America Service Group Announces Record Second Quarter Results; Routine SEC Review of EMSA Transaction Prompts Noncash Restatement of First Quarter Results.NASHVILLE Nashville, city (1990 pop. 487,969), state capital, coextensive with Davidson co., central Tenn., on the Cumberland River, in a fertile farm area; inc. as a city 1806, merged with Davidson co. 1963. , Tenn.--(BW HealthWire)--July 23, 1999-- Second Quarter Highlights: -- Bridge notes reduced by $7.5 million -- Senior bank debt reduced by an additional $7 million -- SG&A decreased from 5.2% of revenue in the first quarter to 4.1% in the second quarter -- Integration of EMSA EMSA Electrophoretic Mobility Shift Assay (molecular biology) EMSA European Maritime Safety Agency EMSA Emergency Medical Services Authority (California) EMSA European Medical Students' Association completed on schedule 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 that results for the second quarter and six months ended June June: see month. 30, 1999, reached record levels. Healthcare revenue for the second quarter of 1999 was $72.2 million, up 160% from $27.8 million a year ago, reflecting the impact of the Company's acquisition of EMSA Government Services (EMSA) during the first quarter. Net income attributable attributable emanating from or pertaining to attribute. attributable proportion see attributable risk (below). attributable risk to common shares, exclusive of transitional costs related to the EMSA acquisition, was $1.2 million, or $0.30 per 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. share, compared with net income of $0.4 million, or $0.10 per diluted share, for the second quarter of 1998, exclusive of the MedPartners' settlement. Including costs related to the EMSA acquisition, net income attributable to common stock for the second quarter of 1999 was $1.1 million, or $0.28 per diluted share. Healthcare expenses as a percent of revenue remained stable at 90.4% in the second quarter of 1999 compared with the second quarter of 1998. In addition, selling, general and administrative expenses improved from 8.3% of revenues in the second quarter of 1998 to 4.1% of revenues in the second quarter of 1999. Healthcare revenue for the six months ended June 30, 1999, was $130.5 million, up 135% from $55.5 million a year ago, again, reflecting the impact of the Company's acquisition of EMSA. Net income attributable to common shares, exclusive of a noncash, nonrecurring Non`re`cur´ring a. 1. Nonrecurrent; as, the costs of a layoff are considered as a nonrecurring expense s>. dividend and transitional costs related to the EMSA acquisition, was $2.0 million or $0.49 per diluted share compared with net income, excluding the MedPartners' settlement, of $0.7 million, or $0.19 per diluted share, for the first six months of 1998. 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:
A measurement of the degree to which a firm or project relies on fixed rather than variable costs. Notes: The higher the degree of operating leverage, the greater the potential danger from forecasting risk. which has enabled us to reduce SG&A decisively de·ci·sive adj. 1. Having the power to decide; conclusive. 2. Characterized by decision and firmness; resolute. 3. Beyond doubt; unmistakable: a decisive defeat. ." On July July: see month. 2, 1999, the Company redeemed re·deem tr.v. re·deemed, re·deem·ing, re·deems 1. To recover ownership of by paying a specified sum. 2. To pay off (a promissory note, for example). 3. $7.5 million of the $15 million Bridge Notes issued as part of the $67 million cash purchase price of EMSA. The acquisition was financed by $47 million of Senior Debt with NationsBank NationsBank was one of the largest banking corporations in the United States, based in Charlotte, North Carolina. In 1998, it acquired BankAmerica to become Bank of America. , $5 million of redeemable Redeemable Eligible for redemption under the terms of an indenture. convertible preferred stock Convertible Preferred Stock Preferred stock that includes an option for the holder to convert the preferred shares into a fixed number of common shares, usually anytime after a predetermined date. Also known as "convertible preferred shares". purchased by Ferrer Ferrer is a surname known in many countries. The name itself is a mutation of the Latin word Ferrarius, meaning iron-worker or smith; for this reason, the crests of the various branches of Ferrer nobles and knights always include horse shoes. Freeman Freeman can mean:
Thompson, city (1991 pop. 14,977), central Man., Canada, on the Burntwood River. A mining town, it developed after large nickel deposits were discovered in the area in 1956. & Co. ("FFT (Fast Fourier Transform) A class of algorithms used in digital signal processing that break down complex signals into elementary components. FFT - Fast Fourier Transform ") and $15 million of Bridge Notes to FFT. The remaining Bridge Notes will be converted to redeemable convertible preferred stock subject to shareholder approval. The redemption The liberation of an estate in real property from a mortgage. Redemption is the process by which land that has been mortgaged or pledged is bought back or reclaimed. It is accomplished through a payment of the debt owed or a fulfillment of the other conditions. of the Bridge Notes, which was accretive to earnings, reduces dilutive common shares by approximately ap·prox·i·mate adj. 1. Almost exact or correct: the approximate time of the accident. 2. 0.8 million shares and annual dividends by $0.4 million. During the first quarter of 1999, the Company reduced Senior Debt by $10 million. In addition to the redemption of the $7.5 million in Bridge Notes, the Company further reduced Senior Debt by an additional $7 million in June 1999. The Company also announced that an SEC review of the recently concluded EMSA acquisition will require the Company to restate re·state tr.v. re·stat·ed, re·stat·ing, re·states To state again or in a new form. See Synonyms at repeat. re·state its results for the first quarter ended March 31, 1999. An adjustment of $1.9 million, which increases paid-in capital Paid-in capital Capital received from investors in exchange for stock, but not stock from capital generated from earnings or donated. This account includes capital stock and contributions of stockholders credited to accounts other than capital stock. , represents a $3.68 noncash, nonrecurring dividend on the redeemable convertible preferred shares Preferred shares Preferred shares give investors a fixed dividend from the company's earnings and entitle them to be paid before common shareholders. See: Preferred stock. issued as part of the acquisition of EMSA. The dividend equals the price increase in the common stock from the date of the equity commitment until January January: see month. 26, 1999, when the acquisition closed. The Company's original accounting treatment was based upon the market valuation at the time of commitment, in line with rule clarifications which became effective in May 1999. If the acquisition of EMSA had occurred subsequent to May 19, 1999, 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 first quarter financial statements would not be required. This restatement is a historical event and will have no impact on earnings per share in future periods. The restatement of the first quarter resulted in a reduction of fully diluted earnings per share diluted earnings per share An earnings measure calculated by dividing net income less preferred stock dividends for a period by the average number of shares of common stock that would be outstanding if all convertible securities were converted into shares of of $0.54. 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 contracts with approximately one hundred government agencies to provide a wide range of managed healthcare programs tailored to specific client needs. The Company employs over 4,200 medical, professional and administrative staff nationwide. This press release may contain "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. " 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. As such, they involve risk and uncertainty that actual results may differ materially from those projected in the 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. . A discussion of the important factors and assumptions regarding the statements and risks involved is contained in the Company's filings with the Securities and Exchange Commission. -0-
AMERICA SERVICE GROUP INC.
Second Quarter and Six Months Financial Highlights
(In thousands, except per share data)
Three Months Ended
-------------------------------------
Consolidated Statement June 30, % of June 30, % of
of Operations: 1999(1) Revenue 1998(2) Revenue
------- ------- ------- -------
Healthcare revenue $72,218 100.0 $27,831 100.0
Healthcare expenses 65,261 90.4 25,163 90.4
------- ------- ------- -------
Gross margin 6,957 9.6 2,668 9.6
Selling, general and
administrative expenses 2,944 4.1 2,309 8.3
Depreciation and amortization 1,031 1.4 518 1.9
MedPartners' settlement -- -- (960) (3.4)
------- ------- ------- -------
Income from operations 2,982 4.1 801 2.9
Interest, net (1,267) (1.8) 202 0.7
------- ------- ------- -------
Income before taxes 1,715 2.4 1,003 3.6
Provision for income taxes 511 0.7 5 --
------- ------- ------- -------
Net income 1,204 1.7 998 3.6
Preferred stock dividends 64 0.1 -- --
------- ------- ------- -------
Net income attributable
to common shares $ 1,140 1.6 $ 998 3.6
======= ======= ======= =======
Net income per common share:
Basic $ 0.32 $ 0.28
======= =======
Diluted $ 0.28 $ 0.27
======= =======
Diluted - exclusive of
nonrecurring items $ 0.30 $ 0.10
======= =======
Weighted average shares
outstanding:
Basic 3,576 3,556
======= =======
Diluted 4,284 3,735
======= =======
Six Months Ended
-------------------------------------
Consolidated Statement June 30, % of June 30, % of
of Operations: 1999(1,3) Revenue 1998(2) Revenue
-------- ------ ------- -------
Healthcare revenue $130,499 100.0 $55,463 100.0
Healthcare expenses 117,739 90.2 50,005 90.2
-------- ------ -------- --------
Gross margin 12,760 9.8 5,458 9.8
Selling, general and
administrative expenses 5,964 4.6 5,070 9.1
Depreciation and amortization 1,698 1.3 812 1.5
MedPartners' settlement -- -- (2,555) (4.6)
-------- ------ -------- --------
Income from operations 5,098 3.9 2,131 3.8
Interest, net (2,291) (1.8) 334 0.6
-------- ------ -------- --------
Income before taxes 2,807 2.2 2,465 4.4
Provision for income taxes 1,123 0.9 5 --
-------- ------ -------- --------
Net income 1,684 1.3 2,460 4.4
Preferred stock dividends 2,053 1.6 -- --
-------- ------ -------- --------
Net income attributable
to common shares $ (369) (0.3) $ 2,460 4.4
======== ====== ======== ========
Net income per common share:
Basic $ (0.10) $ 0.69
======== ========
Diluted $ (0.10) $ 0.67
======== ========
Diluted - exclusive of
nonrecurring items $ 0.49 $ 0.19
======== ========
Weighted average shares
outstanding:
Basic 3,576 3,542
======== ========
Diluted 3,576 3,663
======== ========
(1) Included in the income statement for the quarter and six months
ended June 1999 are $0.1 and $0.6 million of transitional
expenses relating to the EMSA acquisition. The majority of the
transitional costs relate to salaries and bonus and will not
occur in future periods. Exclusive of these transitional expenses
and the noncash, nonrecurring dividend discussed in Note 3 below,
net income attributable to common shares would have been $1.2 and
$2.0 million for the quarter and six months ended June 1999, or
$0.30 and $0.49 per dilutive share.
(2) Exclusive of "one-time" gain and costs related to the
MedPartners' settlement, 1998 earnings for the three and six
months ended June 1998, tax effected at 40%, would have been $0.4
million and $0.7 million, or $0.10 and $0.19 per share,
respectively.
(3) An adjustment of $1.9 million, which increases additional paid-in
capital, is included in the income statement for the six-month
period ended June 1999 and represents a $3.68 noncash,
nonrecurring dividend on the redeemable preferred shares issued
as part of the acquisition of EMSA. The dividend equals the price
increase in the Company's stock from the date of the equity
commitment until January 26, 1999, when the acquisition was
closed. The Company's original accounting treatment was based
upon the market valuation at the time of commitment, in line with
rule clarifications which became effective in May 1999. Under
EITF 98-5, "Accounting for Convertible Securities with Beneficial
Conversion Features for Contingently Adjustable Conversion
Ratios," market valuation is based upon the commitment date, not
the closing date. If the acquisition of EMSA had occurred
subsequent to May 19, 1999, restatement of the Company's first
quarter financial statements would not have been required.
June 30, Dec. 31,
Condensed Balance Sheet: 1999 1998
-------- --------
Cash and short-term
investments $ 5,828 $ 7,211
Other current assets 48,775 17,588
-------- --------
Current assets 54,603 24,799
Cost in excess of net
assets acquired 45,360 --
Property and equipment, net 3,498 1,886
Other assets 2,437 1,690
-------- --------
$105,898 $ 28,375
======== ========
Current liabilities(4) $ 53,828 $ 14,284
Other liabilities 1,876 1,300
Long-term debt 30,000 --
Retained earnings 2,193 2,562
Other stockholders' equity(5) 18,001 10,229
-------- --------
$105,898 $ 28,375
======== ========
(4) Includes $14.6 million in bridge loan at June 1999, which will be
converted to redeemable convertible preferred stock subject to
shareholder approval. On July 2, 1999, $7.5 million of the bridge
loan was repaid.
(5) Includes $1.8 million of redeemable common stock for all periods
presented and $5.0 million of redeemable convertible preferred
stock for June and March 1999.
AMERICA SERVICE GROUP INC.
Restated First Quarter Financial Highlights
(In thousands, except per share data)
Three Months Three Months
Ended Ended
March 31, March 31, % of March 31, % of
1999(1) Adj.(3) 1999(1) Rev. 1998(2) Rev.
------- ------- ------- ------ ------- -----
Consolidated Income
Statement (As Reported) (Restated)
Healthcare revenue $58,281 $ -- $58,281 100.0 $27,632 100.0
Healthcare expenses 52,478 -- 52,478 90.0 24,842 89.9
------- ------- ------- ------ ------- -----
Gross margin 5,803 -- 5,803 10.0 2,790 10.1
Selling, general and
administrative expenses 3,020 -- 3,020 5.2 2,761 10.0
Depreciation and
amortization 667 -- 667 1.1 294 1.1
MedPartners' settlement -- -- -- -- (1,595) (5.8)
------- ------- ------- ------ ------- -----
Income from operations 2,116 -- 2,116 3.6 1,330 4.8
Interest, net (1,024) -- (1,024) (1.8) 132 0.5
------- ------- ------- ------ ------- -----
Income before taxes 1,092 -- 1,092 1.9 1,462 5.3
Provision for income
taxes 612 -- 612 1.1 -- --
------- ------- ------- ------ ------- -----
Net income 480 -- 480 0.8 1,462 5.3
Preferred stock dividends 45 1,944 1,989 3.4 -- --
------- ------- ------- ------ ------- -----
Net income attributable
to common shares $ 435 $(1,944)$(1,509) (2.6)$ 1,462 5.3
======= ======= ======= ====== ======= =====
Net income per
common share:
Basic $ 0.12 $(0.54)$ (0.42) $ 0.41
======= ======= ======= =======
Diluted $ 0.12 $(0.54)$ (0.42) $ 0.41
======= ======= ======= =======
Diluted - exclusive of
nonrecurring items $ 0.19 $ 0.19 $ 0.09
======= ======= =======
Weighted average shares
outstanding:
Basic 3,575 3,575 3,530
======= ======= =======
Diluted 4,166 (591) 3,575 3,591
======= ======= ======= =======
(1) Included in March 1999 operations are approximately $0.5 million
of transitional expenses relating to the EMSA acquisition. The
majority of the $0.5 million relates to salaries and bonus.
Exclusive of these transitional expenses and the noncash,
nonrecurring dividend, earnings would have been $0.8 million, or
$0.19 per dilutive share.
(2) Exclusive of a "one-time" net gain related to the MedPartners'
settlement, March 1998 earnings, tax effected at 40%, would have
been $0.3 million, or $0.09 per dilutive share.
(3) An adjustment of $1.9 million, which increases additional paid-in
capital, is included in the income statement for the quarter
ended March 1999 and represents a $3.68 noncash, nonrecurring
dividend on the redeemable preferred shares issued as part of the
acquisition of EMSA. The dividend equals the price increase in
the Company's stock from the date of the equity commitment until
January 26, 1999, when the acquisition was closed. The Company's
original accounting treatment was based upon the market valuation
at the time of commitment, in line with rule clarifications which
became effective in May 1999. Under EITF 98-5, "Accounting for
Convertible Securities with Beneficial Conversion Features for
Contingently Adjustable Conversion Ratios," market valuation is
based upon the commitment date, not the closing date. If the
acquisition of EMSA had occurred subsequent to May 19, 1999,
restatement of the Company's first quarter financial statements
would not have been required.
March 31, March 31, Dec. 31,
Condensed Balance Sheet: 1999 Adj.(1) 1999 1998
-------- -------- -------- ---------
(As Reported) (Restated)
Cash and short-term
investments $ 1,477 $ -- $ 1,477 $ 7,211
Other current assets 61,913 -- 61,913 17,588
-------- -------- -------- ---------
Current assets 63,390 -- 63,390 24,799
Cost in excess of net
assets acquired 45,933 -- 45,933 --
Property and
equipment, net 3,264 -- 3,264 1,886
Other assets 2,168 -- 2,168 1,690
-------- -------- -------- ---------
$114,755 $ -- $114,755 $ 28,375
======== ======== ======== =========
Current liabilities(4) $ 57,362 $ -- $ 57,362 $ 14,284
Other liabilities 1,477 -- 1,477 1,300
Long-term debt 37,000 -- 37,000 --
Retained earnings 2,997 (1,944) 1,053 2,562
Other stockholders'
equity(5) 15,919 1,944 17,863 10,229
-------- -------- -------- ---------
$114,755 $ -- $114,755 $ 28,375
======== ======== ======== =========
(4) Includes $14.4 million in bridge loan at March 1999, which will
be converted to redeemable convertible preferred stock subject to
shareholder approval. On July 2, 1999, $7.5 million of the bridge
loan was repaid.
(5) Includes $1.8 million of redeemable common stock for all periods
presented and $5.0 million of redeemable convertible preferred
stock for June and March 1999.
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