-----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, PhYTYBkNieWnE9J2McOBefMOBLflc4/4DffYrHTnEiXTIdmaWd8LKUvmdJeRvCUj Z3U4KaI7MdXkd2SNlFRu3A== 0000816151-97-000012.txt : 19970514 0000816151-97-000012.hdr.sgml : 19970514 ACCESSION NUMBER: 0000816151-97-000012 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19970331 FILED AS OF DATE: 19970513 SROS: NASD FILER: COMPANY DATA: COMPANY CONFORMED NAME: LABONE INC CENTRAL INDEX KEY: 0000816151 STANDARD INDUSTRIAL CLASSIFICATION: SERVICES-MEDICAL LABORATORIES [8071] IRS NUMBER: 480952323 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 000-15975 FILM NUMBER: 97602463 BUSINESS ADDRESS: STREET 1: 10310 W 84TH TERR CITY: LENEXA STATE: KS ZIP: 66214 BUSINESS PHONE: 9138888397 MAIL ADDRESS: STREET 1: 10310 W 84TH TERRACE CITY: LENEXA STATE: KS ZIP: 66214 FORMER COMPANY: FORMER CONFORMED NAME: HOME OFFICE REFERENCE LABORATORY INC DATE OF NAME CHANGE: 19940405 10-Q 1 UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For quarterly period ended March 31, 1997 ------------------ Commission file number: 0-15975 LabOne, Inc. ---------------------------------------------------- (Exact name of registrant as specified in its charter) Delaware 48-0952323 ---------- -------------- (State or other jurisdiction (I.R.S. Employer of incorporation or organization) Identification No.) 10310 West 84th Terrace Lenexa, Kansas 66214 ----------------------------- ------- (Address of principal executive offices) (Zip Code) (913)-888-1770 -------------------------------- (Registrant's telephone number, including area code) N/A ------------------------------------ (Former name, former address, former fiscal year, if changed since last report) 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 [ ] Number of shares outstanding of only class of Registrant's common stock, $.01 par value, as of May 1, 1997 - 13,104,935 net of 1,895,065 shares held as treasury stock. Page 1 of 10 PART I. FINANCIAL INFORMATION ITEM 1 - Financial Statements LabOne, Inc. and Subsidiary Consolidated Balance Sheets March 31, December 31, 1997 1996 ASSETS --------- --------- Current assets: Cash and cash equivalents $ 4,121,920 3,613,454 Short-term investments 20,342,910 27,781,974 Accounts receivable-trade, net of allowance for doubtful accounts of $795,368 in 1997 and $657,558 in 1996 11,919,220 9,598,707 Inventories 1,958,507 1,360,164 Prepaid expenses and other current assets 1,616,676 2,074,538 Deferred income taxes 682,206 682,206 ---------- ---------- Total current assets 40,641,439 45,111,043 Investments with maturities of more than one year, at cost 503,755 504,292 Property, plant and equipment 53,442,902 52,642,497 Less accumulated depreciation 36,205,721 35,751,529 ---------- ---------- Net property, plant and equipment 17,237,181 16,890,968 Other assets: Intangible assets, net of accumulated amortization 5,987,747 2,098,987 Deferred income taxes - noncurrent 193,539 114,683 Deposits and other assets 23,198 23,202 ---------- ---------- Total assets $64,586,859 64,743,175 ========== ========== LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities: Accounts payable $ 3,122,045 2,971,376 Income taxes payable 800,302 - Payable to Seafield Capital Corporation 35,106 26,217 Accrued payroll and benefits 2,587,041 2,802,566 Other accrued expenses 513,671 393,811 Other current liabilities 100,945 99,912 ---------- ---------- Total liabilities 7,159,110 6,293,882 Stockholders' equity: Preferred stock, $.01 par value per share; 1,000,000 shares authorized, none issued - - Common stock, $.01 par value per share; 40,000,000 shares authorized, 15,000,000 shares issued 150,000 150,000 Additional paid-in capital 13,554,189 13,546,121 Equity adjustment from foreign currency translation (569,449) (543,959) Retained earnings 66,498,631 67,494,437 ---------- ---------- 79,633,371 80,646,599 Less treasury stock of 1,915,065 shares in 1997 and 1,915,835 shares in 1996 22,205,622 22,197,306 ---------- ---------- Total stockholders' equity 57,427,749 58,449,293 ---------- ---------- Total liabilities and stockholders' equity $64,586,859 64,743,175 ========== ========== See accompanying notes to consolidated financial statements and management's discussion and analysis of financial condition and results of operations. Page 2
LabOne, Inc. and Subsidiary Consolidated Statements of Earnings Three months ended March 31, 1997 1996 ---------- ---------- Sales $ 17,739,985 13,277,845 Cost of sales 9,450,105 7,477,322 ---------- ---------- Gross profit 8,289,880 5,800,523 Selling, general and administrative expenses 6,430,906 5,785,338 ---------- ---------- Earnings from operations 1,858,974 15,185 Other income 428,301 371,462 ---------- ---------- Earnings before income taxes 2,287,275 386,647 Income tax expense 927,793 167,302 ---------- ---------- Net earnings $ 1,359,482 219,345 ========== ========== Earnings per common share $ 0.10 0.02 ====== ====== Dividends per common share $ 0.18 0.18 ====== ====== Weighted average common shares outstanding 13,344,967 13,189,724 ========== ========== See accompanying notes to consolidated financial statements and management's discussion and analysis of financial condition and results of operations. Page 3 LabOne, Inc. and Subsidiary Consolidated Statement of Stockholders' Equity Three Months Ended March 31, 1997
Additional Foreign Total Common paid-in currency Retained Treasury stockholders' stock capital translation earnings stock equity Balance at December 31, 1996 $150,000 13,546,121 (543,959) 67,494,437 (22,197,306) 58,449,293 Net earnings 1,359,482 1,359,482 Cash dividends ($0.18 per share) (2,355,288) (2,355,288) Stock options exercised, net (770 shares) 8,068 (8,316) (248) Equity adjustment from foreign currency translation (25,490) (25,490) -------- ---------- -------- ---------- ----------- ---------- Balance at March 31, 1997 $150,000 13,554,189 (569,449) 66,498,631 (22,205,622) 57,427,749 ======== ========== ======== ========== =========== ==========
See accompanying notes to consolidated financial statements and management's discussion and analysis of financial condition and results of operations. Page 4 LabOne, Inc. and Subsidiary Consolidated Statements of Cash Flows Three months ended March 31, 1997 1996 --------- --------- Cash provided by (used for) operations: Net earnings $ 1,359,482 219,345 Adjustments to reconcile net earnings to net cash provided by operations: Depreciation and amortization 1,095,726 969,736 (Gain) loss on disposal of property and equipment (103,047) 98,752 Provision for deferred taxes (81,412) (178,941) Change in short term trading portfolio, net 14,470,751 (295,160) Changes in: Accounts receivable (2,320,513) (210,978) Inventories (598,343) (220,577) Prepaid expenses and other current assets 457,862 407,435 Accounts payable 150,669 (432,115) Income taxes payable 800,302 241,742 Payable to Seafield Capital Corporation 8,889 (48,667) Accrued payroll & benefits (215,525) (7,847) Accrued expenses 119,860 (25,674) Other current liabilities 1,033 19,882 ---------- ---------- Net cash provided by operations 15,145,734 536,933 ---------- ---------- Cash provided by (used for) investment transactions: Purchases of investments held to maturity (7,713,555) (4,385,810) Proceeds from maturities of investments held to maturity 732,335 11,883,041 Property, plant and equipment, net (1,167,229) (317,565) Acquisition of intangible assets, net (4,120,605) - Other - 8,600 ---------- ---------- Net cash provided by (used for) investment transactions (12,269,050) 7,188,266 ---------- ---------- Cash provided by (used for) financing transactions: Issuance of treasury stock, net of proceeds from the exercise of stock options (248) 9,746 Cash dividends (2,355,288) (2,349,985) ---------- ---------- Net cash used for financing transactions (2,355,536) (2,340,239) ---------- ---------- Effect of foreign currency translation (12,678) (3,848) ---------- ---------- Net increase in cash and cash equivalents 508,466 5,381,112 Cash and cash equivalents - beginning of period 3,613,454 2,993,128 ---------- ---------- Cash and cash equivalents - end of period $ 4,121,920 8,374,240 ========== ========== Supplemental disclosures of cash flow information: Cash paid during the period for: Income Taxes $ 221,022 83,781 ========== ========== See accompanying notes to consolidated financial statements and management's discussion and analysis of financial condition and results of operations. Page 5 LabOne, Inc. and Subsidiary Notes to Consolidated Financial Statements March 31, 1997 and 1996 The accompanying consolidated financial statements include the accounts of LabOne, Inc. and its wholly-owned subsidiary Lab One Canada Inc. (a Canadian corporation). All significant intercompany transactions have been eliminated in consolidation. The financial information furnished herein is unaudited; however, in the opinion of management, it reflects all adjustments which are necessary to fairly state the Company's financial position at March 31, 1997, and December 31, 1996, and the results of its operations and cash flows for the periods ended March 31, 1997 and 1996. The financial statements have been prepared in conformity with generally accepted accounting principles appropriate in the circumstances, and included in the financial statements are certain amounts based on management's estimates and judgments. The financial information herein is not necessarily representative of a full year's operations because levels of sales, capital additions and other factors fluctuate throughout the year. These same considerations apply to all year-to-year comparisons. See the Company's Annual Report on Form 10-K for the year ended December 31, 1996, for additional information not required by this report Form 10-Q. The weighted average shares includes the common stock equivalents of stock options. In February 1997, the Financial Accounting Standards Board issued Statement No.128, "Earnings Per Share" which revises the calculation and presentation provisions of Accounting Principles Board Opinion 15 and related interpretations. Statement No. 128 is effective for the Company's fiscal year ending December 31, 1997. Retroactive application will be required. The Company believes the adoption of Statement No. 128 will not have a significant effect on its reported earnings per share. Effective January 30, 1997, LabOne acquired certain assets, inventory and customer lists, of GIB Laboratories, Inc., a subsidiary of Prudential Insurance Company of America, for $4.6 million. Concurrently, Prudential's Individual Insurance Group made a multi-year commitment to use LabOne as its exclusive provider of risk assessment testing services. The acquisition was accounted for using the purchase method. Accordingly, the purchase price was allocated to assets acquired based on their fair values. The total cost in excess of tangible net assets acquired was $4.1 million and is being amortized on a straight-line basis over 15 years. Page 6 ITEM 2 - MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS. RESULTS OF OPERATIONS - --------------------- Selected financial data: Three months ended March 31, % Increase 1997 1996 ----------- ----------- -------- Sales $ 17,739,985 13,277,845 34% Net earnings 1,359,482 219,345 520% Earnings per common share $0.10 0.02 Cash dividends per common share $0.18 0.18 The Company provides high-quality laboratory services to insurance companies, physicians and employers. LabOne provides risk-appraisal laboratory services to the insurance industry. The tests performed by the Company are specifically designed to assist an insurance company in objectively evaluating the mortality and morbidity risks posed by policy applicants. The majority of the testing is performed on specimens of individual life insurance policy applicants. The Company also provides testing services on specimens of individuals applying for individual and group medical and disability policies. LabOne's clinical testing services are provided to the healthcare industry to aid in the diagnosis and treatment of patients. LabOne operates only one highly automated and centralized laboratory, which the Company believes has significant economic advantages over other conventional laboratory competitors. LabOne markets its clinical testing services to the payers of healthcare--insurance companies and self-insured groups. The Company does this through Lab Card(TM), a Laboratory Benefits Management (LBM) program. The Lab Card Program provides laboratory testing at reduced rates as compared to traditional laboratories. It uses a unique benefit design that shares the cost savings with the patient, creating an incentive for the patient to help direct laboratory work to LabOne. Under the Program, the patient incurs no out-of-pocket expense when the Lab Card is used, and the insurance company or self-insured group receives substantial savings on its laboratory charges. The Company's Lab Card program covered approximately 1.2 million lives as of March 31, 1997, including The Guardian Life Insurance Company of America (The Guardian) and Principal Healthcare of Kansas City (Principal). Additionally, LabOne had a signed backlog of approximately 300,000 additional lives to be covered by the program. LabOne is certified by the Substance Abuse and Mental Health Services Administration (SAMHSA) to perform substance abuse testing services for federally regulated employers and is currently marketing these services throughout the country to both regulated and nonregulated employers. The Company's rapid turnaround times and multiple testing options help clients reduce downtime for affected employees and meet mandated drug screening guidelines. Page 7 Effective January 30, 1997, LabOne acquired certain assets, including customer lists, of GIB Laboratories, Inc., a subsidiary of Prudential Insurance Company of America. Concurrently, Prudential's Individual Insurance Group agreed to use LabOne as its exclusive provider of risk assessment testing services. At the time of the purchase, GIB served approximately 5% of the insurance laboratory testing market. FIRST QUARTER ANALYSIS Net sales increased 34% in the first quarter 1997 to $17.7 million from $13.3 million in the first quarter 1996 due to increases in both the insurance and healthcare segments. Insurance segment revenue increased to $14.4 million during the first quarter 1997 as compared to $11.7 million in the same quarter last year. The increase was due principally to the addition of GIB Laboratories' client base, other market share gains, and an increase in oral fluid testing on applicants applying for smaller face-amount policies. The total number of insurance applicants tested in the first quarter 1997 increased by 22% as compared to the same quarter last year. Average revenue per applicant declined 3% during the same periods. Insurance kit and container revenue increased due primarily to an increase in the number of blood and oral fluid kits sold. Healthcare revenue increased from $1.6 million in the first quarter 1996 to $3.3 million in 1997 due to increases in substance abuse and diagnostic testing volumes. Cost of sales increased $2.0 million (26%) in the first quarter 1997 as compared to the prior year, primarily due to increases in supplies and payroll. Insurance kit supplies increased due to the increased volume of kits sold. Laboratory supplies and payroll expenses increased due primarily to the increase in specimen volumes tested. Healthcare cost of sales expenses were $3.3 million as compared to $2.2 million in the first quarter 1996. As a result of the above factors, gross profit for the quarter increased from $5.8 million in 1996 to $8.3 million in 1997. Healthcare gross profit increased to $36,000 in the first quarter 1997 from a loss of $0.6 million in the first quarter 1996. Selling, general and administrative expenses increased $0.6 million (11%) in the first quarter 1997 as compared to the prior year due primarily to increases in payroll expenses, bad debt accruals and use taxes due to a refund recorded in 1996. These were partially offset by a decrease in consulting and severance expenses. Healthcare overhead expenditures during the first quarter 1997 were $2.4 million as compared to $1.7 million in 1996, primarily due to an increase in allocated overhead and growth in the healthcare segment payroll. Operating income increased from $15,000 in the first quarter 1996 to $1.9 million in 1997. The insurance segment operating income increased $2.0 million. The healthcare segment operating loss increased from $2.3 million in the first quarter 1996 to a loss of $2.4 million in 1997 due in part to a $0.3 million increase in corporate overhead allocations. Corporate overhead allocations to the healthcare segment increased due to the significant rate of growth in healthcare segment revenue. Non operating income increased $0.1 million due primarily to gains on equipment disposals, partially offset by lower investment income. The effective income tax rate declined from 43% in 1996 to 41% in 1997 due to exit taxes on the intercompany dividend from the Canadian subsidiary in 1996. Page 8 The combined effect of the above factors resulted in net earnings of $1.4 million or $0.10 per share in the first quarter 1997 as compared to $0.2 million or $0.02 per share in the same period last year. FINANCIAL POSITION, LIQUIDITY AND CAPITAL RESOURCES LabOne's working capital position decreased by $5.3 million to $33.5 million at March 31, 1997, from $38.8 million at December 31, 1996. This decrease is primarily due to dividends paid, and the purchase of GIB laboratory assets and customer lists. Net trade accounts receivable increased 24% over the balance at December 31, 1996 primarily due to increasing sales in February and March, 1997. Net additions to property, plant and equipment and intangibles were $5.3 million in the first quarter 1997 as compared to $0.3 million in 1996. The increase is primarily due to the purchase of the assets and customer lists of GIB Laboratories. The total number of shares of stock held in treasury at March 31, 1997, was approximately 1.9 million shares at a total cost of $22.2 million, or $11.60 per share. In February 1997, LabOne's Board of Directors declared the regular quarterly dividend of $0.18 per common share. This dividend was paid on March 4, 1997, to stockholders of record as of February 25, 1997, and totaled approximately $2.4 million. The board will review the dividend payment policy on a periodic basis. There are currently no restrictions that would limit the Company's ability to make future dividend payments. The Company had no borrowings in the first quarter 1997. The Company expects to fund operations, capital additions and future dividend payments from a combination of cash reserves and cash flow from operations. At March 31, 1997, LabOne had total cash and investments of $25.0 million as compared to $31.9 million at December 31, 1996. PART II. OTHER INFORMATION Item 6. - Exhibits and Reports on Form 8-K (a) Exhibits 27. Financial Data Schedule - as filed electronically by the Registrant in conjunction with this first quarter 1997 Form 10-Q. (b) Reports on Form 8-K A Form 8-K current report dated January 30, 1997, was filed with the Commission reporting under Other Events the acquisition by LabOne of certain assets, including customer lists of GIB Laboratories, and the agreement by Prudential Insurance Company of America to use LabOne as its exclusive provider of risk assessment testing services for its Individual Insurance Group. Page 9 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 thereunto duly authorized. LabOne, Inc. Date: May 13, 1997 By /s/ Kurt E. Gruenbacher Kurt E. Gruenbacher, V.P. Finance and CAO Date: May 13, 1997 By /s/ Robert D. Thompson Robert D. Thompson, Executive V.P. Finance, CFO and Treasurer Page 10 EX-27 2
5 This schedule contains summary financial information extracted from the first quarter 1997 Form 10-Q for LabOne, Inc. and is qualified in its entirety by reference to such financial statements. 0000816151 LABONE, INC. 3-MOS DEC-31-1997 MAR-31-1997 4,121,920 20,342,910 12,714,588 795,368 1,958,507 40,641,439 53,442,902 36,205,721 64,586,859 7,159,110 0 0 0 150,000 57,277,749 64,586,859 0 17,739,985 0 9,450,105 0 0 0 2,287,275 927,793 1,359,482 0 0 0 1,359,482 0.10 0.10
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