FORM 10-Q/A
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
(Mark One)
[X] AMENDMENT NO. 2 TO QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 1998
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 0-28740
MIM CORPORATION
(Exact name of registrant as specified in it charter)
Delaware 05-0489664
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
One Blue Hill Plaza, Pearl River, New York 10965
(Address of principal executive offices)
(914) 735-3555
(Registrant's 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.
Yes _X_ No ___
APPLICABLE ONLY TO CORPORATE ISSUERS:
On July 30, 1998, there were outstanding 13,822,000 shares of the Company's
$0.0001 per value per share common stock ("Common Stock").
<PAGE>
MIM Corporation's ("MIM" or the "Company") Quarterly Report on Form 10-Q
for the period ended March 31, 1998, as amended by Amendment No. 1 thereto on
Form 10-Q/A filed with the Securities and Exchange Commission on August 5, 1998
(as amended, the "Quarterly Report"), is hereby amended as follows:
Item 1, "Financial Statements," in the Quarterly Report is hereby amended
and restated and replaced in its entirety as follows:
PART 1
FINANCIAL INFORMATION
Item 1. Financial Statements
MIM CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(In thousands, except for share amounts)
<TABLE>
<CAPTION>
March 31, December 31,
1998 1997
----------- ------------
(Unaudited)
<S> <C> <C>
ASSETS
Current assets
Cash and cash equivalents $ 5,816 $ 9,593
Investment securities 15,243 19,235
Receivables, less allowance for doubtful accounts
of $1,386, in 1998 and 1997 34,742 23,666
Prepaid expenses and other current assets 832 888
-------- --------
Total current assets 56,633 53,382
Investment securities, net of current portion 1,100 3,401
Other investments 2,300 2,300
Property and equipment, net 3,626 3,499
Due from affiliates, less allowance for doubtful accounts
of $2,360, in 1998 and 1997 -- --
Other assets, net 187 145
-------- --------
Total assets $ 63,846 $ 62,727
======== ========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities
Current portion of capital lease obligations $ 226 $ 222
Accounts payable 367 931
Deferred revenue -- 2,799
Claims payable 29,462 26,979
Payables to plan sponsors and others 11,949 10,839
Accrued expenses 1,589 2,279
-------- --------
Total current liabilities 43,593 44,049
Capital lease obligations, net of current portion 699 756
Commitments and contingencies
Minority interest 1,112 1,112
Stockholders' equity
Preferred stock, $.0001 par value; 5,000,000 shares authorized,
no shares issued or outstanding -- --
Common stock, $.0001 par value; 40,000,000 shares authorized,
13,421,850 and 13,335,120 shares issued and outstanding
at March 31, 1998 and December 31, 1997, respectively 1 1
Additional paid-in capital 73,593 73,585
Accumulated deficit (53,425) (55,061)
Stockholder notes receivable (1,727) (1,715)
-------- --------
Total stockholders' equity 18,442 16,810
-------- --------
Total liabilities and stockholders' equity $ 63,846 $ 62,727
======== ========
</TABLE>
The accompanying notes are an integral part of these
consolidated financial statements.
2
<PAGE>
MIM CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except for per share amounts)
Three months ended
March 31,
1998 1997
------- -------
(Unaudited)
Revenue $97,963 $70,811
Cost of revenue 92,384 66,829
------- -------
Gross profit 5,579 3,982
Selling, general and administrative expenses 4,450 3,909
------- -------
Income from operations 1,129 73
Interest income, net 507 623
------- -------
Income before minority interest 1,636 696
Minority interest -- 2
------- -------
Net income $ 1,636 $ 698
======= =======
Basic earnings per share $ 0.12 $ 0.06
======= =======
Diluted earnings per share $ 0.11 $ 0.05
======= =======
Weighted average shares outstanding used in computing
basic earnings per share 13,369 12,068
======= =======
Weighted average shares outstanding used in computing
diluted earnings per share 15,132 15,121
======= =======
The accompanying notes are an integral part of these
consolidated financial statements.
3
<PAGE>
MIM CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
<TABLE>
<CAPTION>
Three Months Ended
March 31,
1998 1997
-------- --------
(Unaudited)
<S> <C> <C>
Cash flows from operating activities:
Net income $ 1,636 $ 698
Adjustments to reconcile net loss to net cash provided by (used in)
operating activities:
Net loss allocated to minority interest -- (2)
Depreciation and amortization 361 239
Stock option charges 7 7
Provision for losses on receivables and loans to affiliates -- 579
Changes in assets and liabilities:
Receivables (11,076) (1,318)
Prepaid expenses and other assets 56 (7)
Accounts payable (564) (826)
Deferred revenue (2,799) --
Claims payable 2,483 3,014
Payables to plan sponsors and others 1,110 (2,180)
Accrued expenses (690) (454)
-------- --------
Net cash provided by (used in) operating activities (9,476) (250)
-------- --------
Cash flows from investing activities:
Purchase of property and equipment (487) (312)
Purchase of investment securites (4,000) (14,832)
Proceeds from maturities of investment securities 10,293 21,239
Increase in other assets (43) (11)
Stockholder loans, net (12) (35)
Loans to affiliates, net -- 359
-------- --------
Net cash provided by (used in) investing activities 5,751 6,408
-------- --------
Cash flows from financing activities:
Principal payments on capital lease obligations (53) (53)
Proceeds from exercise of stock options 1 --
-------- --------
Net cash provided by (used in) financing activities (52) (53)
-------- --------
Net increase (decrease) in cash and cash equivalents (3,777) 6,105
Cash and cash equivalents--beginning of period 9,593 1,834
-------- --------
Cash and cash equivalents--end of period $ 5,816 $ 7,939
======== ========
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Cash paid during the period for:
Interest $ 19 $ 12
======== ========
SUPPLEMENTAL DISCLOSURE OF NONCASH TRANSACTIONS:
Equipment acquired under capital lease obligations $ -- $ --
======== ========
Distribution to stockholder through the cancellation of
stockholder notes receivable $ -- $ --
======== ========
</TABLE>
The accompanying notes are an integral part of these
consolidated financial statements.
4
<PAGE>
MIM CORPORATION AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
(In thousands, except for share and per share amounts)
NOTE 1 - BASIS OF PRESENTATION
The accompanying unaudited consolidated interim financial statements have
been prepared in accordance with generally accepted accounting principles for
interim financial information, pursuant to the rules and regulations of the U.S.
Securities and Exchange Commission (the "Commission"). Pursuant to such rules
and regulations, 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 considered necessary for a fair presentation of the
financial statements, primarily consisting of normal recurring adjustments, have
been included. The results of operations and cash flows for the three months
ended March 31, 1998 are not necessarily indicative of the results of operations
or cash flows which may be reported for the remainder of 1998.
These consolidated financial statements should be read in conjunction with
the consolidated financial statements, notes and information included in the
Company's Annual Report on Form 10-K for the fiscal year ended December 31,
1997, as amended by amendments thereto on Form 10-K/A, filed with the Commission
(the "Form 10-K").
The accounting policies following for interim financial reporting are the
same as those disclosed in Note 2 to the consolidated financial statements
included in Form 10K.
NOTE 2 - EARNINGS PER SHARE
The following table sets forth the computation of Basic Earnings per Share
and Diluted Earnings per Share:
Three Months
Ended March 31,
(In thousands except per share share amounts) 1998 1997
- ----------------------------------------------------- ------ ------
Net income less preferred dividends 1,636 698
Denominator:
Average number of common shares outstanding 13,369 12,068
------ ------
Basic Earnings per Share $ .12 $ .06
====== ======
Denominator:
Average number of common shares outstanding 13,369 12,068
Common share equivalents of outstanding stock 1,763 3,053
options and deferred contingent common stock
awards
Total shares 15,132 15,121
------ ------
Diluted Earnings per Share $ .11 $ .05
====== ======
NOTE 3- OTHER COMPREHENSIVE INCOME
The Company adopted Statement of Financial Accounting Standard No. 130,
"Reporting Comprehensive Income" ("SFAS 130") for the three months ended March
31, 1998. There were no transactions during this period that would be required
to be reported as a component of other comprehensive income.
NOTE 4- SUBSEQUENT EVENTS
On April 14, 1998, the Company resolved its dispute with certain
subsidiaries of Sierra Health Services, Inc., a Nevada corporation ("Sierra"), a
party to a PBM Services Agreement (the "Sierra Agreement") with the Company. As
disclosed in the Company's Form 10-K, this dispute related to the parties'
divergent interpretations of certain provisions of the Sierra Agreement, which
led to Sierra's dispute of certain amounts which the Company claimed were owed
to it. Under the terms of the settlement, both parties dismissed their
respective claims pending in the United States District Court, District of
Nevada and the American Arbitration Association. In addition, the parties
modified a number of provisions of the Sierra Agreement, including the addition
of a provision permitting any party to terminate the Sierra Agreement at any
time and for any reason upon 90 days' prior written notice. On May 8, 1998, the
Company notified Sierra of its intention to terminate the Sierra Agreement 90
days after notice thereof in accordance with the terms of Agreement. The Company
continues to provide pharmacy benefit management services to Sierra under the
Sierra Agreement during the 90-day period ending August 6, 1998.
Effective May 15, 1998, Mr. John H. Klein, then the Company's Chief
Executive Officer, Chairman of the Board of Directors and a director, resigned
from such positions with the Company. Effective on that date, Mr. Richard H.
Friedman, the Company's Chief Operating Officer, Chief Financial Officer and a
director through May 15, 1998, succeeded Mr. Klein as the Company's Chief
Executive Officer. Mr. Scott R. Yablon, then a director of the Company, joined
the Company as an employee on May 1, 1998, and effective May 15, 1998, assumed
the titles of President, Chief Financial Officer and Chief Operating Officer of
the Company.
5
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this Amendment No. 2 to Quarterly Report on Form
10-Q/A to be signed on its behalf by the undersigned thereunto duly authorized.
MIM Corporation
Date: August 5, 1998 /s/ Barry A. Posner
--------------------------
Barry A. Posner
Vice President
