|
|
|
|
|
|
|
|
|
|
|
|
|
<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q/A
Amendment No. 1
Quarterly Report Under Section 13 or 15(d) of
the Securities and Exchange Act of 1934
For the Quarter Ended June 30, 1995
Commission file number 0-18067
REN CORPORATION-USA
(Exact name of registrant as specified in its charter)
Tennessee 62-1323090
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification Number)
6820 Charlotte Pike 37209
Nashville, TN (Zip Code)
(Address of principal executive offices)
Registrant's telephone number, including area code: (615) 353-4200
Common Stock, no par value
Indicate by check mark whether 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
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. YES X NO .
--- ---
As of August 11, 1995, 18,949,084 shares of registrant's Common Stock,
no par value, were outstanding.
<PAGE> 2
REN CORPORATION- USA
Consolidated Balance Sheets
(in thousands, except share data)
<TABLE>
<CAPTION>
June 30, December 31,
1995 1994
-------- ------------
(Unaudited)
<S> <C> <C>
Current assets:
Cash and cash equivalents $ 92 $ 644
Accounts receivable less allowance for uncollectibles and
contractual adjustments of $15,022 and $12,885 at
June 30, 1995 and December 31, 1994, respectively 20,488 22,252
Estimated third-party settlements, net 431 60
Inventory 3,922 3,382
Prepaid expense 1,622 974
Current deferred taxes, net 3,729 3,079
Other current assets 222 1,385
-------- --------
Total current assets 30,506 31,776
Property, plant and equipment, net 55,163 51,916
Intangible assets, net 56,448 47,460
Notes receivable $2,667 $1,795
Other assets 5,703 1,368
-------- --------
Total assets $150,487 $134,315
======== ========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Bank notes payable $ 875 $ -
Current maturities of long-term debt and capital lease obligations 92 87
Accounts payable 8,722 6,541
Accrued expenses 4,383 2,939
Accrued wages and benefits 3,842 3,751
Income taxes payable 399 1,521
-------- --------
Total current liabilities 18,313 14,839
Long-term debt and capital lease obligations, less current maturities 5,394 342
Deferred taxes, net 4,974 4,301
Minority interest in consolidated subsidiaries 623 89
-------- --------
Total long-term liabilities 10,991 4,732
Redeemable common stock; 6,000 and 12,000 shares issued and
outstanding at June 30, 1995 and December 31, 1994, respectively 24 47
Commitments and contingencies
Shareholders' equity:
Common stock; no par value, authorized 60,000,000 shares;
18,936,659 and 18,898,546 shares issued and outstanding at
June 30, 1995 and December 31, 1994, respectively 102,229 101,841
Additional paid-in capital 4,224 4,224
Retained earnings 14,706 8,650
Less unearned stock grant compensation - $ (18)
-------- --------
Total shareholders' equity 121,159 114,697
-------- --------
Total liabilities and shareholders' equity $150,487 $134,315
======== ========
</TABLE>
See accompanying notes to consolidated financial statements.
1
<PAGE> 3
REN CORPORATION- USA
Consolidated Statements of Operations
(in thousands, except per share data)
(Unaudited)
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
June 30, June 30,
------------------------- --------------------------
1995 1994 1995 1994
----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
Revenue:
Dialysis services $ 38,714 $ 28,872 $ 73,793 $ 56,309
Laboratory services 4,204 2,766 7,739 5,616
----------- ----------- ----------- -----------
42,918 31,638 81,532 61,925
----------- ----------- ----------- -----------
Direct operating expense:
Dialysis services 28,783 21,027 54,437 41,289
Laboratory services 1,318 1,461 2,802 2,901
----------- ----------- ----------- -----------
30,101 22,488 57,239 44,190
----------- ----------- ----------- -----------
Gross operating profit:
Dialysis services 9,931 7,845 19,356 15,020
Laboratory services 2,886 1,305 4,937 2,715
----------- ----------- ----------- -----------
12,817 9,150 24,293 17,735
Indirect operating expense:
Corporate office general, administrative
and operations support 2,818 2,499 5,534 5,629
Depreciation and amortization 3,207 2,675 6,069 5,269
Bad debt expense 1,018 687 1,542 1,202
Loss of unconsolidated subsidiary 17 0 62 95
----------- ----------- ----------- -----------
Income from operations 5,757 3,289 11,086 5,540
Non-operating (income) expense:
Interest income (141) (39) (229) (106)
Interest expense 349 237 642 493
----------- ----------- ----------- -----------
Income before income taxes 5,549 3,091 10,673 5,153
Income tax expense 2,274 1,206 4,375 2,030
Minority interest in income of consolidated subsidiary,
net of income tax expense of $62 and $167 for
the quarter and six months ended June 30, 1995 91 - 241 -
----------- ----------- ----------- -----------
Net income $ 3,184 $ 1,885 $ 6,057 $ 3,123
=========== =========== =========== ===========
Net income per common share and comon share equivalent $ 0.17 $ 0.10 $ 0.32 $ 0.17
=========== =========== =========== ===========
Weighted average common shares and
common share equivalents outstanding 19,027,576 18,886,187 19,021,789 18,868,932
=========== =========== =========== ===========
</TABLE>
See accompanying notes to consolidated financial statements.
2
<PAGE> 4
REN CORPORATION- USA
Consolidated Statement of Changes in Shareholders' Equity
For the six months ended June 30, 1995
(Unaudited)
(in thousands, except share data)
<TABLE>
<CAPTION>
Common Additional Unearned
--------------------------- Paid-In Retained Stock Grant
Shares Amount Capital Earnings Compensation Total
----------- -------- ---------- -------- ------------ --------
<S> <C> <C> <C> <C> <C> <C>
December 31, 1994 18,898,546 $101,841 $4,224 $ 8,650 ($18) $114,696
Net income - - - 6,057 - 6,057
Issuance of common stock for
employee stock purchase plan 20,038 224 - - - 224
Exercise of stock options 12,075 140 - - - 140
Amortization of unearned stock
grant compensation - - - - 18 18
Expiration of redeemable common stock 6,000 24 - - - 24
---------- -------- ------ ------- -- --------
June 30, 1995 18,936,659 $102,229 $4,224 $14,707 $- $121,159
========== ======== ====== ======= == ========
</TABLE>
See accompanying notes to consolidated financial statements.
3
<PAGE> 5
REN CORPORATION-USA
Consolidated Statements of Cash Flows
(in thousands)
(unaudited)
<TABLE>
<CAPTION>
Six Months Ended
June 30,
-------------------
1995 1994
------- -------
<S> <C> <C>
Cash flows from operating activities:
Net income $ 6,057 $ 3,123
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation and amortization expense 6,069 5,269
Amortization of unearned stock grant compensation 18 122
Deferred income taxes 23 -
Effect on cash of change in operating assets and liabilities, net of
effects from acquisitions:
Accounts receivable and estimated third party settlements 1,392 1,600
Inventory (540) (621)
Income taxes receivable - -
Prepaid expenses and other current assets 515 3,508
Notes receivable and other assets (5,207) 1
Accounts payable 2,181 4,059
Accrued expenses and income taxes 948 1,391
------- -------
Net cash provided by operating activities 11,456 18,452
------- -------
Cash flows from investing activities:
Acquisitions, net of cash acquired (10,837) -
Purchase of property, plant and equipment (6,334) (11,229)
Intangible assets acquired (1,136) (235)
Net book value of assets sold 2 -
------- -------
Net cash used in investing activities (18,305) (11,464)
------- -------
Cash flows from financing activities:
Proceeds from issuance of long-term debt 44,100 4,000
Principal payments on long-term debt and capital lease obligations (38,168) (11,062)
Proceeds from common stock options and warrants exercised 365 506
Redemption of common stock - (159)
------- -------
Net cash provided by (used in) financing activities 6,297 (6,715)
------- -------
Net increase (decrease) in cash and cash equivalents (552) 273
Cash and cash equivalents at beginning of period $ 644 $ 655
------- -------
Cash and cash equivalents at end of period $ 92 $ 928
======= =======
</TABLE>
See accompanying notes to consolidated financial statements.
4
<PAGE> 6
REN CORPORATION-USA
Consolidated Statements of Cash Flows, Continued
<TABLE>
<CAPTION>
Six Months Ended
June 30,
------------------
1995 1994
---- ----
(in thousands)
<S> <C> <C>
Supplemental disclosures of cash flow information:
Cash paid during the period for:
Interest $ 530 $373
Income taxes 5,310 1
</TABLE>
Supplemental schedule of noncash investing and financing activities:
During the six months ended June 30, 1995 the Company acquired certain
assets, principally goodwill and agreements not to compete, of two dialysis
clinics operated by The George Washington University, a 51% ownership in
certain assets, principally goodwill and equipment, of Greater Milwaukee
Dialysis Corporation, and a 53.3% ownership interest in certain assets,
principally goodwill and equipment of Rocky Mountain Kidney Center for an
aggregate purchase price of approximately $12 million.
During January of both 1995, and 1994, redemption rights on 6,000 shares
of common stock for $23,500 expired.
5
<PAGE> 7
REN CORPORATION-USA
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
(1) Basis of Presentation
The accompanying interim financial statements have been
prepared in conformity with generally accepted accouting principles
for interim financial information and with the instructions to
Form 10-Q and Rule 10.01 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, the interim consolidated
financial statements include all adjustments, consisting of normal
recurring adjustments, necessary for a fair presentation of the
results of the interim periods. The interim financial statements
should be read in conjunction with the 1994 audited consolidated
financial statements and related notes. The results of operations
for the interim periods may not be indicative of the operating
results for the year ending December 31, 1995.
(2) Income Taxes
Actual income tax expense for the six months ended June 30,
1995, differs from the "expected" income tax expense (computed by
applying the federal corporate rate of 35%) as follows:
<TABLE>
<CAPTION>
(in thousands)
<S> <C>
Computed expected federal income tax expense $3,736
Increase in income tax resulting from:
State income tax expense, net of federal benefit 486
Other 153
------
Income Tax Expense $4,375
======
</TABLE>
(3) Bank Credit Facility
During 1993, the Company replaced its existing credit
agreement with a new agreement with a consortium of banks. Terms
of the credit agreement provide the Company with a six-year
reducing revolving credit facility in the amount of $60 million.
The revolving facility is available in full until August 30, 1995
when the availability begins to reduce by $3.75 million each
quarter until fully reduced on May 31, 1999. Borrowings under the
facility will bear interest at either the bank prime rate or, at
the Company's option, at a LIBOR rate plus an increment of 75
basis points to 125 basis points depending on the ratio of debt to
equity in accordance with a predetermined schedule. At June 30,
1995, the Company had waivers for or was in compliance with all
loan covenants. The Company had $4 million outstanding under the
Credit Agreement at June 30, 1995.
6
<PAGE> 8
(4) Commitments and Contigencies
The Company has been named a defendant in various legal
actions arising from its normal business activites. In the
opinion of management after consultation with counsel, any
liability that may arise from such actions will not have a
material adverse effect on the Company.
On April 24, 1995, the U.S. Health Care Financing
Administration (HCFA) advised Associate Regional Adminstrators
for Medicare of a contemplated change in the government's
interpretation of the amendment to the Medicare Secondary Payor
(MSP) End Stage Rental Disease (ESRD) provision of the Social
Security Act contained in the Omnibus Budget Reconciliation
Act of 1993 (OBRA 93). An upcoming Program Instruction will
officially advise Medicare Intermediaries that prior guidance
by HCFA was erroneous and direct the Intermediaries to apply the
reinterpretation of the Law retractively and prospective to all
ESRD claims after August 10, 1993
The effect of this reinterpretation of the Law is to make
Medicare the primary payor in cases where a Medicare beneficiary
is entitled to Medicare benefits on the bases of either age or
disability and ESRD and where the entitlement other than ESRD
precedes the ESRD diagnosis. According to previous memorandum
issued by Medicare Intermediaries, the MSP provisions would
apply irrespective of whether the ESRD diagnosis was before or
after the Medicare entitlement other than ESRD.
Because commercial rates are normally in excess of the
Medicare allowable rates, the change in the application of the
MSP provisions may result in a reduction of dialysis revenue
going forward for those patients whose Medicare entitlement other
than ESRD preceded their ESRD diagnosis.
Because the reinterpretation of the MSP provisions to OBRA
93 is retoractive to August 10, 1993, the Company may be required
to refund amount paid by commercial payors and bill Medicare as
the primary payor for patients whose Medicare eligibility preceded
their eligibility due to ESRD. It is not possible to predict at
this time the financial consequences of such refund requests, net
of any available reserves.
7
<PAGE> 9
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
Exhibit Number Exhibit
27 Financial Data Schedule (for SEC use only)
(b) Reports on Form 8-K
On April 12, 1995, the Company filed a report on Form
8-K in respect of The George Washington University
acquisition.
<PAGE> 10
SIGNATURES
Pursuant to the requirement of the Securities and Exchange Act of
1934, the registrant has duly caused this report to be signed on its behalf by
the undersigned thereunto duly authorized.
REN CORPORATION-USA
August 15, 1995 /s/ Bradley S. Wear
-------------------------------------------------
Bradley S. Wear
Senior Vice President, Treasurer and
Chief Financial Officer
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
FINANCIAL STATEMENTS OF REN CORPORATION - USA FOR THE SIX MONTHS ENDED JUNE 30,
1995, AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL
STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<CURRENCY> U.S. DOLLARS
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-START> JAN-01-1995
<PERIOD-END> JUN-30-1995
<EXCHANGE-RATE> 1
<CASH> 92
<SECURITIES> 0
<RECEIVABLES> 35,510
<ALLOWANCES> 15,022
<INVENTORY> 3,922
<CURRENT-ASSETS> 30,506
<PP&E> 77,898
<DEPRECIATION> 22,735
<TOTAL-ASSETS> 150,487
<CURRENT-LIABILITIES> 18,313
<BONDS> 0
<COMMON> 102,229
0
0
<OTHER-SE> 18,930
<TOTAL-LIABILITY-AND-EQUITY> 150,487
<SALES> 81,532
<TOTAL-REVENUES> 81,532
<CGS> 57,239
<TOTAL-COSTS> 57,239
<OTHER-EXPENSES> 11,665
<LOSS-PROVISION> 1,542
<INTEREST-EXPENSE> 642
<INCOME-PRETAX> 10,673
<INCOME-TAX> 4,375
<INCOME-CONTINUING> 6,057
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 6,057
<EPS-PRIMARY> 0.32
<EPS-DILUTED> 0.32
</TABLE>
|
|