America Service Group Announces Second Quarter Results.Business Editors, Health/Medical Writers 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, 2002 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 ): Second Quarter Highlights: -- Increased EBITDA to $5.1 million in the quarter -- $3.3 million gain recorded from reduction in reserve for loss contracts -- Net income of $5.3 million in the quarter -- Debt reduced $4.4 million in the quarter America Service Group Inc. (NASDAQ:ASGR) announced today results for the second quarter and six months ended June June: see month. 30, 2002. Commenting on second quarter results, 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:
During the last six months, the Company has won nine rebids totaling approximately ap·prox·i·mate adj. 1. Almost exact or correct: the approximate time of the accident. 2. $16 million of annual revenues, negotiated extensions or modified mod·i·fy v. mod·i·fied, mod·i·fy·ing, mod·i·fies v.tr. 1. To change in form or character; alter. 2. another 26 contracts on reasonable terms and, as anticipated, has allowed four unproductive contracts to 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. . During the same period, the Company has been awarded ten new contracts with combined annualized annualized Of or relating to a variable that has been mathematically converted to a yearly rate. Inflation and interest rates are generally annualized since it is on this basis that these two variables are ordinarily stated and compared. revenues of approximately $18 million. Healthcare revenues for the second quarter of 2002 were $138.5 million, an increase of 0.5% from the first quarter of the year, although 1.6% lower than the prior year second quarter. For the six months ended June 30, 2002, healthcare revenues were $276.4 million, a decrease of 0.8% over the prior year period. Healthcare expenses for the second quarter of 2002 were $129.9 million, or 93.8% of revenue, as compared with $146.7 million, or 104.2% of revenue, in the prior year period. For the six months ended June 30, 2002, healthcare expenses were $259.2 million, or 93.8% of revenue, as compared with $273.3 million, or 98.1% of revenue, in the prior year period. Included in the prior year second quarter and six month results was a charge of $6.4 million to healthcare expenses, which was the result of an increase in reserves for medical claims. Gross margin for the second quarter of 2002 was $8.6 million and for the six months ended June 30, 2002, was $17.2 million, or 6.2% of revenue in each period. In the prior year, gross margin was negative $5.9 million in the second quarter due to the charge mentioned above and for the six months was $5.4 million, or 1.9% of revenue. Selling, general and administrative expenses for the second quarter of 2002 were $3.5 million, or 2.5% of revenue, as compared with $6.0 million, or 4.3% of revenue, in the prior year period. For the six months ended June 30, 2002, selling, general and administrative expenses were $7.6 million, or 2.8% of revenue, as compared with $10.1 million, or 3.6% of revenue, in the prior year period. Included in the prior year second quarter and six month results was a charge of $1.3 million to selling, general and administrative expenses as a result of increases for legal and malpractice malpractice, failure to provide professional services with the skill usually exhibited by responsible and careful members of the profession, resulting in injury, loss, or damage to the party contracting those services. issues. Excluding the impact of this charge, selling, general and administrative expenses decreased from the prior year as a result of overhead reductions implemented by the Company subsequent to the first half of 2001. 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 for the second quarter of 2002 was $5.1 million as compared with negative $10.6 million in the prior year period. For the six months ended June 30, 2002, EBITDA was $9.6 million as compared with negative $3.4 million in the prior year period. The Company defines EBITDA as earnings before interest, taxes, depreciation, amortization and certain non-recurring items. Considered to be non-recurring items for the purposes of calculating EBITDA in the 2002 results is the $3.3 million reduction in loss contract reserves. Considered to be non-recurring for the prior year period was the $1.3 million of charges to selling, general and administrative expenses related to increases in reserves for legal and malpractice issues, as well as charges for strategic initiatives and severance The act of dividing, or the state of being divided. The term severance has unique meanings in different branches of the law. Courts use the term in both civil and criminal litigation in two ways: first, when dividing a lawsuit into two or more parts, and second, when of $1.3 million and the write-off Write-Off A reduction in the value of an asset or earnings by the amount of an expense or loss. Companies are able to write off certain expenses that are required to run the business, or have been incurred in the operation of the business and detract from retained revenues. of intangible assets Intangible Asset An asset that is not physical in nature. Notes: Examples are things like copyrights, patents, intellectual property, and goodwill. These are the opposite of tangible assets. of $13.2 million. Depreciation and amortization expense for the second quarter of 2002 was $1.1 million, or 0.8% of revenue, as compared with $2.0 million, or 1.4% of revenue in the prior year period. For the six months ended June 30, 2002, depreciation and amortization expense was $2.3 million, or 0.8% of revenue, as compared with $3.9 million, or 1.4% of revenue, in the prior year period. The decrease in depreciation and amortization expense from the prior year periods is primarily the result of the Company's adoption of SFAS SFAS Statement of Financial Accounting Standards SFAS Special Forces Assessment and Selection SFAS Student Financial Aid Services SFAS Sport Fishing Association of Singapore SFAS Safety Features Actuation System SFAS Statewide Fixed Assets System No. 142, "Goodwill and Other Intangible Assets," effective January January: see month. 1, 2002. SFAS No. 142 eliminates the amortization of the Company's existing goodwill. As previously announced on June 28, 2002, the Company modified its contracts with the City of Philadelphia Philadelphia, ancient cities Philadelphia, name of several ancient cities. One was in Lydia, W Asia Minor (now W Turkey). At the foot of Mt. Tmolus and near the location of modern Alaşehir, it was founded in the 2d cent. B.C. and the State of Maine Maine, ship Maine, U.S. battleship destroyed (Feb. 15, 1898) in Havana harbor by an explosion that killed 260 men. The incident helped precipitate the Spanish-American War (Apr., 1898). Commanded by Capt. Charles Sigsbee, the ship had been sent (Jan. . In the fourth quarter of 2001, the Company recorded a charge to establish a reserve for future losses under five contracts, including the Philadelphia and Maine contracts, under which the Company anticipated continuing losses through June 30, 2004 and June 30, 2002, respectively. The contract modifications will enable the Company to avoid further losses on the Philadelphia contract subsequent to June 30, 2002. As a result, the Company has recorded a $3.3 million reduction in its loss contract reserve as of June 30, 2002, resulting in a non-recurring gain in the second quarter. A third loss contract will expire in August of this year, and the Company has been notified that it will be recommended for reaward of the contract under reasonable terms and conditions. Net interest expense for the second quarter of 2002 was $1.9 million, or 1.4% of revenue, as compared with $1.2 million, or 0.8% of revenue, in the prior year period. For the six months ended June 30, 2002, net interest expense was $3.4 million, or 1.2% of revenue, as compared with $2.5 million, or 0.9% of revenue, in the prior year period. The increase in net interest expense from the prior year is primarily the result of increased interest rates on outstanding debt and expenses related to certain interest rate collars entered into in 2000. Tax expense for the second quarter of 2002 was $75,000 as compared with a benefit of $11.2 million, or 8.0% of revenue, in the prior year period. For the six months ended June 30, 2002, a tax benefit of $95,000 was realized as compared with a benefit of $9.6 million, or 3.4% of revenue, in the prior year. Due to the Company's profitability in the second quarter and six months to June 30, 2002, the Company's deferred tax valuation allowance has been reduced by $3.3 million year to date. Net income was $5.3 million for the second quarter of 2002, or 3.8% of revenue, as compared with a net loss of $18.4 million, or 13.0% of revenue, in the prior year period. For the six months ended June 30, 2002, net income was $7.3 million, or 2.6% of revenue, as compared with a net loss attributable attributable emanating from or pertaining to attribute. attributable proportion see attributable risk (below). attributable risk to common shares of $16.2 million, or 5.8% of revenue, in the prior year period. Included in the prior year second quarter and six month results were the charges discussed above. Earnings per share for the second quarter of 2002 were $0.97 basic and $0.95 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. , as compared with a loss per share of $3.39 basic and diluted, in the prior year period. For the six months ended June 30, 2002, earnings per share were $1.34 basic and $1.31 diluted, as compared with a loss per share of $3.14 basic and diluted, in the prior year period. Total debt outstanding was $44.7 million at June 30, 2002, as compared with $49.1 million at March 31, 2002 and $58.1 million at December December: see month. 31, 2001. The debt was classified as a current liability at June 30, 2002, as the Company's debt facility expires April 1, 2003. The Company is in the process of reviewing alternatives for refinancing Refinancing An extension and/or increase in amount of existing debt. the current debt facility. 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 30-day replay of a conference call to discuss this press release will be available online at www.asgr.com or www.companyboardroom.com on July July: see month. 24, 2002, beginning at 11:00 a.m. Eastern time. 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 the 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 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. programs to government agencies for the medical care of inmates. 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.
AMERICA SERVICE GROUP INC.
CONSOLIDATED INCOME STATEMENT
(In thousands, except per share data)
Three Months Ended
June 30, % of June 30, % of
2002 Revenue 2001 Revenue
-------- ----- -------- -----
Healthcare revenues $138,505 100.0 $140,779 100.0
Healthcare expenses 129,924 93.8 146,711 104.2
-------- ----- -------- -----
Gross margin (loss) 8,581 6.2 (5,932) (4.2)
Selling, general and
administrative expenses 3,479 2.5 5,984 4.3
Depreciation and amortization 1,134 0.8 1,960 1.4
Strategic initiative and
severance expenses -- -- 1,267 0.9
Impairment of long-lived assets -- -- 13,236 9.4
Reduction in loss contract reserve (3,320) (2.4) -- --
-------- ----- -------- -----
Income (loss) from operations 7,288 5.3 (28,379) (20.2)
Interest, net 1,905 1.4 1,237 0.8
-------- ----- -------- -----
Income (loss) before income
tax provision (benefit) 5,383 3.9 (29,616) (21.0)
Income tax provision (benefit) 75 0.1 (11,237) (8.0)
-------- ----- -------- -----
Net income (loss) 5,308 3.8 (18,379) (13.0)
Preferred stock dividends -- -- -- --
-------- ----- -------- -----
Net income (loss) attributable
to common shares $5,308 3.8 $(18,379) (13.0)
======== ===== ======== ======
Net income (loss) per common share:
Basic $0.97 $(3.39)
======== ========
Diluted $0.95 $(3.39)
======== ========
Weighted average shares outstanding:
Basic 5,450 5,420
======== ========
Diluted 5,576 5,420
======== ========
Six Months Ended
June 30, % of June 30, % of
2002 Revenue 2001 Revenue
-------- ----- -------- -----
Healthcare revenues $276,360 100.0 $278,720 100.0
Healthcare expenses 259,203 93.8 273,309 98.1
-------- ----- -------- -----
Gross margin 17,157 6.2 5,411 1.9
Selling, general and
administrative expenses 7,564 2.8 10,126 3.6
Depreciation and amortization 2,317 0.8 3,943 1.4
Strategic initiative and
severance expenses -- -- 1,267 0.5
Impairment of long-lived assets -- -- 13,236 4.7
Reduction in loss contract reserve (3,320) (1.2) -- --
-------- ----- -------- -----
Income (loss) from operations 10,596 3.8 (23,161) (8.3)
Interest, net 3,404 1.2 2,525 0.9
-------- ----- -------- -----
Income (loss) before income
tax provision (benefit) 7,192 2.6 (25,686) (9.2)
Income tax benefit (95) -- (9,645) (3.4)
-------- ----- -------- -----
Net income (loss) 7,287 2.6 (16,041) (5.8)
Preferred stock dividends -- -- 163 --
-------- ----- -------- -----
Net income (loss) attributable
to common shares $7,287 2.6 $(16,204) (5.8)
======== ===== ======== =====
Net income (loss) per common share:
Basic $1.34 $(3.14)
======== ========
Diluted $1.31 $(3.14)
======== ========
Weighted average shares outstanding:
Basic 5,445 5,153
======== ========
Diluted 5,551 5,153
======== =========
AMERICA SERVICE GROUP INC.
CONSOLIDATED BALANCE SHEETS
(In thousands)
June 30, Dec. 31,
2002 2001
--------- ----------
ASSETS
Current assets:
Cash and cash equivalents $250 $10,382
Accounts receivable, healthcare and
other less allowances 64,422 64,691
Inventories 7,845 7,747
Prepaid expenses and other current assets 15,967 9,070
--------- ---------
Total current assets 88,484 91,890
Property and equipment, net 7,025 7,827
Goodwill, net 43,896 43,896
Contracts, net 13,088 13,912
Other intangibles, net 1,583 1,683
Other assets 231 1,172
--------- ---------
Total assets $154,307 $160,380
========= =========
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
Current liabilities:
Accounts payable $38,350 $31,159
Medical claims liability 14,190 15,238
Accrued expenses 33,461 30,148
Deferred revenue 735 4,161
Current portion of loss contract reserve 2,590 4,310
Current portion of long-term debt 44,678 10,700
--------- ---------
Total current liabilities 134,004 95,716
Noncurrent portion of accrued expenses 7,655 6,810
Noncurrent portion of loss contract reserve 8,424 14,008
Long-term debt, net of current portion -- 47,400
--------- ---------
Total liabilities 150,083 163,934
Stockholders' equity (deficit):
Common stock 55 54
Additional paid-in capital 31,457 31,377
Stockholders' notes receivable (1,334) (1,383)
Accumulated other comprehensive income (284) (645)
Retained deficit (25,670) (32,957)
--------- ---------
Total stockholders' equity (deficit) 4,224 (3,554)
--------- ---------
Total liabilities and stockholders'
equity (deficit) $154,307 $160,380
========= =========
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