<PAGE>
FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended May 31, 1995
------------------------------------------
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from to
------------------------ ----------------------
Commission file number 1-7008
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COMMUNITY PSYCHIATRIC CENTERS
--------------------------------------------------
(Exact name of registrant as specified in its charter)
NEVADA 94-1599386
- - ------------------------------ ---------------------------------
(State or other jurisdiction of (I.R.S. Employer I.D. No.)
incorporation or organization)
6600 W. Charleston Boulevard, Suite 118, Las Vegas, Nevada 89102
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (702) 259-3600
----------------------
Not Applicable
- - -------------------------------------------------------------------------
(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 and (2) has been subject to such filing requirements for
the past 90 days.
Yes X No
---- ----
Indicate the number of shares outstanding of each of the issuer's classes of
Common Stock, as of the latest practicable date: 43,656,000 as of June 30,
1995.
Total number of pages: 15
Exhibit Index at page: 14
Page 1 of 16
<PAGE>
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
COMMUNITY PSYCHIATRIC CENTERS AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)
<TABLE>
<CAPTION>
Six Months ended Three Months Ended
May 31 May 31
1995 1994 1995 1994
--------------------------------------------
(000s omitted except per share data)
REVENUES:
<S> <C> <C> <C> <C>
Net operating revenues $255,479 $200,590 $135,938 $108,424
Investment and other income 1,552 741 723 382
------- ------- ------- -------
257,031 201,331 136,661 108,806
COSTS AND EXPENSES:
Operating expense 187,118 161,217 98,936 85,569
General and administrative
expense 18,586 15,828 9,898 8,307
Bad debt expense 16,216 9,425 8,532 5,249
Depreciation and
amortization 11,058 8,911 6,045 4,626
Interest expense 2,023 1,800 943 1,072
Restructuring credit -
Note B (2,490) (875) (2,490) --
------- ------- ------- -------
232,511 196,306 121,864 104,823
INCOME BEFORE TAXES 24,520 5,025 14,797 3,893
Income taxes 9,412 2,011 5,619 1,594
------- ------- ------- -------
NET INCOME $ 15,108 $ 3,014 $ 9,178 $ 2,389
------- ------- ------- -------
------- ------- ------- -------
NET INCOME PER SHARE $ .35 $ .07 $ .21 $ .06
------- ------- ------- -------
------- ------- ------- -------
WEIGHTED AVERAGE COMMON
SHARES 43,614 43,247 43,632 43,367
------- ------- ------- -------
------- ------- ------- -------
DIVIDENDS PER COMMON SHARE .01 .01 .01 .01
------- ------- ------- -------
------- ------- ------- -------
</TABLE>
See notes to condensed consolidated financial statements.
Page 2 of 16
<PAGE>
COMMUNITY PSYCHIATRIC CENTERS AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
May 31 November 30
1995 1994
(Unaudited) (Audited)
---------------------------
ASSETS (OOOs omitted)
<S> <C> <C>
CURRENT:
Cash and cash equivalents $ 21,199 $ 37,263
Short-term investments 9,127 13,756
Accounts receivable, less allowances
for doubtful accounts
1995 - $ 31,861 /1994 - $29,381 124,655 103,128
Prepaid expenses and other current assets 19,189 18,305
Assets held for sale 1,921 2,374
Deferred income taxes 2,861 3,773
------- -------
TOTAL CURRENT ASSETS 178,952 178,599
PROPERTY, BUILDINGS & EQUIPMENT-at
cost less allowances for depreciation
1995 - $102,148 /1994 - $92,937 390,539 376,765
REFUNDABLE AND DEFERRED TAXES 2,089 2,823
OTHER ASSETS 26,095 25,207
EXCESS OF INVESTMENTS IN SUBSIDIARIES
OVER NET ASSETS ACQUIRED 16,583 16,610
------- -------
$614,258 $600,004
------- -------
------- -------
LIABILITIES & STOCKHOLDERS' EQUITY
CURRENT:
Accounts payable and accrued expenses $ 47,490 $ 50,232
Income taxes payable 5,899 5,845
Payable to third parties under
reimbursable contracts 4,148 5,802
Current maturities on long-term debt 40,532 13,224
------- -------
TOTAL CURRENT LIABILITIES 98,069 75,103
LONG-TERM DEBT, EXCLUSIVE OF CURRENT
MATURITIES 42,505 69,090
DEFERRED COMPENSATION 1,804 1,816
DEFERRED INCOME TAXES 14,970 13,956
STOCKHOLDERS' EQUITY:
Preferred stock, par value $1.00,
authorized 2,000 shares; none issued
Common Stock, par value $1.00, authorized
100,000 shares; issued 1995 - 46,856
shares 1994 - 46,856 shares 46,856 46,856
Additional paid-in capital 62,173 61,357
Less due from employees for exercise
of stock options (35) (35)
Retained earnings 383,803 369,131
Foreign currency translation adjustment (1,124) (1,805)
Less treasury stock-at cost 1995 - 3,206
shares and 1994 - 3,265 shares (34,763) (35,465)
------- -------
456,910 440,039
------- -------
$614,258 $600,004
------- -------
------- -------
</TABLE>
NOTE: The balance sheet at November 30, 1994 has been derived from the
audited financial statement at that date but does not include all of
the information and footnotes required by generally accepted
accounting principles for complete financial statements.
Page 3 of 16
<PAGE>
COMMUNITY PSYCHIATRIC CENTERS AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
Six Months Ended
May 31
1995 (Unaudited) 1994
---------------------
(000s omitted)
<S> <C> <C>
CASH FLOWS FROM
OPERATING ACTIVITIES:
Net income $ 15,108 $ 3,014
Items not resulting in cash flows:
Depreciation and amortization 11,058 8,911
Provision for uncollectible accounts 16,216 9,425
Restructuring credit (2,490) (875)
Other 2,273 (1,727)
Changes in assets and liabilities:
Short-term investments 4,629 --
Accounts receivable (37,743) (31,726)
Payable to third parties under
reimbursement contracts (1,654) (6,184)
Prepaid expenses and other current assets (884) 3,304
Accounts payable and accrued expense (2,742) 6,945
Accrued restructuring costs -- (5,011)
Income taxes 2,714 (151)
------- -------
Net cash provided from (used for) operations 6,485 (14,075)
FINANCING:
Proceeds from revolving credit facilities 15,851 19,311
Dividends paid (436) (435)
Net proceeds from exercise of stock options 590 4,935
Payments on long-term debt (16,090) (883)
------- -------
Net cash provided from (used for)
financing activities (85) 22,928
INVESTING:
Payments received on notes 370 2,851
Loans made to officers (300) --
Purchase of property, buildings and equipment (18,384) (21,376)
Investment in pre-opening costs (1,654) (2,653)
Proceeds from sale of property, buildings
and equipment 4,256 5,035
Payment for business acquisitions:
Property, buildings and equipment (6,531) (2,517)
Excess of purchase price over fair value of
assets acquired (221) (549)
------- -------
Net cash used for investing activities (22,464) (19,209)
------- -------
Net decrease in cash and
cash equivalents (16,064) (10,356)
Beginning cash and cash equivalents 37,263 24,640
------- -------
Ending cash and cash equivalents $ 21,199 $ 14,284
------- -------
------- -------
</TABLE>
See notes to condensed consolidated financial statements.
Page 4 of 16
<PAGE>
COMMUNITY PSYCHIATRIC CENTERS AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
MAY 31, 1995
NOTE A: BASIS OF PRESENTATION
The accompanying unaudited condensed consolidated financial
statements have been prepared in accordance with generally accepted
accounting principles for interim financial information and with the
instructions to Form 10-Q and Rule 10-01 of Regulation S-X.
Accordingly, they do not include all of the information and footnotes
required by generally accepted accounting principles for complete
financial statements. In the opinion of management, all adjustments
(consisting of normal recurring accruals) considered necessary for a
fair presentation have been included. For further information, refer
to the consolidated financial statements and footnotes thereto
included in the registrant's annual report on Form 10-K for the year
ended November 30, 1994.
NOTE B: RESTRUCTURING CHARGE (CREDIT)
Effective February 28, 1993, the Company recorded a pre-tax
charge of $55.0 million ($35.0 million after tax) in connection with
the decision to close seven of its psychiatric hospitals. The charge
comprised $35.3 million to write down buildings and other fixed
assets, $2.1 million to write off intangibles, $14.4 million for
future operating losses of the seven hospitals and related corporate
restructuring costs associated with terminating employees, and $3.2
million for additional accounts receivable allowances at the seven
hospitals. Six of the restructured hospitals have ceased operations.
The seventh hospital, which returned to operating status effective
March 1, 1994, has been reconstituted under new management into a
rapid stabilization facility. Of the six closed hospitals, five have
been sold and one has been converted into a long-term critical care
hospital operated by the Company's wholly owned subsidiary,
Transitional Hospitals Corporation (THC). The Company received cash
proceeds of approximately $5.0 million and $5.3 million, respectively,
in the first quarter of 1994 and the second and third quarters of 1995
from the sale of the five hospitals. The Company continues to hold
property for sale with a remaining book value of $.3 million that was
included as part of the restructuring in 1993.
Effective February 28, 1994, the Company recorded a restructuring
credit totalling $7.2 million ($4.3 million after tax) from the
resolution of the previously restructured psychiatric assets. The
restructuring credit resulted from the Company's success in
controlling hospital closure costs and in divesting one of its
restructured properties at a higher price than the 1993 writedown of
the facility anticipated.
Effective February 28, 1994, the Company recorded a restructuring
charge of $6.3 million ($3.8 million after tax) in connection with the
decision to close three additional psychiatric facilities. The charge
comprised $2.2 million for future operating losses, $1.5 million for
restructuring costs associated with terminating employees and $2.6
million for additional accounts receivable allowances and reserves for
other assets at the three hospitals. Approximately 225 employees of
the restructured hospitals were terminated. Amounts charged against
the reserve for estimated operating losses and termination benefits
paid approximated amounts originally accrued. Total revenue and net
operating income or (loss) for the three closed hospitals totalled
Page 5 of 16
<PAGE>
COMMUNITY PSYCHIATRIC CENTERS AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
MAY 31, 1995
$2.8 million and ($1.1 million)for the first quarter of 1994, $20
million and $.6 million for fiscal year 1993, and $23.5 million and
$2.3 million for fiscal year 1992. Of the three closed hospitals, one
is being held for sale, one was converted into a THC facility after
the restructuring, and one will be converted into a THC facility in
fiscal year 1995.
Effective May 31, 1995, the Company recorded a restructuring
credit totalling $2.5 million ($1.5 million after tax) from the
resolution of previously restructured psychiatric assets. The
restructuring credit resulted from divesting two restructured
properties at higher prices than the 1993 writedown of the facilities
anticipated and the Company's success in collecting accounts
receivable balances that were reserved for as part of the February 28,
1994 restructuring charge.
NOTE C: In March 1995 the FASB ("Financial Accounting Standards Board")
issued Statement No. 121, "Accounting for the Impairment of Long-Lived
Assets and for Long-Lived Assets to be Disposed Of", that becomes
effective for fiscal years beginning after December 15, 1995. The
statement establishes more consistent accounting standards for
measuring the recoverability of long-lived assets. The Company is in
the process of evaluating the new standard. Although the potential
impact on the Company of adopting the new standard cannot be fully
assessed at this time, the adoption of this statement could result in
a charge to operating income. The Company must adopt the new
statement no later than the quarter ended February 28, 1997.
NOTE D: Certain amounts have been reclassified in the 1994 Financial
Statements to conform with 1995 presentations.
Page 6 of 16
<PAGE>
PART I. FINANCIAL INFORMATION
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF
OPERATIONS AND FINANCIAL CONDITION
Results of Operations
SIX MONTHS ENDED MAY 31, 1995
The following table represents selected unaudited pro forma income
statement data for the six months ended May 31, 1995 and 1994, adjusted as if
the restructuring for the three hospitals restructured in the first quarter of
fiscal year 1994 had occurred on November 30, 1993. The table also excludes the
restructuring credits described in footnote B to the Financial Statements. The
data presented below may not be indicative of the results that would have been
obtained had the transaction described above actually occurred on the date
assumed. In the opinion of management, this data includes all adjustments,
consisting of normal recurring adjustments that the Company considers necessary
for a fair presentation of the data set forth therein.
<TABLE>
<CAPTION>
Six Months Ended
May 31
1995 (Unaudited) 1994
----------------------
(000s omitted)
<S> <C> <C>
Net operating revenues $255,479 $198,998
Investment and other income 1,552 741
------- -------
257,031 199,739
Costs and expenses:
Operating expense 187,118 159,251
General and administrative expense 18,586 15,903
Bad debt expense 16,216 8,960
Depreciation and amortization 11,058 8,786
Interest expense 2,023 1,800
------- -------
Total costs and expenses 235,001 194,700
Earnings before income taxes 22,030 5,039
Income taxes 8,416 2,016
------- -------
Net earnings $ 13,614 $ 3,023
------- -------
------- -------
</TABLE>
The following discussion excludes the restructuring charge and the
operating results for the three hospitals restructured in the first quarter of
1994 and the restructuring credits recorded in both years.
Net operating revenues for the six months ended May 31, 1995 increased by
approximately 28.4% to $255.5 million from $199.0 million for the first six
months of the prior year. The greatest part of this increase was a $53.1
million increase in THC revenue from $36.9 million in the first six months of
1994 to $90.0 million in the first six months of 1995. THC's same-store
admissions and patient days increased 78.3% and 103.3%, respectively.
Net operating revenues from the United States psychiatric hospitals
decreased by 4.4% or approximately $6.2 million as a result of an 8.3% decrease
in adjusted patient days offset by a 4.4% increase in net revenue per patient
day. Although admissions increased 7.6% for the U.S. Psychiatric division,
adjusted patient days declined due to the continuing decline in the average
length of a patient's stay. Net revenues for the U.S. Psychiatric division are
subject to material seasonal variations in the third quarter of each year as
patient volume is significantly lower in the summer months.
Page 7 of 16
<PAGE>
PART I. FINANCIAL INFORMATION
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF
OPERATIONS AND FINANCIAL CONDITION
Results of Operations (continued)
SIX MONTHS ENDED MAY 31, 1995 (continued)
Net operating revenues from the Company's United Kingdom operations
increased by 45.5% or approximately $9.6 million as a result of an increase in
same-store patient days of 24.7% and a 9.9% increase in average net revenue per
patient day. The remaining portion of the increase in net revenue relates to
additional patient days generated by two new facilities that started operations
subsequent to the second quarter of 1994.
Operating expenses decreased as a percentage of net operating revenues to
73.2% in the six months ended May 31, 1995 from 80.0% in the six months ended
May 31, 1994. General and administrative expenses decreased as a percentage of
net operating revenues to 7.3% from 8.0%. A higher percentage of THC's total
costs are now being reimbursed because an increased number of THC hospitals have
received certification for cost-based reimbursement under Medicare during the
first six months of 1995 compared to the first six months of 1994. THC
hospitals incur significant start up losses because they are not entitled to
cost based reimbursement for Medicare patients until they are certified as long-
term care hospitals. Pending such certification, these start up hospitals are
reimbursed under the Medicare Prospective Payment System which does not pay the
full cost of treating Medicare patients with the severity of illness treated at
THC facilities. Of the 14 hospitals in operation during the first six months of
1995, 12 were certified as long-term care hospitals and therefore received cost-
based reimbursement under Medicare, whereas at the same time in 1994, 12
facilities were in operation and only three had been open long enough to
receive their long-term care hospital certification.
In addition, the Company implemented cost-containment programs in the
fourth quarter of 1994 which included consolidation of several corporate
administrative functions for the U.S. Psychiatric Division and THC and the
reduction of personnel and other overhead.
Bad debt expense increased from 4.5% of net operating revenues in the first
six months of 1994 to 6.3% in the first six months of 1995. Approximately $3.5
million of this increase resulted from a slowdown in the billing and collection
functions for 11 U.S. Psychiatric hospitals as the Company centralized those
functions in a central billing office in Las Vegas, Nevada in late 1994 (three
hospitals) and the first quarter of 1995 (eight hospitals). Contributing to the
slowdown in collections was the conversion of several state Medicaid payors to
managed care initiatives at the beginning of 1995. The Company anticipates
future increases in bad debt expense due to decreased annual and lifetime
psychiatric maximum payment limits for individual patients and increased
deductibles and co-insurance.
Investment and other income increased primarily due to the addition of $.4
million of income in the current year from a residential treatment center joint
venture that had not started operations in the comparable prior year period.
Page 8 of 16
<PAGE>
PART I. FINANCIAL INFORMATION
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF
OPERATIONS AND FINANCIAL CONDITION
Results of Operations (continued)
SIX MONTHS ENDED MAY 31, 1995 (continued)
Following is a summary of net income by business segment, excluding the
restructuring credit, for the six months ended May 31, 1995:
<TABLE>
<CAPTION>
(000s)
-------
<S> <C>
U.S. Psychiatric division $ 6,080
U.K. Psychiatric division 5,179
Long-term critical care division 2,355
-------
Net income $ 13,614
-------
-------
</TABLE>
For the reasons described above, earnings before depreciation,
amortization, interest, other income and income taxes for the six months ended
May 31, 1995 increased from $14.9 million in the first six months of 1994 to
$33.6 million in the first six months of 1995.
THREE MONTHS ENDED MAY 31, 1995
Net operating revenues for the quarter ended May 31, 1995 increased by
approximately 25.4% to $135.9 million from $108.4 million for the second quarter
of the prior year. The greatest part of this increase was due to a $26.4
million increase in THC revenue from $22.7 million in the second quarter of 1994
to $49.1 million in the second quarter of 1995. THC's same-store admissions and
patient days increased 70.4% and 101.9%, respectively.
Net operating revenues from the United States psychiatric hospitals
decreased by 4.4% or approximately $3.3 million as a result of a 11.3% decrease
in adjusted patient days offset by a 7.7% increase in net revenue per patient
day. Although admissions increased 1.6% for the U.S. Psychiatric division,
adjusted patient days declined due to the continuing decline in the average
length of a patient's stay. Net revenue per patient day increased as the
Company had more favorable cost report settlements in excess of recorded amounts
in the current year quarter than it did in the comparable prior year quarter.
Net operating revenues from the Company's United Kingdom operations
increased by 38.1% or approximately $4.4 million as a result of an increase in
same-store patient days of 19.9% and a 7.9% increase in average net revenue per
patient day. The remaining portion of the increase in net revenue relates to
additional patient days generated by two new facilities that started operations
subsequent to the second quarter of 1994.
Operating expenses decreased as a percentage of net operating revenues to
72.8% in the quarter ended May 31, 1995 from 78.9% in the quarter ended May 31,
1994. General and administrative expenses decreased as a percentage of net
operating revenues to 7.3% from 7.7%. A higher percentage of THC's total costs
are now being reimbursed because an increased number of THC hospitals have
received certification for cost-based reimbursement under Medicare during the
second quarter of 1995 compared to the second quarter of 1994. THC hospitals
incur significant start up losses because they are not entitled to cost based
reimbursement for Medicare patients until they are certified as long-term care
hospitals. Pending such certification, these start up hospitals are reimbursed
under the Medicare Prospective Payment System which does not pay the full cost
of treating Medicare patients with the severity of illness treated at THC
Page 9 of 16
<PAGE>
PART I. FINANCIAL INFORMATION
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF
OPERATIONS AND FINANCIAL CONDITION
Results of Operations (continued)
THREE MONTHS ENDED MAY 31, 1995 (continued)
facilities. Of the 14 hospitals in operation during the second quarter of 1995,
12 were certified as long-term care hospitals and therefore received cost-based
reimbursement under Medicare, where as in the year-earlier quarter, 12
facilities were in operation and only three had been open long enough to receive
their long-term care hospital certification.
Bad debt expense increased from 4.8% of net operating revenues in the
second quarter of 1994 to 6.3% in the second quarter of 1995. A portion of the
increase relates to the fact that collections have slowed from certain state
Medicaid programs that have converted to managed care initiatives in early 1995.
In addition, the Company moved eight psychiatric hospitals to a central billing
office in the first quarter of 1995 which also contributed to the slowdown in
billings and collections.
The decrease in the effective tax rate from 40.1% to 38.0% is primarily due
to a reduction in the net operating loss valuation reserve for THC operating
loss carryforwards that have been realized in the current year and those that
are expected to be realized in future years.
Following is a summary of net income by business segment, excluding the
restructuring credit, for the three months ended May 31, 1995:
<TABLE>
<CAPTION>
(000s)
-------
<S> <C>
U.S. Psychiatric division $ 3,557
U.K. Psychiatric division 2,973
Long-term critical care division 1,154
------
Net income $ 7,684
------
------
</TABLE>
For the reasons described above, earnings before depreciation,
amortization, interest, other income and income taxes for the quarter ended May
31, 1995 increased from $9.3 million in the second quarter of 1994 to $18.6
million in the second quarter of 1995.
LIQUIDITY AND CAPITAL RESOURCES AT MAY 31, 1995
Cash flows provided from operations were $6.5 million for the six months
ended May 31, 1995 as compared to cash flows used for operations of $14.1
million for the comparable period of 1994. Net accounts receivable balances
increased $21.5 million during the six months ended May 31, 1995 as compared to
$22.3 million during the comparable period of 1994. The main reason for the
increase in accounts receivable since November of 1994 is that quarterly net
revenue for THC has increased $13.1 million to $49.1 million for the second
quarter of 1995 compared to $36.0 million for the fourth quarter of 1994. Due
to the increase in net revenue, THC accounts receivable increased $12.9 million
since November 30, 1994.
Accounts receivable for the U.S. Psychiatric Division increased $5.7 million
since November 30, 1994. During the fourth quarter of 1994 and the first
quarter of 1995, the Company centralized the billing and collection functions
for 11 of its psychiatric hospitals in a central billing office located in Las
Vegas, Nevada. The functions for eight of these hospitals were centralized in
the first quarter of 1995. For two of these hospitals, the full conversion was
not complete until May of 1995 contributing to a slowdown in the billing and
collection functions and increased accounts receivable balances over the past
two
Page 10 of 16
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS AND
FINANCIAL CONDITION
LIQUIDITY AND CAPITAL RESOURCES AT MAY 31, 1995 (continued)
quarters. In addition, conversions to managed care initiatives by certain state
Medicaid programs in early 1995 have slowed the collection process and
contributed to the higher accounts receivable balances for hospitals in those
states. On a consolidated basis, days revenue in accounts receivable decreased
to 84 days at May 31, 1995 compared to 87 days at May 31, 1994.
Proceeds from revolving credit facilities were used to pay off $15 million
of 8 1/2 subordinated guaranteed debentures that were due on March 1, 1995. A
$.01 dividend ($.4 million) was paid to shareholders in redemption of all
preferred share rights outstanding under the Shareholder Rights Agreement dated
as of February 1, 1989.
Proceeds totalling $4.3 million were received from the sale of two
hospitals that were restructured in 1993. Purchases of fixed assets totalled
$18.4 million in the first six months of 1995. The Company also acquired for
$5.8 million, the land, building, and fixed assets for a THC facility that has
been managed by THC since May of 1994. The Company presently expects to expend
up to $12 million over the remaining six months of 1995 for the conversion and
renovation of its THC facilities and expansion into new markets. The Company
also expects to spend approximately $7 million over the remainder of 1995 on
capital expenditures for renovation of its psychiatric facilities and
acquisitions in the United Kingdom.
In January 1995, the Board of Directors authorized the expenditure to build
a new Corporate office which will be situated on the campus of the THC Las Vegas
Hospital in Las Vegas, Nevada. A portion of this building will be utilized by
the hospital to expand patient care space. The Company expects to expend $10.2
million on the construction of the building of which $7.7 million is expected to
be expended in fiscal year 1995.
The Company has a $25.0 million revolving credit facility with Bank of
America National Trust and Savings Association ("BofA"), all of which has been
borrowed as of May 31, 1995. The Company may borrow, repay and reborrow up to
$25 million through November 30, 1995 (the revolving loan period), at which time
any amount outstanding is converted into a term loan payable in equal quarterly
installments through November 30, 1998. The Company's subsidiary in the United
Kingdom has a credit facility whereby the Company is allowed to borrow up to $15
million. At May 31, 1995, approximately $7.9 million was outstanding under this
facility. On May 6, 1994, the Company entered into an additional revolving
credit facility with Bank of America for $50 million. As of May 31, 1995, $35
million was outstanding under this facility. Any amount outstanding under this
facility is due and payable on February 28, 1996. Unused revolving credit
facilities of approximately $22 million remain available to the Company at May
31, 1995. The Company believes that its current cash and cash equivalent
balances, its operating cash flow, and the amounts available under its revolving
credit facilities will be sufficient to fund the Company's operations and
capital expenditures through the end of fiscal 1995. The Company will be
evaluating proposals for additional funding as needed to support further
expansion of THC and to repay outstanding borrowings under the existing credit
facilities.
Page 11 of 16
<PAGE>
COMMUNITY PSYCHIATRIC CENTERS AND SUBSIDIARIES
MAY 31, 1995
PART II. OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
See Part I, Item 3 of the Company's Report on Form 10-K for the fiscal year
ended November 30, 1995.
ITEM 2. CHANGE IN SECURITIES
At the May 14, 1994 annual meeting of CPC shareholders, shareholders voted
in favor of terminating the Company's Shareholder Rights Agreement dated as
of February 1, 1989. In March of 1995, the Board of Directors voted to
terminate the Shareholder Rights Agreement and ordered the redemption of
all of the preferred share rights outstanding under that Agreement at a
redemption price of $.01 per right. The termination was effective March
31, 1995 and redemption payments were made to shareholders of record as of
that date.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
The following table describes the matter voted upon at the annual
meeting of stockholders held May 18, 1995 and shows the number of votes
cast for, against or withheld. There were no abstentions or broker
nonvotes as to such matter.
<TABLE>
<CAPTION>
Against/
For Withheld
----------- --------
<S> <C> <C>
1. Election of two
directors to serve
until the annual
meeting in 1998 and
until their successors
are duly elected and
qualified:
a. Hartly Fleischmann 38,460,094 505,324
b. Jack H. Lindheimer, M.D. 38,460,610 504,808
</TABLE>
ITEM 6: EXHIBITS AND REPORTS ON FORM 8-K:
A) The following exhibits are included herein:
Exhibit 11: Computation of Earnings per Share
The registrant was not required to file a Form 8-K during the six
months ended May 31, 1995.
Page 12 of 16
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
COMMUNITY PSYCHIATRIC CENTERS
(Registrant)
Dated: July 14, 1995 /s/ WENDY SIMPSON
------------------------------
Wendy Simpson
Chief Financial Officer
Page 13 of 16
<PAGE>
EXHIBIT INDEX
EXHIBIT PAGE NO.
- - ------- --------
11 Computation of Earnings Per Share 15
27 Financial Data Schedule 16
Page 14 of 16
<PAGE>
EXHIBIT 11
COMMUNITY PSYCHIATRIC CENTERS AND SUBSIDIARIES
COMPUTATION OF EARNINGS PER SHARE
<TABLE>
<CAPTION>
Six Months Ended Three Months Ended
May 31 May 31
1995 1994 1995 1994
---------------- ----------------
(000s, except per share data)
<S> <C> <C> <C> <C>
Weighted average
common shares* 43,614 43,247 43,632 43,367
------ ------ ------ ------
------ ------ ------ ------
Net Earnings
$15,108 $ 3,014 $ 9,178 $ 2,389
------ ------ ------ ------
------ ------ ------ ------
Earnings per share
$ .35 $ .07 $ .21 $ .06
------ ------ ------ ------
------ ------ ------ ------
<FN>
* Dilutive common stock equivalents are less than 3% of weighted average
common shares outstanding.
</TABLE>
Page 15 of 16
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> NOV-30-1995
<PERIOD-START> DEC-01-1994
<PERIOD-END> MAY-31-1995
<CASH> 21,199
<SECURITIES> 0
<RECEIVABLES> 124,655
<ALLOWANCES> 31,861
<INVENTORY> 0
<CURRENT-ASSETS> 178,952
<PP&E> 390,539
<DEPRECIATION> 102,148
<TOTAL-ASSETS> 614,258
<CURRENT-LIABILITIES> 98,069
<BONDS> 42,505
<COMMON> 46,856
0
0
<OTHER-SE> 410,054
<TOTAL-LIABILITY-AND-EQUITY> 614,258
<SALES> 255,479
<TOTAL-REVENUES> 257,031
<CGS> 187,118
<TOTAL-COSTS> 187,118
<OTHER-EXPENSES> 29,644
<LOSS-PROVISION> 16,216
<INTEREST-EXPENSE> 2,023
<INCOME-PRETAX> 24,520
<INCOME-TAX> 9,412
<INCOME-CONTINUING> 15,108
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 15,108
<EPS-PRIMARY> .35
<EPS-DILUTED> .35
</TABLE>
