<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 17, 1998
UNIVERSAL HOSPITAL SERVICES, INC.
-----------------------------------------------------
(Exact name of registrant as specified in its charter)
Minnesota 0-20086 41-0760940
(State or other jurisdiction (Commission (IRS Employer
of incorporation) File Number) Identification No.)
1250 Northland Plaza, 3800 West 80th Street, Bloomington, Minnesota 55431-4442
- --------------------------------------------------------------------------------
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (612) 893-3200
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 17, 1998, filed September 1, 1998,
as set forth in the pages attached hereto:
Item 7. Financial Statements, Pro Forma Financial Information and Exhibits.
(a) Financial Statements of Business Acquired
Financial statements required to be filed pursuant to Item 7 of
Form 8-K filed October 29, 1998 for Patient's Choice HealthCare,
Inc.
(b) Pro Forma Financial Information
Pro forma financial information required to be filed pursuant to
Item 7 of Form 8-K filed October 29, 1998, for Universal Hospital
Services, Inc. ("UHS").
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.
Date: October 29, 1998 UNIVERSAL HOSPITAL SERVICES, INC.
/s/ Gerald L. Brandt
-----------------------------------
Gerald L. Brandt
Chief Financial Officer
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<PAGE>
PATIENT'S CHOICE HEALTHCARE, INC.
FINANCIAL STATEMENTS
December 31, 1997 and 1996
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<PAGE>
PATIENT'S CHOICE HEALTHCARE, INC.
FINANCIAL STATEMENTS
December 31, 1997 and 1996
CONTENTS
REPORT OF INDEPENDENT ACCOUNTANTS 1
FINANCIAL STATEMENTS
BALANCE SHEETS 2
STATEMENTS OF INCOME AND RETAINED EARNINGS 3
STATEMENTS OF CASH FLOWS 4
NOTES TO FINANCIAL STATEMENTS 5
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<PAGE>
PATIENT'S CHOICE HEALTHCARE, INC.
REPORT OF INDEPENDENT ACCOUNTANTS
Board of Directors
Patient's Choice Healthcare, Inc.
Columbus, Ohio
We have audited the accompanying balance sheets of Patient's Choice Healthcare,
Inc. as of December 31, 1997 and 1996, and related statements of income and
retained earnings and cash flows for the year ended December 31, 1997. 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 audits to
obtain reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting amounts and disclosures in the financial statements. An audit also
includes assessing accounting principles used and significant estimates made by
management, as well as evaluating overall financial statement presentation. We
believe 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 Patient's Choice Healthcare,
Inc. as of December 31, 1997 and 1996 and its results of operations and cash
flows for the year ended December 31, 1997 in conformity with generally accepted
accounting principles.
The December 31, 1996, statements of income and retained earnings and cash flows
were reviewed by us and our report thereon, dated January 31, 1997, stated we
were not aware of any material modifications that should be made to those
statements for them to conform with generally accepted accounting principles.
However, a review is substantially less in scope than an audit and does not
provide a basis for the expression of an opinion on the financial statements
taken as a whole.
Crowe, Chizek and Company LLP
Columbus, Ohio
January 30, 1998
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<PAGE>
BALANCE SHEETS
December 31, 1997 and 1996
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
June 30,
1998
ASSETS (unaudited) 1997 1996
---------- ---------- ----------
<S> <C> <C> <C>
Current assets
Cash $ -- $ 275,868 $ 661,841
Accounts receivable (less allowance of $12,500 and $7,400 in
1997 and 1996) 1,325,037 1,314,304 1,089,838
Net investment in sales-type leases, current portion (Note 2) 266,754 148,487 47,229
Inventories 564,772 419,485 244,212
Prepaid expenses 54,169 3,860 3,396
---------- ---------- ----------
Total current assets 2,210,732 2,162,004 2,046,516
Property and equipment
Equipment 5,741,025 5,222,331 4,158,227
Furniture and fixtures 147,710 105,023 67,374
Building improvements 19,694 18,541 --
Autos and trucks 28,314 28,314 28,314
---------- ---------- ----------
5,936,743 5,374,209 4,253,915
Accumulated depreciation (3,052,527) 2,499,099 1,373,657
---------- ---------- ----------
2,884,216 2,875,110 2,880,258
Other assets
Net investment in sales-type leases, noncurrent portion (Note 3) 279,747 210,861 44,974
Debt issue costs, net -- -- 9,372
Deposits 28,200 22,800 22,050
---------- ---------- ----------
307,947 233,661 76,396
---------- ---------- ----------
$5,402,895 $5,270,775 $5,003,170
========== ========== ==========
LIABILITIES
Current liabilities
Short-term borrowings (Note 3) $ 597,795 $ 139,343 $ --
Current maturities of long-term debt (Note 3) 891,429 891,429 759,519
Accounts payable 740,001 417,051 732,500
Accrued payroll taxes payable 18,517 401,397 293,502
Other liabilities 75,551 89,141 34,172
Due to shareholders -- 24,092 19,483
Accrued interest 6,784 16,972 5,774
---------- ---------- ----------
Total current liabilities 2,330,077 1,979,425 1,844,950
Long-term debt less current maturities (Note 3) 891,429 1,337,143 1,961,178
Shareholders' equity
Common shares $1.00 par value; authorized 500 shares; issued
and outstanding 500 500 500
Paid-in-capital 2,500 2,500 2,500
Retained earnings 2,178,389 1,951,207 1,194,042
---------- ---------- ----------
2,181,389 1,954,207 1,197,042
---------- ---------- ----------
$5,402,895 $5,270,775 $5,003,170
========== ========== ==========
</TABLE>
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See accompanying notes to financial statements
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<PAGE>
PATIENT'S CHOICE HEALTHCARE, INC.
STATEMENTS OF INCOME AND RETAINED EARNINGS
For the years ended December 31, 1997 and 1996
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
For the Six
Months Ended
June 30, (Unaudited)
1998 1997 Percent 1996 Percent
(Unaudited) Amount to Sales Amount to Sales
----------- ----------- --------- ----------- ---------
<S> <C> <C> <C> <C> <C>
Net sales $4,524,784 $8,463,118 100.00% $6,028,022 100.00%
Cost of sales
Material 2,025,936 3,750,926 44.32 2,655,319 44.05
Depreciation 734,775 1,418,475 16.76 925,211 15.35
---------- ---------- ------ ---------- ------
2,760,711 5,169,401 61.08 3,580,530 59.40
---------- ---------- ------ ---------- ------
GROSS PROFIT 1,764,073 3,293,717 38.92 2,447,492 40.60
General and administrative expenses 1,109,831 1,938,675 22.91 1,522,533 25.26
---------- ---------- ------ ---------- ------
OPERATING INCOME 654,242 1,355,042 16.01 924,959 15.34
Other income (expense)
Interest expense (96,565) (226,095) (2.67) (188,591) (3.13)
Interest income 37,353 44,834 .53 16,938 .28
Other, net 29,263 108,789 1.27 48,150 .80
---------- ---------- ------ ---------- ------
(29,949) (72,472) (.87) (123,503) (2.05)
---------- ---------- ------ ---------- ------
NET INCOME 624,293 1,282,570 15.14% 801,456 13.29%
====== ======
Retained earnings, beginning of period 1,951,207 1,194,042 957,686
Dividends (397,111) (525,405) (565,100)
---------- ---------- ----------
RETAINED EARNINGS, END OF YEAR $2,178,389 $1,951,207 $1,194,042
========== ========== ==========
</TABLE>
- -------------------------------------------------------------------------------
See accompanying notes to financial statements
-7-
<PAGE>
STATEMENTS OF CASH FLOWS
For the years ended December 31, 1997 and 1996
<TABLE>
<CAPTION>
For the
Six Months
Ended June 30,
1998 (Unaudited)
(Unaudited) 1997 1996
------------ ------------ ------------
<S> <C> <C> <C>
Cash flows from operating activities
Net income $ 624,293 $ 1,282,570 $ 801,456
Adjustments to reconcile net income to net cash from operating
activities
Depreciation 734,778 1,418,475 925,211
Provision for doubtful accounts 22,591 28,557 38,383
Changes in assets and liabilities
Accounts receivable (33,324) (253,023) (345,791)
Notes receivable (187,153) (267,145) (83,383)
Inventories (145,287) (175,273) (14,119)
Other assets (55,709) 8,158 (7,037)
Accounts payable 322,950 (315,449) 501,280
Other liabilities (406,658) 174,062 171,259
----------- ----------- -----------
Net cash from operating activities 876,478 1,900,932 1,987,259
CASH FLOWS FROM INVESTING ACTIVITIES
Expenditures for property and equipment (743,881) (1,413,327) (2,996,615)
----------- ----------- -----------
Net cash from investing activities (743,881) (1,413,327) (2,996,615)
CASH FLOWS FROM FINANCING ACTIVITIES
Short-term borrowings, net 458,452 139,343 --
Principal payments on long-term borrowings (445,714) (3,092,125) (197,210)
Proceeds from long-term borrowings 2,600,000 2,105,346
Proceeds from shareholder advances (24,092) 4,609 10,611
Dividends paid (397,111) (525,405) (565,100)
----------- ----------- -----------
Net cash from financing activities (408,468) (873,578) 1,353,647
----------- ----------- -----------
Net change in cash (275,868) (385,973) 344,291
Cash balance, beginning of period 275,868 661,841 317,550
----------- ----------- -----------
CASH BALANCE, END OF PERIOD $ -- $ 275,868 $ 661,841
=========== =========== ===========
Supplemental disclosures of cash flow information
Cash paid during the year for interest $ 106,753 $ 214,896 $ 182,817
</TABLE>
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See accompanying notes to financial statements
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<PAGE>
NOTE 1 - ACCOUNTING AND REPORTING POLICIES
Purpose: The Company is engaged in sales and rental of medical equipment and
supplies principally throughout the United States east of the Mississippi River.
Revenue Recognition: The Company recognizes revenue on rentals of IV pumps
based on daily or monthly charges.
Inventories: Inventories consist primarily of disposable medical supplies and
are valued at the lower of cost or market on the first-in, first-out method.
Property and Equipment: Property and equipment are stated at cost, less
accumulated depreciation. Depreciation is computed over the estimated useful
lives of assets using accelerated methods.
Income Taxes: The Company has elected to be taxed as an S-Corporation under the
Internal Revenue Code. Therefore, the Company does not pay corporate income
taxes on its taxable income. Instead, shareholders are liable for individual
income taxes on their respective shares of the Company's taxable income.
Use of Estimates: In preparing financial statements, management must make
estimates and assumptions. These estimates and assumptions affect the amount
reported for assets, liabilities, revenue and expenses, as well as disclosures
provided. Future results could differ from current estimates.
Interim Periods
The balance sheet as of June 30, 1998, and the statements of income and retained
earnings and cash flows for the six months ended June 30, 1998, are unaudited,
but, in the opinion of management of the Company, include all adjustments
necessary to present fairly, in all material respects, the financial position as
of June 30, 1998, and the results of operations and cash flows for the Company
for the six months ended June 30, 1998.
NOTE 2 - NET INVESTMENT IN SALES-TYPE LEASES
The Company, as lessor, has entered various sales-type leases of its equipment.
The components of net investment in sales-type leases as of December 31, 1997
and 1996 are as follows:
<TABLE>
<CAPTION>
1997 1996
-------- --------
<S> <C> <C>
Total minimum lease payments to be received $423,485 $105,749
Deferred revenue 64,137 13,546
-------- --------
$359,348 $ 92,203
======== ========
</TABLE>
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(Continued)
-9-
<PAGE>
NOTE 2 - NET INVESTMENT IN SALES-TYPE LEASES (Continued)
Future annual minimum lease payment receivables, net of deferred revenue, are as
follows:
1998 $148,487
1999 147,315
2000 63,546
--------
$359,348
========
NOTE 3 - LONG-TERM DEBT
The Company has the following borrowing arrangements at December 31, 1997 and
1996:
<TABLE>
<CAPTION>
1997 1996
---------- ----------
<S> <C> <C>
Note payable in monthly installments of $2,494
including interest at prime plus 2.75%; secured by
receivables and other assets. This loan was paid in
full in 1997. $ $110,664
Note payable in monthly installment of $12,329
including interest at prime plus 2.5%; secured by
receivables and other assets. This loan was paid in
full in 1997. 580,818
Note payable in monthly installments of $24,167
including interest at prime plus 1.5%; secured by
receivables and other assets. This loan was paid in
full in 1997. 540,346
Note payable in monthly installments of $49,857
including interest at 9.0%; secured by receivables and
other assets. This loan was paid in full in 1997. 1,488,869
</TABLE>
- --------------------------------------------------------------------------------
(Continued)
-10-
<PAGE>
<TABLE>
<S> <C> <C>
Note payable in monthly installments of $74,286 plus
interest at the prime rate; secured by receivables and
other assets; final installment due on June 1, 2000. 2,228,572
---------- ----------
2,228,572 2,720,697
Current maturities 891,429 759,519
---------- ----------
Long-term debt, less current maturities $1,337,143 $1,961,178
========== ==========
</TABLE>
- --------------------------------------------------------------------------------
(Continued)
-11-
<PAGE>
NOTE 3 - LONG-TERM DEBT (Continued)
Annual long-term debt maturities payable after December 31, 1997 are:
1998 $891,429
1999 891,429
2000 445,714
The prime interest rate was 8.5% and 8.25% at December 31, 1997 and 1996,
respectively. The borrowing arrangement at December 31, 1997, contains loan
covenants with respect to tangible net worth and liabilities to tangible net
worth. The Company complies with these covenants.
At December 31, 1997, the Company has a $2,500,000 bank line-of-credit, payable
on May 1, 1998, interest at a daily variable rate equal to the 30-day libor rate
plus 225 basis points, collateralized by receivables and other assets. The
Company has an outstanding balance of $139,343 at December 31, 1997. There was
no outstanding balance at December 31, 1996.
NOTE 4 - LEASING ARRANGEMENTS
The Company leases office and warehouse space and medical equipment under
operating leases expiring at various dates through 2005. Minimum annual future
rental payments under these leases are as follows:
1998 $ 95,697
1999 90,240
2000 89,342
2001 92,154
2002 93,564
Thereafter 181,094
Rental expense was $38,155 and $34,732 for the year ended December 31, 1997 and
1996.
NOTE 5 - PROFIT SHARING AND 401(K)PLAN
The Company has a qualified profit sharing retirement plan with a 401(k)
deferred-compensation provision for all eligible employees of the Company.
Under the plan, employees may elect to defer up to 10% of their salary, subject
to the Internal Revenue Service limits. The Company contributes, on the 401(k)
portion of the plan, 25% of amounts contributed by employees. Such matching
contributions vest to participants over five years and were $13,617 and $7,094
for the years ended December 31, 1997 and 1996, respectively.
- --------------------------------------------------------------------------------
(Continued)
-12-
<PAGE>
NOTE 6 - RELATED PARTY TRANSACTIONS
The Company had a 30-month lease agreement with its principal shareholder. The
lease, related to the rental of medical equipment with a monthly obligation of
$500, was effective from September 1, 1994 through February 28, 1997.
The Company has a shareholders agreement that, among other provisions, restricts
the sale of the shareholders stock and provides for an agreed-upon value under
certain conditions.
Item 7 - Financial Statements and Exhibits
(b) Pro Forma Financial Information
On February 25, 1998, the Company completed a merger pursuant to the
Agreement and Plan of Merger (the Merger), dated as of November 25, 1997,
between UHS Acquisition Corp., a newly-formed Minnesota corporation
controlled by J.W. Childs Equity Partners, L.P. ("Childs"), with and into
the Company. In connection with the Merger, the following occurred:
* The Company's existing shareholders (other than the new senior
management team and certain other continuing members of management)
received, in consideration for the cancellation of approximately 53
million shares of the Company's common stock and options to purchase
approximately 3.3 million shares of common stock, cash in the
aggregate amount of approximately $84.7 million (net of aggregate
option exercise price) or $1.55 per share.
* The Company repaid the outstanding principal balance of approximately
$35.5 million under existing loan agreements and incurred early
termination fees and write-off of the related deferred financing cost.
* The Company paid fees and expenses of approximately $11.5 million related
to the Merger of which approximately $5.9 million were capitalized as
deferred financing costs.
* The Company paid approximately $3.3 million in severance payments to
certain noncontinuing members of the Company's management of which $476,000
had already been accrued.
* The Company received an equity contribution of approximately $21.3 million
from Childs and affiliates and the management investors.
* The Company issued $100 million in aggregate principal amount of 10.25%
Senior Notes due 2008 (the Senior Notes).
* The Company borrowed approximately $14.3 million under a new Revolving
Credit Facility.
* The Company recognized a tax benefit from the exercise of stock options of
$1 million.
The transaction was structured as a leveraged recapitalization for
accounting purposes.
On July 30, 1998, the Company acquired Home Care Instruments, Inc. ("HCI")
pursuant to a stock purchase agreement among the Company and the
shareholders of HCI. Pursuant to the agreement, the Company acquired all of
the outstanding capital stock of HCI for approximately $20 million, which
includes repayment of approximately $4 million of outstanding indebtedness
of HCI. The purchase price was paid with draws on the Company's Revolving
Credit Facility and issuance of 256,272 shares of the Company's common
stock valued at $715,000.
Home Care Instruments, Inc. rents medical equipment to the home care and
hospital markets in the Midwestern United States, renting approximately 100
types of equipment. The Company also supplies disposable medical products
used in connection with the Company's rental equipment and provides a
variety of biomedical services.
On August 17, 1998, the Company acquired Patient's Choice Healthcare, Inc.
("PCH") pursuant to a stock purchase agreement among the Company and the
shareholders of PCH. Pursuant to the agreement, the Company acquired all
of the outstanding capital stock of PCH for approximately $15.2 million,
which includes repayment of approximately $2.7 million of outstanding
indebtedness of PCH. The purchase price was paid with draws on the
Company's Revolving Credit Facility and the sale of $6,000,000 Series A
cumulative convertible preferred stock.
Patient's Choice is a medical distribution company that rents, sells and
leases IV pumps to home infusion companies, long-term consulting
pharmacies, oncology clinics and hospitals. The Company sells over 4,000
disposables, rents over 60 different models of IV pumps and provides
service on all IV equipment for biomedical recertification, repair and
testing to hospital integrated health systems and alternate site providers.
The following pro forma condensed consolidated statements of operations for
the six months ended June 30, 1998, and the year ended December 31, 1997,
give effect to the merger, acquisitions and the financing thereof as if
such transactions had occurred at January 1, 1997. The pro forma condensed
consolidated balance sheet as of June 30, 1998, gives effect to the
acquisitions and the financing thereof as if such transactions had occurred
as of that date. The recapitalization was structured as a leveraged
recapitalization for accounting purposes, with all assets and liabilities
being carried over at historical cost. The acquisitions were accounted for
pursuant to the purchase method of accounting.
The pro forma financial data presented herein is based on management's
estimate of the effects of the recapitalization and acquisitions 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, 1998, and the year ended December 31, 1997,
and the pro forma condensed consolidated balance sheet as of June 30, 1998
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, 1997, and the year ended December 31, 1997, and the
pro forma condensed consolidated balance sheet as of June 30, 1998 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.
- --------------------------------------------------------------------------------
(Continued)
-13-
<PAGE>
UNIVERSAL HOSPITAL SERVICES, INC.
UNAUDITED PRO FORMA CONDENSED
BALANCE SHEET
June 30, 1998
(DOLLARS IN THOUSANDS, except per share information)
<TABLE>
<CAPTION>
Patient's
Universal Home Care Choice
Hospital Instruments, Healthcare,
Services, Inc. Inc. Inc. Pro Forma
Historical (1) Historical (2) Historical (3) Adjustments Pro Forma
-------------- -------------- ------------- ----------- ---------
<S> <C> <C> <C> <C> <C>
ASSETS
Current Assets:
Cash and cash equivalents 2 -- -- 2
Accounts receivable, net 12,417 1,544 1,325 68 (4) 15,354
Inventories 1,760 283 565 (50)(5) 2,558
Other current assets 2,753 337 321 (337)(6) 3,074
Deferred income taxes 418 0 237 (7) 655
--------- --------- --------- --------- ---------
Total current
assets 17,348 2,166 2,211 (82) 21,643
Property and
equipment, net 54,102 5,314 2,884 0 62,300
Intangible assets -- -- 0
primarily,
goodwill and
deferred
financing
costs, net 19,880 643 308 24,052 (8) 44,883
--------- --------- --------- --------- ---------
Total assets $ 91,330 $ 8,123 $ 5,403 $ 23,970 $ 128,826
========= ========= ========= ========= =========
LIABILITIES AND SHAREHOLDERS'
EQUITY (DEFICIT)
Current Liabilities:
Current portion
of long-term debt 201 800 1,489 (2,289)(9) 201
</TABLE>
-14-
<PAGE>
<TABLE>
<S> <C> <C> <C> <C> <C>
Accounts payable 2,353 936 741 0 4,030
Accrued compensation
and pension 1,956 0 160 (10) 2,116
Accrued expenses other 4,017 105 101 406 (11) 4,629
--------- --------- --------- --------- ---------
Total current liabilities 8,527 1,841 2,331 (1,723) 10,976
Long-term debt 112,764 3,226 891 23,612 (9) 140,493
Deferred income taxes 3,495 660 0 0 4,155
Deferred compensation
and pension 1,701 0 0 0 1,701
Shareholders' equity
(deficiency)
Series A Cumulative
convertible Preferred
Stock, $0.01 par value
25,000 shares designated,
6,000 shares issued and
outstanding on a pro forma
basis 5,943 (12) 5,943
Common Stock, $0.01 par
value; 25,000,000 shares
authorized, 15,624,464
shares issued and outstanding,
15,880,736 issued and
outstanding on a pro forma
basis 156 1 1 24 (13) 182
Additional paid in capital 448 2 239 (13) 689
Accumulated deficit (35,262) 1,947 2,178 (4,125)(13) (35,262)
Stock subscription
receivable (51) 0 0 0 (51)
--------- --------- --------- --------- ---------
Total shareholders'
equity (deficiency) (35,157) 2,396 2,181 2,081 (28,499)
--------- --------- --------- --------- ---------
Total liabilities and
shareholders' equity $ 91,330 $ 8,123 $ 5,403 $ 23,970 $ 128,826
========= ========= ========= ========= =========
</TABLE>
See accompanying notes to unaudited pro forma condensed financial statements
-15-
<PAGE>
NOTES TO PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET
as of June 30, 1998
The purchase price has been allocated to assets and liabilities as indicated in
the following summary open balance sheets of HCI and PCH (in thousands):
HCI PCH
------- -------
Current assets $ 2,169 $ 2,104
Property and equipment, net 5,314 2,884
Goodwill 14,109 10,643
------- -------
Total assets $21,592 $15,631
Accounts payable, accrued compensation,
pension and accrued expenses $ 1,497 $ 877
Deferred income taxes 660
------- -------
Total liabilities $ 2,157 $ 877
------- -------
Net assets $19,435 $14,754
======= =======
1. Represents the unaudited historical balance sheet of the Company as of June
30, 1998, as reported in the Company's June 30, 1998 Form 10-Q as filed
with the SEC.
2. Represents the unaudited historical balance sheet of HCI as of June 30,
1998.
3. Represents the unaudited historical balance sheet of PCH as of June 30,
1998.
4. Represents fair value adjustments to accounts receivable of HCI and PCH,
and an adjustment to accounts receivable of HCI to conform with the
Company's revenue recognition policy.
5. Represents fair value adjustment to inventories of HCI and PCH.
6. Represents the reduction of shareholder notes receivable paid at closing of
HCI acquisition.
7. Represents deferred tax adjustments resulting from other pro forma balance
sheet adjustments.
8. Represents excess of the purchase price on net assets acquired, deferred
financing costs paid for new debt incurred to finance the acquisitions, and
the elimination of HCI historical goodwill.
-16-
<PAGE>
9. Represents the net of HCI and PCH debt repaid in conjunction with the
Acquisitions and new debt incurred to finance the acquisitions.
10. Represents the establishment of severance accruals for employees terminated
at HCI and PCH in connection with the acquisitions.
11. Represents accruals recorded upon acquisition in connection with
liabilities incurred upon acquisition and establishment of accruals to
conform to the Company's policies.
12. Represents the sale of Series A (cumulative convertible) preferred stock to
finance the PCH acquisition, net of offering costs.
13. Represents the elimination of HCI and PCH shareholders' equity and the
addition of common stock issued in connection with the HCI acquisition.
-17-
<PAGE>
UNIVERSAL HOSPITAL SERVICES, INC.
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF INCOME
SIX MONTHS ENDED JUNE 30, 1998
(IN THOUSANDS)
<TABLE>
<CAPTION>
PATIENT'S
UNIVERSAL HOME CARE CHOICE
HOSPITAL INSTRUMENTS, HEALTHCARE,
SERVICES, INC. INC. INC. PRO FORMA
HISTORICAL (1) HISTORICAL (2) HISTORICAL (3) ADJUSTMENTS PRO FORMA
-------------- -------------- -------------- ----------- ---------
<S> <C> <C> <C> <C> <C>
Revenues:
Equipment rentals $29,160 $ 3,117 $ 1,517 $ (82)(4) $33,712
Sales of supplies and
equipment, and other 2,366 843 3,008 -- 6,217
------- ------- ------- ------- -------
Total revenues 31,526 3,960 4,525 (82) 39,929
Costs of rentals and sales:
Cost of equipment rentals 7,276 $ 437 90 -- 7,803
Rental equipment depreciation 7,845 $ 773 716 (9)(5) 9,325
Cost of supplies and equipment sales 1,558 630 2,026 (7)(5) 4,207
------- ------- ------- ------- -------
Total cost of rentals and sales 16,679 1,840 2,832 (16) 21,335
------- ------- ------- ------- -------
Gross profit 14,847 2,120 1,693 (66) 18,594
Selling, general and administrative 9,419 $ 1,221 953 165 (6) 11,758
Recapitalization and transaction costs 5,028 -- -- (5,028)(7) --
------- ------- ------- ------- -------
Operating (loss) income 400 899 740 4,797 6,836
Interest expense 4,392 181 97 2,357 (8) 7,027
------- ------- ------- ------- -------
(Loss) income before income taxes and
extraordinary charge (3,992) 718 643 2,440 (191)
(Benefit) provision for income taxes: (678) 260 366 (9) (52)
Net (loss) income before extraordinary charge (3,314) 458 643 2,074 (139)
Extraordinary charge, net of tax benefit
of $1,300 1,863 -- -- (1,863)(10) --
------- ------- ------- ------- -------
Net (loss) income $(5,177) $ 458 $ 643 $ 3,937 $ (139)
======= ======= ======= ======= =======
</TABLE>
See accompanying notes to unaudited pro forma condensed statement of income.
-18-
<PAGE>
UNIVERSAL HOSPITAL SERVICES, INC.
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF INCOME
YEAR ENDED DECEMBER 31, 1997
(IN THOUSANDS)
<TABLE>
<CAPTION>
PATIENT'S
UNIVERSAL HOME CARE CHOICE
HOSPITAL INSTRUMENTS, HEALTHCARE,
SERVICES, INC. INC. INC. PRO FORMA
HISTORICAL (1) HISTORICAL (2) HISTORICAL (3) ADJUSTMENTS PRO FORMA
-------------- -------------- -------------- ----------- ---------
<S> <C> <C> <C> <C> <C>
Revenues:
Equipment rentals $54,489 $6,460 $2,947 $ (460)(4) $63,436
Sales of supplies and
equipment, and other 5,586 1,875 5,516 -- 12,977
------- ------- ------- ------- -------
Total revenues 60,075 8,335 8,463 (460) 76,413
Costs of rentals and sales:
Cost of equipment rentals 13,577 793 141 -- 14,511
Rental equipment depreciation 14,435 1,579 1,418 (15)(5) 17,417
Cost of supplies and equipment sales 3,838 1,589 3,751 (52)(5) 9,126
------- ------- ------- ------- -------
Total cost of rentals and sales 31,850 3,961 5,310 (67) 41,054
------- ------- ------- ------- -------
Gross profit 28,225 4,374 3,153 (393) 35,359
Selling, general and administrative 18,448 2,598 1,689 (593)(6) 22,142
Recapitalization and transaction costs 1,719 -- -- (1,719)(7) --
------- ------- ------- ------- -------
Operating income (loss) 8,058 1,776 1,464 1,919 13,217
Interest expense 3,012 367 181 10,936 (8) 14,496
------- ------- ------- ------- -------
Income (loss) before income taxes and
extraordinary charge 5,046 1,409 1,283 (9,017) (1,279)
Provision (benefit) for income taxes: 2,347 524 -- (3,211)(9) (340)
------- ------- ------- ------- -------
Net income (loss) 2,699 885 1,283 (5,806) (939)
======= ======= ======= ======= =======
</TABLE>
See accompanying notes to unaudited pro forma condensed statement of income.
-19-
<PAGE>
NOTES TO PRO FORMA CONDENSED CONSOLIDATED STATEMENTS OF INCOME
For the Six Months Ended June 30, 1998
And the Year Ended December 31, 1997
1. Represents the unaudited historical statement of income of the Company for
the six months ended June 30, 1998, as reported in the Company's June 30,
1998, Form 10-Q as filed with the SEC, and the audited historical Statement
of Income of the Company for the year ended December 31, 1997.
2. Represents the unaudited historical statement of income of HCI for the six
months ended June 30, 1998, and the audited historical Statement of Income
of HCI for the year ended December 31, 1997.
3. Represents the unaudited historical statement of income of PCH for the six
months ended June 30, 1998, and the audited historical Statement of Income
of PCH for the year ended December 31, 1997.
4. Represents the elimination of revenue related to ADM, Inc., a wholly-owned
subsidiary of HCI, not acquired by the Company.
5. Represents the elimination of cost of goods sold related to ADM, Inc.
6. Represents the following:
<TABLE>
<CAPTION>
Six Months Year Ended
Ended June 30, December 31,
1998 1997
-------------- ------------
<S> <C> <C>
Decrease in senior management team compensation that
did not continue employment with the Company after
the recapitalization. (176) (986)
Net of amortizations expense of goodwill capitalized
as a result of the acquisitions and the reduction of
HCI historical goodwill eliminated. 788 1,575
Removal of compensation expense of employees of HCI
and PCH terminated as a result of the acquisitions
and not replaced. (188) (376)
Decrease in senior management compensation of HCI and
PCH employees, to new annual compensation per employment
agreements. (148) (291)
Reduction of office rent for HCI and PCH offices
closed as part of the acquisitions. (59) (118)
Elimination of selling general and administrative
expense of ADM, Inc. (56) (397)
------ ------
$ (165) $ (593)
====== ======
</TABLE>
-20-
<PAGE>
NOTES TO PRO FORMA CONDENSED CONSOLIDATED STATEMENTS OF INCOME
For the Six Months Ended June 30, 1998
And the Year Ended December 31, 1997 (Continued)
7. Reflects recapitalization and transaction costs consisting primarily of
legal investment banking and special committee fees incurred by the Company
in connection with the recapitalization and the process of exploring
strategic alternatives to enhance shareholder value prior to the date of
the recapitalization.
8. Represents increase interest expense related to indebtedness incurred to
complete the recapitalization and acquisitions and amortization of related
deferred financing fees, offset by decreased interest expense of the
Company, HCI and PCH retired in conjunction with the recapitalization and
acquisitions.
9. Represents the tax effect of the pro forma adjustments and PCH's historical
operations at the Company's effective rate.
10. Represents the elimination of an extraordinary charge of $1,863 net of tax
benefit of $1,300 for the write-off of unamortized deferred financing fees
and prepayment penalty related to debt retired using proceeds of the
offering.
-21-
