-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, UPVl5Ew8Hc0UFcNHKbkYMTTdXYCozb5uibZTieUb+FfC/e0NZ+D/RjbFEAgoZyQq FpkVh1f563LT6IRv6bX+jA== 0000950149-97-001023.txt : 19970515 0000950149-97-001023.hdr.sgml : 19970515 ACCESSION NUMBER: 0000950149-97-001023 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19970331 FILED AS OF DATE: 19970514 SROS: AMEX SROS: PSE FILER: COMPANY DATA: COMPANY CONFORMED NAME: AMERICAN SHARED HOSPITAL SERVICES CENTRAL INDEX KEY: 0000744825 STANDARD INDUSTRIAL CLASSIFICATION: SERVICES-MEDICAL LABORATORIES [8071] IRS NUMBER: 942918118 STATE OF INCORPORATION: CA FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 001-08789 FILM NUMBER: 97604036 BUSINESS ADDRESS: STREET 1: 4 EMARCADERO CENTER STE 3620 CITY: SAN FRANCISCO STATE: CA ZIP: 94111 BUSINESS PHONE: 4157885300 MAIL ADDRESS: STREET 1: 4 EMBARCADERO CENTER CITY: SAN FRANCISCO STATE: CA ZIP: 94111 10-Q 1 QUARTERLY REPORT 1 SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-Q (MARK ONE) [X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE QUARTERLY PERIOD ENDED MARCH 31, 1997 OR [ ] 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 0-12849 AMERICAN SHARED HOSPITAL SERVICES ----------------------------------------------------------------------- (EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER) CALIFORNIA 94-2918118 - -------------------------------- ----------------------------------- (STATE OR OTHER JURISDICTION OF (I.R.S. EMPLOYER IDENTIFICATION NO.) INCORPORATION OR ORGANIZATION) FOUR EMBARCADERO CENTER, SUITE 3620, SAN FRANCISCO, CALIFORNIA 94111 - -------------------------------------------------------------- ---------- (ADDRESS OF PRINCIPAL EXECUTIVE OFFICES) (ZIP CODE) REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE: (415) 788-5300 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 --- --- AS OF MAY 9, 1997: THERE ARE OUTSTANDING 4,769,384 SHARES OF THE REGISTRANT'S COMMON STOCK. -1- 2 AMERICAN SHARED HOSPITAL SERVICES PART I - FINANCIAL INFORMATION CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED)
(unaudited) (audited) ASSETS March 31, 1997 Dec. 31, 1996 ------ -------------- ------------- Current assets: Cash and cash equivalents $ 192,000 $ 368,000 Restricted cash 546,000 218,000 Receivables, less allowance for uncollectible accounts of $1,271,000 ($1,240,000 in 1996): Trade accounts receivable 6,499,000 6,341,000 Other receivables 112,000 207,000 ------------ ------------ 6,611,000 6,548,000 Prepaid expenses, inventories and other current assets 688,000 698,000 ------------ ------------ TOTAL CURRENT ASSETS 8,037,000 7,832,000 Property and equipment: Land, buildings and improvements 1,226,000 1,226,000 Medical, transportation & office equipment 9,960,000 9,880,000 Capitalized lease equipment 29,160,000 29,318,000 Deposits and construction in progress 1,571,000 1,530,000 ------------ ------------ 41,917,000 41,954,000 Accumulated depreciation & amortization (19,923,000) (18,523,000) ------------ ------------ Net property and equipment 21,994,000 23,431,000 Intangible assets, less accumulated amortization 1,196,000 1,238,000 Other assets 424,000 468,000 ------------ ------------ TOTAL ASSETS $ 31,651,000 $ 32,969,000 ============ ============ LIABILITIES AND STOCKHOLDERS' EQUITY (unaudited) (audited) (NET CAPITAL DEFICIENCY) March 31, 1997 Dec. 31,1996 - ------------------------ -------------- ------------ Current liabilities: Accounts payable $ 4,191,000 $ 3,705,000 Accrued interest 117,000 50,000 Employee compensation 1,030,000 944,000 Other accrued liabilities 691,000 839,000 Current portion of long-term debt 7,138,000 6,816,000 Current portion of obligations under capital leases 6,275,000 6,366,000 ------------ ------------ TOTAL CURRENT LIABILITIES 19,442,000 18,720,000 Long-term debt, less current portion 6,984,000 7,690,000 Obligations under capital leases, less current portion 14,889,000 16,245,000 Deferred income taxes 164,000 164,000 Minority interest 608,000 625,000 Stockholders' equity (net capital deficiency:) Common stock, without par value: authorized shares - 10,000,000; issued & outstanding shares, 4,769,000 in 1997 & 4,769,000 in 1996 11,089,000 11,089,000 Common stock options issued to officer 2,414,000 2,414,000 Additional paid-in capital 930,000 930,000 Accumulated deficit (24,869,000) (24,908,000) ------------ ------------ Total stockholders' equity (net capital deficiency) (10,436,000) (10,475,000) ------------ ------------ TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY (NET CAPITAL DEFICIENCY) $ 31,651,000 $ 32,969,000 ============ ============
See Accompanying Notes 2 3 AMERICAN SHARED HOSPITAL SERVICES CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited)
Three months ended March 31, ----------------------------- 1997 1996 ------------ ----------- REVENUES: Medical services $ 9,096,000 $ 8,939,000 COSTS AND EXPENSES: Costs of operations: Medical services payroll 1,921,000 1,768,000 Maintenance and supplies 1,467,000 1,785,000 Depreciation and amortization 1,650,000 1,661,000 Equipment rental 678,000 1,034,000 Other 1,073,000 941,000 ----------- ----------- 6,789,000 7,189,000 Selling and administrative 1,430,000 1,223,000 Interest 1,006,000 1,076,000 ----------- ----------- Total costs and expenses 9,225,000 9,488,000 ----------- ----------- Gain on sale of assets and early termination of capital leases 139,000 11,000 Interest and other income 29,000 52,000 ----------- ----------- Income (loss) before income taxes 39,000 (486,000) Income tax expense (benefit) 0 (6,000) ----------- ----------- Net income (loss) $ 39,000 ($ 480,000) =========== =========== Net income (loss) per share $ 0.01 ($ 0.11) =========== =========== Common shares and equivalents used in computing per share amounts 6,490,000 4,282,000 =========== ===========
See Accompanying Notes 3 4 AMERICAN SHARED HOSPITAL SERVICES Condensed Consolidated Statement of Cash Flows (Unaudited)
Three Months Ended March 31, ----------------------------- 1997 1996 ----------- ----------- OPERATING ACTIVITIES: Net income (loss) $ 39,000 ($ 480,000) Adjustment to reconcile net income (loss) to net cash provided by (used in) operating activities: Loss (gain) on sale of property and equipment 2,000 (11,000) Gain on early termination of capital leases (141,000) 0 Depreciation and amortization 1,730,000 1,762,000 Changes in operating assets and liabilities: (Increase) in restricted cash (328,000) (306,000) (Increase) decrease in accounts receivable (63,000) 143,000 Decrease in prepaid expenses, inventories and other assets 10,000 641,000 Increase in accounts payable and accrued liabilities 491,000 883,000 ----------- ----------- Net cash provided by operating activities 1,740,000 2,632,000 INVESTING ACTIVITIES: Purchase of property and equipment (net of financing) (160,000) (31,000) Proceeds from sale of property and equipment 24,000 25,000 (Decrease) increase in minority interest (17,000) 453,000 Other 23,000 (2,000) ----------- ----------- Net cash (used in) provided by investing activities (130,000) 445,000 FINANCING ACTIVITIES: Payment for exercise of warrants 0 1,000 Net proceeds (payment) under revolving line of credit 455,000 (907,000) Principal payments on long-term debt (2,241,000) (2,113,000) ----------- ----------- Net cash (used in) financing activities (1,786,000) (3,019,000) ----------- ----------- Net (decrease) increase in cash and cash equivalents (176,000) 58,000 Cash and cash equivalents at beginning of period 368,000 452,000 ----------- ----------- Cash and cash equivalents at end of period $ 192,000 $ 510,000 =========== =========== SUPPLEMENTAL CASH FLOW DISCLOSURE: Cash paid during the period for Interest $ 939,000 $ 1,165,000 =========== =========== Income taxes $ 23,000 $ 19,000 =========== ===========
See Accompanying Notes 4 5 AMERICAN SHARED HOSPITAL SERVICES NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) Note 1. Basis of Presentation In the opinion of management, the accompanying unaudited condensed consolidated financial statements contain all adjustments (consisting of only normal recurring accruals) necessary to present fairly American Shared Hospital Services' (the "Company") consolidated financial position as of March 31, 1997 and the results of its operations for the three months ended March 31, 1997 and 1996, which results are not necessarily indicative of results on an annual basis. Consolidated balance sheet amounts as of December 31, 1996 have been derived from audited financial statements. These financial statements include the accounts of the Company and its wholly owned subsidiaries, CuraCare, Inc., MMRI, Inc., European Shared Medical Services Limited, American Shared Radiosurgery Services, African American Church Health and Economic Services, Inc., ACHES Insurance Services, Inc. and the Company's majority-owned subsidiary, GK Financing, LLC. All significant intercompany accounts and transactions have been eliminated. At March 31, 1997, the Company had a working capital deficiency of $11,405,000 and a net capital deficiency of $10,436,000. These conditions raise substantial doubt about the Company's ability to continue as a going concern. These financial statements do not include any adjustments to reflect the possible future effects on the recoverability and classification of assets or the amounts and classification of liabilities that may result from the possible inability of the Company to continue as a going concern. Note 2. Per Share Amounts Per share information has been computed based on the weighted average number of common shares and dilutive common share equivalents outstanding. In February 1997, the Financial Accounting Standards Board issued Statement No. 128, Earnings per Share, which is required to be adopted on December 31, 1997. At that time, the Company will be required to change the method currently used to compute earnings per share and to restate all prior periods. Under the new requirements for calculating primary earnings per share, the dilutive effect of stock options and warrants will be excluded. The impact is not expected to result in an increase in primary earnings (loss) per share for the first quarter ended March 31, 1997 and March 31, 1996. Statement 128 is not expected to have an impact on the calculation of fully diluted earnings per share for these quarters. 5 6 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations Medical Services revenues increased $157,000 to $9,096,000 for the three months ended March 31, 1997 compared to $8,939,000 for the three months ended March 31, 1996. Revenues from Magnetic Resonance Imaging (MRI) service decreased $211,000 or 3% compared to the same period in the prior year due primarily to the utilization of five (5) fewer MRI units during 1997. Utilization per MRI unit increased compared to the same period in the prior year. The Company had a net increase of approximately 3 new MRI customer contracts as of March 31, 1997 compared to March 31, 1996. Computed Tomography (CT) revenues decreased $52,000 compared to the same period in the prior year due to fewer interim rentals in 1997. Nuclear Medicine and Ultrasound revenues increased $28,000 compared to the same period in the prior year. In March 1997 the company terminated an in-house nuclear medicine contract and sold the equipment to the hospital. Contract Services revenues increased $246,000 during the first quarter of 1997 compared to the same period in the prior year primarily due to revenues from a cardiac catheterization laboratory contract which commenced May, 1996. Gamma Knife revenues increased $146,000 during the first quarter of 1997 compared to the same period in the prior year due to a full quarter of operation from the Company's second Gamma Knife and increased utilization from the second Gamma Knife. Total cost of operations decreased $400,000 from $7,189,000 for the three months ended March 31, 1996 to $6,789,000 for the three months ended March 31, 1997. This decrease resulted primarily from decreases in maintenance and supplies, depreciation and equipment rental which have been partially offset by an increase in medical services payroll and other costs of operation. Medical services payroll costs increased $153,000 from $1,768,000 in 1996 compared to $1,921,000 in 1997. The increase is primarily attributable to increased utilization of staffed mobile MRI units and increased travel time to service customers. Maintenance and supplies decreased $318,000 from $1,785,000 in 1996 compared to $1,467,000 in 1997 due to a reduction in MRI maintenance costs. Equipment rental decreased $356,000 from $1,034,000 in 1996 to $678,000 in 1997 primarily due to the return of five MRI rental units. Other operating costs increased $132,000 from $941,000 in 1996 to $1,073,000 in 1997 primarily due to an increase in fuel costs. Selling and Administrative costs increased $207,000 from $1,223,000 in 1996 to $1,430,000 in 1997 due primarily to increased sales costs and legal fees. Interest expense decreased $70,000 from $1,076,000 in 1996 to $1,006,000 in 1997 primarily due to the Company's exchange for common shares ($413,000 aggregate principal amount) and payment at termination ($360,000 aggregate principal amount) of its Senior Subordinated Notes in the third and fourth quarters of 1996, respectively. 6 7 Gain on sale of assets and early termination of capital leases increased $128,000 primarily due to the gain on the early termination of a capital lease to a customer whose in-house nuclear medicine contract was terminated during March of 1997. Gain on sale of assets and early termination of capital leases fluctuate depending on the timing of asset dispositions. The Company had a net profit of $39,000 for the three month period ended March 31, 1997 compared to a net loss of $480,000 primarily due to increased medical services revenues and decreased costs of operations. LIQUIDITY AND CAPITAL RESOURCES The Company had cash and cash equivalents of $192,000 at March 31, 1997 compared to $368,000 at December 31, 1996. The Company's cash position decreased $176,000 due primarily to the Company's payment of interest and principal on its outstanding leases and credit agreements. On May 17, 1995, the Company repurchased (the "Notes Repurchase") for cash and securities approximately 96% of its outstanding Senior Subordinated Notes ("Subordinated Notes"). The Notes Repurchase, together with a December 1994 lease restructuring and the availability of up to $8,000,000 of new debt financing, concluded a broad restructuring of the Company's obligations as more fully explained in the Company's 1996 Form 10-K. On December 29, 1995 and March 1, 1996, the Company further restructured certain of its medical equipment leases and its outstanding notes (the "GE Notes") to extend the terms of the leases for periods of up to an additional 26 months, to defer certain monthly lease payments and to defer certain installment payments due at the beginning of 1996. This further restructuring resulted in payment reductions of approximately $1,200,000 for the Company in 1996. The various restructuring transactions described above cured all of the Company's outstanding defaults relating to its debt and lease obligations. The Company nevertheless remains highly leveraged and has significant cash payment requirements under its equipment leases and credit facilities. Scheduled equipment capital lease payments and operating lease payments during the 12 months ending December 31, 1997 are $8,606,000 and $1,641,000, respectively, with related maintenance commitments of approximately $1,685,000. Scheduled principal and interest payments under the Company's other debt obligations during such period are approximately $4,154,000 which excludes the Company's revolving line of credit of $4,043,000 whose maturity has been extended to May 31, 1999. Although the Company's operating performance has improved, the Company is uncertain it will have the cash resources to pay all of its obligations when they are due. Accordingly, the Company will continue its program of expense reductions, revenue enhancements and asset sales as well as refinancing or renegotiating the terms of its fixed obligations ("Program"). The Company's ability to meet its obligations when due are dependent upon the success of the Company's Program. Any inability of the Company to meets its obligations when due would result in a default which could permit the relevant obligor to accelerate the obligations and seek other remedies including seizure of the Company's medical imaging equipment. In such event, the Company would be forced to seek a liquidation under Chapter 7 or a reorganization under Chapter 11 of the United States Bankruptcy Code. 7 8 As part of the Program, the Company in March 1996 sold its Modesto buildings for $650,000 in cash, and also has negotiated an increase of $500,000 in its working capital line of credit and extended its maturity date by two years to May 31, 1999. The Company also completed an exchange offer (the "Exchange Offer") for $413,000 aggregate principal amount of Subordinated Notes. In the Exchange Offer, the Company offered to exchange approximately 700 shares of its common stock for each $1,000 principal amount of Subordinated Notes (and all accrued interest thereon). The purpose of the Exchange Offer was to improve the Company's capital structure and relieve the Company of the requirement to pay $836,000 of principal and interest in October, 1996 when the Subordinated Notes were to mature. In the Exchange Offer, the Company issued approximately 287,000 additional shares of Common Stock. The remaining $360,000 of the Subordinated Notes were paid at maturity on October 16, 1996. In the long term, the Company believes that it must respond to fundamental changes in the industry. The medical diagnostic imaging business, both mobile and fixed, is in a period of consolidation as a result of the growth of managed care and other competitive forces. Smaller companies, such as the Company, must either grow through acquisitions or become part of a larger enterprise in order to compete successfully and achieve acceptable returns for their shareholders. The Company in late 1996 entered an agreement in principle to be acquired by a larger entity. The transaction was terminated in April 1997 as a result of the inability of the acquiring entity to proceed with negotiations within a reasonable time period and on satisfactory terms. As a result, the Company must continue to operate on an independent basis and there can be no assurance of its ability to successfully respond to fundamental industry changes. PART II - OTHER INFORMATION Item 1. Legal Proceedings. None. Item 2. Changes in Securities None. Item 3. Defaults upon Senior Securities None. Item 4. Submission of Matters to a Vote of Securities Holders. None Item 5. Other Information. None. 8 9 Item 6. Exhibits and Reports on Form 8-K. (a) Exhibits The following exhibit is filed herewith: Exhibit Number Description ------ ----------- 27 Financial Data Schedule (b) Reports on Form 8-K None. 9 10 SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. AMERICAN SHARED HOSPITAL SERVICES Registrant Date: May 13, 1997 /s/ Ernest A. Bates, M.D. -------------------------- Ernest A. Bates, M.D. Chairman of the Board and Chief Executive Officer Date: May 13, 1997 /s/ Craig K. Tagawa -------------------------- Craig K. Tagawa Senior Vice President Chief Financial Officer 10 EX-27 2 FINANCIAL DATA SCHEDULE
5 3-MOS DEC-31-1997 JAN-01-1997 MAR-31-1997 748 0 7,652 1,153 0 8,037 41,917 19,923 31,651 19,442 21,873 0 0 11,089 3,344 31,651 9,096 9,096 0 6,789 1,430 0 1,006 39 0 39 0 0 0 39 .01 .01
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