<PAGE>
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 10-Q
/X/ Quarterly report pursuant to Section 13 or 15(d) of the Securities Exchange
Act of 1934.
For the quarterly period ended October 31, 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: pending (Securities Act file number: 333-86629)
PROFESSIONAL VETERINARY PRODUCTS, LTD.
(Exact name of registrant as specified in its charter)
<TABLE>
<S> <C> <C>
Nebraska 5047 37-1119387
(State or other jurisdiction of (Primary Standard Industrial (IRS Employer
Incorporation or organization) Classification Code Number) Identification No.)
</TABLE>
10077 South 134th Street
Omaha, Nebraska 68138
(402) 331-4440
(Address and telephone number of registrant's principal executive offices)
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 and Exchange Act
of 1934 during the proceeding 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 / /
Indicate the number of shares outstanding of each of the issuer's classes
of common stock, as of the latest practicable date.
<TABLE>
<CAPTION>
Class Outstanding at October 31, 2000
----- -------------------------------
<S> <C>
Common Stock, $1.00 par value 1,395
</TABLE>
<PAGE>
PROFESSIONAL VETERINARY PRODUCTS, LTD.
INDEX TO 10-Q FOR THE QUARTERLY
PERIOD ENDED OCTOBER 31, 2000
<TABLE>
<CAPTION>
PAGE
<S> <C>
PART I FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
Balance Sheets at October 31, 2000 and October 31, 1999
(unaudited) ........................................................ 3
Statements of Income for the three months ended
October 31, 2000 and October 31, 1999 (unaudited) .................. 5
Statements of Retained Earnings for the three months ended
October 31, 2000 and October 31, 1999 (unaudited) .................. 6
Statements of Cash Flow for the three months ended
October 31, 2000 and October 31, 1999 (unaudited) .................. 7
Notes to Financial Statements ...................................... 8
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATION ....................... 17
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES
ABOUT MARKET RISK .................................................. 18
PART II OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS .................................................. 18
ITEM 2. CHANGES IN SECURITIES AND USE OF PROCEEDS .......................... 18
ITEM 3. DEFAULTS UPON SENIOR SECURITIES .................................... 19
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY
HOLDERS ............................................................ 19
ITEM 5. OTHER INFORMATION .................................................. 19
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K ................................... 19
SIGNATURES ................................................................... 19
</TABLE>
2
<PAGE>
PART I
FINANCIAL INFORMATION
ITEM 1: FINANCIAL STATEMENTS
PROFESSIONAL VETERINARY PRODUCTS, LTD.
Balance Sheet
October 31, 2000 and 1999 (unaudited)
Assets
<TABLE>
<CAPTION>
2000 1999
---- ----
<S> <C> <C>
Current assets:
Cash $ 28,680 26,678
Accounts receivable, trade, less allowance
for doubtful accounts (0) 29,722,365 22,411,417
Accounts receivable, rebate (857,587) (627,289)
Accounts receivable, stock 57,709 72,917
Accounts receivable, other 637,462 604,618
Inventory 23,194,286 17,947,852
----------- ------------
Total current assets 52,782,915 40,366,193
----------- ------------
Property and equipment 8,666,759 8,491,563
Less accumulated depreciation 1,018,299 1,646,504
----------- ------------
7,648,460 6,845,059
----------- ------------
Other assets:
Organization expense less
accumulated amortization of
$49,223 (2000), $34,107 (1999) 177,577 192,691
Loan origination fee less
accumulated amortization of
$3,333 (2000), $1,333 (1999) 16,667 18,667
Trademark, less accumulated
amortization of
$727 (2000), $389 (1999) 4,278 4,611
Investments 1,643,850 143,850
Cash value life insurance 30,077 --
----------- ------------
1,872,449 359,819
----------- ------------
$62,303,824 47,571,071
=========== ============
</TABLE>
See accompanying notes to financial statements.
3
<PAGE>
PROFESSIONAL VETERINARY PRODUCTS, LTD.
Balance Sheet (continued)
October 31, 2000 and 1999 (unaudited)
<TABLE>
<CAPTION>
LIABILITIES AND STOCKHOLDERS' EQUITY
2000 1999
---- ----
<S> <C> <C>
Current liabilities:
Bank overdraft $ 1,503,645 954,198
Notes payable, bank 5,232,460 1,768,877
Notes payable, other - 54,634
Current portion of long-term debt 391,217 75,014
Accounts payable, trade 42,708,388 35,739,039
Accrued interest 92,211 37,574
Accrued wages 78,759 -
Accrued expenses 179,115 234,882
Accrued income taxes 181,796 94,559
------------ ----------
Total current liabilities 50,367,591 38,958,777
------------ ----------
Long-term debt 5,943,283 3,924,986
------------ ----------
Deferred income taxes 14,417 -
------------ ----------
Stockholders' equity:
Common stock, $1 par value per share.
Authorized 30,000 shares; issued and
Outstanding 1,395 (2000), 1,395 1,211
1,211 shares (1999) 4,112,605 3,560,789
Paid-in Capital
Retained earnings 1,864,533 1,125,308
------------ ----------
5,978,533 4,687,308
------------ ----------
$ 62,303,824 47,571,071
============ ==========
</TABLE>
See accompanying notes to financial statements.
4
<PAGE>
PROFESSIONAL VETERINARY PRODUCTS, LTD.
Statements of Income
Three months ended October 31, 2000 and 1999 (unaudited)
<TABLE>
<CAPTION>
AMOUNT PERCENT
------ -------
2000 1999 2000 1999
---- ---- ---- ----
<S> <C> <C> <C> <C>
Revenues:
Gross sales $ 50,180,424 41,839,646 100.17 100.12
Less rebate (857,587) (697,289) (1.71) (1.66)
------------ ---------- ------ ------
Net sales 49,322,837 41,142,357 98.46 98.46
Shipping 63,464 28,251 .13 .07
Commissions 355,386 348,235 .71 .83
Sales promotion 340,169 261,869 .68 .63
Miscellaneous 12,713 3,153 .02 .01
------------ ---------- ------ ------
50,094,569 41,783,865 100.00 100.00
------------ ---------- ------ ------
Cost of sales:
Net purchases 46,445,058 38,536,377 92.71 92.23
Freight out 1,068,932 768,440 2.13 1.84
Less vendor rebates (1,259,942) (842,903) (2.51) (2.02)
------------ ---------- ------ ------
46,254,048 38,461,914 92.33 92.05
------------ ---------- ------ ------
Gross profit 3,840,521 3,321,951 7.67 7.95
Operating, general and administrative
expenses 3,086,235 3,019,105 6.16 7.23
------------ ---------- ------ ------
Operating income 754,286 302,846 1.51 .72
Other income (expense):
Interest income 110,220 69,330 .21 .17
Interest expense (311,936) (99,721) (.62) (.24)
Gain (loss) on sale of equipment (2,560) - (.01) -
------------ ---------- ------ ------
Income before income
taxes 550,010 272,455 1.09 .65
Income taxes 202,300 107,371 .40 .25
------------ ---------- ------ ------
Net income $ 347,710 165,084 .69 .40
============ ========== ====== ======
</TABLE>
See accompanying notes to financial statements.
5
<PAGE>
PROFESSIONAL VETERINARY PRODUCTS, LTD.
Statements of Retained Earnings
Three months ended October 31, 2000 and 1999 (unaudited)
<TABLE>
<CAPTION>
2000 1999
---- ----
<S> <C> <C>
Balance at beginning of period $ 1,516,823 960,224
Net income 347,710 165,084
----------- ---------
Balance at end of period $ 1,864,533 1,125,308
=========== =========
</TABLE>
See accompanying notes to financial statements.
6
<PAGE>
PROFESSIONAL VETERINARY PRODUCTS, LTD.
Statements of Cash Flows
Three months ended October 31, 2000 and 1999
<TABLE>
<CAPTION>
2000 1999
---- ----
<S> <C> <C> <C> <C>
Cash flows from operating activities:
Net income $ 347,710 165,084
Adjustments to reconcile net income
to net cash provided (used) by
operating activities:
Depreciation and amortization $ 135,015 46,368
(Gain) loss on disposition of property 2,560 -
-----------
Deferred income taxes 20,383 -
-----------
Adjustments for working capital
changes:
(Increase) decrease in:
Receivables (7,913,573) (11,180,520)
Inventories 5,232,421 (5,360,620)
Increase (decrease) in:
Accounts payable 5,472,696 17,562,256
Accrued expenses (1,244,989) (1,024,544)
Income taxes payable (50,137) 76,652
---------- -----------
Total adjustments 1,654,376 119,592
--------- -------
Net cash provided by
operating activities 2,002,086 284,676
Cash flows from investing activities -
Purchase of property and equipment (37,463) (3,850,732)
Cash flows from financing activities:
Net loan proceeds (reduction) (3,082,674) 1,410,273
Net proceeds from issuance of
common stock 42,000 135,584
---------- -----------
Net cash provided (used) by
financing activities
(3,040,674) 1,545,857
---------- ------------
Net decrease in cash (1,076,051) (2,020,199)
Cash (deficit) at beginning of period (398,914) 1,092,679
------------- ------------
Cash (deficit) at end of period $ (1,474,965) (927,520)
------------- ------------
Supplemental disclosure of cash flow information:
Interest paid $ 330,336 84,760
============= ===========
Income taxes paid $ 232,054 30,719
============= ===========
</TABLE>
See accompanying notes to financial statements.
7
<PAGE>
PROFESSIONAL VETERINARY PRODUCTS, LTD.
Notes to Financial Statements
(Information with respect to October 31, 2000 and 1999)
(1) Organization and summary of significant accounting policies:
Organization:
Professional Veterinary Products, Ltd. was incorporated in the
State of Missouri in 1982. The corporation was domesticated in
Nebraska on September 22, 1999. The corporation was formed to
buy, sell and warehouse pharmaceuticals and other veterinary
related items. The purpose of the corporation is to act as a
wholesale distributor primarily to shareholders. Shareholders are
limited to the ownership of one share of stock and must be a
licensed veterinarian or business entity comprised of licensed
veterinarians.
Summary of significant accounting policies:
(a) Basis of accounting:
The corporation uses the accrual method of accounting
for financial statement and income tax purposes.
(b) Concentration of cash balances:
The Company's cash funds are located in a single
financial institution. The amount on deposit at October
31, 2000 and 1999 exceeded the $100,000 federally
insured limit.
(c) Accounts receivable:
Management considers accounts receivable to be fully
collectible, accordingly, no allowance for doubtful
accounts is required.
(d) Inventory:
Inventory is valued at the lower of cost or market on
the first-in, first-out basis.
8
<PAGE>
PROFESSIONAL VETERINARY PRODUCTS, LTD.
Notes to Financial Statements (continued)
(Information with respect to October 31, 2000 and 1999)
(1) Summary of significant accounting policies (continued):
(e) Property and equipment depreciation:
Property and equipment are stated at cost. Major
additions are capitalized and depreciated over their
estimated useful lives. For financial reporting
purposes, the Company uses the straight-line method and
for income tax purposes, the Company uses accelerated
depreciation methods.
(f) Cash and cash equivalents:
The corporation considers all highly liquid investments
with a maturity of three months or less when purchased
to be cash equivalents.
(g) Amortization:
Organizational costs are being amortized over sixty
months on a straight-line basis.
Financing costs are being amortized over the term of
the note on a straight-line basis. This amortization is
included in interest expense in the income statement.
The intangible costs are being amortized over fifteen
years on a straight-line basis.
(h) Use of estimates:
The preparation of financial statements in conformity
with generally accepted accounting principles requires
management to make estimates and assumptions that
affect certain reported amounts and disclosures.
Accordingly, actual results could differ from those
estimates.
9
<PAGE>
PROFESSIONAL VETERINARY PRODUCTS, LTD.
Notes to Financial Statements (continued)
(Information with respect to October 31, 2000 and 1999)
(1) Summary of significant accounting policies (continued):
(i) Income taxes:
Income taxes are provided for the tax effects of
transactions reported in the financial statements and
consist of taxes currently due plus deferred taxes.
Deferred taxes are recognized for differences between
the basis of assets and liabilities for financial
statement and income tax purposes. The differences
related primarily to depreciable assets (use of
difference depreciation methods and lives for financial
statement and income tax purposes), and Uniform
Capitalization Rules Code Sec. 263A (capitalization of
direct and indirect costs associated with resale
activities). The deferred tax assets and liabilities
represent the future tax return consequences of those
differences, which will either be deductible or taxable
when the assets and liabilities are recovered or
settled. Deferred taxes are also recognized for
operating losses and tax credits that are available to
offset future taxable income.
(2) For the three months ended October 31, 2000, the Company recognized
liabilities for overcharges on sales in excess of an agreed to
profit margin of 5% totaling $857,587 (2000), $697,289 (1999).
(3) Property and equipment:
<TABLE>
<CAPTION>
BOOK VALUE
ACCUMULATED ----------
COST DEPRECIATION 2000 1999
---- ------------ ---- ----
<S> <C> <C> <C> <C>
Land $ 953,780 - 953,780 953,780
Buildings 4,715,527 107,648 4,607,879 5,224,835
Equipment 2,997,452 910,651 2,086,801 666,444
----------- ---------- --------- ---------
$ 8,666,759 1,018,299 7,648,460 6,845,059
=========== ========== ========= =========
</TABLE>
(4) Investments - Non Marketable:
The Company has invested in AAHA Services Corp., of which they own
20%. The remaining 80% is owned by American Animal Hospital
Association (AAHA). AAHA operates AAHA Services Corp. without
regard to the views of Professional Veterinary Products, Ltd. The
investment is, therefore, carried at cost.
10
<PAGE>
PROFESSIONAL VETERINARY PRODUCTS, LTD.
Notes to Financial Statements (continued)
(Information with respect to October, 2000 and 1999)
(4) Investments - Non Marketable (continued):
The Company has invested in Agri-Laboratories, Ltd., of which they
own 5%. The investment is carried at cost.
<TABLE>
<CAPTION>
2000 1999
---- ----
<S> <C> <C>
Investment in AAHA Services Corp. $ 1,500,000 -
Investment in Agri-Laboratories, Ltd. 143,850 143,850
----------- --------
$ 1,643,850 143,850
=========== ========
</TABLE>
(5) Cash surrender value of life insurance:
The Company owns insurance policies on the Chief Executive Officer.
The total face value of the policies on the life of the Chief
Executive Officer was $385,000 at October 31, 2000.
11
<PAGE>
PROFESSIONAL VETERINARY PRODUCTS, LTD.
Notes to Financial Statements (continued)
(Information with respect to October 31, 2000 and 1999)
(6) Income taxes:
The Company's total noncurrent deferred tax asset and noncurrent
deferred tax liabilities at October 31, 2000 are as follows
(computed at the statutory rate 34%):
<TABLE>
<CAPTION>
2000
----
<S> <C>
Deferred income taxes:
Noncurrent deferred tax asset -
Inventory overhead costs
capitalized for tax purposes $ 47,600
Noncurrent deferred tax liability -
Accumulated depreciation (62,017)
---------
Net noncurrent deferred tax asset (liability) per
financials 10/31/00 (14,417)
Deferred tax asset (liability) 7/31/00 5,966
---------
Deferred tax expense 20,383
Taxes currently payable 181,917
---------
Income tax provision per financials $ 202,300
=========
</TABLE>
(7) Long-term debt:
<TABLE>
<CAPTION>
2000 1999
---- ----
<S> <C> <C>
Note payable, bank, 7.42% interest $ 3,929,138 4,000,000
Note payable, bank, 9.10% interest 1,174,072 -
Note payable, bank, 8.66% interest 1,231,290 -
----------- ---------
6,334,500 4,000,000
Less current portion due within one year (391,217) (75,014)
----------- ---------
$ 5,943,283 3,924,986
=========== =========
</TABLE>
Note payable, bank, 7.42% interest:
Monthly installments of principal and interest of $32,028
commencing January 1, 2000 with final installment and entire
unpaid principal balance due on June 1, 2009. Loan is
collateralized by land and building.
12
<PAGE>
PROFESSIONAL VETERINARY PRODUCTS, LTD.
Notes to Financial Statements (continued)
(Information with respect to October 31, 2000 and 1999)
(7) Long-term debt (continued):
Note payable, bank, 9.10% interest:
Monthly installments of principal and interest of $15,352
commencing July 1, 2000 with a final installment and entire
unpaid principal balance due on June 1, 2005. Loan is
collateralized by land and building.
Note payable, bank, 8.66% interest:
Monthly installments of principal and interest of $29,032
commencing February 1, 2000 with a final installment and
entire unpaid principal balance due on January 1, 2005. Loan
is collateralized by all business assets.
Total yearly payments of long-term debt are due as follows:
<TABLE>
<CAPTION>
NOTE NOTE NOTE TOTAL
PAYABLE PAYABLE PAYABLE -----
BANK, 7.42% BANK, 9.10% BANK, 8.66%
------------ ----------- -----------
INTEREST INTEREST INTEREST
-------- -------- --------
<S> <C> <C> <C> <C>
2001 $ 87,744 73,689 229,784 391,217
2002 102,757 87,690 272,296 462,743
2003 110,646 96,011 296,837 503,494
2004 119,141 105,122 323,588 547,851
2005 128,288 115,097 108,785 352,170
2006 - 2020 3,380,562 696,463 - 4,077,025
----------- ------- --------- ---------
$ 3,929,138 1,174,072 1,231,290 6,334,500
=========== ========= ========= =========
</TABLE>
The maximum amount available on the revolving line of credit is
$15,000,000. The balances due on this line of credit were $5,232,460
and $1,768,877 for 2000 and 1999 respectively. The interest rate as of
October 31, 2000 was 9.25% or .25% under the Index.
All the above loan agreements are with US Bank. These loans are
collateralized by substantially all of the assets of the Company.
13
<PAGE>
PROFESSIONAL VETERINARY PRODUCTS, LTD.
Notes to Financial Statements (continued)
(Information with respect to October 31, 2000 and 1999)
(8) Commitments and contingent liabilities - leases:
On July 28, 1997, the company entered into a lease with IBM
Credit Corporation for the purpose of leasing related computer
hardware. The lease minimum rentals are $6,541 per month. The
lease expires July 30, 2002.
On February 18, 1998, the company entered into a lease with
Nebraska Leasing Services, Inc. for the purpose of leasing a
truck. The lease minimum rentals are $451.13 per month for a term
of 36 months with a final rental installment of $12,000. The
lease expires January 18, 2001.
On August 14, 1998, the company entered into a lease with IBM
Credit Corporation for the purpose of leasing related computer
hardware. The lease minimum rentals are $3,107 per month for a
term of 48 months. The lease expires August 14, 2002.
On August 31, 1999, the company entered into a lease with IOS
Capital for the purpose of leasing two copiers. The lease minimum
rentals are $1,216 per month for a term of 48 months. The lease
expires August 31, 2003.
On September 1, 1999, the company entered into a lease with US
Bancorp Leasing & Financial for the purpose of leasing two
forklifts. The lease minimum rentals are $1,189 per month for a
term of 48 months. The lease expires August 1, 2003.
On October 7, 1999, the company entered into a lease with Neopost
Leasing for the purpose of leasing a postage meter. The lease
minimum rentals are $687 per quarter for a term of 5 years. The
lease expires February 7, 2005.
On October 10, 1999, the company entered into a lease with US
Bancorp Leasing for the purpose of leasing 50 scanners. The lease
minimum rentals are $6,255 per month for a term of 36 months. The
lease expires September 10, 2002.
On November 10, 1999, the company entered into a lease with US
Bancorp Leasing for the purpose of leasing a floor scrubber. The
lease minimum rentals are $306 per month for a term of 48 months.
The lease expires October 10, 2003.
14
<PAGE>
PROFESSIONAL VETERINARY PRODUCTS, LTD.
Notes to Financial Statements (continued)
(Information with respect to October 31, 2000 and 1999)
(8) Commitments and contingent liabilities - leases (continued):
On November 30, 1999, the company entered into a lease with IBM
Credit Corp for the purpose of leasing IBM Service Suite
Maintenance. The lease minimum lease rentals are $1,675 per month
for a term of 36 months. The lease expires November 30, 2002.
On November 30, 1999, the company entered into a lease with IOS
Capital for the purpose of leasing related copier parts. The
lease minimum lease rentals are $164 per month for a term of 60
months. The lease expires November 30, 2004.
On February 15, 2000, the company entered into a lease with
Chrysler Financial for the purpose of leasing a van. The lease
minimum lease payments are $416 per month for a term of 36
months. The lease expires February 15, 2003.
On March 6, 2000, the company entered into a lease with IBM
Credit Corp for the purpose of leasing computer hardware. The
lease minimum rentals are $6,193 per month for a term of 36
months. The lease expires February 6, 2003.
On March 1, 2000, the company entered into a lease with P & L
Capital Corp for the purpose of leasing 11 laptop computers. The
lease minimum lease payments are $1,627 per month for a term of
24 months. The lease expires February 1, 2002.
On April 27, 2000, the company entered into a lease with Chrysler
Financial for the purpose of leasing a vehicle. The lease minimum
rentals are $669 per month for a term of 36 months. The lease
expires April 27, 2003.
On October 1, 2000, the company entered into a lease with US
Bancorp Leasing for the purpose of leasing five forklifts. The
lease minimum rentals are $2,572 per month for a terms of 60
months. The lease expires September 1, 2005.
15
<PAGE>
PROFESSIONAL VETERINARY PRODUCTS, LTD.
Notes to Financial Statements (continued)
(Information with respect to October 31, 2000 and 1999)
(8) Commitments and contingent liabilities - leases: (continued)
Minimum future obligations on operating leases in effect on
October 31, 2000 are:
<TABLE>
<S> <C>
Period ended October 31, 2001 $ 387,250
Period ended October 31, 2002 340,789
Period ended October 31, 2003 95,419
Period ended October 31, 2004 35,576
Period ended October 31, 2005 29,830
---------
$ 888,864
=========
</TABLE>
(9) Transactions between Board of Directors, key employees and the
company.
Professional Veterinary Products, Ltd. had sales to the Board of
Directors and key employees for the period ended October 31, 2000
as follows:
<TABLE>
<CAPTION>
2000 1999
---- ----
<S> <C> <C>
Members of the Board of Directors $ 964,623 792,993
Key employees 216 7,618
--------- -------
$ 964,839 800,611
========= =======
</TABLE>
(10) Profit-sharing and 401-K retirement plans:
The Company provides a non-contributory profit-sharing plan
covering all full-time employees who qualify as to age and length
of service. It has been the Company's policy to make
contributions to the plan as provided annually by the Board of
Directors. The total provision for the contribution to the plan
was $0 for the period ended October 31, 2000 and 1999.
The Company also provides a contributory 401-K retirement plan
covering all full-time employees who qualify as to age and length
of service. It is the Company's policy to match a maximum 15%
employee contribution with a 3% contribution. The total provision
to the plan for the period ended October 31 was $35,001 (2000),
$30,629 (1999).
16
<PAGE>
ITEM 2: MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
LIQUIDITY AND CAPITAL RESOURCES
Our capital requirements relate primarily to working capital and the
expansion of our operations to accommodate sales growth. We maintain significant
inventory levels to fulfill our operating commitment to our customers.
Historically, we have financed our cash requirements primarily from short-term
bank borrowings and cash from operations.
Net cash provided by operating activities of $284,676 for period ending
October 31, 1999 was primarily attributable to increases of $11,180,520 in
accounts receivable and $5,360,620 in inventories. These were partially offset
by an increase of $17,562,256 in accounts payable. Net cash provided by
operating activities of $2,002,086 for period ending October 31, 2000 was
primarily attributable to an increase of $7,913,573 in accounts receivable.
These were partially offset by an increase of $5,232,421 in inventories and
$5,472,696 in accounts payable.
Net cash used by investing activities of $3,850,732 for period ending
October 31, 1999 was primarily attributable to investments in property and
equipment. Net cash used by investing activities of $37,463 for period ending
October 31, 2000 was primarily attributable to investments in property and
equipment.
Net cash provided by financing activities of $1,545,857 for period ending
October 31, 1999 was primarily attributable to increases of $1,410,273 in loan
proceeds and $135,584 from net proceeds from issuance of common stock. Net cash
used by financing activities of $3,040,674 period ending October 31, 2000 was
primarily attributable to reduction of $3,082,674 in loan proceeds and increase
of $42,000 from net proceeds from issuance of common stock.
RESULTS OF OPERATIONS
Three months ended October 31, 2000 as compared to the three months ended
October 31, 1999:
Total revenues for the period ending October 31, 2000 increased by 19.9% or
$8.3 million. Total revenues for the period totaled $50.1 million compared to
$41.8 million for the same period the previous year. The growth was attributable
to increased sales to existing veterinary shareholders and also the addition of
new shareholders. During the period 14 veterinary practices became shareholders
of the Company. On October 31, 2000 there were 1,395 shareholders of the
Company.
Gross profit for the period ending October 31, 2000 increased by $519
thousand to $3.8 million compared to $3.3 million for the same period the
previous year. Gross
17
<PAGE>
profit as a percentage of total revenues was 7.7% in the period compared to 8.0%
in the same period the previous year.
Operating, general and administrative expenses for the period ending
October 31, 2000 increased by $67 thousand to $3.1 million in the period
compared to $3.0 million for the same period the previous year. Such operating,
general and administrative expenses as a percentage of total revenues for the
period was 6.2% vs. 7.2% in the same period the previous year.
ITEM 3: QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
The Company is exposed to market risks primarily from changes in U.S.
interest rates. The Company does not engage in financial transactions for
trading or speculative purposes.
The interest payable on the Company's revolving line of credit is based on
variable interest rates and is therefore affected by changes in market interest
rates. If interest rates on variable rate debt rose .925 percentage points (a
10% change from the interest rate as of October 31, 2000), assuming no change in
the Company's outstanding balance under the line of credit (approximately
$5,232,460 as of October 31, 2000), the Company's annualized income before taxes
and cash flows from operating activities would decline by approximately $48,400.
PART II
OTHER INFORMATION
ITEM 1: LEGAL PROCEEDINGS
The Company has not been informed of any legal matters that would have a
material adverse effect on its financial condition, results of operation or cash
flow.
ITEM 2: CHANGES IN SECURITIES AND USE OF PROCEEDS
(d) Use of Proceeds:
On October 19, 1999 the registration statement (Registration No. 333-86629)
for the initial public offering of our common stock became effective. 500 shares
of common stock were registered with an aggregate offering price of $1,500,000.
Through October 31, 2000, 207 shares of common stock have been sold for an
aggregate offering price of $621,000.
There have been no changes since the last reporting period in the amount or
payment of the expenses incurred in connection with the issuance and
distribution of
18
<PAGE>
our common stock. Accordingly, a total reasonable estimate of the amount of
expenses is $127,053.56.
The net offering proceeds to the Company after deducting the total expenses
are $493,946.44 as of October 31, 2000.
ITEM 3: DEFAULTS UPON SENIOR SECURITES
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 REQUIRED TO BE FILED BY ITEM 601 OF REGULATION S-K
27. Financial Data Schedule
(b) REPORTS ON FORM 8-K
The Company filed no current reports on Form 8-K during the
quarter ended October 31, 2000.
SIGNATURES
Pursuant to the requirements of the Securities and Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
Date: December 15, 2000 By: /s/ Dr. Lionel L. Reilly, President
19
