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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 March 31, 1999 Commission File No. 2-82655
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INTERWEST MEDICAL CORPORATION
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(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. 14,192,861
shares of Common Stock, $0.001 Par Value.
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INTERWEST MEDICAL CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS
March 31, December 31,
1999 1998
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(unaudited)
ASSETS
CURRENT ASSETS
Cash $ 398,527 $ 460,329
Investments available for sale 3,344,459 3,230,320
Accounts receivable - trade 2,172,040 2,108,315
Prepaid expenses and other
receivables 122,303 116,300
Deferred tax asset 247,449 47,255
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Total current assets 6,284,778 5,962,519
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REAL ESTATE DEVELOPMENT AND
CONSTRUCTION COSTS 7,113 7,113
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PROPERTY AND EQUIPMENT, at cost
Land 214,681 214,681
Buildings and improvements 3,828,936 3,789,419
Equipment and furniture 1,127,710 1,117,081
Oil and gas properties (successful
effort method of accounting) 532,869 532,869
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5,704,196 5,654,050
Less accumulated depreciation 1,970,907 1,890,769
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3,733,289 3,763,281
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OTHER ASSETS
Cash escrow accounts 34,914 31,713
Deferred financing costs, net 400,020 400,020
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434,934 431,733
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TOTAL ASSETS $10,460,114 $10,164,646
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LIABILITIES and STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Current maturities of long-term debt $ 120,522 $ 120,522
Accounts payable 1,209,438 1,260,371
Accrued liabilities 558,538 709,402
Income taxes payable 306,632 42,903
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Total current liabilities 2,195,130 2,133,198
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LONG-TERM DEBT 4,542,719 4,558,274
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STOCKHOLDERS' EQUITY
Common stock, par value $0.001
authorized 50,000,000 shares;
issued 20,000,000 shares 20,000 20,000
Additional paid-in capital 4,798,745 4,798,745
Retained earnings 646,357 8,235
Accumulated other
comprehensive income (885,163) (496,552)
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4,579,939 4,330,428
Less shares held in the Treasury
1999 5,807,139 shares
1998 5,804,339 shares 857,674 857,254
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3,722,265 3,473,174
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TOTAL LIABILITIES AND
STOCKHOLDERS' EQUITY $10,460,114 $10,164,646
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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
March 31,
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1999 1998
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Net patient service
revenue $ 2,770,073 $ 2,898,459
Other revenue 27,426 30,664
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Total revenue 2,797,499 2,929,123
COSTS and EXPENSES
Professional care
of patients 1,468,314 1,419,361
General services 523,286 483,060
Administrative
services 399,461 460,924
Other costs 6,696 10,202
Depreciation,
depletion and
amortization 80,138 69,790
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Income from
operations 319,604 485,786
OTHER INCOME
(EXPENSES)
Interest income 3,126 6,549
Interest expense (91,650) (95,668)
Gain on sale
of investments 735,771 252,401
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Income before
taxes on income 966,851 649,068
Provision for
income taxes 328,729 -
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Net income 638,122 649,068
OTHER COMPREHENSIVE
INCOME
Unrealized losses
on securities (388,611) (5,505)
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Comprehensive
Income $ 249,511 $ 643,563
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Per share of common stock
Weighted average
number of shares
outstanding $14,194,728 $16,819,961
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Net income
per share $ 0.04 $ 0.04
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See Accompanying Notes to Condensed Consolidated Financial Statements
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INTERWEST MEDICAL CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
Three Months Ended
March 31,
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1999 1998
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CASH FLOWS FROM OPERATING ACTIVITIES $ 15,399 $ 207,215
CASH FLOWS FROM INVESTING ACTIVITIES
Payments for acquisition of property (50,146) (36,222)
Purchase of investments (4,408,404) (1,271,289)
Proceeds from sale of investments 4,397,324 1,008,208
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Net cash used
in investing activities (61,226) (299,303)
CASH FLOWS FROM FINANCING ACTIVITIES
Purchase of treasury stock (420) -
Payments on borrowings (15,555) (31,499)
Financing costs paid - (146,361)
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Net cash used
in financing activities (15,975) (177,860)
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Net change in cash (61,802) (269,948)
CASH, beginning of period 460,329 1,458,281
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CASH, end of period $ 398,527 $1,188,333
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See Accompanying Notes to Condensed Consolidated Financial Statements
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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 March 31, 1999, and its results of
operations for the three months ended March 31, 1999 and 1998, and cash flows
for the three months ended March 31, 1999 and 1998. 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.
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REVIEW BY INDEPENDENT
CERTIFIED PUBLIC ACCOUNTANTS
Weaver and Tidwell, L.L.P., Independent Certified Public Accountants, have
performed a review of the condensed consolidated balance sheet as of March 31,
1999 and the condensed consolidated statements of operations and comprehensive
income for the three months ended March 31, 1999 and 1998, and cash flows for
the three months ended March 31, 1999 and 1998, 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.
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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 March 31, 1999, and the related condensed consolidated
statements of operations and comprehensive income for the three month periods
ended March 31, 1999 and 1998, and cash flows for the three months ended March
31, 1999 and 1998. 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, 1998, 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, 1999, 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, 1998, is fairly stated
in all material respects in relation to the consolidated balance sheet from
which it has been derived.
WEAVER AND TIDWELL, L.L.P.
Fort Worth, Texas
May 11, 1999
557
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PART I - EXHIBIT I
Item 2. Management's Discussion and Analysis of Financial
Position and Results of Operations.
Changes in Balance Sheet Accounts
Current assets were $6,284,778 and total assets were $10,460,114 at March 31,
1999 as compared to $5,962,519 current assets and $10,164,646 total assets at
December 31, 1998. Current liabilities were $2,195,130 at March 31, 1999 as
compared to $2,133,198 at December 31, 1998.
Results of Operations
For the Three Months Ended March 31, 1999, operating revenue was $2,797,499;
costs and expenses were $2,477,895, net income was $638,122 and interest income
was $3,126, as compared to the Three Months Ended March 31, 1998, operating
revenue of $2,929,123, costs and expenses of $2,443,337, net income of
$649,068 and interest income of $6,549.
Cash Flows
For the Three Months Ended March 31, 1999, cash flows from operating activities
were $15,399, cash flows from investing activities were ($61,226), cash flows
from financing activities were ($15,975), net decrease in cash was ($61,802),
cash at the beginning of the period was $460,329, and cash at the end of the
period was $398,527 as compared to the Three Months Ended March 31, 1998, to
cash flows from operating activities of $207,215, cash flows from investing
activities of ($299,303), cash flows from financing activities of ($177,860),
net decrease in cash of $269,948, cash at the beginning of the period of
$1,458,281 and cash at the end of the period of $1,188,333.
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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) Exhibit 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
By: /s/ ARCH B. GILBERT
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Arch B. Gilbert, President,
Chief Executive Officer,
Chief Financial Officer, and
Chief Accounting Officer
Date: May 15, 1999
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INDEX TO EXHIBITS
EXHIBIT NO.
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27 Financial Data Schedule