UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
| [X] | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) | |
| OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the Quarterly Period Ended: September 30, 2003
| [ ] | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) | |
| OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the transition period from to .
American HomePatient, Inc.
| Delaware | 0-19532 | 62-1474680 | ||
|
|
||||
| (State or other jurisdiction of | (Commission | (IRS Employer Identification No.) | ||
| incorporation or organization) | File Number) |
5200 Maryland Way, Suite 400, Brentwood, Tennessee 37027
(615) 221-8884
None
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 by check mark whether the registrant is an accelerated filer (as defined in Exchange Act Rule 12b-2). Yes [ ] No [X]
16,367,389
(Outstanding shares of the issuer’s common stock as of November 6, 2003)
1
AMERICAN HOMEPATIENT, INC. AND SUBSIDIARIES
INDEX
| Page No. | ||||||
| PART I | Financial Information | |||||
| Item 1. | Financial Statements | |||||
| Interim Condensed Consolidated Balance Sheets | 3 | |||||
Interim Condensed Consolidated Statements of Operations – Three
and nine months ended September 30, 2003 and 2002
|
5 | |||||
Interim Condensed Consolidated Statements of Cash Flows – Nine
months ended September 30, 2003 and 2002
|
6 | |||||
Notes to Interim Condensed Consolidated Financial Statements
|
8 | |||||
| Item 2. | Management’s Discussion and Analysis of Financial Condition and Results of Operations | 20 | ||||
| Item 3. | Quantitative and Qualitative Disclosures about Market Risk | 46 | ||||
| Item 4. | Controls and Procedures | 46 | ||||
| Independent Accountants’ Review Report | 47 | |||||
| PART II | Other Information and Signatures | |||||
| Item 1. | Legal Proceedings | 49 | ||||
| Item 5. | Other Information | 49 | ||||
| Item 6. | Exhibits and Reports on Form 8-K | 49 | ||||
| Signatures | 50 | |||||
| Index to Exhibits | 51 | |||||
2
PART I. FINANCIAL INFORMATION
ITEM 1 - FINANCIAL STATEMENTS
AMERICAN HOMEPATIENT, INC. AND SUBSIDIARIES
INTERIM CONDENSED CONSOLIDATED BALANCE SHEETS
(unaudited)
| September 30, | December 31, | ||||||||||
| 2003 | 2002 | ||||||||||
ASSETS |
|||||||||||
CURRENT ASSETS: |
|||||||||||
Cash and cash equivalents |
$ | 14,856,000 | $ | 22,827,000 | |||||||
Restricted cash |
467,000 | 67,000 | |||||||||
Accounts receivable, less allowance for
doubtful accounts of $19,597,000 in 2003 and
$22,991,000 in 2002 |
56,557,000 | 55,437,000 | |||||||||
Inventories |
15,174,000 | 16,565,000 | |||||||||
Adequate protection payments |
2,196,000 | — | |||||||||
Prepaid expenses and other current assets |
2,554,000 | 2,276,000 | |||||||||
Total current assets |
91,804,000 | 97,172,000 | |||||||||
PROPERTY AND EQUIPMENT, at cost: |
168,085,000 | 171,021,000 | |||||||||
Less accumulated depreciation and amortization |
(114,246,000 | ) | (120,594,000 | ) | |||||||
Property and equipment, net |
53,839,000 | 50,427,000 | |||||||||
OTHER ASSETS: |
|||||||||||
Goodwill |
121,214,000 | 121,214,000 | |||||||||
Investment in joint ventures |
9,069,000 | 9,815,000 | |||||||||
Other assets |
12,882,000 | 12,315,000 | |||||||||
Total other assets |
143,165,000 | 143,344,000 | |||||||||
TOTAL ASSETS |
$ | 288,808,000 | $ | 290,943,000 | |||||||
(Continued)
3
AMERICAN HOMEPATIENT, INC. AND SUBSIDIARIES
INTERIM CONDENSED CONSOLIDATED BALANCE SHEETS
(unaudited)
(Continued)
| September 30, | December 31, | |||||||||||
| 2003 | 2002 | |||||||||||
LIABILITIES AND SHAREHOLDERS’ DEFICIT |
||||||||||||
LIABILITIES NOT SUBJECT TO COMPROMISE: |
||||||||||||
CURRENT LIABILITIES: |
||||||||||||
Current portion of long-term debt and capital leases |
$ | 5,862,000 | $ | — | ||||||||
Accounts payable |
14,275,000 | 13,267,000 | ||||||||||
Other payables |
2,129,000 | 1,637,000 | ||||||||||
Current portion of pre-petition accounts payable |
2,716,000 | — | ||||||||||
Accrued expenses: |
||||||||||||
Payroll and related benefits |
10,042,000 | 7,759,000 | ||||||||||
Insurance, including self-insurance accruals |
7,026,000 | 5,829,000 | ||||||||||
Other |
13,706,000 | 1,625,000 | ||||||||||
Total current liabilities |
55,756,000 | 30,117,000 | ||||||||||
NONCURRENT LIABILITIES: |
||||||||||||
Long-term debt and capital leases, excluding current
portion |
260,215,000 | — | ||||||||||
Pre-petition accounts payable, net of current portion |
5,899,000 | — | ||||||||||
Other noncurrent liabilities |
4,788,000 | 121,000 | ||||||||||
Total noncurrent liabilities |
270,902,000 | 121,000 | ||||||||||
LIABILITIES SUBJECT TO COMPROMISE |
— | 307,829,000 | ||||||||||
TOTAL LIABILITIES |
326,658,000 | 338,067,000 | ||||||||||
MINORITY INTEREST |
461,000 | 470,000 | ||||||||||
SHAREHOLDERS’ DEFICIT |
||||||||||||
Preferred stock, $.01 par value; authorized 5,000,000
shares; none issued and outstanding |
— | — | ||||||||||
Common stock, $.01 par value; authorized 35,000,000
shares; issued and outstanding, 16,367,000 shares |
164,000 | 164,000 | ||||||||||
Paid-in capital |
173,985,000 | 173,985,000 | ||||||||||
Accumulated deficit |
(212,460,000 | ) | (221,743,000 | ) | ||||||||
Total shareholders’ deficit |
(38,311,000 | ) | (47,594,000 | ) | ||||||||
TOTAL LIABILITIES AND SHAREHOLDERS’ DEFICIT |
$ | 288,808,000 | $ | 290,943,000 | ||||||||
The accompanying notes to interim condensed consolidated financial statements are an integral part of these consolidated financial statements.
4
AMERICAN HOMEPATIENT, INC. AND SUBSIDIARIES
INTERIM CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(unaudited)
| Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||||||
| 2003 | 2002 | 2003 | 2002 | ||||||||||||||||
REVENUES: |
|||||||||||||||||||
Sales and related service revenues |
$ | 36,638,000 | $ | 33,423,000 | $ | 109,238,000 | $ | 102,003,000 | |||||||||||
Rentals and other revenues |
47,255,000 | 45,605,000 | 140,026,000 | 135,916,000 | |||||||||||||||
Total revenues |
83,893,000 | 79,028,000 | 249,264,000 | 237,919,000 | |||||||||||||||
EXPENSES: |
|||||||||||||||||||
Cost of sales and related services |
17,342,000 | 15,110,000 | 52,084,000 | 47,175,000 | |||||||||||||||
Cost of rentals and other revenues, including rental equipment
depreciation of $5,513,000, $5,428,000, $15,342,000 and
$14,834,000, respectively |
9,562,000 | 9,295,000 | 26,958,000 | 26,061,000 | |||||||||||||||
Operating, including bad debt expense of $2,955,000, $2,681,000,
$8,278,000 and $9,550,000, respectively |
47,335,000 | 46,084,000 | 140,589,000 | 137,273,000 | |||||||||||||||
General and administrative |
4,337,000 | 3,748,000 | 13,009,000 | 12,065,000 | |||||||||||||||
Earnings from unconsolidated joint ventures |
(964,000 | ) | (1,000,000 | ) | (3,385,000 | ) | (3,392,000 | ) | |||||||||||
Depreciation, excluding rental equipment, and amortization |
942,000 | 982,000 | 2,713,000 | 3,084,000 | |||||||||||||||
Amortization of deferred financing costs |
— | 236,000 | — | 1,779,000 | |||||||||||||||
Interest expense (income), net (excluding post-petition
contractual interest
of $0, $5,113,000, $12,510,000 and $5,113,000, respectively) |
4,269,000 | 1,729,000 | 4,219,000 | 11,920,000 | |||||||||||||||
Other (income) expense, net |
(376,000 | ) | 727,000 | (282,000 | ) | 558,000 | |||||||||||||
Gain
on sales of assets of centers |
— | — | — | (667,000 | ) | ||||||||||||||
Chapter 11 financial advisory expenses incurred prior to filing
bankruptcy |
— | 504,000 | — | 818,000 | |||||||||||||||
Total expenses |
82,447,000 | 77,415,000 | 235,905,000 | 236,674,000 | |||||||||||||||
INCOME FROM OPERATIONS BEFORE REORGANIZATION ITEMS, INCOME TAXES AND
CUMULATIVE EFFECT OF CHANGE IN ACCOUNTING PRINCIPLE |
1,446,000 | 1,613,000 | 13,359,000 | 1,245,000 | |||||||||||||||
REORGANIZATION ITEMS |
920,000 | 3,917,000 | 3,776,000 | 3,917,000 | |||||||||||||||
INCOME (LOSS) FROM OPERATIONS BEFORE INCOME TAXES AND
CUMULATIVE EFFECT OF CHANGE IN ACCOUNTING PRINCIPLE |
526,000 | (2,304,000 | ) | 9,583,000 | (2,672,000 | ) | |||||||||||||
PROVISION FOR (BENEFIT FROM) INCOME TAXES |
100,000 | 100,000 | 300,000 | (1,812,000 | ) | ||||||||||||||
INCOME (LOSS) BEFORE CUMULATIVE EFFECT OF CHANGE IN ACCOUNTING
PRINCIPLE |
426,000 | (2,404,000 | ) | 9,283,000 | (860,000 | ) | |||||||||||||
CUMULATIVE EFFECT OF CHANGE IN ACCOUNTING PRINCIPLE WITH NO RELATED
TAX EFFECT |
— | — | — | (68,485,000 | ) | ||||||||||||||
NET INCOME (LOSS) |
$ | 426,000 | $ | (2,404,000 | ) | $ | 9,283,000 | $ | (69,345,000 | ) | |||||||||
INCOME (LOSS) PER COMMON SHARE BEFORE CUMULATIVE EFFECT OF CHANGE IN
ACCOUNTING PRINCIPLE: |
|||||||||||||||||||
- Basic |
$ | 0.03 | $ | (0.15 | ) | $ | 0.57 | $ | (0.05 | ) | |||||||||
- Diluted |
$ | 0.02 | $ | (0.15 | ) | $ | 0.49 | $ | (0.05 | ) | |||||||||
CUMULATIVE EFFECT OF CHANGE IN ACCOUNTING
PRINCIPLE PER COMMON SHARE: |
|||||||||||||||||||
- Basic |
$ | — | $ | — | $ | — | $ | (4.19 | ) | ||||||||||
- Diluted |
$ | — | $ | — | $ | — | $ | (4.19 | ) | ||||||||||
NET INCOME (LOSS) PER COMMON SHARE: |
|||||||||||||||||||
- Basic |
$ | 0.03 | $ | (0.15 | ) | $ | 0.57 | $ | (4.24 | ) | |||||||||
- Diluted |
$ | 0.02 | $ | (0.15 | ) | $ | 0.49 | $ | (4.24 | ) | |||||||||
WEIGHTED AVERAGE COMMON SHARES OUTSTANDING: |
|||||||||||||||||||
- Basic |
16,367,000 | 16,367,000 | 16,367,000 | 16,355,000 | |||||||||||||||
- Diluted |
19,111,000 | 16,367,000 | 18,942,000 | 16,355,000 | |||||||||||||||
The accompanying notes to interim condensed consolidated financial statements are an integral part of these consolidated financial statements.
5
AMERICAN HOMEPATIENT, INC. AND SUBSIDIARIES
INTERIM CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(unaudited)
| Nine Months Ended Sept. 30, | |||||||||||
| 2003 | 2002 | ||||||||||
CASH FLOWS FROM OPERATING ACTIVITIES: |
|||||||||||
Net income (loss) |
$ | 9,283,000 | $ | (69,345,000 | ) | ||||||
Adjustments to reconcile net income (loss) to net cash
provided by operating activities: |
|||||||||||
Cumulative effect of change in accounting principle |
— | 68,485,000 | |||||||||
Depreciation and amortization |
18,055,000 | 17,918,000 | |||||||||
Amortization of deferred financing costs |
— | 1,779,000 | |||||||||
Non-cash interest income on adequate protection
payments |
(787,000 | ) | — | ||||||||
Equity in earnings of unconsolidated joint ventures |
(1,771,000 | ) | (1,934,000 | ) | |||||||
Minority interest |
245,000 | 214,000 | |||||||||
Gain on sale of assets of centers |
— | (667,000 | ) | ||||||||
Reorganization items |
3,776,000 | 3,917,000 | |||||||||
Reorganization items paid |
(3,572,000 | ) | (176,000 | ) | |||||||
Change in assets and liabilities, net of dispositions: |
|||||||||||
Accounts receivable, net |
(1,120,000 | ) | 7,002,000 | ||||||||
Inventories, net |
1,391,000 | (1,327,000 | ) | ||||||||
Prepaid expenses and other current assets |
(278,000 | ) | 65,000 | ||||||||
Federal income tax receivable |
— | (2,112,000 | ) | ||||||||
Accounts payable, other payables and accrued
expenses |
(9,690,000 | ) | 11,075,000 | ||||||||
Other noncurrent liabilities |
(490,000 | ) | (30,000 | ) | |||||||
Other assets and liabilities |
4,667,000 | 936,000 | |||||||||
Net cash provided by operating activities |
19,709,000 | 35,800,000 | |||||||||
CASH FLOWS FROM INVESTING ACTIVITIES: |
|||||||||||
Proceeds from sales of assets of centers |
— | 1,805,000 | |||||||||
Additions to property and equipment, net |
(21,446,000 | ) | (19,848,000 | ) | |||||||
Distributions and loan payments from unconsolidated
joint
ventures, net |
2,517,000 | 2,503,000 | |||||||||
Net cash used in investing activities |
(18,929,000 | ) | (15,540,000 | ) | |||||||
(Continued)
6
AMERICAN HOMEPATIENT, INC. AND SUBSIDIARIES
INTERIM CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(unaudited)
(Continued)
| Nine Months Ended Sept. 30, | ||||||||||