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þ
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QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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¨
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TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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Pennsylvania
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23-2018365
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(State or other jurisdiction of
incorporated or organization)
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(IRS Employer Identification No.)
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3220 Tillman Drive, Suite 300, Bensalem, PA
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19020
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(Address of principal executive offices)
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(Zip Code)
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Large accelerated filer
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þ
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Accelerated filer
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¨
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Non-accelerated filer
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¨
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Smaller reporting company
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¨
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(Do not check if a smaller reporting company)
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(Unaudited)
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September 30,
2016 |
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December 31,
2015 |
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ASSETS:
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Current assets:
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Cash and cash equivalents
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$
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24,327,000
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$
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33,189,000
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Marketable securities, at fair value
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80,623,000
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69,496,000
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Accounts and notes receivable, less allowance for doubtful accounts of $6,376,000 as of September 30, 2016 and $4,608,000 as of December 31, 2015
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265,533,000
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214,854,000
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Inventories and supplies
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37,603,000
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36,308,000
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Prepaid expenses and other
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16,382,000
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11,495,000
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Total current assets
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424,468,000
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365,342,000
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Property and equipment, net
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13,275,000
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13,086,000
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Goodwill
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44,438,000
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44,438,000
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Other intangible assets, less accumulated amortization of $14,065,000 as of September 30, 2016 and $19,473,000 as of December 31, 2015
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15,016,000
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17,108,000
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Notes receivable - long term portion
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4,048,000
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2,972,000
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Deferred compensation funding, at fair value
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26,332,000
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25,391,000
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Deferred income taxes
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9,198,000
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12,567,000
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Other noncurrent assets
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48,000
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45,000
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TOTAL ASSETS
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$
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536,823,000
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$
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480,949,000
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LIABILITIES AND STOCKHOLDERS’ EQUITY:
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Current liabilities:
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Accounts payable
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$
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39,529,000
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$
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41,472,000
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Accrued payroll, accrued and withheld payroll taxes
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37,850,000
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18,062,000
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Other accrued expenses
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2,767,000
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3,115,000
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Income taxes payable
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9,332,000
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3,212,000
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Accrued legal expenses
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2,284,000
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10,464,000
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Accrued insurance claims
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23,907,000
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19,740,000
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Total current liabilities
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115,669,000
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96,065,000
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Accrued insurance claims - long term portion
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63,213,000
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62,510,000
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Deferred compensation liability
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26,837,000
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25,918,000
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Commitments and contingencies
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STOCKHOLDERS’ EQUITY:
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Common stock, $.01 par value; 100,000,000 shares authorized; 74,187,000 and 73,793,000 shares issued, and 72,510,000 and 72,034,000 shares outstanding as of September 30, 2016 and December 31, 2015, respectively
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742,000
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738,000
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Additional paid-in capital
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215,531,000
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199,294,000
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Retained earnings
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124,134,000
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106,886,000
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Accumulated other comprehensive income, net of taxes
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1,308,000
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543,000
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Common stock in treasury, at cost; 1,677,000 shares as of September 30, 2016 and 1,759,000 shares as of December 31, 2015
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(10,611,000
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)
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(11,005,000
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)
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Total stockholders’ equity
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331,104,000
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296,456,000
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TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY
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$
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536,823,000
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$
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480,949,000
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Three Months Ended September 30,
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Nine Months Ended September 30,
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2016
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2015
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2016
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2015
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Revenues
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$
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392,734,000
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$
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360,165,000
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$
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1,164,097,000
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$
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1,070,767,000
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Operating costs and expenses:
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Costs of services provided
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336,340,000
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308,645,000
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998,595,000
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916,798,000
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Selling, general and administrative expense
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27,182,000
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23,445,000
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78,192,000
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75,332,000
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Other income (expense), net:
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Investment and interest
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1,359,000
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(1,334,000
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)
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2,548,000
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(585,000
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)
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Income before income taxes
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30,571,000
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26,741,000
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89,858,000
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78,052,000
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Income tax provision
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10,860,000
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9,655,000
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32,761,000
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29,162,000
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Net income
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$
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19,711,000
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$
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17,086,000
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$
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57,097,000
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$
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48,890,000
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Per share data:
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Basic earnings per common share
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$
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0.27
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$
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0.24
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$
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0.79
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$
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0.68
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Diluted earnings per common share
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$
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0.27
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$
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0.24
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$
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0.78
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$
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0.68
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Weighted average number of common shares outstanding:
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Basic
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72,839,000
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72,009,000
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72,718,000
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71,714,000
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Diluted
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73,592,000
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72,691,000
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73,435,000
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72,381,000
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Comprehensive income:
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Net income
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$
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19,711,000
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$
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17,086,000
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$
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57,097,000
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$
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48,890,000
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Other comprehensive income:
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Unrealized gain (loss) on available for sale marketable securities, net of taxes
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(369,000
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)
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198,000
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765,000
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181,000
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Total comprehensive income
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$
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19,342,000
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$
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17,284,000
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$
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57,862,000
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$
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49,071,000
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Nine Months Ended September 30,
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2016
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2015
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Cash flows from operating activities:
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|
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Net income
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$
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57,097,000
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$
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48,890,000
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Adjustments to reconcile net income to net cash provided by operating activities:
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|
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Depreciation and amortization
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5,632,000
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5,678,000
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Bad debt provision
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3,200,000
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|
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2,225,000
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Deferred income tax expense
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2,748,000
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20,767,000
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Stock-based compensation expense
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3,113,000
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2,567,000
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Tax benefit from equity compensation plans, gross
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(1,750,000
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)
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(1,062,000
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)
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Amortization of premium on marketable securities
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1,053,000
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|
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314,000
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Unrealized gain on deferred compensation fund investments
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(1,041,000
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)
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939,000
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Changes in operating assets and liabilities:
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|
|
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Accounts and notes receivable
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(54,954,000
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)
|
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(11,170,000
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)
|
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Inventories and supplies
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(1,295,000
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)
|
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(425,000
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)
|
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Prepaid expenses and other assets
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(5,279,000
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)
|
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(2,020,000
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)
|
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Deferred compensation funding
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(941,000
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)
|
|
836,000
|
|
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Accounts payable and other accrued expenses
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(6,774,000
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)
|
|
(7,703,000
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)
|
||
Accrued payroll, accrued and withheld payroll taxes
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22,065,000
|
|
|
(18,189,000
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)
|
||
Accrued insurance claims
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4,870,000
|
|
|
11,384,000
|
|
||
Deferred compensation liability
|
2,284,000
|
|
|
(1,415,000
|
)
|
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Income taxes payable
|
7,870,000
|
|
|
889,000
|
|
||
Net cash provided by operating activities
|
37,898,000
|
|
|
52,505,000
|
|
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|
|
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Cash flows from investing activities:
|
|
|
|
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Disposals of fixed assets
|
177,000
|
|
|
248,000
|
|
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Additions to property and equipment
|
(3,908,000
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)
|
|
(3,975,000
|
)
|
||
Purchases of marketable securities
|
(18,751,000
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)
|
|
(52,219,000
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)
|
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Sales of marketable securities
|
8,137,000
|
|
|
4,786,000
|
|
||
Net cash used in investing activities
|
(14,345,000
|
)
|
|
(51,160,000
|
)
|
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|
||||||
Cash flows from financing activities:
|
|
|
|
||||
Dividends paid
|
(39,849,000
|
)
|
|
(38,338,000
|
)
|
||
Reissuance of treasury stock pursuant to Dividend Reinvestment Plan
|
84,000
|
|
|
83,000
|
|
||
Tax benefit from equity compensation plans, gross
|
1,750,000
|
|
|
1,062,000
|
|
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Proceeds from the exercise of stock options
|
5,600,000
|
|
|
4,937,000
|
|
||
Net cash used in financing activities
|
(32,415,000
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)
|
|
(32,256,000
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)
|
||
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|
||||||
Net change in cash and cash equivalents
|
(8,862,000
|
)
|
|
(30,911,000
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)
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Cash and cash equivalents at beginning of the period
|
33,189,000
|
|
|
75,280,000
|
|
||
Cash and cash equivalents at end of the period
|
$
|
24,327,000
|
|
|
$
|
44,369,000
|
|
|
|
|
|
||||
Supplementary cash flow information:
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|
|
|
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Cash paid for interest
|
$
|
441,000
|
|
|
$
|
137,000
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Cash paid for income taxes, net of refunds
|
$
|
22,141,000
|
|
|
$
|
7,508,000
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|
Nine Months Ended September 30,
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|||||||||||||||||||||||||
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Common Stock
|
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Additional Paid-in Capital
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Accumulated Other Comprehensive Income, net of taxes
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Retained Earnings
|
|
Treasury Stock
|
|
Stockholders’ Equity
|
|||||||||||||||
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Shares
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|
Amount
|
|
|
|
|
|
||||||||||||||||||
Balance — December 31, 2015
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73,793,000
|
|
|
$
|
738,000
|
|
|
$
|
199,294,000
|
|
|
$
|
543,000
|
|
|
$
|
106,886,000
|
|
|
$
|
(11,005,000
|
)
|
|
$
|
296,456,000
|
|
Comprehensive income:
|
|
|
|
|
|
|
|
|
|
|
|
|
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Net income for the period
|
|
|
|
|
|
|
|
|
57,097,000
|
|
|
|
|
57,097,000
|
|
|||||||||||
Unrealized gain on available for sale marketable securities, net of taxes
|
|
|
|
|
|
|
765,000
|
|
|
|
|
|
|
765,000
|
|
|||||||||||
Comprehensive income
|
|
|
|
|
|
|
|
|
|
|
|
|
57,862,000
|
|
||||||||||||
Exercise of stock options and other stock-based compensation, net of shares tendered
|
284,000
|
|
|
3,000
|
|
|
5,597,000
|
|
|
|
|
|
|
|
|
|
5,600,000
|
|
||||||||
Tax benefit from equity compensation plans
|
|
|
|
|
1,540,000
|
|
|
|
|
|
|
|
|
1,540,000
|
|
|||||||||||
Share-based compensation expense — stock options and restricted stock
|
|
|
|
|
2,810,000
|
|
|
|
|
|
|
|
|
2,810,000
|
|
|||||||||||
Treasury shares issued for Deferred Compensation Plan funding and redemptions
|
|
|
|
|
325,000
|
|
|
|
|
|
|
209,000
|
|
|
534,000
|
|
||||||||||
Shares issued pursuant to Employee Stock Purchase Plan
|
|
|
|
|
1,696,000
|
|
|
|
|
|
|
371,000
|
|
|
2,067,000
|
|
||||||||||
Cash dividends
|
|
|
|
|
|
|
|
|
(39,849,000
|
)
|
|
|
|
(39,849,000
|
)
|
|||||||||||
Shares issued pursuant to Dividend Reinvestment Plan
|
|
|
|
|
270,000
|
|
|
|
|
|
|
(186,000
|
)
|
|
84,000
|
|
||||||||||
Shares issued pursuant to settlement
|
113,000
|
|
|
1,000
|
|
|
3,999,000
|
|
|
|
|
|
|
|
|
|
4,000,000
|
|
||||||||
Balance — September 30, 2016
|
74,187,000
|
|
|
$
|
742,000
|
|
|
$
|
215,531,000
|
|
|
$
|
1,308,000
|
|
|
$
|
124,134,000
|
|
|
$
|
(10,611,000
|
)
|
|
$
|
331,104,000
|
|
|
Unrealized Gains and Losses on Available for Sale Securities
(1)
|
||||||
|
Nine Months Ended September 30,
|
||||||
|
2016
|
|
2015
|
||||
Accumulated other comprehensive income — beginning balance
|
$
|
543,000
|
|
|
$
|
25,000
|
|
Other comprehensive income before reclassifications
|
914,000
|
|
|
184,000
|
|
||
Amounts reclassified from accumulated other comprehensive income
(2)(3)
|
(149,000
|
)
|
|
(3,000
|
)
|
||
Net current period change in other comprehensive income
|
765,000
|
|
|
181,000
|
|
||
Accumulated other comprehensive income — ending balance
|
$
|
1,308,000
|
|
|
$
|
206,000
|
|
(1)
|
All amounts are net of tax.
|
(2)
|
Realized gains and losses are recorded pre-tax under “Other income - Investment and interest” on our consolidated statements of comprehensive income.
|
(3)
|
For the
nine months ended September 30, 2016
and
2015
, the Company recorded
$226,000
and
$5,000
, respectively, of realized gains from the sale of available for sale securities. Refer to Note 5 herein for further information.
|
|
September 30, 2016
|
|
December 31, 2015
|
||||
Housekeeping and office equipment and furniture
|
$
|
31,763,000
|
|
|
$
|
29,852,000
|
|
Laundry and linen equipment installations
|
1,201,000
|
|
|
1,117,000
|
|
||
Autos and trucks
|
138,000
|
|
|
138,000
|
|
||
Total property and equipment, at cost
|
33,102,000
|
|
|
31,107,000
|
|
||
Less accumulated depreciation
|
19,827,000
|
|
|
18,021,000
|
|
||
Total property and equipment, net
|
$
|
13,275,000
|
|
|
$
|
13,086,000
|
|
|
September 30, 2016
|
|
December 31, 2015
|
||||
Customer relationships
|
$
|
29,081,000
|
|
|
$
|
35,781,000
|
|
Non-compete agreements
|
—
|
|
|
800,000
|
|
||
Total other intangibles, gross
|
29,081,000
|
|
|
36,581,000
|
|
||
Less accumulated amortization
|
14,065,000
|
|
|
19,473,000
|
|
||
Other intangibles, net
|
$
|
15,016,000
|
|
|
$
|
17,108,000
|
|
Period/Year
|
|
Total Amortization Expense
|
||
October 1 to December 31, 2016
|
|
$
|
607,000
|
|
2017
|
|
$
|
2,427,000
|
|
2018
|
|
$
|
2,328,000
|
|
2019
|
|
$
|
2,130,000
|
|
2020
|
|
$
|
2,130,000
|
|
2021
|
|
$
|
2,130,000
|
|
Thereafter
|
|
$
|
3,264,000
|
|
|
As of September 30, 2016
|
||||||||||||||||||
|
|
|
|
|
Fair Value Measurement Using:
|
||||||||||||||
|
Carrying Amount
|
|
Total Fair Value
|
|
Quoted Prices in Active Markets (Level 1)
|
|
Significant Other Observable Inputs (Level 2)
|
|
Significant Unobservable Inputs (Level 3)
|
||||||||||
Financial Assets:
|
|
|
|
|
|
|
|
|
|
||||||||||
Marketable securities
|
|
|
|
|
|
|
|
|
|
||||||||||
Municipal bonds — available for sale
|
$
|
80,623,000
|
|
|
$
|
80,623,000
|
|
|
$
|
—
|
|
|
$
|
80,623,000
|
|
|
$
|
—
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Deferred compensation fund
|
|
|
|
|
|
|
|
|
|
||||||||||
Money Market
(1)
|
$
|
5,791,000
|
|
|
$
|
5,791,000
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Balanced and Lifestyle
|
6,821,000
|
|
|
6,821,000
|
|
|
6,821,000
|
|
|
—
|
|
|
—
|
|
|||||
Large Cap Growth
|
5,636,000
|
|
|
5,636,000
|
|
|
5,636,000
|
|
|
—
|
|
|
—
|
|
|||||
Small Cap Growth
|
2,723,000
|
|
|
2,723,000
|
|
|
2,723,000
|
|
|
—
|
|
|
—
|
|
|||||
Fixed Income
|
2,780,000
|
|
|
2,780,000
|
|
|
2,780,000
|
|
|
—
|
|
|
—
|
|
|||||
International
|
1,183,000
|
|
|
1,183,000
|
|
|
1,183,000
|
|
|
—
|
|
|
—
|
|
|||||
Mid Cap Growth
|
1,398,000
|
|
|
1,398,000
|
|
|
1,398,000
|
|
|
—
|
|
|
—
|
|
|||||
Deferred compensation fund
|
$
|
26,332,000
|
|
|
$
|
26,332,000
|
|
|
$
|
20,541,000
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
As of December 31, 2015
|
||||||||||||||||||
|
|
|
|
|
Fair Value Measurement Using:
|
||||||||||||||
|
Carrying Amount
|
|
Total Fair Value
|
|
Quoted Prices in Active Markets (Level 1)
|
|
Significant Other Observable Inputs (Level 2)
|
|
Significant Unobservable Inputs (Level 3)
|
||||||||||
Financial Assets:
|
|
|
|
|
|
|
|
|
|
||||||||||
Marketable securities
|
|
|
|
|
|
|
|
|
|
||||||||||
Municipal bonds — available for sale
|
$
|
69,496,000
|
|
|
$
|
69,496,000
|
|
|
$
|
—
|
|
|
$
|
69,496,000
|
|
|
$
|
—
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Deferred compensation fund
|
|
|
|
|
|
|
|
|
|
||||||||||
Money Market
(1)
|
$
|
3,896,000
|
|
|
$
|
3,896,000
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Balanced and Lifestyle
|
9,136,000
|
|
|
9,136,000
|
|
|
9,136,000
|
|
|
—
|
|
|
—
|
|
|||||
Large Cap Growth
|
5,218,000
|
|
|
5,218,000
|
|
|
5,218,000
|
|
|
—
|
|
|
—
|
|
|||||
Small Cap Growth
|
2,275,000
|
|
|
2,275,000
|
|
|
2,275,000
|
|
|
—
|
|
|
—
|
|
|||||
Fixed Income
|
2,624,000
|
|
|
2,624,000
|
|
|
2,624,000
|
|
|
—
|
|
|
—
|
|
|||||
International
|
1,025,000
|
|
|
1,025,000
|
|
|
1,025,000
|
|
|
—
|
|
|
—
|
|
|||||
Mid Cap Growth
|
1,217,000
|
|
|
1,217,000
|
|
|
1,217,000
|
|
|
—
|
|
|
—
|
|
|||||
Deferred compensation fund
|
$
|
25,391,000
|
|
|
$
|
25,391,000
|
|
|
$
|
21,495,000
|
|
|
$
|
—
|
|
|
$
|
—
|
|
(1)
|
The fair value of the money market fund is based on the net asset value (“NAV”) of the shares held by the plan at the end of the period. The money market fund includes short-term United States dollar denominated money market instruments and the NAV is determined by the custodian of the fund. The money market fund can be redeemed at its NAV at the measurement date as there are no significant restrictions on the ability to sell this investment.
|
|
Amortized Cost
|
|
Gross Unrealized Gains
|
|
Gross Unrealized Losses
|
|
Estimated Fair Value
|
|
Other-than-temporary Impairments
|
||||||||||
September 30, 2016
|
|
|
|
|
|
|
|
|
|
||||||||||
Type of security:
|
|
|
|
|
|
|
|
|
|
||||||||||
Municipal bonds — available for sale
|
$
|
78,482,000
|
|
|
$
|
2,175,000
|
|
|
$
|
(34,000
|
)
|
|
$
|
80,623,000
|
|
|
$
|
—
|
|
Total debt securities
|
$
|
78,482,000
|
|
|
$
|
2,175,000
|
|
|
$
|
(34,000
|
)
|
|
$
|
80,623,000
|
|
|
$
|
—
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
December 31, 2015
|
|
|
|
|
|
|
|
|
|
||||||||||
Type of security:
|
|
|
|
|
|
|
|
|
|
||||||||||
Municipal bonds — available for sale
|
$
|
68,640,000
|
|
|
$
|
869,000
|
|
|
$
|
(13,000
|
)
|
|
$
|
69,496,000
|
|
|
$
|
—
|
|
Total debt securities
|
$
|
68,640,000
|
|
|
$
|
869,000
|
|
|
$
|
(13,000
|
)
|
|
$
|
69,496,000
|
|
|
$
|
—
|
|
|
Municipal Bonds — Available for Sale
|
||||||
Contractual maturity:
|
September 30, 2016
|
|
December 31, 2015
|
||||
Maturing in one year or less
|
$
|
2,587,000
|
|
|
$
|
774,000
|
|
Maturing in second year through fifth year
|
18,411,000
|
|
|
13,852,000
|
|
||
Maturing in sixth year through tenth year
|
40,748,000
|
|
|
36,273,000
|
|
||
Maturing after ten years
|
18,877,000
|
|
|
18,597,000
|
|
||
Total debt securities
|
$
|
80,623,000
|
|
|
$
|
69,496,000
|
|
|
Nine Months Ended September 30,
|
||||||
|
2016
|
|
2015
|
||||
Stock options
|
$
|
2,399,000
|
|
|
$
|
2,093,000
|
|
Restricted stock
|
412,000
|
|
|
187,000
|
|
||
Employee Stock Purchase Plan
|
302,000
|
|
|
287,000
|
|
||
Total pre-tax stock-based compensation expense charged against income
(1)
|
$
|
3,113,000
|
|
|
$
|
2,567,000
|
|
(1)
|
Stock-based compensation expense is recorded in selling, general and administrative expense in our consolidated statements of comprehensive income.
|
|
Nine Months Ended September 30,
|
||||||
|
2016
|
|
2015
|
||||
Total grant-date fair value of stock options and awards granted
|
$
|
5,203,000
|
|
|
$
|
4,027,000
|
|
Total fair value of stock options and awards vested during period
|
$
|
3,092,000
|
|
|
$
|
2,719,000
|
|
|
Stock Options Outstanding
|
|||||
|
Number of Shares
|
|
Weighted Average Exercise Price
|
|||
December 31, 2015
|
2,461,000
|
|
|
$
|
22.16
|
|
Granted
|
569,000
|
|
|
$
|
34.14
|
|
Cancelled
|
(105,000
|
)
|
|
$
|
29.60
|
|
Exercised
|
(276,000
|
)
|
|
$
|
20.41
|
|
September 30, 2016
|
2,649,000
|
|
|
$
|
24.62
|
|
|
|
Stock Options
|
||
Range of exercise prices
|
|
$10.39 - $34.14
|
|
|
Outstanding:
|
|
|
||
Weighted average remaining contractual life (years)
|
|
6.5
|
|
|
Aggregate intrinsic value
|
|
$
|
39,626,000
|
|
Exercisable:
|
|
|
||
Number of shares
|
|
1,191,000
|
|
|
Weighted average remaining contractual life (years)
|
|
4.6
|
|
|
Aggregate intrinsic value
|
|
$
|
25,163,000
|
|
Exercised:
|
|
|
||
Aggregate intrinsic value
|
|
$
|
4,581,000
|
|
|
Nine Months Ended September 30,
|
||
|
2016
|
|
2015
|
Risk-free interest rate
|
2.0%
|
|
1.9%
|
Weighted average expected life (years)
|
5.8
|
|
5.8
|
Expected volatility
|
26.0%
|
|
27.2%
|
Dividend yield
|
2.0%
|
|
2.2%
|
|
Nine Months Ended September 30,
|
||
|
2016
|
|
2015
|
Risk-free interest rate
|
0.58%
|
|
0.18%
|
Weighted average expected life (years)
|
1.0
|
|
1.0
|
Expected volatility
|
19.7%
|
|
19.2%
|
Dividend yield
|
2.0%
|
|
2.2%
|
|
Quarter Ended
|
||||||||||
|
March 31, 2016
|
|
June 30, 2016
|
|
September 30, 2016
|
||||||
Cash dividend per common share
|
$
|
0.18125
|
|
|
$
|
0.18250
|
|
|
$
|
0.18375
|
|
Total cash dividends paid
|
$
|
13,158,000
|
|
|
$
|
13,293,000
|
|
|
$
|
13,398,000
|
|
Record date
|
February 19, 2016
|
|
|
May 20, 2016
|
|
|
August 19, 2016
|
|
|||
Payment date
|
March 25, 2016
|
|
|
June 24, 2016
|
|
|
September 23, 2016
|
|
|
Three Months Ended September 30,
|
|
Nine Months Ended September 30,
|
||||||||||||
|
2016
|
|
2015
|
|
2016
|
|
2015
|
||||||||
Cash dividends per common share
|
$
|
0.19
|
|
|
$
|
0.18
|
|
|
$
|
0.55
|
|
|
$
|
0.53
|
|
|
Three Months Ended September 30,
|
|
Nine Months Ended September 30,
|
||||||||||||
|
2016
|
|
2015
|
|
2016
|
|
2015
|
||||||||
Revenues
|
|
|
|
|
|
|
|
|
|
|
|
||||
Housekeeping services
|
$
|
239,584,000
|
|
|
$
|
227,760,000
|
|
|
$
|
716,154,000
|
|
|
$
|
681,306,000
|
|
Dietary services
|
153,150,000
|
|
|
132,405,000
|
|
|
447,943,000
|
|
|
389,461,000
|
|
||||
Total
|
$
|
392,734,000
|
|
|
$
|
360,165,000
|
|
|
$
|
1,164,097,000
|
|
|
$
|
1,070,767,000
|
|
|
|
|
|
|
|
|
|
||||||||
Income before income taxes
|
|
|
|
|
|
|
|
|
|
|
|
||||
Housekeeping services
|
$
|
23,645,000
|
|
|
$
|
21,770,000
|
|
|
$
|
68,966,000
|
|
|
$
|
64,139,000
|
|
Dietary services
|
7,884,000
|
|
|
8,239,000
|
|
|
26,103,000
|
|
|
25,008,000
|
|
||||
Corporate and eliminations
(1)
|
(958,000
|
)
|
|
(3,268,000
|
)
|
|
(5,211,000
|
)
|
|
(11,095,000
|
)
|
||||
Total
|
$
|
30,571,000
|
|
|
$
|
26,741,000
|
|
|
$
|
89,858,000
|
|
|
$
|
78,052,000
|
|
(1)
|
Primarily represents corporate office costs and related overhead, recording of certain inventories and supplies and workers compensation costs at the reportable segment level which use accounting methods that differ from those used at the corporate level, as well as consolidated subsidiaries’ operating expenses that are not allocated to the reportable segments, net of investment and interest income.
|
|
Three Months Ended September 30,
|
|
Nine Months Ended September 30,
|
||||||||||||
2016
|
|
2015
|
|
2016
|
|
2015
|
|||||||||
Housekeeping services
|
$
|
171,802,000
|
|
|
$
|
158,019,000
|
|
|
$
|
510,080,000
|
|
|
$
|
471,692,000
|
|
Dietary services
|
153,150,000
|
|
|
132,405,000
|
|
|
447,943,000
|
|
|
389,461,000
|
|
||||
Laundry and linen services
|
67,363,000
|
|
|
69,060,000
|
|
|
204,529,000
|
|
|
207,887,000
|
|
||||
Maintenance services and other
|
419,000
|
|
|
681,000
|
|
|
1,545,000
|
|
|
1,727,000
|
|
||||
|
$
|
392,734,000
|
|
|
$
|
360,165,000
|
|
|
$
|
1,164,097,000
|
|
|
$
|
1,070,767,000
|
|
|
Three Months Ended September 30,
|
|
Nine Months Ended September 30,
|
||||||||
|
2016
|
|
2015
|
|
2016
|
|
2015
|
||||
Weighted average number of common shares outstanding - basic
|
72,839,000
|
|
|
72,009,000
|
|
|
72,718,000
|
|
|
71,714,000
|
|
Effect of dilutive securities
(1)
|
753,000
|
|
|
682,000
|
|
|
717,000
|
|
|
667,000
|
|
Weighted average number of common shares outstanding - diluted
|
73,592,000
|
|
|
72,691,000
|
|
|
73,435,000
|
|
|
72,381,000
|
|
(1)
|
Certain outstanding stock option awards are anti-dilutive and were therefore excluded from the calculation of the weighted average number of diluted common shares outstanding. During the three and
nine months ended September 30, 2016
, options to purchase
501,000
and
544,000
shares having a weighted average exercise price of
$34.14
were excluded. During the three and
nine months ended September 30, 2015
, options to purchase
597,000
and
925,000
shares having weighted average exercise prices of
$30.03
and
$29.33
, respectively, were excluded.
|
|
Three Months Ended September 30,
|
|||||||||
|
2016
|
|
2015
|
|
% Change
|
|||||
Revenues
|
|
|
|
|
|
|||||
Housekeeping services
|
$
|
239,584,000
|
|
|
$
|
227,760,000
|
|
|
5.2
|
%
|
Dietary services
|
153,150,000
|
|
|
132,405,000
|
|
|
15.7
|
%
|
||
Consolidated
|
$
|
392,734,000
|
|
|
$
|
360,165,000
|
|
|
9.0
|
%
|
|
|
|
|
|
|
|||||
Costs of Services Provided
|
|
|
|
|
|
|||||
Housekeeping services
|
$
|
215,939,000
|
|
|
$
|
205,990,000
|
|
|
4.8
|
%
|
Dietary services
|
145,266,000
|
|
|
124,166,000
|
|
|
17.0
|
%
|
||
Corporate and eliminations
|
(24,865,000
|
)
|
|
(21,511,000
|
)
|
|
15.6
|
%
|
||
Consolidated
|
$
|
336,340,000
|
|
|
$
|
308,645,000
|
|
|
9.0
|
%
|
|
|
|
|
|
|
|||||
Selling, general and administrative expense
|
|
|
|
|
|
|||||
Corporate and eliminations
|
$
|
27,182,000
|
|
|
$
|
23,445,000
|
|
|
15.9
|
%
|
|
|
|
|
|
|
|||||
Investment and interest income
|
|
|
|
|
|
|||||
Corporate and eliminations
|
$
|
1,359,000
|
|
|
$
|
(1,334,000
|
)
|
|
(201.9
|
)%
|
|
|
|
|
|
|
|||||
Income (loss) before income taxes
|
|
|
|
|
|
|||||
Housekeeping services
|
$
|
23,645,000
|
|
|
$
|
21,770,000
|
|
|
8.6
|
%
|
Dietary services
|
7,884,000
|
|
|
8,239,000
|
|
|
(4.3
|
)%
|
||
Corporate and eliminations
|
(958,000
|
)
|
|
(3,268,000
|
)
|
|
(70.7
|
)%
|
||
Consolidated
|
$
|
30,571,000
|
|
|
$
|
26,741,000
|
|
|
14.3
|
%
|
|
Three Months Ended September 30,
|
||||
|
2016
|
|
2015
|
||
Revenues
|
100.0
|
%
|
|
100.0
|
%
|
Operating costs and expenses:
|
|
|
|
||
Costs of services provided
|
85.6
|
%
|
|
85.7
|
%
|
Selling, general and administrative expense
|
6.9
|
%
|
|
6.5
|
%
|
Investment and interest income
|
0.3
|
%
|
|
(0.4
|
)%
|
Income before income taxes
|
7.8
|
%
|
|
7.4
|
%
|
Income taxes
|
2.8
|
%
|
|
2.7
|
%
|
Net income
|
5.0
|
%
|
|
4.7
|
%
|
|
|
Three Months Ended September 30,
|
||||
Costs of Services Provided-Key Indicators as a % of Consolidated Revenue
|
|
2016
|
|
2015
|
|
Change
|
Bad debt provision
|
|
0.3%
|
|
0.2%
|
|
0.1%
|
Workers’ compensation and general liability insurance
|
|
2.7%
|
|
3.3%
|
|
(0.6)%
|
|
Three Months Ended September 30,
|
|||||||||||||
|
2016
|
|
2015
|
|
$ Change
|
|
% Change
|
|||||||
Selling, general and administrative expense excluding deferred compensation change
(1)
|
$
|
26,286,000
|
|
|
$
|
24,858,000
|
|
|
$
|
1,428,000
|
|
|
5.7
|
%
|
Change in value of deferred compensation plan
|
896,000
|
|
|
(1,413,000
|
)
|
|
2,309,000
|
|
|
(163.4
|
)%
|
|||
Selling, general and administrative expense
|
$
|
27,182,000
|
|
|
$
|
23,445,000
|
|
|
$
|
3,737,000
|
|
|
15.9
|
%
|
(1)
|
Selling, general and administrative expense excluding the change in the market value of the deferred compensation fund.
|
|
Nine Months Ended September 30,
|
|||||||||
|
2016
|
|
2015
|
|
% Change
|
|||||
Revenues
|
|
|
|
|
|
|||||
Housekeeping services
|
$
|
716,154,000
|
|
|
$
|
681,306,000
|
|
|
5.1
|
%
|
Dietary services
|
447,943,000
|
|
|
389,461,000
|
|
|
15.0
|
%
|
||
Consolidated
|
$
|
1,164,097,000
|
|
|
$
|
1,070,767,000
|
|
|
8.7
|
%
|
|
|
|
|
|
|
|||||
Costs of Services Provided
|
|
|
|
|
|
|||||
Housekeeping services
|
$
|
647,188,000
|
|
|
$
|
617,167,000
|
|
|
4.9
|
%
|
Dietary services
|
421,840,000
|
|
|
364,453,000
|
|
|
15.7
|
%
|
||
Corporate and eliminations
|
(70,433,000
|
)
|
|
(64,822,000
|
)
|
|
8.7
|
%
|
||
Consolidated
|
$
|
998,595,000
|
|
|
$
|
916,798,000
|
|
|
8.9
|
%
|
|
|
|
|
|
|
|||||
Selling, general and administrative expense
|
|
|
|
|
|
|||||
Corporate and eliminations
|
$
|
78,192,000
|
|
|
$
|
75,332,000
|
|
|
3.8
|
%
|
|
|
|
|
|
|
|||||
Investment and interest income
|
|
|
|
|
|
|||||
Corporate and eliminations
|
$
|
2,548,000
|
|
|
$
|
(585,000
|
)
|
|
(535.6
|
)%
|
|
|
|
|
|
|
|||||
Income (loss) before income taxes
|
|
|
|
|
|
|||||
Housekeeping services
|
$
|
68,966,000
|
|
|
$
|
64,139,000
|
|
|
7.5
|
%
|
Dietary services
|
26,103,000
|
|
|
25,008,000
|
|
|
4.4
|
%
|
||
Corporate and eliminations
|
(5,211,000
|
)
|
|
(11,095,000
|
)
|
|
(53.0
|
)%
|
||
Consolidated
|
$
|
89,858,000
|
|
|
$
|
78,052,000
|
|
|
15.1
|
%
|
|
Nine Months Ended September 30,
|
||||
|
2016
|
|
2015
|
||
Revenues
|
100.0
|
%
|
|
100.0
|
%
|
Operating costs and expenses:
|
|
|
|
||
Costs of services provided
|
85.8
|
%
|
|
85.6
|
%
|
Selling, general and administrative expense
|
6.7
|
%
|
|
7.0
|
%
|
Investment and interest income
|
0.2
|
%
|
|
(0.1
|
)%
|
Income before income taxes
|
7.7
|
%
|
|
7.3
|
%
|
Income taxes
|
2.8
|
%
|
|
2.7
|
%
|
Net income
|
4.9
|
%
|
|
4.6
|
%
|
|
|
Nine Months Ended September 30,
|
|||||||
Cost of Services Provided-Key Indicators as a % of Consolidated Revenue
|
|
2016
|
|
2015
|
|
Change
|
|||
Bad debt provision
|
|
0.3
|
%
|
|
0.2
|
%
|
|
0.1
|
%
|
Workers’ compensation and general liability insurance
|
|
3.0
|
%
|
|
3.3
|
%
|
|
(0.3
|
)%
|
|
Nine Months Ended September 30,
|
|||||||||||||
|
2016
|
|
2015
|
|
$ Change
|
|
% Change
|
|||||||
Selling, general and administrative expense w/o deferred compensation change
(1)
|
$
|
77,078,000
|
|
|
$
|
76,357,000
|
|
|
$
|
721,000
|
|
|
0.9
|
%
|
Change in value of deferred compensation plan
|
1,114,000
|
|
|
(1,025,000
|
)
|
|
2,139,000
|
|
|
(208.7
|
)%
|
|||
Consolidated selling, general and administrative expense
|
$
|
78,192,000
|
|
|
$
|
75,332,000
|
|
|
$
|
2,860,000
|
|
|
3.8
|
%
|
(1)
|
Selling, general and administrative expense excluding the change in the market value of the deferred compensation fund.
|
Covenant Description and Requirement
|
|
As of September 30, 2016
|
Funded debt
(1)
to EBITDA
(2)
ratio: less than 3.00 to 1.00
|
|
0.71 to 1.00
|
(1)
|
All indebtedness for borrowed money, including but not limited to capitalized lease obligations, reimbursement obligations in respect of letters of credit and guaranties of any such indebtedness.
|
(2)
|
Net income plus interest expense, income tax expense, depreciation, amortization and extraordinary non-recurring losses/gains.
|
Exhibit Number
|
|
Description
|
4.1
|
|
Amendment No. 3 to the Healthcare Services Group, Inc. Employee Stock Purchase Plan, dated as of August 1, 2016
|
31.1
|
|
Certification of Principal Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act
|
31.2
|
|
Certification of Principal Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act
|
32.1
|
|
Certification of the Principal Executive Officer and Principal Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act
|
101
|
|
The following financial information from the Company's Form 10-Q for the quarterly period ended September 30, 2016 formatted in eXtensible Business Reporting Language (XBRL): (i) Consolidated Balance Sheets, (ii) Consolidated Statements of Comprehensive Income, (iii) Consolidated Statements of Cash Flows, (iv) Consolidated Statement of Stockholders' Equity, and (v) Notes to Consolidated Financial Statements
|
|
|
|
HEALTHCARE SERVICES GROUP, INC.
|
|
|
|
|
Date:
|
October 28, 2016
|
|
/s/ Theodore Wahl
|
|
|
|
Theodore Wahl
|
|
|
|
President & Chief Executive Officer
|
|
|
|
(Principal Executive Officer)
|
|
|
|
|
Date:
|
October 28, 2016
|
|
/s/ John C. Shea
|
|
|
|
John C. Shea
|
|
|
|
Chief Financial Officer
|
|
|
|
(Principal Financial and Accounting Officer)
|
|
|
|
|
|
_________________________________________
Jason J. Bundick, Secretary
|
Date:
|
October 28, 2016
|
|
/s/ Theodore Wahl
|
|
|
|
Theodore Wahl
|
|
|
|
President & Chief Executive Officer
|
|
|
|
(Principal Executive Officer)
|
Date:
|
October 28, 2016
|
|
/s/ John C. Shea
|
|
|
|
John C. Shea
|
|
|
|
Chief Financial Officer
|
|
|
|
(Principal Financial and Accounting Officer)
|
/s/ Theodore Wahl
|
|
/s/ John C. Shea
|
Theodore Wahl
|
|
John C. Shea
|
President & Chief Executive Officer
|
|
Chief Financial Officer
|
(Principal Executive Officer)
|
|
(Principal Financial and Accounting Officer)
|
October 28, 2016
|
|
October 28, 2016
|