-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, UlijZk4MYUvAPDrGPTwueO1pqHEJsEtYAeQKZAod38fx8itWo572H2TGLNj9Lk83 wkwI99w7ZVgLpvDzXz9plw== 0000737561-98-000002.txt : 19980108 0000737561-98-000002.hdr.sgml : 19980108 ACCESSION NUMBER: 0000737561-98-000002 CONFORMED SUBMISSION TYPE: 8-K/A PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 19971101 ITEM INFORMATION: FILED AS OF DATE: 19980107 SROS: NASD FILER: COMPANY DATA: COMPANY CONFORMED NAME: UCI MEDICAL AFFILIATES INC CENTRAL INDEX KEY: 0000737561 STANDARD INDUSTRIAL CLASSIFICATION: SERVICES-SPECIALTY OUTPATIENT FACILITIES, NEC [8093] IRS NUMBER: 592225346 STATE OF INCORPORATION: DE FISCAL YEAR END: 0930 FILING VALUES: FORM TYPE: 8-K/A SEC ACT: SEC FILE NUMBER: 000-13265 FILM NUMBER: 98502047 BUSINESS ADDRESS: STREET 1: 1901 MAIN ST MAIL CODE 1105 STREET 2: STE 1200 CITY: COLUMBIA STATE: SC ZIP: 29201 BUSINESS PHONE: 8032523661 MAIL ADDRESS: STREET 1: 1901 MAIN ST MAIL CODE 1105 STREET 2: SUITE 1200 CITY: COLUMBIA STATE: SC ZIP: 29201 8-K/A 1 UCI MEDICAL AFFILIATES, INC. FORM 8-K/A UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 8-K/A CURRENT REPORT Pursuant to Section 13 OR 15(d) of The Securities Exchange Act of 1934 Date of earliest event reported: November 1, 1997 ------------------------------------ UCI Medical Affiliates, Inc. (Exact name of registrant as specified in its charter) Delaware 0-13265 59-2225346 (State or other jurisdiction of incorporation) (Commission File Number) (IRS Employer Identification No.)
1901 Main Street, Suite 1200, Mail Code 1105, Columbia, South Carolina 29201 (Address of principal executive offices) (Zip Code) Registrant's telephone number, including area code: (803) 252-3661 ----------------------- No Change (Former name or former address, if changed since last report.) This document contains a total of 17 pages. This Form 8-K/A amends the Form 8-K filed with the Securities and Exchange Commission on November 5, 1997 by UCI Medical Affiliates, Inc., a Delaware corporation (the "Company"), and is filed to include the financial statements required by Item 7 of Form 8-K. Item 7. Financial Statements and Exhibits a) Financial Statements of Business Acquired The financial statements for Marvin Dees, M.D., the business acquired by the wholly-owned subsidiary of the Company, are included in this report beginning on page number three (3). b) Pro Forma Financial Information The pro forma financial information for Marvin Dees, M.D., the business acquired by the wholly-owned subsidiary of the Company, is included in this report following the financial information herein in response to Item 7(a) above. c) Exhibits The following exhibit is incorporated by reference to the exhibit of the same number filed with the Company's Form 8-K filed on November 5, 1997. Exhibit 2.1 - Asset Purchase Agreement executed on October 31, 1997, to be effective November 1, 1997, by, between and among UCI Medical Affiliates of South Carolina, Inc., a South Carolina corporation ("UCI of SC") Doctor's Care, P.A., a South Carolina professional corporation ("Doctor's Care"); Marvin Dees, M.D., a South Carolina resident ("Seller"); and Landlord (defined as Seller and Katherine R. Dees, collectively). Report on Audits of the Financial Statements of Marvin Dees, M.D. as of December 31, 1996 and 1995 Contents Page Report of Independent Accountants.............................................5 Marvin Dees, M.D. Financial Statements as of December 31, 1996 and 1995......................................6-12 UCI Medical Affiliates, Inc. Pro Forma Combining Financial Statements Combining Balance Sheet at September 30, 1997...........................13 Note to Combining Balance Sheet.........................................14 Combining Statement of Operations and Accumulated Deficit for year ended September 30, 1997....................................15 Note to Combining Statement of Operations...............................16 Report of Independent Accountants Board of Directors UCI Medical Affiliates, Inc. We have audited the accompanying balance sheets Marvin Dees, M.D. (the "Practice") as of December 31, 1996 and 1995 and the related statements of operations, changes in owner's equity, and cash flows for the years then ended. These financial statements are the responsibility of the Practice'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 Marvin Dees, M.D. as of December 31, 1996 and 1995, and the results of its operations and its cash flows for the years then ended in conformity with generally accepted accounting principles. The financial statements have been prepared solely from the accounts of Marvin Dees, M.D. and do not include the personal accounts of the owner or those of any other operations in which he may be engaged. Columbia, South Carolina December 22, 1997 ORIGINAL SIGNED OPINION ON SCOTT, HOLLOWAY & MCELVEEN, LLP LETTERHEAD IS ON FILE WITH UCI MEDICAL AFFILIATES, INC. Marvin Dees, M.D. Balance Sheets December 31, 1996 1995 ------------------- ------------------- Assets Current assets: Cash and cash equivalents $ - $ 33,824 Accounts receivable, net 47,148 49,342 ------------------- ------------------- Total current assets 47,148 83,166 ------------------- ------------------- Property and equipment, net 145,986 144,346 ------------------- ------------------- Total assets $ 193,134 $ 227,512 =================== =================== Liabilities and Owner's Equity Current liabilities: Accounts payable and accrued expenses $ 8,799 $ 3,664 Current maturities of capital leases 4,151 1,486 Current maturities of long-term debt 12,209 10,942 --------------- ------------------- Total current liabilities 25,159 16,092 Capital leases payable, net of current portion 13,013 2,588 Long-term debt, net of current portion 42,530 54,740 ----------------- ------------------- Total liabilities 80,702 73,420 ----------------- ------------------- Owner's equity: Owner's capital 112,432 154,092 ----------------- ------------------- Total owner's equity 112,432 154,092 ----------------- ------------------- Total liabilities and owner's equity $ 193,134 $ 227,512 ================= =================== The accompanying notes are an integral part of these financial statements. Marvin Dees, M.D. Statements of Operations for the years ended December 31, 1996 1995 ------------------ ------------------ Net medical revenue $ 406,195 $ 445,822 Operating costs 227,253 205,051 ------------------ ------------------ Operating margin 178,942 240,771 Depreciation and amortization 29,402 25,305 General and administrative expenses 34,339 38,560 ------------------ ------------------ Income from operations 115,201 176,906 Interest expense 6,738 8,729 ------------------ ------------------ Net income $ 108,463 $ 168,177 ================== ================== The accompanying notes are an integral part of these financial statements. Marvin Dees, M.D. Statements of Changes in Owner's Equity for the years ended December 31, 1996 and 1995 Owner's Equity --------------- Balance, January 1, 1995 $ 179,702 Net income 168,177 Owner's draws (193,787) --------------- Balance, December 31, 1995 154,092 Net income 108,463 Owner's draws (150,123) --------------- Balance, December 31, 1996 $ 112,432 =============== The accompanying notes are an integral part of these financial statements. Marvin Dees, M.D. Statements of Cash Flows for the years ended December 31, 1996 1995 ------------------ ------------------ Operating activities: Net income $ 108,463 $ 168,177 Adjustments to reconcile net income to cash provided by operating activities: Depreciation and amortization 29,402 25,305 Changes in operating assets and liabilities: Accounts receivable 2,194 9,050 Accounts payable and accrued expenses 5,135 95 ------------------ ------------------ Cash provided by operating activities 145,194 202,627 ------------------ ------------------ Investing activities: Purchases of property and equipment (15,697) (25,281) ------------------ ------------------ Cash used by investing activities (15,697) (25,281) ------------------ ------------------ Financing activities: Repayments on capital leases (2,255) (1,332) Repayments on long-term debt (10,943) (9,808) Owner's draws (150,123) (193,787) ------------------ ------------------ Cash used by financing activities (163,321) (204,927) ------------------ ------------------ Net decrease in cash and cash equivalents (33,824) (27,581) Cash and cash equivalents, beginning of year 33,824 61,405 ------------------ ------------------ Cash and cash equivalents, end of year $ - $ 33,824 ================== ================== ================== ================== Supplemental cash flow information: Cash paid for interest $ 6,738 $ 8,729 ================== ==================
The accompanying notes are an integral part of these financial statements. MARVIN DEES, M.D. NOTES TO FINANCIAL STATEMENTS Note 1. Significant Accounting Policies Organization - Marvin Dees, M.D. is the sole owner of Marvin Dees, M.D. (the "Practice") located in New Ellenton, South Carolina. The Practice operates a family practice medical office that provides treatments on an outpatient basis for medical conditions not involving an immediate threat to life. The financial statements have been prepared solely from the accounts of the Practice and do not include the personal accounts of the owner or those of any other activities in which he may be engaged. Management makes estimates that are a necessary part of the preparation of financial statements. These estimates include the useful lives of equipment, some of which is subject to technological obsolescence, and the net realizable value of patient accounts receivable. At December 31, 1996, management is not aware of any conditions that could significantly affect the estimates employed in the preparation of the financial statements. Accounts Receivable - Accounts receivable represents amounts due from patients, employers and various third-party payors. Provisions for uncollectable amounts are made based on management's estimates of future collectability and historical payment percentages. Property and Equipment - Property and equipment is reported at cost. Depreciation for financial reporting purposes is computed using accelerated methods for furniture and equipment and by the straight-line method for buildings. Estimated useful lives range from five to seven years for equipment and 19 years for buildings. Depreciation expense includes the amortization of capital lease assets. Maintenance, repairs and the cost of minor equipment are charged to expense. Major renewals or betterments, which prolong the life of the assets, are capitalized. Upon disposal of depreciable property, the asset accounts are reduced by the related cost and accumulated depreciation. The resulting gains and losses are reflected in the statements of operations. Income Taxes - The Practice operates as a sole proprietorship. Under this election, the revenues and expenses of the Practice are reported on the owner's personal income tax returns. Accordingly, the accompanying financial statements have no provision for income tax expense. Cash Equivalents - The Practice considers all short-term debt instruments with a maturity of three months or less at the date of acquisition to be cash equivalents. Supplemental disclosure of non-cash financing and investing activities: During 1996, the Practice placed into service certain medical equipment and furniture totaling $15,345 acquired under capital leases. Fair Value of Financial Investments - The fair value of accounts receivable and accrued expenses payable are estimated by management to approximate their respective carrying values. Management estimates the fair value of long-term debt approximates its carrying value because the interest rate is similar to that presently offered in the marketplace for credit instruments having the same risk profile and term to maturity. Note 2. Description of Leasing Arrangements The Practice leases certain medical equipment under capital leases expiring on various dates through August, 2001. At the end of the lease terms, the Practice is generally transferred title to the leased equipment. In some cases, the payment of a fee representing residual value is required. Included in property and equipment are the following assets held under capital leases: 1996 1995 ------------------- ------------------ Office and medical equipment $ 21,945 $ 6,600 Less, accumulated amortization 8,528 4,699 ------------------- ------------------ $ 13,417 $ 1,901 =================== ================== The following is a schedule by years of the future minimum lease payments under capital leases together with the present value of the net minimum lease payments as of December 31, 1996: 1997 $ 5,929 1998 5,031 1999 4,069 2000 4,069 2001 2,713 ----------------- Total minimum lease payments 21,811 Less amounts representing interest 4,647 ----------------- Present value of net minimum lease payments 17,164 Less current portion of lease obligations 4,151 ----------------- Capital lease obligations $ 13,013 ================== Note 3. Property and Equipment At December 31, 1996 and 1995, property and equipment consisted of the following: 1996 1995 ----------------- ------------------ Land $ 29,513 $ 29,513 Building 135,249 130,361 Furniture and equipment 151,644 125,490 Vehicle 21,000 21,000 ----------------- ------------------ 337,406 306,364 Accumulated depreciation 191,420 162,018 ----------------- ------------------ Property and equipment, net $ 145,986 $ 144,346 ================= ================== Note 4. Long-term Debt The Practice's long-term debt at December 31, 1996 and 1995, follows: 1996 1995 ----------- ------------------ Note payable to financial institution in monthly installments of $1,469, including interest at 11%, through November, 2000. Collateralized by a mortgage on real estate. $ 54,739 $ 65,682 Less current portion 12,209 10,942 ----------- ------------------ $ 42,530 $ 54,740 =========== ================== The aggregate maturities of long-term debt as of December 31, 1996 are as follows: Maturing during the year ended December 31, 1997 $ 12,209 1998 13,622 1999 15,198 2000 13,710 ------------------ $ 54,739 ================== Note 5. Retirement Plan The Practice sponsors a trusteed profit sharing retirement plan covering substantially all employees. Under the plan, employees age 21 or older that work a minimum of 1,000 hours are permitted to participate. Employer contributions to the plan are discretionary. Employee contributions are not permitted. During the years ended December 31, 1996 and 1995, expense of the profit sharing plan was $0 and $1,211, respectively. Note 6. Related Party Transactions The owner participates in the medical activities of Practice. All payments for services and benefits to the owner are recorded as draws and are not included in cost of operations in the financial statements. For the periods ended December 31, 1996 and 1995, owner's draws totalled approximately $150,000 and $194,000, respectively. Note 7. Concentration of Credit Risk In the normal course of providing health care services, the Practice extends credit to patients in its service area without requiring collateral. Each individual's ability to pay balances due the Practice is assessed and reserves are established to provide for management's estimate of uncollectable balances. Future revenues of the Practice are largely dependent on third-party payors and include Medicare and private insurance companies. The amount of loss the Practice would incur in the event of non-payment by the counter party is the amount of the patient billing. Note 8. Subsequent Event On October 31, 1997, UCI Medical Affiliates of South Carolina, Inc. ("UCI") acquired the accounts receivable, certain office and medical equipment and substantially all of the Practice's intangible assets (including patient lists and goodwill) for $279,168. The price paid consists of $85,000 in restricted common stock, two notes payable totalling $159,536, certain assumed lease liabilities totalling $17,164, and cash of $17,468. UCI also entered into a five year lease agreement to rent the Practice's office space for $19,200 annually. Dr. Dees entered into a five-year physician services agreement to provide, on average, forty hours per week of physician services. UCI Medical Affiliates, Inc. Pro Forma Combining Balance Sheet September 30, 1997 (Unaudited) The following pro forma combining balance sheet is based on the individual balance sheets of UCI Medical Affiliates, Inc. as of September 30, 1997 per the Company's Annual Report and Marvin Dees, M.D. as of December 31, 1996 appearing in Item 7(a) of this filing. The information has been prepared to reflect the acquisition by UCI Medical Affiliates, Inc. of Marvin Dees, M.D. after giving effect to the pro forma adjustments described in Note 1. This statement should be read in conjunction with each entity's financial statements and footnotes. UCI Medical Affiliates, Inc. Marvin Dees, Pro Forma Pro Forma M.D. Adjustments Combined -------------- -------------- --------------- --------------- Assets Cash and cash equivalents $ 14,676 $ -- $ $ 14,676 Accounts receivable, net 5,943,884 47,148 -- 5,991,032 Medical supplies inventory 502,888 -- -- 502,888 Deferred taxes 334,945 -- -- 334,945 Prepaids and other assets 579,217 -- -- 579,217 -------------- -------------- --------------- --------------- Total current assets 7,375,610 47,148 7,422,758 Property, plant and equipment, net 4,002,699 145,986 (96,830) (a.) 4,051,855 Deferred taxes 1,417,237 -- -- 1,417,237 Goodwill 7,801,607 -- 182,864 (a.) (12,190) (b.) 7,972,281 Other assets 266,379 -- 266,379 ============== ============== =============== =============== Total assets $ 20,863,532 $ 193,134 $ 73,844 $ 21,130,510 ============== ============== =============== =============== Liabilities and Capital Current portion - long-term debt $ 840,879 $ 16,360 $ (12,209) (a.) $ 845,030 Current long- debt to employees 177,445 -- 42,500 (a.) 219,945 Accounts payable 2,039,506 8,799 (8,799) (a.) 17,468 (a.) 2,056,974 Accrued payroll 959,068 -- -- 959,068 Other accrued liabilities 437,667 -- (15,000) (c.) 9,100 (e.) 5,000 (d.) 436,767 -------------- -------------- --------------- --------------- Total current 4,454,565 25,159 38,060 4,517,784 liabilities Long-term debt, net of current 6,438,655 55,543 (42,530) (a.) 6,451,668 Non-current debt to employees 481,815 -- 117,036 (a.) 598,851 -------------- -------------- --------------- --------------- Total liabilities 11,375,035 80,702 112,566 11,568,303 -------------- -------------- --------------- --------------- Common stock 287,248 -- 1,511 (a.) 288,759 Paid-in capital 15,435,535 -- 83,489 (a.) 15,519,024 Accumulated earnings (deficit) (6,234,286) 112,432 (112,432) (a.) (11,290) (f.) (6,245,576) -------------- -------------- --------------- --------------- Total capital 9,488,497 112,432 (38,722) 9,562,207 ============== ============== =============== =============== Total liabilities and capital $ 20,863,532 $ 193,134 $ 73,844 $ 21,130,510 ============== ============== =============== ===============
UCI Medical Affiliates, Inc. Note to Pro Forma Combining Balance Sheet September 30, 1997 (Unaudited) 1. The pro forma combining balance sheet has been prepared to reflect the acquisition of Marvin Dees, M.D. by UCI Medical Affiliates, Inc. for an aggregate price of $279,168. The purchase occurred on October 30, 1997. The combining balance sheet reflects the balances of UCI at September 30, 1997 and Marvin Dees, M.D. at December 31, 1996. Pro forma adjustments are made to reflect: (a.) The assets acquired consisted of: The purchase price consisted of: $ 47,148 Accounts receivable $ 1,511 Common stock 49,156 Furniture, equipment 83,489 Additional paid-in-capital 182,864 Goodwill 159,536 Notes payable issued -------- 17,161 Lease liabilities assumed $ 279,168 17,468 Cash paid at closing ======== -------- $ 279,168 ======== Issuance of 30,223 shares of restricted common stock valued at $85,000, an estimated per share value of $2.81. Cash paid at closing is recorded in accounts payable. Certain property and equipment ($96,830) was not acquired. Accounts payable ($8,799), long-term debt ($54,739), and prior owner's equity ($112,432) were not assumed. (b.) Excess of acquisition cost over the fair values of net assets acquired (goodwill) less one year's amortization. ($182,864 goodwill less $12,190 amortization) (c.) Net decrease in fees for physician services is $15,000 annually, based on the physician's service agreement compared to the acquired practice's owner's draws. (d.) Net increase in rental expense for office facilities is $5,000 annually, based on the rental agreements executed between the parties. (e.) First year increase in interest costs of $9,100. Computed using contractual interest rates on notes payable of $159,536 issued to the acquired practice's owner at closing. (f.) Effects of pro forma adjustments on statement of operations, closed into pro forma retained earnings. UCI Medical Affiliates, Inc. Pro Forma Statement of Operations and Accumulated Deficit for the year ended September 30, 1997 (Unaudited) The following pro forma combining statement is based on the individual statements of operations and accumulated deficit of UCI Medical Affiliates, Inc. as of September 30, 1997 per the Company's Annual Report and Marvin Dees, M.D. as of December 31, 1996 appearing in item 7(a) of this filing. The information has been prepared to reflect the acquisition by UCI Medical Affiliates, Inc. of Marvin Dees, M.D. after giving effect to the pro forma adjustments described in Note 1. This statement should be read in conjunction with each entity's financial statements and footnotes. UCI Medical Marvin Dees, Pro Forma Pro Forma Affiliates, Inc. M.D. Adjustments Combined ---------------- -------------- --------------- ----------------- Revenue $ 27,924,772 $ 406,195 $ -- $ 28,330,967 Operating costs 26,466,294 227,253 (15,000) (a.) 150,123 (e.) 5,000 (c.) 26,833,670 ---------------- -------------- --------------- ----------------- Operating margin 1,458,478 178,942 (140,123) 1,497,297 General and administrative expenses 153,445 34,339 -- 187,784 Depreciation and amortization 1,250,349 29,402 12,190 (b.) 1,291,941 ---------------- -------------- --------------- ----------------- Income from operations 54,684 115,201 (152,313) 17,572 Interest expense, net (812,749) (6,738) (9,100) (d.) (828,587) Gain on equipment 8,809 -- -- 8,809 ---------------- -------------- --------------- ----------------- Income before income tax (749,256) 108,463 (161,413) (802,206) Income tax benefit 665,530 -- -- 665,530 ---------------- -------------- --------------- ----------------- Net (loss) income (83,726) 108,463 (161,413) (136,676) Accumulated deficit - beginning of year (6,150,560) 154,092 (112,432) (6,108,900) Distribution to stockholders -- (150,123) 150,123 -- ---------------- -------------- --------------- ----------------- Accumulated deficit - end of year $ (6,234,286) $ 112,432 (123,722) $ (6,245,576) ================ ============== =============== ================= Net income (loss) per common and common equivalent share $ (.02) (f.) -- $ (.03) ================ ============== =============== ================= Weighted average common shares outstanding 5,005,081 (f.) -- 5,035,304 ================ ============== =============== =================
UCI Medical Affiliates, Inc. Note to Pro Forma Combining Statement of Operations and Accumulated Deficit for the year ended September 30, 1997 (Unaudited) 1. The above statement gives effect to the following pro forma adjustments necessary to reflect the acquisition outlined in Note 1. to the pro forma balance sheet: (a.) Net change in physician salary computed based on employment agreement compared with the Practice's former owner's draws. Does not include any potential fees or productivity or other incentives provided for in employment contract between the owner of Marvin Dees, M.D. and UCI Medical Affiliates, Inc. (b.) Addition for amortization of goodwill on a straight line basis over 15 years. (c.) Net increase in rental expense for office facilities based on rental agreements executed between the parties. (d.) First year increase in interest costs, related to notes payable issued to Dr. Dees. (e.) Reclassification of owner's draws to compensation expense per employment agreement. (f.) Not applicable; Marvin Dees, M.D. was a sole proprietorship entity. SIGNATURES Pursuant to the requirements of The Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized. UCI Medical Affiliates, Inc. (Registrant) /s/ Marion F. McFarland, III, M.D. /s/ Jerry F. Wells, Jr. Marion F. McFarland, III, M.D. Jerry F. Wells, Jr., CPA President, Chief Executive Officer and Executive Vice President of Chairman of the Board Finance and Chief Financial Officer Date: January 7, 1998 -----END PRIVACY-ENHANCED MESSAGE-----