-----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, MKJ+IafSNs0pSKmaMS+VmGLvbaBYTO0ck0LWQL3cZqU89A1lcVnnUIHpkqLPNr6D kaHiYXpk8v9d9pSIyEpeYQ== 0000950130-97-003296.txt : 19970728 0000950130-97-003296.hdr.sgml : 19970728 ACCESSION NUMBER: 0000950130-97-003296 CONFORMED SUBMISSION TYPE: 10-Q/A PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 19970331 FILED AS OF DATE: 19970725 SROS: NASD FILER: COMPANY DATA: COMPANY CONFORMED NAME: PHYSICIANS HEALTH SERVICES INC CENTRAL INDEX KEY: 0000867098 STANDARD INDUSTRIAL CLASSIFICATION: SERVICES-HEALTH SERVICES [8000] IRS NUMBER: 061116976 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q/A SEC ACT: 1934 Act SEC FILE NUMBER: 000-21098 FILM NUMBER: 97645424 BUSINESS ADDRESS: STREET 1: 120 HAWLEY LANE STREET 2: 1243 BROADRICK DRIVE CITY: TRUMBULL STATE: CT ZIP: 06611 BUSINESS PHONE: 2033816400 10-Q/A 1 FORM 10-Q/A -------------------------------------------------------------- UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-Q/A-1 (Mark One) X QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES - - EXCHANGE ACT OF 1934 For the quarterly period ended March 31, 1997. _ 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 0-21098. Physicians Health Services, Inc. (Exact name of registrant as specified in its charter) Delaware 06-1116976 (State or other jurisdiction of (IRS Employer incorporation or organization) Identification No.) One Far Mill Crossing 06484 Shelton, Connecticut (Zip Code) (Address of principal executive offices) Registrant's telephone number, including area code (203) 381-6400 120 Hawley Lane Trumbull, Connecticut 06611 --------------------------------------------------------- (Former name, former address and former fiscal year, if changed since last report) Indicate by a 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 --- --- There were 5,767,196 shares of Class A Common Stock ($0.01 par value) and 3,542,921 shares of Class B Common Stock ($0.01 par value) outstanding as of May 7, 1997. -------------------------------------------------------------------------- This amendment to the Quarterly Report on Form 10-Q of Physicians Health Services, Inc. for the fiscal quarter ended March 31, 1997 (the "Original Form 10-Q") amends and modifies the Original Form 10-Q as follows: In response to comments from the Securities and Exchange Commission, the second paragraph of "Note 5. Subsequent Events," in "Item 1. Financial Statements," is amended by the addition of language disclosing how the described exchange transaction was recorded and valued. Part I - Financial Information Item 1. Financial Statements PHYSICIANS HEALTH SERVICES, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED BALANCE SHEETS (DOLLARS IN THOUSANDS EXCEPT PER SHARE AMOUNTS)
MARCH 31, DECEMBER 31, 1997 1996 -------- ------------- (Unaudited) ASSETS: Current Assets Cash and Cash Equivalents $ 23,286 $ 39,213 Fixed Maturity Securities available for sale-(amortized cost--1997--$105,770 and 1996--$88,820) 92,612 59,115 Accounts Receivable Less Allowances (1997--$1,634 and 1996--$1,781) 40,263 49,613 Other Receivables 33,880 19,696 Advances to Participating Hospitals - 400 Prepaid Expenses and Other 1,332 1,154 ----------------- ---------------- Total Current Assets 191,373 169,191 Property, Plant, and Equipment Land 8,822 8,822 Building and Improvements 26,938 26,938 Furniture and Equipment 49,309 46,559 ----------------- ---------------- 85,069 82,319 Less Accumulated Depreciation and Amortization 16,762 15,273 ----------------- ---------------- Total Property, Plant, and Equipment 68,307 67,046 ----------------- ---------------- Other Assets (including restricted investments) 13,537 13,658 ----------------- ---------------- TOTAL ASSETS $ 273,217 $ 249,895 ================= =============== LIABILITIES AND STOCKHOLDERS' EQUITY: Current Liabilities Accrued Health Care Expenses $ 71,508 $ 51,757 Unearned Premiums 28,688 27,757 Amounts Due to IPA's, Physicians and other Providers 64,457 59,084 Accounts Payable and Accrued Expenses 10,878 13,849 ----------------- ---------------- Total Current Liabilities 175,531 152,447 Excess of Net Assets Over Cost of Company Acquired 1,132 1,162 Stockholders' Equity Class A Common Stock, Par Value $0.01 per Share--Authorized 58 56 13,000,000 Shares, Issued and Outstanding; 1997--5,763,905 shares; 1996--5,566,023 shares Class B Common Stock, Par Value $0.01 per Share; 36 38 Non-transferable--Authorized and Issued 1997--3,632,612 shares; 1996--3,829,880 Shares; Voting Rights - 10 per share Additional Paid-In Capital 41,369 41,360 Net Unrealized Gains (Losses) on Fixed Maturity Securities available for sale Net of Tax (108) 279 Retained Earnings 55,200 54,554 ----------------- ---------------- 96,555 96,287 Less Cost of Class B Common Stock (86,400) Shares in Treasury 1 1 ----------------- ---------------- Total Stockholders' Equity 96,554 96,286 ----------------- ---------------- TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 273,217 $ 249,895 ================= ================
See Notes to Condensed Consolidated Financial Statements. -3- PHYSICIANS HEALTH SERVICES, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (IN THOUSANDS EXCEPT PER SHARE AMOUNTS) (Unaudited)
THREE MONTHS ENDED MARCH 31, ------------------------------------------- 1997 1996 ------------------------------------------- REVENUES: Premiums $ 149,253 $ 111,820 Investment and Other Income 1,805 1,666 ---------------- ------------------ 151,058 113,486 COSTS AND EXPENSES: Hospital Services 49,060 39,655 Physicians and Related Health Care Services 62,019 40,938 Other Health Care Services 16,080 10,719 Indemnity Costs - 2,633 ---------------- ------------------ Total Health Care Costs 127,159 93,945 ---------------- ------------------ Selling, General and Administrative Expenses 22,873 18,321 ---------------- ------------------ 150,032 112,266 ---------------- ------------------ Income before Income Taxes 1,026 1,220 Income Tax Expense 380 354 ---------------- ------------------ NET INCOME $ 646 $ 866 ================ ================== Net Income Per Common Share $ 0.07 $ 0.09 ================ ================== Weighted Average Number of Common and Common Equivalent Shares Outstanding 9,376 9,536 ================ ==================
See Notes to Condensed Consolidated Financial Statements. -4- PHYSICIANS HEALTH SERVICES, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY (IN THOUSANDS) (Unaudited)
THREE MONTHS ENDED MARCH 31, ------------------------------------ 1997 1996 ------------ -------------- CLASS A COMMON STOCK Balance at Beginning of Period $ 56 $ 53 Conversion of Class B Common Stock into Class A Common Stock 2 1 ============ ============== Balance at End of Period $ 58 $ 54 ============ ============== CLASS B COMMON STOCK Balance at Beginning of Period $ 38 $ 41 Conversion of Class B Common Stock into Class A Common Stock (2) (1) ============ ============== Balance at End of Period $ 36 $ 40 ============ ============== ADDITIONAL PAID-IN CAPITAL Balance at Beginning of Period $ 41,360 $ 40,760 Exercise of Stock Options 9 378 ============ ============== Balance at End of Period $ 41,369 $ 41,138 ============ ============== NET UNREALIZED GAINS (LOSSES) ON FIXED MATURITY SECURITIES, NET OF TAX Balance at Beginning of Period $ 279 $ 510 Unrealized Depreciation (387) (322) ============ ============== Balance at End of Period $ (108) $ 188 ============ ============== RETAINED EARNINGS Balance at Beginning of Period $ 54,554 $ 67,518 Net Income 646 866 ============ ============== Balance at End of Period $ 55,200 $ 68,384 ============ ============== TREASURY STOCK Balance at Beginning and End of Period $ (1) $ (1) ============ ============== TOTAL STOCKHOLDERS' EQUITY Balance at Beginning of Period $ 96,286 $ 108,881 Exercise of Stock Options 9 378 Net Income 646 866 Unrealized Depreciation of Fixed Maturity Securities (387) (322) ============ ============== Balance at End of Period $ 96,554 $ 109,803 ============ ==============
See Notes to Condensed Consolidated Financial Statements. -5- PHYSICIANS HEALTH SERVICES, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOW (IN THOUSANDS) (Unaudited)
THREE MONTHS ENDED MARCH 31, -------------------------------------- 1997 1996 ---------- --------- OPERATING ACTIVITIES Net Income $ 646 $ 866 Adjustments to Reconcile Net Income to Net Cash Provided by (Used for) Operating Activities: Depreciation and Amortization 1,489 827 Provision for Doubtful Accounts 617 832 Amortization of Excess of Net Assets over Cost of Company Acquired (30) (30) Deferred income tax benefit (268) (319) Changes in Assets and Liabilities: Accounts Receivable 8,733 (7,065) Other Receivables (14,184) (3,262) Advances to Participating Hospitals 400 2,767 Prepaid Expenses and Other (178) (1,064) Accrued Health Care Expenses 19,751 2,552 Unearned Premiums 931 1,765 Due to IPA's, Physicians and Other Providers 5,373 (14,353) Accounts Payable and Accrued Expenses (2,452) (5,400) ---------- ---------- Net Cash Provided by (Used for) Operating Activities 20,828 (21,884) INVESTING ACTIVITIES Purchases of Property, Plant, and Equipment (2,750) (3,926) Proceeds from Disposal of Equipment - 6 (Increase) Decrease in Other Assets 121 (1,225) Purchases of Fixed Maturity Securities (95,409) (140,990) Proceeds from Sales and Maturities of Fixed Maturity Securities 61,274 163,847 ---------- ---------- Net Cash Provided by (Used for) Investing Activities (36,764) 17,712 FINANCING ACTIVITIES Exercise of Stock Options 9 378 ---------- ---------- Net Cash Provided by Financing Activities 9 378 ---------- ---------- Decrease in cash and cash equivalents (15,927) (3,794) Cash and cash equivalents at beginning of period 39,213 7,536 ========== ========== Cash and cash equivalents at end of period $ 23,286 $ 3,742 ========== ==========
See Notes to Condensed Consolidated Financial Statements. -6- PHYSICIANS HEALTH SERVICES, INC. AND SUBSIDIARIES NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS MARCH 31, 1997 (UNAUDITED) 1. Basis of Presentation The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with generally accepted accounting principles for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements. In the opinion of management, all adjustments (consisting solely of normal recurring accruals) considered necessary for a fair presentation have been included. Operating results for the three month period ended March 31, 1997 are not necessarily indicative of the results that may be expected for the year ended December 31, 1997. For further information, refer to the consolidated financial statements and footnotes thereto included in the Physicians Health Services, Inc. and Subsidiaries Annual Report on Form 10-K for the year ended December 31, 1996. 2. Stockholders' Equity and Per Share Data Pursuant to the Company's Certificate of Incorporation, upon conversion of Class B shares to Class A shares, such Class B shares are canceled and cannot be reissued. Per share data are based upon the weighted average number of common and common equivalent shares outstanding during the period. Common stock equivalents are excluded to the extent they have an antidilutive effect on per share data. In February 1997, the Financial Accounting Standards Board issued Statement No. 128, Earnings per Share, which is required to be adopted on December 31, 1997. At that time, the Company will be required to change the method currently used to compute earnings per share and to restate all prior periods. Under the new requirements for calculating primary earnings per share, the dilutive effect of stock options will be excluded. The impact of Statement 128 on the calculation of primary and fully diluted earnings per share for the first quarter ended March 31, 1997 and March 31, 1996 is not expected to be material. 3. Tax Provision The Company is currently under examination by the Internal Revenue Service (IRS) for certain prior tax years. Management does not expect any proposed adjustments which may result from the IRS' audit to have a material adverse impact on the Company's financial position or results of operations. 4. Reclassifications Certain reclassifications were made to conform the 1996 amounts to the 1997 presentation. -7- PHYSICIANS HEALTH SERVICES, INC. AND SUBSIDIARIES NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS MARCH 31, 1997 (UNAUDITED) 5. Subsequent Events On May 8, 1997, the Company and Foundation Health Systems, Inc. ("FHS") executed a merger agreement pursuant to which FHS would acquire all of the shares of common stock of the Company for $29.25 per share in cash, or a total consideration to the Company's stockholders of approximately $280 million. FHS announced that it intends to finance the purchase with a combination of cash and bank debt. As part of the transaction, the Company has entered into a voting trust agreement with the Greater Bridgeport Individual Practice Association ("GBIPA"), which owns shares constituting approximately 61% of the voting power of the Company. The agreement stipulates that such shares will be voted in favor of the transaction by GBIPA. The transaction is subject to certain closing conditions, including receipt of regulatory approvals and entering into certain agreements with The Guardian. This transaction is expected to close by the end of 1997. On May 2, 1997, the Company acquired 200 shares of Physicians Health Services of New Jersey, Inc. ("PHS NJ") from MasterCare Companies, Inc. ("MasterCare"). In exchange for the receipt of the shares of PHS NJ the Company gave up 1,250,000 shares of Series B Convertible Preferred Stock of MasterCare Companies, Inc. and 190 shares of Common Stock of MasterCare of Connecticut, Inc. Since the common stock of MasterCare and PHS NJ are not publicly traded, fair values of the shares exchanged were estimated. MasterCare shares were valued based upon prices obtained in a recent private placement while the fair value of PHS NJ shares were derived from a valuation of membership. The purchase price paid (fair value of MasterCare shares held by the Company) exceeded the fair value of MasterCare's proportionate interest in the net assets of PHS NJ acquired from MasterCare by approximately $ 1.8 million. Such excess will be amortized over 10 years. As a result of this transaction, PHS NJ will become a wholly-owned subsidiary of the Company. This transaction will not have a significant impact on the operating results of the Company. -8- 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. PHYSICIANS HEALTH SERVICES, INC. ------------------------------- (Registrant) Date: July 24, 1997 /s/ Robert L. Natt ------------------------ ----------------------- Robert L. Natt President Date: July 24, 1997 /s/ James L. Elrod, Jr. -------------------------- ------------------------- James L. Elrod, Jr. Chief Financial Officer -----END PRIVACY-ENHANCED MESSAGE-----