<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 June 30, 1997 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.
<TABLE>
<CAPTION>
Class Outstanding at July 31, 1997
----- ----------------------------
<S> <C>
Common Stock, par value 6,247,326
$.01 per share
Common Stock Purchase Warrants 414,538(1)
</TABLE>
(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 JUNE 30, 1997
-----------------------------------------------
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, 1996 and
June 30, 1997 (Unaudited) 3-4
Consolidated Statements of Operations (Unaudited)
Three and Six Months Ended June 30, 1997 and 1996 5
Consolidated Statements of Cash Flow (Unaudited)
Three and Six Months Ended June 30, 1997 and 1996 6-7
Notes to Consolidated Financial Statements 8-11
Management's Discussion and Analysis of Financial Condition
and Results of Operations 12-14
Part II
- -------
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 JUNE 30, 1997
-----------------------------------------------
THE WENDT-BRISTOL HEALTH SERVICES CORPORATION
AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
AS AT JUNE 30, 1997 AND DECEMBER 31, 1996
ASSETS
<TABLE>
<CAPTION>
June 30 December 31
1997 1996
----------- -----------
(Unaudited)
<S> <C> <C>
Current assets:
Cash $ 1,001,148 $ 890,670
----------- -----------
Restricted cash 510,282 381,025
----------- -----------
Receivables:
Trade, net of allowance for doubtful
accounts of $179,000 (June) and
$190,000 (December) 2,847,394 2,014,403
Notes receivable 291,586 120,613
Miscellaneous 990,355 890,655
----------- -----------
4,129,335 3,025,671
----------- -----------
Inventories 390,156 482,930
Prepaid expenses and other 263,446 250,947
----------- -----------
Total current assets 6,294,367 5,031,243
----------- -----------
Property, plant and equipment, at cost 21,468,755 20,880,293
Less: Accumulated depreciation and
amortization (6,367,954) (6,135,704)
----------- -----------
15,100,801 14,744,589
----------- -----------
Investments and other assets:
Notes and other receivables, net of current
portion 341,249 359,007
Notes receivable from officers, employees
and related parties, net of amounts
payable 956,434 993,580
Life insurance premiums receivable 926,641 865,299
Investment in unconsolidated affiliates
(Note 4) 591,403 --
Excess of cost over assets of businesses
and subsidiaries acquired, less
amortization 580,595 621,629
Deferred charges 1,024,991 956,795
Other assets 348,783 345,963
----------- -----------
Total investments and other assets 4,770,096 4,142,273
----------- -----------
$26,165,264 $23,918,105
=========== ===========
</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 JUNE 30, 1997
-----------------------------------------------
THE WENDT-BRISTOL HEALTH SERVICES CORPORATION
AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS (Continued)
AS AT JUNE 30, 1997 AND DECEMBER 31, 1996
LIABILITIES AND STOCKHOLDERS' EQUITY
<TABLE>
<CAPTION>
June 30 December 31
1997 1996
----------- -----------
(Unaudited)
<S> <C> <C>
Current liabilities:
Notes payable - officer $ 30,000 $ 55,000
Securitization program advances -- 392,287
Accounts payable 2,855,843 2,729,021
Accrued expenses and other liabilities:
Salaries and wages 453,387 482,134
Workers' compensation 197,259 380,502
Taxes, other than federal income taxes 536,107 726,106
Interest 166,408 118,640
Stock purchase agreement payable -- 325,000
Other 407,815 841,643
Long-term obligations classified as current 827,669 750,758
----------- -----------
Total current liabilities 5,474,488 6,801,091
----------- -----------
Long-term obligations, less amounts classified
as current 15,596,441 12,080,856
----------- -----------
Total liabilities 21,070,929 18,881,947
----------- -----------
Minority interests 181,748 294,128
----------- -----------
Stockholders' equity:
Common stock: $.01 par;
authorized: 12,000,000 shares
issued: 8,248,480 shares 82,485 82,435
Capital in excess of par 10,244,805 10,238,750
Retained earnings (deficit) (2,962,372) (3,119,096)
----------- -----------
7,364,918 7,202,089
Treasury stock, at cost, 2,001,154 (June)
and 2,007,460 shares (December) (2,452,331) (2,460,059)
----------- -----------
Total stockholders' equity 4,912,587 4,742,030
----------- -----------
$26,165,264 $23,918,105
=========== ===========
</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 JUNE 30, 1997
-----------------------------------------------
THE WENDT-BRISTOL HEALTH SERVICES CORPORATION
AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE THREE AND SIX MONTHS ENDED JUNE 30, 1997 AND 1996
(UNAUDITED)
<TABLE>
<CAPTION>
Six Months Ended Three Months Ended
June 30 June 30
------------------------------- -----------------------------
1997 1996 1997 1996
----------- ----------- ---------- ----------
<S> <C> <C> <C> <C>
Revenues:
Net sales $ 1,420,408 $ 1,376,041 $ 736,429 $ 668,064
Service income 9,052,493 9,368,282 4,540,943 4,755,105
----------- ----------- ---------- ----------
10,472,901 10,744,323 5,277,372 5,423,169
----------- ----------- ---------- ----------
Costs and expenses:
Cost of sales 1,063,273 980,369 560,139 484,690
Selling, general and administrative
expenses, net 8,269,707 8,578,313 4,128,764 4,280,072
----------- ----------- ---------- ----------
9,332,980 9,558,682 4,688,903 4,764,762
----------- ----------- ---------- ----------
Operating income before depreciation 1,139,921 1,185,641 588,469 658,407
Depreciation 513,053 463,524 280,092 233,712
----------- ----------- ---------- ----------
Operating income 626,868 722,117 308,377 424,695
----------- ----------- ---------- ----------
Other income (expense):
Minority interests in earnings of
consolidated affiliates, net of tax (31,462) (107,811) 19,867 (82,759)
Equity in earnings of
unconsolidated affiliates (Note 4) 134,103 -- 46,545 --
Interest expense (613,341) (485,057) (299,295) (272,848)
Other, net 52,256 31,850 34,952 2,495
----------- ----------- ---------- ----------
(458,444) (561,018) (197,931) (353,112)
----------- ----------- ---------- ----------
Income before income taxes 168,424 161,099 110,446 71,583
Income tax expense (11,700) (15,671) (5,300) (9,257)
----------- ----------- ---------- ----------
Net income $ 156,724 $ 145,428 $ 105,146 $ 62,326
=========== =========== ========== ==========
Income per common share $ 0.03 $ 0.03 $ 0.02 $ 0.01
=========== =========== ========== ==========
Weighted average shares outstanding 6,241,865 5,728,425 6,247,161 5,736,020
=========== =========== ========== ==========
</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 JUNE 30, 1997
-----------------------------------------------
THE WENDT-BRISTOL HEALTH SERVICES CORPORATION
AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE SIX MONTHS ENDED JUNE 30, 1997 AND 1996
(UNAUDITED)
<TABLE>
<CAPTION>
Six Months Ended June 30
-------------------------------
1997 1996
----------- -----------
<S> <C> <C>
Cash flows from operating activities:
Net income $ 156,724 $ 145,428
----------- -----------
Adjustments required to reconcile net income
to net cash provided by operating activities:
Amortization, depreciation and other, net 554,087 473,056
Provision for losses on notes and accounts receivable 68,763 64,217
Gain on sale of assets (18,621) --
Minority interest in earnings of consolidated affiliates 31,462 107,811
Equity in net earnings of unconsolidated affiliates (134,103) --
Changes in assets and liabilities:
Receivables
Sale (purchase) of receivables (607,229) 970,550
Other changes (394,225) 164,549
Merchandise inventories 92,774 (30,913)
Prepaid expenses and other current assets (3,041) 67,946
Accounts payable 126,822 (610,616)
Accrued expenses and other liabilities (1,113,049) (1,226,722)
Federal income taxes payable -- (100,000)
Deferred charges and other (70,219) (229,614)
----------- -----------
Total adjustments (1,466,579) (349,736)
----------- -----------
Net cash used in operating activities (1,309,855) (204,308)
----------- -----------
Cash flows from investing activities:
Proceeds from the sale of assets 40,000 --
(Increase) decrease in notes receivable (153,215) 14,008
Investment in unconsolidated affiliates (457,300) --
Disbursements to related parties
and former affiliates, net (24,196) (224,353)
Deposits to restricted cash (129,257) (49,738)
Capital expenditures (151,023) (275,880)
----------- -----------
Net cash used in investing activities (874,991) (535,963)
----------- -----------
Cash flows from financing activities:
Purchase of common stock of subsidiary -- (3,000)
Distributions to limited partners, net (143,842) --
Proceeds from officer obligation 90,000 --
Principal payments of officer obligation (115,000) --
Proceeds fromstock options exercised 4,375 --
Principal payments of long-term obligations (702,856) (672,277)
Proceeds from long-term obligations 3,554,934 1,543,453
Net payments to securitization program (392,287) --
----------- -----------
Net cash provided by financing activities 2,295,324 868,176
----------- -----------
Net increase in cash 110,478 127,905
Cash at beginning of period 890,670 35,825
----------- -----------
Cash at end of period $ 1,001,148 $ 163,730
=========== ===========
</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 JUNE 30, 1997
-----------------------------------------------
THE WENDT-BRISTOL HEALTH SERVICES CORPORATION
AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS (Continued)
FOR THE SIX MONTHS ENDED JUNE 30, 1997 AND 1996
(UNAUDITED)
<TABLE>
<CAPTION>
Six Months Ended June 30
--------------------------
1997 1996
--------- --------
<S> <C> <C>
Cash paid during the six months for:
Interest, net of interest income $ 565,573 $489,270
Income taxes $ 12,450 $108,391
Supplemental disclosures of noncash investing and financing activity:
A partnership, of which the Company is the managing general partner
purchased equipment which was financed by entering into installment finance
agreements
Increase in equipment cost, net $ 740,418 $ 69,509
Increase in long-term obligations (740,418) (69,509)
</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 JUNE 30, 1997
-----------------------------------------------
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 June
30, 1997 and December 31, 1996 and the consolidated results of its
operations for the three and six months ended June 30, 1997 and 1996 as
well as the cash flows for the respective six 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, 1996, WHICH IS HEREBY INCORPORATED BY REFERENCE.
2. INCOME TAXES
The Company utilizes the provisions of SFAS No. 109, which requires the
use of the liability method of accounting for deferred income taxes. As
a result, the Company has recognized a deferred tax liability, a
deferred tax asset and a valuation allowance against the deferred tax
assets. A summary of the December 31, 1996 attributes is as follows:
<TABLE>
<S> <C>
Deferred tax assets $1,953,000
Less: valuation allowance 200,000
----------
1,753,000
----------
Deferred tax liabilities 1,499,300
----------
Net deferred tax asset $ 253,700
==========
</TABLE>
During 1997, the Company does not expect to incur any current Federal
tax liability since it will be able to utilize net operating loss carry
forwards to reduce taxable income to zero.
(Continued)
8
<PAGE> 9
THE WENDT-BRISTOL HEALTH SERVICES CORPORATION
---------------------------------------------
FORM 10-Q FOR THE QUARTER ENDED JUNE 30, 1997
-----------------------------------------------
THE WENDT-BRISTOL HEALTH SERVICES CORPORATION
---------------------------------------------
AND SUBSIDIARIES
----------------
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
2. INCOME TAXES (CONTINUED)
State and local taxes are summarized as follows:
<TABLE>
<CAPTION>
Six months ended June 30, Three months ended June 30,
------------------------- ---------------------------
1997 1996 1997 1996
---- ---- ---- ----
<S> <C> <C> <C> <C>
State and local taxes:
Current expense $11,700 $15,671 $ 6,400 $6,414
======= ======= ======= ======
</TABLE>
3. STOCKHOLDERS' EQUITY
At June 30, 1997 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 1997, are May 1,
1998 for the initial Warrant and May 1, 1999 for the Series II
Warrants. There were no warrants exercised during the six or three
months ended June 30, 1997.
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.
In February 1997, Statement of Financial Accounting Standards (SFAS)
No. 128 "Earnings per Share" was issued, which changes the methodology
for calculating earnings per share. Implementation of SFAS 128 is
required for financial statements issued for periods ending after
December 15, 1997, including interim periods; earlier adoption is not
permitted. Early adoption of SFAS 128 would have had no effect on
earnings per share for the six or three months ended June 30, 1997.
9
<PAGE> 10
THE WENDT-BRISTOL HEALTH SERVICES CORPORATION
---------------------------------------------
FORM 10-Q FOR THE QUARTER ENDED JUNE 30, 1997
-----------------------------------------------
THE WENDT-BRISTOL HEALTH SERVICES CORPORATION
---------------------------------------------
AND SUBSIDIARIES
----------------
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
4. NEW VENTURES
A. During December, 1996, an 83.3% owned subsidiary of the Company formed
an Ohio limited liability company. The subsidiary acquired a 50%
interest through a capital contribution of $325,000 in January 1997.
The new entity closed, in January 1997, on the acquisition of operating
assets, including an open field magnetic resonance imaging device.
Operations began in January, 1997 and the operating results are
included in the statement of operations under the caption "Equity in
earnings of unconsolidated affiliates". The Company is managing the
facility.
B. In April, 1997, an 83.3% owned subsidiary of the Company acquired a
22.5% interest in an Ohio limited liability company which will operate
a radiation therapy practice. The new venture has entered into a two
year lease agreement which includes a mandatory purchase of the
building for $1,400,000. The Company will manage the facility.
Unaudited financial information of affiliates which are accounted for
by the equity method is summarized below:
<TABLE>
<CAPTION>
BALANCE SHEET
June 30,1997
------------
<S> <C>
Current assets $ 579,537
Property, plant and equipment
net of accumulated depreciation 919,858
Other non-current assets 271,128
----------
Total assets $1,770,523
==========
Liabilities $ 642,716
Equity 1,127,807
----------
Total liabilities and Equity $1,770,523
==========
</TABLE>
<TABLE>
<CAPTION>
STATEMENT OF OPERATIONS
Six months ended
June 30, 1997
----------------
<S> <C>
Service income $675,547
Net income 268,206
</TABLE>
As a result of limited liability companies being taxed as partnerships
for Federal income tax purposes, there is no tax provided for its
earnings. See Note 2. Income Taxes.
10
<PAGE> 11
THE WENDT-BRISTOL HEALTH SERVICES CORPORATION
---------------------------------------------
FORM 10-Q FOR THE QUARTER ENDED JUNE 30, 1997
-----------------------------------------------
THE WENDT-BRISTOL HEALTH SERVICES CORPORATION
---------------------------------------------
AND SUBSIDIARIES
----------------
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
5. OTHER
A. Effective mid April 1997, management decided to cease operations of a
significant portion of its home health care agency in order to
eliminate unprofitable portions of the business. Management anticipates
a positive impact to the full year 1997 operating results as a result
of the second quarter implementation of this decision.
B. On June 21, 1997, the Company closed one of its retail pharmacy
locations, selling certain of its assets to a retail competitor. The
closing of the pharmacy reduces the total number of retail pharmacies
operated by the Company from three to two.
11
<PAGE> 12
THE WENDT-BRISTOL HEALTH SERVICES CORPORATION
---------------------------------------------
FORM 10-Q FOR THE QUARTER ENDED JUNE 30, 1997
-----------------------------------------------
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 1997 will produce more favorable results than 1996 due
to the elimination of a significant portion of the unprofitable home health care
agency and other significant non-continuing costs. Furthermore, the issuance of
stock in late 1996 along with the issuance of long-term bonds in the first
quarter of 1997 will allow the Company to reduce its costs of borrowing and
achieve cost savings through an improved availability of funds for operations.
The financing also allows the Company to expand its profitable operations
through selective ventures with non-related third parties, such as the
newly-formed limited liability companies. The improving profitability during
1997 is a forward-looking statement that is subject to change as a result of
occupancy and utilization rates, third-party reimbursement rates, market
conditions, and changes in the overall health care industry.
Working capital increased approximately $2,590,000 during the six months ended
June 30, 1997, due mostly from the issuance of $3,417,000 of long-term bonds in
February, 1997. Current assets increased approximately $1,263,000, due mostly
from increases in cash ($110,000), restricted cash ($129,000), notes receivable
($171,000), and accounts receivable ($833,000). The increase in cash is
attributable to the remainder of the funds from the issuance of the long-term
bonds while the increase in restricted cash is mostly due to funds on deposit in
a margin account related to a currency hedging strategy employed by the Company.
The majority of the increase in notes receivable is due to the issuance of a
short-term note to an affiliated limited liability company. The increase in
accounts receivable is a direct result of the Company terminating its accounts
securitization program in March, 1997 and buying back all of the accounts
receivable that were previously sold. Current liabilities decreased
approximately $1,327,000, due primarily from reductions in securitization
program advances ($392,000), accrued workers' compensation ($183,000), taxes
other than federal income tax ($190,000), stock purchase agreement payable
($325,000), and accrued expenses other ($434,000). The issuance of the long-term
bonds allowed the Company to terminate the accounts receivable securitization
program and significantly reduce the amount of current liabilities.
LIQUIDITY AND CAPITAL RESOURCES
The Company continued to improve its liquidity position in the first half of
1997 by issuing long-term 5% bonds pursuant to Regulation S of the Securities
Act of 1933 to a group of European investors in February, 1997. The Company
received approximately $3,417,000, of which approximately $1,462,000 was used to
repay advances from the accounts receivable securitization program. The
remaining funds will be used for general working capital requirements and
expansion into new ventures in the diagnostic and radiology fields.
(Continued)
12
<PAGE> 13
THE WENDT-BRISTOL HEALTH SERVICES CORPORATION
---------------------------------------------
FORM 10-Q FOR THE QUARTER ENDED JUNE 30, 1997
-----------------------------------------------
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 (CONTINUED)
The Company and its subsidiaries, limited partnership, and newly-formed limited
liability companies, have committed to certain equipment upgrades or
acquisitions that will be financed either through the current equipment
financing relationship or through vendor programs. The cost of such equipment
currently on order is approximately $3,300,000.
Management further believes the present resources available and anticipated
through profitable operations will meet anticipated requirements for operations
of the business. There are no further material commitments for capital
expenditures.
RESULTS OF OPERATIONS 1997 - 1996
Consolidated revenues from operations for the six months ended June 30, 1997
decreased approximately $271,000 or 2.5% while revenues for the three months
ended June 30, 1997 decreased approximately $146,000 or 2.7% from 1996. Net
sales increased approximately $44,000 or 3.2% for the six months and increased
$68,000 or 10.2% for the three months ended June 30, 1997 as compared to the
same periods in 1996. Service revenues decreased approximately $316,000 or 3.4%
for the six months and $214,000 or 4.5% for the three months over the same
periods in 1996, mostly attributable to lower patient census at the nursing
homes and a decline in visits and revenues in the Home Care subsidiary which
ceased operations in April 1997 (see Note 5A).
Cost of sales increased approximately $83,000 or 8.5% for the six months and
$75,000 or 15.6% for the three months ended June 30, 1997 as compared to the
corresponding periods in 1996. Gross margin for the six months ended June 30,
1997 declined to 25.1% compared to 28.8% for the same period in 1996,
attributable to new competition in the retail pharmacy division and price
reductions in the second quarter at the location that closed (see note 5B).
Selling, general and administrative expenses decreased approximately $309,000 or
3.6% for the six months and $151,000 or 3.5% for the three months ended June 30,
1997 over the same periods in 1996. The decrease is mostly due to decreased
visits in the home health agency and lower costs in the nursing homes due to
lower occupancy levels.
The equity in earnings of unconsolidated affiliates was approximately $134,000
for the six months and $47,000 for the three months ended June 30, 1997. This
represents the Company's portion of its earnings in the limited liability entity
which commenced operations in January, 1997 (see Note 4).
13
<PAGE> 14
THE WENDT-BRISTOL HEALTH SERVICES CORPORATION
---------------------------------------------
FORM 10-Q FOR THE QUARTER ENDED JUNE 30, 1997
-----------------------------------------------
THE WENDT-BRISTOL HEALTH SERVICES CORPORATION
---------------------------------------------
AND SUBSIDIARIES
----------------
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS (CONTINUED)
RESULTS OF OPERATIONS 1997-1996 (CONTINUED)
Interest expense increased approximately $128,000 or 26.4% for the six months
and $26,000 or 9.7% for the three months ended June 30, 1997 as compared to the
same periods in 1996. In 1996, the Company did not have a working capital line
of credit in place until late May and therefore, most of the interest for the
first six months was related to equipment and mortgages. The 1997 amount
includes the accounts receivable securitization program interest through the
middle of March and the interest attributable to the convertible subordinated
and Series 1 bonds (see note 15 of 1996 Form 10-K).
14
<PAGE> 15
THE WENDT-BRISTOL HEALTH SERVICES CORPORATION
---------------------------------------------
FORM 10-Q FOR THE QUARTER ENDED JUNE 30, 1997
-----------------------------------------------
PART II OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
27 - EDGAR Financial Data Schedule
(b) Reports on Form 8-K
None
--------------------------------
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)
August 13, 1997 By: /s/ Sheldon A. Gold
---------------------------------
Sheldon A. Gold
President
(Principal Executive Officer)
August 13, 1997 By: /s/ Charles R. Cicerchi
---------------------------------
Charles R. Cicerchi
Vice-President, Finance
(Principal Financial and
Accounting Officer)
15
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> JAN-01-1997
<PERIOD-END> JUN-30-1997
<CASH> 1,511,430
<SECURITIES> 0
<RECEIVABLES> 3,026,394
<ALLOWANCES> 179,000
<INVENTORY> 390,156
<CURRENT-ASSETS> 6,294,367
<PP&E> 21,468,755
<DEPRECIATION> 6,367,954
<TOTAL-ASSETS> 26,165,264
<CURRENT-LIABILITIES> 5,474,488
<BONDS> 15,596,441
0
0
<COMMON> 82,485
<OTHER-SE> 4,830,102
<TOTAL-LIABILITY-AND-EQUITY> 26,165,264
<SALES> 1,420,408
<TOTAL-REVENUES> 10,472,901
<CGS> 1,063,273
<TOTAL-COSTS> 1,063,273
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 613,341
<INCOME-PRETAX> 168,424
<INCOME-TAX> 11,700
<INCOME-CONTINUING> 156,724
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 156,724
<EPS-PRIMARY> .03
<EPS-DILUTED> .03
</TABLE>
