<PAGE>
================================================================================
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
____________
FORM 8-K/A
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
DATE OF REPORT (DATE OF EARLIEST EVENT REPORTED): JUNE 4, 1996
____________
PRIME MEDICAL SERVICES, INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
DELAWARE 0-22392 74-2652727
(STATE OR OTHER JURISDICTION (COMMISSION FILE NUMBER) (I.R.S. EMPLOYER
OF INCORPORATION) IDENTIFICATION NUMBER)
- ---------------------------- ------------------------ ----------------------
1301 S. CAPITAL OF TEXAS HIGHWAY, STE. C-300 78746
AUSTIN, TEXAS (ZIP CODE)
(ADDRESS OF PRINCIPAL EXECTIVE OFFICES)
---------------------------------------
REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE: (512) 328-2892
NOT APPLICABLE
(FORMER NAME OR FORMER ADDRESS, IF CHANGED SINCE LAST REPORT)
================================================================================
<PAGE>
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS.
On May 2, 1996, Prime Medical Services, Inc., a Delaware Corporation
("Prime"), filed a current report on Form 8-K that disclosed the acquisition of
all of the outstanding capital stock of Lithotripters, Inc., a North Carolina
corporation (the "Company"), for approximately $88,000,000. Prime did not file a
management's discussion and analysis of financial condition and results of
operations for the Company, financial statements or pro forma financial
information for the Company in such Form 8-K because, at that time, no such
information was available. Set forth below as an amendment to Item 7 of such
Form 8-K are financial statements, pro forma financial information, a
management's discussion and analysis of financial condition and results of
operations for the Company, as required by Item 7 of Form 8-K.
(A) FINANCIAL STATEMENTS OF BUSINESS ACQUIRED.
(See pages F-1 to F-14 attached)
(B) MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS.
(See pages F-15 to F-19 attached)
(C) PRO FORMA FINANCIAL INFORMATION.
(See pages F-20 to F-24 attached)
(D) EXHIBITS.
23 - Consent of Independent Public Accountants
2
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
PRIME MEDICAL SERVICES, INC.
Date: ________ , 1996 By: ______________________________
Its: _____________________________
3
<PAGE>
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To the Shareholders of Lithotripters, Inc.:
We have audited the accompanying consolidated balance sheets of
Lithotripters, Inc. (a North Carolina corporation) as of December 31, 1993,
1994 and 1995, and the related consolidated statements of income, changes in
shareholders' equity and cash flows for each of the three years then ended.
These financial statements are the responsibility of Lithotripters' management.
Our responsibility is to express an opinion on these financial statements based
on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of
material misstatement. An audit also includes assessing the accounting
principles used and significant estimates made by management, as well as
evaluating the overall financial statement presentation. We believe that our
audits provide a reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to above
present fairly, in all material respects, the financial position of
Lithotripters, Inc. as of December 31, 1993, 1994 and 1995, and the results of
their operations and their cash flows for each of the three years then ended,
in conformity with generally accepted accounting principles.
Charlotte, North Carolina,
March 1, 1996.
F-1
<PAGE>
LITHOTRIPTERS, INC.
CONSOLIDATED BALANCE SHEETS
AS OF DECEMBER 31, 1993, 1994 AND 1995
<TABLE>
<CAPTION>
1993 1994 1995
<S> <C> <C> <C>
ASSETS
Cash and cash equivalents............ $ 15,626,188 $ 15,928,728 $ 17,521,037
Accounts receivable, net............. 13,843,253 13,793,827 13,609,930
Prepaid expenses..................... 730,036 691,622 775,090
------------ ------------ ------------
Total current assets............. 30,199,477 30,414,177 31,906,057
Property and equipment, net.......... 26,692,004 23,798,256 21,848,863
Other assets......................... 438,042 280,774 129,624
------------ ------------ ------------
$ 57,329,523 $ 54,493,207 $ 53,884,544
============ ============ ============
LIABILITIES AND SHAREHOLDERS' EQUITY
Liabilities:
Accounts payable................... $ 1,900,038 $ 1,865,185 $ 2,371,939
Accrued expenses................... 454,218 452,290 520,569
Accrued distribution............... 13,663,944 14,557,517 14,661,070
Notes payable, current portion..... 3,949,468 1,775,954 1,851,766
------------ ------------ ------------
Total current liabilities........ 19,967,668 18,650,946 19,405,344
Notes payable........................ 2,854,374 1,366,718 2,359,574
------------ ------------ ------------
Total liabilities................ 22,822,042 20,017,664 21,764,918
Commitments and contingencies (Note
5)
Minority interests................... 24,065,639 22,963,915 21,552,837
------------ ------------ ------------
Shareholders equity:
Common stock par value, 100,000
shares authorized,
40,000 shares issued and
outstanding....................... 39,250 39,250 39,250
Other capital contributions........ 3,727 3,727 3,727
Accumulated earnings............... 46,955,373 60,292,058 72,949,215
Cumulative distributions........... (36,556,508) (48,823,407) (62,425,403)
------------ ------------ ------------
Total shareholders' equity....... 10,441,842 11,511,628 10,566,789
------------ ------------ ------------
$ 57,329,523 $ 54,493,207 $ 53,884,544
============ ============ ============
</TABLE>
The accompanying notes to consolidated financial statements are an integral
part of these balance sheets.
F-2
<PAGE>
LITHOTRIPTERS, INC.
CONSOLIDATED STATEMENTS OF INCOME
FOR THE YEARS ENDED DECEMBER 31, 1993, 1994 AND 1995
<TABLE>
<CAPTION>
1993 1994 1995
<S> <C> <C> <C>
Operating revenue....................... $59,997,288 $61,202,943 $59,214,624
Operating expenses:
Salaries and benefits................. 7,996,280 8,201,083 8,737,366
Mobile unit expense................... 4,326,181 4,732,301 4,421,877
Legal and professional fees........... 1,404,028 1,262,864 1,557,680
Travel and entertainment.............. 1,295,823 1,431,229 1,487,432
Depreciation and amortization......... 4,263,104 4,374,219 5,030,766
Charges to affiliates................. (2,263,594) (2,478,440) (2,521,468)
Other................................. 1,824,528 2,328,729 1,862,368
----------- ----------- -----------
Total operating expenses............ 18,846,350 19,851,985 20,576,021
----------- ----------- -----------
Income from operations.............. 41,150,938 41,350,958 38,638,603
----------- ----------- -----------
Interest expense........................ (754,474) (335,556) (250,010)
Other income............................ 306,303 386,455 478,988
----------- ----------- -----------
Income before minority interest in
consolidated income.................... 40,702,767 41,401,857 38,867,581
Minority interest in consolidated
income................................. 27,635,913 28,065,172 26,210,424
----------- ----------- -----------
Net income.......................... $13,066,854 $13,336,685 $12,657,157
=========== =========== ===========
</TABLE>
The accompanying notes to consolidated financial statements are an integral
part of these statements.
F-3
<PAGE>
LITHOTRIPTERS, INC.
CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY
FOR THE YEARS ENDED DECEMBER 31, 1993, 1994 AND 1995
<TABLE>
<CAPTION>
OTHER TOTAL
COMMON CAPITAL ACCUMULATED CUMULATIVE SHAREHOLDERS'
STOCK CONTRIBUTIONS EARNINGS DISTRIBUTIONS EQUITY
<S> <C> <C> <C> <C> <C>
Balance, December 31,
1992................... $39,250 $3,727 $33,888,519 $(25,190,331) $ 8,741,165
Net income............ 0 0 13,066,854 0 13,066,854
Distributions to
shareholders......... 0 0 0 (11,366,177) (11,366,177)
------- ------ ----------- ------------ ------------
Balance, December 31,
1993................... 39,250 3,727 46,955,373 (36,556,508) 10,441,842
Net income............ 0 0 13,336,685 0 13,336,685
Distributions to
shareholders......... 0 0 0 (12,266,899) (12,266,899)
------- ------ ----------- ------------ ------------
Balances, December 31,
1994................... 39,250 3,727 60,292,058 (48,823,407) 11,511,628
Net income............ 0 0 12,657,157 0 12,657,157
Distributions to
shareholders......... 0 0 0 (13,601,996) (13,601,996)
------- ------ ----------- ------------ ------------
Balance, December 31,
1995................... $39,250 $3,727 $72,949,215 $(62,425,403) $ 10,566,789
======= ====== =========== ============ ============
</TABLE>
The accompanying notes to consolidated financial statements are an integral
part of these statements.
F-4
<PAGE>
LITHOTRIPTERS, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE YEARS ENDED DECEMBER 31, 1993, 1994 AND 1995
<TABLE>
<CAPTION>
1993 1994 1995
<S> <C> <C> <C>
Cash flows from operating activities:
Net income......................... $ 13,066,854 $ 13,336,685 $ 12,657,157
Adjustments to reconcile net income
to net cash provided by operating
activities-
Depreciation and amortization.... 4,263,104 4,374,219 5,030,766
Minority interest in consolidated
income.......................... 27,635,913 28,065,172 26,210,424
Decrease (increase) in accounts
receivable...................... (620,043) 49,426 183,897
Decrease (increase) in prepaid
expenses........................ (188,470) 38,414 (83,468)
Decrease (increase) in other
assets.......................... (54,999) 0 1,446
Increase (decrease) in accounts
payable......................... (122,961) (34,853) 506,754
Increase (decrease) in accrued
expenses........................ (181,770) (1,928) 68,279
------------ ------------ ------------
Net cash provided by operating
activities...................... 43,797,628 45,827,135 44,575,255
------------ ------------ ------------
Cash flows from investing activities:
Purchase of property and equipment,
net............................... (720,536) (1,323,203) (2,931,669)
------------ ------------ ------------
Cash flows from financing activities:
Proceeds from notes payable........ 5,019,811 1,453,150 3,355,000
Payments on notes payable.......... (5,293,744) (5,114,320) (2,286,332)
Payments on capital leases......... (6,761,990) 0 0
Distributions to shareholders...... (9,110,328) (11,373,326) (13,498,443)
Distributions to minority
interests, net of contributions... (25,939,268) (29,166,896) (27,621,502)
------------ ------------ ------------
Net cash used in financing
activities...................... (42,085,519) (44,201,392) (40,051,277)
------------ ------------ ------------
Net increase in cash and cash
equivalents......................... 991,573 302,540 1,592,309
Cash and cash equivalents, beginning
of year............................. 14,634,615 15,626,188 15,928,728
------------ ------------ ------------
Cash and cash equivalents, end of
year................................ $ 15,626,188 $ 15,928,728 $ 17,521,037
============ ============ ============
Supplemental disclosure of cash flow
information-cash paid during the
year for interest................... $ 754,000 $ 336,000 $ 250,000
============ ============ ============
</TABLE>
The accompanying notes to consolidated financial statements are an integral
part of these statements.
F-5
<PAGE>
LITHOTRIPTERS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 1993, 1994 AND 1995
1. ORGANIZATION AND OPERATIONS:
Lithotripters, Inc. (Lithotripters) is a North Carolina corporation formed in
1987 for the purpose of sponsoring and managing medical service limited
partnerships. Lithotripters serves as the general partner for each partnership
with primarily local physicians (primarily urologists) holding the limited
partnership units.
Lithotripters, located in Fayetteville, North Carolina, is a provider of
renal lithotripsy services. Lithotripsy involves the use of extracorporeal
shock waves to pulverize kidney and ureteral stones. Lithotripters provides
lithotripsy services primarily through a network of affiliated partnerships
(the Partnerships) to hospitals located primarily in the Southern and Western
sections of the United States. The Partnerships operate 23 self-contained
mobile lithotripsy systems and two fixed-base systems, all of which feature the
Siemens Medical Systems, Inc. Lithostar(TM) machine (the Lithostar).
Lithotripters also directly owns and operates three mobile Lithostar units.
Lithotripters is the managing general partner in each partnership and has an
economic interest in each which varies from 20% to 58%. Lithotripters provides
a wide array of other services to both the physician partners and the
nonaffiliated physician users. As of December 31, 1995, Lithotripters had an
ownership interest in the Partnerships as follows:
<TABLE>
<CAPTION>
YEAR
OWNERSHIP OPERATIONS
PERCENTAGE COMMENCED
<S> <C> <C>
California Lithotripters Limited Partnership II.......... 20.0% 1991
Fayetteville Lithotripters Limited Partnership--Arizona
I....................................................... 37.0 1989
Fayetteville Lithotripters Limited Partnership--Arkansas
I....................................................... 20.0 1990
Fayetteville Lithotripters Limited Partners--Louisiana
I....................................................... 22.0 1990
Fayetteville Lithotripters Limited Partnership--South
Carolina I.............................................. 39.0 1989
Fayetteville Lithotripters Limited Partnership--South
Carolina II............................................. 20.0 1989
Fayetteville Lithotripters Limited Partnership--Utah I... 24.0 1989
Fayetteville Lithotripters Limited Partnership--Virginia
I....................................................... 20.0 1990
Florida Lithotripters Partnership I...................... 20.0 1991
Indiana Lithotripters Limited Partnership................ 22.6 1991
San Diego Lithotripters Limited Partnership.............. 20.0 1991
Tennessee Lithotripters Limited Partnership.............. 33.0 1991
Texas Lithotripsy Limited Partnership I.................. 45.5 1991
Texas Lithotripsy Limited Partnership II................. 21.5 1991
California Lithotripters Limited Partnership III, L.P.... 20.0 1991
Las Vegas Lithotripters Limited Partnership.............. 27.0 1991
Montana Lithotripters Limited Partnership I.............. 53.0 1992
Texas Lithotripsy Limited Partnership III................ 32.5 1991
Texas Lithotripsy Limited Partnership IV, L.P............ 50.0 1992
Texas Lithotripsy Limited Partnership V, L.P............. 58.0 1993
Mountain Lithotripsy Limited Partnership................. 44.0 1995
</TABLE>
Certain of the Partnerships have formed two additional joint venture
partnerships to own and operate an additional Lithostar machine. The operations
of these two joint ventures are included in the respective Partnerships'
accounts.
The income, losses and cash distributions of the Partnerships are allocated
based on the respective ownership interests of the partners.
F-6
<PAGE>
LITHOTRIPTERS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:
BASIS OF PRESENTATION
The consolidated financial statements have been prepared on the accrual basis
of accounting and include the accounts of Lithotripters and the Partnerships
(collectively, the Company). The consolidated financial statements also include
FastStart, Inc., an entity under common control by the shareholders of
Lithrotripters which provides certain training services on behalf of the
Company. The accounts of FastStart, Inc. are immaterial to these consolidated
financial statements.
Under the terms of the respective partnership agreements, Lithotripters, as
the managing general partner, has the authority to make major financial
decisions regarding the assets of the Partnerships without the approval of the
limited partners. Due to the significant control exhibited by Lithotripters,
the Partnerships have been consolidated in the accompanying financial
statements. All significant intercompany accounts and transactions have been
eliminated in consolidation with the pro rata share of profit and losses and
partners' capital of the Partnerships not owned by Lithotripters allocated to
minority interest.
CASH AND CASH EQUIVALENTS
The Company considers all highly liquid investments with an original maturity
of less than 90 days to be cash equivalents.
REVENUE RECOGNITION
Operating revenue is reported at the estimated realizable amounts from
patients, hospitals and insurance providers including a significant amount of
revenue funded by Medicare for services rendered. Billings in excess of the
estimated realizable amounts generally represent amounts due from patients in
excess of amounts paid by the patient's insurance provider or Medicare. Amounts
that are considered highly uncollectible are recognized as revenue upon
collection. The Company has negotiated agreements with some hospitals to
provide lithotripsy services based on fee schedules. Certain agreements with
hospitals provide for fees to be paid to the hospital based on varying
percentages of revenues collected in connection with services rendered at that
hospital. Revenue is recorded net of fees due hospitals. These agreements with
the hospitals are generally renewed annually. No individual hospital is
material to the consolidated financial statements. Revenue under certain
agreements is subject to audit and retroactive adjustments. Provisions for
estimated settlements and adjustments are estimated in the period the related
services are rendered and adjusted in the period the final settlement is
determined.
ACCOUNTS RECEIVABLE
The Company records accounts receivable at the estimated realizable amounts
which include contractual adjustments for amounts to be paid by the patient
insurance providers, Medicare, hospitals and estimated uncollectible amounts.
Accordingly, no reserve for doubtful accounts is necessary.
PROPERTY AND EQUIPMENT
Property and equipment is recorded at cost. Major betterments to equipment
are capitalized while normal maintenance and repairs are charged to operations.
Depreciation on construction in progress commences upon being placed in
service.
F-7
<PAGE>
LITHOTRIPTERS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
<TABLE>
<CAPTION>
1993 1994 1995
<S> <C> <C> <C>
Building................................ $ 145,007 $ 145,007 $ 145,336
Lithostar machines...................... 30,928,994 32,398,994 32,826,578
Mobile units............................ 7,497,733 7,644,501 7,829,643
Other equipment......................... 438,500 475,396 507,755
Other vehicles.......................... 68,842 104,561 131,824
Leasehold improvements.................. 631,045 665,686 665,686
Construction in process................. 380,000 22,500 168,655
----------- ----------- -----------
Total................................. 40,090,121 41,456,645 42,275,477
Accumulated depreciation................ 13,398,117 17,658,389 20,426,614
----------- ----------- -----------
Net total............................. $26,692,004 $23,798,256 $21,848,863
=========== =========== ===========
</TABLE>
Depreciation is provided over the estimated useful lives as follows:
<TABLE>
<CAPTION>
METHOD USEFUL LIVES
<S> <C> <C>
Buildings......................................... Straight-line 20 years
Lithostar machines................................ Straight-line 10 years
Mobile units...................................... Straight-line 10 years
Other equipment and vehicles...................... Accelerated 5 to 7 years
Leasehold improvements............................ Accelerated 5 to 7 years
</TABLE>
INCOME TAXES
Lithotripters and FastStart, Inc. have elected to be treated as an S
Corporation for federal and state income tax purposes. Under current tax law,
the income or loss of the Partnerships is included in the income tax return of
the partners. As such, income or loss of the Company, including its pro rata
share of partnership income, is included in the income tax returns of the
shareholders. Accordingly, no provision for income taxes have been recorded in
the accompanying consolidated financial statements. However, certain states in
which the Company or the Partnerships operate do impose certain franchise and
income taxes. Included in other operating expenses are franchise and income tax
expenses of approximately $138,000 for 1993, $242,000 for 1994 and $193,000 for
1995.
MANAGEMENT ESTIMATES AND RISK OF OPERATIONS
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions
that affect the reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the financial statements and
the reported amounts of revenues and expenses during the reporting period.
Actual results could differ from those estimates. In addition, the Company's
revenues are derived primarily from the use of the Lithostar machines. As such,
the future operations would be significantly impacted by the development of a
new technology or an alternative procedure.
FAIR VALUE OF FINANCIAL INSTRUMENTS
Cash, accounts receivable, accounts payable and accrued liabilities are
reflected in the financial statements at fair value because of the short-term
maturity of those instruments. The carrying amount of notes payable
approximates fair value at December 31, 1995.
F-8
<PAGE>
LITHOTRIPTERS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
3. TRANSACTIONS WITH AFFILIATES:
Lithotripters provides managerial, operational and other support services to
the Partnerships after formation. As the managing general partner,
Lithotripters receives a management fee for supervising the Partnerships'
operations and business affairs. Generally, under the terms of the individual
partnership agreements, such management fees equate to the greater of $8,000 or
7.5% of individual partnership cash flow (as defined) per month. Such
management fees amounted to approximately $3,129,000 for 1993, $3,347,000 for
1994 and $3,390,000 for 1995. Such amounts have been eliminated in
consolidation.
In addition, Lithotripters is reimbursed by the Partnerships for certain
administrative expenses incurred on behalf of the Partnerships, such as direct
administrative salaries and benefits, rent and office supplies. Such
reimbursement, which is based on the number of patients served by each
partnership divided by the total number of patients served by all partnerships,
amounted to approximately $2,436,062 for 1993, $2,715,370 for 1994 and
$2,729,531 for 1995. Such amounts have been eliminated in consolidation.
Lithotripters provides similar services and certain equipment to two
affiliated entities and charged $2,263,594 for 1993, $2,478,440 for 1994 and
$2,521,468 for 1995. These charges are recorded as charges to affiliates on the
accompanying consolidated statements of income.
In 1993, the Company purchased $335,000 of equipment from an affiliated
entity.
Lithotripters' corporate offices are owned by certain shareholders of
Lithotripters and are leased to Lithotripters. The rent expense was
approximately $108,000 for 1995, $111,000 for 1994 and $108,000 for 1993.
4. NOTES PAYABLE:
Notes payable are as follows:
<TABLE>
<CAPTION>
1993 1994 1995
<S> <C> <C> <C>
Equipment loans bearing interest at
prime plus .25%, secured by certain
equipment............................. $ 5,522,628 $ 3,142,672 $ 4,211,340
Notes payable bearing interest at prime
plus .25%, secured by accounts
receivable............................ 1,199,300 0 0
Other.................................. 81,914 0 0
----------- ----------- -----------
$ 6,803,842 $ 3,142,672 $ 4,211,340
=========== =========== ===========
</TABLE>
Future principal payments on notes payable are as follows:
<TABLE>
<S> <C>
1996......................... $ 1,851,766
1997......................... 937,149
1998......................... 964,475
1999......................... 457,950
-----------
$ 4,211,340
===========
</TABLE>
F-9
<PAGE>
LITHOTRIPTERS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
5. COMMITMENTS AND CONTINGENCIES:
The Company carries malpractice insurance coverage with Healthcare Insurance
Services, Inc. which is a secondary form of insurance which covers medical
professionals once their primary insurance has been exhausted. There are no
significant malpractice claims which have been asserted against the Company.
Incidents occurring through December 31, 1995, may result in the assertion of
claims arising from services provided to patients in the past. Management
believes that future claims, if asserted, would be settled within the limits of
its insurance coverages.
The Federal Trade Commission (FTC) has investigated two of the Partnerships
to determine whether they pose an unreasonable threat to competition. The
Company's counsel has recently been advised by the director of the Bureau of
Competition that the FTC staff has recommended that these investigations be
closed. Based upon the Company's counsel's experience with the FTC, the Company
expects the investigation to be formally closed.
The Company has entered into an agreement with an investment advisor whereby
the advisor would be entitled to a fee in the event Lithotripters and/or
certain affiliates are sold to a third party.
The Company has a facility lease with certain shareholders expiring in
December 2000. The Company will have annual minimum operating lease payments of
approximately $120,000 in 1996 through 2000.
The Company has entered into an agreement to purchase equipment in 1996 for
one of the partnerships for approximately $1,000,000.
6. PENSION PLAN:
The Company makes contributions to a defined contribution pension plan for
qualified employees of the Company included in these consolidated financial
statements, as defined in the plan agreement. Contributions are based on
employee's compensation during the plan year. The Company contributed
approximately $422,000, $498,000 and $557,000 during 1993, 1994 and 1995,
respectively.
F-10
<PAGE>
LITHOTRIPTERS, INC.
CONSOLIDATED BALANCE SHEETS
DECEMBER 31, 1995 AND MARCH 31, 1996
<TABLE>
<CAPTION>
DECEMBER 31, 1995 MARCH 31, 1996
(UNAUDITED)
(IN THOUSANDS)
<S> <C> <C>
ASSETS
Cash and cash equivalents..................... $ 17,521 $ 14,639
Accounts receivable, net...................... 13,610 12,547
Prepaid expenses.............................. 775 992
-------- --------
Total current assets...................... 31,906 28,178
Property and equipment, net................... 21,849 21,770
Other assets.................................. 130 61
-------- --------
$ 53,885 $ 50,009
======== ========
LIABILITIES AND SHAREHOLDERS' EQUITY
Liabilities:
Accounts payable............................ $ 2,372 $ 2,513
Accrued expenses............................ 520 697
Accrued distribution........................ 14,661 10,818
Notes payable, current portion.............. 1,852 463
-------- --------
Total current liabilities................. 19,405 14,491
Notes payable................................. 2,360 5,132
-------- --------
Total liabilities......................... 21,765 19,623
Minority interests............................ 21,553 20,339
Shareholders' equity:
Common stock, no par value, 100,000 shares
authorized, 40,000 shares issued and
outstanding................................ 39 39
Other capital contributions................. 4 4
Accumulated earnings........................ 72,949 75,943
Cumulative distributions.................... (62,425) (65,939)
-------- --------
Total shareholders' equity................ 10,567 10,047
-------- --------
$ 53,885 $ 50,009
======== ========
</TABLE>
The accompanying notes to consolidated financial statements are an integral
part of these balance sheets
F-11
<PAGE>
LITHOTRIPTERS, INC.
CONSOLIDATED STATEMENTS OF INCOME
FOR THE THREE MONTHS ENDED MARCH 31, 1995 AND 1996
(UNAUDITED)
<TABLE>
<CAPTION>
THREE MONTHS ENDED THREE MONTHS ENDED
MARCH 31, 1995 MARCH 31, 1996
(IN THOUSANDS)
<S> <C> <C>
Operating revenue........................ $13,654 $14,308
Operating expenses:
Salaries and benefits.................. 2,106 2,359
Mobile unit expense.................... 1,134 956
Legal and professional fees............ 244 487
Travel and entertainment............... 441 424
Depreciation and amortization.......... 1,036 1,129
Charges to affiliates.................. (584) (655)
Other.................................. 623 713
------- -------
Total operating expenses............. 5,000 5,413
------- -------
Income from operations............... 8,654 8,895
Interest expense......................... (63) (53)
Other income............................. 65 241
------- -------
Income before minority interest in
consolidated income..................... 8,656 9,083
Minority interest in consolidated
income.................................. 5,953 6,089
------- -------
Net income........................... $ 2,703 $ 2,994
======= =======
</TABLE>
The accompanying notes to consolidated financial statements are an integral
part of these statements
F-12
<PAGE>
LITHOTRIPTERS, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE THREE MONTHS ENDED MARCH 31, 1995 AND 1996
(UNAUDITED)
<TABLE>
<CAPTION>
THREE MONTHS THREE MONTHS
ENDED ENDED
MARCH 31, 1995 MARCH 31, 1996
(IN THOUSANDS)
<S> <C> <C>
Cash flows from operating activities:
Net income...................................... $ 2,703 $ 2,994
Adjustments to reconcile net income to net cash
provided by operating activities-.............
Depreciation and amortization.................. 1,036 1,129
Minority interest in consolidated income....... 5,953 6,089
Decrease in accounts receivable, net........... 645 1,063
Increase in prepaid expenses................... (280) (217)
Decrease (increase) in other assets............ (30) 49
Increase in accounts payable................... 529 141
Increase in accrued expenses................... 121 177
-------- --------
Net cash provided by operating activities..... 10,677 11,425
-------- --------
Cash flows from investing activities:
Purchase of property and equipment.............. (189) (1,029)
-------- --------
Cash flows from financing activities:
Proceeds from notes payable..................... 165 1,900
Payments on notes payable....................... (716) (517)
Distributions to shareholders................... (4,500) (4,900)
Distributions to minority interests, net of
contributions.................................. (10,003) (9,761)
-------- --------
Net cash used in financing activities......... (15,054) (13,278)
-------- --------
Net decrease in cash and cash equivalents......... (4,566) (2,882)
Cash and cash equivalents, beginning of period.... 15,929 17,521
-------- --------
Cash and cash equivalents, end of period.......... $ 11,363 $ 14,639
======== ========
</TABLE>
The accompanying notes to consolidated financial statements are an integral
part of these statements
F-13
<PAGE>
LITHOTRIPTERS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 1996
(UNAUDITED)
1. BASIS OF PRESENTATION:
The unaudited consolidated financial statements have been prepared on the
accrual basis of accounting and include the accounts of Lithotripters, Inc.
(Lithotripters) and certain limited partnerships of which Lithotripters is the
general partner (collectively, the Company).
The accompanying unaudited consolidated financial statements have been
prepared in conformity with the accounting principles stated in the audited
financial statements for the year ended December 31, 1995, and reflect all
adjustments (which consist of normal recurring adjustments), in the opinion of
management, necessary to present fairly the financial position as of March 31,
1996, and the results of operations and cash flows for the periods presented.
These statements have not been audited by the Company's independent public
accountants. The operating results for the interim periods are not necessarily
indicative of results for the full year.
Certain information and footnote disclosures required for complete financial
statements have been condensed or omitted. The notes to consolidated financial
statements appearing in the Company's audited financial statements for the year
ended December 31, 1995, should be read in conjunction with these interim
financial statements. There have been no significant changes in the information
reported in those notes other than from normal business activities of the
Company and the matter discussed in Note 2 below.
2. SUBSEQUENT EVENT:
In April 1996, 100% of the common stock of Lithotripters was acquired by
Prime Medical Services, Inc. for $88 million, which consisted of $70 million in
cash and 1,636,364 shares of Prime's common stock.
F-14
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS
------------------------------------
OF FINANCIAL CONDITION AND
--------------------------
RESULTS OF OPERATIONS
---------------------
RESULTS OF OPERATIONS
- ---------------------
Revenues
- --------
Total revenues increased $654,000 (5%) for the three months ended March 31, 1996
compared to the same period in 1995. This increase is in line with the 4.8%
increase in procedures performed during the first quarter. The amount received
per case remained fairly stable in the first quarter of 1996 compared to the
first quarter of 1995.
Expenses
- --------
Total operating expenses increased $413,000 for the three months ended March 31,
1996, compared to the same period in 1995. Salary and benefit expense increased
12% due to normal annual wage increases and the addition of 3 lithotripters and
personnel to run them between March 31, 1995 and March 31, 1996. Legal and
professional fees increased $243,000 as a result of increased activity in the
Federal Trade Commission case against two of the Company's limited partnerships.
This case was dropped in March, 1996. Mobile unit expense decreased by $178,000
(15.7%) as a result of a new maintenance contract which the Company signed with
Siemens Medical Systems to maintain the mobile units. This contract was
effective October 1, 1995.
Other Income
- ------------
Other income increased $176,000 due to an increase in cash reserves maintained
by the limited partnerships which increased interest income.
Minority Interest in Consolidated Income
- ----------------------------------------
Minority interest in consolidated income increased $136,000 (2.3%) in 1996 which
is related to the 4.9% increase in income before minority interest in
consolidated income. Differences between changes in net income and minority
interest in consolidated income are due to fluctuations in net income of
individual consolidated partnerships and the minority interest ownership
percentages of those partnerships.
Liquidity and Capital Resources
- -------------------------------
Cash was $14,639,000 and $17,521,000 at March 31, 1996 and December 31, 1995,
respectively. Cash provided by operating activities for
F-15
<PAGE>
the quarter ended March 31, 1996 was $11,425,000 compared to cash provided by
operating activities for the quarter ended March 31, 1995 in the amount of
$10,677,000.
Cash used in investing activities for the quarter ended March 31, 1996 was
$1,209,000 compared to cash used in investing activities for the quarter ended
March 31, 1995 in the amount of $189,000. This was primarily due to the
acquisition of a second lithotripter in the Arizona limited partnership. Cash
used in financing activities for the quarter ended March 31, 1996 was
$13,278,000, which included $517,000 for payments on notes payable and
distributions to minority interests and shareholders totaling $9,761,000 and
$4,900,000, respectively. Cash used in financing activities for the quarter
ended March 31, 1995 was $15,054,000 which included $716,000 for payments on
notes payable and distributions to minority interests and shareholders totaling
$10,003,000 and $4,500,000 respectively.
Management believes that is present cash position, together with funds generated
from operations, and from available lines of credit will provide sufficient
resources to meet the Company's cash requirements for current operations.
F-16
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
-----------------------------------------------------------
AND RESULTS OF OPERATION
------------------------
Year ended December 31, 1995 compared to year ended December 31, 1994
- ---------------------------------------------------------------------
For the year ended December 31, 1995, the Company had net income of
approximately $12,657,000, as compared to net income for the year ended
December 31, 1994 of approximately $13,337,000, a 5.1% decrease. Significant
changes in income and expense are discussed below.
Revenues decreased by $1,988,000 (3.2%) during 1995 while procedures performed
increased by 0.5%. This decrease in revenues is due to a slight increase in the
number of patients treated who are covered by managed care companies.
Operating expenses increased by $724,000 (3.6%) during 1995. This increase is
due to a 6% rise in salary and benefit expense resulting from the full year
effect of the lithotripter added in 1994 and the lithotripter added in 1995 and
normal wage increases to existing employees as well as a 15% increase in
depreciation expense. Mobile unit expense decreased $310,000 (6.5%) as a result
of a new maintenance contract for the mobile units which was effective
October 1, 1995. Legal and professional fees increased $295,000 (23.4%) as a
result of more activity in the Federal Trade Commission case against two of the
Company's limited partnerships. The Federal Trade Commission dropped its case in
March, 1996.
Interest expense decreased $85,000 because notes payable was less on average in
1995 than in 1994. Other income increased $93,000 primarily due to the fact
that more cash reserves were maintained during 1995 than in 1994.
Minority interest in consolidated income decreased $1,855,000 (6.6%) in 1995
which is related to the 6.1% decrease in income before minority interest in
consolidated income. Differences between changes in net income and minority
interest in consolidated income are due to fluctuations in net income of
individual consolidated partnerships and the minority interest ownership
percentages of those partnerships.
Year ended December 31, 1994 compared to year ended December 31, 1993
- ---------------------------------------------------------------------
For the year ended December 31, 1994, the Company had net income of
approximately $13,337,000, as compared to net income of approximately
$13,067,000 for 1993, a 2.1% increase. Significant changes in income and expense
are discussed below.
F-17
<PAGE>
Revenues increased by $1,206,000 (2%). This increase is due to an 8% increase
in procedures performed coupled with price compression as a result of increased
managed care patients.
Operating expenses increased by $1,006,000 (5.3%) during 1994. Salaries and
benefits expense increased 2.6% primarily due to normal annual wage increases.
Mobile unit expense increased $406,000 (9.4%) due to expenditures made in an
effort to improve the imaging capabilities of the mobile units. Legal and
professional fees decreased $141,000 (10%) because of a decrease in activity in
the Federal Trade Commission case against two of the Company's limited
partnerships. Travel and entertainment expenses increased $135,000 (10.4%) as a
result of increased number of meetings with the Company's limited partnerships.
Charges to affiliates increased $215,000 (9.5%) because of increased revenue to
an entity managed but not owned by the Company.
Interest expense decreased by $419,000 which is a reflection of the decrease in
notes payable which the Company experienced in 1994.
Minority interest in consolidated income increased $429,000 (1.6%) in 1994 which
is related to the 1.7% increase in income before minority interest in
consolidated income. Differences in changes between net income and minority
interest in consolidated income are due to fluctuations in net income of
individual consolidated partnerships and the minority interest ownership
percentages of those partnerships.
Liquidity and Capital Resources
- -------------------------------
The Company's cash was $17,521,000 and $15,929,000 at December 31, 1995 and
1994, respectively. Cash provided by operating activities for the years ended
December 31, 1995 and 1994 was $44,575,000 and $45,827,000 respectively. Cash
used in investing activities for the year ended December 31, 1995 was $2,932,000
which primarily represented the purchase of two lithotripters. Cash used in
financing activities for the year ended December 31, 1995 was $40,051,000 which
included $27,622,000 and $13,498,000 distributions to minority interests and
shareholders respectively.
The Company believes that its present cash position, together with funds
generated from operations, will provide sufficient resources to meet its cash
requirements for current operations and repay existing debt.
Adoption of Accounting Standards
- --------------------------------
The financial Accounting Standards Board issued Statement of Financial
Accounting Standards No. 121, ACCOUNTING FOR THE IMPAIRMENT OF LONG-LIVED ASSETS
AND FOR LONG-LIVED ASSETS TO BE DISPOSED OF ("Statement 12") in March 1995 for
implementation of fiscal years beginning after December 15, 1995. The statement
F-18
<PAGE>
addresses the impact on an enterprise's financial statements when circumstances
indicate the carrying amount of an asset may not be recoverable. The Company
does not expect adoption of Statement 121 to have a material effect on the
financial statements at adoption.
Impact of Inflation
- -------------------
The assets of the Company are not significantly affected by inflation because,
having no manufacturing operations, the Company is not required to make large
investments in fixed assets. However, the rate of inflation will affect certain
of the Company's expenses, such as employee compensation and benefits.
F-19
<PAGE>
PRIME MEDICAL SERVICES, INC. AND SUBSIDIARIES
PRO FORMA CONSOLIDATED STATEMENT OF OPERATIONS
For the Year Ended December 31, 1995
(Unaudited)
(In thousands, except per share data)
<TABLE>
<CAPTION> 1995 Historical Litho
Historical Acquisitions Lithotripters, Acquisition Pro Forma
Company and Adjustments(A) Inc. Adjustments as Adjusted
---------- --------------- -------------- ------------ -----------
<S> <C> <C> <C> <C>
Fee revenue $23,195 $ 7,717 $59,215 $90,127
Costs and expenses:
Cost of services and general and
administrative expenses 10,057 3,552 15,545 29,154
Depreciation and amortization 3,195 1,515 5,031 (640) (B) 9,101
------- ------- ------- ------- -------
13,252 5,067 20,576 (640) (C) 38,255
------- ------- ------- ------- -------
Operating income 9,943 2,650 38,639 640 51,872
Other income (deductions):
Interest and dividends 152 152
Interest expense (1,231) (1,626) (250) (5,950) (D) (9,057)
Other, net 647 60 479 1,186
------- ------- ------- ------- -------
(432) (1,566) 229 (5,950) (7,719)
Income before provision for income taxes
and minority interest 9,511 1,084 38,868 (5,310) 44,153
Minority interest in consolidated income 1,421 633 26,210 1,763 (E) 30,027
Provision for income taxes 886 483 (F) 1,369
------- ------- ------- ------- -------
Net income $ 7,204 $ 451 $12,658 $(7,556) $12,757
======= ======= ======= ======= =======
Primary earnings per share:
Net income $0.47 $0.75
Weighted average shares outstanding 15,298 62 1,702 (G) 17,062
Fully Diluted earnings per share:
Net income $0.46 $0.71 (F)
Weighted average shares outstanding 16,010 991 1,702 (G) 18,703
</TABLE>
The accompanying notes are an integral part of the Pro Forma Consolidated
Financial Statements.
F-20
<PAGE>
PRIME MEDICAL SERVICES, INC. AND SUBSIDIARIES
PRO FORMA CONSOLIDATED BALANCE SHEET
December 31, 1995
(Unaudited)
(In thousands)
<TABLE>
<CAPTION>
Historical Litho
Historical Lithotripters, Acquisition Pro Forma
Company Inc. Adjustments As Adjusted
---------- ------------ ----------- -----------
<S> <C> <C> <C> <C>
ASSETS
Current Assets:
Cash and cash equivalents $ 4,692 $17,521 $ 22,213
Accounts receivable, trade, net 4,109 13,610 17,719
Other current assets 2,137 775 2,912
-------- ------- -------- ---------
Total current assets 10,938 31,906 0 42,844
Property and equipment, net 4,708 21,849 (9,849) (H) 16,708
Intangible assets, net 52,679 86,957 (I) 132,319
(7,317) (J)
Equity investments 7,623 7,623
Other assets 1,679 130 (800) (K) 1,009
-------- ------- -------- ---------
Total assets $ 77,627 $53,885 $ 68,991 $ 200,503
======== ======= ======== =========
Liabilities and Stockholders' Equity
Current liabilities:
Current portion of long-term debt $ 3,043 $ 1,852 $ 5,000 (I) $ 9,895
Accounts payable 4,814 2,892 1,067 (I) 8,773
Accrued expenses and other current
liabilities 2,862 14,661 2,200 (K) 19,723
-------- ------- -------- ---------
Total current liabilities 10,719 19,405 8,267 38,391
Long-term debt, net of current portion 22,323 2,360 65,000 (I) 89,683
Other liabilities 1,212 1,212
Minority interest 623 21,553 (6,599) (H) 15,577
Stockholders' equity:
Common stock 147 39 16 (I) 163
(39) (J)
Capital in excess of par value 58,700 4 15,874 (I) 74,574
(4) (J)
Accumulated earnings (deficit) (15,996) 10,524 (3,250) (H) (18,996)
(7,274) (J)
Treasury stock (101) (3,000) (K) (101)
-------- ------- -------- ---------
Total stockholders' equity 42,750 10,567 2,323 55,640
-------- ------- -------- ---------
Total liabilities and stockholders'
equity $ 77,627 $53,885 $ 68,991 $ 200,503
======== ======= ======== =========
</TABLE>
The accompanying notes are an integral part of the Pro Forma Consolidated
Financial Statements.
F-21
<PAGE>
PRIME MEDICAL SERVICES, INC. AND SUBSIDIARIES
PRO FORMA CONSOLIDATED STATEMENT OF OPERATIONS
For the Three Months Ended March 31, 1996
(Unaudited)
(In thousands, except per share data)
<TABLE>
<CAPTION> Historical Litho
Historical Lithotripters, Acquisition Pro Forma
Company Inc. Adjustments As Adjusted
---------- -------------- ------------ -----------
<S> <C> <C> <C> <C>
Fee Revenue $ 7,224 $14,308 $21,532
Costs and expenses:
Cost of services and general and
administrative expenses 3,021 4,284 7,305
Depreciation and amortization 1,149 1,129 (31) (B) 2,247
------- ------- ------- -------
4,170 5,413 (31) (C) 9,552
------- ------- ------- -------
Operating income 3,054 8,895 31 11,980
Other income (deductions):
Interest and dividends 22 0 22
Interest expense (509) (53) (1,488) (D) (2,050)
Other, net 80 241 321
------- ------- ------- -------
(407) 188 (1,488) (1,707)
Income before provision for income taxes
and minority interest 2,647 9,083 (1,457) 10,273
Minority interest in consolidated income 477 6,089 354 (E) 6,920
Provision for income taxes 264 95 (F) 359
------- ------- ------- ------
Net income $ 1,906 $ 2,994 $(1,906) $ 2,994
======= ======= ======= =======
Primary earnings per share:
Net income $0.12 $0.17
Weighted average shares outstanding 16,360 1,702 (G) 18,062
Fully Diluted earnings per share:
Net income $0.12 $0.16 (F)
Weighted average shares outstanding 17,368 1,702 (G) 19,070
</TABLE>
The accompanying notes are an integral part of the Pro Forma Consolidated
Financial Statements.
F-22
<PAGE>
PRIME MEDICAL SERVICES, INC. AND SUBSIDIARIES
PRO FORMA CONSOLIDATED BALANCE SHEET
March 31, 1996
(Unaudited)
(In thousands)
<TABLE>
<CAPTION>
Historical Litho
Historical Lithotripters, Acquisition Pro Forma
Company Inc. Adjustments As Adjusted
---------- -------------- ----------- -----------
<S> <C> <C> <C> <C>
ASSETS
Current Assets:
Cash and cash equivalents $ 3,316 $14,639 $ 17,955
Accounts receivable, trade, net 3,574 12,547 16,121
Other current assets 2,073 992 3,065
-------- ------- -------- ---------
Total current assets 8,963 28,178 37,141
Property and equipment, net 4,309 21,770 (9,770) (H) 16,309
Intangible assets, net 52,300 86,437 (I) 131,914
(6,823) (J)
Equity investments 7,323 7,323
Other assets 1,672 61 (800) (K) 933
-------- ------- -------- ---------
Total assets $ 74,567 $50,009 $ 69,044 $ 193,620
======== ======= ======== =========
Liabilities and Stockholders' Equity
Current liabilities:
Current portion of long-term debt $ 1,511 $ 463 $ 5,000 (I) $ 6,974
Accounts payable 1,127 2,513 547 (I) 4,187
Accrued expenses and other current
liabilities 2,484 11,515 2,200 (K) 16,199
-------- ------- -------- ---------
Total current liabilities 5,122 14,491 7,747 27,360
Long-term debt, net of current portion 17,467 5,132 65,000 (I) 87,599
Other liabilities 1,212 1,212
Minority interest 730 20,339 (6,546) (H) 14,523
Stockholders' equity:
Common stock 158 39 16 (I) 174
(39) (J)
Capital in excess of par value 63,968 4 15,874 (I) 79,842
(4) (J)
Accumulated earnings (deficit) (14,090) 10,004 (3,224) (H) (17,090)
(6,780) (J)
(3,000) (K)
-------- ------- -------- ---------
Total stockholders' equity 50,036 10,047 2,843 62,926
-------- ------- -------- ---------
Total liabilities and stockholders'
equity $ 74,567 $50,009 $ 69,044 $ 193,620
======== ======= ======== =========
</TABLE>
The accompanying notes are an integral part of the Pro Forma Consolidated
Financial Statements.
F-23
<PAGE>
NOTES TO PRO FORMA CONSOLIDATED FINANCIAL STATEMENTS
(A) Includes historical results of the 1995 Acquisitions prior to the
acquisition dates and related adjustments. Such adjustments consist of
provisions for goodwill amortization and interest expense on debt
incurred in connection with the acquisitions prior to the acquisition
dates. In addition, the Company's primary and fully diluted shares are
adjusted to reflect the effect of options, warrants and convertible debt
issued in connection with the acquisitions.
(B) Reflects the reduction in depreciation expense due to the purchase price
accounting adjustment to reduce book value of equipment to fair value,
offset by an increase in amortization due to goodwill associated with the
Litho Acquisition, as shown below:
<TABLE>
<CAPTION>
YEAR ENDED THREE MONTHS
DEC. 31, 1995 ENDED MARCH 31, 1996
------------- --------------------
(IN THOUSANDS)
<S> <C> <C>
Reduction in depreciation expense......... $(2,631) $(529)
Goodwill amortization..................... 1,991 498
------- -----
Total adjustment........................ $ (640) $ (31)
======= =====
</TABLE>
(C) Does not include charges associated with the write-off of bank financing
fees as described in (M), below.
(D) Reflects additional interest expense attributable to the $70.0 million of
bank debt incurred in conjunction with the Litho Acquisition at an assumed
interest rate of 8.5%.
(E) Reflects an increase in minority interest resulting from the decrease in
depreciation expense due to the adjustment to reduce book value of
equipment to fair value in connection with the Litho Acquisition.
(F) Represents an adjustment to reflect income tax expense at an assumed
effective state tax rate of 6% and an effective federal tax rate of 2%,
as a result of utilization of the NOL. Without the benefit of the NOL,
and at an assumed combined state and federal income tax rate of 40%, the
Company's pro forma income tax expense would have been $8,523,000, net
income would have been $12,784,000 and fully diluted earnings per share
would have been $0.55 for the year ended December 31, 1995, and the
Company's pro forma income tax expense would have been $2,059,000, net
income would have been $3,089,000 and fully diluted earnings per share
would have been $0.13 for the three months ended March 31, 1996.
(G) To record (i) the issuance of 1,636,364 shares of the Company's Common
Stock used for the stock component of the Litho Acquisition and (ii)
stock options issued to key employees of Lithotripters, Inc. concurrently
with the acquisition.
(H) Reflects adjustment to fair value for equipment acquired in conjunction
with the Litho Acquisition, and the corresponding reductions to minority
interest and stockholders' equity.
(I) To record the purchase of the net assets of Lithotripters, Inc. for $70.0
million (bank debt) plus the issuance of 1,636,364 shares of the
Company's Common Stock.
(J) To record the elimination of Lithotripters, Inc.'s Common Stock, capital
in excess of par value, and accumulated earnings.
(K) Reflects a non-recurring write-off of approximately $3.0 million,
including (i) a write-off of $800,000 in deferred costs from the Company's
previous bank facility, and (ii) non-recurring costs of $2.2 million not
previously recorded related to the Company's new Senior Credit Facility.
F-24
<PAGE>
EXHIBIT 23
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the use of our report
(and to all references to our firm) included in or made a part of this Form
8-K/A of Prime Medical Services, Inc. dated June 4, 1996.
/S/ ARTHUR ANDERSEN LLP
ARTHUR ANDERSEN LLP
Raleigh, North Carolina,
June 4, 1996.
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C> <C>
<PERIOD-TYPE> 3-MOS YEAR
<FISCAL-YEAR-END> DEC-31-1996 DEC-31-1995
<PERIOD-START> JAN-01-1996 JAN-01-1995
<PERIOD-END> MAR-31-1996 DEC-31-1995
<CASH> 14,639 17,521
<SECURITIES> 0 0
<RECEIVABLES> 12,547 13,610
<ALLOWANCES> 0 0
<INVENTORY> 0 0
<CURRENT-ASSETS> 28,178 31,906
<PP&E> 0 0
<DEPRECIATION> 0 0
<TOTAL-ASSETS> 50,009 53,885
<CURRENT-LIABILITIES> 14,491 19,405
<BONDS> 0 0
0 0
0 0
<COMMON> 0 0
<OTHER-SE> 0 0
<TOTAL-LIABILITY-AND-EQUITY> 50,009 53,885
<SALES> 0 0
<TOTAL-REVENUES> 14,308 59,215
<CGS> 0 0
<TOTAL-COSTS> 5,413 20,576
<OTHER-EXPENSES> 0 0
<LOSS-PROVISION> 0 0
<INTEREST-EXPENSE> 53 250
<INCOME-PRETAX> 2,994 12,657
<INCOME-TAX> 0 0
<INCOME-CONTINUING> 0 0
<DISCONTINUED> 0 0
<EXTRAORDINARY> 0 0
<CHANGES> 0 0
<NET-INCOME> 2,994 12,657
<EPS-PRIMARY> 0 0
<EPS-DILUTED> 0 0
</TABLE>
