-----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, RgENYFImIIt3OTddzw+Kf3BM9+hDTc+EcAZG5ZFYsKS450sM28OeHUmeavIlMNLP fAEJGQifQ9BQiESB9bFQAQ== 0000904456-98-000171.txt : 19980624 0000904456-98-000171.hdr.sgml : 19980624 ACCESSION NUMBER: 0000904456-98-000171 CONFORMED SUBMISSION TYPE: 10-Q/A PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 19980331 FILED AS OF DATE: 19980623 SROS: AMEX FILER: COMPANY DATA: COMPANY CONFORMED NAME: HANGER ORTHOPEDIC GROUP INC CENTRAL INDEX KEY: 0000722723 STANDARD INDUSTRIAL CLASSIFICATION: ORTHOPEDIC, PROSTHETIC & SURGICAL APPLIANCES & SUPPLIES [3842] IRS NUMBER: 840904275 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q/A SEC ACT: SEC FILE NUMBER: 001-10670 FILM NUMBER: 98652533 BUSINESS ADDRESS: STREET 1: 7700 OLD GEORGETOWN RD 2ND FL CITY: BETHESDA STATE: MD ZIP: 20814 BUSINESS PHONE: 3019860701 MAIL ADDRESS: STREET 2: 7700 OLD GEORGETOWN RD 2ND FL CITY: BETHESDA STATE: MD ZIP: 20814 FORMER COMPANY: FORMER CONFORMED NAME: SEQUEL CORP DATE OF NAME CHANGE: 19890814 FORMER COMPANY: FORMER CONFORMED NAME: CELLTECH COMMUNICATIONS INC DATE OF NAME CHANGE: 19860304 10-Q/A 1 SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 -------------- FORM 10-Q/A No. 1 (For Year Ended 12/31/97) Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 HANGER ORTHOPEDIC GROUP, INC. ------------------------------------------------------------------ (Exact name of Registrant as specified in its charter) DELAWARE 1-10670 84-0904275 ---------------------------- ------------ -------------- (State or other jurisdiction (Commission (IRS Employer of incorporation) File Number) Identification Number) 7700 Old Georgetown Road Bethesda, Maryland 20814 ---------------------------------------- ---------- (Address of principal executive offices) (zip code) Registrant's telephone number, including area code: (301) 986-0701 The undersigned registrant hereby amends the following items, financial statements, exhibits or other portions of its Quarterly Report on Form 10-Q for the quarter ended March 31, 1998, as set forth in the pages attached hereto: Part I - Item 1 Financial Statements - Note E Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this amendment to be signed on its behalf by the undersigned, thereunto duly authorized. HANGER ORTHOPEDIC GROUP, INC. By:/s/RICHARD A. STEIN ------------------- Richard A. Stein Vice President - Finance Date: June 23, 1998 1 HANGER ORTHOPEDIC GROUP, INC. AMENDMENT NO. 1 TO QUARTERLY REPORT ON FORM 10-Q FOR THE QUARTER ENDED MARCH 31, 1998 ------------------ The purpose of this Amendment No. 1 to the Hanger Orthopedic Group, Inc. Quarterly Report on Form 10-Q for the quarter ended March 31, 1998 (the "Form 10-Q") is to reverse the order of presentation of the first three line items of the two columns set forth in the table in Note E to the financial statements set forth under Item 1 of Part I on page 8 of the Form 10-Q. The amounts previously set forth in the first three line items under the heading 1998 have been relocated to appear as the first three line items under the heading 1997, and the amounts previously set forth in the first three line items under the heading 1997 have been relocated to appear as the first three line items under the heading 1998. The revised table in Note E is set forth on page 9 of this Amendment. 2 HANGER ORTHOPEDIC GROUP, INC. CONSOLIDATED BALANCE SHEETS
March 31, December 31, 1998 1997 -------------- -------------- (unaudited) ASSETS CURRENT ASSETS Cash and cash equivalents $ 5,652,746 $ 6,557,409 Accounts receivable less allowances for doubtful accounts of $6,266,000 and $4,871,000 in 1998 and 1997 respectively 31,655,712 31,145,327 Inventories 17,633,551 17,445,476 Prepaid expenses and other assets 4,028,619 4,260,656 Deferred income taxes 2,127,185 2,127,185 -------------- -------------- Total current assets 61,097,813 61,536,053 -------------- -------------- PROPERTY, PLANT AND EQUIPMENT Land 4,267,045 4,269,045 Buildings 8,342,849 8,326,732 Machinery and equipment 8,295,019 7,591,821 Furniture and fixtures 2,465,199 2,378,808 Leasehold improvements 3,495,718 3,142,244 -------------- -------------- 26,865,830 25,708,650 Less accumulated depreciation and amortization 8,134,225 7,538,385 -------------- -------------- 18,731,605 18,170,265 -------------- -------------- INTANGIBLE ASSETS Excess of cost over net assets acquired 92,853,728 81,150,328 Non-compete agreements 2,295,265 2,236,979 Other intangible assets 3,230,052 3,221,912 -------------- -------------- 98,379,045 86,609,219 Less accumulated amortization 9,765,256 9,101,531 -------------- -------------- 88,613,789 77,507,688 -------------- -------------- OTHER ASSETS Other 964,205 768,604 -------------- -------------- TOTAL ASSETS $ 169,407,412 $ 157,982,610 ============== ==============
The accompanying notes are an integral part of the consolidated financial statements. 3 HANGER ORTHOPEDIC GROUP, INC. CONSOLIDATED BALANCE SHEETS
March 31, December 31, 1998 1997 -------------- -------------- (unaudited) LIABILITIES AND SHAREHOLDERS' EQUITY CURRENT LIABILITIES Current portion of long-term debt $ 10,310,984 $ 5,747,865 Accounts payable 3,712,060 3,827,338 Accrued expenses 4,465,388 3,597,104 Customer deposits 1,130,483 1,145,001 Accrued wages and payroll taxes 5,313,447 8,037,805 Deferred revenue 309,801 150,418 -------------- -------------- Total current liabilities 25,242,163 22,505,531 -------------- -------------- Long-term debt 29,286,054 23,237,321 Deferred income taxes 3,405,833 3,405,833 Other liabilities and accrued dividends 2,236,007 2,210,445 Mandatorily redeemable preferred stock, class C, 300 shares authorized, liquidation preference of $500 per 310,588 303,753 share Mandatorily redeemable preferred stock, class F, 100,000 shares authorized, liquidation preference of $500 per share SHAREHOLDERS' EQUITY Common stock, $.01 par value; 25,000,000 shares authorized, 15,778,996 and 15,670,100 shares issued and 15,645,501 and 15,536,605 shares outstanding in 1998 and 1997, respectively 157,791 156,702 Additional paid-in capital 103,496,362 102,585,837 Retained earnings 5,928,176 4,232,750 -------------- -------------- 109,582,329 106,975,289 Treasury stock - (133,495 shares) (655,562) (655,562) -------------- -------------- 108,926,767 106,319,727 -------------- -------------- TOTAL LIABILITIES & SHAREHOLDERS' EQUITY $ 169,407,412 $ 157,982,610 ============== ==============
The accompanying notes are an integral part of the consolidated financial statements. 4 HANGER ORTHOPEDIC GROUP, INC. CONSOLIDATED STATEMENT IF CASH FLOWS FOR THE THREE MONTHS ENDED March 31, 1998 and 1997 (unaudited)
1998 1997 -------------- -------------- Net Sales $ 40,750,018 $ 30,949,614 Cost of products and services sold 21,303,131 16,229,929 -------------- -------------- Gross profit 19,446,887 14,719,685 Selling, general & administrative 14,729,001 10,924,635 Depreciation and amortization 709,022 749,305 Amortization of excess cost over net assets acquired 550,961 409,512 -------------- -------------- Income from operations 3,457,903 2,636,233 Other expense: Interest expense, net (614,822) (1,527,269) Other 30,345 (43,749) -------------- -------------- Income from operations before income taxes 2,873,426 1,065,215 Provision for income taxes 1,178,000 447,300 -------------- -------------- Net income $ 1,695,426 $ 617,915 ============== ============== BASIC PER COMMON SHARE DATA: Net income $ .11 $ .07 ============== ============== Shares used to compute basic per common share amounts 15,576,030 9,358,529 ============== ============== DILUTED PER COMMON SHARE DATA: Net income $ .10 $ .06 ============== ============== Shares used to compute diluted per common share amounts 17,081,983 9,940,659 ============== ==============
The accompanying notes are an integral part of the consolidated financial statements. 5 HANGER ORTHOPEDIC GROUP, INC. CONSOLIDATED STATEMENT IF CASH FLOWS FOR THE THREE MONTHS ENDED March 31, 1998 and 1997 (unaudited)
1998 1997 -------------- -------------- Cash flows from operating activities: Net income $ 1,695,426 $ 617,915 Adjustments to reconcile net income to net cash provided by (used in) operating activities: Provision for bad debt 1,702,241 999,208 Depreciation and amortization 709,022 749,305 Amortization of excess cost over net assets acquired 550,961 409,512 Amortization of Debt Discount 318,515 Changes in assets and liabilities, net of effect from acquired companies: Accounts receivable (272,575) (1,145,684) Inventory 236,234 274,166 Prepaid and other assets 362,852 (1,161,495) Other assets (203,723) (49,638) Accounts payable (624,949) (1,314,988) Accrued expenses 848,880 1,407,612 Accrued wages and payroll taxes (3,221,776) (3,433,979) Customer deposits (14,294) 127,954 Deferred revenue (38,507) (20,486) Other liabilities 25,562 72,577 -------------- -------------- Total adjustments (2,902,296) (2,767,421) -------------- -------------- Net cash provided by (used in) operating activities 1,755,354 (2,149,506) -------------- -------------- Cash flows from investing activities: Purchase of fixed assets, net (605,905) (495,970) Acquisition, net of cash (10,713,583) (2,301,618) Purchase of patents (8,140) (40,009) Purchase of non-compete agreements (58,286) (50,000) -------------- -------------- Net cash used in investing activities (11,385,914) (2,887,597) -------------- --------------
Continued The accompanying notes are an integral part of the consolidated financial statements. 6 HANGER ORTHOPEDIC GROUP, INC. CONSOLIDATED STATEMENT IF CASH FLOWS FOR THE THREE MONTHS ENDED March 31, 1998 and 1997 (unaudited)
1998 1997 -------------- -------------- Cash flows from financing activities: Net borrowings under revolving credit facility $ 4,000,000 $ 500,000 Proceeds from long-term debt 5,000,000 5,500,000 Repayment of long-term debt (1,192,552) (900,678) Proceeds from the sale of common stock 918,449 85,400 -------------- -------------- Net cash provided by financing activities 8,725,897 5,184,722 -------------- -------------- Net change in cash and cash equivalents for the period (904,663) 147,619 Cash and cash equivalents at beginning of period 6,557,409 6,572,402 -------------- -------------- Cash and cash equivalents at end of period $ 5,652,746 $ 6,720,021 ============== ============== Supplemental disclosure of cash flow information: Cash paid during the period for: Interest $ 483,646 $ 641,926 ============== ============== Taxes $ 325,400 $ 99,240 ============== ============== Non-cash financing and investing activities: Issuance of notes in connection with acquisitions $ 2,755,000 $ 250,000 ============== ============== Dividends declared - preferred stock $ 6,835 $ 6,295 ============== ==============
The accompanying notes are an integral part of the consolidated financial statements. 7 NOTE A -- BASIS OF PRESENTATION The accompanying unaudited financial statements have been prepared in accordance with Rule 10-01 of Regulation S-X. They do not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements. In the opinion of management, all adjustments, consisting of a normal recurring nature, considered necessary for a fair presentation have been included. These financial statements should be read in conjunction with the financial statements of Hanger Orthopedic Group, Inc. (the "Company"), as of December 31, 1997 and notes thereto included in the Annual Report on Form 10-K for the year December 31, 1997, filed by the Company with the Securities and Exchange Commission. NOTE B - NEW ACCOUNTING STANDARDS The Company adopted Statement of Financial Accounting Standards (SFAS) 128, "Earnings per Share," effective January 1, 1997. As a result, earnings per share for the first quarter ended March 31, 1997 have been restated to conform to the provisions of this statement. In addition, the Company adopted SFAS 130, "Reporting Comprehensive Income, " effective January 1, 1998. Total comprehensive income and net income are identical for the period ended March 31, 1998. The Company will adopt the provisions of SFAS 131, "Disclosures about Segments of an Enterprise and Related Information" effective with the financial statements for the year ended December 31, 1998. SFAS 131 establishes standards for the way that public business enterprises report information about operating segments in annual financial statements and requires that those enterprises report selected information about operating segments in interim financial reports issued to shareholders. It also establishes standards for related disclosures about products and services, geographic areas, and major customers. Financial statement disclosures for prior periods are required to be restated. The Company is in the process of evaluating the disclosure requirements. The adoption of SFAS 131 will not have a material impact on the Company's consolidated results of operations, financial position or cash flows. 8 NOTE C -- INVENTORY Inventories at March 31, 1998 and December 31, 1997 were comprised of the following:
March 31, 1998 December 31, 1997 -------------- ----------------- (unaudited) Raw materials $ 7,858,656 $ 7,685,134 Work-in-process 1,467,133 1,437,946 Finished goods 8,307,762 8,322,396 ------------- ------------- $ 17,633,551 $ 17,445,476 ============= =============
NOTE D - ACQUISITIONS During the first three months ended March 31, 1998, the Company acquired three orthotic and prosthetic companies. The aggregate purchase price was $13,230,000, comprised of $10,475,000 in cash and $2,755,000 in promissory notes. NOTE E - NET INCOME PER COMMON SHARE The following is a reconciliation of the numerators and denominators of the basic and diluted income per common share amounts for the three months ended March 31, 1998 and 1997.
Three Months Ended March 31, 1998 1997 ------------- ------------- Net income $ 1,695,426 $ 617,915 Less preferred stock dividends declared (6,835) (6,295) ------------- ------------- Income available to common stockholders $ 1,688,591 $ 611,620 ============= ============= Average shares of common stock outstanding used to compute basic per common share amounts 15,576,030 9,358,529 Effect of dilutive options 1,049,473 193,849 Effect of dilutive warrants 456,480 388,281 Shares used to compute dilutive per ------------- ------------- common share amounts 17,081,983 9,940,659 ============= ============= Basic income per common share $ .11 $ .07 Diluted income per common share $ .10 $ .06
Options to purchase 2,389 shares of common stock were outstanding at March 31, 1998 but were not included in the computation of diluted income per common share because the options' exercise price was greater than the average market price of the common shares. 60072 9
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