|
|
Year
Ended December 31, |
| (in
thousands, except per share data) |
|
1996 |
|
1997 |
|
1998 |
|
1999 |
|
2000 |
|
 |
|
| Statement
of income data: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Net
revenue |
|
$ |
71,273 |
|
|
$ |
117,326 |
|
|
$ |
171,298 |
|
|
$ |
226,290 |
|
|
$ |
268,836 |
|
|
|
| Direct
expenses: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Employee
costs |
|
|
19,895 |
|
|
|
33,429 |
|
|
|
46,878 |
|
|
|
61,224 |
|
|
|
78,051 |
|
| Orthodontic
supplies |
|
|
5,428 |
|
|
|
8,789 |
|
|
|
13,287 |
|
|
|
17,136 |
|
|
|
21,274 |
|
| Rent |
|
|
6,114 |
|
|
|
10,299 |
|
|
|
14,128 |
|
|
|
18,624 |
|
|
|
23,973 |
|
| Marketing
and advertising |
|
|
6,644 |
|
|
|
9,855 |
|
|
|
15,491 |
|
|
|
16,874 |
|
|
|
22,001 |
|
|
|
| Total
direct expenses |
|
|
38,081 |
|
|
|
62,372 |
|
|
|
89,784 |
|
|
|
113,858 |
|
|
|
145,299 |
|
| General
and administrative |
|
|
8,703 |
|
|
|
13,356 |
|
|
|
18,104 |
|
|
|
23,270 |
|
|
|
28,360 |
|
| Depreciation
and amortization |
|
|
2,814 |
|
|
|
5,640 |
|
|
|
9,124 |
|
|
|
12,238 |
|
|
|
15,175 |
|
|
|
| Operating
profit |
|
|
21,675 |
|
|
|
35,958 |
|
|
|
54,286 |
|
|
|
76,924 |
|
|
|
80,002 |
|
| Interest
(expense) income, net |
|
|
1,935 |
|
|
|
1,143 |
|
|
|
280 |
|
|
|
(2,204 |
) |
|
|
(3,731 |
) |
|
|
| Income
before income taxes |
|
|
23,610 |
|
|
|
37,101 |
|
|
|
54,566 |
|
|
|
74,720 |
|
|
|
76,271 |
|
| Provision
for income taxes |
|
|
9,208 |
|
|
|
14,469 |
|
|
|
20,753 |
|
|
|
28,206 |
|
|
|
28,549 |
|
|
|
| Income
before cumulative effect |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| of
changes in accounting principles |
|
|
14,402 |
|
|
|
22,632 |
|
|
|
33,813 |
|
|
|
46,514 |
|
|
|
47,772 |
|
| Cumulative
effect of changes in accounting |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| principles,
net of income tax benefit(1)(2) |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
(678 |
) |
|
|
(50,576 |
) |
|
|
| Net
income (loss) |
|
$ |
14,402 |
|
|
$ |
22,632 |
|
|
$ |
33,813 |
|
|
$ |
45,836 |
|
|
$ |
(2,854 |
) |
|
|
| Net
income per share before cumulative effect |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| of
changes in accounting principles(3) |
|
$ |
.33 |
|
|
$ |
.50 |
|
|
$ |
.70 |
|
|
$ |
.96 |
|
|
$ |
.96 |
|
| Cumulative
effect of changes in accounting |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| principles,
net of income tax benefit, per share(1)(2) |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
(.02 |
) |
|
|
(1.02 |
) |
|
|
| Net
income (loss) per share(3) |
|
$ |
.33 |
|
|
$ |
.50 |
|
|
$ |
.70 |
|
|
$ |
.94 |
|
|
$ |
(.06 |
) |
|
|
| Weighted
average shares outstanding(3) |
|
|
43,708 |
|
|
|
45,414 |
|
|
|
48,502 |
|
|
|
48,643 |
|
|
|
49,845 |
|
| Pro
forma net income for change in accounting |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| principle
adopted effective January 1, 2000(2)(4) |
|
$ |
8,288 |
|
|
$ |
12,013 |
|
|
$ |
22,276 |
|
|
$ |
32,326 |
|
|
|
N/A |
|
| Pro
forma net income per share for change in |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| accounting
principle adopted effective January 1, 2000(2)(4) |
|
$ |
.19 |
|
|
$ |
.26 |
|
|
$ |
.46 |
|
|
$ |
.66 |
|
|
|
N/A |
|
| |
|
|
|
|
Year
Ended December 31, |
| (in
thousands, except percentage and per share data) |
|
1996 |
|
1997 |
|
1998 |
|
1999 |
|
2000 |
|
|
|
| Operating
data: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Number
of orthodontic centers(5) |
|
|
247 |
|
|
|
360 |
|
|
|
469 |
|
|
|
537 |
|
|
|
592 |
|
| Comparable
orthodontic center net revenue growth(6) |
|
|
22.2 |
% |
|
|
20.0 |
% |
|
|
19.2 |
% |
|
|
20.1 |
% |
|
|
22.6 |
%(7) |
| Total
case starts |
|
|
44,910 |
|
|
|
70,611 |
|
|
|
95,377 |
|
|
|
126,307 |
|
|
|
160,639 |
|
| |
|
|
|
|
As
of December 31, |
| (in
thousands) |
|
1996 |
|
1997 |
|
1998 |
|
1999 |
|
2000 |
|
|
|
| Balance
sheet data: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Cash
and cash equivalents |
|
$ |
11,827 |
|
|
$ |
9,865 |
|
|
$ |
1,601 |
|
|
$ |
5,822 |
|
|
$ |
4,690 |
|
| Working
capital |
|
|
40,219 |
|
|
|
68,243 |
|
|
|
59,634 |
|
|
|
102,276 |
|
|
|
39,573 |
|
| Total
assets(8) |
|
|
142,460 |
|
|
|
224,805 |
|
|
|
292,472 |
|
|
|
362,816 |
|
|
|
367,947 |
|
| Total
debt |
|
|
3,397 |
|
|
|
10,393 |
|
|
|
31,332 |
|
|
|
58,793 |
|
|
|
61,001 |
|
| Total
equity |
|
|
114,887 |
|
|
|
190,740 |
|
|
|
231,159 |
|
|
|
278,527 |
|
|
|
287,196 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| (1) |
See
Note 2 to our Consolidated Financial Statements included elsewhere
in this Report for information regarding the cumulative effect
of a change in accounting principle effective January 1, 1999
related to Statement of Position 98-5, “Reporting on the Costs
of Start-Up Activities.” |
| (2) |
See
Note 2 to our Consolidated Financial Statements included elsewhere
in this Report for information regarding the cumulative effect
of a change in accounting principle effective January 1, 2000
related to revenue recognition and Staff Accounting Bulletin
No. 101, “Revenue Recognition in Financial Statements” (“SAB
101”). |
| (3) |
These
amounts represent the full dilutive effect of the exercise of
common equivalent shares (stock options) outstanding during
the year. See Note 6 to our Consolidated Financial Statements
included elsewhere in this Report. |
| (4) |
Pro
forma amounts were calculated assuming our change in revenue
recognition effective January 1, 2000 pursuant to SAB 101 had
been in effect for all periods presented. |
| (5) |
These
amounts are presented as of the end of the period. |
| (6) |
These
amounts represent the growth in net revenue in the indicated
period relative to the comparable prior-year period by orthodontic
centers that were affiliated with us throughout each of the
two periods being compared. There were 53 of these comparable
orthodontic centers in 1995, 75 in 1996, 130 in 1997, 227 in
1998, 332 in 1999, and 469 in 2000. The amount of that growth
has been significantly affected by the number of newly-opened
orthodontic centers included in the computation, because newly-opened
orthodontic centers have experienced significant growth during
their first 26 months of operations. The average term of a patient
contract is about 26 months. Our affiliated orthodontic centers
have typically reached maturity as patients are added during
the first 26 months of operations. |
| (7) |
This
amount represents the growth in net revenue in 2000 for orthodontic
centers open throughout 1999 and 2000, compared to pro forma
net revenue for these centers in 1999, calculated as if our
change in accounting principle pursuant to SAB 101 effective
January 1, 2000 had been in effect throughout 1999 and 2000.
See “Item 7. Management’s Discussion and Analysis of Financial
Condition and Results of Operations—Revenue Recognition.” |
| (8) |
To
conform to the balance sheet presentation as of December 31,
2000, amounts reported as of December 31, 1996, 1997, 1998 and
1999 as patient prepayments (previously reported as a liability)
have been reclassified as a reduction of service fees receivable.
|
|
|
