Prime Medical Services Reports Fourth Quarter/Year-End Results; Fourth Quarter Revenue Increases 24.2% To $40.8 Million

Business Wire, Feb 27, 2002

Business Editors

AUSTIN, Texas--(BUSINESS WIRE)--Feb. 27, 2002

Year-End Revenue Jumps 18.5% to Record $154.9 Million

Prime Medical Services, Inc. (NASDAQ: PMSI), today announced its financial results for the fourth quarter and year-ended December 31, 2001.

Total revenue for the fourth quarter increased 24.2% to $40.8 million from $32.8 million for the comparable year-ago quarter. Net income excluding non-recurring charges was $2.1 million, or $0.14 per share, for the 2001 fourth quarter compared with $2.3 million, or $0.15 per share, for the same quarter in 2000. After giving effect to non-recurring charges, the Company posted a net loss of $20.8 million for the 2001 fourth quarter compared with net income of $1.1 million for the same quarter in 2000.

For the twelve months ended December 31, 2001, total revenue increased 18.5% to $154.9 million compared with $130.7 million for the same year-ago period. Net income excluding non-recurring charges was $8.6 million, or $0.54 per share, for the 2001 year-end compared with $12.3 million, or $0.76 per share, for the prior-year period. After giving effect to non-recurring charges, the Company's net loss for the 2001 year-end was $14.5 million, or $0.92 per share, compared with net income of $10.7 million, or $0.66 per share, for the 2000 year-end.

As previously announced on February 4, 2002, the Company took a fourth quarter non-recurring charge of $36.4 million, in mostly all non-cash expenses, to write-down goodwill associated with acquisitions made in the refractive vision correction (RVC) segment during 1999 and 2000, recognize impairment to certain lithotripsy assets, increase reserves on lithotripsy receivables and provide for severance of contractual obligations.

Brad A. Hummel, Prime Medical Services' President and CEO, stated, "2001 was a significant year for Prime. Early in the year, we set out to strengthen our manufacturing and lithotripsy platforms, determine the Company's future in RVC and to strengthen our management team to prepare for the growth we anticipate over the course of the coming years. These important objectives were achieved.

"In May, we acquired Calumet Coach Company, firmly establishing Prime as the world's largest provider of specialized transport for the mobile medical industry. Over the course of the year, we completed the restructuring of our lithotripsy contracts as mandated by the Stark II physician self-referral regulations and continued our efforts to reengineer our lithotripsy partnerships with new equipment, the recruitment of new physician partners and the introduction of governance initiatives that will ensure the vitality of the partnership structure for many years to come. The Company made a definitive decision to exit the RVC business, announcing our intention to sell our partnership interests while recording the impairment of our investment in that segment. Additionally, steps were taken throughout the year to augment the Company's management team in both finance and operations, paving the way for the retirement of former Executive Chairman Ken Shifrin and CFO Cheryl Williams."

The Company's CFO John Barnidge, commented, "Prime continues to deliver strong financial fundamentals. Our cash flow allowed us to significantly reduce our outstanding line of credit from a balance of $29 million during the year to $11 million at year-end, in addition to funding capital expenditures and maintaining an active acquisition program. We further reduced this credit line to $9 million in February, 2002. EBITDA net of minority interest for the 2001 year-end was $38.2 million, or $2.43 per share, a 6.5% increase over the prior-year period. Our net working capital was $30.9 million at December 31, 2001. This financial position, along with our exceptional cash flow and ready access to our senior credit facility, will provide us with the flexibility to pursue transactions providing long term value for our shareholders."

Mr. Hummel concluded, "We now have a streamlined and refocused Company. We see abundant growth opportunity for our manufacturing unit in the medical as well as broadcast and communication segments. Furthermore, with the Stark II compliance issues behind us, we anticipate increased opportunity for lithotripsy partnership development and marketplace consolidation. We are encouraged by a renewed interest in the Company's equity and will continue our efforts to communicate to the investment community the long term value we believe the Company holds."

About Prime Medical Services Inc.

Prime currently operates a fleet of 65 lithotripters and 15 refractive surgery centers in 33 states. These centers perform approximately 37,000 lithotripsy and 20,000 LASIK procedures on an annualized basis. Lithotripsy is a cost effective, non-invasive method for treating kidney stones through the use of extracorporeal shock waves that pulverize kidney stones and permit them to pass painlessly from the body. Prime's AK Specialty Vehicles unit is the global leader in the design, engineering and construction of mobilized medical, broadcast and special purpose technologies with a delivered base of more than 1,750 units operating around the world. LASIK refractive surgery, one of the most advanced forms of laser vision correction, is designed to improve vision and reduce dependence on glasses and contacts by correcting nearsightedness and astigmatism. The Company's lithotripsy and LASIK operations serve nearly 375 institutions and partner with over 1,300 physicians across the United States.