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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q/A
[X] Quarterly Report Pursuant to Section 13 or 15 (d) of the Securities
Exchange
Act of 1934. For the quarterly period ended June 30, 1997.
[_] 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: 0-26502
COMMUNITY CARE OF AMERICA, INC.
(Exact name of registrant as specified in its charter)
Delaware 52-1823411
(State or other jurisdiction of (IRS Employer
incorporation or organization) Identification No.)
3050 North Horseshoe Drive, Suite 260,
Naples, Florida 34104
(Address of principal executive offices)
Registrant's telephone number, including area code: (941) 435-0085
N/A
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(Former name, former address and former fiscal year,
if changed 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 reports), and (2) has been subject to such filing
requirements for the past 90 days. [X] Yes [ ] No
As of July 31, 1997, there were outstanding 7,597,801 shares of common stock,
$.0025 par value, per share.
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<PAGE>
INDEX
PART I - FINANCIAL INFORMATION PAGE
Item 1. Condensed Financial Statements (Unaudited)
Consolidated Balance Sheets...................................1
Consolidated Statements of Operations.........................2
Consolidated Statement of Shareholders' Equity................3
Consolidated Statements of Cash Flows.........................4
Notes to Consolidated Financial Statements....................5
SIGNATURES...............................................................7
<PAGE>
<TABLE>
<CAPTION>
Community Care of America, Inc.
and Subsidiaries
Consolidated Balance Sheets
December 31, June 30,
1996 1997
------------- -------------
<S> <C> <C>
Assets
Current assets:
Cash and cash equivalents $ 1,709,000 $ 1,593,000
Accounts receivable net of allowance for doubtful accounts and
contractual adjustments of $4,833,000 and $4,899,000 at
December 31, 1996 and June 30, 1997: 16,407,000 18,855,000
Inventories 1,761,000 1,496,000
Prepaid expenses and other current assets 1,095,000 1,383,000
------------- -------------
Total current assets 20,972,000 23,327,000
Property, plant, and equipment, net of accumulated depreciation 58,424,000 57,288,000
Notes receivable -- 1,500,000
Deposits 6,637,000 1,995,000
Excess of cost over fair value of net assets acquired, net of
accumulated amortization of $710,000 and $1,001,000 at December
31, 1996 and June 30, 1997 13,666,000 13,376,000
Deferred financing costs 1,066,000 2,429,000
Other assets 1,354,000 1,477,000
------------- -------------
$ 102,119,000 $ 101,392,000
============= =============
Liabilities and shareholders' equity Current liabilities:
Current maturities of long-term debt, net of unamortized
debt discount of $0 and $600,000 at December 31, 1996 and
June 30, 1997 $ 6,341,000 $ 3,643,000
Accounts payable and accrued expenses 23,402,000 24,296,000
Put option contracts payable (219,798 shares) 2,181,000 1,681,000
------------- -------------
Total current liabilities 31,924,000 29,620,000
Long-term debt, less current maturities, net of
unamortized debt discount of $0 and $765,000 at
December 31, 1996 and June 30, 1997 54,030,000 56,672,000
Deferred income taxes 162,000 --
Shareholders' equity:
Common stock, $.0025 par value; authorized
15,000,000 shares; issued and outstanding
7,597,801 at December 31, 1996 and June 30, 1997 19,000 19,000
Additional paid-in capital 36,465,000 38,004,000
Deficit (19,037,000) (21,479,000)
Receivable from shareholders (1,444,000) (1,444,000)
------------- -------------
Total shareholders' equity 16,003,000 15,100,000
------------- -------------
$ 102,119,000 $ 101,392,000
============= =============
See accompanying notes to consolidated financial statements.
1
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Community Care of America, Inc.
and Subsidiaries
Consolidated Statements of Operations
Three Months Ended Six Months Ended
June 30, June 30,
1996 1997 1996 1997
------------ ------------ ------------ ------------
(Unaudited) (Unaudited) (Unaudited) (Unaudited)
<S> <C> <C> <C> <C>
Operating revenues:
Net patient service revenues $ 30,721,000 $ 32,490,000 $ 56,865,000 $ 64,939,000
Other operating revenues 1,716,000 358,000 4,517,000 603,000
------------ ------------ ------------ ------------
Total operating revenues 32,437,000 32,848,000 61,382,000 65,542,000
------------ ------------ ------------ ------------
Operating expenses:
Facility operating expenses 25,325,000 27,365,000 47,431,000 54,604,000
Corporate administrative and general 1,125,000 603,000 2,559,000 1,642,000
Rent 2,090,000 2,616,000 3,853,000 5,248,000
Depreciation and amortization 641,000 945,000 1,286,000 1,802,000
Interest, net of interest income 1,102,000 1,817,000 1,920,000 3,383,000
Unusual charges 19,185,000 1,467,000 19,185,000 1,467,000
------------ ------------ ------------ ------------
Total operating expenses 49,468,000 34,813,000 76,234,000 68,146,000
------------ ------------ ------------ ------------
Earnings before income taxes (17,031,000) (1,965,000) (14,852,000) (2,604,000)
Federal and state income taxes (6,472,000) -- (5,645,000) (162,000)
------------ ------------ ------------ ------------
Earnings (loss) applicable to common stock $(10,559,000) $ (1,965,000) $ (9,207,000) $ (2,442,000)
============ ============ ============ ============
Earnings (loss) per common share $ (1.41) $ (0.26) $ (1.25) $ (0.32)
============ ============ ============ ============
Weighted average number of common and
common equivalent shares outstanding 7,501,701 7,597,801 7,350,441 7,597,801
============ ============ ============ ============
See accompanying notes to consolidated financial statements.
2
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Community Care of America, Inc.
and Subsidiaries
Consolidated Statement of Shareholders' Equity
Receivable
Total Additional From Shareholders'
Common Stock Paid-in Capital Deficit Shareholder Equity
------------ ------------ ------------ ------------ ------------
<S> <C> <C> <C> <C> <C> <C> <C>
Balance at December 31, 1996 $ 19,000 $ 36,465,000 $(19,037,000) $ (1,444,000) $ 16,003,000
Warrants issued in connection
with debt refinancing -- 1,539,000 -- -- 1,539,000
Net loss -- -- (2,442,000) -- (2,442,000)
------------ ------------ ------------ ------------ ------------
Balance at June 30, 1997 (Unaudited) $ 19,000 $ 38,004,000 $(21,479,000) $ (1,444,000) $ 15,100,000
============ ============ ============ ============ ============
</TABLE>
See accompanying notes to consolidated financial statements.
3
<PAGE>
<TABLE>
<CAPTION>
Community Care of America, Inc.
and Subsidiaries
Consolidated Statements of Cash Flows
Six Months Ended
June 30,
----------------------------
1996 1997
------------ ------------
(Unaudited) (Unaudited)
<S> <C> <C>
Net cash provided by (used in) operating activities $ 15,000 $ (1,804,000)
Cash flows from investing activities:
Property, plant and equipment additions (5,551,000) (3,007,000)
Business acquisitions (4,986,000) --
Notes receivable (75,000) --
Deposits held by lessor (516,000) 4,642,000
Sale of Georgiana Hospital -- 315,000
Other assets (942,000) (215,000)
------------ ------------
Net cash provided by (used in) investing activities (12,070,000) 1,735,000
------------ ------------
Cash flows from financing activities:
Principal reductions of long-term debt (1,940,000) (2,005,000)
Proceeds from long-term debt borrowings 14,123,000 4,064,000
Proceeds from Issuance of Stock 162,000 --
Put option contracts payable -- (500,000)
Deferred financing costs (1,667,000) (1,606,000)
------------ ------------
Net cash provided by (used in) financing activities 10,678,000 (47,000)
------------ ------------
Decrease in cash and cash equivalents (1,377,000) (116,000)
Cash and cash equivalents, beginning of period 2,485,000 1,709,000
------------ ------------
Cash and cash equivalents, end of period $ 1,108,000 $ 1,593,000
============ ============
</TABLE>
See accompanying notes to consolidated financial statements.
4
<PAGE>
COMMUNITY CARE OF AMERICA, INC.
Notes to Consolidated Financial Statements
(Unaudited)
June 30, 1997
(1) Basis of presentation
The interim unaudited consolidated financial statements of Community Care of
America, Inc. and subsidiaries (the "Company") presented herein have been
prepared in accordance with generally accepted accounting principles for interim
financial statements and with the instructions to Form 10- Q and Regulation S-X
pertaining to interim financial statements. The interim financial statements
presented herein reflect all adjustments (consisting of normal recurring
adjustments) which, in the opinion of management, are considered necessary for a
fair presentation of the Company's financial condition as of June 30, 1997 and
results of operations for the three and six months ended June 30, 1997 and 1996.
The Company's financial statements should be read in conjunction with the
Company's audited consolidated financial statements and the notes thereto
included in the Company's Annual Report on Form 10-K for the year ended December
31, 1996. The results of operations for the three and six months ended June 30,
1997 and 1996 are not necessarily indicative of the results that may be expected
for the full year.
(2) Recent Accounting Pronouncements
In February 1997, the Financial Accounting Standards Board issued Statement No.
128, Earnings Per Share ("SFAS 128"), which simplifies the standards for
computing earnings per share ("EPS"). SFAS 128 is effective for the Company's
fourth quarter and year ending December 31, 1997. Early application is not
permitted and prior period EPS data will be restated.
Under SFAS 128, primary EPS will be replaced with basic EPS. Basic EPS excludes
the dilutive effect of common stock equivalents. Also, under SFAS 128, fully
diluted EPS will be replaced by diluted EPS. Diluted EPS is calculated similarly
to fully diluted EPS pursuant to Accounting Principles Board Opinion 15.
The change in calculation method is not expected to have a material impact on
previously reported earnings per common share data.
(3) Sale of Georgiana Hospital
On June 11, 1997, the Company sold its 22-bed Georgiana Hospital and the related
clinics and physician practices for cash of $315,000, net of closing costs, a
note receivable of $1.5 million and a reduction of debt of $750,000. The sale
resulted in a non-recurring charge to earnings of $1,467,000.
5
<PAGE>
COMMUNITY CARE OF AMERICA, INC.
Notes to Consolidated Financial Statements
(Unaudited)
June 30, 1997
(4) Stock Warrants
In accordance with Statement of Financial Accounting Standards No. 123,
Accounting for Stock- Based Compensation ("SFAS No. 123"), the Company recorded
the fair value of stock warrants issued in connection with its financial
restructuring plan of $1.5 million in the second quarter of 1997. The fair value
of these stock warrants was estimated using the Black-Scholes option pricing
model and was recorded as an increase to additional paid in capital and
unamortized debt discount. The related unamortized debt discount was $1.4
million at June 30, 1997, net of accumulated amortization of $174,000 which was
charged to interest expense in the second quarter of 1997.
(5) Sandy River Transaction
In April 1997, the Company paid $500,000 to the Sandy River Group shareholders
pursuant to the settlement agreement dated March 1, 1997, to repurchase 219,798
shares of common stock. As of June 30, 1997 the Company is obligated under a
note payable to the Sandy River Group shareholders for $1,681,000.
(6) Subsequent Event
On July 18, 1997, the Company and IHS Holdings, Inc. entered into a second loan
agreement, which entitles the Company to borrow for working capital purposes,
until July 18, 1999, amounts on a revolving credit basis so that no more than
$5.0 million is outstanding at any time. Loan advances are to be made directly
to creditors of the Company, including IHS, in payment of the Company's
obligations to such creditors. Proceeds used to pay the Company's obligations
are directed by IHS in accordance with the management agreement. This revolving
credit facility bears interest at a rate per annum equal to the annual rate of
interest set forth in IHS's revolving credit agreement with Citibank, N.A., plus
4%. Repayment of amounts advanced under this line of credit are subordinated to
the payment of up to an aggregate of $13.6 million of principal and interest on
the Company's obligations to one of the Company's principal unaffiliated
third-party lenders. The revolving credit facility is guaranteed in full by
Community Care of Nebraska, Inc., ECA Holdings, Inc., CCA of Midwest, Inc.,
Quality Care of Columbus, Inc., Quality Care of Lyons, Inc., and W.S.T. Care,
Inc., each wholly-owned subsidiaries of the Company. The revolving line of
credit is secured by the real property assets of the Company and its
subsidiaries. At July 31, 1997, no borrowings were outstanding under this
facility.
6
<PAGE>
SIGNATURES
Pursuant to the requirements of Securities Exchange Act of 1934, the registrant
has duly caused this report to be signed on its behalf by the undersigned
thereunto duly authorized.
COMMUNITY CARE OF AMERICA, INC.
(Registrant)
Date: October 9, 1997 By: /s/ W. Bradley Bennett
------------------- ----------------------------
W. Bradley Bennett
Executive Vice President-Chief
Accounting Officer
7
