 |
 |
| 1.
Description of Business Orthodontic Centers of America, Inc. (the “Company”) provides integrated business services to orthodontists practicing throughout the United States and in Japan, Mexico, and Puerto Rico. The Company provides business operations, financial, marketing and administrative services to orthodontic practices. These services are provided under service and consulting agreements (hereafter referred to as “Service Agreements”) with the orthodontist and their wholly owned orthodontic entities (hereafter referred to as “Affiliated Orthodontists”). The Affiliated Orthodontists own the orthodontic entities. As the Company does not control the orthodontic entities, it does not consolidate the financial results of the orthodontic entities. The financial statements include service fees earned under the Service Agreements and the expenses of providing the Company’s services, which generally includes all expenses of the orthodontic practices except for orthodontist compensation and certain expenses directly related to the orthodontic entities, such as professional insurance coverage. 2. Summary of Significant Accounting Policies Principles of Consolidation The consolidated financial statements include the accounts of Orthodontic Centers of America, Inc. and its wholly owned subsidiaries. Significant intercompany accounts and transactions have been eliminated in consolidation. Use of Estimates The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. Actual results could differ from those estimates. Accounting Changes Effective January 1, 2000, the Company adopted a change in accounting for revenue in connection with Securities and Exchange Commission Staff Accounting Bulletin No. 101 (SAB 101), “Revenue Recognition in Financial Statements.” The cumulative effect of this accounting change, calculated as of January 1, 2000, was $50.6 million, net of income tax benefit of $30.6 million. The effect of this accounting change in 2000 was to reduce revenue by $26.3 million. In 2000, the Company recognized revenue of $57.3 million that was included in the cumulative effect adjustment. The pro forma amounts presented in the consolidated statements of income were calculated assuming the accounting change was made retroactive to prior periods. Effective January 1, 1999, the Company adopted SOP 98-5, “Reporting the Costs of Start-Up Activities.” The cumulative effect of this accounting change, calculated as of January 1, 1999, was $678,000, net of income tax benefit. The pro forma amounts in prior periods were not material. Cash Equivalents The Company considers all highly liquid investments with a maturity of three months or less when purchased to be cash equivalents. Investments Management determines the appropriate classification of debt securities at the time of purchase and re-evaluates such designation as of each balance sheet date. All investments held at December 31, 2000 and 1999 are classified as available-for-sale because management does not have positive intent to hold until maturity. Available-for-sale investments are carried at amortized cost, which approximates fair value. At December 31, 2000, investments were included in current assets as management expects to use the proceeds from the sale of the investments in its current operations. At December 31, 2000 and 1999, the Company’s amortized cost of investments held consisted of $999,000 and $983,000, respectively, of government bonds. The unrealized gains and losses on these investments at December 31, 2000 and 1999 were not significant. The amortized cost of debt securities is adjusted for amortization of premiums and accretion of discounts to maturity and included in interest income. The cost of investments sold is based on the specific identification method. Interest on investments classified as available-for-sale is included in interest income. Financial Instruments The following methods and assumptions were used by the Company in estimating its fair value disclosures for financial instruments: Cash and Cash Equivalents: The carrying amount reported in the balance sheets for cash and cash equivalents approximates their fair value. Investments: The fair values for marketable debt securities are based on quoted market prices. Service Fees Receivable and Advances to Orthodontic Entities: The carrying amounts reported on the balance sheets for service fees receivable and advances to orthodontic entities approximate their fair values. Long-Term Debt: The fair values of the Company’s long-term debt are estimated using discounted cash flow analyses, based on the Company’s current incremental borrowing rates for similar types of borrowing arrangements, and approximate their carrying values. The Company will adopt Financial Accounting Standards Board Statement FASB No. 133, “Accounting for Derivative Instruments and Hedging Activities,” as amended, on January 1, 2001. As the Company has no derivatives at the date of adoption, there will be no financial statement impact. Revenue Recognition Net revenue consists of service fees earned by the Company under the Service Agreements. Effective January 1, 2000, the Company changed its method of revenue recognition for service fees earned under its Service Agreements with Affiliated Orthodontists. The Company recognizes service fees based on patient contract revenues calculated on a straight-line basis over the term of the patient contracts, net of amounts to be retained by the orthodontists. The amounts to be retained by orthodontists is the Company’s estimate of the orthodontists’ proportionate share of straight-line patient contract revenues, reduced by the amount of Company expenses incurred and not yet reimbursed by the orthodontists. Prior to the change in method, the Company recognized service fee revenues pursuant to the terms of the Service Agreements. Such fees were recognized on a monthly basis as approximately 24% of new patient contract balances plus a portion of existing patient contract balances, less amounts retained by the orthodontists. This method was supported by proportional performance of business services provided under the Service Agreements. Under the terms of the Service Agreements, the Affiliated Orthodontists assign their patient receivables to the Company in payment of their service fees. Service fees receivable represents the portion of these patient receivables that the Company expects to retain and which has been recognized as net revenue. Orthodontists retain patient revenue not paid to the Company as the service fee. The amounts ultimately retained by orthodontists are dependent upon the financial performance of their practices. Receivables Service fee receivables and advances to orthodontic entities are classified on the consolidated balance sheets based upon the expected date of collection. Collection of amounts due from orthodontic entities is highly dependent on the entities’ financial performance. Therefore, the Company is exposed to certain credit risk. However, management believes such risk is minimized by the Company’s involvement in certain business aspects of the orthodontic entity. Management evaluates the collectibility of these receivables based upon a number of factors relevant to the affiliated orthodontist, including recent new patient contract performance, active patient base and center cost structure. The Company has a history of collecting amounts due from affiliated orthodontists. Under the terms of the Service Agreements, the orthodontic entities assign their patient receivables (billed and unbilled) to the Company in payment of their service fees. The Company is responsible for collection. Unbilled patient receivables represent the earned revenue in excess of billings to patients as of the end of each period. There are no unbilled receivables which will not be billed. The Company is exposed to certain credit risks. The Company manages such risks by regularly reviewing the accounts and contracts, and providing appropriate allowances. Provisions are made currently for all known or anticipated losses for billed and unbilled patient receivables. Such deductions totaled $373,000, $2,079,000 and $2,295,000, for the years ended December 31, 2000, 1999 and 1998, respectively, and have been within management’s expectations. Supplies Inventory Supplies inventory is valued at the lower of cost or market determined on the first-in, first-out basis. Property, Equipment and Improvements Property, equipment and improvements are stated at cost. Depreciation expense is provided using the straight-line method over the estimated useful lives of the assets, which range from 5 to 10 years. Leasehold improvements are amortized over the original lease terms which are generally 5 to 10 years. The related depreciation and amortization expense for the years ended December 31, 2000, 1999 and 1998 was $8,151,000, $6,519,000 and $4,575,000, respectively. Intangible Assets The Company affiliates with a practicing orthodontist by acquiring substantially all of the non-professional assets of the orthodontist’s practice, either directly or indirectly through a stock purchase, and entering into a Service Agreement with the orthodontist. The terms of the Service Agreements range from 20 to 40 years, with most ranging from 20 to 25 years. The acquired assets generally consist of equipment, furniture, fixtures and leasehold interests. The Company records these acquired tangible assets at their fair value as of the date of acquisition, and depreciates or amortizes the acquired assets using the straight-line method over their useful lives. The remainder of the purchase price is allocated to an intangible asset, which represents the costs of obtaining the Service Agreement, pursuant to which the Company obtains the exclusive right to provide business operations, financial, marketing and administrative services to the orthodontist during the term of the Service Agreement. In the event the Service Agreement is terminated, the related orthodontic entity is generally required to purchase all of the related assets, including the unamortized portion of intangible assets, at the current book value. The Company may issue shares of its common stock as consideration when it acquires the assets of and enters into Service Agreements with practicing orthodontists. The Company values the shares of stock issued in these transactions at the average closing market price during a few days prior to the date on which the particular transaction is closed. Service Agreements are amortized over the shorter of their term or 25 years. Amortization expense for the years ended December 31, 2000, 1999 and 1998, was $7,024,000 $5,719,000 and $4,549,000 respectively. Accumulated amortization was $20,737,000 and $13,713,000 as of December 31, 2000 and 1999, respectively. Intangible assets and the related accumulated amortization are written off when fully amortized. Impairment of Long-Lived Assets The Company assesses long-lived assets for impairment under FASB Statement No. 121, “Accounting for Impairment of Long-Lived Assets and for Long-Lived Assets to Be Disposed Of” (FAS 121). Under those rules, Service Agreements are included in impairment evaluations when events or circumstances exist that indicate the carrying amounts of those assets may not be recoverable. The recoverability of Service Agreements is assessed periodically and takes into account whether the Service Agreements should be completely or partially written off or the amortization period accelerated based on management’s estimate of future operating income over the remaining term of the Service Agreement. If a Service Agreement is considered to be impaired, the impairment to be recognized is measured by the amount by which the carrying amount of the Service Agreement exceeds its fair value using estimated cash flows on a discounted basis. Marketing and Advertising Costs Marketing and advertising costs are expensed as incurred. Income Taxes Income taxes for the Company are determined by the liability method in accordance with Statement of Financial Accounting Standards 109, “Accounting for Income Taxes.” Stock Compensation Arrangements As permitted by FASB Statement No. 123 “Accounting for Stock-Based Compensation,” (FAS 123) the Company accounts for its stock compensation arrangements with employees under the intrinsic value method prescribed by APB 25, “Accounting for Stock Issued to Employees.” The Company accounts for stock options granted to non-employees, primarily orthodontists, at fair value determined according to FAS 123. Reclassifications Amounts reported as patient receivables, unbilled patient receivables and patient prepayments in the financial statements for 1999 and 1998 have been reclassified as service fees receivables to conform to their 2000 presentation. 3. Transactions with Orthodontic Entities The following table summarizes the Company’s finalized agreements with orthodontic entities to obtain Service Agreements and to acquire other assets for the years ended December 31, 2000, 1999 and 1998:
At December 31, 2000 and 1999, advances to orthodontic entities totaled $16,701,000 and $20,530,000, respectively. Of these amounts, approximately $1,208,000 and $5,045,000 related to orthodontic entities that generated operating losses during the three months ended December 31, 2000 and 1999, respectively. At December 31, 2000 and 1999, advances to orthodontic entities in international locations totaled $6,196,000 and $1,413,000, respectively. Orthodontic centers that have been newly developed by the Company have typically generated initial operating losses as the orthodontists practicing in the centers begin to build a patient base. These newly developed centers have typically begun to generate operating profits after approximately 12 months of operations. To assist Affiliated Orthodontists in obtaining financing for their portion of initial operating losses and capital improvements for newly developed orthodontic centers, the Company has entered into an agreement with a financial institution under which (i) the financial institution finances these operating losses and capital improvements directly to the orthodontic entity, subject to the financial institution’s credit approval of the orthodontic entity, and (ii) the Company remains a guarantor of the related debt. At December 31, 2000 and 1999, the Company was a guarantor for approximately $2,914,000 and $4,356,000, respectively, of loans under this arrangement. Of these amounts, approximately $172,000 and $392,000 related to orthodontic centers that generated operating losses during the three months ended December 31, 2000 and 1999, respectively. The Company has reserved 2,000,000 shares of common stock for issuance to Affiliated Orthodontists through a stock purchase program that allows participating Affiliated Orthodontists to acquire shares of common stock from the Company. 4. Property, Equipment and Improvements Property, equipment and improvements consisted of the following (in thousands):
5. Long-Term Debt and Notes Payable Long-term debt consisted of the following (in thousands):
The aggregate maturities of long-term debt as of December 31, 2000 for each of the next five years are as follows (in thousands): 2001—$2,426; 2002—$851; 2003—$57,721; 2004—$0; and 2005—$3. The Company has a syndicated $100,000,000 Senior Revolving Credit Facility Agreement (the “Senior Credit Facility”). The Senior Credit Facility provides for an interest rate based on LIBOR, plus the Applicable Margin, as defined in the Senior Credit Facility. As of December 31, 2000, the Company had $42.5 million available for borrowing under its Senior Credit Facility. The Company’s outstanding borrowings under the Senior Credit Facility at December 31, 2000 included $37.4 million in U.S. dollars and $20.1 million in Japanese yen (converted to U.S. dollars). The Company pays a quarterly commitment fee ranging from 0.25% to 0.375% per annum of the unused portion of available credit under the Senior Credit Facility. The interest rate outstanding as of December 31, 2000 ranged from 1.86% to 7.94% per annum, with a maturity date of October 2003. The Company utilizes the proceeds to refinance certain existing indebtedness, to finance certain acquisitions of assets of existing orthodontic centers, and for working capital. The amounts borrowed under the Senior Credit Facility are secured by security interests in all of the Company’s assets, including its accounts receivable and equipment. The Company is required to maintain certain financial and nonfinancial covenants under the terms of the Senior Credit Facility, including a maximum leverage ratio, minimum fixed charge coverage ratio and minimum consolidated net worth ratio. At December 31, 2000, the Company was in compliance with the covenants and restrictions of the Senior Credit Facility. At December 31, 2000, the Company also had a $3,000,000 line of credit with a financial institution. There was no outstanding balance on this line of credit as of December 31, 2000. The line of credit is available for general working capital needs, the development of new orthodontic centers and the acquisition of assets from existing orthodontic centers. The Company is required to maintain certain financial covenants under the terms of this line of credit. The line of credit agreement also restricts certain activities of the Company, including limiting the declaration of dividends to current earnings. At December 31, 2000, the Company was in compliance with the covenants and restrictions of the agreement. 6. Earnings Per Share The following table sets forth the components of the basic and diluted net income (loss) per share calculations (in thousands).
7. Leases Facilities for the orthodontic centers and administrative offices are rented under long-term leases accounted for as operating leases. The original lease terms are generally 5 to 10 years with options to renew the leases for specified periods subsequent to their original terms. The leases have other various provisions, including sharing of certain executory costs and scheduled rent increases. Minimum rent expense is recorded on a straight-line basis over the life of the lease. Minimum future rental commitments as of December 31, 2000 are as follows (in thousands):
Many of the lease agreements provide for payments comprised of a minimum rental payment plus a contingent rental payment based on a percentage of cash collections and other amounts. Rent expense attributable to minimum and additional rentals along with sublease income was as follows (in thousands):
8. Income Taxes Deferred income taxes reflect the net tax effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes. Significant components of the consolidated deferred tax liabilities and assets were as follows (in thousands):
Components of the provision (benefit) for income taxes before the tax effect of the change in accounting were as follows (in thousands):
The reconciliation of income tax computed at the federal statutory rates to the provision for income taxes before the tax effect of the change in accounting is (in thousands):
9. Benefit Plan Stock Option Plans The Company has reserved 3,400,000 of the authorized shares of common stock for issuance pursuant to options granted and restricted stock awarded under the Orthodontic Centers of America, Inc. 1994 Incentive Stock Plan (the “Incentive Option Plan”). Options may be granted to officers, directors and employees of the Company, for terms not longer than 10 years at prices not less than fair market value of the common stock on the date of grant. Grant options generally become exercisable in four equal installments beginning two years after the grant date, and expire 10 years after the grant date. At December 31, 2000, 526,664 shares were available for issuance under the Incentive Option Plan. The Company has reserved 600,000 of the authorized shares of common stock for issuance pursuant to options granted and restricted stock awarded under the Orthodontic Centers of America, Inc. 1994 Non-Qualified Stock Option Plan for Non-Employee Directors (the “Director Option Plan”). The Director Option Plan provides for the grant of options to purchase 2,400 shares of common stock on the first trading date each year to each non-employee director serving the Company on such date, at prices equal to the fair market value of the common stock on the date of grant. Grant options generally become exercisable in four equal annual installments beginning two years after the grant date, and expiring 10 years after the grant date, unless canceled sooner due to termination of service or death. At December 31, 2000, 552,000 shares were available for issuance under the Director Option Plan. The Company has reserved 2,000,000 of the authorized shares of common stock for issuance pursuant to options granted under the Orthodontic Centers of America, Inc. 1995 Restricted Stock Option Plan (the “Orthodontist Option Plan”). Options may be granted to orthodontists who own an orthodontic entity which has a service or consulting agreement with the Company, at prices not less than 100% of the fair market value of the common stock on the date of grant. Grant options generally become exercisable in four equal annual installments beginning two years after grant date, and expire 10 years after grant date. At December 31, 2000, 1,042,024 shares were available for issuance under the Orthodontist Option Plan. Compensation expense of $110,000, $410,000 and $95,000 has been recognized for the Orthodontist Option Plan for 2000, 1999 and 1998, respectively. The Company has reserved 200,000 of the authorized shares of common stock for issuance under the 1996 Employee Stock Purchase Plan (the “Employee Purchase Plan”), which allows participating employees of the Company to purchase shares of common stock from the Company through a regular payroll deduction of up to 10% of their respective normal monthly pay. Deducted amounts are accumulated for each participating employee and used to purchase the maximum reported on the New York Stock Exchange on the applicable purchase date or the first trading date of the year, whichever is lower. Additionally, the Company has reserved 2,000,000 shares of common stock for issuance to affiliated orthodontists through a stock purchase program that allows participating affiliated orthodontists to acquire shares of common stock from the Company. At December 31, 2000, a total of 2,126,207 shares were available for issuance under these stock purchase plans. FASB Statement No. 123, “Accounting for Stock-Based Compensation,” requires the Company to disclose pro forma information regarding net income and earnings per share as if the Company had accounted for its employee stock options under the fair value method. The fair value was estimated at the date of grant using a Black-Scholes option pricing model with the following weighted-average assumptions.
The Black-Scholes option valuation model was developed for use in estimating the fair value of traded options which have no vesting restrictions and are fully transferable. In addition, option valuation models require the input of highly subjective assumptions including the expected stock price volatility. Because the Company’s employee stock options have characteristics significantly different from those of traded options, and because changes in the subjective input assumptions can materially affect the fair value estimate, in management’s opinion, the existing models do not necessarily provide a reliable single measure of the fair value of its employee stock options. For purposes of pro forma disclosures, the estimated fair value of the option is amortized to expense over the option’s vesting period. Had the Company’s stock-based compensation plans been determined based on the fair value at the grant dates, the Company’s net income and earnings per share would have been reduced to the pro forma amounts before the effect of the change in accounting principle indicated below (in thousands, except per share data):
A summary of the Company’s stock option activity, and related information for the years ended December 31 follows:
Of the options outstanding at December 31, 2000, approximately 809,000 were issued on or about the date of the Company’s initial public offering and have exercise prices which range from $2.75 to $3.25, a weighted average exercise price of $3.06, and a weighted average remaining contractual life of 4 years. The remaining options outstanding at December 31, 2000 have exercise prices which range from $2.75 to $33.13, a weighed average exercise price of $14.63, and a weighed average remaining contractual life of 7.02 years. Key Employee Stock Purchase Plan The Company implemented the Orthodontic Centers of America, Inc. 1997 Key Employee Stock Purchase Plan (the “Key Employee Purchase Plan”) to encourage ownership of the Company’s common stock by executive officers and other key employees of the Company and thereby align their interests with those of the Company’s shareholders. For each employee participating in the Key Employee Purchase Plan, the Company will finance 50% of the purchase price through a loan from the Company. Each such loan will be evidenced by a promissory note and will be a full recourse obligation of the employee, secured by all of the shares of common stock acquired by the employee in connection with the loan. Each such loan will bear a market rate of interest and the outstanding principal and accrued interest under the loan will be payable, in one lump-sum payment, on the earlier of (i) the fifth anniversary of the date of the loan or (ii) termination of the applicable employee’s employment with the Company. A proportionate amount of the outstanding principal and accrued interest under the loan will be payable upon the sale or transfer by the employee of shares of common stock purchase in connection with the loan. The Key Employee Purchase Plan includes a risk-sharing provision, whereby during their term of employment with the Company a participating employee will be responsible for 100% of any losses, but is entitled to only 50% of any gains (with the Company being entitled to the other 50% of such gains), occurring with respect to the sale by the employee of shares of common stock purchased under the Key Employee Purchase Plan and held for less than three years. In addition, with respect to the sale by the employee of shares purchased under the Key Employee Purchase Plan and held for more than three but less than five years, the employee will be entitled to 100% of any gains and the principal amount of the loan to the employee from the Company will be reduced by 50% of any losses during the term of the employee’s employment with the Company. In 1997, 295,000 shares of common stock were purchased under the Key Employee Purchase Plan. The 50% of the loan not financed by the Company was financed personally by major shareholders on terms comparable to the loan from the Company. This loan has been recorded as a capital contribution to the Company with the corresponding amount due from the key employees recorded as a deduction from shareholders’ equity. The loan to be financed personally by shareholders was paid by the Company at the time of the offering and has not been repaid at December 31, 2000. Therefore, a capital contribution receivable from the shareholders had been recorded at December 31, 2000 as a reduction from shareholders’ equity. The total amount due from key employees in conjunction with the Key Employee Purchase Plan as of December 31, 2000 was $1,604,000. Defined Contribution Plan The Company sponsors a 401(k) plan for all employees who have satisfied minimum service and age requirements. Employees may contribute up to 15% of their earnings to the plan. The Company matches 40% of an employee’s contribution to the plan, up to a maximum of $600 per year. Plan expense totaled $45,000, $59,000, and $52,000 for years ended December 31, 2000, 1999 and 1998, respectively. 10. Commitments and Contingencies In May 2000, Benjamin M. Pridemore, Jr., D.D.S. and B. Morgan Pridemore, III filed a lawsuit against the Company alleging that the Company breached the terms of an agreement reached in settlement of previous litigation, and that the Company fraudulently induced them to enter into that settlement agreement. The plaintiffs are seeking specific enforcement of the settlement agreement and unspecified compensatory and punitive damages and attorney’s fees. While the Company believes that the plaintiffs’ claims lack merit, it is not possible to predict the outcome of this matter, and these matters could have a material adverse effect on the Company’s financial position and results of operations. In October 2000, the Company filed a lawsuit against Dr. Ronald M. Roncone. Shortly before filing the litigation, the Company terminated Dr. Roncone’s employment for cause. In its lawsuit, the Company alleges that Dr. Roncone failed to satisfy a condition to the Company’s performance under the employment agreement by refusing to affiliate his orthodontic practice with the Company and by failing to recruit the minimum number of affiliated orthodontists, and is therefore not entitled to certain incentive compensation specified by the employment agreement. The Company also seeks repayment of $2.3 million that the Company loaned to Dr. Roncone, about $1.4 million that the Company paid to a third-party lender as guarantor of a loan to Dr. Roncone and about $1.0 million that the Company advanced on Dr. Roncone’s behalf to lease, improve and equip a training center and orthodontic office for Dr. Roncone. In November 2000, Dr. Ronald M. Roncone filed litigation against the Company alleging that the Company breached the terms of an employment agreement and the terms of an alleged oral agreement to convert about $3.0 million in loans to Dr. Roncone to an interest-free basis and, at his option, compensation, and to waive Dr. Roncone’s obligation to affiliate his practice with the Company. Dr. Roncone seeks an unspecified amount of money damages or 700,000 shares of the Company’s common stock. While the Company believes the plaintiff’s claims lack merit, it is not possible to predict the outcome of this matter, and these matters could have a material adverse effect on the Company’s financial position and results of operations. On April 9, 2001, a lawsuit purported to be a class action on behalf of purchasers of shares of the Company’s stock from April 27, 2000 through March 15, 2001, was filed against the Company, Bartholomew F. Palmisano, Sr., Bartholomew F. Palmisano, Jr., and Dr. Gasper Lazzara, Jr. In the complaint, the plaintiffs alleged that the Company and other defendants violated certain provisions of federal securities laws by allegedly recognizing revenue in violation of generally accepted accounting principles in the United States and SEC disclosure requirements and by allegedly making false and misleading statements about our financial results and accounting, which the plaintiffs alleged artificially inflated the market price of the Company’s common stock. The plaintiffs’ allegations related in part to the Company’s change in revenue recognition policy pursuant to SEC Staff Accounting Bulletin No. 101, “Revenue Recognition in Financial Statements,” which is discussed in Note 2 to the consolidated financial statements. The plaintiff is seeking unspecified compensatory damages, interest and attorney’s fees. While the Company believes the plaintiffs’ claims lack merit, it is not possible to predict the outcome of this matter, and these matters could have a material adverse effect on the Company’s financial position and results of operations In the normal course of business, the Company becomes a defendant or plaintiff in various lawsuits. Although a successful claim for which the Company is not fully insured could have a material effect on the Company’s financial condition, management is of the opinion that it maintains insurance at levels sufficient to insure itself against the normal risk of operations. 11. Quarterly Results of Operations (Unaudited) The following is a tabulation of the unaudited quarterly results of operations for the years ended December 31, 2000 and 1999 (in thousands, except per share data). For the year ended December 31, 2000, the amounts include results previously reported by the Company and results restated to reflect the Company’s change in revenue recognition pursuant to Staff Accounting Bulletin No. 101, “Revenue Recognition in Financial Statements” effective January 1, 2000.
A portion of the revenue that was included in the cumulative effect adjustment as of January 1, 2000 was recognized as revenue in 2000. The amount of this recycled revenue was 16.9 million during the quarter ended March 31, 2000, $15.3 million during the quarter ended June 30, 2000, $13.6 million during the quarter ended September 30, 2000, and $11.5 million during the quarter ended December 31, 2000.
|
|||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
|
|