<PAGE> 1
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q/A-1
/X/ Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange
Act of 1934
For the quarterly period ended November 30, 1995
/ / Transition Report Pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934
For the transition period to
------------------- -------------------
COMMISSION FILE NO. 0-9833
UNIHOLDING CORPORATION
- -------------------------------------------------------------------------------
(Exact name of registrant as specified in its charter)
Delaware 58-1443790
- ---------------------------- ----------------------
(State or other jurisdiction (I.R.S. Employer
of incorporation) Identification Number)
96 Spring Street, 8th Floor, New York, New York 10012
- ----------------------------------------------- ----------------------
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (212) 219-9496
----------------------------
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes X No
--- ---
As of January 10, 1996, there were 6,124,432 shares of Common Stock, par value
$0.01 per share, of the Registrant outstanding.
PAGE 1 OF 21
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UNIHOLDING CORPORATION AND SUBSIDIARIES
FORM 10-Q FOR THE QUARTERLY PERIOD ENDED NOVEMBER 30, 1995
INDEX
<TABLE>
<CAPTION>
Page
----
<S> <C> <C>
PART I - FINANCIAL INFORMATION:
Item 1. Financial Statements 3
Consolidated Balance Sheets - November 30, 1995
and May 31, 1995 4
Consolidated Statements of Operations -
Three month and six month periods ended
November 30, 1995 and 1994 7
Consolidated Statements of Cash Flows -
Six month periods ended November 30, 1995
and 1994 8
Notes to Unaudited Consolidated Financial Statements 10
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of
Operations 15
PART II - OTHER INFORMATION:
Item 1. Legal Proceedings 19
Item 5. Other Items 20
Item 6. Exhibits 20
Signatures 21
Exhibits 22
</TABLE>
2
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PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
3
<PAGE> 4
UNIHOLDING CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(Dollars in thousands)
<TABLE>
<CAPTION>
ASSETS November 30, 1995 May 31, 1995
----------------- ------------
(Unaudited)
<S> <C> <C>
CURRENT ASSETS:
Cash and cash equivalents $ 2,427 $ 16,939
Accounts receivable, net of allowance for doubtful accounts 18,118 17,890
Due from related companies 1,005 124
Inventories 1,890 1,867
Prepaid expenses 2,338 2,921
Other current assets 1,252 1,413
-------- --------
Total current assets 27,030 41,154
-------- --------
NON-CURRENT ASSETS:
Long-term notes receivable 3,501 2,815
Intangible assets, net 57,268 55,654
Property, plant and equipment, net 32,196 33,511
Other assets, net 5,397 424
-------- --------
Total non-current assets 98,362 92,404
-------- --------
$125,392 $133,558
======== ========
</TABLE>
See notes to financial statements
4
<PAGE> 5
UNIHOLDING CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(Dollars in thousands)
<TABLE>
<CAPTION>
LIABILITIES AND STOCKHOLDERS' EQUITY November 30, 1995 May 31, 1995
----------------- ------------
(Unaudited)
<S> <C> <C>
CURRENT LIABILITIES:
Bank overdrafts $ 6,042 $ 6,501
Lease payable, short-term portion 1,097 1,021
Payable to related parties 54 338
Trade payables 5,927 4,854
Accrued liabilities 5,290 4,997
Long-term debt, current portion 19,838 4,378
Taxes payable, current portion 3,808 2,751
------ -------
Total current liabilities 42,056 24,840
------ -------
NON-CURRENT LIABILITIES:
Lease payable, non-current 1,925 1,386
Long-term debt, non-current 34,327 32,662
Taxes payable, long-term portion 192 195
Deferred taxes 4,094 4,534
------ -------
Total non-current liabilities 40,538 38,777
------ -------
Total liabilities 82,594 63,617
------ -------
MINORITY INTERESTS 5,950 32,064
------ -------
</TABLE>
(continued)
5
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UNIHOLDING CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(Dollars in thousands)
(continued)
<TABLE>
<CAPTION>
COMMITMENTS AND CONTINGENCIES November 30, 1995 May 31, 1995
STOCKHOLDERS' EQUITY: ----------------- -------------
(unaudited)
<S> <C> <C>
Common stock, $0.01 par value; authorized 20,000,000 shares; issued and
outstanding 6,122,682 at November 30, 1995
and 6,060,182 at May 31, 1995 245 242
Additional paid-in capital 32,244 31,008
Cumulative translation adjustment - 1,174
Retained earnings 7,446 5,453
------- -------
39,935 37,877
Less - cost of 163,000 and 0 shares of Common Stock held in treasury at
November 30, 1995 and May 31, 1995, respectively (3,087) 0
------- -------
Total stockholders' equity 36,848 37,877
------- -------
$125,392 $133,558
======= =======
</TABLE>
See notes to financial statements
6
<PAGE> 7
UNIHOLDING CORPORATION AND SUBSIDIARIES
UNAUDITED CONSOLIDATED STATEMENTS OF OPERATIONS
(Dollars in thousands, except per share data)
<TABLE>
<CAPTION>
Three Months ended Six Months ended
November 30 November 30
1995 1994 1995 1994
---- ---- ---- ----
<S> <C> <C> <C> <C>
REVENUE $25,612 $20,775 $47,675 $39,004
Operating expenses:
Salaries and related charges 10,253 8,148 20,216 16,366
Supplies 3,903 3,611 7,360 7,062
Other operating expenses 6,011 4,226 11,227 7,679
Depreciation and amortization of tangible assets 1,395 1,252 2,921 2,401
Amortization of intangible assets 609 493 1,194 987
------- ------- ------- -------
OPERATING INCOME 3,441 3,045 4,757 4,509
Interest, net (623) (317) (1,096) (775)
Other, net (349) - 330 (57)
------- ------- ------- -------
Income before taxes and minority interests 2,469 2,728 3,991 3,677
Tax provision (783) (872) (1,186) (1,288)
------- ------- ------- -------
Income from continuing operations
before minority interests 1,686 1,856 2,805 2,389
Minority interests in income of continuing operations (497) (978) (812) (1,329)
------- ------- ------- -------
Income from continuing operations 1,189 878 1,993 1,060
Loss on disposition of discontinued operation, net of tax
benefit of $195 and minority interests of $220 - (234) - (234)
------- ------- ------- -------
NET INCOME $ 1,189 $ 644 $ 1,993 $ 826
======= ======= ======= =======
Weighted average common shares outstanding 6,026,218 5,810,183 6,051,353 5,710,688
Earnings per share of common stock
Net income from continuing operations $ 0.20 $ 0.15 $ 0.33 $ 0.19
Loss on disposition of discontinued operation - ($ 0.04) - ($ 0.04)
Net income $ 0.20 $ 0.11 $ 0.33 $ 0.14
</TABLE>
See notes to financial statements
7
<PAGE> 8
UNIHOLDING CORPORATION AND SUBSIDIARIES
UNAUDITED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Dollars in thousands)
<TABLE>
<CAPTION>
Six Months ended
November 30
1995 1994
---- ----
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $1,993 $ 826
Adjustments to reconcile net income to net cash
provided by operations:
Minority interests in income 812 1,109
Depreciation and amortization of tangible assets 2,921 2,401
Amortization of intangible assets 1,194 987
Other non-cash expenses (5) -
Net changes in assets and liabilities, net of acquisitions:
(Increase) Decrease in accounts receivable (625) (146)
(Increase) Decrease in inventories (57) 792
(Increase) Decrease in prepaid expenses 576 1,239
(Increase) Decrease in other assets (470) 491
Increase (Decrease) in trade payables 1,229 (2,628)
Increase (Decrease) in accrued liabilities 403 (1,242)
Increase (Decrease) in reserve for taxes 1,098 (1,007)
Increase (Decrease) in deferred taxes (506) 442
------ ------
Net cash provided by operating activities 8,563 3,264
------ ------
CASH FLOWS FROM FINANCING ACTIVITIES:
Cash proceeds from issuance of share capital 1,240 -
Repayment of long-term debt (888) (75)
Cash proceeds from long-term debt 565 657
Proceeds (reimbursement) from (of) bank overdrafts (228) 1,378
Dividend paid to minority shareholders (34) (23)
Proceeds (repayment) of lease debt 690 279
------ ------
Net cash provided by financing activities 1,345 2,216
------ ------
</TABLE>
(continued)
8
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UNIHOLDING CORPORATION AND SUBSIDIARIES
UNAUDITED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Dollars in thousands)
(continued)
<TABLE>
<CAPTION>
Six Months ended
November 30
CASH FLOWS FROM INVESTING ACTIVITIES: 1995 1994
---- ----
<S> <C> <C>
Payment for purchases of property and equipment ($2,916) ($2,396)
Loans and advances (to) from affiliates,
related companies and shareholders (2,196) (694)
Payment for purchase of interest in subsidiaries (16,221) (992)
Payment for purchase of intangible assets (162) (1,834)
Payment for purchase of treasury stock (3,087) -
Proceeds from sale of assets 210 760
------- -------
Net cash used in investing activities (24,372) (5,156)
------- -------
Effect of exchange rate changes on cash (48) 61
Net increase (decrease) in cash and cash equivalents (14,512) 385
Cash and cash equivalents, beginning of year 16,939 1,095
------- -------
Cash and cash equivalents, end of period $2,427 $1,480
======= =======
</TABLE>
See notes to financial statements
9
<PAGE> 10
UNIHOLDING CORPORATION AND SUBSIDIARIES
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
(Monetary amounts in thousands, except per share data)
1. DESCRIPTION OF THE COMPANY AND BASIS OF PRESENTATION
As more fully discussed in UniHolding Corporation's ("UniHolding")
Annual Report on Form 10-K for the year ended May 31, 1995, UniHolding and its
subsidiaries (collectively the "Company") primarily provide clinical laboratory
testing services to physicians, managed care organizations, hospitals and other
health care providers through its laboratories in Switzerland, the United
Kingdom, Italy and Spain.
On March 31, 1994 UniHolding issued 13,103,459 (pre-reverse split)
shares (65.75%) of its common stock, a promissory note in the amount of
$18,000 and canceled a debt in the amount of $2,900 in exchange for 60% of the
capital stock of Unilabs Group Limited ("UGL"), 100% of the capital stock of
Uni Clinical Laboratories UCL Engineering SA ("UCLE"), and options to acquire
certain laboratory operating companies in Spain and Italy from Unilabs Holdings
SA, a Panama corporation, ("Holdings") pursuant to a stock exchange agreement
between UniHolding and Holdings.
UGL was formed pursuant to a Stock Purchase Agreement dated January
19, 1993 among Unilab Corporation ("Old Unilab"), MetCal, Inc. (now known as
"Unilab Corporation") and Holdings. Pursuant to the agreement, which closed on
November 10, 1993, Holdings contributed 70% of Unilabs SA, a Swiss corporation
("ULSA"), subject to the assumption by Unilab Corporation from UGL of a
liability of $21,000 to Holdings and Unilab Corporation contributed 100% of the
capital stock of JS Pathology plc ("JSP") in exchange for 60% and 40%,
respectively, of the capital stock of UGL. Subsequent to November 10, 1993,
Holdings and Unilab agreed upon an increase in the relative value of Holdings'
original contribution by approximately $4,100. Accordingly, UGL issued a note
in this amount to Holdings. JSP was subsequently transferred to United
Laboratories Limited ("ULL"), a newly formed United Kingdom corporation and
100% subsidiary of UGL, in a reorganization which is deemed to have occurred as
of November 10, 1993.
The acquisitions referred to above were accounted for as the reverse
acquisition of UniHolding by an "accounting entity" consisting of ULSA and UCLE
because following the acquisitions the former shareholders of ULSA and UCLE
were in control of the Company. Accordingly, the financial statements of the
Company are the financial statements of the "accounting entity" adjusted for
the assumed acquisition, at fair value, of the net assets of UniHolding in
exchange for the issuance of UniHolding's common stock outstanding before the
transaction.
The Company accounted for the net assets of UniHolding at the fair
value of the net assets acquired as of March 31, 1994.
On May 31, 1995, the Company exercised its options, acquired on March
31, 1994, to acquire the Spanish and Italian laboratory operations from
Holdings for an aggregate cost of $7,342 paid in the form of two promissory
notes offset against cash advances. The acquisitions were accounted for at
predecessor cost.
As of May 29, 1995, with a view to streamlining the European
subsidiary structure, UGL sold ULL, its wholly-owned subsidiary, to ULSA,
currently an 87.2% subsidiary of UGL.
10
<PAGE> 11
As of June 30, 1995, the Company, UGL and Unilab entered into an
agreement whereby UGL acquired from Unilab 40% of UGL's common stock for a
total consideration of $30,000. The consideration was paid $13,000 in cash,
$2,000 through the assumption of a debt from Unilab to JSP, and $15,000 in the
form of a one-year, interest-bearing promissory note. The agreement provides
that if the note is still unpaid six months after its due date, Unilab has the
right to convert it into shares of the Company's common stock. The acquisition
of the minority interest in UGL has been accounted for as a purchase and the
excess of the purchase price over the fair value, which approximates the
carrying value, of the assets acquired have been allocated to goodwill.
The accompanying financial statements have been prepared based on
generally accepted accounting principles in the United States and include the
accounts of all the subsidiaries, as restated for this purpose.
2. MANAGEMENT OPINION
In the opinion of management, the accompanying unaudited interim
financial statements reflect all adjustments which are necessary to present
fairly the financial position, results of operations and cash flows for the
interim periods reported. All such adjustments made were of a normal recurring
nature.
The accompanying interim financial statements and related notes should
be read in conjunction with the consolidated financial statements of the
Company and related notes as contained in the Annual Report on Form 10-K for
the year ended May 31, 1995.
The results of operations and financial position for interim periods
are not necessarily indicative of those to be expected for a full year, due, in
part, to the seasonal fluctuations which are normal for the Company's business.
3. NET INCOME PER SHARE
Net income per share is computed by dividing net income by the
weighted average number of common shares outstanding.
4. PAID-IN CAPITAL AND REVERSE SPLIT
Effective as of December 27, 1995, the Company effected a four-to-one
reverse split of its Common Stock. These financial statements reflect this
reverse split for all periods presented. The reverse split has no effect on the
financial position or results of operations of the Company.
As of July 3, 1995, the Company issued 100,000 (pre-reverse split) new
shares of common stock to one investor, at a price of $5.50 per share,
including warrants for 50,000 (pre-reverse split) shares at a price of $6.50
exercisable for 18 months from July 3, 1995. Further, as of October 5, 1995,
the Company issued 150,000 (pre-reverse split) new shares of common stock to
two investors, at a price of $5.50 per share, including warrants for 75,000
(pre-reverse split) shares at a price of $6.50 exercisable for 18 months from
October 5, 1995. See also Note 7.
5. CUMULATIVE TRANSLATION ADJUSTMENT
The Company's operations are located in Switzerland, the United
Kingdom, Italy and Spain. Its net assets, revenues and expenses are
substantially all denominated in Swiss
11
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franc, Sterling pound, Italian lire, and Spanish pesetas, while the Company
presents its consolidated financial statements in US dollars. In accordance
with generally accepted accounting principles in the United States, net gains
and losses arising upon translation from local currency financial statements
are accumulated in a separate component of Stockholders' Equity, the Cumulative
Translation Adjustment account, which may be realized upon the eventual
disposition by the Company of part or all of its investments.
6. SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION
<TABLE>
<CAPTION>
Six months ended November 30
1995 l994
---- ----
<S> <C> <C>
Cash paid during the period for
Interest $ 947 $ 859
Income taxes 727 1,715
</TABLE>
During the period ended November 30, 1995, in connection with its
acquisition of 40% of the share capital of UGL, the Company issued a note of
$15,000 and assumed a note of $2,000 payable to JSP.
During the period ended November 30, 1995, capital lease obligations
of $1,296 were incurred when the Company entered into leases for new capital
equipment.
7. ACQUISITION OF TREASURY STOCK
At various times during the quarter ended August 31, 1995, the Company
transferred funds to Holdings, with a view to enable Holdings to acquire some
shares of the Company's common stock, either from private sources or on the
market. As of November 30, 1995, the balance due by Holdings to the Company was
approximately $2,900. The Company has agreed with Holdings that such balance
would be paid by Holdings through the transfer of 155,000 (post-reverse split)
shares of the Company's common stock reflecting the purchase price of such
stock as paid by Holdings. The Company has recorded the receipt of the 155,000
(post-reverse split) shares as treasury stock offsetting the $2,900 balance due
from Holdings as of November 30, 1995. Further, during the period, the Company
acquired 8,000 (post-reverse split) of its own shares on the market for $142.
8. EXPANSION INTO CLINICAL TRIALS
As of March 1, 1995, the Company entered into a Cooperation Agreement, a
License Agreement and a Marketing Agreement (together referred to as the "NDA
Agreements") with NDA Clinical Trials Services Inc., a Delaware corporation
("NDA") to provide laboratory testing services to the pharmaceutical industry
in clinical evaluations conducted in both the United States and Europe.
According to the NDA Agreements, the Company and NDA will seek to offer a
unique service to the pharmaceutical industry through their joint efforts in
conducting laboratory tests of pharmaceutical products, utilizing similar
procedures and data management, thereby providing a global product. European
operations commenced in the Summer of 1995.
In connection therewith, the Company has formed a wholly-owned
subsidiary whose only activity will be to sell and perform clinical trials
services. The subsidiary's name is Unilabs Clinical Trials Ltd. ("UCT"), and is
domiciled in London (UK).
In connection with its decision to expand into the clinical trials
business, as of October 16, 1995, the Company entered into a Stock Purchase
Agreement and an Option Agreement with NDA. Under these Agreements, the Company
acquired 17% of NDA's capital through the purchase of newly-issued shares,
together with an option to increase its
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stake in NDA to 30% on or before May 31, 1998. The consideration for the
acquisition of 17% was $1,188 paid in cash at closing. The price for the
acquisition of the additional 13% will be based on a formula linked to NDA's
revenues for its fiscal year ending December 31, 1997.
Simultaneously, UCT granted to NDA and NDA's stockholders (excluding
the Company), an option to subscribe to new shares of UCT based on a formula
linked to UCT's revenues for its fiscal year ending May 31, 1998. The option is
contingent upon the Company exercising its option on NDA's equity, and is
limited to a maximum of 5/7th of the Company's aggregate investment in NDA.
9. INVESTMENT IN NEW VENTURE
During the period, UGL entered into an agreement with a non-affiliated
company, Health Strategies Limited, a Jersey Channel Islands corporation
("HSL"), whereby a new company, MISE S.A., a British Virgin Islands corporation
("MISE") was formed. UGL has made an investment of $3,005 in MISE in return for
33% of the voting rights in MISE stock, and for 67% of any dividend which may be
paid in the future. The purpose of this investment is for the Company to have
access to a software package, of which the rights thereto have been contributed
to MISE by HSL. The software package, known as "MDM", operates as a
sophisticated payments system for health insurance companies. The package
permits processing of payments by an insurance company through a networking
system which checks claims for tests provided at the doctor's request against
industry averages thereby identifying test service providers who may deviate
from the relevant norms. MISE intends to market the package to health insurance
companies throughout Europe. The Company believes that such a system should be
particularly useful and applicable in the context of the ongoing deregulation of
the European health care system as it may provide a useful tool in achieving
substantial savings in health care costs.
10. SUBSEQUENT EVENTS
Effective as of December 27, 1995, the Company undertook the following
corporate actions:
(1) a four-to-one reverse split of its Common Stock;
(2) a decrease of authorized shares of its Common Stock from 60
million to 20 million; and
(3) changed its name from UniHolding Corp. to UniHolding Corporation.
Further, on December 15, 1995, the Company announced its intent to
effect a spin-off of its clinical trials business through a distribution to its
shareholders. Had such spin-off been effected as of June 1, 1995, the Company
would have recorded the following pro forma results for the six months ended
November 30, 1995 (unaudited):
<TABLE>
<S> <C>
Revenue $47,675
Operating income 5,355
Net income 2,425
Per share $0.40
</TABLE>
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A summary of the consolidated balance sheet giving pro forma effect to
the spin-off as if it had occurred on June 1, 1995 is as follows (unaudited):
<TABLE>
<S> <C>
Current assets $ 26,539
Other assets 96,821
--------
$123,360
========
Current liabilities $ 41,474
Other liabilities 40,538
Minority interests 5,950
Stockholders' equity 35,398
--------
$123,360
========
</TABLE>
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ITEM 2. MANAGEMENT'S DISCUSSIONS AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
RESULTS OF OPERATIONS
As discussed in Note 1 to the accompanying financial statements, the
Company's results for the three and six month periods ended November 30, 1995
give effect to the acquisition by UniHolding and UGL, as of June 30, 1995, of
40% of the capital stock of UGL, while the Company's results for the three and
six month periods ended November 30, 1994 included a 40% minority interest on
UGL's earnings. The financial statements also give effect to the acquisition of
ULL by ULSA from UGL. The following table presents the required adjustments to
the results of operations for the three and six month periods ended November
30, 1994, providing a comparative analysis with the comparable period in the
current fiscal year, had the 40% of UGL's common stock been acquired as of June
1, 1994, and had ULL been owned by ULSA as of June 1, 1994 (unaudited). The
results of operations for the three and six month periods ended November, 1994
were translated into U.S. dollars using the exchange rates which were then
valid.
Had the Spanish and Italian operations been acquired by the Company as
of June 1, 1994, there would have been no material effect on the consolidated
operations of the Company for the six month period ended November 30, 1994.
<TABLE>
<CAPTION>
Three months ended November 30, 1994
------------------------------------- Three months ended
As reported Adjustments Pro forma November 30, 1995
----------- ----------- --------- ------------------
<S> <C> <C> <C> <C>
Revenue $20,775 $20,775 $25,612
Operating expenses:
Salaries and related charges 8,148 8,148 10,253
Supplies 3,611 3,611 3,903
Other operating expenses 4,226 4,226 6,011
Depreciation 1,252 1,252 1,395
Amortization 493 25 518 609
------- ----- ------- -------
Operating income 3,045 (25) 3,020 3,441
Interest, net (317) (415) (732) (623)
Other, net -- -- -- (349)
------- ----- ------- -------
Income before taxes and minority interests 2,728 (440) 2,288 2,469
Tax provision (872) 222 (650) (783)
------- ----- ------- -------
Income before minority interests from continuing operations 1,856 (218) 1,638 1,686
Minority interests in income of continuing operations (978) 377 (601) (497)
------- ----- ------- -------
Income from continuing operations 878 159 1,037 1,189
Loss on disposition of discontinued operation, net (234) -- (234) --
------- ----- ------- -------
Net income $ 644 $ 159 $ 803 $ 1,189
======= ===== ======= =======
Weighted average common shares outstanding 5,810,183 6,026,218
Earnings per share of common stock
Net income from continuing operations $ 0.18 $ 0.20
Loss on disposition of discontinued operation $ (0.04) --
Net income $ 0.14 $ 0.20
</TABLE>
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<TABLE>
<CAPTION>
Six months ended November 30, 1994
------------------------------------- Six months ended
As reported Adjustments Pro forma November 30, 1995
----------- ----------- --------- -----------------
<S> <C> <C> <C> <C>
Revenue $39,004 $39,004 $47,675
Operating expenses:
Salaries and related charges 16,366 16,366 20,216
Supplies 7,062 7,062 7,360
Other operating expenses 7,679 7,679 11,227
Depreciation 2,401 2,401 2,921
Amortization 987 50 1,037 1,194
------- ----- ------- -------
Operating income 4,509 (50) 4,459 4,757
Interest, net (775) (829) (1,604) (1,096)
Other, net (57) (57) 330
------- ----- ------- -------
Income before taxes and minority interests 3,677 (879) 2,798 3,991
Tax provision (1,288) 249 (836) (1,186)
125
78
------- ----- ------- -------
Income before minority interests from continuing operations 2,389 (427) 1,962 2,805
Minority interests in income of continuing operations (1,329) 484 (808) (812)
63
(16)
(10)
------- ----- ------- -------
Income from continuing operations 1,060 94 1,154 1,993
Loss on disposition of discontinued operation, net (234) -- (234) --
------- ----- ------- -------
Net income $ 826 $ 94 $ 920 $ 1,993
======= ===== ======= =======
Weighted average common shares outstanding 5,710,688 6,051,353
Earnings per share of common stock
Net income from continuing operations $ 0.20 $ 0.33
Loss on disposition of discontinued operation $ (0.04) --
Net income $ 0.16 $ 0.33
</TABLE>
THREE AND SIX MONTH PERIODS ENDED NOVEMBER 30, 1995 COMPARED WITH THE THREE AND
SIX MONTH PERIODS ENDED NOVEMBER 30, 1994
Consolidated revenue denominated in US dollars for the three and six
months ended November 30, 1995 increased $4.9 million or 23.6% and $8.7 million
or 22.3%, respectively, as compared to the similar prior year periods.
Excluding the effect of the change in the US dollar exchange rate versus the
Swiss franc and the pound Sterling (approximately $2.6 million and $4.2 million
for the three and six months, respectively), and excluding revenue generated by
the newly-acquired Italian and Spanish operations ($1.7 million and $3.0
million for the three and six months, respectively), revenue increased by
approximately $0.6 million and $1.5 million for the three and six months,
respectively. Revenue generated by the Swiss operations remained stable
because an increase in specimen volume was offset by a decrease in revenue
resulting from the sale of a subsidiary in October 1994. Revenue generated by
the UK operations increased by approximately 12.9% over the comparable six
month period of the prior year due to additional revenue resulting from the NHS
contract, offset by a decrease in other revenues due to the loss of a
significant client. UCT has not recorded any revenues during the three and six
months periods. It is actively engaged in a marketing and selling effort which
is
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expected to be brought to fruition within a few weeks. Management is confident
that revenue will begin to be recorded within the present fiscal year.
Operating income for the six months ended November 30, 1995 increased
by $0.2 million versus the comparable prior year period. This increase includes
the positive effect of the change in the US dollar exchange rate versus the
Swiss franc and the pound Sterling (approximately $0.6 million), the start-up
expenses of the clinical trials activity without matching income ($0.5
million) and an increase in operating costs related to the strengthening of
certain administrative functions and controls. The contribution to operating
income by the Swiss operations was higher than in the comparable prior year
period, whereas the contribution to operating income by the UK operations was
lower. Operating income for the three months ended November 30, 1995 increased
by $0.3 million versus the comparable prior year period due to the same
factors.
Interest expense increased during the three and six months ended
November 30, 1995 as compared to the similar prior year periods, due to higher
average borrowing levels by the Company resulting from the Company's
acquisition of the 40% minority interest in UGL and other capital expenditures,
offset by an overall decrease in interest rates.
Other income of $0.3 million was recorded primarily from exchange
gains realized on certain assets and liabilities as a result of fluctuations in
exchange rates.
Provision for income taxes remained stable as compared to the
comparable prior year period.
Minority interests in income decreased substantially as compared to
the comparable prior year period. This resulted primarily from the decrease in
the minority interests in income of UGL due to the acquisition of the 40%
minority interest in UGL as of June 30, 1995.
LIQUIDITY AND CAPITAL RESOURCES
Net cash provided by operating activities for the six months ended
November 30, 1995 amounted to $8.6 million, an increase of $5.3 million from
the prior year primarily due to decreases in working capital needs.
Net cash provided by financing activities for the six months ended
November 30, 1995 was $1.3 million, as compared to $2.2 million in the
comparable prior year period. The change primarily resulted from repayment of
debt, coupled with cash proceeds from issuance of new capital.
Net cash used in investing activities for the six months ended
November 30, 1995 was $24.4 million, consisting primarily of capital
expenditures incurred in connection with new laboratory equipment, lending to
affiliates, acquisition of treasury stock, the purchase of the 40% minority
interest in UGL as of June 30, 1995, the purchase of the 17% minority interest
in NDA as of October 16, 1995 and the recent investment in MISE ($3,005 million
of which $2,005 million is presently paid). This compares to $5.2 million used
in investing activities in the comparable prior year period, which had been
used for purchases of property and equipment and intangibles, and for lending
to affiliates.
The Company's bank facilities provide for a total of approximately $43.7
million, including secured senior revolving facilities consisting of term
loans, working capital loans
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and/or guarantees. As of January 10, 1996, the Company had approximately $6.2
million of availability under the aggregate credit facilities. Cash on hand,
cash flows from operations and additional borrowing capabilities are expected
to be sufficient to meet anticipated operating requirements, debt repayments
and provide funds for capital expenditures, excluding acquisitions, and working
capital for the foreseeable future.
OTHER
On June 30, 1995, the Company, UGL and Unilab entered into an
agreement whereby UGL acquired from Unilab 40% of UGL's common stock for a
total consideration of $30,000. The consideration was paid $13,000 in cash,
$2,000 through the assumption of a debt from Unilab to JSP, and $15,000 in the
form of a one-year, interest-bearing promissory note. While the agreement
provides that if the note is still unpaid six months after its due date, Unilab
has the right to convert it into shares of the Company's common stock, the
Company intends to pay the note on or before its due date. In connection with
this note, the Company is considering raising additional capital through debt
or equity financing.
In July 1995, the Company issued 100,000 (pre-reverse split) new
shares of common stock to one investor, at a price of $5.50 per share,
including warrants for 50,000 (pre-reverse split) shares at a price of $6.75
exercisable for 18 months from July 3, 1995.
In October, 1995, the Company issued 150,000 (pre-reverse split) new
shares of common stock to two investors, at a price of $5.50 per share,
including warrants for 75,000(pre-reverse split) shares at a price of $6.50
exercisable for 18 months from October 5, 1995.
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PART II - OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
ARBITRATION
As described and discussed more thoroughly in the Company's Annual
Report on Form 10-K for the year ended May 31, 1995, the Company is entitled to
80% of the net recovery (less legal fees and costs) of any settlement or
successful resolution of the pending arbitration instituted by Americanino
Capital Corp. ("ACC") pursuant to an agreement by which the Company sold its
remaining interest in ACC.
In February 1993, ACC instituted the arbitration proceedings against
Mr. Eugenio Schiena, Mr. Raffaele Palma, Mr. Tonino Manzali, FIBRA S.p.A.,
GEFAPI S.p.A., "S.G.F." SOCIETE GENERALE COMMERCIALE ET FINANCIERE S.A.,
PARIBAS FINANZIARIA S.p.A., BANQUE PARIBAS (Milan, Italy), and BANQUE PARIBAS
(Paris, France) (hereinafter collectively referred to as the "Defendants") for
misrepresentations and fraudulent conduct in the negotiation, consummation and
performance under an agreement by and between the above mentioned parties. The
arbitration is presently pending before an Arbitral Tribunal of three qualified
arbitrators (the "Arbitral Tribunal") under the auspices of the International
Court of Arbitration. A Draft of the Terms of Reference to be used in the
proceedings was established by the Arbitral Tribunal and communicated to the
respective parties on September 6, 1994. A hearing was held on November 9, 1994
to discuss and finalize the Draft Terms of Reference. As of November 9, 1994,
the Terms of Reference were sent to all the parties for signature with a
deadline date of February 15, 1995. Because certain Defendants did not sign
within the prescribed time limit, the International Court of Arbitration
decided on March 29, 1995, to approve the Terms of Reference, and to grant a
time limit of 15 days to these Defendants to sign such Terms, whereupon the
proceedings will go forward irrespective of who has signed the Terms of
Reference. The International Court of Arbitration further summoned all the
Defendants to effectuate payment within 30 days in the amount of $212,500
representing their share of the advance costs. In the meantime, on February 24,
1995, the Arbitral Tribunal fixed a deadline date of April 30, 1995 for the
Claimant, ACC, to file its brief on jurisdiction and on the merits of its
claim; and fixed a deadline date of July 31, 1995 for all the Defendants to
file their briefs in reply. ACC has filed its Brief with the International
Court of Arbitration in compliance with the deadline. In July 1995, the Company
decided to open a bank guarantee in favor of the International Court of
Arbitration to cover the amount of $212,500 which the Defendants have failed to
pay, in order for the proceedings to continue. In July 1995, ACC was notified
by the Panel that PARIBAS FINANZIARIA S.p.A., BANQUE PARIBAS (Italy), and
BANQUE PARIBAS (France) on one hand, and Mr. MANZALI on the other hand, had
each appointed new legal counsels, who requested an extension of the July 31
reply deadline in order to be able to study the files. The Panel agreed to such
an extension. Accordingly, a new deadline date of September 30, 1995 was set by
the Panel for all the Defendants to file their briefs in reply. To the
Company's knowledge, all Defendants filed their briefs in reply, with the
exception of Messrs. Schiena and Palma, and GEFAPI S.p.A. ACC shall file a
further brief in response to the replies by a deadline of March 31, 1996 as set
by the Panel.
The Company intends to monitor the proceedings. While, to the best of
the Company's knowledge, the Claimant appears to have a legitimate claim, there
can be no assurance that an award will be rendered in ACC's favor and thus
benefit the Company as provided under the terms of the ACC Sale Agreement. The
Company believes that any
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estimate of recovery is still subject to many factors beyond the Company's
control. Pending developments in the arbitration proceedings, and in absence
of other criteria, the management of the Company has recorded its rights at a
present fair market value of $10,000 which is estimated to be the amount an
unrelated party might presently pay to acquire all such rights arising from the
ACC Sale Agreement. Realization of any amount is entirely dependent upon a
favorable award from the Court and the collection thereof, if any, from the
Defendants. The Company's management will continuously monitor and report the
progress of the proceedings.
ITEM 5. OTHER ITEMS
PROPOSED RESTRUCTURING OF SUBSIDIARY RELATIONSHIP
The Company has determined that the best financial strategy for
maximizing the present and future value of the Company and its anticipated
growth, is to effect a spin-off to the Company's shareholders of the clinical
trials business conducted by UCT. The clinical trials business to be spun off
consists of UCT, Pharmasoft, and the 17% interest in NDA with the option to
purchase the additional 13% of NDA. The Company is now working on the details
of such action, including the preparation of the documentation to be filed with
the Securities & Exchange Commission and NASDAQ.
PROPOSED OFFERING OF NEW SHARES UNDER REGULATION S
The Company is presently reviewing several alternatives to expand its
operations. In order to raise funds to enable the Company to consider such
actions, the Company is currently offering a maximum of 1,875,000 (post-reverse
split) newly-issued shares of the Company in the offshore market to certain
European investors presently not affiliated with the Company. The shares are
being offered in the offshore market in accordance with Regulation S, which
provides an exemption to registration of the shares from the Securities Act of
1933, as amended.
PROPOSED REGISTRATION OF SHARES
The Company is currently preparing the necessary documentation to be
filed with the Securities & Exchange Commission and NASDAQ with a view to
register substantially all of the outstanding shares of the Company s Common
Stock under the Securities Act of 1933, as amended.
ITEM 6. EXHIBITS
Exhibits included hereinafter are as follows (previously filed on
Uniholding Corp.'s Quarterly Report on Form 10-Q filed January 16, 1996):
Press Release (99):
99.1 UniHolding Corp. Announces Adjustments to its Capital
Structure and the Decision to Register All Outstanding Shares
99.2 UniHolding Corp. Announces Spin-Off of Clinical Trials
Business Units
99.3 UniHolding Corp. Announces Adjustments to its Capital
Structure
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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.
UniHolding Corporation
By: /s/ Bruno Adam by Melanie K. Stapp (poa)
----------------------------------------
Bruno Adam, CFO
By: Melanie K. Stapp by Power
of Attorney
Date: 1-23-96
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