<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
______________________________
FORM 10-Q
QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
______________________________
For Quarter Ended September 30, 1995 Commission file number 0-11656
THE WENDT-BRISTOL HEALTH SERVICES CORPORATION
A Delaware Corporation I.R.S. No. 22-1807533
Two Nationwide Plaza, Suite 760, Columbus, Ohio 43215
Registrant's Telephone No. (614) 221-6000
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 [ ]
Indicate the number of shares outstanding of each of the issuer's classes of
Common Stock, as of the latest practicable date.
EACH OF THE FOLLOWING CLASSES ARE REGISTERED ON THE AMERICAN STOCK EXCHANGE.
Class Outstanding at October 31, 1995
----- -------------------------------
Common Stock, par value 6,219,758
$.01 per share
Common Stock Purchase Warrants 414,538 (1)
(1) Upon exercise, represents 1,139,980 shares of The Wendt-Bristol
Health Services Corporation.
<PAGE> 2
THE WENDT-BRISTOL HEALTH SERVICES CORPORATION
---------------------------------------------
FORM 10-Q FOR THE QUARTER ENDED SEPTEMBER 30, 1995
--------- ----------------------------------------
THE WENDT-BRISTOL HEALTH SERVICES CORPORATION
---------------------------------------------
AND SUBSIDIARIES
----------------
I N D E X
<TABLE>
<CAPTION>
Part I Page No.
------ --------
<S> <C>
Financial Statements:
Consolidated Balance Sheets - December 31, 1994 and
September 30, 1995 (Unaudited) 3-4
Consolidated Statements of Operations (Unaudited)
Three and Nine Months Ended September 30, 1995 and 1994 5
Consolidated Statements of Cash Flow (Unaudited)
Nine Months Ended September 30, 1995 and 1994
6-7
Notes to Consolidated Financial Statements
8-10
Management's Discussion and Analysis of Financial Condition
and Results of Operations
11-13
Part II
-------
Other Information 14
Part III
--------
Signatures 15
Exhibits:
Exhibit 27 EDGAR Financial Data Schedule 16
</TABLE>
2
<PAGE> 3
THE WENDT-BRISTOL HEALTH SERVICES CORPORATION
---------------------------------------------
FORM 10-Q FOR THE QUARTER ENDED SEPTEMBER 30, 1995
--------- ----------------------------------------
THE WENDT-BRISTOL HEALTH SERVICES CORPORATION
AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
AS AT SEPTEMBER 30, 1995 AND DECEMBER 31, 1994
ASSETS
<TABLE>
<CAPTION>
September 30 December 31
1995 1994
------------- -------------
(Unaudited)
<S> <C> <C>
Current assets:
Cash $ 74,199 $ 182,042
------------- -------------
Restricted cash 161,932 407,616
------------- -------------
Receivables:
Trade, net of allowance for doubtful
accounts of $192,000 (September)
and $ 250,000 (December) 897,128 926,085
Notes receivable 251,152 80,710
Miscellaneous 1,799,971 3,380,655
------------- -------------
2,948,251 4,387,450
Inventories 555,666 586,395
Prepaid expenses and other 337,630 663,590
------------- -------------
Total current assets 4,077,678 6,227,093
------------- -------------
Property, plant and equipment 19,158,033 19,259,407
Less: Accumulated depreciation and
amortization (5,679,444) (4,974,847)
------------- -------------
13,478,589 14,284,560
------------- -------------
Investments and other assets:
Investment in preferred stock, at cost - 3,000,000
Notes and other receivables, net of current portion 405,432 644,084
Notes receivable from officers, employees and
related parties, net of amounts payable 863,249 242,112
Life insurance premiums receivable 369,488 300,789
Excess of cost over assets of businesses
and subsidiaries acquired, less amortization 496,879 507,540
Deferred charges 920,731 871,162
Other assets 184,896 430,701
------------- -------------
Total investments and other assets 3,240,675 5,996,388
------------- -------------
$ 20,796,942 $ 26,508,041
============= =============
</TABLE>
(Continued)
The accompanying notes are an integral part of the financial statements.
3
<PAGE> 4
THE WENDT-BRISTOL HEALTH SERVICES CORPORATION
---------------------------------------------
FORM 10-Q FOR THE QUARTER ENDED SEPTEMBER 30, 1995
--------- ----------------------------------------
THE WENDT-BRISTOL HEALTH SERVICES CORPORATION
AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS (Continued)
AS AT SEPTEMBER 30, 1995 AND DECEMBER 31, 1994
LIABILITIES AND STOCKHOLDERS' EQUITY
<TABLE>
<CAPTION>
September 30 December 31
1995 1994
----------- -----------
(Unaudited)
Current liabilities: <S> <C>
Securitization program advances $ - $ 478,500
Accounts payable 2,516,767 3,003,115
Accrued expenses and other liabilities:
Salaries and wages 353,442 356,238
Taxes, other than federal income taxes 1,470,485 981,895
Interest 88,405 117,046
Other 1,125,221 1,753,861
Long-term obligations classified as current 2,609,597 3,451,989
Federal income taxes payable 145,000 320,000
----------- -----------
Total current liabilities 8,308,917 10,462,644
Long-term obligations, less amounts classified
as current 7,453,525 7,964,568
----------- -----------
Total liabilities 15,762,442 18,427,212
----------- -----------
Minority interests 240,503 881,282
----------- -----------
Stockholders' equity:
Common stock: $.01 par;
authorized: 12,000,000 shares;
issued: 8,243,480 shares (September)
and 8,240,730 (December) 82,435 82,407
Capital in excess of par 10,274,974 10,311,509
Retained earnings (deficit) (3,021,396) (3,089,543)
----------- -----------
7,336,013 7,304,373
Treasury stock, at cost, 2,023,722 shares (September)
and 45,486 shares (December) (2,542,016) (104,826)
----------- -----------
Total stockholders' equity 4,793,997 7,199,547
----------- -----------
$20,796,942 $26,508,041
=========== ===========
</TABLE>
The accompanying notes are an integral part of the financial statements.
4
<PAGE> 5
THE WENDT-BRISTOL HEALTH SERVICES CORPORATION
---------------------------------------------
FORM 10-Q FOR THE QUARTER ENDED SEPTEMBER 30, 1995
--------- ----------------------------------------
THE WENDT-BRISTOL HEALTH SERVICES CORPORATION
AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 1995 AND 1994
(UNAUDITED)
<TABLE>
<CAPTION>
Nine Months Ended Three Months Ended
September 30 September 30
------------------------------- -------------------------------
1995 1994 1995 1994
------------- ------------- ------------- -------------
<S> <C> <C>
Revenues:
Net sales $ 2,012,077 $ 2,673,181 $ 660,085 $ 854,826
Service income 13,687,012 11,742,225 4,418,222 3,939,872
------------- ------------- ------------- -------------
15,699,089 14,415,406 5,078,307 4,794,698
------------- ------------- ------------- -------------
Costs and expenses:
Cost of sales 1,369,777 1,840,964 449,172 582,925
Selling, general and administrative
expenses, net 12,517,093 10,814,990 4,055,859 3,586,925
------------- ------------- ------------- -------------
13,886,870 12,655,954 4,505,031 4,169,850
------------- ------------- ------------- -------------
Operating income before depreciation 1,812,219 1,759,452 573,276 624,848
Depreciation 877,484 845,685 295,656 275,923
------------- ------------- ------------- -------------
Operating income 934,735 913,767 277,620 348,925
------------- ------------- ------------- -------------
Other income (expense):
Minority interests in (earnings) losses of
consolidated subsidiaries, net of tax 27,383 9,852 37,165 5,844
Interest expense (887,974) (1,013,261) (287,926) (378,101)
Gain on sale of stock of subsidiaries - 46,744 - -
Gain on sale of investments - 92,498 - -
Other, net 52,003 204,212 15,420 83,689
------------- ------------- ------------- -------------
(808,588) (659,955) (235,341) (288,568)
------------- ------------- ------------- -------------
Income before income taxes 126,147 253,812 42,279 60,357
Income tax provision (58,000) (162,700) (13,000) (54,700)
------------- ------------- ------------- -------------
Net income $ 68,147 $ 91,112 $ 29,279 $ 5,657
============= ============= ============= =============
Income per common share $ 0.01 $ 0.01 $ - $ -
============= ============= ============= =============
Weighted average shares outstanding 6,658,894 8,143,560 6,219,758 8,147,030
============= ============= ============= =============
</TABLE>
The accompanying notes are an integral part of the financial statements.
5
<PAGE> 6
THE WENDT-BRISTOL HEALTH SERVICES CORPORATION
---------------------------------------------
FORM 10-Q FOR THE QUARTER ENDED SEPTEMBER 30, 1995
--------- ----------------------------------------
THE WENDT-BRISTOL HEALTH SERVICES CORPORATION
AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1995 AND 1994
(UNAUDITED)
<TABLE>
<CAPTION>
1995 1994
------------ ------------
<S> <C> <C>
Cash flows from operating activities:
Net income $ 68,147 $ 91,112
------------ ------------
Adjustments required to reconcile net income
to net cash provided by operating activities:
Amortization, depreciation and other, net 888,145 864,801
Loss on sale of property, plant & equipment - 214
Gain on sale of stock of subsidiary - (46,744)
Minority interest in earnings of consolidated subsidiaries (27,383) (9,852)
Changes in assets and liabilities, exclusive of
assets sold (Note 4):
Receivables (95,027) 589,624
Merchandise inventories (95,974) 27,377
Prepaid expenses and other current assets 342,567 (107,446)
Accounts payable (316,014) (18,828)
Accrued expenses and other liabilities (37,223) (633,632)
Federal income taxes payable (175,000) 150,000
Deferred charges and other (44,544) (17,667)
------------ ------------
Total adjustments 439,547 797,847
------------ ------------
Net cash provided by operating activities 507,694 888,959
------------ ------------
Cash flows from investing activities:
Proceeds from sale of property, plant & equipment - 35,050
Decrease or (increase) in notes receivable 68,210 (32,911)
Collection of miscellaneous receivable 1,700,000 -
Receipts from (advances to) related parties
and former affiliates, net (170,823) (70,949)
Utilization of or (deposit to) restricted cash 245,684 2,423
Capital expenditures (311,597) (259,650)
------------ ------------
Net cash provided by (used in) investing activities 1,531,474 (326,037)
------------ ------------
Cash flows from financing activities:
Termination distribution to real estate limited partners (150,000) -
Other distributions to limited partners, net - (138,189)
Purchase of common stock of subsidiary (2,000) -
Proceeds from stock offering of subsidiary - 156,397
Proceeds from warrants exercised 3,750 -
Principal payments of long-term obligations (1,520,261) (730,218)
Net advances from or (payments to) securitization program (478,500) 53,500
------------ ------------
Net cash used in financing activities (2,147,011) (658,510)
------------ ------------
Net decrease in cash (107,843) (95,588)
Cash at beginning of period 182,042 309,820
------------ ------------
Cash at end of period $ 74,199 $ 214,232
============ ============
</TABLE>
(Continued)
The accompanying notes are an integral part of the financial statements.
6
<PAGE> 7
THE WENDT-BRISTOL HEALTH SERVICES CORPORATION
---------------------------------------------
FORM 10-Q FOR THE QUARTER ENDED SEPTEMBER 30, 1995
--------- ----------------------------------------
THE WENDT-BRISTOL HEALTH SERVICES CORPORATION
AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1995 AND 1994
(UNAUDITED)
<TABLE>
<CAPTION>
1995 1994
------------- -------------
<S> <C> <C>
Supplemental disclosures of cash flow information
Cash paid during the six months for:
Interest $ 916,615 $ 1,041,398
Income taxes $ 222,705 $ 23,656
Supplemental disclosures of noncash
investing and financing activity:
A subsidiary of the Company has reached an agreement in
principle to sell the operating assets, net of associated liabilities
to a related party in exchange for an interest bearing note. (Note 4)
Increase in notes receivable from officers, employees
and related parties, net of amounts payable:
Note arising in transaction $ 574,949
Other (55,936)
Decrease in accounts payable 48,624
Decrease in accrued expenses and other liabilities 83,006
Decrease in trade and miscellaneous receivables (4,668)
Decrease in inventories (126,703)
Decrease in prepaid expenses and other current assets (38,409)
Decrease in property, plant and equipment, net (240,079)
Decrease in deferred charges (500)
Decrease in other assets (240,284)
Common stock of the Company (2,000,000 shares) and common
stock of a subsidiary (300,000 shares) were exchanged for 30,000
shares of preferred stock, par value $100 per share, owned by the
Company in Life Holdings, Inc.
Decrease in investment in preferred stock, at cost $ (3,000,000)
Decrease in minority interests 512,653
Increase in treasury stock 2,487,347
A partnership, of which a subsidiary of the Company is the
managing general partner, refinanced a mortgage on its Diagnostic
and Radiology Center building and has capitalized certain costs
relating to the transaction.
Increase in deferred charges $ 9,735
Increase in long-term obligations (9,735)
A subsidiary of the Company incurred costs for the construction
of an Alzheimer's and related disorders facility with draws
against a HUD-insured financing agreement.
Increase in prepaid expenses and other current assets $ 45,116 $ -
Increase in property, plant and equipment - 1,845,983
Decrease in accounts payable 121,710 -
Increase in long-term obligations (166,826) (1,845,983)
</TABLE>
The accompanying notes are an integral part of the financial statements.
7
<PAGE> 8
THE WENDT-BRISTOL HEALTH SERVICES CORPORATION
---------------------------------------------
FORM 10-Q FOR THE QUARTER ENDED SEPTEMBER 30, 1995
--------- ----------------------------------------
THE WENDT-BRISTOL HEALTH SERVICES CORPORATION
---------------------------------------------
AND SUBSIDIARIES
----------------
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. MANAGEMENT'S REPRESENTATION
In the opinion of management, the accompanying unaudited consolidated
financial statements contain all adjustments (consisting only of
normal adjustments and recurring accruals) necessary to present fairly
The Wendt-Bristol Health Services Corporation ("Wendt-Bristol" or
"Company") and subsidiaries consolidated financial position as at
September 30, 1995 and December 31, 1994 and the consolidated results
of its operations for the three and nine months ended September 30,
1995 and 1994 as well as the cash flows for the respective nine
months. The results of operations for any interim period are not
necessarily indicative of results for the full year. These financial
statements should be read in conjunction with the financial statements
and notes thereto contained in the Wendt-Bristol Annual Report filed
as Form 10-K for the year ended December 31, 1994, which is hereby
incorporated by reference.
2. INCOME TAXES
Effective January 1, 1992, the Company implemented the provisions of
SFAS No. 109, which modified the requirements of previously issued
SFAS No. 96. As a result, the Company recorded a deferred tax
liability, a deferred tax asset and a $400,000 valuation allowance
against the deferred tax assets, resulting in a net deferred tax asset
of $94,860 at December 31, 1994. The expense for income taxes
consists of the following:
<TABLE>
<CAPTION>
Nine months ended Three months ended
September 30, September 30,
-------------------------- ---------------------------
1995 1994 1995 1994
---------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
Federal Income Taxes:
Current expense $ 45,000 $ 150,000 $ 10,000 $ 50,000
State and local taxes:
Current expense 13,000 12,700 3,000 4,700
---------- ---------- ---------- ----------
Total tax expense $ 58,000 $ 162,700 $ 13,000 $ 54,700
========== ========== ========== ==========
</TABLE>
Through December, 1992 the Wendt-Bristol Diagnostics Company, ("WBDC")
was a wholly-owned indirect subsidiary of the Company. As such it was
included in the consolidated Federal income tax return of the Company.
Ownership of WBDC has been reduced to less than 80% as a result of
sales of its common stock by the Company; therefore, WBDC can no
longer be included in the Company's consolidated tax returns. WBDC
has been required to file separate
8
<PAGE> 9
THE WENDT-BRISTOL HEALTH SERVICES CORPORATION
---------------------------------------------
FORM 10-Q FOR THE QUARTER ENDED SEPTEMBER 30, 1995
--------- ----------------------------------------
THE WENDT-BRISTOL HEALTH SERVICES CORPORATION
---------------------------------------------
AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
2. INCOME TAXES CONT'D.
returns since January 1, 1993. On a separate return basis the WBDC
tax provision for the three months and nine months ended September 30,
1995 that is included above is $10,000 and $45,000 respectively; the
tax provision for the three and nine months ended September 30, 1994
is $50,000 and $150,000 respectively. At September 30, 1995,
subsequent to the March 1995 acquisition of 300,000 shares of WBDC as
indicated below, the Company owned 79.3% of WBDC.
3. STOCKHOLDERS' EQUITY
Reference is hereby made to Note 14 of the Company's Annual Report and
Form 10-K for the year ended December 31, 1994 concerning the March
1995 sale of its investment in Preferred Stock in exchange for two
million shares of the Company's common stock and three hundred
thousand shares of common stock of Wendt-Bristol Diagnostics Company.
At September 30, 1995 there were 414,538 Common Stock purchase
warrants outstanding, exercisable at $3.75 per warrant. Each warrant,
upon exercise, provides two and three quarters (2 3/4) shares of the
company's common stock and a Series II warrant (issuable upon
completion of appropriate Securities and Exchange Commission filings)
exercisable for two shares at $3.00/share. The Warrants' expiration
dates, as amended by the Board of Directors in April 1995, are May 1,
1996 for the initial Warrant and May 1, 1997 for the Series II
Warrants. There were no warrants exercised during the three months
ended September 30, 1995 and 1,000 warrants were exercised during the
nine months ended September 30, 1995.
Earnings per share were computed using the weighted average number of
shares outstanding (net of Treasury shares) during each period. The
common stock equivalents (warrants and options) are anti-dilutive,
thereby yielding similar primary and fully diluted per share amounts.
4. SALE OF ASSETS OF SUBSIDIARY
The Company has reached an agreement in principle with MHK Corp., a
company owned by certain of its officers and directors, for the sale,
effective January 1, 1995, of the operating assets of a subsidiary's
retail liquor store and two lounges in Palm Beach County, Florida.
Terms of the sale include a purchase price equivalent to the net book
value of the assets (no gain or loss to be recognized) which at
January 1, 1995 was $575,000, as adjusted for certain 1995
transactions, along with an interest-bearing 9% note.
9
<PAGE> 10
THE WENDT-BRISTOL HEALTH SERVICES CORPORATION
---------------------------------------------
FORM 10-Q FOR THE QUARTER ENDED SEPTEMBER 30, 1995
--------- ----------------------------------------
THE WENDT-BRISTOL HEALTH SERVICES CORPORATION
---------------------------------------------
AND SUBSIDIARIES
----------------
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
5. LEGAL PROCEEDINGS
(A) On November 17, 1995, the Wendt-Bristol Company, a wholly owned
subsidiary of the Company and certain of its subsidiaries ("W-B")
filed a Complaint for Damages and Injunctive Relief in the Court of
Common Pleas, Franklin County, Ohio against NPF IV, National Premier
Financial Services, Inc. and National Century Financial Enterprises,
Inc., collectively the lenders in W-B's accounts receivable
securitization program. W-B has made payment of the net balance due,
without consideration for interest and damages due W-B, and seeks the
recognition of the cessation of the agreement and damages in excess of
$500,000. W-B has sought out and is prepared to enter an agreement
with a new third party which will finance its accounts receivable upon
resolution of this matter.
(B) Ethan Allen Care Center, Inc., ("Ethan Allen") a wholly owned
subsidiary of the Company operates a 100 bed nursing home under the
name "Bristol House of Springfield". Ethan Allen leases the real
property from American Health Care Centers, Inc. ("AHCC"). AHCC
filed a complaint for Declaratory Judgement against Ethan Allen on
June 26, 1995, in the Court of Common Pleas, Clark County, Ohio. AHCC
is seeking to have the court declare that Ethan Allen is in default
under the lease and that AHCC is entitled to repurchase the nursing
home license pursuant to the terms of the lease. AHCC alleges that
Ethan Allen is in default with respect to the payment of rent and late
charges. Ethan Allan has tendered all rent for the nursing home and
the amount it believes is due for late charges. An Answer to the
Complaint was filed in August 1995, and Ethan Allen intends to
vigorously defend the action.
10
<PAGE> 11
THE WENDT-BRISTOL HEALTH SERVICES CORPORATION
---------------------------------------------
FORM 10-Q FOR THE QUARTER ENDED SEPTEMBER 30, 1995
--------- ----------------------------------------
THE WENDT-BRISTOL HEALTH SERVICES CORPORATION
---------------------------------------------
AND SUBSIDIARIES
----------------
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
NOTE: REFERENCE SHOULD BE MADE TO THE NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS HEREIN.
FINANCIAL CONDITION
Management believes that the Company's financial condition has been
strengthened through the concentration of efforts to develop its Health Care
Services business. As a result of the emphasis on health services, rather than
manufacture or distribution, Management believes that the Company has
established a focused growth plan that is evidenced by the increase in
operating income for the first nine months from $680,000 in 1993 to $935,000 in
1995. It should be noted that the operating income for the first nine months
in 1995 includes results of the Alzheimer's Center which opened in October,
1994. This special-needs nursing facility had initial costs that had to be
absorbed approximating $330,000 in 1995. Although the facility has reached
95% occupancy, it did not reach profitability in the third quarter and had an
operating loss for the nine months ended September 30, 1995 of approximately
$117,000. With previously anticipated Medicaid rate increases received
effective October 1, 1995, Management believes the facility will favorably
impact the Company's fourth quarter profit and cash flows.
In addition to the aforementioned, the mortgage on the Company's New Jersey
property related to its former manufacturing division (approximate balance at
September 30, 1995 of $1,667,000) has been extended by the present lender to a
balloon payment due April 1, 1996 and continues to be classified as current.
Management believes, based upon discussions with potential lenders, that it
will obtain a refinancing of the existing mortgage prior to April 1, 1996.
Working capital increased approximately $4,000 during the nine months ended
September 30, 1995. Current assets decreased approximately $2,150,000, due
mostly from the collection of miscellaneous receivables ($1,581,000), a
decrease in prepaid expenses and other ($326,000), and a decrease in restricted
cash ($246,000). Current liabilities decreased approximately $2,154,000 due
mostly from reductions in the current portion of long-term debt ($842,000),
other liabilities ($629,000), accounts payable ($486,000), and securitization
program advances ($479,000), offset by an increase in accrued taxes, other than
federal incomes taxes ($489,000).
11
<PAGE> 12
THE WENDT-BRISTOL HEALTH SERVICES CORPORATION
---------------------------------------------
FORM 10-Q FOR THE QUARTER ENDED SEPTEMBER 30, 1995
--------- ----------------------------------------
THE WENDT-BRISTOL HEALTH SERVICES CORPORATION
---------------------------------------------
AND SUBSIDIARIES
----------------
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS (CONTINUED)
LIQUIDITY AND CAPITAL RESOURCES
During the initial stage of the startup of the Alzheimer's Center, the Company
experienced the expected adverse cash impact as a result of the need for
staffing at disproportionate levels during the period of orderly introduction
of patients to the facility as well as the expected processing delays
attributable to Medicaid reimbursement. Although the facility has reached
capacity, the facility did not reach profitability in the third quarter. With
a Medicaid rate increase effective in October and a private rate increase
effective in November, Management believes that the Center will begin to
generate profits and cash in the fourth quarter of 1995.
The Company is replacing its CT Scan unit during the fourth quarter of 1995, at
the Diagnostic and Radiology Center operated by a limited partnership of which
a subsidiary is general partner. The upgraded unit will provide improved
imaging speed and quality enabling the Center to perform additional diagnostic
procedures as well as increase the potential daily through-put at the facility.
The Center is also obtaining additional imaging techniques such as angiography
and fluoroscopy in the first quarter of 1996. The costs of such equipment,
approximately $1,500,000, will be financed through the Partnership by favorable
vendor financing programs.
Additionally, Management is currently reviewing its existing financing in order
to secure a payment schedule that can be modified to provide a less aggressive
timeframe for repayment of its debt. Examples are the mortgage on its New
Jersey facility (leased to the buyer of its former manufacturing division)
which has a balloon payment due in April, 1996 as well as the obligations
related to its other "state of the art" high-technology equipment which
retains high value. Management believes the Company has collateral values that
will enable cost savings as well as reduced debt service. It should also be
noted that despite having experienced cash flow difficulties from time to time,
as in circumstances indicated above, the Company has diligently strived to
maintain good working relationships with its vendors and landlords.
Reference should be made to Note 5 herein concerning a Complaint the Company
has filed related to its accounts receivable securitization program.
Management believes there will not be any significant adverse ramifications
from this action while it is expected to provide long-term positive benefits
upon resolution.
Management further believes the present resources available and anticipated
through profitable operations will meet anticipated requirements for financing
the growth of the business. There are no further material commitments for
capital expenditures.
12
<PAGE> 13
THE WENDT-BRISTOL HEALTH SERVICES CORPORATION
---------------------------------------------
FORM 10-Q FOR THE QUARTER ENDED SEPTEMBER 30, 1995
--------- ----------------------------------------
THE WENDT-BRISTOL HEALTH SERVICES CORPORATION
---------------------------------------------
AND SUBSIDIARIES
----------------
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS (CONTINUED)
RESULTS OF OPERATIONS 1995-1994
Consolidated revenues from operations for the nine months ended September 30,
1995 increased approximately $1,284,000 or 8.9% while revenues for the three
months ended September 30, 1995 increased approximately $284,000 or 5.9% over
1994. Net sales declined approximately $661,000 for the nine months and
$195,000 for the three months ended September 30, 1995 compared to 1994, due
mostly to the disposition of the liquor operations effective as of January 1,
1995 (see Note 4). Service revenues increased approximately $1,945,000 or
16.6% for the nine months and $478,000 or 12.1% for the three months ended
September 30, 1995 over the same periods in 1994. Most of the increase for the
nine months is attributable to the newly-opened Alzheimer's Center ($1,972,000)
and increases at the Diagnostics Center ($322,000), offset by temporary
declines in the nursing homes.
Cost of sales decreased approximately $471,000 for the nine months and $134,000
for the three months ended September 30, 1995 as compared to the same periods
in 1994, primarily from the disposition of the liquor operations. Gross margin
for the nine months ended September 30, 1995 was 31.9% as compared to 31.1% for
the comparable period in 1994.
Selling, general and administrative expenses increased approximately $1,702,000
for the nine months and $469,000 for the three months ended September 30, 1995
as compared to the same periods in 1994, primarily attributable to additional
expenses from the Alzheimer's Center partially offset by the disposition of the
liquor operations.
Operating income increased approximately $21,000 or 2.3% for the nine months
ended September 30, 1995 as compared to the same period in 1994. The increase
for the nine months is attributable to increases at the Diagnostics Center
offset by decreases at the nursing homes as well as the start-up losses at the
Alzheimer's Center. For the quarter ended September 30, 1995, operating income
decreased approximately $71,000 or 20.4% as compared to 1994, mostly
attributable to decreases at the nursing homes and Diagnostics Center. Such
decreases are expected to be reversed by fourth quarter rate increases and
additional diagnostic procedures, respectively.
Net income decreased approximately $23,000 for the nine months and increased
$24,000 for the three months ended September 30, 1995 as compared to the same
periods in 1994. Exclusive of the 1994 non-recurring gains from the sale of
stock of subsidiaries and investments of approximately $139,000, net income
increased approximately $116,000 for the nine months ended September 30, 1995
as compared to 1994.
13
<PAGE> 14
THE WENDT-BRISTOL HEALTH SERVICES CORPORATION
---------------------------------------------
FORM 10-Q FOR THE QUARTER ENDED SEPTEMBER 30, 1995
--------- ----------------------------------------
PART II OTHER INFORMATION
Item 1. Legal Proceedings
(A) On November 17, 1995, The Wendt-Bristol Company, a wholly owned
subsidiary of the Company and certain of its subsidiaries ("W-B")
filed a Complaint for Damages and Injunctive Relief in the Court of
Common Pleas, Franklin County, Ohio against NPF IV, National Premier
Financial Services, Inc. and National Century Financial Enterprises,
Inc., collectively the lenders in W-B's accounts receivable
securitization program. W-B has made payment of the net balance due,
without consideration for interest and damages due W-B, and seeks
recognition of the cessation of the agreement and damages in excess of
$500,000. W-B has sought out and is prepared to enter an agreement
with a new third party which will finance its accounts receivable upon
resolution of this matter.
(B) Ethan Allen Care Center, Inc., ("Ethan Allen") a wholly owned
subsidiary of the Company operates a 100 bed nursing home under the
name "Bristol House of Springfield". Ethan Allen leases the real
property from American Health Care Centers, Inc. ("AHCC"). AHCC
filed a Complaint for Declaratory Judgement against Ethan Allen on
June 26, 1995, in the Court of Common Pleas, Clark County, Ohio. AHCC
is seeking to have the court declare that Ethan Allen is in default
under the lease and that AHCC is entitled to repurchase the nursing
home license pursuant to the terms of the lease. AHCC alleges that
Ethan Allen is in default with respect to the payment of rent and late
charges. Ethan Allen has tendered all rent for the nursing home and
the amount it believes is due for late charges. An Answer to the
Complaint was filed in August 1995, and Ethan Allen intends to
vigorously defend the action.
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits - Exhibit 27 - Financial Data Schedule
(b) Reports on Form 8-K - None
14
<PAGE> 15
THE WENDT-BRISTOL HEALTH SERVICES CORPORATION
---------------------------------------------
FORM 10-Q FOR THE QUARTER ENDED SEPTEMBER 30, 1995
--------- ----------------------------------------
PART III SIGNATURES
________________________________
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.
THE WENDT-BRISTOL HEALTH SERVICES CORPORATION
---------------------------------------------
(Registrant)
November 20, 1995 By: /s/ Sheldon A. Gold
------------------------------------
Sheldon A. Gold
President
(Principal Executive, Financial and
Accounting Officer)
November 20, 1995 By: /s/ Charles R. Cicerchi
------------------------------------
Charles R. Cicerchi
Vice-President, Finance
15
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-START> JAN-01-1995
<PERIOD-END> SEP-30-1995
<CASH> 236,121
<SECURITIES> 0
<RECEIVABLES> 1,089,128
<ALLOWANCES> 192,000
<INVENTORY> 555,666
<CURRENT-ASSETS> 4,077,678
<PP&E> 19,158,033
<DEPRECIATION> 5,679,444
<TOTAL-ASSETS> 20,796,942
<CURRENT-LIABILITIES> 8,308,917
<BONDS> 7,453,525
<COMMON> 82,435
0
0
<OTHER-SE> 4,711,562
<TOTAL-LIABILITY-AND-EQUITY> 20,796,942
<SALES> 2,012,077
<TOTAL-REVENUES> 15,699,089
<CGS> 1,369,777
<TOTAL-COSTS> 1,369,777
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 887,974
<INCOME-PRETAX> 126,147
<INCOME-TAX> 58,000
<INCOME-CONTINUING> 68,147
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 68,147
<EPS-PRIMARY> .01
<EPS-DILUTED> .01
</TABLE>
