_______________________________________________________
UNITED STATES
SECURITIES AND EXCHANGE
COMMISSION
Washington, D.C. 20549
_____________________________
FORM 10-Q
[X] Quarterly Report Pursuant to Section 13 or 15(d) of
the Securities Exchange Act of 1934
For the quarterly period ended March 31, 2004
OR
[ ] Transition Report Pursuant to Section 13 or 15(d) of
the Securities and Exchange Act of 1934
For the transition period from
______ to ______
Commission File Number: 0-22392
Prime
Medical Services, Inc.
(Exact name of registrant as specified in its charter)
| DELAWARE | 74-2652727 | ||||
| (State or other jurisdiction of incorporation or organization) |
(IRS Employer Identification No.) |
1301 Capitol of Texas
Highway Suite 200B, Austin, Texas 78746
(Address of principal executive offices) (Zip Code)
(512) 328-2892
(Registrant’s telephone number, including area code)
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days. |
|
Indicate by check mark whether the registrant is an accelerated filer (as
described in Rule 12b-2 of the Exchange Act). YES X NO |
| Indicate the number of shares outstanding of each of the issuer's classes of common stock, as of the latest practicable date. |
Title of Each Class Common Stock, $.01 par value |
Number of Shares Outstanding at April 30, 2004 20,729,877 |
PART IITEM 1 — FINANCIAL INFORMATION |
|
2 |
|
PRIME MEDICAL SERVICES, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited) |
|---|
| Three Months Ended March 31, |
||||||||
|---|---|---|---|---|---|---|---|---|
| ($ in thousands, except per share data) |
2004 |
2003 |
||||||
| Revenue: | ||||||||
| Lithotripsy | $ | 16,219 | $ | 14,994 | ||||
| Manufacturing | 23,757 | 25,595 | ||||||
| Other | 237 | 263 | ||||||
| Total revenue | 40,213 | 40,852 | ||||||
| Cost of services and general and | ||||||||
| administrative expenses: | ||||||||
| Lithotripsy | 6,997 | 6,432 | ||||||
| Manufacturing | 21,704 | 23,048 | ||||||
| Corporate | 976 | 645 | ||||||
| 29,677 | 30,125 | |||||||
| Depreciation and amortization | 1,620 | 1,820 | ||||||
| 31,297 | 31,945 | |||||||
| Operating income | 8,916 | 8,907 | ||||||
| Other income (expenses): | ||||||||
| Interest and dividends | 88 | 106 | ||||||
| Interest expense | (2,289 | ) | (2,096 | ) | ||||
| Other, net | 40 | (75 | ) | |||||
| (2,161 | ) | (2,065 | ) | |||||
| Income before provision for income | ||||||||
| taxes and minority interests | 6,755 | 6,842 | ||||||
| Minority interest in consolidated income | 4,891 | 4,009 | ||||||
| Provision for income taxes | 683 | 1,006 | ||||||
| Net income | $ | 1,181 | $ | 1,827 | ||||
| Basic earnings per share: | ||||||||
| Net income | $ | 0.06 | $ | 0.11 | ||||
| Weighted average shares outstanding | 18,670 | 17,074 | ||||||
| Diluted earnings per share: | ||||||||
| Net income | $ | 0.06 | $ | 0.11 | ||||
| Weighted average shares outstanding | 18,873 | 17,223 | ||||||
|
See accompanying notes to consolidated financial statements. |
|
-3- |
| PRIME MEDICAL SERVICES, INC. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS |
($ in thousands) |
March 31, 2004 (Unaudited) |
|
December 31, 2003 (Audited) | |||||
|---|---|---|---|---|---|---|---|---|
| ASSETS | ||||||||
| Current assets: | ||||||||
| Cash and cash equivalents | $ | 13,425 | $ | 9,780 | ||||
| Accounts receivable, less allowance for doubtful | ||||||||
| accounts of $1,127 in 2004 and $512 in 2003 | 20,756 | 27,245 | ||||||
| Other receivables | 1,336 | 795 | ||||||
| Deferred income taxes | 12,269 | 8,385 | ||||||
| Prepaid expenses and other current assets | 3,059 | 1,617 | ||||||
| Inventory | 26,947 | 21,288 | ||||||
| Total current assets | 77,792 | 69,110 | ||||||
| Property and equipment: | ||||||||
| Equipment, furniture and fixtures | 42,302 | 40,161 | ||||||
| Building and leasehold improvements | 11,943 | 11,235 | ||||||
| 54,245 | 51,396 | |||||||
| Less accumulated depreciation and amortization | (26,158 | ) | (27,440 | ) | ||||
| Property and equipment, net | 28,087 | 23,956 | ||||||
| Other investments | 2,963 | 3,088 | ||||||
| Goodwill, at cost, net of accumulated amortization | 184,683 | 177,974 | ||||||
| Other noncurrent assets | 7,405 | 5,840 | ||||||
| $ | 300,930 | $ | 279,968 | |||||
|
See accompanying notes to consolidated financial statements. |
|
-4- |
| PRIME MEDICAL SERVICES, INC. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS (continued) |
| ($ in thousands, except share data) |
March 31, 2004 (Unaudited) |
|
December 31, 2003 (Audited) | |||||
|---|---|---|---|---|---|---|---|---|
| LIABILITIES | ||||||||
| Current liabilities: | ||||||||
| Current portion of long-term debt | $ | 3,211 | $ | 3,345 | ||||
| Accounts payable | 9,814 | 8,617 | ||||||
| Accrued distributions to minority interests | 5,655 | 6,908 | ||||||
| Accrued expenses | 15,119 | 10,137 | ||||||
| Customer deposits | 6,325 | 6,259 | ||||||
| Total current liabilities | 40,124 | 35,266 | ||||||
| Long-term debt, net of current portion | 108,111 | 111,728 | ||||||
| Other long term obligations | 1,833 | 1,397 | ||||||
| Deferred income taxes | 18,404 | 17,889 | ||||||
| Total liabilities | 168,472 | 166,280 | ||||||
| Minority interest | 6,991 | 7,077 | ||||||
| STOCKHOLDERS' EQUITY | ||||||||
| Preferred stock, $.01 par value; 1,000,000 shares authorized; none outstanding | -- | -- | ||||||
| Common stock, $0.01 par value; 40,000,000 shares authorized; 21,045,643 issued | ||||||||
| in 2004 and 17,324,585 issued in 2003; 20,729,877 outstanding in 2004 and | 210 | 173 | ||||||
| 17,081,869 outstanding in 2003 | ||||||||
| Capital in excess of par value | 88,863 | 70,813 | ||||||
| Accumulated earnings | 38,020 | 36,839 | ||||||
| Treasury stock, at cost, 315,766 shares in 2004 and 242,716 in 2003 | (1,626 | ) | (1,214 | ) | ||||
| Total stockholders' equity | 125,467 | 106,611 | ||||||
| $ | 300,930 | $ | 279,968 | |||||
|
See accompanying notes to consolidated financial statements. |
|
-5- |
|
PRIME MEDICAL SERVICES, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) |
|---|
| Three Months Ended March 31, |
|||||||||
|---|---|---|---|---|---|---|---|---|---|
($ in thousands) |
2004 |
2003 |
|||||||
| CASH FLOWS FROM OPERATING ACTIVITIES: | |||||||||
| Fee and other revenue collected | $ | 50,222 | $ | 44,552 | |||||
| Cash paid to employees, suppliers of goods and others | (37,584 | ) | (35,333 | ) | |||||
| Interest received | 88 | 105 | |||||||
| Interest paid | (151 | ) | (367 | ) | |||||
| Taxes refunded (paid) | 161 | (48 | ) | ||||||
| Net cash provided by operating activities | 12,736 | 8,909 | |||||||
| CASH FLOWS FROM INVESTING ACTIVITIES: | |||||||||
| Purchase of entities, net of cash acquired | 3,843 | (10,302 | ) | ||||||
| Escrow deposits | -- | (3,492 | ) | ||||||
| Purchases of equipment and leasehold improvements | (3,381 | ) | (2,281 | ) | |||||
| Distributions from investments | 143 | 135 | |||||||
| Proceeds from sales of equipment | 197 | 5 | |||||||
| Other | 3 | -- | |||||||
| Net cash provided by (used in) investing activities | 805 | (15,935 | ) | ||||||
| CASH FLOWS FROM FINANCING ACTIVITIES: | |||||||||
| Borrowings on notes payable | 722 | 9,605 | |||||||
| Payments on notes payable, exclusive of interest | (3,921 | ) | (4,485 | ) | |||||
| Distributions to minority interest | (7,163 | ) | (8,316 | ) | |||||
| Contributions by minority interest, net of buyouts | 343 | (842 | ) | ||||||
| Exercise of stock options | 123 | -- | |||||||
| Net cash used in financing activities | (9,896 | ) | (4,038 | ) | |||||
| NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS | 3,645 | (11,064 | ) | ||||||
| Cash and cash equivalents, beginning of period | 9,780 | 20,174 | |||||||
| Cash and cash equivalents, end of period | $ | 13,425 | $ | 9,110 | |||||
|
See accompanying notes to consolidated financial statements. |
|
-6- |
|
PRIME MEDICAL SERVICES, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS (continued) (Unaudited) |
|---|
| Three Months Ended March 31, |
|||||||||
|---|---|---|---|---|---|---|---|---|---|
($ in thousands) |
2004 |
2003 |
|||||||
| Reconciliation of net income to net cash provided by operating activities: | |||||||||
| Net income | $ | 1,181 | $ | 1,827 | |||||
| Adjustments to reconcile net income | |||||||||
| to net cash provided by operating activities | |||||||||
| Minority interest in consolidated income | 4,891 | 4,009 | |||||||
| Depreciation and amortization | 1,620 | 1,820 | |||||||
| Provision for uncollectible accounts | (34 | ) | 92 | ||||||
| Provision for deferred income taxes | 9 | 1,614 | |||||||
| Equity in (earnings) loss of affiliates | (22 | ) | 35 | ||||||
| Stock buyback agreements | (322 | ) | -- | ||||||
| Other | (293 | ) | 137 | ||||||
| Changes in operating assets and liabilities, | |||||||||
| net of effect of purchase transactions | |||||||||
| Accounts receivable | 9,152 | 2,659 | |||||||
| Other receivables | (530 | ) | 47 | ||||||
| Other assets | (3,048 | ) | (731 | ) | |||||
| Accounts payable | (1,757 | ) | (157 | ) | |||||
| Accrued expenses | 1,889 | (2,443 | ) | ||||||
| Total adjustments | 11,555 | 7,082 | |||||||
| Net cash provided by operating activities | $ | 12,736 | $ | 8,909 | |||||
|
See accompanying notes to consolidated financial statements. |
|
-7- |
|
PRIME MEDICAL
SERVICES, INC. AND SUBSIDIARIES |
|
The accompanying unaudited consolidated financial statements have been prepared in conformity with the accounting principles for interim financial statements and with the instructions to Form 10-Q and Rule 10-01 of Regulation S-X. These consolidated financial statements reflect all adjustments which are, in our opinion, necessary for a fair presentation of the statement of the financial position as of March 31, 2004 and the results of operations and cash flows for the periods presented. These statements have not been audited by our independent certified public accountants. The operating results for the interim periods are not necessarily indicative of results for the full fiscal year. |
|
The notes to consolidated financial statements appearing in our Annual Report on Form 10-K for the year ended December 31, 2003 filed with the Securities Exchange Commission should be read in conjunction with this Quarterly Report on Form 10-Q. There have been no significant changes in the information reported in those notes other than from normal business activities. |
|
Basic EPS is based on weighted average shares outstanding without any dilutive effects considered. Diluted EPS reflects dilution from all contingently issuable shares, including options and warrants. A reconciliation of such EPS data is as follows: |
($ in thousands, except per share data) |
Basic earnings per share |
Diluted earnings per share | ||||||
|---|---|---|---|---|---|---|---|---|
| Three Months Ended March 31, 2004 | ||||||||
| Net income | $ | 1,181 | $ | 1,181 | ||||
| Weighted average shares outstanding | 18,670 | 18,670 | ||||||
| Effect of dilutive securities | -- | 203 | ||||||
| Shares for EPS calculation | 18,670 | 18,873 | ||||||
| Net income per share | $ | 0.06 | $ | 0.06 | ||||