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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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) MARCH 19, 1997
UNISON HEALTHCARE CORPORATION
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(Exact Name of Registrant as Specified in Its Charter)
DELAWARE
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(State or Other Jurisdiction of Incorporation)
0-27374 86-0684011
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(Commission File Number) (I.R.S. Employer Identification No.)
8800 NORTH GAINEY CENTER DRIVE, SUITE 245, SCOTTSDALE, ARIZONA 85258
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(Address of Principal Executive Offices) (Zip Code)
(602) 423-1954
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(Registrant's Telephone Number, Including Area Code)
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ITEM 5. OTHER EVENTS
On March 19, 1997, Unison HealthCare Corporation ("Unison") issued a news
release describing (i) the nature and estimated impact of an anticipated
restatement of its previously issued financial results for the nine months
ended September 30, 1996, (ii) a special review of the facts and circumstances
surrounding the restatement, (iii) actions to correct the conditions which
resulted in the restatement, (iv) the resignations of two executive officers
and directors and (v) other matters. The news release is filed as Exhibit 99.1
to this Form 8-K.
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.
UNISON HEALTHCARE CORPORATION
March 19, 1997 By /s/ Jerry M. Walker
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Jerry M. Walker
President and Chief Executive Officer
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EXHIBIT INDEX
EXHIBIT NO. DESCRIPTION OF EXHIBIT
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99.1 Unison HealthCare Corporation news release describing
events and circumstances surrounding the anticipated
restatement of its previously issued financial results for
the nine months ended September 30, 1996 and other
related matters.
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EXHIBIT 99.1
FOR IMMEDIATE RELEASE
Contact: Jerry M. Walker, President
(602) 607-4011
UNISON HEALTHCARE TO RESTATE FINANCIAL RESULTS
Scottsdale, Arizona (March 19, 1997) -- Last week, on March 11, 1997, Unison
HealthCare Corporation (Nasdaq/NM:UNHC) announced that it expected to restate
its previously issued financial results for the nine months ended September 30,
1996. It reported that the restatement was estimated to result in a reduction in
the nine month year-to-date results of $5 to $6 million pre-tax, or $3 to $3.6
million after tax. The restatement for the nine months ended September 30, 1996,
is necessary to correct certain inaccuracies generated by the accounting systems
of the Company which have been identified during the course of the 1996 audit.
With regard to the consolidated income statement, revenues are expected
to be reduced by approximately $3.7 million and expenses are expected to be
increased by approximately $2.3 million. After consideration of the estimated
impact of income taxes, the previously reported net income of the Company for
the nine months ended September 30, 1996, is expected to be reduced by
approximately $3.6 million, or $0.93 per share.
The reductions in revenue are primarily due to reductions in the amounts
of estimated Medicare third-party settlements expected to be realized by the
Company in connection with unfiled cost reports for 1996. Increases in expenses
are primarily related to adjustments to record (1) previously unrecorded
accounts payable and accrued expenses, (2) amortization of prepaid expenses, and
(3) amortization of intangible assets.
The adjustments to the consolidated balance sheet of the Company as of
September 30, 1996, are expected to result in a net reduction in total assets
of approximately $900,000 and a net increase of approximately $2.6 million to
total liabilities. The combined effect of these adjustments is a reduction in
total stockholders' equity of approximately $3.6 million.
The precise amount of the restatement and the impact on each balance
sheet and income statement account will not be known until the audit of the
full year 1996 is completed by the Company's independent auditors, Ernst &
Young LLP. This release contains estimates based on currently available
information. It is possible that the completion of the audit of 1996 will result
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UNHC Restates Nine Months Results
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March 19, 1997
in changes in the estimates contained herein. The restatements are primarily
related to 1996 financial performance. While the Company believes that the
reported range of adjustments to income is sufficient to cover the actual
amounts which will be recorded upon the completion of the audit, it is possible
that the actual amounts may vary from or exceed the estimates.
The Board of Directors has established a special executive committee to
assist and work more closely with management during the coming months. The
members of the special executive committee include Mr. Bruce H. Whitehead,
chairman of the Board of Directors, Mr. David A. Kremser, and Mr. John T.
Lynch, Jr., chairman of the audit committee. Mr. Kremser has been appointed
chairman of the executive committee.
In addition, the Board of Directors has engaged the law firm of Brown,
Parker & Leahy L.L.P. of Houston, Texas, to conduct a special review of the
facts and circumstances surrounding the restatement, assisted by the accounting
firm of Price Waterhouse LLP.
The Board of Directors of the Company has accepted the resignations,
effective immediately, of Paul J. Contris, executive vice president,
acquisitions, (formerly chief accounting officer) and a member of the Board,
and Craig R. Clark, executive vice president, chief financial officer, and a
member of the Board. The Company has begun an immediate search for a new chief
financial officer. In the interim, Jerry M. Walker, president and chief
executive officer, with the assistance of Mr. Kremser and the other members of
the special executive committee, will fulfill the duties of the senior financial
executive of the Company. Both Mr. Kremser and Mr. Walker are certified public
accountants. Mr. Kremser is the former president and majority owner of
Signature Health Care, which became a Unison subsidiary on October 31, 1996.
The Company has taken and is taking vigorous actions to correct the
conditions which resulted in the restatements. The conversion to a new general
ledger and accounts payable system is underway and is expected to be completed
by April 30, 1997. Installation of a new labor time keeping and payroll system
has just begun and is expected to be completed by June 30, 1997. These new
accounting information systems, together with a complete review of the policies
and procedures related to general ledger, accounts payable and payroll, are
expected to substantially improve the quality, timeliness and accuracy of the
accounting information.
The Company also announced that it had initiated a cost-reduction
program that resulted in the reduction of 26 members of corporate staff. The
annual savings to the Company is projected to be $1.2 million.
In addition, the Company is evaluating its operational performance. The
objective is to reduce the costs of operations at the facility level, improve
staffing ratios, and, in general, ensure that the Company's facilities are
being operated as efficiently as possible.
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UNHC Restates Nine Months Results
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March 19, 1997
The Company also announced on March 11, 1997, that it expects the
announcement of its financial results for the year ended December 31, 1996, to
be delayed and that it may not be able to file its annual report on Form 10-K
within the required time. These delays are expected to result from the
expansion of the annual audit examination now being conducted by the Company
and Ernst & Young to resolve the recently identified inaccuracies in the
accounting systems. The Company now expects to resolve the recently identified
inaccuracies in the accounting systems, The Company now expects the filing of
its annual report on Form 10-K to be no later than May 15, 1997. The Company
anticipates no delays in meeting deadlines for the filing of its quarterly
reports on Form 10-Q during the course of 1997.
While the audit examination has not been completed, it is likely, based
on the circumstances described above regarding the restatement of the nine
months ended September 30, 1996, that the results for the fourth quarter of
1996 and for the year ended December 31, 1996, will be substantially below
previous market expectations.
The Company is currently conducting a review of its expectations for
1997 based upon the information which has lead to the restatement and the
events which have occurred since the March 11, 1997, announcement.
Jerry M. Walker, president, said, "The inaccuracies in our accounting
systems are being vigorously addressed and corrected. We are conducting an
in-depth examination of all financial and operational issues. Our professional
staff members are working diligently to complete the implementation of new
policies and procedures to strengthen internal controls and the conversion of
accounting systems. We have and will continue to take all actions which are
necessary to establish and maintain accurate books and records.
"We understand that this announcement of a restatement to the nine
months ended last September has had a detrimental impact on our position in the
financial market. I want to assure everyone who has been associated with Unison
that we are determined to take the corrective actions necessary to strengthen
and restore the financial position and the operating performance of the
Company."
Unison HealthCare Corporation is a provider of quality long-term and
specialty health care services. The Company provides a broad range of health
care services including nursing care, rehabilitation therapy, pharmacy and
other specialized services primarily to subacute patients.
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THE STATEMENTS APPEARING ABOVE, WHICH ARE NOT HISTORICAL FACTS, ARE
FORWARD-LOOKING STATEMENTS SUBJECT TO RISKS AND UNCERTAINTIES THAT COULD CAUSE
ACTUAL RESULTS TO DIFFER MATERIALLY FROM THE ESTIMATES SET FORTH IN THE
FORWARD-LOOKING STATEMENTS, INCLUDING THE NECESSARY USE OF ESTIMATES IN
FINANCIAL STATEMENTS, UNCERTAINTIES IN THE APPLICATION OF ACCOUNTING PRINCIPLES
TO THE UNDERLYING FACTS, JUDGMENTS AS TO TIMING ISSUES AND OTHER RISKS.
