<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
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FORM 10-Q
QUARTERLY REPORT UNDER SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For Quarter Ended September 30, 1999 Commission File No. 2-82655
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INTERWEST MEDICAL CORPORATION
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(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 organization)
Arlington Heights Professional Office Building
3221 Hulen Street, Suite C, Fort Worth, TX 76107-6193
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(Address of principal executive offices, zip code)
Registrant's telephone number, including area code: (817)731-2743
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Not Applicable
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(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. 16,184,861
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 September 30, 1999,
and its results of operations for the three and nine months ended September
30, 1999 and 1998, and cash flows for the nine months ended September 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 of InterWest
Medical Corporation as of September 30, 1999 and the condensed consolidated
statements of operations and comprehensive income for the three and nine months
ended September 30, 1999 and 1998, and cash flows for the nine months ended
September 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 September 30, 1999, and the related condensed consolidated
statements of operations and comprehensive income for the three and nine month
periods ended September 30, 1999 and 1998, and cash flows for the nine months
ended September 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.
/s/ WEAVER AND TIDWELL, L.L.P.
WEAVER AND TIDWELL, L.L.P.
Fort Worth, Texas
November 8, 1999
<PAGE> 5
INTERWEST MEDICAL CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
September 30, December 31,
1999 1998
------------ ------------
(unaudited)
<S> <C> <C>
ASSETS
CURRENT ASSETS
Cash $ 3,422,777 $ 460,329
Investments available for sale 958,952 3,230,320
Accounts receivable - trade 2,193,049 2,108,315
Prepaid expenses 57,113 116,300
Deferred tax asset 113,070 47,255
------------ ------------
Total current assets 6,744,961 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 1,284,171 1,117,081
Oil and gas properties (successful effort method of accounting) 539,949 532,869
------------ ------------
5,877,589 5,654,050
Less accumulated depreciation 2,153,710 1,890,769
------------ ------------
3,723,879 3,763,281
------------ ------------
OTHER ASSETS
Cash escrow accounts 41,316 31,713
Deferred financing costs, net 400,020 400,020
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441,336 431,733
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TOTAL ASSETS $ 10,917,289 $ 10,164,646
============ ============
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Current maturities of long-term debt $ 120,522 $ 120,522
Accounts payable 1,176,219 1,260,371
Accrued liabilities 436,255 709,402
Income taxes payable 282,293 42,903
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Total current liabilities 2,015,289 2,133,198
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LONG-TERM DEBT 4,453,724 4,558,274
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STOCKHOLDERS' EQUITY
Common stock, par value $0.001
authorized 50,000,000 shares; issued 20,000,000 shares 22,000 20,000
Additional paid-in capital 4,956,745 4,798,745
Retained deficit 599,111 8,235
Notes receivable from shareholder (160,000)
Accumulated other comprehensive income (110,306) (496,552)
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5,307,550 4,330,428
Less shares held in the treasury
1999, 5,815,139 shares; 1998, 3,570,839 shares 859,274 857,254
------------ ------------
4,448,276 3,473,174
------------ ------------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 10,917,289 $ 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 Nine Months Ended
September 30, September 30,
---------------------------- ----------------------------
1999 1998 1999 1998
------------ ------------ ------------ ------------
<S> <C> <C> <C> <C>
Net patient service revenue $ 2,724,678 $ 2,820,197 $ 8,272,803 $ 8,404,461
Other revenue 33,785 36,231 80,963 99,188
------------ ------------ ------------ ------------
Total revenue 2,758,463 2,856,428 8,353,766 8,503,649
COSTS AND EXPENSES
Professional care of patients 1,626,824 1,635,345 4,582,254 4,567,638
General services 585,027 553,644 1,648,742 1,529,550
Administrative services 347,276 346,882 1,180,061 1,168,741
Other costs 133,086 16,090 152,887 39,695
Depreciation, depletion
and amortization 48,014 83,539 207,941 231,055
------------ ------------ ------------ ------------
Income from operations 18,236 220,928 581,881 966,970
OTHER INCOME (EXPENSES)
Interest income 31,253 5,274 42,727 23,802
Interest expense (80,951) (88,335) (266,917) (272,737)
Gain (loss) on
sale of investments (155,189) 27,778 537,575 395,973
------------ ------------ ------------ ------------
Income (loss) before
taxes on income (186,651) 165,645 895,266 1,114,008
Provision (benefit)
for income taxes (63,462) -- 304,390 --
------------ ------------ ------------ ------------
Net income (loss) (123,189) 165,645 590,876 1,114,008
OTHER
COMPREHENSIVE INCOME
Unrealized losses
on securities 439,834 (628,525) 386,246 (924,017)
------------ ------------ ------------ ------------
Comprehensive income $ 316,645 ($ 462,880) $ 977,122 $ 189,991
============ ============ ============ ============
</TABLE>
See Accompanying Notes to Condensed Consolidated Financial Statements
<PAGE> 7
INTERWEST MEDICAL CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
AND COMPREHENSIVE INCOME
(Unaudited)
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
September 30, September 30,
---------------------------- ----------------------------
1999 1998 1999 1998
------------ ------------ ------------ ------------
<S> <C> <C> <C> <C>
Per share of common stock
Weighted average number
of shares outstanding 16,188,528 16,485,411 14,858,484 16,721,487
============ ============ ============ ============
Net income (loss) per share ($ 0.01) $ 0.01 $ 0.04 $ 0.07
============ ============ ============ ============
</TABLE>
See Accompanying Notes to Condensed Consolidated Financial Statements
<PAGE> 8
INTERWEST MEDICAL CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
<TABLE>
<CAPTION>
Nine Months Ended
September 30,
----------------------------
1999 1998
------------ ------------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES $ 172,788 $ 945,246
CASH FLOWS FROM INVESTING ACTIVITIES
Proceeds from sale of investments 9,682,051 1,836,640
Purchase of marketable securities (6,552,679) (3,316,189)
Payments for acquisition of property (223,539) (413,128)
Net changes in escrow accounts (9,603) (9,603)
------------ ------------
Net cash used in investing activities 2,896,230 (1,902,280)
CASH FLOWS FROM FINANCING ACTIVITIES
Financing costs paid -- (146,361)
Purchase of treasury stock (2,020) (87,419)
Payments on borrowings (104,550) (39,099)
------------ ------------
Net cash used in financing activities (106,570) (272,879)
------------ ------------
Net change in cash 2,962,448 (1,229,913)
CASH, beginning of period 460,329 1,458,281
------------ ------------
CASH, end of period $ 3,422,777 $ 228,368
============ ============
</TABLE>
See Accompanying Notes to Condensed Consolidated Financial Statements
<PAGE> 9
Item 2. Management's Discussion and Analysis of Financial Position and
Results of Operations.
Changes in Balance Sheet Accounts
Current assets were $6,744,961 and total assets were $10,917,289 at September
30, 1999 as compared to $5,962,519 current assets and $10,164,646 total assets
at December 31, 1998. Current liabilities were $2,015,289 at September 30, 1999
as compared to $2,133,198 at December 31, 1998.
Results of Operations
For the Three Months Ended September 30, 1999, operating revenue was $2,758,463;
costs and expenses were $2,740,227, net loss was ($123,189) and interest income
was $31,253, as compared to the Three Months Ended September 30, 1998, operating
revenue of $2,856,428, costs and expenses of $2,635,500, net income of $165,645
and interest income of $5,274.
For the Nine Months Ended September 30, 1999, operating revenue was $8,353,766;
costs and expenses were $7,771,885, net income was $590,876 and interest income
was $42,727, as compared to the Nine Months Ended September 30, 1998, operating
revenue of $8,503,649, costs and expenses of $7,536,679, net income of
$1,114,008 and interest income of $23,802.
Cash Flows
For the Nine Months Ended September 30, 1999, cash flows from operating
activities were $172,788, cash flows from investing activities were $2,896,230,
cash flows from financing activities were ($106,570), net increase in cash was
$2,962,448, cash at the beginning of the period was $460,329, and cash at the
end of the period was $3,422,777 as compared to the Nine Months Ended September
30, 1998, to cash flows from operating activities of $945,246, cash flows from
investing activities of ($1,902,280), cash flows from financing activities of
($272,879), net decrease in cash of ($1,229,913), cash at the beginning of the
period of $1,458,281 and cash at the end of the period of $228,368.
<PAGE> 10
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> 11
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
/s/ ARCH B. GILBERT
By:
Arch B. Gilbert, President,
Chief Executive Officer,
Chief Financial Officer, and
Chief Accounting Officer
Date: November 9, 1999
<PAGE> 12
INDEX TO EXHIBITS
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
- ------- -----------
<S> <C>
27 Financial Data Schedule
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-END> SEP-30-1999
<CASH> 3,422,777
<SECURITIES> 958,952
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 6,744,961
<PP&E> 5,877,589
<DEPRECIATION> 2,153,710
<TOTAL-ASSETS> 10,917,289
<CURRENT-LIABILITIES> 2,015,289
<BONDS> 0
0
0
<COMMON> 22,000
<OTHER-SE> 4,426,276
<TOTAL-LIABILITY-AND-EQUITY> 10,917,289
<SALES> 8,272,803
<TOTAL-REVENUES> 8,353,766
<CGS> 4,582,254
<TOTAL-COSTS> 7,771,885
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 266,917
<INCOME-PRETAX> 895,266
<INCOME-TAX> 304,390
<INCOME-CONTINUING> 590,876
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 590,876
<EPS-BASIC> 0.04
<EPS-DILUTED> 0.04
</TABLE>
