PEDIATRIC SERVICES OF AMERICA INC - 10-Q Quarterly Report

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 June 30, 2004

¨	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 0-23946

PEDIATRIC SERVICES OF AMERICA, INC.

(Exact name of Registrant as specified in its charter)

Delaware

58-1873345

(State or other jurisdiction of

incorporation or organization)

(I.R.S. Employer

Identification No.)

310 Technology Parkway, Norcross GA 30092-2929

(Address of principal executive offices, including zip code)

(770) 441-1580

(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. 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

As of August 10, 2004 the Registrant had 7,012,812 shares of Common Stock, $0.01 par value, outstanding.

FORM 10-Q

PEDIATRIC SERVICES OF AMERICA, INC.

INDEX


			Page Number
PART I FINANCIAL INFORMATION

	ITEM 1:	Financial Statements

		Condensed Consolidated Balance Sheets as of June 30, 2004 and September 30, 2003	3

		Condensed Consolidated Statements of Operations for the three and nine months ended June 30, 2004 and 2003	5

		Condensed Consolidated Statements of Cash Flows for the nine months ended June 30, 2004 and 2003	6

		Notes to Condensed Consolidated Financial Statements	7

	ITEM 2:	Management’s Discussion and Analysis of Financial Condition and Results of Operations	13

	ITEM 3:	Quantitative and Qualitative Disclosures about Market Risk	22

	ITEM 4:	Controls and Procedures	22

PART II OTHER INFORMATION

	ITEM 1:	Legal Proceedings	24

	ITEM 5:	Other Information	24

	ITEM 6:	Exhibits and Reports on Form 8-K	24

SIGNATURES			25

PART I – FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

PEDIATRIC SERVICES OF AMERICA, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(In thousands)


	June 30, 2004			September 30, 2003
	(Unaudited)
ASSETS
Current assets:
Cash and cash equivalents	$	5,320		$	9,171
Accounts receivable, less allowances for doubtful accounts of $6,057 and $3,900, respectively		42,037			37,043
Prepaid expenses		2,277			991
Deferred income taxes		4,778			4,778
Workers’ compensation loss fund		3,342			1,633
Inventory		2,547			2,724
Insurance recoveries		3,390			2,227
Other current assets		226			327

Total current assets		63,917			58,894

Property and equipment:
Home care equipment held for rental		32,041			30,009
Furniture and fixtures		11,998			11,402
Vehicles		504			700
Leasehold improvements		2,074			1,961

		46,617			44,072
Accumulated depreciation and amortization		(37,554	)		(36,343	)

		9,063			7,729

Other assets:
Goodwill, less accumulated amortization of approximately $9,613		36,540			36,540
Certificates of need, less accumulated amortization of approximately $621 and $604, respectively		52			69
Deferred financing fees, less accumulated amortization of approximately $533 and $709, respectively		836			632
Deferred income taxes		2,916			2,916
Workers’ compensation bond collateral		2,305			2,779
Insurance recoveries		8,291			5,396
Other		396			389

		51,336			48,721

Total assets	$	124,316		$	115,344

See accompanying notes.

PEDIATRIC SERVICES OF AMERICA, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS — (Continued)

(In thousands)


	June 30, 2004		September 30, 2003
	(Unaudited)
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable	$	6,194	$	6,045
Accrued compensation		5,088		5,138
Income taxes payable		906		1,382
Accrued insurance		6,647		5,798
Refunds payable		1,250		1,176
Accrued interest		435		951
Other accrued liabilities		1,840		2,062
Deferred revenue		853		733
Current maturities of long-term obligations		192		178

Total current liabilities		23,405		23,463

Long-term accrued insurance		14,682		10,302
Long-term obligations, net of current maturities		20,397		20,515

Total liabilities		58,484		54,280

Redeemable preferred stock, $.01 par value, 2,000 shares authorized, no shares issued and outstanding		—		—

Stockholders’ equity:
Common stock, $.01 par value, 80,000 shares authorized 6,998 and 6,879 shares issued and outstanding at June 30, 2004 and September 30, 2003, respectively		70		69
Additional paid-in capital		49,822		49,247
Retained earnings		15,940		11,748

Total stockholders’ equity		65,832		61,064

Total liabilities and stockholders’ equity	$	124,316	$	115,344

See accompanying notes.

PEDIATRIC SERVICES OF AMERICA, INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(In thousands, except per share data)


	Three Months Ended June 30,						Nine Months Ended June 30,
	2004			2003			2004			2003
	(Unaudited)			(Unaudited)			(Unaudited)			(Unaudited)
Net revenue	$	58,413		$	54,149		$	179,276		$	160,348
Costs and expenses:
Costs of goods and services		33,236			29,460			100,854			87,669
Other operating costs and expenses
Administrative and marketing salaries, wages and benefits		10,858			10,116			31,685			30,223
Business insurance		1,613			1,730			5,891			5,327
Overhead		4,304			3,723			12,449			11,562

Other operating costs and expenses		16,775			15,569			50,025			47,112
Corporate, general and administrative
Salaries, wages and benefits		3,074			3,521			10,219			10,351
Business insurance		40			77			127			244
Professional services		605			523			1,759			1,451
Overhead		701			680			2,288			2,129

Corporate, general and administrative		4,420			4,801			14,393			14,175
Provision for doubtful accounts		792			531			2,831			942
Depreciation and amortization		945			1,008			2,723			3,082

Total costs and expenses		56,168			51,369			170,826			152,980

Operating income		2,245			2,780			8,450			7,368
Other income		—			10			5			54
Early extinguishment of debt		—			32			—			63
Interest income		63			16			112			82
Interest expense		(604	)		(612	)		(1,719	)		(1,882	)

Income before income tax expense		1,704			2,226			6,848			5,685
Income tax expense		661			876			2,656			2,236

Net income	$	1,043		$	1,350		$	4,192		$	3,449

Net income per share data:
Basic	$	0.15		$	0.20		$	0.61		$	0.50

Diluted	$	0.14		$	0.19		$	0.57		$	0.49

Weighted average shares outstanding:
Basic		6,973			6,866			6,925			6,857

Diluted		7,488			7,052			7,389			7,065

See accompanying notes.

PEDIATRIC SERVICES OF AMERICA, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands)


	Nine Months Ended June 30,
	2004	2003
	(Unaudited)	(Unaudited)
Operating activities:

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