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 January 31, 1999
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.
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(Exact name of Registrant as Specified in Its Charter)
Delaware 22-2981141
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(State or Other Jurisdiction of (IRS Employer Identification No.)
Incorporation or Organization)
700 White Plains Road, Scarsdale, New York 10583
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(Address of Principal Executive Offices with Zip Code)
Registrant's Telephone Number Including Area Code: 914-722-9000
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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 March 16, 1999 was
5,152,950.
<PAGE>
NATIONAL HOME HEALTH CARE CORP.
FORM 10-Q
FOR THE QUARTER ENDED JANUARY 31, 1999
PART I. FINANCIAL INFORMATION Page
----
Item 1. Financial Statements
Consolidated Balance Sheets as of January 31, 1999 and July 31,
1998 (unaudited) 3-4
Consolidated Statements of Operations for the three months
ended January 31, 1999 and January 31, 1998 and the six
months ended January 31, 1999 and January 31, 1998
(unaudited) 5
Consolidated Statements of Cash Flows for the six months ended
January 31, 1999 and January 31, 1998 (unaudited) 6
Notes to Consolidated Financial Statements 7-8
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations 9-14
PART II. OTHER INFORMATION
Item 4. Submission of Matters to a Vote of Security Holders 15
Item 6. Exhibits and Reports on Form 8-K 15-16
SIGNATURES 17
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<TABLE>
<CAPTION>
NATIONAL HOME HEALTH CARE CORP. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
UNAUDITED
January 31, 1999 July 31, 1998
---------------- -------------
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents $6,537,000 $10,992,000
Investments 318,000 488,000
Accounts receivable -
less allowance for doubtful accounts of
$483,000 at January 31, 1999 and
$295,000 at July 31, 1998 10,648,000 8,269,000
Income taxes receivable 275,000 123,000
Prepaid expenses and other assets 275,000 195,000
Deferred taxes 417,000 289,000
----------- -----------
Total current assets 18,470,000 20,356,000
Furniture, equipment and leasehold
improvements, net 453,000 395,000
Excess of cost over fair value of net assets of
businesses acquired, net 5,443,000 3,179,000
Other intangible assets, net 1,377,000 745,000
Deposits and other assets 168,000 154,000
Investment in unconsolidated investee ------ 674,000
----------- -----------
TOTAL $25,911,000 $25,503,000
=========== ===========
(continued)
</TABLE>
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<TABLE>
<CAPTION>
NATIONAL HOME HEALTH CARE CORP. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
UNAUDITED
January 31, 1999 July 31, 1998
---------------- -------------
<S> <C> <C>
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable and accrued expenses $1,380,000 $1,013,000
Estimated third-party payor settlements 116,000 209,000
---------- ----------
Total current liabilities 1,496,000 1,222,000
---------- ----------
Total liabilities 1,496,000 1,222,000
---------- ----------
Stockholders' equity:
Common stock, $.001 par value: authorized
20,000,000 shares, issued 6,228,746 shares 6,000 6,000
Additional paid-in capital 18,525,000 18,525,000
Retained earnings 7,316,000 7,045,000
----------- -----------
25,847,000 25,576,000
Less treasury stock (1,057,236 and 1,028,879
shares) at cost (1,432,000) (1,295,000)
------------ ------------
Total stockholders' equity 24,415,000 24,281,000
----------- -----------
TOTAL $25,911,000 $25,503,000
=========== ===========
</TABLE>
See accompanying notes to consolidated financial statements.
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<TABLE>
<CAPTION>
NATIONAL HOME HEALTH CARE CORP. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
UNAUDITED
For the three months ended For the six months ended
January 31, January 31,
---------------------------------- -------------------------------------
1999 1998 1999 1998
---- ---- ---- ----
<S> <C> <C> <C> <C>
Net patient revenue $10,022,000 $8,802,000 $19,227,000 $17,903,000
----------- ---------- ----------- -----------
Operating expenses:
Cost of revenue 6,661,000 5,683,000 12,646,000 11,574,000
General and administrative 2,640,000 2,290,000 4,926,000 4,512,000
Amortization of intangibles 142,000 94,000 267,000 187,000
------------- ------------- ------------- -------------
Total operating
expenses 9,443,000 8,067,000 17,839,000 16,273,000
------------ ----------- ----------- -----------
Income from operations 579,000 735,000 1,388,000 1,630,000
Other income (loss):
Interest income 76,000 134,000 195,000 274,000
(Loss) from equity investee (324,000) (564,000) (674,000) (911,000)
------------- ------------ ------------- --------------
Income before taxes 331,000 305,000 909,000 993,000
Provision for income taxes 246,000 135,000 638,000 444,000
------------- ------------ ------------ -------------
NET INCOME $85,000 $170,000 $271,000 $549,000
============= =========== =========== ============
Net income per share:
Basic $0.02 $0.03 $0.05 $0.10
===== ===== ===== =====
Diluted $0.02 $0.03 $0.05 $0.10
===== ===== ===== =====
Weighted average shares outstanding:
Basic 5,186,272 5,244,543 5,192,382 5,248,184
Diluted 5,264,730 5,331,736 5,265,243 5,333,040
</TABLE>
See accompanying notes to consolidated financial statements.
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<TABLE>
<CAPTION>
NATIONAL HOME HEALTH CARE CORP. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
UNAUDITED
For the six months ended January 31,
-----------------------------------
1999 1998
---- ----
<S> <C> <C>
Cash flows from operating activities:
Net income $271,000 $549,000
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation and amortization 329,000 237,000
Provisions for doubtful accounts ------ 25,000
Loss from equity investee 674,000 911,000
Deferred tax ------ (310,000)
Changes in:
Accounts receivable (1,589,000) (1,023,000)
Income taxes receivable/payable (157,000) (172,000)
Prepaid expenses and other assets (66,000) 12,000
Accounts payable, accrued expenses and other
liabilities 240,000 (262,000)
Estimated third party payor settlements (93,000) 239,000
------------- -------------
Net cash (used in) provided by operating
activities (391,000) 206,000
------------- -------------
Cash flows from investing activities:
Proceeds of investments 170,000 10,000
Purchase of property, plant and equipment (32,000) (50,000)
Purchase of assets of business (1,943,000) ------
Purchase of Accredited Health Services, Inc. net of cash
acquired (1,701,000) ------
------------- -------------
Net cash (used in) investing activities (3,506,000) (40,000)
------------- -------------
Cash flows from financing activities:
Proceeds from exercise of stock options ------ 49,000
Purchase of treasury shares (137,000) (198,000)
Repayment of notes payable (421,000) ------
------------- -------------
Net cash (used in) financing activities (558,000) (149,000)
--------------- -------------
NET INCREASE (DECREASE) IN CASH AND CASH
EQUIVALENTS (4,455,000) 17,000
Cash and cash equivalents - beginning of period 10,992,000 9,324,000
------------- -------------
CASH AND CASH EQUIVALENTS-END OF PERIOD $6,537,000 $9,341,000
============= =============
Supplemental disclosures of cash flow information:
Cash paid during the period for:
Taxes $551,000 $946,000
Interest ------ 1,000
</TABLE>
See accompanying notes to consolidated financial statements.
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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 and six month periods ended
January 31, 1999 are not necessarily indicative of the results that may be
expected for the year ending July 31, 1999. 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, 1998.
NOTE 2 - INITIAL PUBLIC OFFERING OF SUNSTAR HEALTHCARE, INC.
On May 21, 1996, the initial public offering of common stock by SunStar
Healthcare, Inc. ("SunStar") was consummated. Prior to the offering, SunStar had
been a wholly owned subsidiary of the Company, consisting of its Florida
outpatient medical center operations. As a result of the offering, the Company
currently owns 890,000 shares, or approximately 30.5%, of SunStar. The Company
utilizes the equity method of accounting for its investment in SunStar. As of
January 31, 1999, the Company's carrying value of its investment in SunStar is
$0.
NOTE 3 - ACQUISITIONS
On August 10, 1998, the Company, through its wholly owned subsidiary
Health Acquisition Corp. ("Health Acquisition"), acquired, for $1,943,000 in
cash, including acquisition costs of $8,000, certain assets of Bryan Employment
Agency, Inc., d/b/a/ Bryan Home Care Services ("Bryan Home Care"), a New York
licensed home health care company which provides home care services in
Westchester County, New York. The acquisition was accounted for as a purchase
and the cost was allocated as follows: $285,000 to personnel files, $285,000 to
patient files, $30,000 to furniture and equipment, $200,000 to covenant not to
compete and $1,143,000 to excess of cost over fair value of net assets of
businesses acquired. The purchase price was generated from internal funds. The
acquisition expanded the geographic presence of the Company and enabled Health
Acquisition to become a participating provider in the Westchester County
Department of Social Services Medicaid Program. Annual revenues for Bryan Home
Care approximated $5,700,000 in calendar 1997.
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<PAGE>
On October 30, 1998, the Company acquired all of the outstanding common
shares of Accredited Health Services, Inc. ("Accredited"). Accredited is a
licensed home health care company that provides home health aide services in
Bergen, Hudson, Passaic, Essex, Morris, Union, Somerset and Middlesex Counties,
New Jersey. The purchase price of approximately $1,914,000 in cash, including
acquisition costs of $49,000, was generated from internal funds. The final
purchase price is subject to a post-closing adjustment. The Company's
preliminary allocation of purchase price is as follows: $1,154,000 to total
current assets, $59,000 to furniture and equipment and $548,000 to total current
liabilities. The acquisition was accounted for as a purchase and the excess of
purchase price over the fair value of assets acquired, $1,249,000, was allocated
to goodwill. Revenues from Accredited approximated $5,300,000 for the fiscal
year ended March 31, 1998.
NOTE 4 - PER SHARE DATA
The Company adopted Statement of Financial Accounting Standard No. 128
("SFAS 128"), "Earnings Per Share," during the fiscal quarter ended January 31,
1998.
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<PAGE>
ITEM 2 - Management's Discussion and Analysis of Financial Condition and Results
of Operations
The following discussion and analysis provides information which the
Company's management believes is relevant to an assessment and understanding of
the Company's results of operations and financial condition. This discussion
should be read in conjunction with the attached consolidated financial
statements and notes thereto, and with the Company's audited financial
statements and notes thereto for the fiscal year ended July 31, 1998.
This discussion contains forward-looking statements that are subject to
a number of known and unknown risks that, in addition to general economic,
competitive and other business conditions, could cause actual results,
performance and achievements to differ materially from those described or
implied in the forward-looking statements.
The Company is subject to significant external factors that could
significantly impact its business, including changes in Medicare and Medicaid
reimbursement, government fraud and abuse initiatives and other such factors
that are beyond the control of the Company. These factors, as well as future
changes in reimbursement, could cause future results to differ materially from
historical results.
The Balanced Budget Act of 1997, as amended (the "Act"), was signed
into law on August 5, 1997. Under the Act, for cost reports beginning on or
after October 1, 1997, Medicare- reimbursed home health agencies will be
reimbursed under an interim payment system ("IPS") for a two-year period prior
to the implementation of a prospective payment system. Under IPS, home health
care providers are reimbursed the lower of (i) their actual costs, (ii) cost
limits based on 105% of median costs of freestanding home health agencies, or
(iii) an agency-specific per patient cost limit, based on 98% of 1994 costs
adjusted for inflation. Prior to the implementation of IPS, Medicare reimbursed
providers on a reasonable cost basis subject to program-imposed cost per visit
limitations. The Act calls for payments to Medicare providers for cost reporting
periods beginning on or after October 1, 2000 to be made in accordance with a
prospective payment system to be established by the Secretary of the Department
of Health and Human Services. Without a prospective payment system by October 1,
2000, a 15% further cut in Medicare home health payments will take effect.
The new IPS cost limits will apply to the Company's Connecticut-based
Medicare certified nursing agency for the cost reporting period beginning July
1, 1998. The Company has determined that these new limits will reduce current
reimbursement for the Medicare services it provides. Accordingly, in May 1998
the Company combined its operations in Connecticut by merging its Medicare
certified subsidiary with its licensed agency subsidiary to increase operational
efficiencies. In addition, the Company has been closely monitoring utilization
of Medicare services in an effort not to exceed per patient cost limits.
The implementation of IPS has resulted in a decrease in revenues from
the Company's Medicare certified agency from the previous fiscal year. In
addition, the Company's operations in New York and New Jersey are dependent upon
referrals, primarily from Medicare certified home
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<PAGE>
health care agencies, whose future reimbursement may be adversely affected.
Accordingly, there can be no assurance that the Company's future referrals will
not result in reduced reimbursement rates or reduced volume of business.
Results of Operations and Effects of Inflation
Three Months Ended January 31, 1999 Compared to Three Months Ended January 31,
1998
For the three months ended January 31, 1999, net patient revenue
increased $1,220,000, or 13.9%, to $10,022,000 from $8,802,000 for the three
months ended January 31, 1998. Net patient revenue from Health Acquisition, the
subsidiary providing home health care services in the New York metropolitan
area, increased $489,000, or 8.4%, to $6,313,000 from $5,824,000. This increase
is attributable to the revenues generated from the purchase of certain assets of
Bryan Home Care of $1,491,000, offset by the decline in same source revenues of
($1,002,000). The decline in same source revenues is attributable to the
continued decline in hours from the Medicare certified home health care agencies
that Health Acquisition contracts with, as a result of the implementation of
IPS. Net patient revenue from New England Home Care, Inc. ("New England Home
Care"), the subsidiary that is Medicare certified and licensed in the state of
Connecticut, decreased ($600,000), or (20.1%), to $2,378,000 from $2,978,000.
This decrease is attributable to the decline in Medicare revenue of ($453,000)
and a decline in non-Medicare revenue of ($147,000). The decrease in both
Medicare and non-Medicare revenue is the result of the change in Medicare
reimbursement from cost reimbursement to the interim payment system. Net patient
revenue from Accredited, the subsidiary providing home health aide services in
the state of New Jersey, were $1,331,000 for the three months ended January 31,
1999.
Cost of revenue as a percentage of net patient revenue increased to
66.5% for the three months ended January 31, 1999 from 64.6% for the three
months ended January 31, 1998. The increase in cost of revenue is attributable
to higher cost of revenues associated with the Company's recent acquisitions. In
addition, the Company has incurred decreases in certain reimbursement rates from
other existing Medicare certified home health care agencies that the Company
contracts with, as a result of the change in the Medicare reimbursement system.
General and administrative expenses increased $350,000, or 15.3%, to
$2,640,000 for the three months ended January 31, 1999 from $2,290,000 for the
three months ended January 31, 1998. This increase is attributable to the
additional general and administrative expenses incurred from the acquisitions of
both Bryan Home Care and Accredited, offset by the decline in general and
administrative expenses of New England Home Care, as a result of the combining
of the operations in Connecticut to offset the impact of the implementation of
IPS. As a percentage of net patient revenue, general and administrative expenses
increased to 26.3% for the three months ended January 31, 1999 from 26.0% for
the three months ended January 31, 1998.
Amortization of intangibles increased to $142,000 for the three months
ended January 31, 1999 from $94,000 for the three months ended January 31, 1998.
This increase is attributable
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<PAGE>
to the acquisition of certain assets of Bryan Home Care and the acquisition of
the stock of Accredited.
As a result of the foregoing, income from operations decreased
($156,000), or (21.2%), to $579,000 for the three months ended January 31, 1999
from $735,000 for the three months ended January 31, 1998.
Interest income decreased (43.3%) to $76,000 for the three months ended
January 31, 1999 from $134,000 for the three months ended January 31, 1998. This
decrease is attributable to the cash used in investing activities resulting from
the acquisition of certain assets of Bryan Home Care and the stock of
Accredited.
The Company recorded a loss from equity investee of ($324,000) in the
three months ended January 31, 1999 as compared to a loss of ($564,000) for the
comparable period of 1998, representing the Company's share of the net loss
reported by SunStar for the same periods. As of January 31, 1999, the Company's
carrying value of its investment in SunStar is $0.
The Company's effective tax rate increased to 74.3% for the three
months ended January 31, 1998 from 44.2% for the three months ended January 31,
1998. This increase is attributable to the Company's share of SunStar's net
loss, in which no income tax benefit was recorded for the three months ended
January 31, 1999, as compared to ($192,000) recorded for the three months ended
January 31, 1998. Excluding the tax effect of loss from equity investee, the
effective tax rate remained at 37.6% for both the three months ended January 31,
1999 and January 31, 1998.
Six Months Ended January 31, 1999 Compared to Six Months Ended January 31, 1998.
For the six months ended January 31, 1999, net patient revenue
increased $1,324,000, or 7.4%, to $19,227,000 from $17,903,000 for the six
months ended January 31, 1998. Net patient revenue from Health Acquisition
increased $1,146,000, or 9.8%, to $12,877,000 from $11,731,000. This increase is
attributable to the revenues generated from the purchase of certain assets of
Bryan Home Care of $2,963,000, offset by the decline in same source revenues of
($1,817,000). This decrease is explained in the above three-month discussion.
Net patient revenue from New England Home Care decreased ($1,153,000), or
(18.7%), to $5,019,000 from $6,172,000. This decrease is explained in the above
three-month discussion. Net patient revenue from Accredited were $1,331,000 for
both the three and six months ended January 31, 1999.
Cost of revenue as a percentage of net patient revenue increased to
65.8% for the six months ended January 31, 1999 from 64.6% for the six months
ended January 31, 1998. This increase is explained in the above three-month
discussion.
General and administrative expenses increased $414,000, or 9.2%, to
$4,926,000 for the six months ended January 31, 1999 from $4,512,000 for the six
months ended January 31, 1998.
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<PAGE>
This increase is attributable to the additional general and administrative
expenses incurred from the acquisitions of both Bryan Home Care and Accredited,
offset by the decline in general and administrative expenses in New England Home
Care, as a result of the combining of the operations in Connecticut to offset
the impact of the implementation of IPS. As a percentage of net patient revenue,
general and administrative expenses increased slightly to 25.6% for the six
months ended January 31, 1999 from 25.2% for the six months ended January 31,
1998.
Amortization of intangibles increased to $267,000 for the six months
ended January 31, 1999 from $187,000 for the six months ended January 31, 1998.
This increase is attributable to the acquisition of certain assets of Bryan Home
Care and the acquisition of the stock of Accredited.
As a result of the foregoing, income from operations decreased
($242,000), or (14.8%), to $1,388,000 for the six months ended January 31, 1999
from $1,630,000 for the six months ended January 31, 1998.
Interest income decreased (28.8%) to $195,000 for the six months ended
January 31, 1999 from $274,000 for the six months ended January 31, 1998. This
decrease is attributable to the cash used in investing activities resulting from
the acquisition of certain assets of Bryan Home Care and the stock of
Accredited.
The Company recorded a loss from equity investee of ($674,000) in the
six months ended January 31, 1999 as compared to a loss of ($911,000) for the
comparable period of 1998, representing the Company's share of the net loss
reported by SunStar for the same periods. As of January 31, 1999, the Company's
carrying value of its investment in SunStar is $0.
The Company's effective tax rate increased to 70.2% for the six months
ended January 31, 1999 from 44.7% for the six months ended January 31, 1998.
This increase is attributable to no income tax benefit recorded for the six
months ended January 31, 1999, as compared to ($310,000) recorded for the six
months ended January 31, 1998 related to the Company's share of SunStar's net
loss. Excluding the tax effect of loss from equity investee, the effective tax
rate increased slightly to 40.3% for the six months ended January 31, 1999 as
compared to 39.6% for the comparable period of 1998.
The rate of inflation had no material effect on operations for the six
months ended January 31, 1999.
Financial Condition and Capital Resources
Current assets decreased to $18,470,000 and current liabilities
increased to $1,496,000, respectively, at January 31, 1999. This resulted in a
decrease in working capital by ($2,160,000) from $19,134,000 at July 31, 1998 to
$16,974,000 at January 31, 1999. Cash and cash
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<PAGE>
equivalents decreased ($4,455,000) to $6,537,000 at January 31, 1999 from
$10,992,000 at July 31, 1998. The decrease in both working capital and cash
resulted from the completed acquisitions during the six months ended January 31,
1999. The combined acquisition costs were $3,857,000.
Net cash used in operating activities for the six months ended January
31, 1999 was ($391,000) as compared to net cash provided by operating activities
of $206,000 for the six months ended January 31, 1998. The decrease in operating
cash flow of ($597,000) is primarily attributable to the decline in net income
and an increase in accounts receivable, offset by the increase in accounts
payable and accrued expenses over the comparable period of 1998. Net cash used
in investing activities for the six months ended January 31, 1999 reflects the
proceeds of investments, acquisitions made by the Company and the purchase of
equipment. Net cash used in investing activities for the six months ended
January 31, 1998 reflects the purchase of equipment. Net cash used in financing
activities for the six months ended January 31, 1999 reflects the purchase of
treasury shares and the repayment of notes payable to the former officers of
Accredited. Net cash used in financing activities for the six months ended
January 31, 1998 reflects the purchase of treasury shares offset by the proceeds
from the exercise of stock options.
The Company has available a $2,000,000 secured line of credit with its
bank. In addition, a subsidiary of the Company has a secured line of credit. The
maximum amount that can be borrowed under the secured line of credit may not
exceed the lesser of eligible accounts receivable or $2,000,000. Both credit
facilities bear interest at the alternate base commercial lending rate of the
bank and expire January 31, 2000. At January 31, 1999, there was no outstanding
balance under either line of credit.
The Company intends to meet its short and long term liquidity needs
with its current cash balances and its available lines of credit. The Company
believes that its cash balances also will allow it to continue to make
acquisitions in the home health care field without affecting its liquidity
needs.
In August 1998, the Board of Directors extended for one year its
program to repurchase its Common Stock. Purchases in the aggregate amount of up
to $1,000,000 in purchase price during the one-year extension would be made from
time to time in the open market and through privately negotiated transactions,
subject to general market and other conditions. The buyback program will be
financed out of existing cash or cash equivalents.
Year 2000 Compliance
The Year 2000 issue is the result of computer programs which were
written using two digits rather than four to define the applicable year. Certain
purchased systems used by the Company, and for which the Company does not
control the programming code, use two digits for the year. The current systems
used by Health Acquisition and Accredited are relatively old and have been
slated for replacement with new systems that better meet the information needs
as they expand and deal with the current operating environment. The Company
anticipates that these conversions will be
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completed to provide compliance with the requirements to handle the year 2000
issue with no significant operational concerns. The current system utilized by
New England Home Care is a relatively new operating system. The Company has been
advised by the system vendor that all required changes necessary to be compliant
with the year 2000 issue have been substantially completed and will be
implemented prior to the year 2000. Management currently believes that the
financial resources necessary to accomplish year 2000 compliance will not be
material to the Company's financial condition, liquidity or results of
operations. However, there is no guarantee that the Company's expected results
will be achieved. In addition, actual results could differ materially from those
expected results.
The Company depends on receipt of payment for services from its payor
sources, most of which utilize computer software to process those payments. The
Company's primary payors include Medicare and Medicaid programs, insurance
companies, other Medicare certified home health agencies and long-term health
care provider programs. The Company currently is unable to predict what effect,
if any, the year 2000 issue may have on the computer systems of those payors,
or, in turn, on the Company.
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PART II. OTHER INFORMATION
Item 4. Submission of Matters to a Vote of Security Holders.
The annual meeting of shareholders of the Company (the "Meeting") was
held on December 8, 1998. Proxies for the Meeting were solicited pursuant to
Rule 14A of the Securities Exchange Act of 1934, as amended, and there was no
solicitation in opposition.
At the Meeting, Frederick H. Fialkow, Bernard Levine, M.D., Steven
Fialkow, Ira Greifer, M.D. and Robert C. Pordy, M.D. were elected as directors
of the Company to serve until the Company's next annual meeting of shareholders
and until their respective successors are elected and qualified. The votes for
each director were as follows:
For Withheld
--- --------
Frederick H. Fialkow 4,746,119 6,083
Bernard Levine, M.D. 4,746,119 6,083
Steven Fialkow 4,746,119 6,083
Ira Greifer, M.D. 4,746,119 6,083
Robert C. Pordy, M.D. 4,746,119 6,083
Item 6. Exhibits and reports on Form 8-K
(a) Exhibits:
10.1 Letter Agreement dated February 20, 1999 providing a
Secured Advised Line of Credit from The Bank of New
York to National Home Health Care Corp.
10.2 Letter Agreement dated February 20, 1999 providing a
Secured Advised Line of Credit from The Bank of New
York to New England Home Care, Inc.
10.3 Form of Amended and Restated Employment Agreement dated
as of December 1, 1998 between the Company and
Frederick H. Fialkow.
10.4 Form of First Amendment to Employment Agreement dated
as of December 1, 1998 between the Company and Steven
Fialkow.
10.5 Form of First Amendment to Employment Agreement dated
as of December 1, 1998 between the Company and Richard
Garofalo.
10.6 Form of First Amendment to Employment Agreement dated
as of December 1, 1998 between the Company and Robert
P. Heller.
27.1 Financial Data Schedule
-15-
<PAGE>
(b) Reports on Form 8-K
The Company has not filed any reports on Form 8-K during the
quarterly period ended January 31, 1999.
-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.
National Home Health Care Corp.
Date: March 16, 1999 /s/ Robert P. Heller
------------------------------------------
Robert P. Heller
Vice President of Finance (chief financial
and accounting officer)
-17-
<PAGE>
EXHIBIT INDEX
-------------
Exhibit
Number Description
- ------- -----------
10.1 Letter Agreement dated February 20, 1999 providing a
Secured Advised Line of Credit from The Bank of New
York to National Home Health Care Corp.
10.2 Letter Agreement dated February 20, 1999 providing a
Secured Advised Line of Credit from The Bank of New
York to New England Home Care, Inc.
10.3 Form of Amended and Restated Employment Agreement dated
as of December 1, 1998 between the Company and
Frederick H. Fialkow.
10.4 Form of First Amendment to Employment Agreement dated
as of December 1, 1998 between the Company and Steven
Fialkow.
10.5 Form of First Amendment to Employment Agreement dated
as of December 1, 1998 between the Company and Richard
Garofalo.
10.6 Form of First Amendment to Employment Agreement dated
as of December 1, 1998 between the Company and Robert
P. Heller.
27.1 Financial Data Schedule
-18-
EXHIBIT 10.1
[LETTERHEAD OF THE BANK OF NEW YORK]
February 20, 1999
Mr. Robert P. Heller, Vice President &
Chief Financial Officer
National Home Health Care Corp.
700 White Plains Road, Suite 363
Scarsdale, New York 10583
Dear Bob:
This letter confirms that The Bank of New York (the "Bank") holds available a
$2,000,000 secured advised line of credit to National Home Health Care Corp.
(the "Borrower").
Advances under the line of credit shall be payable on demand and bear interest
at a rate per annum equal to the alternate base commercial lending rate of the
Bank as publicly announced to be in effect from time to time (the "Alternate
Base Rate"), such rate to change on the effective date of any change in the
Alternate Base Rate.
"Alternate Base Rate" shall mean, for any day, a rate per annum equal
to the higher of (i) the Prime Rate in effect on such day and (ii) the
Federal Funds Rate in effect on such day plus 1/2 of 1%.
For purposes of this definition:
"Prime Rate" shall mean, for any day, the weighted average of the rates
on overnight Federal funds transactions with members of the Federal
Reserve System arranged by Federal funds brokers, as published for such
day (or if such day is not a business day, for the next preceding
business day, the average of quotations for such day on such
transactions received by the Bank from three Federal funds brokers of
recognized standing selected by the Bank.
All advances and all principal payments hereunder shall be endorsed by the Bank
on the sheet attached to the Promissory Grid Note and shall be secured by all
assets of the Borrower pursuant to a security agreement. The Borrower authorizes
the Bank to accept telephonic instructions from a duly authorized representative
of the Borrower, as indicated by the latest Corporate Resolution on file with
the Bank, to make an advance or receive a repayment hereunder and to endorse the
sheet attached to this Promissory Grid Note accordingly. All advances made
hereunder shall be credited to the Borrower's deposit account referred to above,
which credits shall be confirmed to the Borrower by standard advice of credit.
The Borrower agrees that the actual crediting of the sum of money so borrowed to
the Borrower's a deposit account shall constitute conclusive evidence that the
advance was made, and the failure of the Bank to endorse the amount of any
advance on the sheet attached to this note or to forward to
<PAGE>
the Borrower an advice of credit shall not affect the obligation of the Borrower
to repay such advance.
In addition, all advances under the line of credit shall be jointly and
severally guaranteed by Health Acquisition Corp., New England Home Care, Inc.
and Accredited Health Services, Inc. Each guarantee shall be secured by all
assets of the respective guarantors pursuant to a security agreement. The form
of note, security agreement and guarantee to be furnished to the Bank shall be
in form and substance acceptable to the Bank and its counsel.
Advances under the line of credit are subject to the Bank's satisfaction with
(i) the specific purpose and expected time and source of repayment of each
advance, and (ii) the Borrower's and the guarantors' financial condition,
business prospects and operations at the time of each advance. As you know,
lines of credit may be cancelled by either party at any time, however, unless
cancelled earlier, the line of credit shall be held available until January 31,
2000.
Additionally, all outstanding advances under the line of credit shall be reduced
to zero for a period of 30 consecutive days during each twelve (12) month
calendar period in which the line of credit is held available.
Sincerely,
THE BANK OF NEW YORK
/s/ Vito Caraccio
Vito Caraccio
Assistant Vice President
EXHIBIT 10.2
[LETTERHEAD OF THE BANK OF NEW YORK]
February 20, 1999
Mr. Robert P. Heller, Vice President &
Chief Financial Officer
New England Home Care, Inc.
700 White Plains Road, Suite 363
Scarsdale, New York 10583
Dear Bob:
This letter confirms that The Bank of New York (the "Bank") holds available a
$2,000,000 secured advised line of credit to New England Home Care, Inc. (the
"Borrower").
Advances under the line of credit shall be payable on demand and bear interest
at a rate per annum equal to the alternate base commercial lending rate of the
Bank as publicly announced to be in effect from time to time (the "Alternate
Base Rate"), such rate to change on the effective date of any change in the
Alternate Base Rate.
"Alternate Base Rate" shall mean, for any day, a rate per annum equal
to the higher of (i) the Prime Rate in effect on such day and (ii) the
Federal Funds Rate in effect on such day plus 1/2 of 1%.
For purposes of this definition:
"Prime Rate" shall mean, for any day, the weighted average of the rates
on overnight Federal funds transactions with members of the Federal
Reserve System arranged by Federal funds brokers, as published for such
day (or if such day is not a business day, for the next preceding
business day, the average of quotations for such day on such
transactions received by the Bank from three Federal funds brokers of
recognized standing selected by the Bank.
All advances and all principal payments hereunder shall be endorsed by the Bank
on the sheet attached to the Promissory Grid Note and shall be secured by all
assets of the Borrower pursuant to a security agreement. The Borrower authorizes
the Bank to accept telephonic instructions from a duly authorized representative
of the Borrower, as indicated by the latest Corporate Resolution on file with
the Bank, to make an advance or receive a repayment hereunder and to endorse the
sheet attached to this Promissory Grid Note accordingly. All advances made
hereunder shall be credited to the Borrower's deposit account referred to above,
which credits shall be confirmed to the Borrower by standard advice of credit.
The Borrower agrees that the actual crediting of the sum of money so borrowed to
the Borrower's a deposit account shall constitute conclusive evidence that the
advance was made, and the failure of the Bank to endorse the amount of any
advance on the sheet attached to this note or to forward to the Borrower an
advice of credit shall not affect the obligation of the Borrower to repay such
advance.
<PAGE>
In addition, all advances under the line of credit shall be jointly and
severally guaranteed by Health Acquisition Corp., National Home Health Care
Corp. and Accredited Health Services, Inc. Each guarantee shall be secured by
all assets of the respective guarantors pursuant to a security agreement. The
form of note, security agreement and guarantee to be furnished to the Bank shall
be in form and substance acceptable to the Bank and its counsel.
The amount of Loans outstanding under the line of credit shall not exceed the
lesser of the Borrowing Base or $2,000,000 at any time. As used herein, the term
"Borrowing Base" shall mean (a) eighty percent (80%) of the Borrower's Eligible
Accounts Receivable not more than 90 days past due from the invoice date plus
(b) fifty percent (50%) of the Borrower's Estimated Unbilled Accounts Receivable
for the Borrower's previous month. The Borrowing Base shall be calculated
pursuant to the Borrowing Base Certificate set forth on Exhibit A. In the event
that the amount of the Loans outstanding hereunder ever exceed the Borrowing
Base, the Borrower shall prepay the outstanding Loans in such an amount as would
be necessary to bring the amount outstanding under the line of credit in
compliance with the terms and conditions hereof.
Advances under the line of credit are subject to the Bank's satisfaction with
(i) the specific purpose and expected time and source of repayment of each
advance, and (ii) the Borrower's and the guarantors' financial condition,
business prospects and operations at the time of each advance. As you know,
lines of credit may be cancelled by either party at any time, however, unless
cancelled earlier, the line of credit shall be held available until January 31,
2000.
Additionally, all outstanding advances under the line of credit shall be reduced
to zero for a period of 30 consecutive days during each twelve (12) month
calendar period in which the line of credit is held available.
Sincerely,
THE BANK OF NEW YORK
/s/ Vito Caraccio
Vito Caraccio
Assistant Vice President
-2-
EXHIBIT 10.3
AMENDED AND RESTATED EMPLOYMENT AGREEMENT
Amended and Restated Employment Agreement, dated as of
December 1, 1998, by and between NATIONAL HOME HEALTH CARE CORP., with offices
at 700 White Plains Road, Scarsdale, New York 10583 (hereinafter called
"Company"), and FREDERICK H. FIALKOW (hereinafter called "Employee").
W I T N E S S E T H:
WHEREAS, Company and Employee desire to enter into this
Agreement in order that Employee be employed by Company upon the terms and
conditions stated herein.
NOW, THEREFORE, in consideration of the mutual covenants,
conditions and premises contained herein, the parties hereby agree as follows:
1. Employment. Company hereby employs Employee for the period
beginning on the date hereof (the "Commencement Date"), and ending four years
after the Commencement Date, hereinafter called the "Employment Period"). The
Agreement will automatically be renewed for an additional five-year Employment
Period unless Company or Employee elects not to renew by providing written
notice of such election to the other party within 30 days prior to the end of
the initial five-year Employment Period.
2. Duties. Subject to the authority of the Board of Directors
of the Company, Employee shall be employed as the Company's Chairman of the
Board and Chief Executive Officer. It is understood and agreed that Employee
shall perform his services principally in the Company's executive offices in
Westchester County, New York and in the State of Florida where the Company has
certain operations. Employee will perform such other duties and services of a
<PAGE>
senior executive nature and shall retain such status at the Company as shall be
commensurate with his position as the Chairman of the Board and Chief Executive
Officer.
3. Full Time. Employee agrees that he will devote his full
time and attention during regular business hours to the business and affairs of
the Company.
4. Compensation.
A. For all services performed by Employee for Company
during the Employment Period, Company will pay Employee, in accordance with the
normal pay practice of the Company, a salary of $305,000 per annum ("Salary"),
increased by a percentage equal to the aggregate percentage increase in the
Consumer Price Index since the year in which Employee first was paid such salary
amount by the Company. As used in this paragraph 4A, Consumer Price Index shall
mean the Consumer Price Index for Urban Wage Earners and Clerical Workers
prepared by the Bureau of Labor Statistics of the U.S. Department of Labor, or,
if that index is not then being published, the most nearly comparable successor
index that the parties may agree upon or, if they fail to agree, an index
designated by Company's independent certified public accountants. If a successor
index is used, Company's independent certified public accountants shall make
such adjustments to the index as may be appropriate to carry out the intention
of this paragraph and the accountants' determination shall be final and binding
on the parties.
B. As additional compensation, Employee shall receive
5% of the Company's Pre-Tax Income which, in each fiscal year during the
Employment Period, exceeds $3,000,000. No additional compensation shall be paid
for any fiscal year in which Pre-Tax Income is less than $3,000,000.
Notwithstanding anything else contained in this paragraph 4(B), the maximum
amount payable to Employee under this paragraph 4(B) for any fiscal year shall
be
-2-
<PAGE>
$150,000.
C. The additional compensation to be paid pursuant to
paragraph 4(B) shall be payable immediately following the availability of the
financial statements relating to the applicable fiscal year of Company, but in
no event later than 120 days after the end of such fiscal year.
D. The Employee shall also be entitled to participate
in the health, retirement, profit sharing, insurance or similar benefits which
the Company provides to any of its other senior executive employees. The Company
will use its best commercially reasonable efforts to cause its benefits package
for senior executive officers to be commensurate with benefits pack ages
provided for senior executive officers by other similarly situated public
companies in the health care business. In addition, the Employee and his spouse
shall also be entitled to long-term care insurance coverage under policies at
least as beneficial to the Employee and his spouse as the policies to such
effect currently in place as underwritten by Travelers Insurance, the premiums
for which shall be paid by the Company.
E. For the purposes of this Agreement, "Pre-Tax
Income" shall mean for each fiscal year the net income of Company and its
consolidated subsidiaries for such fiscal year before any charges for federal,
state or other taxes relating to income, determined in accordance with generally
accepted accounting principles.
5. Reimbursement of Expenses. Company recognizes that
Employee, in performing Employee's duties under this Agreement, may be required
to spend sums of money in connection with those duties for the benefit of
Company and accordingly will reimburse Employee $15,000 annually, for such
expenses beginning on the first day of the Employment
-3-
<PAGE>
Period payable weekly. In the event Employee incurs expenses in the performance
of Employee's duties on behalf of Company in excess of $15,000 in any year of
the Employment Period, Employee may present to Company an itemized voucher for
such expenses paid or incurred by Employee, and on presentation of that itemized
voucher Company will reimburse Employee or pay the expense incurred for all such
reasonable expenses, including, but not limited to, travel, meals, lodging,
entertainment and cash promotion. Company will provide to Employee every two
years the use for business purposes of an automobile, purchased or leased by
Company (or, at Employee's option, a cash allowance equal to the amount paid by
Employee to purchase or lease such an automobile), selected by Employee and
having a cost to Company of up to $40,000 per each two year period (in the case
of a purchase) or $1,000 per month (in the case of a lease), each of which
amount is subject to a cumulative annual percentage increase equal to the
percentage increase in the Consumer Price Index (as such term is used in
Paragraph 4A), with all expenses of operation, such as insurance, gas, oil and
repair paid for by Company. Company will also provide to Employee the use for
business purposes of a telephone in each of his residences and in each of his
automobiles.
6. Vacation. Employee shall be entitled to reasonable vacation
during the Employment Period but in no event less than six (6) weeks vacation
each year.
7. Disability. In the event that Employee shall be unable to
perform, because of illness or incapacity, physical or mental, all the duties
and services to be performed by him hereunder for a consecutive period of twelve
(12) months, the Company may terminate this Agreement after the expiration of
such period ("Disability Period"). Employee shall be entitled to receive the
compensation provided by paragraph 4(A) up to the end of the Disability Period
-4-
<PAGE>
(less payments from any disability insurance proceeds received by Employee with
respect to the Disability Period). Disability under this Paragraph shall be
determined by a physician who shall be selected by Employee and reasonably
approved by the Company. Such approval shall not be unreasonably withheld or
delayed, and a physician shall be deemed to be approved unless he or she is
disapproved in writing by the Company within ten (10) days after his or her name
is submitted. Company will pay the premiums for a disability insurance policy
which will provide Employee with disability payments after termination of the
Disability Period equal to one-half of Employee's Salary during the period of
disability or until Employee becomes 70 years old, whichever is sooner.
8. Death; Life Insurance. This Agreement shall terminate upon
the death of Employee. Company shall at its expense use all reasonable efforts
to purchase and maintain on behalf of Employee during the Employment Period a
life insurance policy on the life of Employee, payable to such beneficiaries as
Employee may from time to time designate, in an amount equal to three times
Employee's annual Salary.
9. Termination.
A. Company may discharge Employee for cause at any
time. Cause for discharge will exist when (i) Employee materially breaches this
Agreement and such breach is not cured within 30 days following written notice
by Company to Employee of such breach, or (ii) Employee is convicted of any act
or course of action involving moral turpitude which materially adversely affects
the reputation of Company. If, during the Employment Period, Employee is
discharged for cause, Company, without any limitation on any remedies it may
have at law or equity, is without liability for Salary or any other liability to
Employee after the date of such
-5-
<PAGE>
discharge.
B. Employee may terminate this Agreement during the
term hereof without liability at any time upon at least one year prior written
notice to Company.
C. In the event that as of the date of the termination
of this Agreement following a full five-year Employment Period, this Agreement
has not been renewed or Employee and Company have not entered into a mutually
agreeable successor employment agreement, then Company shall pay Employee on the
date of such termination a lump-sum amount equal to Employee's annual Salary as
of such date.
10. Disclosure of Confidential Information. "Confidential
Information" means all information known by Employee, because of employment by
Company, about Company's present or prospective products, processes, services or
activities. Confidential Information does not include information generally
known, other than through breach of a confidentiality agreement with Company, in
the industries in which Company engages or may engage. Employee will never,
during or after the Employment Period, directly or indirectly use any
Confidential Information except in the performance of Employee's duties for
Company, or in the performance of Employee's duties and to other persons as
directed by Company. Employee will use reasonable efforts to prevent
unauthorized use or disclosure of Confidential Information. Upon termination of
employment with Company, Employee will deliver to Company all writings relating
to or containing Confidential Information, including, without limitation, notes,
memoranda, letters, drawings, diagrams, and printouts and also including any
tapes, discs or other forms or recorded information. If Employee violates any
provision of this paragraph during, or after the Employment Period, Company
specifically reserves the right, in appropriate circumstances, to
-6-
<PAGE>
seek full indemnification from Employee should Company suffer any monetary
damages or incur any legal liability to any person as a result of the disclosure
or use of Confidential Information by Employee in violation of this paragraph.
11. Restrictive Covenants. Upon termination of the Employment
Period, Employee will not for a period of one year following the date of
termination of the Employment Period directly or indirectly engage in or
participate in the management or ownership of any business or activity in the
New York City metropolitan area, including suburban and other counties of New
York, New Jersey and Connecticut generally considered a part of such area, the
State of Florida or in any other state in which Company is registered to do
business as of the date of termination of the Employment Period, which directly
or indirectly competes with the business conducted by Company. Employee
recognizes and hereby acknowledges that the restrictions imposed upon Employee
in this paragraph are reasonable and are necessary for the protection of the
business of Company.
12. Ownership of Inventions, Discoveries and Improvements.
Employee shall promptly disclose in writing to the Board of Directors of Company
all inventions, discoveries, and improvements conceived, devised, created, or
developed by Employee in connection with his employment (collectively,
"Invention"), and Employee shall transfer and assign to Company all right, title
and interest in and to such Invention, including any and all domestic and
foreign patent rights, domestic and foreign copyright rights therein, and any
renewal thereof. Such disclosure is to be made promptly after the conception of
each Invention, and each Invention is to become and remain the property of
Company, whether or not patent or copyright applications are filed thereon by
Company. On request of Company Employee shall execute from time to time during
-7-
<PAGE>
or after the termination of employment such further instruments including,
without limitation, applications for patents and copyrights and assignments
thereof as may be deemed necessary or desirable by Company to effectuate the
provisions of this paragraph 12.
13. Construction. If the provisions of paragraph 10 should be
deemed unenforceable, invalid, or overbroad in whole or in part for any reason,
then any court of competent jurisdiction or any arbitrator appointed in
accordance with paragraph 14 is hereby authorized, requested, and instructed to
reform such paragraph to provide for the maximum competitive restraints upon
your activities (in time, product, geographic area and customer solicitation)
which may then be legal and valid.
14. Remedies, Damages and Jurisdiction.
A. Employee agrees that violation of paragraphs 10, 11
or 12 would cause irreparable injury to Company for which the remedy at law
would be inadequate, and that Company shall be entitled in any court of law or
equity or in any arbitration proceeding in accordance with this paragraph 14,
whichever forum is designated by Company, to preliminary, permanent and other
injunctive relief against any breach of the provisions contained in paragraphs
10, 11 or 12, and such punitive and compensatory damages as shall be awarded.
Further, in the event of a violation of the provisions of paragraph 11, the
period of noncompetition referred to therein shall be extended but not decreased
for a period of time equal to the period that the violation occurred.
B. Except as otherwise provided in paragraph 13 and
14A relating to the reformation of the restrictive covenants and obtaining
equitable relief, any controversy or claim arising out of, or relating to this
Agreement, or the breach thereof, shall be settled by
-8-
<PAGE>
arbitration by one arbitrator in New York, New York, in accordance with the rule
of the American Arbitration Association and judgment upon the award rendered by
the arbitrator may be entered in any Court having jurisdiction thereof.
C. Each of Company and Employee hereby consents to the
jurisdiction of the Supreme Court of the State of New York for the County of New
York and the United States District court for the Southern District of New York
for all purposes in connection with said arbitration or for obtaining the relief
referred to in paragraphs 10, 11 or 12, and further consents that any process or
notice of motion therewith may be served by certified or registered mail or
personal services, within or without the State of New York, provided a
reasonable time for appearance is allowed.
15. Severability. If any of the provisions of this Agreement
is held to be invalid, illegal, or unenforceable, that determination will not
affect the enforceability of any other provisions of this Agreement, and the
remaining provisions of this Agreement will be valid and enforceable according
to their terms.
16. Binding Effect.
A. This Agreement constitutes the entire understanding
of the parties, may be modified only in writing, is governed by the laws of New
York, and will be binding and inure to the benefit of Employee and Employee's
personal representatives and Company and Company's successors and permitted
assigns.
-9-
<PAGE>
B. In furtherance and not in limitation of the
foregoing, this Agreement supersedes any and all prior employment agreements,
including the employment agreements dated as of April 30, 1993 and November 1,
1997 by and between Company and Employee and such prior agreements hereby are
terminated and is no longer binding on either party.
IN WITNESS WHEREOF, the parties have executed this Agreement
as of the date first above mentioned.
EMPLOYEE:
/s/ Frederick H. Fialkow
----------------------------------
Frederick H. Fialkow
COMPANY:
NATIONAL HOME HEALTH CARE CORP.
By /s/ Robert P. Heller
-------------------------------
Robert P. Heller
-10-
EXHIBIT 10.4
FIRST AMENDMENT
TO
EMPLOYMENT AGREEMENT
This First Amendment to Employment Agreement, dated as of
December 1, 1998 (the "Amendment"), is by and between NATIONAL HOME HEALTH CARE
CORP., a Delaware corporation having an address at 700 White Plains Road,
Scarsdale, New York 10583 (the "Company") and STEVEN FIALKOW, an individual
having an address at 700 White Plains Road, Scarsdale, New York 10583 (the
"Employee").
WHEREAS, the Company and the Employee are parties to an
Employment Agreement dated as of November 1, 1997 (the "Agreement"); and
WHEREAS, the Company and the Employee desire to amend the
Agreement in certain respects.
NOW, THEREFORE, in consideration of the foregoing and the
mutual covenants and conditions hereinafter set forth, the parties hereby agree
as follows:
1. Amendment to the Agreement. The Agreement hereby is amended
effective as of the date hereof such that: (i) "fourth" contained in Section 2
is changed to "fifth", and (ii) "$157,500" contained in Section 5(a) is changed
to "$180,000."
2. Agreement to Continue as Amended. Except as modified and
amended by this Amendment, the Agreement shall remain and continue in full force
and effect after the date hereof.
3. Applicable Law. This Amendment shall be negotiated and the
transactions contemplated hereby consummated and fully performed in the State of
New York and shall be governed by and construed in accordance with the laws of
the State of New York, without regard to the conflicts of law rules thereof.
Nothing contained in this Amendment shall be construed so as to require the
commission of any act contrary to law, and whenever there is any conflict
between any provision of this Amendment and any statute, law, ordinance, order
or regulation, contrary to which the parties hereto have no legal right to
contract, the latter shall prevail, but in such event any provision of this
Amendment so affected shall be curtailed and limited only to the extent
necessary to bring it within the legal requirements.
4. Jurisdiction and Venue. It is hereby irrevocably agreed that
all disputes or controversies between the Company and Employee arising out of,
in connection with or relating to this Amendment shall be exclusively heard,
settled and determined by arbitration to be held in the City of New York, County
of New York, in accordance with the Commercial Arbitration Rules of the American
Arbitration Association to be conducted before a single arbitrator, who shall be
either an attorney or retired judge licensed to practice law in the State of New
York. The parties also agree that judgment may be entered on the arbitrator's
award by any court having jurisdiction thereof and
<PAGE>
the parties consent to the jurisdiction of any court located in the City of New
York, County of New York for this purpose.
5. Full Understanding. Employee represents and agrees that she
fully understands her right to discuss all aspects of this Amendment with her
private attorney, that to the extent, if any, that she desired, she availed
herself of this right, that she has carefully read and fully understands all of
the provisions of this Amendment, that she is competent to execute this
Amendment, that her Amendment to execute this Amendment has not been obtained by
any duress and that she freely and voluntarily enters into it, and that she has
read this document in its entirety and fully understands the meaning, intent and
consequences of this document which is that it constitutes an Amendment of
employment.
6. Counterparts. This Amendment may be executed in any number
of counterparts, each of which shall be deemed an original and all of which
taken together shall constitute one and the same Amendment.
IN WITNESS WHEREOF, the parties have executed this Amendment as
of the date first above written.
NATIONAL HOME HEALTH CARE CORP.
By: /s/ Robert P. Heller
--------------------------------------
Name: Robert P. Heller
Title: Executive Vice President of Finance
and Chief Financial Officer
/s/ STEVEN FIALKOW
--------------------------------------
STEVEN FIALKOW
-2-
EXHIBIT 10.5
FIRST AMENDMENT
TO
EMPLOYMENT AGREEMENT
This First Amendment to Employment Agreement, dated as of
December 1, 1998 (the "Amendment"), is by and between NATIONAL HOME HEALTH CARE
CORP., a Delaware corporation having an address at 700 White Plains Road,
Scarsdale, New York 10583 (the "Company") and RICHARD GAROFALO, an individual
having an address at 700 White Plains Road, Scarsdale, New York 10583 (the
"Employee").
WHEREAS, the Company and the Employee are parties to an
Employment Agreement dated as of November 1, 1997 (the "Agreement"); and
WHEREAS, the Company and the Employee desire to amend the
Agreement in certain respects.
NOW, THEREFORE, in consideration of the foregoing and the
mutual covenants and conditions hereinafter set forth, the parties hereby agree
as follows:
1. Amendment to the Agreement. The Agreement hereby is amended
effective as of the date hereof such that "fourth" contained in Section 2 is
changed to "fifth".
2. Agreement to Continue as Amended. Except as modified and
amended by this Amendment, the Agreement shall remain and continue in full force
and effect after the date hereof.
3. Applicable Law. This Amendment shall be negotiated and the
transactions contemplated hereby consummated and fully performed in the State of
New York and shall be governed by and construed in accordance with the laws of
the State of New York, without regard to the conflicts of law rules thereof.
Nothing contained in this Amendment shall be construed so as to require the
commission of any act contrary to law, and whenever there is any conflict
between any provision of this Amendment and any statute, law, ordinance, order
or regulation, contrary to which the parties hereto have no legal right to
contract, the latter shall prevail, but in such event any provision of this
Amendment so affected shall be curtailed and limited only to the extent
necessary to bring it within the legal requirements.
4. Jurisdiction and Venue. It is hereby irrevocably agreed that
all disputes or controversies between the Company and Employee arising out of,
in connection with or relating to this Amendment shall be exclusively heard,
settled and determined by arbitration to be held in the City of New York, County
of New York, in accordance with the Commercial Arbitration Rules of the American
Arbitration Association to be conducted before a single arbitrator, who shall be
either an attorney or retired judge licensed to practice law in the State of New
York. The parties also agree that judgment may be entered on the arbitrator's
award by any court having jurisdiction thereof and
<PAGE>
the parties consent to the jurisdiction of any court located in the City of New
York, County of New York for this purpose.
5. Full Understanding. Employee represents and agrees that she
fully understands her right to discuss all aspects of this Amendment with her
private attorney, that to the extent, if any, that she desired, she availed
herself of this right, that she has carefully read and fully understands all of
the provisions of this Amendment, that she is competent to execute this
Amendment, that her Amendment to execute this Amendment has not been obtained by
any duress and that she freely and voluntarily enters into it, and that she has
read this document in its entirety and fully understands the meaning, intent and
consequences of this document which is that it constitutes an Amendment of
employment.
6. Counterparts. This Amendment may be executed in any number
of counterparts, each of which shall be deemed an original and all of which
taken together shall constitute one and the same Amendment.
IN WITNESS WHEREOF, the parties have executed this Amendment as
of the date first above written.
NATIONAL HOME HEALTH CARE CORP.
By: /s/ Robert P. Heller
-----------------------------------------
Name: Robert P. Heller
Title: Executive Vice President of Finance
and Chief Financial Officer
/s/ RICHARD GAROFALO
----------------------------------------
RICHARD GAROFALO
-2-
EXHIBIT 10.6
FIRST AMENDMENT
TO
EMPLOYMENT AGREEMENT
This First Amendment to Employment Agreement, dated as of
December 1, 1998 (the "Amendment"), is by and between NATIONAL HOME HEALTH CARE
CORP., a Delaware corporation having an address at 700 White Plains Road,
Scarsdale, New York 10583 (the "Company") and ROBERT P. HELLER, an individual
having an address at 700 White Plains Road, Scarsdale, New York 10583 (the
"Employee").
WHEREAS, the Company and the Employee are parties to an
Employment Agreement dated as of November 1, 1997 (the "Agreement"); and
WHEREAS, the Company and the Employee desire to amend the
Agreement in certain respects.
NOW, THEREFORE, in consideration of the foregoing and the
mutual covenants and conditions hereinafter set forth, the parties hereby agree
as follows:
1. Amendment to the Agreement. The Agreement hereby is amended
effective as of the date hereof such that: (i) "fourth" contained in Section 2
is changed to "fifth", and (ii) "$122,500" contained in Section 5(a) is changed
to "$140,000."
2. Agreement to Continue as Amended. Except as modified and
amended by this Amendment, the Agreement shall remain and continue in full force
and effect after the date hereof.
3. Applicable Law. This Amendment shall be negotiated and the
transactions contemplated hereby consummated and fully performed in the State of
New York and shall be governed by and construed in accordance with the laws of
the State of New York, without regard to the conflicts of law rules thereof.
Nothing contained in this Amendment shall be construed so as to require the
commission of any act contrary to law, and whenever there is any conflict
between any provision of this Amendment and any statute, law, ordinance, order
or regulation, contrary to which the parties hereto have no legal right to
contract, the latter shall prevail, but in such event any provision of this
Amendment so affected shall be curtailed and limited only to the extent
necessary to bring it within the legal requirements.
4. Jurisdiction and Venue. It is hereby irrevocably agreed that
all disputes or controversies between the Company and Employee arising out of,
in connection with or relating to this Amendment shall be exclusively heard,
settled and determined by arbitration to be held in the City of New York, County
of New York, in accordance with the Commercial Arbitration Rules of the American
Arbitration Association to be conducted before a single arbitrator, who shall be
either an attorney or retired judge licensed to practice law in the State of New
York. The parties also agree that judgment may be entered on the arbitrator's
award by any court having jurisdiction thereof and
<PAGE>
the parties consent to the jurisdiction of any court located in the City of New
York, County of New York for this purpose.
5. Full Understanding. Employee represents and agrees that she
fully understands her right to discuss all aspects of this Amendment with her
private attorney, that to the extent, if any, that she desired, she availed
herself of this right, that she has carefully read and fully understands all of
the provisions of this Amendment, that she is competent to execute this
Amendment, that her Amendment to execute this Amendment has not been obtained by
any duress and that she freely and voluntarily enters into it, and that she has
read this document in its entirety and fully understands the meaning, intent and
consequences of this document which is that it constitutes an Amendment of
employment.
6. Counterparts. This Amendment may be executed in any number
of counterparts, each of which shall be deemed an original and all of which
taken together shall constitute one and the same Amendment.
IN WITNESS WHEREOF, the parties have executed this Amendment as
of the date first above written.
NATIONAL HOME HEALTH CARE CORP.
By: /s/ Frederick H. Fialkow
-----------------------------------
Name: Frederick H. Fialkow
Title: Chairman of the Board
/s/ ROBERT P. HELLER
-----------------------------------
ROBERT P. HELLER
-2-
<TABLE> <S> <C>
<ARTICLE> 5
<CIK> 0000728389
<NAME> NATIONAL HOME HEALTH CARE CORP.
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> JUL-31-1999
<PERIOD-START> AUG-01-1998
<PERIOD-END> JAN-31-1999
<CASH> 6,537,000
<SECURITIES> 318,000
<RECEIVABLES> 11,131,000
<ALLOWANCES> (483,000)
<INVENTORY> 0
<CURRENT-ASSETS> 18,470,000
<PP&E> 1,392,000
<DEPRECIATION> (939,000)
<TOTAL-ASSETS> 25,911,000
<CURRENT-LIABILITIES> 1,496,000
<BONDS> 0
0
0
<COMMON> 6,000
<OTHER-SE> 24,409,000
<TOTAL-LIABILITY-AND-EQUITY> 25,911,000
<SALES> 19,227,000
<TOTAL-REVENUES> 19,227,000
<CGS> 0
<TOTAL-COSTS> 17,839,000
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 674,000
<INTEREST-EXPENSE> (195,000)
<INCOME-PRETAX> 909,000
<INCOME-TAX> 638,000
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 271,000
<EPS-PRIMARY> 0.05
<EPS-DILUTED> 0.05
</TABLE>
