UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): November 7, 2005
ALMOST FAMILY, INC.
(Exact name of registrant as specified in its charter)
Delaware 1-09848 06-1153720
(State or other jurisdiction (Commission File No.) (IRS Employer
of incorporation) Identification No.)
9510 Ormsby Station Road, Suite 300
Louisville, Kentucky 40223
(Address of principal executive offices) (Zip Code)
(502) 891-1000
(Registrant's telephone number, including area code)
N/A
(Former name or former address, if changed since last report.)
Check the appropriate box below if the Form 8-K filing is intended to
simultaneously satisfy the filing obligation of the registrant under any of the
following provisions:
[ ] Written communications pursuant to Rule 425 under the Securities Act
(17 CFR 230.425)
[ ] Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR
240.14a-12)
[ ] Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange
Act (17 CFR 240.14d-2(b))
[ ] Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange
Act (17 CFR 240.13e-4(c))
ITEM 2.02. RESULTS OF OPERATIONS AND FINANCIAL CONDITION
On November 14, 2005, Almost Family, Inc. (the "Company") issued a
press release announcing its financial results for the quarter ended September
30, 2005. Attached to this Current Report on Form 8-K as Exhibit 99.1 is a copy
of such press release.
The information in this Item 2.02 of this Current Report on Form 8-K
and the Exhibit attached hereto shall not be deemed to be "filed" for the
purposes of Section 18 of the Securities Exchange Act of 1934, as amended, or
otherwise subject to the liabilities of that section. Such information will not
be incorporated by reference into any registration statement filed by the
Company under the Securities Act of 1933, as amended, unless specifically
identified therein as being incorporated by reference.
ITEM 4.02. NON-RELIANCE ON PREVIOUSLY FILED FINANCIAL STATEMENTS OR A
RELATED AUDIT REPORT OR COMPLETED INTERIM REVIEW
Upon the recommendation of its Audit Committee, the Board of Directors
of the Company determined on November 7, 2005, that the Company should restate
its previously issued financial statements for the fiscal year ended December
31, 2004, and the quarters ended March 31, 2005, and June 30, 2005. The Board of
Directors, following consultation with management, concluded that the Company's
financial statements for the fiscal year ended December 31, 2004, and the
quarters ended March 31, 2005, and June 30, 2005, should no longer be relied
upon. The Company has restated the previously issued financial statements for
the fiscal year ended December 31, 2004, through the filing on November 14, 2005
of an amended Form 10-K, and will amend its financial statements for the
quarters ended March 31, 2005, and June 30, 2005, through the filing of an
amended Form 10-Q for each of those quarters.
Amendment of Previous Financial Reports Related to Contingent Liability Matters
The Company's previous Form 10-K filings for the years ended December 31, 2004
and 2003 disclosed the following three items, all of which, from an accounting
perspective, are characterized as contingent liabilities in accordance with
Statement of Financial Accounting Standards No. 5 "Accounting for Contingent
Liabilities" (SFAS No. 5):
o in April 2003 the Chancery Court of Williamson County, Tennessee,
issued a ruling in favor of Franklin Associates L.P. ("Franklin"),
awarding damages against the Company in the amount of $984,970;
o a Kentucky transportation broker which owes the Company approximately
$535,000 for services provided by the Company's adult day care segment
(sold in September 2005) entered into bankruptcy proceedings in the
fourth quarter of 2002; and
o the expiration of applicable statutes of limitations on tax returns
related to the Company's 2000 fiscal year, in which it sold its product
operations and adopted discontinued operations accounting treatment for
its visiting nurse segment (later reversed), resulted in the recording
in discontinued operations in the Company's 2003 financial statements
of a one-time reduction in estimated tax liabilities of approximately
$854,000.
The Company received a letter from the U.S. Securities and Exchange Commission
following the SEC staff's routine review of the Company's form 10-K for the year
ended December 31, 2004, which letter commented on, among other items, the
accounting treatment of these contingent liability matters. In addition, at the
same time, management entered into discussions with Ernst & Young LLP, the
Company's independent auditors for the financial statements for each of the
three years ended December 31, 2004, relating to the accounting treatment for
these litigation matters. Management believed there was a reasonable basis for
its original accounting (which was agreed to by Ernst & Young). Following
detailed discussions with the auditors and the SEC staff, and with the
concurrence of the auditors, the Company has amended the financial statements
for the following non-cash items in order to account for these items as set
forth below. Note that the lawsuit in question is still being aggressively
appealed and the receivable in question is still being pursued for collection:
o With respect to the Franklin litigation, provision of approximately
$1,154,000 (for which there is no related income tax benefit) has been
made as of April 2003 ($984,000 for award of damages) and as of
September 2003 ($170,000 for estimated post-judgment interest). As
previously disclosed, the Company did not record a loss in the period
in which it suffered the trial court loss on the grounds, among others,
that the Company's litigation counsel advised the Company that its
prospects on appeal were strong. The Company's accounting for this case
now follows the principle that any loss at a trial court level creates
a de-facto satisfaction of the "probable of loss" criteria of SFAS No.
5.
o With respect to the Kentucky transportation receivable, provision
of approximately $535,000 has been made as of November 2002 of an
additional allowance for uncollectible accounts for the Kentucky
transportation receivable, and the provision of approximately
$106,000 previously recorded in 2004 has been reversed. Thus the net
income effect of this matter is $266,000 after related income tax
benefit. As previously disclosed, the Company did not record a loss
in the period in which the broker filed for bankruptcy on the basis
of management's view that, considering all facts and circum-
stances of the receivable, including other avenues for recovery, it
was not "probable" that the Company had incurred a loss. The Company's
accounting for this matter now follows the principle that
bankruptcy of a contractual obligor creates a de-facto
satisfaction of the "probable of loss" criteria of SFAS No. 5
without regard to other avenues of collection of the receivable.
o The one-time reduction in estimated tax liabilities has been
removed from fiscal 2003 and treated as a reduction in estimated tax
liabilities that should have been recorded instead in fiscal 2000.
In effect the Company has determined that it should have reversed an
excessive reserve for tax liabilities in 2000, rather than in 2003.
The excessive reserve for tax liabilities arose principally from
differences in the estimated income tax provision recorded in fiscal
2000 and prior and the actual tax liabilities resulting from the
ultimate filing and settlement of the tax returns for those periods.
The restatement has the effect of increasing beginning retained
earnings at January 1, 2002 in the amended December 31, 2004
Form 10-K/A. In making this restatement, the Company concluded that
its general concern about the adequacy of its reserve for tax
liabilities in 2000 (resulting from complex tax issues arising from
the dispositions in 2000) was inadequately specific and measurable
to justify the maintenance of the reserve.
All related disclosures have been revised to give effect to the new accounting
treatment for these matters. These changes have no effect on previously reported
cash flows. In the event the Company is able to collect a portion of the
Kentucky receivable it would record a gain in the period in which payment is
received. In the event the Company prevails on appeal in the Franklin litigation
(and no further appeal is available), the Company would record a gain in the
period in which the Company prevails. For a more detailed discussion of these
contingencies, refer to the Form 10-K/A filed today.
The following table summarizes changes in reported net income and earnings per
share for each of the three years in the period ended December 31, 2004 as a
result of these changes:
(In thousands except for per share amounts)
2004 2003 2002
----------------- --------------- ------------------
Summary of changes:
Franklin litigation $ - $ (1,154) $ -
Kentucky transportation litigation 106 (1) (534)
Related income tax effect (40) - 203
Reduction in income tax liabilities - (854) -
----------------- --------------- ------------------
Total $ 66 $ (2,009) $ (331)
Net income as previously reported 1,191 2,120 1,345
----------------- --------------- ------------------
Net income as restated $ 1,257 $ 111 $ 1,014
================= =============== ==================
Change in Earnings Per Share:
Basic $ 0.03 $ (0.88) $ (0.14)
Diluted $ 0.03 $ (0.79) $ (0.12)
Retained earnings as previously reported $ 13,567 $ 12,264 $ 10,104
Cumulative effect of restatement (1,420) (1,486) 523
----------------- --------------- ------------------
Retained earnings as restated $ 12,147 $ 10,778 $ 10,627
================= =============== ==================
Change in previously reported cash flows $ - $ - $ -
The Company's loan agreement provides that the provision of a loss for the above
litigation cases will be excluded from financial results for purposes of
calculating borrowing availability or financial covenant compliance.
Management and the Company's Audit Committee discussed with Ernst &
Young LLP, the Company's independent registered public accounting firm, the
matters disclosed above in this Item 4.02(a) of this Current Report on Form 8-K.
ITEM 9.01. FINANCIAL STATEMENTS AND EXHIBITS
(C) EXHIBITS
99.1 Press Release dated November 14, 2005.
SIGNATURE
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.
ALMOST FAMILY, INC.
Date: November 14, 2005 By /s/ C. Steven Guenthner
------------------------------
C. Steven Guenthner
Senior Vice President and
Chief Financial Officer
INDEX TO EXHIBITS
Exhibit No.
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99.1 Press release issued by the Company on November 14, 2005.