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 June 30, 1999
[ ] Transition Report Pursuant to Section 13 or 15(d) of
the Securities 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 (I.R.S. Employer
incorporation or organization) Identification No.)
1301 Capital of Texas Highway, 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.
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.
Number of Shares Outstanding at
Title of Each Class July 31, 1999
Common Stock, $.01 par value 16,847,467
<PAGE>
PART I
FINANCIAL INFORMATION
-2-
<PAGE>
PRIME MEDICAL SERVICES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)
($ in thousands, except per share data)
<TABLE>
<S> <C> <C> <C> <C>
Three Months Ended Six Months Ended
June 30, June 30,
1999 1998 1999 1998
------- ------- ------- -------
Fee revenue:
Lithotripsy:
Fee revenues $21,577 $21,028 $ 41,073 $39,540
Management fees 1,411 1,289 2,762 2,358
Equity income 601 672 1,163 1,250
------- ------- ------- -------
23,589 22,989 44,998 43,148
Manufacturing 4,473 1,728 7,873 4,161
Prostatherapy 485 224 1,003 307
Cardiac 61 88 116 208
------- ------- ------- -------
Total fee revenue 28,608 25,029 53,990 47,824
------- ------- ------- -------
Costs and expenses:
Cost of services and general
and administrative expense
Lithotripsy 5,798 5,989 11,840 11,398
Manufacturing 3,342 1,459 5,796 3,157
Prostatherapy 371 161 828 269
Cardiac 58 47 119 148
Corporate 1,357 1,266 2,228 2,427
Nonrecurring development and
other costs -- -- -- 1,617
------- ------- ------- -------
10,926 8,922 20,811 19,016
Depreciation and amortization 2,553 2,605 5,028 5,173
------- ------- ------- -------
13,479 11,527 25,839 24,189
------- ------- ------- -------
Operating income 15,129 13,502 28,151 23,635
Other income (deductions):
Interest and dividends 333 403 738 586
Interest expense (2,325) (2,331) (4,654) (4,114)
Financing costs -- -- -- (4,982)
Release of contractual obligation 1,140 -- 1,140 --
Other, net 47 176 (291) 332
------- ------- ------- -------
(805) (1,752) (3,067) (8,178)
------- ------- ------- -------
Income before provision for income taxes
and minority interest 14,324 11,750 25,084 15,457
Minority interest in consolidated income 7,201 6,001 12,644 11,033
Provision for income taxes 2,821 2,232 4,976 2,075
------- ------- ------- -------
Net income $ 4,302 $ 3,517 $ 7,464 $ 2,349
======= ======= ======= =======
Basic earnings per share:
Net income $ 0.25 $ 0.18 $ 0.43 $ 0.12
======= ======= ======= =======
Weighted average shares outstanding 17,098 19,088 17,241 19,200
======= ======= ======= =======
Diluted earnings per share:
Net income $ 0.25 $ 0.18 $ 0.43 $ 0.12
======= ======= ======= =======
Weighted average shares outstanding 17,196 19,223 17,344 19,344
======= ======= ======= =======
</TABLE>
See accompanying notes to consolidated financial statements.
-3-
<PAGE>
PRIME MEDICAL SERVICES, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(Unaudited)
($ in thousands)
<TABLE>
<S> <C> <C>
June 30, December 31,
1999 1998
-------- --------
ASSETS
Current assets:
Cash $ 36,101 $ 40,146
Accounts receivable, less allowance
for doubtful accounts of $968 in
1999 and $966 in 1998 24,893 22,321
Other receivables 2,683 2,228
Deferred income taxes 1,517 2,330
Prepaid expenses and other current assets 5,001 2,774
-------- --------
Total current assets 70,195 69,799
-------- --------
Property and equipment:
Equipment, furniture and fixtures 37,284 34,485
Building and leasehold improvements 2,081 2,073
-------- --------
39,365 36,558
Less accumulated depreciation and
amortization (21,754) (18,471)
-------- --------
Property and equipment, net 17,611 18,087
Other investments 10,716 11,491
Goodwill, at cost, net of amortization 138,829 140,863
Other noncurrent assets 1,036 879
-------- --------
$ 238,387 $ 241,119
======== ========
</TABLE>
See accompanying notes to consolidated financial statements.
-4-
<PAGE>
PRIME MEDICAL SERVICES, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(Unaudited)
($ in thousands)
<TABLE>
<S> <C> <C>
June 30, December 31,
1999 1998
-------- --------
LIABILITIES:
Current liabilities:
Current portion of long-term debt $ 797 $ 890
Accounts payable 4,558 6,208
Accrued distributions to minority interests 55 8,951
Accrued expenses 9,124 12,051
-------- --------
Total current liabilities 14,534 28,100
Long-term debt, net of current portion 101,701 100,987
Deferred income taxes 6,074 4,789
-------- --------
Total liabilities 122,309 133,876
Minority interest 22,727 17,493
STOCKHOLDERS' EQUITY:
Preferred stock, $.01 par value,
1,000,000 shares authorized;
none outstanding -- --
Common stock, $.01 par value,
40,000,000 shares authorized;
19,359,267 issued in 1999 and
19,350,267 issued in 1998 194 194
Capital in excess of par value 87,440 87,380
Accumulated earnings 26,079 18,615
Treasury stock, at cost, 2,360,900 in 1999
and 1,845,200 in 1998 (20,362) (16,439)
-------- --------
Total stockholders' equity 93,351 89,750
-------- --------
$ 238,387 $ 241,119
======== ========
</TABLE>
See accompanying notes to consolidated financial statements.
-5-
<PAGE>
PRIME MEDICAL SERVICES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
($ in thousands)
<TABLE>
<S> <C> <C>
Six Months Ended
June 30,
1999 1998
-------- --------
CASH FLOWS FROM OPERATING ACTIVITIES:
Fee and other revenue collected $ 51,383 $ 45,792
Cash paid to employees, suppliers
of goods and others (28,545) (24,695)
Interest received 738 586
Interest paid (4,555) (2,409)
Income taxes paid (3,147) (6,312)
-------- --------
Net cash provided by
operating activities 15,874 12,962
-------- --------
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of equipment and
leasehold improvements (2,081) (2,068)
Distributions from investments 1,540 1,843
Purchase of investments - (107)
Other 522 540
-------- --------
Net cash provided by (used in)
investing activities (19) 208
-------- --------
CASH FLOWS FROM FINANCING ACTIVITIES:
Borrowings on notes payable 1,508 100,025
Payments on notes payable, exclusive of interest (887) (80,098)
Distributions to minority interest (18,789) (19,053)
Contributions by minority interest 2,138 -
Purchase of treasury stock (3,923) (6,126)
Exercise of stock options 53 70
-------- --------
Net cash used in financing activities (19,900) (5,182)
-------- --------
NET INCREASE (DECREASE) IN CASH AND CASH
EQUIVALENTS (4,045) 7,988
Cash and cash equivalents, beginning of period 40,146 23,770
-------- --------
Cash and cash equivalents, end of period $ 36,101 $ 31,758
======== ========
</TABLE>
See notes to consolidated financial statements
-6-
<PAGE>
PRIME MEDICAL SERVICES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
($ in thousands)
<TABLE>
<S> <C> <C>
Six Months Ended
June 30,
1999 1998
-------- --------
Reconciliation of net income to
cash provided by operating activities
Net income $ 7,464 $ 2,349
Adjustments to reconcile net income
to cash provided by
operating activities:
Minority interest in consolidated income 12,644 11,033
Depreciation and amortization 5,028 5,173
Provision for deferred income taxes 2,098 (766)
Equity in earnings of affiliates (1,113) (1,250)
Other (51) --
Changes in operating assets and
liabilities:
Accounts receivable (2,203) (1,113)
Other receivables (1,024) (426)
Other current assets (2,227) (1,296)
Accounts payable (1,737) 2,677
Accrued expenses (3,005) (3,419)
-------- --------
Total adjustments 8,410 10,613
-------- --------
Net cash provided by
operating activities $ 15,874 $ 12,962
======== ========
</TABLE>
See notes to consolidated financial statements
-7-
<PAGE>
PRIME MEDICAL SERVICES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
JUNE 30, 1999
(Unaudited)
1. General
- -- -------
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, 1998 and reflect all adjustments
which are, in the opinion of management, necessary for a fair statement of the
financial position as of June 30, 1999 and the results of operations for the
periods presented. These statements have not been audited by the Company's
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 the Company's Annual
Report on Form 10-K for the year ended December 31, 1998 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 of the
Company.
2. Earnings per share
- -- ------------------
Basic earnings per share ("EPS") is based on weighted average shares outstanding
without any dilutive effects considered. Diluted EPS reflects dilution from all
contingently issuable shares, including options. A reconciliation of such EPS
data is as follows:
<TABLE>
<S> <C> <C>
Basic Diluted
earnings earnings
Six Months Ended June 30, 1999 per share per share
--------- ---------
(in thousands, except
per share data)
Net income $ 7,464 $ 7,464
========= =========
Average number of shares outstanding 17,241 17,241
Effect of dilutive options -- 103
--------- ---------
Shares for EPS calculation 17,241 17,344
========= =========
Net income per share $ 0.43 $ 0.43
========= =========
Six Months Ended June 30, 1998
Net income $ 2,349 $ 2,349
========= =========
Average number of shares outstanding 19,200 19,200
Effect of dilutive options -- 144
--------- ---------
Shares for EPS calculation 19,200 19,344
========= =========
Net income per share $ 0.12 $ 0.12
========= =========
</TABLE>
-8-
<PAGE>
PRIME MEDICAL SERVICES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
JUNE 30, 1999
(Unaudited)
2. Earnings per share, continued
- -- -----------------------------
<TABLE>
<S> <C> <C>
Basic Diluted
earnings earnings
Three Months Ended June 30, 1999 per share per share
--------- ---------
(in thousands, except
per share data)
Net income $ 4,302 $ 4,302
========= =========
Average number of shares outstanding 17,098 17,098
Effect of dilutive options -- 98
--------- ---------
Shares for EPS calculation 17,098 17,196
========= =========
Net income per share $ 0.25 $ 0.25
========= =========
Three Months Ended June 30, 1998
Net income $ 3,517 $ 3,517
========= =========
Average number of shares outstanding 19,088 19,088
Effect of dilutive options -- 145
--------- ---------
Shares for EPS calculation 19,088 19,223
========= =========
Net income per share $ 0.18 $ 0.18
========= =========
</TABLE>
Unexercised stock options to purchase 1,616,500 and 1,229,000 shares of the
Company's common stock as of June 30, 1999 and 1998 were not included in the
computation of diluted EPS because the effect would be antidilutive.
3. Segment Reporting
- -- -----------------
The Company has two reportable segments: Medical, which includes lithotripsy,
prostatherapy and cardiac rehabilitation, and Manufacturing. Lithotripsy and
prostatherapy provide services related to the operation of the lithotripters and
prostatherapy units, including scheduling, staffing, training, quality
assurance, maintenance, regulatory compliance and contracting with payors,
hospitals and surgery centers; and cardiac rehabilitation provides non-medical
management services for several cardiac rehabilitation centers pursuant to
agreements with physicians, clinics and hospitals. The manufacturing segment
provides manufacturing services, installation, upgrade, refurbishment and repair
of major medical equipment for mobile medical service providers.
-9-
<PAGE>
PRIME MEDICAL SERVICES, INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
JUNE 30, 1999
(Unaudited)
3. Segment Reporting, continued
- -- ----------------------------
The Company measures performance based on the pretax income or loss from its
operating segments, which do not include unallocated corporate general and
administrative expenses and corporate interest revenue and expense.
<TABLE>
<S> <C> <C> <C> <C>
($ in thousands) Six Months Ended Six Months Ended Six Months Ended Six Months Ended
June 30, 1999 June 30, 1999 June 30, 1998 June 30, 1998
------------- ------------- ------------- -------------
Medical Manufacturing Medical Manufacturing
------- ------------- ------- -------------
Revenue from
external customers $46,117 $7,873 $43,663 $4,161
Intersegment
revenues - 148 - 210
Segment profit 16,870 1,443 16,721 898
</TABLE>
The following is a reconciliation of the measure of segment profit per above to
consolidated income before income taxes per the consolidated statements of
income:
<TABLE>
<S> <C> <C>
Six months ended June 30,
1999 1998
------- -------
($ in thousands)
Total segment profit $18,313 $17,619
Unallocated corporate expenses:
General and administrative expenses (2,228) (2,427)
Net interest expense (3,926) (3,635)
Financing costs - (4,982)
Nonrecurring development and other costs - (1,617)
Release of contractual obligation 1,140 -
Other, net (859) (534)
------- -------
Income before income taxes $12,440 $ 4,424
======= =======
</TABLE>
<TABLE>
<S> <C> <C> <C> <C>
($ in thousands) Three Months Ended Three Months Ended Three Months Ended Three Months Ended
June 30, 1999 June 30, 1999 June 30, 1998 June 30, 1998
------------- ------------- ------------- -------------
Medical Manufacturing Medical Manufacturing
------- ------------- ------- -------------
Revenue from
external customers $24,135 $4,473 $23,301 $1,728
Intersegment
revenues - 102 - 75
Segment profit 8,858 783 8,834 176
</TABLE>
-10-
<PAGE>
PRIME MEDICAL SERVICES, INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
JUNE 30, 1999
(Unaudited)
3. Segment Reporting, continued
- -- ----------------------------
The following is a reconciliation of the measure of segment profit per above to
consolidated income before income taxes per the consolidated statements of
income:
<TABLE>
<S> <C> <C>
Three months ended June 30,
1999 1998
------- -------
($ in thousands)
Total segment profit $ 9,641 $ 9,010
Unallocated corporate expenses:
General and administrative expenses (1,357) (1,266)
Net interest expense (1,986) (1,963)
Release of contractual obligation 1,140 -
Other, net (315) (32)
------- -------
Income before income taxes $ 7,123 $ 5,749
======= =======
</TABLE>
4. Condensed Financial Information Regarding Guarantor Subsidiaries
- -- ----------------------------------------------------------------
Condensed consolidating financial information regarding the Company, Guarantor
Subsidiaries and Non-guarantor Subsidiaries for June 30, 1999 and 1998 is
presented below for purposes of complying with the reporting requirements of the
Guarantor Subsidiaries. Separate financial statements and other disclosures
concerning each Guarantor Subsidiary have not been presented because management
has determined that such information is not material to investors. The Guarantor
Subsidiaries are wholly-owned subsidiaries of the Company who have fully and
unconditionally guaranteed the 8.75% unsecured senior subordinated Notes.
-11-
<PAGE>
PRIME MEDICAL SERVICES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
JUNE 30, 1999
(Unaudited)
4. Condensed Financial Information Regarding Guarantor Subsidiaries, continued
- -- ---------------------------------------------------------------------------
Condensed Consolidating Statement of Income
<TABLE>
<S> <C> <C> <C> <C> <C>
Six Months Ended June 30, 1999
($ in thousands)
Prime Medical Guarantor Non-Guarantor Eliminating Consolidated
Services Inc. Subsidiaries Subsidiaries Entries Total
Fee revenue:
Lithotripsy:
Fee revenues $ - $ 9,899 $ 31,174 $ - $ 41,073
Management fees - 1,725 1,037 - 2,762
Equity income 17,286 9,718 - (25,841) 1,163
---------- ---------- ---------- ---------- ----------
17,286 21,342 32,211 (25,841) 44,998
Manufacturing - - 7,873 - 7,873
Prostatherapy - - 1,003 - 1,003
Cardiac - 116 - - 116
---------- ---------- ---------- ---------- ----------
Total revenues 17,286 21,458 41,087 (25,841) 53,990
---------- ---------- ---------- ---------- ----------
Costs and expenses:
Cost of services and general and
administrative expenses:
Lithotripsy - 1,135 10,705 - 11,840
Manufacturing - - 5,796 - 5,796
Prostatherapy - - 828 - 828
Cardiac - 119 - - 119
Corporate 147 2,081 - - 2,228
---------- ---------- ---------- ---------- ----------
Total costs and expenses 147 3,335 17,329 - 20,811
Depreciation and amortization 3 2,436 2,589 - 5,028
---------- ---------- ---------- ---------- ----------
150 5,771 19,918 - 25,839
---------- ---------- ---------- ---------- ----------
Operating income 17,136 15,687 21,169 (25,841) 28,151
---------- ---------- ---------- ---------- ----------
Other income (deductions):
Interest income 352 280 106 - 738
Interest expense (4,554) - (100) - (4,654)
Release of contractual obligation - 1,140 - - 1,140
Other, net (726) 417 18 - (291)
---------- ---------- ---------- ---------- ----------
Total other income
(deductions) (4,928) 1,837 24 - (3,067)
Income before provision for income
taxes and minority interest 12,208 17,524 21,193 (25,841) 25,084
Minority interest in consolidated
income - - - 12,644 12,644
Provision for income taxes 4,744 238 (6) - 4,976
---------- ---------- ---------- ---------- ----------
Net income $ 7,464 $ 17,286 $ 21,199 $ (38,485) $ 7,464
========== ========== ========== ========== ==========
</TABLE>
-12-
<PAGE>
PRIME MEDICAL SERVICES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
JUNE 30, 1999
(Unaudited)
4. Condensed Financial Information Regarding Guarantor Subsidiaries, continued
- -- ---------------------------------------------------------------------------
Condensed Consolidating Statement of Income
<TABLE>
<S> <C> <C> <C> <C> <C>
Six Months Ended June 30, 1998
($ in thousands)
Prime Medical Guarantor Non-Guarantor Eliminating Consolidated
Services Inc. Subsidiaries Subsidiaries Entries Total
Fee revenue:
Lithotripsy:
Fee revenues $ - $ 10,602 $ 28,938 $ - $ 39,540
Management fees - 1,367 991 - 2,358
Equity income 14,062 8,972 - (21,784) 1,250
---------- ---------- ---------- ---------- ----------
14,062 20,941 29,929 (21,784) 43,148
Manufacturing - - 4,161 - 4,161
Prostatherapy - - 307 - 307
Cardiac - 208 - - 208
---------- ---------- ---------- ---------- ----------
Total revenues 14,062 21,149 34,397 (21,784) 47,824
---------- ---------- ---------- ---------- ----------
Costs and expenses:
Cost of services and general and
administrative expenses:
Lithotripsy - 1,692 9,706 - 11,398
Manufacturing - - 3,157 - 3,157
Prostatherapy - - 269 - 269
Cardiac - 148 - - 148
Corporate 75 2,352 - - 2,427
Nonrecurring development
and other costs 1,617 - - - 1,617
---------- ---------- ---------- ---------- ----------
Total costs and expenses 1,692 4,192 13,132 - 19,016
Depreciation and amortization 3 2,620 2,550 - 5,173
---------- ---------- ---------- ---------- ----------
Operating income 12,367 14,337 18,715 (21,784) 23,635
---------- ---------- ---------- ---------- ----------
Other income (deductions):
Interest income 253 125 208 - 586
Interest expense (3,992) (3) (119) - (4,114)
Financing costs (4,982) - - - (4,982)
Other, net 3 328 1 - 332
---------- ---------- ---------- ---------- ----------
Total other income
(deductions) (8,718) 450 90 - (8,178)
Income before provision for
income taxes and minority interest 3,649 14,787 18,805 (21,784) 15,457
Minority interest in consolidated
income - - - 11,033 11,033
Provision for income taxes 1,300 725 50 - 2,075
---------- ---------- ---------- ---------- ----------
Net income $ 2,349 $ 14,062 $ 18,755 $ (32,817) $ 2,349
========== ========== ========== ========== ==========
</TABLE>
-13-
<PAGE>
PRIME MEDICAL SERVICES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
JUNE 30, 1999
(Unaudited)
4. Condensed Financial Information Regarding Guarantor Subsidiaries, continued
- -- ---------------------------------------------------------------------------
Condensed Consolidating Statement of Income
<TABLE>
<S> <C> <C> <C> <C> <C>
Three Months Ended June 30, 1999
($ in thousands)
Prime Medical Guarantor Non-Guarantor Eliminating Consolidated
Services Inc. Subsidiaries Subsidiaries Entries Total
Fee revenue:
Lithotripsy:
Fee revenues $ - $ 4,890 $ 16,687 $ - $ 21,577
Management fees - 937 474 - 1,411
Equity income 9,289 5,284 - (13,972) 601
---------- ---------- ---------- ---------- ----------
9,289 11,111 17,161 (13,972) 23,589
Manufacturing - - 4,473 - 4,473
Prostatherapy - - 485 - 485
Cardiac - 61 - - 61
---------- ---------- ---------- ---------- ----------
Total revenues 9,289 11,172 22,119 (13,972) 28,608
---------- ---------- ---------- ---------- ----------
Costs and expenses:
Cost of services and general and
administrative expenses:
Lithotripsy - 590 5,208 - 5,798
Manufacturing - - 3,342 - 3,342
Prostatherapy - - 371 - 371
Cardiac - 58 - - 58
Corporate 118 1,239 - - 1,357
---------- ---------- ---------- ---------- ----------
Total costs and expenses 118 1,887 8,921 - 10,926
Depreciation and amortization 2 1,230 1,321 - 2,553
---------- ---------- ---------- ---------- ----------
120 3,117 10,242 - 13,479
---------- ---------- ---------- ---------- ----------
Operating income 9,169 8,055 11,877 (13,972) 15,129
---------- ---------- ---------- ---------- ----------
Other income (deductions):
Interest income 147 141 45 - 333
Interest expense (2,273) - (52) - (2,325)
Release of contractual obligation - 1,140 - - 1,140
Other, net (119) 152 14 - 47
---------- ---------- ---------- ---------- ----------
Total other income
(deductions) (2,245) 1,433 7 - (805)
Income before provision for income
taxes and minority interest 6,924 9,488 11,884 (13,972) 14,324
Minority interest in consolidated
income - - - 7,201 7,201
Provision for income taxes 2,622 199 - - 2,821
---------- ---------- ---------- ---------- ----------
Net income $ 4,302 $ 9,289 $ 11,884 $ (21,173) $ 4,302
========== ========== ========== ========== ==========
</TABLE>
-14-
<PAGE>
PRIME MEDICAL SERVICES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
JUNE 30, 1999
(Unaudited)
4. Condensed Financial Information Regarding Guarantor Subsidiaries, continued
- -- ---------------------------------------------------------------------------
Condensed Consolidating Statement of Income
<TABLE>
<S> <C> <C> <C> <C> <C>
Three Months Ended June 30, 1998
($ in thousands)
Prime Medical Guarantor Non-Guarantor Eliminating Consolidated
Services Inc. Subsidiaries Subsidiaries Entries Total
Fee revenue:
Lithotripsy:
Fee revenues $ - $ 5,797 $ 15,231 $ - $ 21,028
Management fees - 690 599 - 1,289
Equity income 7,406 4,664 - (11,398) 672
---------- ---------- ---------- ---------- ----------
7,406 11,151 15,830 (11,398) 22,989
Manufacturing - - 1,728 - 1,728
Prostatherapy - - 224 - 224
Cardiac - 88 - - 88
---------- ---------- ---------- ---------- ----------
Total revenues 7,406 11,239 17,782 (11,398) 25,029
---------- ---------- ---------- ---------- ----------
Costs and expenses:
Cost of services and general and
administrative expenses:
Lithotripsy - 1,220 4,769 - 5,989
Manufacturing - - 1,459 - 1,459
Prostatherapy - - 161 - 161
Cardiac - 47 - - 47
Corporate 26 1,240 - - 1,266
---------- ---------- ---------- ---------- ----------
Total costs and expenses 26 2,507 6,389 - 8,922
Depreciation and amortization 1 1,244 1,360 - 2,605
---------- ---------- ---------- ---------- ----------
27 3,751 7,749 - 11,527
---------- ---------- ---------- ---------- ----------
Operating income 7,379 7,488 10,033 (11,398) 13,502
---------- ---------- ---------- ---------- ----------
Other income (deductions):
Interest income 240 66 97 - 403
Interest expense (2,265) 12 (78) - (2,331)
Other, net 3 197 (24) - 176
---------- ---------- ---------- ---------- ----------
Total other income
(deductions) (2,022) 275 (5) - (1,752)
Income before provision for
income taxes and minority interest 5,357 7,763 10,028 (11,398) 11,750
Minority interest in consolidated
income - - - 6,001 6,001
Provision for income taxes 1,840 357 35 - 2,232
---------- ---------- ---------- ---------- ----------
Net income $ 3,517 $ 7,406 $ 9,993 $ (17,399) $ 3,517
========== ========== ========== ========== ==========
</TABLE>
-15-
<PAGE>
PRIME MEDICAL SERVICES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
JUNE 30, 1999
(Unaudited)
4. Condensed Financial Information Regarding Guarantor Subsidiaries, continued
- -- ---------------------------------------------------------------------------
Condensed Consolidating Balance Sheet
<TABLE>
<S> <C> <C> <C> <C> <C>
($ in thousands) June 30, 1999
Prime Medical Guarantor Non-Guarantor Eliminating Consolidated
Services Inc. Subsidiaries Subsidiaries Entries Total
ASSETS:
Current assets:
Cash $ 15,566 $ 14,050 $ 6,485 $ - $ 36,101
Accounts receivable, net - 4,261 20,632 - 24,893
Other receivables - 2,683 - - 2,683
Deferred income taxes 790 727 - - 1,517
Prepaid expenses and other current assets 51 300 4,650 - 5,001
---------- ---------- ---------- ---------- ----------
Total current assets 16,407 22,021 31,767 - 70,195
---------- ---------- ---------- ---------- ----------
Property and equipment:
Equipment, furniture and fixtures - 5,263 32,021 - 37,284
Building and leasehold improvements - 499 1,582 - 2,081
Less accumulated depreciation
and amortization - (4,508) (17,246) - (21,754)
---------- ---------- ---------- ---------- ----------
Property and equipment, net - 1,254 16,357 - 17,611
Investment in subsidiaries and other
investments 184,072 30,183 - (203,539) 10,716
Goodwill, at cost, net of amortization - 138,829 - - 138,829
Other noncurrent assets 197 640 199 - 1,036
---------- ---------- ---------- ---------- ----------
Total assets $ 200,676 $ 192,927 $ 48,323 $ (203,539) $ 238,387
========== ========== ========== ========== ==========
LIABILITIES:
Current liabilities
Current portion of long-term debt $ - $ - $ 797 $ - $ 797
Accounts payable 540 2,225 1,793 - 4,558
Accrued distributions to minority interests - - 55 - 55
Accrued expenses 4,196 3,151 1,777 - 9,124
---------- ---------- ---------- ---------- ----------
Total current liabilities 4,736 5,376 4,422 - 14,534
Long-term debt, net of current portion 100,000 162 1,539 - 101,701
Deferred income taxes 2,589 3,485 - - 6,074
---------- ---------- ---------- ---------- ----------
Total liabilities 107,325 9,023 5,961 - 122,309
Minority interest - - - 22,727 22,727
STOCKHOLDERS' EQUITY:
Common stock 194 - - - 194
Capital in excess of par value 87,440 - - - 87,440
Accumulated earnings 26,079 - - - 26,079
Treasury stock (20,362) - - - (20,362)
Subsidiary net equity - 183,904 42,362 (226,266) -
---------- ---------- ---------- ---------- ----------
Total stockholders' equity 93,351 183,904 42,362 (226,266) 93,351
---------- ---------- ---------- ---------- ----------
Total liabilities and
stockholders' equity $ 200,676 $ 192,927 $ 48,323 $ (203,539) $ 238,387
========== ========== ========== ========== ==========
</TABLE>
-16-
<PAGE>
PRIME MEDICAL SERVICES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
JUNE 30, 1999
(Unaudited)
4. Condensed Financial Information Regarding Guarantor Subsidiaries, continued
- -- ---------------------------------------------------------------------------
Condensed Consolidating Statement of Cash Flows
<TABLE>
<S> <C> <C> <C> <C> <C>
Six Months Ended June 30, 1999
($ in thousands)
Prime Medical Guarantor Non-Guarantor Eliminating Consolidated
Services Inc. Subsidiaries Subsidiaries Entries Total
Net cash (used) provided by
operating activities $ (8,221) $ 5,335 $ 18,760 $ - $ 15,874
---------- ---------- ---------- ---------- ----------
Cash flows from investing activities:
Purchases of equipment and leasehold
improvements - (141) (1,940) - (2,081)
Distributions from subsidiaries 11,859 11,440 - (23,299) -
Distributions from investments - 1,540 - - 1,540
Other - 150 372 - 522
---------- ---------- ---------- ---------- ----------
Net cash provided (used) by
investing activities 11,859 12,989 (1,568) (23,299) (19)
---------- ---------- ---------- ---------- ----------
Cash flows from financing activities:
Borrowings on notes payable - - 1,508 - 1,508
Payments on notes payable,
exclusive of interest - - (887) - (887)
Distribution to minority interest - - - (18,789) (18,789)
Contributions by minority interest - - 2,138 - 2,138
Purchase of treasury stock (3,923) - - - (3,923)
Other 53 - - - 53
Distributions to equity owners - (11,859) (30,229) 42,088 -
---------- ---------- ---------- ---------- ----------
Net cash provided (used) by
financing activities (3,870) (11,859) (27,470) 23,299 (19,900)
---------- ---------- ---------- ---------- ----------
Net increase (decrease) in cash and
cash equivalents (232) 6,465 (10,278) - (4,045)
Cash and cash equivalents at beginning
of period 15,798 7,585 16,763 - 40,146
---------- ---------- ---------- ---------- ----------
Cash and cash equivalents at end of
period $ 15,566 $ 14,050 $ 6,485 $ - $ 36,101
========== ========== ========== ========== ==========
</TABLE>
-17-
<PAGE>
PRIME MEDICAL SERVICES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
JUNE 30, 1999
(Unaudited)
4. Condensed Financial Information Regarding Guarantor Subsidiaries, continued
- -- ---------------------------------------------------------------------------
Condensed Consolidating Statement of Cash Flows
<TABLE>
<S> <C> <C> <C> <C> <C>
Six Months Ended June 30, 1998
($ in thousands)
Prime Medical Guarantor Non-Guarantor Eliminating Consolidated
Services Inc. Subsidiaries Subsidiaries Entries Total
Net cash (used) provided by
operating activities $ (11,580) $ 2,891 $ 21,651 $ - $ 12,962
---------- ---------- ---------- ---------- ----------
Cash flows from investing activities:
Purchases of equipment and leasehold
improvements - (606) (1,462) - (2,068)
Distributions from subsidiaries 16,277 11,149 - (27,426) -
Investments (107) 1,843 - - 1,736
Other 136 254 150 - 540
---------- ---------- ---------- ---------- ----------
Net cash provided (used) by
investing activities 16,306 12,640 (1,312) (27,426) 208
---------- ---------- ---------- ---------- ----------
Cash flows from financing activities:
Payments on notes payable,
exclusive of interest (79,000) (5) (1,093) - (80,098)
Borrowings on notes payable 100,000 - 25 - 100,025
Distribution to minority interest - - - (19,053) (19,053)
Purchase of treasury stock (6,126) - - - (6,126)
Other 70 - - - 70
Distributions to equity owners - (16,277) (30,202) 46,479 -
---------- ---------- ---------- ---------- ----------
Net cash provided (used) by
financing activities 14,944 (16,282) (31,270) 27,426 (5,182)
---------- ---------- ---------- ---------- ----------
Net increase (decrease) in cash and
cash equivalents 19,670 (751) (10,931) - 7,988
Cash and cash equivalents at beginning
of period 18 6,260 17,492 - 23,770
---------- ---------- ---------- ---------- ----------
Cash and cash equivalents at end of
period $ 19,688 $ 5,509 $ 6,561 $ - $ 31,758
========== ========== ========== ========== ==========
</TABLE>
-18-
<PAGE>
Management's Discussion and Analysis
of Financial Condition and
Results of Operations
Results of Operations
Revenues
- --------
For the six months ended June 30, 1999, total revenues increased $6,166,000
(13%) as compared to the same period in 1998. Revenues from manufacturing
increased $3,712,000 (89%). During 1998 the manufacturing facility became
certified by GE to provide trailers for GE MRI equipment which has resulted in
increased sales. Revenues from lithotripsy operations increased by $1,850,000
(4%) due to an increase in procedures performed and a slight increase in the
average reimbursement per procedure. The increase in the procedures performed is
the result of both the formation of several new partnerships during late 1998
and early 1999, and increased performance at existing partnerships. Revenues
from prostatherapy operations increased $696,000 (227%) because the California
unit did not become operational until June 1998. Revenues from cardiac centers
decreased $92,000 primarily due to two discontinued cardiac centers.
Total revenues for the three months ended June 30, 1999 increased $3,579,000
(14%) as compared to the same period in 1998. Revenues from manufacturing
increased $2,745,000 (159%) and revenues from lithotripter operations increased
by $600,000 (3%). Revenues from prostatherapy operations increased $261,000
(117%) because the California unit did not become operational until June 1998,
offset by a decline in the procedures performed by the North Carolina unit.
Revenues from cardiac centers decreased $27,000 (31%).
Expenses
- --------
For the six months ended June 30, 1999, costs and expenses (excluding
depreciation and amortization) decreased from 40% to 39% of revenues and
increased by $1,795,000 (9%) in absolute terms, primarily due to increased
activity in 1999 in prostatherapy operations and the manufacturing segment
partially offset by certain nonrecurring development and other costs incurred in
1998 of $1,617,000. Cost of services and general and administrative expenses
associated with manufacturing increased $2,639,000 due to the increase in sales.
Cost of services associated with lithotripter operations increased $442,000 (4%)
in absolute terms as a result of increased lithotripsy operations. These
expenses remained constant at 26% of lithotripter revenues. Cost of services
associated with cardiac centers decreased $29,000 (20%). Corporate expenses
decreased 199,000 (8%) and from 5% to 4% of revenues as the Company continues to
successfully grow without proportionately adding overhead.
Costs and expenses(excluding depreciation and amortization) for the three months
ended June 30, 1999 increased from 36% to 38% of revenues and increased
$2,004,000 (22%) in absolute terms, compared to the same period in 1998. This
increase is primarily attributed to the growth in manufacturing sales which has
lower margins as compared to lithotripsy operations. Cost of services and
general and administrative expenses associated with manufacturing increased
$1,883,000 (129%) due to the increase in sales of MRI trailers. Costs of
services associated with lithotripter operations decreased $191,000 (3%) in
absolute terms and decreased from 26% to 25% of lithotripter revenues. Cost of
services associated with prostatherapy operations increased $210,000 (130%) due
to the California unit discussed above. Cost of services associated with cardiac
centers increased $11,000 (23%). Corporate expenses remained constant at 5% of
revenues, while increasing $91,000 (7%) in absolute terms, as the Company
continues to successfully grow without proportionately adding overhead.
-19-
<PAGE>
Other Income (Deductions)
- -------------------------
For the six months ended June 30, 1999, other deductions decreased $5,111,000
compared to the same period in 1998. This decrease is the result of financing
costs recognized in 1998 of $4,982,000 associated with the $100 million debt
offering and the $50 million increase in the senior revolving credit facility,
as well as income recognition in 1999 of $1,140,000 due to the release of a
contractual obligation related to a management incentive compensation program
accrued at December 31, 1998. Interest expense increased $540,000 (13%) due to
the higher principal balances in 1999 related to the $100 million debt offering,
which closed in March 1998. Interest income increased by $152,000 (26%)
resulting from higher cash balances. Other expenses increased $623,000 primarily
due to a write- off of costs related to a proposed acquisition that was not
consummated.
Other deductions for the three months ended June 30, 1999 decreased $947,000
compared to the same period in 1998, primarily due to income recognition in 1999
of $1,140,000 due to the release of a contractual obligation related to a
management incentive compensation program accrued at December 31, 1998.
Minority Interest In Consolidated Income
- ----------------------------------------
Minority interest in consolidated income for the six months ended June 30, 1999
increased $1,611,000 compared to the same period in 1998, primarily due to an
increase in operating income of applicable entities. Earnings before interest,
taxes, depreciation and amortization (EBITDA) attributable to minority interests
was $15,057,660 for the six months ended June 30, 1999 compared to $12,546,000
for the same period in 1998. EBITDA is not intended to represent net income or
cash flows from operating activities in accordance with generally accepted
accounting principles and should not be considered a measure of the Company's
profitability or liquidity.
Minority interest in consolidated income for the three months ended June 30,
1999 increased $1,200,000 compared to the same period in 1998. Earnings before
interest, taxes, depreciation and amortization (EBITDA) attributable to minority
interests was $8,454,000 for the three months ended June 30, 1999 compared to
$6,440,000 for the same period in 1998. EBITDA is not intended to represent net
income or cash flows from operating activities in accordance with generally
accepted accounting principles and should not be considered a measure of the
Company's profitability or liquidity.
Provision for income taxes
- --------------------------
Income tax expense for the six months ended June 30, 1999 increased $2,901,000
compared to the same period in 1998 and increased $589,000 for the three months
ended June 30, 1999 due primarily to the increase in pretax earnings in 1999.
Liquidity and Capital Resources
- -------------------------------
Cash was $36,101,000 and $40,146,000 at June 30, 1999 and December 31, 1998,
respectively. Cash provided by operations for the six months ended June 30, 1999
was $15,874,000 compared to cash provided by operations for the six months ended
June 30, 1998 of $12,962,000. The increase in cash from operation results from
increased fee revenue collections attributed to higher fee revenues during 1999
and lower income tax payments in 1999, offset by higher interest expense
payments due to $100 million in debt incurred in March 1998.
Cash used in investing activities for the six months ended June 30, 1999 was
$19,000 compared to cash provided by investing activities for the six months
ended June 30, 1998 of $208,000. The change was primarily attributed to a
decrease in distributions from equity investments from 1998 to 1999 and a
purchase of investments in 1998 of $107,000. Cash used in financing activities
for the six months ended June 30, 1999 was $19,900,000 which included
distributions to minority interest totaling $18,789,000, purchase of treasury
stock of $3,923,000 and payments on notes payable of $887,000, which was
partially offset by borrowings on notes payable of $1,508,000 and contributions
by minority interest of $2,138,000. Cash used in financing activities for the
six months ended June 30, 1998 was $5,182,000, primarily due to distributions to
minority interests of $19,053,000 and purchase of treasury stock of $6,126,000
offset by new borrowings of $100,025,000 less payments on notes payable of
$80,098,000.
-20-
<PAGE>
The Company's existing senior credit facility is comprised of a revolving line
of credit. The revolving line of credit has a borrowing limit of $100 million,
none of which was drawn at June 30 and July 31, 1999.
On March 27, 1998, the Company completed an offering of $100 million of senior
subordinated notes due 2008 (the "Notes") to qualified institutional buyers. The
net proceeds from the offering of approximately $96 million were used to repay
all outstanding indebtedness under the Company's bank facility, with the
remainder to be used for general corporate purposes, including acquisitions. In
connection therewith, the Company recorded a charge to earnings of approximately
$4.4 million for debt issuance costs associated with the Notes. The Notes bear
interest at 8.75% and interest is payable semi-annually on April 1st and October
1st. Principal is due April 2008.
The Company intends to increase the number of its lithotripsy operations
primarily through acquisitions. The Company believes that the fragmented nature
of the lithotripsy industry, combined with operational challenges created by
increasing regulatory and business complexities, including Stark II, the Illegal
Remuneration Statute and similar state laws, will provide significant
lithotripsy acquisition opportunities. Where appropriate, the Company will seek
to increase its ownership interest in current lithotripsy operations by
purchasing interests of urologists and other investors who desire to divest due
to concerns over regulatory issues, to realize a return on their investment or
to retire. The Company intends to fund the purchase price for future
acquisitions using borrowings under its senior credit facility, remaining
proceeds from the offering of the Notes and cash flow from operations. In
addition, the Company may use shares of its common stock in such acquisitions
where appropriate.
During 1998, the Company announced a stock repurchase program of up to $25.0
million of common stock. From time to time, the Company may purchase additional
shares of its common stock where, in the judgment of management, market
valuations of its stock do not accurately reflect the Company's past and
projected results of operations. The Company intends to fund any such purchases
using available cash, cash flow from operations and borrowings under its senior
credit facility. The Company has purchased 2,511,800 shares of stock for a total
of $21,530,000 as of July 31, 1999.
The Company's ability to make scheduled payments of principal of, or to pay the
interest on, or to refinance, its indebtedness, or to fund planned capital
expenditures will depend on its future performance, which, to a certain extent,
is subject to general economic, financial, competitive, legislative, regulatory
and other factors that are beyond its control. Based upon the current level of
operations and anticipated cost savings and revenue growth, management believes
that cash flow from operations and available cash, together with available
borrowings under its senior credit facility, will be adequate to meet the
Company's future liquidity needs for at least the next several years. However,
there can be no assurance that the Company's business will generate sufficient
cash flow from operations, that anticipated revenue growth and operating
improvements will be realized or that future borrowings will be available under
the senior credit facility in an amount sufficient to enable the Company to
service its indebtedness or to fund its other liquidity needs.
Impact of Inflation
- -------------------
The assets of the Company are not significantly affected by inflation because
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.
Year 2000 Compliance
- --------------------
The "Year 2000 " issue refers to the phenomenon whereby computer programs,
having been written using two digits rather than four to define the applicable
year, may erroneously recognize a date using "00" as the year 1900 rather than
the year 2000. This error could potentially result in a system failure or
miscalculations causing disruptions of operations, including, among other
things, a temporary inability to process transactions or engage in similar
normal business activities.
-21-
<PAGE>
The Company formed a Year 2000 Committee in mid 1998. The Committee was charged
with examining (1) internal hardware and software systems; (2) medical
equipment; (3) physical facilities; and (4) outside suppliers, as these items
relate to potential problems that could be caused by the inability to process
dates beyond December 31, 1999.
The Committee divided its task into four parts - assessment, remediation
planning, implementation and testing and contingency planning. Assessment and
remediation planning have been substantially completed for all four phases of
the project. Implementation and testing and contingency planning are discussed
below.
Internal hardware and software systems: The Company has completed substantially
all of the needed upgrades to its hardware and software systems. The remaining
hardware and software upgrades/replacements are expected to be complete by
September 30, 1999.
Medical equipment: A review of the Company's lithotripters has determined that
their operation is not affected directly by the Year 2000 issue. The Company is
currently reviewing the miscellaneous ancillary medical equipment to determine
compliance and expects to be completed by September 30, 1999.
Physical facilities: The Committee has evaluated its non-computer equipment and
has determined that, except for its telephone system, there are no devices whose
failure would materially affect the ability to carry out the business of the
Company. A compliant telephone system is expected to be installed by September
30, 1999. The outside managers of the Company's office buildings have reported
that all aspects of the physical facilities - elevators, fire and security
systems, etc. are compliant. Their further inquiry of those supplying public
utilities have produced assurances of best efforts but no guarantee of
performance.
Outside suppliers: The Company is currently inquiring about the state of Year
2000 readiness of those outside suppliers who were determined to be critical to
the Company's ability to carry out its business. This survey is expected to be
complete by September 30, 1999.
Contingency planning: The Company cannot be certain that it has identified and
will be successful in bringing into compliance all Year 2000 issues within its
control. It can be even less certain of critical services being supplied by
third parties beyond its control. Upon completion of the implementation and
testing phases of the plan, the Company will formalize plans for carrying on its
business in the event of unanticipated Year 2000-related failures. Presently,
the Company believes that the most reasonably likely worst case scenario would
be a failure of relatively short duration of basic third party services such as
the power grid. With such a failure the Company's planning will be directed
toward a temporary suspension of operations followed by plans for resumption and
catch up operations. Due to the magnitude of the uncertainties related to Year
2000 issues, the Company is unable to fully assess the consequences of Year 2000
failures and, consequently, there could be a material adverse effect on the
Company's results of operations, financial position and cash flows.
To date, the Company has not experienced significant costs associated with the
Year 2000 issue and does not expect significant costs to be incurred in order to
correct the Year 2000 issue.
Forward-Looking Statements
- --------------------------
The statements contained in this Report on Form 10-Q that are not purely
historical are forward-looking statements within the meaning of Section 27A of
the Securities Act of 1933 and Section 21E of the Securities Exchange Act of
1934, including statements regarding the Company's expectation, hopes,
intentions or strategies regarding the future. Readers should not place undue
reliance on forward-looking statements. All forward-looking statements included
in this document are based on information available to the Company on the date
hereof, and the Company assumes no obligation to update any such forward-looking
statements. It is important to note that the Company's actual results could
differ materially from those in such forward-looking statements. In addition to
any risks and uncertainties specifically identified in the text surrounding such
forward-looking statements, the reader should consult the Company's reports on
Form 10-K and other filings under the Securities Act of 1933 and the Securities
Exchange Act of 1934, for factors that could cause actual results to differ
materially from those presented.
-22-
<PAGE>
The forward-looking statements included herein are necessarily based on various
assumptions and estimates and are inherently subject to various risks and
uncertainties, including risks and uncertainties relating to the possible
invalidity of the underlying assumptions and estimates and possible changes or
developments in social, economic, business, industry, market, legal and
regulatory circumstances and conditions and actions taken or omitted to be taken
by third parties, including customers, suppliers, business partners and
competitors and legislative, judicial and other governmental authorities and
officials. Assumptions related to the foregoing involve judgements with respect
to, among other things, future economic, competitive and market conditions and
future business decisions, all of which are difficult or impossible to predict
accurately and many of which are beyond the control of the Company. Any of such
assumptions could be inaccurate and therefore, there can be no assurance that
the forward-looking statements included in this Report on Form 10-Q will prove
to be accurate.
-23-
<PAGE>
PART II
OTHER INFORMATION
-24-
<PAGE>
Item 4. Submission of Matters to a Vote of Security Holders.
- ------- ----------------------------------------------------
On June 9, 1999 an annual meeting of the shareholders of the Company was held
to consider and vote on the two proposals described below. Proxies for this
meeting were solicited pursuant to Regulation 14 under the Act.
1) Election of six directors to the board of directors;
The nominees for director were:
William E. Foree,M.D., Joseph Jenkins,M.D.,J.D., J.A. McEntire IV, William
A. Searles, Kenneth S. Shifrin, and Michael J. Spalding, M.D.
All nominees were elected. The voting was as follows:
Nominee Votes For Votes Against Votes Withheld
------- --------- ------------- --------------
William E. Foree, M.D. 17,605,051 -- 1,072,275
Joseph Jenkins, M.D., J.D. 17,605,051 -- 1,072,275
J.A. McEntire IV 17,605,051 -- 1,072,275
William A. Searles 17,605,051 -- 1,072,275
Kenneth S. Shifrin 17,605,051 -- 1,072,275
Michael J. Spalding, M.D. 17,605,051 -- 1,072,275
2) Amendment to the Company's 1993 Stock Option Plan increasing the
aggregate number of shares that may to be issued thereunder by 400,000.
There were 15,960,621 affirmative votes, 2,110,317 negative votes and
606,388 abstentions with respect to this proposal.
Item 6. Exhibits and Reports on Form 8-K
- ------- --------------------------------
(a) Exhibits
12. Computation of ratio of earnings to fixed charges
27. Financial Data Schedule
(b) Current Reports on Form 8-K
NONE
-25-
<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 thereunto duly authorized.
PRIME MEDICAL SERVICES, INC.
Date: August 13, 1999
By: /s/ Cheryl Williams
---------------------------
Cheryl Williams
Chief Financial Officer
-26-
PRIME MEDICAL SERVICES, INC. AND SUBSIDIARIES
COMPUTATION OF RATIO OF EARNINGS TO FIXED CHARGES
FOR THE SIX MONTHS ENDED JUNE 30, 1999 AND 1998
(Unaudited)
EXHIBIT 12
<TABLE>
<S> <C> <C>
($ in thousands) Six Months Ended June 30,
1999 1998
------- -------
Income before income taxes and
after minority interest $ 12,440 $ 4,424
Undistributed equity income (4) (14)
Minority interest income of subsidiaries
with fixed charges 1,278 1,789
------- -------
Adjusted earnings 13,714 6,199
------- -------
Interest on debt 4,654 4,114
Debt issuance costs -- 4,982
------- -------
Total fixed charges 4,654 9,096
------- -------
Total available earnings before fixed charges 18,368 15,295
======= =======
Ratio 3.9 1.7
======= =======
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted
from the June 30, 1999 Form 10-Q and is qualified in its
entirety by reference to such financial statements.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C> <C>
<PERIOD-TYPE> 3-MOS 6-MOS
<FISCAL-YEAR-END> DEC-31-1999 DEC-31-1999
<PERIOD-START> APR-01-1999 JAN-01-1999
<PERIOD-END> JUN-30-1999 JUN-30-1999
<CASH> 36,101 36,101
<SECURITIES> 0 0
<RECEIVABLES> 24,893 24,893
<ALLOWANCES> 968 968
<INVENTORY> 0 0
<CURRENT-ASSETS> 70,195 70,195
<PP&E> 39,365 39,365
<DEPRECIATION> 21,754 21,754
<TOTAL-ASSETS> 238,387 238,387
<CURRENT-LIABILITIES> 14,534 14,534
<BONDS> 0 0
0 0
0 0
<COMMON> 194 194
<OTHER-SE> 93,157 93,157
<TOTAL-LIABILITY-AND-EQUITY> 238,387 238,387
<SALES> 0 0
<TOTAL-REVENUES> 28,608 53,990
<CGS> 0 0
<TOTAL-COSTS> 10,926 20,811
<OTHER-EXPENSES> 2,553 5,028
<LOSS-PROVISION> 0 0
<INTEREST-EXPENSE> 2,325 4,654
<INCOME-PRETAX> 7,123 12,440
<INCOME-TAX> 2,821 4,976
<INCOME-CONTINUING> 4,302 7,464
<DISCONTINUED> 0 0
<EXTRAORDINARY> 0 0
<CHANGES> 0 0
<NET-INCOME> 4,302 7,464
<EPS-BASIC> 0.25 0.43
<EPS-DILUTED> 0.25 0.43
</TABLE>
