<PAGE>
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
__________________________________
FORM 8-K/A
AMENDMENT NO. 1 TO CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported): August 13, 1996
UNIVERSAL HOSPITAL SERVICES, INC.
---------------------------------
(Exact Name of Registrant as
specified in its charter)
Minnesota 0-20086 41-0760940
- --------------- ----------------------- ------------------
(State or other (Commission File Number) (IRS Employer
jurisdiction of Identification No.)
incorporation or
organization)
1250 Northland Plaza
3800 West 80th Street
Bloomington, Minnesota 55431-4442
-----------------------------------
(Address of principal executive offices)
(Zip Code)
612-893-3200
------------
(Registrant's telephone number, including area code)
Not Applicable
------------------------------
(Former name or former address, if changed since last report)
<PAGE>
The undersigned registrant hereby amends the following items, financial
statements, pro forma financial information and exhibits, if any, or other
portions of its Form 8-K Report dated August 13, 1996, filed October 25, 1996,
as set forth in the pages attached hereto:
Item 7. Financial Statements and Exhibits.
(a) Financial Statements of Business Acquired.
Financial statements required to be filed pursuant to
Item 7 of Form 8-K filed October 25, 1996, for
Biomedical Equipment Rental & Sales, Inc. ("BERS").
(b) Pro Forma Financial Information
Pro forma financial information required to be filed pursuant
to Item 7 of Form 8-K filed October 25, 1996, for
Universal Hospital Services, Inc. ("UHS").
<PAGE>
ITEM 7 - FINANCIAL STATEMENTS AND EXHIBITS
(a) Financial statements of business acquired
BIOMEDICAL EQUIPMENT RENTAL
AND SALES, INC.
Financial Statements
July 31, 1996 and October 31, 1995
(With Independent Auditors' Report Thereon)
<PAGE>
INDEPENDENT AUDITORS' REPORT
The Board of Directors
Biomedical Equipment Rental and Sales, Inc.:
We have audited the accompanying balance sheets of Biomedical Equipment Rental
and Sales, Inc. as of July 31, 1996 and October 31, 1995, and the related
statements of earnings, stockholders' equity, and cash flows for the nine months
ended July 31, 1996 and the year ended October 31, 1995. 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 audits.
We conducted our audits 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 audits provide 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 Biomedical Equipment Rental and
Sales, Inc. as of July 31, 1996 and October 31, 1995, and the results of its
operations and its cash flows for the nine months ended July 31, 1996 and the
year ended October 31, 1995 in conformity with generally accepted accounting
principles.
As discussed more fully in note 8 to the financial statements, on August 13,
1996, the stockholders of the Company sold the stock of the Company.
Batchelor, Tillery & Roberts, LLP
Raleigh, North Carolina
August 30, 1996
<PAGE>
BIOMEDICAL EQUIPMENT RENTAL AND SALES, INC.
Balance Sheets
July 31, 1996 and October 31, 1995
Assets
- ------
1996 1995
---- ----
Current assets:
Cash and cash equivalents $ 409,578 600,020
Receivables:
Trade accounts, less allowance for doubtful
accounts of $77,000 in 1996 and $57,000 in 1995 957,175 1,025,401
Sales-type leases, net of unearned
interest of $33,858 in 1996 and $43,956 in 1995 284,559 281,059
Inventories 136,062 227,360
Prepaid expenses 20,932 16,124
---------- ---------
Total current assets 1,808,306 2,149,964
---------- ---------
Property and equipment, at cost:
Rental equipment 10,049,547 9,884,651
Office furniture and fixtures 179,011 175,518
Engineering equipment 90,984 89,690
Automobiles 54,726 51,939
Land improvements 23,136 22,930
---------- ---------
10,397,404 10,224,728
Less accumulated depreciation and amortization (6,329,751) (5,749,886)
---------- ----------
Property and equipment, net 4,067,653 4,474,842
---------- ----------
Other assets:
Sales-type leases due after one year, net of
unearned interest of $7,078 in 1996 and
$23,203 in 1995 169,810 308,228
Goodwill, less accumulated amortization 101,768 111,616
Cash surrender value of life insurance 38,055 32,385
Other 81,314 11,157
---------- ----------
Total other assets 390,947 463,386
---------- ----------
$ 6,266,906 $ 7,088,192
============ ===========
(Continued)
<PAGE>
BIOMEDICAL EQUIPMENT RENTAL AND SALES, INC.
Balance Sheets, Continued
July 31, 1996 and October 31, 1995
Liabilities and Stockholders' Equity
- ------------------------------------
1996 1995
---- ----
Current liabilities:
Accounts payable $ 379,757 $ 417,467
Accrued expenses 538,443 300,935
Current installments of long-term debt 1,107,731 1,243,534
Current installments of capitalized lease obligation 207,743 172,253
---------- ----------
Total current liabilities 2,233,674 2,134,189
Long-term debt, less current installments 751,243 1,403,671
Capitalized lease obligation, less current installments 189,642 310,366
---------- ----------
Total liabilities 3,174,559 3,848,226
---------- ----------
Stockholders' equity:
Common stock, $1 par value; 100,000 shares authorized,
5,000 shares issued and outstanding in 1996 and 1995 5,000 5,000
Additional paid-in capital 184,450 184,450
Retained earnings 2,902,897 3,050,516
---------- ----------
Total stockholders' equity 3,092,347 3,239,966
---------- ----------
Commitments
$ 6,266,906 $ 7,088,192
============ ===========
See accompanying notes to financial statements.
<PAGE>
BIOMEDICAL EQUIPMENT RENTAL AND SALES, INC.
Statements of Earnings
Nine months ended July 31, 1996 and year ended October 31, 1995
1996 1995
---- ----
Revenue:
Rental income $3,446,745 $4,437,655
Sales 627,900 1,115,554
Service income 67,874 142,184
Gain on sale of equipment 209,683 260,680
Interest income 55,532 59,416
Other 955 1,022
---------- ----------
Total revenue 4,408,689 6,016,511
---------- ----------
Costs and expenses:
Cost of goods sold 392,500 748,057
General and administrative 3,541,273 3,947,548
Interest 181,154 262,827
---------- ----------
Total costs and expenses 4,114,927 4,958,432
---------- ----------
Net earnings $ 293,762 $1,058,079
========== ==========
See accompanying notes to financial statements.
<PAGE>
BIOMEDICAL EQUIPMENT RENTAL AND SALES, INC.
Statements of Stockholders' Equity
Nine months ended July 31, 1996 and year ended October 31, 1995
<TABLE>
<CAPTION>
Additional
Common paid-in Retained
stock capital earnings Total
----- ------- -------- -----
<S> <C> <C> <C> <C>
Balance at October 31, 1994
$5,000 184,450 2,561,687 2,751,137
Net earnings
- - 1,058,079 1,058,079
Dividends
- - (569,250) (569,250)
-------- ------- --------- ---------
Balance at October 31, 1995
5,000 184,450 3,050,516 3,239,966
Net earnings
- - 293,762 293,762
Dividends
- - (441,381) (441,381)
-------- ------- --------- ---------
Balance at July 31, 1996
$5,000 184,450 2,902,897 3,092,347
======== ======= ========= =========
</TABLE>
See accompanying notes to financial statements.
<PAGE>
BIOMEDICAL EQUIPMENT RENTAL AND SALES, INC.
Statements of Cash Flows
Nine months ended July 31, 1996 and year ended October 31, 1995
<TABLE>
<CAPTION>
1996 1995
---- ----
<S> <C> <C>
Cash flows from operating activities:
Net earnings $ 293,762 $1,058,079
Adjustments to reconcile net earnings to net cash
provided by operating activities:
Depreciation and amortization 1,249,884 1,708,581
Bad debt expense 53,104 137,820
Gain on sale of equipment (209,683) (260,680)
Changes in operating assets and liabilities:
Receivables (655) (822,602)
Inventories 91,298 (33,471)
Prepaid expenses and other assets (4,808) 34,198
Accounts payable and accrued expenses 142,073 72,751
----------- ---------
Net cash provided by operating activities 1,614,975 1,894,676
----------- ---------
Cash flows from investing activities:
Purchases of property and equipment (867,702) (1,770,190)
Proceeds from disposal of equipment 254,013 520,317
Collections of sales-type leases 238,195 276,765
Deposit (70,157) -
Increase in cash surrender value of life insurance (5,670) (9,066)
----------- ---------
Net cash used in investing activities (451,321) (982,174)
----------- ---------
Cash flows from financing activities:
Proceeds from short-term borrowings - 335,000
Principal repayments on short-term borrowings - (556,669)
Proceeds from issuance of long-term debt 255,455 1,860,087
Principal repayments on long-term debt (1,043,686) (1,473,810)
Payments on capital lease obligation (137,834) (155,926)
Dividends paid (428,031) (569,250)
----------- ---------
Net cash used in financing activities (1,354,096) (560,568)
----------- ---------
Net (decrease) increase in cash and cash
equivalents (190,442) 351,934
Cash and cash equivalents at beginning of year 600,020 248,086
----------- ---------
Cash and cash equivalents at end of year $ 409,578 $ 600,020
=========== ============
Supplemental disclosure of cash flow information:
Cash paid for interest $ 189,990 $ 252,468
=========== ============
Equipment purchases included in accounts payable $ 44,375 $ 297,070
=========== ============
Equipment purchased under capital lease $ 52,600 $ -
=========== ============
Dividends payable $ 13,350 $ -
=========== ============
</TABLE>
See accompanying notes to financial statements.
<PAGE>
BIOMEDICAL EQUIPMENT RENTAL AND SALES, INC.
Notes to Financial Statements
July 31, 1996 and October 31, 1995
(1) Organization and Summary of Significant Accounting Policies
-----------------------------------------------------------
Organization
------------
Biomedical Equipment Rental and Sales, Inc. (the "Company") is a closely-
held corporation which rents and sells medical equipment to hospitals and
other medical service providers. The Company also sells disposable medical
products used in conjunction with the rental equipment.
As discussed in note 8 to the financial statements, on August 13,
1996, the Company was sold to Universal Hospital Services, Inc.
Basis of Presentation and Use of Estimates
------------------------------------------
The accompanying financial statements have been prepared on the accrual
basis of accounting in accordance with generally accepted accounting
principles. The preparation of financial statements in conformity with
generally accepted accounting principles requires management to make
estimates and assumptions that affect the reported amounts of assets and
liabilities and disclosure of contingent assets and liabilities at the date
of the financial statements and the reported amounts of revenues and
expenses during the reporting period. Actual results could differ from
those estimates.
Significant Accounting Policies
-------------------------------
The significant accounting policies of the Company are summarized below:
(a) Cash and Cash Equivalents
-------------------------
The Company considers all highly liquid instruments with an original
maturity of three months or less, money market funds, and other interest-
bearing deposits to be cash equivalents.
(b) Accounts Receivable
-------------------
The Company provides an allowance for estimated uncollectible receivables
equal to the losses that are estimated to be incurred in the collection of
all receivables. The allowance is based on historical collection experience
combined with a review of the current status of the existing receivables.
The Company extends credit to a large number of customers within its
primary market areas, and the Company performs ongoing credit evaluations
of its customers.
(c) Inventories
-----------
Inventories are stated at the lower of cost, determined on a last-in,
first-out basis (LIFO), or market.
<PAGE>
BIOMEDICAL EQUIPMENT RENTAL AND SALES, INC.
Notes to Financial Statements, Continued
(1) Organization and Summary of Significant Accounting Policies, Continued
----------------------------------------------------------------------
(d) Leases
------
Operating leases
----------------
The Company has the following categories of rental agreements which are
accounted for as operating leases:
Casual rentals: These agreements indicate the equipment to be rented
and the monthly and/or per-day-of-use rate. The number of rental units
and the term of these contracts are not specified.
Full-service, per-day-of-use contracts: These contracts cover a
specified quantity of rental units and have a 12 to 60 month term. As
needed, the customer may add additional units at the same price. The
customer is charged based on usage, with an 8 day minimum charge. The
Company provides semiannual preventive maintenance inspections (PMIs)
and all normal repairs.
Full-service monthly leases: These agreements range from 12 to 60
months and cover a specified number of rental units. Additional units
may be added at the same price. The monthly lease payment covers
semiannual PMIs and all normal repairs.
Full-service operating leases: These contracts cover a specified
quantity of rental units and have a 12 to 60 month term. The Company
provides semiannual PMIs and all normal repairs.
Capital leases
--------------
The Company reports leases with a buy-out option at the end of the term
as capital leases. These sales-type leases cover a specified number of
units, with financing over a 12 to 60 month period.
(e) Property and Equipment
----------------------
Depreciation of property and equipment is provided over the estimated
useful lives of the respective assets, principally on the straight-line
method. Depreciation is computed using an estimated useful life of five
years for rental equipment and estimated useful lives of five to
fifteen years for all other property.
Amortization of equipment under a capital lease is provided over five
years on the straight-line method.
<PAGE>
BIOMEDICAL EQUIPMENT RENTAL AND SALES, INC.
Notes to Financial Statements, Continued
(1) Organization and Summary of Significant Accounting Policies, Continued
----------------------------------------------------------------------
(e) Property and Equipment, Continued
---------------------------------
In March 1995, the Financial Accounting Standards Board issued
Statement of Financial Accounting Standards (SFAS) No. 121, "Accounting
for the Impairment of Long-Lived Assets and for Long-Lived Assets to be
Disposed of". The Company is required to adopt SFAS No. 121 no later
than fiscal year 1997. Management currently believes that adoption of
SFAS No. 121 will not have a significant impact on the Company's
financial position or results of operations.
(f) Goodwill
--------
Goodwill represents the excess purchase cost of acquired assets over
the fair market value of net assets at the date of acquisition and is
being amortized on the straight-line method over ten years. Accumulated
amortization was $29,545 as of July 31, 1996 and $19,697 as of October
31, 1995.
(g) Election for Federal and State Income Tax Purposes
--------------------------------------------------
The stockholders of the Company have elected to have the Company's
taxable income reported as income to the individual stockholders for
federal and state income tax purposes. Accordingly, the Company is not
liable for federal or state income taxes on earnings for the nine
months ended July 31, 1996 and the year ended October 31, 1995.
(2) Inventories
-----------
Inventories consist of replacement parts and supplies for rental equipment.
If the first-in, first-out method of inventory valuation had been used
instead of the LIFO method, inventories would not have been significantly
different than reported as of July 31, 1996 and October 31, 1995.
(3) Short-Term Borrowings and Long-Term Debt
----------------------------------------
(a) As of July 31, 1996 and October 31, 1995, the Company had a $500,000
unused line of credit to be drawn upon as needed, with interest at
prime rate.
(b) Long-term debt consists of the following:
1996 1995
---- ----
Note payable to bank at prime, payable in monthly
installments of $5,725 plus interest beginning May
1994, secured by equipment $51,523 103,047
<PAGE>
BIOMEDICAL EQUIPMENT RENTAL AND SALES, INC.
Notes to Financial Statements, Continued
(3) Short-Term Borrowings and Long-Term Debt, Continued
---------------------------------------------------
(b) Long-term debt, continued:
1996 1995
---- ----
Note payable to bank at prime, payable in
monthly installments of $7,854 plus interest
beginning May 1994, secured by equipment 70,689 141,378
Note payable to bank at prime, payable in monthly
installments of $3,463 plus interest beginning
August 1994, secured by equipment 41,554 72,719
Note payable to bank at prime, payable in monthly
installments of $5,169 plus interest beginning
August 1994, secured by equipment 62,033 108,558
Note payable to bank at prime, payable in
monthly installments of $13,889 plus interest
beginning November 1994, secured by equipment 208,331 333,332
Note payable to bank at prime, payable in monthly
installments of $7,942 plus interest beginning
March 1995, secured by equipment 150,891 222,366
Note payable to bank at prime, payable in monthly
installments of $9,808 plus interest beginning
March 1995, secured by equipment 186,355 274,629
Note payable to bank at prime, payable in monthly
installments of $6,621 plus interest beginning
May 1995, secured by equipment 139,016 198,605
Note payable to bank at prime, payable in monthly
installments of $17,851 plus interest beginning
November 1995, secured by equipment 481,970 642,627
Note payable to bank at prime, payable in monthly
installments of $6,169 plus interest beginning
November 1995, secured by equipment 166,565 222,087
<PAGE>
BIOMEDICAL EQUIPMENT RENTAL AND SALES, INC.
Notes to Financial Statements, Continued
<TABLE>
<CAPTION>
(3) Short-Term Borrowings and Long-Term Debt, Continued
---------------------------------------------------
(b) Long-term debt, continued:
1996 1995
---- ----
<S> <C> <C>
Note payable to bank at prime, payable in monthly
installments of $4,150 plus interest beginning
November 1995, secured by equipment 80,695 118,049
Note payable to bank at prime, payable in monthly
installments of $749 plus interest beginning
March, 1996, secured by equipment 18,713 -
Note payable to bank at prime, payable in monthly
installments of $6,472 plus interest beginning
March 1996, secured by equipment 200,639 -
Notes repaid in 1996 - 209,808
---------- ---------
1,858,974 2,647,205
Installments due within one year (1,107,731) (1,243,534)
---------- ---------
Total long-term debt, less current installments $ 751,243 1,403,671
========== ==========
(c) Principal maturities of long-term debt are as follows:
Year ending July 31:
--------------------
1997 $1,107,731
1998 633,129
1999 118,114
----------
$ 1,858,974
===========
</TABLE>
All notes payable to bank are secured by inventories, furniture, fixtures and
equipment. Notes payable to bank for equipment are also collateralized by the
related equipment leases.
In addition, the loan agreements include certain covenants which, among other
things, require the Company to maintain $2,000,000 of tangible net
worth/stockholders' equity. As of July 31, 1996 and October 31, 1995, the
Company was not in violation of any of the covenants.
In connection with the sale of Company, on August 13, 1996, Universal Hospital
Services, Inc. repaid all of the outstanding long-term debt.
See note 4 for the capital lease obligation.
<PAGE>
BIOMEDICAL EQUIPMENT RENTAL AND SALES, INC.
Notes to Financial Statements, Continued
(4) Leasing Activities
------------------
(a) Rental income is derived from the rental of medical equipment
under operating leases and is recorded in income as earned.
Leases accounted for as sales-type leases are as follows:
1996 1995
---- ----
Future minimum lease payments to be received $ 495,305 $ 656,446
Unearned interest income (40,936) (67,159)
--------- ---------
Net investment in sales-type leases 454,369 589,287
Less current portion (284,559) (281,059)
Net investment in sales-type leases, excluding
current portion $ 169,810 $ 308,228
========= =========
Future minimum payments to be received on sales-type and monthly operating
leases are as follows:
Year ending July 31:
- --------------------
Sales-type Operating
---------- -----------
1997 $ 318,417 $ 671,292
1998 172,108 389,958
1999 4,780 58,927
------------ -----------
$ 495,305 $ 1,120,177
============ ===========
(b) During 1991, the Company entered into a lease for medical equipment.
Additional equipment with a cost of $52,600 and $80,000 was acquired in 1996
and 1994, respectively. The lease term and payments under the lease, which
has been capitalized for financial statement purposes, were adjusted
accordingly. The equipment under this lease is amortized on a straight-line
basis over the five year lease term. Interest expense is accrued on the
basis of the outstanding lease obligation at the rate of 10% per year. In
addition, the Company is obligated to pay $7,676 per month, through May,
1998, for inventory used in conjunction with the equipment. Payments are
adjusted annually based on the consumer price index.
As of July 31, 1996 and October 31, 1995, the equipment under this lease had
a net book value of approximately $119,000 and $160,000, respectively
($1,054,000 and $960,000 of accumulated amortization).
<PAGE>
BIOMEDICAL EQUIPMENT RENTAL AND SALES, INC.
Notes to Financial Statements, Continued
(4) Leasing Activities, Continued
-----------------------------
(b) Continued
Future minimum lease payments under this lease are as follows:
Year ending July 31:
--------------------
1997 $238,131
1998 198,442
--------
436,573
Less amount representing interest (39,188)
--------
Present value of minimum lease payments 397,385
Less current portion (207,743)
--------
Noncurrent lease obligation $ 189,642
=========
Total minimum lease payments have not been reduced by $563,000 to be
received in the future under a non-cancelable sublease.
(c) The Company leases a building from a stockholder under an agreement
classified as an operating lease. The original term of the lease was 20
years, from June 1, 1986 to May 31, 2006, with annual rentals of
approximately $27,000. As a condition of the sale of the Company, the
lease term was amended so that it will expire in August 1997. In
consideration of this amendment, the Company paid the stockholder
$137,000. This amount was accrued as of July 31, 1996.
During 1992 the Company entered into a 39 month building lease with an
unrelated party. In January, 1996, this lease was extended for an
additional 36 months. Annual rent payments amount to approximately
$12,000.
The Company also entered into a 37 month building lease with an unrelated
party beginning September, 1993. This lease was renewed for 36 months
beginning October, 1996. Annual rent payments amount to approximately
$18,000.
(d) Future minimum building lease payments under operating leases
are as follows:
Year ending July 31:
--------------------
1997 $31,000
1998 32,000
1999 25,000
2000 3,000
-------
$91,000
=======
<PAGE>
BIOMEDICAL EQUIPMENT RENTAL AND SALES, INC.
Notes to Financial Statements, Continued
(5) Related Party Transactions
--------------------------
The Company has entered into various transactions with companies related
through common stockholders.
The Company recognized income from related companies as follows:
1996 1995
---- ----
Sales $ 143 $ 44,966
Rental income - 358,034
Service income 4,383 13,280
------ ---------
$4,526 $ 416,280
====== =========
For the year ended October 31, 1995, related party income included $410,747
from Biomedical Home Care, Inc. ("BHC"). In July, 1995, BHC was sold to an
unrelated company. For the nine months ended July 31, 1996, the Company
continued recognizing income from this unrelated company; however, these
transactions were not considered related party transactions.
The Company paid or reimbursed related companies for the following:
1996 1995
---- ----
Rent $ 944 $ 2,420
Inventories 22,360 94,449
Rental equipment 148,134 607,517
Consulting 46,065 60,648
Miscellaneous supplies and service 11,582 16,111
--------- --------
$ 229,085 $781,145
========= ========
Included in trade accounts payable is $11,263 and $18,560 due to a related
company as of July 31, 1996 and October 31, 1995, respectively.
See note 4 for other related party transactions.
<PAGE>
BIOMEDICAL EQUIPMENT RENTAL AND SALES, INC.
Notes to Financial Statements, Continued
(6) Employee Benefit Plans
----------------------
The Company has a tax-qualified contributory profit-sharing plan (the
"Plan") which was established pursuant to Section 401(k) of the Internal
Revenue Code. All employees who have completed one or more years of service
are eligible to participate in the Plan. Employees who participate may
contribute up to 15% of their annual compensation. The Plan provides for
discretionary contributions by the Company in such amounts as the Board of
Directors may annually determine. Total employer contributions to the Plan
were none for the nine months ended July 31, 1996 and $23,489 for the year
ended October 31, 1995. As discussed in note 8 to the financial statements,
for the nine months ended July 31, 1996, the Company paid officer and
employee bonuses of $24,000 in lieu of a discretionary contribution to the
Plan.
The Company is self-insured for employee health care costs.
(7) Concentration of Credit Risk
----------------------------
The Company maintains its cash balances in one financial institution, and
each account is insured by the Federal Deposit Insurance Corporation up to
$100,000. As of July 31, 1996, the Company's uninsured cash balances are
approximately $300,000.
As of July 31, 1996, seven customers have receivable balances totaling
approximately $394,000 (38% of trade accounts receivable). Management
believes that any risk associated with the trade accounts receivable is
adequately provided for in the allowance for doubtful accounts.
(8) Sale of Company
---------------
On August 13, 1996, the stockholders of the Company sold the stock of the
Company to Universal Hospital Services, Inc. In connection with this
transaction, the Company paid bonuses of approximately $225,000 to officers
and employees ($24,000 of this total was paid in lieu of a discretionary
employer contribution to the profit-sharing plan). These bonuses were
accrued as of July 31, 1996 and paid in August, 1996. In addition, as
described in note 4 to the financial statements, the Company amended a
building lease for a cost of $137,000.
<PAGE>
ITEM 7 - FINANCIAL STATEMENTS AND EXHIBITS
(b) Pro Forma Financial Information
On August 13, 1996, Universal Hospital Services, Inc. ("the Company")
acquired Biomedical Equipment Rental & Sales, Inc. ("BERS") pursuant to a Stock
Purchase Agreement among the Company and the shareholders of BERS. Pursuant to
the agreement, the Company acquired all of the outstanding capital stock of BERS
for approximately $11 million paid to shareholders of BERS and repayment of
approximately $1.6 million of outstanding indebtedness of BERS. The purchase
price was paid with Senior Notes from The Prudential Insurance Company of
America. Subsequent to the acquisition BERS became a wholly owned subsidiary of
the Company.
BERS is a medical equipment rental company supplying health care providers
with state-of-the-art, income producing medical equipment and technical
services, primarily in the southeastern United Sates. Principally through rental
programs, BERS provides a wide variety of medical equipment for use by various
segments of the health care market including hospitals, home health care
companies, nursing homes, surgical centers and clinical research laboratories.
In addition, BERS sells related disposable supplies for use with its rental
products. BERS, through its professional and technical staff, also provides its
customers a full range of related support services, including delivery, full-
service maintenance, inservice training and technical support. BERS' technical
staff test, program and calibrate each piece of equipment that BERS rents to its
customers.
Total reported revenues for BERS for the fiscal years ended October 31 for
1995 and 1994 were approximately $6.0 million and $4.6 million, respectively.
EBITDA (earnings before interest, tax, depreciation and amortization) were $3.0
million and $2.0 million, representing 50.4% and 44.4% of total revenues for
1995 and 1994, respectively. These compare to the Company's previously reported
EBITDA and percent of total revenues of $18.2 million and 34.4% for the year
ended December 31, 1995, and $15.2 million and 32.1% for the year ended December
31, 1994. For the proforma consolidated year ended December 31, 1995 and the six
month period ended June 30, 1996, the EBITDA and percent of total revenues were
$22.1 million and 37.5% and $10.7 million and 34.7%, respectively.
As of July 31, 1996, BERS owned over 4,500 pieces of medical equipment in
a variety of categories, including, but not limited to, infusion therapy
devices, pain management devices, suction pumps, compression therapy,
respiratory and hypo/hyperthermia devices.
BERS markets its rental medical equipment through four regional sales
personnel in territories from Delaware to South Carolina. Medical equipment is
delivered to customers from one of three regional offices located in Raleigh,
NC, Charlotte, NC and Richmond, VA. Although BERS' primary market is the
southeastern United States, it currently rents medical equipment to over 400
customers in 26 states.
The following pro forma condensed consolidated statements of operations
for the six months ended June 30, 1996 and the year ended December 31, 1995 give
effect to the acquisition and the financing thereof as if such transactions had
occurred at January 1, 1995. The pro forma condensed consolidated balance sheet
as of June 30, 1996 gives effect to the acquisition and the financing thereof as
if such transactions had occurred as of that date. The acquisition was accounted
for pursuant to the purchase method of accounting.
<PAGE>
The pro forma financial data presented herein is based on management's
estimate of the effects of the acquisition and financing thereof. The pro forma
financial data is based upon current available information and certain
assumptions that the Company believes are reasonable. The Company does not
expect the receipt of additional information to have a material adverse effect
on the pro forma financial data. The pro forma condensed consolidated statements
of operations for the six months ended June 30, 1996 and the year ended December
31, 1995 and the pro forma condensed consolidated balance sheet as of June 30,
1996 are unaudited, but in the opinion of the Company include all adjustments,
consisting of normal recurring adjustments, necessary for a fair presentation of
the results of operations and financial position for the periods presented.
The pro forma condensed consolidated statements of operations for the six
months ended June 30, 1996 and the year ended December 31, 1995, and the pro
forma condensed consolidated balance sheet as of June 30, 1996 are not
necessarily indicative of the results of operations or financial position that
actually would have been achieved had the transactions described been
consummated as of the dates indicated, or that may be achieved in the future.
<PAGE>
UNIVERSAL HOSPITAL SERVICES, INC.
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENTS OF INCOME
FOR THE SIX MONTHS ENDED JUNE 30, 1996
<TABLE>
<CAPTION>
UHS BERS Pro Forma UHS
Historical(1) Historical(2) Adjustments
PRO FORMA
REVENUES:
<S> <C> <C> <C> <C>
Equipment rentals $24,768,454 $2,309,650 $27,078,104
Sales of supplies and equipment 2,941,417 426,742 3,368,159
Other 316,329 170,173 486,502
----------- ---------- -----------
Total revenues 28,026,200 2,906,565 30,932,765
COSTS AND EXPENSES:
Cost of equipment rentals 6,555,180 370,390 6,925,570
Rental equipment depreciation 5,795,000 848,249 $ 44,288(3) 6,687,537
Cost of supplies and equipment sales 2,369,896 270,794 2,640,690
Selling, general and administrative 9,686,824 914,365 280,793(4) 10,881,982
Write-down of DPAP inventory 1,030,500 1,030,500
Interest 1,034,412 122,344 448,268(5) 1,605,024
----------- ----------- ---------- -----------
Total costs and expenses 26,471,812 2,526,142 773,349 29,771,303
----------- ----------- ---------- -----------
Income before income taxes 1,554,388 380,423 (773,349) 1,161,462
Provision for income taxes 670,000 (169,548)(6) 500,452
----------- ----------- ---------- -----------
NET INCOME $ 884,388 $ 380,423 $ (603,801) $ 661,010
----------- ----------- ---------- -----------
NET EARNINGS PER SHARE OF COMMON STOCK $0.16 $0.12
=========== ===========
Weighted average common shares outstanding 5,539,049 5,539,049
=========== ===========
</TABLE>
(1) Represents the unaudited historical statement of income of the Company for
the six months ended 6/30/96 as reported in the Company's 6/30/96 Form 10-Q
as filed with the SEC.
(2) Represents the unaudited historical statement of income of BERS for the six
months ended 6/30/96.
(3) Represents increased depreciation expense related to fair market value
adjustments to rental equipment of BERS.
(4) Represents the amortization of goodwill, a non-competition agreement and
deferred acquisition costs.
(5) Represents increased interest expense related to indebtedness incurred to
complete the acquisition and amortization of related deferred financing
fees, offset by decreased interest expense on BERS debt retired in
conjunction with the acquisition.
(6) Represents the tax effects of the pro forma adjustments and BERS historical
operations at the Company's effective tax rate.
<PAGE>
UNIVERSAL HOSPITAL SERVICES, INC.
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENTS OF INCOME
FOR THE YEAR ENDED DECEMBER 31, 1995
<TABLE>
<CAPTION>
UHS BERS Pro Forma UHS
Historical (1) Historical (2) Adjustments
PRO FORMA
REVENUES:
<S> <C> <C> <C> <C>
Equipment rentals $45,869,789 $4,441,550 $50,311,339
Sales of supplies and equipment 6,585,373 1,080,055 7,665,428
Other 580,632 419,915 1,000,547
----------- ---------- ----------
Total revenues 53,035,794 5,941,520 58,977,314
COSTS AND EXPENSES:
Cost of equipment rentals 11,841,142 708,833 12,549,975
Rental equipment depreciation 10,799,372 1,658,676 $ 88,577(3) 12,546,625
Cost of supplies and equipment sales 5,352,163 718,016 6,070,179
Selling, general and administrative 18,559,504 1,561,592 561,587(4) 20,682,683
Interest 1,784,141 264,070 896,535(5) 2,944,746
---------- ---------- ---------- ----------
Total costs and expenses 48,336,322 4,911,187 1,546,699 54,794,208
---------- ---------- ---------- ----------
Income before income taxes 4,699,472 1,030,333 (1,546,699) 4,183,106
Provision for income taxes 1,949,000 (222,812)(6) 1,726,188
---------- ---------- ---------- ----------
NET INCOME $ 2,750,472 $ 1,030,333 $(1,323,887) $ 2,456,918
=========== =========== =========== ============
NET EARNINGS PER SHARE OF COMMON STOCK $0.50 $0.45
=========== ============
Weighted average common shares outstanding 5,502,258 5,502,258
========== ===========
</TABLE>
(1) Represents the audited historical statement of income of the Company for
the year ended 12/31/95 as reported in the Company's 12/31/95 Form 10-K as
filed with the SEC.
(2) Represents the unaudited historical statement of income of BERS for the
twelve months ended 12/31/95.
(3) Represents increased depreciation expense related to fair market value
adjustments to rental equipment of BERS.
(4) Represents the amortization of goodwill, a non-competition agreement and
deferred acquisition costs.
(5) Represents increased interest expense related to indebtedness incurred to
complete the acquisition and amortization of related deferred financing
fees, offset by decreased interest expense on BERS debt retired in
conjunction with the acquisition.
(6) Represents the tax effects of the pro forma adjustments and BERS historical
operations at the Company's effective tax rate.
<PAGE>
UNIVERSAL HOSPITAL SERVICES, INC.
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET
JUNE 30, 1996
<TABLE>
<CAPTION>
UHS BERS Pro Forma UHS
Historical (1) Historical(2) Adjustments
PRO FORMA
ASSETS
<S> <C> <C> <C> <C>
CURRENT ASSETS:
Cash and cash equivalents $ 217,957 $ 217,957
Receivables:
Accounts receivable, net $10,412,023 948,988 11,361,011
Sales-type leases, net 284,559 284,559
Inventories 2,444,481 139,095 2,583,576
Prepaid expenses 889,924 20,932 910,856
Deferred income taxes 765,000 765,000
----------- ----------- -----------
Total current assets 14,511,428 1,611,530 16,122,959
PROPERTY AND EQUIPMENT:
Rental equipment, net 40,881,835 3,955,764 $ 265,731(3) 45,103,330
Property and office equipment, net 3,580,473 117,947 3,698,420
----------- ----------- ---------- -----------
Total property and equipment, net 44,462,308 4,073,711 265,731 48,801,750
OTHER ASSETS:
Goodwill, less accumulated amortization 8,060,329 7,348,989(4) 15,409,318
Sales-type leases due after one year, net 169,810 169,810
Other 256,266 119,369 351,359(5) 726,993
----------- ----------- ---------- -----------
TOTAL ASSETS $67,290,331 $5,974,420 $7,966,079 $81,230,830
=========== =========== ========== ===========
<CAPTION>
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES:
<S> <C> <C> <C> <C>
Accounts payable $ 3,107,157 $ 377,035 $ 3,484,192
Accrued compensation and pension 1,918,424 449,860 2,368,284
Accrued expenses 723,020 88,583 811,603
Current portion long-term debt 2,800,000 1,107,731 $(1,107,731)(6) 2,800,000
Current portion capitalized lease obligation 207,743 207,743
----------- ---------- ---------- -----------
Total current liabilities 8,548,601 2,230,952 (1,107,731) 9,671,822
Accrued compensation and pension 1,605,518 1,605,518
Deferred income taxes 4,278,000 4,278,000
(543,742)(6)
Long-term debt 23,155,667 543,742 12,644,169 (7) 35,799,836
Capitalized lease obligations, less current 173,109 173,109
Commitments and contingencies
SHAREHOLDERS' EQUITY:
Preferred stock
Common stock 54,602 5,000 (5,000)(8) 54,602
Additional paid-in capital 15,491,917 184,450 (184,450)(8) 15,491,917
Retained earnings 14,156,026 2,837,167 (2,837,167)(8) 14,156,026
----------- ---------- ---------- -----------
Total shareholders' equity 29,702,545 3,026,617 (3,026,617) 29,702,545
----------- ---------- ---------- -----------
TOTAL LIABILITIES AND SHAREHOLDERS' EQUIT $67,290,331 $5,974,420 $ 7,966,079 $81,230,830
=========== ========== =========== ===========
</TABLE>
<PAGE>
(1) Represents the unaudited historical balance sheet of the Company as of
6/30/96 as reported in the Company's 6/30/96 Form 10-Q as filed with the
SEC.
(2) Represents the unaudited historical balance sheet of BERS as of 8/13/96,
the date of the acquisition.
(3) Represents fair market value adjustments to rental equipment of BERS.
(4) Represents the excess of the purchase price over net assets acquired.
(5) Represents a non-competition agreement and deferred acquisition and
financing costs.
(6) Represents BERS debt repaid in conjunction with the acquisition.
(7) Represents the debt incurred to finance the acquisition.
(8) Represents the elimination of BERS shareholders' equity.
<PAGE>
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 thereunto duly authorized.
Date: October 25, 1996
----------------
Universal Hospital Services, Inc.
By /s/ David E. Dovenberg
-------------------------
David E. Dovenberg,
Vice President of Finance and
Chief Financial Officer
