-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: keymaster@town.hall.org Originator-Key-Asymmetric: MFkwCgYEVQgBAQICAgADSwAwSAJBALeWW4xDV4i7+b6+UyPn5RtObb1cJ7VkACDq pKb9/DClgTKIm08lCfoilvi9Wl4SODbR1+1waHhiGmeZO8OdgLUCAwEAAQ== MIC-Info: RSA-MD5,RSA, h/pulQSGHjAl0ExZ65g9xti2M1hjygAje/PVVw8lo1bLabIxCySI/20DClh5kpPD FQgJcb4u2njp7vTbD9yjJA== 0000950149-95-000413.txt : 199507100000950149-95-000413.hdr.sgml : 19950710 ACCESSION NUMBER: 0000950149-95-000413 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 19950531 FILED AS OF DATE: 19950707 SROS: NYSE FILER: COMPANY DATA: COMPANY CONFORMED NAME: VIVRA INC CENTRAL INDEX KEY: 0000850882 STANDARD INDUSTRIAL CLASSIFICATION: SERVICES-HOME HEALTH CARE SERVICES [8082] IRS NUMBER: 943096645 STATE OF INCORPORATION: DE FISCAL YEAR END: 1130 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 001-10261 FILM NUMBER: 95552708 BUSINESS ADDRESS: STREET 1: 400 PRIMROSE ROAD STREET 2: SUITE 200 CITY: BURLINGAME STATE: CA ZIP: 94010 BUSINESS PHONE: 4153488200 10-Q 1 FORM 10-Q FOR THE QUARTER ENDED MAY 31, 1995 1 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 QUARTER ENDED MAY 31, 1995 OR _____ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 COMMISSION FILE NUMBER 1-10261 VIVRA INCORPORATED DELAWARE I.R.S. EMPLOYER IDENTIFICATION NO. 94-3096645 400 PRIMROSE, #200 BURLINGAME, CALIFORNIA 94010 415-348-8200 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 ___ The number of shares outstanding of each of the issuer's classes of common stock as of May 31, 1995 was: 23,933,825 This document contains 12 pages and the Exhibit Index is on Page 11. Page 1 of 12 2 VIVRA INCORPORATED TABLE OF CONTENTS PART I. FINANCIAL INFORMATION PAGE - ---------------------------------------- ---- Item 1. Condensed Consolidated Financial Statements Condensed Consolidated Balance Sheets as of May 31, 1995 and November 30, 1994 3 Condensed Consolidated Statements of Earnings for the Three and Six Months Ended May 31, 1995 and May 31, 1994 4 Condensed Consolidated Statements of Cash Flows for the Six Months Ended May 31, 1995 and May 31, 1994 5 Notes to Condensed Consolidated Financial Statements 6 Item 2. Management's Discussion and Analysis of Results of Operations and Financial Condition 7 PART II. OTHER INFORMATION - ------------------------------------ Item 1. Legal Proceedings 9 Item 4. Submission of Matters to a Vote of Security Holders 9 Item 6. Exhibits and Reports on Form 8-K 9 Signatures 10 Exhibit Index 11 Exhibit 11 Computation of Earnings Per Share 12
Page 2 of 12 3 VIVRA INCORPORATED CONDENSED CONSOLIDATED BALANCE SHEETS (in thousands)
May 31, Nov. 30, 1995 1994 (Note A) ASSETS CURRENT ASSETS Cash and cash equivalents $ 71,970 $ 79,509 Short-term investments (Note B) 23,263 - Accounts receivable, less allowance for doubtful accounts (5/31/95 - $12,417 and 11/30/94 - $10,321) 59,915 51,353 Prepaid expenses and other current assets 26,962 7,348 Deferred income taxes 15,323 10,674 ------------ ------------ Total Current Assets 197,433 148,884 NON-CURRENT ASSETS Marketable non-current investments (Note B) 18,312 - Property, buildings and equipment -- at cost less allowances for depreciation (5/31/95 - $46,546 and 11/30/94 - $43,273) 67,006 65,972 Other assets 7,255 5,335 Goodwill 75,617 55,816 ------------ ------------ $ 365,623 $ 276,007 ============ ============ LIABILITIES AND STOCKHOLDERS' EQUITY CURRENT LIABILITIES Accounts payable $ 13,517 $ 9,833 Accrued payroll and related benefits 22,795 23,073 Other accrued expenses 8,227 10,466 Income taxes 3,933 1,769 Current maturities on long-term debt 1,682 6,499 ------------ ------------ Total Current Liabilities 50,154 51,640 Long-term debt -- exclusive of current maturities 1,770 4,938 Deferred income taxes 6,246 6,184 Minority interest 953 1,391 STOCKHOLDERS' EQUITY Common stock, par value $.01 per share; authorized 80.0 million shares; issued 23.9 million shares in 1995 and 20.8 million in 1994 239 208 Additional paid-in capital 131,023 54,891 Retained earnings 175,238 156,755 ------------ ------------ Total Stockholders' Equity 306,500 211,854 ------------ ------------ $ 365,623 $ 276,007 ============ ============
See accompanying notes to condensed consolidated financial statements Page 3 of 12 4 VIVRA INCORPORATED CONDENSED CONSOLIDATED STATEMENTS OF EARNINGS (in thousands, except per share amounts)
Three Months Ended Six Months Ended May 31, May 31, 1995 1994 1995 1994 REVENUES Operating revenues $ 88,530 $ 69,602 $171,737 $133,139 Other income 3,533 435 4,204 759 -------- -------- -------- -------- Total Revenues 92,063 70,037 175,941 133,898 COSTS AND EXPENSES Operating 59,485 44,652 115,005 87,387 General and administrative 13,517 10,328 25,293 17,347 Depreciation 2,671 2,477 5,058 4,762 Interest (principally on long-term debt) 110 125 292 277 -------- -------- -------- -------- Total Costs and Expenses 75,783 57,582 145,648 109,773 Earnings from continuing operations, before minority interest and income taxes 16,280 12,455 30,293 24,125 Minority interest (164) 92 (186) 16 -------- -------- -------- -------- Earnings from continuing operations, before income taxes 16,116 12,547 30,107 24,141 Income taxes 6,196 5,144 11,718 9,898 -------- -------- -------- -------- Net earnings from continuing operations 9,920 7,403 18,389 14,243 Gain on sale of discontinued operations, less applicable taxes - - - 697 -------- -------- -------- -------- NET EARNINGS $ 9,920 $ 7,403 $ 18,389 $ 14,940 ======== ======== ======== ======== EARNINGS PER SHARE: Net earnings from continuing operations $.42 $.36 $.82 $.70 Gain on sale of discontinued operations - - - .03 -------- -------- -------- -------- Net earnings $.42 $.36 $.82 $.73 ======== ======== ======== ======== AVERAGE NUMBER OF COMMON SHARES 23,670 20,473 22,510 20,391
See accompanying notes to condensed consolidated financial statements Page 4 of 12 5 VIVRA INCORPORATED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (in thousands)
Six Months Ended May 31, 1995 1994 OPERATING ACTIVITIES Net earnings $ 18,389 $ 14,940 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization 6,211 5,395 Gain on sale of discontinued operations - (1,229) Gain on sale of property and investments (2,170) 30 Other (2,727) (1,954) Changes in assets and liabilities: Accounts receivable (9,549) 1,285 Prepaid expenses and other current assets (2,425) 1 Deferred income taxes (4,649) (1,092) Accounts payable 7,586 2,246 Accrued payroll and related benefits (877) 1,228 Other accrued expenses (3,973) (469) Income taxes 2,034 722 ---------- ---------- Net cash flow from operations 7,850 21,103 FINANCING ACTIVITIES Payments on long-term debt (5,547) (3,514) Proceeds from common stock offering 59,597 - Proceeds from exercise of stock options and related transactions 13,036 5,090 ---------- ---------- Net cash flow from financing 67,086 1,576 INVESTING ACTIVITIES Purchase of property, buildings and equipment (12,048) (8,148) Purchase of marketable securities (41,575) - Proceeds from sale of property, buildings and equipment 1,211 140 Proceeds from sale of discontinued operations - 6,238 Proceeds from investments in partnerships - 1,627 Minority interest investment - (1,500) Payment for business acquisitions, net of cash acquired (30,063) (5,938) ---------- ---------- Net cash flow used in investing (82,475) (7,581) ---------- ---------- Net increase (decrease) in cash and cash equivalents (7,539) 15,098 Beginning cash and cash equivalents 79,509 52,535 ---------- ---------- Ending cash and cash equivalents $ 71,970 $ 67,633 ========== ==========
See accompanying notes to condensed consolidated financial statements Page 5 of 12 6 VIVRA INCORPORATED NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS A. BASIS OF PRESENTATION The condensed consolidated financial statements are unaudited pursuant to the rules and regulations of the Securities and Exchange Commission. Accordingly, certain information and footnote disclosures normally included in financial statements prepared in accordance with generally accepted accounting principles have been condensed or omitted. In the opinion of management, all adjustments necessary for a fair presentation of the financial position, results of operations and cash flows for the periods presented have been made and are of a normal recurring nature. The condensed consolidated financial statements should be read in conjunction with the Company's consolidated financial statements and the notes thereto included in the registrant's annual report on Form 10-K for the year ended November 30, 1994. The balance sheet at November 30, 1994 has been derived from the audited financial statements at that date. B. FINANCIAL INSTRUMENTS Short-term investments consist of highly liquid investment grade securities that mature between four and twelve months from the reporting date. Marketable non-current investments consist of liquid investment grade securities that mature between thirteen and thirty months from the reporting date. The Financial Accounting Standards Board ("FASB") issued Statement No. 115, "Accounting for Certain Investments in Debt and Equity Securities", effective December 1, 1994. This statement revises the balance sheet classification of investments in debt and equity securities and requires that certain investments are to be valued at market value while other investments are to be valued at cost. The Company's investment grade securities have been categorized as Held-to-Maturity Securities, and are recorded at amortized cost which approximates market. C. ACQUISITIONS During the six months ended May 31, 1995, the Company acquired sixteen dialysis centers. Total consideration paid was $40.8 million, consisting of cash of $29.8 million and 333,488 shares of the Company's common stock, which exceeded the fair market value of assets acquired by $27.5 million. The acquisition of three dialysis centers have been accounted for as poolings of interest. Consolidated financial statements for the prior periods to the exchanges have not been restated as the effect of the poolings were not material to the Company. The remaining acquisitions have been accounted for as purchases and, accordingly, have been included in the statement of earnings since their dates of acquisition. D. COMMON STOCK OFFERING In February 1995, the Company issued two million shares of its common stock in a public offering. The net proceeds from this offering were approximately $59.6 million. Page 6 of 12 7 ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS AND FINANCIAL CONDITION RESULTS OF OPERATIONS Three Months Ended May 31, 1995 As compared to the three months ended May 31, 1994, revenues increased $22.0 million, or 31.4%; costs and expenses $18.2 million, or 31.6%; and earnings from continuing operations before taxes $3.6 million, or 28.4%. In total, net earnings for the period increased $2.5 million, or 34.0%. The increase in revenues and earnings from continuing operations was driven particularly by the continued growth of the dialysis business. Of the increase in revenues, operating revenues increased $18.9 million, or 27.2%, to $88.5 million for the three months ended May 31, 1995. Revenues from Specialty Services, 90.0% of which was from dialysis services, increased $15.3 million to $78.6 million, or 24.2%. Revenues from Other Services increased $3.6 million to $9.9 million, a 57.3% increase. The increase in Specialty Services revenues was attributable to a 17.6% increase in the number of dialysis treatments from 314,518 to 369,834 which resulted from the addition of 15 new centers, and the addition of the asthma and allergy care business acquired on November 30, 1994. The increase in Other Services revenues primarily reflects the growth of the rehabilitation therapy business. Other income of $3.5 million, was comprised of a $2.2 million gain recorded on the disposition of certain of the Company's ambulatory surgery centers and $1.3 million related to interest earned on tax-free marketable securities. Of the increase in costs and expenses, operating costs increased $14.8 million, or 33.2%, to $59.5 million for the three months ended May 31, 1995. Specialty Services operating costs, of which dialysis represented 91.9%, increased $12.3 million to $52.6 million, or 30.5%, while operating costs of Other Services increased $2.5 million to $6.9 million, or 59.1%. Specialty Services operating costs increased due to the increased volume of dialysis business, expenses associated with the operation of newly developed dialysis centers, higher labor and supply costs, and the addition of the asthma and allergy care business. Operating costs of Other Services increased as a result of the growth of the rehabilitation therapy business. General and administrative expenses increased $3.2 million to $13.5 million, or 30.9%. These expenses include $2.2 million of non-recurring items consisting of a $1.1 million reserve taken for intradialytic parenteral nutrition therapy (IDPN) accounts receivable, $940,000 for severance and compensation arrangements and $200,000 for other charges. In addition, general and administrative expenses increased as a result of continued investment in managed care products. Six Months Ended May 31, 1995 As compared to the six months ended May 31, 1994, revenues increased $42.0 million, or 31.4%; costs and expenses $35.9 million, or 32.7%; earnings from continuing operations before taxes $6.0 million, or 24.7%; and net earnings from continuing operations, $4.1 million, or 29.1%. During the period ended May 31, 1994, the Company had a gain of $697,000, after applicable taxes, on the sale of its home healthcare nursing business. In total, net earnings for the period increased $3.4 million, or 23.1%. The increase in revenues and earnings was driven particularly by the continued growth of the dialysis business. Of the increase in revenues, operating revenues increased $38.6 million, or 29.0%, to $171.7 million for the six months ended May 31, 1995. Revenues from Specialty Services, 90.4% of which was from dialysis services, increased $28.6 million, to $151.6 million, or 23.2%. Revenues from Other Services increased $10.0 million to $20.1 million, a 99.0% increase. The increase in Specialty Services revenues was attributable to a 14.1% increase in the number of dialysis treatments from 615,181 to 701,782 which resulted from the addition of 32 new centers, improved patient census, and the addition of the asthma and allergy care business acquired on November 30, 1994. The increase in Other Services revenues primarily reflects the growth of the rehabilitation therapy business. Other income of $4.2 million, was comprised of a $2.2 million gain recorded in the disposition of certain of the Company's ambulatory surgery centers and $2.0 million related to interest earned on tax-free marketable securities. Page 7 of 12 8 Of the increase in costs and expenses, operating costs increased $27.6 million, or 31.6%, to $115.0 million for the six months ended May 31, 1995. Specialty Services operating costs, of which dialysis represented 91.0%, increased $20.7 million to $101.6 million, or 25.6%, while operating costs of Other Services increased $6.9 million to $13.4 million, or 106.8%. Specialty Services operating costs increased due to the increased volume of dialysis business, expenses associated with the operation of newly developed dialysis centers, higher labor and supply costs, the addition of the asthma and allergy care business and growth in the diabetes management business. Operating costs of Other Services increased as a result of the growth of the rehabilitation therapy business. General and administrative expenses increased $7.9 million to $25.2 million, or 45.8%. These expenses include $2.2 million of non-recurring items consisting of a $1.1 million reserve taken for IDPN accounts receivable, $940,000 for severance and compensation arrangements and $200,000 for other charges. In addition, general and administrative expenses increased as a result of the growth of the rehabilitation therapy business and the development of new managed care products. The effective tax rate for the period was 38.9% of earnings before income taxes, compared to 41.0% a year earlier. This was due, in large part, to the Company's cash assets being invested in tax-free marketable securities, which had the effect of lowering the overall tax rate. LIQUIDITY AND CAPITAL RESOURCES The Company requires capital primarily for the acquisition and development of dialysis facilities, including the purchase of property, buildings and equipment, as well as the acquisition and development of other businesses. Capital and acquisition expenditures were $42.1 million and $14.1 million for the six months ended May 31, 1995 and 1994, respectively. Cash flow from financing activities increased by $65.5 million to $67.1 million at May 31, 1995. This increase was primarily the result of the Company's February 16, 1995 public offering from which the Company received net proceeds of $59.6 million. Cash flow from operations was $7.9 million and $21.1 million for the six months ended May 31, 1995 and 1994, respectively. The Company's working capital increased by $50.0 million to $147.2 million at May 31, 1995, from $97.2 million at November 30, 1994. For the remainder of fiscal 1995, the Company intends to continue to acquired and develop new dialysis facilities. The Company is also evaluating acquisition and development opportunities in other sectors of specialty health care services. To the extent the Company is able to identify significant attractive investment opportunities, such expenditures could exceed $70 million for fiscal 1995. The Company believes that cash generated from operations together with available cash and the proceeds from its common stock public offering will be adequate to meet the Company's planned expenditure, acquisition, development and liquidity needs for fiscal 1995. Page 8 of 12 9 PART II OTHER INFORMATION ITEM 1. LEGAL PROCEEDINGS See Part 1, Item 3, of the Company's report on Form 10-K for the fiscal year ended November 30, 1994. ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS The Company held its Annual Meeting of Stockholders on May 9, 1995. The vote with respect to each matter is set forth below: A. Election of three directors to serve until the annual meeting in 1998 and until their successors are elected;
Total Votes Total Votes for Against/Withheld Nominees Each Director from Each Director ------------------- ------------- ------------------ Stephen G. Pagliuca 19,653,532 119,351 Kent J. Thiry 19,653,870 119,013 LeAnne M. Zumwalt 19,654,822 118,061
B. Approved the amendment and restatement of the Company's 1989 Stock Incentive Plan, including the reservation of an additional 700,000 shares for issuance thereunder;
Total Votes Total Votes For Against/Withheld --------------- ---------------- 15,494,759 4,278,124
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K (a) 1. See Exhibit 11 on Page 12 2. Exhibit 27 - Financial Data Schedule (b) The registrant was not required to file a report on Form 8-K during the three months ended May 31, 1995. Page 9 of 12 10 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. VIVRA INCORPORATED ---------------------------- (Registrant) Date: July 7 , 1995 /s/ LeAnne M. Zumwalt ---------------------------- LeAnne M. Zumwalt Vice President-Finance and Secretary / Treasurer Page 10 of 12 11 VIVRA INCORPORATED EXHIBIT INDEX
EXHIBIT NO. PAGE NO. - ----------- -------- 11. Computation of Earnings Per Share 12 27. Financial Data Schedule
Page 11 of 12 EX-11 2 COMPUTATION OF EARNINGS PER SHARE 1 EXHIBIT 11 VIVRA INCORPORATED COMPUTATION OF EARNINGS PER SHARE (in thousands, except per share amounts)
Three Months Ended Six Months Ended May 31, May 31, 1995 1994 1995 1994 Primary: Average shares outstanding 23,670 20,473 22,510 20,391 Stock options granted to employees, based on the treasury-stock method using average market price 436* 500* 523* 516* -------- --------- --------- ---------- Total 24,106 20,973 23,033 20,907 Earnings: Continuing operations $9,920 $7,403 $18,389 $14,243 Gain on sale of discontinued operations - - - 697 -------- --------- --------- ---------- Net earnings $9,920 $7,403 $18,389 $14,940 Earnings per share: Continuing operations $.42 $.36 $.82 $.70 Gain on sale of discontinued operations - - - .03 -------- --------- --------- ---------- Net earnings $.42 $.36 $.82 $.73 Fully diluted: Average shares outstanding 23,670 20,473 22,510 20,391 Stock options granted to employees, based on the treasury-stock method using quarter end market price, if higher than average market price 448* 500* 528* 490* -------- --------- --------- ---------- Total 24,118 20,973 23,038 20,881 Earnings: Continuing operations $9,920 $7,403 $18,389 $14,243 Gain on sale of discontinued operations - - - 697 -------- --------- --------- ---------- Net earnings $9,920 $7,403 $18,389 $14,940 Earnings per share: Continuing operations $.42 $.36 $.82 $.70 Gain on sale of discontinued operations - - - .03 -------- --------- --------- ---------- Net earnings $.42 $.36 $.82 $.73
* As the dilutive Common Stock equivalents are less than 3% of the weighted average outstanding shares, they have not been included in the computation of earnings per share as shown in the Condensed Consolidated Financial Statements. Page 12 of 12 EX-27 3 FINANCIAL DATA SCHEDULE
5 1,000 6-MOS NOV-30-1995 MAY-31-1995 71,970 23,263 72,332 12,417 0 197,433 113,552 46,546 365,623 50,154 1,770 239 0 0 306,261 365,623 171,737 175,941 115,005 115,005 30,351 0 292 30,293 11,718 18,389 0 0 0 18,389 .82 .82
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