UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
_____________________________
FORM 11-K
ANNUAL REPORT
PURSUANT TO SECTION 15(d) OF THE
SECURITIES ACT OF 1934
(Mark One):
[X] ANNUAL REPORT PURSUANT TO SECTION 15(d) of the SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 2004
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 15(d) of the SECURITIES EXCHANGE ACT OF 1934
For the transition period from _____to_____
Commission File Number: 000-30406
A. Full title of the plan and the address of the plan, if different from that of the issuer named below:
HEALTHTRONICS, INC. AND SUBSIDIARIES 401 (k) PLAN
B. Name of issuer of the securities held pursuant to the plan and the address of its principal executive office:
HEALTHTRONICS, INC.
1301 Capitol of Texas Highway Suite 200B
Austin, Texas 78746
TABLE OF CONTENTS |
Report of Independent Registered Public Accounting Firm Statement of Net Assets Available for Benefits, December 31, 2004 and 2003 Statement of Changes in Net Assets Available for Benefits, Years Ended December 31, 2004 and 2003 Notes to Financial Statements Supplemental Schedule- Assets Held for Investment Purposes at End of Year, December 31, 2004 Signatures Exhibit Index Exhibit 99.1 -Certification pursuant to 18 U.S.C. Section 1350 as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 by Brad A. Hummel Exhibit 99.1 - Certification pursuant to 18 U.S.C. Section 1350 as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 by John Q. Barnidge | Page 1 2 3 4 10 11 12 13 14 |
Report of Independent Registered Public Accounting Firm |
To The Plan Administrator
HealthTronics, Inc. & Subsidiaries 401(k) Plan:
We have audited the accompanying statements of net assets available for benefits of the HealthTronics, Inc. & Subsidiaries 401(k) Plan (“the Plan”) as of December 31, 2004 and 2003, and the related statements of changes in net assets available for benefits for the years ended December 31, 2004 and 2003. These financial statements are the responsibility of the Plan’s Administrator. Our responsibility is to express an opinion on these financial statements based on our audits. |
We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). 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 includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. 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 financial statements referred to above, present fairly, in all material respects, the net assets available for benefits as of December 31, 2004 and 2003, and the changes in net assets available for benefits for the years ended December 31, 2004 and 2003, in conformity with accounting principles generally accepted in the United States of America. |
Our audits were conducted for the purpose of forming an opinion on the basic financial statements taken as a whole. The supplemental schedule of Assets Held for Investment Purposes at End of Year (December 31, 2004), is presented for the purpose of additional analysis and is not a required part of the basic financial statements but is supplementary information required by the Department of Labor’s Rules and Regulations for Reporting and Disclosure under the Employee Retirement Income Security Act of 1974. This supplemental information is the responsibility of the Plan’s Administrator. The supplemental information has been subjected to the auditing procedures applied in the audit of the basic financial statements and, in our opinion, is fairly stated in all material respects in relation to the basic financial statements taken as a whole. |
HELIN, DONOVAN, TRUBEE & WILKINSON, LLP
Austin, Texas
May 13, 2005
-1- |
HEALTHTRONICS, INC. & SUBSIDIARIES 401 (k) PLAN |
December 31, | ||||||||
---|---|---|---|---|---|---|---|---|
2004 | 2003 | |||||||
ASSETS | ||||||||
Investments | ||||||||
Collective trust funds, at fair value | $ | 17,285,113 | $ | 13,954,147 | ||||
Healthtronics common stock, at fair value | 1,901,723 | -- | ||||||
Prime Medical common stock, at fair value | -- | 689,586 | ||||||
Loans to participants, at contract value | 558,474 | 396,991 | ||||||
19,745,310 | 15,040,724 | |||||||
Receivables | ||||||||
Employer contributions | 577,292 | 258,812 | ||||||
Participants contributions | 73,303 | 39,511 | ||||||
Total receivables | 650,595 | 298,323 | ||||||
TOTAL ASSETS | 20,395,905 | 15,339,047 | ||||||
LIABILITIES | ||||||||
Accrued Expenses | -- | -- | ||||||
NET ASSETS AVAILABLE FOR BENEFITS | $ | 20,395,905 | $ | 15,339,047 | ||||
See accompanying notes and independent auditors’ report.
-2- |
HEALTHTRONICS, INC. & SUBSIDIARIES 401 (k) PLAN |
Years Ended December 31, | ||||||||
---|---|---|---|---|---|---|---|---|
2004 | 2003 | |||||||
ADDITIONS: | ||||||||
Additions to net assets attributed to: | ||||||||
Investment income | ||||||||
Net appreciation in fair value of investments | $ | 2,179,578 | $ | 1,348,664 | ||||
Interest and dividends | 30,053 | 28,765 | ||||||
Total investment income | 2,209,631 | 1,377,429 | ||||||
Contributions | ||||||||
Cash: | ||||||||
Participants | 1,989,502 | 1,638,596 | ||||||
Rollover | 284,390 | 62,518 | ||||||
Transfers in | 1,994,600 | 381,711 | ||||||
Total contributions | 4,268,492 | 2,082,825 | ||||||
Non-cash: | ||||||||
Employer stock | 577,292 | 274,135 | ||||||
Total contributions | 4,845,784 | 2,356,960 | ||||||
TOTAL ADDITIONS | 7,055,414 | 3,734,389 | ||||||
DEDUCTIONS: | ||||||||
Deductions from net assets attributable to: | ||||||||
Benefits paid to participants | 1,771,887 | 2,324,588 | ||||||
Administrative expenses | 226,670 | 156,833 | ||||||
Total deductions | 1,998,557 | 2,481,421 | ||||||
Net increase in net assets | 5,056,858 | 1,252,968 | ||||||
Net Assets Available for Benefits: | ||||||||
BEGINNING OF YEAR | 15,339,047 | 14,086,079 | ||||||
END OF YEAR | $ | 20,395,905 | $ | 15,339,047 | ||||
See accompanying notes and independent auditors’ report.
-3- |
HEALTHTRONICS, INC. & SUBSIDIARIES 401 (k) PLAN |
NOTE A--DESCRIPTION OF PLAN
The following description of the HealthTronics, Inc. & Subsidiaries (“Company”) 401(k) Plan (“the Plan”) provides only general information. Participants should refer to the Plan agreement for a more complete description of the Plan’s provisions. |
General |
On November 10, 2004, Prime Medical Services, Inc. (“Prime”) completed a merger with HealthTronics Surgical Services, Inc. (“HSS”) pursuant to which Prime merged with and into HSS, with HealthTronics, Inc. (“HealthTronics”) as the surviving corporation. Under the terms of the merger agreement, as a result of the merger, Prime’s stockholders received one share of HealthTronics common stock for each share of Prime common stock they owned. Immediately following the merger, Prime’s stockholders owned approximately 62% of the outstanding shares of HealthTronics common stock, and Prime’s directors and senior management represented a majority of the combined company’s directors and senior management. As a result, Prime was deemed to be the acquiring company for accounting purposes. HealthTronics was the surviving legal entity. The Plan has changed its name from the Prime Medical Services, Inc. & Subsidiaries 401(k) Plan to the HealthTronics, Inc. & Subsidiaries 401(k) Plan. In addition, all Prime common stock held by the Plan was converted to HealthTronics common stock on the merger date. |
Contributions |
-4- |
HEALTHTRONICS, INC. & SUBSIDIARIES 401 (k) PLAN |
NOTE A—DESCRIPTION OF PLAN (Continued)
Participant Accounts |
Participant Loans |
Vesting |
Number of Completed Years of Service | Vesting Percentage | |
---|---|---|
Less than 1 year 1 years, less than 2 years 2 years, less than 3 years 3 years, less than 4 years 4 years, less than 5 years 5 years or more | 0% 20% 40% 60% 80% 100% |
Payment of Benefits |
During 2004 and in prior years, upon termination of employment, the benefits were paid in a lump sum if the participant’s vested account balance was less than $5,000. If the participant’s account balance exceeds $5,000, the participant may choose to keep the funds in the Plan, request a direct rollover to another qualified plan, or take a lump sum distribution. |
-5- |
HEALTHTRONICS, INC. & SUBSIDIARIES 401 (k) PLAN |
NOTE A—DESCRIPTION OF PLAN (Continued)
Payment of Benefits (continued) |
On termination of service due to retirement after age 65, 100% of the Company contributions become immediately vested. The account balance may be paid to the participant in a lump sum or periodic installments. However, should a participant reach age 65 and not elect to terminate employment, the participant can take an in-service distribution from the vested account balance. |
If the participant becomes disabled and is eligible for Social Security disability benefits, or is determined disabled by a physician selected by the Plan Administrator, the full value of the participant’s account becomes 100% vested. Distributions are only available if the participant terminates with the Employer. |
Forfeited Accounts |
Distributions During Employment |
• • • • | Medical expenses, Purchase of a principal residence, Post secondary education for participant or their dependents, To prevent eviction from or foreclosure on the participant’s principal residence. |
Plan Expenses |
-6- |
HEALTHTRONICS, INC. & SUBSIDIARIES 401 (k) PLAN |
NOTE B—SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Estimates |
Investment Valuation and Income Recognition |
Purchases and sales of securities are recorded on a trade-date basis. Dividends are recorded on the ex-dividend date. |
Payment of Benefits
Benefits are recorded when paid.
Contributions |
NOTE C—NONPARTICIPANT-DIRECTED INVESTMENTS
The Company’s matching contributions are made in Company stock (which is publicly traded under the symbol HTRN as of December 31, 2004 and PMSI as of December 31, 2003 on the NASDAQ market). At December 31, 2004 and 2003, the Plan had a receivable from the Company in the amount of $577,292 and $258,812, respectively. In January 2005 and 2004, the Company contributed 89,371 and 44,642 shares, respectively, of its common stock in payment of that receivable. Those shares had a fair market value of $950,014 and $208,527 on December 31, 2004 and 2003. |
Once the employer matching contribution is made, the participant has authority to direct their portion of the Company stock. Participants direct all of their investments. There are no non participant-directed investments at December 31, 2004 and 2003. |
-7- |
HEALTHTRONICS, INC. & SUBSIDIARIES 401 (k) PLAN |
NOTE D—INVESTMENTS (UNAUDITED)
The following presents investments that are 5% or more of the Plan’s net assets at December 31, 2004 and 2003: |
December 31, | ||||||||
---|---|---|---|---|---|---|---|---|
Collective Trust Funds, at Fair Value | 2004 | 2003 | ||||||
S&P Index Portfolio | $ | 1,659,380 | $ | 1,522,386 | ||||
GIC Portfolio | $ | 4,988,543 | $ | 4,172,811 | ||||
Balanced Portfolio | $ | 1,074,705 | $ | 978,667 | ||||
International Growth Portfolio | $ | 1,278,489 | $ | 1,101,129 | ||||
Large Company Value Portfolio | $ | 1,414,019 | $ | 698,751 | ||||
Intermediate Fixed Income Portfolio | $ | 1,051,572 | $ | 717,502 | ||||
Large Company Growth Portfolio | $ | 3,213,731 | $ | 3,359,516 | ||||
Employer Stock | ||||||||
HealthTronics, Inc. common stock (HTRN) | $ | 1,901,723 | $ | -- | ||||
Prime Medical Services, Inc. common stock (PMSI) | $ | -- | $ | 689,586 |
During 2004 and 2003, the Plan’s investments (including gains and losses on investments bought and sold, as well as held during the year) appreciated in value by $2,179,578 and $1,348,664, respectively, as follows: |
Investment Type | 2004 | 2003 | ||||||
---|---|---|---|---|---|---|---|---|
Collective trust and mutual funds | $ | 1,146,419 | $ | 1,955,183 | ||||
HTRN/PMSI common stock | 1,033,159 | (606,519 | ) | |||||
Total | $ | 2,179,578 | $ | 1,348,664 | ||||
The primary Plan investments are collective trust funds, which apply an investment management fee to the assets. The fee was $226,670 for 2004 and $156,000 for 2003, and was included as administration expenses on the accompanying statements of changes in net assets available for benefits. These fees are charged to the individual participants account balances based on each participants share of the collective trust funds fees incurred. These fees are comparable to mutual fund expense fees that are typically deducted from the mutual funds prior to determination of the funds return. |
NOTE E—RELATED PARTY TRANSACTIONS
The Plan invests in shares of collective trust funds managed by UBS Fiduciary Trust Company. (“UBS”), formerly known as PW Trust. UBS acts as Trustee for only those investments defined by the Plan. UBS is an affiliate of UBS/ Paine Webber. Transactions in such investments qualify as party-in-interest transactions, and are exempt from the prohibited transaction rules. |
-8- |
HEALTHTRONICS, INC. & SUBSIDIARIES 401 (k) PLAN |
NOTE F—RECONCILIATION OF FINANCIAL STATEMENTS TO SCHEDULE H OF FORM 5500
There were no reconciling items between the net assets available for plan benefits per the financial statements at December 31, 2004 and 2003 to Schedule H of the Form 5500. There were also no reconciling items between the benefits paid to participants per the financial statements for the years ended December 31, 2004 and 2003 and Schedule H of Form 5500. |
NOTE G—PLAN TERMINATION
Although it has not expressed any intent to do so, the Company has the right under the Plan to discontinue its contributions at any time and to terminate the Plan subject to the provisions of ERISA. In the event of Plan termination, participants become 100% vested in their accounts. |
NOTE H—TAX STATUS
The plan obtained its latest determination letter, in which the Internal Revenue Service stated that the plan, as then designed, was in compliance with the applicable requirements of the Internal Revenue Code. The plan has been amended since receiving the determination letter. However, the plan administrator and the plan’s third party administrator believe that the plan is currently designed and being operated in compliance with the applicable requirements of the Internal Revenue Code. Therefore, no provision for income taxes has been included in the plan’s financial statements. |
NOTE I—FIDELITY BOND
The plan was covered by a $2,000,000 fidelity bond during 2004 and 2003.
NOTE J-PLAN MERGERS
In October 2003, the net assets of the AMP Plan (“AMP Plan”) totaling $381,711 were transferred into the Plan as a result of a merger of the AMP Plan and the Plan. |
In May 2004, the net assets of the Medstone International 401(k) Plan (“Medstone Plan”) totaling $1,994,600 were transferred into the Plan as a result of a merger of the Medstone Plan and the Plan. |
The net assets transferred have been recorded as such in the accompanying Statements of Changes in Net Assets Available for Benefits. |
-9- |
HEALTHTRONICS, INC. & SUBSIDIARIES 401 (k) PLAN |
(a) | (b) Identity of issuer, borrower, lessor, or similar party | (c) Description of investment including maturity date, rate of interest, collateral, par, or maturity value | (d) Cost | (e) Current Value |
---|
Collective Trust Funds | ||||||||||||||
UBS Trust Company Funds | ||||||||||||||
* | Mid-Cap Growth Portfolio | 70,889 Shares | ** | $ | 601,334 | |||||||||
* | Mid-Cap Value Portfolio | 14,911 Shares | ** | 552,712 | ||||||||||
* | Small Company Growth | 4,981 Shares | ** | 419,009 | ||||||||||
* | Small Company Value | 34,201 Shares | ** | 869,629 | ||||||||||
* | Fixed Income Index Portfolio | 10,926 Shares | ** | 161,990 | ||||||||||
* | S&P 500 Index Portfolio | 111,112 Shares | ** | 1,659,380 | ||||||||||
* | GIC Portfolio | 171,473 Shares | ** | 4,988,543 | ||||||||||
* | Intermediate Fixed Income | 34,154 Shares | ** | 1,051,572 | ||||||||||
* | Balanced Portfolio | 24,710 Shares | ** | 1,074,705 | ||||||||||
* | International Growth Portfolio | 91,581 Shares | ** | 1,278,489 | ||||||||||
* | Large Company Growth | 311,817 Shares | ** | 3,213,731 | ||||||||||
* | Large Company Value | 24,495 Shares | ** | 1,414,019 | ||||||||||
17,285,113 | ||||||||||||||
Employer Stock | ||||||||||||||
* | HealthTronics, Inc. common stock (NASDAQ-HTRN) | 178,569 shares | ** | 1,901,723 | ||||||||||
* | Participant Loans | 5% to 10.50% | 558,474 | |||||||||||
Total Investments Held for Investment Purposes | $ | 19,745,310 | ||||||||||||
* | Party in Interest | |||||||||||||
** | Self-Directed Investment |
-10- |
SIGNATURES |
Pursuant to the requirements of the Securities Exchange Act of 1934, the trustees (or other persons who administer the Plan) have duly caused this annual report to be signed on its behalf by the undersigned hereunto duly authorized. |
HEALTHTRONICS, INC. AND SUBSIDIARIES 401 (k) PLAN
By: Plan Administrator of the HealthTronics, Inc. and Subsidiaries 401(k) Plan
Date: June 21, 2005 | By: /s/ John Q. Barnidge John Q. Barnidge Plan Administrator |
-11- |
EXHIBIT INDEX |
Exhibit Number | Exhibit Description | |
---|---|---|
99.1* 99.2* | Certification pursuant to 18 U.S.C. Section 1350 as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 by Brad A. Hummel Certification pursuant to 18 U.S.C. Section 1350 as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 by John Q. Barnidge |
* Filed herewith. |
-12- |