SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended July 2, 2000
Commission File No. 1-15669
Gentiva Health Services, Inc.
(Exact name of Registrant as specified in its charter)
DELAWARE 36-433-5801
-------- -----------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
175 Broad Hollow Road, Melville, New York 11747-8905
----------------------------------------------------
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (631) 844-7800
--------------
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.
Yes X No
---- ----
The number of shares outstanding of the Registrant's Common Stock,
as of July 2, 2000, was 20,620,426.
<PAGE>
INDEX
Page No.
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PART I - FINANCIAL INFORMATION
Item 1. Interim Financial Statements
Consolidated Balance Sheets -- July 2, 2000
(Unaudited) and January 2, 2000 2
Consolidated Statements of Operations (Unaudited) -
Three and Six Months Ended July 2, 2000 and
July 4, 1999 3
Consolidated Statements of Cash Flows (Unaudited) -
Six Months Ended July 2, 2000 and July 4, 1999 4
Notes to Consolidated Financial Statements (Unaudited) 5-12
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations 13-17
Item 3. Quantitative and Qualitative Disclosures about
Market Risk 17-18
PART II - OTHER INFORMATION
Item 1. Legal Proceedings 19-20
Item 2. Change in Securities and Use of Proceeds 20-21
Item 3. Defaults Upon Senior Securities 21
Item 4. Submission of Matters to a Vote of Security Holders 21
Item 5. Other Information 21-23
Item 6. Exhibits and Reports on Form 8-K 23-25
SIGNATURES 26
<PAGE>
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements.
<TABLE>
<CAPTION>
Gentiva Health Services, Inc. and Subsidiaries
Consolidated Balance Sheets
(In thousands, except share amounts)
July 2, 2000 January 2, 2000
------------ ---------------
(Unaudited)
ASSETS
Current Assets:
<S> <C> <C>
Cash and cash equivalents $ 2,299 $ 2,942
Receivables, net 604,372 575,460
Inventories 74,492 93,218
Prepaid expenses and other current assets 39,410 87,611
-------------- --------------
Total current assets 720,573 759,231
Fixed Assets, Net 44,562 51,809
Intangible Assets, Net 244,654 250,297
Other Assets 4,348 1,678
-------------- --------------
Total assets $1,014,137 $1,063,015
============== ==============
LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities:
Current portion of long-term debt $ 68,562 $ 78,562
Accounts payable 85,460 114,197
Accrued expenses 59,863 76,746
Payroll and related taxes 20,876 20,020
Insurance costs 31,094 31,170
-------------- --------------
Total current liabilities 265,855 320,695
Other Liabilities 37,129 37,029
Long-Term Debt 26,191 -
Gentiva - Obligated Mandatorily Redeemable Convertible
Securities of a Subsidiary Holding Solely Gentiva Debentures 20,000 -
Shareholders' Equity:
Common stock, $.10 par value; authorized 100,000,000 shares;
issued and outstanding 20,620,426 and 20,345,029 shares, 2,062 2,035
respectively
Additional paid-in capital 685,327 725,998
Accumulated deficit (20,105) (20,370)
Accumulated other comprehensive loss (2,322) (2,372)
-------------- --------------
Total shareholders' equity 664,962 705,291
-------------- --------------
Total liabilities and shareholders' equity $1,014,137 $1,063,015
============== ==============
</TABLE>
See notes to consolidated financial statements.
-2-
<PAGE>
<TABLE>
<CAPTION>
Gentiva Health Services, Inc. and Subsidiaries
Consolidated Statements of Operations
(In thousands, except per share amounts)
(Unaudited)
Three Months Ended Six Months Ended
----------------------------------- -----------------------------------
July 2, 2000 July 4, 1999 July 2, 2000 July 4, 1999
----------------------------------- -----------------------------------
<S> <C> <C> <C> <C>
Net revenues $ 383,270 $ 372,573 $ 767,877 $ 740,733
Cost of services sold 254,646 245,331 510,751 487,817
-------------- ---------------- --------------- ----------------
Gross Profit 128,624 127,242 257,126 252,916
Selling, general and administrative expenses 122,785 119,875 250,317 257,427
Interest expense, net 2,112 4,284 6,348 8,557
-------------- ---------------- --------------- ----------------
Income (loss) before income taxes 3,727 3,083 461 (13,068)
Income tax expense (benefit) 1,556 648 196 (2,697)
-------------- ---------------- --------------- ----------------
Net income (loss) $ 2,171 $ 2,435 $ 265 $ (10,371)
============== ================ =============== ================
Net income (loss) per share:
Basic $ 0.11 $ 0.12 $ 0.01 $ (0.51)
============== ================ =============== ================
Diluted $ 0.10 $ 0.12 $ 0.01 $ (0.51)
============== ================ =============== ================
Average shares outstanding:
Basic 20,513 20,345 20,429 20,345
============== ================ =============== ================
Diluted 21,823 20,345 21,681 20,345
============== ================ =============== ================
</TABLE>
See notes to consolidated financial statements.
-3-
<PAGE>
<TABLE>
<CAPTION>
Gentiva Health Services, Inc. and Subsidiaries
Consolidated Statements of Cash Flows
(In thousands)
(Unaudited)
Six Months Ended
---------------------------------
July 2, 2000 July 4, 1999
-------------- ------------
OPERATING ACTIVITIES:
<S> <C> <C>
Net income (loss) $ 265 $ (10,371)
Adjustments to reconcile net income (loss) to net cash used in
operating activities:
Depreciation and amortization 16,141 17,406
Provision for doubtful accounts 16,917 12,408
Changes in assets and liabilities, net of effect from
acquisitions:
Accounts receivable (45,829) (112,710)
Inventories 18,726 (811)
Prepaid expenses and other current assets (899) (1,645)
Current liabilities (48,696) 23,623
Other, net 1,834 1,191
---------- -----------
Net cash used in operating activities (41,541) (70,909)
---------- -----------
INVESTING ACTIVITIES:
Purchase of fixed assets (3,620) (11,182)
Acquisitions of businesses, net of cash acquired - (1,655)
---------- -----------
Net cash used in investing activities (3,620) (12,837)
---------- -----------
FINANCING ACTIVITIES:
Issuance of mandatorily redeemable securities 20,100 -
Net transactions with Olsten 5,226 90,635
Increase in book overdrafts 3,856 -
Retirement of debt (9,525) (7,688)
Proceeds from revolving credit facility 26,191 -
Debt issuance costs (2,564) -
Proceeds from stock options 1,234 -
---------- -----------
Net cash provided by financing activities 44,518 82,947
---------- -----------
Net decrease in cash and cash equivalents (643) (799)
Cash and cash equivalents at beginning of period 2,942 799
---------- -----------
Cash and cash equivalents at end of period $ 2,299 $ -
========== ===========
See notes to consolidated financial statements.
</TABLE>
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<PAGE>
Gentiva Health Services, Inc. and Subsidiaries
Notes to Consolidated Financial Statements
(Unaudited)
1. Accounting Policies
The accompanying interim consolidated financial statements are unaudited,
but have been prepared by Gentiva Health Services, Inc. (the "Company") pursuant
to the rules and regulations of the Securities and Exchange Commission and, in
the opinion of management, include all adjustments necessary for a fair
presentation of results of operations, financial position and cash flows for
each period presented. Results for interim periods are not necessarily
indicative of results for a full year. The year-end balance sheet data was
derived from audited financial statements, but does not include all disclosures
required by generally accepted accounting principles.
2. Background and Basis of Presentation
On March 15, 2000, the Company was split-off (the "split-off") from Olsten
Corporation ("Olsten") through the issuance of all of the Company's shares of
common stock to Olsten's shareholders and the Company became an independent,
publicly-owned company. Prior thereto, the Company operated Olsten's health
services business as a wholly-owned subsidiary of Olsten. The accompanying
interim consolidated financial statements reflect the results of operations,
financial position and cash flows of the Company as if it were a separate entity
for all periods presented. The consolidated financial statements have been
prepared using the historical basis in the assets and liabilities and historical
results of operations related to the Company.
The Company's selling, general and administrative expenses included a
management fee of approximately $1.3 million for the second quarter of fiscal
1999 and $0.9 million and $2.5 million for the first six months of fiscal 2000
and 1999, respectively. This fee represented an allocation of certain general
corporate overhead expenses related to Olsten's corporate headquarters.
Management believes the allocations related to general corporate overhead
expenses are reasonable; however, the costs of these items deemed to be charged
to the Company are not necessarily indicative of the costs that would have been
incurred if the Company had been a stand-alone entity during the period for
which such expenses were allocated. Subsequent to the split-off, the Company has
begun to perform these functions using its own resources or purchased services
and the Company has been responsible for the costs and expenses associated with
the management of a public corporation.
Net interest expense as presented in the consolidated statements of
operations included net interest expense of approximately $3.2 million for the
second quarter of fiscal 1999 and
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<PAGE>
$2.7 million and $6.5 million for the first six months of fiscal 2000 and 1999,
respectively, relating to the intercompany balances with Olsten. Such
intercompany balances have been reflected as a contribution to capital at
January 2, 2000 and as of the split-off date.
3. Earnings per Share
Basic net income per share for the fiscal 2000 periods has been computed
using the weighted average number of shares outstanding. Such amount is based on
20,345,029 shares of common stock, representing the number of shares of the
Company's stock issued on the split-off date, adjusted to reflect 275,397 shares
of common stock issued during the second quarter of fiscal 2000 in connection
with the exercise of stock options.
Diluted net income per share for the fiscal 2000 periods has been computed
using the weighted average number of common and dilutive common equivalent
shares outstanding during each period. Dilutive common equivalent shares
represent the incremental shares that would be issued upon the assumed
conversion of approximately 3.3 million stock options. The computation of
dilutive net income per share excludes the effect of any shares issuable upon
the conversion of the 4 3/4% convertible subordinated debentures due October 1,
2000 and the $20 million of 10% convertible trust preferred securities and the
exercise of approximately 0.9 million stock options since their inclusion would
have had an antidilutive effect on earnings.
Basic and diluted net income (loss) per share for the fiscal 1999 periods
have been computed based solely on the shares of the Company's stock issued on
the split-off date.
4. Non-recurring and Special Charges
During the six months ended July 2, 2000, the Company recorded
non-recurring and special charges aggregating $6.8 million. Of this amount,
non-recurring charges of $4.1 million were incurred to reflect obligations
resulting from the Company's split-off from Olsten and transition costs
associated with the establishment of the Company as an independent,
publicly-owned entity. These non-recurring charges included change of control,
compensation and benefit payments of $3.6 million made to certain former
employees of the Company and Olsten and a current executive officer of the
Company, including approximately $1.0 million which is based on Olsten's
methodology for allocating general corporate overhead expenses as discussed in
Note 7, and transition costs of $0.5 million relating to registration costs,
professional fees and other items. Substantially all amounts were paid as of
July 2, 2000.
Special charges of $1.2 million in second quarter and $2.7 million in the
first six months of fiscal 2000 were incurred in connection with the change of
the Company's name
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<PAGE>
to Gentiva Health Services, Inc. These special charges primarily consisted of
costs incurred and paid for consulting fees, promotional items and advertising.
In the quarter ended April 4, 1999, the Company recorded a special charge
aggregating $16.7 million. This charge was for the realignment of business units
as part of a new restructuring plan, including compensation and severance costs
of $5 million to be paid to operational support staff, branch administrative
personnel and management, asset write-offs of $6.5 million related primarily to
fixed assets being disposed of in offices being closed and facilities being
consolidated, as well as fixed assets and goodwill attributable to the Company's
exit from certain business previously acquired but not within the Company's
strategic objectives, and integration costs of $5.2 million, primarily related
to obligations under lease agreements for offices and other facilities being
closed. Substantially all of the closures and consolidations of facilities and
expected terminations had occurred by January 2, 2000. These activities resulted
in lower costs than originally estimated and, as a result, the Company
recognized a benefit of $1.5 million in the fourth quarter of fiscal 1999 to
reflect this change in estimate. Approximately $1.2 million of this special
charge remains unpaid as of July 2, 2000, representing compensation and
severance costs of $0.8 million and integration costs of $0.4 million.
5. Long-Term Debt
On March 13, 2000, the Company entered into a credit facility, which
provides for up to $150 million in borrowings, including up to $30 million which
is available for letters of credit. The Company may borrow up to a maximum of 80
percent of eligible accounts receivable, as defined. At the Company's option,
the interest rate on borrowings under the credit facility is based on the London
Interbank Offered Rate (LIBOR) plus 2.5 percent or the lender's prime rate plus
0.25 percent.
The credit facility, which expires in 2004, includes certain covenants
requiring the Company to maintain a minimum tangible net worth and minimum
earnings before interest, taxes, depreciation and amortization and provides
limitations on certain other activities. Loans under the credit facility are
collateralized by all of the Company's tangible and intangible personal
property, other than equipment.
At July 2, 2000, borrowings under the credit facility aggregated $26.2
million and there were approximately $19.4 million of standby letters of credit
outstanding. As of such date, the Company had borrowing capacity of
approximately $104.4 million available under the credit facility.
At July 2, 2000, the current portion of long-term debt aggregated $68.6
million, which represents the 4 3/4 percent convertible subordinated debentures
which mature on October 1, 2000. In June 2000, $10 million of the debentures
were retired at 95.25 percent of the princi-
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<PAGE>
pal amount, resulting in a gain of $475,000. In January 1999, $7.7 million of
the debentures were retired at 88.5 percent of the principal amount, resulting
in a gain of approximately $900,000.
6. Mandatorily Redeemable Securities
On March 15, 2000, certain of the Company's and Olsten's directors,
officers and management and other related parties and other investors purchased
$20 million of 10 percent convertible trust preferred securities issued by a
trust, of which the Company owns all the common equity. The convertible trust
preferred securities are mandatorily redeemable five years from issuance at a
declining premium over face amount. Upon a change of control, as defined, the
holders of convertible trust preferred securities may require the trust to
purchase these securities at 100 percent of their face amount. Dividends are
payable quarterly in cash at the rate of 10 percent per annum, but the trust may
defer dividend payments for up to a total of twenty quarters, in which case
dividends will accrue. The convertible trust preferred securities are
convertible into the Company's common stock at a conversion price of $9.319219.
Such conversion price is 17.5 percent above the average closing price of the
Company's common stock during the ten trading days following the earnings
announcement of the first quarter 2000 results.
Simultaneously with, and in connection with the issuance by the trust of
the convertible trust preferred securities, the Company issued to the trust $20
million of its 10 percent convertible subordinated debentures. The convertible
subordinated debentures have the same terms as the convertible trust preferred
securities, including but not limited to maturity, interest, conversion and
redemption price.
The trust which issued the convertible trust preferred securities is a
special purpose trust. The trust's operations are limited to issuing the
convertible trust preferred securities and holding the Company's convertible
subordinated debentures. The trust may pay dividends only to the extent that the
Company pays interest on its convertible subordinated debentures.
In March 2000, the Company also issued 100 shares of Series A Cumulative
Non-voting Redeemable Preferred Stock for proceeds of $100,000. Such amount is
included in other liabilities in the consolidated balance sheet at July 2, 2000.
-8-
<PAGE>
7. Shareholders' Equity
Changes in shareholders' equity during the six months ended July 2, 2000
were as follows (in thousands):
<TABLE>
<CAPTION>
Accumulated
Additional Other
Common paid-in Accumulated Comprehensive
Stock capital Deficit Loss Total
--------------- --------------- ----------------- ----------------- ----------------
<S> <C> <C> <C> <C> <C>
Balance at January 2, 2000 $ 2,035 $ 725,998 $ (20,370) $ (2,372) $ 705,291
Comprehensive income:
Net income and cumulative
translation adjustment 265 50 315
True-up payment made by Olsten 8,851 8,851
Obligations assumed in connection
with the split-off, net of tax
benefit (1,029) (1,029)
Transfer to Olsten of tax benefits
relating to net operating losses (49,700) (49,700)
Issuance of stock upon exercise of
stock options 27 1,207 1,234
------------ --------- ------------- -------------- ------------
Balance at July 2, 2000 $ 2,062 $ 685,327 $ (20,105) $ (2,322) $ 664,962
============ ========= ============= ============== ============
</TABLE>
See Note 8 for a description of the true-up payment made by Olsten.
Under the terms of the separation agreement relating to the split-off, the
Company assumed the obligation for the funding of liabilities of the
non-qualified supplemental executive retirement plan for certain of its
employees and former employees of Olsten. During the first quarter of 2000,
payments of $12.1 million were made under this program; these payments exceeded
assets of the plan which were transferred to the Company by $3.6 million due
primarily to benefits paid to former Olsten employees and a current executive
officer of the Company. Furthermore, the Company also assumed excise tax
obligations of approximately $0.8 million for a former executive officer of
Olsten (and current executive officer of the Company). Approximately $1.0
million of the aggregate net obligations of $4.4 million were included in
non-recurring and special charges in the consolidated statements of operations
based on Olsten's allocation methodology for general corporate overhead
expenses. The remaining $3.4 million associated with these obligations were
charged directly to additional paid-in capital.
In addition, under the terms of the Separation Agreement the Company also
agreed to assume the lease for an Olsten subsidiary commencing September 2000.
In this connection, the present value of future lease obligations and other
costs exceed estimated sublease rentals by $1.7 million. Such amount was charged
directly to additional paid-in capital during the first quarter of 2000.
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<PAGE>
An estimated tax benefit of $4.1 million relating to the aforementioned
obligations was credited to additional paid-in capital.
In accordance with the Tax Sharing Agreement governing the split-off, any
net operating losses generated up to the split-off were to be transferred and
utilized by Olsten. Accordingly, on March 15, 2000 the Company transferred
approximately $49.7 million of tax benefits relating to those net operating
losses to Olsten. Such amount is reflected as a reduction of additional paid-in
capital during the first six months of fiscal 2000.
Total comprehensive income (loss) amounted to $2.1 million and $2.5 million
during the second quarter of fiscal 2000 and 1999, respectively, and $0.3
million and $(10.3) million during the first six months of fiscal 2000 and 1999,
respectively.
8. Transactions with Olsten
Net transactions with Olsten, included in shareholders' equity, include the
accumulated excess of cash outlays made on the Company's behalf and management
fees charged to the Company by Olsten over cash receipts generated by the
Company. In accordance with the terms of the Separation Agreement, intercompany
balances at October 31, 1999 of approximately $507 million have been contributed
to the Company's capital in its entirety. Pursuant to the terms described in the
Separation Agreement, the Company was to receive approximately $32 million in
cash (referred to as the true-up amount) on or prior to the split-off date.
Approximately $23.1 million of the true-up amount was received by the Company
prior to January 2, 2000; the remaining $8.9 million was received by the Company
during the first quarter of 2000.
Following the split-off, the Company paid Olsten approximately $13 million
to settle the intercompany account balance which primarily related to advances
for management fees, additional borrowings and interest expense on intercompany
balances.
9. Business Segment Information
The Company operates in the United States and Canada, servicing patients
and customers through the following business segments: Specialty Pharmaceutical
Services, Home Care Nursing Services and Staffing Services. These segments are
briefly described below.
Specialty Pharmaceutical Services includes (i) the distribution of drugs
and other biological and pharmaceutical products and professional support
services for individuals with chronic diseases, such as hemophilia, primary
pulmonary hypertension, autoimmune deficiencies and growth disorders, (ii) the
administration of antibiotics, chemotherapy, nutrients and other medications for
patients with acute or episodic disease states and (iii) distribution services
for pharmaceutical, biotechnology and medical service firms.
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<PAGE>
Home Care Nursing Services includes (i) professional and paraprofessional
services, including skilled nursing, rehabilitation and other therapies, home
health aide and personal care services, to individuals with acute illnesses,
long-term chronic health conditions, permanent disabilities, terminal illnesses
or post-procedural needs and (ii) care management and coordination for managed
care organizations and self-insured employees.
Staffing Services includes (i) services to institutional, occupational and
alternate site health care organizations by providing health care professionals
to meet supplemental staffing needs and (ii) clinical support services for
pharmaceutical and biotechnology firms.
The Company evaluates performance and allocates resources based on
operating contributions of the reportable segments, which excludes corporate
expenses, depreciation, amortization and interest expense, but includes revenues
and all other costs directly attributable to the specific segment. Identifiable
assets of the segments reflect net accounts receivable and inventories
associated with segment activities. All other assets are assigned to the Company
for the benefit of all segments.
Information about the Company's operations is as follows (in thousands):
<TABLE>
<CAPTION>
Specialty Home Care
Pharmaceutical Nursing Staffing
Services Services Services Total
----------------- --------------- -------------- --------------
Three months ended July 2, 2000
-------------------------------
<S> <C> <C> <C> <C>
Net revenues $ 185,044 $ 161,026 $ 37,200 $ 383,270
================= =============== ============== ==============
Operating contribution $ 23,345 $ 9,718 $ 3,139 $ 36,202
================= =============== ==============
Non-recurring and special charges
(1,191)
Corporate expenses (21,198)
--------------
Earnings before interest expense, taxes
depreciation and amortization 13,813
Depreciation and amortization
(7,974)
Interest expense, net
(2,112)
--------------
Income before income taxes $ 3,727
==============
</TABLE>
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<PAGE>
<TABLE>
<CAPTION>
Specialty Home Care
Pharmaceutical Nursing Staffing
Services Services Services Total
---------------- -------------- ------------ --------------
Three months ended July 4, 1999
-------------------------------
<S> <C> <C> <C> <C>
Net revenues $ 173,395 $ 168,779 $ 30,399 $ 372,573
================= =============== ============== ==============
Operating contribution $ 29,167 $ 8,898 $ 2,454 $ 40,519
================= =============== ==============
Corporate expenses (24,479)
--------------
Earnings before interest expense, taxes
depreciation and amortization 16,040
Depreciation and amortization (8,673)
Interest expense, net (4,284)
--------------
Income before income taxes $ 3,083
==============
Six months ended July 2, 2000
-----------------------------
Net revenues $ 365,862 $ 328,921 $ 73,094 $ 767,877
================= =============== ============== ==============
Operating contribution $ 48,557 $ 18,337 $ 5,770 $ 72,664
================= =============== ==============
Non-recurring and special charges (6,791)
Corporate expenses (42,603)
--------------
Earnings before interest expense, taxes
depreciation and amortization 23,270
Depreciation and amortization (16,461)
Interest expense, net (6,348)
--------------
Income before income taxes $ 461
==============
Segment assets $ 460,075 $ 192,629 $ 26,160 $ 678,864
================= =============== ============== ==============
Six months ended July 4, 1999
-----------------------------
Net revenues $ 341,814 $ 338,509 $ 60,410 $ 740,733
================= =============== ============== ==============
Operating contribution before special charges $ 55,920 $ 14,221 $ 4,902 $ 75,043
Special charges (1,730) (14,590) (380) (16,700)
------------ ---------- ---------- -----------
Operating contribution (loss) $ 54,190 $ (369) $ 4,522 $ 58,343
============ ========== ==========
Corporate expenses (45,448)
-----------
Earnings before interest expense, taxes
depreciation and amortization 12,895
Depreciation and amortization (17,406)
Interest expense, net (8,557)
-----------
Loss before income taxes $ (13,068)
===========
Segment assets $ 401,465 $ 222,207 $ 20,034 $ 643,706
=========== ========== ========== ===========
</TABLE>
Item 2. Management's Discussion and Analysis of Financial Condition and Results
of Operations.
On March 15, 2000, the Company was split-off from Olsten Corporation
through the issuance of all of the Company's shares of common stock to Olsten's
shareholders and the Company became an independent, publicly-owned company.
Prior thereto, the Company op-
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<PAGE>
erated Olsten's health services business as a wholly-owned subsidiary of Olsten.
The accompanying interim consolidated financial statements reflect the results
of operations, financial position and cash flows of the Company as if it were a
separate entity for all periods presented.
The historical financial information may not be indicative of future
performance and may not necessarily reflect what the Company's financial
position and results of operations would have been if it were a separate
stand-alone entity during the periods covered. As an independent company, the
Company would be expected to incur additional legal, risk management, tax,
treasury, human resources and administrative and other expenses that it did not
experience as a wholly-owned subsidiary of Olsten. The consolidated financial
statements have been prepared using the historical basis in the assets and
liabilities and historical results of operations related to the Company.
The Company's results of operations are impacted by various regulations and
other matters that are implemented from time to time in its industry, some of
which are described in the Company's Annual Report on Form 10-K for the fiscal
year ended January 2, 2000.
Results of Operations
Revenues
Net revenues increased by $11 million or 2.9 percent to $383 million during
the second quarter of fiscal 2000 as compared to the second quarter of fiscal
1999 driven by growth in Specialty Pharmaceutical Services of $12 million or 6.7
percent and Staffing Services of $7 million or 22.4 percent. These increases
were partially offset by an $8 million or 4.6 percent decrease in net revenues
in Home Care Nursing Services.
For the first six months of fiscal 2000, net revenues increased by $27
million or 3.7% to $768 million as compared to net revenues of $741 million
during the first six months of fiscal 1999. Net revenue growth resulted from
increases in Specialty Pharmaceutical Services of $24 million or 7.0% and
Staffing Services of $13 million or 21.0% offset by a decrease of $10 million or
2.8% in Home Care Nursing Services.
In the Specialty Pharmaceutical Services business, revenue growth in both
the quarter and the six month period was attributable to increases in
coagulation therapies, Flolan, IVIG, Oxandrin and Total Parental Nutrition (TPN)
therapies offset somewhat by a decrease in Prolastin revenue. Staffing Services
revenue growth during the periods reflects volume and rate increases due to
strong market demand created by industry growth and a shortage of full time
employees in the institutional, occupational and alternate site health care
organizations serviced by the Staffing Services business. The decline in Home
Care Nursing Services during the periods was attributable to the continued
shortage of nursing and caregiver personnel in cer-
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tain parts of the country as well as the impact of the closing of certain home
care nursing branches during 1999.
Gross Profit
Gross profit margins, as a percentage of net revenues, decreased from 34.2
percent in the fiscal 1999 second quarter to 33.6 percent in the second quarter
of fiscal 2000 and from 34.1 percent in the first six months of fiscal 1999 to
33.5 percent in the first six months of fiscal 2000. This decrease in margins
was primarily attributable to a change in business mix reflecting growth in the
lower margin Staffing Services business and higher costs attributable to certain
biological and pharmaceutical products in the Specialty Pharmaceutical Services
business due to product shortages, partly offset by productivity enhancements
and rate increases in Home Care Nursing Services.
Selling, general and administrative expenses
Selling, general and administrative expenses increased to $123 million
during the second quarter of fiscal 2000 as compared to $120 million during the
second quarter of fiscal 1999 due to the special charges of $1.2 million and an
increase in the provision for doubtful accounts of $2.8 million as well as
increases in health insurance costs offset somewhat by the impact of efficiency
improvement efforts in Home Care Nursing Services and corporate administrative
support departments and the closing of certain home care nursing branches.
For the first six months of fiscal 2000, selling, general and
administrative expenses were $250 million as compared to $257 million for the
first six months of fiscal 1999. This decrease resulted from a change in
non-recurring and special charges from $16.7 million in the fiscal 1999 period
to $6.8 million in the fiscal 2000 period as well as the impact of efficiency
improvement efforts and the closing of home care nursing branches offset by an
increase of $4.5 million in the provision for doubtful accounts.
During the six months ended July 2, 2000, the Company recorded
non-recurring and special charges aggregating $6.8 million. Of this amount,
non-recurring charges of $4.1 million were incurred to reflect obligations
resulting from the Company's split-off from Olsten and transition costs
associated with the establishment of the Company as an independent,
publicly-owned entity. These non-recurring charges included change of control,
compensation and benefit payments of $3.6 million made to certain former
employees of the Company and Olsten and a current executive officer of the
Company, including approximately $1.0 million which was based on Olsten's
methodology for allocating general corporate overhead expenses, and transition
costs of $0.5 million relating to registration costs, professional fees and
other items.
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Special charges of $1.2 million in the second quarter and $2.7 million in
the first six months of fiscal 2000 were incurred in connection with the change
of the Company's name to Gentiva Health Services, Inc. These special charges
primarily consisted of costs incurred and paid for consulting fees, promotional
items and advertising.
In the quarter ended April 4, 1999, the Company recorded a special charge
aggregating $16.7 million. This charge was for the realignment of business units
as part of a new restructuring plan, including compensation and severance costs
of $5 million to be paid to operational support staff, branch administrative
personnel and management, asset write-offs of $6.5 million related primarily to
fixed assets being disposed of in offices being closed and facilities being
consolidated, as well as fixed assets and goodwill attributable to the Company's
exit from certain business previously acquired but not within the Company's
strategic objectives, and integration costs of $5.2 million, primarily related
to obligations under lease agreements for offices and other facilities being
closed. Substantially all of the closures and consolidations of facilities and
expected terminations occurred by January 2, 2000. These activities resulted in
lower costs than originally estimated and, as a result, the Company recognized a
benefit of $1.5 million in the fourth quarter of fiscal 1999 to reflect this
change in estimate.
Excluding the effects of non-recurring and special charges recorded in the
periods as described below, selling, general and administrative expenses as a
percentage of net revenues were 31.7 percent and 32.2 percent during the second
quarters of fiscal 2000 and 1999, respectively, and 31.7 percent and 32.5
percent during the first six months of fiscal 2000 and 1999, respectively.
Interest Expense, Net
Interest expense, net was approximately $2.1 million and $4.3 million in
the second quarters of fiscal 2000 and 1999, respectively, and $6.3 million and
$8.6 million during the first six months of fiscal 2000 and 1999, respectively.
Interest expense, net represented primarily interest on the outstanding 4 3/4
percent convertible subordinated debentures during each period, net intercompany
borrowings with Olsten for the fiscal 1999 periods and the period from January
3, 2000 to March 15, 2000 and interest on borrowings under the credit facility
and the mandatorily redeemable securities subsequent to March 15, 2000.
Income Taxes
The effective income tax rate on income (loss) before income taxes was
approximately 42 percent for the fiscal 2000 periods and approximately 21
percent for the fiscal 1999 periods. The rates differ from statutory rates
primarily because of the impact of non-deductible goodwill amortization and
other non-deductible items.
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Liquidity and Capital Resources
Prior to the split-off, the Company relied on cash flow from operations and
advances from Olsten to meet the requirements of its operating and investing
activities. In the past, when liquidity needs exceeded cash flow, Olsten
provided the necessary funds. In accordance with the separation agreement
governing the split-off, the Company received approximately $32 million in cash
(referred to as the true-up amount), including $8.9 million prior to the March
15, 2000 split-off date. Following the split-off, the Company paid Olsten
approximately $13 million to settle the intercompany account balance which
related primarily to management fees, additional advances and interest expense
on intercompany balances. Furthermore, in connection with the split-off the
Company assumed certain liabilities, including supplemental executive retirement
plan and excise tax obligations for former Olsten employees and of the office
lease obligations for an Olsten subsidiary. As of March 15, 2000, the Company
had acquired third party financing, as described below, to meet its funding
requirements.
The Company received $20 million of proceeds from the issuance by Gentiva
Trust, a Delaware statutory trust (the "Trust"), of 10% convertible trust
preferred securities on March 15, 2000. The Company owns all the common equity
in the Trust. The Trust's only asset is the 10% convertible subordinated
debentures of the Company. The Company entered into a credit facility, which
provides for up to $150 million in borrowings, including up to $30 million which
is available for letters of credit. The Company may borrow up to 80 percent of
eligible accounts receivable, as defined. The credit facility, which expires in
2004, includes covenants requiring the Company to maintain a minimum tangible
net worth and minimum earnings before interest, taxes, depreciation and
amortization. Other covenants in the credit facility include: limitations on
mergers, consolidations, acquisitions, indebtedness, liens, capital expenditures
and disposition of assets and other limitations with respect to the Company's
operations. The interest rate on borrowings under the credit facility is based
on the London Interbank Offered Rate (LIBOR) plus 2.5 percent or the lender's
prime rate plus 0.25 percent.
As of July 2, 2000, borrowings under the credit facility aggregated $26.2
million and there were approximately $19.4 million of standby letters of credit
outstanding. As of such date, the Company had an aggregate borrowing capacity of
approximately $104.4 million under the credit facility. In June 2000, the
Company retired $10 million of its 4 3/4 percent convertible subordinated
debentures at 95.25 percent of the principal amount, resulting in a gain of
$475,000. By October 1, 2000, the Company will be required to repay the
remaining $68.6 million of these debentures and, in this connection, is
currently evaluating various financing options. Such options include use of the
revolving credit facility, issuing securities under a $150 million shelf
registration statement which was filed with the Securities and Exchange
Commission in July 2000, and using cash proceeds which may be generated should
the Com-
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pany consummate the sale of its health care staffing services business. The
Company announced in July 2000 that it is in discussions regarding the possible
sale of this business. Furthermore, the Company is also engaged in discussions
with its lenders under the credit facility with respect to certain amendments to
the credit facility.
Working capital at July 2, 2000 was $455 million, an increase of $16
million versus $439 million at January 2, 2000. Net receivables increased by $29
million in the first quarter of fiscal 2000, predominantly due to conversion
issues resulting from the implementation of and transition to a new billing
system for the Specialty Pharmaceutical Services business. Net receivables
remained stable during the second quarter and aggregated $604 million at July 2,
2000. The Company will continue to make investments in billing and accounts
receivable systems and has restructured its contracting, delivery, billing and
collection units in an effort to improve cash flow from operations. In this
regard, the Company used $41.9 million of cash in operating activities during
the first quarter of fiscal 2000; in the second quarter of fiscal 2000, $0.4
million of cash was provided by operating activities.
Management believes cash flows from operations, borrowings available under
the new credit facility and other financing activities will be adequate to
support the ongoing operations and to meet debt service and principal repayment
requirements for the foreseeable future. The Company intends to make investments
and other expenditures to, among other things, upgrade its computer technology
and system infrastructure and relocate its headquarters. If cash flows from
operations or availability under the credit facility fall below expectations,
the Company may be forced to delay planned capital expenditures, reduce
operating expenses, seek additional financing or consider alternatives designed
to enhance liquidity for operations and to refinance the 4 3/4 percent
convertible subordinated debentures which mature on October 1, 2000.
Item 3. Quantitative and Qualitative Disclosures about Market Risk
The Company's exposure to market risk for changes in interest rates relates
primarily to the fair value of its fixed rate 4 3/4 percent convertible
subordinated debentures. Generally, the fair market value of fixed rate debt
will increase as interest rates fall and decrease as interest rates rise.
Based on the overall interest rate exposure on the Company's fixed rate
borrowings at July 2, 2000, a 10 percent change in market interest rates would
not have a material effect on the fair value of the Company's debt.
Based on variable rate debt levels, a 10 percent change in market interest
rates (90 basis points on a weighted average) would have less than a 1 percent
impact on the Company's interest expense, net.
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Other than intercompany transactions between the Company and its Canadian
subsidiary, the Company generally does not have any transactions that are
denominated in a currency other than the functional currency applicable to each
entity.
Although currency fluctuations impact the Company's reported results of
operations, such fluctuations generally do not affect the Company's cash flow or
result in actual economic gains or losses. Each of the Company's subsidiaries
derives revenues and incurs expenses primarily within a single country, and
consequently, does not generally incur currency risks in connection with the
conduct of normal business operations.
Fluctuations in currency exchange rates may also impact the shareholders'
equity of the Company. The assets and liabilities of the Company's Canadian
subsidiary are translated into U.S dollars at the exchange rates in effect at
the balance sheet date. Revenues and expenses are translated into U.S. dollars
at the weighted average exchange rate for the quarter. The resulting translation
adjustments are recorded in shareholders' equity as accumulated other
comprehensive income (loss).
Foreign exchange gains and losses have not been significant. The Company
does not engage in hedging activities. The Company did not hold any derivative
instruments at July 2, 2000.
OTHER:
INFORMATION CONTAINED HEREIN, OTHER THAN HISTORICAL INFORMATION, SHOULD BE
CONSIDERED FORWARD-LOOKING AND IS SUBJECT TO VARIOUS RISKS AND UNCERTAINTIES.
FOR INSTANCE, THE COMPANY'S STRATEGIES AND OPERATIONS INVOLVE RISKS OF
COMPETITION, CHANGING MARKET CONDITIONS, CHANGES IN LAWS AND REGULATIONS
AFFECTING THE COMPANY'S INDUSTRIES AND NUMEROUS OTHER FACTORS DISCUSSED IN THIS
DOCUMENT AND IN OTHER COMPANY FILINGS WITH THE SECURITIES AND EXCHANGE
COMMISSION. ACCORDINGLY, ACTUAL RESULTS MAY DIFFER MATERIALLY FROM THOSE
EXPRESSED IN ANY FORWARD-LOOKING STATEMENTS CONTAINED HEREIN.
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PART II - OTHER INFORMATION
Item 1. Legal Proceedings
There is presently pending in the U.S. District Court for the Eastern
District of New York a purported class action filed by some Olsten stockholders
against Olsten and some of its directors and officers, captioned In re Olsten
Corporation Securities Litigation, No. 97-5056 (the "Class Action"). The Class
Action asserts claims for violations of the Securities Act and the Securities
Exchange Act, including claims that the directors and officers of Olsten
misrepresented information to stockholders relating to the government
investigations into Olsten's health services business described Item 5 - Other
Information. In December 1998, defendants filed a motion to dismiss the Amended
Complaint in this Class Action. In response to a request from the parties, the
Court, by Order dated April 27, 2000, dismissed without prejudice defendants'
dismissal motion, subject to its being re-filed on the previously-submitted
papers, and stayed the Class Action pending the outcome of the parties'
mediation efforts.
There is also pending in the Delaware Chancery Court a purported derivative
lawsuit filed by some Olsten stockholders against some directors and officers of
Olsten (and Olsten, as nominal defendant), captioned Rubin v. May, No. 17135-NC
(the "Derivative Suit"). This purported derivative lawsuit alleges that the
Olsten directors and officers breached their fiduciary duties to stockholders in
connection with the above-described class action and the below-described
government investigations. In September 1999, defendants filed a motion to
dismiss or, in the alternative, stay this Derivative Lawsuit. Prior to the
briefing of defendants' dismissal motion and prior to filing any responses to
discovery requests, the parties jointly petitioned the Chancery Court to stay
all proceedings in the Derivative Lawsuit pending the outcome of the parties'
mediation efforts.
In July 1999, the Indiana Attorney General's Office filed a lawsuit against
Olsten in Indiana Superior Court, captioned State of Indiana v. Quantum Health
Resources, Inc. and Olsten Health Services, Inc., No. 49D029907CP001011,
alleging that Olsten was overpaid by Medicaid, failed to properly disclose
information to Medicaid and engaged in improper billing. Discovery continues in
this matter.
On January 14, 1999, Kimberly Home Health Care, Inc. ("Kimberly") initiated
three arbitration proceedings against hospitals owned by Columbia/HCA Healthcare
Corp. ("Columbia/HCA") with which Kimberly had management services agreements to
provide services to the hospitals' home health agencies. The basis for each of
the arbitrations is that Columbia/HCA sold the home health agencies without
assigning the management services agreements and, as a result, Columbia/HCA has
breached the management services agreements. In response to the arbitrations,
Columbia/HCA has asserted that the arbitration be consolidated and stayed, in
part based upon its alleged claims against Kimberly for breach of
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contract, and requested indemnity and possibly return of management fees.
Columbia/HCA has not yet formally presented these claims in the arbitrations or
other legal proceedings, and has not yet quantified the claims. The parties
agreed to suspend the proceedings until September 2000.
On June 23, 2000, the Company was served with a Complaint in a purported
class action lawsuit filed by Ultimate Home Health Care Inc. in the U.S District
Court for the Middle District of Tennessee (Nashville). Thereafter, the Company
was served with an Amended Complaint on July 21, 2000. The Amended Complaint,
which names as defendants Columbia/HCA, Columbia Homecare Group, Olsten Health
Management a/k/a Hospital Contract Management Services (one of the Company's
subsidiaries) and Olsten Corporation, alleges, among other things, that the
defendants' business practices in connection with the home healthcare patient
referrals during the 1994 and 1996 time period violated provisions of Federal
antitrust laws, the Racketeer Influenced and Corrupt Organizations Act, the
Tennessee Consumer Protection Act, and the common law of Tennessee, Texas,
Georgia and Florida. The Complaint seeks unspecified compensatory damages,
punitive damages, treble damages and attorneys' fees on behalf of a proposed
class of home healthcare companies and/or agencies which conducted business in
Tennessee, Texas, Florida and/or Georgia and allegedly lost business or property
due to defendants' business practices.
Because the above lawsuits and arbitration proceedings are in relatively
preliminary stages and seek unspecified damages, penalties and/or reimbursement
for costs and expenses, the Company is unable at this time to assess the
probable outcome or potential liability arising from such litigation.
Furthermore, in connection with the split-off, the Company agreed to
assume, to the extent permitted by law, and indemnify Olsten for, the above
lawsuits and arbitration proceedings, together with any other liabilities
arising out of the health services business before or after the split-off,
including any such liabilities arising after the split-off in connection with
the government investigations described below.
Reference is made to the descriptions of legal proceedings in the Company's
Annual Report on Form 10-K for the year ended January 2, 2000.
Item 2. Change in Securities and Use of Proceeds
In March 2000, the Company sold 100 shares of its Series A Cumulative
non-voting Redeemable Preferred Stock in exchange for services in the amount of
$100,000. In March 2000, a subsidiary trust of the Company issued $20 million of
10% convertible trust preferred securities to certain of the Company's and
Olsten's directors, officers and management, other related parties and other
investors. The trust used the $20 million of gross proceeds to purchase $20
million of the Company's 10% Convertible Subordinated Debentures. The Com-
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pany used the net proceeds of the transaction to pay Olsten the amount owed for
the intercompany balance and for other corporate purposes. The above issuances
were made in reliance on the exemption from registration provided in Section
4(2) of the Securities Act.
Reference is made to the notes to the Consolidated Financial Statement in
this Form 10-Q for a further description of the above securities.
Item 3. Defaults Upon Senior Securities
None
Item 4. Submission of Matters to a Vote of Security Holders
None
Item 5. Other Information
The Company's business has been subject to extensive federal and state
governmental investigations regarding, among other things, some of the health
care practices of Quantum Health Resources, Inc. ("Quantum"), including alleged
improper billing and fraud against various federally funded medical assistance
programs, which largely occurred during the period prior to Olsten's acquisition
of Quantum in June 1996, which is referred to as the "Quantum Investigation."
In October 1998, Olsten entered into a final settlement agreement with
several government agencies related to the Quantum Investigation. Under the
settlement, Olsten reimbursed the government approximately $4.5 million for
disputed claims under the Medicaid and CHAMPUS programs and entered into a
corporate integrity agreement.
On January 28, 1999, Olsten announced that it had been advised by the
United States Attorney's Office for the District of New Mexico ("New Mexico U.S.
Attorney's Office") that it had dropped its criminal investigation into
allegations of improper billing and fraud against various federally funded
medical assistance programs by Quantum during the period between January 1992
and April 1997. By letter dated February 1, 1999, the New Mexico U.S. Attorney's
Office advised Olsten that, having ended its criminal inquiry, the Office has
referred the Quantum matter to its Affirmative Civil Enforcement Section. The
Company continues to cooperate with the remaining civil inquiry into the Quantum
matter and to explore with the New Mexico U.S. Attorney's Office the possibility
of reaching a negotiated monetary resolution of the matter. Any negotiated
amount could include multiple damages, interest and civil penalties.
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In early December 1999, Olsten received a document subpoena from the
Department of Health and Human Services, Office of Inspector General, and Office
of Investigations. After preliminary discussions with the Office of Inspector
General, the Company believes the subpoena relates to an investigation of
possible overpayments to it by the Medicare program. In early February 2000, the
Company received a document subpoena from the Department of Health and Human
Services, Office of Inspector General, and Office of Investigations. The Company
believes the subpoena relates to its agencies' cost reporting procedures
concerning contracted nursing and home health aide costs. The Company intends to
provide the Office of Inspector General with the requested documents and
cooperate fully with its investigations. At this time, the Company is unable to
assess the probable outcome or potential liability, if any, arising from these
subpoenas. The Company believes that it is possible that one or more of these
investigations may be triggered by lawsuits under federal or state whistle
blower statutes against Olsten or the Company.
The Company continues to have discussions with the North Carolina Attorney
General's Office concerning questions that the Office has raised as to the
eligibility of a certain class of the Company's patients to receive
Medicaid-reimbursed home health services and, thus, the Company's entitlement to
Medicaid reimbursement in connection with those services. At this time, the
Company is unable to assess the probable outcome of or potential liability
arising from this matter.
As noted above, in connection with the October 1998 settlement of the
Quantum Investigation, Olsten executed a corporate integrity agreement with the
U.S. Department of Justice, the Office of Inspector General of the U.S.
Department of Health and Human Services, the U.S. Secretary of Defense (for the
CHAMPUS/Tricare Program) and the Attorneys General for the States of New York
and Oklahoma that will be in effect until December 31, 2001. Also, in connection
with the July 19, 1999 settlement with various government agencies, Olsten
executed a separate corporate integrity agreement with the Office of Inspector
General of the Department of Health and Human Services which will remain in
effect until August 18, 2004. Under each of the corporate integrity agreements,
the Company is, for example, required:
o to maintain a corporate compliance officer to develop and implement
compliance programs;
o to retain an independent review organization to perform annual
reviews; and
o to maintain a compliance program and reporting systems, as well as
provide certain training to employees.
The corporate integrity agreement entered into in connection with the
Quantum Investigation applies to the Company's specialty pharmaceutical services
business and focuses on
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the training and billing of blood factor products for hemophiliacs. The July 19,
1999 corporate integrity agreement applies to the Company's businesses that bill
the federal government health programs directly for services, such as its home
care nursing business (but excluding the specialty pharmaceutical services
business). That corporate integrity agreement focuses on issues and training
related to cost report preparation, contracting, medical necessity and billing
of claims.
The Company's compliance program will be implemented for all newly
established or acquired business units if their type of business is covered by
the corporate integrity agreements. Reports under each integrity agreement are
to be filed annually with the Department of Health and Human Services, Office of
Inspector General. After each corporate integrity agreement expires, the Company
is to file a final annual report with the government. If the Company fails to
comply with the terms of either of its corporate integrity agreements, the
Company will be subject to penalties ranging from $1,500 to $2,500 for each day
of the breach.
In March 2000, Gentiva was notified by the U.S. Department of Justice that,
in light of the Adecco/Olsten merger and the split-off of Gentiva as an
independent public company, the Company has been substituted for Olsten in
connection with the civil settlement and corporate integrity agreements
referenced in this "Government Investigations" section.
Reference is made to the full descriptions of government investigations in
the Company's Annual Report on the Form 10-K for the year ended January 2, 2000.
Item 6 Exhibits and Reports on Form 8-K
(a) Exhibit Number Description
3.1 Restated Certificate of Incorporation of Company. (1)
3.2 Restated By-Laws of Company. (1)
4.1 Specimen of common stock. (3)
4.2 Indenture dated October 8, 1993, between Quantum Health
Resources Inc. and First Trust National Association, as
Trustee. (1)
4.3 Supplemental Indenture dated June 28, 1996, between Quantum
Health Resources Inc. and First Trust National Association,
as Trustee. (1)
4.4 Form of Certificate of Designation of Series A Junior
Participating Preferred Stock. (2)
4.5 Form of Certificate of Designation of Series A Cumulative
Non-Voting Redeemable Preferred Stock. (2)
4.6 Second Supplemental Indenture dated March 15, 2000, be-
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tween Quantum Health Resources, Inc. and U.S. Bank Trust
National Association (formerly known as First Trust National
Association) as Trustee. (5)
4.7 Trust Agreement among the Company, Wilmington Trust Company,
the Administrative Trustees named therein and the holders
from time to time of the convertible trust preferred
securities dated March 9, 2000. (5)
4.8 Indenture between the Company and Wilmington Trust Company
dated March 15, 2000. (5)
10.1 Separation Agreement dated August 17, 1999, among Olsten
Corporation, Aaronco Corp. and Adecco SA. (1)
10.2 Omnibus Amendment No. 1 dated October 7, 1999, by and among
Olsten Corporation, Aaronco Corp., Adecco SA and Olsten
Health Services Holding Corp. (1)
10.3 Form of Rights Agreement dated March 2, 2000 between the
Registrant and Equiserve Limited Partnership, as rights
agent. (1)
10.4 Company's Executive Officers Bonus Plan. (1)
10.5 Company's 1999 Stock Incentive Plan. (5)
10.6 Company's stock & Deferred Compensation Plan for
Non-Employee Directors. (5)
10.7 Company's Employee Stock Purchase Plan. (1)
10.8 Omnibus Amendment No. 2 dated January 18, 2000, by and among
Olsten Corporation, Adecco SA, Olsten Health Services
Holding Corp., the Company and Staffing Acquisition
Corporation. (1)
10.9 Loan and Security Agreement by and between Fleet Capital
Corp., on behalf of the lenders named therein, the Company,
Olsten Health Services Holding Corp. and the subsidiaries
named therein, dated March 13, 2000. (5)
10.10 Form of Employment Agreement with Edward A. Blechschmidt.
(2)
10.11 Form of Change of Control Agreement with Executive Officers
of Company. (5)
10.12 Form of Change in Control Agreement with Edward A.
Blechschmidt. (5)
10.13 Form of Severance Agreement with Executive Officers of
Company. (2)
10.14 Amendment No. 1 dated June 30, 2000 to Trust Agreement
among the Company, Wilmington Trust Company, the
Administrative Trustees
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named therein and the holders from time to time of the
convertible trust preferred securities.
10.15 Amendment No. 1 dated June 30, 2000 to Indenture between
the Company and Wilmington Trust Company.
21.1 List of Subsidiaries of Company. (2)
27 Financial Data Schedule
(1) Incorporated herein by reference to Amendment No. 2 to the
Registration Statement on Form S-4, dated January 20, 2000
(File No. 333-88663).
(2) Incorporated herein by reference to Amendment No. 3 to the
Registration Statement on Form S-4, dated February 4, 2000
(File No. 333-88663).
(3) Incorporated herein by reference to Amendment No. 4 to the
Registration Statement on Form S-4, dated February 9, 2000
(File No. 333-88663).
(4) Incorporated herein by reference to the Post-Effective
Amendment No. 1 on Form S-8 to Form S-4 dated March 27, 2000
(File No. 333-88663).
(5) Incorporated herein by reference to the Form 10-K for the
Registrant for the Fiscal Year ended January 2, 2000
(b) Reports on Form 8-K
No reports on Form 8-K have been filed during the last quarter for the
period covered by this report.
Exhibit Index
Exhibit Description
27 Financial Data Schedule
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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.
Date: August 16, 2000 /s/ Edward A. Blechschmidt
--------------------------
Edward A. Blechschmidt
President and Chief Executive
Officer
Date: August 16, 2000 /s/ John J. Collura
-------------------
John J. Collura
Executive Vice President,
Chief Financial Officer and
Treasurer
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