<PAGE>
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 quarterly period ended June 30, 1998
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the transition period ___________ to ___________
COMMISSION FILE NUMBER: 0-23363
AMERICAN DENTAL PARTNERS, INC.
(Exact name of registrant as specified in its charter)
DELAWARE 04-3297858
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
AMERICAN DENTAL PARTNERS, INC.
301 EDGEWATER PLACE, SUITE 320
WAKEFIELD, MASSACHUSETTS 01880
(Address of principal executive offices, including zip code)
(781) 224-0880
(781) 224-4216 (FAX)
(Registrant's telephone number, including area code)
N/A
(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
Indicate the number of shares outstanding of each of the issurer's classes of
common stock as of the latest practicable date.
Common Stock, $0.01 par value, outstanding as of August 6, 1998:
7,426,406 shares
================================================================================
Exhibit Index appears on Page 21
<PAGE>
AMERICAN DENTAL PARTNERS, INC.
INDEX
-----
PAGE
----
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
Consolidated Balance Sheets at December 31, 1997
and June 30, 1998 (unaudited).................................... 3
Consolidated Statements of Earnings for the Three Months and
Six Months Ended June 30, 1997 and 1998 (unaudited).............. 4
Consolidated Statement of Stockholders' Equity for the
Six Months Ended June 30, 1998 (unaudited) ...................... 5
Consolidated Statements of Cash Flows for the
Six Months Ended June 30, 1997 and 1998 (unaudited).............. 6
Notes to Interim Consolidated Financial Statements .............. 7
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations............................................ 10
Item 3. Quantitative and Qualitative Disclosures About Market Risk....... 17
PART II. OTHER INFORMATION
Item 1. Legal Proceedings ............................................... 17
Item 2. Changes in Securities and Use of Proceeds........................ 17
Item 3. Defaults Upon Senior Securities ................................. 18
Item 4. Submission of Matters to a Vote of Security Holders ............. 18
Item 5. Other Information ............................................... 18
Item 6. Exhibits and Reports on Form 8-K ................................ 19
Signature ............................................................ 20
Exhibit Index ............................................................ 21
Exhibit 27 ............................................................ 22
2
<PAGE>
AMERICAN DENTAL PARTNERS, INC.
CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS, EXCEPT SHARE AND PER SHARE AMOUNTS)
<TABLE>
<CAPTION>
DECEMBER 31, JUNE 30,
1997 1998
------------ -----------
(UNAUDITED)
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents ........................................................ $ 4,675 $ 2,279
Accounts receivable .............................................................. 101 320
Receivables due from affiliated practices ........................................ 3,207 3,173
Inventories ...................................................................... 387 380
Prepaid expenses and other receivables ........................................... 1,631 1,321
Deferred income taxes.............................................................. - 449
------- -------
Total current assets .......................................................... 10,001 7,922
------- -------
Property and equipment, net ........................................................ 8,752 10,848
------- -------
Non-current assets:
Intangible assets, net ........................................................... 28,975 45,314
Deferred income taxes........................................................... - 785
Other assets ..................................................................... 231 528
------- -------
Total non-current assets ...................................................... 29,206 46,627
------- -------
Total assets .................................................................. $47,959 $65,397
======= =======
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable ................................................................. $ 2,618 $ 2,785
Accrued compensation, benefits and taxes ......................................... 3,001 3,279
Accrued expenses ................................................................. 2,666 3,725
Income taxes payable ............................................................. 183 404
Current maturities of debt ....................................................... 774 964
------- -------
Total current liabilities ..................................................... 9,242 11,157
------- -------
Non-current liabilities:
Long-term debt ................................................................... 21,253 7,993
Deferred income taxes ............................................................ 231 -
Other liabilities ................................................................ 27 730
------- -------
Total non-current liabilities ................................................. 21,511 8,723
------- -------
Total liabilities ............................................................. 30,753 19,880
------- -------
Series A convertible preferred stock, par value $0.01 per share, 400,000 shares
authorized, issued and outstanding as of December 31, 1997; no shares authorized,
issued or outstanding as of June 30, 1998 ......................................... 8,641 -
Series B redeemable preferred stock, par value $0.01 per share, 70,000 shares
authorized, issued and outstanding as of December 31, 1997; no shares authorized,
issued or outstanding as of June 30, 1998 ......................................... 7,656 -
Stockholders' equity:
Preferred stock, par value $0.01 per share, 530,000 and 1,000,000 shares
authorized, no shares issued or outstanding....................................... - -
Common stock, par value $0.01 per share, 25,000,000 shares authorized, 2,394,212
and 7,416,512 shares issued and outstanding....................................... 24 74
Additional paid-in capital ....................................................... 2,307 45,546
Unearned compensation ............................................................ (49) (37)
Accumulated deficit .............................................................. (1,373) (66)
------- -------
Total stockholders' equity .................................................... 909 45,517
------- -------
Commitments and contingencies
Total liabilities and stockholders' equity .................................... $47,959 $65,397
======= =======
</TABLE>
See accompanying notes to interim consolidated financial statements.
3
<PAGE>
AMERICAN DENTAL PARTNERS, INC.
CONSOLIDATED STATEMENTS OF EARNINGS
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
<TABLE>
<CAPTION>
THREE MONTHS ENDED SIX MONTHS ENDED
JUNE 30, JUNE 30,
------------------- ------------------
1997 1998 1997 1998
--------- -------- -------- --------
(UNAUDITED)
<S> <C> <C> <C> <C>
Net revenue...................................... $12,076 $20,217 $23,302 $38,388
------- ------- ------- -------
Operating expenses:
Salaries and benefits......................... 6,339 10,452 12,528 20,101
Lab fees and dental supplies.................. 1,505 2,641 2,839 4,837
Office occupancy.............................. 1,113 1,850 2,121 3,459
Other operating expenses...................... 1,581 1,619 2,947 3,264
General corporate expenses.................... 689 1,056 1,424 2,031
Depreciation.................................. 403 606 759 1,162
Amortization of intangibles................... 121 413 214 746
------- ------- ------- -------
Total operating expenses................... 11,751 18,637 22,832 35,600
------- ------- ------- -------
Earnings from operations......................... 325 1,580 470 2,788
Interest expense, net......................... 107 206 80 645
------- ------- ------- -------
Earnings before income taxes..................... 218 1,374 390 2,143
Income taxes.................................. 7 536 7 836
------- ------- ------- -------
Net earnings.................................. $ 211 $ 838 $ 383 $ 1,307
======= ======= ======= =======
Net earnings (loss) per common share:
Basic......................................... $(0.04) $0.12 $(0.10) $0.21
Diluted....................................... $(0.04) $0.11 $(0.10) $0.18
Weighted average common shares outstanding:
Basic......................................... 2,228 6,265 2,219 4,357
Diluted....................................... 2,228 7,103 2,219 6,056
</TABLE>
See accompanying notes to interim consolidated financial statements.
4
<PAGE>
AMERICAN DENTAL PARTNERS, INC.
CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY
FOR THE SIX MONTHS ENDED JUNE 30, 1998
(IN THOUSANDS)
(UNAUDITED)
<TABLE>
<CAPTION>
COMMON STOCK ADDITIONAL TOTAL
------------------- PAID-IN UNEARNED ACCUMULATED STOCKHOLDERS'
SHARES AMOUNT CAPITAL COMPENSATION DEFICIT EQUITY
------------------- ------------- --------------- ------------ --------------
<S> <C> <C> <C> <C> <C> <C>
Balance at December 31, 1997 ........... 2,394 $24 $ 2,307 $(49) $(1,373) $ 909
Issuance of common stock for
acquisitions and affiliations .... 35 - 247 - - 247
Issuance of common stock in
initial public offering, net....... 2,588 26 34,570 - - 34,596
Amortization of unearned
compensation ..................... - - - 12 - 12
Dividends on Series A convertible
preferred stock .................. - - (200) - - (200)
Dividends on Series B redeemable
preferred stock .................. - - (195) - - (195)
Conversion of Series A convertible
preferred stock to common stock.... 2,400 24 8,817 - - 8,841
Net earnings ....................... - - - - 1,307 1,307
----- --- ------- ---- ------- -------
Balance at June 30, 1998 ............... 7,417 $74 $45,546 $(37) $ (66) $45,517
===== === ======= ==== ======= =======
</TABLE>
See accompanying notes to interim consolidated financial statements.
5
<PAGE>
AMERICAN DENTAL PARTNERS, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(IN THOUSANDS)
<TABLE>
<CAPTION>
SIX MONTHS ENDED
JUNE 30,
------------------------------
1997 1998
-------------- --------------
(UNAUDITED)
<S> <C> <C>
Cash flows from operating activities:
Net earnings .................................................................... $ 383 $ 1,307
Adjustments to reconcile net earnings to net cash provided by
operating activities:
Depreciation ............................................................... 759 1,162
Amortization of intangibles ................................................ 214 746
Other amortization ......................................................... 18 53
Changes in assets and liabilities, net of acquisitions and affiliations:
Accounts receivable .................................................... 1,339 110
Receivables due from affiliated practices .............................. (1,079) 278
Other current assets ................................................... (653) (208)
Accounts payable and accrued expenses .................................. (322) (155)
Accrued compensation, benefits and taxes ............................... (282) 938
------- --------
Net cash provided by operating activities .......................... 377 4,231
------- --------
Cash flows from investing activities:
Acquisitions and affiliations, net of cash acquired ............................ (3,171) (15,088)
Capital expenditures, net ...................................................... (1,669) (1,982)
Other............................................................................ (562) (1,010)
------- --------
Net cash used for investing activities ............................. (5,402) (18,080)
------- --------
Cash flows from financing activities:
Borrowings under (repayments of) revolving line of credit, net ................. 1,800 (14,665)
Repayment of borrowings ........................................................ (700) (1,479)
Proceeds from issuance of common stock in initial public offering,
net of underwriting discounts and commissions................................... - 36,096
Redemption of Series B redeemable preferred stock................................ - (7,851)
Payment of initial public offering costs ....................................... - (648)
Payment of debt issuance costs ................................................. (242) -
------- --------
Net cash provided by financing activities .......................... 858 11,453
------- --------
Decrease in cash and cash equivalents .............................................. (4,167) (2,396)
Cash and cash equivalents at beginning of period ................................... 5,836 4,675
------- --------
Cash and cash equivalents at end of period ......................................... $ 1,669 $ 2,279
======= ========
Supplemental disclosure of cash flow information:
Cash paid during the period for interest, net .................................. $ (15) $ 460
======= ========
Cash paid during the period for income taxes, net .............................. $ 35 $ 53
======= ========
Supplemental disclosure of non-cash information:
Conversion of Series A convertible preferred stock to common stock............... $ - $ 8,841
======= ========
Acquisitions and affiliations:
Assets acquired ................................................................. $ 4,893 $ 21,459
Liabilities assumed and issued ................................................. (1,419) (6,067)
Common stock issued ............................................................ (77) (247)
------- --------
Cash paid ....................................................................... 3,397 15,145
Less cash acquired ............................................................. (226) (57)
------- --------
Net cash paid for acquisitions and affiliations .................... $ 3,171 $ 15,088
======= ========
</TABLE>
See accompanying notes to interim consolidated financial statements.
6
<PAGE>
AMERICAN DENTAL PARTNERS, INC.
NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS
(1) BASIS OF PRESENTATION
The interim consolidated financial statements include the accounts of American
Dental Partners, Inc. and its wholly-owned subsidiaries (the "Company"). All
intercompany balances and transactions have been eliminated in consolidation.
The Company does not own any interests in or control the activities of the
affiliated dental practices. Accordingly, the financial statements of the
affiliated dental practices are not consolidated with those of the Company.
The interim consolidated financial statements are unaudited, but in the
opinion of management include all adjustments, which consist only of normal and
recurring adjustments, necessary for a fair presentation of its financial
position and results of operations. Results of operations for the interim
periods are not necessarily indicative of the results to be expected for the
full year. These financial statements should be read in conjunction with the
consolidated financial statements of the Company as of and for the year ended
December 31, 1997 included in the Company's Prospectus dated April 15, 1998.
(2) INITIAL PUBLIC OFFERING
Effective April 16, 1998, the Company sold 2,250,000 shares of Common Stock in
an initial public offering at $15.00 per share. Effective May 4, 1998, the
Company sold an additional 337,500 shares of Common Stock at $15.00 per share
pursuant to the over-allotment option granted to the underwriters. Net proceeds
to the Company after deducting underwriting discounts and commissions and
offering expenses totaled approximately $34,596,000. Such proceeds were used to
(i) redeem all the Series B Redeemable Preferred Stock, including unpaid
dividends, in the amount of $7,851,000, (ii) repay outstanding indebtedness
under the Company's revolving credit facility, including accrued interest, in
the amount of $20,651,000 and (iii) complete additional affiliation
transactions.
In connection with the offering, all 400,000 shares of Series A Convertible
Preferred Stock were converted to 2,399,995 shares of Common Stock.
(3) ACQUISITIONS AND AFFILIATIONS
During 1997, the Company acquired substantially all the assets of six dental
practices and Orthocare, Ltd., a related entity of one of these practices, and
simultaneously entered into 40-year service agreements with four of the
affiliated dental groups (two practices joined existing affiliates). The
aggregate purchase price paid in connection with these transactions consisted of
approximately $16.8 million in cash, $2.4 million in subordinated promissory
notes and 180,834 shares of Common Stock. All transactions completed in 1997
are referred to as the "1997 Transactions."
From January 1, 1998 to June 30, 1998, the Company acquired substantially all
the assets of six dental group practices and simultaneously entered into 40-year
service agreements with three of the affiliated dental groups (three practices
joined existing affiliates). The aggregate purchase price paid in connection
with these transactions consisted of approximately $15.1 million in cash, $1.7
million in subordinated promissory notes, $0.9 million in deferred payments,
34,800 shares of Common Stock and future contingent payments for one affiliation
based on a multiple of service fees received in excess of a predetermined
threshold for each of the three years ending May 31, 1999, 2000 and 2001. All
transactions completed in 1998 are referred to as the "1998 Transactions."
7
<PAGE>
AMERICAN DENTAL PARTNERS, INC.
NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)
The 1997 and 1998 Transactions completed through June 30, 1998 are as follows:
<TABLE>
<CAPTION>
DATE AFFILIATED GROUP LOCATION
---- ---------------- --------
<S> <C> <C>
March 1997.............................. Malcolm R. Scott, D.D.S. San Marcos, TX
March 1997.............................. Lakeside Dental Care Metairie, LA
May 1997................................ Soster Dental Group Pittsburgh, PA
July 1997............................... Northpoint Dental Group Milwaukee, WI
October 1997............................ Wilkens Dental Group Milwaukee, WI
October 1997............................ Orthocare Group Minneapolis, MN
January 1998............................ Associated Dental Care Tucson, AZ
April 1998.............................. Family Care Dental Centers Janesville, Kenosha and Racine, WI
April 1998.............................. John E. Carey, D.D.S. and Madison, WI
James J. Peterman, D.D.S.
April 1998.............................. Leroy S. Crapanzano, D.D.S. Hammond, LA
June 1998............................... Reston Dental Group Reston, VA
June 1998............................... TSC Dental Centers Houston, TX
</TABLE>
The accompanying interim consolidated financial statements include the results
of operations under the service agreements from the date of acquisition. The
excess of the purchase price of all the 1997 and 1998 Transactions over the
estimated fair value of the net assets acquired has been recorded as intangible
assets.
Subsequent to June 30, 1998, the Company acquired substantially all the assets
of Indiana Dental Group which joined the Company's existing affiliate in
Pittsburgh, PA.
(4) EARNINGS PER SHARE
Earnings per share are computed based on Statement of Financial Accounting
Standard No. 128 "Earnings per Share" ("SFAS 128"). SFAS 128 requires
presentation of basic earnings per share ("Basic EPS") and diluted earnings per
share ("Diluted EPS") by all entities that have publicly traded common stock or
potential common stock (options, warrants, convertible securities or contingent
stock arrangements). Basic EPS is computed by dividing income available to
common stockholders by the weighted average number of common shares outstanding
during the period. Diluted EPS gives effect to all dilutive potential common
shares outstanding during the period. The computation of Diluted EPS does not
assume conversion, exercise or contingent exercise of securities that would have
an antidilutive effect on earnings. Accordingly, the assumed conversion of
Series A Convertible Preferred Stock and the effect of stock options were not
included in the calculation of Diluted EPS for the three months and six months
ended June 30, 1997, as the inclusion of these items would have been
antidilutive.
8
<PAGE>
AMERICAN DENTAL PARTNERS, INC.
NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)
The following table provides a reconciliation of the numerators and
denominators of the basic and diluted earnings (loss) per share computations for
the three months and six months ended June 30:
<TABLE>
<CAPTION>
THREE MONTHS ENDED SIX MONTHS ENDED
JUNE 30, JUNE 30,
--------------------------------------------
1997 1998 1997 1998
--------------------------------------------
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<S> <C> <C> <C> <C>
BASIC EARNINGS (LOSS) PER SHARE
Net earnings.............................................................. $ 211 $ 838 $ 383 $1,307
Less: Dividends on Series A Convertible Preferred Stock............... (158) (35) (316) (200)
Dividends on Series B Redeemable Preferred Stock................ (140) (36) (280) (195)
------ ------ ------ ------
Net earnings (loss) available to common stockholders...................... $ (87) $ 767 $ (213) $ 912
====== ====== ====== ======
Weighted average common shares outstanding................................ 2,228 6,265 2,219 4,357
====== ====== ====== ======
Net earnings (loss) per share............................................. $(0.04) $0.12 $(0.10) $0.21
====== ====== ====== ======
DILUTED EARNINGS (LOSS) PER SHARE
Net earnings.............................................................. $ 211 $ 838 $ 383 $1,307
Less: Dividends on Series A Convertible Preferred Stock............... (158) - (316) -
Dividends on Series B Redeemable Preferred Stock................ (140) (36) (280) (195)
------ ------ ------ ------
Net earnings (loss) available to common stockholders...................... $ (87) $ 802 $ (213) $1,112
====== ====== ====== ======
Weighted average common shares outstanding................................ 2,228 6,265 2,219 4,357
Add: Dilutive effect of options...................................... - 311 - 240
Assumed conversion of Series A Convertible Preferred Stock (1).. - 527 - 1,459
------ ------ ------ ------
Weighted average common shares as adjusted................................ 2,228 7,103 2,219 6,056
====== ====== ====== ======
Net earnings (loss) per share............................................. $(0.04) $0.11 $(0.10) $0.18
====== ====== ====== ======
</TABLE>
(1) In connection with the initial public offering, all 400,000 shares of
Series A Convertible Preferred Stock were converted into 2,399,995 shares
of Common Stock on April 21, 1998. The Diluted EPS calculation assumes
conversion of the Series A Convertible Preferred Stock to Common Stock as
of April 1, 1998 and January 1, 1998 for the three months and six months
ended June 30, 1998, respectively.
9
<PAGE>
AMERICAN DENTAL PARTNERS, INC.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The following discussion of the financial condition and results of operations
should be read in conjunction with the consolidated financial statements of the
Company and the notes thereto included in the Company's Prospectus dated April
15, 1998. This Quarterly Report on Form 10-Q contains forward-looking
statements within the meaning of the Private Securities Litigation Reform Act of
1995. The Company's actual results could differ materially from those set forth
in the forward-looking statements. Certain factors that might cause such a
difference include, among others, the Company's limited operating history,
acquisition strategy, management of rapid growth, dependence upon affiliated
dental groups, dependence upon service agreements and the government regulation
of the dental industry. These and other risks are further described in the
Company's Securities and Exchange Commission filings, including the Company's
Registration Statement on Form S-1 (File No. 333-39981).
OVERVIEW
American Dental Partners, Inc. and its subsidiaries (the "Company") is a
leading provider of dental practice management services to multi-disciplinary
dental group practices in selected markets in the United States. The Company was
formed in December 1995, commenced operations in January 1996 and began engaging
in dental practice management operations in November 1996, concurrent with the
completion of its first dental group practice affiliation. The Company's rapid
growth has resulted primarily from the Company's affiliations with dental group
practices. From November 1996 (the date of the Company's first dental group
practice affiliation) to June 1998, the Company completed affiliations with 15
dental group practices and, at June 30, 1998, operated 96 dental facilities with
760 operatories in seven states.
AFFILIATION SUMMARY
When affiliating with a dental group practice, the Company acquires
substantially all its assets, except those required by law to be owned or
maintained by dentists (such as third party contracts, certain governmental
receivables and patient records), and enters into a long-term service agreement
with the affiliated dental practice or professional corporation (the "PC").
Under its service agreements, the Company is responsible for providing all
services necessary for the administration of the non-clinical aspects of the
dental operations. The PC is responsible for the provision of dental care. Each
of the Company's service agreements is for an initial term of 40 years. The
Company does not own or control the affiliated dental practices and,
accordingly, does not consolidate the financial statements of the PCs with those
of the Company.
1997 Transactions
During 1997, the Company acquired substantially all the assets of six dental
group practices and Orthocare Ltd., a related entity of one of these practices,
and simultaneously entered into 40-year service agreements with four of the
affiliated dental groups (two practices joined existing affiliates).
1998 Transactions (completed through June 30, 1998)
Since the beginning of 1998, the Company has acquired substantially all the
assets of six dental group practices and simultaneously entered into 40-year
service agreements with three of the affiliated dental groups (three practices
joined existing affiliates).
COMPONENTS OF REVENUE AND EXPENSES
Affiliate Adjusted Gross Revenue. The Company's affiliated dental group
practices generate revenue from patients and third party payors under fee-for-
service, PPO plans and capitated managed care plans. The affiliated dental
group practices record revenue at established rates reduced by contractual
adjustments and allowances for doubtful accounts to arrive at adjusted gross
revenue. Contractual adjustments represent the difference between gross
billable charges at established rates and the portion of those charges allowable
by third party payors pursuant to certain reimbursement and managed care
contracts.
10
<PAGE>
AMERICAN DENTAL PARTNERS, INC.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS - (CONTINUED)
The PC reimburses the Company for expenses incurred on its behalf in
connection with the operation and administration of the dental facilities and
pays fees to the Company for management services. Expenses incurred for the
operation and administration of the dental facilities include salaries and
benefits for non-dentist personnel working at the dental facilities (the
administrative staff and, where permitted by law, the dental hygienists and
dental assistants), lab fees, dental supplies, office occupancy costs of the
dental facilities (rent, utilities, etc.) and depreciation related to the fixed
assets at the dental facilities. The PC is also responsible for provider
expenses, which generally consist of the salaries, benefits and certain other
expenses of the dentists.
Net Revenue. Net revenue for the Company represents the aggregate fees
charged to the affiliated dental practices pursuant to the terms of the long-
term service agreements under which the Company agrees to manage the non-
clinical aspects of the dental practice. Under such agreements, the affiliated
dental group practices reimburse the Company for actual expenses incurred in
connection with the operation and administration of the dental facilities and
pay fees to the Company for its management services. The Company's service fees
typically consist of a fixed monthly fee and an additional variable fee. The
fixed monthly fee is determined prior to each affiliation and annually
thereafter by agreement of the Company and the affiliated dental group in a
formal budgeting process. To the extent that there is operating income after
payment of the fixed monthly fee, reimbursement of expenses incurred in
connection with the operation and administration of the dental facilities and
payment of provider expenses, an additional variable fee is paid to the Company
in the amount of such excess up to budgeted operating income and 50% of such
excess over budgeted operating income. Under certain service agreements, the
Company's service fees consist of a variable monthly fee which is based upon a
specified percentage of the amount by which the PC's adjusted gross revenue
exceeds expenses incurred in connection with the operation and administration of
its dental facilities. In those situations, no additional variable fee is
applicable. Additionally, the Company's net revenue includes amounts from third
party payors related to the arrangement of the provision of care to patients.
Operating Expenses. Operating expenses (excluding general corporate expenses,
depreciation and amortization of intangibles) consist of the expenses incurred
by the Company in fulfilling its obligations under the service agreements.
These expenses are operating costs and expenses that would have been incurred by
the affiliated dental groups had they not affiliated with the Company and
include non-dentist salaries and benefits, lab fees and dental supplies, office
occupancy costs and other expenses related to operations. Salaries and benefits
expense are for personnel working for the Company at the dental facilities, as
well as the local operating management. At the facility level, the Company
generally employs the administrative staff and, where permitted by law, the
dental hygienists and dental assistants. The local operating management team
supervises and supports the staff at the dental facilities. Office occupancy
includes rent expense and certain other operating costs such as utilities
associated with dental facilities and the local administrative offices. Such
costs vary based on the size of each facility and the market rental rate for
dental office space in the particular geographic market. Other expenses consist
of professional fees, marketing costs and other general and administrative
expenses.
General Corporate Expenses. General corporate expenses consist of
compensation expenses for the Company's corporate personnel and administrative
staff, as well as facility and other administrative costs of the Company's
corporate offices. The Company provides management, administrative, third party
contracting and other services to the affiliated groups.
Depreciation. Depreciation expense includes depreciation charges related to
leasehold improvements and furniture, fixtures and equipment used to operate the
dental facilities.
Amortization of Intangibles. Amortization of intangibles relates to
intangible assets incurred in connection with the 1996, 1997 and 1998
Transactions.
THREE MONTHS ENDED JUNE 30, 1997 COMPARED TO THE THREE MONTHS ENDED JUNE 30,
1998
Overview
The Company's net earnings amounted to $211,000 or a diluted loss per share
available to common stockholders of $(0.04) for the three months ended June 30,
1997, as compared with net earnings of $838,000 or diluted earnings per share of
$0.11 for the three months ended June 30, 1998. The increase in net earnings
resulted from incremental earnings provided from completed acquisitions and
affiliations and from internal growth.
11
<PAGE>
AMERICAN DENTAL PARTNERS, INC.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS - (CONTINUED)
Net Revenue. Net revenue increased from $12,076,000 for 1997 to $20,217,000
for 1998, an increase of approximately 67%. The increase in net revenue in 1998
is due primarily to the inclusion of revenue derived from service agreements
entered into in connection with the 1997 Transactions for the entire period and
from the 1998 Transactions. In addition, same market growth from the Company's
affiliates in Austin, Milwaukee, Minneapolis and New Orleans resulted from the
addition and expansion of the Company's facilities, the addition of dentists to
the Company's affiliated dental group network and increases in certain
affiliates' fees. Net revenue included expense reimbursements ($8,354,000 for
1997 as compared with $13,441,000 for 1998), management service fees ($2,809,000
for 1997 as compared with $4,730,000 for 1998) and revenue related to the
arrangement of the provision of care to patients ($913,000 for 1997 as compared
with $2,046,000 for 1998). Expense reimbursements included rent expense
($793,000 for 1997 as compared with $1,372,000 for 1998) and other operating
expenses ($7,561,000 for 1997 as compared with $12,069,000 for 1998). Management
service fees included a monthly fee ($2,527,000 for 1997 as compared with
$4,241,000 for 1998) and an additional variable fee ($282,000 for 1997 as
compared with $489,000 for 1998). Net revenue derived from the Company's service
agreement with Park Dental represented approximately 61% and 42% of the
Company's consolidated net revenue for 1997 and 1998, respectively.
Salaries and Benefits Expense. Salaries and benefits amounted to $6,339,000
or 52.5% of net revenue for 1997, as compared with $10,452,000 or 51.7% of net
revenue for 1998. The decrease in salaries and benefits as a percentage of net
revenue resulted primarily from more efficient utilization of staff in existing
facilities, the regionalization of finance, operations and administrative staff
in certain markets and the acquisition of facilities with a generally lower
ratio of staffing costs to net revenue in their respective markets compared to
the existing base of facilities. These savings were partially offset by an
increase in the amount of expense related to the arrangement of the provision of
care to patients, which is at a higher percentage of net revenue.
Lab Fees and Dental Supplies Expense. Lab fees and dental supplies expense
increased from $1,505,000 or 12.5% of net revenue for 1997 to $2,641,000 or
13.1% of net revenue for 1998. Lab fees and dental supplies expense varies from
affiliate to affiliate and is affected by the volume and type of procedures
performed. The increase in lab fees and dental supplies as a percentage of net
revenue is attributable to a combination of an increase in the mix of procedures
requiring more extensive lab work, the acquisition of facilities with a
generally higher ratio of lab fees and dental supplies expense to net revenue in
their respective markets compared to the existing base of facilities, rate
increases and precious metals surcharges from certain lab providers and the
outsourcing of certain lab work which was previously handled in-house.
Office Occupancy Expense. Office occupancy expense amounted to $1,113,000 for
1997, as compared with $1,850,000 for 1998. As a percentage of net revenue,
these costs remained consistent from 1997 to 1998 at 9.2%.
Other Operating Expenses. Other expenses amounted to $1,581,000 or 13.1% of
net revenue for 1997, as compared with $1,619,000 or 8.0% of net revenue for
1998. Other costs decreased as a percentage of net revenue due primarily to the
reduction of certain expenses associated with the administration of a benefit
plan that was renegotiated, the regionalization of administrative functions in
certain markets, a reduction of the Minnesota Care Tax rate from 2.0% to 1.5%
and efficiencies from managing certain expenses, such as professional fees and
other costs associated with operating a stand alone dental group practice, on a
national level, as opposed to on a local level.
General Corporate Expenses. General corporate expenses were $689,000 or 5.7%
of net revenue for 1997, as compared with $1,056,000 or 5.2% of net revenue for
1998. The Company has built its management infrastructure in anticipation of
rapid growth. This included the hiring of key management and support staff in
the areas of finance, operations and information systems. In 1998, the Company
began to leverage these costs, resulting in a reduction of general corporate
expenses as a percentage of net revenue. This reduction was partially offset by
an increase in costs associated with being a public company. The level of
general corporate expenses will likely continue to increase in the future as the
Company continues to expand its management infrastructure. However, it is
anticipated that these expenses will continue to decline as a percentage of net
revenue.
12
<PAGE>
AMERICAN DENTAL PARTNERS, INC.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS - (CONTINUED)
Depreciation. Depreciation expense was $403,000 or 3.3% of net revenue for
1997, as compared with $606,000 or 3.0% of net revenue for 1998. Depreciation
expense included depreciation related primarily to the assets acquired and
capital expenditures associated with the addition of two new dental facilities
in Minneapolis and the addition of new operatories in Austin, Milwaukee and
Minneapolis. Depending on the amount and timing of future capital expenditures,
depreciation expense will likely increase.
Amortization of Intangibles. Amortization of intangibles was $121,000 or 1.0%
of net revenue for 1997, as compared with $413,000 or 2.0% of net revenue for
1998. The increase in amortization resulted from intangible assets recorded in
connection with the Company's six affiliations and one acquisition completed
during 1997 and six affiliations completed during 1998. The Company expects that
amortization of intangibles will increase in the future as a result of
intangibles recorded in connection with future acquisitions and affiliations.
Interest Expense, net. Net interest expense was $107,000 or 0.9% of net
revenue for 1997, as compared with $206,000 or 1.0% of net revenue for 1998.
The increase in interest expense resulted primarily from an increase in average
borrowings under the Company's revolving credit facility in 1998 as compared
with 1997. In addition, the issuance of subordinated notes in connection with
the 1997 and 1998 Transactions contributed to higher interest expense in 1998.
This increase in interest expense was partially offset by an increase in
interest income as a result of the temporary investment of the net proceeds from
the initial public offering. As a percentage of net revenue, net interest
expense remained relatively consistent from 1997 to 1998.
Income Taxes. The Company incurred income tax expense of $7,000 for 1997, as
compared with $536,000 for 1998. In 1997, the Company utilized a portion of its
net operating loss carryforward which resulted in minimal income tax expense.
For 1998, the Company's effective tax rate was approximately 39%, resulting in
income tax expense of $536,000.
SIX MONTHS ENDED JUNE 30, 1997 COMPARED TO THE SIX MONTHS ENDED JUNE 30, 1998
Overview
The Company's net earnings amounted to $383,000 or a diluted loss per share
available to common stockholders of $(0.10) for the six months ended June 30,
1997, as compared with net earnings of $1,307,000 or diluted earnings per share
of $0.18 for the six months ended June 30, 1998. The increase in net earnings
resulted from incremental earnings provided from completed acquisitions and
affiliations and from internal growth.
Net Revenue. Net revenue increased from $23,302,000 for 1997 to $38,388,000
for 1998, an increase of approximately 65%. The increase in net revenue in 1998
is due primarily to the inclusion of revenue derived from service agreements
entered into in connection with the 1997 Transactions for the entire period and
from the 1998 Transactions. In addition, same market growth from the Company's
affiliates in Austin, Milwaukee and Minneapolis resulted from the addition and
expansion of the Company's facilities, the addition of dentists to the Company's
affiliated dental group network and increases in certain affiliates' fees. Net
revenue included expense reimbursements ($16,187,000 for 1997 as compared with
$25,645,000 for 1998), management service fees ($5,208,000 for 1997 as compared
with $8,655,000 for 1998) and revenue related to the arrangement of the
provision of care to patients ($1,907,000 for 1997 as compared with $4,088,000
for 1998). Expense reimbursements included rent expense ($1,521,000 for 1997 as
compared with $2,536,000 for 1998) and other operating expenses ($14,666,000 for
1997 as compared with $23,109,000 for 1998). Management service fees included a
monthly fee ($4,826,000 for 1997 as compared with $7,981,000 for 1998) and an
additional variable fee ($382,000 for 1997 as compared with $674,000 for 1998).
Net revenue derived from the Company's service agreement with Park Dental
represented approximately 62% and 43% of the Company's consolidated net revenue
for 1997 and 1998, respectively.
13
<PAGE>
AMERICAN DENTAL PARTNERS, INC.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS - (CONTINUED)
Salaries and Benefits Expense. Salaries and benefits amounted to $12,528,000
or 53.8% of net revenue for 1997, as compared with $20,101,000 or 52.4% of net
revenue for 1998. The decrease in salaries and benefits as a percentage of net
revenue resulted primarily from more efficient utilization of staff in existing
facilities, the regionalization of finance, operations and administrative staff
in certain markets and the acquisition of facilities with a generally lower
ratio of staffing costs to net revenue in their respective markets compared to
the existing base of facilities. These cost savings were partially offset by an
increase in the amount of expense related to the arrangement of the provision of
care to patients, which is at a higher percentage of net revenue.
Lab Fees and Dental Supplies Expense. Lab fees and dental supplies expense
increased from $2,839,000 or 12.2% of net revenue for 1997 to $4,837,000 or
12.6% of net revenue for 1998. Lab fees and dental supplies expense varies from
affiliate to affiliate and is affected by the volume and type of procedures
performed. The increase in lab fees and dental supplies as a percentage of net
revenue is attributable to a combination of an increase in the mix of procedures
requiring more extensive lab work, the acquisition of facilities with a
generally higher ratio of lab fees and dental supplies expense to net revenue in
their respective markets compared to the existing base of facilities, rate
increases and precious metals surcharges from certain lab providers and the
outsourcing of certain lab work which was previously handled in-house.
Office Occupancy Expense. Office occupancy expense amounted to $2,121,000 for
1997, as compared with $3,459,000 for 1998. As a percentage of net revenue,
these costs remained relatively consistent at 9.1% for 1997 and 9.0% for 1998.
Other Operating Expenses. Other expenses amounted to $2,947,000 or 12.6% of
net revenue for 1997, as compared with $3,264,000 or 8.5% of net revenue for
1998. Other costs decreased as a percentage of net revenue due primarily to the
reduction of certain expenses associated with the administration of a benefit
plan that was renegotiated, the regionalization of administrative functions in
certain markets, a reduction of the Minnesota Care Tax rate from 2.0% to 1.5%
and efficiencies from managing certain expenses, such as professional fees and
other costs associated with operating a stand alone dental group practice, on a
national level, as opposed to on a local level.
General Corporate Expenses. General corporate expenses were $1,424,000 or 6.1%
of net revenue for 1997, as compared with $2,031,000 or 5.3% of net revenue for
1998. The Company has built its management infrastructure in anticipation of
rapid growth. This included the hiring of key management and support staff in
the areas of finance, operations and information systems. In 1998, the Company
began to leverage these costs, resulting in a reduction of general corporate
expenses as a percentage of net revenue. This reduction was partially offset by
an increase in costs associated with being a public company. The level of
general corporate expenses will likely continue to increase in the future as the
Company continues to expand its management infrastructure. However, it is
anticipated that these expenses will continue to decline as a percentage of net
revenue.
Depreciation. Depreciation expense was $759,000 or 3.3% of net revenue for
1997, as compared with $1,162,000 or 3.0% of net revenue for 1998. Depreciation
expense included depreciation related primarily to assets acquired and capital
expenditures associated with the addition of three new dental facilities in
Minneapolis and the addition of new operatories in Austin, Milwaukee and
Minneapolis. Depending on the amount and timing of future capital expenditures,
depreciation expense will likely increase.
Amortization of Intangibles. Amortization of intangibles was $214,000 or 0.9%
of net revenue for 1997, as compared with $746,000 or 1.9% of net revenue for
1998. The increase in amortization resulted from intangible assets recorded in
connection with the Company's six affiliations and one acquisition completed
during 1997 and six affiliations completed during 1998. The Company expects that
amortization of intangibles will increase in the future as a result of
intangibles recorded in connection with future acquisitions and affiliations.
Interest Expense, net. Net interest expense was $80,000 or 0.3% of net
revenue for 1997, as compared with $645,000 or 1.7% of net revenue for 1998. The
increase in interest expense resulted primarily from increased average
borrowings under the Company's credit facility in 1998 as compared with 1997.
In addition, the issuance of subordinated notes in connection with the 1997 and
1998 Transactions contributed to higher interest expense in 1998.
14
<PAGE>
AMERICAN DENTAL PARTNERS, INC.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS (CONTINUED)
Income Taxes. The Company incurred income tax expense of $7,000 for 1997, as
compared with $836,000 for 1998. In 1997, the Company utilized a portion of its
net operating loss carryforward which resulted in minimal income tax expense.
For 1998, the Company's effective tax rate was approximately 39%, resulting in
income tax expense of $836,000.
LIQUIDITY AND CAPITAL RESOURCES
The Company has financed its operating and capital needs, including cash used
for acquisitions, capital expenditures and working capital, from its sales of
equity securities, borrowings under its revolving line of credit and cash
generated from operations. From November 1996 (the date of the Company's first
dental group practice affiliation) through June 30, 1998, the Company completed
15 dental group practice affiliations for aggregate consideration of $39,290,000
in cash, $6,318,000 in subordinated promissory notes, $890,000 in deferred
payments, 1,829,034 shares of Common Stock and future contingent payments for
one affiliation based on a multiple of service fees received in excess of a
predetermined threshold for each of the three years ending May 31, 1999, 2000
and 2001.
For the six months ended June 30, 1997 and 1998, cash provided by operating
activities amounted to $377,000 and $4,231,000, respectively. The increase in
cash from operations resulted primarily from earnings generated from
acquisitions and affiliations, same market growth and expanded profit margins.
For the six months ended June 30, 1997 and 1998, cash used in investing
activities amounted to $5,402,000 and $18,080,000, respectively. Cash used for
investing activities included cash used for acquisitions and affiliations and
for capital expenditures. Cash used for acquisitions, net of cash acquired, was
$3,171,000 for 1997 and $15,088,000 for 1998. Cash used for capital
expenditures was $1,669,000 and $1,982,000 for 1997 and 1998, respectively.
Capital expenditures for 1997 included costs associated with the addition of
dental facilities in Austin and Milwaukee. Capital expenditures for 1998
included costs associated with the addition of three new dental facilities in
Minneapolis and the addition of new operatories in Austin, Milwaukee and
Minneapolis. The establishment of new dental facilities and the expansion of
existing dental facilities in the future will require ongoing capital
expenditures.
For the six months ended June 30, 1997 and 1998, cash provided by financing
activities amounted to $858,000 and $11,453,000, respectively. Cash provided by
financing activities during 1997 resulted from borrowings under the Company's
revolving line of credit of $1,800,000, net of the repayment of certain
indebtedness and the payment of debt issuance costs. Cash provided by financing
activities in 1998 resulted primarily from net proceeds received from the
Company's initial public offering. During the second quarter of 1998, the
Company sold 2,587,500 shares of Common Stock in their initial public offering
at $15.00 per share. Net proceeds to the Company after deducting underwriting
discounts and commissions and offering costs were approximately $34,596,000.
Such proceeds were used to (i) redeem all the Series B Redeemable Preferred
Stock, including unpaid dividends, in the amount of $7,851,000 and (ii) repay
outstanding indebtedness under the Company's revolving credit facility,
including accrued interest, in the amount of $20,651,000 and (iii) complete
additional affiliation transactions.
In April 1997, the Company entered into a $30 million revolving line of credit
agreement with Fleet National Bank. The credit facility is being used for
general corporate purposes, including acquisitions and affiliations. Borrowings
under this line of credit bear interest at either prime- or LIBOR-based rates,
at the Company's option, plus a margin based upon the Company's debt coverage
ratio, which ranges up to 0.50% for prime-based loans and up to 2.125% for
LIBOR-based loans. In addition, the Company pays a commitment fee of 0.25% of
the average daily balance of the unused line. Borrowings are limited to an
availability formula based on adjusted EBITDA. The Company is also required to
comply with certain financial and other covenants. The line of credit matures in
April 2000. The outstanding balance under this line as of July 31, 1998 was
$3,035,000.
15
<PAGE>
AMERICAN DENTAL PARTNERS, INC.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS - (CONTINUED)
The Company has a Shelf Registration Statement on file with the Securities and
Exchange Commission (Registration No. 333-56941) covering a total of 750,000
shares of Common Stock and $25,000,000 aggregate principal amount of
subordinated promissory notes to be issued in connection with future dental
group practice affiliations. As of July 31, 1998, 740,106 shares and
$24,790,000 of notes remain available.
The Company believes that cash generated from operations and amounts available
under its revolving credit facility will be sufficient to fund its anticipated
cash needs for working capital, capital expenditures and acquisitions and
affiliations for at least the next 12 months.
YEAR 2000 ISSUE
The Year 2000 issue is the result of certain computer programs being written
using two digits rather than four digits to define the year. Accordingly,
computer programs that have date-sensitive software may recognize a date using
"00" as the year 1900 rather than 2000. This could result in system failures or
miscalculations causing disruptions in operations, including the temporary
inability to process transactions, send invoices or statements, or engage in
similar normal business activities. The Company utilizes software and related
computer technologies essential to its operations.
All operating systems, the general ledger system and network communication
software system utilized by the Company are either already Year 2000 compliant
or will be Year 2000 compliant upon installation of available patches or
upgrades. The Company also uses various dental practice management software
systems in its affiliated dental group practices, some of which are already Year
2000 compliant. In particular, the Company's proprietary practice management
system, Comdent, is Year 2000 compliant. The Company intends, when appropriate,
to convert its current and future affiliated dental group practices to Comdent.
In general, the other practice management systems are commercially available
systems that are either already Year 2000 compliant or scheduled for Year 2000
compliance by the end of 1998 or early 1999. The Company believes that costs
associated with Year 2000 compliance issues will not be material to the
Company's financial position or results of operations.
The Company has not yet determined the extent to which the systems of third
parties with whom the Company has a significant relationship may be vulnerable
to Year 2000 and what impact, if any, these Year 2000 issues would have on the
Company.
16
<PAGE>
AMERICAN DENTAL PARTNERS, INC.
PART I. FINANCIAL INFORMATION - (CONTINUED)
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
Not applicable.
PART II. OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
Not applicable.
ITEM 2. CHANGES IN SECURITIES AND USE OF PROCEEDS
The following reports the use of proceeds information in accordance
with Rule 463 under the Securities Act of 1933, as amended (the "Act"),
and Item 701(f) of Regulation S-K:
(1) The effective date of the Company's Registration Statement on Form
S-1, as amended, was April 15, 1998, and the SEC file number
assigned to this Registration Statement was File No. 333-39981. In
addition, and in connection with the foregoing Registration
Statement, the Company filed a Registration Statement on Form S-1
under Rule 462(b) of the Act, which Registration Statement was
automatically effective upon its filing on April 15, 1998. The SEC
file number assigned to this Registration Statement was File No.
333-50241. These Registration Statements are hereinafter
collectively referred to as the Registration Statement.
(2) The offering commenced on April 16, 1998.
(3) Not applicable.
(4) Securities sold:
(i) The offering terminated on May 6, 1998, which was the date
all sales were completed for the securities registered
pursuant to the Registration Statement.
(ii) Managing Underwriters: BT Alex. Brown, BancAmerica Robertson
Stephens and Piper Jaffray Inc.
(iii) Title of Class of Securities Registered: Common Stock, $0.01
par value
(iv) All shares of Common Stock were sold for the account of the
Company. Amount Registered: 2,587,500 shares Aggregate
offering price of amount registered: $38,812,500 Amount
sold: 2,587,500 shares Aggregate offering price of amount
sold: $38,812,500
(v) From the effective date of the Registration Statement
through August 6, 1998, no direct or indirect payments of
expenses incurred for the Company's account in connection
with the issuance and distribution of the securities
registered were made to directors, officers, or their
associates or to persons owning 10% or more of any class of
equity securities of the Company or to affiliates of the
Company.
17
<PAGE>
AMERICAN DENTAL PARTNERS, INC.
PART II. OTHER INFORMATION (CONTINUED)
From the effective date of the Registration Statement through
August 6, 1998, direct or indirect payments of expenses incurred
for the Company's account in connection with the issuance and
distribution of the securities registered were made to others as
follows:
Underwriting discounts and commissions: $2,716,875
Finder's Fees: $-0-
Expenses paid to or for underwriters: $-0-
Other expenses: $1,500,000 (estimated)
Total Expenses: $4,216,875 (estimated)
(vi) The net proceeds to the Company after deducting the total
expenses described in Item (4)(v) were $34,595,625 (estimated).
All net proceeds have been applied in the manner described in
item (4)(vii).
(vii) From the effective date of the Registration Statement through
August 6, 1998, $7,029,086 of net offering proceeds were paid to
directors, officers or their associates or to persons owning 10%
or more of any class of equity securities of the Company or to
affiliates of the Company, which payments were made for the
purpose of redeeming the Company's Series B Redeemable Preferred
Stock.
From the effective date of the Registration Statement through
August 6, 1998, the net offering proceeds paid to others, along
with the purpose of such payments, were as follows:
Redemption of Series B Redeemable Preferred Stock: $821,544
Repayment of indebtedness under the Company's revolving
credit facility, including accrued interest: $20,651,051
Payments in connection with acquisition and affiliation
transactions: $6,093,994 (estimated)
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
Not applicable.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
Not applicable.
ITEM 5. OTHER INFORMATION
Not applicable.
18
<PAGE>
AMERICAN DENTAL PARTNERS, INC.
PART II. OTHER INFORMATION (CONTINUED)
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(A) EXHIBITS
(27) Financial Data Schedule.
(B) REPORTS ON FORM 8-K
The Company filed a Form 8-K, dated June 11, 1998, reporting the
acquisition of certain non-clinical assets of and affiliation with
Reston Dental Group, P.C. on June 3, 1998.
19
<PAGE>
AMERICAN DENTAL PARTNERS, INC.
SIGNATURE
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.
AUGUST 10, 1998 AMERICAN DENTAL PARTNERS, INC.
/s/ Ronald M. Levenson
----------------------------------------
Ronald M. Levenson
Senior Vice President,
Chief Financial Officer and Treasurer
(duly authorized signatory and principal
financial officer)
20
<PAGE>
AMERICAN DENTAL PARTNERS, INC.
EXHIBIT INDEX
-------------
PAGE
----
(27) Financial Data Schedule. 22
21
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
COMPANY'S CONSOLIDATED BALANCE SHEETS AND CONSOLIDATED STATEMENTS OF EARNINGS
AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH INTERIM FINANCIAL
STATEMENTS.
</LEGEND>
<S> <C> <C>
<PERIOD-TYPE> 3-MOS 6-MOS
<FISCAL-YEAR-END> DEC-31-1998 DEC-31-1998
<PERIOD-START> APR-01-1998 JAN-01-1998
<PERIOD-END> JUN-30-1998 JUN-30-1998
<CASH> 0 2,279
<SECURITIES> 0 0
<RECEIVABLES> 0 3,493
<ALLOWANCES> 0 0
<INVENTORY> 0 380
<CURRENT-ASSETS> 0 7,922
<PP&E> 0 10,848
<DEPRECIATION> 0 0
<TOTAL-ASSETS> 0 65,397
<CURRENT-LIABILITIES> 0 11,157
<BONDS> 0 0
0 0
0 0
<COMMON> 0 74
<OTHER-SE> 0 45,443
<TOTAL-LIABILITY-AND-EQUITY> 0 65,397
<SALES> 20,217 38,388
<TOTAL-REVENUES> 20,217 38,388
<CGS> 0 0
<TOTAL-COSTS> 18,637 35,600
<OTHER-EXPENSES> 0 0
<LOSS-PROVISION> 0 0
<INTEREST-EXPENSE> 206 645
<INCOME-PRETAX> 1,374 2,143
<INCOME-TAX> 536 836
<INCOME-CONTINUING> 0 0
<DISCONTINUED> 0 0
<EXTRAORDINARY> 0 0
<CHANGES> 0 0
<NET-INCOME> 838 1,307
<EPS-PRIMARY> 0.12 0.21
<EPS-DILUTED> 0.11 0.18
</TABLE>
