America Service Group Announces Third Quarter Results.Company Updates Full Year 2009 Guidance and Declares Regular Quarterly Dividend of $0.05 Per Share 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. -- 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 ): Third Quarter Highlights: * Increase in healthcare revenues from continuing contracts of 27.7% from the prior year quarter; * Increase in net income to $716,000 in the quarter, from $348,000 the prior year quarter; * Cash and cash equivalents of $35.6 million at September September: see month. 30, 2009; and * No debt outstanding at September 30, 2009. America Service Group Inc. (NASDAQ:ASGR) announced today results for the third quarter and nine months ended September 30, 2009. Commenting on today's announcement, Richard Hallworth, president and chief executive officer of America Service Group, said, "Although we are pleased with the financial performance of our more mature contract operations during the third quarter, we are disappointed that our results were negatively affected by the unexpected and very late receipt in August of some large inmate INMATE. One who dwells in a part of another's house, the latter dwelling, at the same time, in the said house. Kitch. 45, b; Com. Dig. Justices of the Peace, B 85; 1 B. & Cr. 578; 8 E. C. L. R. 153; 2 Dowl. & Ry. 743; 8 B. & Cr. 71; 15 E. C. L. R. 154; 2 Man. & Ry. 227; 9 B. & Cr. medical claims related to the first quarter of our start-up in Michigan Michigan (mĭsh`ĭgən), upper midwestern state of the United States. It consists of two peninsulas thrusting into the Great Lakes and has borders with Ohio and Indiana (S), Wisconsin (W), and the Canadian province of Ontario (N,E). . As a result, we are adjusting our guidance to reflect some tempering tempering, process involving slow and moderate heating to increase the hardness and toughness of metals that have undergone previous heat treatment. Metals are usually hardened (see hardening) by being heated to high temperatures and quenched rapidly. of our near-term financial expectations in Michigan. We remain optimistic op·ti·mist n. 1. One who usually expects a favorable outcome. 2. A believer in philosophical optimism. op about our long-term performance in our Michigan contract and across our contract portfolio. In addition, we are very pleased with our cash collections for the quarter in this tough economy. We are also excited about the many potential new business opportunities expected to come up for bid during the next few months. We salute the work of our men and women who deliver healthcare at the individual level to a patient population that is most often heavily weighted with chronic or difficult health issues. Our healthcare professionals take pride in their work, and we take great pride in them." Income Statement Presentation Format as a Result of 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. 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). ") Related to Discontinued Operations Discontinued operations Divisions of a business that have been sold or written off and that no longer are maintained by the business. As noted in its 2008 annual report on Form 10-K, the Company is applying the discontinued operations provisions of GAAP 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. 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 GAAP, 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 GAAP accounting presentation as it relates to discontinued operations and the Company's expired contracts has no impact on net income, earnings per share, total cash flows or stockholders' equity. As a result of the application of GAAP related to discontinued operations, "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 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 Third Quarter and Nine Months Ended September 30, 2009 Healthcare revenues from continuing contracts for the third quarter of 2009 were $159.8 million, an increase of 27.7% over the prior year quarter. Healthcare revenues from continuing contracts for the nine months ended September 30, 2009, were $446.9 million, an increase of 21.1% over the prior year period. Total Revenues, which include 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 third quarter of 2009 were $159.8 million, an increase of 23.4% from the prior year quarter. Total Revenues for the nine months ended September 30, 2009, were $449.4 million, an increase of 17.1% from the prior year period. The increase in both healthcare revenues from continuing contracts as well as Total Revenues from the prior year quarter and nine months ended September 30 is primarily due to the commencement of services on April 1, 2009, under the Company's new contract with the State of Michigan Department of Corrections The Michigan Department of Corrections oversees prisons and other correctional facilities in the state of Michigan, USA. It has some 43 prison facilities, 10 camps and a Special Alternative Incarceration program, together composing approximately 50,000 inmates. . Healthcare expenses from continuing contracts for the third quarter of 2009 were $150.1 million, or 93.9% of healthcare revenues, as compared with $113.6 million, or 90.8% of healthcare revenues, in the prior year quarter. Healthcare expenses were negatively impacted in the third quarter of 2009 as a result of the Company increasing by approximately ap·prox·i·mate adj. 1. Almost exact or correct: the approximate time of the accident. 2. $2.5 million its estimate of off-site inmate medical claims expense incurred but not reported Incurred but not reported (IBNR) is a term in common use in general insurance. When a policy of general insurance is written it will typically cover a 12 month period from inception of the policy. for the period April 1, 2009 through June 30, 2009, under the Company's State of Michigan Department of Corrections contract. This increase in estimated inmate medical claims expenses related to an unanticipated increase in claims for the dates of service noted above processed during the month of August by the Company's provider network subcontractor One who takes a portion of a contract from the principal contractor or from another subcontractor. When an individual or a company is involved in a large-scale project, a contractor is often hired to see that the work is done. under this contract. Healthcare expenses from continuing contracts for the nine months ended September 30, 2009, were $415.7 million, or 93.0% of healthcare revenues, as compared with $338.3 million, or 91.7% of healthcare revenues, in the prior year period. Healthcare expenses have also been negatively impacted by adverse reserve development related to two professional liability claims totaling $150,000 and $4.7 million in the third quarter and the nine months ended September 30, 2009, respectively. Adverse reserve development related to other pre-2009 professional liability claims totaled $25,000 and $822,000 in the third quarter and the nine months ended September 30, 2009, respectively. The 2009 amounts compare with $250,000 and $2.1 million of total adverse reserve development related to professional liability claims in the third quarter and the nine months ended September 30, 2008, respectively. Total Healthcare Expenses, which include expenses from continuing and discontinued contracts but excludes share-based compensation expense, for the third quarter of 2009 were $150.2 million, or 94.0% of Total Revenues, as compared with $117.7 million, or 90.9% of Total Revenues, in the prior year quarter. Total Healthcare Expenses for the nine months ended September 30, 2009, were $418.7 million, or 93.2% of Total Revenues, as compared with $352.5 million, or 91.8% of Total Revenues, in the prior year period. The increase in both healthcare expenses from continuing contracts as well as Total Healthcare Expenses from the prior year quarter and nine months ended September 30 is primarily due to the commencement of services on April 1, 2009, under the Company's new contract with the State of Michigan Department of Corrections. Gross margin from continuing contracts for the third quarter of 2009 was $9.7 million, or 6.1% of healthcare revenues, as compared with $11.5 million, or 9.2% of healthcare revenues, in the prior year quarter. Gross margin from continuing contracts for the nine months ended September 30, 2009, was $31.2 million, or 7.0% of healthcare revenues, as compared with $30.6 million, or 8.3% of healthcare revenues, in the prior year period. Total Gross Margin, which includes continuing and discontinued contracts and excludes share-based compensation expense, for the third quarter of 2009 was $9.5 million, or 6.0% of Total Revenues, as compared with $11.7 million, or 9.1% of Total Revenues, in the prior year quarter. Total Gross Margin for the nine months ended September 30, 2009, was $30.7 million, or 6.8% of Total Revenues, as compared with $31.4 million, or 8.2% of Total Revenues, in the prior year period. Selling, general and administrative expenses for the third quarter of 2009 were $6.6 million, or 4.1% of healthcare revenues, as compared with $7.5 million, or 6.0% of healthcare revenues, in the prior year quarter. Selling, general and administrative expenses for the nine months ended September 30, 2009, were $21.3 million, or 4.8% of healthcare revenues, as compared with $20.8 million, or 5.6% of healthcare revenues, in the prior year period. Included in selling, general and administrative expenses is a net reduction of accrued ac·crue v. ac·crued, ac·cru·ing, ac·crues v.intr. 1. To come to one as a gain, addition, or increment: interest accruing in my savings account. 2. bonus expense related to the Company's 2009 incentive compensation plan of $251,000 in the third quarter of 2009 due to the financial performance of the quarter. The Company has recorded accrued bonus expense of $1.1 million in the nine months ended September 30, 2009. This is compared with $1.0 million and $1.7 million of accrued bonus expense in the prior year quarter and the nine months ended September 30, 2008, respectively, related to the Company's 2008 incentive compensation plan. Included in selling, general and administrative expenses is share-based compensation expense of $442,000 and $494,000 for the third quarters of 2009 and 2008, respectively, and $1.3 million and $1.6 million for the nine months ended September 30, 2009 and 2008, respectively. Selling, general and administrative expenses, excluding share-based compensation expense, as a percentage of Total Revenues for the third quarter of 2009, were 3.8%, as compared with 5.4% in the prior year quarter. Selling, general and administrative expenses, excluding share-based compensation expense, as a percentage of Total Revenues for the nine months ended September 30, 2009, were 4.4%, as compared with 5.0% in the prior year period. Expenses related to the Company's Audit Committee investigation into certain matters at 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, LLC (Logical Link Control) See "LANs" under data link protocol. LLC - Logical Link Control , the findings of which were reported in March 2006, for the quarters ended September 30, 2009 and 2008, were $973,000 and $99,000, respectively, and for the nine months ended September 30, 2009 and 2008, were $1.1 million and $157,000, respectively. The expenses incurred in the third quarter of 2009 are primarily due to legal fees, the Company recording a contingent liability Contingent Liability 1. The possibility of an obligation to pay certain sums dependent on future events. 2. Defined obligations by a company that must be met, but the probability of payment is minimal. Notes: 1. reserve and the Company entering into an insurance settlement, all of which are described below, relating to relating to relate prep → concernant relating to relate prep → bezüglich +gen, mit Bezug auf +acc 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. filed against the Company and certain individual defendants on April 6, 2006. On July July: see month. 22, 2009, the Court administratively closed the shareholder litigation case, while the parties pursue mediation mediation, in law, type of intervention in which the disputing parties accept the offer of a third party to recommend a solution for their controversy. Mediation has long been a part of international law, frequently involving the use of an international commission, of this matter. Mediation was held on September 30, 2009, and the parties continue with their negotiations. In the event the parties are unable to reach a settlement, the case will be re-opened by the Court. Although the Company believes that it has meritorious mer·i·to·ri·ous adj. Deserving reward or praise; having merit. [Middle English, from Latin merit liability and damages defenses to the shareholder litigation case and, should mediation fail, intends to defend it vigorously vig·or·ous adj. 1. Strong, energetic, and active in mind or body; robust. See Synonyms at healthy. 2. Marked by or done with force and energy. See Synonyms at active. , it is unable at this time to predict the outcome of this action or, if adversely determined, reasonably estimate a maximum amount of possible damages. However, based on negotiations to date, the Company has recorded a reserve of $8.0 million. This amount has been included in accrued expenses in the accompanying ac·com·pa·ny v. ac·com·pa·nied, ac·com·pa·ny·ing, ac·com·pa·nies v.tr. 1. To be or go with as a companion. 2. condensed con·dense v. con·densed, con·dens·ing, con·dens·es v.tr. 1. To reduce the volume or compass of. 2. To make more concise; abridge or shorten. 3. Physics a. consolidated balance sheet consolidated balance sheet A balance sheet in which assets and liabilities of a parent company and its controlled subsidiaries are combined, thereby presenting balance sheet items for the parent and its subsidiaries as if they were a single firm. . The Company maintains directors and officers liability ("D&O") insurance that may provide coverage for some or all of the shareholder litigation matter. The Company and its primary D&O carrier recently reached an agreement under which the Company and the primary D&O carrier will mutually release each other from future claims related to this matter and the primary D&O carrier will remit To transmit or send. To relinquish or surrender, such as in the case of a fine, punishment, or sentence. An individual, for example, might remit money to pay bills. TO REMIT. To annul a fine or forfeiture. 2. insurance proceeds to the Company totaling $8.0 million, less approximately $446,000 in legal fees paid to date by the primary D&O carrier. As of September 30, 2009, the Company has recorded an insurance proceeds receivable totaling approximately $7.6 million which has been included in other current assets Other Current Assets A balance sheet item that includes the value of non-cash assets due within one year. Notes: Examples are things like prepaid expenses and accounts receivable. in the accompanying condensed consolidated balance sheet. The Company has paid and/or accrued additional legal fees incurred through September 30, 2009, of $660,000 related to this matter. This will reduce the net insurance proceeds remaining for settlement of this matter and/or future legal fees to approximately $6.9 million. In addition to its primary D&O carrier, the Company also maintains D&O insurance with an excess D&O carrier that provides for additional insurance coverage of up to $5.0 million for losses in excess of $10.0 million. To date, the excess D&O carrier has denied coverage of this matter. There is a risk that the excess D&O carrier will continue to deny coverage of this matter, or that, even if covered, the Company's ultimate liability will exceed its recorded reserve and the available limits of insurance. Accordingly, the ultimate resolution of these matters could have a material adverse impact on the Company's business, financial condition, liquidity, results of operations and/or stock price. In the prior year third quarter, the Company incurred $2.3 million of corporate restructuring restructuring - The transformation from one representation form to another at the same relative abstraction level, while preserving the subject system's external behaviour (functionality and semantics). expenses. 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 for the third quarter of 2009 was $3.4 million, as compared with $4.8 million in the prior year quarter. Adjusted EBITDA for the nine months ended September 30, 2009, was $10.8 million, as compared with $12.2 million in the prior year period. As reflected in the attached schedule, the Company defines Adjusted EBITDA as earnings before interest expense, income taxes, depreciation, amortization, corporate restructuring expenses, 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 third quarter of 2009 was $662,000, as compared with $929,000 in the prior year quarter. Depreciation and amortization expense for the nine months ended September 30, 2009, was $2.0 million, as compared with $2.8 million in the prior year period. Income from operations for the third quarter of 2009 was $1.5 million, as compared with $798,000 in the prior year quarter. Income from operations for the nine months ended September 30, 2009, was $6.9 million, as compared with $4.5 million in the prior year period. Net interest expense for the third quarter of 2009 was $28,000, as compared with $176,000 in the prior year quarter. Net interest expense for the nine months ended September 30, 2009, was $148,000, as compared with $625,000 in the prior year period. Income from continuing operations before income taxes for the third quarter of 2009 was $1.5 million, as compared with $622,000 in the prior year quarter. Income from continuing operations before income taxes for the nine months ended September 30, 2009, was $6.7 million, as compared with $3.9 million in the prior year period. The income tax provision for the third quarter of 2009 was $649,000, as compared with $368,000 in the prior year quarter. The income tax provision for the nine months ended September 30, 2009, was $2.9 million, as compared with $1.7 million in the prior year period. Income from continuing operations after taxes for the third quarter of 2009 was $844,000, as compared with $254,000 in the prior year quarter. Income from continuing operations after taxes for the nine months ended September 30, 2009, was $3.8 million, as compared with $2.2 million in the prior year period. The loss from discontinued operations, net of taxes, for the third quarter of 2009 was $128,000, as compared with income from discontinued operations, net of taxes, of $94,000 in the prior year quarter. The loss from discontinued operations, net of taxes, for the nine months ended September 30, 2009, was $324,000, as compared with income from discontinued operations, net of taxes, of $473,000 in the prior year period. Net income for the third quarter of 2009 was $716,000, or $0.08 per 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. common share, as compared with $348,000, or $0.04 per basic and diluted common share, in the prior year quarter. Net income for the nine months ended September 30, 2009, was $3.5 million, or $0.39 per basic and diluted common share, as compared with $2.7 million, or $0.29 per basic and diluted common share, in the prior year period. Cash and cash equivalents were $35.6 million at September 30, 2009, as compared with $31.5 million at June 30, 2009, and $24.9 million at December December: see month. 31, 2008. There was no debt outstanding at September 30, 2009, June 30, 2009 or December 31, 2008. 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 were 29 days at September 30, 2009, as compared with 27 days at June 30, 2009, and 31 days at December 31, 2008. Net cash provided by operating activities for the third quarter of 2009 was $5.7 million, as compared with $7.7 million in the prior year quarter. Net cash provided by operating activities for the nine months ended September 30, 2009, was $16.0 million, as compared with $17.0 million in the prior year period. Declaration of Quarterly Dividend On October October: see month. 26, 2009, the Company's Board of Directors declared de·clare v. de·clared, de·clar·ing, de·clares v.tr. 1. To make known formally or officially. See Synonyms at announce. 2. To state emphatically or authoritatively; affirm. 3. a quarterly cash dividend of $0.05 per share on the Company's common stock for the 2009 fourth quarter. The dividend will be paid on December 9, 2009, to shareholders of record on November November: see month. 18, 2009. Stock Repurchase Stock repurchase A firm's repurchase of outstanding shares of its common stock. Program On March 4, 2008, 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 $15 million of the Company's common stock through the end of 2009. On July 28, 2009, the Company's Board of Directors authorized the extension of the stock repurchase program by two years through the end of 2011. This program is intended to be implemented through purchases made from time to time in either the open market or through private transactions, in accordance with Securities and Exchange Commission requirements. Under the stock repurchase program, no shares will be purchased directly from officers or directors of the Company. The Company repurchased and retired 51,600 shares of its common stock under the stock repurchase program during the third quarter of 2009 for approximately $900,000. Since the inception INCEPTION. The commencement; the beginning. In making a will, for example, the writing is its inception. 3 Co. 31 b; Plowd. 343. Vide Consummation; Progression. of the repurchase program, the Company has repurchased and retired 508,350 shares of its common stock under the repurchase program for approximately $5.9 million. 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 provided by operating activities and also from funds on hand, including amounts available under the Company's credit facility. The repurchase program does not obligate the Company to acquire any particular amount of common stock, and the repurchase program may be 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. at any time at the Company's discretion. As of October 27, 2009, the Company had approximately 9.3 million shares outstanding. 2009 Guidance The Company is reducing its previous guidance for estimated full year 2009 net income to primarily reflect near-term financial performance under the Company's contract with the State of Michigan Department of Corrections and costs related to the shareholder litigation discussed above. The Company's updated guidance for estimated full year 2009 results with a comparison to previous guidance is summarized below:
Consistent with past practice, the Company's guidance for full year 2009 results does not consider the impact of any contracts with potential new customers that have not yet been signed. Contracts currently in operation are included in the guidance for full year 2009 results through the end of the year, unless the Company has previously been notified otherwise by the client. 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 third quarter 2009 results conference call will be available online at www.asgr.com or www.earnings.com on October 29, 2009, beginning at 11:00 a.m. Eastern time. In addition, a copy of the press release containing the related financial information and other information concerning the Company 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. America Service Group Inc., through its subsidiaries, provides a wide range of healthcare programs to government agencies for the medical care of inmates. More information about America Service Group can be found on the Company's website at www.asgr.com. 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 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; healthcare expenses; gross margin; income from continuing operations before income taxes; income tax provision; 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 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, including 2009 guidance, constitute forward-looking statements 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 Company's ability to retain existing client contracts and obtain new contracts at acceptable pricing levels; * 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; * risks arising from governmental budgetary pressures and funding; * the possible effect of adverse publicity on the Company's business; * increased competition for new contracts and renewals of existing contracts; * risks arising from the possibility that the Company may be unable to collect accounts receivable or that accounts receivable collection may be delayed; * the Company's ability to limit its exposure for inmate medical costs, catastrophic illnesses, injuries and medical malpractice Improper, unskilled, or negligent treatment of a patient by a physician, dentist, nurse, pharmacist, or other health care professional. claims in excess of amounts covered under contracts or insurance coverage; * the Company's ability to maintain and continually con·tin·u·al adj. 1. Recurring regularly or frequently: the continual need to pay the mortgage. 2. develop information technology and clinical systems; * the outcome or adverse development of pending litigation, including professional liability litigation; * the Company's determination whether to continue the payment of quarterly cash dividends, and if so, at the current amount; * the Company's determination whether to repurchase shares under its stock repurchase program; * the Company's dependence on key management and clinical personnel; * risks arising from potential weaknesses or deficiencies in the Company's internal control over financial reporting; * risks associated with the possibility that the Company may be unable to satisfy covenants under its credit facility; * the risk that government or municipal entities (including the Company's government and municipal 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 investigated by the Audit Committee in prior years 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 Company's ability to expand its products beyond its traditional correctional health client base; and * the risks arising from shareholder litigation. 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 it makes 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. DISCUSSION AND RECONCILIATIONS OF NON-GAAP MEASURES (Unaudited, in thousands) This release contains certain financial information not derived in accordance with 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 reconciliations to the most comparable GAAP measures (net income, healthcare revenues, healthcare expenses and gross margin) are included below. ADJUSTED EBITDA The Company defines Adjusted EBITDA as earnings before interest expense, income taxes, depreciation, amortization, corporate restructuring expenses, 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.
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. 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 GAAP, "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.
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