<PAGE>
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
/x/ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934
FOR THE QUARTERLY PERIOD ENDED NOVEMBER 30, 1994
OR
/ / TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from _______to_______
AMERICAN MEDICAL HOLDINGS, INC.
(Exact name of registrant as specified in its charter)
Delaware 1-10511 13-3527632
(State or other jurisdiction of (Commission file number) (I.R.S. Employer
incorporation or organization) Identification No.)
AMERICAN MEDICAL INTERNATIONAL, INC.
(Exact name of registrant as specified in its charter)
Delaware 1-7612 95-2111054
(State or other jurisdiction of (Commission file number) (I.R.S. Employer
incorporation or organization) Identification No.)
14001 N. Dallas Parkway, Dallas, Texas 75240
(Address of principal executive offices) (Zip code)
(214) 789-2200
(Registrants' telephone number, including area code)
Indicate by check mark whether the Registrants (1) have 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
Registrants were required to file such reports), and (2) have been subject to
such filing requirements for the past 90 days. American Medical Holdings, Inc.
Yes X No . American Medical International, Inc. Yes X No .
- - - -
As of January 10, 1994, there were 77,622,233 shares of American Medical
Holdings, Inc. Common Stock, $.01 par value outstanding.
All shares of Common Stock, $.01 par value, of American Medical
International, Inc. are held by American Medical Holdings, Inc.
<PAGE>
TABLE OF CONTENTS
PART I - FINANCIAL INFORMATION
<TABLE>
<CAPTION>
<S> <C> <C>
ITEM 1 - FINANCIAL STATEMENTS
Condensed Consolidated Balance Sheets -
November 30, 1994 and August 31, 1994. . . . . . . . . . . . . . . . . . 1
Condensed Consolidated Statements of Income -
Three Months Ended November 30, 1994 and November 30, 1993 . . . . . . . 2
Condensed Consolidated Statements of Cash Flows -
Three Months Ended November 30, 1994 and November 30, 1993 . . . . . . . 3
Notes to Condensed Consolidated Financial Statements . . . . . . . . . . 4
ITEM 2 - MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS. . . . . . . . . . . . . . 7
PART II - OTHER INFORMATION
ITEM 1 - LEGAL PROCEEDINGS. . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
ITEM 2 - CHANGES IN SECURITIES. . . . . . . . . . . . . . . . . . . . . . . . . . 12
ITEM 3 - DEFAULTS UPON SENIOR SECURITIES. . . . . . . . . . . . . . . . . . . . . 12
ITEM 4 - SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS. . . . . . . . . . . 12
ITEM 5 - OTHER INFORMATION. . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
ITEM 6 - EXHIBITS AND REPORTS ON FORM 8-K . . . . . . . . . . . . . . . . . . . . 12
</TABLE>
<PAGE>
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
AMERICAN MEDICAL HOLDINGS, INC. AND SUBSIDIARIES
AMERICAN MEDICAL INTERNATIONAL, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS)
<TABLE>
<CAPTION>
NOVEMBER 30, 1994 AUGUST 31, 1994
-------------------------- --------------------------
HOLDINGS AMI HOLDINGS AMI
------------- ------------ ------------- ------------
(UNAUDITED)
<S> <C> <C> <C> <C>
ASSETS
CURRENT ASSETS:
Cash and cash equivalents $ 21,377 $ 21,377 $ 31,941 $ 31,941
Accounts receivable, net 167,444 167,444 147,415 147,415
Income taxes, net (including current portion of
deferred income taxes) 15,461 15,461 30,876 30,876
Other current assets 83,411 83,411 78,577 78,577
----------- ----------- ----------- -----------
Total current assets 287,693 287,693 288,809 288,809
----------- ----------- ----------- -----------
PROPERTY AND EQUIPMENT 2,022,574 2,022,574 1,971,396 1,971,396
Less - accumulated depreciation 540,338 540,338 507,653 507,653
----------- ----------- ----------- -----------
Net property and equipment 1,482,236 1,482,236 1,463,743 1,463,743
----------- ----------- ----------- -----------
NOTES RECEIVABLE AND INVESTMENTS 39,978 39,978 40,082 40,082
COST IN EXCESS OF NET ASSETS ACQUIRED, NET 1,153,928 1,153,928 1,153,887 1,153,887
OTHER ASSETS 60,983 60,983 30,026 30,026
----------- ----------- ----------- -----------
$ 3,024,818 $ 3,024,818 $ 2,976,547 $ 2,976,547
----------- ----------- ----------- -----------
----------- ----------- ----------- -----------
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES $ 479,393 $ 479,393 $ 476,464 $ 476,464
LONG-TERM DEBT 1,136,545 1,136,545 1,130,967 1,130,967
CONVERTIBLE SUBORDINATED DEBT 10,383 10,383 10,707 10,707
DEFERRED INCOME TAXES 218,651 218,651 218,651 218,651
OTHER DEFERRED CREDITS AND LIABILITIES 306,290 306,290 291,040 291,040
COMMITMENTS AND CONTINGENCIES
SHAREHOLDERS' EQUITY:
Common stock 776 725 775 725
Additional paid-in capital 609,887 594,286 608,096 592,494
Retained earnings 268,593 284,245 245,547 261,199
Adjustment for minimum pension liability (5,700) (5,700) (5,700) (5,700)
----------- ----------- ----------- -----------
Total shareholders' equity 873,556 873,556 848,718 848,718
----------- ----------- ----------- -----------
$ 3,024,818 $ 3,024,818 $ 2,976,547 $ 2,976,547
----------- ----------- ----------- -----------
----------- ----------- ----------- -----------
</TABLE>
SEE ACCOMPANYING NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS.
1
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AMERICAN MEDICAL HOLDINGS, INC. AND SUBSIDIARIES
AMERICAN MEDICAL INTERNATIONAL, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
(UNAUDITED)
<TABLE>
<CAPTION>
THREE MONTHS ENDED NOVEMBER 30,
------------------------------------------------------------------
1994 1993
-------------------------- --------------------------
HOLDINGS AMI HOLDINGS AMI
------------- ------------ ------------- ------------
<S> <C> <C> <C> <C>
NET REVENUES $ 632,211 $ 632,211 $ 558,217 $ 558,217
OPERATING COSTS AND EXPENSES:
Salaries and benefits 236,925 236,925 205,414 205,414
Supplies 91,791 91,791 79,482 79,482
Provision for uncollectible accounts 42,122 42,122 39,036 39,036
Depreciation and amortization 41,090 41,090 38,273 38,273
Other operating costs 140,200 140,200 126,654 126,654
----------- ----------- ----------- -----------
Total operating costs and expenses 552,128 552,128 488,859 488,859
----------- ----------- ----------- -----------
OPERATING INCOME 80,083 80,083 69,358 69,358
Interest expense, net (39,275) (39,275) (38,848) (38,848)
----------- ----------- ----------- -----------
INCOME BEFORE TAXES AND MINORITY EQUITY
INTEREST 40,808 40,808 30,510 30,510
Provision for income taxes (17,100) (17,100) (12,900) (12,900)
----------- ----------- ----------- -----------
NET INCOME BEFORE MINORITY EQUITY INTEREST 23,708 23,708 17,610 17,610
Minority equity interest (662) (662) (1,097) (1,097)
----------- ----------- ----------- -----------
NET INCOME $ 23,046 $ 23,046 $ 16,513 $ 16,513
----------- ----------- ----------- -----------
----------- ----------- ----------- -----------
PER SHARE DATA:
Net income per common and
common equivalent share $ 0.30 N/A $ 0.21 N/A
----------- -----------
----------- -----------
Shares used for computation of
net income per share 77,567 N/A 76,938 N/A
----------- -----------
----------- -----------
</TABLE>
SEE ACCOMPANYING NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS.
2
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AMERICAN MEDICAL HOLDINGS, INC. AND SUBSIDIARIES
AMERICAN MEDICAL INTERNATIONAL, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(IN THOUSANDS)
(UNAUDITED)
<TABLE>
<CAPTION>
THREE MONTHS ENDED NOVEMBER 30,
------------------------------------------------------------------
1994 1993
-------------------------- --------------------------
HOLDINGS AMI HOLDINGS AMI
------------- ------------ ------------- ------------
<S> <C> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $ 23,046 $ 23,046 $ 16,513 $ 16,513
Adjustments to reconcile to net cash
provided by operating activities:
Depreciation and amortization 41,090 41,090 38,273 38,273
Amortization of debt discount, deferred
financing costs and non-cash interest 12,348 12,348 12,481 12,481
Change in working capital (21,843) (21,843) (11,925) (11,925)
Other 1,090 1,090 129 129
----------- ----------- ----------- -----------
NET CASH PROVIDED BY OPERATING ACTIVITIES 55,731 55,731 55,471 55,471
----------- ----------- ----------- -----------
CASH FLOWS FROM FINANCING ACTIVITIES:
Payments on debt (3,748) (3,748) (31,507) (31,507)
Revolving credit facility (4,000) (4,000) (28,000) (28,000)
Other 1,240 1,240 1,008 1,008
----------- ----------- ----------- -----------
NET CASH USED IN FINANCING ACTIVITIES (6,508) (6,508) (58,499) (58,499)
----------- ----------- ----------- -----------
CASH FLOWS FROM INVESTING ACTIVITIES:
Property and equipment additions (30,662) (30,662) (27,093) (27,093)
Acquisitions (18,209) (18,209) - -
Decrease (increase) in other assets (14,054) (14,054) 1,251 1,251
Additions in notes receivable and
investments (2,023) (2,023) (1,773) (1,773)
Decrease in notes receivable and
investments 4,524 4,524 1,453 1,453
Other 637 637 (1,506) (1,506)
----------- ----------- ----------- -----------
NET CASH USED IN INVESTING ACTIVITIES (59,787) (59,787) (27,668) (27,668)
----------- ----------- ----------- -----------
DECREASE IN CASH AND CASH EQUIVALENTS (10,564) (10,564) (30,696) (30,696)
Cash and cash equivalents, beginning of period 31,941 31,941 44,335 44,335
----------- ----------- ----------- -----------
CASH AND CASH EQUIVALENTS, END OF PERIOD $ 21,377 $ 21,377 $ 13,639 $ 13,639
----------- ----------- ----------- -----------
----------- ----------- ----------- -----------
</TABLE>
SEE ACCOMPANYING NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS.
3
<PAGE>
AMERICAN MEDICAL HOLDINGS, INC. AND SUBSIDIARIES
AMERICAN MEDICAL INTERNATIONAL, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
1. BASIS OF PRESENTATION
American Medical Holdings, Inc. ("Holdings") was organized in July 1989 to
acquire American Medical International, Inc. ("AMI" and, together with Holdings,
the "Company"). As a result of this acquisition, Holdings is the owner of all
of the outstanding shares of common stock of AMI.
The accompanying unaudited condensed consolidated financial statements
include the accounts of Holdings, AMI and all majority owned subsidiary
companies and have been prepared in accordance with generally accepted
accounting principles for interim financial information. In the opinion of
management, all adjustments, consisting only of normal recurring adjustments
necessary for a fair presentation, have been included in the accompanying
interim financial statements. The condensed consolidated balance sheet as of
August 31, 1994, was derived from the audited financial statements, but does not
include all disclosures required by generally accepted accounting principles.
All significant intercompany accounts and transactions have been eliminated.
Certain reclassifications have been made to the prior period's financial
statements to be consistent with the current year presentation. For additional
disclosure, refer to Holdings' and AMI's Annual Report on Form 10-K for the year
ended August 31, 1994.
2. PLAN OF MERGER
On October 10, 1994, Holdings, National Medical Enterprises, Inc. a Nevada
corporation ("NME") and a wholly-owned subsidiary of NME ("Merger Sub"),
executed an agreement and plan of merger (the "Merger Agreement"). Pursuant to
the Merger Agreement, Merger Sub will merge with and into Holdings (the
"Merger"). As a result of the Merger, Holdings will become a wholly-owned
subsidiary of NME and the combined company will be the second-largest healthcare
services company in the nation. Under terms of the Merger Agreement each
outstanding share of common stock of Holdings, par value $0.01 per share, will
be converted into the right to receive (i) $19.00 in cash, if the closing occurs
on or before March 31, 1995, and $19.25 thereafter and (ii) 0.42 of a newly
issued share of NME common stock. Under the Merger Agreement, Holdings will pay
a special dividend of $0.10 per share before the effective date of the Merger.
Approximately 50% of the Company's indebtedness contains put provisions whereby
the holders of such debt have the right to require repayment following a change
of control of the Company. The transaction has been approved by shareholders of
approximately 61.4% of Holdings' outstanding shares of common stock and,
therefore, further action by Holdings' shareholders is not required. The
transaction is currently anticipated to close in the first quarter of calendar
1995.
3. ACQUISITIONS
On September 1, 1994, a limited partnership, of which a wholly-owned
subsidiary of AMI is general partner, acquired Hilton Head Hospital in Hilton
Head, South Carolina containing 68 licensed beds. In connection with the
Company's efforts to re-establish a presence in Europe, in September 1994, the
Company entered into a joint venture agreement with a community organization
(the "Burgergemeinde") located in Cham, Canton Zug, Switzerland. The joint
venture is owned 90% by the Company and 10% by the Burgergemeinde. Under the
terms of the transaction, the Company has entered into a long term lease for the
land where the existing hospital is located and will renovate and remodel the
existing acute care facility, construct a new 56 bed acute care wing and convert
an existing structure into a medical office building. In addition, the Company
plans to contract to provide management, food, physical therapy and
rehabilitation services to the hospital, an on-site nursing home and an
affiliated retirement community.
4
<PAGE>
AMERICAN MEDICAL HOLDINGS, INC. AND SUBSIDIARIES
AMERICAN MEDICAL INTERNATIONAL, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
4. ACCOUNTS RECEIVABLE
As of November 30, 1994, and August 31, 1994, Holdings and AMI had reserves
for uncollectible receivables of $100.0 million and $98.6 million, respectively.
5. COST IN EXCESS OF NET ASSETS ACQUIRED
Cost in excess of net assets acquired is amortized over 40 years.
Holdings' and AMI's cumulative amortization of cost in excess of net assets
acquired as of November 30, 1994 and August 31, 1994, was $165.3 million and
$157.2 million, respectively. Amortization of cost in excess of net assets
acquired for Holdings and AMI was $8.1 million and $8.0 million for the three
months ended November 30, 1994 and 1993, respectively.
6. LONG-TERM DEBT
As of November 30, 1994, $262.0 million was outstanding under the Company's
$600 million revolving credit facility which expires in September 1999 and
presently accrues interest at 6.5%. In addition, as of November 30, 1994
$34.8 million in letters of credit were issued thereunder.
AMI has entered into swap agreements which hedge any foreign currency gains
or losses on the Company's L37 million senior notes due February 1995, face
amount $62.7 million at an interest rate of 8.0%, and the SFr.78 million bonds
due March 1996, face amount $52.4 million at an interest rate of 5.15%. Such
swap agreements are through the date of maturity of such debt and include the
face amount of each such debt and the fixed interest rate thereof stated. At
November 30, 1994 no loss would be recognized if the counter parties to these
swap agreements failed to perform their obligations.
7. COMMITMENTS AND CONTINGENCIES
Holdings and AMI are subject to claims and suits arising in the ordinary
course of business. In the opinion of management, the ultimate resolution of
all pending legal proceedings will not have a material adverse effect on the
business, results of operations, cash flows or financial condition of Holdings
or AMI.
8. CAPITAL STOCK
As of November 30, 1994, Holdings had 200 million shares of $0.01 par value
common stock authorized. Of such shares, 77,622,233 and 77,491,000 were
outstanding as of November 30, 1994, and August 31, 1994, respectively. As of
November 30, 1994, Holdings had five million shares of $0.01 par value of
Preferred Stock authorized, of which none were outstanding.
Holdings is the owner of all outstanding shares of common stock of AMI. As
of November 30, 1994, and August 31, 1994, AMI had 200 million shares of $0.01
par value common stock authorized of which 72,481,000 shares were outstanding.
5
<PAGE>
AMERICAN MEDICAL HOLDINGS, INC. AND SUBSIDIARIES
AMERICAN MEDICAL INTERNATIONAL, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
9. NET REVENUES
The Company's sources of revenues are primarily provided from patient
services and are presented net of reserves to recognize the difference between
the hospitals' established billing rates for covered services and the amount
paid by third party or private payers. Patient revenues received under
government and privately sponsored insurance programs are based on cost as
defined under the programs or at predetermined rates based upon the diagnosis,
plus capital costs, return on equity, and other adjustments rather than
customary charges. Adjustments are recorded in the period services are rendered
based on estimated amounts to be reimbursed and contract interpretations,
however, such adjustments are generally subject to final audit and settlement.
Net revenues include adjustments for the three months ended November 30, 1994
and 1993 of $576.3 million, and $490.6 million, respectively. In management's
opinion, the reserves established are adequate to cover the ultimate liabilities
that may result from final settlements.
Net revenues from Medicare/Medicaid programs represented 44% and 40% of
total net revenues for the three months ended November 30, 1994 and 1993,
respectively. The Company's net revenues from contracted business represented
25% and 26% of total net revenues for the three months ended November 30, 1994
and 1993, respectively.
10. MINORITY EQUITY INTEREST
Minority equity interest expense of $1.1 million and $1.8 million
for the three months ended November 30, 1994 and 1993, respectively, is
presented net of income taxes in the accompanying condensed consolidated
statements of income.
11. SUPPLEMENTAL CASH FLOW INFORMATION
The Company paid income taxes (net of refunds) of $1.3 million and $0.6
million for the three months ended November 30, 1994 and 1993, respectively.
The Company paid interest (net of capitalized costs) for the three months ended
November 30, 1994 and 1993 of $19.9 million and $19.3 million, respectively.
Capitalized interest costs were $0.4 million and $0.6 million for the three
months ended November 30, 1994 and 1993, respectively. Interest income was $0.6
million and $0.8 million for the three months ended November 30, 1994 and 1993.
In conjunction with the acquisition of Hilton Head Hospital in September
1994 by a limited partnership, of which a wholly-owned subsidiary of AMI is
general partner, the Company recorded net assets of $14.6 million.
6
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
LIQUIDITY AND CAPITAL RESOURCES
The Company's cash and cash equivalents at November 30, 1994 were $21.4
million compared to $31.9 million at August 31, 1994. The decrease of $10.5
million was primarily due to the acquisition of facilities during the period.
The working capital deficit at November 30, 1994 of $191.7 million was
comparable to the deficit of $187.6 million at August 31, 1994. Accounts
receivable of $167.4 million at November 30, 1994 increased $20.0 million from
$147.4 million at August 31, 1994 while the income tax receivable decreased
$15.4 million to $15.5 million at November 30, 1994 from $30.9 million at August
31, 1994. The addition of a hospital, growth in net revenues, and a decrease
in the amount of receivables collected during the period were the primary
components of the increase in accounts receivable at November 30, 1994. The
decrease in the income tax receivable is primarily due to the current income tax
provision. Current liabilities at November 30, 1994 of $479.4 million
remained relatively the same as the same period a year ago. Cash provided by
operating activities of $55.7 million for the three months ended November 30,
1994 was comparable to $55.5 million for the same period a year ago. The
funding of the Company's pension plan assets and acquisition related
transactions resulted in other long term assets of $61.0 million at November 30,
1994 compared to $30.0 million at August 31, 1994.
The Company invested $30.7 million in capital expenditures (excluding
acquisitions) for the three months ended November 30, 1994, compared to $27.1
million for the three months ended November 30, 1993. Capital expenditures made
by the Company and construction commitments outstanding of approximately $42.0
million are for the expansion and renovations of facilities to accommodate new
inpatient and outpatient programs and to further develop certain lines of
business, including home health, surgery centers and physician practices. The
Company intends to continue to invest in new and existing operations within the
healthcare industry.
Cash of $18.2 million was used during the three months ended November 30,
1994 for the acquisition of healthcare related facilities and an investment in a
limited partnership, of which a wholly-owned subsidiary of AMI is general
partner, which acquired a hospital in Hilton Head, South Carolina. Through its
subsidiaries AMI owns 70% of the limited partnership. In connection with the
Company's efforts to re-establish a presence in Europe, in September 1994 the
Company entered into a joint venture agreement with a community organization
(the "Burgergemeinde") located in Cham, Canton Zug, Switzerland. The joint
venture is owned 90% by the Company and 10% by the Burgergemeinde. Under the
terms of the transaction, the Company will enter into a long term lease for the
land where the existing hospital is located and will then construct a new 56 bed
acute care wing, convert an existing structure into a medical office building
and renovate and remodel the existing acute care facility. In addition, the
Company plans to contract to provide management, food, physical therapy and
rehabilitation services to the hospital, an on-site nursing home and an
affiliated retirement community.
The Company repaid (excluding repayments on the revolving credit facility)
$3.7 million of long-term debt during the three months ended November 30, 1994
from cash provided by operating activities and short-term cash investments. The
amount outstanding under the Company's $600 million revolving credit facility at
November 30, 1994 was $262.0 million, a decrease of $4.0 million from $266.0
million at August 31, 1994.
Management believes that sufficient funds will be generated from
operations, augmented by borrowings under the revolving credit facility, to
finance operations, capital expenditures and service debt. Scheduled principal
payments, excluding amounts that may become due on the revolving credit
facility, will be $155.8 million in the remainder of fiscal 1995, $57.1 million
in fiscal 1996, $182.2 million in fiscal 1997, $2.3 million in fiscal 1998,
$2.6 million in fiscal 1999, and $26.9 million in fiscal 2000.
7
<PAGE>
The terms of certain indebtedness of the Company impose operating and
financial restrictions requiring the Company to maintain certain financial
ratios and restrict the Company's ability to incur additional indebtedness and
enter into leases and guarantees of debt; to make capital expenditures; to make
loans and investments; to pay dividends or repurchase shares of stock; to
repurchase, retire or refinance indebtedness prior to maturity; and to purchase
or sell assets. The Company has pledged the capital stock of certain direct
(first tier) subsidiaries as security for its obligations under the revolving
credit facility and certain other senior indebtedness. In addition, the Company
has granted a security interest in its accounts receivable as security for its
obligations under the revolving credit facility. Management believes that the
Company is currently in compliance with all material covenants and restrictions
contained in all financing agreements.
8
<PAGE>
RESULTS OF OPERATIONS
AMI's results of operations are the same as that of the Company's;
therefore, separate results of operations and a discussion and analysis for AMI
are not presented. The following table summarizes certain consolidated results
of the Company (dollars in millions):
<TABLE>
<CAPTION>
Three Months Ended November 30,
-------------------------------------------------
1994 1993
---------------------- ---------------------
% of Net % of Net
Revenues Revenues
-------- --------
<S> <C> <C> <C> <C>
NET REVENUES $ 632 100.0% $ 558 100.0%
------ ------ ------ ------
OPERATING COSTS AND EXPENSES
Salaries and benefits 237 37.5 205 36.8
Supplies 92 14.5 80 14.2
Provision for uncollectible accounts 42 6.6 39 7.0
Depreciation and amortization 41 6.5 38 6.9
Other operating costs 140 22.2 126 22.7
------ ----- ------ -----
Total operating costs and expenses 552 87.3 488 87.6
------ ----- ------ -----
OPERATING INCOME 80 12.7 70 12.4
Interest expense, net (39) (6.2) (39) (6.9)
------ ----- ------ -----
INCOME BEFORE TAXES AND MINORITY EQUITY INTEREST 41 6.5 31 5.5
Provision for income taxes (17) (2.7) (13) (2.3)
------ ----- ------ -----
INCOME BEFORE MINORITY EQUITY INTEREST 24 3.8 18 3.2
Minority equity interest (1) (0.2) (1) (0.2)
------ ----- ------ -----
NET INCOME $ 23 3.6% $ 17 3.0%
------ ------ ------ ------
------ ------ ------ ------
</TABLE>
The following table sets forth certain operating statistics of the
Company's hospitals for the three months ended November 30, 1994 and 1993:
<TABLE>
<CAPTION>
OPERATING STATISTICS (1): 1994 1993
---------- ----------
<S> <C> <C>
Admissions 62,567 57,355
Equivalent Admissions (2) 88,028 78,852
Outpatient Visits 651,725 510,789
Outpatient Surgeries 34,635 29,916
Patient days 376,198 331,827
Equivalent patient days (2) 518,036 449,966
Licensed beds occupancy rate 45.9% 44.8%
Licensed beds at end of period 9,002 8,131
- ------------------------------
<FN>
(1) Represents statistics for hospitals only and has not been adjusted to
include statistics for related healthcare entities.
(2) Represents actual admissions/patient days as adjusted to include outpatient
and emergency room services by adding to actual admissions/patient days an
amount derived by dividing outpatient and emergency room revenue by
inpatient revenue per admission/patient days.
</TABLE>
9
<PAGE>
The results of operations for the three months ended November 30, 1994
include the results of operations of Saint Francis Hospital and Hilton Head
Hospital which were acquired May 1, 1994 and September 1, 1994, respectively,
and therefore, are not included in the results of operations for the three
months ended November 30, 1993. For the three months ended November 30, 1994,
Saint Francis Hospital and Hilton Head Hospital contributed approximately 60% of
the increase in net revenues and operating expenses over the same period of the
prior year. Operating expenses as a percentage of net revenues decreased to
87.3% for the three months ended November 30, 1994 compared to 87.6% for the
three months ended November 30, 1993. The Company's adherence to cost
management combined with the increase in net revenues resulted in an operating
margin of 12.7% for the three months ended November 30, 1994 as compared to
12.4% for the three months ended November 30, 1993.
While the additional revenues recognized from the acquisition of two
hospitals contributed primarily to the growth in the reported net revenues and
volume, the Company's historical hospitals experienced an increase in net
revenues from growth in volume, primarily in outpatient care from existing
services and the expansion of such services, and general price increases passed
on for patient care services. The growth in outpatient volume of 26.9%
recognized from November 30, 1994 compared to November 30, 1993 resulted in net
revenues from outpatient services accounting for 31.0% of the Company's net
patient revenues for the three months ended November 30, 1994 while such net
revenues were 29.9% for the three months ended November 30, 1993. Net revenues
derived from Medicare/Medicaid programs are a significant portion of the
Company's net revenues, comprising 44.1% of the Company's net revenues for the
three months ended November 30, 1994. This portion of the Company's net
revenues has increased when compared to the three months ended November 30, 1993
(40.3% of net revenues) as an increasing portion of the population continues to
qualify for coverage under such programs and as a result of the impact of the
payer mix of the two additional hospitals. Net revenues derived from non-
contracted sources for the three months ended November 30, 1994 and 1993 were
27.2% and 30.9% of net revenues, respectively. Net revenues derived from
contracted sources for the three months ended November 30, 1994 and 1993 were
24.9% and 25.6% of net revenues, respectively. This decline in net revenues
from contracted sources is mainly due to the impact of the two hospitals
acquired, which have a greater portion of their respective volume and therefore
net revenues being derived from Medicare/Medicaid programs. Net revenues from
other sources for the three months ended November 30, 1994 and 1993 contributed
3.8% and 3.2%, respectively to the Company's net revenues.
The tax provision for the three months ended November 30, 1994 and 1993 is
greater than that which would occur using the Company's marginal tax rate
against its income before taxes and minority equity interest, due in large part
to the amortization of cost in excess of net assets acquired not being
deductible for tax provision purposes.
A significant portion of the Company's operating costs and expenses are
subject to inflationary increases. Since the healthcare industry is labor
intensive, salaries and benefits are continually affected by inflation. The
Company's ability to pass on a certain portion of the increased costs associated
with providing healthcare to Medicare/Medicaid patients may be limited by
existing government reimbursement programs for healthcare services unless the
federal and state governments correspondingly increase the rates of payments
under these programs. Although the Company cannot predict its ability to
continue to cover future cost increases, management believes that through the
continued adherence to its cost containment programs, labor management and
reasonable price increases, inflation is not expected to have a material adverse
effect on operating margins.
Healthcare reform proposals have been introduced in Congress and in state
legislatures that could effect changes in the healthcare delivery system, either
at the national or state level. Among the proposals considered by such
legislatures are healthcare coverage for an increasing percentage of the U.S.
population, cost controls on healthcare providers, insurance market reforms to
increase the availability of group health insurance to small businesses,
requirements that all businesses offer health insurance coverage to their
employees, and the creation of a single government health insurance plan (to
reduce administrative costs) that would cover all citizens.
10
<PAGE>
Although none of these proposals have been adopted, a broad range of both
similar and more comprehensive healthcare reform is likely to be considered at
the state level. Management believes that some form of federal healthcare
reform may occur; however, until such reform is finalized, management cannot
predict which proposals will be adopted, if any, and until adopted the impact of
any such proposals on the Company's business, results of operations, cash flows
or financial condition.
11
<PAGE>
PART II. OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
No material developments in the Company's legal proceedings have
occurred since the reporting of legal proceedings in the
Company's Annual Report on Form 10-K for the year ended August
31, 1994.
ITEM 2. CHANGES IN SECURITIES
Not applicable.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
Not applicable.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
Not applicable.
ITEM 5. OTHER INFORMATION
Not applicable.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) EXHIBITS
11 Computations of earnings per share.
27.1 Financial data schedule for American Medical Holdings, Inc.
27.2 Financial data schedule for American Medical International,
Inc.
(b) REPORTS ON FORM 8-K
None.
12
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, each
registrant has duly caused this report to be signed on its behalf by undersigned
thereunto duly authorized.
AMERICAN MEDICAL HOLDINGS, INC.
Date: January 13, 1995
By: ALAN J. CHAMISON
---------------------------------------
Alan J. Chamison
Executive Vice President and Chief Financial Officer
Date: January 13, 1995
By: BARY G. BAILEY
---------------------------------------
Bary G. Bailey
Vice President and Controller
AMERICAN MEDICAL INTERNATIONAL, INC.
Date: January 13, 1995
By: ALAN J. CHAMISON
---------------------------------------
Alan J. Chamison
Executive Vice President and Chief Financial Officer
Date: January 13, 1995
By: BARY G. BAILEY
---------------------------------------
Bary G. Bailey
Vice President and Controller
13
<PAGE>
EXHIBIT 11
AMERICAN MEDICAL HOLDINGS, INC.
COMPUTATIONS OF EARNINGS PER SHARE
(IN THOUSANDS, EXCEPT FOR PER SHARE AMOUNTS)
<TABLE>
<CAPTION>
THREE MONTHS ENDED NOVEMBER 30,
----------------------------------
1994 1993
------- -------
<S> <C> <C>
SIMPLE
Net income $23,046 $16,513
Average outstanding shares 77,567 76,938
------- -------
------- -------
Simple net income per share $ 0.297 $ 0.215
------- -------
------- -------
PRIMARY
Net income $23,046 $16,513
Adjustment for interest on debentures, net of tax 74 72
------- -------
Net income for primary $23,120 $16,585
------- -------
------- -------
Average outstanding shares 77,567 76,938
Common stock equivalents assuming exercise of
stock options 1,824 1,522
Common stock equivalents assuming conversion
of debentures 186 210
------- -------
Shares for primary 79,577 78,670
------- -------
------- -------
Primary net income per share $ 0.291(1) $ 0.211(1)
------- -------
------- -------
FULLY-DILUTED
Net income for primary $23,120 $16,585
Adjustment for interest on debentures, net of tax 152 132
------- -------
Net income for fully-diluted $23,272 $16,717
------- -------
------- -------
Shares for primary 79,577 78,670
Common stock equivalents assuming additional
conversion of debentures and exercise of
stock options 427 514
------- -------
Shares for fully-diluted 80,004 79,184
------- -------
------- -------
Fully-diluted net income per share $ 0.291(1) $ 0.211(1)
------- -------
------- -------
- --------------------------------------
<FN>
(1) The calculations for primary net income per share and fully-diluted net
income per share are submitted in accordance with Regulation S-K Item
601(b)(11) although it is contrary to paragraph 40 of APB Opinion No. 15
because it produces either no dilutive effect or the effect on dilution is
less than 3%.
</TABLE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION FOR AMERICAN MEDICAL
HOLDINGS, INC. EXTRACTED FROM ITEM 1 FINANCIAL STATEMENTS AND ITEM 6.
EXHIBITS AND REPORTS ON FORM 8-K OF THE REGISTRANT'S QUARTERLY REPORT ON
FORM 10-Q FOR THE QUARTERLY PERIOD ENDED NOVEMBER 30, 1994.
</LEGEND>
<CIK> 0000861439
<NAME> AMERICAN MEDICAL HOLDINGS, INC.
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> AUG-31-1995
<PERIOD-START> SEP-01-1994
<PERIOD-END> NOV-30-1994
<CASH> 21,377
<SECURITIES> 0
<RECEIVABLES> 167,444
<ALLOWANCES> 99,966
<INVENTORY> 64,206
<CURRENT-ASSETS> 287,693
<PP&E> 2,022,574
<DEPRECIATION> 540,338
<TOTAL-ASSETS> 3,024,818
<CURRENT-LIABILITIES> 479,393
<BONDS> 1,146,928
<COMMON> 776
0
0
<OTHER-SE> 872,780
<TOTAL-LIABILITY-AND-EQUITY> 3,024,818
<SALES> 0
<TOTAL-REVENUES> 632,211
<CGS> 0
<TOTAL-COSTS> 552,128
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 42,122
<INTEREST-EXPENSE> 39,275
<INCOME-PRETAX> 40,808
<INCOME-TAX> 17,100
<INCOME-CONTINUING> 23,046
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 23,046
<EPS-PRIMARY> 0.291
<EPS-DILUTED> 0.291
</TABLE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION FOR AMERICAN MEDICAL
INTERNATIONAL, INC. EXTRACTED FROM ITEM 4. FINANCIAL STATEMENTS AND ITEM 6.
EXHIBITS AND REPORTS ON FORM 8-K OF THE REGISTRANT'S QUARTERLY REPORT ON
FORM 10-Q FOR THE QUARTERLY PERIOD ENDED NOVEMBER 30, 1994
</LEGEND>
<CIK> 0000312655
<NAME> AMERICAN MEDICAL INTERNATIONAL, INC.
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> AUG-31-1995
<PERIOD-START> SEP-01-1994
<PERIOD-END> NOV-30-1994
<CASH> 21,377
<SECURITIES> 0
<RECEIVABLES> 167,444
<ALLOWANCES> 99,966
<INVENTORY> 64,206
<CURRENT-ASSETS> 287,693
<PP&E> 2,022,574
<DEPRECIATION> 540,338
<TOTAL-ASSETS> 3,024,818
<CURRENT-LIABILITIES> 479,393
<BONDS> 1,146,928
<COMMON> 725
0
0
<OTHER-SE> 872,831
<TOTAL-LIABILITY-AND-EQUITY> 3,024,818
<SALES> 0
<TOTAL-REVENUES> 632,211
<CGS> 0
<TOTAL-COSTS> 552,128
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 42,122
<INTEREST-EXPENSE> 39,275
<INCOME-PRETAX> 40,808
<INCOME-TAX> 17,100
<INCOME-CONTINUING> 23,046
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 23,046
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
</TABLE>
