-----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, LTJmIowuXaeQy5FiFOPRDqj8ZVXUN9i8LfMlvrMUCYdsJd0psNHtZMug7qBCORe2 JC4N5r/lgjDTfK/uo0EPtw== 0000898430-98-002038.txt : 19980519 0000898430-98-002038.hdr.sgml : 19980519 ACCESSION NUMBER: 0000898430-98-002038 CONFORMED SUBMISSION TYPE: 10-Q/A PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 19970331 FILED AS OF DATE: 19980518 SROS: NYSE FILER: COMPANY DATA: COMPANY CONFORMED NAME: RENAL TREATMENT CENTERS INC /DE/ CENTRAL INDEX KEY: 0000899169 STANDARD INDUSTRIAL CLASSIFICATION: SERVICES-SPECIALTY OUTPATIENT FACILITIES, NEC [8093] IRS NUMBER: 232518331 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q/A SEC ACT: SEC FILE NUMBER: 000-21398 FILM NUMBER: 98627146 BUSINESS ADDRESS: STREET 1: 1180 WEST SWEDESFORD RD STREET 2: BLDG 2, STE 300 CITY: BERWYN STATE: PA ZIP: 19312 BUSINESS PHONE: 6106444796 MAIL ADDRESS: STREET 1: 1180 WEST SWEDESFORD ROAD BLDG 2 STREET 2: SUITE 300 CITY: BERWYN STATE: PA ZIP: 19312 10-Q/A 1 FORM 10-Q/A Form 10-Q/A Amendment No. 1 SECURITIES AND EXCHANGE COMMISSION (Mark One) Washington, D.C. 20549 (X) QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended March 31, 1997 ---------------------- ( ) 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 1-14142 Renal Treatment Centers, Inc. - -------------------------------------------------------------------------------- (Exact name of registrant as specified in its charter) Delaware 23-2518331 - --------------------------------- --------------------- (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification No.) 1180 W. Swedesford Road Building 2, Suite 300 Berwyn, PA 19312 - --------------------------------- --------------------- (Address of principal executive offices) (Zip code) Registrant's telephone number, including area code: 610-644-4796 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 May 8, 1997 ----- -------------------------- Common Stock, Par Value $.01 24,973,035 shares INTRODUCTORY STATEMENT Renal Treatment Centers, Inc. ("RTC") was acquired by Total Renal Care Holdings, Inc. ("TRCH") on February 27, 1998. On April 1, 1998, TRCH announced (i) that it had undertaken a detailed review of RTC's accounts receivable and other balance sheet accounts in connection with the completion of the audit of RTC's financial statements for the fiscal year ended December 31, 1997, and (ii) that as a result of such review, it expected to recognize between $25 million and $30 million of non-cash charges related to prior periods which would require a revision of RTC's previously announced results of operations. On April 30, 1998, TRCH announced that RTC might be required to correct previously audited financial statements. The analysis of RTC's financial statements was completed on May 15, 1998. In order to correct certain errors discovered through such analysis, TRCH has determined to (i) restate RTC's financial statements for the fiscal year ended December 31, 1996, (ii) revise RTC's financial statements for the quarterly periods ended March 31, 1997, June 30, 1997 and September 30, 1997 and (iii) revise RTC's previously announced results of operations for the fiscal quarters ended March 31, 1996 and 1997, June 30, 1996 and 1997, September 30, 1996 and 1997 and December 31, 1996 and 1997 and the fiscal years ended December 31, 1996 and 1997. This Form 10-Q/A is being filed to correct the financial statements included in the Form 10-Q for the quarterly period ended March 31, 1997 which was filed on May 14, 1997 (the "First Quarter 10-Q"). RTC is concurrently filing (i) separate Form 10-Q/A's to correct the financial statements included in the Form 10-Q's previously filed for the quarterly periods ended June 30, 1997 and September 30, 1997 and (ii) a Form 10-K/A to correct the financial statements included in the Form 10-K for the year ended December 31, 1996 which was filed on March 29, 1997. The balance sheets included in the First Quarter 10-Q are being amended hereby to reflect a reduction of accounts receivable at March 31, 1997 and at December 31, 1996 and to reflect the balance sheet impact of (i) the restatement of RTC's financial statements for the year ended December 31, 1996 and (ii) the revision of the statement of income for the three months ended March 31, 1997. The statements of income included in the First Quarter 10-Q are being amended hereby to reflect related reductions of net patient revenue, related increases in the provision for doubtful accounts and related reductions in the provision for income taxes. For the interim period ended March 31, 1997, the reduction in the provision for income taxes was offset, in part, by an increase in the provision for income taxes primarily related to RTC's foreign operations. (See Note 2 of the financial statements filed herewith.) Approximately one half of the charges described above relate to untimely billing and subsequent requests for information by RTC with governmental payors (primarily state medicaid programs) and contracted private payors. The remainder relates primarily to improper contractual allowances related to revenue recognition at the time of billing and to uncollectible accounts. TRCH believes that the causes of such problems have been appropriately addressed and that systems and processes are now in place to ensure accurate contractual allowances related to revenue recognition and timely account resolution, including all appropriate collection efforts. Information included in Item 2 (Management's Discussion and Analysis of Financial Condition and Results of Operations) under the captions "Results of Operations" and "Three Months Ended March 31, 1997 Compared to Three Months Ended March 31, 1996" of the First Quarter 10-Q was based on RTC's unaudited consolidated financial statements prior to the amendments described above. Consequently, the information included in Item 2 under such captions overstates both net patient revenue and the provision for income taxes and understates the provision for doubtful accounts as described above. RTC believes that the amendment of Item 2 to reflect such changes would provide no material additional information not already presented in Item 2 of the First Quarter 10-Q or in this Form 10-Q/A. Consequently, such Item 2 is not restated in this Form 10-Q/A. PART I. FINANCIAL INFORMATION Item 1. Financial Statements Renal Treatment Centers, Inc. and Subsidiaries Consolidated Balance Sheets (Unaudited)
March 31, December 31, 1997 1996 - --------------------------------------------------------------------------------------------------------------------------------- Assets Current assets: Cash $9,487,839 $ 1,445,798 Investments - 41,202,123 Accounts receivable, net of allowance for doubtful accounts of $8,378,117 in 1997 and $7,853,350 in 1996 70,299,673 65,198,524 Inventories 4,099,362 4,388,290 Deferred taxes 2,076,240 2,149,718 Prepaid expenses and other current assets 3,727,563 2,749,497 Income tax receivable 1,992,343 3,782,890 - --------------------------------------------------------------------------------------------------------------------------------- Total current assets 91,683,020 120,916,840 - --------------------------------------------------------------------------------------------------------------------------------- Property and equipment (net of accumulated depreciation of $21,698,808 in 1997 and $19,691,015 in 1996.) 47,031,379 39,578,245 Intangibles (net of accumulated amortization of $36,447,541 in 1997 and $32,934,871 in 1996.) 167,439,151 130,645,378 Deferred taxes, non-current 2,807,064 2,807,064 - --------------------------------------------------------------------------------------------------------------------------------- Total assets $308,960,614 $293,947,527 ================================================================================================================================= Liabilities and Stockholders' Equity Current liabilities: Current portion of long-term debt $5,084,239 $ 12,369,365 Accounts payable 9,598,457 11,341,983 Accrued compensation 4,711,800 3,838,502 Accrued expenses 3,367,363 4,051,614 Accrued interest 1,661,394 3,638,874 - --------------------------------------------------------------------------------------------------------------------------------- Total current liabilities 24,423,253 35,240,338 - --------------------------------------------------------------------------------------------------------------------------------- Long-term debt, net 150,267,999 130,573,685 Commitments and contingencies Stockholders' equity: Preferred stock, $.01 par value, 5,000,000 shares authorized: none issued Common stock, $.01 par value, 45,000,000 shares authorized: issued and outstanding 24,654,419 and 24,430,256 shares in 1997 and 1996, respectively. 246,544 244,303 Additional paid-in capital 90,060,639 87,890,138 Retained earnings 44,356,255 40,393,139 - --------------------------------------------------------------------------------------------------------------------------------- 134,663,438 128,527,580 - --------------------------------------------------------------------------------------------------------------------------------- Less treasury stock, 37,202 shares in 1997 and 1996, at cost (394,076) (394,076) - --------------------------------------------------------------------------------------------------------------------------------- Total stockholders' equity 134,269,362 128,133,504 - --------------------------------------------------------------------------------------------------------------------------------- Total liabilities and stockholders' equity $308,960,614 $293,947,527 =================================================================================================================================
See accompanying notes to consolidated financial statements. Renal Treatment Centers, Inc. and Subsidiaries Consolidated Statements of Income (Unaudited)
Three Months Ended March 31, 1997 1996 - ------------------------------------------------------------------------------------------------------------------------------------ Net patient revenue $68,907,654 $48,255,482 Patient care costs 34,325,569 24,485,227 - ------------------------------------------------------------------------------------------------------------------------------------ Operating profit 34,582,085 23,770,255 General and administrative expense 17,477,866 13,153,351 Provision for doubtful accounts 2,814,047 2,375,935 Depreciation and amortization expense 5,733,667 3,572,201 Merger expenses - 1,708,247 - ------------------------------------------------------------------------------------------------------------------------------------ Income from operations 8,556,505 2,960,521 Interest expense, net 1,824,043 697,120 - ------------------------------------------------------------------------------------------------------------------------------------ Income before income taxes 6,732,462 2,263,401 Provision for income taxes 2,769,346 804,804 - ------------------------------------------------------------------------------------------------------------------------------------ Net income $3,963,116 $1,458,597 - ------------------------------------------------------------------------------------------------------------------------------------ Net income per common share $ 0.15 $ 0.06 Weighted average number of common shares outstanding 24,509,763 24,036,542 Net income per common share -- assuming dilution $ 0.15 $ 0.06 Weighted average number of common shares and equivalents outstanding -- assuming dilution 25,702,611 25,464,145
See accompanying notes to consolidated financial statements. Renal Treatment Centers, Inc. and Subsidiaries Consolidated Statements of Cash Flows (Unaudited)
Three Months Ended March 31, 1997 1996 - ------------------------------------------------------------------------------------------------------------------------------------ Cash flows from operating activities: Net income $3,963,116 $1,458,597 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization 5,827,417 3,583,036 Provision for doubtful accounts 2,814,047 2,375,935 Equity in (earnings) losses from affiliates (82,865) 242,372 Changes in operating assets and liabilities, net of effects of companies acquired: Accounts receivable (7,915,196) (637,609) Inventories 636,284 (813,448) Prepaid expenses and other current assets (926,864) 431,081 Accounts payable and accrued expenses (3,768,643) (3,960,540) Accrued income taxes 1,758,838 (1,083,318) - ------------------------------------------------------------------------------------------------------------------------------------ Net cash provided by operating activities 2,306,134 1,596,106 - ------------------------------------------------------------------------------------------------------------------------------------ Cash flows from investing activities: Capital expenditures (5,824,001) (2,005,302) Purchase of businesses, net of cash acquired (42,841,882) (2,010,241) Sale of investments 41,202,123 - Other (711,466) (613,125) - ------------------------------------------------------------------------------------------------------------------------------------ Net cash used in investing activities (8,175,226) (4,628,668) - ------------------------------------------------------------------------------------------------------------------------------------ Cash flows from financing activities: Proceeds from long-term debt borrowings 23,000,000 1,500,000 Repayments of debt (9,296,614) (3,587,473) Proceeds from issuance of common stock 454,453 524,581 Payments on capital lease obligations (246,706) (793,671) - ------------------------------------------------------------------------------------------------------------------------------------ Net cash (used in) provided by financing activities 13,911,133 (2,356,563) - ------------------------------------------------------------------------------------------------------------------------------------ Net increase (decrease) in cash and cash equivalents 8,042,041 (5,389,125) Cash and cash equivalents at beginning of period 1,445,798 8,231,421 - ------------------------------------------------------------------------------------------------------------------------------------ Cash and cash equivalents at end of period $9,487,839 $2,842,296 ====================================================================================================================================
See accompanying notes to consolidated financial statements. Renal Treatment Centers, Inc. and Subsidiaries Notes to Consolidated Financial Statements (Unaudited) 1. BASIS OF PRESENTATION: The accompanying unaudited consolidated financial statements have been prepared by the Company in accordance with generally accepted accounting principles for interim financial information and pursuant to the rules and regulations of the Securities and Exchange Commission. 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, all adjustments (consisting only of normal recurring accruals) considered necessary for a fair presentation have been included. Operating results for the three months ended March 31, 1997 are not necessarily indicative of the results that may be expected for the year ending December 31, 1997. The interim consolidated financial statements should be read in conjunction with the consolidated financial statements and footnotes thereto included in the Company's Form 10-K filed with the Securities and Exchange Commission on March 28, 1997. 2. EARNINGS PER SHARE: In February 1997, the Financial Accounting Standards Board issued the Statement of Financial Accounting Standards No. 128, Earnings Per Share ("SFAS 128"). SFAS 128 establishes standards for computing and presenting earnings per share. Basic earnings per share is calculated by dividing net income before extraordinary items and net income by the weighted average number of shares of common stock outstanding. Accordingly, earnings per common share--assuming dilution includes the dilutive effects of stock options and warrants using the treasury stock method, in determining the weighted average number of shares of common stock outstanding. Earnings per share for all periods presented have been restated following the provisions of SFAS 128. 3. SELECTED QUARTERLY FINANCIAL DATA: The financial information as previously presented for the three months ended March 31, 1997 and 1996 in the Registrant's Form 10-Q as filed on May 14, 1997 and Form 10-Q/A filed on June 6, 1996 has been restated to correct net patient revenue and the provision for doubtful accounts receivable in 1997 and 1996 and to correct the 1997 provision for income taxes primarily related to the Company's foreign operations with the following effect (in thousands, except per share amounts):
For the three months ended March 31, 1997 1996 ---------------------- ---------------------- As As Originally As Originally As Reported Restated Reported Restated -------- -------- -------- -------- Net patient revenue 71,107 68,907 50,550 48,255 Operating expenses 59,729 60,352 44,490 45,294 Income from operations 11,378 8,555 6,060 2,961 Provision for income taxes 3,535 2,769 1,990 805 Net income 6,019 3,963 3,372 1,459 Net income per common share 0.25 0.15 0.14 0.06 Net income per common share-- assuming dilution 0.24 0.15 0.13 0.06
4. COMMITMENTS AND CONTINGENCIES: The Company is a party to certain legal actions arising in the ordinary course of business. The Company believes it has adequate legal defenses and/or insurance coverage for these actions and that the ultimate outcome of these actions will not have a material adverse impact on the Company's results of operations, financial condition or liquidity. 5. SIGNIFICANT EVENTS: Purchase Transactions: During the first quarter of 1997, the Company acquired substantially all of the assets of twelve dialysis centers, inclusive of one center operating under a management agreement. Eight of the centers are located in Texas, two centers are located in the Republic of Argentina and one center each is located in Nevada, Florida and Pennsylvania. Combined, these centers provide care to an effective patient base of approximately 830, including patients covered under inpatient dialysis service agreements with eight hospitals. Subsequent Event: On May 2, 1997, the Company amended its revolving credit/term facility ("Credit Agreement") to increase the amount available under the Credit Agreement from $100,000,000 to $200,000,000 and to make certain other changes to the terms of the Credit Agreement, including amendments to certain covenants, the amortization schedule and the interest rates. Part II. Other Information - -------------------------- Item 6. Exhibits and Reports on Form 8-K: (a) Exhibits The following exhibits are filed herewith: Exhibit No. Document ----------- -------- 10.1 Renal Treatment Centers, Inc. Amended and Restated 1990 Stock Plan (incorporated herein by reference to Exhibit No. 10.1 filed under the Company's Annual Report on Form 10-K for the year ended December 31, 1996). * 10.12.6 Fifth Amendment to Lease dated November 26, 1996 (previously filed under the Company's Quarterly Report on Form 10-Q for the quarterly period ended March 31, 1997). 11.1 Computation of net income per common share and net income per common share -- assuming dilution. 27 Amended Financial Data Schedule. ---------- *Management contract or compensatory plan or arrangement (b) Reports on Form 8-K Form 8-K dated February 5, 1997 filed to report under Item 5 consolidated selected financial data, management's discussion and analysis and consolidated financial statements and financial statement schedule as of December 31, 1993, 1994 and 1995 and for each of the three years in the period ended December 31, 1995 giving retroactive effect to the merger with Panama City Artificial Kidney Center, Inc. and North Florida Artificial Kidney Center, Inc. (collectively, the "Group"). The Company previously filed this information as supplemental financial statements in a Current Report on Form 8-K dated August 23, 1996. After that time, the Company filed post- combination results of operations including the Group. Accordingly, the financial statements in the Form 8-K dated February 5, 1997 were filed as the historical financial statements of the Company. 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. RENAL TREATMENT CENTERS, INC. By: /s/John E. King ------------------------- Vice President, Finance and Chief Financial Officer Date: May 18, 1998 Renal Treatment Centers, Inc. and Subsidiaries Exhibit Index
Exhibit No. Description - ----------- ----------- 10.1 Renal Treatment Centers, Inc. Amended and Restated 1990 Stock Plan (incorporated herein by reference to Exhibit No. 10.1 filed under the Company's Annual Report on Form 10-K for the year ended December 31, 1996). 10.12.6 Fifth Amendment to Lease dated November 26, 1996 (previously filed under the Company's Quarterly Report on Form 10-Q for the quarterly period ended March 31, 1997). 11.1 Computation of net income per common share and net income per common share--assuming dilution. 27 Amended Financial Data Schedule.
- ---------------- * Management contract or compensatory plan or arrangement. EX-11.1 2 COMPUTATION OF NET INCOME PER SHARE Exhibit 11.1 Renal Treatment Centers, Inc. and Subsidiaries COMPUTATION OF NET INCOME PER COMMON SHARE AND NET INCOME PER COMMON SHARE--ASSUMING DILUTION for the quarter ended March 31, 1997 and 1996
Three Months Ended March 31, 1997 1996 ---------------------------- Reconciliation of numerator: Net income for use in computing net income per common share $ 3,963,116 $ 1,458,597 Add back interest on note, tax effected 34,122 67,665 ---------------------------- Adjusted net income for use in computing net income per common share--assuming dilution $ 3,997,238 $ 1,526,262 ============================ Reconciliation of denominator Weighted average number of shares outstanding for use in computing net income per common share 24,509,763 24,036,542 Weighted average shares assumed issued upon conversion of note 441,191 661,501 Dilutive effect of outstanding stock options 751,657 766,102 ---------------------------- Weighted average number of common shares and equivalents outstanding--assuming dilution 25,702,611 25,464,145 ============================ Net income per common share $ 0.15 $ 0.06 ============================ Net income per common share--assuming dilution $ 0.15 $ 0.06 ============================
EX-27 3 AMENDED FINANCIAL DATA SCHEDULE
5 3-MOS 3-MOS DEC-31-1997 DEC-31-1996 JAN-01-1997 JAN-01-1996 MAR-31-1997 MAR-31-1996 9,487,839 0 0 0 78,677,790 0 (8,378,117) 0 4,099,362 0 91,683,020 0 68,730,187 0 (21,698,808) 0 308,960,614 0 24,423,253 0 150,267,999 0 0 0 0 0 246,544 0 134,022,818 0 308,960,614 0 0 0 68,907,654 48,255,482 0 0 34,325,569 24,485,227 23,211,533 18,433,799 2,814,047 2,375,935 1,824,043 697,120 6,732,462 2,263,401 2,769,346 804,804 3,963,116 1,458,597 0 0 0 0 0 0 3,963,116 1,458,597 0.15 0.06 0.15 0.06
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