0000950144-95-002396.txt : 19950817 0000950144-95-002396.hdr.sgml : 19950817 ACCESSION NUMBER: 0000950144-95-002396 CONFORMED SUBMISSION TYPE: 10-Q/A PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19950630 FILED AS OF DATE: 19950816 SROS: NASD FILER: COMPANY DATA: COMPANY CONFORMED NAME: REN CORP USA CENTRAL INDEX KEY: 0000840491 STANDARD INDUSTRIAL CLASSIFICATION: SERVICES-SPECIALTY OUTPATIENT FACILITIES, NEC [8093] IRS NUMBER: 621323090 STATE OF INCORPORATION: TN FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q/A SEC ACT: 1934 Act SEC FILE NUMBER: 000-18067 FILM NUMBER: 95564714 BUSINESS ADDRESS: STREET 1: 6820 CHARLOTTE PIKE CITY: NASHVILLE STATE: TN ZIP: 37209 BUSINESS PHONE: 6153534200 MAIL ADDRESS: STREET 1: 6820 CHARLOTTE PIKE CITY: NASHVILLE STATE: TN ZIP: 37209 10-Q/A 1 REN CORPORATION - USA 10-Q/A 06-30-95 1 SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q/A Amendment No. 1 Quarterly Report Under Section 13 or 15(d) of the Securities and Exchange Act of 1934 For the Quarter Ended June 30, 1995 Commission file number 0-18067 REN CORPORATION-USA (Exact name of registrant as specified in its charter) Tennessee 62-1323090 (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification Number) 6820 Charlotte Pike 37209 Nashville, TN (Zip Code) (Address of principal executive offices) Registrant's telephone number, including area code: (615) 353-4200 Common Stock, no par value Indicate by check mark whether registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities and Exchange Act of 1934 during the preceding 12 months (or for such shorter period that registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. YES X NO . --- --- As of August 11, 1995, 18,949,084 shares of registrant's Common Stock, no par value, were outstanding. 2 REN CORPORATION- USA Consolidated Balance Sheets (in thousands, except share data)
June 30, December 31, 1995 1994 -------- ------------ (Unaudited) Current assets: Cash and cash equivalents $ 92 $ 644 Accounts receivable less allowance for uncollectibles and contractual adjustments of $15,022 and $12,885 at June 30, 1995 and December 31, 1994, respectively 20,488 22,252 Estimated third-party settlements, net 431 60 Inventory 3,922 3,382 Prepaid expense 1,622 974 Current deferred taxes, net 3,729 3,079 Other current assets 222 1,385 -------- -------- Total current assets 30,506 31,776 Property, plant and equipment, net 55,163 51,916 Intangible assets, net 56,448 47,460 Notes receivable $2,667 $1,795 Other assets 5,703 1,368 -------- -------- Total assets $150,487 $134,315 ======== ======== LIABILITIES AND SHAREHOLDERS' EQUITY Current liabilities: Bank notes payable $ 875 $ - Current maturities of long-term debt and capital lease obligations 92 87 Accounts payable 8,722 6,541 Accrued expenses 4,383 2,939 Accrued wages and benefits 3,842 3,751 Income taxes payable 399 1,521 -------- -------- Total current liabilities 18,313 14,839 Long-term debt and capital lease obligations, less current maturities 5,394 342 Deferred taxes, net 4,974 4,301 Minority interest in consolidated subsidiaries 623 89 -------- -------- Total long-term liabilities 10,991 4,732 Redeemable common stock; 6,000 and 12,000 shares issued and outstanding at June 30, 1995 and December 31, 1994, respectively 24 47 Commitments and contingencies Shareholders' equity: Common stock; no par value, authorized 60,000,000 shares; 18,936,659 and 18,898,546 shares issued and outstanding at June 30, 1995 and December 31, 1994, respectively 102,229 101,841 Additional paid-in capital 4,224 4,224 Retained earnings 14,706 8,650 Less unearned stock grant compensation - $ (18) -------- -------- Total shareholders' equity 121,159 114,697 -------- -------- Total liabilities and shareholders' equity $150,487 $134,315 ======== ========
See accompanying notes to consolidated financial statements. 1 3 REN CORPORATION- USA Consolidated Statements of Operations (in thousands, except per share data) (Unaudited)
Three Months Ended Six Months Ended June 30, June 30, ------------------------- -------------------------- 1995 1994 1995 1994 ----------- ----------- ----------- ----------- Revenue: Dialysis services $ 38,714 $ 28,872 $ 73,793 $ 56,309 Laboratory services 4,204 2,766 7,739 5,616 ----------- ----------- ----------- ----------- 42,918 31,638 81,532 61,925 ----------- ----------- ----------- ----------- Direct operating expense: Dialysis services 28,783 21,027 54,437 41,289 Laboratory services 1,318 1,461 2,802 2,901 ----------- ----------- ----------- ----------- 30,101 22,488 57,239 44,190 ----------- ----------- ----------- ----------- Gross operating profit: Dialysis services 9,931 7,845 19,356 15,020 Laboratory services 2,886 1,305 4,937 2,715 ----------- ----------- ----------- ----------- 12,817 9,150 24,293 17,735 Indirect operating expense: Corporate office general, administrative and operations support 2,818 2,499 5,534 5,629 Depreciation and amortization 3,207 2,675 6,069 5,269 Bad debt expense 1,018 687 1,542 1,202 Loss of unconsolidated subsidiary 17 0 62 95 ----------- ----------- ----------- ----------- Income from operations 5,757 3,289 11,086 5,540 Non-operating (income) expense: Interest income (141) (39) (229) (106) Interest expense 349 237 642 493 ----------- ----------- ----------- ----------- Income before income taxes 5,549 3,091 10,673 5,153 Income tax expense 2,274 1,206 4,375 2,030 Minority interest in income of consolidated subsidiary, net of income tax expense of $62 and $167 for the quarter and six months ended June 30, 1995 91 - 241 - ----------- ----------- ----------- ----------- Net income $ 3,184 $ 1,885 $ 6,057 $ 3,123 =========== =========== =========== =========== Net income per common share and comon share equivalent $ 0.17 $ 0.10 $ 0.32 $ 0.17 =========== =========== =========== =========== Weighted average common shares and common share equivalents outstanding 19,027,576 18,886,187 19,021,789 18,868,932 =========== =========== =========== ===========
See accompanying notes to consolidated financial statements. 2 4 REN CORPORATION- USA Consolidated Statement of Changes in Shareholders' Equity For the six months ended June 30, 1995 (Unaudited) (in thousands, except share data)
Common Additional Unearned --------------------------- Paid-In Retained Stock Grant Shares Amount Capital Earnings Compensation Total ----------- -------- ---------- -------- ------------ -------- December 31, 1994 18,898,546 $101,841 $4,224 $ 8,650 ($18) $114,696 Net income - - - 6,057 - 6,057 Issuance of common stock for employee stock purchase plan 20,038 224 - - - 224 Exercise of stock options 12,075 140 - - - 140 Amortization of unearned stock grant compensation - - - - 18 18 Expiration of redeemable common stock 6,000 24 - - - 24 ---------- -------- ------ ------- -- -------- June 30, 1995 18,936,659 $102,229 $4,224 $14,707 $- $121,159 ========== ======== ====== ======= == ========
See accompanying notes to consolidated financial statements. 3 5 REN CORPORATION-USA Consolidated Statements of Cash Flows (in thousands) (unaudited)
Six Months Ended June 30, ------------------- 1995 1994 ------- ------- Cash flows from operating activities: Net income $ 6,057 $ 3,123 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization expense 6,069 5,269 Amortization of unearned stock grant compensation 18 122 Deferred income taxes 23 - Effect on cash of change in operating assets and liabilities, net of effects from acquisitions: Accounts receivable and estimated third party settlements 1,392 1,600 Inventory (540) (621) Income taxes receivable - - Prepaid expenses and other current assets 515 3,508 Notes receivable and other assets (5,207) 1 Accounts payable 2,181 4,059 Accrued expenses and income taxes 948 1,391 ------- ------- Net cash provided by operating activities 11,456 18,452 ------- ------- Cash flows from investing activities: Acquisitions, net of cash acquired (10,837) - Purchase of property, plant and equipment (6,334) (11,229) Intangible assets acquired (1,136) (235) Net book value of assets sold 2 - ------- ------- Net cash used in investing activities (18,305) (11,464) ------- ------- Cash flows from financing activities: Proceeds from issuance of long-term debt 44,100 4,000 Principal payments on long-term debt and capital lease obligations (38,168) (11,062) Proceeds from common stock options and warrants exercised 365 506 Redemption of common stock - (159) ------- ------- Net cash provided by (used in) financing activities 6,297 (6,715) ------- ------- Net increase (decrease) in cash and cash equivalents (552) 273 Cash and cash equivalents at beginning of period $ 644 $ 655 ------- ------- Cash and cash equivalents at end of period $ 92 $ 928 ======= =======
See accompanying notes to consolidated financial statements. 4 6 REN CORPORATION-USA Consolidated Statements of Cash Flows, Continued
Six Months Ended June 30, ------------------ 1995 1994 ---- ---- (in thousands) Supplemental disclosures of cash flow information: Cash paid during the period for: Interest $ 530 $373 Income taxes 5,310 1
Supplemental schedule of noncash investing and financing activities: During the six months ended June 30, 1995 the Company acquired certain assets, principally goodwill and agreements not to compete, of two dialysis clinics operated by The George Washington University, a 51% ownership in certain assets, principally goodwill and equipment, of Greater Milwaukee Dialysis Corporation, and a 53.3% ownership interest in certain assets, principally goodwill and equipment of Rocky Mountain Kidney Center for an aggregate purchase price of approximately $12 million. During January of both 1995, and 1994, redemption rights on 6,000 shares of common stock for $23,500 expired. 5 7 REN CORPORATION-USA NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS (1) Basis of Presentation The accompanying interim financial statements have been prepared in conformity with generally accepted accouting principles for interim financial information and with the instructions to Form 10-Q and Rule 10.01 of Regulation S-X. Accordingly, 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, the interim consolidated financial statements include all adjustments, consisting of normal recurring adjustments, necessary for a fair presentation of the results of the interim periods. The interim financial statements should be read in conjunction with the 1994 audited consolidated financial statements and related notes. The results of operations for the interim periods may not be indicative of the operating results for the year ending December 31, 1995. (2) Income Taxes Actual income tax expense for the six months ended June 30, 1995, differs from the "expected" income tax expense (computed by applying the federal corporate rate of 35%) as follows:
(in thousands) Computed expected federal income tax expense $3,736 Increase in income tax resulting from: State income tax expense, net of federal benefit 486 Other 153 ------ Income Tax Expense $4,375 ======
(3) Bank Credit Facility During 1993, the Company replaced its existing credit agreement with a new agreement with a consortium of banks. Terms of the credit agreement provide the Company with a six-year reducing revolving credit facility in the amount of $60 million. The revolving facility is available in full until August 30, 1995 when the availability begins to reduce by $3.75 million each quarter until fully reduced on May 31, 1999. Borrowings under the facility will bear interest at either the bank prime rate or, at the Company's option, at a LIBOR rate plus an increment of 75 basis points to 125 basis points depending on the ratio of debt to equity in accordance with a predetermined schedule. At June 30, 1995, the Company had waivers for or was in compliance with all loan covenants. The Company had $4 million outstanding under the Credit Agreement at June 30, 1995. 6 8 (4) Commitments and Contigencies The Company has been named a defendant in various legal actions arising from its normal business activites. In the opinion of management after consultation with counsel, any liability that may arise from such actions will not have a material adverse effect on the Company. On April 24, 1995, the U.S. Health Care Financing Administration (HCFA) advised Associate Regional Adminstrators for Medicare of a contemplated change in the government's interpretation of the amendment to the Medicare Secondary Payor (MSP) End Stage Rental Disease (ESRD) provision of the Social Security Act contained in the Omnibus Budget Reconciliation Act of 1993 (OBRA 93). An upcoming Program Instruction will officially advise Medicare Intermediaries that prior guidance by HCFA was erroneous and direct the Intermediaries to apply the reinterpretation of the Law retractively and prospective to all ESRD claims after August 10, 1993 The effect of this reinterpretation of the Law is to make Medicare the primary payor in cases where a Medicare beneficiary is entitled to Medicare benefits on the bases of either age or disability and ESRD and where the entitlement other than ESRD precedes the ESRD diagnosis. According to previous memorandum issued by Medicare Intermediaries, the MSP provisions would apply irrespective of whether the ESRD diagnosis was before or after the Medicare entitlement other than ESRD. Because commercial rates are normally in excess of the Medicare allowable rates, the change in the application of the MSP provisions may result in a reduction of dialysis revenue going forward for those patients whose Medicare entitlement other than ESRD preceded their ESRD diagnosis. Because the reinterpretation of the MSP provisions to OBRA 93 is retoractive to August 10, 1993, the Company may be required to refund amount paid by commercial payors and bill Medicare as the primary payor for patients whose Medicare eligibility preceded their eligibility due to ESRD. It is not possible to predict at this time the financial consequences of such refund requests, net of any available reserves. 7 9 Item 6. Exhibits and Reports on Form 8-K (a) Exhibits Exhibit Number Exhibit 27 Financial Data Schedule (for SEC use only) (b) Reports on Form 8-K On April 12, 1995, the Company filed a report on Form 8-K in respect of The George Washington University acquisition. 10 SIGNATURES Pursuant to the requirement of the Securities and Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. REN CORPORATION-USA August 15, 1995 /s/ Bradley S. Wear ------------------------------------------------- Bradley S. Wear Senior Vice President, Treasurer and Chief Financial Officer EX-27 2 FINANCIAL DATA SCHEDULE
5 THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE FINANCIAL STATEMENTS OF REN CORPORATION - USA FOR THE SIX MONTHS ENDED JUNE 30, 1995, AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS. 1,000 U.S. DOLLARS 6-MOS DEC-31-1995 JAN-01-1995 JUN-30-1995 1 92 0 35,510 15,022 3,922 30,506 77,898 22,735 150,487 18,313 0 102,229 0 0 18,930 150,487 81,532 81,532 57,239 57,239 11,665 1,542 642 10,673 4,375 6,057 0 0 0 6,057 0.32 0.32