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Table of Contents

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 March 31, 2005

 

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 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 Rule 12b-2 of the Exchange Act).    Yes  x    No  ¨

 

As of May 3, 2005 the Registrant had 7,251,888 shares of Common Stock, $0.01 par value, outstanding.

 

Table of Contents

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 March 31, 2005 and September 30, 2004    3
    Condensed Consolidated Statements of Operations for the three and six months ended March 31, 2005 and 2004    5
    Condensed Consolidated Statements of Cash Flows for the six months ended March 31, 2005 and 2004    6
    Notes to Condensed Consolidated Financial Statements    7
            ITEM 2:   Management’s Discussion and Analysis of Financial Condition and Results of Operations    16
            ITEM 3:   Quantitative and Qualitative Disclosures about Market Risk    27
            ITEM 4:   Controls and Procedures    28
PART II OTHER INFORMATION     
            ITEM 1:   Legal Proceedings    28
            ITEM 4:   Submission of Matters to a Vote of Security Holders    28
            ITEM 6:   Exhibits    28
SIGNATURES    29

 

2

Table of Contents

PART I – FINANCIAL INFORMATION

 

ITEM 1. FINANCIAL STATEMENTS

 

PEDIATRIC SERVICES OF AMERICA, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(In thousands)

 

    

March 31,

2005

    

September 30,

2004

  
     (Unaudited)        

ASSETS

                 

Current assets:

                 

Cash and cash equivalents

    $ 8,187     $ 8,159  

Accounts receivable, less allowances for doubtful accounts of $4,795 and $4,840, respectively

      42,358       40,403  

Prepaid expenses

      2,539       1,102  

Income tax receivable

      618       —    

Deferred income taxes

      6,300       6,557  

Workers’ compensation loss fund

      4,013       3,327  

Inventory

      3,414       2,893  

Insurance recoveries

      1,465       3,473  

Other current assets

      294       630  
    
 

Total current assets

      69,188       66,544  

Property and equipment:

                 

Home care equipment held for rental

      33,971       32,438  

Furniture and fixtures

      12,974       12,200  

Vehicles

      500       505  

Leasehold improvements

      3,180       3,102  
    
 
       50,625       48,245  

Accumulated depreciation and amortization

      (40,009 )     (38,207 )
    
 
       10,616       10,038  

Other assets:

                 

Goodwill, less accumulated amortization of approximately $9,613

      36,540       36,540  

Certificates of need, less accumulated amortization of approximately $638 and $627, respectively

      35       46  

Deferred financing fees, less accumulated amortization of approximately $715 and $594, respectively

      656       777  

Noncompete agreements, less accumulated amortization of approximately $1,239 and $1,220, respectively

      41       60  

Deferred income taxes

      465       1,301  

Workers’ compensation bond collateral

      1,507       2,311  

Insurance cash surrender value and recoveries

      4,956       9,742  

Other

      252       302  
    
 
       44,452       51,079  
    
 

Total assets

    $ 124,256     $ 127,661  
    
 

 

See accompanying notes.

 

3

Table of Contents

PEDIATRIC SERVICES OF AMERICA, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS—(Continued)

(In thousands)

 

     March 31,
2005
    September 30,
2004
     (Unaudited)     

LIABILITIES AND STOCKHOLDERS’ EQUITY

              

Current liabilities:

              

Accounts payable

    $ 5,180    $ 4,672

Accrued compensation

      5,726      6,029

Income taxes payable

      —        281

Accrued insurance

      4,758      6,935

Refunds payable

      1,226      1,489

Accrued interest

      1,033      998

Other accrued liabilities

      2,787      3,032

Deferred revenue

      776      800

Current maturities of long-term obligations

      83      157
    
  

Total current liabilities

      21,569      24,393

Long-term accrued insurance

      10,227      14,046

Deferred compensation

      1,556      2,386

Long-term obligations, net of current maturities

      20,362      20,385
    
  

Total liabilities

      53,714      61,210

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 7,250 and 7,031 shares issued and outstanding at March 31, 2005 and September 30, 2004, respectively

      73      70

Additional paid-in capital

      52,077      50,621

Retained earnings

      18,392      15,760
    
  

Total stockholders’ equity

      70,542      66,451
    
  

Total liabilities and stockholders’ equity

    $ 124,256    $ 127,661
    
  

 

See accompanying notes.

 

4

Table of Contents

PEDIATRIC SERVICES OF AMERICA, INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(In thousands, except per share data)

 

    

Three Months Ended

March 31,

    

Six Months Ended

March 31,

  
     2005
     2004
     2005
     2004
  
     (Unaudited)     (Unaudited)     (Unaudited)     (Unaudited)  

Net revenue

    $ 64,282     $ 61,033     $ 128,283     $ 120,863  

Costs and expenses:

                                 

Costs of goods and services

      37,615       34,322       74,680       67,618  

Other operating costs and expenses

                                 

Salaries, wages and benefits

      11,136       10,604       22,206       20,826  

Business insurance

      2,038       2,295       3,574       4,278  

Overhead

      4,246       3,960       8,321       8,119  
    
 
 
 

Other operating costs and expenses

      17,420       16,859       34,101       33,223  

Corporate, general and administrative

                                 

Salaries, wages and benefits

      3,353       3,588       6,678       7,145  

Business insurance

      60       43       90       87  

Professional services

      999       634       1,803       1,154  

Overhead

      806       853       1,469       1,587  
    
 
 
 

Corporate, general and administrative

      5,218       5,118       10,040       9,973  

Provision for doubtful accounts

      749       656       1,642       2,039  

Depreciation and amortization

      1,088       927       2,143       1,804  
    
 
 
 

Total costs and expenses

      62,090       57,882       122,606       114,657  
    
 
 
 

Operating income

      2,192       3,151       5,677       6,206  

Other income

      65       —         65       4  

Interest income

      51       6       93       49  

Interest expense

      (642 )     (583 )     (1,245 )     (1,115 )
    
 
 
 

Income before income tax expense

      1,666       2,574       4,590       5,144  

Income tax expense

      782       998       1,958       1,995  
    
 
 
 

Net income

    $ 884     $ 1,576     $ 2,632     $ 3,149  
    
 
 
 

Net income per share data:

                                 

Basic

    $ 0.12     $ 0.23     $ 0.37     $ 0.46  
    
 
 
 

Diluted

    $ 0.12     $ 0.21     $ 0.35     $ 0.43  
    
 
 
 

Weighted average shares outstanding:

                                 

Basic

      7,209       6,920       7,151       6,901  
    
 
 
 

Diluted

      7,651       7,430       7,549       7,340  
    
 
 
 

 

See accompanying notes.

 

5

Table of Contents

PEDIATRIC SERVICES OF AMERICA, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands)

 

    

Six Months Ended

March 31,

  
     2005
     2004
  
     (Unaudited)     (Unaudited)  

Operating activities:

                 

Net income

    $ 2,632     $ 3,149  

Adjustments to reconcile net income to net cash provided by (used in) operating activities:

          &nb