-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: keymaster@town.hall.org Originator-Key-Asymmetric: MFkwCgYEVQgBAQICAgADSwAwSAJBALeWW4xDV4i7+b6+UyPn5RtObb1cJ7VkACDq pKb9/DClgTKIm08lCfoilvi9Wl4SODbR1+1waHhiGmeZO8OdgLUCAwEAAQ== MIC-Info: RSA-MD5,RSA, WxmktCVNpsWIrL23JL0X58f66RbzID5V4fUmnQfKyvMorIXH0aYhRg9GkRt6gSzc GRbJ0MjKAl+LOaskfJQ1TQ== 0000276477-95-000030.txt : 19950814 0000276477-95-000030.hdr.sgml : 19950814 ACCESSION NUMBER: 0000276477-95-000030 CONFORMED SUBMISSION TYPE: 10-Q/A PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19940831 FILED AS OF DATE: 19950811 SROS: NYSE FILER: COMPANY DATA: COMPANY CONFORMED NAME: HILLHAVEN CORP CENTRAL INDEX KEY: 0000276477 STANDARD INDUSTRIAL CLASSIFICATION: SERVICES-NURSING & PERSONAL CARE FACILITIES [8050] IRS NUMBER: 911459952 STATE OF INCORPORATION: NV FISCAL YEAR END: 0531 FILING VALUES: FORM TYPE: 10-Q/A SEC ACT: 1934 Act SEC FILE NUMBER: 001-10426 FILM NUMBER: 95561597 BUSINESS ADDRESS: STREET 1: 1148 BROADWAY PLZ CITY: TACOMA STATE: WA ZIP: 98402 BUSINESS PHONE: 2065724901 FORMER COMPANY: FORMER CONFORMED NAME: MERIT CORP DATE OF NAME CHANGE: 19600201 10-Q/A 1 SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 Form 10-Q/A AMENDMENT NO. 1 (MARK ONE) X Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 For the quarterly period ended August 31, 1994. OR Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 For the transition period from to . Commission file number 1-10426 THE HILLHAVEN CORPORATION (Exact name of registrant as specified in its charter) FOR THE QUARTER ENDED AUGUST 31, 1994 Nevada 91-1459952 (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification No.) 1148 Broadway Plaza Tacoma, WA 98402 (Address of principal executive offices) (206) 572-4901 (Registrant's telephone number, including area code) Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days: Yes X No The number of shares of Common Stock, par value $.75 per share, outstanding on October 1, 1994: 27,328,179 THE HILLHAVEN CORPORATION INDEX PART I. FINANCIAL INFORMATION Page No. Item 1. Financial Statements: Consolidated Balance Sheets as of August 31, 1994 and May 31, 1994 1 Consolidated Statements of Operations for the Three Months Ended August 31, 1994 and 1993 3 Consolidated Statements of Cash Flows for the Three Months Ended August 31, 1994 and 1993 4 Notes to Consolidated Financial Statements 5 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations 7 PART II. OTHER INFORMATION Item 1. Legal Proceedings 11 Item 6. Exhibits and Reports on Form 8-K 11 Signature 12 NOTE: Items 2 through 5 of Part II are omitted because they are not applicable. THE HILLHAVEN CORPORATION CONSOLIDATED BALANCE SHEETS August 31, 1994 and May 31, 1994 (In thousands)
August 31, May 31, 1994 1994 (unaudited) ASSETS Current assets: Cash and cash equivalents $ 56,714 $ 49,544 Accounts and notes receivable, less allowance for doubtful accounts of $10,768 at August 31, 1994 and $10,005 at May 31, 1994 144,987 147,956 Inventories 17,798 20,202 Prepaid expenses and other current assets 35,768 34,527 Total current assets 255,267 252,229 Long-term notes receivable, less allowance for doubtful accounts of $14,831 at August 31, 1994 and $14,608 at May 31, 1994 83,323 84,944 Property and equipment, net 792,520 783,259 Intangible assets, net of accumulated amortization of $21,181 at August 31, 1994 and $19,336 at May 31, 1994 30,353 31,331 Other noncurrent assets, net 32,918 32,237 $1,194,381 $1,184,000
See accompanying Notes to Consolidated Financial Statements and Management's Discussion and Analysis of Financial Condition and Results of Operations. THE HILLHAVEN CORPORATION CONSOLIDATED BALANCE SHEETS August 31, 1994 and May 31, 1994 (In thousands, except share information)
August 31, May 31, 1994 1994 (unaudited) LIABILITIES & STOCKHOLDERS' EQUITY Current liabilities: Current portion of long-term debt $ 50,196 $ 43,427 Accounts payable 49,501 63,929 Employee compensation and benefits 47,701 52,444 Other accrued liabilities 59,539 56,282 Total current liabilities 206,937 216,082 Long-term debt 580,116 577,951 Other long-term liabilities 34,761 28,598 Stockholders' equity: Series C Preferred Stock, $.15 par value; 35,000 shares authorized, issued and outstanding (liquidation preference of $35,000) 5 5 Series D Preferred stock, $.15 par value; 300,000 shares authorized; 61,467 and 60,546 issued and outstanding at August 31, 1994 and May 31, 1994 (liquidation preference of $61,467) 9 9 Common stock, $.75 par value; 60,000,000 shares authorized; 27,181,960 and 27,172,694 issued and outstanding at August 31, 1994 and May 31, 1994 20,386 20,380 Additional paid-in capital 331,496 330,472 Retained earnings 22,951 13,714 Unearned compensation (2,280) (3,211) Net stockholders' equity 372,567 361,369 $1,194,381 $1,184,000
See accompanying Notes to Consolidated Financial Statements and Management's Discussion and Analysis of Financial Condition and Results of Operations. THE HILLHAVEN CORPORATION CONSOLIDATED STATEMENTS OF OPERATIONS Three Months Ended August 31, 1994 and 1993 (Unaudited) (In thousands, except per share)
1994 1993 Net operating revenues $ 375,833 $ 354,814 Expenses: General and administrative 322,837 303,142 Interest 11,988 14,245 Depreciation and amortization 13,876 13,565 Rent 12,667 12,852 Guarantee fees 1,375 2,451 Restructuring --- 1,679 Total expenses 362,743 347,934 Operating income 13,090 6,880 Interest income 3,333 3,890 Income before income taxes and extraordinary charge 16,423 10,770 Income tax expense 5,421 2,746 Income before extraordinary charge 11,002 8,024 Extraordinary charge - early extinguishment of debt, net of income taxes of $55 (122) --- Net income $ 10,880 $ 8,024 Income available to common stockholders (net income less preferred stock dividends) $ 9,237 $ 7,302 Primary income per common share: Income before extraordinary charge $ .34 $ .31 Extraordinary charge --- --- Net income $ .34 $ .31 Fully diluted income per common share: Income before extraordinary charge $ .31 Extraordinary charge --- Net income $ .31 N/A Weighted average common shares and equivalents outstanding Primary 27,373 23,338 Fully diluted 35,432 N/A
See accompanying Notes to Consolidated Financial Statements and Management's Discussion and Analysis of Financial Condition and Results of Operations. THE HILLHAVEN CORPORATION CONSOLIDATED STATEMENTS OF CASH FLOWS Three Months Ended August 31, 1994 and 1993 (Unaudited) (In thousands)
1994 1993 Net cash provided by operating activities (including changes in all operating assets and liabilities) $ 23,786 $ 21,047 Cash flows from investing activities: Purchases of property and equipment (11,291) (8,170) Purchase of previously leased nursing centers (3,923) (760) Proceeds from sales of property and equipment 3,115 331 Proceeds from collection of notes receivable 2,271 15,364 Investments in joint ventures and partnerships (518) --- Distributions from joint ventures and partnerships --- 96 Increase in other assets (392) (447) Net cash provided by (used in) investing activities (10,738) 6,414 Cash flows from financing activities: Net increase in borrowings under revolving lines of credit 10,000 --- Proceeds from long-term debt 4,313 2,177 Payments of principal on long-term debt (10,484) (1,716) Increase in intangible assets (320) (1,737) Other items (9,387) (16,114) Net cash used in financing activities (5,878) (17,390) Net increase in cash 7,170 10,071 Cash and cash equivalents at beginning of period 49,544 73,159 Cash and cash equivalents at end of period $ 56,714 $ 83,230 Supplemental disclosures: Cash paid for: Interest $ 5,996 $ 13,854 Income taxes 1,666 362 Long-term debt incurred in connection with purchase of previously leased properties --- 9,900 Financing for equipment purchases 2,535 ---
See accompanying Notes to Consolidated Financial Statements and Management's Discussion and Analysis of Financial Condition and Results of Operations. THE HILLHAVEN CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Dollars in thousands, except per share information) 1. The unaudited financial information furnished herein, in the opinion of management, reflects all adjustments which are necessary to state fairly the financial position, cash flows and results of operations of The Hillhaven Corporation ("Hillhaven" or "the Company") as of and for the periods indicated. Hillhaven presumes that users of the interim financial information herein have read or have access to the audited financial statements and Management's Discussion and Analysis of Financial Condition and Results of Operations for the preceding fiscal year and that the adequacy of additional disclosure needed for a fair presentation, except in regard to material contingencies, may be determined in that context. Accordingly, footnote and other disclosures which would substantially duplicate the disclosures contained in Hillhaven's most recent annual report to stockholders have been omitted. In December 1993, the Company announced the completion of its facility disposition program. Accordingly, the revenues and expenses related to facilities previously held for disposition and subsequently retained have been reclassified to ongoing operations in the consolidated statement of income for all periods presented. In addition, certain other reclassifications of prior year amounts have been made to conform to current year classifications. The financial information herein is not necessarily representative of a full year's operations. 2. The provision for doubtful accounts and notes receivable is included in general and administrative expenses. Provisions totalled $1,515 and $1,266 for the three months ended August 31, 1994 and 1993, respectively. 3. On September 30, 1994, the Company sold its 30% ownership interest in Evergreen Pharmaceutical, Inc. to Omnicare, Inc. As consideration for the sale the Company received shares of Omnicare, Inc. common stock with a market value at September 30, 1994 of $10,144. The Company is restricted from selling these shares until November 1994. Due to possible fluctuations in the market price of Omnicare, Inc. stock, the amount of gain to be ultimately realized cannot be determined; however the Company expects to record a net gain in the quarter ended November 30, 1994 of approximately $6,000 to $9,000. On October 10, 1994, the Company announced that it had signed a definitive agreement to acquire closely-held CPS Pharmaceutical Services, Inc. and Advanced Infusion Systems, Inc. based in Mountain View, California. The purchase price NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Dollars in thousands, except per share information) will be approximately $29,000, consisting of approximately 1.3 million shares of Hillhaven common stock, subject to certain adjustments, and will be accounted for as a pooling of interests. The transaction is expected to close on October 31, 1994. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (Dollars in thousands) The following material should be read in conjunction with the Consolidated Financial Statements of the Company and the related notes thereto. All references in this discussion and analysis to years are to fiscal years of the Company ended May 31 of such year. Results of Operations In the first quarter of 1995, Hillhaven realized net income of $10,880 compared to $8,024 in the prior year period. Income from operations before income taxes and extraordinary charges increased from $10,770 to $16,423 in the current quarter. Net operating revenues were $375,833 and $354,814 in the three months ended August 31, 1994 and 1993, respectively. The following table summarizes selected operating statistics.
At August 31, 1994 1993 Nursing Centers Number of nursing centers 273 284 Number of licensed beds 34,282 35,149 Centers managed for others 15 17 Pharmacy Outlets 56 82 Retirement Housing Communities 19 21
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (Dollars in thousands) The following table identifies the Company's sources of net operating revenues.
Three Months Ended August 31, 1994 1993 Percentage of net operating revenues: Nursing Centers: Long term care 60.6% 64.0% Subacute medical and rehabilitation 23.3 19.8 Other operating revenues 2.5 2.2 Total nursing centers 86.4 86.0 Pharmacies 11.3 11.9 Retirement Housing 2.3 2.1 Total 100.0% 100.0% Net patient revenues per patient day: Long term care $ 87.88 $ 83.29 Subacute medical and rehabilitation $257.87 $236.23 Combined $107.57 $ 98.38 Average number of beds available 34,243 35,142 Average occupancy 93.1% 93.4% Nursing center net operating revenues, comprised primarily of patient revenues, increased 6.5% in the 1995 first quarter to $324,825 from $304,993 in the prior year period. Patient revenues are affected by changes in Medicare and Medicaid reimbursement rates, private pay and other rates charged by Hillhaven, occupancy levels, the nature of services provided and the payor mix. Data for nursing center operations with respect to sources of net patient revenues and patient mix by payor type are set forth below. Included in private and other revenues are per diem amounts received from managed care contracts.
Net Patient Revenues Patient Census Three Months Ended Three Months Ended August 31, August 31, 1994 1993 1994 1993 Medicaid 48.2% 51.8% 65.9% 67.6% Private and other 27.1 26.6 23.5 23.1 Medicare 24.7 21.6 10.6 9.3
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (Dollars in thousands) In the past year, Hillhaven received rate increases from Medicare and Medicaid and increased its private pay rates. The Company is continuing its strategy of improving its quality mix of private pay and Medicare patients by expanding its subacute medical and rehabilitation programs and services. These higher revenue services include physical, occupational, speech and respiratory therapy and subacute care services, such as stroke therapy and wound care. The Company has increased the number of managed care contracts it maintains with insurance companies and other payors to provide subacute medical and rehabilitation care to their insureds, offering a less expensive alternative to acute care hospitals. The average daily number of managed care patients in Hillhaven's nursing centers, including long term care patients, was approximately 510 in the 1995 first quarter compared to 350 in 1994. Net operating revenues from pharmacy operations were $42,611 in the 1995 first quarter and $42,180 in the prior year quarter. Institutional revenues accounted for approximately 84% of pharmacy net operating revenues in the first quarter of 1995 versus 75% in the same period in 1994. The growing contribution from institutional operations reflects the Company's increasing focus on the nursing home market, disposition of retail outlets and continuing pricing pressure in the retail operations. The leases of the remaining 14 Wal-Mart outlets were terminated in the 1995 first quarter. Institutional revenues increased by 12.9% to $35,896 in the three months ended August 31, 1994 from $31,785 in the prior year period. This increase is the result of an increase in the number of nursing center beds serviced and higher sales volumes per bed. The increase in per bed sales reflects the Company's strategy of aggressively marketing higher margin ancillary products and services, such as respiratory and intravenous therapies and enteral and urological supplies. Net operating revenues from retirement housing operations amounted to $8,397 in the 1995 first quarter compared to $7,641 in the prior year period. This increase was due to improvements in average occupancy, which increased to 95.2% in the 1995 first quarter from 94.5% in the same period in 1994, and increases in rates charged. General and administrative expenses of the Company's nursing centers increased by 8.1% in the 1995 first quarter to $281,575 from $260,455 in 1994. These increases were attributable primarily to the expansion of subacute and medical rehabilitation services, as discussed previously. Labor and related benefits, which represented approximately 77% of nursing center general MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (Dollars in thousands) and administrative expenses in 1995, increased by 7.1% in 1995 to $217,274 from $202,872 in 1994. These increases were the result of an increase in the number of therapists in the Company's nursing centers to accommodate the increase in the number of medically complex patients, as well as general wage rate increases. Hillhaven employed approximately 3,600 therapists at August 31, 1994 compared to approximately 2,700 at August 31, 1993. Nursing wages and benefits, accounting for approximately 53% of total nursing center labor and benefit costs in the current period, increased by 2.3% to $114,886 in the three months ended August 31, 1994 from $112,341 in the prior year. The increases in the non-labor components of general and administrative expenses, including ancillary supplies, reflect the higher costs associated with caring for higher acuity patients. Nursing center supplies increased by 14.9% to $14,425 in the current quarter from $12,557 in the previous year. Combined interest and guarantee fee expense decreased by 20% in the 1995 first quarter to $13,363 from $16,696 in the prior year period. This decrease is due to the refinancing of certain of the Company's indebtedness as part of the recapitalization program completed in 1994. Liquidity and Capital Resources Hillhaven believes that it will generate sufficient cash to fund operations and meet its debt and lease obligations for the current fiscal year. Cash provided by operations in the quarter ended August 31, 1994 amounted to $23,786 compared to $21,047 in the prior year. The increase is due primarily to higher pretax earnings. Net cash used in investing activities amounted to $10,738 in the 1995 first quarter compared to $6,414 provided by investing activities in the prior year period. Cash provided in the three months ended August 31, 1993 included unscheduled payoffs of notes receivable totalling $14,311. In the 1995 first quarter, capital expenditures for routine replacements and refurbishment of facilities and capital additions amounted to $11,291, compared to $8,170 in the prior year period. Net cash used in financing activities decreased to $5,878 from $17,390 in the prior year quarter. In the current year period the Company utilized its available credit facilities to finance its operating activities. Such borrowings were not required in the prior year period. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (Dollars in thousands) The Company has an $85,000 revolving bank line of credit, the availability of which allows the Company to maintain lower cash balances and may facilitate repayments of higher-rate debt or provide cash for investment or other corporate purposes. At August 31, 1994, the revolving bank line of credit had an outstanding balance of $13,000. The Company also has an accounts receivable-backed revolving bank line of credit which provides for borrowings of up to $40,000, of which $35,000 was available at August 31, 1994. PART II. OTHER INFORMATION Item 1 Legal Proceedings On August 22, 1994, the Company was served with a lawsuit in the matter of Nita P. Heckendorn vs. The Hillhaven Corporation et. al. Ms. Heckendorn is a former director and officer of the Company. Ms. Heckendorn, who joined the Company in 1992, alleges breach of implied employment contract; discharge in violation of public policy (sex and ethnic discrimination); tortious interference with prospective economic advantage; and intentional infliction of emotional distress. The suit seeks damages for wages, earnings and other benefits, punitive damages, attorneys fees and costs of suit. The case has not been set for trial. The Company believes that Ms. Heckendorn's claims are without merit and intends to vigorously defend the case. Items 2 - 5 are not applicable. Item 6. Exhibits and Reports on Form 8-K (A) Exhibits: (11) Statement Re: Computation of per share earnings for the three months ended August 31, 1994 and 1993. (B) Reports filed on Form 8-K: None. 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 thereunto duly authorized. THE HILLHAVEN CORPORATION (Registrant) Date: August 11, 1995 /s/ Michael B. Weitz Michael B. Weitz* Vice President and Principal Accounting Officer * Michael B. Weitz is signing in the dual capacities as i) principal accounting officer, and ii) a duly authorized officer of the Company. EX-27 2
5 This schedule contains summary financial information extracted from The Consolidated Financial Statements of The Hillhaven Corporation at and for the Three Months Ended August 31, 1994 and the related notes thereto and is qualified in its entirety by reference to such financial statements. 1,000 3-MOS MAY-31-1995 AUG-31-1994 56,714 0 155,755 10,768 17,798 255,267 1,021,030 228,510 1,194,381 206,937 580,116 20,386 0 14 352,167 1,194,381 0 375,833 0 321,322 27,918 1,515 11,988 16,423 5,421 11,002 0 (122) 0 10,880 .34 .31
-----END PRIVACY-ENHANCED MESSAGE-----