-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: keymaster@town.hall.org Originator-Key-Asymmetric: MFkwCgYEVQgBAQICAgADSwAwSAJBALeWW4xDV4i7+b6+UyPn5RtObb1cJ7VkACDq pKb9/DClgTKIm08lCfoilvi9Wl4SODbR1+1waHhiGmeZO8OdgLUCAwEAAQ== MIC-Info: RSA-MD5,RSA, YHwwideeYxpmmD6XEpkPQXzng1v7AGk4GlBzRTcPDKEi1ejknhrAlB5/k/etneJY M7/rCfLFt2ritcHBuI98UA== 0000930661-95-000259.txt : 19950814 0000930661-95-000259.hdr.sgml : 19950814 ACCESSION NUMBER: 0000930661-95-000259 CONFORMED SUBMISSION TYPE: 10QSB PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 19950630 FILED AS OF DATE: 19950811 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: 10QSB SEC ACT: 1934 Act SEC FILE NUMBER: 000-11453 FILM NUMBER: 95561450 BUSINESS ADDRESS: STREET 1: 1301 CAPITAL OF TEXAS HWY CITY: AUSTIN STATE: TX ZIP: 78746 BUSINESS PHONE: 5123280888 MAIL ADDRESS: STREET 1: 1301 CAPITAL OF TEXAS HIGHWAY CITY: AUTIN STATE: TX ZIP: 78746 10QSB 1 FORM 10-QSB =============================================================================== UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON D.C. 20549 ------------------ FORM 10-QSB [X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE PERIOD ENDED JUNE 30, 1995 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 JULY 31, 1995 ------------------- ------------------------------- Common Stock, $.10 par value 3,517,684 =============================================================================== PART I FINANCIAL INFORMATION -2- AMERICAN PHYSICIANS SERVICE GROUP, INC. CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED) (In thousands, except per share data)
Three Months Ended Six Months Ended June 30, June 30, 1995 1994 1995 1994 ----------- ----------- ---------- ----------- REVENUES: Financial services $3,199 2,078 6,029 4,843 Computer systems/software 1,106 1,689 2,379 2,514 Publications 757 (2) 757 (1) Real estate 167 142 329 267 Investments and other 104 93 522 241 ------ ----- ------ ------ Total revenues 5,333 4,000 10,016 7,864 EXPENSES: Financial service expense 2,658 2,087 5,199 4,593 Computer systems/software 952 1,416 2,059 2,273 Publications 829 70 968 149 Real estate 125 111 248 219 General and administrative 358 295 1,096 537 Interest 20 48 46 94 ------ ----- ------ ------ Total expenses 4,942 4,027 9,616 7,865 ------ ----- ------ ------ Operating income (loss) 391 (27) 400 (1) Equity in earnings of unconsolidated affiliate (Note 3) 303 246 604 419 ------ ----- ------ ------ Earnings before income taxes 694 219 1,004 418 Income tax 238 75 346 137 ------ ------ ------ ------ NET EARNINGS $ 456 144 658 281 ====== ====== ====== ====== EARNINGS PER COMMON SHARE: Primary $ 0.12 0.04 0.18 0.08 ====== ====== ====== ====== Fully Diluted $ 0.12 0.04 0.17 0.08 ====== ====== ====== ====== Primary weighted average shares outstanding 3,808 3,481 3,727 3,512 ====== ====== ====== ====== Fully Diluted weighted average shares outstanding 3,808 3,481 3,764 3,512 ====== ====== ====== ======
See accompanying notes to consolidated financial statements -3- AMERICAN PHYSICIANS SERVICE GROUP, INC. CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED) (In thousands)
June 30, December 31, 1995 1994 -------- ------------ ASSETS CURRENT ASSETS: Cash and cash investments $ 6,741 3,266 Marketable securities 540 1,491 Trading account securities 1,583 661 Notes receivable - current 90 325 Management fees and other receivables 1,794 2,932 Receivable from clearing broker ---- 491 Deferred income taxes 164 163 Prepaid expenses and other 404 806 ------- ------- TOTAL CURRENT ASSETS 11,316 10,135 Notes receivable, less current portion 74 915 Property and equipment 2,058 2,025 Investment in Prime Medical Services, Inc. 6,262 5,658 Other assets 1,300 1,185 ------- ------- TOTAL ASSETS $21,010 19,918 ======= =======
See accompanying notes to consolidated financial statements -4- AMERICAN PHYSICIANS SERVICE GROUP, INC. CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED) (In thousands)
June 30, December 31, 1995 1994 -------- ------------ LIABILITIES AND SHAREHOLDERS' EQUITY Current liabilities: Current installments of obligations under capital leases $ 285 327 Accounts payable - trade 273 809 Accrued compensation 158 488 Payable to clearing broker 590 ---- Accrued expenses and other liabilities 2,910 2,168 Federal income taxes payable 222 257 ------- ------ Total current liabilities 4,438 4,049 Long-term obligations 735 878 ------- ------ TOTAL LIABILITIES 5,173 4,927 SHAREHOLDERS' EQUITY: Preferred stock, $1.00 par value, 1,000,000 shares authorized ---- ---- Common stock, $0.10 par value, shares authorized 20,000,000; issued 3,517,684 at 6/30/95 and 3,471,684 at 12/31/94 360 347 Additional paid-in capital 4,653 4,469 Unrealized holding gains 35 44 Retained earnings 11,332 10,674 Reciprocal stockholdings (543) (543) ------- ------ TOTAL SHAREHOLDERS' EQUITY 15,837 14,991 TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $21,010 19,918 ======= ======
See accompanying notes to consolidated financial statements -5- AMERICAN PHYSICIANS SERVICE GROUP, INC. CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED) (In thousands)
Six Months Ended June 30, 1995 1994 -------- ------- CASH FLOWS FROM OPERATING ACTIVITIES: Cash received from customers $10,600 7,366 Cash paid to suppliers and employees (9,089) (8,386) Change in trading account securities (922) (445) Change in payable to clearing broker 1,081 429 Interest paid (46) (94) Income taxes paid (382) --- Interest, dividends and other investment proceeds 515 135 ------- ------ Net cash provided by (used in) operating activities 1,757 (995) CASH FLOWS FROM INVESTING ACTIVITIES: Proceeds from the sale of marketable securities 937 48 Payments for purchase of marketable securities --- (483) Proceeds from the sale of fixed assets --- 14 Payments for purchase property and equipment (308) (76) Collection of notes receivable 1,077 1,021 Proceeds from distribution of partnership --- 146 ------- ------ Net cash provided by investing activities 1,706 670 CASH FLOWS FROM FINANCING ACTIVITIES: Repayment of long term obligations (185) (396) Decrease in minority interest --- (51) Exercise of stock options 197 --- ------- ------ Net cash provided by (used in) financing activities 12 (447) ------- ------ NET CHANGE IN CASH AND CASH EQUIVALENTS $ 3,475 (772) ======= ====== Cash and cash equivalents at beginning of period 3,266 2,544 ------- ------ Cash and cash equivalents at end of period $ 6,741 1,772 ======= ======
See accompanying notes to consolidated financial statements -6- AMERICAN PHYSICIANS SERVICE GROUP, INC. Consolidated Statements of Cash Flows, continued (In thousands)
Six Months Ended June 30, 1995 1994 -------- ------- Reconciliation of net earnings to net cash from operating activities: Net earnings $ 658 281 Adjustments to reconcile net earnings to net cash from operating activities: Depreciation and amortization 204 143 Minority interest in consolidated earnings --- 15 Undistributed earnings of affiliate (604) (419) Change in federal income tax payable (35) (51) Provision for deferred tax asset (1) 108 Change in trading securities (922) (445) Change in payable to clearing broker 1,081 429 Change in management fees & other receivables 1,137 (320) Change in prepaids & other current assets 402 (90) Change in other assets (39) (20) Change in trade payables (536) (309) Change in accrued expenses & other liabilities 412 (317) ------ ---- Net cash from operating activities $1,757 (995) ====== ====
Summary of non-cash transactions: At January 1, 1994, the Company began recording marketable securities at fair value, with unrealized holding gains and losses (net of tax) reported as a separate component of shareholder's equity, per Statement of Financial Accounting Standards #115. The effect of this resulted in a decrease to unrealized holding gains of $9,571, an increase to deferred tax assets of $15,746 and a decrease to marketable securities of $23,317 for the six months ended June 30, 1995 compared to December 31, 1994. See accompanying notes to consolidated financial statements -7- AMERICAN PHYSICIANS SERVICE GROUP, INC. NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS JUNE 30, 1995 (Unaudited) 1. GENERAL ------- The accompanying unaudited consolidated financial statements have been prepared in conformity with the accounting principles stated in the audited financial statements for the year ended December 31, 1994 and reflect all adjustments which are, in the opinion of management, necessary for a fair statement of the financial position as of June 30, 1995 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-KSB for the year ended December 31, 1994 filed with the Securities Exchange Commission should be read in conjunction with this Quarterly Report on Form 10-QSB. There have been no significant changes in the information reported in those notes other than from normal business activities of the Company. Certain classifications in 1994 have been reclassified to be consistent with 1995 classifications. 2. MARKETABLE SECURITIES ---------------------- Marketable securities include equity securities and investments in bonds that are intended to be held less than one year. At January 1, 1994, the Company began recording these securities at fair value, with unrealized holding gains and losses reported as a separate component of shareholders' equity, per SFAS- 115. 3. 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. Through June 30, 1995 APS Financial has accrued $293,000 in contingent liabilities to cover potential portfolio deficiencies. -8- 4. EQUITY IN EARNINGS OF UNCONSOLIDATED AFFILIATE ---------------------------------------------- At June 30, 1995 the Company owned 23% (3,302,000 shares) of the outstanding common stock of Prime Medical Services, Inc. ("Prime"). The Company has granted to a third party the right to purchase 237,500 of such shares at $1.25 per share and expects to exchange these shares for a note payable amounting to $296,875. These options became exercisable in June, 1995 and expire in June, 1996. 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. -9- MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL ------------------------------------------------- CONDITION AND RESULTS OF OPERATIONS ----------------------------------- RESULTS OF OPERATIONS - --------------------- REVENUES - -------- Revenues from operations increased $1,333,000 (33.3%) and $2,152,000 (27.4%) for the three and six month periods ended June 30, 1995, respectively, compared to the same periods in 1994. Financial services, publications, real estate and investments and other increased during the first three and six months of 1995 while computer systems and software sales revenues decreased compared to the same periods in 1994. Financial services revenues increased $1,121,000 (54.0%) and $1,186,000 (24.5%) for the three and six month periods ended June 30, 1995, respectively, compared to the same periods in 1994. The 2nd quarter increase was primarily due to much higher broker/dealer commissions (37.0%), a result of a rally in the bond market caused by lower interest rates which pushed up bond prices. Revenues from premium-based insurance management fees were also up (8.2%) for the first six months of 1995 compared to the same period in 1994, due primarily to the addition of new large-group clients in the 2nd quarter of 1995. Computer systems and software sales revenues decreased $583,000 (34.5%) and $135,000 (5.3%) for the three and six month periods ended June 30, 1995, respectively, compared to the same periods in 1994. The 2nd quarter decrease was primarily due to lower hardware sales, which were earned in the 2nd quarter of 1994 primarily from a large contract. Contracts in the 2nd quarter of 1995 contained smaller hardware components. Publications revenues for the three and six month periods ended June 30, 1995, were $757,000 compared to zero for the same two periods in 1994. This variance is due to a difference in the distribution dates of the Spanish Yellow Page Directory. The Company recognizes revenues upon distribution of its directories. Distribution of the 1993 directory was in late 1993 while distribution of the 1994 directory was early in 1995; consequently, no revenue was recognized in 1994. Real estate revenues rose $25,000 (17.0%) and $62,000 (23.2%) for the three and six month periods ended June 30, 1995, respectively, compared to the same periods in 1994. The increase in both periods was due to achieving full occupancy and also due to rising lease rates. 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 the remainder of the year. -10- Investment and other income increased $11,000 (11.7%) and $281,000 (116.7%) for the three and six month periods ended June 30, 1995, respectively, compared to the same periods in 1994. The six month variance is primarily due to reimbursements received in 1995 for the settlement of the Texas Hospital Insurance Exchange ("THIE") lawsuit described in the 1994 Form 10-KSB. The Company has filed a lawsuit against THIE to recover additional costs related to defending the origianal THIE lawsuit. Expenses - -------- Total expenses increased $915,000 (22.7%) and $1,751,000 (22.5%) for the three and six month periods ended June 30, 1995, respectively, when compared to the same periods in 1994. All segments of the Company except computer systems and software sales experienced increases in expenses for the three and six month periods in 1995. Financial services expense increased $571,000 (27.3%) and $606,000 (13.2%) for the three and six month periods. The increase in the 2nd quarter of 1995 was primarily the result of higher commissions paid in broker/dealer operations arising from the higher commission revenues. In addition, a large increase in legal and professional fees, related to potential liabilities from the settlement of certain litigation described in Section 3 of the Notes to the Condensed Consolidated Financial Statements, further increased the six month variance. Efforts to reduce general and administrative expenses within the broker/dealer subsidiary have resulted in a 18.1% decrease for the six month period in 1995 compared to 1994. Expenses at the insurance management subsidiary were up slightly for both the three and six month periods ended June 30, 1995 compared to the same periods in 1994 due primarily to personnel merit raises. Computer systems/software expense decreased $464,000 (32.8%) and $214,000 (9.4%) for the three and six month periods ended June 30, 1995, respectively, compared to the same periods in 1994. The decrease is due to lower hardware cost of sales, resulting directly from the aforementioned decrease in hardware sales revenue. Partially offsetting the six month decrease was an increase in personnel costs, a result of staff increases associated with installing and servicing new contracts. Publications expense increased $759,000 (1,083.7%) and $819,000 (550.6%) for the three and six month periods ended June 30, 1995, respectively, compared to the same periods in 1994. The delay in distributing the 1994 directory until April, 1995 caused both revenues and expenses to be recognized in the 2nd quarter of 1995. Expenses from the prior directory were recognized in the 4th quarter of 1993 since that directory was distributed in December 1993. This timing difference is the reason for the large expense variance. -11- Real estate expense increased $14,000 (12.9%) and $29,000 (12.7%) for the three and six month periods ended June 30, 1995, respectively, compared to the same periods in 1994. The increase in both periods is primarily attributable to higher utilities as well as to higher property taxes, caused by appreciation in the taxable value of the building operated by the Company. General and administrative expense increased $63,000 (21.6%) and $559,000 (104.6%) during for the three and six month periods ended June 30, 1995, respectively, compared to the same periods in 1994. The increase for the six month period was due primarily to accruals made for certain contingent liabilities associated with ongoing litigation. Interest expense decreased $28,000 (58.3%) and $48,000 (51.1%) for the three and six month periods ended June 30, 1995, respectively, compared to the same periods in 1994. Both period decreases were due to a lower volume of securities held in inventory at the broker/dealer subsidiary for resale to clients. A lower inventory requires a lower level of securities purchased on margin which corresponds to lower interest charged. Liquidity and Capital Resources - ------------------------------- Current assets exceeded current liabilities by $6,931,000 and $6,086,000 at June 30, 1995, and December 31, 1994, respectively. The increase is primarily attributable to cash receipt of a long term note receivable as well as reimbursement received for certain litigation related expenses. To further its ability to meet its liquidity requirements, the Company has established a $2,000,000 revolving line of credit with a bank. The loan is renewable annually and bears interest at the bank's prime rate. The loan is secured by accounts receivable and is guaranteed by APS Facilities Management, Inc. and APS Systems, Inc., two subsidiaries of the Company. The Company plans to use this line of credit to supplement its working capital. No funds were advanced under this line at June 30, 1995. Capital expenditures through the quarter ended June 30, 1995 were approximately $308,000 and total capital expenditures are expected to be approximately $375,000 in 1995. Management believes that its working capital position together with funds generated from operations and from available lines of credit will provide sufficient resources to meet all present and reasonably foreseeable and capital needs. -12- PART II OTHER INFORMATION -13- 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 August 3, 1995, the Company's unconsolidated affiliate, Prime Medical Services, Inc., ("Prime") acquired a 32.5% interest in a lithotripter facility located in Sherman Oaks, California. The lithotripter facility generates approximately $2.4 million in annual revenues and is Prime's first entry into the California lithotripter marketplace. This acquisition also represents an expansion in managed care for Prime as it provides services to approximately 50 managed care providers. Item 6. EXHIBITS AND REPORTS ON FORM 8-K -------------------------------- (a) Exhibits 11 Computation of Net Income Per Share at June 30, 1995 and 1994. 27 Financial Data Schedule (b) Current reports on Form 8-K. No current reports on Form 8-K were filed during the quarter ended June 30, 1995. -14- 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: August 11, 1995 By: /s/ William H. Hayes --------------------------------------- William H. Hayes, Vice President and Chief Financial Officer -15- EX-11 2 COMP. OF EPS EXHIBIT 11 AMERICAN PHYSICIANS SERVICE GROUP, INC. COMPUTATION OF NET INCOME PER SHARE FOR THE THREE MONTHS ENDED JUNE 30, 1995 AND 1994 (In thousands, except earnings per share) Primary Fully Diluted Earnings Earnings Per Share Per Share --------- -------------- 1995 Net Income applicable to common stock $ 456 456 Average number of shares outstanding 3,423 3,423 Average stock option shares 385 385 ------ ------ Shares for earnings calculation 3,808 3,808 Net income per share $ 0.12 0.12 ====== ===== 1994 Net Income applicable to common stock $ 144 144 Average number of shares outstanding 3,296 3,296 Average stock option shares 185 185 ------ ------ Shares for earnings calculation 3,481 3,481 Net income per share $ 0.04 0.04 ====== ===== NOTE: Primary and fully diluted income per share were computed by dividing net income by the average number of shares outstanding plus the common stock equivalents which, would arise from the exercise of dilutive stock options. EXHIBIT 11 AMERICAN PHYSICIANS SERVICE GROUP, INC. COMPUTATION OF NET INCOME PER SHARE FOR THE SIX MONTHS ENDED JUNE 30, 1995 AND 1994 (In thousands, except earnings per share) Primary Fully Diluted Earnings Earnings Per Share Per Share --------- ------------- 1995 Net Income applicable to common stock $ 658 658 Average number of shares outstanding 3,384 3,384 Average stock option shares 343 380 ------ ------ Shares for earnings calculation 3,727 3,764 Net income per share $ 0.18 0.17 ====== ====== 1994 Net Income applicable to common stock $ 281 281 Average number of shares outstanding 3,296 3,296 Average stock option shares 216 216 ------ ------ Shares for earnings calculation 3,512 3,512 Net income per share $ 0.08 0.08 ====== ====== NOTE: Primary and fully diluted income per share were computed by dividing net income by the average number of shares outstanding plus the common stock equivalents which, would arise from the exercise of dilutive stock options. EX-27 3 FINANCIAL DATA SCHEDULE
5 THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM JUNE 30, 1995 FORM 10-QSB AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS. 1,000 3-MOS 6-MOS DEC-31-1995 DEC-31-1995 APR-01-1995 JAN-01-1995 JUN-30-1995 JUN-30-1995 0 6,741 0 2,123 0 1,884 0 0 0 38 0 11,316 0 5,098 0 3,040 0 21,010 0 4,438 0 0 0 360 0 0 0 0 0 15,470 0 21,010 5,147 9,345 5,333 10,016 301 773 3,699 7,159 922 1,638 0 0 20 46 694 1,004 238 346 456 658 0 0 0 0 0 0 456 658 0.12 0.18 0.12 0.17
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