UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D. C. 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, 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 0-19824
Nutrition Management Services Company
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(Exact name of registrant as specified in its charter)
Pennsylvania 23-2095332
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(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
Box 725, Kimberton Road, Kimberton, PA 19442
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (610) 935-2050
N/A
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Former name, former address and former fiscal year, if change 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 Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the Registrant was
required to file such report), and (2) has been subject to such filing
requirements for the past 90 days Yes /X/ No / /.
2,747,000 Shares of Registrant's Class A Common Stock, with no par value, and
100,000 shares of Registrant's Class B Common Stock, with no par value, are
outstanding as of November 12, 2000.
<PAGE>
TABLE OF CONTENTS
Part I. Financial Information Page No.
--------------------- --------
Consolidated Balance Sheets of
September 30, 2000 (unaudited) and June 30, 2000 2 - 3
Consolidated Statements of Operations for the Three
Months Ended September 30, 2000 (unaudited) and
1999 (unaudited) 4
Consolidated Statements of Cash Flows for the Three
Months Ended September 30, 2000 (unaudited) and
1999 (unaudited) 5
Notes to Financial Statements 6
Management's Discussion and Analysis of Financial Condition
and Results of Operations 7 - 9
Part II. Other Information 10
Signatures 11
-1-
<PAGE>
NUTRITION MANAGEMENT SERVICES COMPANY
CONSOLIDATED BALANCE SHEETS
ASSETS
<TABLE>
<CAPTION>
September 30, June 30,
2000 2000
(unaudited)
Current assets:
<S> <C> <C>
Cash and cash equivalents $642,164 $1,134,720
Accounts receivable, net of allowance for doubtful
accounts of $1,008,272 and 853,005, respectively 7,958,350 6,837,269
Accrued Income 441,815 595,228
Deferred income taxes 534,022 534,022
Inventory 217,190 227,379
Prepaid and other 357,797 460,903
---------- ----------
Total current assets 10,151,338 9,789,521
---------- ----------
Property and equipment, net 9,460,457 9,570,651
---------- ----------
Construction in Progress 28,410 12,810
---------- ----------
Other assets:
Advances to employees 324,178 302,221
Deferred income taxes 242,503 242,503
Bond issue costs 235,486 239,128
Deferred costs and other assets 10,021 10,020
---------- ----------
812,188 793,872
---------- ----------
Total other assets $20,452,393 $ 20,166,854
========== ==========
</TABLE>
See Notes to Unaudited Consolidated Financial Statements
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<PAGE>
NUTRITION MANAGEMENT SERVICES COMPANY
CONSOLIDATED BALANCE SHEETS
LIABILITIES AND STOCKHOLDERS' EQUITY
<TABLE>
<CAPTION>
September 30, June 30,
2000 2000
(unaudited)
Current liabilities:
<S> <C> <C>
Accounts payable $ 4,680,360 $ 3,970,660
Accrued expenses 655,544 541,346
Accrued payroll and related expenses 374,859 350,547
Accrued professional 39,626 48,450
Accrued income taxes 44,639 18,466
Current portion of long-term debt 174,000 174,000
Other 173,703 131,953
----------- -----------
Total current liabilities 6,142,731 5,235,422
----------- -----------
Long-Term liabilities:
Long-term debt, net of current portion 6,134,657 6,598,668
Long-term note payable 1,319,869 1,404,116
Other 19,823 26,414
----------- -----------
Total long-term liabilities 7,474,349 8,029,198
----------- -----------
Stockholders' equity:
Undesignated preferred stock - no par, 2,000,000 shares authorized, none
issued or outstanding ----- -----
Common stock:
Class A - no par, 10,000,000 shares authorized; 3,000,000 issued
2,747,000 and 2,747,000 outstanding, respectively 3,801,926 3,801,926
Class B - no par, 100,000 shares authorized, issued and outstanding 48 48
Retained earnings 3,532,902 3,599,823
--------- ---------
7,334,876 7,401,797
Less: treasury stock (Class A common: 253,000 and 253,000
shares, respectively) - at cost (499,563) (499,563)
--------- ---------
Total stockholders' equity 6,835,313 6,902,234
--------- ---------
$ 20,452,393 $ 20,166,854
============ ============
</TABLE>
See Notes to Unaudited Consolidated Financial Statements
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<PAGE>
NUTRITION MANAGEMENT SERVICES COMPANY
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
<TABLE>
<CAPTION>
Three months ended
September 30,
2000 1999
<S> <C> <C>
Food Service Revenue $12,192,563 $9,782,518
Cost of Operations
Payroll and related expenses 3,755,366 4,024,940
Other costs of operations 6,455,074 4,002,323
----------- ----------
Cost of operations 10,210,440 8,027,263
----------- ----------
Gross Profit 1,982,123 1,755,255
------------ ----------
Expenses
General and administrative expenses 1,563,123 1,586,681
Depreciation and amortization 156,272 205,263
Provision for doubtful accounts 180,000 80,000
----------- ----------
Expenses 1,899,395 1,871,944
----------- ----------
Income/(Loss) from operations 82,728 (116,689)
----------- ----------
Other income (expense)
Other 6,115 22,764
Interest income 12,160 18,913
Interest expense (144,591) (138,430)
----------- ----------
Other income (expense) - net (126,316) (96,753)
----------- ----------
Loss before income taxes (43,588) (213,442)
Provision for income taxes 23,334 10,000
----------- ----------
Net loss ($66,922) ($223,442)
----------- ----------
Net loss per share - basic and diluted ($0.02) ($0.08)
=========== ==========
Weighted average number of shares 2,847,000 2,847,000
=========== ==========
</TABLE>
See Notes to Unaudited Consolidated Financial Statements
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<PAGE>
Nutrition Management Services Company
Consolidated Statement of Cash Flows
(Unaudited)
<TABLE>
<CAPTION>
Three Months -Ended
September 30,
2000 1999
Operating activities:
<S> <C> <C>
Net loss ($66,922) ($223,442)
Adjustments to reconcile net loss to net cash provided by (used in)
operating activities:
Depreciation and amortization 146,039 205,263
Provision for bad debts 180,000 (6,592)
Amortization of deferred gain (6,591) 80,000
Amortization of bond costs 3,642 3,641
Changes in assets and liabilities:
Accounts receivable (1,301,081) 1,243,988
Accrued Income 153,413 (143,149)
Inventory and other 113,295 (50,620)
Accounts payable 709,700 7,080
Accrued expenses 114,198 50,268
Accrued payroll and related expenses 24,312 12,807
Accrued professional (8,824) (30,139)
Accrued incomes taxes 26,173 12,181
Other 41,750 (16,018)
---------- ---------
Net cash provided by operating activities 129,104 1,145,268
---------- ---------
Investing activities:
Repayment (Advances) to employees (21,957) 38,086
Purchase of property and equipment, (net) (51,445) (168,501)
Deferred costs 0 4,712
---------- ---------
Net cash (used in) investing activities (73,402) (125,703)
---------- ---------
Financing activities:
Repayments of long-term debt (1,150,000) -----
Repayments of long-term note payable third party debt (84,294) -----
Repayments of term loan (13,964) -----
Proceeds from line of credit 700,000 -----
---------- ---------
Net cash (used in) financing activities (548,258) -----
---------- ---------
Net increase(decrease) in cash (492,556) 1,019,565
---------- ---------
Cash and cash equivalents - beginning of period 1,134,720 43,282
Cash and cash equivalents - end of period $ 642,164 $1,062,847
========= ==========
Supplemental disclosure of cash flow information:
Cash paid during the period for:
Interest $90,721 $136,028
Income taxes $200 $3,300
</TABLE>
See Notes to Unaudited Consolidated Financial Statements
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<PAGE>
NUTRITION MANAGEMENT SERVICES COMPANY
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
September 30,2000
1. Basis of Presentation
The accompanying unaudited consolidated financial statements
were prepared in accordance with generally accepted accounting
principles for interim financial information for quarterly
reports on Form 10-Q and, therefore, do not include all of the
information and footnotes required by generally accepted
accounting principles for complete financial statements.
However, all adjustments that, in the opinion of management are
necessary for fair presentation of the financial statements,
have been included. The results of operations for the interim
periods presented are not necessarily indicative of the results
that may be expected for the entire fiscal year ending June 30,
2001. The financial information presented should be read in
conjunction with the Company's financial statements that were
filed under Form 10-K.
2. Earnings Per Common Share
Earnings per common share amounts are based on the
weighted-average number of shares of common stock outstanding
during the three-month period ending September 30, 2000 and
1999. Stock options and warrants did not impact earnings per
share each period as they were anti-dilutive.
3. Litigation
In the normal course of its business, the Company is exposed to
asserted and unasserted claims. In the opinion of management,
the resolution of these matters will not have a material
adverse effect on the Company's financial position, results of
operations or cash flows.
During 1998, the Company adopted the provisions of SFAS No.
123, Earnings Per Share, which eliminates primary and fully
diluted earning per share and requires presentation of basic
and diluted earnings per share in conjunction with the
disclosure of the methodology used in computing such earnings
per share. Basic earnings per share excludes dilution and is
computed by dividing income available to common shareholders by
the weighted average common shares outstanding during the
period. Diluted earnings per share takes into account the
potential dilution that could occur if securities or other
contracts to issue common stock were exercised and converted
into common stock.
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<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
The following discussion and analysis should be read in
conjunction with the financial statements and notes thereto.
Results of Operations
Revenues for the quarter ended September 30, 2000 were
$12,192,563, an increase of $2,410,045 or 24.6% compared to revenues of
$9,782,518 in the corresponding quarter last year. The increases are a result of
new contracts and growth within existing contracts, offset by contracts canceled
during the period.
Cost of operations provided for the current quarter was $10,210,440,
compared to $8,027,263 for similar expenses in the same period last year, an
increase of $2,183,177 or 27.2%. These increases in costs of services provided
are due to increased operating and start up costs associated with new business.
Gross Profit for the quarter was $1,982,123, compared to
$1,755,255, an increase of $226,868 or 12.9%. As a percentage of revenue, gross
profit decreased from 17.9% to 16.2%. This decrease is due to direct expenses
increasing at a greater percentage than revenues.
General and administrative expenses for the quarter were 12.8%
of revenue, compared to 16.2% of revenue for the same quarter last year, a
decrease of $23,558 or 1.5%. The decrease is the result of the general and
administrative expenses remaining constant while revenue increased over 1999.
Interest expense for the three-month period totaled
$144,591compared to $138,430 for the same period last year. The increase in
interest expense is attributable to an increase in interest rates offset by a
decrease in borrowings.
Net loss after taxes for the quarter ended September 30, 2000
was ($66,922) compared to ($223,442) for the corresponding quarter last year.
Net loss per share for the current quarter was ($0.02) compared to net loss per
share of ($0.08) for the same quarter last year. The decrease in current quarter
net loss and earnings per share are primarily the result of the increase in
revenues for the current quarter.
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<PAGE>
Liquidity and Capital Resources
At September 30, 2000 the Company had working capital of
$4,008,607.
Operating Activities. Cash provided by operations for the three
months ended September 30, 2000 was $129,104 compared to $1,145,268 provided by
operations for the three months ended September 30, 1999. An increase in current
liabilities and noncash items of $1,430,185 offset by an increase in accounts
receivable of $1,301,081 was primarily responsible for the current quarter's
activity.
Investing Activities. Investing activities consumed $73,402 in
cash in the current quarter compared to $125,703 in cash consumed in the same
period last year. This use of cash is associated with the purchase of property
and equipment.
Financing Activities. Current quarter financing activities
consumed $548,258 in cash compared to $-0-consumed in the same period last year.
Net repayments to the line of credit of $450,000 and long term debt of $98,258
is responsible for the use of cash.
Capital Resources. The Company has certain credit facilities
with its bank including a line of credit and two industrial revenue bond issues.
The Company obtained two series of Industrial Development Bonds totaling
$3,560,548 in December 1996. The Company is current with all its obligations to
its Bank and on its bonds and has met all financial covenants in its loan
documents except those that were specifically waived by the bank.
A substantial portion of the Company's revenues are dependent
upon the payment of its fees by customer healthcare facilities, that, in turn,
are dependent upon third-party payers such as state governments, Medicare and
Medicaid. Delays in payment by third-party payers, particularly state and local
governments, may lead to delays in collection of accounts receivable.
The Company has no material commitments for capital
expenditures, including the Collegeville Inn & Conference Center, and believes
that its cash from operations, existing balances, and available credit
facilities are adequate for the foreseeable future to satisfy the needs of its
operations.
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<PAGE>
Forward Looking Statements
This form 10-Q contains forward-looking statements within the meaning of Section
27A of the Securities Act of 1933, as amended and Section 21E of the Securities
Exchange Act of 1934, as amended, that are intended to be covered by the safe
harbors created thereby. Investors are cautioned that all forward-looking
statements involve risks and uncertainty, including without limitation, the
adequacy of the Company's cash from operations, existing balances and available
credit line. Although the Company believes that the assumptions underlying the
forward-looking statements contained herein are reasonable, any of the
assumptions could be inaccurate, and therefore, there can be no assurance that
the forward-looking statements included in this Form 10-Q will prove to be
accurate. In light of significant uncertainties inherent in the forward-looking
statements included herein, the inclusion of such information should not be
regarded as a representation by the Company or any other person that the
objectives and plans of the Company will be achieved.
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<PAGE>
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 27
(b) Reports on Form 8-K None
- 10 -
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of
1934, the Company has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
Nutrition Management Services Company
/s/ Joseph V. Roberts
-------------------------------
Joseph V. Roberts
Chairman and Chief Executive Officer
Date: November 20, 2000
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