The Company's selected financial data presented below for the years ended December 31, 1995, 1996 and 1997 and at December 31, 1996 and 1997, are derived from the audited consolidated financial statements of the Company. The selected financial data presented below for the Company for each of the years ended December 31, 1993 and 1994 and at December 31, 1993, 1994 and 1995 are derived from the audited consolidated financial statements of the Company not included herein. This data is not necessarily indicative of the Company's future performance. The selected financial data (in thousands, except for per share data) set forth below should be read in conjunction with "Management's Discussion and Analysis of Financial Condition and Results of Operations" and the Company's Consolidated Financial Statements and the related Notes thereto included herein:
Certain written and oral statements made or incorporated by reference from time to time by the Company or its representatives in this report, other reports, filings with the Securities and Exchange Commission, (the "Commission"), press releases, conferences, or otherwise, are "forward looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. Such statements include, without limitation any statement that may predict, forecast, indicate, or imply future results, performance, or achievements, and may contain the words "believe," "anticipate," "expect," "estimate,""project," "will be," "will continue," "will likely result," or words or phrases of similar meaning. Such statements involve risks, uncertainties and other factors which may cause actual results to differ materially from the future results, performance or achievements expressed or implied by such forward looking Statements. Certain risks, uncertainties and other factors are detailed in this report and will be detailed from time to time in reports filed by the Company with the Commission, including forms 8-K, 10-Q and 10-K, and include, among others, the following: heightened competition, including specifically the intensification of price competition; adverse state and federal legislation and regulation; loss of key executives; the ability to attract and retain qualified dentists for the Company's networks; general economic and business conditions which are less favorable than expected; unanticipated changes in industry trends; demographic changes; customer service, adverse publicity, fluctuations and difficulty in forecasting operating results; the ability of the Company to sustain, manage or forecast its growth; the entry of new competitors and the development of new products or services by new and existing competitors; failure to obtain new customers or failure to retain existing customers; inability to carry out marketing and sales plans; the loss of significant suppliers, business disruptions; changes in business strategy or development plans; liability and other claims asserted against the Company; the ability to attract and retain qualified personnel; and other factors referenced or incorporated by reference in this report may include additional factors which could adversely impact the Company's business and financial performance. Moreover, the Company operates in a very competitive and rapidly changing environment. New risk factors emerge from time to time and it is not possible for management to predict all such risk factors, nor can it assess the impact of all such risk factors on the Company's business or the extent to which any factor, or combination of factors, may cause actual results to differ materially from those contained in any forward looking statements. These forward looking statements represent the estimates and assumptions of management only as of the date of this report. The Company expressly disclaims any obligation or undertaking to disseminate any updates or revisions to any forward looking statement contained herein to reflect any change in its expectations with regard thereto or any change in events, conditions or circumstances on which any statement is based. Given these risks and uncertainties, investors should not place undue reliance on forward looking statements as a prediction of actual results.
Effective November 1, 1995, the Company completed the acquisition of all of the outstanding common stock of US Dental for $1.3 million in cash, deferred payments of $1.0 million (consulting and non-competition agreements) and a promissory note, maturing January 18, 1996, in the amount of $10.3 million (the "Promissory Note").
Effective January 1, 1997, the Company completed the acquisition of all of the outstanding common stock of United Dental Care, Inc., an Oklahoma corporation ("United") for $7.6 million in cash.
Effective June 1, 1997, the Company completed the acquisition of all of the outstanding common stock of International Dental Plan, Inc., a Florida corporation ("International"), for $5.0 million in cash.
Revenues. Revenues increased by $61.1 million or 53.7%, to $174.7 million in 1997 from $113.6 million in 1996. Of this increase, $58.5 million, or 95.8% was attributable to the operations added through the acquisition of US Dental, AHP, Association, Independent, KCDC, OraCare, United and International. Revenues increased to $116.2 million in 1997 from $93.4 million in 1996 in markets where the Company had operations in both periods. This increase was primarily a result of an increase in the number of members and, to a lesser extent, to premium rate increases. During the year, members increased from 1,729,291 at December 31, 1996 to 1,965,084 at December 31, 1997.
In the third quarter of 1997, the Company recorded an increase of $4.5 million in the reserve for estimated uncollectible premiums receivable due to the availability of additional information regarding the collectibility of certain receivables. This cost has been reported as a reduction in the dental services revenue for the year and as a reduction of net premiums receivable as of December 31, 1997.
Depreciation and Amortization. Depreciation and amortization expenses increased $2.8 million, or 121.0% to $5.1 million in 1997 from $2.3 million in 1996. This increase was the result of amortization of the goodwill and the consulting and non-competition agreements attributable to the acquisitions of Associated, Independent, Association, KCDC, OraCare, United and International and depreciation related to the Company's new computer system.
Revenues. Revenues increased by $34.4 million or 43.4%, to $113.6 million in 1996 from $79.2 million in 1995. Of this increase, $20.4 million, or 59.3% was attributable to the operations added through the acquisition of AHP, Association, Independent, KCDC and OraCare and $11.2 million was attributable to the ownership of US Dental for the entire twelve months in 1996 versus only two months in 1995. Revenues increased to $82.0 million in 1996 from $79.2 million in 1995 in markets where the Company had operations in both periods. This increase was primarily a result of an increase in the number of members and, to a lesser extent, to premium rate increases. During the year, members increased from 937,355 at December 31, 1995 to 1,729,291 at December 31, 1996.
Management believes that cash flow generated by operations will be sufficient to fund the Company's normal working capital needs and capital expenditures (other than any acquisitions) for at least the next twelve months because the Company's operations are not capital intensive (with exception of the funding of the information system).