EX-99 5 exhibit_99-1.txt EXHIBIT 99.1 VCA ANTECH, INC. REPORTS THIRD QUARTER RESULTS - Net income per diluted common share, before extraordinary item, $0.24. - Net income per diluted common share, before extraordinary item beats earnings consensus estimate by $0.04 per share. - Net income per diluted common share (after extraordinary item) is $0.19. - Third quarter revenue increased 12.0% to a record $115.0 million. - Third quarter Adjusted EBITDA(1) increases 18.7% to $29.1 million. LOS ANGELES, CA, OCTOBER 24, 2002 - VCA ANTECH, INC. (NASDAQ NM SYMBOL: WOOF), a leading animal health care company in the United States, today reported financial results for the third quarter and the nine months ended September 30, 2002. Revenue for the quarter ended September 30, 2002 increased 12.0% to a record $115.0 million from revenue of $102.6 million in the same quarter last year. For the quarter ended September 30, 2002, net income per diluted common share before the extraordinary loss on early extinguishment of debt of $0.05 per share, was $0.24. Net loss per diluted common share was $(0.19) for the quarter ended September 30, 2001; however, excluding the after-tax impact of certain items as provided below in the Supplemental Operating Statement Data, the net income was $0.09 per diluted common share. Operating income for the quarter ended September 30, 2002 increased to $26.1 million from $16.0 million for the comparable period in 2001. As detailed below in the Supplemental Operating Statement Data, operating income for the third quarter 2001 included $3.4 million of certain expenses and $2.3 million of amortization of goodwill that did not occur in 2002. Excluding these expenses from 2001, operating income for the third quarter 2002 would have increased $4.3 million, or 19.9% compared to the same period in 2001, as adjusted. Earnings before interest, taxes, depreciation, amortization, minority interest and, in 2001, certain items discussed in footnote (1) ("Adjusted EBITDA") increased 18.7% in the third quarter of 2002 to $29.1 million from $24.5 million in the third quarter of 2001. Revenue for the nine months ended September 30, 2002, increased 10.3% to a record $336.9 million from $305.4 million in 2001. For the nine months ended September 30, 2002, net income per diluted common share before the extraordinary loss on early extinguishment of debt of $0.05 per share, was $0.68. Net loss per diluted common share was $(1.27) for the nine months ended September 30, 2001; however, excluding the after-tax impact of certain items as provided below in the Supplemental Operating Statement Data, the net income was $0.09 per diluted common share. Page 1 In August 2002, the Company completed a refinancing of its senior credit facility by replacing the total amount of its Term Loan A and B notes equal to $143.1 million with $143.1 million of new Term Loan C notes. In connection with the refinancing, the Company wrote-off $3.4 million of unamortized deferred financing costs. These charges were recognized during the third quarter of 2002 as an extraordinary loss of $2.0 million, or approximately $0.05 per diluted common share, net of income taxes. In a separate release, the Company announced that on October 24, 2002, it repaid $30 million of its 15.5% senior notes and retired all $15 million of its outstanding 13.5% senior subordinated notes. Funds used to repay the debt and pay the prepayment penalties and transaction costs were derived from an additional $25.0 million of Term Loan C notes issued under the Company's senior credit facility and $25.2 million of cash on hand. In connection with the repayment of the notes, the Company incurred approximately $9.6 million of costs, including $4.8 million in prepayment penalties and transaction costs, and $4.8 million in non-cash costs pertaining to the write-off of unamortized discount and deferred financing costs associated with the debt retired. These charges will be recognized during the fourth quarter of 2002 as an extraordinary loss in the amount of approximately $5.5 million, net of income taxes. Bob Antin, Chairman and CEO, stated, "We continue to benefit from operating leverage in both of our business segments, which drove outstanding growth in EBITDA and net income in the third quarter of 2002. On a 12.0% revenue increase in the third quarter, Adjusted EBITDA increased 18.7%, to $29.1 million, over the same quarter in the prior year. "Our laboratory division continues to realize the benefits of our market leadership position and our national platform. On a 15.5% revenue increase (all of which was from internal growth) for the three months ended September 30, 2002, we achieved a 23.6% increase in laboratory Adjusted EBITDA, to $14.2 million. Laboratory Adjusted EBITDA margin for the third quarter increased to 36.8% in 2002 from 34.4% in 2001. "Our hospital division achieved a 14.8% increase in hospital Adjusted EBITDA to $18.0 million for the third quarter of 2002 on a 10.8% increase in revenue. For the third quarter, hospital Adjusted EBITDA margin increased to 23.0% in 2002 from 22.2% in 2001. Hospital same-facility revenue growth was 5.7% for the three months ended September 30, 2002." VCA Antech, Inc. will discuss its third quarter 2002 earnings during a conference call today, October 24, 2002 at 4:30 p.m. Eastern Time. The call will be broadcast live on the Internet and can be accessed by visiting the Company's website at HTTP://INVESTOR.VCAANTECH.COM. The conference call can also be accessed via telephone by dialing (800) 289-0544. Interested parties should call at least ten minutes prior to the start of the conference call to register. Statements contained in this release that are not based on historical information are forward-looking statements that involve risks and uncertainties. Actual results may vary substantially as a result of a variety of factors. Among the important factors that could cause actual results to differ are the level of direct costs and the ability of the Company to maintain gross revenue at a level necessary to maintain expected gross profit margins, the level of selling, general and administrative costs, the effects of competition, the efficient integration of the Page 2 Company's acquisitions, the effects of the Company's recent acquisitions and its ability to effectively manage its growth, the ability of the Company to service its debt, the continued implementation of its management information systems, pending litigation and governmental investigations, general economic conditions, and the results of the Company's acquisition program. These and other risk factors are discussed in the Company's recent filings with the Securities and Exchange Commission on Forms 10-K and S-4 and the reader is directed to these statements for a further discussion of important factors that could cause actual results to differ materially from those in the forward-looking statements. VCA ANTECH, INC. owns, operates and manages the largest networks of free-standing veterinary hospitals and veterinary-exclusive clinical laboratories in the country. Media contact:Tom Fuller, Chief Financial Officer (310) 571-6505 Page 3
VCA ANTECH, INC. CONSOLIDATED STATEMENTS OF OPERATIONS THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2002 AND 2001 (UNAUDITED - IN THOUSANDS, EXCEPT PER SHARE AMOUNTS) Three Months Nine Months Ended September 30, Ended September 30, ----------------------- ---------------------- 2002 2001 2002 2001 ----------------------- ---------------------- Revenue: Laboratory $38,650 $ 33,471 $116,911 $101,855 Animal Hospital 78,118 70,531 225,383 207,665 Other 500 500 1,500 1,500 Intercompany (2,296) (1,866) (6,902) (5,655) --------- --------- --------- --------- 114,972 102,636 336,892 305,365 --------- --------- --------- --------- Direct costs 77,157 70,681 226,749 213,454 Gross profit, excluding depreciation and amortization: Laboratory 16,801 13,390 51,366 40,289 Animal Hospital 20,514 18,065 57,277 50,122 Other 500 500 1,500 1,500 --------- --------- --------- --------- 37,815 31,955 110,143 91,911 --------- --------- --------- --------- General and administrative: Laboratory 2,563 2,725 7,632 9,305 Animal Hospital 2,541 2,918 7,805 9,523 Corporate 3,628 3,948 10,456 11,537 --------- --------- --------- --------- 8,732 9,591(a) 25,893 30,365(a) --------- --------- --------- --------- Depreciation 2,752 2,393 8,033 7,085 Amortization 276 4,039 1,297 12,036 Loss/(gain) on sale of assets (80) (92) (80) 125 Write-down of assets - - - 8,620 --------- --------- --------- --------- Operating income 26,135 16,024 75,000 33,680 --------- --------- --------- --------- Interest expense, net 10,208 10,317 30,541 32,387 Other (income) expense (5) 4 (159) 233 Minority interest expense 430 404 1,360 1,104 --------- --------- --------- --------- Income (loss) before income taxes and extraordinary item 15,502 5,299 43,258 (44) Provision for income taxes 6,466 3,275 18,092 6,741 --------- --------- --------- --------- Net income (loss) before extraordinary item 9,036 2,024 25,166 (6,785) Page 4 Extraordinary loss on early extinguishment of debt 2,001 - 2,001 - --------- --------- --------- --------- Net income (loss) 7,035 2,024 23,165 (6,785) Increase in carrying amount of redeemable preferred stock - 5,362 - 15,583 --------- --------- --------- --------- Net income (loss) to common stockholders $ 7,035 $(3,338) $23,165 $(22,368) ========= ========= ========= ========= Diluted income (loss) per common share: Income (loss) before extraordinary item $ 0.24 $ (0.19) $ 0.68 $ (1.27) Extraordinary loss on early extinguishment of debt (0.05) - (0.05) - --------- --------- --------- --------- Earnings (loss) per common share $ 0.19 $ (0.19) $ 0.63 $ (1.27) ========= ========= ========= ========= Diluted shares 37,094 17,878 37,088 17,643 ========= ========= ========= ========= (a) General and administrative expense for the three and nine months ended September 30, 2001 include $1.2 million and $6.2 million of non-cash compensation, and $620,000 and $1.9 million of management fees, respectively, which were not incurred in 2002.
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VCA ANTECH, INC. SUPPLEMENTAL OPERATING STATEMENT DATA THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2002 AND 2001 (UNAUDITED - IN THOUSANDS, EXCEPT PER SHARE AMOUNTS) Three Months Ended Nine Months Ended September 30, September 30, 2002 2001 2002 2001 ---------- ---------- ---------- ---------- Adjusted net income available to common stockholders: Net income (loss) reported $ 7,035 $ (3,338) $ 23,165 $ (22,368) ---------- --------- ---------- ---------- Add expense (income): Management fees - 620 - 1,860 Write-down of assets - - - 8,620 Non-cash compensation - 1,523 - 7,611 Amortization of executive covenants not to compete - 1,303 - 3,928 Amortization of goodwill - 2,323 - 6,878 ---------- --------- ---------- ---------- Total - 5,769 - 28,897 Tax effect - (725) - (4,759) ---------- --------- ---------- ---------- Total, net of tax - 5,044 - 24,138 Extraordinary item, net of tax 2,001 - 2,001 - ---------- --------- ---------- ---------- Adjusted net income $ 9,036 $ 1,706 $ 25,166 $ 1,770 ========== ========= ========== ========== Adjusted net income per diluted common share $ 0.24 $ 0.09 $ 0.68 $ 0.09 ========== ========= ========== ========== Diluted shares 37,094 19,565 37,088 19,445 ========== ========= ========== ========== Adjusted EBITDA (1) $ 29,083 $ 24,507 $ 84,250 $ 71,017 ========== ========= ========== ========== Ratio of earnings to fixed charges (2) 2.4x 1.5x 2.3x n/a ========== ========= ========== ========== (1) EBITDA is operating income before depreciation and amortization. Adjusted EBITDA for 2002 represents EBITDA adjusted to exclude the gain on sale of assets. Adjusted EBITDA for 2001 represents EBITDA adjusted to exclude management fees, write-down (gain)/loss of assets and non-cash compensation. The management agreement for the management fees discussed above was terminated in the fourth quarter of 2001 in connection with the Company's initial public offering of common stock. EBITDA and Adjusted EBITDA are not measures of financial performance under generally accepted accounting principles, GAAP. Although EBITDA and Adjusted EBITDA should not be considered in isolation or as substitutes for net income, cash flows from operating activities and other income or cash flow statement data prepared in accordance with GAAP, or as a measure of profitability or liquidity, we understand that EBITDA and Adjusted EBITDA are widely used by financial analysts as a measure of financial performance. We believe Adjusted EBITDA is a useful measure of our operating performance as it reflects earnings before the impact of depreciation and amortization, interest, taxes and minority interest (and, in 2001, other non-operating or non-recurring items) that may vary from period to period as a result of non-operating activities. Adjusted EBITDA is also an important component of our financial ratios included in our debt covenants, which provides us with a measure of our ability to service our debt and meet capital expenditure requirements out of our earnings. Our calculation of EBITDA and Adjusted EBITDA may not be comparable to similarly titled measures reported by other companies. Page 6 (2) Calculated by dividing income before income taxes and fixed charges by fixed charges. "Fixed charges" means the sum of (a) interest expensed or capitalized, (b) amortized discounts and deferred financing costs related to indebtedness and (c) an estimate of the interest within rental expense. This calculation is not applicable for the nine months ended September 30, 2001 as we had pre-tax losses for the nine months ended September 30, 2001.
VCA ANTECH, INC. SELECTED CONSOLIDATED BALANCE SHEET DATA AS OF SEPTEMBER 30, 2002 AND DECEMBER 31, 2001 (UNAUDITED - IN THOUSANDS) September 30, December 31, 2002 2001 ------------- ------------ Cash $ 32,358 $ 7,103 Accounts receivable, net 20,791 18,036 Equity 64,914 39,764 Total assets 513,380 468,521 Debt: Senior Term Loan A - 24,112 Senior Term Loan B - 121,242 Senior Term Loan C 142,703 - 13.5% Senior Subordinated Notes 15,000 15,000 9.875% Senior Subordinated Notes 170,000 170,000 15.5% Senior Notes 66,715 59,670 Other 1,658 1,486 Unamortized discounts (7,242) (7,178) ------------- ------------ Total debt $ 388,834 $ 384,332 ============= ============
SELECTED CONSOLIDATED CASH FLOW DATA FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2002 AND 2001 (UNAUDITED - IN THOUSANDS) Nine Months Ended September 30, --------------------------- 2002 2001 ----------- ----------- Cash flows provided by operating activities $ 60,838 $ 49,316 Capital expenditures $ 13,405 $ 10,604
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