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 ENDED: MARCH 31, 2003
COMMISSION FILE NUMBER: 0-26625
NOVAMED EYECARE, INC.
(Exact name of registrant as specified in its charter)
| Delaware |
36-4116193 | |
| (State or other jurisdiction of incorporation or organization) |
(I.R.S. Employer Identification No.) |
980 North Michigan Avenue, Suite 1620, Chicago, Illinois 60611
(Address of principal executive offices)
Registrant’s telephone, including area code: (312) 664-4100
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 and 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 by check mark whether the registrant is an accelerated filer (as defined in Rule 12b-2 of the Exchange Act). Yes ¨ No x
As of May 8, 2003, there were outstanding 21,440,646 shares of the registrant’s common stock, par value $.01 per share.
NOVAMED EYECARE, INC.
FORM 10-Q FOR QUARTERLY PERIOD ENDED MARCH 31, 2003
| PART OR ITEM |
PAGE | |||
| Part I. |
3 | |||
| Item 1. |
Interim Condensed Consolidated Financial Statements (unaudited) |
|||
| Condensed Consolidated Balance Sheets—March 31, 2003 and December 31, 2002 |
3 | |||
| Condensed Consolidated Statements of Operations—Three months ended March 31, 2003 and 2002 |
4 | |||
| Condensed Consolidated Statements of Cash Flows—Three months ended March 31, 2003 and 2002 |
5 | |||
| Notes to the Interim Condensed Consolidated Financial Statements |
6 | |||
| Item 2. |
Management’s Discussion and Analysis of Financial Condition and Results of Operations |
12 | ||
| Item 4. |
15 | |||
| Part II. |
16 | |||
| Item 6. |
16 | |||
| 17 |
2
Item 1.
NOVAMED EYECARE, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(Dollars in thousands, except per share data)
| March 31, 2003 |
December 31, 2002 |
|||||||
| (unaudited) |
||||||||
| ASSETS |
||||||||
| Current assets: |
||||||||
| Cash and cash equivalents |
$ |
2,506 |
|
$ |
1,957 |
| ||
| Accounts receivable, net |
|
8,756 |
|
|
7,060 |
| ||
| Notes and amounts due from affiliated providers |
|
1,280 |
|
|
1,280 |
| ||
| Notes receivable from related parties |
|
1,054 |
|
|
1,289 |
| ||
| Inventory |
|
1,031 |
|
|
1,020 |
| ||
| Current tax assets, net |
|
2,724 |
|
|
2,940 |
| ||
| Other current assets |
|
831 |
|
|
1,175 |
| ||
| Current assets of discontinued operations |
|
980 |
|
|
2,575 |
| ||
| Total current assets |
|
19,162 |
|
|
19,296 |
| ||
| Property and equipment, net |
|
6,649 |
|
|
7,008 |
| ||
| Intangible assets, net |
|
26,795 |
|
|
26,756 |
| ||
| Noncurrent deferred tax assets, net |
|
7,481 |
|
|
7,861 |
| ||
| Other assets, net |
|
1,365 |
|
|
1,406 |
| ||
| Noncurrent assets of discontinued operations, net |
|
867 |
|
|
1,801 |
| ||
| Total assets |
$ |
62,319 |
|
$ |
64,128 |
| ||
| LIABILITIES AND STOCKHOLDERS’ EQUITY |
||||||||
| Current liabilities: |
||||||||
| Accounts payable |
$ |
3,721 |
|
$ |
3,654 |
| ||
| Accrued expenses |
|
3,190 |
|
|
3,696 |
| ||
| Restructuring reserves |
|
581 |
|
|
784 |
| ||
| Current maturities of long-term debt |
|
63 |
|
|
92 |
| ||
| Current liabilities of discontinued operations |
|
2,738 |
|
|
3,844 |
| ||
| Total current liabilities |
|
10,293 |
|
|
12,070 |
| ||
| Long-term debt, net of current maturities |
|
9 |
|
|
11 |
| ||
| Minority interest |
|
4,115 |
|
|
3,399 |
| ||
| Commitments and contingencies |
||||||||
| Stockholders’ equity: |
||||||||
| Series E Junior Participating Preferred Stock, $0.01 par value, 1,912,000 shares authorized, none outstanding at March 31, 2003 and December 31, 2002, respectively |
|
— |
|
|
— |
| ||
| Common stock, $0.01 par value, 81,761,465 shares authorized, 24,930,852 and 24,905,507 shares issued at March 31, 2003 and December 31, 2002, respectively |
|
249 |
|
|
249 |
| ||
| Additional paid-in-capital |
|
77,778 |
|
|
77,753 |
| ||
| Accumulated deficit |
|
(26,570 |
) |
|
(27,132 |
) | ||
| Treasury stock, at cost, 3,491,299 and 2,473,640 shares at March 31, 2003
and |
|
(3,555 |
) |
|
(2,222 |
) | ||
| Total stockholders’ equity |
|
47,902 |
|
|
48,648 |
| ||
| Total liabilities and stockholders’ equity |
$ |
62,319 |
|
$ |
64,128 |
| ||
The notes to the interim condensed consolidated financial statements
are an integral part of these statements.
3
NOVAMED EYECARE, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Amounts in thousands, except per share data; unaudited)
| Three months ended |
|||||||
| 2003 |
2002 |
||||||
| Net revenue: |
|||||||
| Surgical facilities |
$ |
8,548 |
$ |
7,865 |
| ||
| Product sales and other |
|
4,955 |
|
5,409 |
| ||
| Total net revenue |
|
13,503 |
|
13,274 |
| ||
| Operating expenses: |
|||||||
| Salaries, wages and benefits |
|
5,240 |
|
4,800 |
| ||
| Cost of sales and medical supplies |
|
3,351 |
|
3,349 |
| ||
| Selling, general and administrative |
|
2,879 |
|
2,746 |
| ||
| Depreciation and amortization |
|
637 |
|
619 |
| ||
| Total operating expenses |
|
12,107 |
|
11,514 |
| ||
| Income from continuing operations |
|
1,396 |
|
1,760 |
| ||
| Other expense, net |
|
460 |
|
78 |
| ||
| Income from continuing operations before income taxes |
|
936 |
|
1,682 |
| ||
| Income tax provision |
|
377 |
|
673 |
| ||
| Net income from continuing operations before cumulative effect of change in accounting principle |
|
559 |
|
1,009 |
| ||
| Net income (loss) from discontinued operations |
|
4 |
|
89 |
| ||
| Net loss on disposal of discontinued operations |
|
— |
|
(186 |
) | ||
| Cumulative effect of change in accounting principle, net of tax |
|
— |
|
(1,803 |
) | ||
| Net income (loss) |
$ |
563 |
$ |
(891 |
) | ||
| Basic earnings per common share: |
|||||||
| Income from continuing operations before cumulative effect of change in accounting principle |
$ |
0.03 |
$ |
0.04 |
| ||
| Income (loss) from discontinued operations |
|
— |
|
(0.01 |
) | ||
| Cumulative effect of change in accounting principle |
|
— |
|
(0.07 |
) | ||
| Net income (loss) |
$ |
0.03 |
$ |
(0.04 |
) | ||
| Diluted earnings per common share: |
|||||||
| Income from continuing operations before cumulative effect of change in accounting principle |
$ |
0.03 |
$ |
0.04 |
| ||
| Income (loss) from discontinued operations |
|
— |
|
(0.01 |
) | ||
| Cumulative effect of change in accounting principle |
|
— |
|
(0.07 |
) | ||
| Net income (loss) |
$ |
0.03 |
$ |
(0.04 |
) | ||
| Weighted average common shares outstanding |
|
21,805 |
|
24,837 |
| ||
| Dilutive effect of employee stock options |
|
280 |
|
— |
| ||
| Diluted weighted average common shares outstanding |
|
22,085 |
|
24,837 |
| ||
The notes to the interim condensed consolidated financial statements
are an integral part of these statements.
4
NOVAMED EYECARE, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Dollars in thousands; unaudited)
| Three months ended March 31, |
||||||||
| 2003 |
2002 |
|||||||
| Cash flows from operating activities: |
||||||||
| Net income (loss) |
$ |
563 |
|
$ |
(891 |
) | ||
| Adjustments to reconcile net income (loss) to net cash provided by continuing operations, net of effects of purchase transactions— |
||||||||
| Net (earnings) loss of discontinued operations |
|
(4 |
) |
|
97 |
| ||
| Cumulative effect of change in accounting principle, net |
|
— |
|
|
1,803 |
| ||
| Depreciation and amortization |
|
637 |
|
|
619 |
| ||
| Deferred taxes |
|
377 |
|
|
673 |
| ||
| Gain on sale of minority interests |
|
(115 |
) |
|
— |
| ||
| Minority interests |
|
578 |
|
|
38 |
| ||
| Distributions to minority partners |
|
(222 |
) |
|
— |
| ||
| Changes in operating assets and li | ||||||||