-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, GP8tnFON/ndvuboF5b1zJCc5lB43yFD8nqRTlcd6LTiTrYs7peOGOal6dipuAz1g Mxw5y1enp84TzrCL67ZfBw== 0000908634-95-000114.txt : 19951119 0000908634-95-000114.hdr.sgml : 19951119 ACCESSION NUMBER: 0000908634-95-000114 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 19950930 FILED AS OF DATE: 19951114 SROS: AMEX FILER: COMPANY DATA: COMPANY CONFORMED NAME: HANGER ORTHOPEDIC GROUP INC CENTRAL INDEX KEY: 0000722723 STANDARD INDUSTRIAL CLASSIFICATION: ORTHOPEDIC, PROSTHETIC & SURGICAL APPLIANCES & SUPPLIES [3842] IRS NUMBER: 840904275 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 001-10670 FILM NUMBER: 95592214 BUSINESS ADDRESS: STREET 1: 7700 OLD GEORGETOWN RD 2ND FL CITY: BETHESDA STATE: MD ZIP: 20814 BUSINESS PHONE: 3019860701 MAIL ADDRESS: STREET 2: 7700 OLD GEORGETOWN RD 2ND FL CITY: BETHESDA STATE: MD ZIP: 20814 FORMER COMPANY: FORMER CONFORMED NAME: SEQUEL CORP DATE OF NAME CHANGE: 19890814 FORMER COMPANY: FORMER CONFORMED NAME: CELLTECH COMMUNICATIONS INC DATE OF NAME CHANGE: 19860304 10-Q 1 SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q (Mark One) [X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended September 30, 1995 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 1-10670 HANGER ORTHOPEDIC GROUP, INC. ------------------------------------------------------ (Exact name of registrant as specified in its charter) Delaware 84-0904275 ----------------------------------------------------------------------------- (State or other jurisdiction of (IRS Employer Identification No.) incorporation or organization) 7700 Old Georgetown Road, Bethesda, MD 20814 ----------------------------------------------------------------------------- (Address of principal executive offices) (Zip Code) Registrant's telephone number, including area code: ----------------------------------------------------------------------------- (301) 986-0701 ----------------------------------------------------------------------------- Former name, former address and former fiscal year, if changed since last report. Indicate by check 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 [ ] APPLICABLE ONLY TO CORPORATE ISSUERS: Indicate the number of shares outstanding of each of the issuer's classes of common stock, as of November 14, 1995, 8,290,544 shares of common stock, $.01 par value per share. HANGER ORTHOPEDIC GROUP, INC. INDEX Page No. Part I. FINANCIAL INFORMATION Item 1. Financial Statements Consolidated Balance Sheets - September 30, 1995 (unaudited) and December 31, 1994 1 Consolidated Statements of Operations for the nine months ended September 30, 1995 and 1994 (unaudited) 3 Consolidated Statements of Operations for the three months ended September 30, 1995 and 1994 (unaudited) 4 Consolidated Statements of Cash Flows for the nine months ended September 30, 1995 and 1994 (unaudited) 5 Notes to Consolidated Financial Statements 7 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations 8 Part II. OTHER INFORMATION Item 6. Exhibits and Reports on Form 8-K 14 SIGNATURES 15 HANGER ORTHOPEDIC GROUP, INC. CONSOLIDATED BALANCE SHEETS
September 30, December 31, 1995 1994 ---- ---- (unaudited) ASSETS CURRENT ASSETS Cash and cash equivalents $ 1,069,627 $ 1,048,381 Accounts receivable less allowances for doubtful accounts of $1,211,000 and $975,000 in 1995 and 1994 12,551,617 12,392,843 Inventories 10,302,297 9,465,186 Prepaid expenses and other assets 1,127,011 1,149,026 Deferred income taxes 1,264,790 1,264,790 ------------- ------------- Total current assets 26,315,342 25,320,226 ------------- ------------- PROPERTY, PLANT AND EQUIPMENT Land 2,991,245 2,991,245 Buildings 2,583,661 2,288,357 Machinery and equipment 3,553,390 3,232,442 Furniture and fixtures 1,573,055 1,526,237 Leasehold improvements 1,174,353 1,075,481 ------------- ------------- 11,875,704 11,113,762 Less accumulated depreciation and amortization 3,946,341 3,104,828 ------------- ------------- 7,929,363 8,008,934 ------------- ------------- INTANGIBLE ASSETS Excess of cost over net assets acquired 27,121,855 26,633,643 Non-compete agreements 4,786,371 4,751,371 Other intangible assets 3,809,876 3,762,307 ------------- ------------- 35,718,102 35,147,321 Less accumulated amortization 8,682,424 7,532,295 ------------- ------------- 27,035,678 27,615,026 ------------- ------------- OTHER ASSETS Other 400,763 537,032 ------------- ------------- TOTAL ASSETS $61,681,146 $61,481,218 ============ ============
1 HANGER ORTHOPEDIC GROUP, INC. CONSOLIDATED BALANCE SHEETS
September 30, December 31, 1995 1994 (unaudited) LIABILITIES AND SHAREHOLDERS' EQUITY CURRENT LIABILITIES Current portion of long-term debt $ 2,146,843 $ 2,132,076 Accounts payable 1,500,942 1,562,625 Accrued expenses 1,365,577 1,300,070 Customer deposits 340,826 392,722 Accrued wages and payroll taxes 1,057,317 1,422,741 Deferred revenue 101,523 97,690 ------------- ------------- Total current liabilities 6,513,028 6,907,924 ------------- ------------- Long-term debt 23,311,649 24,329,710 Deferred income taxes 563,902 563,902 Other liabilities 294,523 269,871 Mandatorily redeemable preferred stock, class C, liquidation preference of $500 per share 248,258 232,086 Mandatorily redeemable preferred stock, class F, liquidation preference of $500 per share SHAREHOLDERS' EQUITY Common stock, $.01 par value; 25,000,000 shares authorized, 8,424,039 shares issued and 8,290,544 shares outstanding in 1995 and 1994 84,241 84,241 Additional paid-in capital 33,579,685 33,595,857 Accumulated deficit (2,258,578) (3,846,811) ------------- ------------- 31,405,348 29,833,287 Treasury stock - (133,495 shares) (655,562) (655,562) ------------- ------------- 30,749,786 29,177,725 TOTAL LIABILITIES & SHAREHOLDERS' EQUITY $ 61,681,146 $ 61,481,218 ============= =============
2 HANGER ORTHOPEDIC GROUP, INC. CONSOLIDATED STATEMENTS OF OPERATIONS FOR THE NINE MONTHS ENDED September 30, (unaudited)
1995 1994 ---- ---- Net Sales $ 39,110,549 $ 36,674,095 Cost of products and services sold 18,334,524 16,708,946 ------------- ------------- Gross profit 20,776,025 19,965,149 Selling, general & administrative 14,362,923 15,052,424 Depreciation and amortization 1,514,443 1,775,894 Amortization of excess cost over net assets acquired 517,618 504,599 ------------- ------------- Income from operations 4,381,041 2,632,232 Other income expense: Interest expense, net (1,545,706) (1,230,946) Other income (expense) (106,280) (82,384) ------------- ------------- Income from continuing operations before income taxes 2,729,055 1,318,902 Provision for income taxes 1,140,822 594,000 ------------- ------------- Income from continuing operations 1,588,233 724,902 Loss from discontinued operations net of tax benefit of $189,000 (231,313) Loss on sale of assets net of tax benefit of $93,000 (114,304) ------------- ------------- Net income $ 1,588,233 $ 379,285 ============= ============= Income from continuing operations $ .19 $ .09 Loss from discontinued operations (.03) Loss on sale of discontinued operations (.01) ------------- ------------- Net income per share $ .19 $ .05 ============= ============= Weighted average number of common shares outstanding 8,290,544 8,290,454 ============= =============
3 HANGER ORTHOPEDIC GROUP, INC. CONSOLIDATED STATEMENTS OF OPERATIONS FOR THE THREE MONTHS ENDED September 30, (unaudited)
1995 1994 ---- ---- Net Sales $ 13,549,654 $ 13,729,841 Cost of products and services sold 6,404,886 6,086,081 ------------- ------------- Gross profit 7,144,768 7,643,760 Selling, general & administrative 4,758,320 5,362,128 Depreciation and amortization 468,482 596,338 Amortization of excess cost over net assets acquired 171,494 172,374 ------------- ------------- Income from operations 1,746,472 1,512,920 Other expense: Interest expense, net (528,682) (461,340) Other (43,077) (42,563) ------------- ------------- Income from continuing operations before income taxes 1,174,713 1,009,017 Provision for income taxes 488,000 454,000 ------------- ------------- Income from continuing operations 686,713 555,017 Loss from discontinued operations net of tax benefit of $142,000 (173,061) Loss on sale of assets net of tax benefit of $93,000 (114,304) ------------- ------------- Net income $ 686,713 $ 267,652 ============= ============= Income from continuing operations $ .08 $ .07 Loss from discontinued operations (.03) Loss from sale of discontinued operations (.01) ------------- ------------- Net income per share $ .08 $ .03 ============= ============= Weighted average number of common shares outstanding 8,290,544 8,290,694 ============= =============
4 HANGER ORTHOPEDIC GROUP, INC. CONSOLIDATED STATEMENTS OF CASH FLOWS FOR THE NINE MONTHS ENDED September 30, (unaudited)
1995 1994 ---- ---- Cash flows from operating activities: Net income $ 1,588,233 $ 379,285 Adjustments to reconcile net income to net cash provided by operating activities: Discontinued operations 420,313 Loss on sale of assets 207,304 Provision for bad debt 554,661 439,769 Amortization of deferred compensation 4,197 Depreciation and amortization 1,514,443 1,775,894 Amortization of excess cost over net assets acquired 517,618 504,599 Changes in assets and liabilities, net of effect from acquired companies: Increase in accounts receivable (695,128) (1,965,973) Increase in inventory (790,941) (1,652,625) (Increase) decrease in prepaid and other assets 22,015 (823,309) (Increase) decrease in other assets 136,267 (24,365) Decrease in accounts payable (62,997) (8,670) Increase (decrease) in accrued expenses (587,315) 196,248 Decrease in accrued wages and payroll taxes (365,424) (592,749) Increase (decrease) in customer deposits (51,896) 55,102 Increase in deferred revenue 3,833 2,517 Increase in taxes payable 652,822 312,000 Increase in other liabilities 24,652 133,849 ------------- ------------- Total adjustments 872,609 (1,015,899) ------------- ------------- Net cash provided by continuing operations 2,460,842 (636,614) Net cash provided by discontinued operations 48,908 ------------- ------------- Net cash provided by operating activities 2,460,842 (587,706) ------------- ------------- Cash flows from investing activities: Purchase of fixed assets, (792,148) (773,086) Purchase of patents (58,188) (26,123) Acquisitions, net of cash (274,294) (2,509,114) Proceeds from sale of certain assets 180,806 Purchase of non-compete agreements (35,000) (450,500) Other intangibles (12,293) (265,377) ------------- ------------- Net cash used in investing activities (1,171,923) (3,843,394) ------------- -------------
Continued 5 HANGER ORTHOPEDIC GROUP, INC. CONSOLIDATED STATEMENTS OF CASH FLOWS FOR THE NINE MONTHS ENDED September 30, (unaudited)
1995 1994 ---- ---- Cash flows from financing activities: Net borrowings under revolving credit facility $ 200,000 $ 2,135,449 Increase in long-term debt 5,000,000 Repayment of long-term debt (1,478,292) (2,808,326) Increase (decrease) in financing costs 10,619 (64,268) ------------- ------------- Net cash (used in) provided by financing activities (1,267,673) 4,262,855 ------------- ------------- Net change in cash and cash equivalents for the period 21,246 (168,245) Cash and cash equivalents at beginning of period 1,048,381 1,404,157 ------------- ------------- Cash and cash equivalents at end of period $ 1,069,627 $ 1,235,912 ============= ============= Supplemental disclosure of cash flow information: Cash paid during the period for: Interest $ 1,750,507 $ 1,090,844 ============= ============= Taxes $ 427,700 $ 216,392 ============= ============= Non-cash financing and investing activities: Issuance of common stock in connection with acquisitions $ 1,725,000 ============= Issuance of notes in connection with acquisitions $ 175,000 $ 200,000 ============= ============= Dividends declared preferred stock $ 16,146 $ 14,762 ============= =============
The accompanying notes are an integral part of the consolidated financial statements. 6 NOTE A -- BASIS OF PRESENTATION The accompanying unaudited financial statements have been prepared in accordance with Rule 10-01 of Regulation S-X. They do not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements. In the opinion of management, all adjustments, consisting of a normal recurring nature, considered necessary for a fair presentation have been included. These financial statements should be read in conjunction with the financial statements of Hanger Orthopedic Group, Inc. (the "Company"), as of December 31, 1994, and notes thereto included in the Annual Report on Form 10-K filed by the Company with the Securities and Exchange Commission for the year then ended. NOTE B -- INVENTORY Inventories at September 30, 1995 and December 31, 1994 were comprised of the following: September 30, 1995 December 31, 1994 ------------------ ----------------- (unaudited) Raw materials $ 9,036,594 $ 8,078,838 Work-in-process 754,829 835,934 Finished goods 510,874 550,414 ------------ ------------ $10,302,297 $9,465,186 ============ ============ NOTE C -- ACQUISITIONS During the nine months ended September 30, 1995, the Company acquired two orthotic and prosthetic companies and certain assets of another O&P company. The aggregate purchase price was $390,000 comprised of $215,000 in cash and $175,000 in promissory notes. The cash portion of the purchase prices for these acquisitions was borrowed under the Company's revolving credit facility. 7 Management's Discussion and Analysis of Financial Condition and Results of Operations Results of Operations The following table sets forth for the periods indicated certain items of the Company's statements of operations and their percentage of the Company's net sales:
For the Nine For the Three Months Ended Months Ended September 30, September 30, -------------- -------------- 1995 1994 1995 1994 ---- ---- ---- ---- Net sales 100.0% 100.0% 100.0% 100.0% Cost of products and services sold 46.9 45.6 47.3 44.3 Gross profit 53.1 54.4 52.7 55.7 Selling, general & administrative expenses 36.7 41.0 35.1 39.1 Depreciation and amortization 3.9 4.8 3.5 4.3 Amortization of excess cost over net assets acquired 1.3 1.4 1.3 1.3 Income from operations 11.2 7.2 12.9 11.0 Interest expense 4.0 3.4 3.9 3.4 Provision for income taxes 2.9 1.6 3.6 3.3 Loss from discontinued operations and sale of assets .9 2.1 Net income 4.1 1.0 5.1 1.9
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1995 COMPARED TO THE NINE MONTHS ENDED SEPTEMBER 30, 1994 NET SALES Net sales for the nine months ended September 30, 1995 amounted to approximately $39,111,000, an increase of approximately $2,437,000, or 6.6%, over net sales of approximately $36,674,000 for the nine months ended September 30, 1994. The increase was primarily a result of an increase of $1,888,000, or an increase of 6%, in net sales attributable to patient care centers and facilities that were in operation during both periods ("Internal Base Net Sales"). Of the $1,888,000 increase in Internal Base Net Sales, $1,627,000, or an increase of 6.7%, was attributable to patient care centers and $261,000 was attributable to the Company's manufacturing and distribution activities. The balance of the increase in net sales was attributable to O&P patient care centers and facilities acquired by the Company in late 1994 and 1995. The increase of $2,437,000 in net sales occurred notwithstanding the sale or closure of nine patient care centers during late 1994 and the first quarter of 1995 in connection with the restructuring (the "Restructuring") announced by the Company in March 1995. These nine centers 8 accounted for net sales of $1,389,000 during the first nine months of 1994 compared with only $75,000 in the first nine months of 1995. The non-recurring charges associated with the Restructuring were recorded during the fourth quarter of 1994. GROSS PROFIT Gross profit for the first nine months of 1995 increased by approximately $811,000, or 4.1% over the prior year's comparable period. Gross profit as a percent of net sales remained constant for the comparable periods. SELLING, GENERAL AND ADMINISTRATIVE Selling, general and administrative expenses for the first nine months ended September 30, 1995 decreased by approximately $689,000, or 4.6%, compared to the first nine months of 1994. In addition to decreasing in dollar amount, selling, general and administrative expenses as a percent of net sales decreased to 36.7% for the nine months ended September 30, 1995 from 41.0% of net sales for the nine months ended September 30, 1994. The decrease in selling, general and administrative expenses as a percent of net sales resulted primarily from the increase in Internal Base Net Sales while selling, general and administrative expenses decreased. The decrease in selling, general and administrative expenses was primarily a result of cost reduction efforts initiated in late 1994 in connection with the Restructuring. INCOME FROM OPERATIONS Principally as a result of the above, income from operations in the first nine months ended September 30, 1995 amounted to approximately $4,381,000, an increase of $1,762,000, or 66.9%, over the prior year's comparable period. In addition to increasing in dollar amount, income from operations as a percent of net sales increased from 7.2% in the nine months ended September 30, 1994 to 11.2% in the nine months ended September 30, 1995. INTEREST EXPENSE Interest expense for the first nine months of 1995 amounted to approximately $1,546,000, an increase of approximately $315,000, or 25.6%, over the $1,231,000 of interest expense incurred in the nine months of 1994. In addition, interest expense as a percent of net sales increased from 3.4% for the nine months ended September 30, 1994 to 4.0% for the nine months ended September 30, 1995. The increase in interest expense was primarily attributable to indebtedness incurred in connection with the acquisition of O&P patient care centers and facilities acquired subsequent to September 30, 1994 and the increase in the Bank's prime rate. 9 INCOME TAXES The provision for income taxes for the nine months ended September 30, 1995 amounted to approximately $1,141,000 as compared to a $594,000 for the nine months ended September 30, 1994. NET INCOME As a result of the above, the Company recorded net income of $1,588,000, or $.19 per share, in the first nine months of 1995, compared to net income of $379,000, or $.05 per share, in the first nine months of 1994. FOR THE THREE MONTHS ENDED SEPTEMBER 30, 1995 COMPARED TO THE THREE MONTHS ENDED SEPTEMBER 30, 1994 NET SALES Net sales for the three months ended September 30, 1995, amounted to approximately $13,550,000, a decrease of approximately $180,000, or 1.3%, from net sales of approximately $13,730,000 for the three months ended September 30, 1994. The decrease in net sales was attributable to the sale or closure of nine patient care centers during late 1994 and the first quarter of 1995 in connection with the restructuring (the "Restructuring") announced by the Company in March 1995. These nine centers accounted for net sales of $529,000 during the three months ended September 30, 1994 compared with no sales during the three months ended September 30, 1995. The non-recurring charges associated with the Restructuring were recorded during the fourth quarter of 1994. Excluding the net sales of such discontinued operations, net sales in the third quarter of 1995 increased approximately $400,000, or 3%, over the prior year's comparable quarter. Such sales growth was primarily a result of new patient care center openings after the third quarter of 1994. Gross Profit Gross profit in the three months ended September 30, 1995 decreased by approximately $499,000, or 6.5%, from the prior year's comparable quarter. Gross profit as a percent of net sales decreased from 55.7% to 52.7% for the comparable periods. SELLING, GENERAL AND ADMINISTRATIVE Selling, general and administrative expenses in the three months ended September 30, 1995 decreased by approximately $604,000, or 11.3%, compared to the three months ended September 30, 1994. Selling, general and administrative expenses as a percent of net sales decreased to 35.1% in the three months ended September 30, 1995 from 39.1% for the last year's comparable period. This decrease in selling, general and administrative 10 expenses as a percent of net sales resulted primarily from the increase in sales while selling, general and administrative expenses decreased. INCOME FROM OPERATIONS Principally as a result of the above, income from operations in the three months ended September 30, 1995 amounted to approximately $1,746,000, an increase of $233,000, or 15.4%, from the prior year's comparable quarter. Income from operations as a percent of net sales, increased to 12.9% in the third quarter of 1995 from 11.0% for the prior year's comparable period. INTEREST EXPENSE Interest expense in the third quarter of 1995 amounted to approximately $529,000, an increase of approximately $67,000, or 14.6%, from the $461,000 of interest expense incurred in the third quarter of 1994. Interest expense as a percent of net sales also increased to 3.9% from 3.4% for the same period a year ago. The increase in interest expense is primarily a result of indebtedness incurred in connection with acquisitions consummated subsequent to September 30, 1994 and an increase in the Bank's prime rate. INCOME TAXES The provision for income taxes for the quarter ended September 30, 1995 was $488,000 compared to $454,000 for the quarter ended September 30, 1994. NET INCOME As a result of the above, the Company recorded net income of $687,000, or $.08 per share, in the quarter ended September 30, 1995, compared to net income of $268,000, or $.03 per share, in the quarter ended September 30, 1994. LIQUIDITY AND CAPITAL RESOURCES The Company's consolidated working capital at September 30, 1995 was approximately $19.8 million. Cash available at that date was approximately $1,070,000. Net cash provided by operations for the nine months ended September 30, 1995 was $2,461,000. The Company's cash resources available during the first nine months of 1995 were satisfactory to meet its obligations. The Company's total long-term debt at September 30, 1995, including a current portion of approximately $2.1 million, was approximately $25.2 million. Such indebtedness included: (i) $4.0 million principal amount of an 8.5% Convertible Note; (ii) $1.0 million principal amount of an 8.25% Convertible Note; (iii) $13.0 million borrowed under the Company's $13.0 million revolving credit facility with NationsBank, N.A. (the 11 "Bank"); (iv) a total of $4.8 million in term loans borrowed from the Bank and (v) approximately $2.7 million of other indebtedness. Under the terms of the Financing and Security Agreement, as amended, between the Bank and the Company (the "Financing Agreement"), the Bank currently provides a $13.0 million revolving credit facility (the "Revolving Credit Facility"), which reflects a reduction from its original amount of $13.5 million. The Revolving Credit Facility bears interest, at the Company's option, at either a fluctuating rate equal to the Bank's prime lending rate plus .25% or a fixed rate equal to the three-month London InterBank Offered Rate ("LIBOR") plus 2.5%. On June 30, 1995, the Company made a mandatory curtailment payment of $250,000 to the Bank to reduce the maximum amount of the Revolving Credit Facility from $13.5 million to $13.25 million. On October 2, 1995, the Company and the Bank entered into Amendment No. 8 to the Financing Agreement which memorialized the prior understanding between the Bank and the Company to reduce the mandatory curtailment payment by the Company under the Revolving Credit Facility from a $1.0 million curtailment to a $250,000 curtailment at September 30, 1995. On September 30, 1995, the Company made such mandatory curtailment payment of $250,000 to the Bank to reduce the maximum amount of the Revolving Credit Facility from $13.25 million to its current amount of $13.0 million. On November 13, 1995, the Company and the Bank agreed to the terms of Amendment No. 9 to the Financing Agreement, which will (i) eliminate the previously required mandatory curtailment payments of the Revolving Credit Facility of $250,000 at each of December 31, 1995 and March 31, 1996 and (ii) extend the expiration date of the Revolving Credit Facility from September 30, 1996 to June 30, 1997. The Revolving Credit Facility is collateralized by substantially all the assets of the Company and contains covenants restricting, among other things, the payment of dividends, the making of acquisitions and other transactions, and imposes net worth, debt service coverage and other financial maintenance requirements. The Company plans to finance future acquisitions through internally generated funds or borrowings under the Revolving Credit Facility, the issuance of notes or shares of common stock of the Company, or through a combination thereof. During the first nine months of 1995, the Company acquired two orthotic and prosthetic companies and certain assets of another O&P company. Negotiations relating to those acquisitions commenced prior to the Restructuring. The total purchase price of the acquisitions effected during that period was $390,000, of which $215,000 was paid in cash and $175,000 was financed through seller notes. The cash paid to effect such acquisitions was borrowed under the Revolving Credit Facility established between the Company and the Bank. 12 The Company is actively engaged in ongoing discussions with prospective acquisition candidates. The Company plans to continue to expand its operations through acquisitions, at a slower rate, with a view towards increasing efficiency and profitability of its existing facilities. OTHER Inflation has not had a significant effect on the Company's operations, as increased costs to the Company generally have been offset by increased prices of products and services sold. 13 PART II. OTHER INFORMATION Item 6. Exhibit and Reports on Form 8-K (a) Exhibits The following exhibit is filed herewith: 11 Computation of net Income Per Share (b) Reports on Form 8-K None 14 SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. HANGER ORTHOPEDIC GROUP, INC. Date: November 14, 1995 /s/IVAN R. SABEL ------------------ Ivan R. Sabel Chief Executive Officer Date: November 14, 1995 /s/RICHARD A. STEIN ------------------- Richard A. Stein Vice President - Finance Principal Financial and Accounting Officer EX-11 2 HANGER ORTHOPEDIC GROUP, INC. EXHIBIT 11 COMPUTATION OF NET INCOME PER SHARE FOR THE THREE MONTHS ENDED September 30,
1995 1994 ---- ---- Net income $ 686,713 $ 267,652 Less: Dividends declared (5,628) (5,032) ------------- ------------- Total $ 681,085 $ 262,620 Divided by: Weighted average number of shares outstanding 8,290,544 8,290,694 ------------- ------------- Net income (loss) per share $ .08 $ .03 ============= ============= FOR THE NINE MONTHS ENDED September 30, 1995 1994 ---- ---- Net income $ 1,588,233 $ 379,285 Less: Dividends declared (21,774) (14,762) ------------- ------------- Total $ 1,566,459 $ 364,523 Divided by: Weighted average number of shares outstanding 8,290,544 8,290,454 ------------- ------------- Net income per share $ .19 $ .05 ============= =============
EX-27 3
5 9-MOS DEC-31-1995 JUL-01-1995 SEP-30-1995 1,069,627 0 12,551,617 0 10,302,297 26,315,342 11,875,704 3,946,341 61,681,146 6,513,028 23,311,649 84,241 248,258 0 30,665,545 61,681,146 39,110,549 0 18,334,524 14,362,923 1,651,986 0 1,545,706 2,729,055 1,140,822 1,588,233 0 0 0 1,588,233 .19 0
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