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 period ended September 30, 1997
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Commission File Number: 1-14316
APRIA HEALTHCARE GROUP INC.
(Exact name of registrant as specified in its charter)
DELAWARE 33-0488566
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification Number)
3560 HYLAND AVENUE, COSTA MESA, CA 92626
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (714)427-2000
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
----- -----
There were 51,517,255 shares of Common Stock, $.001 par value, outstanding
at November 11, 1997.
<PAGE>
APRIA HEALTHCARE GROUP INC.
FORM 10-Q
For the period ended September 30, 1997
PART I. FINANCIAL INFORMATION
- ------------------------------
Item 1. Financial Statements (unaudited)
Consolidated Balance Sheets
Consolidated Statements of Operations
Consolidated Statements of Cash Flows
Notes to Consolidated Financial Statements
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations
PART II. OTHER INFORMATION
- ---------------------------
Item 1. Legal Proceedings
Item 2. Changes in Securities
Item 3. Defaults Upon Senior Securities
Item 4. Submission of Matters to a Vote of Security
Holders
Item 5. Other Information
Item 6. Exhibits and Reports on Form 8-K
SIGNATURES
- ----------
<PAGE>
<TABLE>
APRIA HEALTHCARE GROUP INC.
CONSOLIDATED BALANCE SHEETS
ASSETS
<CAPTION>
September 30, December 31,
1997 1996
---------- ------------
(Unaudited)
(Dollars in thousands)
<S> <C> <C>
CURRENT ASSETS
Cash $ 26,573 $ 26,930
Accounts receivable, less allowance for
doubtful accounts of $68,967 and
$73,809 at September 30, 1997 and
December 31, 1996, respectively 301,670 335,616
Inventories 34,079 55,733
Deferred income taxes 38,498 31,106
Refundable and prepaid income taxes 9,153 34,598
Prepaid expenses and other current
assets 10,159 9,764
--------- ---------
TOTAL CURRENT ASSETS 420,132 493,747
PATIENT SERVICE EQUIPMENT, less
accumulated depreciation of $254,989
and $229,684 at September 30, 1997 and
December 31, 1996, respectively 199,872 213,602
PROPERTY, EQUIPMENT AND IMPROVEMENTS, NET 114,403 120,030
COVENANTS NOT TO COMPETE, NET 13,530 17,054
GOODWILL, NET 291,241 295,536
OTHER ASSETS 2,527 9,141
--------- ---------
$1,041,705 $1,149,110
========= =========
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Accounts payable $ 63,514 $ 83,619
Accrued payroll and related taxes
and benefits 25,338 34,850
Other accrued liabilities 39,893 51,699
Current portion of long-term debt 9,582 11,588
--------- --------
TOTAL CURRENT LIABILITIES 138,327 181,756
LONG-TERM DEBT 573,772 623,276
DEFERRED INCOME TAXES 17,446 1,143
STOCKHOLDERS' EQUITY
Preferred Stock, $.001 par value:
10,000,000 shares authorized;
none issued - -
Common Stock, $.001 par value:
150,000,000 shares authorized;
51,506,655 and 51,203,450 shares
issued and outstanding at September
30, 1997 and December 31, 1996,
respectively 51 51
Additional paid-in capital 323,625 319,950
Retained (deficit) earnings (11,516) 22,934
--------- ---------
312,160 342,935
COMMITMENTS AND CONTINGENCIES - -
--------- ---------
$1,041,705 $1,149,110
========= =========
</TABLE>
See notes to consolidated financial statements.
<PAGE>
<TABLE>
APRIA HEALTHCARE GROUP INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
<CAPTION>
Three Months Ended Nine Months Ended
September 30, September 30,
----------------- -----------------
1997 1996 1997 1996
------ ------ ------ ------
(in thousands, except per share data)
<S> <C> <C> <C> <C>
Net revenues $304,356 $306,026 $913,954 $907,908
Costs and expenses:
Cost of net revenues 104,650 93,917 337,792 284,951
Selling, distribution and
administrative 151,782 147,584 449,148 433,021
Provision for doubtful
accounts 15,194 15,118 101,141 42,976
Amortization of intangible
assets 4,256 4,176 12,633 12,627
------- ------- ------- -------
275,882 260,795 900,714 773,575
------- ------- ------- -------
OPERATING INCOME 28,474 45,231 13,240 134,333
Interest expense 12,288 12,816 37,779 35,927
------- ------- ------- -------
INCOME (LOSS) BEFORE TAXES 16,186 32,415 (24,539) 98,406
Income taxes - 11,666 9,911 35,423
------- ------- ------- -------
NET INCOME (LOSS) $ 16,186 $ 20,749 $(34,450)$ 62,983
======= ======= ======= =======
Income (loss) per common and
common equivalent share $ 0.31 $ 0.40 $ (0.67) $ 1.20
======= ======= ======= =======
Weighted average number of
common and common equivalent
shares outstanding 51,894 52,257 51,384 52,276
Income (loss) per common and
common equivalent share assuming
full dilution $ 0.31 $ 0.40 $ (0.67) $ 1.20
======= ======= ======= =======
Weighted average number of common
and common equivalent shares
outstanding 51,895 52,257 51,384 52,351
</TABLE>
See notes to consolidated financial statements.
<PAGE>
<TABLE>
APRIA HEALTHCARE GROUP INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
<CAPTION>
Nine Months Ended
September 30,
-----------------------
1997 1996
------ ------
(Dollars in thousands)
<S> <C> <C>
OPERATING ACTIVITIES
Net (loss) income $ (34,450) $ 62,983
Items included in net (loss) income
not requiring (providing) cash:
Provision for doubtful accounts 101,141 42,976
Provision for excess/obsolete
equipment 23,000 513
Depreciation 89,076 65,937
Amortization of intangible assets 12,633 12,627
Amortization of deferred debt costs 860 793
Loss on sale of property,
equipment and improvements 202 165
Gain on sale of short-term investment (1,350) -
Gain on disposition of assets (448) -
Deferred income taxes 8,911 12,712
Changes in operating assets and
liabilities, net of effects of
acquisitions:
Increase in accounts receivable
(before bad debt writeoffs) (66,085) (138,915)
Decrease (increase) in inventories 1,220 (16,452)
Decrease in prepaids and other assets 25,118 18,659
Decrease in accounts payable (20,105) (24,755)
Decrease in accrued payroll
and other liabilities (22,250) (16,962)
Net purchases of patient service
equipment, net of effects of
acquisitions (51,795) (84,462)
Other 95 1,106
-------- --------
NET CASH PROVIDED BY (USED IN)
OPERATING ACTIVITIES 65,773 (63,075)
INVESTING ACTIVITIES
Purchases of property, equipment
and improvements, net of effects
of acquisitions (17,561) (40,579)
Proceeds from sale of property,
equipment and improvements 289 168
Proceeds on sale of short-term
investment 1,350 -
Proceeds on disposition of assets 5,196 -
Acquisitions and payments of
contingent consideration (3,862) (13,920)
-------- --------
NET CASH USED IN
INVESTING ACTIVITIES (14,588) (54,331)
FINANCING ACTIVITIES
Proceeds under revolving credit
facility 129,950 686,900
Payments under revolving credit
facility (174,950) (568,200)
Payments of senior and other
long-term debt (9,411) (8,606)
Capitalized debt costs, net (711) (1,296)
Issuances of Common Stock 3,580 14,825
-------- --------
NET CASH (USED IN) PROVIDED BY
FINANCING ACTIVITIES (51,542) 123,623
-------- --------
NET (DECREASE) INCREASE IN CASH (357) 6,217
Cash at beginning of period 26,930 18,829
-------- --------
CASH AT END OF PERIOD $ 26,573 $ 25,046
======== ========
</TABLE>
See notes to consolidated financial statements.
<PAGE>
APRIA HEALTHCARE GROUP INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE A - BASIS OF PRESENTATION
The accompanying consolidated financial statements include the accounts of
Apria Healthcare Group Inc. ("the Company") and its subsidiaries. All
significant intercompany transactions and accounts have been eliminated.
In the opinion of management, all adjustments, consisting of normal
recurring accruals necessary for a fair presentation of the results of
operations for the interim periods presented, have been reflected herein.
The results of operations for interim periods are not necessarily
indicative of the results to be expected for the entire year. For further
information, refer to the consolidated financial statements and footnotes
thereto for the year ended December 31, 1996, filed with the Company's 1996
Form 10-K.
NOTE B - RECLASSIFICATIONS AND USE OF ACCOUNTING ESTIMATES
Certain amounts from prior periods have been reclassified to conform to the
current year presentation.
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make assumptions that
affect the amounts reported in the financial statements and accompanying
notes. Such amounts include, among others, the allowance for doubtful
accounts, patient service equipment reserves, other asset valuation
allowances and certain liabilities. Management periodically re-evaluates
the estimates inherent in certain financial statement amounts and may
adjust accordingly. In the second quarter of 1997, Management estimated
and recorded a $20,000,000 adjustment to reduce accounts receivable and net
revenues, a $55,000,000 adjustment to increase the allowance for doubtful
accounts and a $23,000,000 adjustment to provide for inventory and patient
service equipment losses. Actual results could differ from the estimates.
NOTE C - INCOME TAXES
No tax benefit will be recognized in the third quarter of the current
fiscal year because the tax losses will be carried forward. The nine month
tax provision of $9,911,000 primarily represents an increase in the
Company's valuation allowance for deferred tax assets.
NOTE D - BUSINESS COMBINATIONS
The Company periodically makes acquisitions of complementary businesses in
specific geographic markets. Acquisitions that closed during the nine
month period ended September 30, 1997 resulted in cash payments of
approximately $3,424,000.
On January 30, 1997, after obtaining a release from the Omnicare Board of
Directors, the Company sold all its 1,875,000 ordinary shares of Omnicare
plc, a public limited company incorporated under the laws of England, to a
former director. The Company had accounted for this investment using the
equity method. Cash proceeds from the sale were $2,791,000, which resulted
in a gain of $1,232,000.
On March 14, 1997, the Company sold M&B Ventures, Inc., its Medicare-
certified home health agency, which operated in South Carolina under the
assumed business names of Doctors Home Health and Advanced Care Service, to
North Trident Regional Hospital, Inc., a subsidiary of Columbia/HCA
Healthcare Corporation. Cash proceeds from the sale were $2,400,000,
resulting in a loss on the sale of $784,000. The operations of Doctor's
Home Health and Advanced Care Service had revenues of $1,356,000 and
$5,536,000 for the nine months ended September 30, 1997 and 1996.
NOTE E - RESTRUCTURING COSTS
In connection with the 1995 merger between Abbey Healthcare Group
Incorporated and Homedco Group, Inc., the Company adopted a plan to
restructure and consolidate its operating locations and administrative
functions within specific geographic areas. The plan, which was completed
by September 1996, resulted in a restructuring charge in 1995 of
approximately $68,304,000, consisting of accrued costs and impairments.
The following table summarizes amounts paid during the nine months ended
September 30, 1997 and the remaining accrual at September 30, 1997.
Accrual at December 31, 1996 $7,131,000
Severance amounts paid through September 30, 1997 (1,841,000)
Other amounts paid through September 30, 1997 (3,156,000)
----------
Accrual at September 30, 1997 $2,134,000
==========
The remaining accrual balance consists of $40,000 for severance and related
personnel costs and $2,094,000 for branch and billing center closure costs.
NOTE F - LONG-TERM DEBT
The Credit Agreement between the Company and a syndicate of banks was
amended in April 1997 and further amended in July 1997. The loan facility
was reduced from $800,000,000 to $600,000,000, amounts available for
acquisitions were reduced and tighter restrictions were imposed on
dividends and other distributions.
The applicable margin range on the London Interbank Offered Rate ("LIBOR")
interest rate option was increased to a high of 1.5% per annum and a low of
.5% per annum. Certain nonrecurring charges and resulting net losses (as
defined by the agreement) will be excluded from the calculation of certain
financial ratios when determining covenant compliance.
In August 1997, the Company's counterparty to an 18-month swap agreement
covering $280,000,000 in notional principal, exercised its option to
terminate after one year.
The Company added letters of credit totaling $1,000,000 in June 1997 and
$7,500,000 in September 1997. Total letters of credit outstanding at
September 30, 1997 amounted to $8,970,000.
Subsequent to September 30, 1997, the Company entered into new leases in
order to upgrade computer systems, and refinanced existing capital lease
obligations. These transactions resulted in a net increase to debt of
$7,435,000.
NOTE G - EARNINGS PER SHARE
In February 1997, the Financial Accounting Standards Board issued Statement
No. 128, Earnings per Share, which is required to be adopted by the Company
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 for the periods presented herein is not expected to be
material.
NOTE H - EQUITY
The change in stockholders' equity, other than from net loss, resulted
primarily from the exercise of stock options. For the nine months ended
September 30, 1997, proceeds from the exercise of stock options amounted to
$3,580,000.
NOTE I - COMMITMENTS AND CONTINGENCIES
The Company is engaged in the defense of certain claims and lawsuits
arising out of the ordinary course and conduct of its business, the outcome
of which are not determinable at this time. The Company has insurance
policies covering such potential losses where such coverage is cost
effective. In the opinion of management, any liability that might be
incurred by the Company upon the resolution of these claims and lawsuits
will not, in the aggregate, have a material adverse effect on the
consolidated results of operations or financial position of the Company.
<PAGE>
CAUTIONARY STATEMENT FOR PURPOSES OF THE "SAFE HARBOR" PROVISIONS OF THE
PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995: The Company's business
is subject to a number of risks, some of which are beyond the Company's
control. The Company has described certain of those risks in its Current
Report on Form 8-K as filed with the Securities and Exchange Commission on
June 26, 1997. Such report may be used for purposes of the Private
Securities Litigation Reform Act of 1995 as a readily available document
containing meaningful cautionary statements identifying important factors
that could cause actual results to differ materially from those projected
in any forward-looking statements the Company may make from time to time.
These risks include whether the Company will be able to resolve issues
pertaining to the collectibility of its accounts receivable, pricing
pressures (including changes in governmental reimbursement levels), the
impact of healthcare reform proposals, the effect of federal and state
healthcare regulations, the highly competitive market, recent losses, the
concentration of large payors and dependence on relationships with third
parties.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
In June 1997, the Company announced that it retained an investment banking
firm as its financial advisor to explore strategic alternatives to enhance
shareholder value, including the possible sale, merger, or recapitalization
of the Company. The Company continues to work closely with the investment
firm and a group of interested parties. This process has given rise to
some uncertainty within the Company's workforce, the impact of which is
difficult to determine, but undoubtedly has shifted focus away from the
Company's operational priorities, which may have impacted its financial
results.
The Company has also commenced a restructuring of its operations to focus
more fully on the core business lines of respiratory therapy, home infusion
therapy and home medical equipment. The lower-margin medical supply and
home health nursing lines will be phased out over the remainder of 1997 and
early 1998.
Results of Operations
- ----------------------
Net Revenues: Net revenues decreased 0.5% to $304.4 million for the third
quarter of 1997 compared with $306.0 million for the same quarter last
year. For the nine months ended September 30, 1997, net revenues were
$914.0 million compared with $907.9 million for the same period last year,
representing a 0.7% increase. The decrease in the third quarter of 1997
compared to the third quarter of 1996 reflects the Company's decision to
phase out the non-core business. The nine-month period ended September 30,
1997 reflects a charge taken in the second quarter of 1997 to provide for
estimated revenue adjustments of $20 million. Revenue adjustments result
from (1) incorrect contract prices entered upon service delivery due to
complex contract terms, a biller's lack of familiarity with a contract or
payor or an incorrect system price, (2) subsequent changes to estimated
revenue amounts for services not covered by a preexisting contract, and (3)
failure subsequent to service delivery to qualify a patient for
reimbursement due to lack of authorization or a missed filing or appeal
deadline [see Liquidity and Capital Resources]. The minimal increase in
net revenues in the nine-month period of 1997 versus the same period last
year reflects slow volume growth and price competition in the managed care
environment.
In August 1997, the Balanced Budget Act of 1997 was adopted which includes
several provisions affecting Medicare reimbursement for home medical
equipment and services. Reimbursement for home oxygen services will be
reduced by 25% in 1998 and an additional 5% in 1999 and subsequent years.
The Company estimates that the impact of this reduction on 1998 revenues
will be $60 to $65 million. Also effective January 1, 1998, Consumer Price
Index-based reimbursement increases on durable medical equipment will be
frozen through 2002.
Gross Profit: Gross margins for the third quarter and the nine months
ended September 30, 1997 were 65.6% and 63.0%, respectively, compared with
69.3% and 68.6% for the same periods last year. The nine-month period in
1997 reflects a $23 million charge taken in the second quarter to provide
for losses in inventory and patient service equipment and the $20 million
revenue adjustment previously described. The variance between the three-
month periods is partially attributable to a reduction in cost of sales
recognized in the third quarter of 1996 resulting from a change in the
depreciable lives of certain classes of patient service equipment.
Another factor contributing to the decline in gross margins is the
Company's participation in the managed care environment. The intense
pressure by employers on managed care organizations leads to greater price
pressure on subcontracted providers such as the Company. Also, in response
to requests from the managed care market the Company has been offering a
broad range of products and services, including lower-margin services and
supplies. To address this downward pressure on gross margins, the Company
has recently adopted numerous initiatives, the most significant of which is
the decision to exit the lower-margin medical supply and home health
nursing lines. The Company is currently working with its customers and
patients to ensure that their needs for these products and services are
being met during this transitional period. Prior to this decision,
management initiated a contract assessment process whereby the Company's
top revenue-producing accounts were reviewed for profitability. The
objective of the review was to identify contracts which could be
renegotiated to obtain better terms, improve business mix and eliminate
those not meeting acceptable profitability levels. The review phase of
contracts representing approximately $300 million in annual revenues has
been completed. Contracts representing about half of those revenues meet,
or will soon meet, the Company's standards; the remainder have been
identified for renegotiation.
Other initiatives the Company has pursued to improve its gross margins
include (1) phasing out of subrented patient service equipment, (2)
implementing sales incentives to focus on certain higher-margin products and
services and (3) implementing an infusion therapy formulary which limits
product choices to those which optimize gross margins. During the
last half of 1996 the Company established automated purchasing budgets to
more effectively control the purchase and use of patient service equipment
which has contributed to a $32.7 million reduction in net patient service
equipment purchases in the nine months ended September 30, 1997, as
compared to the same period last year. Further, now that all locations have
been converted to two standardized information systems (the primary system
captures activity for respiratory, home medical equipment/other; the
secondary system captures infusion activity), tools to better evaluate and
monitor product/service mix at individual branch levels are continually
being developed.
Selling, Distribution and Administrative: Selling, distribution and
administrative expenses expressed as percentages of net revenues for the
third quarter and nine months ended September 30, 1997 were 49.9% and
49.1%, respectively, compared with 48.2% and 47.7% for the same periods in
1996. The increase in 1997 versus the same periods in 1996 is due to an
increase in expenses, primarily attributable to increased staffing levels
in the functional areas of reimbursement, patient service and information
systems to address the problems the Company had been experiencing in
these areas [see Liquidity and Capital Resources]. Also impacting the
increase in selling, distribution and administrative expenses in the third
quarter of 1997 compared to the same period last year is the decrease in net
revenues.
Provision for Doubtful Accounts: The provision for doubtful accounts as a
percentage of net revenues for the third quarter and nine months ended
September 30, 1997 was 5.0% and 11.1%, respectively, compared to 4.9% and
4.7% for the same periods in the prior year. The nine-month period in 1997
reflects a charge of $55 million taken in the second quarter to increase
the allowance for doubtful accounts and reflects a more conservative
position taken on accounts in excess of 180 days. The change in estimate
was considered necessary by Management because the reduction in these
accounts had been slower than anticipated. The charge also reflects an
increase to the bad debt provision rate for accounts receivable aged less
than 180 days, necessitated by billing and collection difficulties that
continued into early 1997 [see Liquidity and Capital Resources].
Interest Expense: Interest expense for the third quarter in 1997 decreased
to $12.3 million compared to $12.8 million for the same period last year,
which correlates to a reduction in long-term debt between the periods.
Interest expense for the nine months ended September 30, 1997 increased to
$37.8 million, from $35.9 million for the same period last year, primarily
due to higher long-term debt levels. Long-term debt increased steadily
from early 1996 through early 1997, at which time it began to decline.
This trend resulted in higher average debt in the nine-month period ended
September 30, 1997 compared to the same period of the prior year [see
Liquidity and Capital Resources].
Income Taxes: The nine-month tax provision of $9.9 million primarily
represents an increase in the Company's valuation allowance for deferred
tax assets.
Liquidity and Capital Resources
- --------------------------------
Cash provided by the Company's operations was $65.8 million for the nine
months ended September 30, 1997, compared with $63.1 million used in
operations during the same period last year. The main reasons for the
significant improvement between the two periods are as follows: (1) a
decrease in the magnitude of the accounts receivable increase (before write-
offs) during the nine months ended September 30, 1997, as compared to the
same period in 1996, (2) the receipt of federal tax refunds in 1997 and (3)
a reduction in patient service equipment and inventory expenditures in the
first nine months of 1997 compared to the same period last year. The
higher equipment and inventory expenditures in 1996 were due to concerted
efforts by the Company to upgrade the quality of the asset base.
Accounts receivable, before allowance for doubtful accounts, decreased by
$38.8 million during the nine months ended September 30, 1997. The
decrease includes the impact of bad debt write-offs, net of recoveries,
totaling $109.1 million. Despite high levels of bad debt write-offs and
revenue adjustments, accounts in excess of 180 days at September 30, 1997
decreased by only $12.4 million since December 31, 1996. Days sales
outstanding (DSO - calculated as of each period-end by dividing accounts
receivable less allowance for doubtful accounts by the 90-day rolling
average of net revenues) decreased from 99 days at December 31, 1996 to 89
days at September 30, 1997 (after adjustments and write-offs). The primary
causes of the slower than expected (1) decline in accounts receivable in
excess of 180 days and (2) decrease in DSO are the residual effects of
the disruptions and delays in billing and collection activity associated
with the Company's conversion of its field locations to the standardized
information systems and a higher than normal turnover rate among billing
and collection personnel. These activities contributed to billing delays
and errors and, ultimately, difficulties in receiving timely
reimbursement.
Management's quarter-end accounts receivable analysis includes a review of
aging trends and the aggregate amounts and timing of cash applications, bad
debt write-offs and revenue adjustments. Based on such analyses,
Management estimated and recorded in the second quarter of 1997 a $20
million adjustment to reduce accounts receivable and net revenues and a $55
million adjustment to increase the allowance for doubtful accounts [see
Results of Operations]. The third quarter analysis revealed improvement in
some of the key trends, most notably cash applications.
Actions taken in 1996 to mitigate the impact of conversion disruptions and
employee turnover included, among others, a collection incentive program
with special emphasis on older accounts, hiring additional management-level
billing and collection personnel and reinforcement training for the billing
locations. Early in 1997, the Company took further steps to reduce the
incidence of billing errors including a process review of the field
information systems to identify opportunities to improve billing
processing, timeliness and accuracy, validation of system pricing files and
implementation of billing center audits to assess compliance with billing
practices and procedures. Further, in the second quarter of 1997, the
Company appointed an executive vice president of operations and reorganized
the reimbursement and information system functions.
Long-term debt, including current maturities, decreased by $51.5 million
from December 31, 1996 to September 30, 1997. In addition to the cash
provided by operations, the decrease in long-term debt can be attributed to
a reduction in property, plant and equipment expenditures and proceeds
received in certain sale transactions described below. Subsequent to
September 30, 1997, the Company entered into leases totaling $7.4 million
to upgrade its computer hardware.
On January 30, 1997, after obtaining a release from the Omnicare Board of
Directors, the Company sold all its 1,875,000 ordinary shares of Omnicare
plc, a public limited company incorporated under the laws of England, to a
former director. Cash proceeds from the sale were $2.8 million, which
resulted in a gain of $1.2 million.
On March 14, 1997, the Company sold M&B Ventures, Inc., its last remaining
Medicare-certified home health agency (which operated in South Carolina
under the assumed business names of Doctors Home Health and Advanced Care
Service) to North Trident Regional Hospital, Inc., a subsidiary of
Columbia/HCA Healthcare Corporation. Cash proceeds from the sale were $2.4
million, resulting in a loss on the sale of approximately $784,000.
On September 30, 1997, the Company exercised its warrants to purchase
248,000 shares of common stock of Living Centers of America, Inc. The
subsequent sale resulted in net proceeds and income of $1.4 million.
In anticipation of a planned merger with Vitas Healthcare Corporation, the
Company entered into a credit agreement in August 1996 which provided a
revolving loan facility of up to $800 million. Because the merger was
never consummated and due to declining long-term debt levels and commitment
fees assessed on the unused portion of the credit line, the Company decided
to reduce the facility to $600 million effective July 31, 1997. Amendments
to the Company's credit agreement were executed on April 22, 1997 and July
31, 1997 which, in addition to reducing the loan facility, allow the
exclusion of certain nonrecurring charges (as defined by the agreement)
from the computation of certain financial covenant ratios and increase the
margin range applicable to rates based on the London Interbank Offered
Rate.
In August 1997, the Company's counter-party to an 18-month swap agreement
covering $280 million in notional principal, exercised its option to
terminate the agreement after one year.
At September 30, 1997, the Company had $16.3 million invested in a money
market account.
Overall, the Company believes that cash provided by operations and amounts
available under its existing credit facilities will be sufficient to
finance its current operations for at least the next 12 months. At
September 30, 1997, availability under the credit facility was $216
million.
<PAGE>
PART II. OTHER INFORMATION
- --------------------------
Items 1-5. Not applicable
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits:
Exhibit
Number Description and Reference
------- -------------------------
10.1 Resignation and General Release Agreement dated
September 26, 1997, between Apria Healthcare Group
Inc. and Steven T. Plochocki.
11.1 Statement of Computation of Earnings per Share.
27.1 Financial Data Schedule.
(b) Reports on Form 8-K:
No reports on Form 8-K were filed during the quarter for
which this report is filed.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
APRIA HEALTHCARE GROUP INC.
------------------------------
Registrant
November 14, 1997 /s/ Lawrence H. Smallen
------------------------------
Lawrence H. Smallen
Chief Financial Officer,
Senior Vice President, Finance
and Treasurer
(Principal Financial Officer)
EXHIBIT 10.1
RESIGNATION AND GENERAL RELEASE AGREEMENT
THIS RESIGNATION AND GENERAL RELEASE AGREEMENT (this
"Agreement"), made as of the 26th day of September, 1997, by and
between Steven T. Plochocki, an individual ("Mr. Plochocki"), and
Apria Healthcare Group Inc., a Delaware corporation ("Apria"), is
a resignation agreement which includes a general release of
claims. In consideration of the covenants undertaken and the
releases contained in this Agreement, Mr. Plochocki and Apria
agree as follows:
1. Mr. Plochocki shall voluntarily resign from
his positions as President and Chief Operating Officer and as an
employee of Apria and all of its affiliates and subsidiaries by
executing Exhibit A attached hereto, such resignation to be
effective September 26, 1997.
2. Mr. Plochocki shall return to Apria and shall
not take or copy in any form or manner any financial information,
lists of customers, prices, and similar confidential and
proprietary materials or information of Apria.
3. Apria shall pay to Mr. Plochocki the
following amounts:
a. $921,450 in compensation, subject to
standard withholding for federal and state taxes, one-third
of which ($307,150) shall be payable in a lump sum on
October 6, 1997, and two-thirds of which (a total of
$614,300) shall be payable in accordance with Apria's
regular payroll procedures in 52 substantially equal
installments over a 24-month period ending on the first
regular payroll date after October 6, 1999; and
b. All earned but unpaid vacation pay, and
any salary amounts earned but not yet paid, payable as
promptly as practicable following October 6, 1997.
4. Neither this Agreement nor anything in this
Agreement shall be construed to be or shall be admissible in any
proceeding as evidence of an admission by Apria or Mr. Plochocki
of any violation of Apria's policies or procedures, or state or
federal laws or regulations. This Agreement may be introduced,
however, in any proceeding to enforce the Agreement. Such
introduction shall be pursuant to an order protecting its
confidentiality.
5. Except for (i) those obligations created by
or arising out of this Agreement for which receipt or satisfac
tion has not been acknowledged herein, (ii) any rights Mr.
Plochocki may have under stock option agreements with Apria and
any retirement, 401(k), SERP or similar benefit plans of Apria
(including the Abbey Healthcare Group Incorporated Employees'
Retirement Plan), and (iii) the continuing right to
indemnification as provided by applicable law or in Apria's
bylaws and articles of incorporation in connection with acts,
suits or proceedings by reason of the fact that he was an officer
or employee of Apria where the basis of the claims against him
consists of acts or omissions taken or made in such capacity, Mr.
Plochocki on behalf of himself, his descendants, dependents,
heirs, executors, administrators, assigns, and successors, and
each of them, hereby covenants not to sue and fully releases and
discharges Apria, and its predecessors, subsidiaries and
affiliates, past and present, and each of them, as well as its
and their trustees, directors, officers, agents, attorneys,
insurers, employees, stockholders, representatives, assigns, and
successors, past and present, and each of them, hereinafter
together and collectively (including Apria) referred to as the
"Apria Releasees," with respect to and from any and all claims,
wages, demands, rights, liens, agreements, contracts, covenants,
actions, suits, causes of action, obligations, debts, costs,
expenses, attorneys' fees, damages, judgments, orders and liabili
ties of whatever kind or nature in law, equity or otherwise,
whether now known or unknown, suspected or unsuspected, and
whether or not concealed or hidden, which he now owns or holds or
he has at any time heretofore owned or held as against the Apria
Releasees, arising out of or in any way connected with his
employment relationship with any Apria Releasee, or his voluntary
resignation from employment with the Apria Releasees or any other
transactions, occurrences, actions, omissions, claims, losses,
damages or injuries whatsoever, known or unknown, suspected or
unsuspected, resulting from any act or omission by or on the part
of any Apria Releasee committed or omitted prior to the date of
this Agreement, including, without limiting the generality of the
foregoing, any claim under Title VII of the Civil Rights Act of
1964, the Age Discrimination in Employment Act, the Americans
with Disabilities Act, the Family and Medical Leave Act of 1993,
the California Fair Employment and Housing Act, the California
Family Rights Act, or any claim for severance pay, bonus, sick
leave, holiday pay, vacation pay, life insurance, health or
medical insurance or any other fringe benefit, workers'
compensation or disability.
Except for those obligations created by or arising out
of this Agreement for which receipt or satisfaction has not been
acknowledged herein, and except as provided below, Apria on
behalf of itself and the Apria Releasees (to the extent the
matter in question arises on the basis of their relationship to
Apria) hereby acknowledges full and complete satisfaction of and
releases and discharges, and covenants not to sue, Mr. Plochocki
from and with respect to any and all claims, agreements, obliga
tions, losses, damages, injuries, demands and causes of action,
known or unknown, suspected or unsuspected, whether or not
concealed or hidden, arising out of or in any way connected with
Mr. Plochocki's employment relationship with any Apria Releasee
or his voluntary resignation from employment with the Apria
Releasees, or any other transactions, occurrences, actions,
omissions, claims, losses, damages or injuries whatsoever, known
or unknown, suspected or unsuspected, which Apria now owns or
holds or has at any time heretofore owned or held as against
Mr. Plochocki.
6. It is the intention of Apria and Mr.
Plochocki in executing this Agreement that the same shall be
effective as a bar to each and every claim, demand and cause of
action hereinabove specified. In furtherance of this intention,
Apria and Mr. Plochocki hereby expressly waive any and all rights
and benefits conferred upon them by the provisions of SECTION
1542 OF THE CALIFORNIA CIVIL CODE and expressly consent that this
Agreement shall be given full force and effect according to each
and all of its express terms and provisions, including those
related to unknown and unsuspected claims, demands and causes of
action, if any, as well as those relating to any other claims,
demands and causes of action hereinabove specified. SECTION 1542
provides:
"A GENERAL RELEASE DOES NOT EXTEND TO CLAIMS
WHICH THE CREDITOR DOES NOT KNOW OR SUSPECT TO EXIST IN
HIS FAVOR AT THE TIME OF EXECUTING THE RELEASE, WHICH
IF KNOWN BY HIM MUST HAVE MATERIALLY AFFECTED HIS
SETTLEMENT WITH THE DEBTOR."
Apria and Mr. Plochocki, and each of them, acknowledge that
either may hereafter discover claims or facts in addition to or
different from those which either or both of them now knows or
believes to exist with respect to the subject matter of this
Agreement and which, if known or suspected at the time of
executing this Agreement, may have materially affected this
settlement. Nevertheless, Apria and Mr. Plochocki each hereby
waive any right, claim or cause of action that might arise as a
result of such different or additional claims or facts. Apria
and Mr. Plochocki each acknowledge that it or he understands the
significance and consequence of such release and such specific
waiver of SECTION 1542.
7. Apria and Mr. Plochocki each agree that a
press release in substantially the form attached as Exhibit B
hereto shall be issued by Apria promptly following the execution
and delivery of this Agreement. Except to the extent disclosed
in such press release, the terms and conditions of this Agreement
shall remain confidential as between the parties and professional
advisers to the parties and neither of them shall disclose them
to any other person, except as provided herein or as required by
the rules and regulations of the Securities and Exchange
Commission ("SEC") or as otherwise may be required by law or
court order. Without limiting the generality of the foregoing,
neither Apria nor Mr. Plochocki will respond to or in any way
participate in or contribute to any public discussion concerning,
or in any way relating to, the execution of this Agreement or the
events which led to its execution. Except as provided above with
respect to SEC rules and regulations or as otherwise may be
required by law or court order, if inquiry is made of Apria
concerning any of the claims released by this Agreement or
relating to Mr. Plochocki's employment with Apria, Apria shall
provide to third parties only Mr. Plochocki's dates of employment
with Apria and its predecessors and his job titles during such
employment, in accordance with the normal practices of Apria's
human resources department.
8. Mr. Plochocki will continue to keep
confidential all confidential and proprietary Apria information,
as required by Section 10 of the Executive Severance Agreement
dated June 28, 1997 between Mr. Plochocki and Apria. Mr.
Plochocki also acknowledges the continuing effectiveness, in
accordance with their respective terms, of Sections 7, 8, 9, and
10 of said Executive Severance Agreement (without agreeing with
regard to whether or acknowledgment that said Sections 7 and 8 of
said Agreement are enforceable under California law) provided,
however, that Apria agrees that a violation of the non-compete
provisions of said Section 8 shall not result from any employment
of Mr. Plochocki by an employer substantially in the business of
providing home health agency intermittent nursing services, so
long as such employer is not also competing with Apria in the
respiratory therapy, home infusion or home medical equipment
business, and provided, further, that Apria shall not withhold
payments to Mr. Plochocki under this Agreement on the basis of a
breach or alleged breach by him of Section 7 or Section 8 of said
Executive Severance Agreement.
9. Mr. Plochocki expressly acknowledges and agrees
that, by entering into this Agreement, he is waiving any and all
rights or claims that may have arisen under the Age
Discrimination in Employment Act of 1967, as amended, which have
arisen on or before the date of execution of this Agreement. Mr.
Plochocki further expressly acknowledges that:
a. In return for this Agreement, he will receive
compensation beyond that which he was already entitled to
receive before entering into this Agreement;
b. He is hereby advised in writing by this Agreement
to consult with an attorney before signing this Agreement,
and has done so;
c. He was given a copy of this Agreement on September
24, 1997, and informed that he had 21 days within which to
consider the Agreement; and
d. He was informed that he has seven (7) days
following the date of his execution of the Agreement in
which to revoke the Agreement.
10. Apria and Mr. Plochocki each warrant and represent
that neither has heretofore assigned or transferred to any person
not a party to this Agreement any released matter or any part or
portion thereof and each shall defend, indemnify and hold
harmless the other from and against any claim (including the
payment of attorneys' fees and costs actually incurred whether or
not litigation is commenced) based on or in connection with or
arising out of any such assignment or transfer made, purported or
claimed.
11. Apria and Mr. Plochocki acknowledge that any
employment or contractual relationship between them (including
with any other Apria Releasee) will terminate on September 26,
1997, that they have no further employment or contractual
relationship except as may arise out of this Agreement and that
Mr. Plochocki waives any right or claim to reinstatement as an
employee of any Apria Releasee and will not seek employment in
the future with Apria.
12. Mr. Plochocki agrees that he shall be exclusively
liable for the payment of all of his share of federal and state
taxes which may be due as the result of the consideration
received from the settlement of disputed claims as set forth
herein.
13. Mr. Plochocki agrees that, following the
termination of his employment with Apria, (i) he will, at no cost
to him, cooperate with any reasonable request Apria may make for
information or assistance with respect to any matter involving
Mr. Plochocki during his period of employment, and (ii) he will
not at any time, directly or indirectly, disparage Apria or take
any action with the intention of injuring Apria's business or
prospects. Apria, on behalf of itself and the Apria Releasees,
agrees that it will use its best efforts to cause its officers
and directors not to disparage Mr. Plochocki in any manner.
14. This Agreement is an integrated document and
constitutes and contains the entire agreement and understanding
concerning Mr. Plochocki's employment, voluntary resignation from
the same and the other subject matters addressed herein between
the parties, and supersedes and replaces all prior negotiations
and all agreements, proposed or otherwise, whether written or
oral, concerning the subject matter hereof, and expressly
releases all Apria Releasees from any obligations not covered
herein, including, but not limited to Apria's Severance Pay Plan
and, except as provided in the last sentence of Paragraph 8
above, the Executive Severance Agreement, dated June 28, 1997,
between Mr. Plochocki and Apria. This Agreement does not,
however, affect Mr. Plochocki's rights under any Apria
retirement, 401(k), SERP or similar benefit plan, including the
Abbey Healthcare Group Incorporated Employees' Retirement Plan.
This Agreement also does not, by its terms, modify the provisions
of any of Mr. Plochocki's stock options. Prior to the execution
and delivery of this Agreement, however, Apria's Board of
Directors has authorized amendments to Mr. Plochocki's stock
option agreements to provide that all of Mr. Plochocki's vested
stock options, representing the currently exercisable right to
purchase a total of 84,600 shares of Apria's common stock, shall
continue to be exercisable for said 84,600 shares during the
fifteen-month period following the termination of Mr. Plochocki's
employment, until December 26, 1998. However, if the
Compensation Committee of Apria's Board of Directors, acting on
the advice of counsel, determines that the applicable stock
incentive plan does not permit Apria to extend the final date on
which Mr. Plochocki may exercise such options, or such extension
is not in the best interests of Apria, Apria, in exchange for a
cancellation of Mr. Plochocki's vested stock options, agrees to
make a cash payment to Mr. Plochocki at the time he would
otherwise have elected to exercise his stock options under the
extended period for exercise described above in an amount equal
to the amount he would have realized if he had exercised the
stock options and immediately sold the stock issued thereunder at
its then Fair Market Value (as defined in the applicable stock
incentive plan). Amendments confirming the extension of Mr.
Plochocki's right to exercise said options or the other
agreements described above shall be executed and delivered to Mr.
Plochocki on October 6, 1997.
15. If any provision of this Agreement or the
application thereof is held invalid, the invalidity shall not
affect the other provisions or applications of this Agreement
which can be given effect without the invalid provisions or
applications and to this end the provisions of this Agreement are
declared to be severable.
16. This Agreement has been executed and delivered
within the State of California, and the rights and obligations of
the parties hereunder shall be construed and enforced in
accordance with, and governed by, the laws of the State of
California without regard to principles of conflict of laws.
17. This Agreement may be executed in counterparts,
and each counterpart, when executed, shall have the efficacy of a
signed original. Photographic copies of such signed counterparts
may be used in lieu of the originals for any purpose.
18. Any dispute or controversy between Mr. Plochocki
on the one hand, and Apria (or any other Apria Releasee), on the
other hand, in any way arising out of, related to, or connected
with this Agreement or the subject matter hereof, or otherwise in
any way arising out of, related to, or connected with
Mr. Plochocki's employment with any Apria Releasee or the
termination of Mr. Plochocki's employment with any Apria
Releasee, shall be governed exclusively by the Federal
Arbitration Act, as amended, and shall be submitted for
resolution to mandatory, exclusive and binding arbitration in
Costa Mesa, California before a single arbitrator in accordance
with the then existing Rules of Practice and Procedure of the
Judicial Arbitration and Mediation Services, Orange County Office
("JAMS"). The party initiating arbitration shall first provide
the responding party with written notice of the initiating
party's intention to arbitrate and a brief statement of the
nature of the dispute (the "Arbitration Notice"). The initiating
and responding parties shall then mutually select an arbitrator.
If, however, Apria and Mr. Plochocki fail to agree to an
arbitrator within thirty (30) days following effective delivery
of the Arbitration Notice, an arbitrator knowledgeable in
corporate law, employment agreements and disputes arising under
such agreements shall be selected in the manner provided by the
American Arbitration Association from the then current list of
arbitrators maintained by JAMS. Apria and Mr. Plochocki agree to
be bound by any final decision rendered by the arbitrator, which
final decision may be enforced in any court of competent
jurisdiction. Apria and Mr. Plochocki further agree that the
arbitrator shall have the power to dispense equitable relief.
The arbitrator shall render a single written decision setting
forth an award, to the extent applicable, and state with
reasonable specificity the reasons for the decision reached. In
the event Mr. Plochocki incurs attorneys' fees and costs in
enforcing or defending any right or obligation contained herein
and is the prevailing party in any such arbitration, he shall be
entitled to recover attorneys' fees and costs from Apria. Apria
shall not be entitled to attorneys' fees incurred in enforcing or
defending any arbitration proceeding initiated by Mr. Plochocki
unless an arbitration finds that Mr. Plochocki initiated such
arbitration proceeding in bad faith. Apria and Mr. Plochocki
hereby further stipulate that the losing party (as determined by
the arbitrator) shall pay the fees and expenses of the
arbitrator. APRIA AND MR. PLOCHOCKI ACKNOWLEDGE, UNDERSTAND AND
AGREE THAT IN THE EVENT OF A DISPUTE UNDER THIS AGREEMENT, EACH
PARTY HAS WAIVED ANY RIGHT TO A JURY TRIAL AND A JUDICIAL
RESOLUTION OF THE DISPUTE.
19. No waiver of any breach of any term or provision
of this Agreement shall be construed to be, or shall be, a waiver
of any other breach of this Agreement. No waiver shall be
binding unless in writing and signed by the party waiving the
breach.
20. In entering this Agreement, the parties represent
that they have relied upon the advice of their attorneys, who are
attorneys of their own choice, and that they have read the
Agreement and have had the opportunity to have the Agreement
explained to them by their attorneys, and that those terms
are fully understood and voluntarily accepted by them.
21. All parties agree to cooperate fully and to
execute any and all supplementary documents and to take all
additional actions that may be necessary or appropriate to give
full force to the terms and intent of this Agreement and which
are not inconsistent with its terms.
22. Mr. Plochocki hereby declares as follows:
I, Steven T. Plochocki, hereby acknowledge that I was
given 21 days to consider the foregoing Agreement and voluntarily
chose to sign the Agreement prior to the expiration of the 21-day
period.
I have read the foregoing Agreement and I accept and
agree to the provisions it contains and hereby execute it
voluntarily with full understanding of its consequences.
I declare under penalty of perjury under the laws of
the State of California that the foregoing is true and correct.
IN WITNESS WHEREOF, the undersigned have executed and
delivered this Agreement this 26th day of September, 1997.
--------------------------------------
Steven T. Plochocki
APRIA HEALTHCARE GROUP INC.
By: ---------------------------------------
Lawrence H. Smallen
Senior Vice President and Chief
Financial Officer
<PAGE>
EXHIBIT A
September 26, 1997
Mr. Jeremy M. Jones
Chief Executive Officer and
Chairman of the Board of Directors
Apria Healthcare Group Inc.
3560 Hyland Avenue
Costa Mesa, California 92626
Dear Jerry:
This is to advise you that effective September 26, 1997, I
hereby voluntarily resign my positions as President and Chief
Operating Officer and my employment in any other capacity with
Apria Healthcare Group Inc. or any of its affiliates or
subsidiaries.
Sincerely yours,
___________________
Steven T. Plochocki
<PAGE>
EXHIBIT B
SEPTEMBER 29, 1997
For Further Information, Contact:
Sheree L. Aronson
Director of Investor Relations
714.427.4919
APRIA HEALTHCARE PRESIDENT RESIGNS
Chairman/CEO Assumes Duties on Interim Basis
COSTA MESA, CALIF. -- September 29, 1997 -- Apria Healthcare
Group Inc. (NYSE:AHG) today announced the resignation of
President and Chief Operating Officer Steven T. Plochocki.
Plochocki was named chief operating officer of Apria in
June, 1995 and assumed the additional title of president in
March, 1996. He was responsible for overseeing field operations
and various corporate functions, including sales, marketing and
clinical services. Plochocki tendered his resignation to allow
him to pursue other interests.
"On behalf of the board of directors and management team of
Apria, I want to thank Steve for his leadership and contributions
to Apria over the past two years," said Jeremy M. Jones, Apria
chairman and chief executive officer.
Until a successor is named, Jones will assume daily
management oversight of Plochocki's responsibilities.
Apria Healthcare provides and/or manages comprehensive
integrated homecare services, including respiratory therapy, home
infusion and home medical equipment. The company operates 350
locations and serves patients in 50 states.
# # #
EXHIBIT 11.1
APRIA HEALTHCARE GROUP INC.
COMPUTATION OF EARNINGS PER SHARE
Three Months Ended Nine Months Ended
September 30, September 30,
-----------------------------------
1997 1996 1997 1996
------ ------ ------ ------
(In thousands,
except per share information)
Net income (loss) for primary
and fully diluted earnings
per share $ 16,186 $ 20,749 $(34,450) $62,983
======== ======== ======== =======
Weighted average shares outstanding 51,481 51,082 51,384 50,696
Incremental shares - stock options 413 1,175 514 1,580
-------- ------- -------- -------
Primary shares 51,894 52,257 51,898 52,276
Incremental shares - stock options 1 - 6 75
-------- ------- -------- -------
Fully diluted shares 51,895 52,257 51,904 52,351
======== ======= ======== =======
Primary and fully diluted
earnings per share $ 0.31 $ 0.40 $(0.67) $ 1.20
======= ======= ======= =======
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
CONSOLIDATED BALANCE SHEET AT SEPTEMBER 30, 1997 (UNAUDITED) AND
CONSOLIDATED INCOME STATEMENT FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1997
(UNAUDITED) AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH
FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> JAN-01-1997
<PERIOD-END> SEP-30-1997
<CASH> 26,573
<SECURITIES> 0
<RECEIVABLES> 370,637
<ALLOWANCES> 68,967
<INVENTORY> 34,079
<CURRENT-ASSETS> 420,132
<PP&E> 670,415
<DEPRECIATION> 356,140
<TOTAL-ASSETS> 1,041,705
<CURRENT-LIABILITIES> 138,327
<BONDS> 573,772
0
0
<COMMON> 51
<OTHER-SE> 312,109
<TOTAL-LIABILITY-AND-EQUITY> 1,041,705
<SALES> 913,954
<TOTAL-REVENUES> 913,954
<CGS> 337,792
<TOTAL-COSTS> 337,792
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 101,141
<INTEREST-EXPENSE> 37,779
<INCOME-PRETAX> (24,539)
<INCOME-TAX> 9,911
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (34,450)
<EPS-PRIMARY> (0.67)
<EPS-DILUTED> (0.67)
</TABLE>
