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, 1996
[ ] 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 13, 1997, there were 7,758,120 shares of Common Stock, par value
$0.01 per share, of the Registrant outstanding.
<PAGE>
UNIHOLDING CORPORATION AND SUBSIDIARIES Form 10-Q/A-1 for the
Quarterly Period Ended November 30, 1996
INDEX
Page
Part I - FINANCIAL INFORMATION:
Item 1. Financial Statements 3
Consolidated Balance Sheets - November 30, 1996
(unaudited) and May 31, 1996 4
Unaudited Consolidated Statements of
Operations - Three month and six month periods
ended November 30, 1996 and 1995 6
Unaudited Consolidated Statements of Cash
Flows - Six month periods ended
November 30, 1996 and 1995 7
Notes to Unaudited Consolidated Financial Statements 8
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations 12
<PAGE>
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements
<PAGE>
UNIHOLDING CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(Dollars in thousands)
November 30, May 31,
ASSETS 1996 1996
---- ----
(Unaudited)
CURRENT ASSETS:
Cash and cash equivalents $1,607 $1,587
Accounts receivable, net of allowance
for doubtful accounts 19,956 18,726
Due from related companies 8,538 4,960
Inventories 1,951 1,910
Prepaid expenses 1,903 2,535
Other current assets 1,370 1,051
-------- --------
Total current assets 35,325 30,769
-------- --------
NON-CURRENT ASSETS:
Long-term notes receivable 818 818
Intangible assets, net 55,969 54,828
Property, plant and equipment, net 36,023 33,238
Investment in equity affiliates 1,360 1,423
Other assets, net 2,975 2,176
-------- --------
Total non-current assets 97,145 92,483
-------- --------
$132,470 $123,252
========= ========
See notes to financial statements
<PAGE>
UNIHOLDING CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(Dollars in thousands)
Pro Forma
(Notes 6 and 9)
November 30, November 30, May 31,
LIABILITIES AND STOCKHOLDERS' EQUITY 1996 1996 1996
----------- ----------- --------
(Unaudited) (Unaudited)
CURRENT LIABILITIES:
Bank overdrafts $8,243 $8,243 $6,686
Lease payable, short-term portion 1,546 1,546 1,331
Payable to related parties - - 9
Trade payables 8,089 8,089 6,843
Accrued liabilities 5,906 5,156 4,568
Note payable 15,000 - 15,000
Long-term debt, current portion 8,937 8,937 2,971
Taxes payable, current portion 3,316 3,316 3,175
-------- --------- --------
Total current liabilities 51,037 35,287 40,583
-------- --------- --------
NON-CURRENT LIABILITIES:
Lease payable, non-current 2,989 2,989 2,633
Long-term debt, non-current 27,469 27,469 35,721
Taxes payable, long-term portion 193 193 199
Deferred taxes 4,444 4,444 4,410
-------- --------- --------
Total non-current liabilities 35,095 35,095 42,963
-------- --------- --------
Total liabilities 86,132 70,382 83,546
-------- --------- --------
MINORITY INTERESTS 5,068 5,068 5,464
-------- --------- --------
COMMITMENTS AND CONTINGENCIES
STOCKHOLDERS' EQUITY:
Common stock, $0.01 par value; Voting;
authorized 18,000,000 shares; issued
6,157,118 at November 30, 1996 (pro-
forma 7,627,736 at November 30, 1996)
and 5,823,785 at May 31, 1996 61 76 58
Non-Voting; authorized 2,000,000
shares; issued and outstanding
298,384 at November 30, 1996, and
298,384 at May 31, 1996 3 3 3
Additional paid-in capital 37,426 53,161 32,429
Cumulative translation adjustment 2,637 2,637 (239)
Retained earnings 4,305 4,305 5,153
------- -------- --------
44,432 60,182 37,404
Less - cost of 168,000 shares of
Common Stock held in treasury at
November 30, 1996 and May 31, 1996,
respectively (3,162) (3,162) (3,162)
------- -------- --------
Total stockholders' equity 41,270 57,020 34,242
------- -------- --------
$132,470 $132,470 $123,252
======= ========= =========
See notes to financial statements
<PAGE>
UNIHOLDING CORPORATION AND SUBSIDIARIES
UNAUDITED CONSOLIDATED STATEMENTS OF OPERATIONS
(Dollars in thousands, except per share data)
Three Months ended Six Months ended
November 30, November 30,
1996 1995 1996 1995
------ ------ ------ ------
REVENUE $26,771 $25,612 $49,615 $47,675
Operating expenses:
Salaries and related charges 10,425 10,253 20,716 20,216
Supplies 4,495 3,903 8,329 7,360
Other operating expenses 7,753 6,011 14,233 11,227
Depreciation and amortization of
tangible assets 1,404 1,395 2,700 2,921
Amortization of intangible assets 588 609 1,169 1,194
------- -------- -------- --------
OPERATING INCOME 2,106 3,441 2,468 4,757
Interest, net (906) (623) (1,869) (1,096)
Equity in loss of affiliates (39) (3,005) (73) (3,005)
Other, net 756 (545) 198 134
------- -------- -------- --------
Income (loss) before taxes and
minority interests 1,917 (732) 724 790
Tax provision (859) (783) (1,024) (1,186)
------- -------- -------- --------
Income (loss) before minority
interests 1,058 (1,515) (300) (396)
Minority interests in income (411) (497) (548) (812)
-------- -------- -------- --------
NET INCOME (LOSS) $647 ($2,012) ($848) ($1,208)
======== ======== ======== ========
Weighted average common shares
outstanding 6,455,502 6,026,218 6,358,963 6,051,353
Earnings (loss) per share of
common stock $0.10 ($0.33) ($0.13) ($0.20)
See notes to financial statements
<PAGE>
UNIHOLDING CORPORATION AND SUBSIDIARIES
UNAUDITED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Dollars in thousands)
Six Months ended
November 30,
1996 1995
------- --------
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss) ($848) ($1,208)
Adjustments to reconcile net income to net cash
provided by operations:
Equity in loss of affiliates 73 3,005
Minority interests in income 548 812
Depreciation and amortization of tangible assets 2,700 2,921
Amortization of intangible assets 1,169 1,194
Other non-cash income (expenses) 15 (5)
Net changes in assets and liabilities, net of acquisitions:
(Increase) Decrease in accounts receivable (1,098) (625)
(Increase) Decrease in inventories (88) (57)
(Increase) Decrease in prepaid expenses 797 576
(Increase) Decrease in other assets (171) (470)
Increase (Decrease) in trade payables 98 1,229
Increase (Decrease) in accrued liabilities 915 403
Increase (Decrease) in reserve for taxes 372 1,098
Increase (Decrease) in deferred taxes (714) (506)
--------- ---------
Net cash provided by operating activities 3,768 8,367
--------- ---------
CASH FLOWS FROM FINANCING ACTIVITIES:
Cash proceeds from issuance of share capital 5,000 1,240
Repayment of long-term debt (1,953) (888)
Cash proceeds from long-term debt (25) 565
Proceeds (reimbursement) from (of) bank overdrafts 954 (228)
Dividend paid to minority shareholders - (34)
Proceeds (repayment) of lease debt (219) 690
Payment for purchase of treasury stock - (3,087)
--------- ---------
Net cash provided by (used in) financing activities 3,757 (1,742)
--------- ---------
CASH FLOWS FROM INVESTING ACTIVITIES:
Payment for purchases of property and equipment (2,689) (2,916)
Loans and advances (to) from affiliates, related
companies and shareholders (3,961) (2,196)
Payment for purchase of interest in subsidiaries (622) (16,025)
Payment for purchase of intangible assets (164) (162)
Proceeds from sale of assets 55 210
--------- ---------
Net cash used in investing activities (7,381) (21,089)
--------- ---------
Effect of exchange rate changes on cash (124) (48)
Net increase (decrease) in cash and cash equivalents 20 (14,512)
Cash and cash equivalents, beginning of year 1,587 16,939
--------- ---------
Cash and cash equivalents, end of period $1,607 $2,427
======= =======
See notes to financial statements
<PAGE>
UNIHOLDING CORPORATION AND SUBSIDIARIES
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS (Monetary
amounts in thousands, except per share data)
1. Basis of Presentation
The consolidated financial statements include the accounts of UniHolding
and its majority-owned subsidiaries. All significant intercompany accounts and
transactions have been eliminated. The investment in the Company's equity
affiliates NDA Clinical Trials Services Inc. and MISE S.A. is accounted for on
the equity method.
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 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.
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, 1996.
3. Net Income (Loss) Per Share
Net income (loss) per share is computed by dividing net income or net loss
by the weighted average number of voting and non-voting common shares
outstanding.
4. 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 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 European
investments.
<PAGE>
5. Supplemental Disclosure of Cash Flow Information
Six months ended November 30
1996 l995
Cash paid during the period for
Interest $ 903 $ 947
Income taxes 1,375 727
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, 1996, in connection with its
acquisition of 300 shares of the share capital of ULSA, the Company incurred a
future obligation of $1,030.
During the period ended November 30, 1996, capital lease obligations of
$1,258 were incurred when the Company entered into leases for new capital
equipment.
6. Capital Stock and Additional Paid In Capital
During the period ended November 30, 1996, ULSA acquired 300 shares (or
1.9%) of its own common stock from independent investors in ULSA for a total
consideration of $1,550, out of which $515 was paid during the period.
On July 22, 1996, UniHolding issued 333,333 new shares of common stock to
an investor, at a price of $15 per share. The investor received certain
antidilution and preemptive subscription rights. The antidilution provisions
provide that if the Company issues its Common Stock to repay the $15,000 note
owed to Unilab Corporation (a Delaware corporation "Unilab"), it will transfer
to the investor additional shares of Common Stock so that the percentage of
ownership of the investor will remain substantially unchanged. The preemptive
right provisions provide that the Company and its affiliates will not sell,
pledge, encumber or otherwise transfer any shares of Common Stock at a value
below market without first offering the same shares to the investor on the same
conditions. The Company has a call right on the shares of the investor at a
price of $18 per share, exercisable on or before January 15, 1997.
As of December 31, 1996, the $15,000 note due Unilab was unpaid.
Accordingly, pursuant to the agreement with Unilab dated as of June 30, 1995,
the note's principal, together with accrued but unpaid interest of $750 as of
December 31, 1996 ($625 as of November 30, 1996), converted into 1,394,963
newly- issued shares of Common Stock. Further, pursuant to the antidilution
provisions referred to above, the Company issued to the investor 75,655
newly-issued shares of Common Stock, for no additional consideration. Had the
Unilab note converted as
<PAGE>
of June 1, 1996, the results of operations for the three and six months
ended November 30, 1996, would have been as follows (unaudited):
Three months Six months
ended ended
November 30, November 30,
1996 l996
----------- -----------
Sales $26,771 $49,615
Operating income 2,106 2,468
Net income (loss) 1,022 (98)
Weighted average common shares outstanding 7,926,120 7,807,670
Earnings (loss) per share of common stock $0.13 ($0.01)
7. Investment in Equity Affiliates
NDA Clinical Trials Services Inc.
As of July 23, 1996, the Company transferred the assets of its Clinical
Trials Division, consisting of 100% of the equity of Unilabs Clinical Trials
Limited, 100% of the equity of Pharmasoft SA and 17% of the equity of NDA to a
newly formed wholly-owned British Virgin Islands subsidiary, Global Unilabs
Clinical Trials Ltd. ("GUCT") in exchange for 217,000 ordinary shares
representing all of the issued and outstanding shares of GUCT. After the
transaction, GUCT was a wholly-owned subsidiary of UniHolding. The ownership of
the 217,000 shares of GUCT was then transferred to UGL at book value.
Also on July 23, 1996, the Company, through GUCT, made a loan of $700 to
NDA. In August, November and December 1996, and in January 1997, the Company
made further loans to NDA, totaling $605 (together with the initial $700: the
"NDA Loan"). The NDA Loan bears interest at 12 % per annum and is unsecured. The
NDA Loan was originally repayable in principal and interest on December 31,
1996. In connection with ongoing discussions with a view to increase the
Company's stake in NDA, the Company has agreed to postpone the repayment in
principal and interest of the NDA Loan to June 30, 1997.
MISE S.A.
During the period ended November 30, 1996, MISE, an equity investee, had no
activity, however the Company's management is
<PAGE>
of the opinion that there has been no impairment of its investment, and that
operations will start in fiscal year 1997. Accounting principles generally
accepted in the U.S. require that know-how and marketing plans such as those
purchased by MISE, purchased from either related or unrelated parties, be
expensed as incurred. Accordingly, during the year ended May 31, 1996, the
Company has recognized a loss from its equity investee of $3,000.
UNIMED
On October 8, 1996, the Company, through a subsidiary, signed a joint
venture agreement with the State Affiliated company MEDINCENTER of the Main
Administration for Services to the Diplomatic Corps of the Ministry of Foreign
Affairs of the Russian Federation. Pursuant to the agreement, the Company will
invest an amount of $240 and will hold 50% of Unimed Laboratories (a
newly-established Russian close joint stock company, "Unimed"), which will
establish a diagnostic laboratory in Moscow and provide a comprehensive range of
clinical laboratory tests to public and private medical institutions, doctors
and patients in Russia. The new Unimed laboratory is expected to start
operations in 1997.
8. Segment Information
During the year ended May 31, 1996, the Company expanded its activities in
testing performed in relation with clinical trials for the pharmaceutical
industry, and therefore distinguishes its core clinical laboratory business (the
"Diagnostic Laboratory Division") from its clinical trials testing business (the
"Clinical Trials Division"). In connection therewith, the Company transferred to
UCT, as of June 1, 1996, certain clinical trials activities previously performed
by JSP. Accordingly, for analysis and comparative purposes, the activities
conducted by JSP in the clinical trials business during both years have been
included under the Clinical Trials Division caption.
Following are the key financial data of the respective businesses for
purposes of segment information. Such information does not include segment data
relating to the Company's investment in unconsolidated affiliates.
Six Months Ended November 30,
1996 1995
---- ----
Revenues from unaffiliated customers:
Diagnostic Laboratory Division $ 46,796 $ 45,783
Clinical Trials Division 2,819 1,892
Healthcare Management Services Division - -
Operating Profit or Loss:
Diagnostic Laboratory Division 4,553 4,760
Clinical Trials Division (2,085) (3)
Healthcare Management Services Division - -
Identifiable Assets:
Diagnostic Laboratory Division 126,700 120,159
Clinical Trials Division 6,524 2,032
Healthcare Management Services Division - -
9. Subsequent Event
As discussed in Note 6, on January 1, 1997, the note payable to Unilab in
the principal amount of $15,000, together with accrued but unpaid interest of
$750, converted into 1,394,963 newly-issued shares of Common Stock. As a result,
total Stockholders' Equity increased from $41,270 to $57,020.
<PAGE>
Item 2. Management's Discussions and Analysis of Financial
Condition and Results of Operations
RESULTS OF OPERATIONS
The Company's results of operations for the period ended November 30, 1996,
include the operations of the Company's core business (the "Diagnostic
Laboratory Division") and of the Company's expanded activities in clinical
trials testing for the pharmaceutical industry (the "Clinical Trials Division")
and in healthcare management services (the "Healthcare Management Services
Division"). The following tables present a reconciliation of the results of
operations of each division with the consolidated statement of operations, for
the purpose of discussing the results of operations.
Three months ended November 30, 1996
-----------------------------------------
Healthcare
Diagnostic Management Clinical
Laboratory Services Trials As
Division Division Division reported
--------- --------- -------- --------
REVENUE $25,169 - $1,602 $26,771
Operating expenses:
Salaries and related charges 9,590 - 835 10,425
Supplies 4,436 - 59 4,495
Other operating expenses 5,968 - 1,785 7,753
Depreciation and amortization
of tangible assets 1,366 - 38 1,404
Amortization of intangible
assets 576 - 12 588
----------- ----------- -------- ----------
OPERATING INCOME (LOSS) 3,233 - (1,127) 2,106
Interest, net (860) - (46) (906)
Equity in loss of affiliates - - (39) (39)
Other, net 758 - (2) 756
----------- ---------- --------- ----------
Income (loss) before taxes and
minority interests 3,131 - (1,214) 1,917
Tax provision (1,181) - 322 (859)
---------- ---------- -------- ----------
Income (loss) before minority
interests 1,950 - (892) 1,058
Minority interests in income (411) - - (411)
---------- ---------- -------- ----------
NET INCOME (LOSS) $1,539 $0 ($892) $647
========= ========= ======== ==========
Weighted average common
shares outstanding 6,455,502 6,455,502 6,455,502 6,455,502
Earnings (loss) per share of
common stock $0.24 $0.00 ($0.14) $0.10
Six months ended November, 1996
-----------------------------------------
Healthcare
Diagnostic Management Clinical
Laboratory Services Trials As
Division Division Division reported
-------- ---------- -------- --------
REVENUE $46,796 - $2,819 $49,615
Operating expenses:
Salaries and related charges 19,304 - 1,412 20,716
Supplies 8,225 - 104 8,329
Other operating expenses 10,946 - 3,287 14,233
Depreciation and amortization
of tangible assets 2,622 - 78 2,700
Amortization of intangible
assets 1,146 - 23 1,169
--------- -------- ---------- ---------
OPERATING INCOME (LOSS) 4,553 - (2,085) 2,468
Interest, net (1,798) - (71) (1,869)
Equity in loss of affiliates - - (73) (73)
Other, net 200 - (2) 198
--------- -------- --------- ---------
Income (loss) before taxes and
minority interests 2,955 - (2,231) 724
Tax provision (1,663) - 639 (1,024)
--------- -------- --------- ---------
Income (loss) before minority
interests 1,292 - (1,592) (300)
Minority interests in income (548) - - (548)
--------- -------- --------- --------
NET INCOME (LOSS) $744 $0 ($1,592) ($848)
====== ====== ====== ======
Weighted average common
shares outstanding 6,358,963 6,358,963 6,358,963 6,358,963
Earnings (loss) per share of
common stock $0.12 $0.00 ($0.25) $(0.13)
The Company's results for the three and six month periods ended November
30, 1996, 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
six month period ended November 30, 1995 included a 40% minority interest on
UGL's earnings for the month of June 1995. The following table presents the
required adjustments to the results of operations for the six month period ended
November 30, 1995, 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, 1995 (unaudited). The results of operations for the three and six
month periods ended November 30, 1995 were translated into U.S. dollars using
the exchange rates which were then valid.
Three months ended November 30, 1995
-----------------------------------------
Healthcare
Diagnostic Management Clinical
Laboratory Services Trials As
Division Division Division reported
--------- --------- -------- --------
REVENUE $24,616 - $996 $25,612
Operating expenses:
Salaries and related charges 10,253 - - 10,253
Supplies 3,903 - - 3,903
Other operating expenses 4,937 - 1,074 6,011
Depreciation and amortization
of tangible assets 1,389 - 6 1,395
Amortization of intangible
assets 609 - - 609
-------- -------- -------- --------
OPERATING INCOME (LOSS) 3,525 - (84) 3,441
Interest, net (621) - (2) (623)
Equity in loss of affiliates - (3,005) - (3,005)
Other, net (449) - (96) (545)
--------- --------- -------- -------
Income (loss) before taxes and
minority interests 2,455 (3,005) (182) (732)
Tax provision (926) - 143 (783)
--------- -------- -------- -------
Income (loss) before minority
interests 1,529 (3,005) (39) (1,515)
Minority interests in income (487) - (10) (497)
-------- -------- -------- -------
NET INCOME (LOSS) $1,042 ($3,005) ($49) ($2,012)
======= ======= ======= =======
Weighted average common
shares outstanding 6,026,218 6,026,218 6,026,218 6,026,218
Earnings (loss) per share of
common stock $0.18 ($0.50) ($0.01) ($0.33)
<TABLE>
<CAPTION>
Six months ended November 30, 1995
--------------------------------------------------------------------------
Healthcare
Diagnostic Management Clinical
Laboratory Services Trials
Division Division Division As reported Adjustments Pro Forma
-------- -------- -------- ----------- ----------- ---------
<S> <C> <C> <C> <C> <C> <C>
REVENUE $45,783 - $1,892 $47,675 $47,675
Operating expenses:
Salaries and related charges 20,216 - - 20,216 20,216
Supplies 7,360 - - 7,360 7,360
Other operating expenses 9,340 - 1,887 11,227 11,227
Depreciation and amortization of
tangible assets 2,914 - 7 2,921 2,921
Amortization of intangible assets 1,193 - 1 1,194 8 (d) 1,202
-------- --------- -------- -------- -------- --------
OPERATING INCOME (LOSS) 4,760 - (3) 4,757 (8) 4,749
Interest, net (1,093) - (3) (1,096) (138)(b) (1,234)
Equity in loss of affiliates - (3,005) - (3,005) (3,005)
Other, net 230 - (96) 134 134
-------- --------- -------- -------- -------- --------
Income (loss) before taxes and
minority interests 3,897 (3,005) (102) 790 (146) 644
Tax provision (1,302) - 116 (1,186) 41 (c) (1,145)
-------- --------- -------- -------- -------- --------
Income (loss) before minority interests 2,595 (3,005) 14 (396) (105) (501)
Minority interests in income (795) - (17) (812) 116 (a) (696)
-------- --------- -------- -------- -------- --------
NET INCOME (LOSS) $1,799 ($3,005) ($2) ($1,208) $11 ($1,197)
======== ========= ======== ======== ======== ========
Weighted average common shares outstanding 6,051,353 6,051,353 6,051,353 6,051,353 6,051,353
Earnings (loss) per share of common stock $0.30 ($0.50) ($0.00) ($0.20) ($0.20)
<FN>
(a) To record the cancellation of the 40% minority interest in the June 1995 net
income of UGL.
(b) To record the interest cost on the repurchase of 40% in UGL at an effective
rate of 5.5% for June 1995
(c) To record the tax benefit at 30% on the interest cost on repurchase of 40%
in UGL.
(d) To record goodwill amortization on the acquisition of 40% in UGL for June
1995
</FN>
</TABLE>
THREE AND SIX MONTH PERIODS ENDED NOVEMBER 30, 1996 COMPARED WITH THE THREE AND
SIX MONTH PERIODS ENDED NOVEMBER 30, 1995
Consolidated revenue was $26.8 million and $49.6 million for the three and
six months ended November 30, 1996, representing an increase of $1.2 million and
$1.9 million respectively (including the effect of the change in the US dollar
exchange rate of $1.2 million and $2.1 million for the respective periods) from
the comparable prior year period. Revenue generated by the Swiss operations for
the six months increased by approximately 3.3% as a result of additional
specimen volume of 3.9% partly offset by a decrease in the test mix of 0.6%.
Revenue generated by the UK increased in respect of the Diagnostic Laboratory
Division due to additional revenue
<PAGE>
resulting from the new contract with a major public transport service and an
existing Government contract being offset by under performance of the private
doctors area. Spanish operations increased revenues to $2.9 million,
representing an 193% increase from the comparable prior year period. Revenues of
$1.6 million and $2.8 million for the three and six months respectively were
recorded by the Clinical Trials Division due to the signing of further new
contracts.
Operating income for the six months ended November 30, 1996 decreased by
$2.3 million (including the effect of the change in the US dollar exchange rate
of $0.4 million) versus the comparable prior year. The small decrease in
operating income of the Diagnostic Laboratory Division ($0.2 million) reflects
increased reagent and other operating costs. Italian operations continue to
maintain a small positive contribution to operating income. Operating results of
Spanish operations are rapidly improving and showing a positive trend of
returning to break-even. The variance in operating results of the Clinical
Trials Division (an operating loss of $2.1 million as compared to $0.3 million)
reflects fixed expenses which are not matched with income to be recorded in the
future from a backlog of contracts due to lead-time of up to six months from the
signing of a contract to the actual start of a study.
Interest expense, net, increased $0.3 million and $0.8 million during the
three and six months ended November 30, 1996 respectively as compared to the
prior year, primarily 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, partly offset by a decrease in interest rates.
Other income of $0.7 million and $0.2 million was recorded of the three and
six months respectively, resulting from foreign currency transactions and
changes in foreign currency positions, as compared to losses of $0.5 million and
gains of $0.1 million in the prior year comparable periods.
Provision for income taxes decreased $0.2 million in the six months ended
November 30, 1996, and increased $0.1 million in the three months ended November
30, 1996 after taking into account the period losses of UCT which gave rise to a
tax benefit of $0.3 million and $0.6 million respectively, which management
believes it is more likely than not that the Company will recover through future
income of such Division in view of the already existing backlog of contracts.
Other potential future tax benefits arising from losses of other subsidiaries
(primarily in Spain) have been entirely provided for.
Minority interests in income decreased substantially as compared to the
comparable prior year, resulting primarily from the decrease in the minority
interests in income due to the acquisition of the 40% minority interest in UGL
as of June 30,
<PAGE>
1995, and the acquisition of 1.9% minority interest in ULSA as of June 1, 1996.
LIQUIDITY AND CAPITAL RESOURCES
Net cash provided by operating activities for the six months ended November
30, 1996 amounted to $3.8 million, a decrease of $4.6 million from the prior
year primarily due to working capital needs of the Diagnostic Laboratory
Division and the net losses of the Clinical Trials Division.
Net cash provided by financing activities for the six months ended November
30, 1996 was $3.8 million, as compared to $1.7 million used in financing
activities in the prior year period. The increase of $5.5 million primarily
resulted from the issuance of new shares of common stock, increased borrowing
primarily from overdraft facilities in conjunction with reduced repayment of
long term debt as compared to the prior year, and the use of $2.9 million in the
prior year to purchase treasury stock.
Net cash used in investing activities for the period ended November 30,
1996 was $7.4 million, a decrease of $13.7 million from the prior period,
consisting primarily of the purchase of the 40% minority interest in UGL in the
prior period, offset in the current period by increased lending to affiliates of
$3.9 million including $2.8 million to the Company's controlling shareholder and
$0.9 million to NDA.
The Company's bank facilities provide for a total of approximately $40.2
million, including secured senior revolving facilities consisting of term loans,
working capital loans and/or guarantees. As of January 13, 1997, the Company had
approximately $3.2 million of availability under the aggregate credit
facilities.
On July 23, 1996, the Company issued 333,333 new shares of its common stock
to a U.S. institutional investor at $15.00 per share.
As of November 30, 1996, the Company had a working capital deficiency of
$14.2 million at November 30, 1996, compared to $9.8 million at May 31, 1996.
The increase in the deficiency was due primarily to the reclassification as a
current liability of the short-term portion of long-term debt owed by ULSA
maturing on June 30, 1997. Of that amount of $15.8 million, $15 million was due
to Unilab on June 30, 1996. All interest accrued as of March 31 and June 30,
1996, have been paid by UGL. As of December 31, 1996, the $15,000 note due
Unilab was unpaid. Accordingly, pursuant to the agreement with Unilab dated as
of June 30, 1995, the note's principal, together with accrued but unpaid
interest of $750 as of December 31, 1996 ($625 as of November 30, 1996),
converted
<PAGE>
into 1,394,963 newly-issued shares of Common Stock. As a result of the
conversion, the Company's working capital was restated at $1.4 million.
With respect to the Diagnostic Laboratory Division, the Company believes
that the liquidity provided by the cash flow from operations, the existing cash
balances and the borrowing arrangements described above will be sufficient to
meet the Company's capital requirements for fiscal 1997 including anticipated
operating expenses arising from the Company's recent expansion into the Spanish
and Italian markets, as well as debt repayments.
With respect to the Clinical Trials Division, the Company believes that the
liquidity provided by the cash flow from the Diagnostic Laboratory Division
operations, the existing cash balances and the borrowing arrangements described
above will be sufficient to meet the Company's capital requirements for fiscal
1997 including anticipated operating expenses arising from the Company's recent
expansion into the clinical trials, as well as debt repayments.
With respect to the Healthcare Management Services Division, the Company is
currently reviewing detailed marketing plans for several countries, with a view
to start actual operations during the fiscal year 1996/97. The Company believes
that no significant new funding will be required to meet working capital
requirements during that period.
In addition, the Company has outstanding obligations and commitments under
capital leases which mature over the next five to ten years.
<PAGE>
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: BRUNO ADAM
------------------------
Bruno Adam, CFO
Date: 01-21 -97
