<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
FORM 10-Q
QUARTERLY REPORT UNDER SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For Quarter Ended June 30, 1999 Commission File No. 2-82655
INTERWEST MEDICAL CORPORATION
-----------------------------
(Exact name of registrant as specified in its charter)
Oklahoma 75-1864474
- ---------------------------- ------------------------------------
(State or other jurisdiction (I.R.S. Employer Identification No.)
of incorporation or organi-
zation)
Arlington Heights Professional Office Building
3221 Hulen Street, Suite C, Fort Worth, TX 76107-6193
-----------------------------------------------------
(Address of principal executive offices, zip code)
Registrant's telephone number, including area code: (817)731-2743
-------------
Not Applicable
--------------------------------------------------------
(Former name, former address, and former fiscal year, if
changed since last report)
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.
Yes X No
------ ------
APPLICABLE ONLY TO ISSUERS INVOLVED IN
BANKRUPTCY PROCEEDINGS DURING THE
PRECEDING FIVE YEARS:
Indicate by check mark whether the registrant has filed all documents and
reports required to be filed by Sections 12, 13 or 15(d) of the Securities
Exchange Act of 1934 subsequent to the distribution of securities under a plan
confirmed by a court.
(Not Applicable)
Yes X No
------ ------
(APPLICABLE TO CORPORATE ISSUERS)
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the close of the period covered by this report. 14,188,861
shares of Common Stock, $0.001 Par Value.
<PAGE> 2
INTERWEST MEDICAL CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
1. In the opinion of management, the accompanying unaudited condensed
consolidated financial statements contain all adjustments necessary to
present fairly the Company's financial position as of June 30, 1999, and
its results of operations for the three and six months ended June 30,
1999 and 1998, and cash flows for the six months ended June 30, 1999 and
1998. The results of operations for the period presented are not
necessarily indicative of the results to be expected for a full year.
2. Income per share was computed by dividing the net income by the weighted
average number of shares outstanding.
<PAGE> 3
REVIEW BY INDEPENDENT
CERTIFIED PUBLIC ACCOUNTANTS
Weaver and Tidwell, L.L.P., Independent Certified Public Accountants, have
performed a review of the condensed consolidated balance sheet as of June 30,
1999 and the condensed consolidated statements of operations and comprehensive
income for the three and six months ended June 30, 1999 and 1998, and cash flows
for the six months ended June 30, 1999 and 1998, in accordance with established
professional standards and procedures for such a review. All adjustments or
additional disclosures proposed by Weaver and Tidwell, L.L.P. have been
reflected in the data presented.
The report of Weaver and Tidwell, L.L.P. commenting upon their review is
included as Part I - Exhibit I.
<PAGE> 4
INDEPENDENT ACCOUNTANT'S REVIEW REPORT
To the Board of Directors
InterWest Medical Corporation
We have reviewed the condensed consolidated balance sheet of InterWest Medical
Corporation as of June 30, 1999, and the related condensed consolidated
statements of operations and comprehensive income for the three and six month
periods ended June 30, 1999 and 1998, and cash flows for the six months ended
June 30, 1999 and 1998. These financial statements are the responsibility of the
Company's management.
We conducted our review in accordance with standards established by the American
Institute of Certified Public Accountants. A review of interim financial
information consists of obtaining an understanding of the system for the
preparation of interim financial information, applying analytical review
procedures to financial data and making inquiries of persons responsible for
financial and accounting matters. It is substantially less in scope than an
audit in accordance with generally accepted auditing standards, the objective of
which is the expression of an opinion regarding the financial statements taken
as a whole. Accordingly, we do not express such an opinion.
Based on our review, we are not aware of any material modifications that should
be made to the accompanying condensed consolidated statements referred to above,
for them to be in conformity with generally accepted accounting principles.
We have previously audited, in accordance with generally accepted auditing
standards, the consolidated balance sheet as of December 31, 1998, and the
related consolidated statements of operations, stockholders' equity and cash
flows for the year then ended (not presented herein); and in our report dated
March 18, 1999, we expressed an unqualified opinion on those financial
statements. In our opinion, the information set forth in the accompanying
condensed consolidated balance sheet as of December 31, 1998, is fairly stated
in all material respects in relation to the consolidated balance sheet from
which it has been derived.
WEAVER AND TIDWELL, L.L.P.
Fort Worth, Texas
August 11, 1999
570
PART I - EXHIBIT I
<PAGE> 5
INTERWEST MEDICAL CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
June 30, December 31,
1999 1998
------------ ------------
(unaudited)
ASSETS
CURRENT ASSETS
<S> <C> <C>
Cash $ 1,659,035 $ 460,329
Investments available for sale 2,374,175 3,230,320
Accounts receivable - trade 2,409,036 2,108,315
Prepaid expenses 64,397 116,300
Deferred tax asset 283,406 47,255
------------ ------------
Total current assets 6,790,049 5,962,519
------------ ------------
REAL ESTATE DEVELOPMENT AND CONSTRUCTION COSTS 7,113 7,113
------------ ------------
PROPERTY AND EQUIPMENT, at cost
Land 214,681 214,681
Buildings and improvements 3,838,788 3,789,419
Equipment and furniture 1,191,714 1,117,081
Oil and gas properties (successful efforts method of accounting) 539,949 532,869
------------ ------------
5,785,132 5,654,050
Less accumulated depreciation 2,105,696 1,890,769
------------ ------------
3,679,436 3,763,281
------------ ------------
OTHER ASSETS
Cash escrow accounts 38,115 31,713
Deferred financing costs, net 400,020 400,020
------------ ------------
438,135 431,733
------------ ------------
TOTAL ASSETS $ 10,914,733 $ 10,164,646
============ ============
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Current maturities of long-term debt $ 120,522 $ 120,522
Accounts payable 1,221,713 1,260,371
Accrued liabilities 562,262 709,402
Income taxes payable 345,755 42,903
------------ ------------
Total current liabilities 2,250,252 2,133,198
------------ ------------
LONG-TERM DEBT 4,532,050 4,558,274
------------ ------------
STOCKHOLDERS' EQUITY
Common stock, par value $0.001
authorized 50,000,000 shares; issued 20,000,000 shares 20,000 20,000
Additional paid-in capital 4,798,745 4,798,745
Retained earnings 722,300 8,235
Accumulated other comprehensive income (550,140) (496,552)
------------ ------------
4,990,905 4,330,428
Less shares held in the treasury
1999 - 5,811,139 shares; 1998 - 3,458,339 shares 858,474 857,254
------------ ------------
4,132,431 3,473,174
------------ ------------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 10,914,733 $ 10,164,646
============ ============
</TABLE>
See Accompanying Notes to Condensed
Consolidated Financial Statements.
<PAGE> 6
INTERWEST MEDICAL CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
AND COMPREHENSIVE INCOME
(Unaudited)
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
June 30, June 30,
------------------------------- -------------------------------
1999 1998 1999 1998
------------ ------------ ------------ ------------
<S> <C> <C> <C> <C>
Net patient service revenue $ 2,778,052 $ 2,685,805 $ 5,548,125 $ 5,584,264
Other revenue 19,752 32,293 47,178 62,957
------------ ------------ ------------ ------------
Total revenue 2,797,804 2,718,098 5,595,303 5,647,221
COSTS AND EXPENSES
Professional care of patients 1,487,116 1,512,932 2,955,430 2,932,293
General services 540,429 492,846 1,063,715 975,906
Administrative services 433,324 360,935 832,785 821,859
Other costs 13,105 13,403 19,801 23,605
Depreciation, depletion
and amortization 79,789 77,726 159,927 147,516
------------ ------------ ------------ ------------
Income from operations 244,041 260,256 563,645 746,042
OTHER INCOME (EXPENSES)
Interest income 8,348 11,979 11,474 18,528
Interest expense (94,316) (88,734) (185,966) (184,402)
Gain on sale of investments (43,007) 115,794 692,764 368,195
------------ ------------ ------------ ------------
Income before
taxes on income 115,066 299,295 1,081,917 948,363
Provision for income taxes 39,123 -- 367,852 --
------------ ------------ ------------ ------------
Net income 75,943 299,295 714,065 948,363
Other comprehensive income
Unrealized losses
on securities 335,023 (289,987) (53,588) (295,492)
------------ ------------ ------------ ------------
COMPREHENSIVE INCOME $ 410,966 $ 9,308 $ 660,477 $ 652,871
============ ============ ============ ============
Per share of common stock
Weighted average number
of shares outstanding 14,190,861 16,698,013 14,192,795 16,758,987
============ ============ ============ ============
Net income per share $ 0.01 $ 0.02 $ 0.05 $ 0.06
============ ============ ============ ============
</TABLE>
See Accompanying Notes to Condensed
Consolidated Financial Statements.
<PAGE> 7
INTERWEST MEDICAL CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
<TABLE>
<CAPTION>
Six Months Ended
June 30,
-------------------------------
1999 1998
------------ ------------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES $ (218,329) $ 395,445
CASH FLOWS FROM INVESTING ACTIVITIES
Proceeds from sale of investments 7,378,286 1,665,368
Payments for acquisition of property (131,082) (264,702)
Net changes in escrow accounts (6,402) (6,402)
Purchase of investments (5,796,323) (2,461,868)
------------ ------------
Net cash provided by
(used in) investing activities 1,444,479 (1,067,604)
CASH FLOWS FROM FINANCING ACTIVITIES
Purchase of treasury stock (1,220) (59,797)
Payments on borrowings (26,224) (35,099)
Financing costs paid -- (146,361)
------------ ------------
Net cash used in
financing activities (27,444) (241,257)
------------ ------------
Net increase (decrease) in cash 1,198,706 (913,416)
CASH, beginning of period 460,329 1,458,281
------------ ------------
CASH, end of period $ 1,659,035 $ 544,865
============ ============
</TABLE>
See Accompanying Notes to Condensed
Consolidated Financial Statements.
<PAGE> 8
Item 2. Management's Discussion and Analysis of Financial
Position and Results of Operations.
Changes in Balance Sheet Accounts
Current assets were $6,790,049 and total assets were $10,914,733 at June 30,
1999 as compared to $5,962,519 current assets and $10,164,646 total assets at
December 31, 1998. Current liabilities were $2,250,252 at June 30, 1999 as
compared to $2,133,198 at December 31, 1998.
Results of Operations
For the Three Months Ended June 30, 1999, operating revenue was $2,797,804;
costs and expenses were $2,553,763, net income was $75,943 and interest income
was $8,348, as compared to the Three Months Ended June 30, 1998, operating
revenue of $2,718,098, costs and expenses of $2,457,842, net income of $229,295
and interest income of $11,979.
Cash Flows
For the Six Months Ended June 30, 1999, cash flows from operating activities
were ($218,329), cash flows from investing activities were $1,444,479, cash
flows from financing activities were ($27,444), net increase in cash was
$1,198,706, cash at the beginning of the period was $460,329, and cash at the
end of the period was $1,659,035 as compared to the Six Months Ended June 30,
1998, to cash flows from operating activities of $395,445, cash flows from
investing activities of ($1,067,604), cash flows from financing activities of
($241,257), net decrease in cash of ($913,416), cash at the beginning of the
period of $1,458,281 and cash at the end of the period of $544,865.
<PAGE> 9
PART II. OTHER INFORMATION
Item 1. Legal Proceedings.
Not applicable.
Item 2. Changes in Securities.
Not applicable.
Item 3. Defaults upon Senior Securities.
Not applicable.
Item 4. Submission of Matters to a Vote of Securities Holders.
Not applicable.
Item 5. Other Information
Not applicable.
Item 6. Exhibits and Reports on Form 8-K.
(a) None.
(b) None.
<PAGE> 10
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its half by the
undersigned thereunto duly authorized.
INTERWEST MEDICAL CORPORATION
By: /s/ ARCH B. GILBERT
-----------------------------------
Arch B. Gilbert, President,
Chief Executive Officer,
Chief Financial Officer, and
Chief Accounting Officer
Date: August 13, 1999
<PAGE> 11
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
- ------ -----------
<S> <C>
27 Financial Data Schedule
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-END> JUN-30-1999
<CASH> 1,659,305
<SECURITIES> 2,374,175
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 6,790,049
<PP&E> 5,785,132
<DEPRECIATION> 2,105,696
<TOTAL-ASSETS> 10,914,733
<CURRENT-LIABILITIES> 2,250,252
<BONDS> 0
0
0
<COMMON> 20,000
<OTHER-SE> 4,112,431
<TOTAL-LIABILITY-AND-EQUITY> 10,914,733
<SALES> 5,595,303
<TOTAL-REVENUES> 5,595,303
<CGS> 4,019,145
<TOTAL-COSTS> 4,019,145
<OTHER-EXPENSES> 1,012,513
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 185,966
<INCOME-PRETAX> 1,081,917
<INCOME-TAX> 367,852
<INCOME-CONTINUING> 714,065
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 714,065
<EPS-BASIC> .05
<EPS-DILUTED> .05
</TABLE>
