Securities and exchange commission


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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, DC 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 March 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 001-14057
KINDRED HEALTHCARE, INC.

(Formerly Vencor, Inc.)

(Exact name of registrant as specified in its charter)
Delaware 61-1323993

(State or other jurisdiction of (I.R.S. Employer

incorporation or organization) Identification No.)

680 South Fourth Street

Louisville, KY 40202-2412

(Address of principal executive offices) (Zip Code)
(502) 596-7300

(Registrant's telephone number, including area code)

Indicate by check mark whether the registrant (1) has filed all reports

required to be filed by Section 13 or 15(d) of the Securities Exchange Act of

1934 during the preceding 12 months (or for such shorter period that the

registrant was required to file such reports), and (2) has been subject to such

filing requirements for the past 90 days. Yes X No

----- -----

Indicate the number of shares outstanding of each of the issuer's classes of

common stock, as of the latest practicable date.

Class of Common Stock Outstanding at April 30, 2000

----------------------------- -----------------------------

Common stock, $0.25 par value 69,937,473 shares

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KINDRED HEALTHCARE, INC.

(Formerly Vencor, Inc., a Debtor-in-Possession)

FORM 10-Q/A

INDEX

PART I. FINANCIAL INFORMATION Page

----

Item 1. Financial Statements (restated):

Condensed Consolidated Statement of Operations -- for the three

months ended March 31, 2000 and 1999 ........................... 3
Condensed Consolidated Balance Sheet -- March 31, 2000

and December 31, 1999........................................... 4
Condensed Consolidated Statement of Cash Flows -- for the

three months ended March 31, 2000 and 1999...................... 5
Notes to Condensed Consolidated Financial Statements.............. 6
Item 2. Management's Discussion and Analysis of Financial Condition

and Results of Operations....................................... 24
Item 3. Quantitative and Qualitative Disclosures About Market Risk........ 36
2
KINDRED HEALTHCARE, INC

(Formerly Vencor, Inc., a Debtor-in-Possession)

CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS

For the three months ended March 31, 2000 and 1999

(Unaudited)

(In thousands, except per share amounts)
(Restated - see Note 2)

--------------------

2000 1999

-------- --------
Revenues............................................................ $715,456 $700,232

-------- --------

Salaries, wages and benefits........................................ 405,313 403,894

Supplies............................................................ 93,398 84,997

Rent................................................................ 76,220 75,452

Other operating expenses............................................ 122,589 112,561

Depreciation and amortization....................................... 17,902 22,285

Interest expense.................................................... 16,239 19,536

Investment income................................................... (1,206) (631)

-------- --------

730,455 718,094

-------- --------

Loss before reorganization costs and income taxes................... (14,999) (17,862)

Reorganization costs................................................ 3,065 2,312

-------- --------

Loss before income taxes............................................ (18,064) (20,174)

Provision for income taxes.......................................... 500 50

-------- --------

Loss from operations................................................ (18,564) (20,224)

Cumulative effect of change in accounting for start-up costs........ - (8,923)

-------- --------

Net loss................................................... (18,564) (29,147)

Preferred stock dividend requirements............................... (261) (261)

-------- --------

Loss to common stockholders................................ $(18,825) $(29,408)

======== ========
Loss per common share:

Basic:

Loss from operations.......................................... $ (0.27) $ (0.29)

Cumulative effect of change in accounting for start-up costs.. - (0.13)

-------- --------

Net loss................................................... $ (0.27) $ (0.42)

======== ========
Diluted:

Loss from operations.......................................... $ (0.27) $ (0.29)

Cumulative effect of change in accounting for start-up costs.. - (0.13)

-------- --------

Net loss................................................... $ (0.27) $ (0.42)

======== ========
Shares used in computing loss per common share:

Basic............................................................ 70,240 70,326

Diluted.......................................................... 70,240 70,326

See accompanying notes.
3
KINDRED HEALTHCARE, INC.

(Formerly Vencor, Inc., a Debtor-in-Possession)

CONDENSED CONSOLIDATED BALANCE SHEET

(Unaudited)

(In thousands, except per share amounts)
(Restated)

--------------------------

March 31, December 31,

2000 1999

----------- -----------
ASSETS

Current assets:

Cash and cash equivalents........................................... $ 141,906 $ 148,350

Accounts receivable less allowance for loss......................... 317,185 324,135

Inventories......................................................... 29,817 28,956

Insurance subsidiary investments.................................... 39,376 16,483

Income taxes........................................................ 8,109 8,884

Other............................................................... 70,393 65,076

----------- -----------

606,786 591,884
Property and equipment, at cost...................................... 611,560 615,160

Accumulated depreciation............................................. (250,089) (243,526)

----------- -----------

361,471 371,634
Goodwill less accumulated amortization............................... 171,001 173,818

Investment in affiliates............................................. 16,255 15,874

Assets held for sale................................................. 16,343 17,217

Other................................................................ 65,217 65,547

----------- -----------

$ 1,237,073 $ 1,235,974

=========== ===========
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)

Current liabilities:

Accounts payable.................................................... $ 89,428 $ 101,219

Salaries, wages and other compensation.............................. 151,810 159,482

Due to third party payors........................................... 64,840 52,205

Other accrued liabilities........................................... 83,753 83,967

----------- -----------

389,831 396,873
Professional liability risks......................................... 78,737 72,785

Deferred credits and other liabilities............................... 13,618 11,178

Liabilities subject to compromise.................................... 1,177,992 1,159,417
Series A preferred stock (subject to compromise)..................... 1,743 1,743
Stockholders' equity (deficit):

Common stock, $0.25 par value; authorized 180,000 shares;

issued 70,228 shares -- March 31 and 70,278 shares -- December 31.. 17,557 17,570

Capital in excess of par value...................................... 667,090 667,078

Accumulated deficit................................................. (1,109,495) (1,090,670)

----------- -----------

(424,848) (406,022)

----------- -----------

$ 1,237,073 $ 1,235,974

=========== ===========

See accompanying notes.
4
KINDRED HEALTHCARE, INC.

(Formerly Vencor, Inc., a Debtor-in-Possession)

CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS

For the three months ended March 31, 2000 and 1999

(Unaudited)

(In thousands)
(Restated)

--------------------

2000 1999

-------- --------
Cash flows from operating activities:

Net loss......................................................................... $(18,564) $(29,147)

Adjustments to reconcile net loss to net cash provided by operating activities:

Depreciation and amortization................................................. 17,902 22,285

Provision for doubtful accounts............................................... 8,801 6,725

Reorganization costs.......................................................... 3,065 2,312

Cumulative effect of change in accounting for start-up costs.................. - 8,923

Other......................................................................... 3,586 1,871

Changes in operating assets and liabilities:

Accounts receivable........................................................ (1,851) (11,472)

Inventories and other assets............................................... (2,697) 9,068

Accounts payable........................................................... (387) 10,934

Income taxes............................................................... 775 3,421

Due to third party payors.................................................. 12,635 (194)

Other accrued liabilities.................................................. 21,746 12,254

-------- --------

Net cash provided by operating activities before reorganization costs... 45,011 36,980

Payment of reorganization costs.................................................. (2,348) (923)

-------- --------

Net cash provided by operating activities............................... 42,663 36,057

-------- --------

Cash flows from investing activities:

Purchase of property and equipment............................................... (8,250) (24,492)

Sale of assets................................................................... 2,354 3,267

Surety bond deposits............................................................. (3,947) -

Net change in investments........................................................ (22,570) 5,083

Collection of notes receivable................................................... 1,468 -

Other............................................................................ 234 (767)

-------- --------

Net cash used in investing activities................................... (30,711) (16,909)

-------- --------

Cash flows from financing activities:

Repayment of long-term debt...................................................... (5,711) (6,758)

Payment of debtor-in-possession deferred financing costs......................... (600) -

Payment of deferred financing costs.............................................. - (901)

Other............................................................................ (12,085) (29,756)

-------- --------

Net cash used in financing activities................................... (18,396) (37,415)

-------- --------

Change in cash and cash equivalents................................................. (6,444) (18,267)

Cash and cash equivalents at beginning of period.................................... 148,350 34,551

-------- --------

Cash and cash equivalents at end of period.......................................... $141,906 $ 16,284

======== ========

Supplemental information:

Interest payments................................................................ $ 3,444 $ 11,324

Income tax refunds............................................................... 275 3,371

See accompanying notes.
5
KINDRED HEALTHCARE, INC.

(Formerly Vencor, Inc., a Debtor-in-Possession)

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)
NOTE 1 -- BASIS OF PRESENTATION
Kindred Healthcare, Inc. ("Kindred" or the "Company") (formerly Vencor,

Inc.) provides long-term healthcare services primarily through the operation

of nursing centers and hospitals. At March 31, 2000, the Company's health

services division operated 320 nursing centers (40,915 licensed beds) in 31

states and a rehabilitation therapy business. The Company's hospital division

operated 56 hospitals (4,931 licensed beds) in 23 states and an institutional

pharmacy business.
The Company and substantially all of its subsidiaries filed voluntary

petitions for protection under Chapter 11 of Title 11 of the United States Code

(the "Bankruptcy Code") on September 13, 1999. The Company currently is

operating its businesses as a debtor-in-possession subject to the jurisdiction

of the United States Bankruptcy Court in Delaware (the "Bankruptcy Court").

Accordingly, the condensed consolidated financial statements of the Company have

been prepared in accordance with the American Institute of Certified Public

Accountants Statement of Position 90-7, "Financial Reporting by Entities in

Reorganization Under the Bankruptcy Code" ("SOP 90-7") and generally accepted

accounting principles applicable to a going concern, which assumes that assets

will be realized and liabilities will be discharged in the normal course of

business. The condensed consolidated financial statements do not include any

adjustments that might result from the resolution of the Chapter 11 Cases (as

defined) or other matters discussed in the accompanying notes. The Company's

continued operating losses, liquidity issues and the Chapter 11 Cases raise

substantial doubt about the Company's ability to continue as a going concern.

The ability of the Company to continue as a going concern and the

appropriateness of using the going concern basis of accounting are dependent

upon, among other things, (i) the Company's ability to comply with the terms of

the DIP Financing (as defined), (ii) confirmation of a plan of reorganization
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