America Service Group Announces Transfer of Contract with Kansas Department of Corrections; Company to Reduce Reserve for Estimated Losses by Approximately $2 Million.Business Editors/Health/Medical Writers NASHVILLE, Tenn.--(BUSINESS WIRE)--Aug. 22, 2003 America 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 it has executed an agreement with the Kansas Department of Corrections (Kansas DOC) to assign the Kansas DOC contract to Health Cost Solutions, Inc. (HCS HCS - Heterogeneous Computer System A distributed system project. ), effective October 1, 2003. The Company had expected the contract to continue until June 30, 2005. "Despite the extensive losses incurred under this contract," said Richard D. Wright, vice chairman of operations, "the Company continuously demonstrated its uncompromised values to provide the necessary medical care to our patients and to fulfill our contractual commitment to our client. However, the time had long passed to explore options to move on, and we were able to achieve this result in full cooperation with the client." The Company has entered into a General Assignment, Novation The substitution of a new contract for an old one. The new agreement extinguishes the rights and obligations that were in effect under the old agreement. A novation ordinarily arises when a new individual assumes an obligation to pay that was incurred by the original party and Assumption Agreement with HCS to transfer the Kansas DOC contract to HCS, effective October 1, 2003. The Company will pay HCS consideration of $6.5 million to assume the Company's obligations under the Kansas DOC contract. The Company's obligation to make payments to HCS is subject to specified offsets and is payable in 21 equal monthly installments, commencing on October 31, 2003, and continuing through June 30, 2005. The offsets relate to HCS's purchase of the Company's fixed assets fixed assets npl → activo sg fijo fixed assets npl → immobilisations fpl fixed assets fix npl → and inventory at September 30, 2003, utilized in the performance of the Kansas DOC contract. The Company will continue to operate and incur liabilities under the Kansas DOC contract only through September 30, 2003. Beginning October 1, 2003, HCS will become solely responsible for the performance of the Kansas DOC contract, and the Company will have no obligation to the Kansas DOC or HCS related to HCS's performance of the contract. Based on estimated operating results of the Kansas DOC contract through September 30, 2003, the financial terms of the Company's agreement with HCS and the estimated reserve requirements Reserve Requirements Requirements regarding the amount of funds that banks must hold in reserve against deposits made by their customers. This money must be in the bank's vaults or at the closest Federal Reserve Bank. for the Company's remaining loss contract (Baltimore County, Maryland Coordinates: For other uses of "Baltimore", see Baltimore (disambiguation). Baltimore County is a county located in the northern part of the U.S. state of Maryland. In 2004, its population was estimated to be 763,181.[1]. ), the Company expects to record a reduction in its reserve for loss contracts of approximately $2.0 million as of September 30, 2003. America Service Group Inc., based in Brentwood, Tennessee, is the leading provider of correctional healthcare services in the United States. America Service Group Inc., through its subsidiaries, provides a wide range of healthcare and pharmacy programs to government agencies for the medical care of inmates. This press release may contain "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. As such, they involve risk and uncertainty that actual results may differ materially from those projected in the forward-looking statements including, without limitation, risks related to the following: the Company's ability to retain existing client contracts and obtain new contracts; whether or not government agencies continue to privatize correctional healthcare services; increased competition for new contracts and renewals of existing contracts; the Company's ability to execute its expansion strategies; the Company's ability to limit its exposure for catastrophic illnesses and injuries in excess of amounts covered under contracts or insurance coverage; and the Company's dependence on key personnel. A discussion of these important factors and assumptions regarding the statements and risks involved is contained in the Company's annual report on Form 10-K Form 10-K A report required by the SEC from exchange-listed companies that provides for annual disclosure of certain financial information. Form 10-K See 10-K. and other filings with the Securities and Exchange Commission. These forward-looking statements are made as of the date of this release. The Company assumes no obligations to update or revise them or provide reasons why actual results may differ. |
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