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UNITED STATES


SECURITIES AND EXCHANGE COMMISSION


WASHINGTON, D.C. 20549





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FORM 10-Q





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(MARK ONE)





|x |  | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934
|- |  | ---------------------------------------------------------------------------------------




For the Quarterly Period Ended September 30, 2002





OR





| ̈ |  | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES ACT OF 1934
|- |  | -------------------------------------------------------------------------------




Commission File Number 0-19946





LINCARE HOLDINGS INC.


(Exact name of registrant as specified in its charter)








Delaware

51-0331330(State or other jurisdiction of incorporation or organization)

(I.R.S. Employer Identification No.)





19387 US 19 North Clearwater,
FL

33764(Address of principal executive offices)

(Zip Code)





Registrants telephone number, including area code:


(727) 530-7700





Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant
was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    Yes x    No  ̈





Indicate the number of shares
outstanding of each of the issuers classes of common stock, as of the latest practicable date.





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Class

Outstanding at October 31,
2002Common Stock, $0.01 par value

105,706,812 shares


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LINCARE HOLDINGS INC.





FORM 10-Q


For The Quarterly Period Ended September 30, 2002





INDEX





PagePART I.    FINANCIAL INFORMATIONItem 1

Financial Statements (unaudited)Condensed consolidated balance sheets

3Condensed consolidated statements of operations

4Condensed consolidated statements of cash flows

5Notes to condensed consolidated financial statements

6Item 2

Managements Discussion and Analysis of Results of Operations and Financial Condition

9Item 3

Quantitative and Qualitative Disclosure Regarding Market Risk

12Item 4

Controls and Procedures

12PART II.    OTHER INFORMATIONItem 1

Legal Proceedings

13Item 2

Changes in Securities

13Item 3

Defaults Upon Senior Securities

13Item 4

Submission of Matters to a Vote of the Security Holders

13Item 5

Other Information

13Item 6

Exhibits and Reports on Form 8-K

13SIGNATURE

14CERTIFICATIONS

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##### Table of Contents

PART I.    FINANCIAL INFORMATION





Item 1.Financial Statements (Unaudited)





LINCARE HOLDINGS INC. AND SUBSIDIARIES





CONDENSED CONSOLIDATED BALANCE SHEETS


(In thousands)


(Unaudited)





September 30,2002


December 31, 2001Current assets:Cash and cash equivalents

$
888


$
0Restricted cash


4,175



8,350Accounts and notes receivable


145,391



143,840Inventories


2,898



2,857Other


3,853



6,185Total current assets


157,205



161,232Property and equipment


496,167



441,391Less: accumulated depreciation


(265,861
)


(229,076
)Net property and equipment


230,306



212,315Other assets:Goodwill


755,248



684,771Intangible assets


0



3,949Covenants not to compete


5,707



6,810Other


3,006



1,987Total other assets


763,961



697,517Total assets

$
1,151,472


$
1,071,064Current liabilities:Current installments of long-term obligations

$
49,949


$
97,489Accounts payable


26,743



29,946Accrued expenses:Compensation and benefits


12,359



18,488Other


9,325



10,873Income taxes payable


12,931



5,219Total current liabilities


111,307



162,015Long-term obligations, excluding current installments


143,588



125,775Deferred income taxes


59,122



43,568Minority interest


724



748Stockholders equity:Common stock


1,215



1,210Additional paid-in capital


202,969



194,164Retained earnings


859,774



719,637Less: treasury stock


(227,227
)


(176,053
)Total stockholders equity


836,731



738,958Total liabilities and stockholders equity

$
1,151,472


$
1,071,064





See accompanying notes to unaudited condensed consolidated financial
statements.




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LINCARE HOLDINGS INC. AND SUBSIDIARIES





CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS


(In thousands except share and per share data)


(Unaudited)





For The Three Months Ended


For The Nine Months EndedSeptember 30,2002


September 30,2001


September 30,2002


September 30,2001Net revenues

$
244,174


$
206,780


$
707,150


$
596,812Costs and expenses:Costs of goods and services


36,806



31,038



106,659



91,147Operating expenses


54,716



46,525



158,659



135,036Selling, general and administrative expenses


51,154



42,315



147,839



123,633Bad debt expense


3,663



3,101



10,607



8,952Depreciation expense


16,210



13,815



46,545



40,210Amortization expense


415



5,257



1,248



15,728162,964



142,051



471,557



414,706Operating income


81,210



64,729



235,593



182,106Other income (expense):Interest income


39



94



121



313Interest expense


(3,415
)


(3,968
)


(10,671
)


(11,908
)Net loss on disposal of property and equipment


(57
)


(23
)


(105
)


(45
)Unrealized loss on derivative financial instrument


0



(4,670
)


0



(6,305
)(3,433
)


(8,567
)


(10,655
)


(17,945
)Income before income taxes


77,777



56,162



224,938



164,161Income taxes


29,321



21,398



84,801



62,547Net income

$
48,456


$
34,764


$
140,137


$
101,614Basic earnings per common share

$
0.45


$
0.32


$
1.31


$
0.95Diluted earnings per common share

$
0.44


$
0.31


$
1.27


$
0.92Weighted average number of common shares outstanding


106,621,843



107,658,856



107,282,987



107,345,181Weighted average number of common shares and common share equivalents outstanding


109,601,256



110,366,857



110,030,756



110,022,308








See accompanying notes to unaudited
condensed consolidated financial statements.




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LINCARE HOLDINGS INC. AND SUBSIDIARIES





CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS


(In thousands)


(Unaudited)





For The Nine Months EndedSeptember 30, 2002


September 30, 2001Cash from operations

$
205,499


$
177,140Investing activities:Proceeds from sale of property and equipment


217



136Capital expenditures


(62,129
)


(52,793
)(Increase) decrease in other assets


(1,134
)


498Business acquisitions, net of cash acquired


(56,887
)


(65,120
)(119,933
)


(117,279
)Financing activities:Proceeds from long-term obligations


124,402



52,000Payment of long-term obligations


(163,303
)


(125,735
)Decrease in minority interest


(98
)


(137
)Proceeds from issuance of common stock


5,495



10,748Proceeds from issuance of treasury stock


788



596Payment to acquire treasury stock


(51,962
)


0(84,678
)


(62,528
)Increase (decrease) in cash


888



(2,667
)Cash and cash equivalents, beginning of period


0



3,201Cash and cash equivalents, end of period

$
888


$
534





See accompanying notes to unaudited condensed consolidated financial
statements.




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LINCARE HOLDINGS INC.





NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS


(Unaudited)





Note 1.    Basis of
Presentation





The accompanying condensed consolidated balance sheet as of September 30, 2002, the condensed
consolidated statements of operations for the three and nine month periods ended September 30, 2002 and 2001 and the condensed consolidated statements of cash flows for the nine months ended September 30, 2002 and 2001 are unaudited and have been
prepared in accordance with generally accepted accounting principles for interim financial information and with the instructions to Form 10-Q and should be read in conjunction with the consolidated financial statements and related notes of
Lincare Holdings Inc. (the Company) on Form 10-K for the fiscal year ended December 31, 2001. In the opinion of management, all adjustments, consisting of normal recurring accruals, necessary for a fair presentation of the results
of operations for the interim periods presented have been reflected herein. The results of operations for interim periods are not necessarily indicative of the results to be expected for the entire year. The accompanying condensed consolidated
balance sheet as of December 31, 2001 is derived from the Companys audited balance sheet as of that date.





Note
2.    Business Combinations





Lincare routinely acquires the business and related assets of
local and regional competitors as an ongoing strategy to increase share within its respective markets. Lincare arrives at a negotiated purchase price taking into account such factors including, but not limited to, the acquired companys
historical and projected revenue growth, operating cash flow, product mix, payor mix, service reputation, and geographical location.





During the nine months ended September 30, 2002, the Company acquired, in unrelated acquisitions, certain assets of 22 companies. Each acquisition was accounted for as a purchase. The results of the acquired companies are
included in the accompanying consolidated statements of operations since the respective dates of acquisition.





The
aggregate cost of these acquisitions was as follows:





(In thousands)Cash

$
56,887Deferred acquisition obligations


14,907Assumption of liabilities


315$
72,109The aggregate purchase price was allocated as follows:Current assets

$
1,728Property and equipment


2,731Intangible assets


145Goodwill


67,505$
72,109





Unaudited pro forma supplemental information on the results of
operations for the nine months ended September 30, 2002 and September 30, 2001 are provided below and reflect the acquisitions as if they had been combined at the beginning of each respective period. Effective with the adoption of SFAS 142 (see
below) on January 1, 2002, the amortization of goodwill and certain intangible assets was discontinued.




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LINCARE HOLDINGS INC.





NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS(Continued)







For The Nine Months Ended
September 30,2002

2001(In thousands except per share
data)Net revenues

$
725,594

$
631,261Net income

$
144,247

$
109,297Income per common share:Basic

$
1.34

$
1.02Diluted

$
1.31

$
0.99





The unaudited pro forma financial information is not necessarily
indicative of either the results of operations that would have occurred had the transactions been effected at the beginning of the respective preceding periods or of future results of operations of the combined companies.





On January 1, 2002, the Company adopted Statement of Financial Accounting Standards (SFAS) No. 142, Goodwill and Other
Intangible Assets, which requires that goodwill and certain intangible assets with indefinite useful lives no longer be amortized. Under the requirements of SFAS No. 141, Business Combinations issued in July 2001, the criteria for
recognizing intangible assets was changed. The Company reclassified $3,949,000 to goodwill from intangible assets (customer base) on January 1, 2002 based on the intangible assets no longer meeting the SFAS No.141 requirements. The total goodwill no
longer being amortized at September 30, 2002, which includes the reclassified intangible assets and the year to date 2002 business combinations, was $755,248,000.





For assets determined to have indefinite lives, the Company is required to test the assets for impairment in accordance with SFAS No. 142. The Company performed impairment
testing of its goodwill as of January 1, 2002 by using a single reporting unit approach and no impairment was indicated. Impairment is measured as the excess of carrying value over the fair value of an intangible asset with an indefinite life. Any
transitional impairment loss would have been measured as of January 1, 2002 and recognized as a cumulative effect of a change in accounting principle in the first interim period in the Companys statement of operations.





The following supplemental information for the nine months ended September 30, 2002 and September 30, 2001 are provided to illustrate the
effect of SFAS No. 141 and 142 on the results of operations.




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LINCARE HOLDINGS INC.





NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS(Continued)







For The Nine Months Ended September 30,2002

2001(In thousands except per share data)Net incomeAs reported

$
140,137

$
101,614Amortization of goodwill and certain intangible assets


0


9,516Adjusted net income

$
140,137

$
111,130Income per common sharebasicAs reported

$
1.31

$
0.95Amortization of goodwill and certain intangible assets


0


.09Adjusted income per common sharebasic

$
1.31

$
1.04Income per common sharedilutedAs reported

$
1.27

$
0.92Amortization of goodwill and certain intangible assets


0


.09Adjusted income per common sharediluted

$
1.27

$
1.01








Note 3.    Income Per
Common Share





Basic income per common share is computed by dividing earnings available to common stockholders
by the weighted average number of common shares outstanding for the period. Diluted income per common share reflects the potential dilution of securities that could share in earnings, including stock options. When the exercise of stock options is
anti-dilutive, they are excluded from the calculation. There were no anti-dilutive stock options excluded from the calculation at September 30, 2002 and 2001.





A reconciliation of the numerators and the denominators of the basic and diluted income per common share computations is as follows:


Income (Numerator)

Shares (Denominator)

Per Share Amount(In thousands, except per share data)NINE MONTHS ENDED SEPTEMBER 30, 2002Basic:Income available to common stockholders

$
140,137

107,283

$
1.31Effect of dilutive securities:Stock options


0

2,748Diluted:Income available to common stockholders and holders of dilutive securities

$
140,137

110,031

$
1.27NINE MONTHS ENDED SEPTEMBER 30, 2001Basic:Income available to common stockholders

$
101,614

107,345

$
0.95Effect of dilutive securities:Stock options


0

2,677Diluted:Income available to common stockholders and holders of dilutive securities

$
101,614

110,022

$
0.92




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LINCARE HOLDINGS INC.





Item 2.Managements Discussion and Analysis of Results of Operations and Financial Condition





Operating Results





The following table sets forth for the
periods indicated a summary of the Companys net revenues by source:





For The Three Months Ended
September 30,

For The Nine Months Ended
September 30,2002

2001

2002

2001(In thousands)

(In thousands)Oxygen and other respiratory therapy

$
220,944

$
182,747

$
637,447

$
523,358Home medical equipment and other


23,230


24,033


69,703


73,454Total

$
244,174

$
206,780

$
707,150

$
596,812





Net revenues for the three months ended September 30, 2002
increased by $37,394,000 (or 18.1%) compared with the three months ended September 30, 2001, and for the nine months ended September 30, 2002 increased $110,338,000 (or 18.5%) compared with the nine months ended September 30, 2001. The
increases in net revenues are attributed to underlying growth in the market for the Companys products, increased market share primarily resulting from the Companys sales and marketing efforts that emphasize quality and customer service,
and the effects of business acquisitions completed by the Company.





The contribution of oxygen and other
respiratory therapy products to the Companys net revenues increased during the three and nine months ended September 30, 2002, over the comparable three and nine month periods ended September 30, 2001. During the three and nine month periods
ended September 30, 2002, lower margin non-respiratory product lines contributed less to net revenues as compared with the prior year periods. The Company will continue to concentrate on providing oxygen and other respiratory therapy services to
patients in the home and to provide home medical equipment and other services where it believes such services will enhance the Companys primary respiratory business.





Costs of goods and services as a percentage of net revenues were 15.1% for the three and nine months ended September 30, 2002 compared with 15.0% and 15.3% for the three
and nine months ended September 30, 2001. The decrease in costs of goods and services as expressed as a percentage of net revenues for the nine months ended September 30, 2002 is attributed to the Companys continued focus on home respiratory
products, which is enhanced by the Companys ability to eliminate lower margin non-respiratory product lines from acquired businesses.





The Company continues to maintain a cost structure that, with increases in net revenues, has permitted the Company to spread its fixed operating and overhead expenses over a larger base of revenues,
resulting in improvement in operating income. Operating expenses expressed as a percentage of net revenues were 22.4% for the three and nine month periods ended September 30, 2002 compared with 22.5% and 22.6% for the three and nine months ended
September 30, 2001. Selling, general and administrative expenses as a percentage of net revenues were 20.9% for the three and nine months ended September 30, 2002 compared with 20.5% and 20.7% for the three and nine months ended September 30, 2001.
The increase in selling, general and administrative expenses as a percentage of net revenues is attributed to the Companys increased expansion of its sales and marketing efforts within the geographic markets it currently serves.





Amortization expense for the three and nine months ended September 30, 2002 was $415,000 and $1,248,000 as compared with
$5,257,000 and $15,728,000 for the three and nine months ended September 30, 2001. The decrease was the result of the Companys adoption of SFAS No. 142 (see Note 2).





Operating income for the three and nine months ended September 30, 2002 increased to $81,210,000 and $235,593,000, respectively, compared with $64,729,000 and $182,106,000
for the three and nine months ended September 30, 2001. The increases in operating income are attributable to the continued growth in net revenues,




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a favorable shift in product mix to higher margin products, control over operating costs, and the reduction in amortization expense attributable to the adoption of SFAS No. 142.





Liquidity And Capital Resources





Net cash provided from operating activities was $205,499,000 for the nine months ended September 30, 2002 compared with $177,140,000 for the nine months ended September 30, 2001.





Net cash used in investing and financing activities was $204,611,000 for the nine months ended September 30, 2002. Activity during
the nine-month period ended September 30, 2002 included the Companys investment of $56,887,000 in business acquisitions, investment in capital equipment of $62,129,000, payments to acquire treasury stock of $51,962,000, proceeds of
$124,402,000 from long-term obligations and payments of $163,303,000 related to long-term obligations.





As of
September 30, 2002, the Companys principal sources of liquidity consisted of $45,898,000 of working capital and $146,440,000 available under its revolving bank credit facility. The Company believes that internally generated funds, together
with funds that may be borrowed under its bank credit facility, will be sufficient to meet the Companys anticipated capital requirements for the foreseeable future.





On June 11, 1999, the Companys Board of Directors authorized the Company to repurchase up to $200,000,000 of its outstanding common stock. As of May 17, 2002, the
Company had fully completed the repurchase of common stock authorized under the program and had repurchased 14,173,500 shares of the Companys common stock. On May 21, 2002, the Companys Board of Directors authorized additional
repurchases of up to $100,000,000 of the Companys outstanding common stock. As of September 30, 2002, $29,970,000 or 1,004,300 shares had been repurchased under this program. The total common stock held in treasury as of September 30, 2002 was
$227,227,000. Purchases are made through open market or privately negotiated transactions, subject to market conditions and trading restrictions.





New Accounting Standards





In April 2002, the Financial Accounting Standards Board issued
Statement of Financial Accounting Standards (SFAS) No. 145, Rescission of FASB Statements No. 4, 44, and 64, Amendment of FASB Statement No. 13 and Technical Corrections, which clarifies the criteria under which
extinguishment of debt can be considered as extraordinary and rescinds the related SFAS Nos. 4 and 64 in addition to SFAS No. 44 and also makes technical corrections to other Statements of Financial Standards. The Company does not believe the
adoption of SFAS No. 145, in 2003, will have a material effect on its financial statements.





In June 2002, the
Financial Accounting Standards Board issued Statement of Financial Accounting Standards (SFAS) No. 146, Accounting for Costs Associated with Exit or Disposal Activities, which is effective for exit or disposal activities that
are initiated after December 31, 2002. SFAS No. 146 requires that a liability for a cost associated with an exit or disposal activity be recognized when the liability is incurred and can be measured at fair value and nullifies EITF 94-3,
Liability Recognition for Certain Employee Termination Benefits and Other Costs to Exit an Activity (including Certain Costs Incurred in Restructuring). The Company does not believe the adoption of SFAS No. 146 will have a material
effect on its financial statements.





Medicare Reimbursement





As a supplier of home oxygen and other respiratory therapy services for the home health care market, the Company participates in Medicare Part B, the Supplementary Medical
Insurance Program, which was established by the Social Security Act of 1965. Suppliers of home oxygen and other respiratory therapy services have historically been heavily dependent on Medicare reimbursement due to the high proportion of elderly
suffering from respiratory disease.




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In December 2000, the Consolidated Appropriations Act, 2001 (H.R.
4577) was signed into law. The appropriations act incorporated by reference the text of H.R. 5661, the Medicare, Medicaid and SCHIP Benefits Improvement and Protection Act of 2000 (BIPA), which included certain Medicare reimbursement and
other policy changes. Among other things, BIPA required the U.S. General Accounting Office (GAO) to study Medicare reimbursement for drugs and biologicals and for related services. The GAO issued its report to Congress, entitled
Medicare Payments for Covered Outpatient Drugs Exceed Providers Cost, in September 2001. The GAO made recommendations designed to improve the accuracy of Medicare payment for drugs and related services, including establishing
Medicare payment levels for prescription drugs and their delivery and administration that are more closely related to their costs, examining the benefits and risks of expanding the current competitive bidding demonstration projects for drugs covered
under Medicare Part B, and instituting a process to monitor access to Medicare covered drugs to ensure that payment changes do not negatively affect access for particular drugs for groups of beneficiaries or in certain geographic areas. The
government, acting through legislation or regulation, may implement some or all of the GAOs recommendations. The Company cannot predict whether the government will take any such action and, if so, what effect such action will have on the
Companys ability to provide respiratory and infusion drugs and related services to Medicare beneficiaries in the future.





The Presidents fiscal year 2003 budget includes a proposal to change reimbursement for prescription drugs covered under Medicare Part B. The budget also contains a proposal to adopt a national competitive bidding payment system
for durable medical equipment, including home oxygen equipment. The Company cannot predict whether any of the proposals outlined in the Presidents budget will be adopted by Congress and become law.





Federal and state budgetary and other cost-containment pressures will continue to impact the home respiratory care industry. The Company
cannot predict whether new federal and state budgetary proposals will be adopted or the effect, if any, such proposals would have on the Companys business.





Forward Looking Statements





Statements contained herein that are not based on
historical facts are forward-looking statements that are based on projections and estimates regarding the economy in general, the health care industry and other factors which impact the Company. These statements involve known and unknown risks,
uncertainties and other factors that may cause the Companys actual results, levels of activity, performance or achievements to be materially different from any results, levels of activity, performance or achievements expressed or implied by
any forward-looking statements. The estimates relate to reimbursement by government and third party payors for the Companys products, the costs associated with government regulation of the health care industry and the effects of competition
and industry consolidation. In some cases, forward-looking statements that involve risks and uncertainties contain terminology such as may, will, should, could, expects,
intends, plans, anticipates, believes, estimates, predicts, potential or continue or variations of these terms or other comparable terminology.





Key factors that have an impact on the Companys ability to attain these estimates include potential
reductions in reimbursement rates by government and third party payors, changes in reimbursement policies, demand for the Companys products and services, the availability of appropriate acquisition candidates and the Companys ability to
successfully complete acquisitions, efficient operations of the Companys existing and future operating facilities, regulation and/or regulatory action affecting the Company or its business, economic and competitive conditions and access to
borrowed and/or equity capital on favorable terms.





In developing its forward-looking statements, the Company has
made certain assumptions relating to reimbursement rates and policies, internal growth and acquisitions and the outcome of various legal and regulatory proceedings. If the assumptions used by the Company differ materially from what actually occurs,
then actual results could vary significantly from the performance projected in the forward-looking statements. The Company is under no duty to update any of the forward-looking statements after the date of this Form 10-Q.




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Item 3.Quantitative and Qualitative Disclosure Regarding Market Risk





The Company had no derivative securities as of September 30, 2002. The Company is exposed to changes in interest rates as a result of its revolving bank credit facility which is based on the London
Interbank Offered Rate. A 10% increase in interest rates related to the Companys revolving bank credit facility would not have a material effect on the Companys earnings over the next fiscal year or the revolving bank credit
facilitys fair value.





The fair value of the Companys revolving bank credit facility and senior
secured notes are subject to change as a result of changes in interest rates. The Company estimates potential changes in the fair value of interest rate sensitive financial instruments based on a hypothetical decrease (or increase) in interest
rates. The Companys use of this methodology to quantify the market risk of such instruments should not be construed as an endorsement of its accuracy or the accuracy of the related assumptions. The quantitative information about market risk is
necessarily limited because it does not take into account anticipated operating and financial transactions.





The
following table sets forth the Companys estimated impact on the fair value of its long-term obligations and the impact on earnings resulting from a hypothetical 10% decrease in interest rates.





Estimated fair value of financial instruments (in thousands):





(Assuming 10% Decrease in
Interest Rates)Face Amount

Carrying Amount

Fair Value

Hypothetical Change
in Fair Value

Hypothetical Change
in Annual Interest ExpenseSeptember 30, 2002:Revolving bank credit facility

$
48,000

$
48,000

$
48,000

$
0

$
(144
)Senior secured notes


125,000


125,000


129,349


472


0December 31, 2001:Revolving bank credit facility

$
75,000

$
75,000

$
75,000

$
0

$
(240
)Senior secured notes


125,000


125,000


126,931


435


0





Item 4.Controls and Procedures





Within the 90 days prior to the date of this Form
10-Q, the Companys Chief Executive Officer and Chief Financial Officer evaluated the effectiveness of the Companys disclosure controls and procedures pursuant to Exchange Act Rule 13a-14. Based upon that evaluation, the officers
concluded that the Companys disclosure controls and procedures are effective in timely alerting management to material information relating to the Company required to be included in periodic filings with the Securities and Exchange Commission.
There have been no significant changes in the Companys internal controls or in other factors that could significantly affect internal controls subsequent to the date the Company completed its evaluation.




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PART II.    OTHER INFORMATION





Item 1.    Legal Proceedings





As a health care provider, Lincare is
subject to extensive government regulation, including numerous laws directed at preventing fraud and abuse and laws regulating reimbursement under various government programs. The marketing, billing, documentation and other practices of health care
companies are all subject to government scrutiny. To ensure compliance with Medicare and other regulations, regional carriers often conduct audits and request patient records and other documents to support claims submitted by the Company for payment
of services rendered to patients. Similarly, government agencies periodically open investigations and obtain information from health care providers pursuant to legal process.





Violations of federal and state regulations can result in severe criminal, civil and administrative penalties and sanctions, including disqualification from Medicare and
other reimbursement programs.





From time to time, the Company receives inquiries from various government agencies
requesting patient records and other documents. It has been Lincares policy to cooperate with all such requests for information. The government has not instituted any proceedings or served Lincare with any complaints as a result of these
inquiries.





Private litigants may also make claims against the Company for violations of health care laws in
actions known as qui tam suits. In these cases, the government has the opportunity to intervene in, and take control of, the litigation. The Company is a defendant in certain qui tam proceedings. The government has declined to
intervene in all unsealed qui tam actions of which the Company is aware. Lincare intends to vigorously defend these suits should they proceed.





Items 2-5.    Not Applicable.





Item 6.    Exhibits and Reports on Form 8-K





| | (a) |  | Exhibits included or incorporated herein: See Exhibit Index.
| | --- |  | ------------------------------------------------------------




| | (b) |  | The Company did not file a Current Report on Form 8-K during the three months ended September 30, 2002.
| | --- |  | -------------------------------------------------------------------------------------------------------



13




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##### Table of Contents




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.





LINCARE HOLDINGS INC.Registrant/s/    PAUL G.
GABOSPaul G. GabosSecretary, Chief Financial Officerand Principal Accounting Officer





November 14, 2002




14




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##### Table of Contents




CERTIFICATIONS





I, John P. Byrnes, certify that:





| | 1. |  | I have reviewed this quarterly report on Form 10-Q of Lincare Holdings Inc.;
| | -- |  | ----------------------------------------------------------------------------




| | 2. |  | Based on my knowledge, this quarterly report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the
statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this quarterly report;
| | -- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------




| | 3. |  | Based on my knowledge, the financial statements, and other financial information included in this quarterly report, fairly present in all material respects the
financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this quarterly report;
| | -- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------




| | 4. |  | The registrants other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange
Act Rules 13a-14 and 15d-14) for the registrant and we have:
| | -- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------




| | a) |  | designed such disclosure controls and procedures to ensure that material information relating to the registrant, including its consolidated subsidiaries, is
made known to us by others within those entities, particularly during the period in which this quarterly report is being prepared;
| | -- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------




| | b) |  | evaluated the effectiveness of the registrants disclosure controls and procedures as of a date within 90 days prior to the filing date of this quarterly
report (the Evaluation Date); and
| | -- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------




| | c) |  | presented in this quarterly report our conclusions about the effectiveness of the disclosure controls and procedures based on our evaluation as of the
Evaluation Date;
| | -- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------




| | 5. |  | The registrants other certifying officer and I have disclosed, based on our most recent evaluation, to the registrants auditors and the audit
committee of the registrants board of directors (or persons performing the equivalent function):
| | -- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------




| | a) |  | all significant deficiencies in the design or operation of internal controls which could adversely affect the registrants ability to record, process,
summarize and report financial data and have identified for the registrants auditors any material weaknesses in internal controls; and
| | -- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------




| | b) |  | any fraud, whether or not material, that involves management or other employees who have a significant role in the registrants internal controls; and
| | -- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------




| | 6. |  | The registrants other certifying officer and I have indicated in this quarterly report whether or not there were significant changes in internal controls
or in other factors that could significantly affect internal controls subsequent to the date of our most recent evaluation, including any corrective actions with regard to significant deficiencies and material weaknesses.
| | -- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------




Date:

November 14, 2002



By:

/s/    JOHN P.
BYRNESJohn P. Byrnes Chief Executive
Officer




15




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##### Table of Contents




I, Paul G. Gabos, certify that:





| | 1. |  | I have reviewed this quarterly report on Form 10-Q of Lincare Holdings Inc.;
| | -- |  | ----------------------------------------------------------------------------




| | 2. |  | Based on my knowledge, this quarterly report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the
statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this quarterly report;
| | -- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------




| | 3. |  | Based on my knowledge, the financial statements, and other financial information included in this quarterly report, fairly present in all material respects the
financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this quarterly report;
| | -- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------




| | 4. |  | The registrants other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange
Act Rules 13a-14 and 15d-14) for the registrant and we have:
| | -- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------




| | a) |  | designed such disclosure controls and procedures to ensure that material information relating to the registrant, including its consolidated subsidiaries, is
made known to us by others within those entities, particularly during the period in which this quarterly report is being prepared;
| | -- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------




| | b) |  | evaluated the effectiveness of the registrants disclosure controls and procedures as of a date within 90 days prior to the filing date of this quarterly
report (the Evaluation Date); and
| | -- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------




| | c) |  | presented in this quarterly report our conclusions about the effectiveness of the disclosure controls and procedures based on our evaluation as of the
Evaluation Date;
| | -- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------




| | 5. |  | The registrants other certifying officer and I have disclosed, based on our most recent evaluation, to the registrants auditors and the audit
committee of the registrants board of directors (or persons performing the equivalent function):
| | -- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------




| | a) |  | all significant deficiencies in the design or operation of internal controls which could adversely affect the registrants ability to record, process,
summarize and report financial data and have identified for the registrants auditors any material weaknesses in internal controls; and
| | -- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------




| | b) |  | any fraud, whether or not material, that involves management or other employees who have a significant role in the registrants internal controls; and
| | -- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------




| | 6. |  | The registrants other certifying officer and I have indicated in this quarterly report whether or not there were significant changes in internal controls
or in other factors that could significantly affect internal controls subsequent to the date of our most recent evaluation, including any corrective actions with regard to significant deficiencies and material weaknesses.
| | -- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------




Date:

November 14, 2002



By:

/s/    PAUL G.
GABOSPaul G. Gabos Chief Financial
Officer




16




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##### Table of Contents

Table of Contents





INDEX OF EXHIBITS








Exhibit Number


Exhibit

Sequentially Numbered
Page3.10
(A)

Amended and Restarted Certificate of Incorporation of Lincare Holdings Inc.3.11
(C)

Certificate of Amendment to the Amended and Restated Certificate of Incorporation of Lincare Holdings Inc.3.20
(I)

Amended and Restated By-Laws of Lincare Holdings Inc.,10.20
(A)

Non-Qualified Stock Option Plan of Registrant10.21
(A)

Lincare Holdings Inc. 1991 Stock Plan10.22
(E)

Lincare Holdings Inc. 1994 Stock Plan10.23
(E)

Lincare Holdings Inc. 1996 Stock Plan10.24
(E)

Lincare Holdings Inc. 1998 Stock Plan10.25
(E)

Lincare Holdings Inc. 2000 Stock Plan10.26
(F)

Lincare Holdings Inc. 2001 Stock Plan10.30
(H)

Lincare Inc. 401(k) Plan10.31
(B)

Employment Stock Purchase Plan10.40
(G)

Form of Executive Employment Agreement Dated December 15, 200110.50
(B)

Form of Non-employment Director Stock Option Agreement10.51
(B)

Form of Non-qualified Stock Option Agreement10.60
(H)

Amended and Restated Credit Agreement dated as of April 25, 200210.70
(D)

Senior Secured Note Purchase Agreement among Lincare Holdings Inc., as Borrower, and several note holders with Bank
of America, N.A., as Agent10.71
(D)

Form of Series A Note10.72
(D)

Form of Series B Note10.73
(D)

Form of Series C Note99.1


Certifications pursuant to 18 U.S.C Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of
2002


---

|(A) |  | Incorporated by reference to the Corresponding exhibit to the Registrants Registration Statement on
|--- |  | ----------------------------------------------------------------------------------------------------

| |  | Form S-1 (No. 33-44672)
| |  | -----------------------

|(B) |  | Incorporated by reference to the Registrants Form 10-K dated March 26 1998.
|--- |  | ----------------------------------------------------------------------------

|(C) |  | Incorporated by reference to the Registrants Form 10-Q dated August 12, 1998.
|--- |  | ------------------------------------------------------------------------------

|(D) |  | Incorporated by reference to the Registrants Form 10-Q dated November 13, 2000.
|--- |  | --------------------------------------------------------------------------------

|(E) |  | Incorporated by reference to the Registrants Form 10-K dated March 29, 2001.
|--- |  | -----------------------------------------------------------------------------

|(F) |  | Incorporated by reference to the Registrants Form 10-Q dated August 1, 2001.
|--- |  | -----------------------------------------------------------------------------

|(G) |  | Incorporated by reference to the Registrants Form 10-K dated March 28, 2002.
|--- |  | -----------------------------------------------------------------------------

|(H) |  | Incorporated by reference to the Registrants Form 10-Q dated May 13, 2002.
|--- |  | ---------------------------------------------------------------------------

|(I) |  | Incorporated by reference to the Registrants Form 10-Q dated August 13, 2002.
|--- |  | ------------------------------------------------------------------------------