SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C.
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(D) OF
THE SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported): December 21, 1995
UNITED SERVICES ADVISORS, INC.
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(Exact name of registrant as specified in its charter)
Texas 0-13928 74-1598370
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(State of other juris- (Commission (IRS Employer
diction of incorporation) File Number) Identification No.)
7900 Callaghan Road, San Antonio, Texas 78229
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: 210-308-1234
Not Applicable
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(Former name or former address, if changed since last report)
ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS.
DECEMBER 21 SALE OF SECURITIES
United Services Advisors, Inc. (the "Registrant" or "USAI") disposed of
$47.25 million (par value) of government securities subject to reverse
repurchase agreements on December 21, 1995 as discussed in Registrant's December
28, 1995 press release which is attached hereto as Exhibit 20(a) and
incorporated herein by reference.
DECEMBER 28 MARLEAU, LEMIRE INC. TRANSACTION
Registrant and Marleau, Lemire Inc. ("ML") closed a transaction on December
29, 1995 covering the issuance of preferred stock and the repurchase of
convertible non-voting common stock and closely related items as discussed in
Registrant's January 3, 1996 press release which is attached hereto as Exhibit
20(b) and incorporated herein by reference and as discussed below.
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For consideration of $US 2,500,000 USAI repurchased 500,000 of ML's 1,000,000
Class B Common Shares ("B Shares") issued to ML by USAI pursuant to that certain
Subscription and Purchase Agreement dated December 7, 1994 ("Purchase
Agreement") between USAI, ML, Mr. Frank Holmes and F.E. Holmes Organization,
Inc. ("Holmes"). Further, USAI exchanged 1,000,000 shares of its Preferred Class
("Preferred") for ML's remaining 500,000 B Shares and the following
consideration. Simultaneous with the completion of these two events the 1
million purchase warrants issued to ML pursuant to the Purchase Agreement and
the option provided for in the subordinated debenture for ML to convert the
remaining balance of its subordinated debenture into Preferred stock were
canceled in their entirety. USAI agreed to commence work in January 1996 on a
registration statement on Form S-3 to be filed with the SEC so that ML will have
free trading shares.
The December 29, 1995 transaction also provided for:
1. The Purchase Agreement, the Shareholder's Agreement and the Employment and
Non-competition Agreement, all dated December 7, 1994, were canceled in
their entirety;
2. Messrs. Hubert Marleau and Richard Renaud are to resign from USAI's Board
of Directors and Frank E. Holmes is to resign from ML's Board of Directors;
3. Approval of the respective Board of Directors of USAI and ML;
4. Reclassification and sale of certain Government Notes (Cusip 3133883Q1 par
value $37,250,000 and Cusip 313311W81 par value $10,000,000);
5. Beginning January 15, 1996 and for every month thereafter, USAI will commit
to prepay $50,000 per month toward the principal balance outstanding in
accordance with the prepayment clause set forth in that certain
Subordinated Debenture Agreement amended December 7, 1994 ("Debenture");
6. Reclassification as available-for-sale a certain Government Note (Cusip
313388X88 par value $16,550,000) which will generate upon sale and/or
prepayment approximately $959,000 as principal repayment under the
Debenture;
7. The Debenture shall be amended to provide that in the event voting control
of USAI changes, the balance owing ML under the Debenture shall become due
and payable prior to closing on the change of control and the registration
statement covering ML's 1,000,000 shares shall be declared effective by the
SEC prior to said closing;
8. ML undertakes to transfer immediately the assets and the management
contract(s) of ML's Small Cap Fund from ML to United Services Advisors
Canada, Inc. (or one of its designated subsidiaries) ("USACI"), subject to
regulatory and shareholder approvals. All revenues generated by ML's Small
Cap Fund effective January 1, 1996, whether the assets and the management
contracts have been transferred or not, will become the revenue of USACI;
9. USAI agrees to bear up to the next $Cdn. 250,000 in costs with respect to
ML's and USAI's joint venture, USACI.
10. Upon the transfer of any monies by USAI to ML, the purpose of which is for
USAI to acquire from ML any Class B Common Shares or Preferred Shares or
any warrants or options to convert into any Class of Shares then authorized
and issued by USAI; any certificate, document, letter, writing or any
understanding evidencing ownership by ML or any affiliate will be deemed to
be and will be canceled. ML will forward to USAI all USAI stock
certificates, warrants and other such documents and agreements simultaneous
with the transfer of monies to ML. It is understood that the 72,720 Class A
Common Shares held by ML are not subject to this paragraph 10; and
11. Subject to paragraph 10, the requirement that Mr. Holmes exchange 177,280
Class A Common Shares for 133,551 Shares (consolidated shares based on 1
new for 3 old) of ML pursuant to the terms and conditions of the Purchase
and Shareholders Agreement dated December 7, 1994 will be canceled in its
entirety.
All the foregoing is subject to general market conditions and the absence of any
material adverse conditions or changes to USAI.
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ITEM 7. FINANCIAL STATEMENTS, INFORMATION AND EXHIBITS.
(b) Proforma financial information: Unaudited Consolidated Balance Sheet
and Statement of Operations of Registrant at September 30, 1995.
(c) Exhibits.
20(a)December 28, 1995 Press Release which is incorporated by
reference into Registrant's Current Report on Form 8-K.
20(b)January 3, 1996 Press Release which is incorporated by reference
into Registrant's Current Report on Form 8-K.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
UNITED SERVICES ADVISORS, INC.
By: /s/ Jane K. Hatton
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JANE K. HATTON
Vice President, Chief Financial Officer
Dated: January 4, 1996
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EXHIBIT INDEX
SEQUENTIALLY
EXHIBIT NUMBERED
NUMBER EXHIBIT PAGE
--- Proforma Financial Information 5
20(a) December 29, 1995 Press Release which is 8
incorporated by reference into Registrant's
Current Report on Form 8-K
20(b) January 3, 1996 Press Release which is 10
incorporated by reference into Registrant's
Current Report on Form 8-K
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PROFORMA FINANCIAL INFORMATION
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UNITED SERVICES ADVISORS,INC.
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UNAUDITED PRO FORMA PRO FORMA
CONSOLIDATED BALANCE SHEET AS OF ADJUSTMENTS ADJUSTMENTS PRO FORMA
SEPTEMBER 30, 1995 DECEMBER 21, 1995 DECEMBER 29, 1995 RESULTS
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<S> <C> <C> <C> <C>
CURRENT ASSETS
CASH & INTEREST BEARING DEPOSITS ............ 2,069,161 1,147,577 (1) (2,500,000)(2) 716,738
TRADING SECURITIES .......................... 2,178,436 0 0 2,178,436
RECEIVABLES ................................. 2,147,763 (91,397)(1) 0 2,056,366
PREPAID EXPENSES ............................ 473,509 0 0 473,509
DEFERRED TAX ASSET .......................... 0 (571,530)(1) 10,963 (3) (560,567)
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TOTAL CURRENT ASSETS ........................... 6,868,869 484,650 (2,489,037) 4,864,482
NET FIXED ASSETS ............................. 2,573,389 0 0 2,573,389
GOVERNMENT SECURITIES ........................ 113,785,240 (45,138,064)(1) (32,245)(2) 68,614,931
RESTRICTED CASH AND INVESTMENTS .............. 661,856 0 0 661,856
RECEIVABLES .................................. 281,128 0 0 281,128
DEFERRED TAX ASSET ........................... 2,262,304 0 0 2,262,304
RESIDUAL EQUITY INTEREST ..................... 217,861 0 0 217,861
INVESTMENT IN JOINT VENTURE .................. 557,933 0 0 557,933
AVAILABLE-FOR-SALE SECURITIES ............... 1,319,371 0 0 1,319,371
OTHER LONG-TERM ASSETS ....................... 68,793 0 0 68,793
TOTAL OTHER ASSETS ........................... 119,154,486 (45,138,064) (32,245) 73,984,177
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TOTAL ASSETS ................................... 128,596,744 (44,653,414) (2,521,282) 81,422,048
=========== =========== ========== ==========
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UNAUDITED PRO FORMA PRO FORMA
CONSOLIDATED BALANCE SHEET AS OF ADJUSTMENTS ADJUSTMENTS PRO FORMA
SEPTEMBER 30, 1995 DECEMBER 21, 1995 DECEMBER 29, 1995 RESULTS
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CURRENT LIABILITIES
ACCRUED EXPENSES AND OTHER ................... 1,351,457 (615,167)(1) 0 736,290
DEFERRED TAX LIABILITY ....................... 153,423 0 0 153,423
SECURITIES SOLD UNDER AGMT TO REPURCHASE ..... 112,307,387 (44,519,375)(1) 0 67,788,012
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TOTAL CURRENT LIABILITIES .................... 113,812,267 (45,134,542) 0 68,677,725
NOTES PAYABLE-L/T ............................ 1,291,760 0 0 1,291,760
SUBORDINATED DEBENTURE ....................... 4,534,212 (334,196)(1) 0 4,200,016
ANNUITY OBLIGATION & LONG TERM LEASES ........ 161,452 0 0 161,452
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TOTAL LONG-TERM LIABILITIES .................. 5,987,424 (334,196) 0 5,653,228
TOTAL LIABILITIES .............................. 119,799,691 (45,468,738) 0 74,330,953
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SHAREHOLDERS EQUITY
PREFERRED STOCK @ PAR ........................ 253,575 0 50,000 (2) 303,575
COMMON STOCK @ PAR ........................... 78,539 0 (50,000)(2) 28,539
ADDITIONAL PAID IN CAPITAL ................... 12,835,084 0 (2,500,000)(2) 10,335,084
TREASURY STOCK ............................... (274,123) 0 0 (274,123)
NET UNREALIZED HOLDING GAIN .................. 158,715 0 0 158,715
RETAINED EARNINGS (DEFICIT) .................. (4,254,737) 815,324 (21,282)(3) (3,460,695)
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TOTAL SHAREHOLDERS EQUITY ...................... 8,797,053 815,324 (1) (2,521,282) 7,091,095
TOTAL LIABILITIES & SHLDR. EQUITY .............. 128,596,744 (44,653,414) (2,521,282) 81,422,048
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<FN>
(1) See Exhibit 20(a) to this Form 8K for a detailed description of the
transaction.
(2) See Item 2 and Exhibit 20(b) to this Form 8K for a detailed description of
the transaction.
(3) A $16.55 million par value government note was reclassified from the
held-to-maturity category to the available-for-sale category pusuant to the
FASB Special Report on SFAS 115. This amount represents the accretion to
par, along with the related tax effect, that was taken during the period as
allowed for held-to-maturity securities which is now not taken when the
security is classified as available-for-sale.
</FN>
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UNITED SERVICES ADVISORS,INC.
CONSOLIDATED INCOME STATEMENT
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UNAUDITED PRO FORMA PRO FORMA
REVENUES QUARTER ENDED ADJUSTMENTS ADJUSTMENTS PRO FORMA
SEPTEMBER 30, 1995 DECEMBER 21, 1995 DECEMBER 29, 1995 RESULTS
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MANAGEMENT FEES (NET) ............................... 1,406,082 0 0 1,406,082
NET TRANSFER AGENCY FEES ............................ 758,453 0 0 758,453
INVESTMENT INCOME ................................... 582,530 1,534,102 (1) 0 2,116,632
OTHER FEES AND INCOME ............................... 390,037 0 0 390,037
GOVERNMENT SECURITY INTEREST INCOME ................. 1,354,513 (542,902)(1) 0 811,611
GOVERNMENT SECURITY ACCRETION TO PAR ................ 524,880 (298,116)(1) (32,245)(3) 194,519
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TOTAL REVENUE ....................................... 5,016,495 693,084 (32,245) 5,677,334
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UNAUDITED PRO FORMA PRO FORMA
EXPENSES QUARTER ENDED ADJUSTMENTS ADJUSTMENTS PRO FORMA
SEPTEMBER 30, 1995 DECEMBER 21, 1995 DECEMBER 29, 1995 RESULTS
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TOTAL GENERAL & ADMINISTRATIVE ...................... 2,513,239 0 0 2,513,239
DEPRECIATION & AMORTIZATION ......................... 120,474 0 0 120,474
INTEREST & FINANCE CHARGES .......................... 34,132 0 0 34,132
INTEREST EXPENSE - SEC SOLD TO REPURCHASE ........... 1,733,832 (687,086)(1) 0 1,046,746
INTEREST EXPENSE - SUBORDINATED DEBENTURE ........... 90,684 (6,684)(1) 0 84,000
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TOTAL EXPENSES ...................................... 4,492,361 (693,770) 0 3,798,591
FEDERAL TAXES ....................................... 218,644 571,530 (1) (10,963)(3) 779,211
NET INCOME (LOSS) ................................... 305,490 815,324 (21,282) 1,099,532
========= ======== ======== =========
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PRO FORMA EARNINGS PER SHARE AFTER TAX
Primary & Fully Diluted $ 0.05 $ 0.12 $ 0.00 $ 0.17
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WEIGHTED AVERAGE SHARES OUTSTANDING
Primary 6,611,599 6,611,599 6,611,599 6,611,599
Fully Diluted 6,611,599 6,611,599 6,611,599 6,611,599
<FN>
(1) See Exhibit 20(a) to this Form 8K for a detailed description of the
transaction.
(3) A $16.55 million par value government note was reclassified from the
held-to-maturity category to the available-for-sale category pusuant to the
FASB Special Report on SFAS 115. This amount represents the accretion to
par, along with the related tax effect, that was taken during the period as
allowed for held-to-maturity securities which is now not taken when the
security is classified as available-for-sale.
</FN>
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EXHIBIT 20(a)
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NEWS RELEASE
For additional information contact: Frank E. Holmes
Chairman
For Immediate Release: (210) 308-1234
UNITED SERVICES REDUCES DEBT DRAMATICALLY
San Antonio, Texas -- December 28, 1995. United Services Advisors, Inc. ("USAI")
today announced that it has reduced its investment in government notes ("Notes")
by selling an additional $47.25 million (par value) in open market transactions.
These transactions strengthen the Company's balance sheet and improve its
financial ratios and cash flow. Going forward, the Company is expected to save
approximately $560,000 in annual interest costs on debt that was used to finance
the Notes. To date, USAI has reduced its investment in the Notes by
approximately 46%.
These transactions resulted in the Company recording a net realized gain in
excess of $1.0 million before tax ($.15 per share) which it will recognize
during the second quarter of fiscal 1996.
Frank Holmes, Chairman, said, "We are pleased that market conditions allowed
USAI to accelerate the reduction of its debt, lower its future interest costs
and most importantly increase its cash flow."
USAI is a public company based in San Antonio, Texas. USAI and its subsidiaries
manage approximately $1.5 billion in mutual fund and trust assets. The Company's
stock is traded in the NASDAQ Stock Market. (Symbol USVSP)
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EXHIBIT 20(b)
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NEWS RELEASE
For additional information contact: Frank E. Holmes
Chairman
For Immediate Release: (210) 308-1234
UNITED SERVICES STRIKES NEW DEAL WITH MARLEAU, LEMIRE
San Antonio, Texas -- January 3, 1996. United Services Advisors, Inc. ("USAI" or
the "Company") announced that on December 29, 1995 an agreement was reached with
Marleau, Lemire Inc. ("ML"), a major shareholder of the Company, pursuant to
which:
1. ML will no longer have a right to put its one million shares of Class B
Common Stock back to the Company at its original purchase price of
$5,000,000 for debt;
2. the Company eliminates any future interest costs it might have borne had ML
converted its investment to debt; and
3. remaining shareholders will benefit as a result of cancellation of ML's
warrants and options to acquire additional shares, thereby significantly
reducing future dilution by approximately 1.65 million shares (25%).
In connection with this transaction, ML received $2,500,000 cash and 1 million
shares of Preferred Stock in exchange for ML (1) cancelling 1 million shares of
USAI's Class B Common Shares, (2) cancelling warrants giving ML the right to
acquire 1 million shares of USAI's voting Class A Common Stock or Preferred
Stock, (3) cancelling the option to convert the remaining balance of its
subordinated debenture into approximately 648,000 shares of USAI's Preferred
Stock, and (4) cancelling other rights under the December 1994 agreements
relating to ML's original purchase, including its right to obtain voting control
of USAI.
Further, the agreement calling for ML to exchange 133,551 of its shares for
177,280 shares of Class A common stock held by Frank Holmes and F. E. Holmes
Organization, Inc. has been cancelled.
Frank Holmes, Chairman, stated: "The transaction is part of our continuing
effort to simplify and strengthen our balance sheet, to reduce dilution and to
reduce debt. In addition, the Company plans to accelerate the reduction of the
ML debt. Specifically, we expect to further reduce said debt by approximately
$50,000 per month or, $600,000 during the next 12 months.
Additionally, Messrs. Hubert Marleau, Chairman and CEO of ML, and Richard J.
Renaud, a Director of ML, have resigned from the Board of Directors of USAI;
and, Mr. Frank E. Holmes, Chairman of USAI, has resigned from the Board of ML.
Both USAI and ML will actively continue to grow United Services Advisors Canada,
Inc., their Canadian based joint venture.
USAI is a public company based in San Antonio, Texas. USAI and its subsidiaries
manage approximately $1.5 billion in mutual fund and trust assets. The Company's
stock is traded in the NASDAQ Stock Market. (Symbol USVSP)
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