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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: April 2, 2005

 

¨ 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 1-10031

 


 

NOBEL LEARNING COMMUNITIES, INC.

(Exact name of registrant as specified in its charter)

 


 

Delaware   22-2465204
(State or other jurisdiction of
incorporation or organization)
  (IRS Employer
Identification No.)

 

1615 West Chester Pike, Suite 200, West Chester, PA   19382-6223
(Address of principal executive offices)   (Zip Code)

 

(484) 947-2000

(Registrant’s telephone number, including area code)

 


 

Indicate by check whether the registrant (1) has filed all report(s) 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  ¨

 

Indicated by check mark whether the registrant is an accelerated filer (as defined in Rule 12b-2b of the Exchange Act)    Yes  ¨    No  x

 

APPLICABLE ONLY TO CORPORATE ISSUERS:

 

The number of shares of the issuer’s common stock outstanding at May 9, 2005 was 7,486,807.

 



Table of Contents

INDEX TO FORM 10-Q

 

Nobel Learning Communities, Inc.

 

         Page
Number


PART I.   FINANCIAL INFORMATION     

Item 1.

 

Financial Statements

    
   

Consolidated Balance Sheets as of April 2, 2005 (Unaudited) and July 3, 2004

   2
    Consolidated Statements of Operations for the thirteen weeks and three months and the thirty-nine weeks and nine months ended April 2, 2005 and March 31, 2004, respectively (Unaudited)    3
    Consolidated Statements of Stockholders’ Equity and Comprehensive Loss for the thirty-nine weeks ended April 2, 2005 (Unaudited)    4
    Consolidated Statements of Cash Flows for the thirty-nine weeks ended April 2, 2005 and the nine months ended March 31, 2004 (Unaudited)    5
   

Notes to Consolidated Interim Financial Statements

   6

Item 2.

 

Management’s Discussion and Analysis of Financial Condition and Results of Operations

   11

Item 3.

 

Quantitative and Qualitative Disclosures About Market Risk

   21

Item 4.

 

Controls and Procedures

   21
PART II.   OTHER INFORMATION     

Item 6.

 

Exhibits

   22

 

i


Table of Contents

PART I

 

Item 1. Financial Information

 

CAUTIONARY STATEMENTS ABOUT FORWARD-LOOKING INFORMATION

 

Statements included or incorporated herein which are not historical facts are forward-looking statements pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. When the Company uses words such as “believes,” “expects,” “anticipates,” “plans,” “estimates,” “projects,” “may,” “intends,” “seeks” or similar expressions, the Company is making forward-looking statements, but these terms are not the exclusive means of identifying forward-looking statements.

 

Forward-looking statements reflect management’s current views with respect to future events and financial performance, and are based on currently available competitive, financial and economic data and management’s assumptions regarding future events. While management believes that its assumptions are reasonable, forward-looking statements are subject to various known and unknown risks and uncertainties, and actual results may differ materially from those expressed or implied herein. In connection with the “safe harbor provisions” of the Private Securities Litigation Reform Act of 1995, the Company notes that certain factors, among others, which could cause future results to differ materially from the forward-looking statements, expectations and assumptions expressed or implied herein are discussed in greater detail under “Management’s Discussion and Analysis.” In addition, the Company’s results may be affected by general factors, such as economic conditions, political developments, interest and inflation rates, accounting standards, taxes, and laws and regulations affecting it in markets where it competes.

 

Readers are cautioned that the forward-looking statements reflect management’s analysis only as of the date hereof, and the Company assumes no obligation to update or revise these statements or to update the reasons why actual results could differ from those projected in the forward-looking statements, whether as a result of new information, future developments or otherwise.

 

1


Table of Contents

Nobel Learning Communities, Inc. and Subsidiaries

Consolidated Balance Sheets

(Dollars in thousands, except share amounts)

 

    

(Unaudited)

April 2, 2005


    July 3, 2004

 

ASSETS

                

Cash and cash equivalents

   $ 5,594     $ 2,716  

Accounts receivable, less allowance for doubtful accounts of $849 at April 2, 2005 and $803 at July 3, 2004

     3,099       3,249  

Deferred tax asset

     3,056       3,552  

Prepaid assets

     4,741       4,843  

Property and equipment held for sale

     —         4,238  
    


 


Total Current Assets

     16,490       18,598  

Property and equipment, net

     25,874       24,924  

Goodwill and intangible assets, net

     36,993       37,167  

Deferred tax asset

     1,975       1,863  

Note receivable and other assets

     1,291       3,313  
    


 


Total Assets

   $ 82,623     $ 85,865  
    


 


LIABILITIES AND STOCKHOLDERS’ EQUITY

                

Current portion of long-term debt

   $ 2,277     $ 2,405  

Cash overdraft liability

     —         319  

Accounts payable and other current liabilities

     12,659       15,092  

Deferred revenue

     12,265       9,470  
    


 


Total Current Liabilities

     27,201       27,286  
    


 


Long-term debt

     9,046       12,931  

Subordinated debt

     10,000       10,000  

Other long term liabilities

     822       1,373  
    


 


Total Liabilities

     47,069       51,590  
    


 


Commitments and Contingencies

                

Stockholders’ Equity:

                

Preferred stock, $0.001 par value; 10,000,000 shares authorized, issued 8,160,187 at April 2, 2005 and 7,969,749 at July 3, 2004, outstanding 3,175,777 at April 2, 2005 and 6,015,807 at July 3, 2004. $11,897 and $14,030 aggregate liquidation preference at April 2, 2005 and July 3, 2004, respectively.

     3       6  

Common stock, $0.001 par value; 20,000,000 shares authorized, issued 7,486,807 at April 2, 2005 and 6,842,707 at July 3, 2004, outstanding 7,450,097 at April 2, 2005 and 6,612,197 at July 3, 2004

     7       7  

Treasury stock, cost; shares held 36,710 at April 2, 2005 and 230,510 at July 3, 2004

     (375 )     (1,375 )

Additional paid-in capital

     51,302       51,216  

Accumulated deficit

     (15,315 )     (15,375 )

Accumulated other comprehensive loss

     (68 )     (204 )
    


 


Total Stockholders’ Equity

     35,554       34,275  
    


 


Total Liabilities and Stockholders’ Equity

   $ 82,623     $ 85,865  
    


 


 

The accompanying notes and the notes in the financial statements included in the Registrant’s Annual Report on Form 10-K

are an integral part of these financial statements.

 

 

2


Table of Contents

Nobel Learning Communities, Inc. and Subsidiaries

Consolidated Statements of Operations

(Dollars in thousands except per share data)

(Unaudited)

 

     Thirteen
Weeks Ended
April 2, 2005


    Three
Months Ended
March 31, 2004


    Thirty-nine
Weeks Ended
April 2, 2005


    Nine
Months Ended
March 31, 2004


 

Revenue

   $ 43,156     $ 40,804     $ 120,721     $ 116,595  
    


 


 


 


Personnel costs

     20,384       19,569       57,560       56,311  

School operating costs

     5,793       5,559       17,673       16,972  

Rent and other

     10,641       9,969       31,061       29,227  
    


 


 


 


Cost of services

     36,818       35,097       106,294       102,510  
    


 


 


 


Gross profit

     6,338       5,707       14,427       14,085  

General and administrative expenses

     4,557       2,919       11,020       10,807  
    


 


 


 


Operating income

     1,781       2,788       3,407       3,278  

Interest expense

     671       966       2,079       2,886  

Other income

     (39 )     (6 )     (131 )     (60 )
    


 


 


 


Income from continuing operations before income taxes

     1,149       1,828       1,459       452  

Income tax expense

     436       680       554       131  
    


 


 


 


Income from continuing operations

     713       1,148       905       321  

Loss from discontinued operations, net of income tax effect

     (117 )     (279 )     (351 )     (1,360 )
    


 


 


 


Net income (loss)

     596       869       554       (1,039 )

Preferred stock dividends

     146       132       494       382  
    


 


 


 


Net income (loss) available to common stockholders

   $ 450     $ 737     $ 60     $ (1,421 )
    


 


 


 


Basic income (loss) per share:

                                

Income (loss) from continuing operations

   $ 0.08     $ 0.15     $ 0.06     $ (0.01 )

Discontinued operations

     (0.02 )     (0.04 )     (0.05 )     (0.21 )
    


 


 


 


Income (loss) per share

   $ 0.06     $ 0.11     $ 0.01     $ (0.22 )
    


 


 


 


Diluted income (loss) per share:

                                

Income (loss) from continuing operations

   $ 0.07     $ 0.12     $ 0.09     $ (0.01 )

Discontinued operations

     (0.01 )     (0.03 )     (0.03 )     (0.21 )
    


 


 


 


Income (loss) per share

   $ 0.06     $ 0.09     $ 0.06     $ (0.22 )
    


 


 


 


Weighted average common shares outstanding:

                                

Basic

     7,450       6,578       6,936       6,476  

Diluted

     9,748       9,342       9,656       6,476  

 

The accompanying notes and the notes in the financial statements included in the Registrant’s Annual Report on Form 10-K

are an integral part of these financial statements.

 

3


Table of Contents

Nobel Learning Communities, Inc. and Subsidiaries

Consolidated Statements of Stockholders’ Equity and Comprehensive Loss

For the Thirty-nine Weeks Ended April 2, 2005

(Dollars in thousands except share data)

 

     Preferred Stock

    Common Stock

  

Treasury

Stock


   

Additional
Paid-In

Capital


   

Accumulated

Deficit


   

Accumulated
Other
Comprehensive

Loss


   

Total


 
     Shares

    Amount

    Shares

    Amount

          

July 3, 2004

   6,015,807     $ 6     6,842,707     $ 7    $ (1,375 )   $ 51,216     $ (15,375 )   $ (204 )   $ 34,275  

Comprehensive income:

                                                                   

Net income

   —         —       —         —        —         —         554       —         554  

Swap contract, net of tax

   —         —       —         —        —         —         —         136       136