-----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, BOp7fiagYqplFzQVQXC78+OmSEKsQYC6//tgOpaNus6NclVf08u8kdG1BAgd5DyJ oROoiROBHVpxBd04YpvAnQ== 0000899243-01-000075.txt : 20010123 0000899243-01-000075.hdr.sgml : 20010123 ACCESSION NUMBER: 0000899243-01-000075 CONFORMED SUBMISSION TYPE: 10QSB PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 20001130 FILED AS OF DATE: 20010116 FILER: COMPANY DATA: COMPANY CONFORMED NAME: DYNACQ INTERNATIONAL INC CENTRAL INDEX KEY: 0000890908 STANDARD INDUSTRIAL CLASSIFICATION: SERVICES-HOME HEALTH CARE SERVICES [8082] IRS NUMBER: 760375477 STATE OF INCORPORATION: NV FISCAL YEAR END: 0831 FILING VALUES: FORM TYPE: 10QSB SEC ACT: SEC FILE NUMBER: 000-21574 FILM NUMBER: 1508646 BUSINESS ADDRESS: STREET 1: 10304 INTERSTATE 10 EAST STREET 2: SUITE 369 CITY: HOUSTON STATE: TX ZIP: 77029 BUSINESS PHONE: 7136736639 MAIL ADDRESS: STREET 1: 10304 I-10 EAST STREET 2: SUITE 369 CITY: HOUSTON STATE: TX ZIP: 77029 10QSB 1 0001.txt FORM 10-QSB FOR QUARTER ENDED NOVEMBER 30, 2000 SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-QSB (Mark One) (X) QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended November 30, 2000 or ( ) TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from _______________ to ___________________ Commission file number 0-20554 DYNACQ INTERNATIONAL, INC. (Exact name of registrant as specified in its charter) NEVADA 76-0375477 (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification No.) 10304 INTERSTATE 10 EAST, SUITE 369, HOUSTON, TEXAS 77029 (address of principal executive offices) Zip Code Registrants telephone number, including area code (713)673-6432 N/A (Former name, former address and former fiscal year, if changed since last report) Check whether the issurer (1) filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the past 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirement for the past 90 days. Yes X. No __. APPLICABLE ONLY TO CORPORATE ISSUERS State the number of shares outstanding of each of the issuer's classes of common equity, as of the latest practicable dates. Title of Each Class Outstanding at January 5, 2001 Common Stock, $0.001 par value 6,898,037 shares Transitional Small Business Disclosure Format (check one) Yes ______ No X PART I. - FINANCIAL INFORMATION ITEM I. - FINANCIAL STATEMENTS DYNACQ INTERNATIONAL, INC. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS ASSETS
NOVEMBER 30, AUGUST 31, 2000 2000 ------------- ----------- (Unaudited) (Audited) CURRENT ASSETS: Cash and Cash Equivalents 6,215,201 4,301,523 Accounts Receivable (Net of Allowance for 10,159,706 8,419,608 Doubtful Accounts) Inventories 327,220 346,969 ---------- ---------- Total Current Assets 16,702,127 13,068,100 FIXED ASSETS - NET 9,347,850 9,493,028 OTHER ASSETS - NET 610,753 485,113 ---------- ---------- TOTAL ASSETS 26,660,730 23,046,241 ========== ========== LIABILITIES AND STOCKHOLDERS' EQUITY CURRENT LIABILITIES: Accounts Payable 648,533 1,126,070 Accrued Liabilities 552,029 681,515 Current Maturities of Long-Term Debt 205,457 297,522 Income Taxes Payable 4,765,138 3,380,306 Deferred Income Taxes Payable 170,000 145,000 ---------- ---------- TOTAL CURRENT LIABILITIES 6,341,157 5,630,413 LONG-TERM DEBT, NET OF CURRENT MATURITIES 408,472 387,965 DEFERRED INCOME TAXES PAYABLE 646,000 671,000 NEGATIVE GOODWILL, NET 549,683 549,683 MINORITY INTERESTS IN SUBSIDIARIES 1,794,645 1,238,671 STOCKHOLDERS' EQUITY: Preferred Stock, $0.01 Par Value, 5,000,000 Shares Authorized, None Issued or Outstanding Common Stock, $0.001 Par Value, 300,000,000 Shares Authorized After 8 to 1 & 4 to 1 reverse stock split, & 100% stock dividend on 1/10/2000, 7,658,856 Shares Issued and Outstanding 7,659 7,659 Additional Paid In Capital 4,338,917 4,309,813 Retained Earnings 13,764,703 11,392,583 Less Treasury Stock, 784,469 shares at cost (1,190,506) (1,141,546) ---------- ---------- TOTAL STOCKHOLDERS' EQUITY 16,920,773 14,568,509 TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY 26,660,730 23,046,241 ========== ==========
DYNACQ INTERNATIONAL, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF OPERATIONS FOR THE THREE MONTHS ENDED NOVEMBER 30 (UNAUDITED)
2000 1999 ----------- ----------- NET REVENUES (net of contractual adjustments) 8,904,528 5,243,612 COST OF SALE 179,348 125,677 --------- --------- GROSS PROFIT 8,725,180 5,117,935 LESS EXPENSES: Contract payments to physicians 379,666 401,748 Compensation and benefits 1,076,754 959,571 Medical supplies 1,137,546 850,038 Other general and administrative expense 1,452,740 1,013,302 Depreciation and amortization 195,520 236,113 Rent and occupancy 175,034 80,951 Provision for uncollectible accounts 17,438 - Interest 17,061 64,685 --------- --------- Total Expenses 4,451,759 3,606,408 --------- --------- NET INCOME FROM OPERATIONS 4,273,421 1,511,527 LESS PROVISION FOR INCOME TAXES 1,345,328 525,647 NET INCOME BEFORE MINORITY INTERESTS 2,928,093 985,880 MINORITY INTERESTS IN EARNINGS OF SUBSIDIARIES (555,974) (116,668) NET INCOME 2,372,119 869,212 BASIC EARNINGS PER COMMON SHARE: $0.35 $0.13 ========= ========= DILUTED EARNINGS PER COMMON SHARE: $0.33 $0.13 --------- --------- WEIGHTED AVERAGE COMMON SHARES-BASIC 6,865,064 6,519,222 (1) WEIGHTED AVERAGE COMMON SHARES-DILUTED 7,159,350 6,684,836 (1)
Note: (1) Common shares presented in the corresponding quarter of the previous year in computing the earnings per share are restated as if the 2 for 1 stock split effected in the form of a 100% stock dividend on January 10, 2000 has been retroactively applied for comparison purposes. DYNACQ INTERNATIONAL, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS FOR THE THREE MONTHS ENDED NOVEMBER 30 (UNAUDITED)
2000 1999 --------- ---------- RECONCILIATION OF NET INCOME TO NET CASH PROVIDED BY OPERATING ACTIVITIES: Net Income 2,372,119 869,212 Add: Items not requiring cash: Depreciation 195,520 236,113 Deferred Income Taxes, Net 0 155,647 Minority Interests 555,974 116,668 Adjustments to reconcile net income to net cash provided by operating activities: (Increase) Decrease in Accounts Receivable (1,740,098) (352,504) (Increase) Decrease in Inventory 19,749 3,403 (Increase) Decrease in Other Current Assets 0 (60,000) (Increase) Decrease in Other Assets (125,640) 2,843 Increase (Decrease) in Accounts Payable (477,537) (836,706) Increase (Decrease) in Accrued Liabilities (129,486) 745,747 Increase (Decrease) in Income Taxes Payable 1,384,832 41,576 ---------- --------- Net Cash Provided by Operating Activities 2,055,433 921,999 CASH FLOW FROM INVESTING ACTIVITIES: Purchases of Fixed Assets (50,341) (428,542) ---------- --------- Net Cash (Used) by Investing Activities (50,341) (428,542) CASH FLOW FROM FINANCING ACTIVITIES: Retirements of Long-Term Debt, Net (71,558) (64,617) Repayment of Notes Payable 0 (250,000) Proceeds From Exercise of Option Shares 29,104 266,566 Acquisition of Treasury Stock , Net (48,960) 0 ---------- --------- Net Cash (Used) by Financing Activities (91,414) (48,051) ---------- --------- Net Increase in Cash and Cash Equivalents 1,913,678 445,406 CASH AND CASH EQUIVALENTS AT BEGINNING OF YEAR 4,301,523 1,163,535 ---------- --------- CASH AND CASH EQUIVALENTS AT END OF THE QUARTER 6,215,201 1,608,941 ========== =========
DYNACQ INTERNATIONAL, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS NOVEMBER 30, 2000 (UNAUDITED) NOTE 1. - BASIS OF PRESENTATION The accompanying unaudited financial statements have been prepared by Dynacq International, Inc. without audit pursuant to the rules and regulations of the Securities and Exchange Commission. Certain information and footnote disclosures normally included in financial statements prepared in accordance with generally accepted accounting principles have been condensed or omitted as allowed by such rules and regulations, and management believes that the disclosures are adequate to make the information presented not misleading. These financial statements include all of the adjustments which, in the opinion of management, are necessary for a fair presentation of financial position and results of operations. All such adjustments are of a normal and recurring nature. These unaudited financial statements should be read in conjunction with the audited financial statements at August 31, 2000. Operating results for the three months period ended November 30,2000 are not necessarily indicative of the results that may be expected for the year ending August 31, 2001. Item 2. - MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS RESULTS OF OPERATIONS COMPARISON OF THE THREE MONTHS ENDED NOVEMBER 30, 2000 TO THE THREE MONTHS ENDED NOVEMBER 30, 1999 Consolidated net revenues after subtracting contractual adjustments with payors from gross revenues for the three months ended November 30, 2000 increased $3,660,916 or 70% from that for the corresponding previous quarter ended November 30, 1999. Notwithstanding this significant increase in consolidated net revenues, there were a number of significant increases and decreases in the component net revenue categories. For instance, net revenue attributable to Doctors Practice Management, Inc. ("DPMI") increased significantly by $199,087 or 40% from the corresponding previous quarter, primarily derived from increased management fee of physicians under management. Net revenue attributable to Vista operations significantly increased by $1,492,854 or 49% from the corresponding previous quarter due to increased in patient referral. Net revenue attributable to the Hospital significantly increased by $1,924,046 or 127% from the corresponding previous quarter. Net revenue attributable to infusion therapy increased $29,430 from the corresponding previous quarter due to slightly higher patient load. Net revenue attributable to the Company's new subsidiary, Vista Land and Equipment, L.L.C. ("VLE") increased by $15,149 which did not exist in the corresponding previous quarter. Consolidated costs of sale for the three months ended November 30, 2000 increased $53,671 or 43% from that for the corresponding previous quarter ended November 30, 1999 was primarily attributable to the increased Vista operations. Consolidated operating expenses for the three months ended November 30, 2000 increased $845,351 or 23% from that for the corresponding previous quarter ended November 30, 1999 primarily due to increase in activities of Vista and the Hospital. The significant increases and decreases in the component expense categories of the consolidated operating expenses are explained as follows: (1) The increase in compensation and benefits of $117,183 or 12% was primarily attributable to the Hospital, Vista and DPMI operations due to the increase in their activities. (2) The increase in medical supplies expense of $287,508 or 34% was primarily attributable to the Hospital and Vista operations due to the increase in their activities. 5 (3) The increase in other general and administrative expense of $439,438 or 43% was primarily attributable to the Hospital, Vista and DPMI operations due to the increase in their activities. (4) The increase in rent and occupancy expense of $94,083 or 116% was primarily due to accrual of increased property taxes due to increase in improvements value. Net Income increased $1,502,907 or 173% from $869,212 in the corresponding quarter of the previous fiscal year to $2,372,119 in the current quarter. Basic Earnings per common share increased $0.22 per share or 169% from $0.13 per share in the corresponding quarter of the previous fiscal year to $0.35 per share in the current quarter. Diluted Earnings per common share increased $0.20 per share or 154% from $0.13 per share in the corresponding quarter of the previous fiscal year to $0.33 per share in the current quarter. FINANCIAL CONDITION COMPARISON OF THE BALANCE SHEET AT THREE MONTHS ENDED NOVEMBER 30, 2000 TO THE AUDITED BALANCE SHEET AT FISCAL YEAR ENDED AUGUST 31, 2000. Consolidated cash and cash equivalents for the three months ended November 30, 2000 increased $1,913,678 or 44% from that of the previous audited balance sheet ending August 31, 2000 was due to $2,055,433 provided by operating activities, $50,341 used by investing activities and $91,414 used by financing activities. Consolidated accounts receivable for the three months ended November 30, 2000 increased $1,740,098 or 21% from that of the previous audited balance sheet ended August 31, 2000. Liquidity and Capital Resources Working Capital of $10,360,970 at November 30, 2000 increased $2,923,283 or 39% from working capital at August 31, 2000 primarily due to increases in cash and cash equivalents and accounts receivable, decreases in accounts payable, accrued liabilities and current maturities of long-term debt, and an increase in income taxes payable. At November 30, 2000, the Company maintained a liquid position evidenced by a current ratio of 2.63 to 1 and total debt to equity of 0.44 to 1. Management believes that available cash funds and funds generated from operations will be sufficient for the Company to finance working capital requirements for the foreseeable future and to meet its payment obligations on its long-term indebtedness. Segment and related information The Company has five reportable segments (four in fiscal 1999): clinic and outpatient surgical center, emergency and inpatient surgical center, property and equipment holding, which was added in fiscal 2000, physician practice and infusion therapy. The clinic and outpatient surgical center segment provides outpatient surgical facilities, x-ray diagnostic services and laboratory testing. The emergency and inpatient surgical center segment is comprised of a forty-two bed hospital which provides a wide range of medical services including major surgical cases which require hospitalization. The property and equipment holding segment has acquired all of the fixed assets of the clinic and outpatient surgical center segment and the emergency and inpatient surgical center segment. The physician practice management segment provides office space and fee-based management services to physicians. The infusion therapy segment's business principally involves the administration of physician-prescribed nutrients, antibiotics or other medicines to cancer patients in their homes. The Compny's reporting segments are business units that offer different services. They are managed separately because each business requires different technology, marketing strategies and performance evaluations. 6 Summarized financial information concerning the Company's reportable segments is shown in the following table for the three months ended November 30.
Physician Emergency and Clinic and Property and Infusion Practice Inpatient Outpatient Equipment Therapy Management Surgical Center Surgical Center Holding Totals -------- ---------- --------------- --------------- ------------ ------ 2000 Revenues-external 208,868 647,280 3,432,380 4,517,060 15,149 8,820,737 Intersegment revenues 285,000 3,784,988 - - 403,500 4,473,488 Interest revenue 44 45,775 11,890 31,607 4,423 93,739 Interest expense 34,206 - - 10,247 - 44,453 Depreciation and amort - 14,753 - - 180,767 195,520 Income tax expense 37,539 369,269 361,555 559,477 17,488 1,345,328 Segment assets 180,370 11,638,223 6,354,522 11,803,395 9,354,229 39,330,739 Expenditures-segment - 4,347 - - 45,994 50,341 Segment profit 69,715 685,786 1,114,179 1,039,028 32,477 2,941,185 1999 Revenues-external 179,482 489,404 1,515,959 3,023,817 - 5,208,662 Intersegment revenues 307,500 3,219,839 - - - 3,527,339 Interest revenue - 4,564 4,265 31,996 - 40,825 Interest expense 44,365 37,099 - 14,831 - 96,295 Depreciation and amort 157,723 35,641 - 42,749 - 236,113 Income tax expense 12,025 336,361 52,849 124,412 - 525,647 Segment assets 6,253,499 4,654,742 3,400,483 7,003,302 - 21,312,026 Expenditures-segment 5,196,908 - - 76,871 - 5,273,779 Segment profit 11,683 652,937 110,445 241,504 - 1,016,569
The following table provides a reconciliation of the reportable segments' revenues, profit, assets, and other significant items to the consolidated totals as of November 30 and for the three months ended November 30. 2000 1999 ---- ---- REVENUES: - --------- Total revenues for reportable segments 8,820,737 5,208,662 Interest income 93,739 40,825 Elimination of rent and other income (9,948) (5,875) --------- --------- Consolidated total revenues 8,904,528 5,243,612 PROFIT: - ------- Total profit for reportable segments 2,941,185 1,016,569 Elimination of intersegment income (13,092) (30,689) Elimination of minority interests (555,974) (116,668) --------- --------- Consolidated net income 2,372,119 869,212 7 ASSETS: - ------- Total assets for reportable segments 39,330,739 21,312,026 Elimination of intercompany accounts and other (12,670,009) (4,755,421) ----------- ---------- Consolidated total assets 26,660,730 16,556,605 OTHER SIGNIFICANT ITEMS: - ------------------------ Interest expense 44,453 96,295 Elimination of intersegment expense (27,392) (31,610) ----------- ---------- Consolidated interest expense 17,061 64,685 The Company's revenues and long-lived assets are derived and domiciled from a customer base solely in the United States. Inflation. Inflation has not significantly impacted the Company's financial position or operations. Forward-Looking Information. Information in this Form 10-QSB contains forward- looking statements and information relating to the Company that are based on the beliefs of the Company's management, as well as assumptions made by, and information currently available to the Company's management. When used in this Form 10-QSB, words such as "anticipate", "believe", "estimate", "expect", "intend", "will", "will be" and similar expressions, as they related to the Company or the Company's management, identify forward-looking statements. Such statements reflect the current views of the Company with respect to future events, and are subject to certain risks, uncertainties, and assumptions relating to the operations and results of operations of the Company, competitive factors and pricing pressures, costs of products and services, general economic conditions, and the acts of third parties, as well as other factors described in this Form 10-QSB, and, from time to time, in the Company's periodic earnings releases and other reports filed with the Securities and Exchange Commission. Should one or more of these risks or uncertainties materialize, or should underlying assumptions prove incorrect, actual results or outcomes may vary materially from those described herein as anticipated, believed, estimated, intended, or will be or the like. PART II. ITEM 1. - LEGAL PROCEEDINGS The Company is not a party to any material litigation. ITEM 2. - CHANGES IN SECURITIES AND USE OF PROCEEDS None ITEM 3. - DEFAULT UPON SENIOR SECURITIES None ITEM 4. - SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS None ITEM 5. - OTHER INFORMATION During October, 2000, an employee exercised 15,523 option common shares at $1.87 per share. ITEM 6. - EXHIBITS AND REPORTS ON FORM 8-K None 8 SIGNATURES Pursuant to the requirements 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. DYNACQ INTERNATIONAL, INC. DATE: January 14, 2001 BY: /s/ Philip Chan ------------------------------------ Philip Chan Vice President-Finance/Treasurer and Chief Financial Officer 9 -----END PRIVACY-ENHANCED MESSAGE-----