<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K/A
AMENDMENT NO. 1 TO FORM 8-K
CURRENT REPORT PURSUANT
TO SECTION 13 or 15(d) OF THE
SECURITIES AND EXCHANGE ACT OF 1934
DATE OF REPORT (DATE OF EARLIEST EVENT REPORTED) AUGUST 1, 1996
---------------------
UNISON HEALTHCARE CORPORATION
- -------------------------------------------------------------------------------
(Exact Name of Registrant as Specified in Its Charter)
DELAWARE
- --------------------------------------------------------------------------------
(State or Other Jurisdiction of Incorporation)
0-27374 86-0684011
- --------------------------------------- --------------------------------------
(Commission File Number) (I.R.S. Employer Identification No.)
7272 EAST INDIAN SCHOOL ROAD, SUITE 214, SCOTTSDALE, ARIZONA 85251
- --------------------------------------------------------------------------------
(Address of Principal Executives Offices) (Zip Code)
(602) 423-1954
- --------------------------------------------------------------------------------
(Registrant's Telephone Number, Including Area Code)
<PAGE> 2
Unison HealthCare Corporation, a Delaware corporation, ("Unison"),
hereby amends Item 7 of its Report on Form 8-K dated August 1, 1996.
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS
(a) Financial Statements.
2
<PAGE> 3
REPORT OF INDEPENDENT AUDITORS
The Board of Directors
Unison HealthCare Corporation
We have audited the accompanying combined balance sheets of the Franciscan
Health Care Centers at Enumclaw and Walla Walla (the Companies) as of June 30,
1996, and the related combined statements of operations and changes in net
assets, and cash flows for each of the three years in the period ended June 30,
1996. Our audits also included the financial statement schedule listed in the
Index at Item 14(a). These financial statements are the responsibility of the
Companies' management. Our responsibility is to express an opinion on these
financial statements and schedule 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 combined financial position of the Companies at
June 30, 1996, and the combined results of their operations and their cash flows
for each of the three years in the period ended June 30, 1996 in conformity with
generally accepted accounting principles. Also, in our opinion, the related
financial statement schedule, when considered in relation to the basic financial
statements taken as a whole, presents fairly in all material respects the
information set forth therein.
ERNST & YOUNG LLP
Phoenix, Arizona
October 4, 1996
3
<PAGE> 4
FRANCISCAN HEALTH CARE CENTERS AT
ENUMCLAW AND WALLA WALLA
COMBINED BALANCE SHEETS
<TABLE>
<CAPTION>
JUNE 30,
-------------------------
1995 1996
---------- ----------
<S> <C> <C>
ASSETS
Current assets:
Cash.............................................................. $ 1,473 $ 3,358
Accounts receivable, net of allowance for doubtful accounts of
$37,000 in 1995 and $140,000 in 1996........................... 633,155 915,374
Prepaids and other................................................ 22,545 66,019
---------- ----------
Total current assets................................................ 657,173 984,751
Property and equipment, net....................................... 4,521,122 4,578,773
---------- ----------
Total assets........................................................ $5,178,295 $5,563,524
========== ==========
LIABILITIES AND NET ASSETS
Current liabilities:
Accounts payable.................................................. $ 117,379 645,309
Accrued expenses.................................................. 417,139 413,360
---------- ----------
Total current liabilities........................................... 534,518 1,058,669
Net assets.......................................................... 4,643,777 4,504,855
---------- ----------
Total liabilities and net assets.................................... $5,178,295 $5,563,524
========== ==========
</TABLE>
See accompanying notes.
4
<PAGE> 5
FRANCISCAN HEALTH CARE CENTERS AT
ENUMCLAW AND WALLA WALLA
COMBINED STATEMENTS OF OPERATIONS AND
CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
YEAR ENDED JUNE 30,
---------------------------------------- ONE MONTH ENDED
1994 1995 1996 JULY 31, 1996
---------- ---------- ---------- ---------------
(UNAUDITED)
<S> <C> <C> <C> <C>
Changes in unrestricted net assets:
Revenues:
Net patient......................... $5,367,940 $5,571,282 $4,991,628 $ 444,832
Other............................... 3,221 1,026 584 11,819
---------- ---------- ---------- ----------
Total................................. 5,371,161 5,572,308 4,992,212 456,651
Expenses:
Wages and related................... 4,158,494 4,576,574 4,107,961 347,881
Other............................... 1,412,513 1,424,319 1,554,089 168,996
Depreciation........................ 276,853 240,153 268,934 10,327
---------- ---------- ---------- ----------
Total................................. 5,847,860 6,241,046 5,930,984 527,204
---------- ---------- ---------- ----------
Net loss.............................. $ (476,699) $ (668,738) $ (938,772) $ (70,553)
========== ========== ========== ==========
</TABLE>
See accompanying notes.
5
<PAGE> 6
FRANCISCAN HEALTH CARE CENTERS AT
ENUMCLAW AND WALLA WALLA
COMBINED STATEMENTS OF OPERATIONS AND
CHANGES IN NET ASSETS -- (CONTINUED)
<TABLE>
<CAPTION>
YEAR ENDED JUNE 30,
----------------------------------------
1994 1995 1996
---------- ---------- ----------
<S> <C> <C> <C>
Net loss............................................... $ (476,699) $ (668,738) $ (938,772)
Net transfers from affiliate........................... 89,993 825,440 799,850
---------- ---------- ----------
Total changes in unrestricted net assets............... (386,706) 156,702 (138,922)
Net assets at beginning of period...................... 4,873,781 4,487,075 4,643,777
---------- ---------- ----------
Net assets at end of period............................ $4,487,075 $4,643,777 $4,504,855
========== ========== ==========
</TABLE>
See accompanying notes.
6
<PAGE> 7
FRANCISCAN HEALTH CARE CENTERS AT
ENUMCLAW AND WALLA WALLA
COMBINED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
YEARS ENDED JUNE 30, ONE MONTH
------------------------------------- ENDED
1994 1995 1996 JULY 31, 1996
--------- --------- --------- -------------
(UNAUDITED)
<S> <C> <C> <C> <C>
OPERATING ACTIVITIES
Net loss................................... $(476,699) $(668,738) $(938,772) $ (70,553)
Adjustments to reconcile net loss to net
cash provided by (used in) operating
activities:
Depreciation............................. 276,853 240,153 268,934 10,327
Provision for doubtful accounts.......... 5,619 20,523 104,502 1,759
Changes in operating assets and
liabilities:
Accounts receivable................... 262,725 (404,232) (386,721) (382,367)
Prepaids and other.................... (4,980) 53,380 (43,474) 53,031
Accounts payable and accrued
expenses............................ 5,884 (2,967) 524,251 (568,814)
--------- --------- --------- -------------
Net cash provided by (used in) operating
activities............................... 69,402 (761,881) (471,280) (956,617)
INVESTING ACTIVITIES
Purchases of property and equipment........ (158,892) (63,288) (326,685) --
--------- --------- --------- -------------
Net cash used in investing activities...... (158,892) (63,288) (326,685) --
FINANCING ACTIVITIES
Net transfers from affiliates.............. 89,993 825,440 799,850 956,617
--------- --------- --------- -------------
Net cash provided by financing
activities............................... 89,993 825,440 799,850 956,617
--------- --------- --------- -------------
Net increase in cash....................... 503 271 1,885 --
Cash at beginning of period................ 699 1,202 1,473 3,358
--------- --------- --------- -------------
Cash at end of period...................... $ 1,202 $ 1,473 $ 3,358 $ 3,358
========= ========= ========= =========
</TABLE>
See accompanying notes.
7
<PAGE> 8
FRANCISCAN HEALTH CARE CENTERS AT
ENUMCLAW AND WALLA WALLA
NOTES TO COMBINED FINANCIAL STATEMENTS
JUNE 30, 1996
DESCRIPTION OF BUSINESS
Franciscan Health Care Center at Enumclaw (Enumclaw) is a 148 bed skilled
nursing facility located in Enumclaw, Washington. Franciscan Health Care Center
at Walla Walla (Walla Walla) is a 74 bed skilled nursing facility located in
Walla Walla, Washington. Unison HealthCare Corporation (Unison) began operating
Enumclaw and Walla Walla through the terms of an operating lease agreement
effective August 1996. Prior to August 1996, both Enumclaw and Walla Walla were
operating divisions of Franciscan ElderCare Corporation (FEC), a Delaware
not-for-profit corporation.
SIGNIFICANT ACCOUNTING POLICIES
Basis of Combination
The accompanying combined financial statements include the accounts of
Enumclaw and Walla Walla, (collectively referred to as the Companies).
Unaudited Interim Financial Information
The accompanying combined statement of operations and changes in net assets
for the one month interim period ended July 31, 1996 is unaudited. However, in
the opinion of the Companies' management, such statements include all
adjustments consisting only of normal recurring adjustments necessary for a fair
presentation of the combined results of operation and cash flows of the
Companies. The combined operating results for the interim period are not
necessarily indicative of the results of a full year.
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 amounts reported in the combined financial
statements and accompanying notes. Actual results could differ from those
estimates.
Net Patient Revenues
The Companies' revenues are derived primarily from providing long-term
health care services. Approximately 83, 77 and 78 percent of the Companies' net
patient revenues for the years ended June 30, 1996, 1995 and 1994, respectively,
were derived from Medicare and Medicaid assistance programs and approximately 71
and 87 percent of the Companies' net patient accounts receivable at June 30,
1996 and 1995, respectively, are due from such programs. These revenues are
reported at their estimated net realizable amounts and are subject to audit and
retroactive adjustments. Contractual adjustments resulting from agreements with
various organizations to provide services for amounts which differ from billed
charges, including services under Medicare and Medicaid, are recorded as
deductions from gross patient revenue. The collectibility of receivables from
Medicare and Medicaid are dependent upon the performance of these programs.
A provision for doubtful accounts is made when the related revenue is
recorded. Accounts, when determined to be uncollectible, are charged against the
allowance for doubtful accounts. Provisions for estimated third-party payor
settlements are provided in the period the related services are rendered and are
adjusted in the period of settlement.
The estimated third party payor settlements under the Medicare and Medicaid
programs are recorded in the period the related services are rendered and are
subject to audit and final settlement by the fiscal intermediary. Differences
between the net amounts accrued and subsequent settlement, if any, are recorded
in operations at the time the final settlement is determined.
8
<PAGE> 9
FRANCISCAN HEALTH CARE CENTERS AT
ENUMCLAW AND WALLA WALLA
NOTES TO COMBINED FINANCIAL STATEMENTS
JUNE 30, 1996
Property and Equipment
Property and equipment are stated at cost. Depreciation is computed using
the straight-line method over the respective estimated useful lives of the
respective assets. The Companies' property and equipment serves as collateral
with FEC's pooled financing bonds.
PROPERTY AND EQUIPMENT
Property and equipment consists of the following at June 30:
<TABLE>
<CAPTION>
JUNE 30,
-------------------------
1995 1996
---------- ----------
<S> <C> <C>
Building and improvements................................... $4,548,262 $4,573,135
Equipment................................................... 779,960 1,081,672
---------- ----------
5,328,222 5,654,807
---------- ----------
Less accumulated depreciation............................... 807,100 1,076,034
---------- ----------
$4,521,122 $4,578,773
========= =========
</TABLE>
RELATED PARTY TRANSACTIONS
The Companies represent two of several facilities operated as divisions of
FEC. FEC makes advances to its divisions for operating purposes and the
divisions forward cash receipts to FEC as part of FEC's centralized cash
management system. Consequently, the Companies' combined financial statements do
not include certain accounts, such as operating cash and debt. The results of
transactions between FEC and the Companies are reflected as net transfers from
affiliates in the accompanying combined statements of operations and changes in
net assets.
Prior to December 1, 1994, management services were provided to the
Companies by FEC. Management fees allocated from FEC totaled $283,000 for the
year ended June 30, 1994 and $23,000 for the five months ended November 30,
1994. From December 1, 1994 to June 30, 1996, management services were provided
to the Companies by Unison, based on a percentage of net patient revenue.
Management fees totaled $298,000 in 1996 and $182,000 in 1995, and are included
in other expenses. Management fee accrual totaled $26,252 at June 30, 1996 and
$16,493 at June 30, 1995.
LEASES
Future minimum lease payments for the Companies at June 30, 1996, by year
and in the aggregate, under noncancelable operating lease arrangements with
initial or remaining terms of one year or more consist of the following:
<TABLE>
<S> <C>
1997..................................................... $ 629,724
1998..................................................... 629,724
1999..................................................... 629,724
2000..................................................... 629,724
2001..................................................... 629,724
Thereafter............................................... 5,341,980
----------
$8,490,600
=========
</TABLE>
9
<PAGE> 10
FRANCISCAN HEALTH CARE CENTERS AT
ENUMCLAW AND WALLA WALLA
NOTES TO COMBINED FINANCIAL STATEMENTS
JUNE 30, 1996
INSURANCE
Health care companies are subject to medical malpractice, personal injury
and other liability claims that are customary risks inherent in their operations
and are generally covered by insurance. The Companies are subject to claims and
litigation for which FEC carries professional, general liability and other
insurance coverages. In the opinion of the Companies management, the outcome of
such claims and litigation will not have a material impact on the Companies'
combined financial position or results of operations.
SUBSEQUENT EVENT
In July 1996, FEC entered into a purchase agreement, pursuant to which
Monica R. Salusky and Walla Walla Partners, L.P. (the acquirers) purchased
certain accounts receivable, equipment, leasehold improvements and supply
inventory, and acquired FEC's rights under certain contracts of the Companies.
Beginning in August of 1996, Unison leased the Companies' skilled nursing
facilities from the acquirers. The lease agreements require that Unison be
responsible for management and operation of the Companies' facilities.
10
<PAGE> 11
(b) Pro Forma Financial Information.
UNISON UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL STATEMENTS
Unison HealthCare Corporation ("Unison") acquired the leasehold rights
to two skilled nursing facilities in the State of Washington, the Franciscan
Health Care Centers at Enumclaw and Walla Walla, on August 1, 1996. Unison
additionally has other pending acquisitions: (i) the acquisition of Signature
Health Care Corporation, four affiliated entities and RehabWest, Inc. (the
"Signature Acquisition"); and (ii) the acquisition of American Professional
Holding, Inc. ("Ampro") and Memphis Clinical Laboratory, Inc. ("Memphis" and
together with Ampro, "Ampro/Memphis") (the "Ampro/Memphis Acquisition").
Further, Unison is holding seven facilities for disposition (the
"Dispositions"), has completed other acquisitions since January 1, 1995 (the
"Completed Acquisitions") and anticipates placing $100.0 million of senior
notes (the "Senior Notes") in connection with the Signature Acquisition.
Information concerning Enumclaw and Walla Walla is within the "Other
Acquisitions" and "Pro Forma Adjustments" columns of the Unaudited Pro Forma
Condensed Combined Statement of Operations and the notes thereto.
The following Unaudited Pro Forma Condensed Combined Financial
Statements are presented assuming that the Signature Acquisition will be
accounted for as a purchase and the Ampro/Memphis Acquisition will be accounted
for as a poolings-of-interests. Accordingly, the Unaudited Pro Forma Condensed
Combined Financial Statements include the combined operations of Unison and
Ampro/Memphis for all periods presented. The Unaudited Pro Forma Condensed
Combined Statements of Operations for the six months ended June 30, 1996 and
1995 and the year ended December 31, 1995 have been prepared as if the
Dispositions, the Completed Acquisitions, the sale of the Senior Notes in the
assumed amount of $100.0 million and acquisition of Signature had been
consummated as of the first day of the period presented. The Unaudited Pro
Forma Condensed Combined Balance Sheet has been prepared as if all of the
aforementioned transactions had been consummated as of June 30, 1996.
The pro forma information is based on the historical statements of
operations of the acquired businesses giving effect to the placement of the
Senior Notes and the other assumptions and adjustments described in the
accompanying Notes to Unaudited Pro Forma Condensed Combined Financial
Statements.
The Unaudited Pro Forma Condensed Combined Financial Statements do not
purport to present the results of operations of Unison had the business
combinations taken place on the dates specified, nor are they necessarily
indicative of the results of operations that may be achieved in the future.
11
<PAGE> 12
UNISON HEALTHCARE CORPORATION
UNAUDITED PRO FORMA CONDENSED COMBINED BALANCE SHEET
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
<TABLE>
<CAPTION>
AS OF JUNE 30, 1996
-------------------------------------------------------------------------------------------
ADJUSTMENTS
FOR
PRO FORMA SENIOR PRO FORMA
UNISON SIGNATURE(a) AMPRO(b) ADJUSTMENTS PRO FORMA NOTES(f) AS ADJUSTED
------- ------------ -------- ----------- --------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents....... $ 847 $ 116 $ 30 $ -- $ 993 $ 20,383 $ 21,376
Accounts and notes receivable,
net........................... 22,152 8,223 2,149 -- 32,524 32,524
Other current assets............ 2,413 1,025 399 -- 3,837 -- 3,837
------- ------- ------ ------- -------- -------- --------
Total current assets.......... 25,412 9,364 2,578 -- 37,354 20,383 57,737
Lease operating rights and other
assets, net..................... 42,588 44,936 319 -- 87,843 4,500
94,093
1,750
Goodwill, net..................... 11,195 22,603 943 -- 34,741 -- 34,741
Property and equipment, net....... 5,548 19,221 657 -- 25,426 -- 25,426
------- ------- ------ ------- -------- -------- --------
Total assets.................. $84,743 $ 96,124 $4,497 -- $185,364 $ 26,633 $ 211,997
======= ======= ====== ======= ======== ======== ========
LIABILITIES AND STOCKHOLDERS'
EQUITY
Current liabilities:
Current portion of long-term
debt.......................... $ 3,576 $ 812 $ 895 -- $ 5,283 $ (895) $ 4,388
Other current liabilities....... 16,988 3,654 1,664 2,000 (c)
127 (d) 24,433 -- 24,433
------- ------- ------ ------- -------- -------- --------
Total current liabilities..... 20,564 4,466 2,559 2,127 29,716 (895) 28,821
Long-term debt.................... 27,535 62,238 691 335 (e) 90,799 100,000
118,327
(72,472)
Deferred taxes.................... 9,030 6,921 -- (800)(c)
(134)(e) 15,017 -- 15,017
Other long-term liabilities....... 4,728 2,499 -- -- 7,227 -- 7,227
------- ------- ------ ------- -------- -------- --------
Total liabilities............. 61,857 76,124 3,250 1,528 142,759 26,633 169,392
------- ------- ------ ------- -------- -------- --------
Common stock.................... 3 1 1 -- 5 -- 5
Additional paid-in capital...... 21,804 19,999 99 -- 41,902 -- 41,902
Retained earnings............... 1,079 -- 1,147 (1,200)(c)
(127)(d)
(201)(e) 698 -- 698
------- ------- ------ ------- -------- -------- --------
Total stockholders' equity.... 22,886 20,000 1,247 (1,528) 42,605 42,605
------- ------- ------ ------- -------- -------- --------
Total liabilities and
stockholders' equity........ $84,743 $ 96,124 $4,497 $ -- $185,364 $ 26,633 $ 211,997
======= ======= ====== ======= ======== ======== ========
Common shares outstanding......... 3,871 2,049 5,920 5,920
Book value per common share....... $ 5.91 $ 7.20 $ 7.20
</TABLE>
See Notes to Unaudited Pro Forma Condensed Combined Balance Sheet
12
<PAGE> 13
NOTES TO UNAUDITED PRO FORMA CONDENSED COMBINED BALANCE SHEET
(a) Represents the combined balance sheet of Signature as of June 30, 1996
after application of the purchase method of accounting. The expected total
purchase price is approximately $63,550,000, comprised of cash amounting to
approximately $43,050,000 (including $5,350,000 for RehabWest), a promissory
note in the amount of $500,000 and Unison Common Stock with a market value of
approximately $20,000,000. The table below illustrates the historical balance
sheet of all entities acquired in the Signature Acquisition other than RehabWest
(the "Signature Affiliates") and of RehabWest together with the purchase
accounting adjustments associated with the Signature Acquisition.
<TABLE>
<CAPTION>
AS OF JUNE 30, 1996
-------------------------------------------------
PURCHASE
SIGNATURE ACCOUNTING
AFFILIATES REHABWEST ADJUSTMENTS SIGNATURE
---------- --------- ----------- ----------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents................................ $ -- $ 116 $ -- $ 116
Accounts and notes receivable, net....................... 7,761 462 -- 8,223
Other current assets..................................... 1,009 16 -- 1,025
---------- --------- ----------- ----------
Total current assets............................... 8,770 594 -- 9,364
Lease operating rights and other assets, net............... 1,692 -- 43,244 44,936
Goodwill, net.............................................. 1,721 -- 20,882 22,603
Property and equipment, net................................ 17,213 8 2,000 19,221
---------- --------- ----------- ----------
Total assets....................................... $ 29,396 $ 602 $66,126 $ 96,124
========== ========== =========== ==========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Current portion of long-term debt........................ $ 312 $ -- $ 500 $ 812
Other current liabilities................................ 3,223 431 -- 3,654
---------- --------- ----------- ----------
Total current liabilities.......................... 3,535 431 500 4,466
Long-term debt............................................. 19,188 -- 43,050 62,238
Deferred taxes............................................. 2,921 -- 4,000 6,921
Other long-term liabilities................................ 2,499 -- -- 2,499
---------- --------- ----------- ----------
Total liabilities.......................................... 28,143 431 47,550 76,124
Stockholders' equity:
Common stock............................................. 7 -- (6) 1
Additional paid-in capital............................... 62 -- 19,937 19,999
Retained earnings........................................ 1,184 171 (1,355) --
---------- --------- ----------- ----------
Total stockholders' equity......................... 1,253 171 18,576 20,000
---------- --------- ----------- ----------
Total liabilities and stockholders' equity......... $ 29,396 $ 602 $66,126 $ 96,124
========== ========== =========== ==========
</TABLE>
13
<PAGE> 14
(b) Represents the combined balance sheets of Ampro and Memphis, as
follows:
<TABLE>
<CAPTION>
AS OF JUNE 30, 1996
--------------------------------------------
PRO FORMA PRO FORMA
AMPRO MEMPHIS ADJUSTMENTS COMBINED
------ ------- ----------- ---------
<S> <C> <C> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents........................... $ 14 $ 16 $ 30
Accounts and notes receivable, net.................. 2,048 101 2,149
Other current assets................................ 385 14 -- 399
------ ---- ----- ------
Total current assets........................ 2,447 131 -- 2,578
Lease operating rights and other assets, net.......... 319 -- -- 319
Goodwill, net......................................... 943 -- -- 943
Property and equipment, net........................... 497 160 -- 657
------ ---- ----- ------
Total assets................................ $4,206 $ 291 $ -- $ 4,497
====== ==== ===== ======
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Current portion of long-term debt................... $ 395 $ 10 $ 490(1) $ 895
Other current liabilities........................... 1,585 79 -- 1,664
------ ---- ----- ------
Total current liabilities................... 1,980 89 490 2,559
Long-term debt........................................ 669 22 -- 691
Stockholders' equity:
Common stock........................................ 10 1 (1) 10
Additional paid-in capital.......................... 400 -- (310) 90
Retained earnings................................... 1,147 179 (179) 1,147
------ ---- ----- ------
Total stockholders' equity.................. 1,557 180 (490) 1,247
------ ---- ----- ------
Total liabilities and stockholders'
equity.................................... $4,206 $ 291 $ -- $ 4,497
====== ==== ===== ======
</TABLE>
- ---------------
(1) Represents the consideration paid for Memphis, comprised of cash in the
amount of $240,000 (assumed to be borrowed) and the assumption of debt
amounting to $250,000.
(c) In September 1996, Unison announced a plan to dispose of seven nursing
facilities, two of which were not in operation. The $2,000,000 provision for
disposition represents estimated direct costs to sublease the facilities. This
charge will result in a reduction of the Company's deferred tax liability of
$800,000.
(d) To record a prepayment penalty of $335,000 related to the $4,188,000
principal reduction on the Signature mortgage. This extraordinary charge will
result in a reduction of the Company's deferred tax liability of $134,000.
Lease operating rights are being amortized over the lease terms, including
renewal options, not to exceed 35 years. Goodwill represents the amount of the
purchase price in excess of identifiable assets and is being amortized over 40
years. The adjustment to property and equipment is based on the estimated fair
value of the assets acquired as determined by independent appraisals.
(e) In connection with the Ampro Merger, Unison paid a financial advisory
fee to Trouver in the amount of approximately $127,000.
(f) To record 1,509,000 common shares to be issued in connection with the
Signature Health Care Merger and 540,000 shares to be issued in connection
with the Ampro/Memphis Acquisition.
14
<PAGE> 15
(g) To record the issuance of the Senior Notes in the principal amount of
$100,000,000. The following table illustrates the pro forma application of
proceeds of the Senior Notes as if such application had occurred at June 30,
1996 (dollars in thousands).
<TABLE>
<S> <C>
Signature Acquisition payment............................................. $ 43,050
Repayment of long-term debt............................................... 28,731
Payment of BritWill contingent obligation................................. 1,750
General corporate purposes................................................ 21,969
Estimated fees and expenses............................................... 4,500
--------
$100,000
========
</TABLE>
15
<PAGE> 16
UNISON HEALTHCARE CORPORATION
UNAUDITED PRO FORMA CONDENSED COMBINED STATEMENT OF OPERATIONS
SIX MONTHS ENDED JUNE 30, 1996
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
<TABLE>
<CAPTION>
ADJUSTMENTS
FOR
OTHER PRO FORMA SENIOR PRO FORMA
UNISON SIGNATURE(a) AMPRO(b) ACQUISITIONS(c) ADJUSTMENTS PRO FORMA NOTES AS ADJUSTED
------- ------------ -------- --------------- ----------- --------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Revenues:
Net patient............. $63,442 $ 24,321 $ -- $ 5,140 $(6,597)(d) $86,306 $ -- $86,306
Other................... 1,555 268 3,562 569 (300)(d)
(249)(e) 5,405 510(k) 5,915
------- ------- ------ ------ ------- ------- ------- -------
Total revenues........ 64,997 24,589 3,562 5,709 (7,146) 91,711 510 92,221
Expenses:
Wages and related....... 32,447 15,927 1,514 3,336 (3,669)(d) 49,555 -- 49,555
Other operating......... 21,172 472 1,493 2,230 (2,478)(d)
(249)(e) 22,640 -- 22,640
Rent.................... 6,653 1,050 51 21 (892)(d)
538 (e) 7,421 -- 7,421
Interest................ 1,452 3,179 56 249 (163)(d)
(247)(e) 4,549 1,357(l) 5,906
23 (f)
Depreciation and
amortization.......... 1,054 1,583 98 121 (190)(d)
(113)(e) 2,560 225(m) 2,785
7 (g)
Provision for loss on
dispositions.......... -- -- -- -- 2,000 (h) 2,000 -- 2,000
------- ------- ------ ------ ------- ------- ------- -------
Total expenses........ 62,778 22,211 3,212 5,957 (5,433) 88,725 1,582 90,307
------- ------- ------ ------ ------- ------- ------- -------
Income (loss) before
income taxes and
extraordinary charges... 2,219 2,378 350 (248) (1,713) 2,986 (1,072) 1,914
Income tax expense
(benefit)............... 932 185 118 -- (41)(i) 1,194 (429)(i) 765
------- ------- ------ ------ ------- ------- ------- -------
Net income (loss) before
extraordinary changes... $ 1,287 $ 2,193 $ 232 $ (248) $(1,672) $ 1,792 $ (643) $ 1,149
======= ======= ====== ====== ======= ======= ======= =======
Income (loss) before
extraordinary charges
per share:
Primary................. $ 0.32 $ 0.29 $ 0.19
Fully diluted........... 0.31 0.29 0.19
Weighed average shares
used in per share
calculation:
Primary................. 4,070 2,049(j) 6,119 6,119
Fully diluted........... 4,132 2,049(j) 6,181 6,181
</TABLE>
See Notes to Unaudited Pro Forma Condensed Combined Statement of Operations
16
<PAGE> 17
UNISON HEALTHCARE CORPORATION
UNAUDITED PRO FORMA CONDENSED COMBINED STATEMENT OF OPERATIONS
SIX MONTHS ENDED JUNE 30, 1995
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
<TABLE>
<CAPTION>
ADJUSTMENTS
OTHER PRO FORMA FOR SENIOR PRO FORMA
UNISON SIGNATURE(c) AMPRO(b) ACQUISITIONS ADJUSTMENTS PRO FORMA NOTES AS ADJUSTED
------- ------------ ------ --------------- ----------- --------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Revenues:
Net patient....... $12,415 $ 13,345 $ -- $40,314 $(7,232)(d) $58,842 $ -- $58,842
Other............. 1,028 60 3,644 291 (56)(d)
(249)(e) 4,718 510(k) 5,228
------- ------- ------ ------- ------- ------- ------- -------
Total
revenues... 13,443 13,405 3,644 40,605 (7,537) 63,560 510 64,070
Expenses:
Wages and
related......... 7,486 9,117 1,418 24,977 (3,225)(d) 39,773 -- 39,773
Other operating... 4,587 561 1,545 9,724 (2,716)(d)
(249)(e)
(750)(n) 12,702 -- 12,702
Rent.............. 1,151 235 55 4,523 (950)(d)
538 (e)
(94)(o) 5,458 -- 5,458
Interest.......... 183 3,125 19 892 (98)(d)
(338)(e)
387 (f) 4,170 1,357(l) 5,527
Depreciation and
amortization.... 88 1,569 135 627 (134)(d)
(183)(e)
632 (g) 2,734 225(m) 2,959
Provision for loss
on
disposition..... -- -- -- -- 2,000 (h) 2,000 -- 2,000
------- ------- ------ ------- ------- ------- ------- -------
Total
expenses... 13,495 14,607 3,172 40,743 (5,180) 66,837 1,582 68,419
------- ------- ------ ------- ------- ------- ------- -------
Income (loss) before
income taxes and
extraordinary
charges........... (52) (1,202) 472 (138) (2,357) (3,277) (1,072) (4,349)
Income tax expense
(benefit)......... 1 (495) 157 26 (1,000)(i) (1,311) (429)(i) (1,740)
------- ------- ------ ------- ------- ------- ------- -------
Income (loss) before
extraordinary
charges........... $ (53) $ (707) 315 (164) $(1,357) $(1,966) $ (643) $(2,610)
======= ======= ====== ======= ======= ======= ======= =======
Income (loss) before
extraordinary
charges per share: $ (0.04) $ (0.59) $ (0.79)
Weighed average
shares used in per
share
calculation....... 1,266 2,049(j) 3,315 3,315
</TABLE>
See Notes to Unaudited Pro Forma Condensed Combined Statement of Operations
17
<PAGE> 18
UNISON HEALTHCARE CORPORATION
UNAUDITED PRO FORMA CONDENSED COMBINED STATEMENT OF OPERATIONS
YEAR ENDED DECEMBER 31, 1995
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
<TABLE>
<CAPTION>
ADJUSTMENTS
OTHER PRO FORMA FOR SENIOR PRO FORMA
UNISON SIGNATURE(a) AMPRO(b) ACQUISITIONS(c) ADJUSTMENTS PRO FORMA NOTES AS ADJUSTED
------- ------------ -------- --------------- ----------- --------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Revenues:
Net patient........ $57,743 $ 36,150 $ -- $58,568 $ (14,495)(d) $137,966 $ -- $ 137,966
Other.............. 3,542 281 7,203 549 (131)(d)
(499)(e) 10,945 1,019(k) 11,964
------- ------- ------ ------- -------- -------- ------- --------
Total
revenues... 61,285 36,431 7,203 59,117 (15,125) 148,911 1,019 149,930
Expenses:
Wages and
related.......... 31,811 24,777 3,234 37,707 (6,933)(d) 90,596 -- 90,596
Other operating.... 20,777 2,060 3,256 13,780 (5,250)(d)
(499)(e)
(875)(n) 33,249 -- 33,249
Rent............... 6,565 1,245 108 5,587 (1,779)(d)
1,076 (e)
(110)(o) 12,692 -- 12,692
Interest........... 1,058 6,320 118 1,486 (240)(d)
(675)(e)
568 (f) 8,635 2,712 (l) 11,347
Depreciation and
amortization..... 1,050 3,030 262 1,026 (266)(d)
(366)(e)
773 (g) 5,509 450 (m) 5,959
Provision for loss
on
dispositions..... -- -- -- -- 2,000 (h) 2,000 -- 2,000
------- ------- ------ ------- -------- -------- ------- --------
Total
expenses... 61,261 37,432 6,978 59,586 (12,576) 152,681 3,162 155,843
------- ------- ------ ------- -------- -------- ------- --------
Income (loss) before
income taxes and
extraordinary
charges............ 24 (1,001) 225 (469) (2,549) (3,770) (2,143) (5,913)
Income tax expense
(benefit).......... 50 (727) 82 30 (943)(i) (1,508) (857)(i) (2,365)
------- ------- ------ ------- -------- -------- ------- --------
Income (loss) before
extraordinary
charges............ $ (26) $ (274) $ 143 $ (499) $ (1,606) $ (2,262) $(1,286) $ (3,548)
======= ======= ====== ======= ======== ======== ======= ========
Income (loss) before
extraordinary
charges per
share:............. $(0.02) $ (0.67) $ (1.04)
Weighted average
shares used in per
share
calculation........ 1,349 2,049 (j) 3,398 3,398
</TABLE>
See Notes to Unaudited Pro Forma Condensed Combined Statement of Operations
18
<PAGE> 19
UNISON HEALTHCARE CORPORATION
UNAUDITED PRO FORMA CONDENSED COMBINED STATEMENT OF OPERATIONS
YEAR ENDED DECEMBER 31, 1994
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
<TABLE>
<CAPTION>
PRO
PRO FORMA FORMA
UNISON AMPRO(p) ADJUSTMENTS COMBINED
------- -------- ----------- --------
<S> <C> <C> <C> <C>
Revenues:
Net patient.................................. $11,070 $ -- $ -- $11,070
Other........................................ 1,336 6,000 -- 7,336
------ ----- ---- ------
Total revenues....................... 12,406 6,000 -- 18,406
Expenses:
Wages and related............................ 7,149 2,445 9,594
Other operating.............................. 3,902 2,560 -- 6,462
Rent......................................... 1,299 107 1,406
Interest..................................... 84 63 -- 147
Depreciation and amortization................ 51 234 -- 285
------ ----- ---- ------
Total expenses....................... 12,485 5,409 -- 17,894
------ ----- ---- ------
Income (loss) before income taxes.............. (79) 591 -- 512
Income tax expense............................. 1 171 -- 172
------ ----- ---- ------
Net income (loss).............................. $ (80) $ 420 $ -- $ 340
====== ===== ==== ======
Net income (loss) per share.................... $ (0.06) $ 0.19
Weighed average shares used in per share
calculation.................................. 1,266 540(j) 1,806
</TABLE>
See Notes to Unaudited Pro Forma Condensed Combined Statement of Operations
19
<PAGE> 20
UNISON HEALTHCARE CORPORATION
UNAUDITED PRO FORMA CONDENSED COMBINED STATEMENT OF OPERATIONS
YEAR ENDED DECEMBER 31, 1993
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
<TABLE>
<CAPTION>
PRO FORMA PRO FORMA
UNISON AMPRO(p) ADJUSTMENTS COMBINED
------ -------- ----------- ---------
<S> <C> <C> <C> <C>
Revenues:
Net patient.................................... $1,076 $ -- $ -- $ 1,076
Other.......................................... 880 5,055 -- 5,935
------ ------ ---- ------
Total revenues.............................. 1,956 5,055 -- 7,011
Expenses:
Wages and related.............................. 1,455 2,234 3,689
Other operating................................ 545 2,084 -- 2,629
Rent........................................... 99 107 206
Interest....................................... 11 33 -- 44
Depreciation and amortization.................. 7 150 -- 157
------ ------ ---- ------
Total expenses......................... 2,117 4,608 -- 6,725
------ ------ ---- ------
Income (loss) before income taxes................ (161) 447 -- 286
Income tax expense (benefit)..................... (20) 197 -- 177
------ ------ ---- ------
Net income (loss)................................ $ (141) $ 250 $ -- $ 109
====== ====== ==== ======
Net income (loss) per share...................... $(0.11) $ 0.06
Weighed average shares used in per share
calculation.................................... 1,266 540(j) 1,806
</TABLE>
See Notes to Unaudited Pro Forma Condensed Combined Statement of Operations
20
<PAGE> 21
NOTES TO UNAUDITED PRO FORMA CONDENSED COMBINED
STATEMENT OF OPERATIONS
(a) Represents the combined operating results for Signature for the year
ended December 31, 1995 and the six months ended June 30, 1995 and June 30, 1996
after application of the purchase method of accounting. The table below
illustrates the historical operating results of the Signature Affiliates and
RehabWest and the pro forma adjustments associated with the Signature
Acquisition. The pro forma adjustments represent (i) the elimination of
management fees paid by the Signature Affiliates to a related party, net of
incremental operating costs to be incurred by Unison estimated to be
approximately $556,000 annually, (ii) interest expense on the portion of the
Senior Notes to be allocated to the purchase of Signature at an assumed rate of
10.0% ($4,305,000) annually and interest expense on the $500,000 promissory note
to be issued in connection with the Signature Acquisition at an assumed rate of
8.0% ($40,000 annually), (iii) depreciation expense related to the $2,000,000
purchase accounting adjustment to Signature's property and equipment and (iv)
amortization expense related to the intangible assets recorded in connection
with the Signature Acquisition.
SIX MONTHS ENDED JUNE 30, 1996
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
SIGNATURE PRO FORMA
AFFILIATES REHABWEST ADJUSTMENTS SIGNATURE
---------- --------- ----------- ---------
<S> <C> <C> <C> <C>
Revenues:
Net patient......................................... $ 21,984 $ 2,337 $ -- $24,321
Other............................................... 268 -- -- 268
------- ------ ------- -------
Total revenues................................ 22,252 2,337 -- 24,589
Expenses:
Wages and related................................... 14,263 1,664 -- 15,927
Other operating..................................... 4,684 118 (4,330) 472
Rent................................................ 1,044 6 -- 1,050
Interest............................................ 1,006 1 2,172 3,179
Depreciation and amortization....................... 845 1 50
687 1,583
------- ------ ------- -------
Total expenses................................ 21,842 1,790 (1,421) 22,211
------- ------ ------- -------
Income before income taxes and extraordinary
charges............................................. 410 547 1,421 2,378
Income tax expense (benefit).......................... (383) -- 568 185
------- ------ ------- -------
Income before extraordinary charges................... $ 793 $ 547 $ 853 $ 2,193
======= ====== ======= =======
</TABLE>
SIX MONTHS ENDED JUNE 30, 1995
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
SIGNATURE PRO FORMA
AFFILIATES REHABWEST ADJUSTMENTS SIGNATURE
---------- --------- ----------- ---------
<S> <C> <C> <C> <C>
Revenues:
Net patient......................................... $ 11,880 $ 1,465 $ -- $13,345
Other............................................... 60 -- -- 60
------- ------ ------- -------
Total revenues................................ 11,940 1,465 -- 13,405
Expenses:
Wages and related................................... 7,931 1,186 -- 9,117
Other operating..................................... 2,129 206 (1,774) 561
Rent................................................ 230 5 235
Interest............................................ 947 6 2,172 3,125
Depreciation and amortization....................... 827 5 50
687 1,569
------- ------ ------- -------
Total expenses................................ 12,064 1,408 1,135 14,607
------- ------ ------- -------
Income (loss) before income taxes and extraordinary
charges............................................. (124) 57 (1,135) (1,202)
Income tax expense (benefit).......................... (41) -- (454) (495)
------- ------ ------- -------
Income (loss) before extraordinary charges............ $ (83) $ 57 $ (681) $ (707)
======= ====== ======= =======
</TABLE>
21
<PAGE> 22
NOTES TO UNAUDITED PRO FORMA CONDENSED COMBINED
STATEMENT OF OPERATIONS
YEAR ENDED DECEMBER 31, 1995
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
SIGNATURE PRO FORMA
AFFILIATES REHABWEST ADJUSTMENTS SIGNATURE
---------- --------- ----------- ---------
<S> <C> <C> <C> <C>
Revenues:
Net patient......................................... $ 32,769 $ 3,381 $ -- $36,150
Other............................................... 281 -- -- 281
------- ------ ------- -------
Total revenues................................ 33,050 3,381 -- 36,431
Expenses:
Wages and related................................... 22,006 2,771 -- 24,777
Other operating..................................... 5,761 469 (4,170) 2,060
Rent................................................ 1,235 10 1,245
Interest............................................ 1,967 8 4,345 6,320
Depreciation and amortization....................... 1,550 6 100
1,374 3,030
------- ------ ------- -------
Total expenses................................ 32,519 3,264 1,649 37,432
------- ------ ------- -------
Income (loss) before income taxes and extraordinary
charges............................................. 531 117 (1,649) (1,001)
Income tax expense (benefit).......................... (67) -- (660) (727)
------- ------ ------- -------
Income (loss) before extraordinary charges............ $ 598 $ 117 $ (989) $ (274)
======= ====== ======= =======
</TABLE>
(b) Represents the combined income statements of Ampro and Memphis, as
follows:
<TABLE>
<CAPTION>
SIX MONTHS ENDED JUNE 30, SIX MONTHS ENDED JUNE 30,
1996 1995
---------------------------- ----------------------------
PRO FORMA PRO FORMA
AMPRO MEMPHIS COMBINED AMPRO MEMPHIS COMBINED
------ ------- --------- ------ ------- ---------
<S> <C> <C> <C> <C> <C> <C>
Revenues:
Net patient.................... $ -- $ -- $ -- $ -- $ -- $ --
Other.......................... 3,088 474 3,562 3,225 419 3,644
------ ------- --------- ------ ------- ---------
Total revenues......... 3,088 474 3,562 3,225 419 3,644
Expenses:
Wages and related.............. 1,341 173 1,514 1,273 145 1,418
Other operating................ 1,309 184 1,493 1,359 186 1,545
Rent........................... 37 14 51 40 15 55
Interest....................... 56 -- 56 19 -- 19
Depreciation and
amortization................ 81 17 98 112 23 135
------ ------- --------- ------ ------- ---------
Total expenses......... 2,824 388 3,212 2,803 369 3,172
------ ------- --------- ------ ------- ---------
Income before income taxes....... 264 86 350 422 50 472
Income tax expense............... 94 24 118 143 14 157
------ ------- --------- ------ ------- ---------
Net income....................... $ 170 $ 62 $ 232 $ 279 $ 36 $ 315
====== ======= ======== ====== ======= ========
</TABLE>
22
<PAGE> 23
NOTES TO UNAUDITED PRO FORMA CONDENSED COMBINED
STATEMENT OF OPERATIONS
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31, 1995 YEAR ENDED DECEMBER 31, 1994
---------------------------- ----------------------------
PRO FORMA PRO FORMA
AMPRO MEMPHIS COMBINED AMPRO MEMPHIS COMBINED
------ ------- --------- ------ ------- ---------
<S> <C> <C> <C> <C> <C> <C>
Revenues:
Net patient.................... $ -- $ -- $ -- $ -- $ -- $ --
Other.......................... 6,421 782 7,203 5,152 848 6,000
------ ------- --------- ------ ------- ---------
Total revenues......... 6,421 782 7,203 5,152 848 6,000
Expenses:
Wages and related.............. 2,913 321 3,234 2,119 326 2,445
Other operating................ 2,864 392 3,256 2,159 401 2,560
Rent........................... 79 29 108 77 30 107
Interest....................... 118 -- 118 63 -- 63
Depreciation and
amortization................ 194 68 262 147 87 234
------ ------- --------- ------ ------- ---------
Total expenses......... 6,168 810 6,978 4,565 844 5,409
------ ------- --------- ------ ------- ---------
Income (loss) before income
taxes.......................... 253 (28) 225 587 4 591
Income tax expense (benefit)..... 86 (4) 82 170 1 171
------ ------- --------- ------ ------- ---------
Net income (loss)................ $ 167 $ (24) $ 143 $ 417 $ 3 $ 420
====== ======= ======== ====== ======= ========
</TABLE>
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31, 1993
----------------------------
PRO FORMA
AMPRO MEMPHIS COMBINED
------ ------- ---------
<S> <C> <C> <C>
Revenues:
Net patient............................................. $ -- $ -- $ --
Other................................................... 4,190 865 5,055
------ ------- ---------
Total revenues.................................. 4,190 865 5,055
Expenses:
Wages and related....................................... 1,872 362 2,234
Other operating......................................... 1,681 403 2,084
Rent.................................................... 77 30 107
Interest................................................ 33 -- 33
Depreciation and amortization........................... 81 69 150
------ ------- ---------
Total expenses.................................. 3,744 864 4,608
------ ------- ---------
Income before income taxes................................ 446 1 447
Income tax expense........................................ 197 -- 197
------ ------- ---------
Net income................................................ $ 249 $ 1 $ 250
====== ======= ========
</TABLE>
23
<PAGE> 24
NOTES TO UNAUDITED PRO FORMA CONDENSED COMBINED
STATEMENT OF OPERATIONS
(c) Other Acquisitions: The following table summarizes the operating
results for BritWill and for the following leases entered into from January 1,
1995 through the later of the date of lease inception or the period of the
statement of operations.
<TABLE>
<CAPTION>
SIX MONTHS ENDED YEAR ENDED
JUNE 30, 1996 DECEMBER 31, 1995
ACQUISITION --------------------- ---------------------
ACQUISITION DATE REVENUES EXPENSES REVENUES EXPENSES
------------------------------- ----------- -------- -------- -------- --------
(IN THOUSANDS) (IN THOUSANDS)
<S> <C> <C> <C> <C> <C>
BritWill....................... Aug. 1995 $ -- $ -- $ 38,854 $ 38,841
Nightingale West............... Oct. 1995 -- -- 4,438 4,506
The Oaks of Boise.............. July 1995 -- -- 815 911
Sunbelt Therapy................ Feb. 1996 544 568 5,942 5,725
Franciscan Enumclaw............ Aug. 1996 2,060 2,294 3,860 4,313
Franciscan Walla Walla......... Aug. 1996 969 999 1,371 1,507
Other acquisitions............. July 1996 2,136 2,096 3,837 3,813
------ ------ ------- -------
$5,709 $5,957 $ 59,117 $ 59,616
====== ====== ======= =======
</TABLE>
(d) In September 1996, Unison announced a plan to dispose of seven nursing
facilities, two of which were not in operation. To record the disposition of
these facilities as if the dispositions had occurred at the beginning of the
period presented.
(e) Operating lease pro forma adjustments represent adjustments to the
pre-lease operating results of the facilities identified in note (c). The
historical results have been adjusted to include the lease expense incurred by
Unison, elimination of management fee income to Unison and elimination of the
lessor's depreciation, interest expense and management fees.
(f) To record interest on debt incurred to acquire BritWill and Sunbelt, as
follows:
<TABLE>
<CAPTION>
SIX MONTHS
ENDED
JUNE 30,
--------------- YEAR ENDED
1996 1995 DECEMBER 31, 1995
---- ---- -----------------
(IN THOUSANDS)
<S> <C> <C> <C>
Subordinated Note.............................. $-- $320 $ 435
Notes and Debentures........................... 23 140 280
Other obligations.............................. -- (73) (147)
--- ---- -----
$23 $387 $ 568
=== ==== =====
</TABLE>
In connection with the acquisition of BritWill, Unison issued the
$8,000,000 Subordinated Note bearing interest initially at 8.0%, or $640,000
annually. Interest expense related to other debt obligations was reduced by
$147,000 based on the anticipated replacement of the accounts receivable sales
program with BritWill's receivables financing program.
Effective as of February 1, 1996, Unison purchased 90% of the outstanding
common stock of Sunbelt. In consideration for the $3,600,000 purchase price,
Unison paid cash in the amount of $800,000, issued promissory notes in the
aggregate amount of $1,000,000 (the "Notes") and issued subordinated convertible
debentures in the aggregate amount of $1,800,000 (the "Debentures"). The Notes
and Debentures bear interest at 10.0%.
24
<PAGE> 25
NOTES TO UNAUDITED PRO FORMA CONDENSED COMBINED
STATEMENT OF OPERATIONS
(g) To record amortization of goodwill, lease operating rights and other
intangible assets related to the acquisitions of BritWill and Sunbelt, as
follows:
<TABLE>
<CAPTION>
SIX MONTHS
ENDED
JUNE 30,
--------------- YEAR ENDED
1996 1995 DECEMBER 31, 1995
---- ---- -----------------
(IN THOUSANDS)
<S> <C> <C> <C>
BritWill Acquisition........................... $-- $589 $ 687
Sunbelt Acquisition............................ 7 43 86
--
---- ----
$ 7 $632 $ 773
== ==== ====
</TABLE>
Under the purchase method of accounting, assets acquired and liabilities
assumed were recorded at the estimated fair value. With respect to BritWill, the
excess of the purchase price over the fair value of net assets acquired is being
amortized over 40 years, the noncompete agreement and assembled work force
intangible assets are being amortized over five years, and the lease operating
rights intangible assets are being amortized over the respective lease terms,
not to exceed 25 years. Such amortization is approximately $2,007,000 annually.
Amortization expense was reduced by $830,000 annually to eliminate BritWill's
historical amortization of intangible assets.
With respect to Sunbelt, the excess of the $3,600,000 purchase price over
the net assets acquired was recorded as goodwill in the amount of $3,433,000 and
amortized over 40 years.
(h) In September 1996, Unison announced a plan to dispose of seven nursing
facilities, two of which were not in operation. To record the provision for loss
on disposition of $2,000,000.
(i) To record the tax provision related to the pro forma adjustments and
adjustments for the offering at an assumed rate of 40%.
(j) To record 1,509,000 common shares to be issued in connection with the
Signature Health Care Merger and 540,000 shares to be issued in connection with
the Ampro/Memphis Acquisition.
(k) To record interest income on excess proceeds from the sale of the
Senior Notes at an assumed rate of 5%.
(l) To record interest expense on the $100,000,000 principal amount of
Senior Notes at an assumed rate of 10.0%, net of repayments and reductions, as
follows:
<TABLE>
<CAPTION>
SIX
MONTHS ANNUAL
------- -------
(IN THOUSANDS)
<S> <C> <C>
Interest on Senior Notes....................................... $ 5,000 $10,000
Interest on debt allocated to Signature Acquisition (note
(a))......................................................... (2,152) (4,305)
Interest on debt refinanced at an average rate of 10.0%........ (1,437) (2,873)
-------- -------
$ 1,411 $ 2,822
======== =======
</TABLE>
(m) To record amortization expense related to debt issue costs incurred in
connection with the Offering.
25
<PAGE> 26
NOTES TO UNAUDITED PRO FORMA CONDENSED COMBINED
STATEMENT OF OPERATIONS
(n) In connection with the acquisition of BritWill, other operating
expenses have been reduced to give effect to the following estimated annual cost
savings to be realized (in thousands):
<TABLE>
<S> <C>
Elimination of duplicate corporate compensation and benefits........ $ 710
Reduction of insurance costs........................................ 300
Reduction of corporate office rent and operating costs.............. 468
Other............................................................... 22
------
$1,500
======
</TABLE>
(o) To record amortization of a lease liability incurred in connection with
the acquisition of BritWill. The lease liability represents the excess of the
value of BritWill's lease obligations over market lease rates, based on
independent appraisals.
26
<PAGE> 27
SELECTED HISTORICAL AND PRO FORMA COMBINED FINANCIAL DATA
(Dollars in thousands, except ratios and selected operating data)
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
--------------------------------------------------------------
SIX MONTHS ENDED JUNE 30,
ACTUAL ------------------------------------
------------------------------------------------- PRO FORMA ACTUAL PRO FORMA PRO FORMA
1992 1993 1994 1995 1995(2) 1996 1995(2) 1996(2)
---------- ---------- ---------- ---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
STATEMENT OF OPERATIONS
DATA:
Total revenues............ $ 379 $ 1,956 $ 12,406 $ 61,285 $ 149,930 $ 64,997 $ 64,070 $ 92,221
Expenses:
Wages and related....... 190 1,455 7,149 31,811 90,596 32,447 39,773 49,555
Other operating......... 109 545 3,902 20,777 33,249 21,172 12,702 22,640
Rent.................... 8 99 1,299 6,565 12,692 6,653 5,458 7,421
Interest................ 5 11 84 1,058 11,347 1,452 5,527 5,906
Depreciation and
amortization.......... 3 7 51 1,050 5,959 1,054 2,959 2,785
Provision for loss on
dispositions.......... -- -- -- -- 2,000 2,000 2,000
------- ------- ------ ---- -------- ------- ------- -------
Total expenses........ 315 2,117 12,485 61,261 155,843 62,778 68,419 90,307
------- ------- ------ ---- -------- ------- ------- -------
Income (loss) before
income taxes........ 64 (161) (79) 24 (5,913) 2,219 (4,349) 1,914
Income taxes (benefit).... 26 (20) 1 50 (2,365) 932 (1,740) 765
------- ------- ------ ---- -------- ------- ------- -------
Net income (loss)..... $ 38 $ (141) $ (80) $ (26) $ (3,548) $ 1,287 $ (2,609) $ 1,149
======= ======= ====== ==== ======== ======= ======= =======
OTHER DATA:
Capital expenditures.... 50 13 371 1,081 2,949 2,010 1,024 2,514
Ratio of earnings to
fixed charges(3)...... 9.35x -- 0.85x 1.01x 0.63x 1.60x -- 1.22x
Skilled nursing
facilities:(4)
Number of
facilities.......... 4 6 16 47 52 45 20 51
Number of licensed
beds................ 436 671 1,674 4,851 5,270 4,679 2,820 5,184
Patient days.......... -- 12,705 112,727 581,410 1,252,750 541,741 -- 685,999
Assisted living
facilities:(4)
Number of
facilities.......... -- 1 4 6 9 5 4 8
Number of units....... -- 30 104 229 417 134 292 324
Sources of patient
revenues:
Medicare.............. -- 3.4% 9.1% 26.9% 27.9% 32.4% 27.5% 33.6%
Private pay........... -- 13.8 32.4 17.2 26.1 15.8 24.5 24.0
------- ------- ------ ---- -------- ------- ------- -------
Quality mix......... -- 17.2 41.5 44.1 54.0 48.2 52.0 57.6
Medicaid.............. -- 82.8 58.5 55.9 46.0 51.8 48.0 42.4
------- ------- ------ ---- -------- ------- ------- -------
Total............. -- 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0%
======= ======= ====== ==== ======== ======= ======= =======
</TABLE>
<TABLE>
<CAPTION>
AT DECEMBER 31, AT JUNE 30, 1996
------------------------------------------------- --------------------------
1992 1993 1994 1995 ACTUAL PRO FORMA(5)
---------- ---------- ---------- ---------- ---------- -------------
<S> <C> <C> <C> <C> <C> <C>
BALANCE SHEET DATA:
Cash and cash
equivalents............. $ 17 $ 8 $ 118 $ 6,097 $ 847 $ 21,376
Working capital........... 5 (120) (866) (1,208) 4,848 28,916
Total assets.............. 9 499 4,297 77,531 84,743 211,997
Total debt................ 38 176 1,589 25,633 31,111 122,715
Stockholders' equity...... 38 (103) (139) 19,885 22,886 42,605
</TABLE>
27
<PAGE> 28
NOTES TO SELECTED HISTORICAL AND PRO FORMA COMBINED FINANCIAL DATA
(1) On August 10, 1995, Unison acquired BritWill. The actual results for the
year ended December 31, 1995 include the results of operations for BritWill
for the five months ended December 31, 1995.
(2) Gives effect to (i) the Pending Acquisitions, (ii) the Dispositions, (iii)
the Completed Acquisitions and (iv) the placement of the Senior Notes and
the application of the net proceeds therefrom, effective, in each case, at
the beginning of the period presented. See "Unaudited Pro Forma Condensed
Combined Financial Statements" and Notes thereto.
(3) Earnings are defined as income (loss) before extraordinary items and fixed
charges. Fixed charges are defined as interest expense and a portion of rent
expense representing the interest factor, which Unison estimates to be
one-third of base rents. Earnings were inadequate to cover fixed charges by
approximately $161,000 in 1993.
(4) Number of facilities, beds and units expressed are at end of period.
(5) Gives effect to (i) the Pending Acquisitions, (ii) the Dispositions, (iii)
the Completed Acquisitions and (iv) the placement of the Senior Notes and
the application of the net proceeds therefrom, effective, in each case, as
of June 30, 1996. See "Unaudited Pro Forma Condensed Combined Financial
Statements" and Notes thereto.
28
<PAGE> 29
(c) Exhibits.
See Exhibit Index to Form 8-K dated August 1, 1996.
SIGNATURE
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.
UNISON HEALTHCARE CORPORATION
By: /s/ CRAIG R. CLARK
----------------------------
Craig R. Clark
Executive Vice President
and Chief Financial Officer
October 15, 1996
29
<PAGE> 30
EXHIBIT INDEX
<TABLE>
<CAPTION>
SEQUENTIALLY
EXHIBIT NO. DESCRIPTION OF EXHIBIT PAGINATED NO.
- ----------- ---------------------------------------------------------- -------------
<S> <C> <C>
10.1 Lease dated November 30, 1994 between Monica R. Salusky
and SunQuest SPC, Inc. (commencement date: August 1,
1996) ................................................. *
10.2 Modification of Lease dated as of July 31, 1996 between
Monica R, Salusky, SunQuest SPC, Inc. and Unison
HealthCare Corporation ................................ *
10.3 Lease dated June 19, 1996 between Walla Walla Partners,
L.P. and SunQuest SPC, Inc. (commencement date:
August 1, 1996) ....................................... *
10.4 First Amendment to Lease dated July 26, 1996 between
Walla Walla Partners, L.P. and SunQuest SPC, Inc. ..... *
- -----------------
* Previously Filed.
</TABLE>
E-1
