-----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, a/3OIGhG9Shku3rkrv69/t71nBe/Ewt9kbFrsXKgpz9sePRFw7aXD3SEnvr79ZrZ 08bvaSCx0fDHN4cZOjRnjw== 0000912057-95-002460.txt : 19950417 0000912057-95-002460.hdr.sgml : 19950417 ACCESSION NUMBER: 0000912057-95-002460 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 4 CONFORMED PERIOD OF REPORT: 19950228 FILED AS OF DATE: 19950414 SROS: NYSE FILER: COMPANY DATA: COMPANY CONFORMED NAME: AMERICAN MEDICAL HOLDINGS INC CENTRAL INDEX KEY: 0000861439 STANDARD INDUSTRIAL CLASSIFICATION: SERVICES-HOSPITALS [8060] IRS NUMBER: 133527632 STATE OF INCORPORATION: DE FISCAL YEAR END: 0831 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 001-10511 FILM NUMBER: 95528942 BUSINESS ADDRESS: STREET 1: 8201 PRESTON RD SUITE 300 CITY: DALLAS STATE: TX ZIP: 75255 BUSINESS PHONE: 2143606300 MAIL ADDRESS: STREET 1: 8201 PRESTON RD STE 300 CITY: DALLAS STATE: TX ZIP: 75255 FILER: COMPANY DATA: COMPANY CONFORMED NAME: AMERICAN MEDICAL INTERNATIONAL INC /DE/ CENTRAL INDEX KEY: 0000312655 STANDARD INDUSTRIAL CLASSIFICATION: SERVICES-GENERAL MEDICAL & SURGICAL HOSPITALS, NEC [8062] IRS NUMBER: 952111054 STATE OF INCORPORATION: DE FISCAL YEAR END: 0831 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 001-07612 FILM NUMBER: 95528943 BUSINESS ADDRESS: STREET 1: 8201 PRESTON RD, SUITE 300 CITY: DALLAS STATE: TX ZIP: 75255 BUSINESS PHONE: 2143606300 10-Q 1 FORM 10-Q UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-Q (Mark One) /X/ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE QUARTERLY PERIOD ENDED FEBRUARY 28, 1995 OR / / TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from _______ to _______ AMERICAN MEDICAL HOLDINGS, INC. (Exact name of registrant as specified in its charter) Delaware 1-10511 13-3527632 (State or other (Commission file number) (I.R.S. Employer jurisdiction of Identification No.) incorporation or organization) AMERICAN MEDICAL INTERNATIONAL, INC. (Exact name of registrant as specified in its charter) Delaware 1-7612 95-2111054 (State or other (Commission file number) (I.R.S. Employer jurisdiction of Identification No.) incorporation or organization) 14001 N. Dallas Parkway, Dallas, Texas 75240 (Address of principal executive offices) (Zip code) (214) 789-2200 (Registrants' telephone number, including area code) Indicate by check mark whether the Registrants (1) have 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 Registrants were required to file such reports), and (2) have been subject to such filing requirements for the past 90 days. American Medical Holdings, Inc. Yes X No_. American Medical International, Inc. Yes X No _. As of February 28, 1995, there were 77,660,133 shares of American Medical Holdings, Inc. Common Stock, $.01 par value outstanding. All shares of Common Stock, $.01 par value, of American Medical International, Inc. are held by American Medical Holdings, Inc. AMERICAN MEDICAL HOLDINGS, INC. AND SUBSIDIARIES AMERICAN MEDICAL INTERNATIONAL, INC. AND SUBSIDIARIES TABLE OF CONTENTS PART I - FINANCIAL INFORMATION ITEM 1 - FINANCIAL STATEMENTS Condensed Consolidated Balance Sheets - February 28, 1995 and August 31, 1994 .......................... 1 Condensed Consolidated Statements of Operations - Three Months Ended February 28, 1995 and February 28, 1994 ..... 2 Condensed Consolidated Statements of Operations - Six Months Ended February 28, 1995 and February 28, 1994 ....... 3 Condensed Consolidated Statements of Cash Flows - Six Months Ended February 28, 1995 and February 28, 1994 ....... 4 Notes to Condensed Consolidated Financial Statements ........... 5 ITEM 2 - MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS .................. 8 PART II - OTHER INFORMATION ITEM 1 - LEGAL PROCEEDINGS .............................................. 13 ITEM 2 - CHANGES IN SECURITIES .......................................... 13 ITEM 3 - DEFAULTS UPON SENIOR SECURITIES ................................ 13 ITEM 4 - SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS ............ 13 ITEM 5 - OTHER INFORMATION .............................................. 13 ITEM 6 - EXHIBITS AND REPORTS ON FORM 8-K ............................... 13 SIGNATURES ..................................................... 14 PART I. FINANCIAL INFORMATION ITEM 1. FINANCIAL STATEMENTS AMERICAN MEDICAL HOLDINGS, INC. AND SUBSIDIARIES AMERICAN MEDICAL INTERNATIONAL, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED BALANCE SHEETS (IN THOUSANDS)
FEBRUARY 28, 1995 AUGUST 31, 1994 ---------------------- ---------------------- HOLDINGS AMI HOLDINGS AMI ---------- ---------- ---------- ---------- (UNAUDITED) ASSETS CURRENT ASSETS: Cash and cash equivalents $ 89,433 $ 89,433 $ 31,941 $ 31,941 Accounts receivable, net 195,707 195,707 147,415 147,415 Income taxes, net (including current portion of deferred income taxes) 15,325 15,325 30,876 30,876 Other current assets 81,018 81,018 78,577 78,577 ---------- ---------- ---------- ---------- Total current assets 381,483 381,483 288,809 288,809 ---------- ---------- ---------- ---------- PROPERTY AND EQUIPMENT 2,060,285 2,060,285 1,971,396 1,971,396 Less - accumulated depreciation 569,282 569,282 507,653 507,653 ---------- ---------- ---------- ---------- Net property and equipment 1,491,003 1,491,003 1,463,743 1,463,743 ---------- ---------- ---------- ---------- NOTES RECEIVABLE AND INVESTMENTS 37,362 37,362 40,082 40,082 COST IN EXCESS OF NET ASSETS ACQUIRED, NET 1,152,300 1,152,300 1,153,887 1,153,887 OTHER ASSETS 60,202 60,202 30,026 30,026 ---------- ---------- ---------- ---------- $3,122,350 $3,122,350 $2,976,547 $2,976,547 ========== ========== ========== ========== LIABILITIES AND SHAREHOLDERS' EQUITY CURRENT LIABILITIES $ 428,526 $ 428,526 $ 476,464 $ 476,464 LONG-TERM DEBT 1,321,069 1,321,069 1,130,967 1,130,967 CONVERTIBLE SUBORDINATED DEBT 10,456 10,456 10,707 10,707 DEFERRED INCOME TAXES 211,452 211,452 218,651 218,651 OTHER DEFERRED CREDITS AND LIABILITIES 309,296 309,296 291,040 291,040 COMMITMENTS AND CONTINGENCIES SHAREHOLDERS' EQUITY: Common stock 777 725 775 725 Additional paid-in capital 610,346 594,746 608,096 592,494 Retained earnings 235,999 251,651 245,547 261,199 Adjustment for minimum pension liability (5,700) (5,700) (5,700) (5,700) Translation Adjustment 129 129 - - ---------- ---------- ---------- ---------- Total shareholders' equity 841,551 841,551 848,718 848,718 ---------- ---------- ---------- ---------- $3,122,350 $3,122,350 $2,976,547 $2,976,547 ========== ========== ========== ==========
SEE ACCOMPANYING NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS. 1 AMERICAN MEDICAL HOLDINGS, INC. AND SUBSIDIARIES AMERICAN MEDICAL INTERNATIONAL, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (IN THOUSANDS, EXCEPT PER SHARE AMOUNTS) (UNAUDITED)
THREE MONTHS ENDED FEBRUARY 28, ----------------------------------------- 1995 1994 ------------------- ------------------- HOLDINGS AMI HOLDINGS AMI -------- -------- -------- -------- NET REVENUES $667,923 $667,923 $583,339 $583,339 OPERATING COSTS AND EXPENSES: Salaries and benefits 245,263 245,263 210,390 210,390 Supplies 96,411 96,411 83,130 83,130 Provision for uncollectible accounts 48,962 48,962 38,281 38,281 Depreciation and amortization 41,375 41,375 38,689 38,689 Merger costs 73,900 73,900 - - Other operating costs 140,777 140,777 131,049 131,049 -------- -------- -------- -------- Total operating costs and expenses 646,688 646,688 501,539 501,539 -------- -------- -------- -------- OPERATING INCOME 21,235 21,235 81,800 81,800 Interest expense, net (39,150) (39,150) (38,092) (38,092) -------- -------- -------- -------- INCOME (LOSS) BEFORE TAXES AND MINORITY EQUITY INTEREST (17,915) (17,915) 43,708 43,708 Provision for income taxes (6,000) (6,000) (18,500) (18,500) -------- -------- -------- -------- NET INCOME (LOSS) BEFORE MINORITY EQUITY INTEREST (23,915) (23,915) 25,208 25,208 Minority equity interest (924) (924) (931) (931) -------- -------- -------- -------- NET INCOME (LOSS) $(24,839) $(24,839) $ 24,277 $ 24,277 ======== ======== ======== ======== PER SHARE DATA: Net income (loss) per common and common equivalent share $ (0.32) N/A $ 0.32 N/A ======== ======== Shares used for computation of net income (loss) per share 77,647 N/A 77,058 N/A ======== ========
SEE ACCOMPANYING NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS. 2 AMERICAN MEDICAL HOLDINGS, INC. AND SUBSIDIARIES AMERICAN MEDICAL INTERNATIONAL, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (IN THOUSANDS, EXCEPT PER SHARE AMOUNTS) (UNAUDITED)
SIX MONTHS ENDED FEBRUARY 28, ------------------------------------------------- 1995 1994 ----------------------- ----------------------- HOLDINGS AMI HOLDINGS AMI ---------- ---------- ---------- ---------- NET REVENUES $1,300,134 $1,300,134 $1,141,556 $1,141,556 OPERATING COSTS AND EXPENSES: Salaries and benefits 482,188 482,188 415,804 415,804 Supplies 188,202 188,202 162,612 162,612 Provision for uncollectible accounts 91,084 91,084 77,317 77,317 Depreciation and amortization 82,465 82,465 76,962 76,962 Merger costs 73,900 73,900 - - Other operating costs 280,977 280,977 257,703 257,703 ---------- ---------- ---------- ---------- Total operating costs and expenses 1,198,816 1,198,816 990,398 990,398 ---------- ---------- ---------- ---------- OPERATING INCOME 101,318 101,318 151,158 151,158 Interest expense, net (78,425) (78,425) (76,940) (76,940) ---------- ---------- ---------- ---------- INCOME BEFORE TAXES AND MINORITY EQUITY INTEREST 22,893 22,893 74,218 74,218 Provision for income taxes (23,100) (23,100) (31,400) (31,400) ---------- ---------- ---------- ---------- NET INCOME (LOSS) BEFORE MINORITY EQUITY INTEREST (207) (207) 42,818 42,818 Minority equity interest (1,586) (1,586) (2,028) (2,028) ---------- ---------- ---------- ---------- NET INCOME (LOSS) $ (1,793) $ (1,793) $ 40,790 $ 40,790 ========== ========== ========== ========== PER SHARE DATA: Net income (loss) per common and common equivalent share $ (0.02) N/A $ 0.53 N/A ========== ========== Shares used for computation of net income (loss) per share 77,607 N/A 76,998 N/A ========== ==========
SEE ACCOMPANYING NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS. 3 AMERICAN MEDICAL HOLDINGS, INC. AND SUBSIDIARIES AMERICAN MEDICAL INTERNATIONAL, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (IN THOUSANDS) (UNAUDITED)
SIX MONTHS ENDED FEBRUARY 28, ------------------------------------------- 1995 1994 ---------------------- ------------------ HOLDINGS AMI HOLDINGS AMI --------- --------- -------- -------- CASH FLOWS FROM OPERATING ACTIVITIES: Net income (loss) $ (1,793) $ (1,793) $ 40,790 $ 40,790 Adjustments to reconcile to net cash provided by operating activities: Merger costs 73,900 73,900 - - Depreciation and amortization 82,465 82,465 76,962 76,962 Deferred income taxes (7,200) (7,200) - - Amortization of debt discount, deferred financing costs and non-cash interest 25,264 25,264 24,716 24,716 Change in working capital (18,943) (18,943) (33,706) (33,706) (Increase) decrease in other liabilities 5,222 5,222 (10,274) (10,274) Other (6,654) (6,654) (761) (761) --------- --------- -------- -------- NET CASH PROVIDED BY OPERATING ACTIVITIES 152,261 152,261 97,727 97,727 --------- --------- -------- -------- CASH FLOWS FROM FINANCING ACTIVITIES: Payments on debt (154,507) (154,507) (32,509) (32,509) Revolving credit facility 172,000 172,000 (29,000) (29,000) Cash dividends (7,755) (7,755) - - Other 2,116 2,116 1,990 1,990 --------- --------- -------- -------- NET CASH PROVIDED BY (USED IN) FINANCING ACTIVITIES 11,854 11,854 (59,519) (59,519) --------- --------- -------- -------- CASH FLOWS FROM INVESTING ACTIVITIES: Property and equipment additions (72,193) (72,193) (53,707) (53,707) Acquisitions (23,151) (23,151) - - Increase in other assets (17,240) (17,240) (3,441) (3,441) Increase in notes receivable and investments (3,468) (3,468) (3,339) (3,339) Decrease in notes receivable and investments 10,802 10,802 4,772 4,772 Other (1,373) (1,373) 1,710 1,710 --------- --------- -------- -------- NET CASH USED IN INVESTING ACTIVITIES (106,623) (106,623) (54,005) (54,005) --------- --------- -------- -------- INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS 57,492 57,492 (15,797) (15,797) Cash and cash equivalents, beginning of period 31,941 31,941 44,335 44,335 --------- --------- -------- -------- CASH AND CASH EQUIVALENTS, END OF PERIOD $ 89,433 $ 89,433 $ 28,538 $ 28,538 ========= ========= ======== ========
SEE ACCOMPANYING NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS. 4 AMERICAN MEDICAL HOLDINGS, INC. AND SUBSIDIARIES AMERICAN MEDICAL INTERNATIONAL, INC. AND SUBSIDIARIES NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) 1. BASIS OF PRESENTATION American Medical Holdings, Inc. ("Holdings") was organized in July 1989 to acquire American Medical International, Inc. ("AMI" and, together with Holdings, the "Company"). As a result of this acquisition, Holdings is the owner of all of the outstanding shares of common stock of AMI. The accompanying unaudited condensed consolidated financial statements include the accounts of Holdings, AMI and all majority owned subsidiary companies and have been prepared in accordance with generally accepted accounting principles for interim financial information. In the opinion of management, all adjustments, consisting only of normal recurring adjustments necessary for a fair presentation, have been included in the accompanying interim financial statements. The condensed consolidated balance sheet as of August 31, 1994, was derived from the audited financial statements, but does not include all disclosures required by generally accepted accounting principles. All significant intercompany accounts and transactions have been eliminated. Certain reclassifications have been made to the prior period's financial statements to be consistent with the current year presentation. For additional disclosure, refer to Holdings' and AMI's Annual Report on Form 10-K for the year ended August 31, 1994. 2. MERGER OF THE COMPANY AND NATIONAL MEDICAL ENTERPRISES, INC. On October 10, 1994, Holdings, National Medical Enterprises, Inc. a Nevada corporation ("NME") and a wholly-owned subsidiary of NME executed an agreement and plan of merger (the "Merger Agreement"). On March 1, 1995, under terms of the Merger Agreement, NME acquired all of the outstanding shares of common stock of Holdings for approximately $1.5 billion in cash and approximately 33.2 million shares of NME's common stock valued at approximately $489 million. The shares of NME's common stock include the buyout of employee stock options which were issued to certain of the Company's executives and shares issuable upon the conversion of the 9 1/2% convertible subordinated debentures, due 2001. On February 28, 1995 Holdings, under terms of the Merger Agreement paid a special dividend of $0.10 per share to stockholders of record on February 10, 1995. As a result of the Merger, Holdings became a wholly-owned subsidiary of NME and as of March 1, 1995, the combined company began doing business as Tenet Healthcare Corporation, Inc. ("Tenet"). Tenet is the second-largest healthcare services company in the nation. The Merger was approved by shareholders owning approximately 61.4% of Holdings' outstanding shares of common stock and, therefore, further action by Holdings' shareholders was not required. (See Note 5 for a discussion of debt repayments by NME.) In connection with the Merger, the Company incurred non-recurring merger costs of approximately $73.9 million ($55.2 million, net of tax), principally related to the buyout of employee stock options, employee benefit costs and professional fees. 3. ACCOUNTS RECEIVABLE As of February 28, 1995, and August 31, 1994, Holdings and AMI had reserves for uncollectible receivables of $104.9 million and $98.6 million, respectively. 4. COST IN EXCESS OF NET ASSETS ACQUIRED Cost in excess of net assets acquired is amortized over 40 years. Holdings' and AMI's cumulative amortization of cost in excess of net assets acquired as of February 28, 1995 and August 31, 1994, was $173.5 million and 5 AMERICAN MEDICAL HOLDINGS, INC. AND SUBSIDIARIES AMERICAN MEDICAL INTERNATIONAL, INC. AND SUBSIDIARIES NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) (UNAUDITED) 4. COST IN EXCESS OF NET ASSETS ACQUIRED (CONTINUED) $157.2 million, respectively. Amortization of cost in excess of net assets acquired for Holdings and AMI was $8.2 million and $8.0 million for the three months ended February 28, 1995 and 1994, respectively. Amortization of cost in excess of net assets acquired for Holdings and AMI was $16.3 million and $16.0 million for the six months ended February 28, 1995 and 1994, respectively. 5. LONG-TERM DEBT As of February 28, 1995, $438.0 million was outstanding under the Company's $600 million revolving credit facility which expires in September 1999 and presently accrues interest at 8.03%. In addition, as of February 28, 1995 $31.8 million in letters of credit were issued thereunder. In connection with the Merger, and subsequent to February 28, 1995, Tenet repaid approximately $1.2 billion of the Company's outstanding indebtedness as of April 3, 1995. Repayments made by Tenet on the principal amount of the Company's outstanding indebtedness are summarized as follows (in thousands): $600 million Revolving Credit Facility $ 438,000 11 1/4% Senior notes, due 1995 47,793 11% Senior notes, due 2000 98,110 6 1/2% Swiss franc/dollar dual currency senior notes, due 1997 58,418 5% Swiss franc bonds, due 1996 45,391 Zero Coupon Guaranteed Bonds, due 1997 14,327 Zero Coupon Guaranteed Bonds, due 2002 16,986 9 1/2% Senior Subordinated Notes, due 2006 150,000 13 1/2% Senor Subordinated Notes, due 2001 178,512 15% Junior Subordinated Discount Debentures, due 2005 90,195 9 1/2% Convertible Subordinated Debentures, due 2001, 4,536 8 1/4% Convertible Subordinated Debentures, due 2008 14,456 ---------- $1,156,724 ==========
In addition, the Company's $600 million revolving credit facility was cancelled upon repayment of the outstanding principle and accrued interest. 6. COMMITMENTS AND CONTINGENCIES Holdings and AMI are subject to claims and suits arising in the ordinary course of business. In the opinion of management, the ultimate resolution of all pending legal proceedings will not have a material adverse effect on the business, results of operations, cash flows or financial condition of Holdings or AMI. 6 AMERICAN MEDICAL HOLDINGS, INC. AND SUBSIDIARIES AMERICAN MEDICAL INTERNATIONAL, INC. AND SUBSIDIARIES NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) (UNAUDITED) 7. CAPITAL STOCK As of February 28, 1995, Holdings had 200 million shares of $0.01 par value common stock authorized. Of such shares, 77,660,133 and 77,491,000 were outstanding as of February 28, 1995, and August 31, 1994, respectively. Holdings, under terms of the Merger Agreement, paid a special dividend of $0.10 per share, on February 28, 1995, to stockholders of record on February 10, 1995. As of February 28, 1995, Holdings had five million shares of $0.01 par value of Preferred Stock authorized, of which none were outstanding. As a result of the Merger, NME is the owner of all outstanding shares of common stock of Holdings. Holdings is the owner of all outstanding shares of common stock of AMI. As of February 28, 1995, and August 31, 1994, AMI had 200 million shares of $0.01 par value common stock authorized of which 72,481,000 shares were outstanding. 8. NET REVENUES The Company's sources of revenues are primarily provided from patient services and are presented net of reserves to recognize the difference between the hospitals' established billing rates for covered services and the amount paid by third party or private payers. Patient revenues received under government and privately sponsored insurance programs are based on cost as defined under the programs or at predetermined rates based upon the diagnosis, plus capital costs, return on equity, and other adjustments rather than customary charges. Adjustments are recorded in the period services are rendered based on estimated amounts to be reimbursed and contract interpretations, however, such adjustments are generally subject to final audit and settlement. Net revenues include adjustments for the three and six months ended February 28, 1995 and 1994 of $585.1 million, $1,161.4 million, $546.8 million and $1,037.4 million, respectively. In management's opinion, the reserves established are adequate to cover the ultimate liabilities that may result from final settlements. Net revenues from Medicare/Medicaid programs represented 46% and 41% of total net revenues for the six months ended February 28, 1995 and 1994, respectively. The Company's net revenues from contracted business represented 25% of total net revenues for the six months ended February 28, 1995 and 1994, respectively. 9. MINORITY EQUITY INTEREST Minority equity interest expense of $1.3 million and $1.5 million for the three months ended February 28, 1995 and 1994, respectively and $2.4 million and $3.3 million for the six months ended February 28, 1995 and 1994, respectively, is presented net of income taxes in the accompanying condensed consolidated statements of operations. 10. SUPPLEMENTAL CASH FLOW INFORMATION The Company paid income taxes (net of refunds) of $13.9 million and $36.1 million for the six months ended February 28, 1995 and 1994, respectively. The Company paid interest (net of capitalized costs) for the six months ended February 28, 1995 and 1994 of $68.2 million and $50.6 million, respectively. Capitalized interest costs were $1.2 million and $2.0 million for the six months ended February 28, 1995 and 1994, respectively. Interest income was $2.0 million and $1.3 million for the six months ended February 28, 1995 and 1994, respectively. In conjunction with the acquisition of Hilton Head Hospital in September 1994 by a limited partnership, of which a wholly-owned subsidiary of AMI is general partner, the Company recorded net assets of $14.6 million. 7 Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS LIQUIDITY AND CAPITAL RESOURCES The Company's cash and cash equivalents at February 28, 1995 were $89.4 million compared to $31.9 million at August 31, 1994. The increase of $57.5 million was primarily due to cash and short-term cash investments required for certain costs related to the completion of the merger transaction between the Company and National Medical Enterprises, Inc. ("NME") subsequent to February 28, 1995 (the "Merger"). Accounts receivable of $195.7 million at February 28, 1995 increased $48.3 million from $147.4 million at August 31, 1994 while the income tax receivable decreased $15.6 million to $15.3 million at February 28, 1995 from $30.9 million at August 31, 1994. The addition of a hospital, growth in net revenues, and a decrease in the amount of receivables collected during the period were the primary components of the increase in accounts receivable at February 28, 1995. The decrease in the income tax receivable is primarily due to the current income tax provision. Current liabilities at February 28, 1995 of $428.5 million decreased $48.0 million from $476.5 million at August 31, 1994, largely as a result of payments on the current portion of long-term debt which was partially offset by a reserve for merger related costs. The changes discussed above in the working capital accounts resulted in a reduction in the working capital deficit; at February 28, 1995 the working capital deficit of $47.0 million compared to a working capital deficit of $187.6 million at August 31, 1994. The decrease in the working capital deficit at February 28, 1995, along with the improved results of operation (excluding merger costs), increased the cash provided by operating activities to $152.3 million for the six months ended February 28, 1995 compared to $97.7 million for the six months ended February 28, 1994. The funding contribution of the Company's pension plan assets and acquisition related transactions resulted in other long term assets of $60.2 million at February 28, 1995 compared to $30.0 million at August 31, 1994. The Company invested $72.2 million in capital expenditures (excluding acquisitions) for the six months ended February 28, 1995, compared to $53.7 million for the six months ended February 28, 1994. Capital expenditures made by the Company and construction commitments outstanding of approximately $44.5 million are for the expansion and renovations of facilities to accommodate new inpatient and outpatient programs and to further develop certain lines of business, including home health, surgery centers and physician practices. Cash of $23.2 million was used during the six months ended February 28, 1994 for the acquisition of healthcare related facilities and an investment in a limited partnership, of which a wholly-owned subsidiary of AMI is general partner, which acquired a hospital in Hilton Head, South Carolina. In September 1994, the Company entered into a joint venture agreement with a community organization (the "Burgergemeinde") located in Cham, Canton Zug, Switzerland. The joint venture is owned 90% by the Company and 10% by the Burgergemeinde. Under the terms of the transaction, the Company entered into a long term lease for the land where the existing hospital is located and will construct a new 56 bed acute care wing, convert an existing structure into a medical office building and renovate and remodel the existing acute care facility. In addition, the Company plans to contract to provide management, food, physical therapy and rehabilitation services to the hospital, an on-site nursing home and an affiliated retirement community. The Company repaid (excluding repayments on the Company's $600 million revolving credit facility) $154.5 million of long-term debt during the six months ended February 28, 1995 from cash provided by operating activities, short-term cash investments and borrowings under the Company's $600 million revolving credit facility. The Company's repayments on long-term debt include (i) $88.8 million for the redemption of the remaining principal amount of the 11 3/8% senior debt due February 1, 1995 (ii) $62.7 million for the redemption of the 11 1/4% senior notes due February 3, 1995 (L37 million face value), and (iii) $3 million in other long-term debt. The amount outstanding under the Company's $600 million revolving credit facility at February 28, 1995 was $438.0 million, an increase of $172.0 million from $266.0 million at August 31, 1994. The increase in the $600 million revolving credit facility was primarily for the repayments made on long-term debt. 8 The terms of certain indebtedness of the Company imposed operating and financial restrictions requiring the Company to maintain certain financial ratios and restrict the Company's ability to incur additional indebtedness and enter into leases and guarantees of debt; to make capital expenditures; to make loans and investments; to pay dividends or repurchase shares of stock; to repurchase, retire or refinance indebtedness prior to maturity; and to purchase or sell assets. The Company has pledged the capital stock of certain direct (first tier) subsidiaries as security for its obligations under the revolving credit facility and certain other senior indebtedness. In addition, the Company granted a security interest in its accounts receivable as security for its obligations under the revolving credit facility. Management believes that the Company is currently in compliance with all material covenants and restrictions contained in all financing agreements. Subsequent to February 28, 1995 and in connection with the Merger on March 1, 1995 to form Tenet Healthcare Corporation, certain of the Company's long-term debt was repaid. In addition, the Company's $600 million revolving credit facility was cancelled upon repayment of the outstanding principal and accrued interest. As the result of such repayments and the cancellation of the $600 million revolving credit facility, the operating and financial restrictions required by such indebtedness are no longer in place. 9 RESULTS OF OPERATIONS AMI's results of operations are the same as that of the Company's; therefore, separate results of operations and a discussion and analysis for AMI are not presented. The following table summarizes certain consolidated results of the Company (dollars in millions):
SIX MONTHS ENDED FEBRUARY 28, --------------------------------------- 1995 1994 ------------------ ------------------ % OF NET % OF NET REVENUES REVENUES -------- -------- NET REVENUES $1,300.1 100.0% $1,141.5 100.0% OPERATING COSTS AND EXPENSES Salaries and benefits 482.2 37.1 415.8 36.4 Supplies 188.2 14.5 162.6 14.2 Provision for uncollectible accounts 91.1 7.0 77.3 6.8 Depreciation and amortization 82.5 6.3 77.0 6.7 Merger costs 73.9 5.7 - - Other operating costs 280.9 21.6 257.7 22.7 -------- ----- -------- ----- Total operating costs and expenses 1,198.8 92.2 990.4 86.8 -------- ----- -------- ----- OPERATING INCOME 101.3 7.8 151.1 13.2 Interest expense, net (78.4) (6.0) (76.9) (6.7) -------- ----- -------- ----- INCOME BEFORE TAXES AND MINORITY EQUITY INTEREST 22.9 1.8 74.2 6.5 Provision for income taxes (23.1) (1.8) (31.4) (2.7) -------- ----- -------- ----- INCOME (LOSS) BEFORE MINORITY EQUITY INTEREST (0.2) 0.0 42.8 3.8 Minority equity interest (1.6) (0.1) (2.0) (0.2) -------- ----- -------- ----- NET INCOME (LOSS) $ (1.8) (0.1)% $ 40.8 3.6% ======== ===== ======== =====
The following table sets forth certain operating statistics of the Company's hospitals for the six months ended February 28, 1995 and 1994:
OPERATING STATISTICS (1): 1995 1994 --------- --------- Admissions 127,947 118,728 Equivalent Admissions (2) 178,358 160,926 Outpatient Visits 1,412,613 1,081,860 Patient days 769,147 695,102 Equivalent patient days (2) 1,048,608 932,055 Licensed beds occupancy rate 47.2% 47.2% Licensed beds at end of period 9,002 8,131 - ---------------------- (1) Represents statistics for hospitals only and has not been adjusted to include statistics for related healthcare entities. (2) Represents actual admissions/patient days as adjusted to include outpatient and emergency room services by adding to actual admissions/ patient days an amount derived by dividing outpatient and emergency room revenue by inpatient revenue per admission/patient days.
10 The results of operations for the six months ended February 28, 1995 include the results of operations of Saint Francis Hospital and Hilton Head Hospital which were acquired May 1, 1994 and September 1, 1994, respectively, and therefore, are not included in the results of operations for the six months ended February 28, 1994. For the six months ended February 28, 1995, Saint Francis Hospital and Hilton Head Hospital contributed approximately 59% of the increase in net revenues and 63% of the increase in operating expenses (excluding merger costs), primarily in salaries and benefits and supplies, over the same period of the prior year. Operating expenses of $1,198.8 million for the six months ended February 28, 1995 include non-recurring merger costs of $73.9 million incurred in connection with the Merger. Excluding these merger costs, operating expenses of $1,124.9 million for the six months ended February 28, 1995 remained stable as a percentage of net revenue at 86.5% when compared to the six months ended February 28, 1994 of 86.8%. Operating income, excluding merger costs, increased to $175.2 million for the six months ended February 28, 1995 from $151.1 million for the six months ended February 28, 1994, resulting in an operating margin of 13.5% for the six months ended February 28, 1995 compared to 13.2% for the six months ended February 28, 1994. While the additional revenues recognized from the acquisition of two hospitals contributed primarily to the growth in the reported net revenues and volume, the Company's historical hospitals experienced an increase in net revenues from growth in volume from outpatient care from existing services and the expansion of such services, and general price increases passed on for patient care services. The growth in outpatient volume of 30.6% recognized from February 28, 1995 compared to February 28, 1994 resulted in an increase in net revenues from outpatient services, 30.4% of the Company's net patient revenues for the six months ended February 28, 1995 compared to net revenues of 28.7% from such sources for the six months ended February 28, 1994. The increase in admissions of 7.8% for the six months ended February 28, 1995 from the six months ended February 28, 1994 was due to the addition of Saint Francis Hospital and Hilton Head Hospital. Net revenues derived from Medicare/Medicaid programs are a significant portion of the Company's net revenues, comprising 45.8% of the Company's net revenues for the six months ended February 28, 1995. This portion of the Company's net revenues has increased when compared to the six months ended February 28, 1994 (41.4% of net revenues) as an increasing portion of the population continues to qualify for coverage under such programs and as a result of the impact of the payer mix of the two additional hospitals. Net revenues derived from non-contracted sources for the six months ended February 28, 1995 and 1994 were 25.4% and 30.2% of net revenues, respectively. Net revenues derived from contracted sources for the six months ended February 28, 1995 and 1994 were 25.2% and 25.1% of net revenues, respectively. Net revenues from other sources for the six months ended February 28, 1995 and 1994 contributed 3.6% and 3.3%, respectively to the Company's net revenues. The tax provision for the six months ended February 28, 1995 and 1994 is greater than that which would occur using the Company's marginal tax rate against its income before taxes and minority equity interest, due in large part to the amortization of cost in excess of net assets acquired and certain merger costs not being deductible for tax provision purposes. A significant portion of the Company's operating costs and expenses are subject to inflationary increases. Since the healthcare industry is labor intensive, salaries and benefits are continually affected by inflation. The Company's ability to pass on a certain portion of the increased costs associated with providing healthcare to Medicare/Medicaid patients may be limited by existing government reimbursement programs for healthcare services unless the federal and state governments correspondingly increase the rates of payments under these programs. Although the Company cannot predict its ability to continue to cover future cost increases, management believes that through the continued adherence to its cost containment programs, labor management and reasonable price increases, inflation is not expected to have a material adverse effect on operating margins. Healthcare reform proposals have been introduced in Congress and in state legislatures that could effect changes in the healthcare delivery system, either at the national or state level. Among the proposals considered by such legislatures are healthcare coverage for an increasing percentage of the U.S. population, cost controls on healthcare providers, insurance market reforms to increase the availability of group health insurance to small businesses, requirements that all businesses offer health insurance coverage to their employees, managed care programs for 11 Medicare patients and the creation of a single government health insurance plan (to reduce administrative costs) that would cover all citizens. Although none of these proposals have been adopted, a broad range of both similar and more comprehensive healthcare reform is likely to be considered by all states, with some states having already implemented some type of healthcare reform. Management believes that some form of federal healthcare reform may occur; however, until such reform is finalized, management cannot predict which proposals will be adopted, if any, and until adopted the impact of any such proposals on the Company's business, results of operations, cash flows or financial condition. 12 PART II. OTHER INFORMATION ITEM 1. LEGAL PROCEEDINGS No material developments in the Company's legal proceedings have occurred since the reporting of legal proceedings in the Company's Annual Report on Form 10-K for the year ended August 31, 1994. ITEM 2. CHANGES IN SECURITIES Not applicable. ITEM 3. DEFAULTS UPON SENIOR SECURITIES Not applicable. ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS Not applicable. ITEM 5. OTHER INFORMATION Not applicable. ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K (a) EXHIBITS 11 Computations of earnings per share. 27.1 Financial data schedule for American Medical Holdings, Inc. 27.2 Financial data schedule for American Medical International, Inc. (b) REPORTS ON FORM 8-K None. 13 SIGNATURES ----------- Pursuant to the requirements of the Securities Exchange Act of 1934, each registrant has duly caused this report to be signed on its behalf by undersigned thereunto duly authorized. AMERICAN MEDICAL HOLDINGS, INC. Date: April 14, 1995 By: RAYMOND L. MATHIASEN ----------------------------------------- Raymond L. Mathiasen Senior Vice President Chief Financial Officer AMERICAN MEDICAL INTERNATIONAL, INC. Date: April 14, 1995 By: RAYMOND L. MATHIASEN ----------------------------------------- Raymond L. Mathiasen Senior Vice President Chief Financial Officer 14 EX-11 2 EXHIBIT 11 EXHIBIT 11 AMERICAN MEDICAL HOLDINGS, INC. COMPUTATIONS OF EARNINGS PER SHARE (IN THOUSANDS, EXCEPT FOR PER SHARE AMOUNTS)
THREE MONTHS ENDED SIX MONTHS ENDED FEBRUARY 28, FEBRUARY 28, -------------------- ------------------- 1995 1994 1995 1994 -------- ------- ------- ------- SIMPLE Net income (loss) $(24,839) $24,277 $(1,793) $40,790 ======== ======= ======= ======= Average outstanding shares 77,647 77,058 77,607 76,998 ======== ======= ======= ======= Simple net income (loss) per share $ (0.32) $ 0.32 $ (0.02) $ 0.53 ======== ======= ======= ======= PRIMARY Net income (loss) $(24,839) $24,277 $ (1,793) $40,790 Adjustment for interest on debentures, net of tax 72 72 146 143 -------- ------- ------- ------- Net income (loss) for primary $(24,767) $24,349 $ (1,647) $40,933 ======== ======= ======= ======= Average outstanding shares 77,647 77,058 77,607 76,998 Common stock equivalents assuming exercise of stock options 1,907 1,833 1,866 1,698 Common stock equivalents assuming conversion of debentures 186 210 186 210 -------- ------- ------- ------- Shares for primary 79,740 79,101 79,659 78,906 ======== ======= ======= ======= Primary net income (loss) per share $ (0.31)(1) $ 0.31(1) $ (0.02)(1) $ 0.52(1) ======== ======= ======= ======= FULLY-DILUTED Net income (loss) for primary $(24,767) $24,349 $(1,647) $40,933 Adjustment for interest on debentures, net of tax 154 133 307 266 -------- ------- ------- ------- Net income (loss) for fully-diluted $(24,613) $24,482 $(1,340) $41,199 ======== ======= ======= ======= Shares for primary 79,740 79,101 79,659 78,906 Common stock equivalents assuming additional conversion of debentures and exercise of stock options 416 414 457 573 -------- ------- ------- ------- Shares for fully-diluted 80,156 79,515 80,116 79,479 ======== ======= ======= ======= Fully-diluted net income (loss) per share $ (0.31)(1) $ 0.31(1) $ (0.02)(1) $ 0.52(1) ======== ======= ======= ======= ____________________ (1) The calculations for primary net income per share and fully-diluted net income per share are submitted in accordance with Regulation S-K Item 601(b)(11) although it is contrary to paragraph 40 of APB Opinion No. 15 because it produces either no dilutive effect or the effect on dilution is not material.
EX-27.1 3 FDS FOR AMERICAN MEDICAL HOLDINGS
5 ITEM 1, FINANCIAL STATEMENTS ON FORM 10-Q FOR AMERICAN MEDICAL HOLDINGS, INC. 0000861439 AMERICAN MEDICAL HOLDINGS, INC. 1,000 6-MOS AUG-31-1995 SEP-01-1994 FEB-28-1995 89433 0 195707 104857 64804 381483 2060285 569282 3122350 428526 1331525 777 0 0 840774 3122350 0 1300134 0 1198816 0 91084 78425 22893 (23100) (207) 0 0 0 (1793) (0.02) (0.02)
EX-27.2 4 FDS FOR AMERICAN MEDICAL INTERNATIONAL
5 Item 1, Financial Statements on Form 10-Q for American Medical Interantional, Inc. 0000312655 AMERICAN MEDICAL INTERNATIONAL, INC. 1,000 6-MOS AUG-31-1995 SEP-01-1994 FEB-28-1995 89433 0 195707 104857 64804 381483 2060285 569282 3122350 428526 1331525 725 0 0 840826 3122350 0 1300134 0 1198816 0 91084 78425 22893 (23100) (207) 0 0 0 (1793) 0 0
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