-----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, Le2QeaiK2DGFfP/D97scwz+e+WaO/Xozu5YH3a6AlICHqA2G5jy6yHt4+emi2Gm1 OG6S8z/FRBX7o+ZwmJZiKg== 0000950116-95-000481.txt : 19951119 0000950116-95-000481.hdr.sgml : 19951119 ACCESSION NUMBER: 0000950116-95-000481 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19950930 FILED AS OF DATE: 19951113 SROS: NONE FILER: COMPANY DATA: COMPANY CONFORMED NAME: HEALTHCARE SERVICES GROUP INC CENTRAL INDEX KEY: 0000731012 STANDARD INDUSTRIAL CLASSIFICATION: SERVICES-TO DWELLINGS & OTHER BUILDINGS [7340] IRS NUMBER: 232018365 STATE OF INCORPORATION: PA FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 000-12015 FILM NUMBER: 95589501 BUSINESS ADDRESS: STREET 1: 2643 HUNTINGDON PIKE CITY: HUNTINGDON VALLEY STATE: PA ZIP: 19006 BUSINESS PHONE: 2159381661 MAIL ADDRESS: STREET 1: 2643 HUNTINGDON PIKEE CITY: HUNTINGDON VALLEY STATE: PA ZIP: 19006 10-Q 1 FORM 10-Q =============================================================================== SECURITIES AND EXCHANGE COMMISSION Washington, D. C. 20549 FORM 10-Q QUARTERLY REPORT UNDER SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934 For Quarter Ended September 30, 1995 Commission File Number 0-12015 HEALTHCARE SERVICES GROUP, INC. ------------------------------------------------------ (Exact name of registrant as specified in its charter) Pennsylvania 23-2018365 - ------------------------------- ---------------------------- (State or other jurisdiction of (IRS Employer Identification incorporation or organization) number) 2643 Huntingdon Pike, Huntingdon Valley, Pennsylvania 19006 ---------------------------------------------------------------- (Address of principal executive office) (Zip code) Registrant's telephone number, including area code: 215-938-1661 ---------------------- Indicate 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 past 90 days. YES X NO -------- ------- Number of shares of common stock, issued and outstanding as of November 10, 1995 is 8,165,963 shares Total of 15 Pages INDEX PART I. FINANCIAL INFORMATION PAGE NO. --------------------- -------- Balance Sheets as of September 30, 1995 and December 31, 1994 2 Statements of Income for the Three Months ended September 30, 1995 and 1994 3 Statements of Income for the Nine Months ended September 30, 1995 and 1994 4 Statements of Cash Flows for the Nine Months ended September 30, 1995 and 1994 5 to 6 Notes to Financial Statements 7 to 10 Management's Discussion and Analysis of Financial Condition and Results of Operations 11 to 13 PART II. OTHER INFORMATION 14 ----------------- SIGNATURES 15 - 1 - HEALTHCARE SERVICES GROUP, INC. Balance Sheets
September 30, December 31, 1995 1994 (Unaudited) (Audited) -------------- ------------- ASSETS CURRENT ASSETS: Cash and cash equivalents $14,600,244 11,230,118 Accounts and notes receivable, less allowance for doubtful accounts of $4,200,000 in 1995 and $4,500,000 in 1994 34,124,193 32,773,299 Prepaid income taxes 1,109,065 Inventories and supplies 7,066,192 6,298,370 Deferred income taxes 923,875 1,435,350 Prepaid expenses and other 2,085,213 2,791,376 -------------- ------------- Total current assets 59,908,782 54,528,513 PROPERTY AND EQUIPMENT: Laundry and linen equipment 11,994,585 10,835,247 Housekeeping equipment and office furniture 6,022,916 5,174,624 Autos and trucks 179,756 140,703 -------------- ------------- 18,197,257 16,150,574 Less accumulated depreciation 11,897,247 10,207,941 -------------- ------------- 6,300,010 5,942,633 INTANGIBLE ASSETS less accumulated amortization of $398,565 in 1994 1,106,666 COST IN EXCESS OF FAIR VALUE OF NET ASSETS ACQUIRED less accumulated amortization of $1,070,507 in 1995 and $1,008,455 in 1994 2,284,970 2,367,021 CERTIFICATES OF DEPOSIT PLEDGED FOR LOAN GUARANTEES (Note 4) 1,500,000 DEFERRED INCOME TAXES 1,992,346 2,207,236 OTHER NONCURRENT ASSETS 9,824,799 8,163,134 -------------- ------------- $80,310,907 75,815,203 ============== ============= LIABILITIES AND STOCKHOLDERS' EQUITY CURRENT LIABILITIES: Accounts payable $ 2,899,634 3,630,573 Accrued payroll 3,372,678 1,769,544 Accrued and withheld payroll taxes 342,611 176,545 Other accrued expenses 395,918 720,749 Income taxes payable 727,741 Accrued insurance claims 778,786 1,356,984 -------------- ------------- Total current liabilities 7,789,627 8,382,136 ACCRUED INSURANCE CLAIMS 2,929,720 2,883,591 LIABILITY FOR CONTINGENT LOSSES ON PROMISSORY NOTES (Note 2) 300,000 LITIGATION SETTLEMENT LIABILITY (Note 3) 2,125,000 LIABILITY FOR ESTIMATED COST RELATED TO SEC INQUIRY AND OTHER MATTERS (Note 5) 1,542,673 COMMITMENTS AND CONTINGENCIES (Notes 2,3,4, & 5) STOCKHOLDERS' EQUITY: Common stock, $.01 par value: 10,000,000 shares authorized, 8,160,963 shares issued in 1995 and 7,935,874 in 1994 81,610 79,359 Additional paid in capital 35,188,067 32,621,034 Retained earnings 32,779,210 29,424,083 -------------- ------------- Total stockholders' equity 68,048,887 62,124,476 -------------- ------------- $80,310,907 75,815,203 ============== =============
See accompanying notes. -2- HEALTHCARE SERVICES GROUP, INC. Statements of Income (Unaudited)
For the Three Months Ended For the Nine Months Ended September 30, September 30, ---------------------------- ---------------------------- 1995 1994 1995 1994 ------------- ------------- ------------- ------------- Revenues $ 38,208,527 $ 35,005,523 $ 111,219,213 $ 99,523,806 Operating costs and expenses: Cost of services provided 32,800,523 29,197,727 94,417,799 83,263,762 Selling, general and administrative 3,103,320 2,871,525 9,357,390 8,029,224 Recovery of contingent losses on promissory notes sold (Note 2) (100,000) (75,000) (300,000) (200,000) Other income (expense): Provision for estimated cost related to SEC Inquiry and other matters (Note 5) (2,400,000) Interest income 187,311 42,917 621,103 266,413 ------------- ------------- ------------- ------------- Income before income taxes 2,591,995 3,054,188 5,965,127 8,697,233 Income taxes 1,063,000 1,283,000 2,610,000 3,653,000 ------------- ------------- ------------- ------------- Net income $ 1,528,995 $ 1,771,188 $ 3,355,127 $ 5,044,233 ============= ============= ============= ============= Earnings per common share $ 0.19 $ 0.22 $ 0.41 $ 0.63 ============= ============= ============= ============= Weighted average number of common shares outstanding 8,215,348 8,203,390 8,243,414 8,180,648 ============= ============= ============= =============
See accompanying notes. -3- HEALTHCARE SERVICES GROUP, INC. Statements of Cash Flows (Unaudited)
For the Nine Months Ended September 30, -------------------------- 1995 1994 ------------ ----------- Cash flows from operating activities: Net Income $ 3,355,127 $ 5,044,233 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization 1,936,984 1,966,841 Bad debt provision 398,303 569,377 Recovery of contingent losses on promissory notes sold (Note 2) (300,000) (200,000) Deferred income taxes 726,365 57,961 Tax benefit of stock option transactions 62,000 23,487 Changes in operating assets and liabilities: Accounts receivable (1,749,197) (2,372,636) Prepaid income taxes (1,109,065) Inventories and supplies (767,822) (635,944) Changes to long term trade notes receivable (1,680,609) (2,460,493) Accounts payable and other accrued expenses (1,055,771) (1,790,888) Accrued payroll, accrued and withheld payroll taxes 1,769,200 1,546,100 Accrued insurance claims (532,069) 437,335 Liability for estimated cost related to SEC inquiry and other matters (Note 5) 1,542,673 Income taxes payable (727,741) 866,351 Prepaid expenses and other assets 1,680,814 201,263 ------------ ------------ Net cash provided by operating activities 3,549,192 3,252,987 ------------ ------------ Cash flows from investing activities: Disposals of fixed assets 267,095 Additions to property and equipment (2,061,350) (1,398,747) Release of certificates of deposits pledged for loan guarantees 1,500,000 ------------ ------------ Net cash used in investing activities (561,350) (1,131,652) ------------ ------------ Cash flows from financing activities: Purchase of treasury stock (51,875) Proceeds from the exercise of stock options 434,159 403,790 ------------ ------------ Net cash provided by financing activities 382,284 403,790 ------------ ------------ Net increase in cash and cash equivalents 3,370,126 2,525,125 Cash and cash equivalents at beginning of the period 11,230,118 7,858,694 ------------ ------------ Cash and cash equivalents at end of the period $ 14,600,244 $ 10,383,819 ============ ============
See accompanying notes. -4- Healthcare Services Group, Inc. Supplemental Disclosure of Noncash Financing Activity: On August 1, 1995, the Company issued 180,851 shares of its common stock representing its payment obligation under the 1993 settlement of the lawsuits relating to the consolidated class action complaints filed against it in 1991 and 1992. Accordingly, the September 30, 1995 Balance Sheet reflects the payment of the previously recorded Litigation Liability of $2,125,000 by increasing stockholders' equity in the same amount. -5- NOTES TO FINANCIAL STATEMENTS (Unaudited) Note 1 - Basis of Reporting The accompanying financial statements are unaudited and do not include certain information and note disclosures required by generally accepted accounting principles for complete financial statements. The balance sheet shown in this report as of September 30, 1995 has been derived from, and does not include, all the disclosures contained in the financial statements for the year ended December 31, 1994. These statements should be read in conjunction with the financial statements and notes thereto included in the Company's Annual Report on Form 10-K for the year ended December 31, 1994. However, in the opinion of the Company, all adjustments considered necessary for a fair presentation have been included. The results of operations for the three and nine months ended September 30, 1995 are not necessarily indicative of the results that may be expected for the full fiscal year. Note 2 - Sale of Promissory Notes Receivable and Provision for Contingent Losses on Promissory Notes Sold In 1991 and 1990, the Company sold to its bank, with recourse, promissory notes receivable at face value of approximately $3,800,000 and $2,500,000, respectively. As of September 30, 1995 the 1991 and 1990 promissory notes sold have been paid in full. As of December 31, 1994 approximately $300,000 and $800,000, respectively, of the aggregate amount of such promissory notes sold in each year remained outstanding. On July 15, 1992, a client paid in full to the Company's bank one of the promissory notes in the amount of $910,000. In addition, the client paid $100,000 in each quarter of 1993 (in the aggregate $400,000), as well as $50,000 in the first quarter of 1994 and $75,000 in each of the second and third quarters of 1994 and $100,000 in the fourth quarter of 1994 (in the aggregate $300,000), and payments of $150,000, $50,000 and $100,000 in the first, second and third quarters of 1995, respectively, as partial payment on another note (see discussion below regarding these promissory notes). Therefore, the Company reversed the provision recorded as of December 31, 1991 and recognized the $910,000, $400,000, $300,000 and $300,000 payments as income in 1992, 1993, 1994 and the nine month period ending September 30, 1995, respectively. All of the promissory notes sold during 1990 and all but one of the promissory notes sold during 1991 represent accounts receivable due to the Company for services rendered. These accounts receivable had been converted to promissory notes prior to their sale to the bank. The Company converted the accounts receivable to interest bearing promissory notes receivable in order to further evidence the amounts owed and to enhance its collection efforts. All of the promissory notes (except the one mentioned in the following paragraph) provided for monthly payments of principal and interest and some were secured by certain assets of the issuers. Pursuant to agreements with its bank, the Company would have been required to post substitute collateral if its line of credit from its bank expired or was terminated prior to the promissory notes being paid in full. - 6 - In 1991, the Company made arrangements with its bank to provide financing of $1,000,000 to one of its clients for which the Company agreed to guarantee payment. In order for the Company to negotiate maximum security for its guarantee, the Company made the loan directly to the client and simultaneously sold the promissory note receivable to the bank. In addition, among the notes sold during 1991, is a promissory note in the amount of $910,000 which was issued in 1990 by an entity related to this client and subsequently paid in full to the bank on July 15, 1992. On April 22, 1992 a director of the Company, who is not an officer, agreed to purchase these promissory notes (for the full principal amount thereof plus accrued interest) without recourse to the Company, upon a request by the bank that the Company post substitute collateral. Any such purchase would include the assignment of the collateral pledged as security. The Company entered into this agreement (which was approved by the Board of Directors) with the director in order to protect its interests with respect to these promissory notes. The director is engaged in the operation of nursing homes. Although the Company believed that it would not have incurred any financial loss as a result of these promissory notes, it had, as of December 31, 1994 established a reserve for contingent losses in the amount of $300,000. The borrower of the $1,000,000 financing used the proceeds to fully fund the purchase price for its acquisition of the client. The equity method of accounting had been used to value the collateral held as security for these promissory notes, which, as a consequence of losses incurred by the client after the closing date of the transaction, had resulted in the Company providing a reserve for the total unpaid amount of the promissory notes as of December 31, 1994. Note 3 - Settlement of Class Action Litigation In the fourth quarter of 1993 the Company and its insurer consummated an agreement to settle the consolidated class action complaints filed against it in Federal District Court in 1991 and 1992. The settlement was approved by court order dated September 8, 1994 and became effective on October 10, 1994. The settlement provided for the payment of $2,625,000 by the Company's insurer and the issuance of common shares by the Company having a value of $2,125,000. The settlement and related estimated legal costs have been recorded as an extraordinary item in 1993. Such extraordinary item reduced 1993 net income by approximately $1,437,000, net of income tax benefit of $844,000. On August 1, 1995, the Company issued 180,851 shares of its common stock representing its payment obligation under the 1993 settlement relating to the consolidated class action complaints. Accordingly, the effect of issuing these shares is reflected in the per share amounts reported for the three and nine month periods ended September 30, 1995 and 1994. The September 30, 1995 Balance Sheet also reflects the payment of the previously recorded Litigation Liability of $2,125,000 by increasing stockholders' equity in the same amount. - 7 - Note 4 - Other Contingencies In 1988, the Company acquired a 19.5% interest in T.L.C. St Petersburg, Inc. ("TLC"), a corporation which owned and operated a long-term care facility in Florida and which was a client of the Company. The Company had guaranteed $1,500,000 of working capital loans of TLC at both December 31, 1994 and December 31, 1993 and had pledged equal amounts of certificates of deposit as collateral for the guarantee (which are listed as Certificates of Deposit Pledged for Loan Guarantees in the accompanying balance sheet at December 31, 1994). In addition, the Company had guaranteed TLC notes payable of approximately $1,700,000. TLC made all required principal and interest payments due under the terms of these loans through December 31, 1994.Total guarantees for TLC aggregated $3,200,000 at both December 31, 1994 and December 31, 1993. During 1993, one of the Company's clients, which owns and operates a significant number of long-term care facilities throughout the country, purchased from a third party the balance of the issued and outstanding shares of TLC and that client now holds 90.1% of the issued and outstanding shares of TLC. During the fourth quarter of 1993, TLC entered into an agreement to sell substantially all of its assets to an unrelated third party. The sale closed on March 28, 1995 and all loans guaranteed by the Company have been paid in full and the Certificates of Deposit pledged for the loan guarantees have been released to the Company. As of January 1, 1994, TLC entered into a twenty year agreement to lease the operations of the facility to an entity controlled by TLC's majority shareholder. The purchaser of TLC's assets assumed such operating lease. By reason of TLC's uncertain financial condition, the Company, until the time TLC entered into an agreement to sell its assets, fully reserved advances to and receivables from TLC which amounted to approximately $2,000,000 at both December 31, 1994 and 1993 and $1,200,000 at December 31, 1992. Subsequent to the sales agreement, the Company advanced approximately $2,900,000 to TLC. All obligations due the Company have been assumed by the entity that began operating the facility on January 1, 1994. The obligations are being repaid in accordance with the terms of a promissory note issued to the Company. The Company has a $13,000,000 bank line of credit on which it may draw to meet short-term liquidity requirements or for other purposes. This line expires on June 30, 1996. Amounts drawn under the line are payable upon demand. At both September 30, 1995 and December 31, 1994, there were no borrowings under the line. However, during 1991 and 1990, the Company sold promissory notes receivable of approximately $3,800,000 and $2,500,000, respectively, to its bank, with recourse. As of September 30, 1995 the 1991 and 1990 promissory notes sold have been paid in full. At December 31, 1994, the unpaid balance of the promissory notes receivable sold was approximately $1,100,000 (see Note 6 of Notes to Financial Statements at December 31, 1994). - 8 - At both September 30, 1995 and December 31, 1994 the Company had outstanding approximately $8,200,000 of irrevocable standby letters of credit, which primarily relate to payment obligations under the Company's insurance program. As a result of the promissory notes receivable sold (see Note 2 above) and letters of credits issued, the amount available under the line was reduced by approximately $8,200,000 at September 30, 1995 and $9,300,000 at December 31, 1994. Note 5 - Provision for Estimated Cost Related to SEC Inquiry and Other Matters The Securities and Exchange Commission (SEC) has been conducting a non-public investigation since 1990 with respect to certain matters, including the Company's financial statements, financial condition and results of operations. The Company has been cooperating fully with such inquiry on a voluntary basis. The Staff of the SEC has recently advised the Company that it is considering recommendations to the Commission about certain allegations of violations of the Federal securities laws by the Company and certain of its officers with respect to periods ended on or before December 31, 1991. However, the Staff has advised the Company that it will not make any recommendations to the Commission until the Company has the opportunity to address the issues raised by the Staff, which it is still in the process of doing. In addition, the United States Attorney for the Eastern District of Pennsylvania is investigating certain payments (approximately $84,000 in 1988, $54,000 in 1989, $110,000 in 1990, $125,000 in 1991 and $34,000 in 1992) made by the Company between June 1988 and January 1992 to certain vendors that were not in accordance with Company policy. This matter was previously investigated and reported upon by the Company in its Form 10-K for the year ended December 31, 1991. The information regarding this matter was voluntarily furnished to the U.S. Attorney's office in New Jersey in May 1992 and such payments were recovered by the Company in 1992. The Company anticipates that it will incur a significant amount of legal and related costs in connection with these matters. As of September 30, 1995, the Company has incurred approximately $900,000 of costs and estimates that the additional costs which may be incurred in connection with these matters will be in a range of approximately $1,500,000 to $3,500,000 and accordingly has set up a provision for the estimated low range of this liability. The result of this $2,400,000 provision was to reduce the nine month net income by approximately $1,594,000 or $.20 per common share. - 9 - PART I. ITEM 2 - MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS The following discussion and analysis should be read in conjunction with the financial statements and notes thereto. RESULTS OF OPERATIONS Revenues for the third quarter of 1995 increased by 9.2% over revenues in the corresponding 1994 quarter. Revenues for the nine months ending September 30, 1995 increased by 11.8% over the same 1994 period. The following factors contributed to the increase in revenues: service agreements with new clients in existing geographic areas increased 17.8% for the third quarter and 19.9% for the nine month period; geographic expansion increased revenues 2.4% for the third quarter and 2.8 % for the nine month period; and cancellations and other minor changes decreased revenues 11.0 % for the third quarter and 10.9% for the nine month period. Cost of services provided as a percentage of revenues increased to 85.9% for the third quarter of 1995 from 83.4% in the corresponding 1994 quarter. In addition, cost of services provided as a percentage of revenue increased to 84.9% for the nine month period ending September 30, 1995 from 83.7% in the same 1994 period. The primary factors affecting the variations in comparing the 1995 three and nine month periods, respectively, in cost of services provided as a percentage of revenue and their effects on the respective 2.5% and 1.2% increases are as follows: in the third quarter, an increase of .8% in amortization of service agreements and costs associated with service agreements cancelled (see Note 1- Intangible Assets in Notes to Financial Statements at December 31, 1994); a .7% increase in the cost of laundry and housekeeping supplies, and an increase of .6% in health insurance and employee benefits; and offsetting these increases was a decrease in service equipment depreciation of .3%; as well as a .3% decrease in the allowance for bad debts; in the nine month period, an increase of 1.0% in labor cost; and a .9% increase in amortization of service agreements and costs associated with service agreements cancelled (see Note 1- Intangible Assets in Notes to Financial Statements at December 31, 1994); and offsetting these increases was a decrease of .3% in depreciation and a .3% decrease in workers' compensation, general liability and other insurance costs. Selling, general and administrative expenses as a percentage of revenue decreased to 8.1% for the third quarter of 1995 as compared to 8.2% in the corresponding 1994 period. The nine month period ending September 30, 1995 recognized an increase in SG & A expenses to 8.4% as a percentage of revenue as compared to 8.1% in the corresponding 1994 period. The nine month period increase of .3% is primarily attributable to additional costs, recognized in prior 1995 periods associated with the expansion of the divisional and regional staffs. - 10 - The Company presently anticipates that it will incur a significant amount of additional legal and related costs in connection with the pending governmental investigations and accordingly has established a provision for this purpose (see Note 5 - Provision for Estimated Cost Related to SEC Inquiry and Other Matters). Liquidity and Capital Resources At September 30, 1995 the Company had working capital of $52,119,155 compared to $46,146,376 at December 31, 1994. The Company's current ratio at September 30, 1995 is 7.7 to 1 as compared to 6.5 to 1 at December 31, 1994. The net cash provided by the Company's operating activities was $3,549,192 for the nine month period ended September 30, 1995. The components of working capital that required the largest amount of cash were: increases in accounts receivable and long term trade notes receivable of $1,749,197 and $1,680,609, respectively, and a $1,109,065 increase in prepaid income taxes. The increase in accounts receivable and long term trade notes receivable resulted primarily from the continued growth in the Company's revenues which increased by 11.8% in the nine month period ended September 30, 1995. The increased use of cash associated with prepaid income taxes resulted from the timing of estimated tax liability payments. The Company expends considerable effort to collect the amounts due for its services on the terms agreed upon with its clients. Many of the Company's clients participate in programs funded by federal and state governmental agencies which historically have encountered delays in making payments to its program participants. Whenever possible, when a client falls behind in making agreed-upon payments, the Company converts the unpaid accounts receivable to interest bearing promissory notes receivable. The promissory notes receivable provide a definitive repayment plan and therefore may enhance the ultimate collectibility of the amounts due. In some instances the Company obtains a security interest in certain of the debtors' assets. Certain of the Company's promissory notes receivable were previously sold to its bank (see Note 2 of Notes to Financial Statements). The Company has a $13,000,000 bank line of credit on which it may draw to meet short-term liquidity requirements in excess of internally generated cash flow. This line expires on June 30, 1996. Amounts drawn under the line are payable on demand. At September 30, 1995, there were no borrowings under the line. However, at such date, the amount available under the line had been reduced by approximately $8,200,000 as a result of contingent liabilities of the Company to the lender relating to letters of credit issued for the Company. - 11 - At September 30, 1995, the Company had $14,600,244 of cash and cash equivalents, which it views as its principal measure of liquidity. In the fourth quarter of 1993, the Company and its insurer reached an agreement in principle to settle the consolidated class action complaints filed against it in Federal District Court. The Order approving the settlement was approved by the court on September 8, 1994 and became effective on October 10, 1994. The settlement provided for the payment of $2,625,000 by the Company's insurer and common shares having a value of $2,125,000 to be issued by the Company (see Note 8 of Notes to Financial Statements at December 31, 1994.). On August 1, 1995, the Company issued 180,851 shares of its common stock representing its payment obligation under the 1993 settlement of the consolidated class action complaints. Accordingly, the September 30, 1995 Balance Sheet reflects the payment of the previously recorded Litigation Liability of $2,125,000 by increasing stockholders' equity in the same amount. The Company has no specific material commitments for capital expenditures and believes that its cash from operations, existing balances and available credit line will be adequate for the foreseeable future to satisfy the needs of its operations and to fund its continued growth. However, if the need arose, the Company would seek to obtain capital from such sources as long-term debt or equity financing. - 12 - PART II. Other Information Item 1. Legal Proceedings. None. Item 2. Changes in Securities. None. Item 3. Defaults under Senior Securities. None. Item 4. Submission of Matters to a Vote of Security Holders. Not Applicable. Item 5. Other Information. a) None. Item 6. Exhibits and Reports on Form 8-K. a) Exhibits - None. b) Reports on Form 8-K - None - 13 - SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant had duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. HEALTHCARE SERVICES GROUP, INC. ------------------------------- November 10, 1995 /s/ Daniel P. McCartney - -------------------------- ----------------------------------- Date DANIEL P. McCARTNEY, Director and Chief Executive Officer November 10, 1995 /s/ Thoams A. Cook - -------------------------- ----------------------------------- Date THOMAS A. COOK, Director, President and Chief Operating Officer November 10, 1995 /s/ James L. DiStefano - -------------------------- ----------------------------------- Date JAMES L. DiSTEFANO, Chief Financial Officer and Treasurer November 10, 1995 /s/ Richard W. Hudson - -------------------------- ----------------------------------- Date RICHARD W. HUDSON, Vice President- Finance, Secretary and Chief Accounting Officer - 14 - EX-27 2
5 3-MOS DEC-31-1995 SEP-30-1995 14,600,244 0 38,324,193 4,200,000 7,066,192 59,908,782 18,197,257 11,897,247 80,310,907 7,789,627 0 81,610 0 0 67,967,277 80,310,907 0 111,219,213 105,127,591 115,410,168 0 2,400,000 0 6,816,627 2,921,096 3,895,531 0 0 0 3,895,531 .47 .47
-----END PRIVACY-ENHANCED MESSAGE-----