SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
_________________
FORM 10-Q/A No. 1
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
HANGER ORTHOPEDIC GROUP, INC.
(Exact name of Registrant as specified in its charter)
Delaware 1-10670 84-0904275
(State or other jurisdiction (Commission (IRS Employer
of incorporation) File Number) Identification
Number)
7700 Old Georgetown Road
Bethesda, Maryland 20814
(Address of principal executive offices) (zip code)
Registrant's telephone number, including area code: (301) 986-0701
The undersigned registrant hereby amends the following items, financial
statements, exhibits or other portions of its Quarterly Report on Form 10-Q for
the quarter ended March 31, 1995, as set forth in the pages attached hereto:
PART I, Item 1 - Financial Statements
(Statements of Cash Flows
- page 6)
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this amendment to be signed on its behalf by the
undersigned, thereunto duly authorized.
HANGER ORTHOPEDIC GROUP, INC.
By: RICHARD A. STEIN
Richard A. Stein
Vice President-Finance and
Principal Financial and
Accounting Officer
Date: May 18, 1995
<PAGE>
HANGER ORTHOPEDIC GROUP, INC.
CONSOLIDATED BALANCE SHEETS
March 31, December 31,
1995 1994
(unaudited)
ASSETS
CURRENT ASSETS
Cash and cash equivalents $ 853,253 $ 1,048,381
Accounts receivable less allowances for
doubtful accounts of $1,041,000 and
$975,000 in 1995 and 1994, respectively 12,008,411 12,392,843
Inventories 9,806,559 9,465,186
Prepaid expenses and other assets 1,400,891 1,149,026
Deferred income taxes 1,264,790 1,264,790
------------ ------------
Total current assets 25,333,904 25,320,226
------------ ------------
PROPERTY, PLANT AND EQUIPMENT
Land 2,991,245 2,991,245
Buildings 2,473,014 2,288,357
Machinery and equipment 3,311,302 3,232,442
Furniture and fixtures 1,551,802 1,526,237
Leasehold improvements 1,126,905 1,075,481
------------- ------------
11,454,268 11,113,762
Less accumulated depreciation
and amortization 3,372,091 3,104,828
------------- ------------
8,082,177 8,008,934
------------- ------------
INTANGIBLE ASSETS
Excess of cost over net assets acquired 27,001,565 26,633,643
Non-compete agreements 4,786,371 4,751,371
Other intangible assets 3,746,507 3,762,307
------------- -----------
35,534,443 35,147,321
Less accumulated amortization 7,976,590 7,532,295
------------- -----------
27,557,853 27,615,026
------------- -----------
OTHER ASSETS
Other 408,734 537,032
------------- -----------
TOTAL ASSETS $61,382,668 $61,481,218
============= ===========
2
<PAGE>
HANGER ORTHOPEDIC GROUP, INC.
CONSOLIDATED BALANCE SHEETS
March 31, December 31,
1995 1994
(unaudited)
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES
Current portion of long-term debt $ 3,258,239 $ 2,132,076
Accounts payable 1,656,684 1,562,625
Accrued expenses 1,239,766 1,300,070
Customer deposits 294,512 392,722
Accrued wages and payroll taxes 1,057,183 1,422,741
Deferred revenue 100,536 97,690
--------------- ---------------
Total current liabilities 7,606,920 6,907,924
--------------- ---------------
Long-term debt 23,265,190 24,329,710
Deferred income taxes 563,902 563,902
Other liabilities and accrued dividends 292,645 269,871
Mandatorily redeemable preferred stock,
class C, 300 shares authorized,
liquidation preference of $500 per share 237,192 232,086
Mandatorily redeemable preferred stock,
class F, 100,000 shares authorized,
liquidation preference of $500 per share
SHAREHOLDERS' EQUITY
Common stock, $.01 par value; 25,000,000
shares authorized 8,424,039 shares issued
and 8,290,544 shares outstanding in
1995 and 1994 84,241 84,241
Additional paid-in capital 33,590,751 33,595,857
Accumulated deficit (3,602,611) (3,846,811)
--------------- --------------
30,072,381 29,833,287
Treasury stock - (133,495 shares) (655,562) (655,562)
--------------- --------------
29,416,819 29,177,725
--------------- --------------
TOTAL LIABILITIES & SHAREHOLDERS' EQUITY $61,382,668 $61,481,218
=============== ==============
3
<PAGE>
HANGER ORTHOPEDIC GROUP, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE THREE MONTHS ENDED March 31, 1995 and 1994
(unaudited)
1995 1994
---- ----
Net Sales $ 12,211,038 $ 10,108,590
Cost of products and services sold 5,867,202 5,059,790
----------------- -----------------
Gross profit 6,343,836 5,048,800
Selling, general & administrative 4,727,703 4,869,696
Depreciation and amortization 538,970 583,344
Amortization of excess cost over net
assets acquired 172,942 161,004
------------------ ----------------
Income (loss) from operations 904,221 (565,244)
Other expense:
Interest expense, net (466,757) (339,915)
Other (16,518) (15,176)
------------------ ----------------
Income (loss) from continuing operations
before income taxes 420,946 (920,335)
Provision (benefit) for income taxes 176,746 (414,000)
------------------ -----------------
Income (loss) from continuing operations
before loss from discontinued operations 244,200 (506,335)
Loss from discontinued operations net of
tax benefit of $23,000 (28,618)
------------------ ------------------
Net income (loss) $ 244,200 $ (534,953)
================= =================
Income (loss) from continuing operations $.03 ($.06)
Loss from discontinued operations
$ .03 $ (.06)
================== =================
Weighted average number of common shares
outstanding 8,290,544 8,383,181
4
<PAGE>
HANGER ORTHOPEDIC GROUP, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE THREE MONTHS ENDED March 31, 1995 and 1994
(unaudited)
1995 1994
---- ----
Cash flows from operating activities:
Net income (loss) $ 244,200 $ (534,953)
Adjustments to reconcile net income to net
cash provided by (used in ) operating activities:
Discontinued operations 51,618
Provision for bad debt 127,232 146,237
Amortization of deferred compensation 4,197
Depreciation and amortization 538,970 583,344
Amortization of excess cost over net
assets acquired 172,942 161,004
Deferred taxes (437,000)
Changes in assets and liabilities, net
of effect from acquired companies:
Decrease in accounts receivable 275,507 413,365
Increase in inventory (295,203) (683,786)
Increase in prepaid and other assets (428,611) (166,073)
Decrease (increase) in other assets 128,298 (25,343)
Increase in accounts payable 92,745 446,697
Decrease in accrued expenses (60,304) (27,480)
Decrease in accrued wages and payroll taxes (365,558) (119,758)
Increase (decrease) in customer deposits (98,210) 32,185
Increase in deferred revenue 2,846 5,800
Increase in taxes payable 176,746
Increase in other liabilities 22,774 85,410
------------- ------------
Total adjustments 290,173 476,417
------------- ------------
Net cash provided by (used in) in continuing
operations 534,373 (58,536)
Net cash used in discontinuing operations (5,031)
------------- ------------
Net cash provided by (used in) operating
activities 534,373 (63,567)
------------- ------------
Cash flows from investing activities:
Purchase of fixed assets, net (330,647) (169,782)
Purchase of patents (17,089) (2,165)
Acquisitions, net of cash (265,194) (860,170)
Purchase of non-compete agreements (35,000) (150,500)
Other intangibles (1,103) (106,369)
-------------- -----------
Net cash used in investing activities (649,033) (1,288,986)
-------------- ------------
Continued
5
<PAGE>
HANGER ORTHOPEDIC GROUP, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE THREE MONTHS ENDED March 31, 1995 and 1994
(unaudited)
1995 1994
---- ----
Cash flows from financing activities:
Net borrowings under revolving credit facility $ 500,000 $ 674,449
Repayment of long-term debt (613,357) (324,147)
Increase (decrease) in financing costs 32,889 (12,093)
------------- ---------
Net cash (used in) provided by financing activities (80,468) 338,209
------------- ---------
Net change in cash and cash equivalents for
the period (195,128) (1,014,344)
Cash and cash equivalents at beginning of period 1,048,381 1,404,157
------------- ---------
Cash and cash equivalents at end of period $ 853,253 $ 389,813
============= =========
Supplemental disclosure of cash flow information:
Cash paid during the period for:
Interest $ 616,808 $ 342,522
============= =========
Non-cash financing and investing activities:
Issuance of common stock in connection with
acquisitions $ 200,000
Issuance of notes in connection with acquisitions $ 175,000 $ 425,000
============= =========
Dividends declared - preferred stock $ 5,262 $ 4,810
============= =========
The accompanying notes are an integral part of the consolidated
financial statements.
6
<PAGE>
NOTE A -- BASIS OF PRESENTATION
The accompanying unaudited financial statements have been prepared in
accordance with Rule 10-01 of Regulation S-X. 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 a normal recurring nature, considered necessary for a
fair presentation have been included.
These financial statements should be read in conjunction with the
financial statements of Hanger Orthopedic Group, Inc. (the "Company"), as of
December 31, 1994, and notes thereto included in the Annual Report on Form 10-K
filed by the Company with the Securities and Exchange Commission.
NOTE B -- INVENTORY
Inventories at March 31, 1995 and December 31, 1994 were comprised of
the following:
March 31, 1995 December 31, 1994
-------------- -----------------
(unaudited)
Raw materials $7,905,847 $8,078,838
Work-in-process 754,828 835,934
Finished goods 1,145,884 530,414
----------- ------------
$9,806,559 $9,465,186
========== ==========
NOTE C -- ACQUISITIONS
During the first quarter of 1995, the Company acquired two orthotic and
prosthetic companies and certain assets of another O&P company. The aggregate
purchase price was $390,000 comprised of $215,000 in cash and $175,000 in
promissory notes. The cash portion of these acquisitions was borrowed under the
Company's revolving credit facility.
7
