SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended October 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 0-12927
NATIONAL HOME HEALTH CARE CORP.
(Exact name of Registrant as Specified in Its Charter)
Delaware 22-2981141
(State or Other Jurisdiction of (IRS Employer Identification No.)
Incorporation or Organization)
700 White Plains Road, Scarsdale, New York 10583
(Address of Principal Executive Offices with Zip Code)
Registrant's Telephone Number Including Area Code: 914-722-9000
____________________________________________________
Former Name, Former Address and Former Fiscal Year, if Changed Since
Last Report.
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days. Yes X No
--- ---
APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY PROCEEDINGS
DURING THE PRECEDING FIVE YEARS:
Indicate by check mark whether the registrant has filed all documents and
reports required by Section 12, 13 or 15(d) of the Securities Exchange Act of
1934 subsequent to the distribution of securities under a plan confirmed by a
court. Yes No
--- ---
APPLICABLE ONLY TO CORPORATE ISSUERS:
The number of shares of common stock outstanding as of December _____, 1995 was
4,718,075.
<PAGE>
NATIONAL HOME HEALTH CARE CORP.
FORM 10-Q
FOR THE QUARTER ENDED OCTOBER 31, 1995
PART I. FINANCIAL INFORMATION Page
Item 1. Financial Statements
Consolidated Balance Sheets as of October 31, 1995
and July 31, 1995 (Unaudited) 3-4
Consolidated Statements of Operations for the three
months ended October 31, 1995 and October 31,
1994 Unaudited) 5
Consolidated Statements of Cash Flows for the three
months ended October 31, 1995 and October 31,
1994 (Unaudited) 6
Notes to Consolidated Financial Statements 7
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations 8-9
PART II. OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K 10
SIGNATURES 11
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<TABLE>
<CAPTION>
NATIONAL HOME HEALTH CORP. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEET
UNAUDITED
October 31, 1995 July 31, 1995
---------------- -------------
ASSETS
<S> <C> <C>
Current assets:
Cash and cash equivalents $7,764,000 $9,237,000
Investments 813,000 813,000
Accounts receivable -
less allowance for doubtful accounts of
$411,000 at October 31, 1995 and $99,000
at July 31, 1995 8,542,000 5,338,000
Notes receivable 345,000 349,000
Income taxes receivable 72,000
Prepaid expenses and other assets 394,000 354,000
Deferred taxes 190,000 80,000
----------- -----------
Total current assets 18,048,000 16,243,000
Furniture, equipment and leasehold
improvements, net 473,000 445,000
Notes receivable - noncurrent 605,000 690,000
Excess of cost over fair value of net
assets of businesses acquired, net 2,872,000 1,036,000
Other intangible assets, net 301,000 342,000
Deposits and other assets 121,000 109,000
----------- -----------
TOTAL $22,420,000 $18,865,000
=========== ===========
(Continued)
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<PAGE>
NATIONAL HOME HEALTH CARE CORP. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEET
UNAUDITED
October 31, 1995 July 31, 1995
---------------- -------------
LIABILITIES AND STOCKHOLDER'S EQUITY
Current liabilities:
Accounts payable and accrued expenses $1,470,000 $ 910,000
Income taxes payable 180,000
Capital lease obligations-current 33,000 27,000
Estimated third-party payor settlements 2,370,000
---------
Total current liabilities 4,053,000 937,000
Capital lease obligations-noncurrent 1,000 14,000
----------- -----------
Total liabilities 4,054,000 951,000
--------- ----------
Stockholders' equity:
Common stock, $.001 par value; authorized
20,000,000 shares, issued 5,673,075 shares 6,000 6,000
Additional paid-in capital 15,552,000 15,552,000
Retained earnings 3,759,000 3,307,000
----------- -----------
19,317,000 18,865,000
Less treasury stock (891,000 shares) at cost (951,000) (951,000)
---------- ----------
Total stockholders' equity 18,366,000 17,914,000
---------- ----------
TOTAL $22,420,000 $18,865,000
========== ===========
</TABLE>
See accompanying notes to consolidated financial statements.
-4-
<PAGE>
<TABLE>
<CAPTION>
NATIONAL HOME HEALTH CARE CORP. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
UNAUDITED
For the three months ended
October 31,
---------------------------------
1995 1994
---- ----
<S> <C> <C>
Net patient fee income $10,074,000 $5,730,000
---------- ---------
Operating expenses:
Personnel costs 8,040,000 4,427,000
General and administrative 1,199,000 848,000
Amortization of intangibles 73,000 36,000
----------- -----------
Total operating expenses 9,312,000 5,311,000
---------- ---------
Income from operations 762,000 419,000
Other income:
Interest income 104,000 76,000
---------- ----------
Income before taxes 866,000 495,000
Provision for income taxes 414,000 230,000
---------- ---------
NET INCOME $ 452,000 $ 265,000
========= =========
Net income per share of common stock: $0.10 $0.06
===== =====
Weighted average shares outstanding 4,718,075 4,779,075
</TABLE>
See accompanying notes to consolidated financial statements.
-5-
<PAGE>
<TABLE>
<CAPTION>
NATIONAL HOME HEALTH CARE CORP. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
UNAUDITED
For the three months ended
October 31,
---------------------------------
1995 1994
---- ----
<S> <C> <C>
Cash flows from operating activities:
Net income from continuing operations $452,000 $265,000
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation and amortization 124,000 75,000
Changes in operating assets and liabilities:
(Increase) decrease in accounts receivable (276,000) 33,000
Decrease in income taxes receivable 351,000 151,000
(Increase) in prepaid expenses and other
assets (38,000) (23,000)
(Decrease) in accounts payable and
accrued expenses (238,000) (6,000)
Increase in income taxes payable 180,000
Increase in estimated third party payor
settlements 498,000
--------- --------
Net cash provided by operating activities 1,053,000 495,000
--------- --------
Cash flows from investing activities:
Purchase of property, plant and equipment (13,000) (34,000)
Purchase of investments (12,000)
Purchase of Nurse Care, Inc., net of cash acquired (2,595,000)
--------- --------
Net cash (used in) investing activities (2,608,000) (46,000)
--------- --------
Cash flows from financing activities:
Decrease in notes receivable 89,000 5,000
Principal payments under capital lease obligations (7,000) (7,000)
--------- --------
Net cash provided by (used in) financing
activities 82,000 (2,000)
--------- --------
NET (DECREASE) INCREASE IN CASH AND
CASH EQUIVALENTS (1,473,000) 447,000
Cash and cash equivalents-beginning of period 9,327,000 5,017,000
--------- --------
CASH AND CASH EQUIVALENTS-END OF PERIOD $7,764,000 $5,464,000
========== ===========
Supplemental disclosures of cash flow information:
Cash paid during the period for:
Taxes $298,000 $ 80,000
Interest 5,000 2,000
</TABLE>
See accompanying notes to consolidated financial statements
-6-
<PAGE>
NATIONAL HOME HEALTH CARE CORP. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 1 - BASIS OF PRESENTATION
The accompanying unaudited 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 Article
10 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. Operating results for the three month period ended October 31,
1995 are not necessarily indicative of the results that may be expected for the
year ended July 31, 1996. For further information, refer to the consolidated
financial statements and footnotes thereto included in the Company's annual
report on Form 10-K for the year ended July 31, 1995.
NOTE 2 - ACQUISITION
On August 4, 1995, the Company acquired all of the outstanding common
shares of Nurse Care, Inc., the parent company of New England Home Care, Inc.
("New England Home Care"). New England Home Care is a licensed Medicare
certified home health care agency providing services in Fairfield and New Haven
counties in the State of Connecticut. The purchase price of $3,150,000 was
generated from internal funds. The acquisition was accounted for as a purchase
and the excess of purchase price over the fair value of the assets acquired,
$1,869,000, was allocated to goodwill and is being amortized over a twenty year
period.
The following unaudited pro forma consolidated statement of
operations information gives effect to the acquisition described above as though
it had occurred on August 1, 1994, after giving effect to certain adjustments.
<TABLE>
<CAPTION>
Unaudited
October 31, 1994
----------------
<S> <C>
Patient fee income $ 9,728,000
Operating expenses 9,152,000
------------
Income from operations $ 576,000
============
Net income $ 317,000
============
Net income per share $ .07
============
</TABLE>
-7-
<PAGE>
ITEM 2 - Management's Discussion and Analysis of Financial Condition and Results
of Operations.
RESULTS OF OPERATIONS AND EFFECTS OF INFLATION
For the three months ended October 31, 1995, total revenues were
$10,074,000 as compared to $5,730,000 for the three months ended October 31,
1994, which represents an increase of 76%. Approximately $3,692,000 or 85% of
this increase is attributable to the acquisition of New England Home Care. In
addition, revenues from Health Acquisition Corp., the subsidiary providing home
health care services in the New York metropolitan area, increased $637,000 or
14% from the corresponding period of 1994. This increase primarily was the
result of additional volume from existing contracts with certified home health
care agencies and other long-term provider programs. In addition, approximately
$225,000 of this increase is attributable to the expansion of services by Health
Acquisition Corp., in April 1995, to include home care pediatric skilled nursing
services for medically fragile children and their families.
Total operating expenses as a percentage of total revenues were 92%
for the three months ended October 31, 1995 as compared to 93% for the
corresponding period of 1994. Personnel costs increased to 80% of total revenues
in the recent fiscal quarter as compared to 77% from the corresponding quarter
of 1994. This result is primarily attributable to the acquisition of New England
Home Care, Inc., which is more labor intensive than the operations of Health
Acquisition Corp., as it is a Medicare Certified home health agency. General and
administrative expenses, excluding those relating to New England Home Care,
decreased $120,000 from the corresponding period of 1994. This decrease is
primarily due to certain non-recurring professional fees incurred in the quarter
ended October 31, 1994. Amortization of intangibles increased $37,000 to $73,000
for the current quarter ended October 31, 1995 as a result of the recognition of
goodwill in connection with the acquisition of New England Home Care.
Interest income for the current three month period increased $28,000
or 37% to $118,000 from $76,000 in the corresponding period of 1994 due to
increased investments of cash from operations and interest earned on the federal
income tax refund in the current three month period.
The rate of inflation had no material effect on operations for the
three months ended October 31, 1995.
FINANCIAL CONDITION AND CAPITAL RESOURCES
The Company believes that it has sufficient cash to fund its
operations for at least the ensuing twelve month period. The Company also has
available a $2,000,000 secured offering line of credit with the Bank of New
York. In addition, New England Home Care, Inc., a wholly-owned subsidiary
of the Company has a secured advised line of credit with the Bank
of New York, the maximum amount of which shall not exceed the
lesser of eligible accounts receivable or $2,000,000. Both
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<PAGE>
facilities are at the alternate base commercial lending rate of the bank. As of
October 31, 1995, there were no outstanding balances under either line of
credit.
The Company has agreed in principle that a subsidiary comprised of
substantially all of its Florida operations, consisting of the operations of
Brevard Medical Center, Inc., and First Health, Inc., will conduct an
underwritten initial public offering of 1,200,000 shares of common stock at a
proposed price of $5.00 per share. Upon completion of the offering, the public
would own approximately 50%, and the Company would retain approximately 36%, of
the outstanding common stock of the issuer on a fully-diluted basis. The
planning for the proposed offering is in initial stages and there can be no
assurance that the offering will be consummated as currently contemplated, if at
all. The offering would be made only by means of a prospectus.
-9-
<PAGE>
PART II. OTHER INFORMATION
Item 6. Exhibits and reports on Form 8-K
(a) Exhibits:
10.1 Letter Agreement dated October 30, 1995
providing Secured Advised Line of Credit
from Bank of New York for New England Home
Care, Inc.
(b) Reports on Form 8-K:
During the quarter ended October 31, 1995, the Company filed one
Report on Form 8-K, dated August 4, 1995, regarding the acquisition of Nurse
Care, Inc., the parent company of New England Home Care, Inc. (Item 2).
-10-
<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.
National Home Health Care Corp.
Date: December 13, 1995 /s/ ROBERT P. HELLER
--------------------
Robert P. Heller
Vice President of Finance,
Chief Financial
and Accounting Officer
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EXHIBIT 10.1
<PAGE>
THE BANK OF NEW YORK
[Letterhead]
October 30, 1995
New England Home Care, Inc.
c/o National Home Health Care Corp.
700 White Plains Road, Suite 363
Scarsdale, New York 10583
Re: The Bank of New York to New England Home Care, Inc.
$2,000,000.00 Secured Advised Line of Credit
Gentlemen:
The Bank of New York (the "Bank) is pleased to advise you that it is
prepared to offer a secured advised line of credit (the "Line") to New England
Home Care, Inc. (the "Company") pursuant to the terms and conditions herein set
forth. Under the Line, the Bank will consider making loans (the "Loans") to the
Company of which the aggregate principal amount of Loans at any one time
outstanding, shall not exceed the lesser of the Borrowing Base (as hereinafter
defined) or $2,000,000.00. This Line means that the Bank will perform an ongoing
credit review to enable it to respond quickly to any request for Loans which the
Company may make. The issuance of this letter and the Line is not a commitment
and does not in any way obligate the Bank to make loans or grant any credit.
Any Loan extended under the Line will be subject to the terms and
conditions herein contained and such additional terms and conditions as the Bank
may require at the time the Company requests a Loan and must be evidenced by
documents in form and substance satisfactory to the Bank.
Prior to the making of any Loan hereunder, the Bank must have
received, at minimum, the following support, in form and content satisfactory to
the Bank, which must remain in place as long as any Loan is outstanding and the
Company must be in compliance with the following terms and conditions:
1. SECURITY:
(i) Receipt by the Bank of a perfected first priority
security interest in all of the personal property and
assets of the Company and of National Home Health Care
Corp. and Nurse Care, Inc.;
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(ii) Receipt by the Bank of the joint and several,
unconditional corporate guaranties of payment (the
"Guaranties") of National Home Health Care Corp. and
Nurse Care, Inc. (collectively the "Corporate
Guarantors") of all indebtedness and obligations of the
Company to the Bank.
2. FINANCIAL STATEMENTS. To enable the Bank to carry out an
ongoing financial review, the Company must furnish the following:
(i) within 90 days after the end of each fiscal year of the
Company and the Corporate Guarantors, and audited
consolidated and internal consolidating financial
statement, a balance sheet of the Company and the Corporate
Guarantors as of the end of such fiscal year and a income
statement and statements of cash flows and retained
earnings for such fiscal year, all in reasonable detail and
stating in comparative form the figures for the
corresponding date and period in the prior fiscal year
audited by independent certified public accountants
selected by the Company and acceptable to the Bank;
(ii) within 60 days after the end of each quarter of the
Company and the Corporate Guarantors, an unaudited
consolidated and internal consolidating financial
statement, a balance sheet of the Company and the Corporate
Guarantors as of the end of such interim period and an
income statement and statements of cash flows and retained
earnings for such interim period, all in reasonable detail
and stating in comparative form the figures for the
corresponding date and period in the prior interim period
audited by independent certified public accountants
selected by the Company and acceptable to the Bank;
(iii) no later than the 5th day of each month and, together
with any request for a Loan hereunder, a detailed listing
prepared by the Company of all accounts receivable
outstanding with a summary of the dates due, and
confirmation of the value of inventory held by the Company;
(iv) no later than the 5th day of each month and together
with any request for a Loan hereunder, a Borrowing Base
Certificate in the form attached hereto as Exhibit A;
(v) promptly after the commencement thereof, notice of all
actions, suits, and proceedings before any court or
governmental department, commission, board, bureau, agency
or instrumentality, domestic or foreign, affecting the
Company or Corporate Guarantor or any of their
Subsidiaries which, if determined adversely to the
Company or any such Corporate Guarantor or any such
2
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Subsidiary could have a material adverse effect on the
financial condition, properties, or operations of the
Company, any Corporate Guarantor or such Subsidiary;
(vi) prior to the payment thereof, notice of any intended
payment of dividends to shareholders as permitted by the
provisions of this agreement;
(vii) such other information respecting the condition or
operations, financial or otherwise, of the Company and the
Corporate Guarantors as the Bank may from time to time
reasonably request.
3. LOANS. All Loans made under the Line shall be evidenced by a
credit line grid note prepared by the Bank's counsel in the form and content
satisfactory to the Bank. The Bank shall have the right to make notations on the
note evidencing all loans and prepayments made under the Line and the Bank's
notations shall be deemed correct absent manifest error. Each Loan under the
line shall be made subject to the terms and conditions contained herein to the
Company in increments of not less than $25,000.00 and upon at least one (1)
business day prior written notice to the Bank.
4. INTEREST RATE AND CHARGES. Interest on the Loans made under this
Line shall accrue on each loan from and including the date of each advance to,
but excluding, the date of repayment in full of such amount, in lawful money of
the United States, and in immediately available funds, payable on the first day
of each calendar month, at a floating interest rate per annum (the "Floating
Rate") equal at all time to the Alternate Base Rate. For the purposes of this
letter, the term "Alternate Base Rate" shall mean, for any day, a rate per annum
equal to the higher of (i) the Prime Commercial Lending Rate of the Bank as
publicly announced to be in effect from time to time, such rate to be adjusted
automatically, without notice, on the effective date of any change in such rate,
and (ii) the Federal Funds Rate in effect on such day plus 1/2 of 1%. For the
purposes of this letter, the term "Prime Commercial Lending Rate" shall mean
that rate of interest from time to time announced by the Bank of New York as its
prime commercial lending rate. Any change in the interest rate resulting from a
change in the Prime Commercial lending Rate or the Federal Funds Rate shall be
effective at the beginning of the day on which such change in the Prime
Commercial Lending Rate or the Federal Funds Rate becomes effective.
The principal of any Loan, if not paid when due (whether at stated
maturity, by acceleration or otherwise) shall bear interest from and including
the date due to but excluding the date paid in full at the rate of 5% plus the
Floating Rate set forth above.
3
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The Bank shall have the right to impose a late charge of 4% of any
installment if any payment under any Loan is received 15 days or more after it
is due. No acceleration of the Loans will be required in order to impose this
rate. This rate will be in addition to and not in lieu of any other rate
imposition.
5. PREPAYMENTS. Except for borrowings which exhaust the full
remaining amount of the Line, and prepayments which result in the prepayment of
all Loans outstanding under the Line, each borrowing or prepayment of principal
under the Line shall be in an amount at least equal to $25,000.00. The Company
shall have the right to prepay the Loans and reborrow under the Line, subject to
the conditions set forth herein, at any time or from time to time prior to the
Expiration Date (as hereinafter defined).
6. FINANCIAL COVENANTS.
(i) The Company and the Corporate Guarantors agree that, so long
as the Line is in effect and any of the Loans remain outstanding,
the Company and the Corporate Guarantors, on a consolidated
basis, will maintain a Minimum Net Worth of $1,000,000. The term
"Minimum Net Worth" shall mean the excess of Assets over
Liabilities which includes common stock, additional paid in
capital and retained earnings.
(ii) The Company and the Corporate Guarantors shall not, without
the Bank's prior written consent incur any additional
indebtedness with any other institutional lender.
7. BORROWING BASE. The amount of loans outstanding under the Line
shall not exceed the lesser of the Borrowing Base or $2,000,000.00 at any time.
As used herein, the term "Borrowing Base" shall mean (a) eighty percent (80%) of
the Company's Eligible Accounts Receivable not more than 90 days past due from
time to time outstanding plus (b) fifty (50%) of the Company's Estimated
Unbilled Accounts Receivable for the Company's previous month. For the purposes
of this letter, the term "Eligible Accounts Receivable" shall mean those
accounts arising out of the sale or lease of goods or the rendering of services
by the Company in the ordinary course of business to persons or entities other
than the Corporate Guarantors or subsidiaries which have been outstanding for
not more than 90 days from invoice date. For the purposes of this letter, the
term "Estimated Unbilled Accounts Receivable" shall mean estimated unbilled
accounts receivable for the immediately preceding month for which the
calculation of the Borrowing Base is being made. The Borrowing Base shall be
calculated pursuant to the Borrowing Base Certificate set forth on Exhibit A
attached hereto. In the event that the amount of Loans outstanding hereunder
ever exceed the Borrowing Base, the Company shall, within five (5) days of
written notice thereof from the Bank, prepay the outstanding Loans in such an
amount as would be
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necessary to bring the amount outstanding under the Line in compliance with the
terms and conditions hereof.
8. EXPIRATION. Notwithstanding anything to the contrary contained
herein and in addition to the other rights and remedies herein provided, the
Line shall be reviewed by the Bank on December 31, 1995 (the "Expiration Date").
At such time, the Bank shall have the right, exercisable in our sole discretion,
to make no additional advances under the Line and to demand immediate payment in
full of the outstanding principal balance of all Loans advanced hereunder,
together with all accrued interest thereon.
9. MATURITY. In addition to the monthly payments of interest
hereinabove set forth and the other provisions contained herein pursuant to
which the Bank shall have the right to accelerate repayment of the Loans, the
outstanding principal balance of Loans under the Line and any accrued and unpaid
interest shall be due and payable, unless extended by the Bank in their sole and
absolute discretion, on the Expiration Date.
10. DEFAULTS. If (a) there shall be any material adverse change in
the business or property of the Company or the Corporate Guarantors; or (b) the
Company or any of the Corporate Guarantors shall default under or fail to comply
with any of the terms and conditions contained herein or in any note, security
agreement, guaranty or other document executed in connection herewith (the
"Facility Documents"); or (c) an Event of Default shall occur under any other
document or instrument executed and delivered by the Company or the Corporate
Guarantors to the Bank in connection with this or any other financing; or (d)
the Company's medicare and/or medicaid certification shall be discontinued (all
of the foregoing of which shall be collectively referred to as an "Event of
Default") then, in such event, the Bank shall have the right, without notice and
without regard to the other provisions contained herein, to decline to make any
other Loans hereunder and to declare all Loans outstanding hereunder immediately
due and payable.
11. Additional Terms and Conditions. In addition to the other terms
and conditions herein contained, the Line shall also be subject to the following
terms and conditions:
(i) Receipt and approval by the Bank of an audited seven (7)
month (7/31/95) financial statement of Nurse Care, Inc. on or
before October 31, 1995;
(ii) Receipt and approval by the Bank of a statement from the
Company satisfactorily explaining the basis for an existing
$901,000 reserve for 3rd party settlements; and
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(iii) Receipt and approval by the Bank of the 10/31/95 interim
financial statements on a consolidating basis for the Company and
the Corporate Guarantors; and
(iv) Receipt by the Bank, prior to the making of any Loans
hereunder of the certificate of incorporation, by-laws and good
standing certificates for each of the Company and the Corporate
Guarantors, together with such resolutions and certificates as
the Bank and its counsel shall require in form and content
satisfactory to the Bank and its counsel authorizing and
evidencing the execution and delivery of the Facility Documents
and the Loans to be made hereunder; and
(v) Receipt by the Bank of evidence satisfactory to the Bank and
its counsel that all prior security interests in any or all of
the assets of the Company or the Corporate Guarantors have been
terminated and that the Bank has been granted a first priority
perfected security interest in all of the assets of the Company
and the Corporate Guarantors; and
(vi) Receipt by the Bank of documentation prepared by the Bank's
counsel in form and content satisfactory to the Bank and its
counsel including, but not limited to, amendments to existing
loan documents, additional guaranties, additional security
agreements and such other agreements as shall be required to
cross-collateralize, cross-default and cross-guarantee all
obligations of the company and the Corporate Guarantors.
This Line is issued subject to the terms and conditions herein
contained and to the Bank, in its sole discretion, continuing to be satisfied
with the Company's and the Corporate Guarantors' financial condition and
economic prospects; and the Company's and the Corporate Guarantors' maintenance
of a satisfactory relationship with the Bank.
This letter is for the Company's information only and is not to be
shown to or relied upon by third parties. This letter constitutes the entire
understanding between the Bank and the Company, and supersedes all prior
discussion.
Please acknowledge your understanding of the above by signing and
returning the original copy of this letter.
THE BANK OF NEW YORK
By: /s/ John Gusciora
---------------------
Name: John Gusciora
Title: Vice President
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ACKNOWLEDGED AND CONSENTED TO:
NEW ENGLAND HOME CARE, INC.
By: /s/ Thomas Smith, President
---------------------------
NATIONAL HOME HEALTH CARE CORP.
By: /s/ Robert P. Heller, C.F.O.
---------------------------
NURSE CARE, INC.
By: /s/ Steven Finerow
---------------------------
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EXHIBIT A
BORROWING BASE CERTIFICATE
This certificate is a part of and subject to the terms and conditions set forth
in a certain Line Letter dated October __, 1995 (the "Letter"), by and between
the Bank of New York (the "Bank") and New England Home Care, Inc. (the
"Company").
Terms used in this certificate shall have the same meaning as ascribed thereto
in the Letter.
The undersigned officers of the Company certify that the information furnished
herein as of ________, 1995 as to Eligible Accounts Receivable and as of
__________, 1995, as to Estimated Unbilled Accounts Receivable is true and
correct and that as of the date hereof no Event of Default, or event which after
notice or lapse of time or both would be an Event of Default exists under the
Letter.
I. Computation of Borrowing Base
A. Eligible Accounts Receivable $___________
B. 80% of Line A $___________
C. Value of Estimated Unbilled
Accounts Receivable for the
month of _______ (the month
immediately preceding the $___________
month of this certificate)
D. 50% of Line C $___________
E. Borrowing Base (Line B + $___________
Line D)
II. Aggregate Principal balance of
Loans outstanding $___________
III. Commitment Available or Amount
Due
A. If line II is greater than
line I(E), Amount Due. If
line II is less than line $___________
IE, Amount Available
NEW ENGLAND HOME CARE, INC.
By:_______________________________
8
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> JUL-31-1996
<PERIOD-END> OCT-31-1995
<CASH> 7,764,000
<SECURITIES> 813,000
<RECEIVABLES> 8,953,000
<ALLOWANCES> (411,000)
<INVENTORY> 0
<CURRENT-ASSETS> 18,048,000
<PP&E> 2,168,000
<DEPRECIATION> (1,695,000)
<TOTAL-ASSETS> 22,420,000
<CURRENT-LIABILITIES> 4,053,000
<BONDS> 0
<COMMON> 6,000
0
0
<OTHER-SE> 18,360,000
<TOTAL-LIABILITY-AND-EQUITY> 22,420,000
<SALES> 10,074,000
<TOTAL-REVENUES> 10,074,000
<CGS> 0
<TOTAL-COSTS> 9,312,000
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> (104,000)
<INCOME-PRETAX> 866,000
<INCOME-TAX> 414,000
<INCOME-CONTINUING> 452,000
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 452,000
<EPS-PRIMARY> .10
<EPS-DILUTED> .10
</TABLE>
