UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549


                                    FORM 10-Q


             [X] Quarterly Report Pursuant to Section 13 or 15(d) of
                       the Securities Exchange Act of 1934
                  For the quarterly period ended June 30, 2002
                                       OR
            [ ] Transition Report Pursuant to Section 13 or 15(d) of
                     the Securities and Exchange Act of 1934
                         For the transition period from
                                ______ to ______


                         Commission File Number: 0-22392


                          PRIME MEDICAL SERVICES, INC.
             (Exact name of registrant as specified in its charter)


              DELAWARE                                74-2652727
   (State or other jurisdiction of                 (I.R.S. Employer
   incorporation or organization)                  Identification No.)


                1301 Capital of Texas Highway, Austin, TX   78746
                (Address of principal executive office)   (Zip code)


                                 (512) 328-2892
              (Registrant's telephone number, including area code)


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  ___
     -----

Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date.

                                          Number of Shares Outstanding at
        Title of Each Class                         July 31, 2002
        -------------------                         -------------
   Common Stock, $.01 par value                      16,910,117



                                       1
<PAGE>


                                     PART I


                              FINANCIAL INFORMATION


                                       2

<PAGE>
                                   PRIME MEDICAL SERVICES, INC. AND SUBSIDIARIES
                                       CONSOLIDATED STATEMENTS OF OPERATIONS
                                                    (Unaudited)
<TABLE>
<CAPTION>

                                                                Three Months Ended           Six Months Ended
                                                                    June 30,                       June 30,
($ in thousands, except per share data)                       2002           2001            2002           2001
                                                           -----------    -----------     -----------    -----------

Revenue:
     Lithotripsy:
<S>                                                           <C>           <C>              <C>           <C>
         Fee revenues                                         $17,502       $ 18,614         $34,561       $ 36,695
         Management fees                                           75          1,002             311          1,777
         Equity income                                            254            533             360          1,120
                                                           -----------    -----------     -----------    -----------
                                                               17,831         20,149          35,232         39,592
     Manufacturing                                             19,106         12,425          37,325         18,019
     Refractive                                                 3,571          6,366           8,058         14,062
     Other                                                        196              -             392              -
                                                           -----------    -----------     -----------    -----------
         Total revenue                                         40,704         38,940          81,007         71,673
                                                           -----------    -----------     -----------    -----------

Cost of services and general and
     administrative expenses:
     Lithotripsy                                                6,977          6,834          13,732         13,775
     Manufacturing                                             15,515         10,917          31,142         15,278
     Refractive                                                 3,050          4,185           6,222          8,899
     Corporate                                                    807            616           1,619          1,339
                                                           -----------    -----------     -----------    -----------
                                                               26,349         22,552          52,715         39,291
Depreciation and amortization                                   1,814          3,510           3,609          6,985
                                                           -----------    -----------     -----------    -----------
                                                               28,163         26,062          56,324         46,276
                                                           -----------    -----------     -----------    -----------

Operating income                                               12,541         12,878          24,683         25,397

Other income (expenses):
     Interest and dividends                                        77            143             128            279
     Interest expense                                          (2,534)        (2,900)         (5,077)        (5,780)
     Loan fees                                                   (217)          (163)           (513)          (163)
     Other, net                                                    89             39              27            111
                                                           -----------    -----------     -----------    -----------
                                                               (2,585)        (2,881)         (5,435)        (5,553)
                                                           -----------    -----------     -----------    -----------
Income before provision for income
     taxes and minority interests                               9,956          9,997          19,248         19,844

Minority interest in consolidated income                        5,035          6,605          10,911         13,263

Provision for income taxes                                      1,890          1,347           3,200          2,566
                                                           -----------    -----------     -----------    -----------

Net income                                                    $ 3,031        $ 2,045         $ 5,137        $ 4,015
                                                           ===========    ===========     ===========    ===========

Basic earnings per share:
     Net income                                                $ 0.19         $ 0.13          $ 0.33         $ 0.26
                                                           ===========    ===========     ===========    ===========

     Weighted average shares outstanding                       15,863         15,704          15,784         15,704
                                                           ===========    ===========     ===========    ===========

Diluted earnings per share:
     Net income                                                $ 0.19         $ 0.13          $ 0.32         $ 0.26
                                                           ===========    ===========     ===========    ===========

     Weighted average shares outstanding                       16,199         15,716          15,972         15,720
                                                           ===========    ===========     ===========    ===========

                                   See accompanying notes to consolidated financial statements.
</TABLE>



                                       3
<PAGE>

                            PRIME MEDICAL SERVICES, INC. AND SUBSIDIARIES
                                    CONSOLIDATED BALANCE SHEETS


<TABLE>
<CAPTION>

                                                                   June 30,          December 31,
                                                                    2002                2001
($ in thousands)                                                 (Unaudited)          (Audited)
                                                                 -----------         -----------
ASSETS

Current assets:
<S>                                                                <C>               <C>
     Cash and cash equivalents                                     $  5,658           $ 16,503
     Investments                                                          -                612
     Accounts receivable, less allowance for doubtful
         accounts of $1,353 in 2002 and $2,172 in 2001               24,598             21,781
     Other receivables                                                2,404              3,167
     Deferred income taxes                                            1,280              1,658
     Prepaid expenses and other current assets                        3,004              4,349
     Inventory                                                       17,020             11,143
                                                                   --------          ---------

         Total current assets                                        53,964             59,213
                                                                   --------          ---------

Property and equipment:
     Equipment, furniture and fixtures                               51,414             52,735
     Building and leasehold improvements                             11,353             11,282
                                                                   --------          ---------

                                                                     62,767             64,017

     Less accumulated depreciation and amortization                 (33,838)           (32,823)
                                                                   --------          ---------

         Property and equipment, net                                 28,929             31,194
                                                                   --------          ---------

Other investments                                                     5,551              4,737
Goodwill, net of accumulated amortization                           167,743            151,687
Other noncurrent assets                                               5,307              5,210
                                                                   --------          ---------

                                                                   $261,494          $ 252,041
                                                                   ========          =========

                       See accompanying notes to consolidated financial statements.
</TABLE>


                                       4
<PAGE>

                                   PRIME MEDICAL SERVICES, INC. AND SUBSIDIARIES
                                       CONSOLIDATED BALANCE SHEETS (continued)
<TABLE>
<CAPTION>

                                                                                                June 30,            December 31,
                                                                                                  2002                 2001
($ in thousands, except share data)                                                           (Unaudited)            (Audited)
                                                                                              -------------        ------------

LIABILITIES

Current liabilities:
<S>                                                                                               <C>                <C>
     Current portion of long-term debt                                                             $ 2,033             $ 3,002
     Accounts payable                                                                                7,091               3,706
     Accrued distributions to minority interests                                                         -               6,739
     Accrued expenses                                                                               10,687              13,128
     Customer deposits                                                                               4,749               1,775
                                                                                              -------------        ------------

         Total current liabilities                                                                  24,560              28,350

Long-term debt, net of current portion                                                             115,798             117,364
Deferred compensation liability                                                                          -               1,168
Deferred income taxes                                                                                3,774               1,065
                                                                                              -------------        ------------

         Total liabilities                                                                         144,132             147,947

Minority interest                                                                                   14,753              18,618

STOCKHOLDERS' EQUITY

Preferred stock, $.01 par value; 1,000,000 shares authorized; none outstanding                           -                   -
Common stock, $0.01 par value; 40,000,000 shares authorized; 20,730,317 shares
     issued in 2002 and 19,524,533 in 2001;  16,910,117 shares outstanding in 2002
     and 15,562,734 in 2001                                                                            207                 195
Capital in excess of par value                                                                      99,943              89,128
Accumulated earnings                                                                                34,984              29,846
Treasury stock, at cost; 3,820,200 shares in 2002 and  3,961,799 in 2001                           (32,525)            (33,693)
                                                                                              -------------        ------------

         Total stockholders' equity                                                                102,609              85,476
                                                                                              -------------        ------------

                                                                                                  $261,494           $ 252,041
                                                                                              =============        ============
                       See accompanying notes to consolidated financial statements.
</TABLE>


                                       5
<PAGE>

<TABLE>
<CAPTION>
                                            PRIME MEDICAL SERVICES, INC. AND SUBSIDIARIES
                                                CONSOLIDATED STATEMENTS OF CASH FLOWS
                                                             (Unaudited)

                                                                              Six Months Ended June 30,
($ in thousands)                                                              2002                2001
                                                                           ------------        ------------

CASH FLOWS FROM OPERATING ACTIVITIES:
<S>                                                                           <C>                 <C>
     Fee and other revenue collected                                          $ 80,139            $ 65,621
     Cash paid to employees, suppliers of goods and others                     (56,601)            (47,849)
     Purchase of investments                                                      (199)             (1,644)
     Proceeds from sales and maturities of investments                             811               2,587
     Interest received                                                             128                 255
     Interest paid                                                              (5,083)             (5,822)
     Taxes refunded                                                              2,035                 825
                                                                              ---------           ---------

         Net cash provided by operating activities                              21,230              13,973
                                                                              ---------           ---------

CASH FLOWS FROM INVESTING ACTIVITIES:
     Purchase of entity                                                        (12,285)             (9,866)
     Purchases of equipment and leasehold improvements                            (806)             (2,649)
     Distributions from investments                                                533               1,743
     Other                                                                          64                  57
                                                                              ---------           ---------

         Net cash used in investing activities                                 (12,494)            (10,715)
                                                                              ---------           ---------

CASH FLOWS FROM FINANCING ACTIVITIES:
     Borrowings on notes payable                                                 5,411              11,090
     Payments on notes payable, exclusive of interest                           (8,696)             (8,160)
     Distributions to minority interest                                        (19,088)            (17,188)
     Contributions by minority interest, net of buyouts                          1,255               2,324
     Exercise of stock options                                                   1,537                   -
                                                                              ---------           ---------

         Net cash used in financing activities                                 (19,581)            (11,934)
                                                                              ---------           ---------

NET DECREASE IN CASH AND CASH EQUIVALENTS                                      (10,845)             (8,676)

Cash and cash equivalents, beginning of period                                  16,503              15,530
                                                                              ---------           ---------

Cash and cash equivalents, end of period                                       $ 5,658             $ 6,854
                                                                              =========           =========

                       See accompanying notes to consolidated financial statements.
</TABLE>



                                       6
<PAGE>
<TABLE>
<CAPTION>
                                            PRIME MEDICAL SERVICES, INC. AND SUBSIDIARIES
                                          CONSOLIDATED STATEMENTS OF CASH FLOWS (continued)
                                                             (Unaudited)

                                                                                                     Six Months Ended June 30,
($ in thousands)                                                                                     2002              2001
                                                                                                  ------------      ------------

Reconciliation of net income to net cash provided by operating activities:
<S>                                                                                                  <C>               <C>
     Net income                                                                                       $ 5,137           $ 4,015
     Adjustments to reconcile net income to net cash provided by operating activities:
         Minority interest in consolidated income                                                      10,911            13,263
         Depreciation and amortization                                                                  3,609             6,985
         Provision for deferred income taxes                                                            3,087             1,520
         Equity in earnings of affiliates                                                                (347)           (1,078)
         Other                                                                                            359                32

     Changes in operating assets and liabilities, net of effect of purchase transactions:
         Investments                                                                                      612               919
         Accounts receivable                                                                             (805)           (3,867)
         Other receivables                                                                                762               425
         Other assets                                                                                   2,395            (1,668)
         Accounts payable                                                                                (523)           (5,736)
         Accrued expenses                                                                              (3,967)             (837)
                                                                                                     ---------         ---------

     Total adjustments                                                                                 16,093             9,958
                                                                                                     ---------         ---------

Net cash provided by operating activities                                                            $ 21,230          $ 13,973
                                                                                                     =========         =========

                                    See accompanying notes to consolidated financial statements.
</TABLE>



                                       7
<PAGE>
                  PRIME MEDICAL SERVICES, INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                  JUNE 30, 2002
                                   (Unaudited)


1.   General
     -------

The accompanying unaudited consolidated financial statements have been prepared
in conformity with the accounting principles for interim financial statements
and with the instructions to Form 10-Q and Rule 10-01 of Regulation S-X. These
consolidated financial statements reflect all adjustments which are, in our
opinion, necessary for a fair presentation of the statement of the financial
position as of June 30, 2002 and the results of operations and cashflows for the
periods presented. These statements have not been audited by our independent
certified public accountants. The operating results for the interim periods are
not necessarily indicative of results for the full fiscal year.

The notes to consolidated financial statements appearing in our Annual Report on
Form 10-K for the year ended December 31, 2001 filed with the Securities
Exchange Commission should be read in conjunction with this Quarterly Report on
Form 10-Q. There have been no significant changes in the information reported in
those notes other than from normal business activities.


2.   Earnings per share
     ------------------

Basic EPS is based on weighted average shares outstanding without any dilutive
effects considered. Diluted EPS reflects dilution from all contingently issuable
shares, including options and warrants. A reconciliation of such EPS data is as
follows:
                                                     Basic             Diluted
                                                   earnings           earnings
($ in thousands, except per share data)            per share          per share
                                                   ---------          ---------

Six Months Ended June 30, 2002
------------------------------

Net income                                          $5,137              $5,137
                                                    ======              ======

Weighted average shares outstanding                 15,784              15,784
Effect of dilutive securities                           --                 188
                                                    ------              ------
     Shares for EPS calculation                     15,784              15,972
                                                    ======              ======

Net income per share                                 $0.33               $0.32
                                                     =====              ======

Six Months Ended June 30, 2001
------------------------------

Net income                                          $4,015              $4,015
                                                    ======              ======

Weighted average shares outstanding                 15,704              15,704
Effect of dilutive securities                           --                  16
                                                    ------              ------
     Shares for EPS calculation                     15,704              15,720
                                                    ======              ======

Net income per share                                 $0.26               $0.26
                                                   =======             =======

                                       8
<PAGE>

                  PRIME MEDICAL SERVICES, INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                            JUNE 30, 2002 (continued)
                                   (Unaudited)

2.     Earnings per share (continued)
       ------------------
                                                 Basic               Diluted
                                               earnings             earnings
($ in thousands, except per share data)        per share            per share
                                               ---------            ---------

Three Months Ended June 30, 2002
--------------------------------

Net income                                      $3,031                $3,031
                                                ======                ======

Weighted average shares outstanding             15,863                15,863
Effect of dilutive securities                       --                   336
                                                ------                ------
     Shares for EPS calculation                 15,863                16,199
                                                ======                ======

Net income per share                             $0.19                 $0.19
                                                 =====                ======

Three Months Ended June 30, 2001
--------------------------------

Net income                                      $2,045                $2,045
                                                ======                ======

Weighted average shares outstanding             15,704                15,704
Effect of dilutive securities                       --                    12
                                                ------                ------
     Shares for EPS calculation                 15,704                15,716
                                                ======                ======

Net income per share                             $0.13                 $0.13
                                                 =====                 =====


We did not include in our computation of diluted EPS unexercised stock options
and warrants to purchase 474,000 and 2,844,000 shares of our common stock as of
June 30, 2002 and 2001, respectively, because the effect would be antidilutive.

3.   Segment Reporting
     -----------------

We have three reportable segments: lithotripsy, manufacturing and refractive.
The lithotripsy segment provides services related to the operation of the
lithotripters, including scheduling, staffing, training, quality assurance,
maintenance, regulatory compliance and contracting with payors, hospitals and
surgery centers. The manufacturing segment provides manufacturing services and
installation, upgrade, refurbishment and repair of major medical equipment for
mobile medical service providers and the mobile broadcast and communication
industry. The refractive segment provides services related to the operations of
refractive vision correction centers.

We measure performance based on the pretax income or loss from our operating
segments, which does not include unallocated corporate general and
administrative expenses and corporate interest revenue and expense.



                                       9
<PAGE>

                  PRIME MEDICAL SERVICES, INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                            JUNE 30, 2002 (continued)
                                   (Unaudited)

3.   Segment Reporting (continued)
     -----------------

($ in thousands)            Lithotripsy       Manufacturing       Refractive
                            -----------       -------------       ----------

Six Months Ended
-----------------
    June 30, 2002
    -------------

Revenue from
external customers            $35,232            $37,325              $8,058

Intersegment revenues          --                   --                  --

Segment profit                  9,474              5,437                 256


Six Months Ended
-----------------
    June 30, 2001
    -------------

Revenue from
external customers            $39,592            $18,019             $14,062

Intersegment revenues           --                    46                --

Segment profit                 10,059              1,955               1,230



The following is a reconciliation of the measure of segment profit per above to
consolidated income before provision for income taxes per the consolidated
statements of operations:



                                                 Six Months ended June 30,
($ in thousands)                                2002                    2001
                                                ----                    ----

Total segment profit                         $15,167                 $13,244

Corporate revenues                               392                      --

Unallocated corporate expenses:

    General and administrative                (1,619)                 (1,339)

    Net interest expense                      (4,762)                 (5,032)

    Loan fees                                   (513)                   (163)

    Other, net                                  (328)                   (129)
                                              ------                   ------

Total unallocated corporate expenses          (7,222)                 (6,663)
                                              ------                  ------

Income before income taxes                    $8,337                  $6,581
                                              ======                  ======



                                       10
<PAGE>

                  PRIME MEDICAL SERVICES, INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                            JUNE 30, 2002 (continued)
                                   (Unaudited)

3.   Segment Reporting (continued)
     -----------------

($ in thousands)               Lithotripsy       Manufacturing     Refractive
                               -----------       -------------     ----------

Three Months Ended
-----------------
    June 30, 2002
    -------------

Revenue from
external customers               $17,831            $19,106            $3,571

Intersegment revenues               --                 --                 --

Segment profit                     4,915              3,441             (116)


Three Months Ended
------------------
    June 30, 2001
    -------------

Revenue from
external customers               $20,149            $12,425            $6,366

Intersegment revenues               --                    4               --

Segment profit                     5,385              1,083               324



The following is a reconciliation of the measure of segment profit per above to
consolidated income before provision for income taxes per the consolidated
statements of operations:

                                                  Three Months ended June 30,
($ in thousands)                                  2002                    2001
                                                  ----                    ----

Total segment profit                            $8,240                  $6,792

Corporate revenues                                 196                      --

Unallocated corporate expenses:

    General and administrative                    (807)                   (616)

    Net interest expense                        (2,370)                 (2,504)

    Loan fees                                     (217)                   (163)

    Other, net                                    (121)                   (117)
                                                ------                  ------

Total unallocated corporate expenses            (3,515)                 (3,400)
                                                ------                  ------

Income before income taxes                      $4,921                  $3,392
                                                ======                  ======



                                       11
<PAGE>

                  PRIME MEDICAL SERVICES, INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                            JUNE 30, 2002 (continued)
                                   (Unaudited)

4.  Goodwill and Other Intangible Assets
    ------------------------------------

We adopted Statement of Financial Accounting Standards ("SFAS") No. 142
"Goodwill and Other Intangible Assets" effective January 1, 2002. Under the new
standard, we no longer amortize goodwill and indefinite life intangible assets,
but those assets are subject to annual impairment tests. Other intangible assets
with finite lives consisted entirely of non-compete agreements at June 30, 2002
and December 31, 2001, and we have included them as other noncurrent assets in
the accompanying consolidated balance sheets. The non-compete agreements will
continue to be amortized over their useful lives.

In accordance with SFAS 142, we have not restated prior period amounts. A
reconciliation of the previously reported net income and earnings per share for
the six and three months ended June 30, 2001 to the amounts adjusted for the
reduction of amortization expense, net of the related income tax effect, is as
follows:

Six Months Ended
----------------
June 30, 2001
-------------
($ in thousands, except per share data)  Net Income     Basic EPS    Diluted EPS
                                         ----------     ---------    -----------

Reported net income                       $4,015          $ 0.26        $ 0.26
Add: amortization adjustment               1,945            0.12          0.12
                                          ------          ------        ------
Adjusted net income                       $5,960          $ 0.38        $ 0.38
                                          ======          ======        ======

Three Months Ended
------------------
June 30, 2001
-------------
($ in thousands, except per share data)

Reported net income                       $2,045          $ 0.13        $ 0.13
Add: amortization adjustment                 974            0.06          0.06
                                          -------         ------        ------
Adjusted net income                       $3,019          $ 0.19        $ 0.19
                                          ======          ======        ======

The net carrying value of goodwill and other intangible assets as of June 30,
2002 is comprised of the following:
                            Total      Lithotripsy   Manufacturing    Refractive
                          ---------    -----------   -------------    ----------

Goodwill                  $ 167,743      $ 129,876       $ 27,237       $ 10,630
Non-compete agreements        4,222            306            500          3,416
                          ---------      ---------       --------     ----------
                          $ 171,965      $ 130,182       $ 27,737       $ 14,046
                          =========      =========       ========       ========

Non-compete agreements as of June 30, 2002, subject to amortization expense, are
comprised of the following:
                               Gross Carrying       Accumulated
                                  Amount            Amortization        Net
                               --------------       ------------      ------

Non-compete agreements            $ 5,626             $ 1,404         $4,222
                                  =======             =======         ======



                                       12
<PAGE>

                  PRIME MEDICAL SERVICES, INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                            JUNE 30, 2002 (continued)
                                   (Unaudited)

4.  Goodwill and Other Intangible Assets (continued)
    ------------------------------------

Amortization expense for non-compete agreements with finite lives was $268,000
and $135,000 for the six and three months ended June 30, 2002, respectively. We
estimate annual amortization expense for each of the five succeeding fiscal
years as follows:

                               2002      $ 577,000
                               2003        613,000
                               2004        565,100
                               2005        465,900
                               2006        322,200

5.   Aquisitions
     -----------

Effective May 31, 2002, we acquired the assets and certain liabilities of
Frontline Communications Corporation ("Frontline"). Frontline is a leading
manufacturer and integrator of custom vehicles exclusively for the broadcast and
communications industry with 2001 sales in excess of $20 million. This
acquisition expands our market share in the broadcast and communications
industry and provides opportunities for combination synergy with our existing
manufacturing operations. The aggregate purchase price was approximately $12.8
million, comprised of approximately $10.1 million in cash and approximately
300,000 shares of our common stock valued at $2.7 million. We determined the
value of our common stock using an average closing price of our common stock
over the ten trading days ending 5 days prior to May 31, 2002. We recognized
approximately $12 million of goodwill related to this transaction.

Also effective May 31, 2002, we acquired the remaining 20% ownership interest in
our manufacturing subsidiary, AK Specialty Vehicles. The aggregate purchase
price was approximately $8.2 million comprised of $1.8 million in cash and
approximately 730,000 shares of our common stock valued at $6.4 million. We
determined the value of our common stock using an average closing price for the
twenty trading days ending five days prior to the date of the Purchase
Agreement. Upon first anniversary of closing, each of the two sellers has a
one-time right to require us to purchase its shares of our common stock at a
20% discount to the original value of the common stock. We recognized $4.5
million of goodwill related to this transaction.

6.   Condensed Financial Information Regarding Guarantor Subsidiaries
     ----------------------------------------------------------------

We have presented below our condensed consolidating financial information
regarding Guarantor Subsidiaries and Non-guarantor Subsidiaries for June 30,
2002 and 2001 for purposes of complying with the reporting requirements of the
Guarantor Subsidiaries. We have not presented separate financial statements and
other disclosures concerning each Guarantor Subsidiary because we have
determined that such information is not material to investors. The Guarantor
Subsidiaries are wholly owned subsidiaries of ours who have fully and
unconditionally guaranteed the 8.75% unsecured senior subordinated Notes.



                                       13
<PAGE>

<TABLE>
<CAPTION>
                                            PRIME MEDICAL SERVICES, INC. AND SUBSIDIARIES
                                             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                           Condensed Consolidating Statement of Operations
                                                   Six Months Ended June 30, 2002
                                                             (Unaudited)



                                             Prime Medical     Guarantor      Non-Guarantor     Eliminating     Consolidated
($ in thousands)                            Services, Inc.   Subsidiaries     Subsidiaries        Entries           Total
                                           --------------   ---------------  ---------------  ---------------  ---------------

Revenue:
     Lithotripsy:
<S>                                               <C>               <C>              <C>             <C>               <C>
         Fee revenues                              $   -           $ 6,237         $ 28,324          $     -         $ 34,561
         Management fees                               -               488             (177)               -              311
         Equity income                             7,811             4,294              337          (12,082)             360
                                           --------------   ---------------  ---------------  ---------------  ---------------
                                                   7,811            11,019           28,484          (12,082)          35,232
     Manufacturing                                 5,378            14,741           25,005           (7,799)          37,325
     Refractive                                      399               537            8,058             (936)           8,058
     Other                                             -               392                -                -              392
                                           --------------   ---------------  ---------------  ---------------  ---------------
         Total revenue                            13,588            26,689           61,547          (20,817)          81,007
                                           --------------   ---------------  ---------------  ---------------  ---------------

Cost of services and general and
     administrative expenses:
         Lithotripsy                                   -             1,237           12,495                -           13,732
         Manufacturing                                 -             9,352           21,790                -           31,142
         Refractive                                    -                 -            6,222                -            6,222
         Corporate                                    39             1,580                -                -            1,619
                                           --------------   ---------------  ---------------  ---------------  ---------------
                                                      39            12,169           40,507                -           52,715
Depreciation and amortization                          -               882            2,727                -            3,609
                                           --------------   ---------------  ---------------  ---------------  ---------------
                                                      39            13,051           43,234                -           56,324
                                           --------------   ---------------  ---------------  ---------------  ---------------

Operating income                                  13,549            13,638           18,313          (20,817)          24,683
                                           --------------   ---------------  ---------------  ---------------  ---------------

Other income (expenses):
     Interest and dividends                           30                51               47                -              128
     Interest expense                             (4,706)             (147)            (224)               -           (5,077)
     Loan fees                                      (459)              (54)               -                -             (513)
     Other, net                                     (118)              185              (40)               -               27
                                           --------------   ---------------  ---------------  ---------------  ---------------
         Total other income (expenses)            (5,253)               35             (217)               -           (5,435)
                                           --------------   ---------------  ---------------  ---------------  ---------------

Income before provision for income
     taxes and minority interest                   8,296            13,673           18,096          (20,817)          19,248

Minority interest in consolidated income               -                 -                -           10,911           10,911

Provision for income taxes                         3,159                85              (44)               -            3,200
                                           --------------   ---------------  ---------------  ---------------  ---------------

Net income                                       $ 5,137          $ 13,588         $ 18,140        $ (31,728)         $ 5,137
                                           ==============   ===============  ===============  ===============  ===============
</TABLE>



                                       14
<PAGE>

<TABLE>
<CAPTION>

                                            PRIME MEDICAL SERVICES, INC. AND SUBSIDIARIES
                                             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                           Condensed Consolidating Statement of Operations
                                                   Six Months Ended June 30, 2001
                                                             (Unaudited)



                                             Prime Medical     Guarantor      Non-Guarantor     Eliminating      Consolidated
($ in thousands)                            Services, Inc.   Subsidiaries     Subsidiaries        Entries            Total
                                           ---------------  ---------------  ---------------   --------------   ---------------

Revenue:
     Lithotripsy:
<S>                                                <C>              <C>              <C>             <C>                <C>
         Fee revenues                                 $ -          $ 6,414         $ 30,281              $ -          $ 36,695
         Management fees                                -              980              797                -             1,777
         Equity income                              8,719            6,897              341          (14,837)            1,120
                                           ---------------  ---------------  ---------------   --------------   ---------------
                                                    8,719           14,291           31,419          (14,837)           39,592
     Manufacturing                                  1,923            2,010           18,019           (3,933)           18,019
     Refractive                                     1,264            2,284           14,062           (3,548)           14,062
                                           ---------------  ---------------  ---------------   --------------   ---------------
         Total revenue                             11,906           18,585           63,500          (22,318)           71,673
                                           ---------------  ---------------  ---------------   --------------   ---------------

Cost of services and general and
     administrative expenses:
         Lithotripsy                                    -            1,560           12,215                -            13,775
         Manufacturing                                  -                -           15,278                -            15,278
         Refractive                                     -                -            8,899                -             8,899
         Corporate                                     19            1,320                -                -             1,339
                                           ---------------  ---------------  ---------------   --------------   ---------------
                                                       19            2,880           36,392                -            39,291
Depreciation and amortization                           -            3,889            3,096                -             6,985
                                           ---------------  ---------------  ---------------   --------------   ---------------
                                                       19            6,769           39,488                -            46,276
                                           ---------------  ---------------  ---------------   --------------   ---------------

Operating income                                   11,887           11,816           24,012          (22,318)           25,397
                                           ---------------  ---------------  ---------------   --------------   ---------------

Other income (expenses):
     Interest income                                   30              116              133                -               279
     Interest expense                              (5,176)             (16)            (588)               -            (5,780)
     Loan fees                                       (163)               -                -                -              (163)
     Other, net                                        62              (19)              68                -               111
                                           ---------------  ---------------  ---------------   --------------   ---------------
         Total other income (expenses)             (5,247)              81             (387)               -            (5,553)
                                           ---------------  ---------------  ---------------   --------------   ---------------

Income before provision for income
     taxes and minority interest                    6,640           11,897           23,625          (22,318)           19,844

Minority interest in consolidated income                -                -                -           13,263            13,263

Provision for income taxes                          2,625               (9)             (50)               -             2,566
                                           ---------------  ---------------  ---------------   --------------   ---------------

Net income                                        $ 4,015         $ 11,906         $ 23,675        $ (35,581)          $ 4,015
                                           ===============  ===============  ===============   ==============   ===============
</TABLE>



                                       15
<PAGE>

<TABLE>
<CAPTION>

                                           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                        Condensed Consolidating Statement of Operations
                                                  Three Months Ended June 30, 2002
                                                             (Unaudited)



                                                Prime Medical     Guarantor      Non-Guarantor     Eliminating     Consolidated
($ in thousands)                               Services, Inc.   Subsidiaries     Subsidiaries        Entries           Total
                                              ---------------  ---------------  ---------------  ---------------  ---------------

Revenue:
     Lithotripsy:
<S>                                                    <C>             <C>              <C>             <C>               <C>
         Fee revenues                                    $ -          $ 3,243         $ 14,259              $ -         $ 17,502
         Management fees                                   -              207             (132)               -               75
         Equity income                                 4,158            2,185              169           (6,258)             254
                                              ---------------  ---------------  ---------------  ---------------  ---------------
                                                       4,158            5,635           14,296           (6,258)          17,831
     Manufacturing                                     3,421           12,781            6,786           (3,882)          19,106
     Refractive                                          (59)              10            3,571               49            3,571
     Other                                                 -              196                -                -              196
                                              ---------------  ---------------  ---------------  ---------------  ---------------
         Total revenue                                 7,520           18,622           24,653          (10,091)          40,704
                                              ---------------  ---------------  ---------------  ---------------  ---------------

Cost of services and general and
     administrative expenses:
         Lithotripsy                                       -              603            6,374                -            6,977
         Manufacturing                                     -            9,352            6,163                -           15,515
         Refractive                                        -                -            3,050                -            3,050
         Corporate                                        20              787                -                -              807
                                              ---------------  ---------------  ---------------  ---------------  ---------------
                                                          20           10,742           15,587                -           26,349
Depreciation and amortization                              -              463            1,351                -            1,814
                                              ---------------  ---------------  ---------------  ---------------  ---------------
                                                          20           11,205           16,938                -           28,163
                                              ---------------  ---------------  ---------------  ---------------  ---------------

Operating income                                       7,500            7,417            7,715          (10,091)          12,541
                                              ---------------  ---------------  ---------------  ---------------  ---------------

Other income (expenses):
     Interest and dividends                               29               27               21                -               77
     Interest expense                                 (2,356)             (78)            (100)               -           (2,534)
     Loan fees                                          (217)               -                -                -             (217)
     Other, net                                           (1)             156              (66)               -               89
                                              ---------------  ---------------  ---------------  ---------------  ---------------
         Total other income (expenses)                (2,545)             105             (145)               -           (2,585)
                                              ---------------  ---------------  ---------------  ---------------  ---------------

Income before provision for income
     taxes and minority interest                       4,955            7,522            7,570          (10,091)           9,956

Minority interest in consolidated income                   -                -                -            5,035            5,035

Provision for income taxes                             1,924                2              (36)               -            1,890
                                              ---------------  ---------------  ---------------  ---------------  ---------------

Net income                                           $ 3,031          $ 7,520          $ 7,606        $ (15,126)         $ 3,031
                                              ===============  ===============  ===============  ===============  ===============
</TABLE>



                                       16
<PAGE>


<TABLE>
<CAPTION>
                                         PRIME MEDICAL SERVICES, INC. AND SUBSIDIARIES
                                           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                        Condensed Consolidating Statement of Operations
                                                Three Months Ended June 30, 2001
                                                           (Unaudited)



                                                Prime Medical     Guarantor      Non-Guarantor     Eliminating     Consolidated
($ in thousands)                               Services, Inc.   Subsidiaries     Subsidiaries        Entries           Total
                                              ---------------  ---------------  ---------------  ---------------  ---------------

Revenue:
     Lithotripsy:
<S>                                                    <C>              <C>             <C>             <C>               <C>
         Fee revenues                                    $ -          $ 3,139         $ 15,475              $ -         $ 18,614
         Management fees                                   -              562              440                -            1,002
         Equity income                                 4,710            3,648              160           (7,985)             533
                                              ---------------  ---------------  ---------------  ---------------  ---------------
                                                       4,710            7,349           16,075           (7,985)          20,149
     Manufacturing                                     1,051            1,099           12,425           (2,150)          12,425
     Refractive                                          468              975            6,366           (1,443)           6,366
                                              ---------------  ---------------  ---------------  ---------------  ---------------
         Total revenue                                 6,229            9,423           34,866          (11,578)          38,940
                                              ---------------  ---------------  ---------------  ---------------  ---------------

Cost of services and general and
     administrative expenses:
         Lithotripsy                                       -              700            6,134                -            6,834
         Manufacturing                                     -                -           10,917                -           10,917
         Refractive                                        -                -            4,185                -            4,185
         Corporate                                         2              614                -                -              616
                                              ---------------  ---------------  ---------------  ---------------  ---------------
                                                           2            1,314           21,236                -           22,552
Depreciation and amortization                              -            1,950            1,560                -            3,510
                                              ---------------  ---------------  ---------------  ---------------  ---------------
                                                           2            3,264           22,796                -           26,062
                                              ---------------  ---------------  ---------------  ---------------  ---------------

Operating income                                       6,227            6,159           12,070          (11,578)          12,878
                                              ---------------  ---------------  ---------------  ---------------  ---------------

Other income (expenses):
     Interest and dividends                               23               55               65                -              143
     Interest expense                                 (2,580)              (8)            (312)               -           (2,900)
     Loan fees                                          (163)               -                -                -             (163)
     Other, net                                          (19)              14               44                -               39
                                              ---------------  ---------------  ---------------  ---------------  ---------------
         Total other income (expenses)                (2,739)              61             (203)               -           (2,881)
                                              ---------------  ---------------  ---------------  ---------------  ---------------

Income before provision for income
     taxes and minority interest                       3,488            6,220           11,867          (11,578)           9,997

Minority interest in consolidated income                   -                -                -            6,605            6,605

Provision for income taxes                             1,443               (9)             (87)               -            1,347
                                              ---------------  ---------------  ---------------  ---------------  ---------------

Net income                                           $ 2,045          $ 6,229         $ 11,954        $ (18,183)         $ 2,045
                                              ===============  ===============  ===============  ===============  ===============
</TABLE>



                                       17
<PAGE>

<TABLE>
<CAPTION>

                                         PRIME MEDICAL SERVICES, INC. AND SUBSIDIARIES
                                          NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                             Condensed Consolidating Balance Sheet
                                                        June 30, 2002
                                                          (Unaudited)



                                                 Prime Medical     Guarantor      Non-Guarantor    Eliminating     Consolidated
($ in thousands)                                 Services, Inc.  Subsidiaries     Subsidiaries       Entries          Total
                                                --------------  ---------------  --------------   --------------  --------------

ASSETS

Current assets:
<S>                                                 <C>              <C>              <C>            <C>              <C>
     Cash and cash equivalents                           $ 60          $ 2,486         $ 3,112              $ -         $ 5,658
     Accounts receivable, net                               -           13,326          11,272                -          24,598
     Other receivables                                  1,145             (120)          1,379                -           2,404
     Deferred income taxes                              1,280                -               -                -           1,280
     Prepaid expenses and other current assets          1,757              170           1,077                -           3,004
     Inventory                                              -           17,020               -                -          17,020
                                                --------------  ---------------  --------------   --------------  --------------
         Total current assets                           4,242           32,882          16,840                -          53,964
                                                --------------  ---------------  --------------   --------------  --------------

Property and equipment:
     Equipment, furniture and fixtures                      -           11,221          40,193                -          51,414
     Building and leasehold improvements                    -           10,044           1,309                -          11,353
                                                --------------  ---------------  --------------   --------------  --------------
                                                            -           21,265          41,502                -          62,767
     Less accumulated depreciation
         and amortization                                   -           (7,746)        (26,092)               -         (33,838)
                                                --------------  ---------------  --------------   --------------  --------------
         Property and equipment, net                        -           13,519          15,410                -          28,929
                                                --------------  ---------------  --------------   --------------  --------------

Investment in subsidiaries
     and other investments                            213,885           18,796               -         (227,130)          5,551
Goodwill, net of accumulated amortization                   -          167,743               -                -         167,743
Other noncurrent assets                                   881            3,571             855                -           5,307
                                                --------------  ---------------  --------------   --------------  --------------
                                                    $ 219,008        $ 236,511        $ 33,105       $ (227,130)      $ 261,494
                                                ==============  ===============  ==============   ==============  ==============

LIABILITIES

Current liabilities:
     Current portion of long-term debt                    $ -              $ -         $ 2,033              $ -         $ 2,033
     Accounts payable                                       -            5,997           1,094                -           7,091
     Accrued expenses                                   3,125            6,838             724                -          10,687
     Customer deposits                                      -            4,749               -                -           4,749
                                                --------------  ---------------  --------------   --------------  --------------
         Total current liabilities                      3,125           17,584           3,851                -          24,560

Long-term debt, net of current portion                109,500            5,042           1,256                -         115,798
Deferred income taxes                                   3,774                -               -                -           3,774
                                                --------------  ---------------  --------------   --------------  --------------
         Total liabilities                            116,399           22,626           5,107                -         144,132
                                                --------------  ---------------  --------------   --------------  --------------

Minority interest                                           -                -               -           14,753          14,753

STOCKHOLDERS' EQUITY

Common stock                                              207                -               -                -             207
Capital in excess of par value                         99,943                -               -                -          99,943
Accumulated earnings                                   34,984                -               -                -          34,984
Treasury stock                                        (32,525)               -               -                -         (32,525)
Subsidiary net equity                                       -          213,885          27,998         (241,883)              -
                                                --------------  ---------------  --------------   --------------  --------------
         Total stockholders' equity                   102,609          213,885          27,998         (241,883)        102,609
                                                --------------  ---------------  --------------   --------------  --------------
                                                    $ 219,008        $ 236,511        $ 33,105       $ (227,130)      $ 261,494
                                                ==============  ===============  ==============   ==============  ==============
</TABLE>



                                       18
<PAGE>

<TABLE>
<CAPTION>
                                            PRIME MEDICAL SERVICES, INC. AND SUBSIDIARIES
                                             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                           Condensed Consolidating Statement of Cash Flows
                                                   Six Months Ended June 30, 2002
                                                             (Unaudited)


                                                    Prime Medical    Guarantor      Non-Guarantor     Eliminating     Consolidated
($ in thousands)                                   Services, Inc.   Subsidiaries    Subsidiaries        Entries           Total
                                                  --------------   --------------  ---------------  ---------------  ---------------

CASH FLOWS FROM OPERATING
     ACTIVITIES:
<S>                                                    <C>               <C>             <C>                   <C>         <C>
         Net cash provided by (used in)
              operating activities                     $ (3,704)         $ 5,463         $ 19,471              $ -         $ 21,230
                                                  --------------   --------------  ---------------  ---------------  ---------------

CASH FLOWS FROM INVESTING
     ACTIVITIES:
     Purchases of operating entities                          -          (12,285)               -                -          (12,285)
     Purchases of equipment and leasehold
         improvements                                         -             (165)            (641)               -             (806)
     Distributions from subsidiaries                      8,468            9,320                -          (17,788)               -
     Investments in subsidiaries                         (5,000)               -                -            5,000                -
     Distributions from investments                           -              533                -                -              533
     Other                                                    -                -               64                -               64
                                                  --------------   --------------  ---------------  ---------------  ---------------

         Net cash provided by (used in)
              investing activities                        3,468           (2,597)            (577)         (12,788)         (12,494)
                                                  --------------   --------------  ---------------  ---------------  ---------------

CASH FLOWS FROM FINANCING
     ACTIVITIES:
     Borrowings on notes payable                          5,000                -              411                -            5,411
     Payments on notes payable exclusive of
         interest                                        (6,500)               -           (2,196)               -           (8,696)
     Exercise of stock options                            1,537                -                -                -            1,537
     Contributions by minority interest,
         net of buyouts                                       -                -            1,255                -            1,255
     Distributions to minority interest                       -                -                -          (19,088)         (19,088)
     Contributions by parent                                  -            5,000                -           (5,000)               -
     Distributions to equity owners                           -           (8,468)         (28,408)          36,876                -
                                                  --------------   --------------  ---------------  ---------------  ---------------

         Net cash provided by (used in)
                financing activities                         37           (3,468)         (28,938)          12,788          (19,581)
                                                  --------------   --------------  ---------------  ---------------  ---------------

NET INCREASE (DECREASE) IN CASH AND
     CASH EQUIVALENTS                                      (199)            (602)         (10,044)               -          (10,845)

Cash and cash equivalents, beginning of period              259            3,088           13,156                -           16,503
                                                  --------------   --------------  ---------------  ---------------  ---------------

Cash and cash equivalents, end of period                   $ 60          $ 2,486          $ 3,112              $ -          $ 5,658
                                                  ==============   ==============  ===============  ===============  ===============
</TABLE>



                                       19
<PAGE>

<TABLE>
<CAPTION>

                                            PRIME MEDICAL SERVICES, INC. AND SUBSIDIARIES
                                             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                           Condensed Consolidating Statement of Cash Flows
                                                   Six Months Ended June 30, 2001
                                                             (Unaudited)



                                                    Prime Medical    Guarantor      Non-Guarantor     Eliminating     Consolidated
($ in thousands)                                   Services, Inc.   Subsidiaries    Subsidiaries        Entries           Total
                                                  --------------   --------------  ---------------  ---------------  ---------------

CASH FLOWS FROM OPERATING
     ACTIVITIES:
         Net cash provided by (used in)
<S>                                                    <C>              <C>              <C>                <C>             <C>
              operating activities                     $ (7,098)        $ (2,344)        $ 23,415              $ -         $ 13,973
                                                  --------------   --------------  ---------------  ---------------  ---------------

CASH FLOWS FROM INVESTING
     ACTIVITIES:
     Purchases of operating entities                          -           (3,101)          (6,765)               -           (9,866)
     Purchases of equipment and leasehold
         improvements                                         -             (843)          (1,806)               -           (2,649)
     Proceeds from sales of equipment                         -                -               57                -               57
     Distributions from subsidiaries                     13,273           10,348                -          (23,621)               -
     Investments in subsidiaries                        (11,000)          (8,000)               -           19,000                -
     Distributions from investments                           -            1,743                -                -            1,743
                                                  --------------   --------------  ---------------  ---------------  ---------------

         Net cash provided by (used in)
              investing activities                        2,273              147           (8,514)          (4,621)         (10,715)
                                                  --------------   --------------  ---------------  ---------------  ---------------

CASH FLOWS FROM FINANCING
     ACTIVITIES:
     Borrowings on notes payable                         11,000                -               90                -           11,090
     Payments on notes payable exclusive of
         interest                                        (6,000)               -           (2,160)               -           (8,160)
     Contributions by minority interest,
         net of buyouts                                       -                -            2,324                -            2,324
     Distributions to minority interest                       -                -                -          (17,188)         (17,188)
     Contributions by parent                                  -           11,000            8,000          (19,000)               -
     Distributions to equity owners                           -          (13,273)         (27,536)          40,809                -
                                                  --------------   --------------  ---------------  ---------------  ---------------

         Net cash provided by (used in)
                financing activities                      5,000           (2,273)         (19,282)           4,621          (11,934)
                                                  --------------   --------------  ---------------  ---------------  ---------------

NET INCREASE (DECREASE) IN CASH AND
     CASH EQUIVALENTS                                       175           (4,470)          (4,381)               -           (8,676)

Cash and cash equivalents, beginning of period              427            7,393            7,710                -           15,530
                                                  --------------   --------------  ---------------  ---------------  ---------------

Cash and cash equivalents, end of period                  $ 602          $ 2,923          $ 3,329              $ -          $ 6,854
                                                  ==============   ==============  ===============  ===============  ===============
</TABLE>



                                       20
<PAGE>

                      Management's Discussion and Analysis
                           of Financial Condition and
                              Results of Operations

Forward-Looking Statements
--------------------------

The statements contained in this report that are not purely historical are
forward-looking statements within the meaning of Section 27A of the Securities
Act of 1933 and Section 21E of the Securities Exchange Act of 1934, including
statements regarding our expectations, hopes, intentions or strategies regarding
the future. You should not place undue reliance on forward-looking statements.
All forward-looking statements included in this report are based on information
available to us on the date hereof, and we assume no obligation to update any
such forward-looking statements. It is important to note that our actual results
could differ materially from those in the forward-looking statements. In
addition to any risks and uncertainties specifically identified in the text
surrounding such forward-looking statements, you should consult our reports on
Form 10-K and other filings under the Securities Act of 1933 and the Securities
Exchange Act of 1934, for factors that could cause our actual results to differ
materially from those presented.

The forward-looking statements included herein are necessarily based on various
assumptions and estimates and are inherently subject to various risks and
uncertainties, including risks and uncertainties relating to the possible
invalidity of the underlying assumptions and estimates and possible changes or
developments in social, economic, business, industry, market, legal and
regulatory circumstances and conditions and actions taken or omitted to be taken
by third parties, including customers, suppliers, business partners and
competitors and legislative, judicial and other governmental authorities and
officials. Assumptions related to the foregoing involve judgments with respect
to, among other things, future economic, competitive and market conditions and
future business decisions, all of which are difficult or impossible to predict
accurately and many of which are beyond our control. Any of such assumptions
could be inaccurate and therefore, there can be no assurance that the
forward-looking statements included in this report will prove to be accurate.

General
-------

We provide lithotripsy services, design and manufacture trailers and coaches
that transport high technology medical devices and equipment for the media and
broadcast industry, and provide refractive vision correction services.

Lithotripsy Services. Lithotripsy is a non-invasive procedure for treating
kidney stones, typically performed on an outpatient basis, that eliminates the
need for lengthy hospital stays and extensive recovery periods associated with
surgery. We own 65 lithotripters, 60 of which are mobile and five of which are
fixed site. We do not render any medical services. Rather, the physicians do.

We also provide services relating to operating our lithotripters, including
scheduling, staffing, training, quality assurance, maintenance, regulatory
compliance, and contracting with payors, hospitals and surgery centers.

Manufacturing. We design, construct and engineer mobile trailers, coaches, and
special purpose mobile units that transport high technology medical devices and
equipment designed for broadcasting and communications applications, such as
magnetic resonance imaging, cardiac catheterization labs, CT scanware,
lithotripters, postitron emission tomography, mobile command and control centers
and satellite news gathering vehicles.



                                       21
<PAGE>
Refractive Vision Correction, or RVC Services. Our RVC procedures correct common
vision disorders such as myopia (nearsightedness), hyperopia (farsightedness)
and astigmatism by using specialized laser applications such as LASIK. We
currently operate 14 RVC facilities.

Recent Developments
-------------------

Effective May 31, 2002, we acquired the assets and certain liabilities of
Frontline. Frontline is a leading manufacturer and integrator of custom vehicles
exclusively for the broadcast and communications industry with 2001 sales in
excess of $20 million. This acquisition expands our market share in the
broadcast and communications industry and provides opportunities for combination
synergy with our existing operations. The aggregate purchase price was
approximately $12.8 million, comprised of approximately $10.1 million in cash
and shares of our common stock valued at $2.7 million.

Also effective May 31, 2002, we acquired the remaining 20% ownership interest in
our manufacturing subsidiary, AK Specialty Vehicles. The aggregate purchase
price of approximately $8.2 million comprised of $1.8 million in cash and shares
of our common stock valued at $6.4 million.

In February 2002, we announced our intention to divest our RVC operations to
focus more on opportunities in our manufacturing and lithotripsy businesses.

Critical Accounting Policies.
----------------------------

Management has identified the following critical accounting policies:

Consolidation of our investment in certain limited partnerships where we, as the
general partner, exercise effective control, even though our ownership is less
than 50%. We have reviewed each of the underlying agreements and determined we
have effective control. If effective control did not exist, we would reflect
these investments using the equity method of accounting. Although equity method
presentation would change individual line items within our consolidated
financial statements, it would have no effect on our net income and/or total
stockholders' equity.

Impairments of intangible assets is another critical accounting policy that
requires judgment and is based on assumptions of future operations. Effective
January 1, 2002, we adopted Statement of Financial Accounting Standards ("SFAS")
No. 142. Under SFAS No. 142, goodwill is no longer amortized, but must be tested
for impairment at least annually. We provide impairment testing at a reporting
unit level. We currently have identified three reporting units under the
criteria set forth by SFAS No. 142. Pursuant to the transitional rules of SFAS
No. 142, we have completed the first step of our goodwill impairment test during
the second quarter of 2002. As a result of our first step testing, a potential
impairment related to our RVC reporting unit was indicated. We will complete the
second step of the evaluation required by SFAS No. 142 in the third quarter of
2002. The statement requires any such charge be recognized as a cumulative
effect of a change in accounting principle.

A third critical accounting policy which requires judgment of management is the
estimated allowance for doubtful accounts and contractual adjustments. We have
based our estimates on historical collection amounts, current contracts with
payors, current changes of the facts and circumstances relating to these matters
and certain negotiations with related payors. Actual results could vary from
these estimates.



                                       22
<PAGE>
Six months ended June 30, 2002 compared to the six months ended June 30, 2001
-----------------------------------------------------------------------------

Our total revenues for the six months ended June 30, 2002 increased $9,334,000
(13%) as compared to the same period in 2001. Revenues from our lithotripter
operations decreased by $4,360,000 (11%). Conversion of contracts from a retail
style contract to a wholesale style contract, payor mix changes and
renegotiation of contracts during the past year resulted in decreases in average
revenue per procedure. The actual number of procedures performed in the period
decreased by 8% compared to the same period in 2001. Our manufacturing revenues
increased $19,306,000 (107%) due to the acquisitions of Calumet Coach Company
during May 2001 and Frontline in May 2002. Our refractive revenues decreased
$6,004,000 (43%). Our refractive operations actually decreased 37% on a same
store basis between the two periods. The remaining decrease is due to the sale
of one of our refractive centers in October of 2001. Our refractive operations
continue to be affected by weakness in the economy, which is an industry-wide
phenomenon. Our physician partners remain committed to our markets and focused
on lowering costs to reflect marketplace realities and maintaining
profitability. While we expect demand to return once general economic
uncertainty is alleviated, we do not intend to invest further into this segment,
and we have announced our intention to sell our refractive business.

Our costs of services and general and administrative expenses (excluding
depreciation and amortization) for six months ended June 30, 2002 increased from
55% to 65% of revenues, primarily due to increases in our manufacturing
operations, which has lower operating margins than our lithotripsy operations.
Our costs of services associated with our lithotripsy operations decreased
$43,000 (1%) in absolute terms and increased from 34% to 39% of our lithotripsy
revenues primarily due to decrease in revenues noted above. Our cost of services
associated with our manufacturing operations increased $15,864,000 (104%) in
absolute terms due to increased sales and costs related to our acquisitions but
decreased from 85% to 83% of our manufacturing revenues as we were able to
improve our margins do to successfully integration cost savings at Calumet. Cost
of services associated with our refractive operations decreased $2,677,000 (30%)
in absolute terms, but increased from 63% to 77% of our refractive revenues due
to decreased procedures from the same period a year ago. Our corporate expenses
remained constant at 2% of revenues, increasing $280,000 (21%) in absolute
terms, as we continue to grow without adding a disproportionately higher amount
of corporate expenses.

Depreciation and amortization expense decreased $3,376,000 for the six months
ended June 30, 2002 compared to the same period in 2001, primarily due to the
adoption of SFAS No. 142 on January 1, 2002, which eliminated amortization
expense related to goodwill and due to certain lithotripsy units becoming fully
depreciated in the fourth quarter of 2001.

Other expenses, net for the six months ended June 30, 2002 decreased $118,000
(2%) compared to the same period in 2001, primarily due to a $366,000 decrease
in interest expense related to our senior credit facility.

Minority interest in consolidated income for the six months ended June 30, 2002
decreased $2,352,000 compared to the same period in 2001, primarily as a result
of a decrease in income from our lithotripsy segment which has significantly
higher minority interest percentages than our other segments and due to our
acquiring the remaining minority interest in our manufacturing segment. Earnings
before interest, taxes, depreciation and amortization (EBITDA) attributable to
minority interest was $12,616,000 for the six months ended June 30, 2002
compared to $15,215,000 for the same period in 2001. EBITDA is not intended to
represent net income or cash flows from operating activities in accordance with
generally accepted accounting principles and should not be considered a measure
of our profitability or liquidity.



                                       23
<PAGE>
Provision for income taxes for the six months ended June 30, 2002 increased
$634,000 compared to the same period in 2001 due to an increase in taxable
income.

Three months ended June 30, 2002 compared to the three months ended
-------------------------------------------------------------------
June 30, 2001
-------------

Our total revenues for the three months ended June 30, 2002 increased $1,764,000
(5%) as compared to the same period in 2001. Revenues from our lithotripter
operations decreased by $2,318,000 (12%). Conversion of contracts from a retail
style contract to a wholesale style contract, payor mix changes and
renegotiation of contracts during the past year resulted in decreases in average
revenue per procedure. The actual number of procedures performed in the three
months ended June 30, 2002 decreased by 6% compared to the same period in 2001.
Our manufacturing revenues increased $6,681,000 (54%) due to the acquisition of
Calumet Coach Company during May 2001 and Frontline in May 2002. Our refractive
revenues decreased $2,795,000 (44%). Our refractive operations actually
decreased 39% on a same store basis between the two periods. The remaining
decrease is due to the sale of one of our refractive centers in October of 2001.
Our refractive operations continue to be affected by weakness in the economy,
which is an industry-wide phenomenon. Our physician partners remain committed to
our markets and focused on lowering costs to reflect marketplace realities and
maintaining profitability. While we expect demand to return once general
economic uncertainty is alleviated, we do not intend to invest further into this
segment, and we have announced our intention to sell our refractive business.

Our costs of services and general and administrative expenses (excluding
depreciation and amortization) for three months ended June 30, 2002 increased
from 58% to 65% of revenues, primarily due to increases in our manufacturing
operations, which has lower operating margins than our lithotripsy operations.
Our costs of services associated with our lithotripsy operations increased
$143,000 (2%) in absolute terms and increased from 34% to 39% of our lithotripsy
revenues primarily due to decrease in revenues noted above. Our cost of services
associated with our manufacturing operations increased $4,598,000 (42%) in
absolute terms due to increased sales and costs related to our acquisitions but
decreased from 88% to 81% of our manufacturing revenues as we were able to
significantly improve our margins do to successfully integration cost savings at
Calumet. Cost of services associated with our refractive operations decreased
$1,135,000 (27%) in absolute terms, and increased from 66% to 85% of our
refractive revenues due to decreased procedures from the same period a year ago.
Our corporate expenses remained constant at 2% of revenues, increasing $191,000
(31%) in absolute terms, as we continue to grow without adding a
disproportionately higher amount of corporate expenses.

Depreciation and amortization expense decreased $1,696,000 for the three months
ended June 30, 2002 compared to the same period in 2001, primarily due to the
adoption of SFAS No. 142 on January 1, 2002, which eliminated amortization
expense related to goodwill and due to certain lithotripsy units becoming fully
depreciated in the fourth quarter of 2001.

Other expenses, net for the three months ended June 30, 2002 decreased $296,000
(10%) compared to the same period in 2001, primarily due to a $366,000 decrease
interest expense to our senior credit facility.

Minority interest in consolidated income for the three months ended June 30,
2002 decreased $1,570,000 compared to the same period in 2001, primarily as a
result of a decrease in income from our lithotripsy segment which has
significantly higher minority interest percentages than our other segments and
due to our acquiring the remaining minority interest in our manufacturing
segment. Earnings before interest, taxes, depreciation and amortization (EBITDA)
attributable to minority interest was $5,999,000 for the three months ended June
30, 2002 compared to $7,700,000 for the same period in 2001.



                                       24
<PAGE>
Provision for income taxes for the three months ended June 30, 2002 increased
$543,000 compared to the same period in 2001 due to an increase in taxable
income.

Liquidity and Capital Resources
-------------------------------

Cash and cash equivalents were $5,658,000 and $16,503,000 at June 30, 2002 and
December 31, 2001, respectively. Cash provided by operations for the six months
ended June 30, 2002 was $21,230,000 compared to cash provided by operations for
the six months ended June 30, 2001 of $13,973,000. Fee and other revenue
collected increased by $14,518,000 and was partially offset by the increase in
cash paid to employees, suppliers of goods and others of $8,752,000. We
attribute these fluctuations to increased operations primarily in our
manufacturing segment as well as the timing of accounts receivable collections
and accounts payable and accrued expense payments. A decrease in interest
payments of $739,000 was due to less monies drawn on our senior credit facility.
Taxes refunded increased $1,210,000 from 2001 to 2002 due to the receipt of a
2001 tax refund in 2002.

Cash used in investing activities for the six months ended June 30, 2002 was
$12,494,000 compared to cash used in investing activities for the six months
ended June 30, 2001 of $10,715,000. The increase in cash used was attributable
to an increase in the cash paid for acquisitions partially offset by decrease in
cash paid for equipment purchases. Cash used in financing activities for the six
months ended June 30, 2002 was $19,581,000 compared to cash used for financing
activities for the six months ended June 30, 2001 of $11,934,000. The increase
in cash used was primarily due to a net increase in payments on notes payable
and distributions paid to minority interests.

We terminated our deferred compensation plan during the first quarter of 2002.
We satisfied the related deferred compensation liability through the issuance of
treasury stock, which we had previously held in the deferred compensation plan.

Senior Credit Facility
----------------------

We revised our senior credit facility, which is a revolving line of credit, in
July 2002. The new revolving line of credit has a borrowing limit of $50
million, $9.5 million of which was drawn at June 30, 2002 and July 31, 2002,
respectively. Our senior credit facility contains covenants that, among other
things, limit the payment of cash dividends on our common stock, limit
repurchases of our common stock, limit the amount of our consolidated debt,
limit our ability to make certain loans and investments, and provide that we
must maintain certain financial ratios.

8.75% Notes
-----------

In addition, we have $100 million of unsecured senior subordinated notes. The
notes bear interest at 8.75% and interest is payable semi-annually on April 1st
and October 1st. Principal is due April 2008.

The indenture governing our 8.75% notes contains covenants that, among other
things: (1) limit the incurrence of additional indebtedness; (2) limit certain
investments; (3) limit restricted payments; (4) limit the disposition of assets;
(5) limit the payment of dividends and other payment restrictions affecting
subsidiaries; (6) limit transactions with affiliates; (7) limit the creation of
liens; and (8) restrict mergers, consolidations and transfers of assets. In the
event of a change of control under the indenture, we will be required to make an
offer to repurchase the 8.75% notes at 101% of the principal amount thereof,
plus accrued and unpaid interest to the date of the repurchase.



                                       25
<PAGE>
The 8.75% notes are unsecured general obligations and are subordinated in right
of payment to all our existing and future senior indebtedness and are guaranteed
by our subsidiaries on a full, unconditional, joint and several basis.

General
-------

We seek opportunities to increase our lithotripsy operations primarily through
forming new operating subsidiaries in new markets as well as by acquisitions. We
seek opportunities to grow our manufacturing operations through both
acquisitions, expanding our product lines and by selling to a broader customer
base. We intend to fund the purchase price for future acquisitions and
developments using borrowings under our senior credit facility and cash flows
from our operations. In addition, we may use shares of our common stock in
acquisitions where appropriate.

During 1998, we announced a stock repurchase program of up to $25.0 million of
our common stock. In February 2000, we announced an increase in the authorized
repurchase amount from $25.0 million to $35.0 million and in January 2001 we
increased this amount to $45.0 million. We did not repurchase any of our common
stock during 2002 or 2001. From time to time, we may purchase additional shares
of our common stock where, in our judgment, market valuations of our stock do
not accurately reflect our past and projected results of operations. We intend
to fund any additional stock purchases using cash flows from operations and
borrowings under our senior credit facility. Under our repurchase program,
through July 31, 2002, we have purchased 3,820,200 shares of our stock at total
cost of $32,525,000.

Our ability to make scheduled payments of principal, or to pay the interest on,
or to refinance, our indebtedness, or to fund planned capital expenditures, will
depend on our future performance, which, to a certain extent, is subject to
general economic, financial, competitive, legislative, regulatory and other
factors that are beyond our control. Based upon the current level of our
operations and anticipated cost savings and revenue growth, we believe that cash
flows from our operations and available cash, together with available borrowings
under our senior credit facility, will be adequate to meet our future liquidity
needs for at least the next several years. However, there can be no assurance
that our business will generate sufficient cash flows from operations, that we
will realize our anticipated revenue growth and operating improvements or that
future borrowings will be available under our senior credit facility in an
amount sufficient to enable us to service our indebtedness or to fund our other
liquidity needs.

Inflation
---------

Our operations are not significantly affected by inflation because we are not
required to make large investments in fixed assets. However, the rate of
inflation will affect certain of our expenses, such as employee compensation and
benefits.

Adoption of Accounting Pronouncements
-------------------------------------

In August 2001, the FASB issued Statement of Financial Accounting Standards No.
144 ("Statement 144"), Accounting for the Impairment or Disposal of Long-Lived
Assets. Statement 144 addresses financial accounting and reporting for the
impairment or disposal of long-lived assets. Statement 144 requires that one
accounting model be used for long-lived assets to be disposed of by sale and
broadens presentation of discontinued operations to include more disposals. Our
adoption or Statement 144 effective January 1, 2002 did not have a material
effect on our financial position or results of operations.



                                       26
<PAGE>


                    Quantitative and Qualitative Disclosures
                                About Market Risk

Interest Rate Risk
------------------

As of June 30, 2002, we had long-term debt (including current portion) totaling
$117,831,000, of which $100,000,000 has a fixed rate of interest of 8.75%,
$356,000 has fixed rates of 5% to 14%, $7,960,000 bears interest at a variable
rate equal to a specified prime rate, $9,500,000 bears interest at a variable
rate equal to LIBOR + 2 to 3.5% and $15,000 does not bear any interest. We are
exposed to some market risk due to the floating interest rate debt totaling
$17,460,000. We make monthly or quarterly payments of principal and interest on
$7,960,000 of the floating rate debt. An increase in interest rates of 1.5%
would result in a $262,000 annual increase in interest expense on this existing
principal balance.



                                       27
<PAGE>










                                     PART II


                                OTHER INFORMATION



                                       28
<PAGE>


ITEM 4.  SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
-------  ---------------------------------------------------
On June 18, 2002, we held an annual meeting of our stockholders to consider and
vote on the two proposals we describe below. Management solicited proxies for
this meeting.

1)     Election of seven directors to the board of directors;
       The nominees for director were:
       David D. Dulaney, M.D., Brad A. Hummel, Joseph Jenkins, M.D., J.D.,
       Michael R. Nicolais, William A. Searles, Kenneth S. Shifrin, and
       Michael J. Spalding, M.D.

All nominees were elected.  The voting was as follows:

 Nominee                     Votes For     Votes Against   Votes Withheld

 David D. Dulaney, M.D.      12,640,210    1,888,390              --
 Brad A. Hummel              13,875,378      653,222              --
 Joseph Jenkins, M.D., J.D.  13,875,378      653,222              --
 Michael R. Nicolais         13,875,378      653,222              --
 William A. Searles          13,875,378      653,222              --
 Kenneth S. Shifrin          12,973,676    1,554,924              --
 Michael J. Spalding, M.D.   13,874,681      653,919              --

2) We amended our 1993 Stock Option Plan to increase the aggregate number of
shares that we may issue thereunder by 500,000 to 4,550,000. The votes for were
13,456,432, the votes against were 1,035,860 and the votes withheld were 36,308.

Item 6.  Exhibits and Reports on Form 8-K.
-------  ---------------------------------

(a)      Exhibits

12.      Computation of ratio of earnings to fixed charges.

99.1     Certification of Chief Executive Officer

99.2     Certification of Chief Financial Officer

(b)      Current Reports on Form 8-K

         None.




                                       29
<PAGE>


                                   SIGNATURES


Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.



                                    PRIME MEDICAL SERVICES, INC.



Date:  August 7, 2002



                                    By: /s/ John Q. Barnidge
                                        John Q. Barnidge, Senior Vice President
                                         and Chief Financial Officer









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