<PAGE> 1
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 10-Q
(MARK ONE)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934
FOR THE QUARTERLY PERIOD ENDED SEPTEMBER 30, 1997
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from ________ to _________
Commission File Number 0-16162
CHILDREN'S COMPREHENSIVE SERVICES, INC.
- --------------------------------------------------------------------------------
(Exact name of registrant as specified in its charter)
Tennessee 62-1240866
--------- ----------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification Number)
805 South Church Street, Murfreesboro, Tennessee 37130
- ------------------------------------------------ -----
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (615) 896-3100
--------------
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 periods 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
--- ---
The number of shares outstanding of each of the issuer's classes of common
stock, as of the latest practicable date.
Common Stock, $.01 Par Value, outstanding at November 10, 1997 - 7,820,675
shares.
1
<PAGE> 2
INDEX
CHILDREN'S COMPREHENSIVE SERVICES, INC.
<TABLE>
<CAPTION>
Page
Number
------
<S> <C> <C>
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements (unaudited)
Consolidated Balance Sheets -- September 30, 1997
and June 30, 1997...............................................................................3
Consolidated Statements of Income --
Three months ended September 30, 1997 and 1996..................................................5
Consolidated Statements of Cash Flows --
Three months ended September 30, 1997 and 1996..................................................6
Notes to Consolidated Financial Statements --
September 30, 1997..............................................................................8
Item 2. Management's Discussion and
Analysis of Financial Condition and Results
of Operations...................................................................................9
Item 3. Quantitative and Qualitative Disclosures About Market Risk.....................................14
PART II. OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K...............................................................14
SIGNATURES.......................................................................................................15
</TABLE>
2
<PAGE> 3
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
CHILDREN'S COMPREHENSIVE SERVICES, INC.
CONSOLIDATED BALANCE SHEETS (UNAUDITED)
<TABLE>
<CAPTION>
September 30, June 30,
(dollars in thousands) 1997 1997
------- -------
<S> <C> <C>
ASSETS
CURRENT ASSETS
Cash and cash equivalents $11,772 $13,641
Accounts receivable, net of allowance for doubtful
accounts of $2,414 at September 30 and $2,361 at
June 30 16,473 16,001
Prepaid expenses 793 604
Other current assets 1,747 1,483
------- -------
TOTAL CURRENT ASSETS 30,785 31,729
PROPERTY AND EQUIPMENT, net of
accumulated depreciation of $6,371 at September
30 and $5,908 at June 30 36,383 36,321
DEFERRED TAX ASSETS, net of valuation
allowance of $150 at September 30 and June 30 614 614
COST IN EXCESS OF NET ASSETS ACQUIRED,
at cost, net of accumulated amortization of $11 at
September 30 and $4 at June 30 365 372
OTHER ASSETS AND DEFERRED CHARGES,
at cost, net of accumulated amortization of $104 at
September 30 and $91 at June 30 261 412
------- -------
TOTAL ASSETS $68,408 $69,448
======= =======
</TABLE>
3
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CHILDREN'S COMPREHENSIVE SERVICES, INC.
CONSOLIDATED BALANCE SHEETS (UNAUDITED) (CONTINUED)
<TABLE>
<CAPTION>
September 30, June 30,
(dollars in thousands) 1997 1997
-------- --------
<S> <C> <C>
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES
Accounts payable $ 2,047 $ 1,620
Current portion - capital leases 41 40
Accrued employee compensation 3,108 3,062
Income taxes payable (1,288) 143
Accrued other expenses 1,989 2,744
Deferred revenue 167 168
-------- --------
TOTAL CURRENT LIABILITIES 6,064 7,777
LONG TERM DEBT AND CAPITAL LEASE
OBLIGATIONS 11,645 11,655
OTHER LIABILITIES 265 265
-------- --------
TOTAL LIABILITIES 17,974 19,697
-------- --------
SHAREHOLDERS' EQUITY
Preferred stock, par value $1.00 per share --
10,000,000 shares authorized -0- -0-
Common stock, par value $.01 per share --
50,000,000 shares authorized; issued and
outstanding 7,815,008 shares
at September 30 and 7,769,656 shares
at June 30 78 78
Additional paid-in capital 56,663 56,618
Accumulated (deficit) (6,307) (6,945)
-------- --------
TOTAL SHAREHOLDERS' EQUITY 50,434 49,751
-------- --------
TOTAL LIABILITIES AND SHAREHOLDERS'
EQUITY $ 68,408 $ 69,448
======== ========
</TABLE>
See notes to consolidated financial statements.
4
<PAGE> 5
CHILDREN'S COMPREHENSIVE SERVICES, INC.
CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)
<TABLE>
<CAPTION>
Three Months Ended
September 30,
--------------------
(In thousands, except per share amounts) 1997 1996
-------- -------
<S> <C> <C>
Revenues:
Operating revenues $ 19,706 $ 6,138
Management fee income 661 310
-------- -------
TOTAL REVENUES 20,367 6,448
-------- -------
Operating expenses:
Employee compensation and benefits 12,529 4,175
Purchased services and other expenses 6,208 1,361
Depreciation and amortization 476 209
Related party rent 25 25
-------- -------
TOTAL OPERATING EXPENSES 19,238 5,770
-------- -------
Income from operations 1,129 678
Other (income) expense:
Interest expense 259 199
Interest income (176) (181)
Other income -0- (4)
-------- -------
TOTAL OTHER (INCOME) EXPENSE, NET 83 14
-------- -------
Income before income taxes 1,046 664
Provision for income taxes 408 177
-------- -------
NET INCOME $ 638 $ 487
======== =======
Earnings per common share:
Primary $ .08 $ .08
Assuming full dilution $ .08 $ .08
</TABLE>
See notes to consolidated financial statements.
5
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CHILDREN'S COMPREHENSIVE SERVICES, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
<TABLE>
<CAPTION>
Three Months Ended
September 30,
-----------------
(dollars in thousands) 1997 1996
------- -----
<S> <C> <C>
OPERATING ACTIVITIES
Net income $ 638 $ 487
Adjustments to reconcile net income to net cash provided by operating
activities:
Depreciation 463 196
Amortization 13 13
Amortization of deferred loan costs 6 14
Provision for bad debts 12 (38)
Other -0- (4)
Changes in operating assets and liabilities:
Accounts receivable (484) 131
Prepaid expenses (189) (55)
Other current assets (47) (209)
Accounts payable 427 191
Accrued employee compensation 46 150
Accrued other expenses (45) 354
Income taxes payable (1,431) (365)
------- -----
NET CASH (USED) PROVIDED BY OPERATING ACTIVITIES (591) 865
INVESTING ACTIVITIES
Purchase of assets of Vendell Healthcare (710) -0-
Purchase of property and equipment (525) (341)
Proceeds from sale of property and equipment -0- 9
(Increase) in other assets (78) (85)
------- -----
NET CASH (USED) BY INVESTING ACTIVITIES $(1,313) $(417)
------- -----
</TABLE>
6
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CHILDREN'S COMPREHENSIVE SERVICES, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED) (CONTINUED)
<TABLE>
<CAPTION>
Three Months Ended
September 30,
---------------------
(dollars in thousands) 1997 1996
-------- --------
<S> <C> <C>
FINANCING ACTIVITIES
Principal payments on revolving lines of credit and
long-term borrowing $ (10) $ (48)
Proceeds from issuance of Common Stock, net 45 23,424
-------- --------
NET CASH PROVIDED BY FINANCING
ACTIVITIES 35 23,376
-------- --------
INCREASE IN CASH AND CASH EQUIVALENTS (1,869) 23,824
Cash and cash equivalents at beginning of period 13,641 3,318
-------- --------
CASH AND CASH EQUIVALENTS AT END OF
PERIOD $ 11,772 $ 27,142
======== ========
SUPPLEMENTAL INFORMATION
Income taxes paid $ 1,856 $ 542
Interest paid 175 186
</TABLE>
See notes to consolidated financial statements.
7
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CHILDREN'S COMPREHENSIVE SERVICES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
September 30, 1997
NOTE A -- BASIS OF PRESENTATION
The accompanying unaudited consolidated financial statements have been prepared
in accordance with generally accepted accounting principles for interim
financial information and with the instructions to Form 10-Q and Article 10 of
Regulation S-X. Accordingly, they do not include all of the information and
footnotes required by generally accepted accounting principles for complete
financial statements. In the opinion of management, all adjustments (consisting
of normal recurring accruals) considered necessary for a fair presentation have
been included. Certain reclassifications have been made in the consolidated
financial statements for the three month period ended September 30, 1996, to
conform to the presentation of the financial statements for the three month
period ended September 30, 1997. Operating results for the three month period
ended September 30, 1997 are not necessarily indicative of the results that may
be expected for the fiscal year ending June 30, 1998. For further information,
refer to the financial statements and footnotes thereto included in the
Company's Annual Report on Form 10-K for the fiscal year ended June 30, 1997,
the Company's prior fiscal year end.
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the amounts reported in the financial statements and accompanying notes.
Actual results could differ from those estimates.
NOTE B -- EARNINGS PER COMMON SHARE
The computation of net income per common share is based on the weighted average
number of shares outstanding and common stock equivalents, consisting of
dilutive stock options and warrants.
NOTE C -- ADOPTION OF NEW ACCOUNTING PRONOUNCEMENT
In February 1997, the Financial Accounting Standards Board issued Statement No.
128, Earnings per Share, which is required to be adopted on December 31, 1997.
At that time, the Company will be required to change the method currently used
to compute earnings per share and to restate all prior periods. Under the new
requirements for calculating primary earnings per share, the dilutive effect of
stock options will be excluded. The impact of Statement 128 on the calculation
of primary and fully diluted earnings per share is not expected to be material.
8
<PAGE> 9
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
During June 1997, the Company completed the acquisition of substantially all the
assets of Vendell Healthcare, Inc., and its subsidiaries ("Vendell
acquisition"). The results for the comparable fiscal 1997 period do not include
the results of this acquisition.
The following discussion and this Quarterly Report on Form 10-Q contain
forward-looking statements and should be read in conjunction with the Company's
Consolidated Financial Statements and Notes thereto included elsewhere herein.
For this purpose, any statements contained herein that are not statements of
historical fact may be deemed to be forward-looking statements. There are a
number of important factors that could cause the Company's actual results to
differ materially from those indicated by such forward-looking statements. These
factors include, without limitation, those set forth under "Business - Risk
Factors" in the Company's Annual Report on Form 10-K for the fiscal year ended
June 30, 1997. The Company undertakes no obligation to publicly release any
revisions to any forward-looking statements contained herein to reflect events
or circumstances occurring after the date hereof or to reflect the occurrence of
unanticipated events.
General
As of September 30, 1997, the Company was providing education, treatment and
juvenile justice services to approximately 2,600 at risk and troubled youth and
100 adults either directly or through management contracts. It currently offers
these services through the operation and management of nonresidential
specialized education programs and day treatment programs and both open and
secured residential treatment centers in 11 states. These services were provided
directly or through the Company's management contract with Helicon, Incorporated
("Helicon"), a Section 501(c)(3) not-for-profit corporation. Revenues under
these contracts are recognized as services are rendered. The Company's
non-residential programs, which historically have generated higher operating
margins than the Company's residential facilities, generally receive revenues
based on per diem rates. The Company's residential facilities generally receive
revenues under either fixed fee contracts, at per diem rates or on a cost
reimbursed basis.
The Company receives management fee income from Helicon for consulting,
management and marketing services rendered pursuant to a Consulting and
Marketing Agreement, effective as of August 1992, by and between Helicon and the
Company (the "Helicon agreement"). As of September 30, 1997, the Company was
providing consulting, management and marketing services to Helicon at 12
programs. In addition, Helicon also leases three facilities owned by the Company
to operate its programs. Pursuant to the Helicon Agreement, the Company is
entitled to receive for these services management fee income in an amount equal
to 6% of the monthly gross revenues of Helicon's programs. The payment of these
management fees, however, is subordinated in right of payment to amounts payable
by Helicon to fund its programs. During the periods reported herein, the Company
recognized all of the management fee income to which it was entitled. However,
for certain periods prior to fiscal 1997, the Company did not recognize all of
the management fee income to which it was entitled due to the inability of
Helicon to pay these amounts, and there can be no assurance that the Company
will recognize any management fee income in the future. As of September 30,
1997, unpaid management fees, lease payments and advances, plus interest, due
the Company from Helicon totaled approximately $7,282,000. Based on the current
level of operations being maintained by Helicon, the Company does not anticipate
collecting any of this amount. The Company has fully reserved this amount, and
future payments received from Helicon on this amount, if any, will be recognized
by the Company on the cash basis. The Helicon Agreement expires September 1,
1999. The Company has also guaranteed Helicon's
9
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obligations under a bank line of credit in the amount of $1,000,000. No amounts
are currently outstanding under this line of credit. See "--Liquidity and
Capital Resources." The Company also receives management fee income from
services provided to other health care providers for management of behavioral
units or facilities pursuant to contracts.
Employee compensation and benefits include facility and program payrolls and
related taxes, as well as employee benefits, including insurance and worker's
compensation coverage. Employee compensation and benefits also includes general
and administrative payroll and related benefit costs, including salaries and
supplemental compensation of officers.
Purchased services and other expenses include all expenses not otherwise
presented separately in the Company's statements of income. Significant
components of these expenses at the operating level include items such as
professional fees and contracted services, food, utilities, supplies, rent and
insurance. Significant components of these expenses at the administrative level
include legal, accounting, investor relations, marketing, consulting and travel
expense.
The Company's effective tax rate for the quarter ended September 30, 1996 is
less than the statutory tax rate primarily because of the utilization of tax net
operating loss carryforwards for which no tax benefit had been recognized prior
to the quarterly period ended December 31, 1996. At June 30, 1997, the Company's
prior fiscal and tax year end, the Company had net operating loss carryforwards
of $2,112,000, utilization of which is subject to annual limitations pursuant to
the provisions of Internal Revenue Code Section 382.
The Company's quarterly results may fluctuate significantly as a result of a
variety of factors, including the timing of the opening of new programs. When
the Company opens a new program, the program may be unprofitable until the
program population, and net revenues contributed by the program, approach
intended levels, primarily because the Company staffs its programs in advance of
achieving such levels. The Company's quarterly results may also be impacted by
seasonality, as revenues generated by youth education and treatment services are
generally seasonal in nature, fluctuating with the academic school year.
During the three month period ended September 30, 1997, the Company opened the
following programs:
- A 30 bed residential program for seriously disturbed, adjudicated
juvenile offenders located at its St. Johns, Michigan facility;
- Alternative education schools with an aggregate of 80 chairs in Little
Rock, North Little Rock and Bryant, Arkansas;
- A 24 bed observation and assessment, short term residential program
for adjudicated male juvenile offenders located at its West Jordan,
Utah facility.
10
<PAGE> 11
Results of Operations
The following table sets forth, for the periods indicated, the percentage
relationship to the Company's total revenues of certain items in the Company's
statements of income:
<TABLE>
<CAPTION>
Three Months Ended
September 30,
------------------
1997 1996
------ ------
<S> <C> <C>
Operating revenues 96.8% 95.2%
Management fee income 3.2 4.8
------ ------
TOTAL REVENUES 100.0 100.0
------ ------
Employee compensation and benefits 61.5 64.8
Purchased services and other expenses 30.5 21.1
Depreciation and amortization 2.4 3.2
Related party rent 0.1 0.4
------ ------
TOTAL OPERATING EXPENSES 94.5 89.5
------ ------
Income from operations 5.5 10.5
Other (income) expense:
Interest expense 1.3 3.1
Interest income (0.9) (2.8)
Other income -- (0.1)
Provision for income taxes 2.0 2.8
------ ------
NET INCOME 3.1% 7.5%
====== ======
</TABLE>
Three Months Ended September 30, 1997 versus September 30, 1996
Operating revenues for the three months ended September 30, 1997 increased
$13,568,000 or 221.0%, to $19,706,000 as compared to $6,138,000 for the three
months ended September 30, 1996. Approximately $11,000,000 of the increase in
operating revenues is attributable to the Vendell acquisition. The increase is
also due to increased utilization in certain programs along with the opening of
eight new programs during the current and preceding three quarters.
Management fee income increased $351,000 for the three months ended September
30, 1997 to $661,000 from $310,000 for the three month period ended September
30, 1996. Management fee income recognized under the Helicon Agreement for the
three months ended September 30, 1997 increased $13,000 to $323,000 from
$310,000 for the three months ended September 30, 1996. Other management fee
income, attributable to the Vendell acquisition, accounted for the remainder of
the increase.
Total revenues for the three months ended September 30, 1997 increased
$13,919,000, or 215.9%, to $20,367,000 as compared to $6,448,000 for the three
months ended September 30, 1996 as a result of the factors described above.
Employee compensation and benefits for the three months ended September 30, 1997
increased $8,354,000, or 200.1%, to $12,529,000, as compared to $4,175,000 for
the three months ended September 30, 1996. As
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a percentage of total revenues, employee compensation and benefits decreased
from 64.8% for the three months ended September 30, 1996 to 61.5% for the three
months ended September 30, 1997. The increase in employee compensation and
benefits over the same period in the prior year results primarily from the
Company's growth, including the Vendell acquisition. The decrease in employee
compensation and benefits as a percent of revenue over the same period in the
prior year results primarily from the effect of the Vendell acquisition.
Purchased services and other expenses for the three months ended September 30,
1997 increased $4,847,000, or 356.1%, to $6,208,000, as compared to $1,361,000
for the three months ended September 30, 1996. As a percentage of total
revenues, purchased services and other expenses increased to 30.5% for the three
months ended September 30, 1997 from 21.1% for the three months ended September
30, 1996. The increase in purchased services and other expenses over the same
period in the prior year is attributed primarily to the Company's growth,
including the Vendell acquisition. The increase in purchased services and other
expenses as a percent of revenue over the same period in the prior year results
primarily from the effect of the Vendell acquisition.
Depreciation and amortization for the three months ended September 30, 1997
increased $267,000, or 127.8%, to $476,000 as compared to $209,000 for the three
months ended September 30, 1996. The increase in depreciation and amortization
compared to the same period in the prior year is attributable to the Company's
growth, including the Vendell acquisition.
Income from operations for the three months ended September 30, 1997 increased
$451,000, or 66.5%, to $1,129,000 as compared to $678,000 for the three months
ended September 30, 1996, and decreased as a percentage of total revenues to
5.5% for the three months ended September 30, 1997 from 10.5% for the three
months ended September 30, 1996, as a result of the factors described above.
Interest expense for the three months ended September 30, 1997 increased
$60,000, or 30.2%, to $259,000 as compared to $199,000 for the three months
ended September 30, 1996. The increase in interest expense over the same period
in the prior year is attributed principally to debt incurred as part of the
Vendell acquisition offset by the prepayment of the Company's long-term debt on
October 1, 1996 and the related elimination of deferred loan cost amortization.
Interest income decreased $5,000 to $176,000 for the three months ended
September 30, 1997 as compared to $181,000 for the three months ended September
30, 1996. The decrease in interest income over the same period in the prior year
is attributable primarily to the decrease in cash available for investment
resulting from the Company's public offering completed in August 1996 following
the June 1997 Vendell acquisition.
Provision for income tax expense for the three months ended September 30, 1997
increased $231,000 to $408,000 from $177,000 for the three months ended
September 30, 1996. The increase in provision for income tax expense compared to
the same period in the prior year results both from the increase in the
Company's increase in taxable income and an increase in the Company's effective
tax rate due to the reversal, during the period ended December 31, 1996, of a
portion of the valuation allowance against the Company's deferred tax assets.
Liquidity and Capital Resources
Cash used by operating activities for the three months ended September 30, 1997
was $591,000 on net income of $638,000 as compared to cash provided of $865,000
on net income of $487,000 for the three months ended
12
<PAGE> 13
September 30, 1996. Working capital at September 30, 1997 was $24,721,000, as
compared to $23,952,000 at June 30, 1997, and the current ratio at September 30,
1997, was 5.1:1, as compared to 4.1:1, at June 30, 1997.
Cash used by investing activities was $1,313,000 for the three months ended
September 30, 1997 as compared to $417,000 for the three months ended September
30, 1996, due primarily to an increase in cash outlays for the purchase of
property and equipment and for the additional cash payment related to the
purchase of Vendell's assets. Cash of $23,376,000 was provided by financing
activities for the three months ended September 30, 1996, due primarily to the
receipt of net proceeds of $23,359,000 from the issuance of shares of the
Company's Common Stock in the public offering completed in August 1996. Cash of
$35,000 was provided by financing activities for the three months ended
September 30, 1997.
On November 8, 1996, the Company entered into a loan and security agreement with
First American National Bank ("FANB"). Under the terms of this agreement, FANB
has made available to the Company, for acquisition financing and working capital
requirements, a revolving line of credit for up to $13,000,000. The initial term
of the agreement extends through November 1, 1999. The credit facility bears
interest at either (i) the one, two or three month LIBOR rate plus an applicable
margin, which ranges between 1.35% and 2.10% and is dependent on the ratio of
funded debt to operating earnings or (ii) FANB's index rate, at the Company's
option. The line of credit is secured primarily by the Company's accounts
receivable and equipment. At September 30, 1997, the outstanding balance under
the line of credit was $11,450,000.
The Company's line of credit with FANB requires the Company to comply with
certain restrictive covenants with respect to its business and operations and to
maintain certain financial ratios. The restrictive covenants under this
agreement prohibit the Company, without the prior consent of its lender, from
entering into major corporate transactions, such as a merger, tender offer or
sale of its assets, and from incurring additional indebtedness in excess of
$1,000,000. The agreement also prohibits the Company from declaring dividends in
excess of 25% of the Company's net income during any fiscal year.
Helicon has also entered into a $1 million line of credit with FANB. As a
condition to this line of credit, the Company agreed to guarantee Helicon's
performance under such line of credit. At September 30, 1997, there were no
amounts outstanding under Helicon's line of credit.
Capital expenditures during fiscal 1998 are expected to include the replacement
of existing capital assets as necessary, as well as the costs associated with
the opening of new programs and facilities, including the possible purchase of
certain real estate and improvements. The Company also may consider other
possible strategic acquisitions, including acquisitions of existing programs and
other companies engaged in youth services or related businesses.
Current obligations, typically due within thirty days or less, are expected to
be funded with cash flows from operations and borrowings under the Company's
line of credit. Management believes that operations, remaining proceeds from the
August 1996 public offering, and amounts available under its line of credit will
provide sufficient cash flow for the foreseeable future.
Inflation
Inflation has not had a significant impact on the Company's results of operation
since inception. Certain of the Company's existing contracts provide for annual
price increases based upon changes in the Consumer Price Index.
13
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ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.
This information called for by Item 3 is not required for the fiscal quarter
ended September 30, 1997 as the Company's market capitalization was less than
$2.5 billion as of January 28, 1997.
PART II. OTHER INFORMATION
Item 6. Exhibits and Reports on form 8-K
(a) The following exhibits are included herein:
(11) Statement re: computation of earnings per share.
(27) Financial Data Schedule. (SEC use only)
(b) Reports on Form 8-K:
None.
14
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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.
CHILDREN'S COMPREHENSIVE SERVICES, INC.
(Registrant)
Date: November 14, 1997 /s/ WILLIAM J BALLARD
----------------------
William J Ballard
Chairman and Chief Executive Officer
Date: November 14, 1997 /s/ DONALD B. WHITFIELD
------------------------
Donald B. Whitfield
Vice President of Finance
(Principal Financial and
Accounting Officer)
15
<PAGE> 16
Exhibit Index
Exhibit No.
11 Computation of Per Share Earnings
27 Financial Data Schedule (SEC use only)
- ---------------
16
<PAGE> 1
EXHIBIT 11 - STATEMENT RE: COMPUTATION OF PER SHARE EARNINGS
<TABLE>
<CAPTION>
Three Months Ended
September 30,
--------------------------
1997 1996
---------- ----------
<S> <C> <C>
PRIMARY:
Average shares outstanding 7,784,026 6,223,029
Net effect of dilutive stock options and warrants
-- based on the treasury stock method using
average market price 288,025 265,123
---------- ----------
TOTAL 8,072,051 6,488,192
========== ==========
Net income $ 638,000 $ 478,000
========== ==========
Per share amount $ .08 $ .08
========== ==========
FULLY DILUTED:
Average shares outstanding 7,784,026 6,223,029
Net effect of dilutive stock options and warrants
-- based on the treasury stock method using the
higher of ending or average market price 340,543 265,163
---------- ----------
TOTAL 8,124,569 6,488,192
========== ==========
Net income $ 638,000 $ 487,000
========== ==========
Per share amount $ .08 $ .08
========== ==========
</TABLE>
17
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
FINANCIAL STATEMETS OF CHILDREN'S COMPREHENSIVE SERVICES, INC. FOR THE 3 MONTH
PERIOD ENDED SEPTEMBER 30 1997 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO
SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> JUN-30-1998
<PERIOD-END> SEP-30-1997
<CASH> 11,772
<SECURITIES> 0
<RECEIVABLES> 19,157
<ALLOWANCES> 2,414
<INVENTORY> 0
<CURRENT-ASSETS> 30,785
<PP&E> 42,754
<DEPRECIATION> 6,371
<TOTAL-ASSETS> 68,408
<CURRENT-LIABILITIES> 6,064
<BONDS> 11,645
0
0
<COMMON> 78
<OTHER-SE> 50,356
<TOTAL-LIABILITY-AND-EQUITY> 68,408
<SALES> 0
<TOTAL-REVENUES> 20,367
<CGS> 0
<TOTAL-COSTS> 19,238
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 259
<INCOME-PRETAX> 1,046
<INCOME-TAX> 408
<INCOME-CONTINUING> 638
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 638
<EPS-PRIMARY> .08
<EPS-DILUTED> .08
</TABLE>
