America Service Group Announces First Quarter Results.BRENTWOOD Brentwood, city and district, England Brentwood, city (1991 pop. 51,212) and district, Essex, SE England. Brentwood is mainly residential but produces some agricultural equipment, film, and prefabricated concrete. , Tenn. -- First Quarter Highlights: --Net loss of $1.1 million in the quarter includes pretax pre·tax adj. Existing before tax deductions: pretax income. pretax adj [profit] → vor (Abzug der) Steuern $3.6 million of Audit Committee investigation and related expenses and pretax $1.0 million of share-based compensation expense --Adjusted EBITDA (Earnings Before Interest, Taxes, Depreciation and Amortization) A metric used to show a company's profitability, but not its cash flow. EBITDA became popular in the 1980s to show the potential profitability of leveraged buyouts, but has become of $4.2 million in the first quarter --Increase in cash balances of $16.1 million in the first quarter --Company confirms previous guidance for full-year 2006 results --Company plans resumption RESUMPTION. To reassume; to promise again; as, the resumption of payment of specie by the banks is general. It also signifies to take things back; as the government has resumed the possession of all the lands which have not been paid for according to the requisitions of the law, and the of stock repurchase Stock repurchase A firm's repurchase of outstanding shares of its common stock. program America America [for Amerigo Vespucci], the lands of the Western Hemisphere—North America, Central (or Middle) America, and South America. The world map published in 1507 by Martin Waldseemüller is the first known cartographic use of the name. Service Group Inc. (NASDAQ NASDAQ in full National Association of Securities Dealers Automated Quotations U.S. market for over-the-counter securities. Established in 1971 by the National Association of Securities Dealers (NASD), NASDAQ is an automated quotation system that reports on :ASGR ASGR America Service Group Inc. ASGR Armed Services Graves Registration Office ) announced today results for the first quarter ended March 31, 2006, confirmation of its previous guidance for full-year 2006 results and the planned resumption of the Company's stock repurchase program. Commenting on today's announcement, Michael Michael, archangel Michael (mī`kəl) [Heb.,=who is like God?], archangel prominent in Christian, Jewish, and Muslim traditions. In the Bible and early Jewish literature, Michael is one of the angels of God's presence. Catalano Catalano, originally an adjective or derived substantive indicating something or someone Catalan, can refer to the following persons:
FAS 144 Impact on Income Statement Presentation Format As noted in its 2005 annual report on Form 10-K Form 10-K A report required by the SEC from exchange-listed companies that provides for annual disclosure of certain financial information. Form 10-K See 10-K. , the Company is applying the discontinued operations Discontinued operations Divisions of a business that have been sold or written off and that no longer are maintained by the business. provisions of Financial Accounting Standards Board Financial Accounting Standards Board (FASB) Board composed of independent members who create and interpret Generally Accepted Accounting Principles (GAAP). Statement of Financial Accounting Standards No. 144 ("FAS 144") to all service contracts that expire expire /ex·pire/ (ek-spi´er) 1. to exhale. 2. to die. ex·pire v. 1. To breathe one's last breath; die. 2. To exhale. subsequent to January January: see month. 1, 2002. FAS 144 requires the Company to follow the income statement presentation format described in FAS 144. The results of operations of contracts that expire, less applicable income taxes, are classified on the Company's consolidated con·sol·i·date v. con·sol·i·dat·ed, con·sol·i·dat·ing, con·sol·i·dates v.tr. 1. To unite into one system or whole; combine: statements of operations separately from continuing operations continuing operations Parts of a business that are expected to be maintained as an ongoing segment of an overall business operation. Income and losses from continuing operations are reported separately if any segments have been discontinued during the . The presentation prescribed pre·scribe v. pre·scribed, pre·scrib·ing, pre·scribes v.tr. 1. To set down as a rule or guide; enjoin. See Synonyms at dictate. 2. To order the use of (a medicine or other treatment). for discontinued operations requires the collapsing of healthcare revenues and expenses, as well as other specifically identifiable costs, into the income or loss from discontinued operations, net of taxes. Items such as indirect selling, general and administrative expenses or interest expense cannot be allocated to expired ex·pire v. ex·pired, ex·pir·ing, ex·pires v.intr. 1. To come to an end; terminate: My membership in the club has expired. 2. contracts. The application of the FAS 144 accounting presentation to expired contracts has no impact on net income, earnings per share, total cash flows or stockholders' equity Stockholders' Equity The portion of the balance sheet that includes capital received from investors in exchange for stock (paid-in capital), donated capital, and retained earnings. This is equal to total assets minus liabilities, preferred stock and intangible assets. . As a result of the application of FAS 144, "healthcare revenues" and "healthcare expenses" on the Company's consolidated statements of operations for any period presented will only include revenues and expenses from continuing contracts. The Company will also discuss "Total Revenues," "Total Healthcare Expenses," and "Total Gross Margin," which will include all of the Company's revenues and healthcare expenses for a period (i.e., healthcare revenues plus revenues from expired service contracts, or healthcare expenses plus expenses from expired contracts less share-based compensation expense). Total Gross Margin is defined as Total Revenues less Total Healthcare Expenses. Total Gross Margin excludes loss contract reserve utilization utilization, n 1. the extent to which a given group uses a particular service in a specified period. Although usually expressed as the number of services used per year per 100 or per 1000 persons eligible for the service, utilization rates may be and share-based compensation expense. Reconciliations of healthcare revenues to Total Revenues, healthcare expenses to Total Healthcare Expenses and gross margin to Total Gross Margin are found in the attached schedules. Results for First Quarter Ended March 31, 2006 Healthcare revenues from continuing contracts for the first quarter of 2006 were $167.1 million, an increase of 25.7% over the prior year quarter. Total Revenues, which includes revenues from continuing and discontinued dis·con·tin·ue v. dis·con·tin·ued, dis·con·tin·u·ing, dis·con·tin·ues v.tr. 1. To stop doing or providing (something); end or abandon: contracts, for the first quarter of 2006 were $167.6 million, a decrease of 1.2% compared with the prior year quarter. Healthcare expenses from continuing contracts for the first quarter of 2006 were $157.8 million, or 94.4% of healthcare revenues, as compared with $121.5 million, or 91.4% of healthcare revenues, in the prior year quarter. Included in healthcare expenses from continuing contracts for the first quarter of 2006 is $111,000 of share-based compensation expense. The increase in healthcare expenses from continuing contracts as a percentage of healthcare revenues when compared with the prior year quarter is primarily due to a continuation continuation - continuation passing style of items discussed in the Company's filings related to the Company's 2005 financial results including: Secure Pharmacy pharmacy, art of compounding and dispensing drugs and medication. The term is also applied to an establishment used for such purposes. Until modern times medication was prepared and dispensed by the physician himself. In the 18th cent. Plus ("SPP (1) (Scalable Parallel Processor) A multiprocessing computer that can be upgraded by adding more CPUs. (2) (Standard Parallel Port) The Centronics parallel port that was used on the first PCs. ") operating at a loss in the first quarter of 2006; the Wyoming Wyoming, city, United States Wyoming, city (1990 pop. 63,891), Kent co., W Mich., in the greater Grand Rapids metropolitan area, on the Grand River; settled 1832, inc. 1959. Department of Corrections and Vermont Vermont (vərmŏnt`) [Fr.,=green mountain], New England state of the NE United States. It is bordered by New Hampshire, across the Connecticut R. Department of Corrections contracts operating at losses during the first quarter of 2006; and, a reduction in profitability in the Alabama Alabama, indigenous people of North America Alabama (ăləbăm`ə), indigenous people of North America whose language belongs to the Muskogean branch of the Hokan-Siouan linguistic stock (see Native American languages). Department of Corrections contract in the first quarter of 2006 as compared with the prior year quarter. Additionally, the Company's contract with the Florida Department Florida is a department (departamento) of Uruguay. Population and Demographics As of the census of 2004, there were 68,181 people and 21,938 households in the department. The average household size was 3.1. For every 100 females, there were 100.4 males. of Corrections, which commenced January 1, 2006, while marginally mar·gin·al adj. 1. Of, relating to, located at, or constituting a margin, a border, or an edge: the marginal strip of beach; a marginal issue that had no bearing on the election results. 2. profitable, is not yet generating profits at the anticipated levels. This is primarily due to higher than anticipated pharmacy and off-site off-site adj. Taking place or located away from the site, as of a particular activity: an off-site waste treatment operation. off utilization costs. Total Healthcare Expenses, which includes expenses from continuing and discontinued contracts and excludes share-based compensation expense, for the first quarter of 2006 were $158.4 million, or 94.5% of Total Revenues, as compared with $157.5 million, or 92.9% of Total Revenues, in the prior year quarter. Gross margin from continuing contracts for the first quarter of 2006 was $9.3 million, or 5.6% of healthcare revenues, as compared with $11.5 million, or 8.6% of healthcare revenues, in the prior year quarter. Included in gross margin from continuing contracts for the first quarter of 2006 is $111,000 of share-based compensation expense. Total Gross Margin, which includes continuing and discontinued contracts and excludes share-based compensation expense, for the first quarter of 2006 was $9.2 million, or 5.5% of Total Revenues, as compared with $12.0 million, or 7.1% of Total Revenues, in the prior year quarter. Selling, general and administrative expenses for the first quarter of 2006 were $5.9 million, or 3.5% of healthcare revenues, as compared with $4.3 million, or 3.2% of healthcare revenues, in the prior year quarter. Included in selling, general and administrative expenses for the first quarter of 2006 is $937,000 of share-based compensation expense. Selling, general and administrative expenses, excluding share-based compensation expense, as a percentage of Total Revenues for the first quarter of 2006 were 3.0%, as compared with 2.5% in the prior year period. Expenses related to the Audit Committee investigation into certain matters at SPP, the findings of which were reported on March 15, 2006 for the first quarter of 2006 were $3.6 million. The Company currently expects to record an additional $200,000 to $700,000 of Audit Committee investigation and related expenses into certain matters related to SPP subsequent to the first quarter of 2006. Adjusted EBITDA for the first quarter of 2006 was $4.2 million, as compared with $7.7 million in the prior year quarter. As reflected in the attached schedule, the Company defines Adjusted EBITDA as earnings before interest expense, income taxes, depreciation, amortization, Audit Committee investigation expenses and share-based compensation expense. The Company includes in Adjusted EBITDA the results of discontinued operations under the same definition. Depreciation and amortization expense for the first quarter of 2006 was $976,000, as compared with $961,000 in the prior year quarter. The loss from operations for the first quarter of 2006 was $1.2 million, as compared with income from operations of $6.2 million in the prior year quarter. Negatively impacting the current year results is the $3.6 million of Audit Committee investigation expenses, as well as $1.0 million of share-based compensation expense. Net interest expense for the first quarter of 2006 was $513,000, as compared with $278,000 in the prior year quarter. The loss from continuing operations before income taxes for the first quarter of 2006 was $1.7 million, as compared with income from continuing operations before income taxes of $5.9 million in the prior year quarter. Negatively impacting the current year results is the $3.6 million of Audit Committee investigation expenses, as well as $1.0 million of share-based compensation expense. The income tax benefit for the first quarter of 2006 was $679,000, as compared with an income tax provision of $2.4 million in the prior year quarter. The loss from continuing operations for the first quarter of 2006 was $989,000, as compared with income from continuing operations of $3.6 million in the prior year quarter. Negatively impacting the current year results is the pre-tax pre-tax adj → anterior al impuesto pre-tax adj → avant impôt(s) pre-tax adj → al lordo d'imposta $3.6 million of Audit Committee investigation expenses, as well as the pre-tax $1.0 million of share-based compensation expense. The loss from discontinued operations, net of taxes, for the first quarter of 2006 was $159,000, as compared with income from discontinued operations, net of taxes, of $305,000 in the prior year quarter. The net loss for the first quarter of 2006 was $1.1 million, or $0.11 basic and diluted di·lute tr.v. di·lut·ed, di·lut·ing, di·lutes 1. To make thinner or less concentrated by adding a liquid such as water. 2. To lessen the force, strength, purity, or brilliance of, especially by admixture. per common share, as compared with net income of $3.9 million, or $0.36 basic and $0.35 diluted per common share, in the prior year quarter. Negatively impacting the current year results is the pre-tax $3.6 million of Audit Committee investigation expenses, as well as the pre-tax $1.0 million of share-based compensation expense. Cash on hand and restricted cash increased $16.1 million to $20.3 million at March 31, 2006, as compared with $4.2 million at December December: see month. 31, 2005. Total debt outstanding as of March 31, 2006 and December 31, 2005 was $12.5 million. Days sales outstanding In accountancy, Days Sales Outstanding is a company's average collection period. A low figure indicates that the company collects its outstanding receivables quickly. Typically it is looked at either quarterly or yearly (90 or 365 days). in accounts receivable accounts receivable n. the amounts of money due or owed to a business or professional by customers or clients. Generally, accounts receivable refers to the total amount due and is considered in calculating the value of a business or the business' problems in paying decreased to approximately ap·prox·i·mate adj. 1. Almost exact or correct: the approximate time of the accident. 2. 52 days at March 31, 2006, as compared to 61 days at December 31, 2005. Included in healthcare accounts receivable at March 31, 2006 is approximately $6.5 million of receivables Receivables An asset designation applicable to all debts, unsettled transactions or other monetary obligations owed to a company by its debtors or customers. Receivables are recorded by a company's accountants and reported on the balance sheet, and they and include all debts owed related to contracts that expired prior to December 31, 2004. The Company believes that these receivables are contractually con·trac·tu·al adj. Of, relating to, or having the nature of a contract. con·trac  tu·al·ly adv.Adv. 1. due under the terms of the respective expired contracts. However, due to the age of the receivables and the lack of an ongoing business relationship between the Company and the clients, there is a heightened risk of collectibility related to these receivables. Nevertheless, the Company intends to take all necessary measures in order to collect these receivables. 2006 Guidance The Company is confirming its previous guidance for full-year 2006 results. Consistent with past practice, the Company's guidance for full-year 2006 results does not consider the impact of any potential new business. Contracts currently in operation are included in the guidance for full-year 2006 results through the end of the year, unless the Company has previously been notified otherwise by the client. The Company's guidance for estimated full-year 2006 results (adjusted for the items discussed in detail in the footnotes) is summarized below:
Total Revenues (1) $660 - 680 million
Depreciation, amortization
and interest expense (1) $6.0 million
Adjusted pre-tax income (2) $16.0 - 17.0 million
Effective tax rate 41%
Adjusted net income (2) $9.4 - 10.0 million
Weighted average common shares
outstanding - diluted 10.5 million
Adjusted net income per common
share - diluted (2) $0.90 - 0.96
(1) From continuing and discontinued contracts
(2) From continuing and discontinued contracts and adjusted to
exclude the pre-tax negative impact of $3.8 million to $4.3
million (or $0.21 to $0.24 per diluted common share) of estimated
Audit Committee investigation and related expenses expected to be
recorded in 2006 and the $4.0 million to $5.0 million (or $0.22
to $0.28 per diluted common share) of estimated share-based
compensation expense expected to be recorded in 2006 as a result
of the Company's adoption of Financial Accounting Standards Board
Statement of Financial Accounting Standards No. 123 (revised
2004), effective January 1, 2006.
Planned Resumption of Stock Repurchase Program On July July: see month. 26, 2005, the Company announced that its Board of Directors had approved a stock repurchase program to repurchase re·pur·chase tr.v. re·pur·chased, re·pur·chas·ing, re·pur·chas·es To buy (something) again. n. The act of buying something that one previously sold or owned. Noun 1. up to $30 million of the Company's common stock over an approximate ap·prox·i·mate v. To bring together, as cut edges of tissue. adj. 1. Relating to the contact surfaces, either proximal or distal, of two adjacent teeth; proximate. 2. Close together. 24-month period. The Company plans to resume repurchases, which were temporarily suspended sus·pend v. sus·pend·ed, sus·pend·ing, sus·pends v.tr. 1. To bar for a period from a privilege, office, or position, usually as a punishment: suspend a student from school. pending the Audit Committee investigation into certain matters related to SPP, under this program from time to time in accordance Accordance is Bible Study Software for Macintosh developed by OakTree Software, Inc.[] As well as a standalone program, it is the base software packaged by Zondervan in their Bible Study suites for Macintosh. with Securities and Exchange Commission requirements and subject to ongoing reviews of the Company's operating cash flow Operating cash flow Earnings before depreciation minus taxes. Measures the cash generated from operations, not counting capital spending or working capital requirements. requirements. This program is intended to be implemented through purchases made from time to time in either the open market or through private transactions. Under the stock repurchase program, no shares will be purchased directly from officers or directors of the Company. The timing, prices and sizes of purchases will depend upon prevailing stock prices, general economic and market conditions and other considerations. Funds for the repurchase of shares are expected to come primarily from cash generated from operations and also from funds on hand, including amounts available under the Company's credit facility. The repurchase program does not obligate obligate /ob·li·gate/ (ob´li-gat) pertaining to or characterized by the ability to survive only in a particular environment or to assume only a particular role, as an obligate anaerobe. the Company to acquire any particular amount of common stock and the repurchase program may be suspended at any time at the Company's discretion. The Company had repurchased and retired 149,100 shares of its common stock for approximately $3.0 million prior to the temporary suspension suspension, in vehicles suspension, in automobiles, system of springs used to suspend the frame, body, engine, and power train above the wheels. Its principal purpose is to lessen the jarring of the automobile that is caused by irregularities in the roads of the program pending the Audit Committee investigation into certain matters related to SPP. As of April 26, 2006, the Company had approximately 10.9 million shares outstanding. Conference Call A listen-only simulcast Simulcast is a portmanteau of "simultaneous broadcast", and refers to programs or events broadcast across more than one medium, or more than one service on the same medium, at the same time. and replay of America Service Group's first quarter 2006 results conference call will be available online at www.asgr.com or www.earnings.com on May 4, 2006, beginning at 11:00 a.m. Eastern time. In addition, a copy of the press release containing the related financial information can be found on the Company's website. America Service Group Inc., based in Brentwood, Tennessee Brentwood is a city in Williamson County, Tennessee, United States. The population was 23,445 as of the U.S. Census Bureau's 2000 census, and as of 2007, Brentwood's population has increased to over 30,000. Brentwood is an affluent Nashville suburb. , is a leading provider of correctional cor·rec·tion n. 1. The act or process of correcting. 2. Something offered or substituted for a mistake or fault: made corrections in the report. 3. a. healthcare services in the United States United States, officially United States of America, republic (2005 est. pop. 295,734,000), 3,539,227 sq mi (9,166,598 sq km), North America. The United States is the world's third largest country in population and the fourth largest country in area. . America Service Group Inc., through its subsidiaries, provides a wide range of healthcare and pharmacy programs to government agencies for the medical care of inmates. This release contains certain financial information not derived de·rive v. de·rived, de·riv·ing, de·rives v.tr. 1. To obtain or receive from a source. 2. in accordance with United States generally accepted accounting principles The standard accounting rules, regulations, and procedures used by companies in maintaining their financial records. Generally accepted accounting principles (GAAP) provide companies and accountants with a consistent set of guidelines that cover both broad accounting ("GAAP GAAP See: Generally Accepted Accounting Principles GAAP See generally accepted accounting principles (GAAP). "). The Company believes this information is useful to investors and other interested parties. Such information should not be considered as a substitute for any measures derived in accordance with GAAP and may not be comparable to other similarly titled measures of other companies. A discussion of the Company's definition of such information and reconciliation to the most comparable GAAP measure is included below. The most directly comparable GAAP measures for the guidance provided by the Company are: Healthcare Revenues; Income from Continuing Operations Before Income Taxes; Depreciation and Amortization; and Interest, each of which will only include results from continuing contracts. Because it is not possible to reliably forecast discontinued operations, reconciliation of the Company's guidance to the most directly comparable GAAP measure cannot be estimated on a forward-looking for·ward-look·ing adj. Concerned with or making provision for the future: forward-looking educators; a forward-looking corporate plan. Adj. 1. basis. Cautionary Statement This press release contains "forward-looking" statements made pursuant to the safe harbor Safe Harbor 1. A legal provision to reduce or eliminate liability as long as good faith is demonstrated. 2. A form of shark repellent implemented by a target company acquiring a business that is so poorly regulated that the target itself is less attractive. provisions of the Private Securities Litigation Reform Act The Private Securities Litigation Reform Act of 1995 (PSLRA) implemented several significant substantive changes affecting certain cases brought under the federal securities laws, including changes related to pleading, discovery, liability, class representation and awards fees and of 1995. Statements in this release that are not historical facts, including statements about the Company's or management's beliefs and expectations, constitute forward-looking statements forward-looking statement A projected financial statement based on management expectations. A forward-looking statement involves risks with regard to the accuracy of assumptions underlying the projections. and may be indicated by words or phrases such as "anticipate," "estimate," "plans," "expects," "projects," "should," "will," "believes" or "intends" and similar words and phrases Words and Phrases® A multivolume set of law books published by West Group containing thousands of judicial definitions of words and phrases, arranged alphabetically, from 1658 to the present. . Forward-looking statements involve inherent risks and uncertainties. A number of important factors could cause actual results to differ materially from those contained in any forward-looking statement. Such factors include, but are not limited to, the following: --the risk that government entities (including the Company's government customers) may bring enforcement actions against, seek additional refunds from, or impose penalties on, the Company or its subsidiaries as a result of the matters recently investigated by the Audit Committee or the previous restatement Restatement A revision in a company's earlier financial statements. Notes: The need for restating financial figures can result from fraud, misrepresentation, or a simple clerical error. of the Company's financial results; --the risks arising from shareholder litigation An action brought in court to enforce a particular right. The act or process of bringing a lawsuit in and of itself; a judicial contest; any dispute. When a person begins a civil lawsuit, the person enters into a process called litigation. as a result of the matters recently investigated by the Audit Committee or the previous restatement of the Company's financial results; --risks associated with the possibility that we may be unable to satisfy covenants under our credit facility; --risks arising from potential weaknesses or deficiencies in our internal control over financial reporting; --risks arising from the possibility that we may be unable to collect accounts receivable; --the Company's ability to retain existing client contracts and obtain new contracts; --whether or not government agencies continue to privatize pri·va·tize tr.v. pri·va·tized, pri·va·tiz·ing, pri·va·tiz·es To change (an industry or business, for example) from governmental or public ownership or control to private enterprise: "The strike ... correctional healthcare services; --the possible effect of adverse publicity on the Company's business; --increased competition for new contracts and renewals of existing contracts; --the Company's ability to execute To run a program, which causes the computer to carry out its instructions. See executable code, instruction and EXE file. execute - execution its expansion strategies; --the Company's ability to limit its exposure for catastrophic illnesses catastrophic illness A morbid condition that results in health care costs that exceed a person's income, or which compromise financial independence, reducing him/her to subsistence or near-poverty levels; CIs are usually life-threatening and may leave significant and injuries in excess of amounts covered under contracts or insurance coverage; --the outcome of pending litigation; --the Company's dependence on key personnel; and --the Company's determination whether to repurchase shares under its stock repurchase program. A discussion of important factors and assumptions regarding certain statements and risks involved in an investment in the Company is contained in the Company's Annual Report on Form 10-K and other filings with the Securities and Exchange Commission. These forward-looking statements are made as of the date of this release. The Company assumes no obligations to update or revise them or provide reasons why actual results may differ.
AMERICA SERVICE GROUP INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share data)
Three Months Ended
--------------------------------------
Mar. 31, % of Mar. 31, % of
2006 Revenue 2005 Revenue
-------- -------- -------- --------
Healthcare revenues $167,101 100.0 $132,953 100.0
Healthcare expenses 157,799 94.4 121,464 91.4
-------- -------- -------- --------
Gross margin 9,302 5.6 11,489 8.6
Selling, general and
administrative expenses 5,912 3.5 4,304 3.2
Audit Committee investigation
and related expenses 3,569 2.2 -- --
Depreciation and amortization 976 0.6 961 0.7
-------- -------- -------- --------
Income (loss) from operations (1,155) (0.7) 6,224 4.7
Interest, net 513 0.3 278 0.2
-------- -------- -------- --------
Income (loss) from continuing
operations before income tax
provision (benefit) (1,668) (1.0) 5,946 4.5
Income tax provision (benefit) (679) (0.4) 2,388 1.8
-------- -------- -------- --------
Income (loss) from
continuing operations (989) (0.6) 3,558 2.7
Income (loss) from discontinued
operations, net of taxes (159) (0.1) 305 0.2
-------- -------- -------- --------
Net income (loss) $ (1,148) (0.7) $ 3,863 2.9
======== ======== ======== ========
Income (loss) per common
share - basic:
Income (loss) from
continuing operations $ (0.09) $ 0.33
Income (loss) from
discontinued operations,
net of taxes (0.02) 0.03
-------- --------
Net income (loss) $ (0.11) $ 0.36
======== ========
Income (loss) per common
share - diluted:
Income (loss) from
continuing operations $ (0.09) $ 0.32
Income (loss) from
discontinued operations,
net of taxes (0.02) 0.03
-------- --------
Net income (loss) $ (0.11) $ 0.35
======== ========
Weighted average common
shares outstanding:
Basic 10,766 10,847
======== ========
Diluted 10,766 11,161
======== ========
AMERICA SERVICE GROUP INC.
CONSOLIDATED BALANCE SHEETS
(In thousands)
Mar. 31, Dec. 31,
2006 2005 (1)
-------- --------
ASSETS
Current assets:
Cash and cash equivalents $ 16,093 $ --
Restricted cash 4,189 4,200
Accounts receivable: healthcare
and other, less allowances 97,507 99,712
Inventories 8,072 6,546
Prepaid expenses and other current assets 19,800 18,976
Current deferred tax assets 8,371 7,575
-------- --------
Total current assets 154,032 137,009
Property and equipment, net 6,467 6,336
Goodwill, net 43,813 43,813
Contracts, net 6,759 7,166
Other intangibles, net 788 845
Other assets 9,340 10,068
-------- --------
Total assets $221,199 $205,237
======== ========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 42,294 $ 36,023
Accrued medical claims liability 35,717 31,122
Accrued expenses 48,521 44,478
Deferred revenue 8,815 8,533
Revolving credit facility classified as current 12,500 12,500
-------- --------
Total current liabilities 147,847 132,656
Noncurrent portion of accrued expenses 15,951 15,701
Noncurrent deferred tax liabilities 876 876
-------- --------
Total liabilities 164,674 149,233
-------- --------
Stockholders' equity:
Common stock 109 108
Additional paid-in capital 55,427 53,759
Retained earnings 989 2,137
-------- --------
Total stockholders' equity 56,525 56,004
-------- --------
Total liabilities and stockholders' equity $221,199 $205,237
======== ========
(1) Certain prior period amounts have been reclassified in order to
conform to the current period presentation.
AMERICA SERVICE GROUP INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
Three Months Ended
Mar. 31,
------------------
2006 2005
-------- --------
Cash Flows from Operating Activities
Net income (loss) $ (1,148) $ 3,863
Adjustments to reconcile net income (loss) to
net cash provided by operating activities:
Depreciation and amortization 985 984
Loss on retirement of fixed assets 3 --
Finance cost amortization 24 146
Stock option income tax benefits -- 81
Deferred income taxes (796) 2,436
Share-based compensation expense 1,047 14
Excess tax benefits from share-based
compensation expense (374) --
Changes in operating assets and liabilities:
Accounts receivable, net 2,205 8,093
Inventories (1,526) (134)
Prepaid expenses and other current assets (824) 574
Other assets 704 (593)
Accounts payable 6,271 (5,139)
Accrued medical claims liability 4,595 443
Accrued expenses 4,293 3,107
Deferred revenue 282 (2,392)
Loss contract reserve utilization -- (3,056)
-------- --------
Net cash provided by operating activities 15,741 8,427
-------- --------
Cash Flows from Investing Activities
Capital expenditures (654) (1,156)
-------- --------
Net cash used in investing activities (654) (1,156)
-------- --------
Cash Flows from Financing Activities
Net borrowings (payments) on line of credit and
term loan -- --
Reduction in restricted cash used to collateralize
letters of credit 11 --
Excess tax benefits from share-based compensation
expense 374 --
Issuance of common stock 215 369
Exercise of stock options 406 745
-------- --------
Net cash provided by financing activities 1,006 1,114
-------- --------
Net increase in cash and cash equivalents 16,093 8,385
Cash and cash equivalents at beginning of period -- 7,191
-------- --------
Cash and cash equivalents at end of period $ 16,093 $ 15,576
======== ========
AMERICA SERVICE GROUP INC.
SCHEDULE OF INCOME (LOSS) FROM DISCONTINUED OPERATIONS, NET OF TAXES
(In thousands)
Three Months Ended
--------------------------------------
Mar. 31, % of Mar. 31, % of
2006 Revenue 2005 Revenue
-------- -------- -------- --------
Healthcare revenues $ 462 100.0 $ 36,605 100.0
Healthcare expenses 711 153.9 36,071 98.5
-------- -------- -------- --------
Gross margin (249) (53.9) 534 1.5
Depreciation and amortization 9 1.9 23 0.1
Interest, net 10 2.2 2 --
-------- -------- -------- --------
Income (loss) from
discontinued operations
before income taxes (268) (58.0) 509 1.4
Income tax provision (benefit) (109) (23.6) 204 0.6
-------- -------- -------- --------
Income (loss) from discontinued
operations, net of taxes $ (159) (34.4) $ 305 0.8
======== ======= ======== ========
AMERICA SERVICE GROUP INC. DISCUSSION AND RECONCILIATION OF NON-GAAP MEASURES (In thousands) This release contains certain financial information not derived in accordance with United States generally accepted accounting principles ("GAAP"). The Company believes this information is useful to investors and other interested parties. Such information should not be considered as a substitute for any measures derived in accordance with GAAP and may not be comparable to other similarly titled measures of other companies. A discussion of the Company's definition of such information and reconciliation to the most comparable GAAP measure is included below. ADJUSTED EBITDA The Company defines Adjusted EBITDA as earnings before interest expense, income taxes, depreciation, amortization, Audit Committee investigation expenses and share-based compensation expense. The Company includes in Adjusted EBITDA the results of discontinued operations under the same definition. The Company believes that Adjusted EBITDA is an important operating measure that supplements discussions and analysis of the Company's results of operations. The Company believes that it is useful to investors to provide disclosures of its results of operations on the same basis as that used by management, credit providers and analysts. The Company's management, credit providers and analysts rely upon Adjusted EBITDA as a key measure to review and assess operating performance. Adjusted EBITDA is utilized by management, credit providers and analysts to compare the Company's current operating results with the corresponding periods in the previous year and to compare the Company's operating results with other companies in the healthcare industry. Adjusted EBITDA is not a measure of financial performance under United States generally accepted accounting principles and should not be considered an alternative to net income as a measure of operating performance or to cash flows from operating, investing and financing activities as a measure of liquidity. Because Adjusted EBITDA is not a measurement determined in accordance with generally accepted accounting principles and is susceptible susceptible /sus·cep·ti·ble/ (su-sep´ti-b'l) 1. readily affected or acted upon. 2. lacking immunity or resistance and thus at risk of infection. sus·cep·ti·ble adj. to varying calculations, Adjusted EBITDA, as presented, may not be comparable to other similarly titled measures presented by other companies.
RECONCILIATION OF NET INCOME (LOSS) TO ADJUSTED EBITDA
Three Months Ended
Mar. 31,
------------------
2006 2005
-------- --------
Net income (loss) $ (1,148) $ 3,863
Depreciation, interest and taxes included in income
(loss) from discontinued operations, net of taxes (90) 229
Income tax provision (benefit) (679) 2,388
Interest, net 513 278
Depreciation and amortization 976 961
Audit Committee investigation and related expenses 3,569 --
Share-based compensation expense included in
healthcare expenses 111 --
Share-based compensation expense included in
selling, general and administrative expenses 937 --
-------- --------
Adjusted EBITDA $ 4,189 $ 7,719
======== ========
TOTAL REVENUES, TOTAL HEALTHCARE EXPENSES AND TOTAL GROSS MARGIN The Company defines Total Revenues as healthcare revenues plus revenues from expired service contracts classified as discontinued operations. The Company defines Total Healthcare Expenses as healthcare expenses plus expenses from expired contracts classified as discontinued operations, less share-based compensation expense. The Company defines Total Gross Margin as Total Revenues less Total Healthcare Expenses. Total Gross Margin excludes loss contract reserve utilization. The Company believes that Total Revenues, Total Healthcare Expenses and Total Gross Margin are useful measurements when comparing the Company's performance for such items as selling, general and administrative expenses, interest expense or tax expense as a percentage of revenue between periods. As a result of the application of FAS 144, "healthcare revenues," "healthcare expenses," and "gross margin" on the Company's consolidated statements of operations for any period presented will only include revenues and expenses from continuing contracts.
RECONCILIATION OF HEALTHCARE REVENUES TO TOTAL REVENUES
Three Months Ended
Mar. 31,
------------------
2006 2005
-------- --------
Healthcare revenues $167,101 $132,953
Healthcare revenues included in income (loss) from
discontinued operations, net of taxes 462 36,605
-------- --------
Total Revenues $167,563 $169,558
======== ========
RECONCILIATION OF HEALTHCARE EXPENSES TO TOTAL HEALTHCARE EXPENSES
Three Months Ended
Mar. 31,
------------------
2006 2005
-------- --------
Healthcare expenses $157,799 $121,464
Healthcare expenses included in income (loss) from
discontinued operations, net of taxes 711 36,071
Share-based compensation expense included in
healthcare expenses (111) --
-------- --------
Total Healthcare Expenses $158,399 $157,535
======== ========
RECONCILIATION OF GROSS MARGIN TO TOTAL GROSS MARGIN
Three Months Ended
Mar. 31,
------------------
2006 2005
-------- --------
Gross margin $ 9,302 $ 11,489
Gross margin included in income (loss) from
discontinued operations, net of taxes (249) 534
Share-based compensation expense included in gross
margin 111 --
-------- --------
Total Gross Margin $ 9,164 $ 12,023
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