1
SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
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FORM 10-Q
QUARTERLY REPORT UNDER SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For Quarter Ended September 30, 2000 Commission File No. 2-82655
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INTERWEST MEDICAL CORPORATION
(Exact name of registrant as specified in its charter)
Oklahoma 75-1864474
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(State or other jurisdiction (I.R.S. Employer Identification No.)
of incorporation or organization)
Arlington Heights Professional Office Building
3221 Hulen Street, Suite C, Fort Worth, TX 76107-6193
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(Address of principal executive offices, zip code)
Registrant's telephone number, including area code: (817)731-2743
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Not Applicable
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(Former name, former address, and former fiscal year, if
changed since last report)
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.
Yes X No
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APPLICABLE ONLY TO ISSUERS INVOLVED IN
BANKRUPTCY PROCEEDINGS DURING THE
PRECEDING FIVE YEARS:
Indicate by check mark whether the registrant has filed all documents and
reports required to be filed by Sections 12, 13 or 15(d) of the Securities
Exchange Act of 1934 subsequent to the distribution of securities under a plan
confirmed by a court.
(Not Applicable)
Yes X No
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(APPLICABLE TO CORPORATE ISSUERS)
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the close of the period covered by this report. 16,182,111
shares of Common Stock, $0.001 Par Value.
2
INTERWEST MEDICAL CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
1. In the opinion of management, the accompanying unaudited condensed
consolidated financial statements contain all adjustments necessary to
present fairly the Company's financial position as of September 30, 2000,
and its results of operations for the three and nine months ended
September 30, 2000 and 1999, and cash flows for the nine months ended
September 30, 2000 and 1999. The results of operations for the period
presented are not necessarily indicative of the results to be expected for
a full year.
2. Income per share was computed by dividing the net income by the weighted
average number of shares outstanding.
3
REVIEW BY INDEPENDENT
CERTIFIED PUBLIC ACCOUNTANTS
Weaver and Tidwell, L.L.P., Independent Certified Public Accountants, has
performed a review of the condensed consolidated balance sheet of InterWest
Medical Corporation as of September 30, 2000 and the condensed consolidated
statements of operations and comprehensive income for the three and nine months
ended September 30, 2000 and 1999, and cash flows for the nine months ended
September 30, 2000 and 1999, in accordance with established professional
standards and procedures for such a review. All adjustments or additional
disclosures proposed by Weaver and Tidwell, L.L.P. have been reflected in the
data presented.
The report of Weaver and Tidwell, L.L.P. commenting upon their review is
included as Part I - Exhibit I.
4
INDEPENDENT ACCOUNTANT'S REVIEW REPORT
To the Board of Directors
InterWest Medical Corporation
We have reviewed the condensed consolidated balance sheet of InterWest Medical
Corporation as of September 30, 2000, and the related condensed consolidated
statements of operations and comprehensive income for the three and nine month
periods ended September 30, 2000 and 1999, and cash flows for the nine months
ended September 30, 2000 and 1999. These financial statements are the
responsibility of the Company's management.
We conducted our review in accordance with standards established by the
American Institute of Certified Public Accountants. A review of interim
financial information consists of obtaining an understanding of the system for
the preparation of interim financial information, applying analytical review
procedures to financial data and making inquiries of persons responsible for
financial and accounting matters. It is substantially less in scope than an
audit in accordance with generally accepted auditing standards, the objective
of which is the expression of an opinion regarding the financial statements
taken as a whole. Accordingly, we do not express such an opinion.
Based on our review, we are not aware of any material modifications that should
be made to the accompanying condensed consolidated statements referred to
above, for them to be in conformity with generally accepted accounting
principles.
We have previously audited, in accordance with generally accepted auditing
standards, the consolidated balance sheet as of December 31, 1999, and the
related consolidated statements of operations, stockholders' equity and cash
flows for the year then ended (not presented herein); and in our report dated,
March 18, 2000, we expressed an unqualified opinion on those financial
statements. In our opinion, the information set forth in the accompanying
condensed consolidated balance sheet as of December 31, 1999, is fairly stated
in all material respects in relation to the consolidated balance sheet from
which it has been derived.
/s/ WEAVER AND TIDWELL, L.L.P.
WEAVER AND TIDWELL, L.L.P.
Fort Worth, Texas
November 8, 2000
596
PART I - EXHIBIT I
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INTERWEST MEDICAL CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS
September 30, December 31,
2000 1999
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(unaudited)
ASSETS
CURRENT ASSETS
Cash $ 428,770 $ 947,420
Investments available for sale 4,045,042 5,667,540
Accounts receivable - trade 2,487,211 2,436,376
Prepaid expenses 83,672 65,006
Deferred tax asset 560,835 --
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Total current assets 7,605,530 9,116,342
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PROPERTY AND EQUIPMENT, at cost
Land 294,354 294,354
Buildings and improvements 3,960,924 3,958,924
Equipment and furniture 1,121,832 1,040,724
Oil and gas properties (successful effort method of accounting) 304,639 414,150
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5,681,749 5,708,152
Less accumulated depreciation 2,077,392 2,009,519
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3,604,357 3,698,633
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OTHER ASSETS
Cash escrow accounts 54,940 45,337
Deferred financing costs, net 387,345 387,345
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442,285 432,682
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TOTAL ASSETS $ 11,652,172 $ 13,247,657
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LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Current maturities of long-term debt $ 45,505 $ 123,544
Accounts payable 1,182,568 1,368,813
Accrued expenses 490,773 672,640
Income taxes payable 216,743 774,346
Deferred tax liability - current -- 70,540
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Total current liabilities 1,935,589 3,009,883
DEFERRED TAX LIABILITY -- 37,626
LONG-TERM DEBT 4,405,457 4,435,560
STOCKHOLDERS' EQUITY
Common stock, par value $0.001
authorized 50,000,000 shares; issued 22,000,000 shares 22,000 22,000
Additional paid-in capital 5,096,745 5,096,745
Retained earnings 1,214,630 1,665,267
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Less 6,333,375 6,784,012
Shares held in the treasury
2000, 5,817,889 shares; 1999, 5,816,139 shares 859,749 859,424
Notes receivable - officer 162,500 160,000
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1,022,249 1,019,424
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5,311,126 5,764,588
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TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 11,652,172 $ 13,247,657
============== ==============
See Accompanying Notes to Condensed
Consolidated Financial Statements.
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INTERWEST MEDICAL CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
AND COMPREHENSIVE INCOME
(UNAUDITED)
Three Months Ended Nine Months Ended
September 30, September 30,
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2000 1999 2000 1999
------------ ------------ ------------ ------------
Net patient service revenue $ 3,106,632 $ 2,724,678 $ 9,366,549 $ 8,272,803
Other revenue 28,270 33,785 145,815 80,963
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Total revenue 3,134,902 2,758,463 9,512,364 8,353,766
COSTS AND EXPENSES
Professional care of patients 1,817,754 1,626,824 5,261,821 4,582,254
General services 574,399 585,027 1,643,881 1,648,742
Administrative services 442,150 347,276 1,711,877 1,180,061
Other costs 5,317 133,086 36,715 152,887
Depreciation, depletion
and amortization 64,997 48,014 191,009 207,941
------------ ------------ ------------ ------------
Income from operations 230,285 18,236 667,061 581,881
OTHER INCOME (EXPENSES)
Interest income 13,408 31,253 64,197 42,727
Interest expense (154,658) (80,951) (359,410) (266,917)
Gain (loss) on
sale of investments (765,419) (155,189) (1,053,677) 537,575
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Income (loss) before
taxes on income (676,384) (186,651) (681,829) 895,266
Provision (benefit)
for income taxes (229,341) (63,462) (231,192) 304,390
------------ ------------ ------------ ------------
Net income (loss) (447,043) (123,189) (450,637) 590,876
OTHER
COMPREHENSIVE INCOME
Unrealized losses
on securities -- 439,834 -- 386,246
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Comprehensive income $ (447,043) $ 316,645 $ (450,637) $ 977,122
============ ============ ============ ============
See Accompanying Notes to Condensed
Consolidated Financial Statements.
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INTERWEST MEDICAL CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
AND COMPREHENSIVE INCOME
(UNAUDITED)
Three Months Ended Nine Months Ended
September 30, September 30,
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2000 1999 2000 1999
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Per share of common stock
Weighted average number
of shares outstanding 16,182,111 16,188,528 16,182,611 14,858,484
============ ============ ============ ============
Earnings per common share -
basic and diluted $ (0.03) $ (0.01) $ (0.03) $ 0.04
============ ============ ============ ============
See Accompanying Notes to Condensed
Consolidated Financial Statements.
8
INTERWEST MEDICAL CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
Nine Months Ended
September 30,
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2000 1999
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CASH FLOWS FROM OPERATING ACTIVITIES $ (363,800) $ 172,788
CASH FLOWS FROM INVESTING ACTIVITIES
Proceeds from sale of property and equipment 80,000 --
Proceeds from sale of investments -- 9,682,051
Purchase of marketable securities -- (6,552,679)
Payments for acquisition of property (116,780) (223,539)
Net changes in escrow accounts (9,603) (9,603)
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Net cash used in investing activities (46,383) 2,896,230
CASH FLOWS FROM FINANCING ACTIVITIES
Purchase of treasury stock (325) (2,020)
Payments on borrowings (108,142) (104,550)
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Net cash used in financing activities (108,467) (106,570)
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Net change in cash (518,650) 2,962,448
CASH, beginning of period 947,420 460,329
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CASH, end of period $ 428,770 $ 3,422,777
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See Accompanying Notes to Condensed
Consolidated Financial Statements.
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Item 2. Management's Discussion and Analysis
of Financial Position and Results of Operations.
Changes in Balance Sheet Accounts
Current assets were $7,605,530 and total assets were $11,652,172 at September
30, 2000 as compared to $9,116,342 current assets and $13,247,657 total assets
at December 31, 1999. Current liabilities were $1,935,589 at September 30, 2000
as compared to $3,009,883 at December 31, 1999.
Results of Operations
For the Three Months Ended September 30, 2000, operating revenue was
$3,134,902; costs and expenses were $2,904,127, net loss was ($447,043) and
interest income was $13,408, as compared to the Three Months Ended September
30, 1999, operating revenue of $2,758,463, costs and expenses of $2,740,227,
net loss of ($123,189) and interest income of $31,253.
For the Nine Months Ended September 30, 2000, operating revenue was $9,512,364;
costs and expenses were $8,845,303, net loss was ($450,637) and interest income
was $64,197, as compared to the Nine Months Ended September 30, 1999, operating
revenue of $8,353,766, costs and expenses of $7,771,885, net income of $590,876
and interest income of $42,727.
Cash Flows
For the Nine Months Ended September 30, 2000, cash flows from operating
activities were ($363,800), cash flows from investing activities were
($46,383), cash flows from financing activities were ($108,467), net change in
cash was ($518,650), cash at the beginning of the period was $947,420, and cash
at the end of the period was $428,770 as compared to the Nine Months Ended
September 30, 1999, to cash flows from operating activities of $172,788, cash
flows from investing activities of $2,896,280, cash flows from financing
activities of ($106,570), net change in cash of $2,962,448, cash at the
beginning of the period of $460,329 and cash at the end of the period of
$3,442,777.
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PART II. OTHER INFORMATION
Item 1. Legal Proceedings.
Not applicable.
Item 2. Changes in Securities.
Not applicable.
Item 3. Defaults upon Senior Securities.
Not applicable.
Item 4. Submission of Matters to a Vote of Securities Holders.
Not applicable.
Item 5. Other Information
Not applicable.
Item 6. Exhibits and Reports on Form 8-K.
(a) Exhibits.
27 Financial Data Schedule
(b) None.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its half by the
undersigned thereunto duly authorized.
INTERWEST MEDICAL CORPORATION
/s/ ARCH B. GILBERT
By:
Arch B. Gilbert, President,
Chief Executive Officer,
Chief Financial Officer, and
Chief Accounting Officer
Date: November 9, 2000
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INDEX TO EXHIBITS
EXHIBIT
NUMBER DESCRIPTION
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27 Financial Data Schedule