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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K/A
CURRENT REPORT
PURSUANT TO SECTION 13 OF 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934
_____________________________
Date of Report (Date of earliest event reported): October 23, 1997
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UNITED AMERICAN HEALTHCARE CORPORATION
(Exact name of registrant as specified in its charter)
____________________________________
<TABLE>
<S> <C> <C>
Michigan 000-18839 38-2526913
State or other jurisdiction of Commission IRS Employer Identification
incorporation File Number Number
</TABLE>
1155 Brewery Park Blvd., Suite 200, Detroit, Michigan 48207
(313) 393-0200
(Address, including zip code and telephone number,
including area code of Registrant's principal
executives offices)
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FORM 8-K/A CURRENT REPORT
UNITED AMERICAN HEALTHCARE CORPORATION
ITEM 4. CHANGES IN REGISTRANT'S CERTIFYING ACCOUNTANT.
Effective October 23, 1997, the Registrant's Board of Directors, upon
the recommendation of its Audit Committee, engaged Arthur Andersen LLP as the
Registrant's principal accountant to audit its financial statements for the
fiscal year ending June 30, 1998. Arthur Andersen LLP was selected by the
Board of Directors following a selection process by the Audit Committee to
select a single accounting firm to audit all of the Registrant's operations.
Previously, Grant Thornton LLP served as the Registrant's principal accountant
for substantially all of its operations, except for OmniCare Health Plan, Inc.
of Tennessee ("OmniCare-TN") which was audited by Ernst & Young LLP. In
addition, KPMG Peat Marwick LLP audited UltraMedix Health Care Systems, Inc.
("UltraMedix").
The selection process was initiated upon the advice of Grant Thornton
LLP and Ernst & Young LLP, both of which had previously recommended that the
Registrant select a single principal accountant to audit the financial
statements of the Registrant and its subsidiaries. Grant Thornton LLP, Ernst &
Young LLP and KPMG Peat Marwick LLP have been notified of the engagement of
Arthur Andersen LLP, and the discontinuance of their respective engagements as
accountants for the Registrant, OmniCare-TN and UltraMedix, respectively. The
Registrant had not, during its two most recent fiscal years, or any subsequent
interim period prior to engaging Arthur Andersen LLP, consulted or engaged the
latter for any purposes.
Neither Grant Thornton LLP, Ernst & Young LLP nor KPMG Peat Marwick
LLP have included, in either of the past two years, an adverse opinion or a
disclaimer of opinion, or a qualification or modification as to uncertainty,
audit scope or accounting principles, with respect to financial statements of
the Registrant, OmniCare-TN or UltraMedix, respectively. A copy of the Form
8-K and the Form 8-K/A have been provided to Grant Thornton LLP, Ernst & Young
LLP and Arthur Andersen LLP.
Following the conclusion of the Registrant's fiscal 1997 audit, Grant
Thornton LLP met with the Audit Committee of the Registrant's Board of
Directors on October 22, 1997, at which meeting they discussed the audit and
disagreements with management that Grant Thornton LLP concluded it had to
report under applicable professional standards concerning financial accounting,
reporting or auditing matters at the conclusion of their engagement. Grant
Thornton LLP reported the following two disagreements with representatives of
the Registrant's senior management:
Cost of Existing Philadelphia Lease Not Used for Operating Purposes
Grant Thornton LLP had advised management that a liability should have
been recognized for the remaining cost of a long term operating lease,
reduced by actual or probable sub-lease income, and discounted to the
present value. During preliminary discussions, management stated that
the Registrant was still engaged in business activity in Philadelphia
and believed that the rent should be a period cost. Ultimately,
management was unable to provide persuasive evidence to Grant Thornton
LLP that the Company was currently engaged in significant
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business activity in the Philadelphia area. Management ultimately
accepted Grant Thornton LLP's position, and Grant Thornton LLP
reported that the disagreement was resolved to their satisfaction when
the Registrant recorded an adjustment of approximately $195,000, net
of applicable taxes, to recognize the liability.
HealthScope Debt Restructuring
Grant Thornton LLP advised management that a reduction in cost should
be recognized for the exchange of notes receivable from HealthScope
for a class of HealthScope's non-cumulative preferred stock, which is
subordinated to other preferred stock and creditors. Grant Thornton
LLP reported that the disagreement involved their judgment that the
consideration received at the time of the restructuring needed to be
discounted using venture capital yield rates in order to reflect fair
value of the non-cumulative preferred stock. Management initially
responded that HealthScope did not account for the transaction in this
manner, that HealthScope's auditors did not require such an
adjustment, and that the risk associated with this investment in
HealthScope did not warrant the use of venture capital rates. After
Grant Thornton LLP discussed the matter with HealthScope's auditors
and the Registrant's Audit Committee, it determined that persuasive
arguments or evidence against using such a discount factor were not
provided. Grant Thornton LLP reported that ultimately the
disagreement was resolved to their satisfaction when the Registrant
recorded an adjustment of approximately $729,000 to reduce the cost
of its investment in HealthScope.
Both of the reported disagreements were discussed by the Audit
Committee. The Audit Committee supported management's actions in accepting
positions from Grant Thornton LLP, and believes that the Company has fully
resolved the disagreements. The adjustments recorded upon the advice of Grant
Thornton LLP were reported in the Registrant's Form 10-K for the fiscal year
ended June 30, 1997. The Audit Committee has further authorized Grant Thornton
LLP to respond fully to the inquiries of Arthur Andersen LLP concerning the
subject matter of each of the foregoing disagreements.
There were no disagreements with Ernst & Young LLP during the
Registrant's last two years and the subsequent interim period on any matters
under applicable professional standards concerning financial accounting,
reporting or auditing matters at the conclusion of their engagement which would
cause Ernst & Young LLP to make reference to the subject matter of disagreement
in connection with its reports.
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ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS.
The following exhibits are listed as part of this report:
(a) Concurring Letter regarding change in Certifying Accountants
dated November 12, 1997, from Grant Thornton LLP.
(b) Concurring Letter regarding change in Certifying Accountants
dated November 12, 1997, from Ernst & Young LLP.
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 American Healthcare Corporation
Date: November 12, 1997
/s/ JAGU VANAHARAM
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Jagu Vanaharam
Senior Vice President,
Finance & Treasurer
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[GRANT THORNTON LLP LETTERHEAD]
November 12, 1997
Office of the Chief Accountant
Securities and Exchange Commission
Mail Stop 11-3
450 Fifth Street, N.W.
Washington, D.C. 20549
Re: United American Healthcare Corporation
File No. 000-18839
Dear Sir or Madam:
We have read Item 4 of the Form 8-K/A of United American Healthcare Corporation
dated October 23, 1997, and agree with the statements contained therein insofar
as the statements apply to Grant Thornton LLP. We have previously sent a
letter to you dated October 30, 1997 which indicated that we had read Item 4 of
the Form 8-K of United American Healthcare Corporation dated October 23, 1997
and agreed with the statements contained therein insofar as the statements
applied to Grant Thornton LLP.
Very truly yours,
/s/GRANT THORNTON LLP
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[ERNST & YOUNG LLP LETTERHEAD]
November 12, 1997
Securities and Exchange Commission
450 Fifth Street, N.W.
Washington, DC 20549
Gentlemen:
We have read Item 4 of Form 8-K/A dated November 12, 1997 of United American
Healthcare Corporation and are in agreement with the statements therein insofar
as the statements apply to Ernst & Young LLP. We have no basis to agree or
disagree with other statements of the registrant contained therein.
/s/ERNST & YOUNG LLP
