Back to GetFilings.com
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 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, 2004
OR
|_| TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from ______________to ______________
Commission file number 0-12927
NATIONAL HOME HEALTH CARE CORP.
-------------------------------
(Exact name of Registrant as Specified in Its Charter)
Delaware 22-2981141
------------------------------- -------------------------------
(State or Other Jurisdiction of (IRS Employer Identification No.)
Incorporation or Organization)
700 White Plains Road, Scarsdale, New York 10583
------------------------------------------------
(Address of Principal Executive Offices with Zip Code)
Registrant's Telephone Number Including Area Code: 914-722-9000
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. Yes X No __
Indicate by check mark whether the Registrant is an accelerated filer
(as defined in Rule 12b-2 of the Exchange Act). Yes No X
--- ---
APPLICABLE ONLY TO CORPORATE ISSUERS:
The number of shares of common stock outstanding as of December 14, 2004 was
5,664,124.
NATIONAL HOME HEALTH CARE CORP.
Form 10-Q
For the Quarter Ended October 31, 2004
Table of Contents
PART I. FINANCIAL INFORMATION Page
----
Item 1. Financial Statements
Balance Sheets as of October 31, 2004 and July 31, 2004 3-4
(unaudited)
Statements of Operations for the three months ended October 31, 5
2004 and October 31, 2003 (unaudited)
Statements of Cash Flows for the three months ended October 31, 6
2004 and October 31, 2003 (unaudited)
Notes to Consolidated Financial Statements 7
Item 2. Management's Discussion and Analysis of Financial Condition and 8-12
Results of Operations
Item 3. Quantitative and Qualitative Disclosure About Market Risk 12
Item 4. Controls and Procedures 13
PART II. OTHER INFORMATION
Item 1. Legal Proceedings 14
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds 15
Item 4. Submission of Matters to Vote of Securities Holders 15
Item 6. Exhibits and Reports on Form 8-K 16
SIGNATURES 17
EXHIBIT INDEX 18
-2-
NATIONAL HOME HEALTH CARE CORP. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(UNAUDITED)
October 31, 2004 July 31, 2004
----------- -----------
ASSETS
Current:
Cash and cash equivalents $20,006,000 $20,185,000
Investments 19,000 19,000
Accounts receivable-less allowance for possible
losses of $1,120,000 and $1,122,000 18,357,000 18,084,000
Prepaid expenses and other 931,000 801,000
Deferred income taxes 518,000 527,000
----------- -----------
Total current assets 39,831,000 39,616,000
Furniture, equipment and leasehold
improvements, net 1,097,000 1,083,000
Goodwill 11,621,000 10,628,000
Other intangible assets, net 1,531,000 1,589,000
Deposits and other assets 832,000 570,000
----------- -----------
TOTAL $54,912,000 $53,486,000
=========== ===========
(continued)
-3-
NATIONAL HOME HEALTH CARE CORP. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(UNAUDITED)
October 31, 2004 July 31, 2004
------------ ------------
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable and accrued expenses $ 3,200,000 $ 3,322,000
Estimated third-party payor settlements 533,000 696,000
Deferred revenue 512,000 402,000
Income taxes payable 559,000 27,000
------------ ------------
Total current liabilities 4,804,000 4,447,000
------------ ------------
Stockholders' equity:
Common stock, $.001 par value; authorized
20,000,000 shares, issued 7,041,388 shares 7,000 7,000
Additional paid-in capital 26,174,000 26,174,000
Retained earnings 27,760,000 26,342,000
------------ ------------
53,941,000 52,523,000
Less: treasury stock (1,461,360 and 1,424,883 shares) at
cost (3,833,000) (3,484,000)
------------ ------------
Total stockholders' equity 50,108,000 49,039,000
------------ ------------
TOTAL $ 54,912,000 $ 53,486,000
============ ============
See accompanying notes to consolidated financial statements.
-4-
NATIONAL HOME HEALTH CARE CORP. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
For the three months
ended October 31,
----------------------------
2004 2003
----------- -----------
Net patient revenue $24,177,000 $24,414,000
----------- -----------
Operating expenses:
Cost of revenue 15,577,000 16,419,000
General and administrative 6,102,000 5,887,000
Amortization of intangibles 133,000 127,000
Provision for possible losses 85,000 105,000
----------- -----------
Total operating expenses 21,897,000 22,538,000
----------- -----------
Income from operations 2,280,000 1,876,000
Other income:
Interest 48,000 25,000
----------- -----------
Income before income taxes 2,328,000 1,901,000
Provision for income taxes 910,000 746,000
----------- -----------
Net income $ 1,418,000 $ 1,155,000
=========== ===========
Net income per common share:
Basic $ 0.25 $ 0.21
=========== ===========
Diluted $ 0.25 $ 0.20
=========== ===========
Weighted average number of shares outstanding:
Basic 5,609,845 5,495,666
=========== ===========
Diluted 5,734,510 5,673,853
=========== ===========
See accompanying notes to consolidated financial statements.
-5-
NATIONAL HOME HEALTH CARE CORP. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
For the three months ended
October 31,
-------------------------------
2004 2003
------------ ------------
Cash flows from operating activities:
Net income $ 1,418,000 $ 1,155,000
Adjustments to reconcile net income
to net cash provided by operating activities:
Depreciation and amortization 216,000 208,000
Allowance for possible losses, net of writeoffs (2,000) (38,000)
Deferred income taxes 9,000 33,000
Unrealized (gain) on investments - - - - (2,000)
Loss on sale of assets 3,000 - - - -
Changes in assets and liabilities:
Accounts receivable (271,000) (821,000)
Prepaid expenses and other (392,000) 74,000
Accounts payable and accrued expenses (122,000) (180,000)
Estimated third-party payor settlements (163,000) (50,000)
Income taxes payable 532,000 188,000
Deferred revenue 110,000 32,000
------------ ------------
Net cash provided by operating activities 1,338,000 599,000
------------ ------------
Cash flows from investing activities:
Purchase of furniture, equipment and leasehold improvements (90,000) (57,000)
------------ ------------
Purchase of assets of business (1,078,000) - - - -
------------ ------------
Net cash used in investing activities (1,168,000) (57,000)
------------ ------------
Cash flows from financing activities:
Purchase of treasury shares (349,000) (7,000)
Proceeds from exercise of stock options - - - - 4,000
------------ ------------
Net cash used in financing activities (349,000) (3,000)
------------ ------------
Net increase (decrease) in cash and cash equivalents (179,000) 539,000
------------ ------------
Cash and cash equivalents-beginning of period 20,185,000 14,252,000
------------ ------------
Cash and cash equivalents-end of period $ 20,006,000 $ 14,791,000
============ ============
Supplemental disclosures of cash flow information:
Cash paid during the period for:
Taxes $ 369,000 $ 525,000
Interest 5,000 5,000
See accompanying notes to consolidated financial statements.
-6-
NATIONAL HOME HEALTH CARE CORP. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
NOTE 1 - BASIS OF PRESENTATION
The accompanying unaudited consolidated financial statements have been
prepared in accordance with generally accepted accounting principles for interim
financial information and with instructions to Form 10-Q and Article 10 of
regulation S-X. Accordingly, they do not include all of the information and
footnotes required by generally accepted accounting principles for complete
financial statements. In the opinion of management, all adjustments (consisting
of normal recurring accruals) considered necessary for a fair presentation have
been included. Operating results for the three-month period ended October 31,
2004 are not necessarily indicative of the results that may be expected for the
year ending July 31, 2005. For further information, refer to the consolidated
financial statements and footnotes thereto included in the Company's annual
report on Form 10-K for the year ended July 31, 2004.
NOTE 2 - ACQUISITION
On October 6, 2004, the Company, through a wholly-owned subsidiary in
Connecticut, acquired certain assets and employees from On Duty Metropolitan
Connecticut, LLC ("On Duty"). On Duty provided home health care services in New
Haven and Fairfield Counties. The purchase price of $1,078,000, including
acquisition costs of $103,000 was financed using internal funds. The acquisition
was accounted for as a purchase and substantially allocated to goodwill.
NOTE 3 - RECLASSIFICATIONS
Certain reclassifications have been made in prior periods' financial
statements to conform to classifications used in the current period.
NOTE 4 - NET INCOME PER SHARE DATA
A reconciliation of shares used in calculating basic and diluted net
income per share is as follows:
For the three months ended
October 31,
--------------------------------------------------------
2004 2003
--------- ---------
Shares Shares
--------- ---------
Basic EPS: 5,609,845 5,495,666
Effect of dilutive stock options 124,665 178,187
--------- ---------
Diluted EPS: 5,734,510 5,673,853
========= =========
-7-
Item 2. Management's Discussion and Analysis of Financial Condition and Results
of Operations.
General
The following discussion and analysis provides information which the
Company's management believes is relevant to an assessment and understanding of
the Company's results of operations and financial condition. This discussion and
analysis should be read in conjunction with the attached unaudited consolidated
financial statements and notes thereto, and with the Company's audited financial
statements and notes thereto for the fiscal year ended July 31, 2004 included
with the Company's annual report on Form 10-K with respect to such fiscal year.
Certain matters set forth in this report are forward-looking statements
that are dependent on certain risks and uncertainties, including but not limited
to risks and uncertainties relating to whether the Company can identify,
consummate and integrate on favorable terms acquisitions or market penetrations,
market acceptance, pricing and demand for the Company's services, changing
regulatory environment, changing economic conditions, whether the Company can
attract and retain qualified personnel, the ability to manage the Company's
growth, and other risks detailed in the Company's other filings with the
Securities and Exchange Commission.
The Company is subject to external factors that could significantly
impact its business, including potential reductions in reimbursement rates by
Medicare, Medicaid and other third party payers for the Company's services,
retroactive adjustments due to prior year audits, reviews and investigations,
government fraud and abuse initiatives and other such factors that are beyond
the control of the Company. These factors could cause future results to differ
materially from historical results.
As a Medicaid provider, the Company is subject to routine, unscheduled
audits. These audits may result in the application of a statistically-derived
adjustment factor to the Company's revenues, which may have an adverse impact on
the Company's results of operations. Although the audits to date have not
resulted in any material adjustments, such audits were conducted at a time when
the Company had significantly lower Medicaid revenues. There can be no assurance
that future Medicaid audits will not have a material adverse impact on the
Company.
The Balanced Budget Act (the "Act") was signed into law in August 1997.
The Act made significant changes in the reimbursement system for Medicare home
health care services. The primary change that affects the Company is the
restructuring of the reimbursement system related to Medicare certified home
health care agencies. Prior to the Act, Medicare reimbursed providers on a
reasonable cost basis subject to program-imposed cost per visit limitations.
Under the Act, changes in Medicare home care reimbursement were
scheduled in two phases. A temporary or interim payment system ("IPS") took
effect for cost reports beginning on or after October 1, 1997. Under IPS, home
health care providers were reimbursed the lowest of (i) their actual costs, (ii)
cost limits based on 105% of median costs of freestanding home health agencies,
or (iii) an agency-specific per patient cost limit, based on 1994 costs adjusted
for inflation. Under IPS, most Medicare providers were actually reimbursed under
an agency-specific per patient cost limit. Effective October 1, 2000, under the
prospective payment system, Medicare now reimburses providers a predetermined
base payment. The payment is adjusted for the health condition and care needs of
the beneficiary and is also adjusted for geographic differences in wages across
the country. Medicare provides home health agencies with payments for 60-day
"episodes of care".
The final phase of the Act implemented a 15% cut in Medicare
reimbursement rates effective October 1, 2002. In two of the last three fiscal
years, less than five percent of the Company's net patient
-8-
revenue was derived directly from Medicare, and accordingly the change to the
prospective payment system has not, to date, had a material adverse effect on
the Company. However, there can be no assurance that the Medicare prospective
payment system will not adversely affected by the prospective payment system.
The Company's operations in New York are dependent upon referrals, primarily
from Medicare certified home health care agencies, whose reimbursement has been
adversely affected by the prospective payment system. Under the prospective
payment system, there can be no assurance that the Company's future referrals
will not result in reduced reimbursement rates or reduced volume of business.
The Company derives a substantial amount of revenue from state
sponsored Medicaid programs. Approximately 43%, 42% and 47% of net patient
revenue for the fiscal years ended July 31, 2004, 2003 and 2002, respectively,
were derived from these programs. States differ as to reimbursement policies and
rates. The Company is a licensed Medicaid provider in Connecticut,
Massachusetts, New Jersey and in Nassau and Westchester Counties, New York.
Recent Matters
On or about October 8, 2004, New England Home Care, Inc. ("New
England'), the Company's Medicare certified and state licensed home health care
subsidiary in Connecticut was notified by the Division of Health Systems
Regulation for the Connecticut Department of Public Health ("DPH") of New
England's alleged lack of compliance with a Condition of Participation and nine
standards for continued Certification for Participation in the Title XVIII
Medicare Program ("Summary Statement of Deficiencies"). On October 12, 2004, New
England received notice from DPH of alleged violation of Connecticut state
regulations based on substantially the same grounds as the Summary Statement of
Deficiencies. DPH notified New England that consideration for continued Medicare
certification would be based on New England's submission of a Plan of Correction
addressing the cited deficiencies and DPH's acceptance of that Plan of
Correction by November 12, 2004.
A Title XVIII Medicare Follow Up Survey was concluded at New England on
November 30, 2004. The results of the survey indicated that one Condition of
Participation and eight standards continued to be out of compliance. Based on
the results of the survey, New England continues to not be certifiable at this
time. Consideration for continued certification will be based on correction of
the Condition level non-compliance. Continued failure to achieve compliance with
the Condition of Participation will result in a recommendation from DPH that New
England's Title XVIII Medicare participation should be terminated effective
December 27, 2004.
Although New England disputes certain of the deficiencies cited by DPH,
New England intends to comply fully with DPH's direction and has submitted a
Plan of Correction and expects that its Plan of Correction will be acceptable.
In the event that New England's Plan of Correction is deemed unacceptable, New
England would no longer be certified as an approved provider of services
reimbursed under the Medicare program and would be prohibited from participating
in that program as well as the Medicaid program. Revenues derived from New
England's participation in the Medicare and Medicaid programs for the fiscal
year ended July 31, 2004 were 32% of the Company's total revenues for such
period.
On December 6, 2004, the New York State Senate voted to override the
Governor's veto of legislation that will increase the State minimum wage from
the current $5.15 per hour to $7.15 over a two-year period. The law will
increase the minimum wage to $6.00 per hour starting January 1, 2005. The
minimum wage will be raised to $6.75 on January 1, 2006 and again on January 1,
2007 to $7.15 per hour. This minimum wage legislation will impact the Company's
New York operations on two fronts. Firstly, the Company will be paying higher
base wages and secondly, overtime in New York is computed at 1.5 times state
minimum wage, thus increasing overtime costs to the Company. The Company is
evaluating its options to determine the effect of this legislation. It does not,
however, anticipate being able to pass along these increases to its customers in
2005.
-9-
Results of Operations and Effects of Inflation
Net Patient Revenue. For the three months ended October 31, 2004, net
patient revenue decreased $237,000, or 1%, to $24,177,000 from $24,414,000 for
the three months ended October 31, 2003. This decrease was primarily
attributable to (i) a decrease of $1,085,000 as a result of fewer hours being
subcontracted to the Company from other Medicare certified agencies in New York
and the Company terminating operations in Suffolk County, New York in May 2004,
offset by a nonrecurring retroactive Medicaid rate adjustment payment of
$176,000 recorded in the three months ended October 31, 2004, and (ii) a
decrease of $568,000 in staffing revenue as a result of the Company terminating
its staffing operations in New York and New Jersey during the fiscal year ended
July 31, 2004. The decline in net patient revenue was partially offset by an
increase in net patient revenue of $1,415,000 resulting from the Company's
expansion in New Jersey, Massachusetts and Connecticut. The increase in
Connecticut was attributable to increased Medicaid reimbursement rates for
certain nursing visits effective May 1, 2004 and the acquisition of On Duty on
October 6, 2004.
Gross Profit. Gross profit margin increased to 35.6% for the three
months ended October 31, 2004 from 32.8% for the three months ended October 31,
2003. This increase was primarily attributable to (i) the nonrecurring
retroactive Medicaid rate adjustment in New York, (ii) the increase in Medicaid
reimbursement rates for certain nursing visits in Connecticut, (iii) the
termination of the Company's staffing operations in New York and New Jersey and
(iv) the increase in Medicare certified business in Massachusetts.
General and Administrative. General and administrative expenses
increased $215,000, or 3.7%, to $6,102,000 for the three months ended October
31, 2004 from $5,887,000 for the three months ended October 31, 2003. This
increase is primarily attributable to (i) increased professional fees, and (ii)
increases in administrative personnel and occupancy costs resulting from the
expansion of operations in New Jersey, Massachusetts and Connecticut. The
increase in general and administrative expenses was offset by the termination of
staffing operations in New Jersey and New York. As a percentage of net patient
revenue, general and administrative expenses increased to 25.1% for the three
months ended October 31, 2004 from 24.1 % for the three months ended October 31,
2003.
Amortization. Amortization of intangibles increased $6,000, or 4.7%, to
$133,000 for the three months ended October 31, 2004 from $127,000 for the three
months ended October 31, 2003. This increase is attributable to the acquisition
of On Duty in October 2004.
Provision for Possible Losses. The Company recorded a provision for
possible losses of $85,000 for the three months ended October 31, 2004, as
compared to $105,000 for the three months ended October 31, 2003. This decrease
is attributable to the Company terminating staffing operations in New York and
New Jersey during the fiscal year ended July 31, 2004.
Income from Operations. As a result of the foregoing, income from
operations increased $404,000, or 21.5% to $2,280,000 for the three months ended
October 31, 2004 from $1,876,000 for the three months ended October 31, 2003.
Interest Income. Interest income increased $23,000, or 92%, to $48,000
for the three months ended October 31, 2004 from $25,000 for the three months
ended October 31, 2003. This increase is attributable to the higher cash
balances of the Company and an increase in interest rates.
Income Taxes. The Company's effective tax rate decreased slightly to
39.1 % for the three months ended October 31, 2004 from 39.2% for the three
months ended October 31, 2003.
-10-
Net Income. Net income increased $263,000, or 22.8%, to $1,418,000, or
$.25 per diluted share, in the three months ended October 31, 2004 from
$1,155,000, or $.20 per diluted share, in the three months ended October 31,
2003.
The rate of inflation had no material effect on operations for the
three months ended October 31, 2004.
Financial Condition and Capital Resources
Current assets increased to $39,831,000 and current liabilities
increased to $4,804,000 at October 31, 2004. This resulted in a decrease in
working capital of $142,000 from $35,169,000 at July 31, 2004 to $35,027,000 at
October 31, 2004. Cash and cash equivalents decreased $179,000 to $20,006,000 at
October 31, 2004 from $20,185,000 at July 31, 2004. The decrease in cash and
working capital was primarily attributable to the acquisition of On Duty in
October 2004.
The Company provided net cash from operating activities of $1,338,000
for the three months ended October 31, 2004 as compared to net cash provided by
operating activities of $599,000. The increase in net cash provided by operating
activities of $739,000 is attributable to an increase in operating cash flow of
$288,000, a decrease in operating assets of $84,000 and an increase in operating
liabilities of $367,000 over the comparable period for the three months ended
October 31, 2003.
Net cash used in investing activities for the three months ended
October 31, 2004 consisted of the purchase of assets of business and the
purchase of equipment. Net cash used in investing activities for the three
months ended October 31, 2003 consisted of the purchase of equipment.
The net cash used in financing activities for the three months ended
October 31, 2004 consisted of the purchase of treasury shares. The net cash used
in investing activities for the three months ended October 31, 2003 consisted of
the purchase of treasury shares, reduced by the proceeds from stock option
exercises.
The nature of the Company's business requires weekly payments to health
care personnel at the time services are rendered. The Company typically receives
payment for these services in 90 to 120 days with respect to contracted and
insurance business and 8 to 45 days with respect to certain governmental payers,
such as Medicare and Medicaid programs. Accounts receivable was 75 days at
October 31, 2004 as compared to 71 days at October 31, 2003.
The Company has a $7,500,000 committed revolving line of credit
facility (the "credit facility") with its bank. The credit facility provides for
the Company to borrow up to the lesser of $7,500,000 or 80% of eligible accounts
receivable that are aged less than 120 days at the bank's prime rate or LIBOR
plus 2.5%. the credit facility expires in October 2005 and requires the Company
to meet certain financial covenants and ratios. The Company is required to pay
..25% commitment fee on unused amounts, payable in arrears. At October 31, 2004,
there was no outstanding balance under the credit facility.
In June 2004, the Board of Directors extended the Company's program to
repurchase its Common Stock for an additional year. Purchases of up to
$3,000,000 will be made from time to time in the open market and through
privately negotiated transactions, subject to general market and other
conditions. The buyback program will be financed out of existing cash or cash
equivalents.
The Company intends to incur capital expenditures of approximately
$1,000,000 during the fiscal year ended July 31, 2005 in connection with the
proposed implementation of new computer software systems and hardware. The new
hardware would be designed to, among other things, update certain data
-11-
input capability regarding services rendered at certain locations. The Company
believes that the software will provide efficiencies in data organization,
retrieval and analysis, both for continuing operations and in connection with
certain audits. The Company paid a cash dividend of $0.075 per share on November
5, 2004, and has authorized a cash dividend of $0.075 per share to be paid on
February 4, 2005 to stockholders of record on January 21, 2005. The amount of
the dividend is approximately $418,000 per quarter. The Company intends to fund
these expenditures, acquisitions and cash dividends declared by the Board of
Directors and otherwise meet its short term and long term liquidity needs from
its current cash balances, cash flow from operations and its credit facility.
Contractual Obligations
The Company rents various office facilities through 2008 under terms of
several lease agreements that include escalation clauses. At October 31, 2004,
minimum rental commitments under noncancellable operating leases are as follows:
Operating Leases
less than 1 year $968,000
1-3 years $499,000
3-5 years -0-
Item 3. Quantitative and Qualitative Disclosure About Market Risk.
None.
-12-
Item 4. Controls and Procedures
The Company maintains disclosure controls and procedures that are
designed to ensure that information required to be disclosed in the reports that
the Company is required to file under the Securities Exchange Act of 1934 (the
"Exchange Act Reports") is recorded, processed, summarized and reported within
the time periods specified in the SEC's rules and forms, and that such
information is accumulated and communicated to the Company's management,
including the principal executive officer and principal financial officer, as
appropriate, to allow timely decisions regarding required disclosure. The
Company's management necessarily has applied its judgment in assessing the costs
and benefits of such controls and procedures, which, by their nature, can
provide only reasonable assurance regarding management's control objectives.
Management believes that there are reasonable assurances that our controls and
procedures will achieve management's control objectives.
Prior to the filing date of this report, the Company carried out an
evaluation, under the supervision and with the participation of its management,
including the President and Chief Executive Officer and the Vice President of
Finance and Chief Financial Officer, of the effectiveness of the design and
operation of the Company's disclosure controls and procedures pursuant to
Exchange Act Rule 13a-15 as of October 31, 2004. Based upon that evaluation, the
President and Chief Executive Officer and the Vice President of Finance and
Chief Financial Officer concluded that the Company's disclosure controls and
procedures are effective in timely alerting them to material information
relating to the Company (and its consolidated subsidiaries) required to be
included in its Exchange Act Reports.
Changes in Internal Controls Over Financial Reporting
The evaluation referred to above did not identify any changes in the
Company's internal controls over financial reporting that occurred during the
quarter ended October 31, 2004 that have materially affected, or are reasonably
likely to materially affect, the Company's internal control over financial
reporting.
-13-
PART II OTHER INFORMATION
Item 1. Legal Proceedings
In October 2003, New England received a subpoena from the United States
Attorney's Office in New Haven, Connecticut. The subpoena sought production of
documents in connection with an investigation into possible violations of
certain federal health care laws. The Company believes that the investigation,
which the Company understands is being conducted in parallel with an
investigation by state of Connecticut authorities, seeks evidence of potentially
fraudulent claims that may have been submitted by psychiatric nurses employed by
New England. The Company cannot now predict the course or outcome of the
investigation or whether additional information will be sought. The Company
believes that the investigation extends to certain other competitors in the
Connecticut market for psychiatric nursing. New England has produced documents
in response to the subpoena and intends to continue to cooperate with the
investigation.
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
(c) Purchases of Equity Securities by the Issuer and Affiliated
Purchasers: The following table shows Issuer Purchases of Equity Securities:
Total
Number of
Shares
Purchased Maximum
Average as Part of Approximate
Total Price Publicly Dollar Value
Number Paid Per Announced that May
Period of Shares Share Plans Yet Be Purchased
------ ------ ----- ----- ---------
August 1, 2004 - August 31, 2004 33,200 $9.53 33,200 $2,525,733
September 1, 2004 - September 30, 2004 3,277 $9.98 3,277 $2,493,038
October 1, 2004 - October 31, 2004 --- --- --- ---
---------- ---------- ------------- -----------------
Total 36,477 $9.57 36,477 $2,493,038
Effective April 24, 2004, the Company's Board of Directors extended its
program to repurchase its Common Stock for an additional year. Purchases up to
$3,000,000 will be made from time to time in the open market and through
privately-negotiated transactions, subject to general market and other
conditions.
Item 4. Submission of Matters to a Vote of Security Holders
The annual meeting of shareholders of the Company (the "Meeting") was
held on December 6, 2004. Proxies for the Meeting were solicited pursuant to
Rule 14A of the Securities Exchange Act of 1934, as amended, and there was no
solicitation in opposition.
-14-
At the Meeting, Frederick H. Fialkow, Bernard Levine, M.D., Steven
Fialkow, Ira Greifer, M.D., Robert C. Pordy, M.D. and Harold Shulman, J.D., CPA
were elected as directors of the Company to serve until the Company's next
annual meeting of stockholders and until their respective successors are elected
and qualified. The votes for each director were as follows:
For Withheld
--- --------
Frederick H. Fialkow 3,902,615 4,197
Steven Fialkow 3,902,615 4,197
Bernard Levine, M.D. 3,902,615 4,197
Ira Greifer, M.D. 3,902,615 4,197
Robert C. Pordy, M.D. 3,903,515 3,297
Harold Shulman J.D., CPA 3,903,515 3,297
In addition, the Company's stockholders ratified at the Meeting the
selection by the Audit Committee of the Board of Directors of BDO Seidman, LLP
as the Company's independent certified accountants for the year ending July 31,
2005. The votes for such ratification were as follows:
For Against Abstain Broker Non-Votes
--- ------- ------- ----------------
3,881,070 25,495 247 0
Item 6. Exhibits and Reports on Form 8-K
(a) The following exhibits are filed herewith:
Exhibit
Number Description
------ -----------
31.1 Rule 13a-14(a)/15d-14(a) Certification of Principal Executive
Officer.
31.2 Rule 13a-14(a)/15d-14(a) Certification of Principal Financial
Officer.
32.1 Section 1350 Certification of Principal Executive Officer.
32.2 Section 1350 Certification of Principal Financial Officer.
-15-
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.
NATIONAL HOME HEALTH CARE CORP.
Date: December 14, 2004 /s/ Robert P. Heller
-----------------------
Robert P. Heller
Vice President of Finance (principal financial
officer and principal accounting officer)
-16-
EXHIBIT INDEX
Exhibit
Number Description
------ -----------
31.1* Rule 13a-14(a)/15d-14(a) Certification of Principal Executive
Officer.
31.2* Rule 13a-14(a)/15d-14(a) Certification of Principal Financial
Officer.
32.1* Section 1350 Certification of Principal Executive Officer.
32.2* Section 1350 Certification of Principal Financial Officer.
- ------------------
* Filed herewith
-17-