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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
QUARTERLY REPORT UNDER SECTION 13 OR 15 (d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For The Second Quarter Ended June 30, 1996 Commission File #0-19240
U.S. HOMECARE CORPORATION
(Exact name of registrant as specified in its charter)
New York 13-2853680
- ------------------------------- -----------------------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization ) Identification Number)
750 Main Street, Hartford, CT 06103
- ------------------------------- -----------------------------------
(Address of principal executive (Zip Code)
office)
Registrant's telephone number, (860)278-7242
including area code -----------------------------------
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15 (d) of the Securities Exchange Act of 1934
during the preceding 12 months (or for such shorter period that the registrant
was required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days. Yes X No
Number of Shares of Registrant's Common Stock Outstanding
June 30, 1996: 8,985,876
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<PAGE>
U.S. HOMECARE CORPORATION
INDEX
Page Number
-----------
Part I - Financial Information
Item 1 Consolidated Balance Sheets as of
June 30, 1996 and December 31, 1995 1
Consolidated Statements of Operations
for the three months ended June 30, 1996
and 1995. 2
Consolidated Statements of Operations
for the six months ended June 30, 1996
and 1995. 3
Consolidated Statements of Cash Flows
for the six months ended June 30, 1996
and 1995. 4
Notes to Unaudited Consolidated
Financial Statements. 5-7
Item 2 Management's Discussion and Analysis
of Financial Condition and Results of
Operations. 8-11
Part II - Other Information
Item 1 Legal Proceedings 12-13
Item 4 Submission of Matters to a Vote of Securities Holders 14
Item 6 Exhibits & Reports on Form 8-K 15-17
Signatures 18
<PAGE>
U.S. HOMECARE CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(In thousands, except per share data)
<TABLE>
<CAPTION>
June 30, December 31,
1996 1995
-------- -------
<S> <C> <C>
ASSETS (unaudited)
CURRENT ASSETS
Cash and cash equivalents $ 397 $ 225
Accounts receivable, net of allowance
for doubtful accounts of $2,081 and $2,960 14,631 15,480
Other current assets 2,222 2,329
-------- --------
TOTAL CURRENT ASSETS 17,250 18,034
-------- --------
PROPERTY AND EQUIPMENT, net 3,022 3,875
-------- --------
OTHER ASSETS
Excess cost over net assets acquired, net
of accumulated amortization of $2,765 and $2,496 11,400 11,669
Intangible assets, net of accumulated
amortization of $7,193 and $6,573 3,115 3,735
Other 843 1,128
-------- --------
TOTAL OTHER ASSETS 15,358 16,532
-------- --------
TOTAL ASSETS $ 35,630 $ 38,441
======== ========
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Current maturities of long-term debt $ 13,175 $ 1,119
Accounts payable 3,928 4,205
Accrued Expenses 1,298 2,229
Restructuring reserves 633 1,172
Accrued payroll and related costs 938 1,123
-------- --------
TOTAL CURRENT LIABILITIES 19,972 9,848
-------- --------
OTHER LIABILITIES
Bank revolving line of credit -- 11,766
Capital lease obligations and other long-term debt 69 758
Deferred income taxes 154 154
-------- --------
TOTAL OTHER LIABILITIES 223 12,678
-------- --------
TOTAL LIABILITIES 20,195 22,526
-------- --------
STOCKHOLDERS' EQUITY
Common stock, $0.01 par value, 20,000,000 shares authorized,
9,098,894 and 8,782,963 shares outstanding 91 88
Preferred stock, $1 par value, 484,000 authorized, 328,569
shares outstanding 328 328
Additional paid-in capital 45,442 45,688
Accumulated deficit (29,783) (28,607)
Treasury stock at cost, 113,018 and 277,936 shares (643) (1,582)
-------- --------
TOTAL STOCKHOLDERS' EQUITY 15,435 15,915
-------- --------
TOTAL LIABILITIES & STOCKHOLDERS' EQUITY $ 35,630 $ 38,441
======== ========
</TABLE>
See accompanying notes to unaudited consolidated financial statements.
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U.S. HOMECARE CORPORATION
CONSOLIDATED STATEMENTS OF OPERATIONS
(unaudited)
Three Months
Ended June 30,
----------------------
(In thousands, except per share data) 1996 1995
-------- --------
Net revenues $ 16,574 $ 18,261
Cost of revenues, primarily payroll and related costs 10,605 11,741
-------- --------
Gross profit 5,969 6,520
Operating expenses:
Selling, general & administrative expenses 5,477 5,784
Amortization and depreciation 796 850
-------- --------
Total operating expenses 6,273 6,634
Loss from operations (304) (114)
-------- --------
Interest expense, net 275 223
-------- --------
Loss before provision for income taxes (579) (337)
Provision for income taxes 29 0
-------- --------
Net loss ($ 608) ($ 337)
======== ========
Loss per share ($ 0.07) ($ 0.04)
======== ========
Weighted average common shares outstanding 8,645 8,136
======== ========
See accompanying notes to unaudited consolidated financial statements.
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<PAGE>
U.S. HOMECARE CORPORATION
CONSOLIDATED STATEMENTS OF OPERATIONS
(unaudited)
Six Months
Ended June 30,
----------------------
(In thousands, except per share data) 1996 1995
-------- --------
Net revenues $ 33,445 $ 36,251
Cost of revenues, primarily payroll and related costs 21,452 23,668
-------- --------
Gross profit 11,993 12,583
Operating expenses:
Selling, general & administrative expenses 10,936 11,660
Amortization and depreciation 1,642 1,757
-------- --------
Total operating expenses 12,578 13,417
Loss from operations (585) (834)
-------- --------
Interest expense, net 533 477
-------- --------
Loss before provision for income taxes (1,118) (1,311)
Provision for income taxes 58 0
-------- --------
Net loss ($ 1,176) ($ 1,311)
======== ========
Loss per share ($ 0.14) ($ 0.16)
======== ========
Weighted average common shares outstanding 8,601 8,167
======== ========
See accompanying notes to unaudited consolidated financial statements.
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U.S. HOMECARE CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In Thousands)
<TABLE>
<CAPTION>
For the six months ended June 30,
----------------------------------
1996 1995
-------------- ---------------
( unaudited )
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net loss ($1,176) ($1,311)
Adjustments to reconcile net cash (used in)/provided
by operating activities:
Amortization and Depreciation 1,642 1,757
Provision for bad debts 701 583
Changes in operating assets and liabilities:
Decrease/(increase) in accounts receivable 148 (1,665)
Decrease in other current assets 107 1,848
Decrease/increase in other assets 91 (211)
Decrease in accounts payable (73) (2,724)
Decrease in accrued expenses (690) (1,189)
Decrease in restructuring reserve (8) (1,850)
(Decrease)/increase in accrued payroll and related costs (185) 1,214
----- ------
Net cash (used in) / provided by operating activities (557) (3,548)
----- ------
CASH FLOWS FROM INVESTING ACTIVITIES
(Purchase)/disposition of property and equipment, net 14 (50)
----- ------
Net cash (used in) / provided by investing activities 14 (50)
----- ------
CASH FLOWS FROM FINANCING ACTIVITIES
Payments on promissory note (2,000)
Payments on capital leases and long-term debt (399) (2,300)
Decrease in cash overdraft (100)
Purchase of treasury stock (329)
Issuance of preferred stock 8,702
----- ------
Net cash used in/provided by financing activities (399) 3,973
----- ------
Net increase in cash 172 375
Cash and cash equivalents, beginning of period 225 659
----- ------
Cash and cash equivalents, end of period $397 $1,034
===== ======
Cash paid during the period for:
Income taxes $0 $25
===== ======
Interest $533 $496
===== ======
</TABLE>
See accompanying notes to unaudited consolidated financial statements.
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<PAGE>
U.S. HOMECARE CORPORATION
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
Note 1 - Unaudited Information
In the opinion of the management of U.S. HomeCare Corporation (the
"Company"), the accompanying unaudited consolidated financial statements
contain all adjustments (consisting of only normal recurring accruals)
necessary to present fairly the Company's financial position as of June
30, 1996 and the results of its operations for the three month and six
month periods ended June 30, 1996 and 1995. These consolidated financial
statements should be read in conjunction with the Company's Annual Report
on Form 10-K for the fiscal year ended December 31, 1995.
The results of operations for the six month period ended June 30, 1996
are not necessarily indicative of the results to be expected for the full
year.
Note 2 - Revenue recognition
The Company recognizes revenues as the services are performed. The
Company receives retroactive increases to certain rates, certain of which
are intended to be passed through as additional salary and benefits to
Company personnel. The Company records such additional amounts as revenue
and expenses when they are notified by the payor or the amount is
estimable. Certain of the Company's revenues and related disbursements
are subject to audit by third party payors; these revenues are accrued on
an estimated basis in the period the related services are rendered. Net
revenues are adjusted, as required in subsequent periods, based on final
settlement.
Note 3 - Litigation
No substantive changes have occurred since the filing of the 1995 10-K.
For a more detailed description of pending matters, see Note 9 c. to the
Consolidated Financial Statements in the 1995 10-K.
Note 4 - Cash and cash equivalents
Cash and cash equivalents include a $130,925 certificate of deposit which
has been pledged as collateral for a stand-by letter of credit issued by
one of the C-ompany's banks in connection with a government contract.
Note 5 - Stockholders Equity
On February 1 and February 8, 1995, the Company issued and sold in a
private placement a total of 271,428 shares of $35.00 6% Convertible
Preferred Stock, $1.00 par value ( the "$35.00 Preferred") for $35.00 per
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share (the "Private Placement"). The $35.00 Preferred is convertible into
5,428,560 shares of Common Stock at a conversion price of $1.75 per
share, subject to certain adjustments, and will be automatically
converted into Common Stock if the 20 day moving average of the closing
prices of the Company's Common Stock is greater than $4.375 per share.
The $35.00 Preferred pays an annual dividend of $2.10, which is payable
quarterly in cash or, at the Company's option, Common Stock.
Simultaneously with the initial closing of the Private Placement, all of
the holders of Preferred Stock issued in September and October 1994 (the
"Exchange Preferred") exchanged their 57,141 shares of Exchange Preferred
for an equal number of shares of the $35.00 Preferred and exchanged their
certain related Warrants for Warrants to purchase an aggregate of 99,997
shares of Common Stock at $1.75 per share. The Company has incurred
dividends of $848,000 to date. These dividends were paid by issuing
shares of Common Stock from Treasury.
During June 1996, the Company issued 315,931 common shares in lieu of
cash payments for several obligations. These shares included 250,000
issued in connection with the renegotiation of the lease obligation for
one of the Company's locations in New York State and 25,000 shares issued
in connection with the termination of a lease for a former IV location.
In addition, 29,567 shares were issued to directors in lieu of cash fees
under the directors automatic stock fee program and 11,364 shares were
issued to the Company's CEO in lieu of cash compensation for a portion of
his salary. The impact of these transactions was to increase
Stockholders' Equity by $697,000.
Note 6 - Commitments and Contingencies
A Medicare audit of the Home Office cost report for the fiscal year ended
June 30, 1993 was begun during August 1995. The audit has not been
completed but a revenue reduction of approximately $150,000 is estimated
at this time. The revenue reduction was reflected in the 1995 third
quarter results. The Company's cost reports for 1994 and 1995 remain
subject to final audit.
Note 7 - Fair Value of Financial Instruments
Effective January 1, 1995, the Company has adopted Statement of Financial
Accounting Standards ("SFAS") No. 107 "Disclosures about Fair Values of
Financial Instruments". The Company considers the fair value of its
financial instruments to approximate their book values.
Note 8 - Accounting for Stock-Based Compensation
Effective January 1, 1996, the Company has adopted Statement of Financial
Accounting Standards No. 123 "Accounting for Stock-Based Compensation".
SFAS No. 123 requires expanded disclosures of stock-based compensation
arrangements with employees and encourages (but does not require)
compensation cost to be measured based on the fair value of the equity
instrument awarded. The Company will continue to apply APB Opinion No. 25
to its stock based compensation awards to employees and will disclose the
required pro forma effect on net income and earning per share.
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Note 9 - Long-term Debt
The Company's Revolving Line of Credit ("RLOC") agreement with its bank
expires March 31, 1997. The Company's subordinated credit facility
expires April 1, 1997. It is the Company's intention to refinance these
obligations, although there can be no assurance that the Company will be
successful in refinancing on commercially reasonable terms or at all.
Since these facilities expire in less than a year the debt has been
classified as current.
-7-
<PAGE>
U.S. HOMECARE CORPORATION
Management's Discussion and Analysis of
Financial Condition and Results of Operations
This Quarterly Report on Form 10-Q contains certain statements of a
forward-looking nature relating to future events or the future financial
performance of the Company. Such statements are only predictions and the actual
events or results may differ materially from the results discussed in the
forward-looking statements. Factors that could cause or contribute to such
differences include those discussed below as well as those discussed in the
Company's Annual Report on Form 10-K filed with the Securities and Exchange
Commission for the year ended December 31, 1995.
R E S U L T S O F O P E R A T I O N S
Three Months Ended June 30, 1996
Compared With Three Months Ended June 30, 1995
Net revenues for the three month period ended June 30, 1996 decreased by
$1,687,000, or 9.2%, to $16,574,000 compared to $18,261,000 for the second
quarter of 1995. This decline was primarily the result of the continued
pressures on the Company's infusion therapy services business. Net revenue from
nursing services increased $189,000 from $14,258,000, or 1.3% for the second
quarter of 1995 to $14,447,000 for the second quarter of 1996. Net revenue from
infusion therapy services was $2,093,000 for the second quarter of 1996, which
was $1,874,000, or 47.2% below last year's second quarter. These decreases in IV
net revenue were primarily due to the consolidation of IV branch offices, the
competitive pressures being experienced in the Company's infusion therapy
markets, a drop off in new referrals and the Company's efforts to ensure that
new IV services revenue meets the Company's standards of pricing and risk
selection.
Cost of revenues as a percentage of net revenues was 64.0% for the second
quarter of 1996 and 64.3 % for the second quarter of 1995.
Selling, general and administrative expenses were $5,477,000 in the second
quarter of 1996 as compared to $5,784,000 in the second quarter of 1995. This
reflects the Company's efforts to reduce expenses beginning in the second half
of 1994 offset by an increase in sales personnel and related costs as the
Company has accelerated, beginning with the first quarter of 1995, its efforts
to grow core operations.
Net interest expense was $275,000 for the second quarter of 1996 compared
to $223,000 for the second quarter of 1995. This increase is the result of
higher average borrowings on the Company's RLOC facility and the subordinated
credit facility.
As a result of the foregoing, for the three months ended June 30, 1996, the
Company had a net loss of $608,000 or $.07 per share, compared to a net loss of
$337,000 or $.04 per share for the corresponding quarter in 1995.
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<PAGE>
Six Months Ended June 30, 1996
Compared With Six Months Ended June 30, 1995
Net revenues for the six month period ended June 30, 1996 decreased by
$2,806,000, or 7.7%, to $33,445,000 compared to $36,251,000 for the six months
ended June 30, 1995. This decline was primarily the result of the continued
pressures on the Company's infusion therapy services business. Net revenue from
nursing services increased $849,000 from $27,828,000 for the six months ended
June 30, 1995 to $28,677,000 for the first half of 1996. Net revenue from
infusion therapy services was $4,732,000 for the six months ended June 30, 1996,
which was $3,588,000, or 43.1% below the six months ended June 30, 1995. These
decreases in IV net revenue were primarily due to the competitive pressures
being experienced in the Company's infusion therapy markets, a drop off in new
referrals and the Company's efforts to ensure that new IV services revenue meets
the Company's standards of pricing and risk selection.
Cost of revenues as a percentage of net revenues was 64.1 % for the first
half of 1996 and 65.3% for the first half of 1995. The cost of revenues for 1996
was favorably impacted by the Company's efforts to ensure that new IV services
revenue meets the Company's standards of pricing.
Selling, general and administrative expenses were $10,936,000 in the first
half of 1996 as compared to $11,660,000 in the comparable period of 1995. This
reflects the Company's efforts to reduce expenses beginning with the
restructuring program which was initiated in the second half of 1994 offset by
an increase in sales personnel and related costs as the Company accelerated its
efforts, beginning with the first of 1996, to grow core operations.
Net interest expense was $533,000 for the six month period ended June 30,
1996 compared to $477,000 for the first half of 1995. This increase was the
result of higher average borrowings on the Company's RLOC and subordinated
credit facilities.
As a result of the foregoing, for the six month period ended June 30, 1996,
the Company had a net loss of $1,176,000 or $.14 per share, compared to a net
loss of $1,311,000 or $.16 per share for the corresponding period in 1995.
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<PAGE>
FINANCIAL CONDITION
As of June 30, 1996 the Company's cash and cash equivalents totaled
$397,000 compared to $225,000 at December 31, 1995.
Net accounts receivable declined $849,000 from $15,480,000 at December 31,
1995 to $14,631,000 at June 30, 1996 due primarily to the decline in net revenue
for the first half of 1996.
Trade accounts payable declined from $4,205,000 at December 31, 1995 to
$3,928,000 at June 30, 1996 reflecting, in part, the decline in purchases of IV
products resulting from the decline in IV revenue and the settlement of certain
accounts payable for common stock in lieu of cash..
Accrued expenses declined from $2,229,000 at December 31, 1995 to
$1,298,000 resulting from the pay down of several obligations and the settlement
of two property lease obligations.
The Company believes that its cash position and liquidity will continue to
require careful management over the remainder of 1996. The liquidity pressure
has caused the Company to manage its accounts payable closely, including
deferral of some disbursements. This situation has resulted in a number of
dissatisfied vendors including some who are operating on cash in advance (CIA)
or cash on delivery (COD) terms with the Company and some of whom have
discontinued doing business with the Company. In the circumstances where vendors
have discontinued doing business with the Company the Company has not
encountered difficulty in obtaining alternative sources although there can be no
guarantee that the Company will have continued access to such alternative
sources.
The Company's financing facilities include a $9,000,000 bank revolving line
of credit ("RLOC") which expires March 31, 1997 and a $3,000,000 subordinated
credit facility which expires April 1, 1997. The outstanding balances on the
RLOC of $8,951,000 and the subordinated credit facility of $3,000,000 have been
classified as current liabilities. The Company will seek to renew the RLOC and
the subordinated credit facility or to refinance such facilities, but there can
be no assurance that the Company will be able to do so on commercially
reasonable terms, if at all. Failure by the Company to renew or refinance its
credit facility would have a material adverse effect on the business, financial
condition and results of operations of the Company.
The Company received correspondence from The Nasdaq Stock Market, Inc.
("Nasdaq") during the second quarter of 1996 stating that the Company had fallen
below the $4,000,000 net tangible assets requirement applicable to continued
listing on the Nasdaq National Market and would be delisted from the Nasdaq
National Market. The Company appealed Nasdaq's determination and, in a letter
to the Company dated July 30, 1996, Nasdaq indicated contingent approval for
continued listing on the Nasdaq National Market, subject to the satisfaction of
certain conditions (not all of which can be met currently by the Company). One
of these conditions relates to the Company's obtaining an infusion of equity
capital. Although the Company is currently exploring a number of alternatives to
raise equity capital, the Company is in the early stages of discussion with
potential investors and it cannot predict whether any such investment will
materialize on terms acceptable to the Company, or at all. Consequently, there
can be no assurance that the Company will be able to meet Nasdaq's conditions in
the future or that Nasdaq will grant an extension to the Company in order to
provide additional time to meet such conditions. If the Company is unable to
meet such conditions and no extension is granted, the Company's Common Stock
will likely be delisted from the Nasdaq National Market. In such event, the
Company will apply to have its Common Stock listed on the Nasdaq Small Cap
Market.
The Company's existing capital, funds form operations and borrowings under
the Company's credit facilities may not be sufficient to enable the Company to
fund its operations for the foreseeable future. The Company believes that it
will need to raise additional equity capital as noted above in order to obtain
renewal or refinancing of its credit facilities, maintain Nasdaq National Market
listing and fund its operations. There can be no assurance that the Company will
be able to raise sufficient equity capital and failure to do so would have a
material adverse effect on the Company's business, financial condition and
results of operation.
The Company believes that its existing credit facilities, together with
cash generated from operations, will be sufficient to fund the Company's
operations and debt obligations through 1996. The Company is seeking to
refinance the existing revolving line of credit and subordinated credit facility
which expire March 31, 1997 and April 1, 1997, respectively, and is also
exploring alternatives for raising additional equity capital. Furthermore, the
Company is exploring alternatives for its IV business including a joint venture
or outsourcing arrangement. There can be no assurance that the Company will be
able to achieve the refinancing, raise additional equity capital, or arrange for
alternatives for its IV business.
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FACTORS AFFECTING THE COMPANY'S BUSINESS
The Company's future business, financial condition and results of
operations are dependent on the Company's ability to successfully provide
comprehensive home health care services to its customers and to successfully
collect for such services. Inherent in this process are a number of factors that
the Company must carefully manage in order to be successful. Some of these
factors are: obtaining sufficient cash flow from operations to meet its debt
service and pay vendors on a timely basis; correcting problems it has
experienced with its infusion therapy billing and collection procedures to
enable it to collect accounts receivable on a timely basis; obtaining additional
external financing to meet its working capital requirements, if necessary;
complying with the financial covenants in its revolving line of credit,
subordinated credit facility and accounts receivable securitization programs so
the banks would not have the right to declare the amounts outstanding under such
facilities immediately due and payable; maintaining and establishing close
working relationships with home care and social services agencies, hospitals,
clinics, nursing homes, physicians and physician groups, health maintenance
organizations and other health care providers; obtaining reimbursement from
third party payors; complying with applicable law regarding the health care
industry; attracting and retaining senior management personnel and branch level
management as well as qualified health care professionals and paraprofessionals;
maintaining adequate liability insurance; and competing effectively with other
home health care providers. The failure to manage such factors successfully
could have a material adverse effect on the Company's business, financial
condition and results of operations.
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U.S. HOMECARE CORPORATION
Part II - Other Information
Item 1. Legal Proceedings
HIPS LITIGATION. In July 1993, in HIPS v. USHC Infusion, et al., Index No.
117835/93 (Supreme Court, State of New York, New York County), Home Infusion
Pharmaceutical Services, Inc. "HIPS") sued, on a motion for summary judgment in
lieu of complaint, to enforce the payment of promissory notes in the face amount
of $4.5 million and approximately $880,000 in consulting fees in connection with
the acquisition (the "Acquisition") of assets (or an interest therein) from HIPS
and its affiliate Abel Health Management Services, Inc. (collectively
"HIPS/Abel") and their principal, Edward J. Abel ("Abel"). In September 1994,
the Court denied HIPS's motion for summary judgment and instructed HIPS to bring
a plenary suit on the promissory notes. In October 1994, HIPS brought such a
suit and Abel joined in the suit, seeking payment on the consulting agreement.
In November 1994, the Company answered the complaint and counterclaimed for
rescission of the Acquisition, fraudulent inducement, fraud, breach of contract,
breach of the covenant of good faith and fair dealing, and for a declaratory
judgment relieving it of any further purported obligations in connection with
the Acquisition.
In September 1995, HIPS moved to dismiss certain of the Company's
counterclaims. On February 29, 1996 the court denied HIP's motion, except that
it struck the Company's request for the imposition of punitive damages. At this
time discovery is continuing.
Although the Company believes that is position in the HIPS/Abel litigation
is meritorious, the ultimate outcome of this matter cannot presently be
determined. A reserve has been established in the Company's consolidated
financial statements for specified amounts in connection with the resolution of
this matter.
KINGSLAND LITIGATION. Kingsland Associates v. Abel Health Management
Services, Inc. and U.S. HomeCare Infusion Therapy Products Corporation, Index
No. 14294/93 (Supreme Court of the State of New York, Nassau County) also arises
from the Acquisition. Based on the Asset Purchase Agreement provision regarding
USHC Infusion's assumption of certain liabilities in connection with the
Acquisition, Abel Health Management Services, Inc. ("AHMS") has impleaded USHC
Infusion into these cases brought by Kingsland Associates ("Kingsland") in
connection with AHMS's abandonment of three suites of offices. Kingsland has
also asserted a claim directly against USHC Infusion. Kingsland seeks damages in
excess of $50,000, approximately $325,000 in rent, attorneys' fees and rent
escalation amounts. USHC Infusion filed an answer on November 5, 1993,
asserting, among other defenses, that because of AHMS's breaches of contract and
torts in connection with the Acquisition, as alleged in USHC Infusion, et. al.
v. HIPS, USHC infusion is not liable to AHMS and therefore is not liable to
Kingsland.
In August 1995, AHMS moved to dismiss certain of USHC Infusion's
affirmative defenses. On March 22, 1996 the Court granted the motion in part,
denied it in part, certified the case for trial and ordered AHMS to participate
in discovery noticed by the Company. In so doing, the Court upheld the same
defense that was upheld in the HIPS litigation.
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<PAGE>
In May 1996, Kingsland filed a motion seeking a special trial preference,
designed to move the case to trial ahead of other cases on the trial calendar;
the Company opposed the motion. At the same time, the Company filed a motion
asking the court to (a) dismiss with prejudice the claims of AHMS against it and
(b) preclude AHMS from presenting at trial any evidence or testimony concerning
USHC Infusions defenses against AHMS; AHMS opposed the motion, and both motions
are now awaiting decision.
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<PAGE>
Item 4. Submission of Matters to a Vote of Security-Holders.
A. The company's Annual Meeting of Shareholders was held on
June 6, 1996.
C. Motions before shareholders:
(1) To elect eight directors:
NAME OF DIRECTOR VOTES FOR VOTES WITHHELD
---------------- --------- --------------
Jay C. Huffard 8,071,691 359,078
W. Edward Massey 8,071,291 359,478
W. Wallace McDowell 7,967,728 463,041
G. Robert O'Brien 8,071,691 359,078
Shawkat Raslan 8,071,691 359,078
Susan S. Robfogel 8,071,691 359,078
John R. Gunn 7,967,728 463,041
Hadley C. Ford 7,967,728 463,041
(2) To amend the Company's 1995 Stock/Option Issuance
Plan to implement a Director Stock Fee program:
Votes For 7,955
Votes Against 400,113
Votes Withheld 10,312
Broker Non-Votes 64,896
(3) To amend the Company's Restated Certificate of
Incorporation to increase the number of authorized shares of the Company's
Common Stock:
Votes For 7,834,529
Votes Against 589,608
Votes Withheld 6,632
(4) To amend the Company's Restated Certificate of
Incorporation to increase the number of authorized shares of the Company's
preferred Stock:
Votes For 7,675,593
Votes Against 682,348
Votes Withheld 7,932
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Item 6. Exhibits and Reports on Form 8-K
A. Exhibits - The following exhibits are filed
herewith or incorporated herein.
1. Calculation of earnings/(loss) per share - Three months
ended June 30, 1996 and 1995
2. Calculation of earnings/(loss) per share - Six months
ended June 30, 1996 and 1995
B. Reports on Form 8-K
1. No reports on Form 8-K were filed during the quarter
for which this report is filed.
-15-
<PAGE>
EXHIBIT 11
U.S. HOMECARE CORPORATION
CALCULATION
OF LOSS PER SHARE
For the Three Months Ended June 30, 1996
Primary
Net loss ($608,000)
Weighted average number of common shares 8,645,000
Loss per share ($0.07)
For the Three Months Ended June 30, 1995
Primary
Net loss ($337,000)
Weighted average number of common shares 8,136,000
Loss per share ($0.04)
-16-
<PAGE>
EXHIBIT 11 (continued)
U.S. HOMECARE CORPORATION
CALCULATION
OF LOSS PER SHARE
For the Six Months Ended June 30, 1996
Primary
Net loss ($1,176,000)
Weighted average number of common shares 8,601,000
Loss per share ($0.14)
For the Six Months Ended June 30, 1995
Primary
Net loss ($1,311,000)
Weighted average number of common shares 8,167,000
Loss per share ($0.16)
-17-
<PAGE>
U.S. HOMECARE CORPORATION
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.
U.S. HomeCare Corporation
May 14, 1996 G. Robert O'Brien
- --------------------------- ------------------------------------------
Date President and Chief Executive Officer
(Principal Executive Officer)
May 14, 1996 Gerald J. Boisvert, Jr.
- --------------------------- ------------------------------------------
Date Vice President, Finance and Chief
Financial Officer (Principal Financial
Officer)
-18-
<PAGE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
COMPANY'S UNAUDITED FINANCIAL STATEMENTS DATED AS OF MARCH 31, 1996 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> DEC-31-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> MAR-31-1996
<CASH> 378
<SECURITIES> 0
<RECEIVABLES> 16,901
<ALLOWANCES> 2,611
<INVENTORY> 0
<CURRENT-ASSETS> 16,573
<PP&E> 11,760
<DEPRECIATION> 8,324
<TOTAL-ASSETS> 35,956
<CURRENT-LIABILITIES> 17,390
<BONDS> 0
0
328
<COMMON> 88
<OTHER-SE> 14,930
<TOTAL-LIABILITY-AND-EQUITY> 35,956
<SALES> 16,871
<TOTAL-REVENUES> 16,871
<CGS> 0
<TOTAL-COSTS> 10,847
<OTHER-EXPENSES> 5,097
<LOSS-PROVISION> 362
<INTEREST-EXPENSE> 258
<INCOME-PRETAX> (539)
<INCOME-TAX> 29
<INCOME-CONTINUING> (568)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (568)
<EPS-PRIMARY> 0.07
<EPS-DILUTED> 0
</TABLE>
