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 February 27, 2004
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 No. 001-12392
NDCHealth Corporation
(Exact name of registrant as specified in charter)
| DELAWARE | 58-0977458 | |
| (State or other jurisdiction of incorporation or organization) |
(I.R.S. Employer Identification No.) | |
| NDC Plaza, Atlanta, Georgia | 30329-2010 | |
| (Address of principal executive offices) | (Zip Code) | |
Registrant’s telephone number, including area code 404-728-2000
None
(Former name, former address and former fiscal year, if changed since last report)
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 Rule 12b-2 of the Exchange Act). Yes x No ¨.
APPLICABLE ONLY TO CORPORATE ISSUERS:
Indicate the number of shares outstanding of each of the issuer’s classes of common stock as of the latest practicable date.
Common Stock, Par Value $.125 – 36,012,221 shares
outstanding as of April 15, 2004
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
NDCHealth Corporation and Subsidiaries
(In thousands, except per share data)
| Three Months Ended |
||||||||
| February 27, 2004 |
February 28, 2003 |
|||||||
| Revenues |
$ | 116,113 | $ | 109,007 | ||||
| Operating expenses: |
||||||||
| Cost of service |
58,914 | 53,130 | ||||||
| Sales, general and administrative |
25,863 | 22,341 | ||||||
| Depreciation and amortization |
9,761 | 7,842 | ||||||
| Restructuring, impairment and other charges |
— | 2,283 | ||||||
| 94,538 | 85,596 | |||||||
| Operating income |
21,575 | 23,411 | ||||||
| Other income (expense): |
||||||||
| Interest and other income |
126 | 343 | ||||||
| Interest and other expense |
(6,980 | ) | (7,766 | ) | ||||
| Minority interest in losses |
776 | 185 | ||||||
| Loss related to investments |
— | (14,955 | ) | |||||
| Early extinguishment of debt charges |
— | (1,438 | ) | |||||
| (6,078 | ) | (23,631 | ) | |||||
| Income (loss) before income taxes and equity in losses of affiliated companies |
15,497 | (220 | ) | |||||
| Provision for income taxes |
5,811 | 3,121 | ||||||
| Income (loss) before equity in losses of affiliated companies |
9,686 | (3,341 | ) | |||||
| Equity in losses of affiliated companies |
(410 | ) | (359 | ) | ||||
| Net income (loss) |
$ | 9,276 | $ | (3,700 | ) | |||
| Basic earnings (loss) per share: |
$ | 0.26 | $ | (0.11 | ) | |||
| Diluted earnings (loss) per share: |
$ | 0.26 | $ | (0.11 | ) | |||
See Notes to Condensed Consolidated Financial Statements.
2
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
NDCHealth Corporation and Subsidiaries
(In thousands, except per share data)
| Nine Months Ended |
||||||||
| February 27, 2004 |
February 28, 2003 |
|||||||
| Revenues |
$ | 340,238 | $ | 314,375 | ||||
| Operating expenses: |
||||||||
| Cost of service |
171,248 | 156,881 | ||||||
| Sales, general and administrative |
73,871 | 64,555 | ||||||
| Depreciation and amortization |
28,519 | 22,952 | ||||||
| Restructuring, impairment and other charges |
3,999 | 2,283 | ||||||
| 277,637 | 246,671 | |||||||
| Operating income |
62,601 | 67,704 | ||||||
| Other income (expense): |
||||||||
| Interest and other income |
450 | 1,088 | ||||||
| Interest and other expense |
(22,296 | ) | (14,682 | ) | ||||
| Minority interest in losses |
1,399 | 1,216 | ||||||
| Loss related to investments |
— | (14,955 | ) | |||||
| Early extinguishment of debt charges |
— | (2,359 | ) | |||||
| (20,447 | ) | (29,692 | ) | |||||
| Income before income taxes and equity in losses of affiliated companies |
42,154 | 38,012 | ||||||
| Provision for income taxes |
15,797 | 16,886 | ||||||
| Income before equity in losses of affiliated companies |
26,357 | 21,126 | ||||||
| Equity in losses of affiliated companies |
(993 | ) | (984 | ) | ||||
| Net income |
$ | 25,364 | $ | 20,142 | ||||
| Basic earnings per share: |
$ | 0.73 | $ | 0.58 | ||||
| Diluted earnings per share: |
$ | 0.71 | $ | 0.58 | ||||
See Notes to Condensed Consolidated Financial Statements.
3
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
NDCHealth Corporation and Subsidiaries
(In thousands)
| Nine Months Ended |
||||||||
| February 27, 2004 |
February 28, 2003 |
|||||||
| Cash flows from operating activities: |
||||||||
| Net income |
$ | 25,364 | $ | 20,142 | ||||
| Adjustments to reconcile net income to cash provided by operating activities: |
||||||||
| Equity in losses of affiliated companies |
993 | 984 | ||||||
| Non-cash portion of restructuring, impairment and other charges |
1,049 | 2,283 | ||||||
| Non-cash in process research and development charges |
350 | — | ||||||
| Non-cash early extinguishment of debt charges |
— | 1,217 | ||||||
| Loss related to investments |
— | 14,955 | ||||||
| Depreciation and amortization |
28,519 | 22,952 | ||||||
| Deferred income taxes |
17,709 | 12,072 | ||||||
| Provision for bad debts |
3,246 | 2,115 | ||||||
| Other, net |
2,211 | 5,333 | ||||||
| Changes in assets and liabilities which provided (used) cash, net of the effects of acquisitions: |
||||||||
| Accounts receivable, net |
(6,092 | ) | (5,307 | ) | ||||
| Prepaid expenses and other assets |
(1,728 | ) | (8,612 | ) | ||||
| Accounts payable and accrued liabilities |
7,312 | (1,304 | ) | |||||
| Accrued interest on long-term debt |
(6,207 | ) | 6,490 | |||||
| Deferred revenue |
(1,499 | ) | (3,896 | ) | ||||
| Income taxes |
(862 | ) | 857 | |||||
| Net cash provided by operating activities |
70,365 | 70,281 | ||||||
| Cash flows from investing activities: |
||||||||
| Capital expenditures |
(33,633 | ) | (31,767 | ) | ||||
| Proceeds from the sale of equipment |
2,148 | — | ||||||
| Investing activities and other non-current assets |
(7,077 | ) | (13,831 | ) | ||||
| Net cash used in investing activities |
(38,562 | ) | (45,598 | ) | ||||
| Cash flows from financing activities: |
||||||||
| Net repayments under lines of credit |
— | (91,000 | ) | |||||
| Net principal payments under capital lease arrangements and other long-term debt |
(16,559 | ) | (1,888 | ) | ||||
| Net cash from refinancing activities |
(395 | ) | 168,070 | |||||
| Net proceeds from stock activities |
8,431 | 1,283 | ||||||
| Dividends paid |
(4,254 | ) | (4,170 | ) | ||||
| Net cash (used in) provided by financing activities |
(12,777 | ) | 72,295 | |||||
| Cash flows from discontinued operations: |
||||||||
| Cash provided by tax benefits of discontinued operations |
— | 6,106 | ||||||
| Cash used in discontinued operations |
(1,527 | ) | (4,393 | ) | ||||
| Net cash (used in) provided by discontinued operations |
(1,527 | ) | 1,713 | |||||
| Increase in cash and cash equivalents |
17,499 | 98,691 | ||||||
| Cash and cash equivalents, beginning of period |
16,103 | 13,447 | ||||||
| Cash and cash equivalents, end of period |
$ | 33,602 | $ | 112,138 | ||||
See Notes to Condensed Consolidated Financial Statements.
4
CONDENSED CONSOLIDATED BALANCE SHEETS
NDCHealth Corporation and Subsidiaries
(In thousands, except share data)
| February 27, 2004 |
May 30, 2003 |
|||||||
| ASSETS |
||||||||
| Current assets: |
||||||||
| Cash and cash equivalents |
$ | 33,602 | $ | 16,103 | ||||
| Accounts receivable |
82,720 | 78,988 | ||||||
| Allowance for doubtful accounts |
(8,555 | ) | (6,785 | ) | ||||
| Accounts receivable, net |
74,165 | 72,203 | ||||||
| Income tax receivable |
2,050 | 1,199 | ||||||
| Deferred income taxes |
10,022 | 21,663 | ||||||
| Prepaid expenses and other current assets |
31,862 | 34,304 | ||||||
| Total current assets |
151,701 | 145,472 | ||||||
| Property and equipment, net |
128,494 | 116,678 | ||||||
| Intangible assets, net |
492,078 | 479,234 | ||||||
| Deferred income taxes |
— | 5,018 | ||||||
| Debt issuance cost |
13,476 | 12,756 | ||||||
| Investments |
17,979 | 15,662 | ||||||
| Other |
15,669 | 12,432 | ||||||
| Total Assets |
$ | 819,397 | $ | 787,252 | ||||
| LIABILITIES AND STOCKHOLDERS’ EQUITY |
||||||||
| Current liabilities: |
||||||||
| Current portion of long-term debt |
$ | 6,037 | $ | 6,558 | ||||
| Current portion of obligations under capital leases |
1,019 | 1,028 | ||||||
| Accounts payable and accrued liabilities |
67,993 | 61,211 | ||||||
| Accrued interest |
7,074 | 13,281 | ||||||
| Deferred revenue |
37,444 | 38,137 | ||||||
| Total current liabilities |
119,567 | 120,215 | ||||||
| Long-term debt |
305,666 | 321,262 | ||||||
| Obligations under capital leases |
124 | 558 | ||||||
| Deferred revenue |
8,794 | 9,461 | ||||||
| Deferred income taxes |
742 | — | ||||||