America Service Group Reports Year-End 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)--March 18, 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 (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 ) Fourth Quarter and Year-End year-end also year·end n. The end of a year. adj. Occurring or done at the end of the year: a year-end audit. Noun 1. Highlights: -- Progress on upgrade of contract portfolio is proceeding, with 25 contracts renewed, amended or allowed to expire -- Strengthened and reorganized management team -- Debt levels reduced from third quarter level by $11 million to $52 million through today's date -- New bank amendment completed March 15, 2002 -- Same contract revenue growth of 11% in 2001 -- Continued improvements in gross margins and EBITDA from the prior quarter -- Entire portfolio analyzed, with five unprofitable contracts identified, resulting in a nonrecurring fourth quarter charge of $18.3 million America Service Group Inc. (NASDAQ:ASGR) announced today results for the fourth quarter and year ended December December: see month. 31, 2001. Business Update "During 2001, the Company weathered a difficult year. However, we have addressed our issues and are beginning our recovery. The Company's program to upgrade its contract portfolio is proceeding," 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:
1. to exhale. 2. to die. ex·pire v. 1. To breathe one's last breath; die. 2. To exhale. twenty-five contracts and contracted for approximately $20 million of new business on an 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. basis. The Company's objectives have been to achieve reasonable rates, which reflect current healthcare costs, and to establish risk-sharing models for areas such as 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. , off-site off-site adj. Taking place or located away from the site, as of a particular activity: an off-site waste treatment operation. off utilization and nursing costs. "We have strengthened and reorganized re·or·gan·ize v. re·or·gan·ized, re·or·gan·iz·ing, re·or·gan·iz·es v.tr. To organize again or anew. v.intr. To undergo or effect changes in organization. our management team, bringing on Richard Wright Noun 1. Richard Wright - United States writer whose work is concerned with the oppression of African Americans (1908-1960) Wright as vice chairman of operations and Michael Taylor Michael Taylor may refer to:
"Company performance is showing some improvement with debt levels significantly reduced from the prior quarter, strong same contract revenue growth for the year and improvements in gross margins and 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 , before nonrecurring charges Nonrecurring Charge An expense occurring only once on a company's financial statement. Notes: An extraordinary item is an example of a nonrecurring charge. Also known as "nonrecurring item". , for the last two quarters." As discussed in the Company's prior quarterly earnings release, five contracts, with combined third quarter revenues of $30.2 million, accounted for a negative gross margin of approximately $2.0 million in the third quarter. The Company has executed amendments that either increase revenues, provide for risk sharing or provide flexibility of staffing on four of these contracts. Reflecting improved terms, these five contracts produced combined fourth quarter negative gross margins of $1.2 million. During the fourth quarter, the Company conducted a comprehensive analysis of its portfolio of 145 contracts for the purpose of identifying loss contracts and developing a contract loss reserve for succeeding years. Resulting from this review, three of the five contracts mentioned above, plus an additional two county contracts, were determined to be loss contracts. These five contracts accounted for a negative gross margin of $2.5 million during the fourth quarter and were included in a charge for loss contracts of $18.3 million as of December 31, 2001. The five contracts covered by the charge have expiration dates Expiration Date The day on which an options or futures contract is no longer valid and, therefore, ceases to exist. Notes: The expiration date for all listed stock options in the U.S. ranging from June June: see month. 30, 2002 through June 30, 2005. Ninety percent of the charge relates to the State of Kansas Kansas, state, United States Kansas (kăn`zəs), midwestern state occupying the center of the coterminous United States. It is bordered by Missouri (E), Oklahoma (S), Colorado (W), and Nebraska (N). contract, which expires June 30, 2005, and 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. contract, which expires June 30, 2004. The remaining liability covers 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. contract, which expires June 30, 2002, and two county contracts that expire August 15, 2002 and June 30, 2005. The Company will continue, in cooperation with clients, to address the loss circumstances CIRCUMSTANCES, evidence. The particulars which accompany a fact. 2. The facts proved are either possible or impossible, ordinary and probable, or extraordinary and improbable, recent or ancient; they may have happened near us, or afar off; they are public or of the five contracts. As a result of the comprehensive review of all contracts, the Company does not anticipate further contracts requiring loss reserves. "The dramatic and continuing rise in healthcare costs has impacted the correctional healthcare industry, and particularly our Company, the leading player. Long-term Long-term Three or more years. In the context of accounting, more than 1 year. long-term 1. Of or relating to a gain or loss in the value of a security that has been held over a specific length of time. Compare short-term. , full-risk contracts, the prevailing industry standard for large contract awards, can no longer be supported in the current cost environment. The charge for loss contracts in 2001 recognizes that reality and will shape the Company's future contracting strategy," added Mr. Catalano. Financial Results Healthcare revenues for the fourth quarter of 2001 were $133.6 million, an increase of 17.7% over the prior year quarter. For the year ended December 31, 2001, healthcare revenues were $552.5 million, an increase of 44.6% over the prior year. Same contract revenues increased 11.1% in 2001, as compared with the prior year. Healthcare expenses for the fourth quarter of 2001 were $126.3 million, or 94.6% of revenue, including the impact of the five loss contracts discussed above. In the prior year quarter, healthcare expenses were $102.9 million, or 90.7% of revenue. For the year ended December 31, 2001, healthcare expenses were $532.7 million, or 96.4% of revenue, as compared to $344.8 million, or 90.3% of revenue, in the prior year. Included in the full year results for 2001 was a charge of $6.4 million to healthcare expenses in the second quarter, which was the result of an increase in reserves for medical claims. Selling, general and administrative expenses for the fourth quarter of 2001 were $4.6 million, or 3.5% of revenue. Included in the results for the quarter was an increase in legal reserves of $600,000, primarily related to further development of 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. cases previously covered by insurance carriers now in liquidation The collection of assets belonging to a debtor to be applied to the discharge of his or her outstanding debts. A type of proceeding pursuant to federal Bankruptcy . In the prior year quarter, selling, general and administrative expenses were $3.5 million, or 3.1% of revenue. For the year ended December 31, 2001, selling, general and administrative expenses were $19.1 million, or 3.5% of revenue, as compared to $13.8 million, or 3.6% of revenue, in the prior year. In addition to the $600,000 charge in the fourth quarter noted above, the Company incurred an additional $1.3 million of charges to selling, general and administrative expenses from increases in reserves for legal and malpractice issues in the second quarter. EBITDA for the fourth quarter was $3.2 million, as compared with $7.0 million in the prior year quarter. For the year ended December 31, 2001, EBITDA was $2.6 million, including the negative impact of the $6.4 million increase in reserves for medical claims in the second quarter, as compared with $23.3 million in the prior year. The Company defines EBITDA as earnings before interest, taxes, depreciation, amortization and certain non-recurring charges. Considered to be non-recurring charges for the purposes of calculating EBITDA for 2001 were $1.9 million of charges to selling, general and administrative expenses related to increases in reserves for legal and malpractice issues, $2.6 million of strategic initiative 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 expenses, $13.2 million of charges related to impairment Impairment 1. A reduction in a company's stated capital. 2. The total capital that is less than the par value of the company's capital stock. Notes: 1. This is usually reduced because of poorly estimated losses or gains. 2. of long-lived long-lived adj. 1. Having a long life: a long-lived aunt. 2. Lasting a long time; persistent: a long-lived rumor. 3. assets, and the $18.3 million charge for loss contracts. As of December 31, 2001, the Company had $16.1 million of gross deferred tax assets primarily created during 2001 by the various charges mentioned above. Under accounting rules 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). by Financial Accounting Standards Board Financial Accounting Standards Board (FASB) Board composed of independent members who create and interpret Generally Accepted Accounting Principles (GAAP). Statement 109, the Company established a full valuation allowance related to its gross deferred tax assets. Assuming the Company achieves sufficient profitability to realize the deferred income tax assets, the valuation allowance will be reduced in future years through a credit to income tax expense. Primarily as a result of the charge for loss contracts, establishment of a valuation allowance related to deferred taxes and the increase in legal reserves, the Company incurred a net loss of $27.8 million, or $5.12 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, in the fourth quarter, as compared with net income of $2.0 million, or $0.38 per diluted share, in the prior year quarter. For the year ended December 31, 2001, the Company incurred a net loss available to common shareholders of $45.0 million, or $8.50 per diluted share, as compared with net income available to common shareholders of $7.2 million, or $1.40 per diluted share, in the prior year. Cash and cash equivalents increased to $10.4 million at December 31, 2001, as compared with $256,000 in the prior year. The Company has reduced debt levels from $63.0 million at the end of the third quarter to $58.1 million at December 31, 2001, and $52.025 million as of the date of this release. Additionally, the Company has amended a·mend v. a·mend·ed, a·mend·ing, a·mends v.tr. 1. To change for the better; improve: amended the earlier proposal so as to make it more comprehensive. 2. its revolving credit Revolving Credit A line of credit where the customer pays a commitment fee and is then allowed to use the funds when they are needed. It is usually used for operating purposes, fluctuating each month depending on the customers current cash flow needs. facility with its syndicate Syndicate organized crime unit throughout major cities of the United States. [Am. Hist.: NCE, 2018] See : Gangsterism of bank lenders, effective March 15, 2002. Among other changes, this amendment reduces the level of facility commitment reductions required before ultimate maturity of the facility on April 1, 2003, waives certain financial covenant violations for the period ended December 31, 2001, and modifies financial covenant targets prospectively. If the current credit facility is still in place at December 31, 2002, the Company must deliver to the lenders warrants entitling the lenders to acquire either 2.5% or 5% of the fully diluted common stock of the Company. The amount of the warrants would be based on the facility size at December 31, 2002. A listen-only simulcast and 30-day replay of America Service Group's year-end conference call will be available online at www.asgr.com, or www.companyboardroom.com on March 19, 2002, beginning at 9:00 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 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 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.
Financial Highlights
(In thousands, except per share data)
Consolidated Statements
of Operations: Three Months Ended
---------------------------------
Dec. 31, % of Dec. 31, % of
2001 Revenue 2000 Revenue
-------- ----- -------- ------
Healthcare revenues $133,606 100.0 $113,486 100.0
Healthcare expenses 126,345 94.6 102,919 90.7
-------- ----- -------- -----
Gross margin 7,261 5.4 10,567 9.3
Selling, general and
administrative expenses 4,634 3.5 3,531 3.1
Depreciation and amortization 1,794 1.3 1,924 1.7
Strategic initiative and
severance expenses (24) -- -- --
Charge for loss contracts 18,318 13.7 -- --
-------- ----- -------- -----
Income (loss) from operations (17,461) (13.1) 5,112 4.5
Interest, net 1,798 1.3 1,310 1.1
-------- ----- -------- -----
Income (loss) before income taxes (19,259) (14.4) 3,802 3.4
Provision for income
taxes (benefit) 8,547 6.4 1,606 1.5
-------- ----- -------- -----
Net income (loss) (27,806) (20.8) 2,196 1.9
Preferred stock dividends -- -- 159 0.1
-------- ----- -------- -----
Net income (loss) attributable
to common shares $(27,806) (20.8) $2,037 1.8
======== ===== ======== =====
Net income (loss) per common share:
Basic $(5.12) $0.51
======== ========
Diluted $(5.12) $0.38
======== ========
Weighted average shares outstanding:
Basic 5,433 4,029
======== ========
Diluted 5,433 5,842
======== ========
Year Ended
---------------------------------
Dec. 31, % of Dec. 31, % of
2001 Revenue 2000 Revenue
-------- ----- -------- ------
Healthcare revenues $552,471 100.0 $381,946 100.0
Healthcare expenses 532,739 96.4 344,759 90.3
-------- ----- -------- -----
Gross margin 19,732 3.6 37,187 9.7
Selling, general and
administrative expenses 19,063 3.5 13,838 3.6
Depreciation and amortization 7,535 1.4 5,962 1.6
Strategic initiative and
severance expenses 2,562 0.4 -- --
Impairment of long-lived assets 13,236 2.4 -- --
Charge for loss contracts 18,318 3.3 -- --
-------- ----- -------- -----
Income (loss) from operations (40,982) (7.4) 17,387 4.5
Interest, net 5,713 1.0 4,077 1.1
-------- ----- -------- -----
Income (loss) before income taxes (46,695) (8.4) 13,310 3.4
Provision for income
taxes (benefit) (1,852) (0.3) 5,503 1.4
-------- ----- -------- -----
Net income (loss) (44,843) (8.1) 7,807 2.0
Preferred stock dividends 163 -- 648 0.1
-------- ----- -------- -----
Net income (loss) attributable
to common shares $(45,006) (8.1) $7,159 1.9
======== ===== ======== =====
Net income (loss) per common share:
Basic $(8.50) $1.86
======== =======
Diluted $(8.50) $1.40
======== =======
Weighted average shares outstanding:
Basic 5,292 3,854
======== ========
Diluted 5,292 5,587
======== ========
AMERICA SERVICE GROUP INC.
Financial Highlights
(In thousands, except per share data)
Consolidated Balance Sheets: December 31,
2001 2000
--------- ---------
ASSETS
Current assets:
Cash and cash equivalents $10,382 $256
Accounts receivable, healthcare
and other less allowances 64,691 64,053
Inventories 7,747 7,497
Prepaid expenses and other current assets 6,984 1,427
Current deferred taxes -- 1,143
--------- ---------
Total current assets 89,804 74,376
Property and equipment, net 7,827 8,651
Goodwill, net 44,566 61,358
Contracts, net 13,242 14,002
Other intangibles, net 1,683 1,925
Other assets 1,172 1,090
--------- ---------
Total assets $158,294 $161,402
========= =========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $31,159 $21,664
Medical claims liability 15,238 11,285
Accrued expenses 28,062 24,213
Deferred revenue 4,161 1,641
Current portion of loss
contract reserve 4,310 --
Current portion of long-term debt 10,700 --
--------- ---------
Total current liabilities 93,630 58,803
Noncurrent portion of
accrued expenses 6,810 3,680
Deferred taxes -- 757
Noncurrent portion of loss
contract reserve 14,008 --
Long-term debt, net of
current portion 47,400 56,800
--------- ---------
Total liabilities 161,848 120,040
Mandatory redeemable preferred stock -- 12,397
Common stock 54 41
Additional paid-in capital 31,377 18,259
Stockholders' notes receivable (1,383) (1,384)
Accumulated other comprehensive income (645) --
Retained earnings (deficit) (32,957) 12,049
--------- ---------
Total liabilities and
stockholders' equity $158,294 $161,402
========= =========
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