<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
---------------
FORM 8-K/A-1
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
Date of Report: May 15, 1996
------------
(Date of earliest event reported)
NCS HEALTHCARE, INC.
----------------------------------------------------
(Exact name of Registrant as specified in its charter)
Delaware 0-027602 34-1816187
- ---------------------------- ------------ -------------------
(State or other jurisdiction (Commission (I.R.S. employer
of incorporation) file number) identification no.)
3201 Enterprise Parkway, Suite 220, Beachwood, Ohio 44122
- --------------------------------------------------------------------------------
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (216) 514-3350
-----------------------
<PAGE> 2
The undersigned Registrant hereby amends the following items, financial
statements, exhibits or other portions of its Current Report on Form 8-K dated
May 15, 1996 as set forth in the pages attached hereto:
"Item 7. Financial Statements, Pro Forma Financial Information and
Exhibits" is hereby amended and restated to include historical and pro forma
financial information required in connection with the acquisition of Uni-Care by
the Registrant.
Item 7. Financial Statements, Pro Forma Financial Information and Exhibits.
-------------------------------------------------------------------
(a) Financial Statements of Businesses Acquired.
Americare Health Services, Inc. and subsidiaries,
Consolidated Financial Statements
Report of Independent Auditors
Consolidated Balance Sheets at December 31, 1994 and 1995
and March 31, 1996 (Unaudited)
Consolidated Statements of Operations on
Retained Earnings
Consolidated Statements of Cash Flow for the years ended
December 31, 1994 and 1995 and for the three-month period
ended March 31, 1996 (Unaudited)
Notes to Consolidated Financial Statements
(b) Pro Forma Financial Information.
NCS HealthCare, Inc. and subsidiaries, and Uni-Care Pro
Forma Condensed Combined Financial Statements
Pro Forma Condensed Combined Balance Sheet of NCS
HealthCare, Inc. and subsidiaries and Uni-Care at March
31, 1996
Pro Forma Condensed Combined Statements of Income of NCS
HealthCare, Inc. and subsidiaries and Uni-Care for the
nine months ended March 31, 1996 and for the year
ended June 30, 1995
2
<PAGE> 3
(c) Exhibits.
---------
<TABLE>
<CAPTION>
Sequential
Exhibit No. Description Page No.
- ----------- ----------- --------
<S> <C> <C>
2.1 Stock Purchase Agreement, dated May 15, 1996, by and among *
NCS HealthCare, Inc., a Delaware corporation, and the owners
of capital stock of Uni-Care Health Services, Inc., a New
Hampshire corporation, and Uni-Care Health Services of
Maine, Inc., a New Hampshire corporation (without
schedules).
99.1 Employment Agreement, dated as of May 15, 1996, by and *
between Uni-Care Health Services, Inc. and Michael F.
Fecteau.
99.2 Employment Agreement, dated as of May 15, 1996, by and *
between Uni-Care Health Services of Maine, Inc., and Richard
P. Legere.
99.3 Employment Agreement, dated as of May 15, 1996, by and *
between Uni-Care Health Services, Inc. and Leon Parker.
99.4 Noncompetition Agreement, dated as of May 15, 1996, by and *
between NCS HealthCare, Inc. and Francis J. Cassidy.
- ---------------
<FN>
* Previously filed.
</TABLE>
3
<PAGE> 4
AMERICARE HEALTH SERVICES, INC. AND SUBSIDIARIES
CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 1994 AND 1995, AND MARCH 31, 1996 (Unaudited)
<PAGE> 5
R.E. REED & COMPANY CERTIFIED PUBLIC ACCOUNTANTS
================================================================================
REPORT OF INDEPENDENT AUDITORS
To the Board of Directors
AMERICARE HEALTH SERVICES, INC.
23 Perimeter Road, South
Londonderry, New Hampshire 03053
We have audited the accompanying consolidated balance sheets of Americare Health
Services, Inc. and Subsidiaries as of December 31, 1994 and 1995, and the
related consolidated statements of operations and retained earnings, and cash
flows for the two years ended December 31, 1995. These financial statements are
the responsibility of the Company's management. Our responsibility is to express
an opinion on these financial statements based on our audits.
We conducted our audit 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 consolidated financial statements referred to above present
fairly, in all material respects, the consolidated financial position of
Americare Health Services, Inc. and Subsidiaries at December 31, 1994 and 1995,
and the consolidated results of their operations and their cash flows for the
two years ended December 31, 1995, in conformity with generally accepted
accounting principles.
R.E. Reed & Company
/s/ R.E. Reed & Company
Laconia, New Hampshire
March 21, 1996
174 COURT STREET LACONIA NEW HAMPSHIRE 03246 (603) 524-4693 FAX (603) 528-5762
<PAGE> 6
AMERICARE HEALTH SERVICES, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
ASSETS
<TABLE>
<CAPTION>
December 31 December 31 March 31
1994 1995 1996
--------- --------- ---------
(Unaudited)
CURRENT ASSETS
<S> <C> <C> <C>
Cash $ 0 $ 115,460 $ 0
Accounts Receivable, Net 1,610,942 2,561,244 2,636,670
Other Receivables 46,477 56,245 64,936
Inventory 741,892 862,565 743,309
Prepaid Expenses 37,529 68,201 30,750
--------- --------- ---------
Total Current Assets 2,436,840 3,663,715 3,475,665
--------- --------- ---------
PROPERTY AND EQUIPMENT
Computer Equipment 436,392 516,827 572,956
Office Equipment 190,333 231,114 212,637
Medical Carts 540,957 574,465 663,220
Vehicles 161,450 152,219 161,450
Leasehold Improvements 158.648 184,431 201.016
--------- --------- ---------
1,487,780 1,659,056 1,811,279
Accumulated Depreciation (932,700) (1,084,080) (1,130,448)
--------- --------- ---------
Net Property and Equipment 555,080 574,976 680,831
--------- --------- ---------
OTHER ASSETS
Note Receivable 213,234 204,109 201,726
Intangible Assets 99,022 63,094 61,612
Security Deposits 7,874 7,775 7,775
Deferred Tax Asset 0 89,739 89,739
--------- --------- ---------
Total Other Assets 320,130 364,717 360,852
--------- --------- ---------
TOTAL ASSETS $ 3,312,050 $ 4,603,408 $ 4,517,348
========= ========= =========
</TABLE>
See accompanying notes
<PAGE> 7
AMERICARE HEALTH SERVICES, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
LIABILITIES AND STOCKHOLDERS' EQUITY
<TABLE>
<CAPTION>
December 31 December 31 March 31
1994 1995 1996
---------- ----------- -----------
(Unaudited)
CURRENT LIABILITIES
<S> <C> <C> <C>
Accounts Payable $ 646,482 $ 896,800 $ 762,801
Bank Overdraft 137,425 99,976 665,371
Advance Payment
- State of N.H. 425,000 60,000 60,000
Line of Credit
and Demand Note 76,000 1,120,000 165,000
Accrued Expenses 270,198 496,457 545,020
Current Portion of
Long-Term Debt 180,607 178,755 196,232
Current Portion of
Covenant Payable 30,000 0 0
---------- ----------- -----------
Total Current Liabilities 1,765,712 2,851,988 2,394,424
---------- ----------- -----------
LONG-TERM DEBT -
NET OF CURRENT PORTION 552,357 373,923 515,435
---------- ----------- -----------
TOTAL LIABILITIES 2,318,069 3,225,911 2,909,859
---------- ----------- -----------
STOCKHOLDERS' EQUITY
Common Stock, No Par Value, 100
Shares Authorized, 100 Shares
Issued and Outstanding 22,833 22,833 22,833
Additional Paid-In Capital 200,853 200,853 200,853
Retained Earnings 770,295 1,153,811 1,383,803
---------- ----------- -----------
Total Stockholders' Equity 993,981 1,377,497 1,607,489
---------- ----------- -----------
TOTAL LIABILITIES AND
STOCKHOLDERS' EQUITY $ 3,312,050 $ 4,603,408 $ 4,517,348
========== =========== ===========
</TABLE>
See accompanying notes
<PAGE> 8
AMERICARE HEALTH SERVICES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS AND RETAINED EARNINGS
FOR THE YEARS ENDED DECEMBER 31, 1994 AND 1995
AND THE THREE MONTHS ENDED MARCH 31, 1996 (UNAUDITED)
<TABLE>
<CAPTION>
Year Ended December 31 Three Months Ended
---------------------- ------------------
1994 1995 March 31, 1996
---- ---- --------------
(Unaudited)
<S> <C> <C> <C>
SALES (NET) $12,350,848 $15,012,358 $ 4,604,204
COST OF SALES 6,922,847 8,329,333 2,566,441
----------- ----------- -----------
GROSS PROFIT 5,428,001 6,683,025 2,037,763
OPERATING EXPENSES 5,143,585 5,986,735 1,654,251
----------- ----------- -----------
INCOME FROM OPERATIONS 284,416 696,290 383,512
----------- ----------- -----------
OTHER INCOME AND (EXPENSES)
Interest Income 18,617 34,805 4,400
Interest Expense (76,715) (113,018) (19,517)
Sale of Equipment 2,896 (55,443) 0
Miscellaneous Income 7,690 6,323 14,820
----------- ----------- -----------
Total Other
Income and (Expenses) (47,512) (127,333) (297)
----------- ----------- -----------
INCOME BEFORE TAXES 236,904 568,957 383,215
PROVISION FOR INCOME TAXES 106,511 185,441 153,223
----------- ----------- -----------
NET INCOME 130,393 383,516 229,992
RETAINED EARNINGS
- - BEGINNING OF YEAR 639,902 770,295 1,153,811
----------- ----------- -----------
RETAINED EARNINGS
- - END OF YEAR $ 770,295 $ 1,153,811 $ 1,383,803
=========== =========== ===========
</TABLE>
See accompanying notes
<PAGE> 9
AMERICARE HEALTH SERVICES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE YEARS ENDED DECEMBER 31, 1994 AND 1995
AND THE THREE MONTHS ENDED MARCH 31, 1996 (UNAUDITED)
<TABLE>
<CAPTION>
Year Ended December 31 Three Months Ended
---------------------- ------------------
1994 1995 March 31, 1996
---- ---- --------------
(Unaudited)
CASH FLOWS FROM
OPERATING ACTIVITIES:
<S> <C> <C> <C>
Net Income $ 130,393 $ 383,516 $ 229,992
--------- --------- ---------
Adjustments to Reconcile
Net Income to Net Cash Provided
by Operations:
Change in Reserve for Bad Debt 34,938 117,118 20,576
Depreciation 216,989 247,065 46,368
Amortization 36,783 35,928 1,482
(Gain) Loss on Sale of Assets (2,896) 55,443
Deferred Taxes (89,739)
(Increase) Decrease
in Current Assets:
Accounts Receivable (393,923) (1,067,420) (96,002)
Other Receivables 36,058 (9,768) (8,691)
Inventory (37,802) (120,673) 119,256
Prepaid Expenses 32,045 (30,671) 37,451
Increase (Decrease) in Current
Liabilities:
Accounts Payable 73,249 250,318 (133,999)
Accrued Expenses 7,208 226,259 48,563
Bank Overdraft 137,425 (37,449) 565,395
Advance Payment
- State of N.H. 425,000 (365,000) 0
--------- --------- ---------
Total Adjustments 565,074 (788,589) 600,399
--------- --------- ---------
Net Cash Flows From Operations $ 695,467 $(405,073) $ 830,391
--------- --------- ---------
</TABLE>
See accompanying notes
<PAGE> 10
AMERICARE HEALTH SERVICES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS - CONTINUED
FOR THE YEARS ENDED DECEMBER 31, 1994 AND 1995
AND THE THREE MONTHS ENDED MARCH 31, 1996 (UNAUDITED)
<TABLE>
<CAPTION>
Year Ended December 31 Three Months Ended
---------------------- ------------------
1994 1995 March 31, 1996
---- ---- --------------
(Unaudited)
CASH FLOWS FROM
INVESTING ACTIVITIES:
<S> <C> <C> <C>
Proceeds From Sale of Equipment $ 5,896 $ 7,930 $ 0
Purchases of Equipment (342,333) (330,336) (152,223)
Increase in Note Receivable (27,062) 9,125 2,383
Change in Deposits (250) 99 0
Change in Covenant Payable (30,000) (30,000) 0
--------- ---------- ---------
Net Cash Flows From
Investing Activities (393,749) (343,182) (149,840)
--------- ---------- ---------
CASH FLOWS FROM
FINANCING ACTIVITIES:
Capital Stock 2,000 0 0
Loan Proceeds
Loan Principal Reduction 182,962 2,418,670 200,000
(492,236) (1,554,955) (996,011)
--------- ---------- ---------
Net Cash Flows From
Financing Activities (307,274) 863,715 (796,011)
--------- ---------- ---------
Net Change in Cash
and Cash Equivalents (5,556) 115,460 (115,460)
Cash, Beginning of Year 5,556 0 115,460
--------- ---------- ---------
Cash, End of Year 0 $ 115,460 0
========= ========== =========
SUPPLEMENTAL DISCLOSURE OF
CASH PLOW INFORMATION:
Cash Paid During the Year for:
Income Taxes $ 132,726 $ 151,347 $ 0
Interest 76,655 113,088 19,517
</TABLE>
See accompanying notes
<PAGE> 11
AMERICARE HEALTH SERVICES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 1994 AND 1995
AND UNAUDITED FOR THE THREE MONTHS ENDED MARCH 31, 1996
Uni-Care Health Services, Inc. was incorporated on July 1, 1979.
The corporation provides for the pharmaceutical needs of nursing
homes, jails and group home residents in New Hampshire and Maine.
On January 1, 1994, AmeriCare Health Services, Inc., a holding
company, was formed. The shareholders of Uni-Care Health
Services, Inc. exchanged their stock for shares in the holding
company. Uni-Care Health Services, Inc. is now a wholly owned
subsidiary of AmeriCare Health Services, Inc.
Also on January 1, 1994, Uni-Care Health Services of Maine, Inc. was
formed by the three existing shareholders of Uni-Care Health Services,
Inc. Certain assets of Uni-Care Health Services, Inc., pertaining to
the Maine operations were sold at fair market value to the new
corporation.
NOTE 1: Summary of Significant Accounting Policies
The consolidated financial statements include the company's
subsidiaries, Uni-Care Health Services, Inc. and Uni-Care Health
Services of Maine, Inc. All significant inter-company
transactions have been eliminated in consolidation.
Income and expenses are recognized on the accrual basis of accounting,
whereby income is recognized when earned rather than when received and
expenses are recognized when incurred rather than when paid.
Accounts receivable at December 31, 1995 and 1994 are shown net of an
allowance for doubtful accounts of $190,776 and $73,658, respectively.
Inventories are stated at cost, utilizing the first-in, first-out
(FIFO) method. Inventories are located at the Londonderry and Wells
distribution centers as well as at the various nursing facilities as
follows:
1995 1994
---- ----
Londonderry $564,839 $469,981
Wells 174,893 189,976
Off-site Facilities 122,833 81,935
-------- --------
$862,565 $741,892
======== ========
<PAGE> 12
AMERICARE HEALTH SERVICES, INC. AND SUBSIDIARIES
NOTES TO FINANCIAL STATEMENTS CONTINUED
NOTE 1: Summary of Significant Accounting Policies (Continued)
Property and equipment are recorded at cost and are being depreciated
over their estimated useful lives, shown below, using both
straight-line and accelerated methods.
Life
----
Computer Equipment 5 years
Office Equipment 5 - 7 years
Medical Carts 5 - 8 years
Vehicles 5 years
Leasehold Improvements 7 - 31.5 years
Accrued vacation expense represents vacation, holiday and sick time
accumulated by employees. The corporation accrues on behalf of its
employees, based upon the following policy with a maximum of 40 days
accumulation:
Years of Service Full-time Part-time
---------------- --------- ---------
1 - 5 years 20 days/year 15 days/year
5 - 15 years 25 days/year 20 days/year
15 - 20 years 30 days/year 25 days/year
20 + years 35 days/year 30 days/year
The corporation has a 401k profit sharing plan which is available to
all employees. Management elected to fund this plan and charge expense
in the amount of $14,090 and $41,430 for the years ended December 31,
1994 and 1995, respectively. The plan has a December 31 year end and is
administered by Benefit Strategies, Inc.
Management uses estimates and assumptions in preparing financial
statements in accordance with generally accepted accounting principles.
Those estimates and assumptions affect the reported amounts of assets
and liabilities, the disclosure of contingent assets and liabilities,
and the reported revenues and expenses. Actual results could vary from
the estimates that were used.
<PAGE> 13
AMERICARE HEALTH SERVICES, INC. AND SUBSIDIARIES
NOTES TO FINANCIAL STATEMENTS CONTINUED
NOTE 1: Summary of Significant Accounting Policies (Continued)
For purposes of the statement of cash flows, the company considers all
highly liquid debt instruments purchased with a maturity of three
months or less to be cash equivalents.
The company maintains its cash in bank deposit accounts, which, at
times, may exceed federally insured limits. The company has not
experienced any losses in such account. The company believes it is not
exposed to any significant credit risk on cash and cash equivalents.
Federal and state income taxes are recognized at the corporate level.
1995 1994
---- ----
Federal $231,380 $ 93,724
State Taxes 43,800 12,787
Deferred Taxes (89,739) 0
-------- --------
$185,441 $106,511
======== ========
The company's deferred tax asset results from temporary timing
differences between book and tax expenses. The corporation has expensed
on its books, bad debts and vacation expenses resulting from accrual
and reserve allowances. These expenses cannot be taken for tax purposes
until paid or incurred. Under FASB 109 the company has recognized a
deferred tax asset and reduced current period tax expense by the amount
of this asset.
NOTE 2: Life Insurance
The corporation is the owner and beneficiary of the following term life
insurance policies on the shareholder and key employee.
Face Value
----------
Richard Fortier $ 516,600
Michael Fecteau 300,000
---------
$ 816,600
=========
MOTE 3: Intangible Assets
Loan origination fees associated with the 1992 refinancing are being
amortized using the straight-line method over 7 years.
Organization costs, contract rights and goodwill related to the
acquisition of the Uni-Care Health Services of Maine, Inc. are being
amortized using the straight-line method over 15 years.
<PAGE> 14
AMERICARE HEALTH SERVICES, INC. AND SUBSIDIARIES
NOTES TO FINANCIAL STATEMENTS CONTINUED
NOTE 3: Intangible Assets (continued)
A covenant not to compete' is being amortized using the straight-line method
over 15 years.
The 1995 amortization expense and net balances of the intangible assets at
December 31, 1995 are as follows:
Beginning Amortization 12/31/95
Balance Expense Balance
-------- -------- ---------
Loan Fees $ 6,016 $ (1,331) $ 4,685
Organization Costs 8,333 (600) 7,733
Contract Rights 13,672 (996) 12,676
Goodwill 4,552 (336) 4,216
Covenants 66,449 (32,665) 33,784
-------- -------- --------
$ 99,022 $(35,928) $ 63,094
======== ======== ========
NOTE 4: Demand Note
The corporation has a $2,000,000 working capital credit line with a bank.
Interest at .5% over the bank's base rate is payable monthly. The balance at
December 31, 1994 and 1995 was $76,000 and $1,120,000, respectively.
This note is secured by assets of the corporation.
NOTE 5: Long-Term Debt
<TABLE>
<CAPTION>
1994 1995 March 31, 1996
(Unaudited)
<S> <C> <C> <C>
Bank Note - SBA Guarantee is
payable in monthly installments of
$10,215 including interest at 1.5%
above the bank's base rate. The
rate and monthly payment are
adjusted on a quarterly basis in
January, April, July and October.
This note is being amortized over 7
years and is secured by the assets
of the corporation. This
loan matures on May 27, 1999. $432,504 $351,276 $336,717
Bank Note is payable in monthly
principal installments of $2,778
plus interest at 1% over the bank's
base rate. This note is being
amortized over 36 months and is
secured by the assets of the
corporation. This loan
matures on November 30, 1996. 61,111 27,778 22,222
</TABLE>
<PAGE> 15
AMERICARE HEALTH SERVICES, INC. AND SUBSIDIARIES
NOTES TO FINANCIAL STATEMENTS CONTINUED
<TABLE>
<CAPTION>
NOTE 5: LONG-TERM DEBT (CONTINUED)
<S> <C> <C> <C>
Note Payable to bank in monthly
installments of $2,453 including
principal and interest. Interest is
1% over bank base rate and the note
will mature on September 1,
1998. $ 110,414 $ 80,970 $ 73,609
Note payable to bank for vehicle
purchase. Monthly payments of
$571 including principal and
interest. This note matures on
October 10, 1998. 21,961 16,763 15,394
Capital lease payable for
computer requiring monthly
payments of $1,715 per month.
There are 12 payments left on
this lease. 29,364 22,132 16,229
Note Payable to bank in monthly
installments of $4,166 including
principle and interest. Interest is
3/4 % over the bank base rate.
This note matures on 3/21/2000. 0 0 200,000
Note Payable - Paul Boisseau is
payable in 20 quarterly
installments of $7,339 through
1998. The stated rate of interest
is 8% and this note is secured by
the personal guarantee of a
shareholder and key employee. 77,610 53,760 47,496
--------- --------- ---------
Total Long-Term Debt
Less Current Portion 732,964 552,679 711,667
(180,607) (178,755) (196,232)
--------- --------- ---------
Long-Term Debt Net of
Current Portion $ 552,357 $ 373,924 $ 515,435
========= ========= =========
</TABLE>
Maturities of long-term debt for the next four years are as follows:
1996 $ 178,755
1997 138,670
1998 140,077
1999 41,111
The corporation is not in compliance with one of its loan convenants at December
31, 1995. It meets all ratios except the total debt to tangible net worth ratio.
The bank requires a 2.5:1 and the actual is 3.0:1. Management has obtained a
waiver for this financial covenant.
<PAGE> 16
AMERICARE HEALTH SERVICES, INC. AND SUBSIDIARIES
NOTES TO FINANCIAL STATEMENTS CONTINUED
NOTE 6: Financial Instruments
All financial instruments are held for purposes other than trading. The
following methods and assumptions were used to estimate the fair value
of each financial instrument for which it is practicable to estimate
that value:
Cash and Cash Equivalents
-------------------------
The carrying amount approximates fair value because of the short
maturity of those instruments.
Notes Receivable
----------------
The fair market value of the companies notes receivable are based upon
an interest rate of 6% as compared to the actual rate of 7% and 10%.
Long-Term Debt
--------------
The fair value of the company's long-term debt is estimated based on
borrowing rates currently available to the company for bank loans with
similar terms and maturities. The companies current debt interest rate,
floats with prime. As a result its fair market value equals the
carrying value.
Investments
-----------
None.
The estimated fair value of the company's financial instruments are as
follows:
ASSETS
------
CARRYING AMOUNT FAIR VALUE
Cash and Cash Equivalents $ 115,460 $ 115,460
Notes Receivable 206,109 292,000
LIABILITIES
-----------
Long-Term Debt $ 552,679 $ 552,679
<PAGE> 17
AMERICARE HEALTH SERVICES, INC. AND SUBSIDIARIES
NOTES TO FINANCIAL STATEMENTS CONTINUED
NOTE 7: PAYABLE - STATE OF NEW HAMPSHIRE
During June and July of 1994, the state of New Hampshire had problems
processing medicaid claims for payment. As a result, the state
processed blanket advances amounting to $425,000 to the corporation.
These advances were not matched to claims. Subsequently, the actual
claims, less the current balance owed, were paid by the State.
The balance owed on these advances as of December 31, 1995 is $60,000.
NOTE 8: STOCK OWNERSHIP
Americare Health Services, Inc.
100 shares of issued and outstanding
no par common stock:
Michael Fecteau 59.7
Francis Cassidy 40.3
Uni-Care Health Services, Inc.
250 shares of no par value:
Americare Health
Services, Inc. 250
Uni-Care Health Services of Maine, Inc.
375 shares 324 issued and outstanding
no par value common stock:
Americare Health
Services, Inc. 300
Richard Legree 24
Fifty one shares of Uni-Care Health Services of Maine, Inc. are
being held in escrow for future stock bonuses to Richard Legree.
Refer to Note 13 for the 1995 shares to be bonused in 1996.
<PAGE> 18
AMERICARE HEALTH SERVICES, INC. AND SUBSIDIARIES
NOTES TO FINANCIAL STATEMENTS CONTINUED
NOTE 9: RELATED PARTY TRANSACTIONS
One of the shareholders owes the corporation monies for the original
acquisition of his shares. This note bears 10% interest and as of
December 31, 1995, $54,355 has been accrued. The balance and principal
reductions on these notes are as follows:
Michael
Fecteau
-------
Balance 12/31/94 $116,976
Payment -0-
--------
Balance 12/31/95 $116,476
========
During 1995, the corporation leased its New Hampshire facility from
Michael Fecteau, a shareholder of the corporation. The total lease
payments for the facility for 1995 were $144,960.
NOTE 10: LEASES
The corporation has two long-term real estate leases. The first lease
is for the former location on Brown Avenue, Manchester, New Hampshire.
This lease expires on October 30, 1998 and requires monthly payments of
$1,419. A portion of this facility is being sublet for $450 per month.
The second lease is with a shareholder (Note 10) for 15 years at
$12,079 per month. This lease is subject to annual CPI (Consumer Price
Index) increases.
The corporation is leasing its facility in Wells, Maine under a three
year lease through October 1996. Monthly lease payments of $1,500 began
November 1, 1994. This lease has a renewal option of three years at
which time the monthly rent will be recalculated based on the CPI for
the Northeast Region.
The corporation has 12 operating leases for vehicles and postage
machines. The total obligation under these leases amount to $116,335
which will be paid over a four year period.
The total projected lease payments over the next five years are as
follows:
1996 $ 229,204
1997 192,963
1998 173,060
1999 141,147
2000 139,200
<PAGE> 19
AMERICARE HEALTH SERVICES, INC. AND SUBSIDIARIES
NOTES TO FINANCIAL STATEMENTS CONTINUED
NOTE 11: CONTINGENT LIABILITIES
Under the employment agreements referenced in Note 13 the corporation
has liabilities that would accelerate in the event of the sale of 50%
or more of the corporate ownership.
The accelerated liability would be as follows:
Severance Pay under Employment Agreements $ 336,511
Deferred Compensation Agreement 372,000
---------
$ 708,511
=========
NOTE 12: EMPLOYMENT AGREEMENTS
The corporation has three employment agreements with key employees.
These agreements are in effect for a period of two to five years.
The annual obligation under these agreements amounts to $271,650
adjusted annually for CPI.
One agreement contains a provision for a stock bonus equaling 1%
ownership interest in the Maine corporation for every 100 bed increase
in Maine. At December 31, 1995 sixteen additional shares have been
earned under this agreement. At December 31, 1995 these additional
shares had not been issued.
Refer to Note 11 for obligations as to severance pay liabilities.
One agreement contains a deferred compensation package totaling
$400,000 to be paid on a five year period commencing March 31, 1998.
NOTE 13: SUBSEQUENT EVENT (UNAUDITED)
On May 15, 1996 all of the outstanding stock of Americare Health Care
Services, Inc. and Uni-Care Health Services of Maine were acquired by
NCS HealthCare, Inc.
<PAGE> 20
Pro Forma Condensed Combined Financial Statements
The following pro forma condensed combined balance sheet as of March 31, 1996
and the pro forma condensed combined statements of income for the nine-month
period ended March 31, 1996 and for the year ended June 30, 1995, give effect to
the NCS HealthCare, Inc. (NCS) acquisition of Americare Health Services, Inc.
(d.b.a Uni-Care) on May 15, 1996 in exchange for 34,483 shares of NCS Class A
common stock valued at $1,000,000 and $7,370,000 in cash accounted for as a
purchase. The pro forma information is based on the historical consolidated
financial statements of NCS and Uni-Care and their subsidiaries under the
assumptions and adjustments set forth in the accompanying notes to the pro forma
condensed combined financial statements.
The pro forma information is presented for illustrative purposes only and may
not be indicative of the results that actually would have occurred if the NCS
acquisition of Uni-Care had been in effect during the periods presented or which
may be attained in the future. The pro forma condensed combined financial
statements should be read in conjunction with the historical consolidated
financial statements and notes thereto of NCS and Uni-Care.
<PAGE> 21
NCS HealthCare, Inc. and Uni-Care
Pro Forma Condensed Combined Balance Sheet
March 31, 1996
(In Thousands, Except Per Share Amounts)
<TABLE>
<CAPTION>
Historical NCS
HealthCare and Pro Forma Pro Forma
Subsidiaries Uni-Care Adjustments Eliminations Combined
------------------------------------------------------------------------------------
(Note A) (Note B)
ASSETS
Current assets:
<S> <C> <C> <C> <C> <C>
Cash and cash equivalents $ 40,752 $ (7,370) $ 33,382
Accounts receivable, net 23,950 $ 2,637 26,587
Inventories 6,048 743 6,791
Prepaid expenses and other assets 3,190 96 3,286
------------------------------------------------------------------------------------
Total current assets 73,940 3,476 (7,370) 70,046
Property, plant and equipment, net 8,275 680 8,955
Goodwill, net 24,636 8,370 $ (1,608) 31,398
Other assets, net 542 361 903
------------------------------------------------------------------------------------
TOTAL ASSETS $ 107,393 $ 4,517 $ 1,000 $ (1,608) $ 111,302
====================================================================================
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 4,312 $ 1,488 $ 5,800
Accrued expenses and other current
liabilities 4,220 545 4,765
Current portion of long-term debt 361 361
------------------------------------------------------------------------------------
Total current liabilities 8,532 2,394 10,926
Long-term debt, excluding current portion 3,438 515 3,953
Convertible subordinated debentures 6,549 6,549
Other 565 565
Stockholders' equity:
Common stock, par value $.01 per share:
Class A 55 23 $ (23) 55
Class B 66 66
Paid-in capital 83,676 201 $ 1,000 (201) 84,676
Retained earnings 4,512 1,384 (1,384) 4,512
------------------------------------------------------------------------------------
Total stockholders' equity 88,309 1,608 1,000 (1,608) 89,309
------------------------------------------------------------------------------------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 107,393 $ 4,517 $ 1,000 $ (1,608) $ 111,302
====================================================================================
Book value per common share $ 7.28 $ 7.35
=================== ==================
</TABLE>
See accompanying notes to pro forma condensed combined financial statements.
<PAGE> 22
NCS HealthCare, Inc. and Uni-Care
Pro Forma Condensed Combined Statements of Income
Nine Months Ended March 31, 1996
(In Thousands, Except Per Share Amounts)
<TABLE>
<CAPTION>
Historical
----------------------------------
Previously Acquisitions Offering
NCS HealthCare Acquired Pro Forma Pro Forma Pro Forma
and Subsidiaries Companies (C) Uni-Care (C) Adjustments Adjustments as Adjusted
-------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Revenues $ 80,236 $ 5,650 $ 12,590 $ 98,476
Cost of revenues 58,183 4,254 6,925 69,362
-------------------------------------------------------------------------------------------------
Gross profit 22,053 1,396 5,665 29,114
Selling, general and
administrative expenses 16,044 822 4,914 $ (70)(D) 21,710
Special compensation 2,811 2,811
-------------------------------------------------------------------------------------------------
Operating income (loss) 3,198 574 751 70 4,593
Interest expense 1,775 80 87 516 (E) $ (1,735)(F) 723
-------------------------------------------------------------------------------------------------
Income (loss) before income
taxes 1,423 494 664 (446) 1,735 3,870
Income tax expense (benefit) 626 192 223 (101) 763 1,703
-------------------------------------------------------------------------------------------------
Net income (loss) $ 797 $ 302 $ 441 $ (345) $ 972 $ 2,167
=================================================================================================
Net income per share $ 0.10 $ 0.18
=================== =================
Shares used in the
computation 7,854 12,276(G)
=================== =================
</TABLE>
See accompanying notes to pro forma condensed combined financial statements.
<PAGE> 23
NCS HealthCare, Inc. and Uni-Care
Pro Forma Condensed Combined Statements of Income
Year Ended June 30, 1995
(In Thousands, Except Per Share Amounts)
<TABLE>
<CAPTION>
Historical
----------------------------------
Previously Acquisitions Offering
NCS HealthCare Acquired Pro Forma Pro Forma Pro Forma
and Subsidiaries Companies (C) Uni-Care (C) Adjustments Adjustments as Adjusted
-------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Revenues $ 65,602 $ 32,184 $ 13,617 $ 111,403
Cost of revenues 46,570 24,996 7,685 79,251
-------------------------------------------------------------------------------------------------
Gross profit 19,032 7,188 5,932 32,152
Selling, general and
administrative expenses 14,539 5,251 5,455 $ 166 (D) 25,411
-------------------------------------------------------------------------------------------------
Operating income (loss) 4,493 1,937 477 (166) 6,741
Interest expense 1,089 397 83 (1,990)(E) $(2,886) (F) 673
-------------------------------------------------------------------------------------------------
Income (loss) before income
taxes 3,404 1,540 394 (2,156) 2,886 6,068
Income tax expense (benefit) 1,536 678 169 (951) 1,302 2,734
-------------------------------------------------------------------------------------------------
Net income (loss) $ 1,868 $ 862 $ 225 $(1,205) $ 1,584 $ 3,334
=================================================================================================
Net income per share $ 0.28 $ 0.27
=================== =================
Shares used in the
computation 6,764 12,276(G)
=================== =================
</TABLE>
See accompanying notes to pro forma condensed combined financial statements.
<PAGE> 24
NCS HealthCare, Inc. and Uni-Care
Notes to Pro Forma Condensed Combined Financial Statements
(A) Issuance of 34,483 shares of NCS Class A common stock valued at
$1,000,000 and $7,370,000 in cash in exchange for all of the outstanding
shares of Uni-Care. The transaction is accounted for as a purchase
resulting in an excess purchase price over historical cost of $6,762,000
all of which was allocated to goodwill.
(B) Adjustments to consolidate Uni-Care with NCS.
(C) The historical statement of income data for the acquired companies and
Uni-Care for the year ended June 30, 1995 represent the results of
operations of such companies from July 1, 1994 to the earlier of their
respective dates of acquisition or June 30, 1995. The historical
statement of income data for the acquired companies and Uni-Care for the
nine months ended March 31, 1996 represent the results of operations for
such companies from July 1, 1995 to their respective dates of
acquisition. Each of the acquisitions has been accounted for as a
purchase. Accordingly, the results of the operations of each such
acquired company are included in the Company's results of operations from
the date of acquisition.
(D) The adjustment to selling, general and administrative expenses consists
of: (i) reductions to acquired companies' historical amounts of
compensation for owners and certain employee benefits for the difference
between such historical amounts and amounts specified in post-acquisition
employment contracts for such individuals and continuing benefit
programs, and (ii) the adjustment to amortization of excess of cost over
net assets acquired over a 30-year period arising from the excess of cost
over fair value of net assets of the acquired companies, as if such
companies were acquired as of July 1, 1994.
(E) The adjustment reflects the additional interest expense that would have
been incurred had the consideration in the form of long-term debt and
convertible debentures for the acquisitions been issued on July 1, 1994.
The convertible debentures bear interest at annual rates from 7% to 8%
and are payable through 1997.
(F) The adjustment to interest expense reflects the retirement of certain
outstanding debt of NCS and Uni-Care by applying a portion of the
estimated net proceeds of NCS' initial public offering and the conversion
of certain convertible subordinated debentures, as if such transactions
had occurred on July 1, 1994.
(G) Shares used in the computation of pro forma net income per share, as
adjusted, gives effect to the issuance of 682,300 shares of Class A
Common Stock in connection with the conversion of convertible
subordinated debentures, the issuance and sale of 4,476,000 shares of
Class A Common Stock in connection with NCS' initial public offering in
February 1996 and the issuance of 34,483 shares of Class A Common Stock
in connection with the acquisition of Uni-Care. The dilutive effect of
all options outstanding was calculated using the treasury stock method.
<PAGE> 25
SIGNATURES
----------
Pursuant to the requirements of the Securities Exchange Act of
1934, the Registrant has duly caused this report to be signed on its behalf by
the undersigned thereunto duly authorized.
NCS HEALTHCARE, INC.
By: /s/ Jeffrey R. Steinhilber
--------------------------------
Jeffrey R. Steinhilber,
Senior Vice President and
Chief Financial Officer
Date: July 29, 1996
4
