America Service Group Announces Third 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.--(BUSINESS WIRE)--Oct. 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 ) Third Quarter Highlights: -- EBITDA of $5.1 million in the quarter -- Net income of $2.3 million in the quarter -- Debt reduced $3.1 million in the quarter -- Executed commitment letter for debt refinancing by October 31 -- Net proceeds of $4.0 million received from private placement of stock -- $29 million of annualized new business awarded in the quarter America Service Group Inc. (NASDAQ:ASGR) announced today results for the third quarter and nine months ended September September: see month. 30, 2002. "The Company remained on course with steady financial results for the quarter," commented 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:
An extension and/or increase in amount of existing debt. . Also, the contract renewals, expansions and new business awarded this year have certainly been encouraging. We believe the market for our services remains strong." Healthcare revenues for the third quarter of 2002 were $141.4 million, an increase of 2.1% from $138.5 million in the second quarter of the year and 0.9% as compared with $140.1 million in the third quarter of 2001. For the nine months ended September 30, 2002, healthcare revenues were $417.7 million, a decrease of 0.3% over healthcare revenues of $418.9 million in the prior year period. During the third quarter, the Company was awarded four 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 and expanded services under its existing contract with the State of Virginia Virginia, state, United States Virginia, state of the south-central United States. It is bordered by the Atlantic Ocean (E), North Carolina and Tennessee (S), Kentucky and West Virginia (W), and Maryland and the District of Columbia (N and NE). for an approximate $11 million of annualized revenues. For the first nine months of the year, the Company has been awarded approximately $47 million of annualized new business. In addition, the Company extended its contract 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. through June June: see month. 30, 2003. New business awarded in 2002 reflects a variety of risk-sharing arrangements with the Company's clients. Healthcare expenses for the third quarter of 2002 were $132.9 million, or 94.0% of revenue, as compared with $133.1 million, or 95.0% of revenue, in the prior year period. For the nine months ended September 30, 2002, healthcare expenses were $392.1 million, or 93.9% of revenue, as compared with $406.4 million, or 97.0% of revenue, in the prior year period. Included in the nine-month results for 2001 was a charge of $6.4 million to healthcare expenses, which was primarily the result of an increase in reserves for medical claims. Gross margin for the third quarter of 2002 was $8.5 million, or 6.0% of revenue, as compared with $7.1 million, or 5.0% of revenue, in the third quarter of 2001. Gross margin for the nine months ended September 30, 2002, was $29.0 million, or 6.9% of revenue, including the reduction in loss contract reserve of $3.3 million recorded in the second quarter, as compared with $12.5 million, or 3.0% of revenue, for the nine months ended September 30, 2001. Selling, general and administrative expenses for the third quarter of 2002 were $3.4 million, or 2.4% of revenue, as compared with $4.3 million, or 3.1% of revenue, in the prior year period. For the nine months ended September 30, 2002, selling, general and administrative expenses were $11.0 million, or 2.6% of revenue, as compared with $14.4 million, or 3.4% of revenue, in the prior year nine-month period. Included in the prior year nine-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. 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 2002 was $5.1 million as compared with $2.8 million in the prior year period. For the nine months ended September 30, 2002, EBITDA was $14.7 million as compared with negative $0.7 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 a non-recurring item for the purpose of calculating EBITDA in the 2002 results is the $3.3 million reduction in loss contract reserves in the second quarter. 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 $2.6 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. Cash flow from operations Cash flow from operations A firm's net cash inflow resulting directly from its regular operations (disregarding extraordinary items such as the sale of fixed assets or transaction costs associated with issuing securities), calculated as the sum of net income plus noncash expenses was $6.9 million in the third quarter and $11.2 million for the nine months ended September 30, 2002. Included in cash flow from operations was 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 of the loss contract reserve of $1.2 million in the third quarter and $5.2 million for the nine months ended September 30, 2002. Depreciation and amortization expense for the third quarter of 2002 was $1.3 million, or 0.9% of revenue, as compared with $1.8 million, or 1.3% of revenue in the prior year period. For the nine months ended September 30, 2002, depreciation and amortization expense was $3.6 million, or 0.9% of revenue, as compared with $5.7 million, or 1.4% of revenue, in the prior year period. The decrease in depreciation and amortization expense from the prior year period 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. Net interest expense for the third quarter of 2002 was $1.2 million, or 0.9% of revenue, as compared with $1.4 million, or 1.0% of revenue, in the prior year period. For the nine months ended September 30, 2002, net interest expense was $4.6 million, or 1.1% of revenue, as compared with $3.9 million, or 1.0% of revenue, in the prior year period. Tax expense for the third quarter of 2002 was $331,000, or 0.2% of revenue, as compared with a benefit of $754,000, or 0.6% of revenue, in the prior year period. Tax expense for the nine months ended September 30, 2002, was $236,000, as compared with a benefit of $10.4 million, or 2.5% of revenue, in the prior year. Due to the Company's profitability in the third quarter and nine months ended September 30, 2002, the Company's deferred tax valuation allowance has been reduced by $4.2 million year-to-date Year-to-date (YTD) The period beginning at the start of the calendar year up to the current date. . Net income was $2.3 million for the third quarter of 2002, or 1.6% of revenue, as compared with a net loss of $996,000, or 0.7% of revenue, in the prior year period. For the nine months ended September 30, 2002, net income was $9.6 million, or 2.3% 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 $17.2 million, or 4.1% of revenue, in the prior year period. Earnings per share for the third quarter of 2002 were $0.41 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. , as compared with a loss per share of $0.18 basic and diluted in the prior year period. For the nine months ended September 30, 2002, earnings per share was $1.75 basic and $1.72 diluted, as compared with a loss per share of $3.28 basic and diluted in the prior year period. Total debt outstanding was $41.6 million at September 30, 2002, as compared with $44.7 million at June 30, 2002, $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 September 30, 2002, as the Company's current debt facility expires April 1, 2003. The Company has entered into a binding commitment letter with CapitalSource Finance LLC (Logical Link Control) See "LANs" under data link protocol. LLC - Logical Link Control for the refinancing of its current debt facility on or before October October: see month. 31, 2002. Upon completion of the refinancing, the Company anticipates a one-time one-time adj. 1. or one·time a. Occurring or undertaken only once: a one-time winner in 1995. b. charge of approximately $800,000 for early debt retirement. The charge represents the write-off of the remaining unamortized loan arrangement fees related to the Company's existing credit facility. These loan arrangement fees were being amortized to interest expense over the term of the current debt facility. On October 21, 2002, the Company completed a private placement of 480,000 shares of newly issued common stock with several institutional and other accredited investors Accredited Investor A term used by the Securities and Exchange Commission (SEC) under Regulation D to refer to investors who are financially sophisticated and have a reduced need for the protection provided by certain government filings. Also known as "qualified purchaser". at $9.50 per share. The net proceeds Net Proceeds The amount received after all costs are deducted from the sale of a piece of property or security. Notes: In the case of an investor selling a security, net proceeds represent the proceeds from the sale minus any trading costs (i.e. commissions). to the Company of approximately $4.0 million were used to repay borrowings under its 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 October 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 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
Sept. 30, % of Sept. 30, % of
2002 Revenue 2001 Revenue
--------- ------ --------- ------
Healthcare revenues $141,375 100.0 $140,145 100.0
Healthcare expenses 132,886 94.0 133,085 95.0
--------- ------ --------- ------
Gross margin 8,489 6.0 7,060 5.0
Selling, general and
administrative expenses 3,394 2.4 4,303 3.1
Depreciation and amortization 1,256 0.9 1,798 1.3
Strategic initiative and
severance expenses -- -- 1,319 0.9
--------- ------ --------- ------
Income (loss) from
operations 3,839 2.7 (360) (0.3)
Interest, net 1,223 0.9 1,390 1.0
--------- ------ --------- ------
Income (loss) before income
tax provision (benefit) 2,616 1.8 (1,750) (1.3)
Income tax provision (benefit) 331 0.2 (754) (0.6)
--------- ------ --------- ------
Net income (loss) $2,285 1.6 (996) (0.7)
========= ====== ========= ======
Net income (loss) per common share:
Basic $0.41 $(0.18)
========= =========
Diluted $0.41 $(0.18)
========= =========
Weighted average shares
outstanding:
Basic 5,526 5,428
========= =========
Diluted 5,631 5,428
========= =========
Nine Months Ended
Sept. 30, % of Sept. 30, % of
2002 Revenue 2001 Revenue
--------- ------ --------- ------
Healthcare revenues $417,735 100.0 $418,865 100.0
Healthcare expenses 392,089 93.9 406,394 97.0
Reduction in loss
contract reserve 3,320 0.8 -- --
--------- ------ --------- ------
Gross margin 28,966 6.9 12,471 3.0
Selling, general and
administrative expenses 10,958 2.6 14,429 3.4
Depreciation and amortization 3,573 0.9 5,741 1.4
Strategic initiative and
severance expenses -- -- 2,586 0.6
Impairment of long-lived assets -- -- 13,236 3.2
--------- ------ --------- ------
Income (loss) from operations 14,435 3.4 (23,521) (5.6)
Interest, net 4,627 1.1 3,915 1.0
--------- ------ --------- ------
Income (loss) before income
tax provision (benefit) 9,808 2.3 (27,436) (6.6)
Income tax provision (benefit) 236 0.0 (10,399) (2.5)
--------- ------ --------- ------
Net income (loss) 9,572 2.3 (17,037) (4.1)
Preferred stock dividends -- -- (163) --
--------- ------ --------- ------
Net income (loss) attributable
to common shares $9,572 2.3 $(17,200) (4.1)
========= ====== ========= ======
Net income (loss) per common share:
Basic $1.75 $(3.28)
========= =========
Diluted $1.72 $(3.28)
========= =========
Weighted average shares
outstanding:
Basic 5,472 5,245
========= =========
Diluted 5,578 5,245
========= =========
AMERICA SERVICE GROUP INC.
CONSOLIDATED BALANCE SHEETS
(In thousands)
Sept. 30, Dec. 31,
2002 2001
--------- ----------
ASSETS
Current assets:
Cash and cash equivalents $3,717 $10,382
Accounts receivable, healthcare
and other less allowances 66,485 64,691
Inventories 7,475 7,747
Prepaid expenses and other
current assets 16,481 9,070
--------- ---------
Total current assets 94,158 91,890
Property and equipment, net 6,672 7,827
Goodwill, net 43,896 43,896
Contracts, net 12,568 13,912
Other intangibles, net 1,533 1,683
Other assets 503 1,172
--------- ---------
Total assets $159,330 $160,380
========= =========
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
Current liabilities:
Accounts payable $41,520 $31,159
Medical claims liability 13,969 15,238
Accrued expenses 31,053 30,148
Deferred revenue 6,829 4,161
Current portion of loss contract reserve 2,647 4,310
Current portion of long-term debt 41,589 10,700
--------- ---------
Total current liabilities 137,607 95,716
Noncurrent portion of accrued expenses 7,886 6,810
Noncurrent portion of loss contract reserve 7,162 14,008
Long-term debt, net of current portion -- 47,400
--------- ---------
Total liabilities 152,655 163,934
Stockholders' equity (deficit):
Common stock 56 54
Additional paid-in capital 31,465 31,377
Stockholders' notes receivable (1,358) (1,383)
Accumulated other comprehensive income (103) (645)
Retained deficit (23,385) (32,957)
--------- ---------
Total stockholders' equity (deficit) 6,675 (3,554)
--------- ---------
Total liabilities and
stockholders' equity (deficit) $159,330 $160,380
========= =========
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