-----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, NiOtvm0nhPxmEEQiI/Fg4hEC1hCxIyPK9ZB0KE4tJ3GcSgh88tVtjXkYr+Gk4a5u PHiguae0YcpFJ/xwUZrYwA== 0001157523-04-009844.txt : 20041026 0001157523-04-009844.hdr.sgml : 20041026 20041026160546 ACCESSION NUMBER: 0001157523-04-009844 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 20041026 ITEM INFORMATION: Results of Operations and Financial Condition ITEM INFORMATION: Regulation FD Disclosure ITEM INFORMATION: Financial Statements and Exhibits FILED AS OF DATE: 20041026 DATE AS OF CHANGE: 20041026 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: 041096793 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 a4750555.txt VCA ANTECH 8-K UNITED STATES 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): October 26, 2004 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) Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions: |_| Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |_| Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |_| Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |_| Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) 1 Item 2.02: Results of Operations and Financial Condition Reference is made to the press release of Registrant issued on October 26, 2004, regarding earnings for the third quarter of fiscal 2004, which is incorporated herein by reference. A copy of the press release is attached to this Form 8-K as Exhibit 99.1. Item 7.01: Regulation FD Disclosure Reference is made to the press release of Registrant issued on October 26, 2004, regarding earnings guidance, which is incorporated herein by reference. A copy of the press release is attached to this Form 8-K as Exhibit 99.2. Item 9.01: Financial Statements, Pro Forma Financial Information and Exhibits (c) Exhibits 99.1 Press release dated October 26, 2004, regarding earnings for the third quarter of fiscal 2004 99.2 Press release dated October 26, 2004, regarding earnings guidance. 2 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 hereunto duly authorized. October 26, 2004 VCA Antech, Inc. /s/ Tomas W. Fuller ------------------- By: Tomas W. Fuller Its: Chief Financial Officer 3 EXHIBIT INDEX Exhibits 99.1 Press release dated October 26, 2004, regarding earnings for the third quarter of fiscal 2004. 99.2 Press release dated October 26, 2004, regarding earnings guidance. 4 EX-99.1 2 a4750555ex991.txt VCA ANTECH EX 99.1 PRESS RLS 3RD QTR. RESULTS Exhibit 99.1 VCA Antech, Inc. Reports Third Quarter Results LOS ANGELES--(BUSINESS WIRE)--Oct. 26, 2004--VCA Antech, Inc. (Nasdaq:WOOF): -- Third quarter diluted earnings per common share was $0.21 (a 16.7% increase compared to adjusted diluted earnings per common share in the comparable prior year period). -- Third quarter reported revenue increased 27.4% to a record $183.4 million. -- Third quarter reported net income increased to $17.3 million (a 19.7% increase compared to adjusted net income in the comparable prior year period). VCA Antech, Inc. (Nasdaq:WOOF), a leading animal health care company in the United States, today reported financial results for the third quarter ended September 30, 2004 as follows: revenue increased 27.4% to a third quarter record of $183.4 million; reported net income increased to $17.3 million; and reported diluted earnings per common share increased to $0.21. Reported net income and reported diluted earnings per common share for the quarter ended September 30, 2003 included an after-tax charge of $1.0 million for debt retirement costs. Excluding this item from 2003, adjusted net income increased 19.7% and adjusted diluted earnings per common share increased 16.7%. The Company also reported the financial results for the nine months ended September 30, 2004 as follows: revenue increased 20.7% to $497.6 million; reported net income increased to $50.3 million; and reported diluted earnings per common share increased to $0.60. Reported net income and reported diluted earnings per common share for the nine months ended September 30, 2004 included (i) an after-tax charge of $478,000 for debt retirement costs and (ii) an after-tax benefit of $1.1 million for the settlement of an insurance claim relating to a prior legal settlement. Reported net income and reported diluted earnings per common share for the nine months ended September 30, 2003 included an after-tax charge of $5.4 million for debt retirement costs. Excluding these items, adjusted net income increased 25.9% to $49.6 million, and adjusted diluted earnings per common share increased 25.0% to $0.60. Bob Antin, Chairman and CEO, stated, "We had another excellent and productive quarter marked by continued growth in our core businesses, despite the impact of hurricanes in the Southeastern United States. For the quarter, adjusted diluted earnings per common share increased by 16.7% from $0.18 to $0.21. The hurricanes resulted in an aggregate loss of 58 business days for impacted animal hospitals and a reduction in laboratory revenue in the affected markets. "Our laboratory internal revenue growth for the third quarter of 2004 was 9.2%. Excluding the Florida market, which was the market most significantly impacted by the hurricanes, our laboratory internal revenue growth was 10.1% for the quarter. The 9.2% growth in revenue generated an increase in laboratory gross profit of 12.4% to $22.2 million and an increase in laboratory gross profit margins to 43.8% from 42.6% in 2003. "The integration of National PetCare Centers, Inc. ("NPC") animal hospitals, which we acquired on June 1, 2004, continues to proceed well. Revenue and gross profit for NPC's animal hospitals met our expectations. Our consolidated animal hospital segment revenue growth for the third quarter of 2004 was 36.3%. However, as expected, NPC's gross profit margins, which are lower than our existing margins, resulted in a reduction in our consolidated animal hospital segment gross profit margins, which decreased from 21.3% in 2003 to 20.2% in 2004. "Our animal hospital same-store revenue growth for the third quarter of 2004 was 2.8%. Same-store animal hospital gross profit margins declined from 21.4% to 21.0% primarily due to decreased margins at two specialty/referral practices located in Chicago and Manhattan as the result of interruptions in business operations due to expansion activities at these sites. Margins on these practices are expected to return to historical norms as the expansion is completed and operations return to normal. "We incurred integration costs related to the acquisition of NPC in the amount of approximately $670,000 and $1.2 million for the three and nine months ended September 30, 2004, respectively. These costs are within management's forecasts. The integration process is substantially complete and we expect to incur nominal costs during the fourth quarter of 2004. These costs are included in corporate selling, general and administrative expense. Because the NPC animal hospitals have historically had lower gross profit margins than our existing animal hospitals, we anticipate lower margins in our animal hospital segment for the next several quarters. We remain excited about the opportunities to achieve shared synergies as we continue to integrate the two companies." The Company completed its acquisition of Sound Technologies, Inc. on October 1, 2004, following the close of the third quarter. Non-GAAP Financial Measures We believe investors' understanding of our total performance is enhanced by disclosing adjusted operating income, adjusted operating margin, adjusted net income and adjusted diluted earnings per common share. We define adjusted net income, adjusted operating income, adjusted operating margin and adjusted diluted earnings per common share as the reported items, adjusted to exclude certain significant items. For the periods presented in this press release, the only significant item that was excluded from adjusted operating income and adjusted operating margin was a litigation settlement reimbursement recognized during the first quarter of 2004 as a result of the Company settling a claim with its insurance company. The only significant items excluded from adjusted net income were the litigation settlement reimbursement recognized during the first quarter of 2004, debt retirement costs incurred during the second quarter of 2004 and debt retirement costs incurred during the first and third quarters of 2003. Adjusted diluted earnings per common share is adjusted net income divided by diluted common shares outstanding. Management uses adjusted operating income, adjusted operating margin, adjusted net income and adjusted diluted earnings per common share because they exclude the effects of the litigation settlement reimbursement and debt retirement costs that we believe are not representative of our core operations for the periods presented. As a result, these non-GAAP financial measures help to provide meaningful comparisons of our overall performance from one reporting period to another and meaningful assessments of our future performance and related trends. We also believe that disclosing animal hospital adjusted operating margin enhances investors' understanding of our animal hospital division's performance. We define animal hospital adjusted operating margin as reported operating margin adjusted to exclude certain items. For the periods reported in this press release, the only item that was excluded from animal hospital adjusted operating margin was a third quarter 2003 impairment charge of $392,000 for the write-down of real estate. There are material limitations associated with the use of these non-GAAP financial measures: adjusted operating income and adjusted operating margin exclude the impact of significant items (in this case, the litigation settlement reimbursement); animal hospital adjusted operating margin does not include the impact of significant items (in this case, an impairment charge); adjusted net income excludes the impact of significant items (in this case, the litigation settlement reimbursement and debt retirement costs) on current performance; and adjusted diluted earnings per common share does not depict the amount accrued directly to each stockholder's benefit. To compensate for the limitations in the non-GAAP financial measures discussed above, our disclosures provide a complete understanding of all adjustments found in non-GAAP financial measures, and we reconcile the non-GAAP financial measures to the GAAP financial measures in the attached financial schedules titled "Supplemental Operating Data." Conference Call VCA Antech will discuss its third quarter 2004 financial results during a conference call today, October 26, 2004 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 800-289-0493. 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 ability to successfully integrate NPC into the Company's existing operations and achieve expected operating synergies following the merger; the level of direct costs and the ability of the Company to maintain revenue at a level necessary to maintain expected operating margins; the level of selling, general and administrative costs; the effects of competition; 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 the Company's 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 Form 10-K and Form 10-Q 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 freestanding veterinary hospitals and veterinary-exclusive clinical laboratories in the country. VCA Antech, Inc. Consolidated Statements of Operations For the Three and Nine Months Ended September 30, 2004 and 2003 (Unaudited -- In Thousands, Except Per Share Amounts) Three Months Nine Months Ended Ended September 30, September 30, ---------------- ----------------- 2004 2003 2004 2003 ------- ------- ------- ------- Revenue: Laboratory $ 50,685 $ 46,429 $ 151,818 $ 134,818 Animal hospital 136,399 100,060 355,739 285,189 Intercompany (3,732) (2,605) (9,908) (7,783) ------- ------- ------- ------- 183,352 143,884 497,649 412,224 ------- ------- ------- ------- Direct costs (1): Laboratory 28,470 26,664 84,168 76,489 Animal hospital 108,833 78,789 284,044 226,708 Intercompany (3,732) (2,605) (9,908) (7,783) ------- ------- ------- ------- 133,571 102,848 358,304 295,414 ------- ------- ------- ------- Gross profit: Laboratory 22,215 19,765 67,650 58,329 Animal hospital 27,566 21,271 71,695 58,481 ------- ------- ------- ------- 49,781 41,036 139,345 116,810 ------- ------- ------- ------- Selling, general and administrative (1): Laboratory 3,136 2,855 9,499 8,359 Animal hospital 3,423 2,516 9,227 7,538 Corporate 6,478 3,982 14,777 12,649 ------- ------- ------- ------- 13,037 9,353 33,503 28,546 ------- ------- ------- ------- Write-down and loss (gain) on sale of assets (12) 442 54 282 -------- -------- --------- --------- Operating income 36,756 31,241 105,788 87,982 Interest expense, net 6,629 6,361 18,712 19,771 Other (income) expense (9) (129) (185) 129 Minority interest expense 746 456 1,917 1,279 Debt retirement costs - 1,701 810 9,118 ------- ------- ------- ------- Income before provision for income taxes 29,390 22,852 84,534 57,685 Provision for income taxes 12,046 9,363 34,279 23,663 ------- ------- ------- ------- Net income $ 17,344 $ 13,489 $ 50,255 $ 34,022 ======= ======= ======= ======= Diluted earnings per common share (2) $0.21 $0.16 $0.60 $0.42 ======= ======= ======= ======= Shares used for computing diluted earnings per common share (2) 83,455 82,668 83,300 81,300 ======= ======= ======= ======= VCA Antech, Inc. Supplemental Operating Data For the Three and Nine Months Ended September 30, 2004 and 2003 (Unaudited -- In Thousands, Except Per Share Amounts) Table #1 Three Months Nine Months Reconciliation of net income Ended Ended to adjusted net income September 30, September 30, 2004 2003 2004 2003 ------ ------ ------ ------ Net income $17,344 $13,489 $50,255 $34,022 Certain significant items: Debt retirement costs - 1,701 810 9,118 Litigation settlement reimbursement - - (1,124) - Related income tax benefit - (697) (332) (3,738) ------ ------ ------ ------ - 1,004 (646) 5,380 ------ ------ ------ ------ Adjusted net income $17,344 $14,493 $49,609 $39,402 ====== ====== ====== ====== Table #2 Reconciliation of diluted earnings per common share to adjusted diluted earnings per common share (2) Diluted earnings per common share $ 0.21 $ 0.16 $ 0.60 $ 0.42 Certain significant items as detailed in Table #1, net of income tax benefit - 0.02 - 0.06 ------ ------ ------ ------ Adjusted diluted earnings per common share $ 0.21 $ 0.18 $ 0.60 $ 0.48 ====== ====== ====== ====== Shares used for computing adjusted diluted earnings per common share 83,455 82,668 83,300 81,300 ====== ====== ====== ====== Table #3 Reconciliation of operating income to adjusted operating income and operating margin to adjusted operating margin Revenue $183,352 $143,884 $497,649 $412,224 ------ ------ ------ ------ Operating income $36,756 $31,241 $105,788 $87,982 Operating margin 20.0% 21.7% 21.3% 21.3% Certain significant items: Litigation settlement reimbursement - - (1,124) - ------ ------ ------ ------ Adjusted operating income $36,756 $31,241 $104,664 $87,982 ====== ====== ====== ====== Adjusted operating margin 20.0% 21.7% 21.0% 21.3% VCA Antech, Inc. Supplemental Operating Data -- Continued For the Three and Nine Months Ended September 30, 2004 and 2003 (Unaudited -- In Thousands) Table #4 Reconciliation of animal Three Months Nine Months hospital operating margin to Ended Ended animal hospital adjusted September 30, September 30, operating margin ----------------- ----------------- 2004 2003 2004 2003 ------- ------- ------- ------- Revenue $136,399 $100,060 $355,739 $285,189 ======= ======= ======= ======= Animal hospital operating income $ 24,155 $ 18,352 $ 62,415 $ 50,718 Animal hospital operating margin 17.7% 18.3% 17.5% 17.8% Certain items: Write-down of assets - 392 - 392 ------- ------- ------- ------- Animal hospital adjusted operating income $ 24,155 $ 18,744 $ 62,415 $ 51,110 ======= ======= ======= ======= Animal hospital adjusted operating margin 17.7% 18.7% 17.5% 17.9% Table #5 Depreciation and amortization(1) Depreciation and amortization included in direct costs: Laboratory $ 809 $ 794 $ 2,527 $ 2,347 Animal hospital 2,682 2,363 7,619 7,144 ------- ------- ------- ------- 3,491 3,157 10,146 9,491 Other 481 422 1,261 1,162 ------- ------- ------- ------- Depreciation and amortization $ 3,972 $ 3,579 $ 11,407 $ 10,653 ======= ======= ======= ======= VCA Antech, Inc. Supplemental Operating Data -- Continued As of September 30, 2004 and December 31, 2003 (Unaudited -- In Thousands) Table #6 September December 30, 31, Selected consolidated balance sheet data 2004 2003 -------- -------- Cash $ 50,834 $ 17,237 Accounts receivable, net $ 25,765 $ 22,335 Stockholders' equity $ 218,331 $ 161,923 Total assets $ 723,738 $ 554,803 Debt: Revolving credit facility $ - $ - Senior term E notes 223,875 - Senior term D notes - 145,703 9.875% senior subordinated notes 170,000 170,000 Other 3,779 1,770 Unamortized discounts - (4) -------- -------- Total debt $ 397,654 $ 317,469 ======== ======== For the Nine Months Ended September 30, 2004 and 2003 (Unaudited -- In Thousands) For the Nine Months Table #7 Ended September 30, ------------------ Selected cash flow and expense data 2004 2003 -------- -------- Net cash provided by operating activities $ 71,735 $ 67,690 Rent expense $ 15,272 $ 12,196 Capital expenditures $ 16,035 $ 11,040 Notes to Press Release (1) During 2004, the Company began including depreciation and amortization in direct costs and selling, general and administrative expense. Prior periods presented in this press release have been reclassified to conform to the 2004 financial statement presentation. (2) Diluted shares outstanding and earnings per share information presented in this release have been adjusted to reflect the 2-for-1 stock split effected in the form of a 100% stock dividend which was distributed on August 25, 2004. CONTACT: VCA Antech, Inc. Tom Fuller, 310-571-6505 EX-99.2 3 a4750555ex992.txt VCA ANTECH EX. 99.2 EARNINGS GUIDANCE Exhibit 99.2 VCA Antech, Inc. Provides Financial Guidance LOS ANGELES--(BUSINESS WIRE)--Oct. 26, 2004--VCA Antech, Inc. (Nasdaq:WOOF), a leading animal health care company in the United States, provides the following guidance for all investors in adherence with Regulation Fair Disclosure as issued by the United States Securities and Exchange Commission, SEC, and encourages all current and potential investors to review the disclosure regarding forward-looking statements in this press release as well as in all financial documents filed with the SEC. All guidance amounts are before any potential special items. VCA Antech, Inc. is providing the following financial guidance for the three months ending December 31, 2004: -- Revenue to a range of $168.0 million to $171.0 million. -- Diluted earnings per common share of $0.14. VCA Antech, Inc. is providing the following preliminary financial guidance for the year ending December 31, 2005: -- Revenue to a range of $771.0 million to $785.0 million. -- Diluted earnings per common share to a range of $0.86 to $0.88, which excludes the potential impact of proposed changes in accounting for stock-based compensation for which a final standard has not been issued by the Financial Accounting Standards Board. 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 revenue at a level necessary to maintain expected operating margins, the level of selling, general and administrative costs, the effects of competition, 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 the Company's 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 Form 10-K and Form 10-Q 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 freestanding veterinary hospitals and veterinary-exclusive clinical laboratories in the country. CONTACT: VCA Antech, Inc. Tom Fuller, 310-571-6505 -----END PRIVACY-ENHANCED MESSAGE-----