-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, Q2dJ3EStRVYCtf3j/JbERrfkHhnG7hREcVG2wSf8iLA6w3d6Z8BnRM5WCY6AeXUH zHZ786vbw6g4Nx4E5Ln9FA== 0000724024-98-000006.txt : 19980518 0000724024-98-000006.hdr.sgml : 19980518 ACCESSION NUMBER: 0000724024-98-000006 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19980331 FILED AS OF DATE: 19980515 SROS: NASD FILER: COMPANY DATA: COMPANY CONFORMED NAME: AMERICAN PHYSICIANS SERVICE GROUP INC CENTRAL INDEX KEY: 0000724024 STANDARD INDUSTRIAL CLASSIFICATION: SERVICES-MANAGEMENT SERVICES [8741] IRS NUMBER: 751458323 STATE OF INCORPORATION: TX FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: SEC FILE NUMBER: 000-11453 FILM NUMBER: 98625457 BUSINESS ADDRESS: STREET 1: 1301 CAPITAL OF TEXAS HWY STREET 2: C-300 CITY: AUSTIN STATE: TX ZIP: 78746 BUSINESS PHONE: 5123280888 MAIL ADDRESS: STREET 1: 1301 CAPITAL OF TEXAS HIGHWAY CITY: AUTIN STATE: TX ZIP: 78746 10-Q 1 MARCH 31, 1998 FORM 10-Q ===================================================================== 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 PERIOD ENDED MARCH 31, 1998 OR [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE TRANSITION PERIOD FROM TO -------------------- -------------------- COMMISSION FILE NUMBER 0-11453 AMERICAN PHYSICIANS SERVICE GROUP, INC. (Exact name of registrant as specified in its charter) TEXAS 75-1458323 (State or other jurisdiction of (I.R.S. Employer incorporation or organization) identification No.) 1301 CAPITAL OF TEXAS HIGHWAY AUSTIN, TEXAS 78746 (Address of principal executive offices) (Zip Code) (512) 328-0888 (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 April 30, 1998 -------------------- ---------------- Common Stock, $.10 par value 4,160,693 ============================================================================ PART I FINANCIAL INFORMATION -2- AMERICAN PHYSICIANS SERVICE GROUP, INC. CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED) (In thousands) Three Months Ended March 31, 1998 1997 ---------- ---------- REVENUES: Financial services $3,022 1,946 Real estate 178 182 Investments and other 32 184 ---------- ---------- Total revenues 3,232 2,312 EXPENSES: Financial service expense 2,783 1,751 Real estate 131 129 General and administrative 219 259 Interest 4 3 ---------- ---------- Total expenses 3,136 2,141 ---------- ---------- Operating income/(loss) 96 171 Equity in earnings/(loss) of unconsolidated affiliates (Note 3) (297) 462 ---------- ---------- Earnings/(loss) from continuing operations before income taxes and minority interest (201) 633 Income tax expense/(benefit) (64) 225 Minority interest (1) --- --------- --------- Earnings/(loss) from continuing operations (138) 408 Discontinued operations: Earnings/(loss) from discontinued operations net of income tax benefit of $19 and $(21) in 1998 and 1997, respectively. 36 (42) ---------- ---------- NET EARNINGS/(LOSS) $(102) 366 ========== ========== See accompanying notes to consolidated financial statements - 3 - AMERICAN PHYSICIANS SERVICE GROUP, INC. CONSOLIDATED STATEMENT OF EARNINGS PER SHARE (UNAUDITED) EARNINGS PER COMMON SHARE: March 31, ------------------------ 1998 1997 --------- --------- Basic: Earnings/(loss) from continuing operations $(0.03) 0.10 Discontinued operations 0.01 (0.01) ---------- ---------- Net earnings/(loss) $(0.02) 0.09 Diluted: Earnings/(loss) from continuing opertions $(0.03) 0.10 Discontinued operations 0.01 (0.01) ---------- ---------- Net earnings/(loss) $(0.02) 0.09 Basic weighted average shares outstanding 4,159 4,032 ========== ========== Diluted weighted average shares outstanding 4,266 4,182 ========== ========== See accompanying notes to consolidated financial statements - 4 - AMERICAN PHYSICIANS SERVICE GROUP, INC. CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED) (In thousands) March 31, December 31, 1998 1997 ------------- ------------- ASSETS Current Assets: Cash and cash investments $3,354 5,188 Trading account securities 697 449 Notes receivable - current 818 1,157 Management fees and other receivables 750 815 Receivable from clearing broker 0 543 Income taxes receivable 34 0 Prepaid expenses and other 451 508 ------------- ------------- Total current assets 6,104 8,660 Notes receivable, less current portion 2,927 2,982 Property and equipment 1,760 1,830 Investment in affiliates 15,309 15,611 Preferred stock investment 2,078 --- Other assets 305 318 ------------- ------------- Total Assets $28,483 29,401 ============= ============= See accompanying notes to consolidated financial statements - 5 - AMERICAN PHYSICIANS SERVICE GROUP, INC. CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED) (In thousands) March 31, December 31, 1998 1997 ----------- ----------- LIABILITIES AND SHAREHOLDERS' EQUITY Current Liabilities: Accounts payable - trade $ 332 614 Payable to clearing broker 142 441 Accrued compensation 132 446 Accrued expenses and other liabilities (Note 4) 4,124 3,573 Income taxes payable 0 226 ----------- ----------- Total current liabilities 4,730 5,300 Net deferred income tax liability 740 822 ----------- ----------- Total liabilities 5,470 6,122 Minority interest 26 175 Shareholders' Equity: Preferred stock, $1.00 par value, 1,000,000shares authorized ---- ---- Common stock, $0.10 par value, shares authorized 20,000,000; issued 4,160,693 at 3/31/98 and 4,160,861 at 12/31/97 416 416 Additional paid-in capital 5,513 5,528 Retained earnings 17,058 17,160 ----------- ----------- Total shareholders' equity 22,987 23,104 Total Liabilities and Shareholders' Equity $28,483 29,401 =========== =========== See accompanying notes to consolidated financial statements - 6 - AMERICAN PHYSICIANS SERVICE GROUP, INC. CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED) (In thousands) Three Months Ended March 31, 1998 1997 ----------- ----------- Cash flows from operating activities: Cash received from customers $3,243 1,930 Cash paid to suppliers and employees (3,229) (2,335) Change in trading account securities (248) (40) Change in receivable from clearing broker 244 100 Interest paid (4) (3) Income taxes paid (286) (7) Interest, dividends and other investment proceeds 54 46 ----------- ----------- Net cash provided by (used in) operating activities (226) (309) Cash flows from investing activities: Proceeds from sale of property and equipment 2 --- Payments for purchase property and equipment (26) (56) Proceeds from equity owners in investment 259 --- Investment in preferred stock (2,073) --- Collection of notes receivable 345 9 Other 57 21 ----------- ----------- Net cash provided by (used in) investing activities (1,436) (26) Cash flows from financing activities: Repayment of long term obligations --- (542) Purchase/retire treasury stock (42) (180) Exercise of stock options 20 --- Distribution to minority interest (150) --- ----------- ----------- Net cash provided by (used in) financing activities (172) (722) ----------- ----------- Net change in cash and cash equivalents $(1,834) (1,057) =========== =========== Cash and cash equivalents at beginning of period 5,188 5,770 ----------- ----------- Cash and cash equivalents at end of period $3,354 4,713 =========== =========== See accompanying notes to consolidated financial statements - 7 - AMERICAN PHYSICIANS SERVICE GROUP, INC. CONSOLIDATED STATEMENTS OF CASH FLOWS, continued (In thousands) Three Months Ended March 31, 1998 1997 --------- --------- Reconciliation of net earnings to net cash from operating activities: Net earnings $(102) 366 Adjustments to reconcile net earnings to net cash from operating activities: Depreciation and amortization 149 87 Earnings from discontinued operations (55) --- Other miscellaneous gains --- (133) Write-off of fixed assets 7 --- Undistributed (earnings)/loss of affiliate 297 (399) Change in federal income tax payable (256) 47 Minority interest in consolidated earnings 1 --- Provision for deferred tax asset (82) 150 Change in trading securities (248) (40) Change in receivable from clearing broker 244 100 Change in management fees & other receivables 65 (431) Change in prepaids & other current assets 58 (140) Change in other assets --- (3) Change in trade payables (282) (206) Change in accrued expenses & other liabilities (22) 293 --------- --------- Net cash from operating activities $(226) (309) ========= ========= Summary of non-cash transactions: At March 31, 1997, the Company recognized a gain on the discontinuation of a lawyer's professional liability insurance exchange resulting from the reversal of accruals for contingencies which are no longer likely. The effect of this transaction was an increase to revenue and an increase to other assets of $133,000. See accompanying notes to consolidated financial statements - 8 - AMERICAN PHYSICIANS SERVICE GROUP, INC. NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS March 31, 1998 (Unaudited) 1. GENERAL The accompanying unaudited consolidated financial statements have been prepared in conformity with the accounting principles described in the audited financial statements for the year ended December 31, 1997 and reflect all adjustments which are, in the opinion of management, necessary for a fair statement of the financial position as of March 31, 1998 and the results of operations for the periods presented. These statements have not been audited or reviewed by the Company's 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 the Company's Annual Report on Form 10-K for the year ended December 31, 1997 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 of the Company. Certain reclassifications have been made to amounts presented in prior periods to be consistent with the 1998 presentation. 2. CONTINGENCIES In conjunction with a settlement agreement, the Company's broker/dealer subsidiary, APS Financial, has guaranteed the future yield of a customer's investment portfolio beginning in November 1994 for up to a five and one-half year period. Management believes that the Company's financial statements adequately provide for any loss that might occur under this agreement; however, as defined in AICPA Statement of Position 94-6, it is reasonably possible that the Company's estimate of loss could change over the remaining term of the agreement. Management is unable to determine the range of potential adjustment since it is based on securities markets, which are beyond its ability to control. - 9 - 3. EQUITY IN EARNINGS OF UNCONSOLIDATED AFFILIATE At March 31, 1998 the Company owned 15.9% (3,064,000 shares) of the outstanding common stock of Prime Medical Services, Inc. ("Prime"). The Company records its pro-rata share of Prime's results on the equity basis. Prime is in the business of providing lithotripsy services. The common stock of Prime is traded in the over-the-counter market under the symbol "PMSI". Prime is a Delaware corporation which is required to file annual, quarterly and other reports and documents with the Securities and Exchange Commission, which reports and documents contain financial and other information regarding Prime. Such reports and documents may be examined and copies may be obtained from the offices of the Securities and Exchange Commission. At March 31, 1998 the Company owned 74.0% of Syntera HealthCare Corporation ("Syntera"). The Company records its pro-rata share of Syntera's results on the equity basis. Syntera specializes in the management of OB/GYN and related medical practices. The Company expects to reduce its ownership to a minority level as Syntera issues additional shares for future acquisitions. Due to the short time frame anticipated for this change in ownership to occur, the Company has accounted for its ownership on the equity basis in the first quarter of 1998. 4. ACCRUED EXPENSES AND OTHER LIABILITIES Accrued expenses and other liabilities consists of the following: March 31 December 31 1998 1997 ----- ----- Taxes payable-other ...............................$ 226,000 196,000 Commissions payable ............................... 300,000 287,000 Deferred income ................................... 571,000 280,000 Health insurance and other claims payable ......... 18,000 59,000 Contractual/legal claims ........................ 1,508,000 1,461,000 Vacation payable .................................. 98,000 102,000 Funds held for others ............................. 334,000 58,000 Systems disposition costs ........................ 1,132,000 1,138,000 Other ............................................. (63,000) (8,000) ---------- ---------- $4,124,000 3,573,000 ========== ========== - 10 - 5. Discontinued Operations The Company, through its wholly owned subsidiary, APS Systems, Inc. ("Systems"), had previously developed software and marketed it to medical clinics and medical schools. This business segment became unprofitable and the Company ceased marketing the software and reduced the scope of Systems' operations to a level adequate to service existing clients through the terms of their contracts. The Company has assumed that all clients will have migrated to other software products by the end of 1999 and has reflected the expected financial impact of discontinuing this segment on that date in the 1997 financial statements. Net assets/(liabilities) of the discontinued computer systems and software segment as of March 31, 1998 consisted of the following: Cash and cash investments $ 122.0 Trade accounts receivable 191.6 Other receivables 20.9 Prepaid and other current assets 71.0 Fixed assets, net of depreciation 75.6 Intercompany receivables 668.8 Trade accounts payable (4.6) Accrued expenses (1,166.5) -------- Net liabilities $ (21.2) ======== 6. EARNINGS PER SHARE Statement of Financial Accounting Standards No. 128, Earnings per Share ("Statement 128") specifies new measurement, presentation and disclosure requirements for earnings per share and is required to be applied retroactively upon initial adoption. The Company has adopted Statement 128 effective with the release of the December 31, 1997 earnings data, and accordingly, has restated herein all previously reported earnings per share data. Basic earnings per share is based on the weighted average shares outstanding without any dilutive effects considered. Diluted earnings per share reflect dilution from all contingently issuable shares, including options and convertible debt. A reconciliation of income and average shares outstanding used in the calculation of basic and diluted earnings per share from continuing operations follows: - 11 - 6. EARNINGS PER SHARE, continued For the Quarter Ended March 31, 1998 ------------------------------------------ Income Shares Per Share (Numerator) (Denominator) Amount Loss from continuing operations $(102,000) Basic EPS Loss available to common stockholders (102,000) 4,159,000 $(.02) Effect of Dilutive Securities Options --- --- Contingently issuable shares (5,000) 137,000 ---------- ---------- Diluted EPS Loss available to common stockholders and assumed conversions $(107,000) 4,266,000 $(.02) =========== ========= ====== For the Quarter Ended March 31, 1997 ----------------------------------------- Income Shares Per Share (Numerator) (Denominator) Amount Earnings from continuing operations $366,000 Basic EPS Income available to 366,000 4,032,000 $.09 Common stockholders Effect of Dilutive Securities Options --- 150,000 Contingently issuable shares --- --- --------- --------- Diluted EPS Income available to common stockholders and assumed conversions $366,000 4,182,000 $.09 ======== ========= ===== - 12 - 6. EARNINGS PER SHARE, continued Unexercised employee stock options to purchase 366,800 shares of the Company's common stock as of March 31, 1998 were not included in the computations of diluted EPS because the effect would be antidilutive. Unexercised employee stock options to purchase 287,300 shares of the Company's common stock as of March 31, 1997 were not included in the computations of diluted EPS because the options' prices were greater than the average market price of the Company's common stock during the period. At March 31, 1998 the Company's affiliate, Syntera HealthCare Corp., had issued 241,000 shares which are convertible into 137,000 of the Company's common shares in the event that the Syntera shares are not publicly tradeable by May 1, 1999. - 13 - MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS RESULTS OF OPERATIONS REVENUES Revenues from operations increased $920,000 (39.8%) for the three-month period ended March 31, 1998 compared to the same period in 1997. Financial services revenues increased while real estate and investments and other revenues decreased compared to the same period in 1997. Financial services revenues increased $1,076,000 (55.3%) for the three-month period ended March 31, 1998 compared to the same period in 1997. The increase in 1998 was due to greater commission income at the Company's broker/dealer subsidiary, APS Financial Corp. Total revenues at APS Financial rose $1,176,000 (128.2%). The higher commission income is primarily the result of a greater number of experienced brokers, most of whom joined the Company through the opening of a branch office in Houston, Texas on March 1, 1997. The Houston office currently employs eighteen brokers. Revenues from premium-based insurance management fees were down $100,000 (9.8%) for the three month period ended March 31, 1998 compared to the same period in 1997, due primarily to stiffer competition in the Texas professional liability insurance market which has resulted in fewer insureds and lower premium rates. Real estate revenues decreased $4,000 (2.2%) for the current year three-month period ended March 31, 1998 compared to the same period in 1997. The decrease in 1998 reflects greater utilization of the office building by the Company and affiliates at lower rates than outside tenants. Given the current economic good health of the Austin real estate market, it is reasonable to expect rental and occupancy rates to remain favorable throughout 1998. Investment and other income decreased $152,000 (82.6%) for the three-month period ended March 31, 1998 compared to the same period in 1997. The decrease in the current quarter was primarily due to a gain on the dissolution of an inactive insurance entity in the first quarter of 1997. In addition, investment and other income declined due to reduced interest income arising from a lower investable cash balance. Cash and cash investments was lower due to a $4,387,000 cash investment in the Company's OB/GYN management affiliate, Syntera HealthCare Corporation, in November 1997 and a March 1998 cash investment of $1,962,000 in a privately-held developer and operator of dedicated Alzheimer's care facilities, Uncommon Care, Inc. EXPENSES Total operating expenses increased $995,000 (46.5%) for the three-month period ended March 31, 1998 compared to the same period in 1997. Financial services and real estate expenses increased while investments and other expenses decreased compared to the same period in 1997. - 14 - Financial services expense increased $1,032,000 (58.9%) for the three-month period ended March 31, 1998 compared to the same period in 1997. The primary reason for the increase is higher commission expense resulting from the increase in commission revenue at the Company's broker/dealer subsidiary, APS Financial. In addition, general and administrative costs at APS Financial increased in the current quarter primarily as a result of opening the Houston branch office. Expenses at the insurance management subsidiary increased $36,000 (4.2%) for the three month period ended March 31, 1998 compared to the same period in 1997 due primarily to higher commissions expense which is the result of outside agents producing a higher percentage of total premiums. Partially offsetting this was a decrease in personnel related costs resulting from a reallocation of some salary expenses from operations to administration. General and administrative expense decreased $40,000 (15.4%) for the three-month period ended March 31, 1998 compared to the same period in 1997. The decrease in the current quarter was due primarily to the reversal of a certain contingent expense accrual deemed no longer necessary. Partially offsetting this was an increase in personnel related costs resulting from a reallocation of some salary expenses from operations to administratiion. EQUITY IN EARNINGS/(LOSS) OF UNCONSOLIDATED AFFILIATES The Company's equity in earnings of Prime Medical Services, Inc. ("Prime") decreased $647,000 for the three month period ended March 31, 1998 compared to the same period in 1997. Current year earnings were adversely affected by a nonrecurring write-off of approximately $5.0 million in fees incurred in connection with a $100 million senior subordinated debt offering by Prime, completed in March 1998. In addition, Prime expensed an additional $1.6 million associated with nonrecurring restructuring/development costs. Excluding these non-recurring write-offs, Prime's net income for the first quarter of 1998 was $3.2 million compared to $3.1 million in the same quarter of 1997. The Company's percentage ownership of Prime was 15.9% at March 31, 1998. The Company's equity in the loss of Syntera HealthCare Corporation totaled $112,000 which represents the Company's 74.0% share of an after-tax loss at Syntera of $151,000. At March 31, 1998 Syntera had entered into management contracts with a total of four OB/GYN physicians. Long-term contracts were entered into with three additional physicians as of April 30, 1998. MINORITY INTEREST The Company records twenty percent of the after-tax profit or loss of Insurance Services as minority interest on the condensed consolidated statement of operations as well as the condensed consolidated balance sheet. The minority interest was purchased in June 1997 by Florida Physicians Insurance Company for $2,000,000. - 15 - LIQUIDITY AND CAPITAL RESOURCES Current assets exceeded current liabilities by $1,374,000 and $3,360,000 at March 31, 1998, and December 31, 1997, respectively. The decrease was primarily the result of cash invested ($1,962,000) in Uncommon Care, Inc., a privately-held developer and operator of dedicated Alzheimer's care facilities. Capital expenditures through the period ended March 31, 1998 were approximately $26,000. Total capital expenditures are expected to be approximately $150,000 in 1998. Historically, the Company has maintained a strong working capital position and, has been able to satisfy its operational and capital expenditure requirements with cash generated from its operating and investing activities. These same sources of funds have also allowed the Company to pursue investment and expansion opportunities consistent with its growth plans. To further its ability to meet its liquidity requirements and to accelerate its growth, the Company has established a $10,000,000 revolving line of credit with NationsBank of Texas, N.A. The line of credit is for a term of thirty-six months with a fluctuating interest rate (currently 8.25%) based upon the prime rate. No funds were advanced under this credit line as of April 30, 1998. - 16 - PART II OTHER INFORMATION - 17 - Item 1. LEGAL PROCEEDINGS The Company is involved in various claims and legal actions that have arisen in the ordinary course of business. The Company believes that the liability provision in its financial statements is sufficient to cover any unfavorable outcome related to lawsuits in which it is currently named. Management believes that liabilities, if any, arising from these actions will not have a significant adverse effect on the financial condition of the Company. However, due to the uncertain nature of legal proceedings, the actual outcome of these lawsuits may differ from the liability provision recorded in the Company's financial statements. Item 5. OTHER INFORMATION On October 31, 1996, the Company invested $3,300,000 in common stock of Exsorbet Industries, Inc. ("Exsorbet") (NASDAQ:EXSO) with a put option. Exsorbet is a diversified environmental and technical services company. On November 26, 1996, the Company exercised its put in exchange for a note receivable from Exsorbet. The note is secured by the shares that were subject to the put plus all the stock and substantially all of the assets of a wholly owned subsidiary of Exsorbet. On November 13, 1997, the Company announced that it has reached an agreement with Consolidated Eco-Systems, Inc. ("Consolidated ECO", formerly Exsorbet) to restructure the terms of the $3,300,000 note due October 1, 1997. In exchange for additional collateral and certain covenants, APS has agreed to roll all interest due into the note and has extended the terms of the note for two years. Repayment terms are geared to track Consolidated ECO's improving cash flow and will include monthly payments of $40,000 from January 1, 1998 through September 30, 1998, at which time payments become $85,000. The remaining note balance is due October 1, 1999. No interest has been accrued on this note and, consequently, there was no income effect from converting the interest to additional debt. On March 13, 1998 Consolidated Eco announced that its subsidiary, 7-7 Inc., has been declared in default of a Loan Agreement, Security Agreement, and Forebearance Agreement by Dollar Bank of Cleveland, Ohio. Dollar Bank has additionally accelerated all amounts due to it from 7-7, Inc. The amounts total approximately $850,000. As a result of the actions of Dollar Bank, the business operations of 7-7, Inc. have effectively been terminated. APS is a second lien holder of the assets of 7-7, Inc. and does not expect to recoup any funds realized by the foreclosure and subsequent sale of these assets by Dollar Bank. However, APS's debt continues to be collateralized by common stock of Consolidated Eco and one of its subsidiaries, Eco Acquisition, Inc. APS is also the second lien holder of the assets of another Consolidated Eco subsidiary, LARCO Environmental Services, Inc. - 18 - On March 20, 1998 the Company purchased non-voting convertible preferred stock of Uncommon Care, Inc., a developer and operator of dedicated Alzheimer's care facilities. The shares are convertible into approximately 34% of Uncommon Care's equity. In addition to the purchase price of approximately $2.0 million, APS has provided a line of credit to Uncommon Care of $2.4 million to be used for working capital and interim development financing. As of April 30, 1998 no funds had been advanced. On April 28, 1998 the Company announced that Uncommon Care was opening its third residential care facility, located in Austin, and has broken ground on a fourth facility, located in Houston. On April 23, 1998 the Company's affiliate, APS Practice Management, announced that it had changed its name to Syntera HealthCare Corporation ("Syntera"). Syntera is a physician practice management company specializing in OB/GYN practices. The Company is currently a 74% owner of Syntera, a percentage expected to decline to a minority level as Syntera issues additional shares for future acquisitions. Syntera also announced that it had signed additional physician contracts in its Austin, Texas location and had established a San Antonio presence by entering into contracts with two physicians there. Item 6. Exhibits and Reports on Form 8-K (a) Exhibits 27 Financial data schedule as of March 31, 1998. (b) Current reports on Form 8-K. No current reports on Form 8-K were filed during the quarter ended March 31, 1998. - 19 - 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. AMERICAN PHYSICIANS SERVICE GROUP, INC. Date: May 15, 1998 By: /s/ William H. Hayes -------------------------------------- William H. Hayes, Vice President and Chief Financial Officer - 20 - EX-27 2 FINANCIAL DATA SCHEDULE
5 THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE MARCH 31, 1998 FORM 10-Q AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS. 1,000 3-MOS DEC-31-1998 JAN-01-1998 MAR-31-1998 3,354 697 1,630 84 22 6,104 5,611 3,851 28,483 4,730 0 0 0 416 22,571 28,483 0 3,232 0 2,997 135 0 4 (201) (64) (138) 36 0 0 (102) (0.02) (0.02)
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