-----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, OGnqrVOXm1dvsbvpRirEpHr51vwRo/+sPsE6D+OJhiVF8hmhH6Z6VmOUkSzfYTT+ RWH7NzM8qmwdFtVoTsMG0Q== 0001011438-03-000072.txt : 20030225 0001011438-03-000072.hdr.sgml : 20030225 20030225152118 ACCESSION NUMBER: 0001011438-03-000072 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 20030220 ITEM INFORMATION: Other events ITEM INFORMATION: Financial statements and exhibits FILED AS OF DATE: 20030225 FILER: COMPANY DATA: COMPANY CONFORMED NAME: VCA ANTECH INC CENTRAL INDEX KEY: 0000817366 STANDARD INDUSTRIAL CLASSIFICATION: AGRICULTURE SERVICES [0700] IRS NUMBER: 954097995 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 8-K SEC ACT: 1934 Act SEC FILE NUMBER: 001-16783 FILM NUMBER: 03579225 BUSINESS ADDRESS: STREET 1: 12401 WEST OLYMPIC BOULEVARD CITY: LOS ANGELES STATE: CA ZIP: 90064-1022 BUSINESS PHONE: 310-584-65 MAIL ADDRESS: STREET 1: 12401 WEST OLYMPIC BOULEVARD CITY: LOS ANGELES STATE: CA ZIP: 90064-1022 FORMER COMPANY: FORMER CONFORMED NAME: VETERINARY CENTERS OF AMERICA INC DATE OF NAME CHANGE: 19940328 8-K 1 form_8-k.txt SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 _________________ Form 8-K CURRENT REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 Date of Report (Date of earliest event reported): February 20, 2003 VCA ANTECH, INC. (Exact Name of Registrant as Specified in Charter) Delaware 001-16783 95-4097995 (State or Other Jurisdiction (Commission (IRS Employer of Incorporation) File Number) Identification No.) 12401 West Olympic Boulevard Los Angeles, California 90064-1022 (Address of Principal Executive Offices) (310) 571-6500 (Registrant's Telephone Number) ITEM 5. OTHER EVENTS Reference is made to the press release of Registrant issued on February 20, 2003, regarding earnings guidance, which is incorporated herein by reference. A copy of the press release is attached to this Form 8-K as Exhibit 99.1. ITEM 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND EXHIBITS (c) Exhibits 99.1 Press release dated October 24, 2002, regarding earnings guidance. 99.2 Press release dated October 24, 2002, regarding fourth quarter and fiscal year 2002 earnings. ITEM 12. Reference is made to the press release of Registrant issued on February 20, 2003, regarding fourth quarter and fiscal year 2002 earnings, which is incorporated herein by reference. A copy of the press release is attached to this Form 8-K as Exhibit 99.2. Page 2 SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized. February 25, 2003 VCA Antech, Inc. /S/ TOMAS W. FULLER ---------------------------------- By: Tomas W. Fuller Its: Chief Financial Officer Page 3 EXHIBIT INDEX Exhibits 99.1 Press release dated February 20, 2003, regarding earnings guidance. 99.2 Press release dated February 20, 2003, regarding fourth quarter and fiscal year 2002 earnings. Page 4 EX-99 3 exhibit_99-1.txt EXHIBIT 99.1 VCA ANTECH, INC. INCREASES FINANCIAL GUIDANCE FOR FISCAL YEAR 2003 LOS ANGELES, CA, February 20, 2003 - VCA Antech, Inc. (NASDAQ NM SYMBOL: WOOF). In adherence to the U.S. Securities and Exchange Commission's ("SEC") Regulation Fair Disclosure, VCA Antech, a leading animal health care company in the United States, provides the following guidance for all investors and encourages all current and potential investors to review the disclosure regarding forward-looking statements in this press release as well as all financial documents filed with the SEC. All guidance amounts are before any potential special items. In response to its strong performance for the fourth quarter of 2002 and to reflect the effect of the secondary offering of common stock on February 4, 2003, VCA Antech has adjusted its financial guidance for 2003. As previously announced, the Company completed a secondary offering of 10.1 million shares of its common stock on February 4, 2003, which included 3.3 million primary shares of stock sold by the Company. The proceeds received from the offering were used to redeem the entire principal amount, or approximately $36.7 million, of its 15.5% senior notes due 2010 at a redemption price of 110% of the principal amount, plus accrued and unpaid interest, and for general corporate purposes. In connection with the repayment of these notes, the Company incurred $7.4 million of costs, including $4.0 million in prepayment premiums and transaction costs, and $3.4 million in non-cash costs pertaining to the write-off of unamortized discounts and deferred financing costs associated with the debt. These charges will be recognized as early debt redemption costs (as a component of net income) in the first quarter of 2003. The after-tax impact of these charges on net income will be approximately $4.4 million, or $0.11 per diluted common share. As a result of redeeming the entire $36.7 million principal balance of its 15.5% senior notes, the Company will realize interest expense savings in 2003 of $5.8 million. After adjusting for the income tax benefit, the savings in 2003 will amount to $3.4 million, or $0.08 per diluted common share. As a result of the performance in the fourth quarter of 2002 and the offering of common stock in the first quarter of 2003, VCA Antech adjusted its guidance for 2003. The Company's guidance for EBITDA(1) has increased to a range of $117.0 million to $120.0 million from its previously announced guidance of $116.0 million to $119.0 million. The guidance for operating income is a range of $104.0 million to $106.0 million. The guidance for net income (reflecting the after-tax benefit of the interest expense savings and charges for early debt redemption costs, discussed above) is now a range of $36.5 million to $37.5 million. Based on 40.6 million diluted outstanding shares, annual earnings per diluted common share ("EPS") is now expected to be $0.91. The guidance for 2003 EPS reflects the $0.11 per diluted share charge for early debt redemption costs. Our goal for 2003 EPS by quarter is as follows: Q1 $0.09 (net of $0.11 per diluted share charge for early debt redemption costs) Q2 $0.34 Q3 $0.30 Q4 $0.18 Year $0.91 (net of $0.11 per diluted share charge for early debt redemption costs) (1) EBITDA is operating income, before depreciation and amortization. EBITDA is not a measure of financial performance under generally accepted accounting principles ("GAAP"). Although 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 is widely used by financial analysts as a measure of financial performance. We believe 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 that may vary from period to period as a result of non-operating activities. EBITDA is also an important component of our financial ratios included in our debt covenants, which provide us with a measure of our ability to service our debt and meet capital expenditure requirements out of Page 1 our earnings. Our calculation of EBITDA may not be comparable to similarly titled measures reported by other companies. 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 gross profit margins, the level of selling, general and administrative costs, the effects of competition, the efficient integration of the 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-3 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 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 2 EX-99 4 exhibit_99-2.txt EXHIBIT 99.2 VCA ANTECH, INC. REPORTS FOURTH QUARTER AND YEAR-END RESULTS - Fourth quarter net income per diluted common share, excluding extraordinary items and certain significant items (including litigation charges), was $0.14 per diluted common share, beating earnings consensus estimate by $0.02 per diluted common share. - Full year net income per diluted common share, excluding extraordinary items and certain significant items (including litigation charges), was $0.83 per diluted common share. - Fourth quarter revenue grew 11.1% to a record $106.7 million. - Full year revenue grew 10.5% to a record $443.5 million. LOS ANGELES, CA, FEBRUARY 20, 2003 - VCA ANTECH, INC. (NASDAQ NM SYMBOL: WOOF), a leading animal health care company in the United States, today reported financial results for the fourth quarter and the year ended December 31, 2002. For the fourth quarter of 2002, the Company reported under generally accepted accounting principles the following: revenue increased 11.1% to a record $106.7 million from $96.0 million in 2001; operating income increased to $16.5 million from a loss of $6.0 million in 2001; net income, before extraordinary item, increased to $3.3 million from a loss of $10.5 million in 2001; and, operating income before depreciation and amortization ("EBITDA")(1) increased to $19.7 million from $0.1 million in 2001. For the full 2002 year, the Company reported under generally accepted accounting principles the following: revenue increased 10.5% to a record $443.5 million from $401.4 million in 2001; operating income increased to $91.5 million from $27.7 million in 2001; net income, before extraordinary item, increased to $28.4 million from a loss of $17.3 million in 2001; and, EBITDA(1) increased to $104.0 million from $52.9 million in 2001. VCA Antech management believes that investors' understanding of the performance of the Company is enhanced by providing both "as reported" (in accordance with generally accepted accounting principles) net income (loss) to common stockholders, diluted earnings per share, operating income and EBITDA(1) and "as adjusted" for certain expense items that are unusual due to their nature, their infrequency of occurrence or their size, including extraordinary items, litigation charges, write-down of assets, non-cash compensation, amortization of goodwill and certain costs in connection with the Company's reorganization in 2000 and initial public offering in 2001. VCA Antech has listed these items in the attached financial schedules titled "Supplemental Operating Data" and reconciles these measures to net income determined according to generally accepted accounting principles. Adjusting for certain significant items, the Company reported for the fourth quarter of 2002 the following: adjusted net income increased to $5.3 million from $2.6 million in 2001; adjusted operating income increased 18.8% to $18.7 million from $15.7 million in 2001; adjusted net income per diluted common share increased to $0.14 from a loss of $0.04 in 2001; and, adjusted EBITDA(1) increased 17.5% to $21.9 million from $18.6 million in 2001. Adjusting for certain significant items, the Company reported for the 2002 year the following: adjusted net income increased to $30.7 million from $19.9 million in 2001; adjusted operating income increased 20.0% to $93.9 million from $78.3 million in 2001; adjusted net income per diluted common share, increased to $0.83 from $0.04 in 2001; and, adjusted EBITDA(1) increased 19.0% to $106.5 million from $89.5 million in 2001. On October 24, 2002, the Company repaid $30.0 million of its 15.5% senior notes and retired all $15.0 million of its outstanding 13.5% senior subordinated notes. Funds used to repay the debt and pay related prepayment premium and transaction costs were derived from an additional $25.0 million of senior term C notes issued under the Company's senior credit facility and cash on hand. In connection with the repayment of the notes, the Company incurred approximately $9.4 million of costs, including $4.6 million in prepayment premium and transaction costs and $4.8 million in non-cash costs pertaining to the write-off of unamortized discounts and deferred financing costs associated with the debt retired. These charges were recognized during the fourth quarter of 2002 as an extraordinary loss in the amount of approximately $5.6 million, net of income tax benefit. In February 2003, the Company settled in principle a lawsuit for $2.0 million or $0.05 per diluted common share. The settlement is subject to completion of final documentation. The settlement is reflected as a charge to corporate general and administrative expense. Bob Antin, Chairman and CEO, stated, "I am pleased to announce strong fourth quarter results to close out a great 2002. Adjusted net income per diluted common share, before extraordinary item, beats the earnings consensus by $0.02 per share. "Our fourth quarter results continue to reflect the operating leverage in both of our business segments. This leverage drove outstanding growth in adjusted EBITDA(1) and adjusted net income in the fourth quarter of 2002. On an 11.1% revenue increase in the fourth quarter of 2002, adjusted EBITDA(1) increased 17.5% to $21.9 million. Adjusted EBITDA(1) margins increased to 20.5% in the fourth quarter of 2002 from 19.4% in the fourth quarter of 2001. "Our laboratory division continues to realize the benefits of our market leadership position and our national platform. On a 14.2% laboratory revenue increase in the fourth quarter of 2002, adjusted laboratory EBITDA(1) increased 20.5% to $12.4 million over the same quarter in the prior year. Adjusted laboratory EBITDA(1) margin for the fourth quarter of 2002 increased to 33.1% from 31.3% for the fourth quarter of 2001. Laboratory internal revenue growth was 13.7% for the fourth quarter of 2002. "On a 10.7% animal hospital revenue increase in the fourth quarter of 2002, adjusted animal hospital EBITDA(1) increased 24.0% to $13.3 million over the same quarter in the prior year. Adjusted animal hospital EBITDA(1) margin for the fourth Page 2 quarter of 2002 increased to 18.7% from 16.7% for the fourth quarter of 2001. Animal hospital same-facility revenue growth was 3.9% for the fourth quarter of 2002. "I am very pleased that the strength of our operations and the success of our Company along with our outstanding relationships with our bank group and the investment banking community have enabled us to make some positive and significant changes to our capital structure while expanding our base of shareholders. The two debt restructurings that we completed in the third and fourth quarters of 2002 along with the proceeds from the secondary offering of our common stock completed in February 2003 have allowed us to retire all of our 15.5% senior notes and 13.5% senior subordinated notes." VCA Antech will discuss its fourth quarter 2002 earnings during a conference call today, February 20, 2003 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) 289-0485. 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 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-3 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 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 TWELVE MONTHS ENDED DECEMBER 31, 2002 AND 2001 (UNAUDITED - IN THOUSANDS, EXCEPT PER SHARE AMOUNTS) THREE MONTHS TWELVE MONTHS ENDED DECEMBER 31, ENDED DECEMBER 31, ---------------------- ---------------------- 2002 2001 2002 2001 ---------- --------- ---------- ---------- Revenue: Laboratory $ 37,525 $ 32,856 $ 154,436 $ 134,711 Animal Hospital 71,336 64,448 296,719 272,113 Other - 500 1,500 2,000 Intercompany (2,207) (1,807) (9,109) (7,462) ---------- --------- ---------- ---------- 106,654 95,997 443,546 401,362 ---------- --------- ---------- ---------- Direct costs 75,703 69,772 302,452 283,226(a) Gross profit, excluding depreciation and amortization: Laboratory 15,068 12,426 66,434 52,715 Animal Hospital 15,883 13,299 73,160 63,421 Other - 500 1,500 2,000 ---------- --------- ---------- ---------- 30,951 26,225 141,094 118,136 ---------- --------- ---------- ---------- General and administrative: Laboratory 2,660 2,129 10,292 11,434 Animal Hospital 2,582 2,800 10,387 12,323 Corporate 6,050 3,339 16,506 14,876 ---------- --------- ---------- ---------- 11,292 8,268(b) 37,185 38,633(b) ---------- --------- ---------- ---------- Depreciation 2,756 2,476 10,789 9,561 Amortization 467 3,569 1,764 15,605 Agreement termination costs - 17,552 - 17,552 Gain on sale of assets (20) (243) (100) (118) Write-down of assets - 577 - 9,197 ---------- --------- ---------- ---------- Operating income (loss) 16,456 (5,974) 91,456 27,706 ---------- --------- ---------- ----------
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VCA ANTECH, INC. CONSOLIDATED STATEMENTS OF OPERATIONS - CONTINUED THREE AND TWELVE MONTHS ENDED DECEMBER 31, 2002 AND 2001 (UNAUDITED - IN THOUSANDS, EXCEPT PER SHARE AMOUNTS) THREE MONTHS TWELVE MONTHS ENDED DECEMBER 31, ENDED DECEMBER 31, ------------------------ ---------------------- 2002 2001 2002 2001 ---------- ---------- ---------- ---------- Interest expense, net 8,663 10,531 39,204 42,918 Other (income) expense 304 (65) 145 168 Minority interest expense 421 335 1,781 1,439 ---------- ---------- ---------- ---------- Income (loss) before income taxes and extraordinary item 7,068 (16,775) 50,326 (16,819) Provision for income taxes 3,818 (6,296) 21,910 445 ---------- ---------- ---------- ---------- Net income (loss) before extraordinary item 3,250 (10,479) 28,416 (17,264) Extraordinary loss on early extinguishment of debt, net of tax 5,575 10,159 7,576 10,159 ---------- ---------- ---------- ---------- Net income (loss) (2,325) (20,638) 20,840 (27,423) Increase in carrying amount of redeemable preferred stock - 3,568 - 19,151 ---------- ---------- ---------- ---------- Net income (loss) to common stockholders $ (2,325) $ (24,206) $ 20,840 $ (46,574) ========== ========== ========== ========== Diluted income (loss) per common share: Income (loss) before extraordinary item $ 0.09 $ (0.56) $ 0.77 $ (1.87) Extraordinary loss on early extinguishment of debt (0.15) (0.41) (0.21) (0.52) ---------- ---------- ---------- ---------- Diluted earnings (loss) per common share $ (0.06) $ (0.97) $ 0.56 $ (2.39) ========== ========== ========== ========== Diluted shares 36,764 25,043 37,091 19,509 ========== ========== ========== ========== (a) Direct costs for the twelve months ended December 31, 2001 include $1.4 million of non-cash compensation, which was not incurred in 2002. (b) General and administrative expense for the twelve months ended December 31, 2001 includes $6.2 million of non-cash compensation and $2.3 million of management fees, and for the three months ended December 31, 2001 includes $413,000 of management fees. These were not incurred in 2002.
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VCA ANTECH, INC. SUPPLEMENTAL OPERATING DATA FOR THE THREE AND TWELVE MONTHS ENDED DECEMBER 31, 2002 AND 2001 (UNAUDITED - IN THOUSANDS, EXCEPT PER SHARE AMOUNTS) THREE MONTHS TWELVE MONTHS ENDED DECEMBER 31, ENDED DECEMBER 31, ------------------------ ------------------------ 2002 2001 2002 2001 ---------- ---------- ---------- ---------- TABLE #1A RECONCILIATION OF NET INCOME TO ADJUSTED EBITDA (1) Net income (loss) before extraordinary item $ 3,250 $ (10,479) $ 28,416 $ (17,264) Provision for income taxes 3,818 (6,296) 21,910 445 Minority interest expense 421 335 1,781 1,439 Interest expense, net 8,663 10,531 39,204 42,918 Other (income) expense 304 (65) 145 168 ---------- ---------- ---------- ---------- Operating income 16,456 (5,974) 91,456 27,706 Depreciation and amortization 3,223 6,045 12,553 25,166 ---------- ---------- ---------- ---------- EBITDA (1) 19,679 71 104,009 52,872 Certain significant items: Litigation charges 2,200 - 2,475 - Management fees - 413 - 2,273 Agreement termination costs - 17,552 - 17,552 Write-down of assets - 577 - 9,197 Non-cash compensation - - - 7,611 ---------- ---------- ---------- ---------- Adjusted EBITDA (1) $ 21,879 $ 18,613 $ 106,484 $ 89,505 ========== ========== ========== ========== TABLE #1B COMPONENTS OF ADJUSTED EBITDA Adjusted laboratory EBITDA (1) $ 12,405 $ 10,297 $ 56,115 $ 45,561 Adjusted animal hospital EBITDA (1) 13,321 10,742 62,784 53,776 Other revenue - 500 1,500 2,000 Corporate selling, general and administrative and gain on sale of corporate assets, excluding certain significant items as detailed in Table #1A (3,847) (2,926) (13,915) (11,832) ---------- ---------- ---------- ---------- Adjusted EBITDA (1) $ 21,879 $ 18,613 $ 106,484 $ 89,505 ========== ========== ========== ==========
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VCA ANTECH, INC. Supplemental Operating Data - Continued For the Three and Twelve Months Ended December 31, 2002 and 2001 (Unaudited- In Thousands, Except Per Share Amounts) THREE MONTHS TWELVE MONTHS ENDED DECEMBER 31, ENDED DECEMBER 31, ------------------------ ----------------------- 2002 2001 2002 2001 ---------- ---------- ---------- ---------- TABLE #2 RECONCILIATION OF OPERATING INCOME TO ADJUSTED OPERATING INCOME Operating income (loss) $ 16,456 $ (5,974) $ 91,456 $ 27,706 Certain significant items: Litigation charges 2,200 - 2,475 - Management fees - 413 - 2,273 Agreement termination costs - 17,552 - 17,552 Write-down of assets - 577 - 9,197 Non-cash compensation - - - 7,611 Amortization of executive covenants not to compete - 868 - 4,796 Amortization of goodwill (2) - 2,274 - 9,152 ---------- ---------- ---------- ---------- Adjusted operating income $ 18,656 $ 15,710 $ 93,931 $ 78,287 ========== ========== ========== ========== TABLE #3 RECONCILIATION OF NET INCOME TO ADJUSTED NET INCOME (LOSS) TO COMMON STOCKHOLDERS Net income (loss) $ (2,325) $ (20,638) $ 20,840 $ (27,423) Certain significant items: Litigation charges 2,200 - 2,475 - Management fees - 413 - 2,273 Agreement termination costs - 17,552 - 17,552 Write-down of assets - 577 - 9,197 Non-cash compensation - - - 7,611 Amortization of executive covenants not to compete - 868 - 4,796 Amortization of goodwill (2) - 2,274 - 9,152 ---------- ---------- ---------- ---------- Total of certain significant items 2,200 21,684 2,475 50,581 Tax effect (103) (8,610) (215) (13,369) ---------- ---------- ---------- ---------- Total, net of tax 2,097 13,074 2,260 37,212 Extraordinary item, net of tax 5,575 10,159 7,576 10,159 ---------- ---------- ---------- ---------- Adjusted net income 5,347 2,595 30,676 19,948 Increase in carrying amount of redeemable preferred stock - 3,568 - 19,151 ---------- ---------- ---------- ---------- Adjusted net income (loss) to common stockholders $ 5,347 $ (973) $ 30,676 $ 797 ========== ========== ========== ==========
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VCA ANTECH, INC. Supplemental Operating Data - Continued For the Three and Twelve Months Ended December 31, 2002 and 2001 (Unaudited - In Thousands, Except Per Share Amounts) THREE MONTHS TWELVE MONTHS ENDED DECEMBER 31, ENDED DECEMBER 31, ------------------------ ----------------------- 2002 2001 2002 2001 ---------- ---------- ---------- ---------- TABLE #4 RECONCILIATION OF DILUTED EARNINGS (LOSS) PER COMMON SHARE TO ADJUSTED DILUTED EARNINGS (LOSS) PER COMMON SHARE Diluted earnings (loss) per common share $ (0.06) $ (0.97) $ 0.56 $ (2.39) Certain significant items as detailed in Table #3, net of tax 0.05 0.52 0.06 1.91 Extraordinary item, net of tax 0.15 0.41 0.21 0.52 ---------- ---------- ---------- ---------- Adjusted diluted earnings (loss) per common share $ 0.14 $ (0.04) $ 0.83 $ 0.04 ========== ========== ========== ========== Diluted shares 37,102 25,043 37,091 19,509 ========== ========== ========== ========== TABLE #5 RATIO OF EARNINGS TO FIXED CHARGES Ratio of earnings to fixed charges (3) 2.1x N/A 1.7x N/A ========== ========== ========== ========== (1) EBITDA is operating income before depreciation and amortization. Adjusted EBITDA represents EBITDA adjusted to exclude litigation charges, management fees, agreement termination costs, write-down 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 operating 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, minority interest and certain other significant 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. Adjusted laboratory EBITDA excludes non-cash compensation of $4.3 million for the twelve months ended December 31, 2001. Adjusted animal hospital EBITDA excludes non-cash compensation of $2.6 million for the twelve months ended December 31, 2001. (2) Effective January 1, 2002 the Company stopped amortizing goodwill pursuant to Statement of Financial Accounting Standards No. 142, GOODWILL AND OTHER INTANGIBLE ASSETS. For the three and twelve months ended December 31, 2001, amortization expense for goodwill amounted to $1.7 million and $6.9 million, respectively after adjusting for the income tax benefit. (3) 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 three and twelve months ended December 31, 2001 as we had pre-tax losses in these periods.
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VCA ANTECH, INC. Supplemental Operating Data - Continued As of and For the Twelve Months Ended December 31, 2002 and 2001 (Unaudited - In Thousands, Except Per Share Amounts) AS OF DECEMBER 31, ----------------------------- 2002 2001 ---------- ---------- TABLE #6 SELECTED CONSOLIDATED BALANCE SHEET DATA Cash $ 6,462 $ 7,103 Accounts receivable, net $ 20,727 $ 18,036 Equity $ 63,086 $ 39,764 Total assets $ 507,428 $ 468,521 Debt: Revolving credit facility $ 7,500 $ - Senior Term Loan A - 24,112 Senior Term Loan B - 121,242 Senior Term Loan C 167,283 - 13.5% Senior Subordinated Notes - 15,000 9.875% Senior Subordinated Notes 170,000 170,000 15.5% Senior Notes 38,137 59,670 Other 1,637 1,486 Unamortized discounts (3,000) (7,178) ---------- ---------- Total debt $ 381,557 $ 384,332 ========== ========== FOR THE TWELVE MONTHS ENDED DECEMBER 31 ----------------------------- 2002 2001 ---------- ---------- TABLE #7 SELECTED CASH FLOW AND EXPENSE DATA Net cash provided by operating activities $ 67,122 $ 57,104 Rent expense $ 14,159 $ 12,635 Capital expenditures $ 17,912 $ 14,156
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