SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 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 September 30, 2000
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 1-9848
ALMOST FAMILY, INC. TM
(Exact name of registrant as specified in its charter)
Delaware 06-1153720
(State or other jurisdiction (IRS Employer
of incorporation or organization) Identification No.)
100 Mallard Creek Road, Suite 400 40207
(Address of principal executive offices) (Zip Code)
(502) 899-5355
(Registrant's telephone number, including area code)
Not Applicable
(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 and 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.
Class of Common Stock $.10 par value
Shares outstanding at September 30, 2000 3,141,186
<PAGE>
ALMOST FAMILY, INC. AND SUBSIDIARIES
FORM 10-Q
INDEX
Part I. Financial Information
Item 1. Financial Statements
Consolidated Balance Sheets as of September 30, 2000
and March 31, 2000 3
Consolidated Statements of Operations for the Three
Months ended September 30, 2000 and 1999 4
Consolidated Statements of Operations for the Six
Months ended September 30, 2000 and 1999 5
Consolidated Statements of Cash Flows for the Six
Months ended September 30, 2000 and 1999 6
Notes to Interim Consolidated Financial Statements 7 - 9
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations 10 - 16
Item 3. Quantitative and Qualitative Disclosures
About Market Risk 17
Part II. Other Information
Items 1 through 6 18
<PAGE>
ALMOST FAMILY, INC. AND SUBSIDIARIES
INTERIM CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
ASSETS September 30, March 31, 2000
2000
--------------- --------------
(UNAUDITED)
<S> <C> <C>
CURRENT ASSETS
Cash and cash equivalents $ 480,058 $ 1,427,937
Accounts receivable - net 6,215,574 6,459,004
Prepaid expenses and other current assets 910,531 301,415
Net assets of discontinued operations
1,021,432 -
------------ -----------
TOTAL CURRENT ASSETS 8,627,595 8,187,956
PROPERTY AND EQUIPMENT - net 3,565,549 3,079,636
COST IN EXCESS OF NET ASSETS ACQUIRED - net 2,507,376 2,537,740
DEFERRED TAX ASSETS 3,429,093 3,429,093
OTHER ASSETS 948,900 916,482
------------- -----------
$ 19,078,513 $18,150,907
============= ===========
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts payable and accrued liabilities $ 5,844,061 $ 5,309,359
------------ -----------
TOTAL CURRENT LIABILITIES 5,844,061 5,309,359
------------ -----------
LONG-TERM LIABILITIES:
Revolving credit facility 327,551 651,221
Other liabilities 959,084 1,037,296
------------ ----------
TOTAL LONG-TERM LIABILITIES 1,286,635 1,688,517
------------ ----------
TOTAL LIABILITIES 7,130,696 6,997,876
------------ ----------
COMMITMENTS AND CONTINGENCIES
Stockholders' equity:
Common stock, par value $.10; authorized
10,000,000 shares;
3,141,186 issued and outstanding 315,119 315,119
Treasury stock, at cost, 10,000 shares (95,975) (95,975)
Additional paid-in capital 25,384,270 25,384,270
Accumulated deficit (13,655,597) (14,450,383)
------------ -----------
TOTAL STOCKHOLDERS' EQUITY 11,947,817 11,153,031
----------- -----------
$19,078,513 $18,150,907
=========== ===========
</TABLE>
See accompanying notes to interim consolidated financial statements.
<PAGE>
ALMOST FAMILY, INC. AND SUBSIDIARIES
INTERIM CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
Three Months Ended
----------------------------
September September
30, 2000 30, 1999
------------- -------------
Net revenues $ 12,545,155 $ 11,105,137
Cost of sales and services 10,170,205 9,217,895
General and administrative expenses 973,351 966,360
Depreciation and amortization expense 270,033 223,243
Provision for uncollectible accounts 152,626 231,347
------------- -------------
Income before other income (expense)
and income taxes 978,940 466,292
Other income (expense):
Interest expense (33,402) (122,521)
------------- -------------
Income before income taxes 945,538 343,771
Income tax expense 441,466 144,384
------------- -------------
Net income from continuing operations 504,072 199,387
Discontinued operations:
Net income from operations net of applicable
income taxes of $16,000 - 22,347
Estimated loss on disposal, net of
applicable income tax provision of $527,000 - (5,000,000)
------------- -------------
Net income (loss) $ 504,072 $ (4,778,266)
============= ==============
Per share amounts - Basic:
Average shares outstanding - Basic 3,141,186 3,120,436
Net income from continuing operations $ 0.16 $ 0.06
Discontinued operations
Income from operations, net
of applicable income taxes - 0.01
Loss on disposal, net of applicable - (1.60)
income taxes
------------- -------------
Net income (loss) $ 0.16 $ (1.53)
============= =============
Per share amounts - Diluted:
Average shares outstanding - Diluted 3,378,615 3,120,436
Net income from continuing operations $ 0.15 $ 0.06
Discontinued operations
Income from operations, net
of applicable income taxes - 0.01
Loss on disposal, net of applicable - (1.60)
income taxes
------------- -------------
Net income (loss) $ 0.15 $ (1.53)
============= =============
See accompanying notes to interim consolidated financial statements.
<PAGE>
ALMOST FAMILY, INC. AND SUBSIDIARIES
INTERIM CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
Six Months Ended
----------------------------
September September
30, 2000 30, 1999
------------- -------------
Net revenues $24,321,595 $21,440,145
Cost of sales and services 20,090,284 17,973,807
General and administrative expenses 1,871,743 1,932,719
Depreciation and amortization expense 534,591 448,245
Provision for uncollectible accounts 286,499 410,725
------------- -------------
Income before other income (expense)
and income taxes 1,538,478 674,649
Other income (expense):
Interest expense (47,310) (233,452)
Loss on sale of building - (91,701)
------------- -------------
Income before income taxes 1,491,165 349,496
Income tax expense 696,382 146,789
----------- ------------
Net income from continuing operations 794,783 202,707
Discontinued operations:
Net income from operations net of
applicable income taxes of $57,000 - 78,258
Estimated loss on disposal, net of
applicable income Tax provision of $527,000 - (5,000,000)
------------- -------------
Net income (loss) $ 794,786 $(4,719,035)
============= =============
Per share amounts - Basic:
Average shares outstanding - Basic 3,141,186 3,120,436
Net income from continuing operations $ 0.25 $ 0.06
Discontinued operations
Income from operations, net
of applicable income taxes - 0.03
Loss on disposal, net of applicable - (1.60)
income taxes ------------- -------------
Net income (loss) $ 0.25 $ (1.51)
============= =============
Per share amounts - Diluted:
Average shares outstanding - Diluted 3,378,615 3,120,436
Net income from continuing operations $ 0.24 $ 0.03
Discontinued operations
Income from operations, net
of applicable income taxes - 0.01
Loss on disposal, net of applicable - (1.60)
income taxes
------------- -------------
Net income (loss) $ 0.24 $ (1.51)
============= =============
See accompanying notes to interim consolidated financial statements.
<PAGE>
ALMOST FAMILY, INC. AND SUBSIDIARIES
INTERIM CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
Six Months Ended
-------------------------------
September September
30, 2000 30, 1999
--------------- ---------------
Cash flows from operating activities:
Net income from continuing operations $ 794,786 $ 202,708
Adjustments to reconcile net income to
net cash provided
by operating activities:
Depreciation and amortization 534,591 448,245
Provision for uncollectible accounts 286,499 410,725
Loss on sale of assets - 91,701
Deferred taxes - 730,908
--------------- ---------------
1,615,876 1,884,287
Change in certain net assets (Increase)
decrease in: Accounts receivable (43,069) (1,257,487)
Prepaid expenses and other current
assets (652,976) (497,310)
Increase (decrease) in:
Accounts payable and accrued
liabilities 534,702 (318,108)
--------------- ---------------
Net cash provided (used) by 1,454,533 (188,618)
operating activities 1,454,533 (188,618)
Cash flows from investing activities:
Capital expenditures (923,389) (466,120)
Other assets (32,418) (74,380)
Goodwill (22,700) (108,794)
Sale of assets - 119,009
--------------- ---------------
Net cash used by investing
activities (978,507) (530,285)
-------------- ---------------
Cash flows from financing activities:
Net revolving credit facility (323,670) 8,942
borrowings (payments)
Other (78,403) (90,595)
--------------- ---------------
Net cash used by financing
activities (402,073) (81,653)
--------------- ---------------
Cash flows from discontinued operations (1,021,432) 170,303
--------------- ---------------
Net decrease in cash (947,479) (630,253)
Cash and cash equivalents at
beginning of period 1,427,537 1,036,951
--------------- ---------------
Cash and cash equivalents at end of period $ 480,058 $ 406,698
=============== ===============
See accompanying notes to interim consolidated financial statements.
<PAGE>
ALMOST FAMILY, INC. AND SUBSIDIARIES
NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS
1. BASIS OF PRESENTATION
The accompanying interim consolidated financial statements for the three
and six months ended September 30, 2000 and 1999 have been prepared
pursuant to the rules and regulations of the Securities and Exchange
Commission. Certain information and footnote disclosures normally included
in financial statements prepared in accordance with generally accepted
accounting principles have been omitted pursuant to such rules and
regulations. Accordingly, the reader of this Form 10-Q is referred to the
Company's Form 10-K for the year ended March 31, 2000 for further
information. In the opinion of management of the Company, the accompanying
unaudited interim financial statements reflect all adjustments (consisting
of normally recurring adjustments) necessary to present fairly the
financial position at September 30, 2000 and the results of operations and
cash flows for the periods ended September 30, 2000 and 1999.
The results of operations for the three and six months ended September 30,
2000 are not necessarily indicative of the operating results for the year.
Use of Estimates
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the
financial statements and reported amounts of revenues and expenses during
the reported period. Actual results could differ from those estimates.
2. COMMITMENTS AND CONTINGENCIES
Legal Proceedings
The Company, from time to time, is subject to claims and suits arising in
the ordinary course of its business, including claims for damages for
personal injuries. In the opinion of management, the ultimate resolution of
any of these pending claims and legal proceedings will not have a material
effect on the Company's financial position or results of operations.
Franklin
On January 26, 1994 Franklin Capital Associates L.P., Aetna Life and
Casualty Company and Aetna Casualty and Surety Company, shareholders, who
at one time held approximately 320,000 shares of the Company's common stock
(approximately 13% of shares outstanding) filed suit in Chancery Court of
Williamson County, Tennessee claiming unspecified damages not to exceed
three million dollars in connection with registration rights they received
in the Company's acquisition of National Health Industries in February
1991. The suit alleges the Company failed to use its best efforts to
register the shares held by the plaintiffs as required by the merger
agreement. The Company settled with Aetna shortly before the case went to
trial in February 2000. In mid-trial Franklin voluntarily withdrew its
complaint reserving its legal rights to bring a new suit as allowed under
Tennessee law. In May 2000, Franklin re-filed its claim. The Company
believes it has meritorious defenses to the claims and does not expect
<PAGE>
ALMOST FAMILY, INC. AND SUBSIDIARIES
NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS
2. COMMITMENTS AND CONTINGENCIES (continued)
the ultimate outcome of the suit to have a material impact on the Company's
results of operations, liquidity or financial position. The Company plans
to vigorously defend its position in this case. Anticipated costs of
litigation have been included in the Company's one-time charge for
discontinuing its home health operations in September 1999.
3. FINANCIAL STATEMENT RECLASSIFICATIONS
Certain amounts have been reclassified in the 1999 financial statements in
order to conform to the 2000 presentation. Such reclassifications had no
effect on previously reported net income (loss).
4. LOSS ON SALE OF BUILDING
In May 1999, the Company sold an office building resulting in a
non-operating loss of $91,701. The transaction generated net cash of
$79,093 after repaying mortgage debt of approximately $40,000.
5. DISCONTINUED OPERATIONS
As part of a formal plan of separation, the Company in late 1999 sold its
product operations (consisting of infusion therapy and respiratory and
medical equipment businesses) to Lincare Holdings, Inc. in an asset sale
for $14.5 million and is pursuing available strategic alternatives to
complete the separation of its visiting nurse operations. Proceeds from
the sale were used to repay obligations outstanding under the Company's
bank line of credit. As a result of the operational separations, the
Company recorded a one-time net of tax loss of approximately $5 million or
($1.60) in the quarter ended September 30, 1999. That charge reduced the
book value of the operations to their expected net realizable value,
provided for losses on fulfilling certain obligations and close down
costs, and included the estimated future operating results of the visiting
nurse operations through disposition.
The implementation of Medicare's Prospective Payment System for home care
(PPS) may have a material impact on the disposal value of the visiting
nurse operations. Proposed rules for a home care PPS reimbursement system
were released by HCFA on October 1, 1999. On June 28, 2000 HCFA published
final rules. The final rules vary significantly from the proposed rules.
Among other changes, the rate of reimbursement per episode was increased
by approximately 4% as compared to the proposed rules. This system went
into effect on October 1, 2000 replacing the previous reimbursement
system, which was cost-based. Unlike the previous cost-based system, which
prohibited profitable operation for the visiting nurse business, PPS makes
it at least possible to make a profit. However, there can be no assurance
that the visiting nurse business will operate profitably under PPS.
Management is continuing to evaluate this new reimbursement system and is
currently unable to predict what impact, if any, PPS may have on the
disposal value of the visiting nurse operations. Additionally, there can
be no assurance that HCFA will not make further significant changes to the
published rules that may impact the disposal value of the visiting nurse
operations.
<PAGE>
ALMOST FAMILY, INC. AND SUBSIDIARIES
NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS
5. DISCONTINUED OPERATIONS (continued)
Revenue from visiting nurse operations was approximately $12.1 million for
the six-months ended September 30, 2000. Interest expense has been
allocated to continuing and discontinued operations on the basis of
allocated debt balances. Accordingly, interest expense of $278,000 has
been allocated to discontinued operations for the six-months ended
September 30, 2000.
The accompanying balance sheet includes net current assets and liabilities
of discontinued operations, consisting primarily of accounts receivable,
inventory, accounts payable and accrued liabilities, and long term assets
of discontinued operations consisting primarily of property and equipment,
net of accumulated depreciation and goodwill.
Visiting Nurse Operations - Statement of Operations
For the Six-Months Ended September 30,
2000
-------------
Revenues
$12,114,361
Operating expenses 13,025,885
Interest expense 277,542
-------------
Pre-tax income (loss) (1,189,066)
Income taxes (451,845)
-------------
Net income (loss) (737,221)
Less amounts previously provided 737,221
-------------
Shown in accompanying
statement of operations $ -
=============
Discontinued Operations - Balance Sheet - As Of September 30,
2000
-------------
Accounts receivable $8,715,026
Other current assets 1,225,688
Long-term assets -
Current liabilities 2,381,270
Revolving credit facility 6,005,068
Long-term liabilities 532,944
-------------
Net assets held for sale $1,021,432
=============
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
As described elsewhere herein, the Company has sold its product operations and
is pursuing strategic alternatives for its visiting nurse operations.
Accordingly, the results of continuing operations presented below include only
the result of the Company's adult day health services operations consisting of
in-center adult day care and personal care services provided in the patients'
homes.
RESULTS OF CONTINUING OPERATIONS
The financial tables that follow are presented for continuing operations
excluding non-recurring items.
Quarter Ended September 30, 2000 Compared with Quarter Ended September 30, 1999
-------------------------------------------------------------------------------
<TABLE>
<CAPTION>
2000 1999 Change
Amount % Rev. Amount % Rev. Amount %
<S> <C> <C> <C> <C> <C> <C>
Net Revenues $12,545,155 100.0% $11,105,137 100.0% $ 1,440,018 13.0%
Cost of Sales
and Services 10,170,205 81.1% 9,217,895 83.0% 952,303 10.3%
Center Contribution 2,374,950 18.9% 1,887,242 17.0% 487,715 25.8%
General &
Administrative 973,351 7.8% 966,360 8.7% 6,991 0.7%
Depreciation and
Amortization 270,033 2.2% 223,243 2.0% 46,790 21.0%
Provision for
uncollectible accounts
152,626 1.2% 231,347 2.1% (78,721)(34.0%)
Interest, Net 33,402 0.3% 122,521 1.1% (89,119)(72.7%)
Income from continuing
operations before
non-recurring items and
taxes $ 945,538 7.5% $ 343,771 3.1% $ 601,774 175.1%
</TABLE>
<PAGE>
Net Revenues
Net revenues increased 13% to $12.5 million from $11.1 million in the prior
year. Growth came primarily from volumes, which grew to 180,566 days of care in
2000 from 158,103 in 1999. Average revenue per day of care decreased 1.1% due to
mix changes offsetting price increases of about 5%. Increased volumes were
derived primarily from increased attendance in the adult day care centers, which
grew to 1,280 guests per weekday in 2000 from 1,179 in 1999 and increased
personal care volumes in state funded programs. ADC in-center occupancy rates
were 76.6% and 78.9% in 2000 and 1999 respectively while average capacity
increased 11.8% to 1,671 in 2000 from 1,494 in the same quarter last year. As of
September 30, 2000 total system capacity was 1,671 guests per day.
Cost of Sales and Services
Cost of sales and services as a percent of revenues declined to 81% in 2000 from
83% in 1999 primarily as a result of increased volumes of business, and
increased pricing relative to operating costs.
General and Administrative
General and administrative costs remained relatively flat between years. G&A as
a percent of revenues dropped to 7.8% in 2000 from 8.7% in 1999.
Depreciation and Amortization
Depreciation and amortization increased by $46,790 due to capital expenditures.
Provision for Uncollectible Accounts
Management establishes an allowance for uncollectible accounts based on its
estimate of probable collection losses. The decrease in provision for
uncollectible accounts resulted from improved collection results in 2000.
Interest, Net
The decrease in interest, net is primarily a result of lower average outstanding
debt levels associated with the Company's improved operating results and
proceeds from the sale of the product operations.
<PAGE>
Six-Months Ended September 30, 2000 Compared with
Six-Months Ended September 30, 1999
<TABLE>
<CAPTION>
2000 1999 Change
Amount % Rev. Amount % Rev. Amount %
<S> <C> <C> <C> <C> <C> <C>
Net Revenues $24,321,595 100.0% $21,440,145 100.0% $ 2,881,450 13.4%
Cost of Sales
and Services 20,090,284 82.6% 17,973,807 83.8% 2,116,470 11.8%
Center Contribution 4,231,311 17.4% 3,466,338 16.2% 764,980 22.1%
General &
Administrative 1,871,743 7.7% 1,932,719 9.0% (60,976) (3.2%)
Depreciation and
Amortization 534,591 2.2% 448,245 2.1% 86,346 19.3%
Provision for
uncollectible
accounts 286,499 1.2% 410,725 1.9% (124,226) (30.2%)
Interest, Net 47,310 0.2% 233,452 1.1% (186,142) (79.7%)
Income from continuing
operations before
non-recurring items
and taxes $1,491,168 6.1% $ 441,197 1.6% $ 1,049,978 238.0%
</TABLE>
Net Revenues
Net revenues increased 13% to $24.3 million from $21.4 million in the prior
year. Growth came primarily from volumes, which grew to 357,710 days of care in
2000 from 307,129 in 1999. Average revenue per day of care decreased 2.6% due to
mix changes offsetting price increases of about 4%. Increased volumes were
derived primarily from increased attendance in the adult day care centers, which
grew to 1,268 guests per weekday in 2000 from 1,147 in 1999 and increased
personal care volumes in state funded programs. ADC in-center occupancy rates
were 77.0% and 76.7% in 2000 and 1999 respectively while average capacity
increased 10.2% to 1,646 in 2000 from 1,494 last year.
Cost of Sales and Services
Cost of sales and services as a percent of revenues declined to 83% in 2000 from
84% in 1999 primarily as a result of increased volumes of business, and
increased pricing relative to operating costs.
General and Administrative
General and administrative costs declined slightly between years due to the
elimination of certain corporate positions. G&A as a percent of revenues dropped
to 7.7% in 2000 from 9.0% in 1999.
Depreciation and Amortization
Depreciation and amortization increased by $86,346 due to capital expenditures.
Provision for Uncollectible Accounts
Management establishes an allowance for uncollectible accounts based on its
estimate of probable collection losses. The decrease in provision for
uncollectible accounts resulted from improved collection results in 2000.
<PAGE>
Interest, Net
The decrease in interest, net is primarily a result of lower average outstanding
debt levels associated with the Company's improved operating results and
proceeds from the sale of the product operations.
Income Taxes
As of September 30, 2000, the Company has net deferred tax assets of
approximately $3.5 million. The net deferred tax asset is composed of $3.4
million of long-term deferred tax assets and $117,000 of current deferred tax
assets.
The Company has provided a valuation allowance against certain net deferred tax
assets based upon management's estimation of realizability of those assets
through future taxable income. This valuation was based in large part on the
Company's history of generating operating income or losses, individual tax
locales and expectations for the future. The Company's ability to generate the
expected amounts of taxable income from future operations is dependent upon
general economic conditions, competitive pressures on revenues and margins and
legislation and regulation at all levels of government. Management has
considered the above factors in reaching its conclusions that it is more likely
than not that future taxable income will be sufficient to fully utilize the net
deferred tax assets. However, there can be no assurances that the Company will
meet its expectations of future taxable income.
For the three and six-month periods ended September 30, 2000, the effective
income tax rate was approximately 47% of income before income taxes, as compared
to an effective income tax rate of approximately 42% of income before taxes for
1999. The change in the effective tax rate results from changes in the Company's
business and the state and local tax jurisdictions in which taxable income was
generated.
Discontinued Operations
Results of operations for the quarter ended September 30, 1999 included net
income of $22,347 from operations which have subsequently been sold or are
subject to disposition. Please refer to the Company's report on Form 10K for the
year ended March 31, 2000 for a more detailed description.
The estimated loss on disposal of discontinued operations reflected in the
Company's financial statements for the year ended March 31, 2000 included
management's estimate of the results of operating the visiting nurse segment,
through the date of disposal, and the estimated financial results of such
disposal. The implementation of Medicare's Prospective Payment System for home
care (PPS) may have a material impact on the disposal value of the visiting
nurse operations. Proposed rules for a home care PPS reimbursement system were
released by HCFA on October 1, 1999. On June 28, 2000 HCFA published final
rules. The final rules vary significantly from the proposed rules. Among other
changes, the rate of reimbursement per episode was increased by approximately 4%
as compared to the proposed rules. This system went into effect on October 1,
2000 replacing the previous reimbursement system, which was cost-based. Unlike
the previous cost-based system, which prohibited profitable operation for the
visiting nurse business, PPS makes it at least possible to make a profit.
However, there can be no assurance that the visiting nurse business will operate
profitably under PPS. Management continues to evaluate the impact of this new
reimbursement system and is currently unable to predict what impact, if any, PPS
may have on the disposal value of the visiting nurse operations. Additionally,
there can be no assurance that HCFA will not make further significant changes to
the published rules that may impact the disposal value of the visiting nurse
operations.
Revenue from visiting nurse operations was approximately $12.1 million for the
six months ended September 30, 2000. Interest expense has been allocated to
continuing and discontinued operations on the basis of allocated debt balances.
Accordingly, interest expense of $278,000 has been allocated to discontinued
operations for the six months ended September 30, 2000.
<PAGE>
The accompanying balance sheet includes net current assets and liabilities of
discontinued operations, consisting primarily of accounts receivable, inventory,
accounts payable and accrued liabilities, and long term assets of discontinued
operations consisting primarily of property, plant and equipment, net of
accumulated depreciation and goodwill. Refer to Note 5 to the accompanying
financial statements for additional information.
Building Sale
In May 1999, the Company sold an office building resulting in a non-operating
loss of $91,701. The transaction generated net cash of $79,093 after repaying
mortgage debt of approximately $40,000.
Liquidity and Capital Resources
Revolving Credit Facility
The Company has a $20 million revolving credit facility with Bank One Kentucky,
NA. The credit facility bears interest at prime plus a margin (ranging from 0%
to 1.0%, currently 1.0%) dependent upon total leverage and is secured by
substantially all assets and the stock of the Company's subsidiaries. Borrowings
are available equal to the greater of: a) a multiple of earnings before
interest, taxes, depreciation and amortization (as defined) or, b) an asset
based formula, primarily based on accounts receivable. Borrowings under the
facility may be used for working capital, capital expenditures, development and
growth of the business and other corporate purposes. The facility has an
expiration date of October 10, 2001.
As of September 30, 2000 approximately $6.3 million was outstanding on the line
of credit. The Company has retained certain assets and liabilities associated
with the discontinued operations, the liquidation of which, together with
disposition of the visiting nurse operations, is expected to reduce the
Company's bank borrowings to approximately $327,551. Accordingly, as of
September 30, 2000, approximately $6.0 million of debt has been classified with
net assets from discontinued operations in the accompanying balance sheet. This
balance has increased since June 30, 2000 due to the repayment of previously
recorded liabilities to visiting nurse third-party payers and finance
operating results.
The Company believes that this facility will be sufficient to fund its operating
needs for at least the next twelve months.
Management will continue to evaluate additional capital including possible debt
and equity investments in the Company to support a more rapid development of the
business than would be possible with internal funds.
<PAGE>
Cash Flows and Financial Conditions
Key elements to the Consolidated Statements of Cash Flows for the six-months
ended September 30, 2000 and 1999 were:
Net Change in Cash and Cash Equivalents 2000 1999
Continuing Operations
Provided by (used in)
Operating activities $ 1,455,000 $ (188,000)
Investing activities (979,000) (530,000)
Financing activities (402,000) (82,000)
$ 74,000 $ (800,000)
Discontinued operations $ (1,021,000) $ 170,000
-------------- ------------
Net Change in Cash and Cash $ (947,000) $ (630,000)
Equivalents ============== ============
2000
Net cash provided by operating activities resulted principally from current
period income, net of changes in accounts receivable, accounts payable and
accrued expenses. The increase in prepaid expenses resulted from the timing of
insurance payments. The increase in accounts receivable resulted from volume
increases. Days sales outstanding declined to 45 from 53 at March 31, 2000. The
increase in accounts payable and accrued liabilities resulted primarily from
accrued income taxes. Net cash used in investing activities resulted principally
from amounts invested in adult day health services expansion activities
(including approximately $330,000 used in the acquisition of a building for a
new adult day care center), and improvements in information systems. Net cash
used in financing activities resulted primarily from lower borrowings under the
Company's credit facility. Discontinued operations used cash to reduce certain
previously recorded liabilities to third party payers and finance operating
results.
1999
Net cash used by operating activities resulted principally from current period
income, net of changes in accounts receivable, accounts payable and accrued
expenses. The increase in prepaid expenses resulted from the timing of insurance
payments. The increase in accounts receivable resulted from volume increases.
Days sales outstanding declined to 60 from 62 at March 31, 1999. The decrease in
accounts payable and accrued liabilities resulted from a reduction in days
payables outstanding. Net cash used in investing activities resulted principally
from amounts invested in adult day health services expansion activities, and
improvements in information systems, plus the proceeds from the sale of a
building. Net cash used in financing activities resulted primarily from reduced
borrowings under the Company's credit facility. Discontinued operations provided
cash from operating results and a reduction in accounts receivable.
Health Care Reform
The health care industry has experienced, and is expected to continue to
experience, extensive and dynamic change. In addition to economic forces and
regulatory influences, continuing political debate is subjecting the health care
industry to significant reform. Health care reforms have been enacted as
discussed elsewhere in this document and proposals for additional changes are
continuously formulated by departments of the federal government, Congress, and
state legislatures.
Government officials can be expected to continue to review and assess
alternative health care delivery systems and payment methodologies. Changes in
the law or new interpretations of existing laws may have a dramatic effect on
the definition of permissible or impermissible activities, the relative cost of
doing business, and the methods and amounts of payments for medical care by both
governmental and other payers. Legislative changes to "balance the budget" and
slow the annual rate of growth of expenditures are expected to continue. Such
future changes may further impact reimbursement.
<PAGE>
There can be no assurance thatfuture legislation or regulatory changes will not
have a material adverse effect on the operations of the Company.
The Company cannot predict what additional government regulations may be enacted
in the future affecting its business or how existing or future laws and
regulations might be interpreted, or whether the Company will be able to comply
with such laws and regulations in its existing or future markets.
Refer to the sections on Reimbursement Changes and Cautionary Statements -
Forward Outlook and Risks in Part I, and the notes to the accompanying financial
statements and Management's Discussion and Analysis of Financial Condition and
Results of Operations all included in the Company's report on Form 10K for the
year ended March 31, 2000 for additional information.
Impact of Inflation
Management does not believe that inflation has had a material effect on income
during the past several years.
<PAGE>
ITEM 3. Quantitative and Qualitative Disclosures About Market Risk
Derivative Instruments
The Company does not use derivative instruments.
Market Risk of Financial Instruments
The Company's primary market risk exposure with regard to financial instruments
is to changes in interest rates.
At September 30, 2000, a hypothetical 100 basis point increase in short-term
interest rates would result in a reduction of approximately $3,200 in annual
pre-tax earnings from continuing operations.
<PAGE>
Commission File No. 1-9848
Part II - Other Information
Item 1. Legal Proceedings
None
Item 2. Changes in Securities
None
Item 3. Defaults Upon Senior Securities
None
Item 4. Submission of Matters to a Vote of Security Holders
None
Item 5. Other Information
None
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
Exhibit 11 Calculation of Earnings Per Share (attached)
Exhibit 27 Financial Data (electronic filing only)
(b) Form 8-K - None
<PAGE>
ALMOST FAMILY, INC. AND SUBSIDIARIES
(FORMERLY CARETENDERS HEALTH CORP)
COMPUTATION OF EARNINGS PER SHARE
EXHIBIT 11
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
September 30, September 30,
------------------------- --------------------------
<S> <C> <C> <C> <C>
BASIC 2000 1999 2000 1999
----------- ------------ ----------- -----------
Net income (loss) $504,079 $(4,778,266) $ 794,793 $(4,719,035)
Weighted average outstanding shares
during the period 3,141,186 3,120,413 3,141,186 3,120,413
----------- ------------ ---------- -----------
Net income (loss) per share $0.16 $(1.53) $0.25 $ (1.51)
=========== ============ ========== ===========
DILUTED
Net income for diluted income per common share $504,079 $(4,778,266) $ 794,793 $(4,719,035)
----------- ------------ ---------- -----------
Weighted average outstanding shares
during the period 3,141,186 3,120,413 3,141,186 3,120,413
Add-common equivalent shares representing
shares issuable upon exercise of dilutive
options and warrants 237,429 (a) 237,429 (a)
----------- ------------ ---------- -----------
3,378,615 3,120,413 3,378,615 3,120,413
----------- ------------ ----------- -----------
Net income (loss) per share $0.15 $(1.53) $0.24 $ (1.51)
=========== ============ =========== ===========
(a) Omitted since effect is anti-dilutive
</TABLE>
<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.
Date: November 8, 2000
ALMOST FAMILY, INC.
BY /s/ William B. Yarmuth
William B. Yarmuth,
Chairman of the Board, President
and Chief Executive Officer
BY /s/ C. Steven Guenthner
C. Steven Guenthner,
Senior Vice President and
Chief Financial Officer
