=====================================================================
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 JUNE 30, 1997
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, 1997
-------------------- ----------------
Common Stock, $.10 par value 4,124,195
============================================================================
<PAGE>
PART I
FINANCIAL INFORMATION
-2-
<PAGE>
AMERICAN PHYSICIANS SERVICE GROUP, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)
(In thousands, except per share data)
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
June 30, June 30,
1997 1996 1997 1996
---------- ---------- ---------- ---------
<S> <C> <C> <C> <C>
REVENUES:
Financial services $1,718 1,822 3,759 4,152
Real estate 168 169 350 338
Investments and other 52 157 236 267
---------- ---------- ---------- ---------
Total revenues 1,937 2,148 4,344 4,757
EXPENSES:
Financial service expense 1,950 1,761 3,795 3,766
Real estate 129 129 258 257
General and administrative 522 (174) 781 89
Interest 2 13 5 29
---------- ---------- ---------- ---------
Total expenses 2,603 1,728 4,839 4,140
---------- ---------- ---------- ---------
Operating income/(loss) (666) 420 (495) 617
Equity in earnings of unconsolidated
affiliate (Note 3) 580 (72) 1,041 328
---------- ---------- ---------- ---------
Earnings/(loss) from continuing
operations before income taxes (87) 348 546 945
Gain on sale of portion of subsidiary 1,899 0 1,899 0
Income tax expense 622 108 847 291
Discontinued operations:
Income/(loss) from discontinued operations
net of income tax benefit of $21 and $(9),
and $71 and $1 for the threeand six months
in 1997 and 1996, respectively. (97) 18 (138) (1)
Loss on disposal of computer software segment,
net of income tax benefit of $411 and $0
and $411 and $0 for the three and six months
in 1997 and 1996, respectively. (798) 0 (798) 0
---------- ---------- ---------- ---------
NET EARNINGS 296 259 662 653
========== ========== ========== =========
</TABLE>
See accompanying notes to consolidated financial statements
- 3 -
<PAGE>
EARNINGS PER COMMON SHARE:
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
Primary $0.07 0.06 0.16 0.15
========== ========== ========== =========
Fully Diluted $0.07 0.06 0.16 0.15
========== ========== ========== =========
Primary weighted average shares outstanding 4,230 4,346 4,201 4,293
========== ========== ========== =========
Fully Diluted weighted average shares outstanding 4,270 4,360 4,259 4,353
========== ========== ========== =========
</TABLE>
See accompanying notes to consolidated financial statements
- 4 -
<PAGE>
AMERICAN PHYSICIANS SERVICE GROUP, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED)
(In thousands)
June 30, December 31,
1997 1996
------------- -------------
ASSETS
Current Assets:
Cash and cash investments $4,997 5,770
Marketable securities (Note 2) 3 29
Trading account securities 551 699
Notes receivable - current 3,545 3,447
Management fees and other receivables 3,105 512
Receivable from clearing broker 0 279
Deferred income tax receivable 392 650
Prepaid expenses and other 358 239
------------- -------------
Total current assets 12,951 11,625
Notes receivable, less current portion 84 179
Property and equipment 1,919 1,781
Investment in affiliates 9,946 8,905
Other assets 1,351 1,226
------------- -------------
Total Assets $26,251 23,716
============= =============
See accompanying notes to consolidated financial statements
- 5 -
<PAGE>
AMERICAN PHYSICIANS SERVICE GROUP, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED)
(In thousands)
June 30, December 31,
1997 1996
----------- -----------
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Current installments of obligations
under capital leases $ ---- 542
Accounts payable - trade 345 382
Payable to clearing broker 18 ---
Accrued compensation 201 252
Accrued expenses and other
liabilities (Note 5) 4,004 2,144
----------- -----------
Total current liabilities 4,568 3,320
Net deferred income tax liability 629 766
----------- -----------
Total liabilities 5,197 4,086
Shareholders' Equity:
Preferred stock, $1.00 par value,
1,000,000shares authorized ---- ----
Common stock, $0.10 par value, shares
authorized 20,000,000; issued 4,124,165
at 6/30/97 and 4,049,195 at 12/31/96 414 405
Additional paid-in capital 5,384 4,614
Unrealized holding losses (28) (11)
Retained earnings 15,284 14,622
----------- -----------
Total shareholders' equity 21,054 19,630
Total Liabilities and Shareholders' Equity $26,251 23,716
=========== ===========
See accompanying notes to consolidated financial statements
- 6 -
<PAGE>
AMERICAN PHYSICIANS SERVICE GROUP, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
(In thousands)
Six Months Ended
June 30,
1997 1996
----------- -----------
Cash flows from operating activities:
Cash received from customers $3,561 5,513
Cash paid to suppliers and employees (3,145) (5,033)
Change in trading account securities 148 465
Change in receivable from clearing broker (297) (461)
Interest paid (5) (29)
Income taxes paid (244) (603)
Interest, dividends and other investment
proceeds 89 182
----------- -----------
Net cash provided by (used in) operating
activities 108 34
Cash flows from investing activities:
Proceeds from the sale of marketable securities --- 1,655
Payments for purchase property and equipment (236) (85)
Funds loaned to others (30) (65)
Collection of notes receivable 15 49
Other 10 62
----------- -----------
Net cash provided by (used in) investing
activities (241) 1,616
Cash flows from financing activities:
Repayment of long term obligations (542) (144)
Purchase/retire treasury stock (317) ---
Exercise of stock options 219 517
----------- -----------
Net cash provided by (used in) financing
activities (640) 373
----------- -----------
Net change in cash and cash equivalents ($773) 2,023
=========== ===========
Cash and cash equivalents at beginning of period 5,770 6,798
----------- -----------
Cash and cash equivalents at end of period $4,997 8,821
=========== ===========
See accompanying notes to consolidated financial statements
- 7 -
<PAGE>
AMERICAN PHYSICIANS SERVICE GROUP, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS, continued
(In thousands)
Six Months Ended
June 30,
1997 1996
--------- ---------
Reconciliation of net earnings to net cash
from operating activities:
Net earnings $662 653
Adjustments to reconcile net earnings to
net cash from operating activities:
Depreciation and amortization 180 175
Loss from discontinued operations 210 13
Loss on disposal of discontinued operations 1,209 ---
Gain on sale of securities --- (55)
Undistributed earnings of affiliate (1,041) (328)
Change in federal income tax payable 258 (596)
Provision for deferred tax asset (137) 284
Change in trading securities 148 465
Change in receivable from clearing broker (297) (461)
Change in management fees & other receivables (2,593) 1,005
Change in prepaids & other current assets (119) 1
Change in other assets (125) (154)
Change in trade payables (58) (35)
Change in accrued expenses & other liabilities 1,811 (934)
--------- ---------
Net cash from operating activities $108 34
========= =========
Summary of non-cash transactions:
At June 30, 1997, the Company recognized a gain on the sale of 20% of its
professional liability insurance subsidiary. Since cash was not collected until
July 2, 1997, the results of this transaction were to increase management fees
and other receivables ($2,000,000), gain on sale of subsidiary ($1,899,000), and
accrued expenses and other liabilities ($101,000).
See accompanying notes to consolidated financial statements
- 8 -
<PAGE>
AMERICAN PHYSICIANS SERVICE GROUP, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
June 30, 1997
(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, 1996 and reflect all adjustments
which are, in the opinion of management, necessary for a fair statement of the
financial position as of June 30, 1997 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, 1996 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 1997 presentation.
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. 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 -
<PAGE>
4. EQUITY IN EARNINGS OF UNCONSOLIDATED AFFILIATE
At June 30, 1997 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.
In the Form 10-Q dated March 31, 1997, the Company combined the equity in
earnings/losses of Prime and Syntera Technologies, Inc. ("Syntera"), a computer
systems/software affiliate, into Equity in Earnings of Unconsolidated
Affiliates. At May 15, 1997, Syntera and International Software Solutions, Inc.
("ISSI") agreed to terminate the Joint Development Agreement which they had
entered into July 1, 1996. Also on this date the Company decided to discontinue
product development and marketing efforts. Under the termination agreement, ISSI
relinquished its 51% ownership interest in Syntera, making Syntera once again a
wholly owned subsidiary of the Company. As such, Syntera is no longer considered
an affiliate and therefore, results of its operations are no longer accounted
for as equity in earnings of unconsolidated affiliates of the parent company,
but rather, they are reported in discontinued operations.
5. ACCRUED EXPENSES AND OTHER LIABILITIES
Accrued expenses and other liabilities consists of the following:
Jun Dec
1997 1996
---- ----
Taxes payable-other $ 47,000 74,000
Commissions payable 73,000 18,000
Deferred income 1,330,000 339,000
Health insurance and other claims payable 78,000 87,000
Contractual/legal claims 1,342,000 1,352,000
Vacation payable 105,000 77,000
Funds held for others 40,000 63,000
Syntera disposition costs 917,000 ---
Other 72,000 134,000
-------- -------
$4,004,000 2,144,000
========= =========
- 10 -
<PAGE>
6. DISCONTINUED OPERATIONS
At May 15, 1997, Syntera and ISSI agreed to terminate the Joint Development
Agreement which they had entered into July 1, 1996. Also on this date the
Company decided to discontinue product development and marketing efforts. Net
assets/(liabilities) of the discontinued computer systems and software segment
as of June 30, 1997 consisted of the following:
Cash and cash investments 71.3
Trade accounts receivable 231.9
Other receivables 2.8
Prepaid and other current assets 53.4
Fixed assets, net of depreciation 144.0
Intercompany receivables 521.0
Trade accounts payable (22.1)
Accrued expenses (1,057.9)
Deferred Income (20.0)
--------
Net liabilities (75.6)
- 11 -
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
RESULTS OF OPERATIONS
REVENUES
Revenues from operations decreased $211,000 (9.8%) and $413,000 (8.7%)
for the three and six month periods ended June 30, 1997, respectively, compared
to the same periods in 1996. All segments recorded less revenue during the
second quarter of 1997 compared to 1996. For the six months, financial services
and investments and other decreased while real estate increased in 1997 compared
to 1996.
Financial services revenues decreased $104,000 (5.7%) and $393,000
(9.5%) for the three and six month periods ended June 30, 1997, respectively,
compared to the same periods in 1996. The decrease in both periods of 1997 was
due primarily to market value adjustments of securities held in the investment
portfolio at the Company's broker/dealer subsidiary, APS Financial Corp. Barring
further declines in the investment portfolio, revenues from broker/dealer
operations should improve due to the Company's opening of a branch office in
Houston, Texas on March 1, 1997. The new office currently employs fourteen
brokers.
Revenues from premium-based insurance management fees were down $85,000
(7.7%) and $117,000 (5.2%) for the three and six month periods ended June 30,
1997, respectively, compared to the same periods in 1996, due primarily to a
lower number of insureds brought about by stiffer competition in the Texas
professional liability insurance market which has resulted in lower premium
rates. Rather than renew certain insureds at rates which would result in
underwriting losses, the Company has elected not to renew these insureds,
resulting in a decline in premium volume.
Real estate revenues dropped $1,000 (0.9%) but increased $12,000 (3.4%)
for the three and six month periods ended June 30, 1997, respectively, compared
to the same periods in 1996. The decrease in revenue in the current quarter was
due to reclassifying Syntera as a wholly owned subsidiary, whose lease income is
now eliminated at consolidation. The six month increase in 1997 over 1996 was
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 1997.
Investment and other income decreased $105,000 (66.9%) and $31,000
(11.8%) for the three and six month period ended June 30, 1997, respectively,
compared to the same periods in 1996. The decrease in the current quarter was
due to reduced interest income arising from a lower investable cash balance.
Cash and cash investments was lower due to the purchase of Exsorbet Industries,
Inc. common stock which subsequently was converted to a note receivable. (See
Item 5). The six month decrease in investment and other income was partially
offset by a first quarter 1997 gain from the dissolution of an inactive
insurance entity.
- 12 -
<PAGE>
EXPENSES
Total expenses increased $875,000 (50.6%) and $699,000 (16.7%) for the
three and six month periods ended June 30, 1997, respectively, compared to the
same periods in 1996. Financial services and general and administrative
increased during the current three and six month periods compared to 1996 while
real estate services stayed the same and interest expenses declined.
Financial services expense increased $189,000 (10.7%) and $29,000
(0.8%) for the three and six month periods ended June 30, 1997, respectively,
compared to the same periods in 1996. Expenses at the insurance management
subsidiary increased $65,000 (10.7%) and $173,000 (9.9%) for the three and six
month periods ended June 30, 1997, respectively, compared to the same periods in
1996 due primarily to personnel additions in the marketing department as well as
annual merit increases.
Partially offsetting these increases was lower costs incurred in
broker/dealer operations. Legal fees were reduced as prior year claims were
settled satisfactorily and no new suits required significant actual or accrued
expenditures. Reduced general and administrative expenses within the
broker/dealer subsidiary have also contributed to the decrease.
General and administrative expense increased $696,000 and $692,000
(777.5%) for the three and six month periods ended June 30, 1997, respectively,
compared to the same periods in 1996. The increase was due primarily to the fact
that prior year expenses were down as a result of reversals of contractual/legal
contingency accruals resulting from the Company prevailing in litigation. No
such reversals occurred in 1997. In addition, expenses were incurred associated
with a potential new physician practice startup. Prospects for this new venture
are still uncertain but the Company is expected to continue to fund
approximately $50,000 per month in salaries and general & administrative
expense.
Interest expense decreased $11,000 (85.2%) and $24,000 (83.0%) for the
three and six month periods ended June 30, 1997, respectively, compared to the
same periods in 1996. The decrease in both periods was due to the early payoff
of the note payable for the office space owned by the Company.
EQUITY IN EARNINGS OF UNCONSOLIDATED AFFILIATES
The Company's equity in earnings of Prime Medical Services, Inc.
("Prime") increased $652,000 and $713,000 (217.4%) for the three and six month
periods ended June 30, 1997, respectively, compared to the same periods in 1996.
Prior year earnings in the second quarter were adversely affected by two
non-recurring write-offs: (1) costs associated with Prime's acquisition of
Lithotripters, Inc.; and (2) costs associated with a secondary offering.
As mentioned in Note 4 of the Notes to the Consolidated Financial
Statements, the earnings of Syntera Technologies, Inc. are no longer accounted
for as Equity in Unconsolidated Affiliates. Since the Company reacquired 100%
ownership of Syntera on May 15, 1997, and simultaneously decided to cease
product development and marketing efforts, results of operations of Syntera are
now reported in Discontinued Operations.
- 13 -
<PAGE>
GAIN ON SALE OF PORTION OF SUBSIDIARY
Effective June 30, 1997, the Company sold 20% of the shares of its medical
professional liability insurance management subsidiary, APS Insurance Services,
Inc. to Florida Physicians Insurance Company ("FPIC"). This strategic alliance
was formed in an effort to strengthen and expand both company's presence in the
Texas market for medical professional liability insurance. The gain from this
sale represents the sales price of $2,000,000 less closing costs and the
Company's basis in the stock sold.
LIQUIDITY AND CAPITAL RESOURCES
Current assets exceeded current liabilities by $8,383,000 and
$8,305,000 at June 30, 1997, and December 31, 1996, respectively. A large
increase in current receivables resulting from the sale of 20% of APS Insurance
Services, Inc. was chiefly offset by an increase in accrued liabilities
resulting from the disposition of Syntera Technologies, Inc. In addition, cash
was reduced by the purchase and retirement of approximately $245,000 of common
stock of the Company.
Capital expenditures through the period ended June 30, 1997 were
approximately $236,000. Total capital expenditures are expected to be
approximately $325,000 in 1997.
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. The ability of the
Company to borrow against its investment in the common stock of Prime Medical
(market value $33,136,000 at June 30, 1997) gives it significant additional
liquidity.
ADOPTION OF ACCOUNTING STANDARDS
The Financial Accounting Standards Board issued Statement of Accounting
Standards No. 128, Earnings Per Share ("Statement 128") which replaces Primary
EPS and Fully Diluted EPS with Basic EPS and Diluted EPS, respectively.
Statement 128 was issued to simplify the computation of EPS and to make the U.S.
standard more compatible with the EPS standards of other countries and that of
the International Accounting Standards Committee (IASC). Implementation of
Statement 128 is scheduled to begin for fiscal years beginning after December
15, 1997. If the Company had applied Standard 128 for the quarter ended June 30,
1997, the rounded earnings per share calculations for both Basic EPS and Diluted
EPS would have been the same as Primary EPS and Fully Diluted EPS, respectively.
- 14 -
<PAGE>
PART II
OTHER INFORMATION
- 15 -
<PAGE>
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 4. RESULTS OF VOTES OF SECURITY HOLDERS
On June 19, 1997 the annual meeting of shareholders of American
Physicians Service Group, Inc. was held in Austin, Texas. The names of the
directors elected at the meeting along with number of votes for, against and
withheld are as follows:
Name For Against Withheld
------------------- --------- ---------- -----------
Richard J. Clark 3,598,632 22,000 ---
Jack Murphy 3,599,631 21,001 ---
Robert L. Myer 3,598,632 22,000 ---
William A. Searles 3,598,632 22,000 ---
Kenneth S. Shifrin 3,599,632 21,000 ---
No other matters were voted upon at this meeting.
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 which were subject to the put plus
all the stock and substantially all of the assets of a wholly-owned subsidiary
of Exsorbet. According to documents which Exsorbet has filed with the Securities
and Exchange Commission, Exsorbet has limited liquidity, which would currently
not allow payment of the Company's note, and is considering various options to
secure such funding, including a private placement of debt or equity. The
Company does not expect such financing to be available by the October 1, 1997
due date and expects to renegotiate the terms of the note. As of July 31, 1997
there has been no change in the status of this note.
On December 20, 1996, the Company announced its intention to purchase
up to 500,000 shares of the Company's common stock. As of July 31, 1997, the
Company has bought back approximately 51,000 shares and expects to repurchase
shares so long as they are trading below adjusted book value.
On April 4, 1997, the Company formed an alliance with FPIC Insurance
Group, Inc. and its subsidiary, Florida Physicians Insurance Company, Inc.
("FPIC") (NASDAQ:FPIC) in a plan to strengthen and expand its presence in the
Texas market for medical professional liability insurance. With the subsequent
approval on June 30, 1997 by the Texas Department of Insurance, FPIC has
purchased a 20% interest in the Company's subsidiary, APS Insurance Services,
Inc. for two million dollars. FPIC also has an option to purchase an additional
35% within two years.
- 16 -
<PAGE>
Item 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) EXHIBITS
11 Computation of Net Income Per Share at June 30, 1997
and 1996.
(b) CURRENT REPORTS ON FORM 8-K
A report on Form 8-K was filed with the Securities and
Exchange Commission on April 15, 1997 disclosing the Company's sale of
20% of its professional liability insurance subsidiary, APS Insurance
Services, Inc.
- 17 -
<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.
AMERICAN PHYSICIANS SERVICE GROUP, INC.
Date: August 14, 1997 By: /s/ William H. Hayes
--------------------------------------
William H. Hayes, Vice President
and Chief Financial Officer
- 18 -
<PAGE>
EXHIBIT 11
AMERICAN PHYSICIANS SERVICE GROUP, INC.
COMPUTATION OF NET INCOME PER SHARE
FOR THE THREE MONTHS ENDED JUNE 30, 1997 AND 1996
(In thousands, except earnings per share) Primary Fully Diluted
Earnings Earnings
Per Share Per Share
---------- ----------
1997
Net Income applicable to common stock $296 296
Average number of shares outstanding 4,111 4,111
Average stock option shares 119 159
----------- ----------
Shares for earnings calculation 4,230 4,270
Net income per share $0.07 0.07
=========== ==========
1996
Net Income applicable to common stock $259 259
Average number of shares outstanding 4,018 4,018
Average stock option shares 328 342
----------- ----------
Shares for earnings calculation 4,346 4,360
Net income per share $0.06 0.06
=========== ==========
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.
- 19 -
<PAGE>
EXHIBIT 11
AMERICAN PHYSICIANS SERVICE GROUP, INC.
COMPUTATION OF NET INCOME PER SHARE
FOR THE SIX MONTHS ENDED JUNE 30, 1997 AND 1996
(In thousands, except earnings per share) Primary Fully Diluted
Earnings Earnings
Per Share Per Share
---------- ----------
1997
Net Income applicable to common stock $662 662
Average number of shares outstanding 4,059 4,059
Average stock option shares 142 200
----------- ----------
Shares for earnings calculation 4,201 4,259
Net income per share $0.16 0.16
=========== ==========
1996
Net Income applicable to common stock $653 653
Average number of shares outstanding 3,983 3,983
Average stock option shares 310 370
----------- ----------
Shares for earnings calculation 4,293 4,353
Net income per share $0.15 0.15
=========== ==========
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.
- 20 -
<PAGE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
JUNE 30, 1997 FORM 10-Q AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO
SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C> <C>
<PERIOD-TYPE> 3-MOS 6-MOS
<FISCAL-YEAR-END> DEC-31-1997 DEC-31-1997
<PERIOD-START> APR-01-1997 JAN-01-1997
<PERIOD-END> JUN-30-1997 JUN-30-1997
<CASH> 4,997 4,997
<SECURITIES> 3 3
<RECEIVABLES> 6,675 6,675
<ALLOWANCES> 25 25
<INVENTORY> 11 11
<CURRENT-ASSETS> 12,951 12,951
<PP&E> 5,604 5,604
<DEPRECIATION> 3,685 3,685
<TOTAL-ASSETS> 26,251 26,251
<CURRENT-LIABILITIES> 4,568 4,568
<BONDS> 0 0
0 0
0 0
<COMMON> 414 414
<OTHER-SE> 20,640 20,640
<TOTAL-LIABILITY-AND-EQUITY> 26,251 26,251
<SALES> 0 0
<TOTAL-REVENUES> 1,937 4,344
<CGS> 0 0
<TOTAL-COSTS> 2,441 4,632
<OTHER-EXPENSES> 160 202
<LOSS-PROVISION> 0 0
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</TABLE>
