<PAGE>
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-QSB
(Mark One)
[X] QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the quarterly period ended SEPTEMBER 23, 1995
------------------------------------------------
OR
[_] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the transition period from ________________________ to _____________________
Commission file number 0-08547
----------------------
AMSERV HEALTHCARE INC.
- --------------------------------------------------------------------------------
(Exact name of Issuer as specified in its charter)
DELAWARE 94-1627467
- -------------------------------- --------------------------------------
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
3252 Holiday Court, #204,
La Jolla, CA 92037
- -------------------------------- --------------------------------------
(Address of principal executive offices) (Zip code)
(Issuer's telephone number,
including area code) (619) 597-1000
--------------------------------------
Check whether the Issuer (1) filed all reports required to be filed by
Section 13 or 15(d) of the Securities Exchange Act of 1934 during the past 12
months (or for such shorter period that the Issuer was required to file such
reports), and (2) has been subject to such filing requirements for the past 90
days.
Yes X No _____
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As of November 2, 1995, there were outstanding 3,163,203 shares of the
Issuer's common stock, par value $.01 per share.
Transitional Small Business Disclosure Format (check one):
Yes _____ No X
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AMSERV HEALTHCARE INC.
I N D E X
_____________________
<TABLE>
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Page
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PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
A. CONDENSED CONSOLIDATED BALANCE SHEETS,
SEPTEMBER 23, 1995 AND JUNE 24, 1995 3
B. CONDENSED CONSOLIDATED STATEMENTS OF
OPERATIONS FOR THE THREE MONTH PERIODS
ENDED SEPTEMBER 23, 1995 AND SEPTEMBER 30, 1994 4
C. CONDENSED CONSOLIDATED STATEMENTS OF
CASH FLOWS FOR THE THREE MONTH PERIODS
ENDED SEPTEMBER 23, 1995 AND SEPTEMBER 30, 1994 5
D. NOTES TO CONDENSED CONSOLIDATED FINANCIAL
STATEMENTS 6 - 7
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF
OPERATION 8
PART II - OTHER INFORMATION
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K 9
SIGNATURES 10
EXHIBIT INDEX E-1
</TABLE>
2
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PART I - FINANCIAL INFORMATION
AMSERV HEALTHCARE INC.
CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
September 23, June 24,
1995 1995
--------- ---------
ASSETS (unaudited)
<S> <C> <C>
Current Assets
Cash and cash equivalents........................................... $ 1,794,211 $ 1,226,448
Short-term investments, net......................................... 646,588 1,392,021
Accounts receivable, net of allowance for
doubtful accounts of $103,264...................................... 1,156,908 973,731
Other current assets................................................ 256,926 187,463
----------- -----------
Total current assets............................................ 3,854,633 3,779,663
Equipment, furniture and fixtures net of
accumulated depreciation of $221,050 and $196,069, respectively..... 412,375 387,821
Intangible assets, net............................................... 2,137,036 2,203,113
Other assets......................................................... 307,709 313,888
----------- -----------
$ 6,711,753 $ 6,684,485
=========== ===========
LIABILITIES, REDEEMABLE PREFERRED STOCK AND SHAREHOLDERS' EQUITY
Current Liabilities
Accounts payable.................................................... $ 70,873 $ 105,663
Accrued payroll and related taxes................................... 653,712 561,143
Net liabilities of discontinued operations (Note 4)................. 281,334 391,770
Other current liabilities........................................... 208,000 254,778
----------- -----------
Total current liabilities....................................... 1,213,919 1,313,354
----------- -----------
Long-Term Liabilities
Other long-term liabilities......................................... 31,708 30,859
----------- -----------
Total long-term liabilities..................................... 31,708 30,859
----------- -----------
Redeemable Preferred Stock
Redeemable preferred stock, $.01 par value;
authorized 3,000,000 shares:
Class A; issued and outstanding 341,435 shares (Note 5)......... - 3,414
Class B; issued and outstanding 260,141 shares (Note 5)......... 2,601 -
Additional paid-in capital (Note 5)................................. 680,269 679,456
----------- -----------
Total redeemable preferred stock................................ 682,870 682,870
Common Shareholders' Equity
Common stock, $.01 par value; authorized 15,000,000 shares;
3,306,471 shares and 3,295,356 shares
outstanding, respectively.......................................... 33,067 32,953
Treasury stock, at cost, 143,268 shares............................. (296,053) (296,053)
Additional paid-in capital.......................................... 6,806,601 6,787,963
Note receivable from officer........................................ (198,440) (198,440)
Unrealized loss on short-term investments........................... (2,340) (14,564)
Accumulated deficit................................................. (1,559,579) (1,654,457)
----------- -----------
Total common shareholders' equity............................... 4,783,256 4,657,402
----------- -----------
$ 6,711,753 $ 6,684,485
=========== ===========
</TABLE>
See accompanying notes to consolidated financial statements.
3
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AMSERV HEALTHCARE INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
Three months ended Three months ended
September 23, September 30,
1995 1994
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Operating Revenues................................ $ 2,893,058 $ 2,636,920
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Operating Expenses
Selling, general and administrative.............. 2,700,032 2,433,291
Depreciation and amortization.................... 91,059 110,230
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Total Operating Expenses....................... 2,791,091 2,543,521
------------- ------------
Operating Income from Continuing Operations....... 101,967 93,399
Interest Expense.................................. - (18,476)
Interest Income................................... 52,911 13,490
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Income from Continuing Operations
Before Provision for Income Taxes................ 154,878 88,413
Income Tax Provision.............................. 60,000 25,000
------------- ------------
Net Income from Continuing Operations............. $ 94,878 $ 63,413
============= ============
Net Income Per Common Share
from Continuing Operations....................... $ 0.03 $ 0.02
============= ============
Shares Used in Computing Per Share Amounts........ 3,268,642 2,945,664
========== ==========
</TABLE>
See accompanying notes to consolidated financial statements.
4
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AMSERV HEALTHCARE INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
Three months ended
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September 23, September 30,
1995 1994
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OPERATING ACTIVITIES:
Net income............................................ $ 94,878 $ 63,413
Noncash items included in net income:
Depreciation and amortization........................ 91,059 110,230
Changes in assets and liabilities:
Accounts receivable.................................. (183,177) (37,004)
Income taxes......................................... 27,333 26,639
Other assets......................................... (63,284) (41,349)
Accounts payable..................................... (34,790) (52,979)
Other liabilities.................................... 19,306 (41,237)
---------- --------
Net cash provided by (used in) operating activities... (48,675) 27,713
INVESTING ACTIVITIES:
Payment of costs related to discontinued operations.. (110,436) (77,941)
Proceeds from sale of short-term investments......... 757,657 100,325
Purchase of equipment, furniture and fixtures........ (49,535) (14,563)
Cash received on notes receivable.................... - 16,956
---------- --------
Net cash provided by investing activities............. 597,686 24,777
FINANCING ACTIVITIES:
Repayment on note payable............................ - (43,767)
Exercise of employee stock options................... 18,752 -
---------- --------
Net cash provided by (used in) financing activities... 18,752 (43,767)
---------- --------
Net increase in cash and cash equivalents............. 567,763 8,723
Cash and cash equivalents at beginning of year........ 1,226,448 643,987
---------- --------
Cash and cash equivalents at end of year.............. $ 1,794,211 $ 652,710
========== ========
NONCASH FINANCING AND INVESTING ACTIVITIES:
Income tax paid....................................... 30,115 -
Interest paid......................................... - 976
</TABLE>
See accompanying notes to consolidated financial statements.
5
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AMSERV HEALTHCARE INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
1. ADJUSTMENTS
In the opinion of management of the Company, the accompanying unaudited
condensed consolidated financial statements reflect all adjustments necessary
(which are of a normal recurring nature) to present fairly the Company's
financial position as of September 23, 1995, and the results of operations and
cash flows for the three month periods ended September 23, 1995 and September
30, 1994. Information included in the condensed consolidated balance sheet as
of June 24, 1995 has been derived from the Company's Form 10-K for the year
ended June 24, 1995 ("1995 Form 10-K"). The unaudited condensed financial
statements contained herein should be read in conjunction with the consolidated
financial statements and notes contained in the Company's 1995 Form 10-K.
2. FISCAL YEAR
During fiscal 1995 the Company commenced utilizing a 52/53-week fiscal year
ending on the last Saturday in June. Monthly periods are accounted for in a
four-week, four-week, five-week sequence, with each quarter consisting of 13
weeks. All references to years relate to fiscal years rather than calendar
years.
3. EARNINGS PER SHARE
Earnings per share for the three month periods ended September 23, 1995 and
September 30, 1994 are based on the weighted average number of common and common
stock equivalent shares outstanding. Certain stock options were not included in
the computation of earnings per share because their effect would be
antidilutive. Earnings per share assuming full dilution are the same as primary
earnings per share.
4. DISCONTINUED OPERATIONS
On November 9, 1994, the Company sold substantially all of the fixed and
intangible assets of its temporary nursing services business for $814,000 in
cash. The related net liabilities for this discontinued operation are included
in the balance sheet under the caption "Net liabilities of discontinued
operations". The balance remaining unpaid at September 23, 1995, relates to
various state and local tax and payroll issues that have not been finalized.
6
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5. REDEEMABLE PREFERRED STOCK
On April 7, 1995, the Company issued 426,794 shares of its voting Class A
Redeemable Preferred Stock, which had a redemption value of $2.00 per share, in
exchange for the Company's promissory note payable to North Central Personnel,
Inc. and related accrued interest which totalled $853,588 on the date of the
exchange. The preferred shares pay no dividends and may be redeemed at the
option of the holder, in specified installments for cash. On May 29, 1995,
85,359 shares were redeemed for $170,718. Subsequently, on July 6, 1995, the
remaining 341,435 Class A Redeemable Preferred Shares were exchanged for 260,141
Class B Redeemable Preferred Shares, with a redemption price of $2.625 per
share. These remaining 260,141 shares, with an aggregate redemption value of
$682,870 at September 23, 1995 and June 24, 1995, may be redeemed in
installments of approximately 65,000 shares on November 29, 1995, May 29, 1996,
November 29, 1996 and May 29, 1997. All outstanding Class B shares become
redeemable in the event of default or change of control.
7
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AMSERV HEALTHCARE INC.
MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION
LIQUIDITY AND CAPITAL RESOURCES
Cash, cash equivalents and short-term investments decreased $178,000, from
$2,619,000 to $2,441,000 during the first three months of fiscal 1996. This
decrease is the result of an increase in accounts receivable and payments made
during the period for corporate income taxes and liabilities associated with the
Company's discontinued operations. The Company's balance sheet maintains a
current ratio of 3.2 to 1 at September 23, 1995. Management believes that its
working capital position will enable the Company to continue its expansion in
home care and other health care services and meet its anticipated cash
requirements.
OPERATING RESULTS
Operating revenues for the three month period ended September 23, 1995 increased
$256,000 or 10% over the same period a year ago. Higher operating revenues are
the result of an overall increase in the demand for home care services.
Selling, general and administrative expenses for the three months ended
September 23, 1995 increased $267,000 or 11% compared to the same period of the
prior fiscal year. This increase is primarily the result of the direct variable
costs associated with the increase in operating revenues and the fixed costs
incurred in connection with the start-up office in Union City, New Jersey, which
began operations in October 1994.
Depreciation and amortization decreased $19,000 or 17%, from $110,000 to $91,000
during the three month period ended September 23, 1995 over the same period of
fiscal 1995. This overall decrease is the result of a reduction of amortization
expense in connection with the intangible assets acquired in the purchase of the
New Jersey subsidiary, part of which became fully amortized, offset by an
increase in depreciation expense due to the purchase of equipment, furniture and
fixtures.
Interest income increased to $53,000 during the three month period ended
September 23, 1995 compared to $13,000 during the same period of a year ago.
This increase of $40,000 is due to one-time interest and dividends received
during the period related to the sale of various short-term investments.
Net income increased 50% from $63,000 in the first quarter of fiscal 1995 to
$95,000 for the first quarter of fiscal 1996.
8
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PART II - OTHER INFORMATION
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits:
The exhibits listed on the accompanying Exhibit Index are filed as part of
this Quarterly Report.
(b) Reports on Form 8-K:
There were no reports on Form 8-K filed during the quarter ended September
23, 1995.
9
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SIGNATURES
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In accordance with the requirements of the Securities Exchange Act of 1934, the
Issuer caused this report to be signed on its behalf by the undersigned,
thereunto duly authorized.
AMSERV HEALTHCARE INC.
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Issuer
/s/Eugene J. Mora
- -----------------
Eugene J. Mora November 2, 1995
Chairman and President
/s/Lori Anderson
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Lori Anderson November 2, 1995
Treasurer
10
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EXHIBIT INDEX
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2.1 Asset Purchase Agreement dated March 22, 1991, by and
between Always Care of New Jersey, Inc., and AMSERV
NURSES OF NEW JERSEY, INC. incorporated herein by
reference from the Company's Form 8-K dated March 22,
1991. -
2.2 Asset Purchase Agreement dated March 31, 1992, by and
between MERX, Inc., AMSERV, Inc.,and AMSERV MEDICAL
PRODUCTS, INC. incorporated herein by reference from
the Company's Form 8-K dated March 31, 1992. -
2.3 Asset Purchase Agreement dated July 21, 1992, by and
between John Parker and AMSERV NURSES OF WASHINGTON,
INC. incorporated herein by reference from the
Company's Form 8-K dated July 21, 1992. -
2.4 Asset Purchase Agreement dated June 10, 1994, by
and between North Central Personnel, Inc. and AMSERV
HEALTHCARE OF OHIO INC. incorporated herein by
reference from the Company's Form 8-K dated June 10, 1994. -
2.5 Amendment No. 2 to Asset Purchase Agreement dated April 7,
1995, by and between North Central Personnel, Inc., Diane
Gurik and AMSERV HEALTHCARE OF OHIO INC. incorporated
herein by reference from the Company's Form 10-Q dated
May 10, 1995. -
3.1 Certificate of Incorporation of the Company, as amended,
incorporated herein by reference from the Company's Form
10-K dated October 2, 1995. -
3.2 By-laws of the Company, as amended, incorporated herein
by reference from the Company's Form 10-K dated October 2,
1995. -
4.1 Form of Common Stock Certificate incorporated herein by
reference from the Company's Registration Statement on Form
10, Exhibit 3, filed October 3, 1977. -
4.2 Certificate of Designation of Class A Preferred Stock,
incorporated herein by reference from the Company's Form
10-Q dated May 10, 1995. -
</TABLE>
E-1
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4.3 Certificate of Designation of Class B Preferred Stock,
incorporated herein by reference from the Company's Form
8-K dated July 6, 1995. -
4.4 Exchange Agreement dated July 6, 1995, between the
Company and North Central Personnel, Inc. incorporated
herein by reference from the Company's Form 8-K dated July
6, 1995. -
10.1 Company's 1982 Stock Option Plan incorporated herein by
reference from the Company's Registration Statement on Form
S-8 dated August 12, 1988. -
10.2 Employment Agreement dated February 27, 1987, and amended
August 8, 1989, by and between AMSERV HEALTHCARE INC. and
Eugene J. Mora, President, incorporated herein by
reference from the Company's Form 10-K dated October 2,
1995. -
10.3 Non-Competition Agreement dated March 22, 1991, by and
between Kenneth Freeman and AMSERV NURSES OF NEW JERSEY,
INC. incorporated herein by reference from the Company's
Form 8-K dated March 22, 1991. -
10.4 Consulting Agreement dated August 23, 1990, and amended
August 15, 1991, by and between AMSERV HEALTHCARE INC.
and Eugene J. Mora, President, incorporated herein by
reference from the Company's Form 10-K dated October 2,
1995. -
10.5 Non-Competition Agreement dated March 31, 1992, by and
between MERX, Inc., AMSERV, Inc. and AMSERV MEDICAL
PRODUCTS, INC. incorporated herein by reference from
the Company's Form 8-K dated March 31, 1992. -
10.6 Company's 1991 Stock Option Plan incorporated herein by
reference from the Company's Registration Statement on Form
S-8 dated April 16, 1992, as amended. -
10.7 Non-Competition Agreement dated July 21, 1992, by and
between John Parker and AMSERV NURSES OF WASHINGTON, INC.
incorporated herein by reference from the Company's Form
8-K dated July 21, 1992. -
10.8 Non-Competition Agreement dated June 10, 1994, by and
between Diane Gurik and AMSERV HEALTHCARE OF OHIO INC.
incorporated herein by reference from the Company's
Form 8-K dated June 10, 1994. -
</TABLE>
E-2
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<TABLE>
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10.9 Promissory note dated June 10, 1994, by and between
North Central Personnel, Inc. and AMSERV HEALTHCARE
OF OHIO INC. incorporated herein by reference from
the Company's Form 8-K/A dated August 22, 1994. -
10.10 Employment Agreement dated March 21, 1995, by and
between AMSERV HEALTHCARE INC. and Leslie Hodge,
Vice President - Administration and Secretary,
incorporated herein by reference from the
Company's Form 10-K dated October 2, 1995. -
10.11 Employment Agreement dated March 21, 1995, by and
between AMSERV HEALTHCARE INC. and Lori Anderson,
Controller and Treasurer, incorporated herein by
reference from the Company's Form 10-K dated
October 2, 1995. -
10.12 Promissory note dated April 20, 1995, by and
between Eugene J. Mora and AMSERV HEALTHCARE INC.
incorporated herein by reference from Amendment
No. 8 to Mr. Mora's Schedule 13D, dated April 7,
1995. -
10.13 Stock Pledge Agreement dated April 20, 1995, by and
between Eugene J. Mora and AMSERV HEALTHCARE INC.,
incorporated herein by reference from Amendment No.
8 to Mr. Mora's Schedule 13D dated April 7, 1995. -
10.14 Voting Agreement and Proxy dated April 7, 1995, by
and between North Central Personnel, Inc. and
AMSERV HEALTHCARE INC., incorporated herein by
reference from Amendment No. 8 to Eugene J. Mora's
Schedule 13D dated April 7, 1995. -
10.15 Rescission Agreement dated May 12, 1995, by and
between North Central Personnel, Inc. and AMSERV
HEALTHCARE INC., incorporated herein by reference
from Amendment No. 8 to Eugene J. Mora's Schedule
13D dated April 7, 1995. -
10.16 Stock Purchase Agreement dated April 7, 1995, by and
between AMSERV HEALTHCARE INC. and North Central
Personnel, Inc. incorporated herein by reference from
the Company's Form 10-Q dated May 10, 1995. -
10.17 Standstill Agreement dated May 12, 1995, by and among
Stockbridge Investment Partners, Inc., and AMSERV
HEALTHCARE INC., and each of their affiliates,
associates, groups, directors, officers,
representatives or agents, incorporated herein by
reference from Amendment No. 4 to Stockbridge
Investment Partners, Inc.'s Schedule 13D dated
May 15, 1995. -
</TABLE>
E-3
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10.18 Stipulation and Order of Settlement, Release of Claims and
Final Judgment dated May 12, 1995, by and between
Stockbridge Investment Partners, Inc., and AMSERV
HEALTHCARE INC. and its directors, incorporated herein
by reference from the Company's Form 10-K dated
October 2, 1995. -
10.19 Renewed Standstill Agreement dated June 9, 1995, by and
among Stockbridge Investment Partners, Inc., and AMSERV
HEALTHCARE INC., and each of their affiliates, associates,
groups, directors, officers, representatives or agents,
incorporated herein by reference from Amendment No. 5 to
Stockbridge Investment Partners, Inc.'s Schedule 13D
dated June 13, 1995. -
10.20 Agreement by and between Stockbridge Investment Partners,
Inc. and AMSERV HEALTHCARE INC. dated October 18, 1995,
incorporated herein by reference from Amendment No. 8 to
Stockbridge Investment Partners, Inc.'s Schedule 13D
dated October 18, 1995. -
27.1 Financial Data Schedule E-5
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<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM *Condensed
----------
Consolidated Balance Sheets as of September 23, 1995 and June 24, 1995; and
- ---------------------------------------------------------------------------
Condensed Consolidated Statements of Operations for the three month periods
- ---------------------------------------------------------------------------
ended September 23, 1995 and September 30, 1994 AND IS QUALIFIED IN ITS ENTIRETY
- -----------------------------------------------
BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> JUN-29-1996
<PERIOD-START> JUN-25-1995
<PERIOD-END> SEP-23-1995
<CASH> 1,794,211
<SECURITIES> 646,588
<RECEIVABLES> 1,260,172
<ALLOWANCES> 103,264
<INVENTORY> 0
<CURRENT-ASSETS> 3,854,633
<PP&E> 633,425
<DEPRECIATION> 221,050
<TOTAL-ASSETS> 6,711,753
<CURRENT-LIABILITIES> 1,213,919
<BONDS> 0
<COMMON> 33,067
682,870
0
<OTHER-SE> 4,750,189
<TOTAL-LIABILITY-AND-EQUITY> 6,711,753
<SALES> 0
<TOTAL-REVENUES> 2,893,058
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 154,878
<INCOME-TAX> 60,000
<INCOME-CONTINUING> 94,878
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 94,878
<EPS-PRIMARY> .03
<EPS-DILUTED> .03
</TABLE>
