<PAGE>
UNITED STATES
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 quarter period ended June 30, 1996 or
[_] Transition Report pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934
For the transition period from _________ to ________
Commission File Number: 0-27162
NATIONAL SURGERY CENTERS, INC.
Delaware 36-3549627
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
35 East Wacker Drive, Suite 2800, Chicago, Illinois 60601
(Address of principal executive offices) (Zip Code)
(312) 553-4200
Registrants telephone number, including area code
- --------------------------------------------------------------------------------
Former name, former address and former fiscal year, if changed since last report
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. [X] Yes [ ] No
APPLICABLE ONLY TO CORPORATE ISSUERS:
Indicate the number of shares outstanding of each of the issuer's classes
of common stock, as of the latest practicable date.
Common stock, par value $.01:7,567,535 shares outstanding at August 1, 1996
Non-Voting common stock, par value $.01:1,307,016 shares outstanding at
August 1, 1996
<PAGE>
NATIONAL SURGERY CENTERS, INC.
FORM 10-Q
INDEX
<TABLE>
<CAPTION>
PART I FINANCIAL INFORMATION PAGE
--------------------- ----
<S> <C> <C>
Item 1. Financial Statements
Consolidated Balance Sheets as of June 30, 1996 and
December 31, 1995....................................... 3
Consolidated Statements of Income for the Three
and Six Month Periods Ended June 30, 1996 and 1995...... 4
Consolidated Statements of Cash Flows for the
Six Month Periods Ended June 30, 1996 and 1995.......... 5
Notes to Consolidated Financial Statements.............. 6
Item 2. Management's Discussion and Analysis of the Consolidated
Financial Condition and Results of Operations........... 7
PART II OTHER INFORMATION
-----------------
Item 1. Legal Proceedings....................................... None
Item 2. Changes in Securities................................... None
Item 3. Defaults Upon Senior Securities......................... None
Item 4. Submission of Matters to a Vote of Security Holders..... 10
Item 5. Exhibits and Reports on Form 8-K........................ 10
SIGNATURES........................................................ 11
</TABLE>
Page 2
<PAGE>
CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS, EXCEPT SHARES)
<TABLE>
<CAPTION>
JUNE 30, December 31,
1996 1995
-------- ------------
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents $ 8,308 $ 14,653
Short-term investments 250 8,190
Accounts receivable (less allowance for uncollectible accounts
of $1,700 and $1,167) 13,221 8,764
Inventories 2,529 2,154
Prepaid expenses 1,365 581
Other current assets 511 259
-------- --------
26,184 34,601
-------- --------
Property and equipment 43,018 32,310
Less accumulated depreciation and amortization (8,781) (6,758)
-------- --------
34,237 25,552
-------- --------
Other assets:
Excess of purchase price over net assets acquired (less accumulated
amortization of $1,616 and $1,295) 28,202 16,446
Deferred income taxes 3,871 4,425
Deferred development costs (less accumulated amortization
of $879 and $591) 577 180
Other long-term assets 1,598 1,083
-------- --------
34,248 22,134
-------- --------
$ 94,669 $ 82,287
======== ========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Current installments of long-term debt $ 8,698 $ 7,069
Accounts payable and accrued expenses 7,842 5,387
-------- --------
16,540 12,456
-------- --------
Long-term debt, less current installments:
Long-term debt 14,823 11,028
Convertible notes 4,837 5,977
-------- --------
19,660 17,005
-------- --------
Other long-term liabilities 493 449
Minority interests 6,376 4,185
Shareholders equity:
Preferred stock, $.01 par value; authorized 10,000,000 shares; no
shares issued and outstanding --- ---
Non-voting common stock, $.01 par value; authorized 10,000,000
shares; issued and outstanding 1,307,016 shares in 1996 and
654,313 shares in 1995 13 6
Common stock, $.01 par value; authorized 20,000,000 shares;
issued and outstanding 7,479,660 shares in 1996 and 4,971,118
shares in 1995 75 50
Additional paid-in-capital 87,897 87,814
Accumulated deficit (36,385) (39,678)
-------- --------
51,600 48,192
-------- --------
$ 94,669 $ 82,287
======== ========
</TABLE>
See accompanying Notes to Consolidated Financial Statements.
Page 3
<PAGE>
CONSOLIDATED STATEMENTS OF INCOME
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
June 30, June 30,
-------------------- --------------------
1996 1995 1996 1995
--------- --------- --------- ---------
<S> <C> <C> <C> <C>
Net revenue $19,752 $13,118 $35,911 $25,097
Costs and expenses:
Operating expenses 12,718 8,875 23,765 17,266
General and administrative expenses 899 581 1,623 1,136
Depreciation and amortization expense 1,544 861 2,680 1,680
------- ------- ------- -------
Total costs and expenses 15,161 10,317 28,068 20,082
------- ------- ------- -------
Operating income 4,591 2,801 7,843 5,015
Other (income) and expenses:
Interest expense 705 1,105 1,297 2,193
Interest income (85) (56) (219) (97)
Minority interests 926 374 1,517 650
Other, net 8 101 (153) 144
------- ------- ------- -------
Total other expenses 1,554 1,524 2,442 2,890
------- ------- ------- -------
Income before income taxes 3,037 1,277 5,401 2,125
Provision for income taxes 1,199 505 2,108 843
------- ------- ------- -------
Net income $ 1,838 $ 772 $ 3,293 $ 1,282
======= ======= ======= =======
Income per common share:
Primary $ 0.20 $ 0.16 $ 0.36 $ 0.26
Fully diluted $ 0.20 $ 0.16 $ 0.35 $ 0.26
Weighted average number of common and
common equivalent shares outstanding:
Primary 9,225 4,939 9,127 4,931
Fully diluted 9,700 4,939 9,699 4,931
</TABLE>
See accompanying Notes to Consolidated Financial Statements.
Page 4
<PAGE>
CONSOLIDATED STATEMENTS OF CASH FLOWS
(IN THOUSANDS)
<TABLE>
<CAPTION>
Six Months Ended
June 30,
------------------
1996 1995
------- -------
<S> <C> <C>
Operating activities:
Net income $ 3,293 $ 1,282
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation and amortization expense 2,680 1,680
Minority interests 1,517 650
Distribution to minority interests (1,126) (601)
Deferred income taxes 530 575
Change in assets and liabilities, net of entities acquired:
Accounts receivable (1,534) (354)
Inventories (65) 147
Prepaid expenses (282) (182)
Other current assets 367 19
Other long-term assets (404) (190)
Accounts payable and accrued expenses (253) 571
Other long-term liabilities and other 130 1
------- -------
Net cash provided by operating activities 4,853 3,598
------- -------
Investing activities:
Payments for entities acquired, net of cash acquired (13,798) (216)
Purchases of property and equipment (2,950) (1,434)
Proceeds from sale of short-term investments 7,940 -
Proceeds from sale of property and equipment - 20
Proceeds from sale of partnership interests 270 -
------- -------
Net cash used in investing activities (8,538) (1,630)
------- -------
Financing activities:
Payments on long-term debt (2,775) (1,731)
Proceeds from issuance of common stock 50 318
Proceeds from issuance of warrants and options 65 8
------- -------
Net cash used in financing activities (2,660) (1,405)
------- -------
Net increase (decrease) in cash and cash equivalents (6,345) 563
Cash and cash equivalents at beginning of period 14,653 4,478
------- -------
Cash and cash equivalents at end of period $ 8,308 $ 5,041
======= =======
NON-CASH TRANSACTIONS:
Long-term debt issued in acquisitions and contingent payments $ 240 $ 300
Liabilities assumed in acquisitions 11,155 -
Capital lease obligations 155 568
SUPPLEMENTAL CASH FLOW INFORMATION:
Interest paid $ 971 $ 1,846
Income taxes paid 1,184 170
</TABLE>
See accompanying Notes to Consolidated Financial Statements.
Page 5
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 1 - SUMMARY ACCOUNTING POLICIES
The Company - National Surgery Centers, Inc. and subsidiaries (collectively
the "Company") acquires, develops and manages ambulatory surgery centers. Many
of the Company's surgery centers are operated in partnership with physicians and
other health care providers.
The accompanying unaudited interim financial statements of the Company have
been prepared in accordance with generally accepted accounting principles for
interim financial information. In the opinion of management, all adjustments
(consisting only of normal recurring adjustments) have been made which are
necessary for a fair presentation of the financial position, results of
operations, and cash flows for the interim periods presented. The interim
statements presented herein do not include all disclosures normally provided in
annual financial statements.
Principles of Consolidation - The consolidated financial statements include
all accounts of the Company and its wholly-owned subsidiaries and controlled
partnerships. All significant intercompany balances and transactions have been
eliminated in consolidation.
Common Share Data - Primary income per common and common equivalent share and
income per common and common equivalent share assuming full dilution are
computed using the weighted average number of shares outstanding adjusted for
the incremental shares attributable to outstanding options and warrants to
purchase common stock. Certain convertible debt is dilutive and, therefore, is
included in the fully diluted weighted average number of shares outstanding for
the three and six month periods ending June 30, 1996.
Stock Exchange - Effective September 14, 1995, the Company's Board of
Directors authorized a 1-for-3 stock exchange in conjunction with the Company's
merger and reincorporation in Delaware. The merger included changing the
Company's common stock par value from no par value to $.01 par value per share
and authorized 10,000,000 shares of preferred stock, $.01 par value per share,
with no specific terms. Effective May 31, 1996, the Company effected a 3-for-2
stock split in the form of a 50% stock dividend. Accordingly, all references in
these financial statements to shares, average number of shares outstanding and
per share amounts have been restated to reflect these stock exchanges.
NOTE 2 - ACQUISITIONS
Purchases - During January, February, April and May, 1996, the Company
acquired three multi-specialty surgery centers and two companies which operated
specialty endoscopy centers. The aggregate purchase price was $13.6 million in
cash and of this purchase price, $ 11.9 million was recorded as goodwill. Also,
during August and October, 1995, the Company acquired two multi-specialty
surgery centers. The following unaudited results of operations give effect to
the operations of the entities acquired in the first and second quarters of 1996
and during 1995 as if these respective transactions had occurred as of the first
day of 1995. The pro forma results of operations do not purport to represent
what the Company's results would have been had such transactions in fact
occurred at the beginning of the periods presented or to project the Company's
results of operations in any future period.
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
June 30, June 30,
------------------ ------------------
1996 1995 1996 1995
-------- -------- -------- --------
(in thousands, except per share amounts)
<S> <C> <C> <C> <C>
Net revenue $20,370 $17,321 $40,047 $34,026
Net income 1,842 965 3,105 1,414
Income per common share:
Primary $ 0.20 $ 0.20 $ 0.34 $ 0.29
Fully diluted 0.20 0.20 0.34 0.29
</TABLE>
The above pro forma operating results include adjustments to conform
accounting policies and excludes general and administrative expenses of one of
the specialty endoscopy companies.
Page 6
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
OVERVIEW
The Company's growth has resulted primarily from the acquisition and
development of ambulatory surgery centers. Since 1991, the Company has completed
the acquisition of 28 ambulatory surgery centers, including two centers in which
the Company has minority ownership positions; developed two centers in which it
has majority equity ownership; and developed centers for other health care
providers, including one hospital.
In January, April and May, 1996, the Company acquired three multi-specialty
surgery centers; in February 1996 acquired a convertible subordinated note which
was converted into 90% of the common stock of Endoscopy Center Affiliates, Inc.
in March, 1996, which operates and develops specialty endoscopy centers; and in
May 1996 acquired a majority interest in three specialty endoscopy centers. In
August and October 1995, the Company acquired two multi-specialty surgery
centers which are operating as limited partnerships. All of these acquisitions
have been accounted for under the purchase method of accounting.
Because of the financial impact of the Company's recent acquisitions and
developments, it is difficult to make meaningful comparisons between the
Company's financial statements to the comparable period in 1995. In addition,
due to the limited number of operated surgery centers, each additional center
acquired or developed can affect the overall operating margin of the Company.
Upon the acquisition of a surgery center, the Company has typically implemented
certain steps to improve operating margins. The impact of such actions and of
other activities to improve operating margins may not occur immediately.
Consequently, the financial performance of an acquired surgery center may
adversely affect overall operating margins in the near-term. As the Company
makes additional surgery center acquisitions, the Company expects that this
effect will be mitigated by the expanded financial base of the existing surgery
centers.
The Company's principal source of revenue is a facility fee charged for
surgical procedures performed in its surgery centers. This fee varies depending
on the procedure performed, but usually includes all charges for operating room
usage, special equipment usage, supplies, recovery room usage, nursing staff and
medications. Facility fees do not include the charges of the patients' surgeons,
anesthesiologists or attending physicians, which are billed directly by such
physicians. For those surgery centers providing extended recovery care, an
additional fee is typically charged for an overnight stay. This fee generally
includes a flat fee for post-operative care and may include itemized amounts for
medications and other supplies.
<TABLE>
<CAPTION>
RESULTS OF OPERATIONS
Three Months Ended Six Months Ended
June 30, June 30,
------------------ ----------------
1996 1995 1996 1995
----- ----- ----- -----
(percentage of net revenue)
<S> <C> <C> <C> <C>
Net revenue 100.0% 100.0% 100.0% 100.0%
Costs and expenses:
Operating expenses 64.4 67.6 66.2 68.8
General and administrative expenses 4.6 4.4 4.5 4.5
Depreciation and amortization expense 7.8 6.6 7.5 6.7
----- ----- ----- -----
Total costs and expenses 76.8 78.6 78.2 80.0
----- ----- ----- -----
Operating income 23.2 21.4 21.8 20.0
----- ----- ----- -----
Other (income) and expenses:
Interest expense 3.5 8.4 3.6 8.7
Interest income (.4) (.4) (.6) (.4)
Minority interests 4.7 2.9 4.2 2.6
Other, net - .8 (.4) .6
----- ----- ----- -----
Total other expenses 7.8 11.7 6.8 11.5
----- ----- ----- -----
Income before income taxes 15.4 9.7 15.0 8.5
Provision for income taxes 6.1 3.8 5.8 3.4
----- ----- ----- -----
Net income 9.3 5.9 9.2 5.1
===== ===== ===== =====
</TABLE>
Page 7
<PAGE>
THREE MONTHS ENDED JUNE 30, 1996 AND 1995
Net Revenue. Net revenue is net of provisions for contractual adjustments and
doubtful accounts. Net revenue increased 51% to $19.8 million in 1996 from $13.1
million in 1995. Overall net revenue per case declined 11% to $887 in 1996 from
$994 in 1995, primarily due to the inclusion of eleven specialty endoscopy
centers acquired during 1996. Separately, net revenue per case was $1,005 for
the multi-specialty centers and $473 for the specialty endoscopy centers. Same
center net revenue increased $1.8 million or 14% due to a 13% increase in cases
combined with a 1% increase in net revenue per case to $1,002 from $994. Of the
remaining increase in net revenue, $3.6 million and $1.3 million resulted from
centers acquired in 1996 and 1995, respectively.
Operating Expenses. Operating expenses include salaries and benefits, drugs
and medical supplies, utilities, marketing, maintenance costs and rent expense
of the centers. Operating expenses increased 43% to $12.7 million in 1996 from
$8.9 million in 1995. Of this increase, $2.9 million resulted from centers
acquired in 1996 and 1995. As a percentage of net revenue, operating expenses
decreased to 64.4% in 1996 from 67.6% in 1995.
General and Administrative Expenses. General and administrative expenses
include only corporate-level expenses and do not include any center-level
administrative expenses. General and administrative expenses increased 55% to
$899,000 in 1996 from $581,000 in 1995. As a percentage of net revenue, general
and administrative expenses increased to 4.6% in 1996 from 4.4% in 1995.
Depreciation and Amortization Expense. Depreciation and amortization expenses
increased 79% to $1.5 million in 1996 from $861,000 in 1995. Of this increase,
$537,000 resulted from centers acquired in 1996 and 1995. As a percentage of net
revenue, depreciation and amortization expense increased to 7.8% in 1996 from
6.6% in 1995.
Interest Expense. Interest expense decreased 36% to $705,000 in 1996 from
$1.1 million in 1995. The decrease in interest expense was primarily the result
of the repayment of the $20.0 million subordinated debt in November 1995 with
proceeds from the Company's public offering offset by additional interest
expense related to debt assumed from acquisitions in 1996 and 1995. As a
percentage of net revenue, interest expense decreased to 3.5% in 1996 from 8.4%
in 1995.
Minority Interests. Minority interests include the limited partners'
ownership share in the earnings (losses) of the operating center partnerships.
Minority interests increased 148% to $926,000 in 1996 from $374,000 in 1995. Of
this increase, $282,000 was attributable to centers acquired in 1996 and 1995
with the remaining increase resulting from improved center operating
performance. As a percentage of net revenue, minority interests increased to
4.7% in 1996 from 2.9% in 1995.
Provision for Income Taxes. Provision for income taxes increased to $1.2
million in 1996 from $505,000 in 1995. The effective tax rate remained constant
at 39.5% for both periods.
SIX MONTHS ENDED JUNE 30, 1996 AND 1995
Net Revenue. Net revenue increased 43% to $35.9 million in 1996 from $25.1
million in 1995. Overall net revenue per case declined 7% to $931 in 1996 from
$997 in 1995, primarily due to the inclusion of the eleven specialty endoscopy
centers acquired in 1996. Separately, net revenue per case was $1,014 for the
multi-specialty centers and $471 for the specialty endoscopy centers. Same
center net revenue increased $4.0 million or 16% due to a 14% increase in cases
combined with a 2% increase in net revenue per case to $1,016 from $997. Of the
remaining increase in net revenue, $4.5 million and $2.3 million resulted from
centers acquired in 1996 and 1995, respectively.
Operating Expenses. Operating expenses increased 38% to $23.8 million in 1996
from $17.3 million in 1995. Of this increase, $4.2 million resulted from centers
acquired in 1996 and 1995. As a percentage of net revenue, operating expenses
decreased to 66.2% in 1996 from 68.8% in 1995.
General and Administrative Expenses. General and administrative expenses
increased 43% to $1.6 million in 1996 from $1.1 million in 1995. As a percentage
of net revenue, general and administrative expenses remained constant at 4.5% in
1996 and 1995.
Page 8
<PAGE>
Depreciation and Amortization Expense. Depreciation and amortization expense
increased 60% to $2.7 million in 1996 from $1.7 million in 1995. Of this
increase, $719,000 resulted from centers acquired in 1996 and 1995. As a
percentage of net revenue, depreciation and amortization expense increased to
7.5% in 1996 from 6.7% in 1995.
Interest Expense. Interest expense decreased 41% to $1.3 million in 1996 from
$2.2 million in 1995. The decrease in interest expense was primarily the result
of the repayment of the $20.0 million subordinated debt in November 1995 with
proceeds from the Company's public offering offset by additional interest
expense related to debt assumed from acquisitions in 1996 and 1995. As a
percentage of net revenue, interest expense decreased to 3.6% in 1996 from 8.7%
in 1995.
Minority Interests. Minority interests increased 133% to $1.5 million in 1996
from $650,000 in 1995. Of this increase, $305,000 is attributable to centers
acquired in 1996 and 1995 with the remaining increase resulting from improved
center operating performance. As a percentage of net revenue, minority interests
increased to 4.2% in 1996 from 2.6% in 1995.
Provision for Income Taxes. Provision for income taxes increased to $2.1
million in 1996 from $843,000 in 1995. The effective tax rate decreased to 39.0%
in 1996 from 39.7% in 1995 due primarily to the effects of tax-exempt interest
earned during 1996 from short-term investments.
SEASONALITY
The Company's business experiences some degree of seasonality because patients
have discretion in scheduling elective surgery. The first quarter tends to be
lower due to beginning of the year deductibles while the third quarter reflects
the effects of vacations taken both by patients and physicians. Although the
Company's growth and development of centers may obscure the effects of
seasonality in the Company's financial results, the Company's first and third
quarters generally reflect lower net revenue and operating income margins on a
same center basis when compared to the Company's second and fourth quarters.
LIQUIDITY AND CAPITAL RESOURCES
At June 30, 1996, the Company had working capital of $9.6 million including
cash and cash equivalents and short-term investments of $8.6 million. The
Company's cash flow from operations increased to $4.9 million for the six months
ended June 30, 1996 from $3.6 million in 1995. The Company's cash flow from
operations combined with proceeds from sale of short-term investments of $7.9
million and existing cash and cash equivalents were used primarily to finance
acquisitions of $13.8 million, capital expenditures of $3.0 million, and
repayment of long-term debt of $2.8 million.
The Company expects that its principal use of funds in the near future will be
in connection with the acquisition and development of surgery centers, working
capital requirements, debt repayments and purchases of property and equipment.
The Company expects that cash and cash equivalents, short-term investments, cash
generated from operations and available credit borrowings will be adequate to
provide for the Company's cash requirements for at least the next twelve months,
unless the rate of acquisitions significantly increases. No assurances can be
given that cash and borrowings will be sufficient to provide for the Company's
cash requirements beyond the next twelve months.
The Company's credit agreement provides for revolving and term loans of up to
$20.0 million, to be used by the Company for acquisitions and development of
surgery centers and related businesses. As of June 30, 1996, no amount was
outstanding under the credit agreement. Loans under the credit agreement are
secured by substantially all the assets of the Company (including the capital
stock or partnership units of the Company's subsidiaries) and matures in June
30, 2000. Loans under the credit agreement are denominated at the Company's
option as either Eurodollar Tranches (loans bearing interest at a rate of 1.5%
above the London Interbank Offered Rate) or Base Rate Tranches (loans bearing
interest at 0.5% above the prime rate for U.S. commercial loans) subject to
adjustments in certain circumstances.
Page 9
<PAGE>
PART II. OTHER INFORMATION
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
At the Annual Shareholders Meeting on May 22, 1996, the shareholders (a)
reelected John T. Henley, Jr., M.D. and John G. Rex-Waller as directors of the
Company with 4,275,889 votes for and 152,185 votes abstaining; and (b) approved
an increase in the number of shares authorized under the Company's Amended and
Restated 1992 Stock Option Plan from 750,000 shares to 1.5 million shares by
3,191,714 votes for, 1,198,994 votes against and 37,366 votes abstaining.
ITEM 5. EXHIBITS AND REPORTS ON FORM 8-K
a. Exhibits
The exhibits to this report are listed in the Exhibit Index set forth
elsewhere herein.
b. Reports on Form 8-K
The registrant filed Amendment No. 1 to a report on Form 8-K on May 8,
1996, which form includes item 7 (a) and (b) with related financial
statements as follows:
1) Consolidated Balance Sheets as of February 23, 1996 and
December 31, 1995 and 1994 and Consolidated Statements of
Operations, Stockholders' Deficit and Cash Flows for the
period ended February 23, 1996 and the years ended
December 31, 1995 and 1994 for Endoscopy Center Affiliates,
Inc. and Subsidiaries,
2) Unaudited Pro Forma Consolidated Balance Sheet as of
December 31, 1995 and Statement of Operations for the year
end December 31, 1995.
The registrant filed a report on Form 8-K on May 28 , 1996, which form
includes items 2 and 7(a), (b) and (c) except that financial
statements for item 7(a) and (b) were not available and will be filed
within 60 days or as soon as possible.
Page 10
<PAGE>
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.
NATIONAL SURGERY CENTERS, INC.
(Registrant)
Date: August 13, 1996 /s/ E. Timothy Geary
--------------- -------------------------
E. Timothy Geary
President and Chief
Executive Officer
/s/ Bryan S. Fisher
-------------------------
Bryan S. Fisher
Vice President and
Chief Financial Officer
Page 11
<PAGE>
EXHIBIT INDEX
Number and Description of Exhibit*
2 None
4 None
10 None
11 Computation of Income Per Common Share
12 None
15 None
18 None
19 None
22 None
23 None
24 None
27 None
99 None
- --------------------------------------------
* Exhibits not listed are inapplicable.
Page 12
<PAGE>
EXHIBIT 11
COMPUTATION OF INCOME PER COMMON SHARE
(In thousands, except per share amounts)
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
June 30, June 30,
------------------ ----------------
1996 1995 1996 1995
------ ------ ------ ------
<S> <C> <C> <C> <C>
PRIMARY INCOME PER SHARE
Average shares outstanding 8,465 4,939 8,454 4,931
Net effect of dilutive stock options and warrants - based
on the treasury stock method using average market price 760 - 673
------ ------ ------ ------
Total 9,225 4,939 9,127 4,931
====== ====== ====== ======
Income:
Net income $1,838 $ 772 $3,293 $1,282
====== ====== ====== ======
Per common share amount:
Net income $ 0.20 $ 0.16 $ 0.36 $ 0.26
====== ====== ====== ======
FULLY DILUTED INCOME PER SHARE
Average shares outstanding 8,465 4,939 8,454 4,931
Net effect of dilutive stock options and warrants - based
on the treasury stock method using market closing price 805 - 815 -
Assumed conversion of certain convertible debt 430 - 430 -
------ ------ ------ ------
Total 9,700 4,939 9,699 4,931
====== ====== ====== ======
Income:
Net income $1,838 $ 772 $3,293 $1,282
Add convertible debt interest, net of income tax effect 62 - 124 -
------ ------ ------ ------
Net income $1,900 $ 772 $3,417 $1,282
====== ====== ====== ======
Per common share amount:
Net income $ 0.20 $ 0.16 $ 0.35 $ 0.26
====== ====== ====== ======
</TABLE>
NOTE: All number of shares and per share amounts have been adjusted to reflect
the one-for-three stock exchange related to the Company's reincorporation
in Delaware effected on September 14, 1995 and the three-for-two stock
split in the form of a 50% stock dividend effected on May 31, 1996.
Page 13
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND> This schedule contains summary financial information extracted from the
financial statements of National Surgery Centers for the six months ended June
30, 1996 and is qualified in its entirety by reference to such financial
statements.
</LEGEND>
<CAPTION>
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> JUN-30-1996
<CASH> 8,308,000
<SECURITIES> 250,000
<RECEIVABLES> 14,921,000
<ALLOWANCES> 1,700,000
<INVENTORY> 2,529,000
<CURRENT-ASSETS> 26,184,000
<PP&E> 43,018,000
<DEPRECIATION> 8,781,000
<TOTAL-ASSETS> 94,669,000
<CURRENT-LIABILITIES> 16,540,000
<BONDS> 19,660,000
<COMMON> 88,000
0
0
<OTHER-SE> 51,600,000
<TOTAL-LIABILITY-AND-EQUITY> 94,669,000
<SALES> 35,911,000
<TOTAL-REVENUES> 35,911,000
<CGS> 26,445,000
<TOTAL-COSTS> 26,445,000
<OTHER-EXPENSES> 2,987,000
<LOSS-PROVISION> 1,265,000
<INTEREST-EXPENSE> 1,078,000
<INCOME-PRETAX> 5,401,000
<INCOME-TAX> 2,108,000
<INCOME-CONTINUING> 3,293,000
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 3,293,000
<EPS-PRIMARY> .36
<EPS-DILUTED> .35
</TABLE>
