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From the Wires
American Dental Partners Reports First Quarter 2006 Financial Results
American Dental Partners Reports First Quarter 2006 Financial Results

By: Marketwire .
May. 1, 2006 08:06 PM

WAKEFIELD, MS -- (MARKET WIRE) -- 05/01/06 -- American Dental Partners, Inc. (NASDAQ: ADPI) announced financial results today for the first quarter ended March 31, 2006.

Comparing the first quarter of 2006 with the first quarter of 2005:

--  Net revenue was $54,066,000 as compared to $48,145,000, an increase of
    12%.
--  Earnings from operations were $5,088,000 as compared to $4,585,000, an
    increase of 11%.
--  Net earnings were $2,791,000 as compared to $2,509,000, an increase of
    11%.
--  Diluted net earnings per share were $0.22 as compared to $0.20, an
    increase of 10%.
--  Diluted cash net earnings per share were $0.28 as compared to $0.26,
    an increase of 8%.
    

Patient revenue of the Company's affiliated dental group practices, which is not consolidated with the Company's financial results, was $84,286,000 for the quarter as compared to $73,542,000 for the prior year's same quarter, an increase of 15%. Same market revenue growth for the Company's affiliated dental group practices as measured by patient revenue was 13% for the quarter.

For the quarter, cash flow from operations was $7,976,000, capital expenditures were $1,489,000 and amounts paid for affiliations, including contingent payments and affiliation costs, were $1,045,000. The Company expanded five dental facilities, opened one de novo facility and completed three practice affiliations which were combined with its existing affiliated dental group practices in Michigan, New York and Oklahoma. As previously announced, subsequent to the end of the first quarter, the Company completed a platform affiliation with Deerwood Orthodontics.

The Company's debt to total capitalization stood at 21% at March 31, 2006, compared to 24% at December 31, 2005. The Company achieved an annualized cash return on committed capital of 19% for the quarter and cash return on equity of 14% for the quarter.

The Company adopted Statement of Financial Accounting Standards No. 123 (R) "Share-Based Payment," effective January 1, 2006. As a result, the Company recognized $304,000 in stock-based compensation expense, $185,000 net of tax, during the first quarter. The Company estimates stock-based compensation expense for the full year 2006 will be approximately $786,000, net of tax.

The Company's Minnesota subsidiary, PDHC, Ltd. ("PDHC"), responded on February 23, 2006 to the previously announced complaint served against PDHC by PDG, P.A. ("PDG"), the dental group practice which is affiliated with Park Dental. PDHC denied all claims made by PDG and has made various counterclaims. The Company intends to defend itself and pursue its claims vigorously. During the first quarter, the Company incurred approximately $300,000 in legal fees related to this litigation.

Cash net earnings and cash earnings from operations are non-GAAP financial measures. In accordance with the requirement of SEC Regulation G, please see the attached financial tables for a presentation of the most comparable GAAP measures and the reconciliation to the nearest GAAP measure and all additional reconciliations required by Regulation G.

For further discussion of these events and a comprehensive review of the first quarter ended March 31, 2006, the Company will host its previously announced conference call on Tuesday, May 2, 2006 at 10:00 a.m. EDT, which will be broadcast live over the Internet at www.amdpi.com. To access the webcast, participants should visit the Investor Relations section of the website at least fifteen minutes prior to the start of the conference call to download and install any necessary audio software. A replay of the webcast will be available at www.amdpi.com and www.streetevents.com approximately two hours after the call through 6:00 p.m. EDT Tuesday, May 9, 2006.

American Dental Partners is one of the nation's leading business partners to dental group practices. The Company is affiliated with 20 dental groups which have 192 dental facilities with approximately 1,789 operatories located in 18 states.

"Safe Harbor" Statement under the Private Securities Litigation Reform Act of 1995: With the exception of the historical information contained in this news release, the matters described herein contain "forward-looking" statements that involve risk and uncertainties that may individually or collectively impact the matters herein described, including but not limited to the possibility that we may not realize the benefits expected from our acquisition and affiliation strategy, economic, regulatory and/or other factors outside the control of the Company, which are detailed from time to time in the "Risk Factors" section of the Company's SEC reports, including the annual report on Form 10-K for the year ended December 31, 2005.

                    AMERICAN DENTAL PARTNERS, INC.
                         FINANCIAL HIGHLIGHTS
               (in thousands, except per share amounts)
                             (unaudited)

                                                       Three Months Ended
                                                            March 31,
                                                      ---------------------
                                                          2006       2005
                                                      ---------- ----------

Net revenue                                           $   54,066 $   48,145
Operating expenses:
     Salaries and benefits                                22,540     20,382
     Lab fees and dental supplies                          8,711      7,634
     Office occupancy expenses                             6,335      5,530
     Other operating expenses                              4,818      4,562
     General corporate expenses                            3,352      2,598
     Depreciation expense                                  1,912      1,645
     Amortization of intangible assets                     1,310      1,209
                                                      ---------- ----------
          Total operating expenses                        48,978     43,560
                                                      ---------- ----------
Earnings from operations                                   5,088      4,585
     Interest expense, net                                   484        430
                                                      ---------- ----------
Earnings before income taxes                               4,604      4,155
     Income taxes                                          1,813      1,646
                                                      ---------- ----------
Net earnings                                          $    2,791 $    2,509
                                                      ========== ==========

Net earnings per common share:
     Basic                                            $     0.23 $     0.21
                                                      ========== ==========
     Diluted                                          $     0.22 $     0.20
                                                      ========== ==========
Weighted average common shares outstanding:
     Basic                                                12,269     11,870
                                                      ========== ==========
     Diluted                                              12,851     12,534
                                                      ========== ==========


                      AMERICAN DENTAL PARTNERS, INC.
                           FINANCIAL HIGHLIGHTS
                              (in thousands)
                               (unaudited)

                                                   March 31,   December 31,
                                                      2006         2005
                                                  ------------ ------------
ASSETS
Current assets:
   Cash and cash equivalents                      $      1,551 $        592
   Receivables due from affiliated dental group
    practices                                           15,436       14,751
   Other current assets                                  6,787        6,966
                                                  ------------ ------------
      Total current assets                              23,774       22,309
                                                  ------------ ------------

Property and equipment, net                             44,941       45,184
                                                  ------------ ------------
Other non-current assets:
   Goodwill                                              5,095        5,095
   Intangible assets, net                               96,953       97,260
   Other assets                                            654          798
                                                  ------------ ------------
      Total non-current assets                         102,702      103,153
                                                  ------------ ------------
      Total assets                                $    171,417 $    170,646
                                                  ============ ============

LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
   Accounts payable and accrued expenses          $     22,383 $     20,131
   Current maturities of debt                              123          123
                                                  ------------ ------------
      Total current liabilities                         22,506       20,254
                                                  ------------ ------------
Non-current liabilities:
   Long-term debt                                       27,294       32,039
   Other liabilities                                    16,366       16,458
                                                  ------------ ------------
      Total non-current liabilities                     43,660       48,497
                                                  ------------ ------------
      Total liabilities                                 66,166       68,751
                                                  ------------ ------------

Commitments and contingencies
Stockholders' equity                                   105,251      101,895
                                                  ------------ ------------
      Total liabilities and stockholders' equity  $    171,417 $    170,646
                                                  ============ ============


                      AMERICAN DENTAL PARTNERS, INC.
                       Supplemental Operating Data
                              (in thousands)
                               (unaudited)

    Reconciliation of GAAP earnings, as reported, to cash net earnings

                                                        Three Months Ended
                                                            March 31,
                                                      ---------------------
                                                         2006       2005
                                                      ---------- ----------


Net earnings (as reported)                            $    2,791 $    2,509
Add: Amortization of intangible assets, net of tax           794        730
                                                      ---------- ----------
Cash net earnings (1)                                 $    3,585 $    3,239
                                                      ========== ==========


Weighted average common shares outstanding                12,851     12,534
                                                      ========== ==========
Diluted net earnings per share                        $     0.22 $     0.20
                                                      ========== ==========
Diluted cash net earnings per share (1)               $     0.28 $     0.26
                                                      ========== ==========


 Calculation of cash return on committed capital and cash return on equity
            for the three months ended March 31, 2006 and 2005

                                                       Three Months Ended
                                                            March 31,
                                                      --------------------
                                                         2006       2005
                                                      ---------  ---------

Earnings from operations                              $   5,088  $   4,585
Add back:  Amortization of intangible assets              1,310      1,209
                                                      ---------  ---------
Cash earnings from operations (2)                     $   6,398  $   5,794
                                                      =========  =========
Annualized cash earnings from operations              $  25,592  $  23,176
                                                      =========  =========

Average committed capital (3)                         $ 133,363  $ 118,400

Cash return on committed capital (2)                         19%        20%

Net earnings                                          $   2,791  $   2,509
Add back:  Amortization of intangible assets, net of
 taxes                                                      794        730
                                                      ---------  ---------
Cash net earnings (1)                                 $   3,585  $   3,239
                                                      =========  =========
Annualized cash net earnings                          $  14,339  $  12,957
                                                      =========  =========

Average stockholders' equity (3)                      $ 103,573  $  88,953

Cash return on equity (2)                                    14%        15%


                       AMERICAN DENTAL PARTNERS, INC.
                        Supplemental Operating Data
                               (in thousands)
                                (unaudited)

       Patient revenue of the affiliated dental group practices (4)

                                                 Three Months Ended
                                                      March 31,
                                                  -------- --------    %
                                                    2006     2005   Change
                                                  -------- -------- ------
Patient revenue - affiliated practices:
    Platform dental groups affiliated with the
     Company in both periods of comparison (5)    $ 81,234 $ 72,059     13%
    Platform dental groups that affiliated with
     the Company during periods of comparison        3,052    1,483    106%
                                                  -------- -------- ------
Total patient revenue                               84,286   73,542     15%
Amounts due to the Company under service
 agreements                                         52,976   46,915     13%
                                                  -------- -------- ------
Amounts retained by affiliated practices          $ 31,310 $ 26,627     18%
                                                  ======== ======== ======

(1) Cash net earnings and diluted cash net earnings per share are not
    measures of financial performance under GAAP.  Cash net earnings
    excludes amortization expense related to intangible assets, net of tax.
    The Company incurs significant amortization expense related to its
    service agreements while many companies, both in the same industry and
    other industries, no longer amortize a significant portion of their
    intangible assets pursuant to Statement of Financial Accounting
    Standards No. 142 – Goodwill and Other Intangible Assets.  The Company
    believes that cash net earnings and diluted cash net earnings per share
    are important financial measures for understanding its relative
    financial performance.

(2) Cash earnings from operations is not a measure of financial performance
    under GAAP. The Company believes that cash return on committed capital
    and cash return on equity are useful financial measures for
    understanding its financial performance.

(3) Average committed capital calculated as average of beginning of quarter
    and end of quarter debt, including current portion, plus stockholders'
    equity.  Average stockholders' equity calculated as average of beginning of
    quarter and end of quarter stockholders' equity.

(4) Patient revenue of the affiliated dental group practices is not
    consolidated with the Company's financial statements.

(5) Same market patient revenue excludes new platform affiliations that
    occurred during the periods of comparison in which a new service
    agreement was entered into.

Contacts:
Gregory A. Serrao
Chairman, President and
Chief Executive Officer
781-224-0880

Breht T. Feigh
Executive Vice President
Chief Financial Officer and Treasurer
781-224-0880

American Dental Partners, Inc.
201 Edgewater Drive, Suite 285
Wakefield, MA 01880
Phone: 781/224-0880
Fax: 781/224-4216

Published May. 1, 2006
Copyright © 2006 SYS-CON Media, Inc. — All Rights Reserved.
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