-----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, Ldb+QqxcwP0/KqysLUu9yqqFH3rxI32PlQuurRFeAdraHvlCNcAroWEACwAXfCK6 1zfu920M876yDQ16zMb0tw== 0000950144-96-002172.txt : 19960514 0000950144-96-002172.hdr.sgml : 19960514 ACCESSION NUMBER: 0000950144-96-002172 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19960331 FILED AS OF DATE: 19960513 SROS: NASD FILER: COMPANY DATA: COMPANY CONFORMED NAME: LINCARE HOLDINGS INC CENTRAL INDEX KEY: 0000882235 STANDARD INDUSTRIAL CLASSIFICATION: SERVICES-MISC HEALTH & ALLIED SERVICES, NEC [8090] IRS NUMBER: 510331330 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 000-19946 FILM NUMBER: 96561643 BUSINESS ADDRESS: STREET 1: 19337 US 19 N STE 500 CITY: CLEARWATER STATE: FL ZIP: 34624 BUSINESS PHONE: 8135307700 MAIL ADDRESS: STREET 1: 19337 US 19 NORTH STE 500 CITY: CLEARWATER STATE: FL ZIP: 34624 10-Q 1 LINCARE, INC. FORM 10-Q 1 - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 --------------------- FORM 10-Q --------------------- (MARK ONE) [X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE QUARTERLY PERIOD ENDED MARCH 31, 1996 OR [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES ACT OF 1934 COMMISSION FILE NUMBER 0-19946 LINCARE HOLDINGS INC. (Exact name of registrant as specified in its charter) DELAWARE 51-0331330 (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification No.) 19337 US 19 NORTH, SUITE 500, 34624 CLEARWATER, FL (Zip Code) (Address of principal executive offices)
Registrant's telephone number, including area code: (813) 530-7700 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 _ Indicate the number of shares outstanding of each of the issuer's classes of common stock, as of the latest practicable date.
CLASS OUTSTANDING AT APRIL 30, 1996 - --------------------------------------------------------------------- ----------------------------- Common Stock, $0.01 par value........................................ 27,844,396 shares
- -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- 2 LINCARE HOLDINGS INC. FORM 10-Q FOR THE QUARTERLY PERIOD ENDED MARCH 31, 1996 INDEX
PAGE ---- PART I. FINANCIAL INFORMATION Item 1 Financial Statements (unaudited) Condensed consolidated balance sheets.......................................... 3 Condensed consolidated statements of operations................................ 4 Condensed consolidated statements of cash flows................................ 5 Notes to condensed consolidated financial statements........................... 6 Item 2 Management's Discussion and Analysis of Financial Condition and Results of Operations..................................................................... 7 PART II. OTHER INFORMATION Item 1 Legal Proceedings.............................................................. 8 Item 2 Changes in Securities.......................................................... 8 Item 3 Defaults Upon Senior Securities................................................ 8 Item 4 Submission of Matters to a Vote of Security Holders............................ 8 Item 5 Other Information.............................................................. 8 Item 6 Exhibits and Reports on Form 8-K............................................... 8 SIGNATURES.............................................................................. 8
2 3 LINCARE HOLDINGS INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED BALANCE SHEETS
MARCH 31, DECEMBER 31, 1996 1995 ----------- ------------ (UNAUDITED) (IN THOUSANDS) ASSETS Current assets: Cash and cash equivalents......................................... $ 3,942 $ 1,009 Accounts and notes receivable..................................... 39,259 36,610 Income tax receivable............................................. -- 772 Inventories....................................................... 1,287 1,299 Prepaid expenses.................................................. 821 674 ----------- ------------ Total current assets...................................... 45,309 40,364 ----------- ------------ Property and equipment.............................................. 124,729 121,786 Less accumulated depreciation....................................... 48,806 48,534 ----------- ------------ Net property and equipment................................ 75,923 73,252 ----------- ------------ Other assets: Goodwill.......................................................... 143,612 130,491 Intangible assets................................................. 9,460 9,510 Covenants not to compete.......................................... 5,998 6,370 Other............................................................. 469 219 ----------- ------------ Total other assets........................................ 159,539 146,590 ----------- ------------ Total assets......................................... $ 280,771 $260,206 ========= ========== LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities: Current installments of long-term obligations..................... $ 6,219 $ 4,992 Accounts payable.................................................. 9,165 10,214 Accrued expenses: Compensation and benefits...................................... 5,795 7,028 Other.......................................................... 1,839 1,620 Income taxes payable.............................................. 6,984 -- ----------- ------------ Total current liabilities................................. 30,002 23,854 Revolving credit loan............................................... 3,000 5,000 Long-term obligations, excluding current installments............... 1,503 2,383 Deferred income taxes............................................... 6,735 6,707 Minority interest................................................... 733 879 Stockholders' equity: Common stock...................................................... 278 277 Additional paid-in capital........................................ 88,039 86,049 Retained earnings................................................. 150,481 135,057 ----------- ------------ Total stockholders' equity................................ 238,798 221,383 ----------- ------------ Total liabilities and stockholders' equity........... $ 280,771 $260,206 ========= ==========
See accompanying notes to condensed consolidated financial statements. 3 4 LINCARE HOLDINGS INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)
FOR THE THREE MONTHS ENDED ------------------------- MARCH 31, MARCH 31, 1996 1995 ----------- ----------- (IN THOUSANDS EXCEPT SHARE AND PER SHARE DATA) Net revenues........................................................ $ 79,772 $ 61,223 ----------- ----------- Costs and expenses: Costs of goods and services....................................... 12,258 9,112 Operating expenses................................................ 17,318 13,207 Selling, general and administrative expenses...................... 16,344 12,664 Bad debt expense.................................................. 798 489 Depreciation expense.............................................. 4,785 3,945 Amortization expense.............................................. 3,131 2,391 ----------- ----------- 54,634 41,808 ----------- ----------- Operating income.......................................... 25,138 19,415 ----------- ----------- Other income (expense): Interest income................................................... 32 134 Interest expense.................................................. (85) (110) Net gain on disposal of property and equipment.................... (6) 7 ----------- ----------- (59) 31 ----------- ----------- Income before income taxes................................ 25,079 19,446 Income taxes........................................................ 9,655 7,584 ----------- ----------- Net income................................................ $ 15,424 $ 11,862 ========== ========== Income per common share............................................. $ 0.54 $ 0.42 ========== ========== Weighted average number of common shares and common share equivalents outstanding........................................... 28,593,365 28,525,960 ========== ==========
See accompanying notes to condensed consolidated financial statements. 4 5 LINCARE HOLDINGS INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
FOR THE THREE MONTHS ENDED ------------------------- MARCH 31, MARCH 31, 1996 1995 --------- --------- (IN THOUSANDS) Cash from operations................................................. $28,240 $20,088 Investing activities: Proceeds from sale of property and equipment....................... 170 292 Capital expenditures............................................... (6,658) (7,336) Decrease in other assets........................................... (250) 26 Business acquisitions, net of cash acquired........................ (14,992) (27,033) --------- --------- (21,730) (34,051) --------- --------- Financing activities: Proceeds from revolving line of credit............................. 4,000 8,000 Payment on revolving line of credit................................ (6,000) -- Payment of long-term obligations................................... (2,003) (4,075) Decrease in minority interest...................................... (226) (116) Proceeds from issuance of common stock............................. 652 1,397 --------- --------- (3,577) 5,206 --------- --------- Increase (decrease) in cash.......................................... 2,933 (8,757) Cash and cash equivalents, beginning of period....................... 1,009 16,023 --------- --------- Cash and cash equivalents, end of period............................. $ 3,942 $ 7,266 ======= =======
See accompanying notes to condensed consolidated financial statements. 5 6 LINCARE HOLDINGS INC. NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) NOTE 1 -- BASIS OF PRESENTATION The accompanying condensed consolidated balance sheet as of March 31, 1996 and condensed statements of operations and cash flows for the three months ended March 31, 1996 and 1995 are unaudited. In the opinion of management, all adjustments, consisting of normal recurring accruals, necessary for a fair presentation of the results of operations for the interim periods presented have been reflected herein. The results of operations for interim periods are not necessarily indicative of the results to be expected for the entire year. The accompanying condensed consolidated balance sheet as of December 31, 1995 is derived from the Lincare Holdings Inc. (the "Company") audited balance sheet as of that date. NOTE 2 -- BUSINESS COMBINATIONS During the three months ended March 31, 1996 the Company acquired, in unrelated acquisitions, the stock of three companies and certain assets of five companies. Each acquisition was accounted for as a purchase. The results of the acquired companies are included in the accompanying consolidated statements of operations since the respective date of acquisition. The aggregate cost of these acquisitions was as follows:
(IN THOUSANDS) -------------- Cash................................................................... $ 14,992 Deferred acquisition obligations....................................... 2,130 Assumption of liabilities.............................................. 62 Other.................................................................. 11 -------------- $ 17,195 ===========
The aggregate purchase price was allocated as follows: Current assets......................................................... $ 686 Property and equipment................................................. 975 Intangible assets...................................................... 1,822 Goodwill............................................................... 13,712 -------------- $ 17,195 ===========
Unaudited pro forma supplemental information on the results of operations for the three months ended March 31, 1996 and March 31, 1995 are provided below and reflect the acquisitions as if they had been combined at the beginning of each respective period.
FOR THE THREE MONTHS ENDED MARCH 31, --------------------- 1996 1995 ------- ------- (IN THOUSANDS, EXCEPT PER SHARE DATA) Net revenues................................................... $81,874 $64,133 ======= ======= Net income..................................................... $15,880 $12,497 ======= ======= Income per common share........................................ $ 0.56 $ 0.44 ======= =======
The unaudited pro forma financial information is not necessarily indicative of either the results of operations that would have occurred had the transactions been effected at the beginning of the respective preceding periods or of future results of operations of the combined companies. 6 7 NOTE 3 -- NEW ACCOUNTING STANDARDS Effective January 1, 1996, the Company adopted Financial Accounting Standards No. 123, "Accounting for Stock-Based Compensation." This standard allows the Company to select either a fair value based method or its current intrinsic value based method of accounting for employee stock-based compensation. The Company retained its intrinsic value method of accounting and, therefore, the adoption of this standard did not have a material affect on the Company's financial statements. LINCARE HOLDINGS INC. MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS AND FINANCIAL CONDITION OPERATING RESULTS The following table sets forth for the periods indicated a summary of the Company's net revenues by source:
FOR THE THREE MONTHS ENDED MARCH 31, ------------------- 1996 1995 ------- ------- (IN THOUSANDS) Oxygen and other respiratory therapy............................. $73,194 $55,880 Home medical equipment and other................................. 6,578 5,343 ------- ------- Total.................................................. $79,772 $61,223 ======= =======
Net revenues for the three months ended March 31, 1996 increased by $18,549,000 (or 30.3%) compared with the three months ended March 31, 1995. Approximately $9,751,000 of the net revenue increase is attributable to acquisitions and the balance of approximately $8,798,000 reflects internal growth. On August 10, 1993, Congress passed the Omnibus Reconciliation Act of 1993 ("OBRA 93"). The OBRA 93 legislation provided for a consumer price index update, effective January 1, 1996, of approximately 3.0% on Medicare products and services. No additional impact from OBRA 93 is expected for 1996. Cost of goods and services as a percentage of net revenues was 15.4% for the three months ended March 31, 1996 compared with 14.9% for the three months ended March 31, 1995. The increase is attributable to a change in the product mix related to acquisitions having higher levels of home medical equipment and certain respiratory therapy products. Operating expenses as a percentage of net revenues was 21.7% for the three months ended March 31, 1996 which is comparable with 21.6% for the three months ended March 31, 1995. Selling, general and administrative expenses as a percentage of net revenues decreased to 20.5% for the three months ended March 31, 1996 compared with 20.7% for the three months ended March 31, 1995. The improvement is attributable to the Company's ability to leverage its infrastructure, with selling, general and administrative expenses increasing by 29.1% while revenues grew by 30.3%. Amortization expense for the three months ended March 31, 1996 increased to $3,131,000 compared with $2,391,000 for the three month period ending March 31, 1995. The increase is attributable to the amortization of intangible assets acquired in 1995 and the first quarter of 1996. Operating income for the three months ended March 31, 1996 increased to $25,138,000 compared with $19,415,000 for the three months ended March 31, 1995. The increases in operating income are attributable to the continued revenue growth and efforts to control costs. 7 8 LIQUIDITY AND CAPITAL RESOURCES Net cash provided from operating activities was $28,240,000 for the three months ended March 31, 1996 compared with $20,088,000 for the three months ended March 31, 1995. Net cash used in investing and financing activities was $25,307,000 for the three months ended March 31, 1996 compared with $28,845,000 for the three months ended March 31, 1995. First quarter activity included the Company's investment of $14,992,000 in business acquisitions, investment in capital equipment of $6,658,000, the borrowing of $4,000,000 from its revolving line of credit, payments of $6,000,000 on its revolving line of credit and payments of $2,003,000 related long-term obligations. FORWARD LOOKING STATEMENTS Statements contained in this Form 10-Q that are not based on historical facts are forward looking statements, subject to uncertainties and risks, including, but not limited to, the constantly changing healthcare environment, potential reductions in reimbursement by government and third party payors for the Company's products and services, the demand for Company's products and services, economic and competitive conditions, the availability of appropriate acquisition candidates and the successful completion of acquisitions, access to borrowed and/or equity capital on favorable terms, and other risks detailed in the Company's Securities and Exchange Commission filings. PART II. OTHER INFORMATION Items 1-5 Not applicable. Item 6 Exhibits and Reports on Form 8-K (a) Exhibits:
SEQUENTIALLY EXHIBIT NUMBERED NUMBER EXHIBIT PAGE - ------ ------------------------------------------------------------------------- ------------ 27.0 -- Financial Data Schedule (for SEC Use Only)...............................
(b) The Company did not file a Current Report on Form 8-K during the three months ended March 31, 1996. 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. Lincare Holdings Inc. -------------------------------------- Registrant /s/ JAMES M. EMANUEL -------------------------------------- James M. Emanuel Secretary, Chief Financial Officer and Principal Accounting Officer May 13, 1996 8 EX-27 2 FINANCIAL DATA SCHEDULE
5 THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE FINANCIAL STATEMENTS OF LINCARE HOLDINGS, INC. FOR THE THREE MONTHS ENDED MARCH 31, 1996, AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS. 1,000 3-MOS DEC-31-1996 JAN-01-1996 MAR-31-1996 3,942 0 44,015 4,756 1,287 45,309 124,729 48,806 280,771 30,002 0 0 0 278 238,520 280,771 79,772 79,772 12,258 12,258 42,376 798 85 25,079 9,655 25,079 0 0 0 15,424 .54 .54
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