UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
For the quarterly period March 31, 2003
Commission File Number: 0-23363
AMERICAN DENTAL PARTNERS, INC.
(Exact name of registrant as specified in its charter)
| DELAWARE |
04-3297858 | |
| (State or other jurisdiction of incorporation or organization) |
(I.R.S. Employer Identification No.) |
American Dental Partners, Inc.
201 Edgewater Drive, Suite 285
Wakefield, Massachusetts 01880
(Address of principal executive offices, including zip code)
(781) 224-0880
(781) 224-4216 (fax)
(Registrant’s telephone number, including area code)
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.
x YES ¨ NO
Indicate by check mark whether the registrant is an accelerated filer (as defined in Rule 12b-2 of the Act.) ¨
Indicate the number of shares outstanding of each of the issuer’s classes of common stock as of the latest practicable date.
The number of shares of Common Stock, $0.01 par value, outstanding as of May 9, 2003 was 7,333,857.
AMERICAN DENTAL PARTNERS, INC.
| Page | ||||
| Part I. |
Financial Information |
|||
| Item 1 |
Financial Statements |
|||
| Consolidated Balance Sheets at December 31, 2002 and March 31, 2003 (unaudited) |
3 | |||
| Consolidated Statements of Income for the Three Months Ended March 31, 2002 and 2003 (unaudited) |
4 | |||
| Consolidated Statement of Stockholders’ Equity for the Three Months Ended March 31, 2003 (unaudited) |
5 | |||
| Consolidated Statements of Cash Flows for the Three Months Ended March 31, 2002 and 2003 (unaudited) |
6 | |||
| 7 | ||||
| Item 2 |
Management’s Discussion and Analysis of Financial Condition and Results of Operations |
12 | ||
| Item 3 |
22 | |||
| Item 4 |
22 | |||
| Part II. |
Other Information |
|||
| Item 1. |
23 | |||
| Item 2. |
23 | |||
| Item 3. |
23 | |||
| Item 4. |
23 | |||
| Item 5. |
23 | |||
| Item 6. |
23 | |||
| 24 | ||||
| 25 | ||||
| 27 |
2
AMERICAN DENTAL PARTNERS, INC.
(in thousands, except share and per share amounts)
(unaudited)
| March 31, 2003 |
December 31, 2002 |
|||||||
| ASSETS |
||||||||
| Current assets: |
||||||||
| Cash and cash equivalents |
$ |
993 |
|
$ |
844 |
| ||
| Accounts receivable |
|
930 |
|
|
824 |
| ||
| Receivables due from affiliated dental groups |
|
18,528 |
|
|
17,631 |
| ||
| Inventories |
|
1,905 |
|
|
1,963 |
| ||
| Prepaid expenses and other receivables |
|
2,514 |
|
|
1,964 |
| ||
| Deferred income taxes |
|
624 |
|
|
624 |
| ||
| Total current assets |
|
25,494 |
|
|
23,850 |
| ||
| Property and equipment, net |
|
31,507 |
|
|
31,925 |
| ||
| Non-current assets: |
||||||||
| Goodwill, net |
|
5,045 |
|
|
5,045 |
| ||
| Intangible assets, net |
|
82,534 |
|
|
83,575 |
| ||
| Other assets |
|
581 |
|
|
620 |
| ||
| Total non-current assets |
|
88,160 |
|
|
89,240 |
| ||
| Total assets |
$ |
145,161 |
|
$ |
145,015 |
| ||
| LIABILITIES AND STOCKHOLDERS’ EQUITY |
||||||||
| Current liabilities: |
||||||||
| Accounts payable |
$ |
7,601 |
|
$ |
7,959 |
| ||
| Accrued compensation and benefits |
|
4,251 |
|
|
4,286 |
| ||
| Accrued expenses |
|
4,350 |
|
|
3,675 |
| ||
| Current maturities of debt |
|
1,586 |
|
|
1,586 |
| ||
| Total current liabilities |
|
17,788 |
|
|
17,506 |
| ||
| Non-current liabilities: |
||||||||
| Long-term debt |
|
48,261 |
|
|
49,677 |
| ||
| Deferred income taxes |
|
10,563 |
|
|
10,566 |
| ||
| Other liabilities |
|
339 |
|
|
350 |
| ||
| Total non-current liabilities |
|
59,163 |
|
|
60,593 |
| ||
| Total liabilities |
|
76,951 |
|
|
78,099 |
| ||
| Stockholders’ equity: |
||||||||
| Preferred stock, par value $0.01 per share, 1,000,000 shares authorized, no shares issued or outstanding |
|
— |
|
|
— |
| ||
| Common stock, par value $0.01 per share, 25,000,000 shares authorized, 7,852,282 and 7,836,572 shares issued and 7,269,782 and 7,254,072 shares outstanding at March 31, 2003 and December 31, 2002, respectively |
|
79 |
|
|
78 |
| ||
| Additional paid-in capital |
|
48,161 |
|
|
48,039 |
| ||
| Retained earnings |
|
23,844 |
|
|
22,673 |
| ||
| Treasury stock, at cost, 582,500 shares |
|
(3,874 |
) |
|
(3,874 |
) | ||
| Total stockholders’ equity |
|
68,210 |
|
|
66,916 |
| ||
| Commitments and contingencies |
||||||||
| Total liabilities and stockholders’ equity |
$ |
145,161 |
|
$ |
145,015 |
| ||
See accompanying notes to interim consolidated financial statements.
3
AMERICAN DENTAL PARTNERS, INC.
CONSOLIDATED STATEMENTS OF INCOME
(in thousands, except per share amounts)
(unaudited)
| Three Months Ended March 31, | ||||||
| 2003 |
2002 | |||||
| Net revenue |
$ |
39,032 |
$ |
35,305 | ||
| Operating expenses: |
||||||
| Salaries and benefits |
|
17,542 |
|
15,621 | ||
| Lab fees and dental supplies |
|
6,511 |
|
5,650 | ||
| Office occupancy expenses |
|
4,930 |
|
4,405 | ||
| Other operating expenses |
|
3,611 |
|
3,247 | ||
| General corporate expenses |
|
1,580 |
|
1,428 | ||
| Depreciation expenses |
|
1,280 |
|
1,223 | ||
| Amortization of intangible assets |
|
1,040 |
|
988 | ||
| Total operating expenses |
|
36,494 |
|
32,562 | ||
| Earnings from operations |
|
2,538 |
|
2,743 | ||
| Interest expense, net |
|
633 |
|
816 | ||
| Earnings before income taxes |
|
1,905 |
|
1,927 | ||
| Income taxes |
|
734 |
|
750 | ||
| Net earnings |
$ |
1,171 |
$ |
1,177 | ||
| Net earnings per common share: |
||||||
| Basic |
$ |
0.16 |
$ |
0.16 | ||
| Diluted |
$ |
0.16 |
$ |
0.16 | ||
| Weighted average common shares outstanding: |
||||||
| Basic |
|
7,266 |
|
7,202 | ||
| Diluted |
|
7,518 |
|
7,381 | ||
See accompanying notes to interim consolidated financial statements.
4
AMERICAN DENTAL PARTNERS, INC.
CONSOLIDATED STATEMENT OF STOCKHOLDERS’ EQUITY
FOR THE THREE MONTHS ENDED MARCH 31, 2003
(in thousands)
(unaudited)
| Number of Shares |
Common Stock |
Additional Paid-In Capital |
Retained Earnings |
Treasury Stock at Cost |
Total Stockholders Equity | ||||||||||||||||
| Common Stock Issued |
Common Stock in Treasury |
||||||||||||||||||||
| Balance at December 31, 2002 |
7,837 |
(582 |
) |
$ |
78 |
$ |
48,039 |
$ |
22,673 |
$ |
(3,874 |
) |
$ |
66,916 | |||||||
| Issuance of common stock for employee stock purchase plan |
14 |
— |
|
|
1 |
|
114 |
|
— |
|
— |
|
|
115 | |||||||
| Issuance of common stock for exercised stock options, including tax benefit of $1 |
1 |
— |
|
|
— |
|
8 |
|
— |
|
— |
|
|
8 | |||||||
| Net earnings |
— |
— |
|
|
— |
|
— |
|
1,171 |
|
— |
|
|
1,171 | |||||||
| Balance at March 31, 2003 |
7,852 |
(582 |
) |
$ |
79 |
$ |
48,161 |
$ |
23,844 |
$ |
(3,874 |
) |
$ |
68,210 | |||||||
See accompanying notes to interim consolidated financial statements.
5
AMERICAN DENTAL PARTNERS, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
(unaudited)
| Three Months Ended March 31, |
||||||||
| 2003 |
||||||||