the Financial Statements of
Progressive Therapy Services, P.A.
as of December 31, 1996 and 1995
Contents
Page
Report of Independent Accountants.............................................5
Progressive Therapy Services, P.A. Financial Statements
as of December 31, 1996 and 1995......................................6-13
UCI Medical Affiliates, Inc. Pro Forma Combining Financial Statements
Combining Balance Sheet at September 30, 1996...........................14
Notes to Combining Balance Sheet........................................15
Combining Statement of Operations and Accumulated Deficit
for year ended September 30, 1996....................................16
Notes to Combining Statement of Operations and Accumulated Deficit......17
UCI Medical Affiliates, Inc. Pro Forma Combining Financial Statements
Combining Balance Sheet at June 30, 1997................................18
Notes to Combining Balance Sheet........................................19
Combining Statement of Operations and Accumulated Deficit
for the nine months ended June 30, 1997............................20
Notes to Combining Statement of Operations and Accumulated Deficit......21
Report of Independent Accountants
Board of Directors
UCI Medical Affiliates, Inc.
We have audited the accompanying balance sheets of Progressive Therapy Services,
P.A. ("Progressive") as of December 31, 1996 and 1995 and the related statements
of operations, changes in stockholders' equity, and cash flows for the years
then ended. These financial statements are the responsibility of the
Progressive'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 Progressive Therapy Services,
P.A. as of December 31, 1996 and 1995, and the results of its operations and its
cash flows for the years then ended in conformity with generally accepted
accounting principles.
The financial statements have been prepared solely from the accounts of
Progressive Therapy Services, P.A. and do not include the personal accounts of
the stockholders or those of any other operations in which they may be engaged.
Columbia, South Carolina
December 5, 1997
ORIGINAL SIGNED OPINION ON SCOTT, HOLLOWAY & MCELVEEN, LLP
LETTERHEAD IS ON FILE IN THE CORPORATE OFFICE OF UCI
Progressive Therapy Services, P.A.
Balance Sheets
December 31,
1996 1995
------------------- -------------------
Assets
Current assets:
Cash and cash equivalents $ 11,728 $ 5,370
Accounts receivable, net 147,658 115,534
------------------- -------------------
Total current assets 159,386 120,904
------------------- -------------------
Property and equipment, net 354,225 234,646
Other assets 30,247 25,220
------------------- -------------------
384,472 259,866
------------------- -------------------
Total assets $ 543,858 $ 380,770
=================== ===================
Liabilities and Stockholders' Equity Current liabilities:
Accounts payable and accrued expenses $ 33,566 $ 25,435
Line of credit payable 20,000 -
Current maturities of capital leases 28,372 3,082
Current maturities of long-term debt 31,293 23,289
------------------- -------------------
Total current liabilities 113,231 51,806
Capital leases payable, net of
current portion 104,573 15,075
Long-term debt, net of current portion 225,598 166,891
------------------- -------------------
Total liabilities 443,402 233,772
------------------- -------------------
Stockholders' equity
Capital stock, $1 par value; 100,000 shares authorized;
400 shares issued and outstanding 400 400
Additional paid-in-capital 19,491 9,600
Retained earnings 80,565 136,998
------------------- -------------------
Stockholders' equity 100,456 146,998
------------------- -------------------
Total liabilities and
stockholders' equity $ 543,858 $ 380,770
=================== ===================
The accompanying notes are an integral part of
these financial statements.
Progressive Therapy Services, P.A.
Statements of Operations
for the years ended December 31,
1996 1995
------------------ ------------------
Net medical revenue $ 964,405 $ 609,966
Operating costs 792,387 459,906
------------------ ------------------
Operating margin 172,018 150,060
Depreciation and amortization 48,847 36,708
General and administrative expenses 122,562 79,170
------------------ ------------------
Income from operations 609 34,182
Interest expense 30,414 17,622
------------------ ------------------
Net (loss) income $ (29,805) $ 16,560
================== ==================
The accompanying notes are an integral part of
these financial statements.
Progressive Therapy Services, P.A.
Statements of Changes in Stockholders' Equity
for the years ended December 31, 1996 and 1995
Additional Total
Capital Paid in Retained Stockholders'
Stock Capital Earnings Equity
-------------- --------------- -------------- -------------------
Balance, January 1, 1995 $ 400 $ 9,600 $ 120,438 $ 130,438
Net income - - 16,560 16,560
-------------- --------------- -------------- -------------------
Balance, December 31, 1995 400 9,600 136,998 146,998
Bar-Ed capital contribution - 9,891 - 9,891
Distributions to shareholders - - (26,628) (26,628)
Net loss - - (29,805) (29,805)
-------------- --------------- -------------- -------------------
Balance, December 31, 1996 $ 400 $ 19,491 $ 80,565 $ 100,456
============== =============== ============== ===================
The accompanying notes are an integral part of
these financial statements.
Progressive Therapy Services, P.A.
Statements of Cash Flows
for the years ended December 31,
1996 1995
------------------ ------------------
Operating activities:
Net (loss) income $ (29,805) $ 16,560
Adjustments to reconcile net (loss) income to cash (used)
provided by operating activities:
Depreciation and amortization 48,847 36,708
(Increase) decrease in cash surrender value of life
insurance (7,791) 2,732
Decrease (increase) in other assets 2,764 (11,671)
Changes in operating assets and liabilities:
Accounts receivable (32,124) (17,752)
Accounts payable and accrued expenses 8,131 12,115
------------------ ------------------
Cash (used) provided by operating activities (9,978) 38,692
------------------ ------------------
Investing activities:
Purchases of property and equipment (52,785) (4,655)
Proceeds from sale of property and equipment 3,500 -
------------------ ------------------
------------------ ------------------
Cash used by investing activities (49,285) (4,655)
------------------ ------------------
Financing activities:
Net borrowings under line of credit agreement 20,000 -
Capital investment in Bar-Ed Corporation 9,891 -
Repayments on capital leases (4,353) (1,624)
Proceeds from borrowings on long-term debt 90,000 -
Repayments on long-term debt (23,289) (27,669)
Distributions to shareholders (26,628) -
------------------ ------------------
Cash provided (used) by financing activities 65,621 (29,293)
------------------ ------------------
Net increase in cash and cash equivalents 6,358 4,744
Cash and cash equivalents, beginning of year 5,370 626
------------------ ------------------
Cash and cash equivalents, end of year $ 11,728 $ 5,370
================== ==================
Supplemental cash flow information:
Cash paid for interest $ 30,414 $ 17,622
============== ==================
The accompanying notes are an integral part of
these financial statements.
Progressive Therapy Services, P.A.
Notes to Financial Statements
Note 1. Significant Accounting Policies
Organization -Progressive Therapy Services, P.A. and its affiliate, Bar-Ed,
Professional Corporation, (collectively referred to as "Progressive"), own and
operate a physical therapy practice at three locations in metropolitan Columbia,
South Carolina, and at one location in North Augusta, South Carolina.
The financial statements have been prepared solely from the accounts of
Progressive Therapy Services, P.A. and its affiliate, Bar-Ed, Professional
Corporation, and do not include the personal accounts of the stockholders or
those of any other activities in which they may be engaged. The accompanying
financial statements present the combined assets, liabilities, equity and
operations of the two entities because they operate under common control. All
significant intercompany transactions and balances have been eliminated.
Management makes estimates that are a necessary part of the preparation of
financial statements. These estimates include the useful lives of equipment,
some of which is subject to technological obsolescence, and the net realizable
value of patient accounts receivable. At December 31, 1996, management is not
aware of any conditions that could significantly affect the estimates employed
in the preparation of the financial statements.
Accounts Receivable - Accounts receivable represents amounts due from patients,
employers and various third-party payors. Provisions for uncollectable amounts
are made based on management's estimates of future collectability and historical
payment percentages.
Property and Equipment - Property and equipment is reported at cost.
Depreciation for financial reporting purposes is computed using accelerated
methods for furniture and equipment and by the straight-line method for
buildings. Estimated useful lives range from five to seven years for equipment
and 31 years for buildings. Depreciation expense includes the amortization of
capital lease assets. Maintenance, repairs and the cost of minor equipment are
charged to expense. Major renewals or betterments, which prolong the life of the
assets, are capitalized. Upon disposal of depreciable property, the asset
accounts are reduced by the related cost and accumulated depreciation. The
resulting gains and losses are reflected in the statements of operations.
Income Taxes - Progressive has elected S Corporation status as is provided by
the Internal Revenue Code. Under this election, the revenues and expenses are
reported on the personal income tax returns of the shareholders. Accordingly,
the accompanying financial statements have no provision for income tax expense.
Cash Equivalents - Progressive considers all short-term debt instruments with a
maturity of three months or less at the date of acquisition to be cash
equivalents.
Supplemental disclosure of non-cash financing and investing activities: During
1996 and 1995, Progressive placed into service certain medical equipment and
furniture totaling $119,141 and $19,791, respectively, acquired under capital
leases.
Fair Value of Financial Investments - The fair value of accounts receivable and
accrued expenses payable are estimated by management to approximate their
respective carrying values. All significant long-term borrowings are under
variable rate terms. Accordingly, management estimates the fair value of
long-term debt approximates it carrying value.
Note 2. Description of Leasing Arrangements
Progressive leases certain medical equipment under capital leases expiring on
various dates through August 2001. At the end of the lease terms, Progressive is
generally transferred title to the leased equipment. In some cases, the payment
of a fee representing residual value is required.
Included in property and equipment are the following assets held under capital
leases:
1996 1995
------------------- ------------------
Office and medical equipment $ 138,922 $ 19,781
Less, accumulated amortization 38,829 3,956
------------------- ------------------
$ 100,093 $ 15,825
=================== ==================
The following is a schedule by years of the future minimum lease payments under
capital leases together with the present value of the net minimum lease payments
as of December 31, 1996.
1997 $ 48,515
1998 51,493
1999 45,502
2000 24,914
2001 9,984
------------------
Total minimum lease payments 180,408
Less amounts representing interest 47,463
-------------------
Present value of minimum lease payments 132,945
Less current portion of lease obligations 28,372
-------------------
Capital lease obligations $ 104,573
===================
Note 3. Property and Equipment
At December 31, 1996 and 1995, property and equipment consisted of the
following:
1996 1995
------------------ ------------------
Land $ 65,000 $ 68,500
Building 125,000 125,000
Office and medical equipment 223,552 82,563
Furniture and fixtures 32,483 2,955
Vehicles 93,960 93,960
----------------- ------------------
539,995 372,978
Accumulated depreciation 185,770 138,332
----------------- ------------------
Furniture and equipment, net $ 354,225 $ 234,646
================= ==================
Note 4. Long-term Debt
Progressive's long-term debt at December 31, 1996 and 1995 follows:
1996 1995
----------------- ------------------
Note payable to a stockholder in monthly
payments of $226, including principal
and interest at 6.5%, maturing June,
1998, unsecured $ 3,867 $ 6,244
Note payable to an individual in monthly
payments of $389, including principal and
interest at 8.0%, maturing April, 2000,
unsecured 13,641 17,075
Variousequipment notes payable to banks
bearing interest at rates ranging from
6.5% to7.7%, maturing August, 1998,
collateralized by vehicles 18,043 29,092
Mortgage payable to a bank in monthly
payments of $1,519 bearing interest at
8.75%, maturing May, 2008,
collateralized by real estate 131,340 137,769
Note payable to a bank in monthly payments
of $535, bearing interest at 9.7%,
maturing December, 1998, secured by
business assets 40,000 -
----------------- ------------------
Note payable to a bank in monthly payments
of $804, bearing interest at 10.1%,
maturing October, 2003, secured by
business assets 50,000 -
----------------- ------------------
256,891 190,180
Less, current portion long-term debt 31,293 23,289
----------------- ------------------
$ 225,598 $ 166,891
================= ==================
Certain of Progressive's borrowings are personally guaranteed by its principal
stockholders.
The aggregate maturities of long-term debt as of December 31, 1996 are as
follows:
Maturing during the year ended December 31,
1997 $ 31,293
1998 29,705
1999 53,572
2000 17,767
2001 and thereafter 124,554
------------------
$ 256,891
==================
Note 5. Related Party Transactions
The stockholders participate in the medical activities of Progressive. All
payments for services and benefits to the stockholders are recorded as salaries
and contract services and are included in cost of operations in the financial
statements. For the periods ended December 31, 1996 and 1995, amounts paid to
the stockholders totalled approximately $37,000 and $35,000, respectively.
Note 6. Concentration of Credit Risk
In the normal course of providing health care services, Progressive extends
credit to patients in its service area without requiring collateral. Each
individual's ability to pay balances due Progressive is assessed and reserves
are established to provide for management's estimate of uncollectable balances.
Future revenues of Progressive are largely dependent on third-party payors and
include Medicare and private insurance companies. The amount of loss Progressive
would incur in the event of non-payment by the counter party is the amount of
the patient billing.
Note 7. Contingencies
At December 31, 1996, management and its legal counsel are not aware of any
pending or threatened litigation, or unasserted claims against Progressive that
could result in losses, if any, that would be material to the financial
statements.
Note 8. Subsequent Event
On October 8, 1997, UCI Medical Affiliates of South Carolina, Inc. ("UCI")
acquired the accounts receivable, certain office and medical equipment and
substantially all of Progressive's intangible assets (including patient lists
and goodwill) for $856,756 consisting of $723,811 in restricted common stock of
UCI and the assumption of liabilities totalling $132,945. UCI entered into an
agreement with a stockholder to lease the Progressive office space for $13,600
annually. As a condition of the transaction, each of the stockholders entered
into a five-year physician services agreement to provide, on average, forty
hours per week of physician services.
UCI Medical Affiliates, Inc.
Pro Forma Combining Balance Sheet
September 30, 1996
(Unaudited)
The following pro forma combining balance sheet is based on the individual
balance sheets of UCI Medical Affiliates, Inc. as of September 30, 1996 per the
Company's Annual Report and Progressive Therapy Services, P.A. as of December
31, 1996 appearing in Item 7(a) of this filing. The information has been
prepared to reflect the acquisition by UCI Medical Affiliates, Inc. of
Progressive Therapy Services, P.A. after giving effect to the pro forma
adjustments described in Note 1. This statement should be read in conjunction
with each entity's financial statements and footnotes.
UCI Medical Progressive
Affiliates, Therapy
Inc. Services, Pro Forma Pro Forma
P.A. Adjustments Combined
-------------- -------------- --------------- ---------------
Assets
Cash and cash equivalents $ 237,684 $ 11,728 $ (11,728) (a.) $ 237,684
Accounts receivable, net 4,187,394 147,658 -- 4,335,052
Medical supplies inventory 407,617 -- -- 407,617
Deferred taxes 197,056 -- -- 197,056
Prepaids and other assets 441,384 -- -- 441,384
-------------- -------------- --------------- ---------------
Total current assets 5,471,135 159,386 (11,728) 5,618,793
Property, plant and equipment, net
3,300,048 354,225 (215,735) (a.) 3,438,538
Deferred taxes 855,126 -- -- 855,126
Goodwill 5,828,963 -- 570,608 (a.)
(38,041) (b.) 6,361,530
Other assets 277,422 30,247 (30,247) (a.) 277,422
============== ============== =============== ===============
Total assets $ 15,732,694 $ 543,858 $ 274,857 $ 16,551,409
============== ============== =============== ===============
Liabilities and Capital
Current portion - long-term debt $ 913,749 $ 79,665 $ (51,293) (a.) $ 942,121
Accounts payable 1,391,858 33,566 (33,566) (a.) 1,391,858
Accrued payroll 750,745 -- -- 750,745
Other accrued liabilities 394,635 -- 166,400 (c.)
13,600 (d.) 574,635
-------------- -------------- --------------- ---------------
Total current 3,450,987 113,231 (84,859) 3,659,359
liabilities
Deferred taxes -- -- -- --
Long-term debt, net of current 4,459,484 330,171 (225,598) (a.) 4,564,057
-------------- -------------- --------------- ---------------
Total liabilities 7,910,471 443,402 (310,457) 8,223,416
-------------- -------------- --------------- ---------------
Common stock 240,390 400 (400) (a.)
13,466 (a.) 253,856
Paid-in capital 13,732,393 19,491 (19,491) (a.)
710,345 (a.) 14,442,738
Accumulated earnings (deficit) (6,150,560) 80,565 (80,565) (a.)
(218,041) (e.) (6,368,601)
-------------- -------------- --------------- ---------------
Total capital 7,822,223 100,456 405,314 8,327,993
============== ============== =============== ===============
Total liabilities and capital $ 15,732,694 $ 543,858 $ 274,857 $ 16,551,409
============== ============== =============== ===============
UCI Medical Affiliates, Inc.
Notes to Pro Forma Combining Balance Sheet
September 30, 1996
(Unaudited)
1. The pro forma combining balance sheet has been prepared to reflect the
acquisition of Progressive Therapy Services, P.A. and Bar-Ed Professional
Corporation (collectively "Progressive"), by UCI Medical Affiliates, Inc. for an
aggregate price of $856,756. The purchase occurred on October 8, 1997. The
combining balance sheet reflects the balances of UCI at September 30, 1996 and
Progressive at December 31, 1996. Pro forma adjustments are made to reflect:
(a.)The assets acquired consisted of: The purchase price consisted of:
$147,658 Accounts receivable $ 13,466 Common stock
138,490 Furniture, equipment 710,345 Additional paid-in-capital
570,608 Goodwill 132,945 Liabilities assumed
------- -------
$856,756 $856,756
======= =======
Issuance of 269,325 shares of restricted common stock valued at $723,811
at estimated per share value of $2.69.
Certain deposits ($11,728), certain furniture and equipment ($215,735),
and other assets ($30,247) were not acquired. Accounts payable ($33,566),
long-term debt ($276,891), and prior stockholders' equity ($100,456) were
not assumed.
(b.) Excess of acquisition cost over the fair values of net assets acquired
(goodwill) less one year's amortization. ($570,608 goodwill less $38,041
amortization)
(c.) Net increase in fees for physician services is $166,400 annually,
based on the physician's service agreement.
(d.) Net increase in rental expense for office facilities is $13,600
annually, based on the rental agreements executed between the parties.
(e.) Effects of pro forma adjustments on statement of operations, closed
into pro forma retained earnings.
UCI Medical Affiliates, Inc.
Pro Forma Combining Statement of
Operations and Accumulated
Deficit for the year ended
September 30, 1996
(Unaudited)
The following pro forma combining statement is based on the individual
statements of operations and accumulated deficit of UCI Medical Affiliates, Inc.
as of September 30, 1996 per the Company's Annual Report and Progressive Therapy
Services, P.A. as of December 31, 1996 appearing in item 7(a) of this filing.
The information has been prepared to reflect the acquisition by UCI Medical
Affiliates, Inc. of Progressive Therapy Services, P.A. after giving effect to
the pro forma adjustments described in Note 1. This statement should be read in
conjunction with each entity's financial statements and footnotes.
Progressive
Therapy
UCI Medical Services, Pro Forma Pro Forma
Affiliates, Inc. P.A. Adjustments Combined
---------------- -------------- --------------- -----------------
Revenue $ 23,254,351 $ 964,405 $ -- $ 24,218,756
Operating costs 21,525,421 792,387 166,400 (a.)
13,600 (c.) 22,497,808
---------------- -------------- --------------- -----------------
Operating margin 1,728,930 172,018 (180,000) 1,720,948
General and administrative
expenses 148,637 122,562 -- 271,199
Depreciation and amortization 961,115 48,847 38,041 (b.) 1,048,003
---------------- -------------- --------------- -----------------
Income from operations 619,178 609 (218,041) 401,746
Interest expense, net (582,937) (30,414) -- (613,351)
Gain on equipment 2,105 -- -- 2,105
---------------- -------------- --------------- -----------------
Income before income tax 38,346 (29,805) (218,041) (209,500)
Income tax benefit 427,733 -- -- 427,733
---------------- -------------- --------------- -----------------
Net (loss) income 466,079 (29,805) (218,041) 218,233
Accumulated deficit - beginning
of year (6,616,639) 136,998 (80,565) (6,560,206)
Distribution to stockholders -- (26,628) -- (26,628)
---------------- -------------- --------------- -----------------
Accumulated deficit - end of
year $ (6,150,560) $ 80,565 (298,606) $ (6,368,601)
================ ============== =============== =================
Earnings per common and common equivalent share:
Net income $ .11 (d.) -- $ .05
================ ============== =============== =================
Weighted average shares of
common stock outstanding 4,294,137 (d.) -- 4,563,462
================ ============== =============== =================
UCI Medical Affiliates, Inc.
Note to Pro Forma Combining
Statement of Operations and
Accumulated Deficit for the
year ended September 30, 1996
(Unaudited)
1. The above statement gives effect to the following pro forma adjustments
necessary to reflect the acquisition outlined in Note 1. to the pro forma
balance sheet:
(a.) Net change in physician salary. Does not include any potential fees or
productivity or other incentives provided for in employment contracts between
the stockholders of Progressive Therapy Services P.A. and UCI Medical
Affiliates, Inc.
(b.) Addition for amortization of goodwill on a straight line basis over 15
years.
(c.) Net increase in rental expense for office facilities based on rental
agreements executed between the parties.
(d.) Not applicable; Progressive Therapy Services, P.A. was not required
to, and did not, compute earnings per share.
UCI Medical Affiliates, Inc.
Pro Forma Combining Balance Sheet
June 30, 1997
(Unaudited)
The following pro forma combining balance sheet is based on the individual
balance sheets of UCI Medical Affiliates, Inc. as of June 30, 1997 per the
Company's Form 10QSB and Progressive Therapy Services, P.A. as of September 30,
1997. The information has been prepared to reflect the acquisition by UCI
Medical Affiliates, Inc. of Progressive Therapy Services, P.A. after giving
effect to the pro forma adjustments described in Note 1. This statement should
be read in conjunction with each entity's financial statements and footnotes.
Progressive
UCI Medical Therapy Pro Forma Pro Forma
Affiliates, Inc. Services, P.A. Adjustments Combined
----------------- ----------------- ------------------ -----------------
Assets
Cash and cash equivalents $ 119,538 $ 27,079 $ (27,079) (a.) $ 119,538
Accounts receivable - net 5,743,707 90,311 -- 5,834,018
Medical supplies inventory 379,647 -- -- 379,647
Deferred taxes 197,056 -- -- 197,056
Prepaids and other assets 445,636 -- -- 445,636
----------------- ----------------- ------------------ -----------------
Total current assets 6,885,584 117,390 (27,079) 6,975,895
Property, plant and
equipment, net 3,433,218 309,217 (215,735) (a.) 3,526,700
Deferred taxes 1,380,126 -- -- 1,380,126
Goodwill 5,720,394 -- 672,963 (a.)
(33,648) (b.) 6,359,709
Other assets 268,908 29,780 (29,780) (a.) 268,908
----------------- ----------------- ------------------ -----------------
Total assets $ 17,688,230 $ 456,387 $ 366,721 $ 18,511,338
================= ================= ================== =================
Liabilities and Capital
Current portion - long-term
debt $ 854,903 $ 68,257 $ -- $ 923,160
Accounts payable 1,627,827 9,658 (9,658) (a.) 1,627,827
Accrued payroll 452,995 -- -- 452,995
Other accrued liabilities 330,679 -- 124,800 (c.)
10,200 (d.) 465,679
----------------- ----------------- ------------------ -----------------
Total current 3,266,404 77,915 125,342 3,469,661
liabilities
Deferred taxes -- -- -- --
Long-term debt, net of current 5,659,476 340,821 (276,133) (a.) 5,724,164
----------------- ----------------- ------------------ -----------------
Total liabilities 8,925,880 418,736 (150,791) 9,193,825
----------------- ----------------- ------------------ -----------------
Common stock 260,390 400 (400) (a.)
13,466 (a.) 273,856
Paid-in capital 14,312,393 19,491 (19,491) (a.)
710,345 (a.) 15,022,738
Accumulated earnings (deficit) (5,810,433) 17,760 (17,760) (a.)
(168,648) (e.) (5,979,081)
----------------- ----------------- ------------------ -----------------
Total capital 8,762,350 37,651 517,512 9,317,513
----------------- ----------------- ------------------ -----------------
Total liabilities
and capital $ 17,688,230 $ 456,387 $ 366,721 $ 18,511,338
================= ================= ================== =================
UCI Medical Affiliates, Inc.
Notes to Pro Forma Combining Balance Sheet
June 30, 1997
(Unaudited)
1. The pro forma combining balance sheet has been prepared to reflect the
acquisition of Progressive Therapy Services, P.A. and Bar-Ed Professional
Corporation (collectively "Progressive"), by UCI Medical Affiliates, Inc. for an
aggregate price of $856,756. The purchase occurred on October 8, 1997. The
combining balance sheet reflects the balances of UCI at June 30, 1997 and
Progressive at September 30, 1997. Pro forma adjustments are made to reflect:
(a.)The assets acquired consisted of: The purchase price consisted of:
$ 90,311 Accounts receivable $ 13,466 Common stock
93,482 Furniture, equipment 710,345 Additional paid-in-capital
672,963 Goodwill 132,945 Liabilities assumed
------- -------
$856,756 $856,756
======= =======
Issuance of 269,325 shares of restricted common stock valued at $723,811
at estimated per share value of $2.69.
Certain deposits ($27,079), certain furniture and equipment ($215,735),
and other assets ($29,780) were not acquired. Accounts payable ($9,658),
long-term debt ($276,133), and prior stockholders' equity ($37,651) were
not assumed.
(b.) Excess of acquisition cost over the fair values of net assets acquired
(goodwill) less nine month's amortization. ($672,963 goodwill less $33,648
amortization)
(c.) Net increase in fee for physician services of $124,800 for nine months
based on service agreement for nine months recorded as an accrued payable.
(d.) Net increase in rental expense for office expense is $10,200 for nine
months, based on the rental agreements executed between the parties.
(e.) Effects of pro forma adjustments on statement of operations, closed
into pro forma retained earnings.
UCI Medical Affiliates, Inc.
Pro Forma Statement of Operations and Accumulated Deficit
for the nine months ended June 30, 1997
(Unaudited)
The following pro forma combining statement is based on the individual
statements of operations and accumulated deficit of UCI Medical Affiliates, Inc.
as of June 30, 1997 per the Company's Form 10QSB and Progressive Therapy
Services, P.A. as of September 30, 1997. The information has been prepared to
reflect the acquisition by UCI Medical Affiliates, Inc. of Progressive Therapy
Services, P.A. after giving effect to the pro forma adjustments described in
Note 1. This statement should be read in conjunction with each entity's
financial statements and footnotes.
UCI Progressive
Medical Therapy Services, Pro Forma Pro Forma
Affiliates, Inc. P.A. Adjustments Combined
------------------ ------------------- ------------------ -----------------
Revenue $ 20,299,676 $ 702,524 $ -- $ 21,002,200
Operating costs 18,876,302 636,054 124,800 (a.)
10,200 (c.) 19,647,356
------------------ ------------------- ------------------ -----------------
Operating margin 1,423,374 66,470 (135,000) 1,354,844
General and administrative
expenses 127,881 49,862 -- 177,743
Depreciation and amortization 892,372 49,040 33,648 (b.) 975,060
------------------ ------------------- ------------------ -----------------
Income from operations 403,121 (32,432) (168,648) 202,041
Interest expense, net (570,951) (30,373) -- (601,324)
Gain on equipment 8,809 -- -- 8,809
------------------ ------------------- ------------------ -----------------
Income (loss) before income tax
(159,021) (62,805) (168,648) (390,474)
Income tax benefit 499,148 -- -- 499,148
------------------ ------------------- ------------------ -----------------
Net income 340,127 (62,805) (168,648) 108,674
Accumulated deficit -
beginning of period (6,150,560) 80,565 (17,760) (6,087,755)
------------------ ------------------- ------------------ -----------------
Accumulated deficit - end of
period $ (5,810,433) $ 17,760 (186,408) $ (5,979,081)
================== =================== ================== =================
(f)
Earnings per common and common equivalent share:
Net income $ .07 (d.) -- $ .02
================== =================== ================== =================
(a)
Weighted average shares of (a)
common stock outstanding 4,819,527 (d.) -- 5,088,852
================== =================== ================== =================
UCI Medical Affiliates, Inc.
Note to Pro Forma Combining Statement
of Operations and Accumulated
Deficit for the nine months
ended June 30, 1997
(Unaudited)
1. The above statement gives effect to the following pro forma adjustments
necessary to reflect the acquisition outlined in Note 1. to the pro forma
balance sheet:
(a.) Net change in physician salary. Does not include any potential fees or
productivity or other incentives provided for in employment contracts between
the stockholders of Progressive Therapy Services, P.A. and UCI Medical
Affiliates, Inc.
(b.) Addition for nine months amortization of goodwill on a straight line
basis over 15 years.
(c.) Net increase in rental expense for office facilities for nine months based
on rental agreements executed between the parties.
(d.) Not applicable; Progressive Therapy Services, P.A. was not required
to, and did not, compute earnings per share.
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.
UCI Medical Affiliates, Inc.
(Registrant)
/s/ Marion F. McFarland, III, M.D. /s/ Jerry F. Wells, Jr.
Marion F. McFarland, III, M.D. Jerry F. Wells, Jr., CPA
President, Chief Executive Officer and Executive Vice President of
Chairman of the Board Finance and Chief Financial Officer
Date: December 11, 1997