SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K/A
AMENDMENT NO. 1
Current Report Pursuant to Section 13 or 15(d) of
The Securities Exchange Act of 1934
Date of Report (Date of earliest event reported) February 28, 1998
GENTLE DENTAL SERVICE CORPORATION
(Exact name of registrant as specified in its charter)
Washington 000-23673 91-1577891
- ------------------------------- ---------- -------------------
(State or other jurisdiction of (Commission (IRS Employer
incorporation or organization) File No.) Identification No.)
22800 Savi Ranch Parkway, Suite 206, Yorba Linda, CA 92887
- --------------------------------------------------------------------------------
(Address of principal executive offices) (Zip Code)
(714) 998-0587
- --------------------------------------------------------------------------------
(Registrant's telephone number, including area code)
No Change
- --------------------------------------------------------------------------------
(Former name, former address and former fiscal year,
if changed since last report)
<PAGE>
Item 2. Acquisition or Disposition of Assets
On February 28, 1998, Gentle Dental Service Corporation (the "Company")
completed the acquisition of substantially all of the assets of Affordable
Dental Care, Inc. ("ADC"), a provider of dental care in western Oregon. The ADC
operations have 19 dentists in 9 offices in the Willamette Valley and
southwestern Oregon. All of ADC's offices are outside of the Portland
metropolitan area, where the Company currently provides dental practice
management services to 13 offices. In addition, the Company has entered into a
definitive agreement to acquire all of the outstanding stock of Managed Dental
Care of Oregon, Inc. ("MDCO"), a dental care organization which has an annually
renewable contract with the state of Oregon to provide care under the Oregon
Health Plan. MDCO in turn contracts with dental care providers, including ADC,
to provide dental care to Oregon Health Plan participants. The acquisition of
MDCO is subject to Oregon State regulatory approval.
The purchase price paid at closing for ADC's assets consisted of $7,574,600
in cash. The purchase price to be paid at closing for the stock of MDCO will
consist of $950,000 in cash. In addition, the Company has agreed to make cash
earnout payments equal to .66 times the combined EBITDA of the acquired
businesses for the first 12 months following the ADC closing, .67 times such
EBITDA for the second 12 months following the ADC closing, and .67 times such
EBITDA for the third 12 months following the ADC closing. The cash paid at
closing was borrowed under the Company's credit facility with Imperial Bank.
Item 7. Financial Statements and Exhibits
(a) Financial statements of businesses acquired.
Audited Combined Balance Sheets of ADC and MDCO as of December 31,
1996 and 1997, related audited Combined Statements of Income,
Stockholder's Equity and Cash Flows of ADC and MDCO for the years
ended December 31, 1996 and 1997, and independent auditors' report
thereon. Included as pages F-1 to F-10 of this Form 8-K/A Amendment
No. 1.
(b) Pro forma financial information. Pro Forma Consolidated Statement of
Operations for the year ended December 31, 1997 and Pro Forma
Condensed Consolidated Balance Sheet as of December 31, 1997. Included
as pages F-11 to F-13 of this Form 8-K/A Amendment No. 1.
(c) Exhibits.
2.1 Asset Purchase Agreement, dated as of February 28, 1998, between
the Company and Affordable Dental Care, Inc. (Included with
original Form 8-K filed by the Company on March 16, 1998.)
2
<PAGE>
2.2 Stock Purchase Agreement, dated as of February 28, 1998, between
the Company and the sole shareholder of Managed Dental Care of
Oregon, Inc. (Included with original Form 8-K filed by the
Company on March 16, 1998.)
23.1 Consent of KPMG Peat Marwick LLP.
SIGNATURE
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.
Dated: May 15, 1998
GENTLE DENTAL SERVICE CORPORATION
By NORMAN R. HUFFAKER
-------------------------------------------
Norman R. Huffaker,
Chief Financial Officer
3
<PAGE>
INDEPENDENT AUDITORS' REPORT
The Board of Directors
Affordable Dental Care, Inc. and
Managed Dental Care of Oregon, Inc.:
We have audited the accompanying combined balance sheets of Affordable Dental
Care, Inc. and Managed Dental Care of Oregon, Inc. (the Company) as of December
31, 1996 and 1997, and the related combined statements of income, stockholder's
equity and cash flows for the years ended December 31, 1996 and 1997. These
combined financial statements are the responsibility of the Company's
management. Our responsibility is to express an opinion on these combined
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 combined financial position of Affordable Dental
Care, Inc. and Managed Dental Care of Oregon, Inc. as of December 31, 1996 and
1997, and the combined results of their operations and their cash flows for the
years ended December 31, 1996 and 1997 in conformity with generally accepted
accounting principles.
KPMG PEAT MARWICK LLP
Portland, Oregon
February 13, 1998
F-1
<PAGE>
AFFORDABLE DENTAL CARE, INC. AND
MANAGED DENTAL CARE OF OREGON, INC.
Combined Balance Sheets
December 31, 1996 and 1997
(In thousands, except share data)
<TABLE>
<CAPTION>
Assets 1996 1997
------ -------- --------
<S> <C> <C>
Current assets:
Cash and cash equivalents..................................... $ 1,143 $ 898
Investments available for sale................................ 197 46
Accounts receivable, net of allowance for doubtful
accounts of $-0- and $69 in 1996 and 1997,
respectively............................................... 432 506
Dental supplies............................................... 46 66
Prepaid expenses and other current assets..................... 25 24
-------- --------
Total current assets............................. 1,843 1,540
--------- --------
Equipment and leasehold improvements, net (note 3)................. 362 358
Intangible assets, net of accumulated amortization of
$7 and $9 in 1996 and 1997, respectively...................... 30 28
Other assets....................................................... 14 8
--------- --------
Total assets..................................... $ 2,249 $ 1,934
======== ========
Liabilities and Stockholder's Equity
------------------------------------
Current liabilities:
Accounts payable ............................................. $ 347 $ 198
Accrued salaries, wages and benefits.......................... 207 155
Accrued expenses and other current liabilities................ 172 167
Current maturities of notes payable (note 5).................. 26 27
-------- --------
Total current liabilities........................ 752 547
-------- --------
Notes payable, net of current portion (note 5)..................... 37 19
-------- --------
Stockholder's equity:
Common stock, no par value; 100 shares of Affordable
Dental Care, Inc., and 100 shares of Managed Dental
Care of Oregon, Inc., authorized, issued and
outstanding at 1996 and 1997................................ - -
Retained earnings............................................. 1,460 1,368
-------- --------
Total stockholder's equity....................... 1,460 1,368
-------- --------
Total liabilities and stockholder's equity....... $ 2,249 $ 1,934
======== ========
See accompanying notes to combined financial statements.
</TABLE>
F-2
<PAGE>
AFFORDABLE DENTAL CARE, INC. AND
MANAGED DENTAL CARE OF OREGON, INC.
Combined Statements of Income
Years ended December 31, 1996 and 1997
(In thousands)
<TABLE>
<CAPTION>
1996 1997
-------- --------
<S> <C> <C>
Revenues:
Capitation and other ......................................... $ 7,648 $ 6,928
Fee for service............................................... 2,503 2,599
-------- --------
10,151 9,527
Operating expenses:
Clinical salaries and benefits................................ 4,316 4,073
Practice nonclinical salaries and benefits.................... 577 656
Dental supplies and lab expenses.............................. 696 540
Practice occupancy expenses................................... 442 531
Practice selling, general and administrative expenses......... 394 373
Capitation expenses........................................... 469 469
Depreciation and amortization................................. 148 130
-------- --------
7,042 6,772
-------- --------
Operating income................................. 3,109 2,755
Nonoperating income:
Interest income, net.......................................... 258 98
Other income ............................................. 68 6
-------- --------
Net income....................................... $ 3,435 $ 2,859
======== ========
See accompanying notes to combined financial statements.
</TABLE>
F-3
<PAGE>
AFFORDABLE DENTAL CARE, INC. AND
MANAGED DENTAL CARE OF OREGON, INC.
Combined Statements of Stockholder's Equity
Years ended December 31, 1996 and 1997
(In thousands, except share data)
<TABLE>
<CAPTION>
Common stock Total
---------------------- Retained stockholder's
Shares Amount earnings equity
------- ---------- ------------- -------------
<S> <C> <C> <C> <C>
Balances at December 31, 1995.................... 200 $ - $ 1,784 $ 1,784
Distributions to stockholders.................... - - (3,759) (3,759)
Net income ...................................... - - 3,435 3,435
------- ---------- ------------- -----------
Balances at December 31, 1996.................... 200 - 1,460 1,460
Distributions to stockholders.................... - - (2,951) (2,951)
Net income ...................................... - - 2,859 2,859
------- ---------- ------------- -----------
Balances at December 31, 1997.................... 200 $ - $ 1,368 $ 1,368
======= ========== ============= ===========
See accompanying notes to combined financial statements.
</TABLE>
F-4
<PAGE>
AFFORDABLE DENTAL CARE, INC. AND
MANAGED DENTAL CARE OF OREGON, INC.
Combined Statements of Cash Flows
Years ended December 31, 1996 and 1997
(In thousands)
<TABLE>
<CAPTION>
1996 1997
-------- --------
<S> <C> <C>
Cash flows from operating activities:
Net income.................................................... $ 3,435 $ 2,859
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation and amortization........................... 148 130
Increase in accounts receivable......................... (177) (74)
Increase in dental supplies, prepaid expenses and
other assets....................................... (42) (13)
Decrease in accounts payable and accrued liabilities.... (282) (206)
-------- --------
Net cash provided by operating activities........ 3,082 2,696
-------- --------
Cash flows from investing activities:
Purchases of equipment and leasehold improvements............. (188) (124)
Net proceeds from sale of investments......................... 795 151
-------- --------
Net cash provided by investing activities........ 607 27
-------- --------
Cash flows from financing activities:
Principal payments on notes payable........................... (39) (17)
Distributions to stockholder.................................. (3,759) (2,951)
-------- --------
Net cash used in financing activities............ (3,798) (2,968)
-------- --------
Decrease in cash and cash equivalents............ (109) (245)
Cash and cash equivalents, beginning of period..................... 1,252 1,143
-------- --------
Cash and cash equivalents, end of period........................... $ 1,143 $ 898
======== ========
See accompanying notes to combined financial statements.
</TABLE>
F-5
<PAGE>
AFFORDABLE DENTAL CARE, INC. AND
MANAGED DENTAL CARE OF OREGON, INC.
Notes to Combined Financial Statements
Years Ended December 31, 1996 and 1997
(In thousands)
(1) Business Description
Managed Dental Care of Oregon, Inc. (MDCO), a subchapter S Corporation, is
a dental care organization that contracts with the State of Oregon Office
of Medical Assistance Program (OMAP) to provide care under the Oregon
Health Plan (OHP). MDCO in turn contracts with dental care providers,
including Affordable Dental Care, Inc. (ADC), also a subchapter S
Corporation, to provide dental care to OHP participants. ADC also provides
dental care services on a fee-for-service basis.
(2) Significant Accounting Policies
Basis of Presentation
The accompanying financial statements have been prepared on the accrual
basis of accounting and include the combined accounts of ADC and MDCO
(collectively referred to as the Company).
Capitation and Other Revenue
Capitation and other revenue represents the premiums received from OMAP for
related OHP participants and for dental services provided for commercially
insured and private pay patients.
Cash and Cash Equivalents
The Company considers all highly liquid investments in debt instruments
with an original maturity of three months or less to be cash equivalents.
Investments
Investments represent certain marketable equity securities and a 25% equity
investment in Exceptional Needs Dental Service, an Oregon partnership. The
investment in Exceptional Needs Dental Service is accounted for by the
equity basis of accounting. The investments in marketable equity securities
are covered under the scope of SFAS No. 115, Accounting for Certain
Investments in Debt and Equity Securities, and are classified as "available
for sale". The carrying value of these investments, based on marketable
quotes, approximates book value.
(Continued)
F-6
<PAGE>
AFFORDABLE DENTAL CARE, INC. AND
MANAGED DENTAL CARE OF OREGON, INC.
Notes to Combined Financial Statements
(In thousands)
Accounts Receivable
Accounts receivable principally represent receivables from patients and
other third party payors for dental services provided by the dental groups.
Amounts are recorded net of contractual allowances and allowance for
doubtful accounts.
Dental Supplies
Dental supplies represent disposable supplies and instruments used in
delivering dental services to patients. The supplies are recorded at the
lower of cost or market (net realizable value).
Equipment and Leasehold Improvements
Equipment and leasehold improvements are stated at cost. Depreciation of
equipment is recorded using the straight-line method over five to seven
years, the estimated useful lives of the assets. Leasehold improvements are
amortized on the straight-line method over the shorter of the lease term or
the estimated useful life of the improvements.
Intangible Assets
Intangible assets consist primarily of the amount of purchase price for
dental practices in excess of the fair market value of the identifiable
tangible assets. The amounts are amortized on the straight-line basis over
fifteen years. Amortization expense for the years ended December 31, 1996
and 1997 is $3 and $2, respectively.
Concentration of Credit Risk
Capitated revenues under the Oregon Health Plan constitute a significant
source of revenue for the Company. Adverse changes in general economic or
regulatory factors in the state of Oregon could negatively impact the
funding of the Oregon Health Plan, adversely impacting the Company's
financial position and results of operations.
Fair value of Financial Instruments
The carrying value of financial instruments such as cash and cash
equivalents, accounts receivable, accounts payable and notes payable
approximate their fair value.
(Continued)
F-7
<PAGE>
AFFORDABLE DENTAL CARE, INC. AND
MANAGED DENTAL CARE OF OREGON, INC.
Notes to Combined Financial Statements
(In thousands)
Use of Estimates
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,
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.
(3) Equipment and Leasehold Improvements
Equipment and leasehold improvements are summarized as follows:
<TABLE>
<CAPTION>
1996 1997
-------- --------
<S> <C> <C>
Dental equipment.......................................... $ 386 $ 421
Computer equipment........................................ 40 78
Furniture, fixtures and equipment......................... 33 60
Leasehold improvements.................................... 144 166
-------- --------
Total equipment and leasehold improvements....... 603 725
Less accumulated depreciation............................. 241 367
-------- --------
Equipment and leasehold improvements, net........ $ 362 $ 358
======== ========
</TABLE>
(4) Malpractice Insurance
The Company's dentists are insured with respect to dentistry malpractice
risks on a claims-made basis. Management is not aware of any claims or
incidents that may result in the assertion of a claim. However, there may
be claims from unknown incidents that may be asserted arising from services
provided to patients. Management is not aware of any claims against the
Company or its affiliated groups which might have a material impact on the
Company's financial position or results of operations.
(Continued)
F-8
<PAGE>
AFFORDABLE DENTAL CARE, INC. AND
MANAGED DENTAL CARE OF OREGON, INC.
Notes to Combined Financial Statements
(In thousands)
(5) Notes Payable
Notes payable consist of the following at December 31, 1997:
<TABLE>
<CAPTION>
<S> <C>
8% note payable with monthly principal
and interest payments of $1, maturing
May 31, 2001...................................................... $ 26
10% note payable to principal stockholder
requiring interest only payments, no
maturity date..................................................... 20
------
46
Less current portion................................................. (27)
------
$ 19
======
</TABLE>
Annual maturities of notes payable as of December 31 are as follows:
1998 ..................................................... $ 27
1999 ..................................................... 7
2000 ..................................................... 8
2001 ..................................................... 4
----
$ 46
====
(6) Commitments and Contingencies
Lease Commitments
The Company has primarily entered into operating leases of commercial
property. Commercial properties under operating leases mostly include space
required to perform dental services and space for administrative
facilities. Lease expense for dental office space and administrative office
space for the years ended December 31, 1996 and 1997 was $211 and $254,
respectively.
The future minimum lease payments under noncancelable operating leases with
remaining terms of one or more years consist of the following at December
31, 1997:
1998 ..................................................... $ 164
1999 ..................................................... 134
2000 ..................................................... 54
-----
Total minimum lease obligation...................... $ 352
=====
(Continued)
F-9
<PAGE>
AFFORDABLE DENTAL CARE, INC. AND
MANAGED DENTAL CARE OF OREGON, INC.
Notes to Combined Financial Statements
(In thousands)
Litigation
The Company is subject to various claims and legal actions which arise in
the ordinary course of business. In the opinion of management, the ultimate
resolution of such matters will not have a material adverse effect on the
Company's financial position or results of operations.
(7) Income Taxes
The Company is considered a subchapter S Corporation under the Internal
Revenue Code, therefore, the Company is not subject to corporate income
taxes. Accordingly, there is no provision for income taxes in the
accompanying combined financial statements.
(8) Subsequent Event (Unaudited)
On February 28, 1998, MDCO and ADC signed a definitive stock purchase
agreement and a definitive asset purchase agreement, respectively, to sell
substantially all of their operating assets to Gentle Dental Service
Corporation, a publicly traded Washington corporation. The acquisition of
ADC was consummated on February 28, 1998, and was accounted for as a
purchase transaction. The acquisition of MDCO is subject to Oregon state
regulatory approval, and will be accounted for as a purchase transaction.
F-10
<PAGE>
GENTLE DENTAL SERVICE CORPORATION
PRO FORMA CONSOLIDATED STATEMENT OF OPERATIONS
For the year ended December 31, 1997
(unaudited, in thousands, except per share amounts)
<TABLE>
<CAPTION>
(a) (b)
ADC/ Pro Forma Pro Forma
Company MDCO Adjustments Consolidated
-------- -------- ----------- ------------
<S> <C> <C> <C> <C>
Dental practice net patient service revenue - consolidated $ 29,327 $ 9,527 $ - $ 38,854
Net management fees 14,076 - - 14,076
-------- -------- ----------- ------------
Net Revenues 43,403 9,527 - 52,930
Costs and expenses
Clinical salaries and benefits 13,701 4,073 (67) (c) 17,707
Practice nonclinical salaries and benefits 8,177 656 - 8,833
Dental supplies and lab 6,271 540 - 6,811
Practice occupancy expenses 3,527 531 - 4,058
Practice selling, general and administrative expenses 4,912 842 - 5,754
Corporate selling, general and administrative expenses 5,700 - - 5,700
Corporate restructure and merger costs 1,809 - - 1,809
Depreciation and amortization 1,847 130 231 (d) 2,208
-------- -------- ----------- ------------
Operating income (loss) (2,541) 2,755 (164) 50
-------- -------- ----------- ------------
Nonoperating expense
Interest expense (net) (653) 98 (915) (e) (1,470)
Other income (expense) (74) 6 (6) (f) (74)
-------- -------- ----------- ------------
(727) 104 (921) (1,544)
-------- -------- ----------- ------------
Profit (loss) before income taxes (3,268) 2,859 (1,085) (1,494)
Income tax benefit (expense) 81 - (130) (g) (49)
-------- -------- ----------- ------------
Net Income (loss) (3,187) 2,859 (1,215) (1,543)
Dividends on redeemable convertible preferred stock - Series B (932) - - (932)
Accretion of redeemable common stock (34) - - (34)
-------- -------- ----------- ------------
Net loss attributable to common stock ($ 4,153) $2,859 ($ 1,215) ($2,509)
======== ======== =========== ============
Loss per share attributable to common stock - basic and diluted ($1.17) ($0.71)
======== ============
Weighted average number of shares 3,544 3,544
======== ============
</TABLE>
F-11
<PAGE>
GENTLE DENTAL SERVICE CORPORATION
PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET
December 31, 1997
(unaudited, in thousands)
<TABLE>
<CAPTION>
(a) (b)
ADC/ Pro Forma Pro Forma
Assets Company MDCO Adjustments Consolidated
-------- -------- ----------- ------------
<S> <C> <C> <C> <C>
Cash and cash equivalents $ 302 $ 898 $ (548) (h) $ 652
Accounts receivable 8,062 506 - 8,568
Other current assets 2,835 136 - 2,971
-------- -------- ----------- ------------
Total current assets 11,199 1,540 (548) 12,191
Property and equipment 10,084 358 (64) (i) 10,378
Intangible assets 22,843 28 7,777 (j) 30,648
Other long-term assets 282 8 (8) (k) 282
-------- -------- ----------- ------------
Total Assets $ 44,408 $ 1,934 $ 7,157 $ 53,499
======== ======== =========== ============
Liabilities, Redeemable Common Stock,
and Shareholders' Equity
Current liabilities $ 8,361 $ 547 $ - $ 8,908
LTD and capital lease, net of current portion 14,423 19 8,525 (l) 22,967
Other long-term liabilities 115 - - 115
Redeemable common stock 2,130 - - 2,130
Shareholders' Equity 19,379 1,368 (1,368) (m) 19,379
-------- -------- ----------- ------------
Total Liabilities, Redeemable Common Stock,
and Shareholders' equity $ 44,408 $ 1,934 $ 7,157 $ 53,499
======== ======== =========== ============
</TABLE>
F-12
<PAGE>
Gentle Dental Service Corporation
Notes to Pro Forma Consolidated Financial Information
December 31, 1997
The accompanying pro forma consolidated financial information presents the Pro
Forma Consolidated Statement of Operations of Gentle Dental Service Corporation
(the Company) for the year ended December 31, 1997 as if the acquisition of ADC
and MDCO had occurred on January 1, 1997 and presents the Pro Forma Condensed
Consolidated Balance Sheet of the Company as of December 31, 1997 as if the
acquisition of ADC and MDCO had occurred on that date.
The pro forma adjustments reflected in the Pro Forma Condensed Consolidated
Balance Sheet and the Pro Forma Consolidated Statement of Operations are as
follows:
(a) Reflects the consolidated financial position and consolidated statement of
operations of the Company as of and for the year ended December 31, 1997.
(b) Reflects the combined balance sheet and combined statement of operations of
ADC and MDCO as of and for the year ended December 31, 1997.
(c) Reflects a decrease in officer compensation of ADC and MDCO under a new
employment agreement with the Company.
(d) Reflects adjustment for depreciation and amortization expense related to
the fixed assets and intangibles recorded as a result of the purchase of
ADC and MDCO. The following table reconciles the two components to the
total adjustment:
Depreciation Expense (81)
Amortization Expense 312
---
231
===
Depreciation expense decrease stems from property not acquired by the
Company and reflects the change in depreciation to conform to the Company's
accounting methodology for depreciation. Amortizaton expense increase stems
from intangible assets recorded as a result of the acquisition.
(e) Reflects adjustment for interest expense as a result of issuing debt to
finance the purchase of ADC and MDCO at an estimated interest rate of 9.5%.
(f) Reflects the elimination of ADC and MDCO other income related to assets not
included in the purchase.
(g) Reflects adjustment of income tax expense to the estimated tax on the pro
forma consolidated pre-tax income.
(h) Reflects adjustment to ADC and MDCO cash for amounts not acquired.
(i) Reflects adjustment to ADC and MDCO property and equipment for property not
acquired and an adjustment to record equipment at fair market value.
(j) Reflects adjustment to record intangible assets at excess of purchase price
over the fair market value of ADC and MDCO net assets acquired.
(k) Reflects elimination adjustment for ADC and MDCO other long-term assets not
acquired.
(l) Reflects debt issued to finance the purchase of ADC and MDCO.
(m) Reflects elimination of ADC and MDCO shareholder's equity in accordance
with purchase accounting treatment.
F-13
<PAGE>
EXHIBIT INDEX
Exhibit Description
- ------- -----------
2.1 Asset Purchase Agreement, dated as of February 28, 1998, between
the Company and Affordable Dental Care, Inc. (Included with
original Form 8-K filed by the Company on March 16, 1998.)
The following exhibits and schedules to the Asset Purchase
Agreement have been omitted and will be provided to the
Securities and Exchange Commission upon request:
Exhibit A Assumption Agreement
Exhibit B Assignment and Bill of Sale to GDSC
Exhibit C Assignment to Professional Corporation
Exhibit D Restated MDCO Contract
Exhibit E Agreement Regarding New Offices
Exhibit F Employment Agreement
Exhibit G-1 Lease of Corvallis Dental Office
Exhibit G-2 Lease of Newberg Administrative Office
Exhibit H Opinion of ADC's Counsel
Exhibit I Opinion of GDSC's Counsel
Schedule 1.02-2 Excluded Assets
Schedule 1.10 Purchase Price Allocation
Schedule 3.04 Litigation
Schedule 3.06-2 Employee Benefits
Schedule 3.06-3 Employment Manuals and Policies
Schedule 3.06-4 Compensation
Schedule 3.07 Financial Statements
Schedule 3.08 Receivables
Schedule 3.09 Prepaid Expenses and Other
Schedule 3.10 Tangible Personal Property
Schedule 3.11 Payables
Schedule 3.12 Indebtedness
Schedule 3.13 Other Liabilities
Schedule 3.15 Leases
Schedule 3.16 Contracts
Schedule 3.19 Insurance
Schedule 3.25 Consents and Approvals
2.2 Stock Purchase Agreement, dated as of February 28, 1998, between
the Company and the sole shareholder of Managed Dental Care of
Oregon, Inc. (Included with original Form 8-K filed by the
Company on March 16, 1998.)
<PAGE>
The following exhibits and schedules to the Stock Purchase
Agreement have been omitted and will be provided to the
Securities and Exchange Commission upon request:
Exhibit A Opinion of MDCO's Counsel
Exhibit B Opinion of GDSC's Counsel
Schedule 1.06 Purchase Price Allocation
Schedule 3.04 Litigation
Schedule 3.06-2 Employee Benefits
Schedule 3.06-3 Employment Manuals and Policies
Schedule 3.06-4 Compensation
Schedule 3.07 Financial Statements
Schedule 3.08 Receivables
Schedule 3.09 Prepaid Expenses and Other
Schedule 3.10 Tangible Personal Property
Schedule 3.11 Payables
Schedule 3.12 Indebtedness
Schedule 3.13 Other Liabilities
Schedule 3.15 Leases
Schedule 3.16 Contracts
Schedule 3.19 Insurance
Schedule 3.25 Consents and Approvals
23.1 Consent of KPMG Peat Marwick LLP.
EXHIBIT 23.1
CONSENT OF ACCOUNTANTS
The Board of Directors and Shareholders
Gentle Dental Service Corporation:
We consent to incorporation by reference in the registration statements on Form
S-8 (Nos. 333-25315 and 333-25319) of Gentle Dental Service Corporation of our
report dated February 13, 1998, relating to the combined balance sheets of
Affordable Dental Care, Inc. and Managed Dental Care of Oregon, Inc. as of
December 31, 1996 and 1997 and the related combined statements of income,
stockholder's equity and cash flows for the years ended December 31, 1996 and
1997, which report appears in this Current Report on Form 8-K/A Amendment No. 1
of Gentle Dental Service Corporation.
KPMG PEAT MARWICK LLP
Portland, Oregon
May 15, 1998
