UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K/A
CURRENT REPORT
Pursuant to Section 13 OR 15(d) of The Securities Exchange Act of 1934
Date of earliest event reported: August 1, 1997
UCI Medical Affiliates, Inc.
(Exact name of registrant as specified in its charter)
<TABLE>
<S> <C> <C>
Delaware 0-13265 59-2225346
(State or other jurisdiction of incorporation)(Commission File Number) (IRS
Employer Identification No.)
</TABLE>
1901 Main Street, Suite 1200, Mail Code 1105, Columbia, South Carolina 29201
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (803) 252-3661
No Change
Former name or former address, if changed since last report.)
This document contains a total of 23 pages.
<PAGE>
This Form 8-K/A amends the Form 8-K filed with the Securities and Exchange
Commission on August 5, 1997 by UCI Medical Affiliates, Inc., a Delaware
corporation (the Company), and is filed to include the financial statements
required by Item 7 of Form 8-K.
Item 7. Financial Statements and Exhibits
a) Financial Statements of Business Acquired
The financial statements for Springwood Lake Family Practice Center, P.A., the
business acquired by the wholly-owned subsidiary of the Company, are included in
this report beginning on page number 3.
b) Pro Forma Financial Information
The pro forma financial information for Springwood Lake Family Practice Center,
P.A., the business acquired by the wholly-owned subsidiary of the Company, is
included in this report following the financial information herein in response
to Item 7(a) above.
c) Exhibits
The following exhibit is incorporated by reference to the exhibit of the same
number filed with the Company's Form 8-K filed on August 5, 1997.
Exhibit 2.1 - Merger Agreement dated and executed on July 17, 1997, to be
effective as of August 1, 1997 by, between and among UCI Medical Affiliates,
Inc., a Delaware corporation (UCI), UCI Medical Affiliates of South Carolina,
Inc., a South Carolina corporation and wholly-owned subsidiary of UCI (UCI of
SC); Doctors Care, P.A., a South Carolina professional corporation (Doctors
Care); Springwood Lake Family Practice Center, P.A., a South Carolina
professional corporation (Springwood); Springwood Lake Occupational Medicine
Center, P.A., a South Carolina professional corporation and wholly-owned
subsidiary of Springwood (SLOMC); Stephen F. Serbin, M.D. (Serbin); Peter J.
Stahl, M.D. (Stahl); Sharon Silverman, M.D. (Silverman); and Woodhill Family
Practice Center, a South Carolina general partnership (Woodhill).
<PAGE>
Report on Audit of the Financial Statements of
Springwood Lake Family Practice Center, P.A.
as of December 31, 1996 and 1995
<PAGE>
Contents
Page
Springwood Lake Family Practice Center, P.A. Financial Statements
as of December 31, 1996 and 1995......................................6-14
UCI Medical Affiliates, Inc. Pro Forma Combining Financial Statements
Combining Balance Sheet at September 30, 1996...........................15
Note to Combining Balance Sheet.........................................16
Combining Statement of Operations and Accumulated Deficit
for year ended September 30, 1996....................................17
Note to Combining Statement of Operations...............................18
UCI Medical Affiliates, Inc. Pro Forma Combining Financial Statements
Combining Balance Sheet at June 30, 1997................................19
Note to Combining Balance Sheet.........................................20
Combining Statement of Operations and Accumulated Deficit
for the nine months ended June 30, 1997............................21
Note to Combining Statement of Operations...............................22
<PAGE>
Report of Independent Accountants
Board of Directors
UCI Medical Affiliates, Inc.
We have audited the accompanying balance sheets of Springwood Lake Family
Practice Center, P.A. (the "Company") as of December 31, 1996 and 1995 and the
related statements of operations, changes in stockholders' equity, and cash
flows for the periods then ended. 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 audit.
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 audit provides a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Springwood Lake Family Practice
Center, P.A. as of December 31, 1996 and 1995, and the results of its
operations, changes in stockholders' equity, and its cash flows for the periods
then ended in conformity with generally accepted accounting principles.
The financial statements have been prepared solely from the accounts of
Springwood Lake Family Practice Center, P.A. and do not include the personal
accounts of the stockholders or those of any other operations in which they may
be engaged.
Columbia, South Carolina
September 30, 1997
ORIGINAL SIGNED OPINION ON SCOTT & HOLLOWAY, L.L.P.
LETTERHEAD IS ON FILE WITH
UCI MEDICAL AFFILIATES, INC.
<PAGE>
Springwood Lake Family Practice Center, P.A.
Balance Sheets
December 31,
1996 1995
-------- --------
Assets
Current assets:
Cash and cash equivalents ................ $ -- $ 8,832
Accounts receivable, net ................. 304,743 153,408
-------- --------
Total current assets ................. 304,743 162,240
-------- --------
Furniture and equipment, net ....................... 230,262 73,400
Other assets ....................................... 488 488
-------- --------
230,750 73,888
-------- --------
Total assets ............................... $535,493 $236,128
======== ========
Liabilities and Stockholders' Equity
Current liabilities:
Accounts payable and accrued expenses .......... $ 83,230 $ 39,289
Book overdraft ................................. 28,936 --
Income taxes payable ........................... -- 1,518
Note payable ................................... 26,250 --
Line of credit payable ......................... 241,420 12,000
Current maturities of capital leases ........... 27,682 9,139
Current maturities of long-term debt ........... 25,632 52,121
-------- --------
Total current liabilities .................. 433,150 114,067
Deferred income taxes payable ...................... 2,234 2,234
Long-term debt, net of current portion ............. 1,493 --
Capital leases payable, net of current portion...... 94,497 36,164
-------- --------
Total liabilities .......................... 531,374 152,465
-------- --------
Stockholders' equity
Capital stock, $1 par value; 100,000 shares authorized;
1,500 and 2,250 shares issued and outstanding in 1996
and 1995, respectively ...................... 1,500 2,250
Retained earnings (See Note 9) ................ 2,619 81,413
-------- --------
Stockholders' equity ....................... 4,119 83,663
-------- --------
Total liabilities and stockholders' equity . $535,493 $236,128
======== ========
The accompanying notes are an integral part of these financial statements.
<PAGE>
Springwood Lake Family Practice Center, P.A.
Statements of Operations
for the years ended December 31,
1996 1995
----------- -----------
Net medical revenue ............................. $ 2,225,543 $ 1,799,234
Operating costs ................................. 1,992,802 1,565,512
----------- -----------
Operating margin ........................ 232,741 233,722
Depreciation and amortization ..................... 32,275 11,173
General and administrative expenses ............... 220,983 166,232
------- -----------
Income (loss) from operations ............ (20,517) 56,317
Income tax expense ..................................... -- 3,752
Interest expense ....................................... 24,027 9,468
----------- -----------
Net income (loss) ...................... $ (44,544) $ 43,097
=========== ===========
The accompanying notes are an integral part of these financial statements
<PAGE>
Springwood Lake Family Practice Center, P.A.
Statements of Changes in Stockholders' Equity
for the years ended December 31, 1996 and 1995
<TABLE>
Total
Capital Retained Stockholders'
Stock Earnings Equity
------------------- ------------------ -------------------
<S> <C> <C> <C>
Balance, January 1, 1995 $ 2,250 $ 38,316 $ 40,566
Net income -- 43,097 43,097
------------------- ------------------ -------------------
Balance, December 31, 1995 2,250 81,413 83,663
Redemption of shares (750) (34,250) (35,000)
Net loss -- (44,544) (44,544)
------------------- ------------------ -------------------
Balance, December 31, 1996 $ 1,500 $ 2,619 $ 4,119
=================== ================== ===================
</TABLE>
The accompanying notes are an integral part of these financial statements.
<PAGE>
Springwood Lake Family Practice Center, P.A.
Statements of Cash Flows
for the years ended December 31,
<TABLE>
1996 1995
------------------ ------------------
<S> <C> <C>
Operating activities:
Net income (loss) $ (44,544) $ 43,097
Adjustments to reconcile net income (loss) to cash provided (used) by operating
activities:
Depreciation and amortization 32,275 11,173
Deferred income tax provision -- 2,234
Changes in operating assets and liabilities:
Accounts receivable (151,335) (34,248)
Book overdraft 28,936 --
Accounts payable and accrued expenses 43,941 14,486
Income taxes payable (1,518) 1,518
------------------ ------------------
------------------ ------------------
Cash provided (used) by operating activities (92,245) 38,260
------------------ ------------------
Investing activities:
Purchases of furniture and equipment (91,274) (11,642)
Proceeds from sale of furniture and equipment -- 2,150
------------------ ------------------
------------------ ------------------
Cash used by investing activities (91,274) (9,492)
------------------ ------------------
Financing activities:
Payments on capital leases (20,120) 4,530
Proceeds from issuance of debt obligations 255,908 --
Repayments on debt obligations (26,101) (27,988)
Payments to redeem stock (35,000) --
------------------ ------------------
Cash provided (used) by financing activities 174,687 (23,458)
------------------ ------------------
Net increase (decrease) in cash and cash equivalents (8,832) 5,310
Cash and cash equivalents, beginning of year 8,832 3,522
------------------ ------------------
Cash and cash equivalents, end of year $ -- $ 8,832
================== ==================
Supplemental cash flow information:
Cash paid for interest $ 24,027 $ 9,468
================== ==================
Cash paid for income taxes $ 1,518 $ --
================== ==================
</TABLE>
The accompanying notes are an integral part of these financial statements.
<PAGE>
Springwood Lake Family Practice Center, P.A.
Notes to Financial Statements
Note 1. Significant Accounting Policies
Organization - Stephen F. Serbin, M.D., Peter J. Stahl, M.D., and Sharon
Silverman, M.D. are stockholders of Springwood Lake Family Practice Center, P.A.
("Springwood") located in Columbia, South Carolina. Springwood commenced
operations in September 1978 and conducts business under the names Springwood
Lake Family Practice Center, P.A.; Springwood Lake Occupational Medicine Center,
P.A.; Woodhill Family Practice Center; and Midtown Family Medicine. Springwood
operates a family practice medical office that provides treatments on an
outpatient basis for medical conditions not involving an immediate threat to
life.
The financial statements have been prepared solely from the accounts of
Springwood and do not include the personal accounts of the stockholders or those
of any other activities in which they may be engaged. Management makes estimates
that are a necessary part of the preparation of financial statements. These
estimates include the useful lives of equipment, some of which is subject to
technological obsolescence, and the net realizable value of patient accounts
receivable. At December 31, 1996, management is not aware of any conditions that
could significantly affect the estimates employed in the preparation of the
financial statements.
Accounts Receivable - Accounts receivable represent amounts due from
patients, employers and various third-party payors. Provisions for uncollectable
amounts are made based on management's estimates of future collectability and
historical payment percentages.
Furniture and Equipment - Furniture and equipment is reported at cost.
Depreciation for financial reporting purposes is computed principally by
straight line methods over the estimated useful lives of the assets, which range
from five to seven years. Depreciation expense includes the amortization of
capital lease assets. Maintenance, repairs and the cost of minor equipment are
charged to expense. Major renewals or betterments, which prolong the life of the
assets, are capitalized. Upon disposal of depreciable property, the asset
accounts are reduced by the related cost and accumulated depreciation. The
resulting gains and losses are reflected in the statements of operations.
Income Taxes - Income tax expense is the sum of amounts currently payable
to taxing authorities and the net changes in income taxes payable or refundable
in future years. Income taxes deferred to future years are determined by a
liability method which gives consideration to the future tax consequences
associated with differences between the financial accounting and tax bases of
certain assets and liabilities.
Cash Equivalents - Springwood considers all short-term debt investments
with a maturity of three months or less at the date of acquisition to be cash
equivalents.
Under Springwood's cash management system, checks issued but not presented
to banks that result in overdraft balances for accounting purposes are
classified as "book overdraft" in the balance sheet.
Fair Value of Financial Investments - The fair value of accounts receivable
and accrued expenses payable are estimated by management to approximate their
respective carrying values.
<PAGE>
Note 2. Description of Leasing Arrangements
Springwood leases certain medical equipment under capital leases expiring
on various dates through May 2001. At the end of the lease terms, Springwood is
generally transferred title to the leased equipment, or, in some cases, the
payment of a fee representing residual value is required.
Included in furniture and equipment are the following assets held under
capital leases:
1996 1995
-------- --------
Equipment .................................... $150,463 $ 52,750
Less accumulated amortization ................ 27,917 8,374
-------- --------
$122,546 $ 44,376
======== ========
The following is a schedule by years of the future minimum lease payments
under capital leases together with the present value of the net minimum lease
payments as of December 31, 1996.
1997 $ 38,244
1998 38,244
1999 34,731
2000 29,218
2001 6,600
--------
Total minimum lease payments ................................. 147,037
Less amounts representing interest ........................... 24,858
--------
Present value of minimum lease payments ...................... 122,179
Less current portion of lease obligations .................... 27,682
--------
Capital lease obligations .................................... $ 94,497
========
Springwood leases its office spaces under month-to-month operating leases
executed directly with a stockholder and with a real estate partnership owned by
Springwood's stockholders. Total rental expense was approximately $200,000 and
$140,000 for the years ended December 31, 1996 and 1995, respectively.
Note 3. Furniture and Equipment
At December 31, furniture and equipment consisted of the following:
1996 1995
-------- --------
Office and medical equipment ................... $227,805 $ 98,478
Furniture and fixtures ......................... 161,875 102,132
-------- --------
389,680 200,610
Accumulated depreciation ...................... 159,418 127,210
-------- --------
Furniture and equipment, net ............. $230,262 $ 73,400
======== ========
<PAGE>
Note 4. Financing Arrangements
A summary of Springwood's financing arrangements at December 31, 1996 and
1995 follows:
<TABLE>
1996 1995
-------- --------
<S> <C> <C>
Note payable to a bank in monthly installments of $1,117,
including principal and interest at 7.5 percent,
maturing February 1998, unsecured .................... $ 14,210 $ 26,732
Note payable to a bank in monthly installments of $1,179,
including principal and interest at 9.75 percent,
maturing December 1997, unsecured .................... 12,915 25,389
Line of credit payable to a bank bearing interest at 8.75
percent, maturing December 2001, collateralized by
furniture, fixtures and equipment .................... 99,908 12,000
Line of credit payable to a bank bearing interest at 8.75
percent, maturing January 2001, collateralized by
business equipment ................................... 81,522 --
Line of credit payable to a bank bearing interest at 8.5
percent, maturing February 1997, unsecured
59,990 --
Note payable to a former shareholder for repurchase of common
shares ............................................... 26,250 --
-------- --------
Total financial obligations ................................. 294,795 64,121
Less, current portion notes payable .................. 26,250
Lines of credit ...................................... 241,420 12,000
Less, current portion long-term debt ................. 25,632 52,121
-------- --------
$ 1,493 $ --
======== ========
</TABLE>
Substantially all of Springwood's borrowings are personally guaranteed by
its stockholders. Certain borrowings are collateralized by second mortgages on
residential real estate of certain stockholders.
The aggregate maturities of long-term debt as of December 31, 1996 are as
follows:
Maturing during the year ended December 31,:
1997 $293,302
1998 1,493
--------
$294,795
========
<PAGE>
Note 5. Income Taxes
Income tax expense for the years ended December 31, 1996 and 1995 is
summarized as follows:
1996 1995
------ ------
Currently payable:
Federal ...................................... $ -- $1,266
State ........................................ -- 252
------
------
-- 1,518
------ ------
Change in deferred income taxes:
Federal ...................................... -- 2,234
State ........................................ -- --
------ ------
-- 2,234
------ ------
Income tax expense ............................... $ -- $3,752
====== ======
A summary of Springwood's deferred income tax accounts as of December 31,
1996 and 1995 follows:
1996 1995
-------- --------
Deferred tax assets ....................... $ 69,349 $ --
Deferred tax liabilities .................. $ 6,696 $ 2,234
Valuation allowance ....................... $(64,887) $ --
The principle sources of temporary differences in 1996 and 1995 and the
related tax effects are as follows:
1996 1995
---------------- ----------------
Net operating loss carryforward $ 68,173 $ --
Tax depreciation in excess of book
depreciation (4,462) (2,234)
Other, net 1,176 --
---------------- ----------------
Temporary differences attributable to
continuing operations 64,887 (2,234)
Change in valuation allowance (64,887) --
---------------- ----------------
Change in deferred income taxes $ -- $ (2,234)
================ ================
Springwood has net operating loss carryforwards available to reduce taxable
income in future years. At December 31, 1996, net operating loss carryforwards
are approximately $170,000 and expire at various dates through 2011.
Note 6. Related Party Transactions
The stockholders participate in the medical activities of Springwood. All
payments for services and benefits to the stockholders are recorded as salaries
and contract services and are included in cost of operations in the financial
statements. For the periods ended December 31, 1996 and 1995, amounts paid to
the stockholders totalled $551,116 and $572,468, respectively. The Company
leases its office facilities from an affiliated entity (Note 2).
<PAGE>
Note 7. Concentration of Credit Risk
In the normal course of providing health care services, Springwood extends
credit to patients in the Columbia, South Carolina area without requiring
collateral. Each individual's ability to pay balances due Springwood is assessed
and reserves are established to provide for management's estimate of
uncollectable balances. Future revenues of Springwood are largely dependent on
third-party payors and include Medicare and private insurance companies. The
amount of loss Springwood would incur in the event of non-payment by the counter
party is the amount of the patient billing.
Note 8. Contingencies
At December 31, 1996, management and its legal counsel are not aware of any
pending or threatened litigation, or unasserted claims against Springwood that
could result in losses, if any, that would be material to the financial
statements.
Note 9. Equity Transactions
During the year ended December 31, 1996, Springwood retired 750 outstanding
shares of its common stock for $35,000. The repurchase price exceeded the
shares' par value and the related additional paid-in capital by $34,250.
Accordingly, this excess has been first applied to reduce any additional paid-in
capital with the remaining purchase price applied as a reduction of retained
earnings. During the period from inception to December 31, 1996, the aggregate
excess of the cost of retired common stock over its par value and additional
paid-in capital charged to retained earnings totals $69,325.
Note 10. Subsequent Event
On August 1, 1997, UCI Medical Affiliates of South Carolina, Inc. ("UCI")
acquired the cash, accounts receivable, certain office and medical equipment and
substantially all of Springwood's intangible assets (including patient lists and
goodwill) for $2,271,250 consisting of $1,100,000 in restricted common stock of
UCI, the assumption of substantially all liabilities of the P.A., the payment of
$200,000 in cash immediately at closing, and the execution of an
interest-bearing promissory note for $600,000, maturing in August 2002. UCI
entered into an agreement with Stephen Serbin, M.D. to lease the Springwood
office space for an initial term of seven years at an annual rate of $78,005.
UCI also entered into an agreement with Woodhill Family Practice Center to lease
the Gregg Street and Garners Ferry Road office spaces. The Gregg Street lease
has an initial term of fifteen years at an annual rate of $96,244. The Garners
Ferry Road lease has an initial term of five years at an annual rate of $45,684.
As a condition of the transaction, each of the stockholders entered into a
five-year physician services agreement to provide, on average, forty hours per
week of physician services.
<PAGE>
UCI Medical Affiliates, Inc.
Pro Forma Combining Balance Sheet
September 30, 1996
(Unaudited)
The following pro forma combining balance sheet is based on the individual
balance sheets of UCI Medical Affiliates, Inc. as of September 30, 1996 per the
Company's Annual Report and Springwood Lake Family Practice Center, P.A. as of
December 31, 1996 appearing in Item 7(a) of this filing. The information has
been prepared to reflect the acquisition by UCI Medical Affiliates, Inc. of
Springwood Lake Family Practice Center, P.A. after giving effect to the pro
forma adjustments described in Note 1. This statement should be read in
conjunction with each entity's financial statements and footnotes.
<TABLE>
Springwood
UCI Medical Lake Family
Affiliates, Practice Pro Forma Pro Forma
Inc. Center, P.A. Adjustments Combined
-------------- --------------- --------------- --------------
<S> <C> <C> <C> <C>
Assets
Cash and cash equivalents $ 237,684 $ -- $ (200,000) (a)
71,845 (d) $ 109,529
Accounts receivable - net 4,187,394 304,743 -- 4,492,137
Medical supplies inventory 407,617 -- -- 407,617
Deferred taxes 197,056 -- -- 197,056
Prepaids and other assets 441,384 -- -- 441,384
-------------- --------------- --------------- --------------
Total current assets 5,471,135 304,743 (128,155) 5,647,723
Property, plant and equipment,
net 3,300,048 230,262 -- 3,530,310
Deferred taxes 855,126 -- -- 855,126
Goodwill 5,828,963 -- 1,907,495 (a)
(127,166) (b) 7,609,292
Other assets 277,422 488 -- 277,910
============== =============== =============== ==============
Total assets $ 15,732,694 $ 535,493 $ 1,652,174 $ 17,920,361
============== =============== =============== ==============
Liabilities and Capital
Current portion - long-term debt
$ 913,749 $ 320,984 $ 83,000 (a) $ 1,317,733
Accounts payable 1,391,858 26,545 -- 1,418,403
Accrued payroll 750,745 8,716 -- 759,461
Other accrued liabilities 394,635 76,905 7,495 (a)
13,000 (e)
50,800 (c) 542,835
-------------- --------------- --------------- --------------
Total current
liabilities 3,450,987 433,150 154,295 4,038,432
Deferred taxes -- 2,234 -- 2,234
Long-term debt, net of current 4,459,484 95,990 517,000 (a) 5,072,474
-------------- --------------- --------------- --------------
Total liabilities 7,910,471 531,374 671,295 9,113,140
-------------- --------------- --------------- --------------
Common stock 240,390 1,500 25,882 (a) 267,772
Paid-in capital 13,732,393 -- 1,074,118 (a) 14,806,511
Accumulated earnings
(deficit) (6,150,560) 2,619 (119,121) (f) (6,267,062)
-------------- --------------- --------------- --------------
Total capital 7,822,223 4,119 980,879 8,807,221
============== =============== =============== ==============
Total liabilities and capital $ 15,732,694 $ 535,493 $ 1,652,174 $17,920,361
============== =============== =============== ==============
</TABLE>
<PAGE>
UCI Medical Affiliates, Inc.
Note to Pro Forma Combining Balance Sheet
September 30, 1996
(Unaudited)
1. The pro forma combining balance sheet has been prepared to reflect the
acquisition of Springwood Lake Family Practice Center, P.A. by UCI Medical
Affiliates, Inc. for an aggregate price of $2,271,250. The purchase occurred on
August 1, 1997. The combining balance sheet reflects the balances of UCI at
September 30, 1996 and Springwood Lake Family Practice Center, P.A. at December
31, 1996. Pro forma adjustments are made to reflect:
(a.)The assets acquired and liabilities
assumed consisted of: The purchase price consisted of:
$ 304,743 Accounts receivable $ 25,882 Common stock
230,262 Furniture, equipment 1,074,118 Additional paid-in-capital
1,907,495 Goodwill 600,000 Note payable
(371,250) Liabilities assumed 200,000 Cash paid at closing
200,000 Cash paid at closing 371,250 Liabilities assumed
----------- ----------
$ 2,271,250 $ 2,271,250
=========== ===========
Issuance of 517,649 shares of restricted common stock valued at $1,100,000
at estimated per share value of $2.12.
$83,000 of the note payable is recorded as currently due, $517,000 is
recorded as non-current.
(b.) Excess of acquisition cost over the fair values of net assets acquired
(goodwill) less one year's amortization. ($1,907,495 goodwill less $127,166
amortization)
(c.) Accrued interest for the two month term of the note payable at 8.5%
(d.) Net decrease in fees for physician services is $71,845 annually, based
on the physician's service agreement.
(e.) Net increase in rental expense for office facilities is $13,000
annually, based on the rental agreements executed between the parties.
(f.) Effects of pro forma adjustments on statement of operations, closed
into pro forma retained earnings.
<PAGE>
UCI Medical Affiliates, Inc.
Pro Forma Combining Statement of Operations and Accumulated Deficit
for the year ended September 30, 1996
(Unaudited)
The following pro forma combining statement is based on the individual
statements of operations and accumulated deficit of UCI Medical Affiliates, Inc.
as of September 30, 1996 per the Company's Annual Report and Springwood Lake
Family Practice Center, P.A. as of December 31, 1996 appearing in item 7(a) of
this filing. The information has been prepared to reflect the acquisition by UCI
Medical Affiliates, Inc. of Springwood Lake Family Practice Center, P.A. after
giving effect to the pro forma adjustments described in Note 1. This statement
should be read in conjunction with each entity's financial statements and
footnotes.
<TABLE>
Springwood
Lake Family
UCI Medical Practice Pro Forma Pro Forma
Affiliates, Inc. Center, P.A. Adjustments Combined
---------------- -------------- --------------- -----------------
<S> <C> <C> <C> <C>
Revenue $ 23,254,351 $ 2,225,543 $ -- $ 25,479,894
Operating costs 21,525,421 1,992,802 (71,845) (a)
13,000 (d) 23,459,378
---------------- -------------- --------------- -----------------
Operating margin 1,728,930 232,741 58,845 2,020,516
General and administrative
expenses 148,637 220,983 -- 369,620
Depreciation and amortization 961,115 32,275 127,166 (b) 1,120,556
---------------- -------------- --------------- -----------------
Income from operations 619,178 (20,517) (68,321) 530,340
Interest expense, net (582,937) (24,027) (50,800) (c) (657,764)
Gain on equipment 2,105 -- -- 2,105
---------------- -------------- --------------- -----------------
Income before income tax 38,346 (44,544) (119,121) (125,319)
Income tax benefit (expense) 427,733 -- -- 427,733
---------------- -------------- --------------- -----------------
Net (loss) income 466,079 (44,544) (119,121) 302,414
Accumulated deficit - beginning
of year (6,616,639) 83,663 -- (6,532,976)
Redemption -- (35,000) -- (35,000)
---------------- -------------- --------------- -----------------
Accumulated deficit - end of
year $ (6,150,560) $ 4,119 (119,121) $ (6,265,562)
================ ============== =============== =================
Earnings per common and common equivalent share:
Net income $ .11 (e) -- $ .06
================ ============== =============== =================
Weighted average shares of
common stock outstanding 4,294,137 (e) -- 4,811,786
================ ============== =============== =================
</TABLE>
<PAGE>
UCI Medical Affiliates, Inc.
Note to Pro Forma Combining Statement of Operations and
Accumulated Deficit for the year ended September 30, 1996
(Unaudited)
1. The above statement gives effect to the following pro forma adjustments
necessary to reflect the acquisition outlined in Note 1 to the pro forma balance
sheet:
(a.) Net change in physician salary. Does not include any potential fees or
productivity or other incentives provided for in employment contracts between
the Springwood Lake Family Practice Center and UCI Medical Affiliates, Inc.
(b.) Addition for amortization of goodwill on a straight line basis over 15
years.
(c.) Accrued interest on note payable at 8.5% for two month loan term.
(d.) Net increase in rental expense for office facilities based on rental
agreements executed between the parties.
(e.) Not applicable; Springwood Lake Family Practice Center, P.A. was not
required to, and did not, compute earnings per share.
<PAGE>
UCI Medical Affiliates, Inc.
Pro Forma Combining Balance Sheet
June 30, 1997
(Unaudited)
The following pro forma combining balance sheet is based on the individual
balance sheets of UCI Medical Affiliates, Inc. as of June 30, 1997 per the
Company's Form 10QSB and Springwood Lake Family Practice Center, P.A. as of June
30, 1997. The information has been prepared to reflect the acquisition by UCI
Medical Affiliates, Inc. of Springwood Lake Family Practice Center, P.A. after
giving effect to the pro forma adjustments described in Note 1. This statement
should be read in conjunction with each entity's financial statements and
footnotes.
<TABLE>
Springwood Lake
Family Practice
UCI Medical Center, P.A. Pro Forma Pro Forma
Affiliates, Inc. Adjustments Combined
----------------- ----------------- -------------------- -----------------
<S> <C> <C> <C> <C>
Assets
Cash and cash equivalents $ 119,538 $ 11,453 $ 53,884 (d)
(200,000) (a) $ (15,125)
Accounts receivable - net 5,743,707 325,433 -- 6,069,140
Medical supplies inventory 379,647 -- -- 379,647
Deferred taxes 197,056 -- -- 197,056
Prepaids and other assets 445,636 -- -- 445,636
----------------- ----------------- ------------------ ------------------
Total current assets 6,885,584 336,886 (146,116) 7,076,354
Property, plant and
equipment, net 3,433,218 208,568 -- 3,641,786
Deferred taxes 1,380,126 -- -- 1,380,126
Goodwill 5,720,394 -- 1,907,495 (a)
(95,375) (b) 7,532,514
Other assets 268,908 488 -- 269,396
----------------- ----------------- ------------------ ------------------
Total assets $ 17,688,230 $ 545,942 $ 1,666,004 $ 19,900,176
================= ================= ================== ==================
Liabilities and Capital
Current portion - long-term
debt $ 854,903 $ 320,879 $ 83,000 (a) $ 1,258,782
Accounts payable 1,627,827 20,414 -- 1,648,241
Accrued payroll 452,995 4,358 -- 457,353
Other accrued liabilities 330,679 100,388 40,000 (c)
9,750 (e)
7,495 (a) 488,312
----------------- ----------------- ------------------ ------------------
Total current
liabilities 3,266,404 446,039 140,245 3,852,688
Deferred taxes -- 2,234 -- 2,234
Long-term debt, net of current
5,659,476 87,510 517,000 (a) 6,263,986
----------------- ----------------- ------------------ ------------------
Total liabilities 8,925,880 535,783 657,245 10,118,908
----------------- ----------------- ------------------ ------------------
Common stock 260,390 1,500 25,882 (a) 287,772
Paid-in capital 14,312,393 -- 1,074,118 (a) 15,386,511
Accumulated earnings (deficit) (5,810,433) 8,659 (91,241) (f) (5,893,015)
----------------- ----------------- ------------------ ------------------
Total capital 8,762,350 10,159 1,008,759 9,781,268
----------------- ----------------- ------------------ ------------------
Total liabilities
and capital $ 17,688,230 $ 545,942 $ 1,666,004 $ 19,900,176
================= ================= ================== ==================
</TABLE>
<PAGE>
UCI Medical Affiliates, Inc.
Note to Pro Forma Combining Balance Sheet
June 30, 1997
(Unaudited)
1. The pro forma combining balance sheet has been prepared to reflect the
acquisition of Springwood Lake Family Practice Center, P.A. by UCI Medical
Affiliates, Inc. for an aggregate price of $2,271,250. The purchase occurred on
August 1, 1997. The combining balance sheet reflects the balances of UCI at June
30, 1997 and Springwood Lake Family Practice Center, P.A. at June 30, 1997. Pro
forma adjustments are made to reflect:
(a.) The assets acquired and liabilities
assumed consisted of: The purchase price consisted of:
$ 304,743 Accounts receivable $ 25,882 Common stock
230,262 Furniture, equipment 1,074,118 Additional paid-in-capital
1,907,495 Goodwill 600,000 Note payable
(371,250) Liabilities assumed 200,000 Cash paid at closing
200,000 Cash paid at closing 371,250 Liabilities assumed
--------- ---------
$2,271,250 $2,271,250
========= ==========
Issuance of 517,649 shares of restricted common stock valued at $1,100,000
at estimated per share value of $2.12.
$83,000 of the note payable is recorded as currently due, $517,000 is
recorded as noncurrent.
(b.) Excess of acquisition cost over the fair values of net assets acquired
(goodwill) less nine month's amortization. ($1,907,495 goodwill less $95,375
amortization)
(c.) Accrued interest for nine month term of the note payable at 8.5%.
(d.) Net decreasing fee for physician services of $53,884 for nine months
based on service agreement for nine months recorded as an accrued payable.
(e.) Net increase in rental expense for office expense is $9,750 for nine
months, based on the rental agreements executed between the parties.
(f.) Effects of pro forma adjustments on statement of operations, closed
into pro forma retained earnings.
<PAGE>
UCI Medical Affiliates, Inc.
Pro Forma Combining Statement of Operations and Accumulated Deficit
for the nine months ended June 30, 1997
(Unaudited)
The following pro forma combining statement is based on the individual
statements of operations and accumulated deficit of UCI Medical Affiliates, Inc.
as of June 30, 1997 per the Company's Form 10QSB and Springwood Lake Family
Practice Center, P.A. as of June 30, 1997. The information has been prepared to
reflect the acquisition by UCI Medical Affiliates, Inc. of Springwood Lake
Family Practice Center, P.A. after giving effect to the pro forma adjustments
described in Note 1. Information for the nine months ended June 30, 1997 for
Springwood Lake Family Practice Center, P.A. is estimated since Springwood Lake
Family Practice Center, P.A. did not maintain its records on a basis consistent
with UCI Medical Affiliates, Inc. This statement should be read in conjunction
with each entity's financial statements and footnotes.
<TABLE>
Springwood Lake
UCI Family Practice
Medical Center, P.A. Pro Forma Pro Forma
Affiliates, Inc. Adjustments Combined
------------------ ------------------- ------------------ ------------------
<S> <C> <C> <C> <C>
Revenue $ 20,299,676 $ 1,783,040 $ -- $ 22,082,716
Operating costs 18,876,302 1,574,097 (53,884) (a)
9,750 (d) 20,406,265
------------------ ------------------- ------------------ ------------------
Operating margin 1,423,374 208,943 44,134 1,676,451
General and administrative
Expenses 127,881 161,764 -- 289,645
Depreciation and amortization 892,372 29,763 95,375 (b) 1,017,510
------------------ ------------------- ------------------ ------------------
Income from operations 403,121 17,416 (51,241) 369,296
Interest expense, net (570,951) (22,513) (40,000) (c) (633,464)
Gain on equipment 8,809 -- -- 8,809
------------------ ------------------- ------------------ ------------------
Income(loss) before income tax
(159,021) (5,097) (91,241) (255,359)
Income tax benefit 499,148 -- -- 499,148
------------------ ------------------- ------------------ ------------------
Net income 340,127 (5,097) (91,241) 243,789
Accumulated deficit -
beginning of period (6,150,560) 15,990 -- (6,134,570)
------------------ ------------------- ------------------ ------------------
))
Accumulated deficit - end of
period $ (5,810,433) $ 10,893 (91,241) $ (5,890,781)
================== =================== ================== ==================
(f)
Earnings per common and common equivalent share:
Net income $ .07 (e) -- $ .05
================== =================== ================== ==================
(a)
Weighted average shares of (a)
common stock outstanding
4,819,527 (e) -- 5,337,176
================== =================== ================== ==================
</TABLE>
<PAGE>
UCI Medical Affiliates, Inc.
Note to Pro Forma Combining Statement of Operations and
Accumulated Deficit for the nine months ended June 30, 1997
(Unaudited)
1. The above statement gives effect to the following pro forma adjustments
necessary to reflect the acquisition outlined in Note 1 to the pro forma balance
sheet:
(a). Net change in physician salary. Does not include any potential fees or
productivity or other incentives provided for in employment contracts between
the Springwood Lake Family Practice Center and UCI Medical Affiliates, Inc.
(b.) Addition for nine months amortization of goodwill on a straight line
basis over 15 years.
(c.) Accrued interest on note payable at 8.5% for nine months.
(d.) Net increase in rental expense for office facilities for nine months
based on rental agreements executed between the parties.
(e.) Not applicable; Springwood Lake Family Practice Center, P.A. was not
required to, and did not, compute earnings per share.
<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.
UCI Medical Affiliates, Inc.
(Registrant)
/s/ Marion F. McFarland, III, M.D. /s/ Jerry F. Wells, Jr.
Marion F. McFarland, III, M.D. Jerry F. Wells, Jr., CPA
President, Chief Executive Officer and Executive Vice President of
Chairman of the Board Finance and Chief Financial Officer
Date: October 14, 1997
