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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 SEPTEMBER 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 October 31, 1997
-------------------- ----------------
Common Stock, $.10 par value 4,157,861
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<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 Nine Months Ended
September 30, September 30,
1997 1996 1997 1996
---------- ---------- ---------- ---------
<S> <C> <C> <C> <C>
REVENUES:
Financial services $2,875 1,786 6,633 5,938
Real estate 178 189 527 527
Investments and other 64 135 300 402
---------- ---------- ---------- ---------
Total revenues 3,116 2,110 7,460 6,867
EXPENSES:
Financial service expense 2,528 1,644 6,324 5,410
Real estate 132 131 390 387
General and administrative 425 318 1,206 407
Interest 7 13 12 42
---------- ---------- ---------- ---------
Total expenses 3,092 2,106 7,931 6,247
---------- ---------- ---------- ---------
Operating income/(loss) 24 3 (471) 620
Equity in earnings of unconsolidated
affiliate (Note 3) 718 640 1,759 968
---------- ---------- ---------- ---------
Earnings/(loss) from continuing
operations before income taxes 742 643 1,288 1,588
Gain on sale of portion of subsidiary 0 0 1,899 0
Income tax expense 251 248 1,097 539
Discontinued operations:
Income/(loss) from discontinued operations
net of income tax benefit of $0 and $4,
and $71 and $5 for the three and nine months
in 1997 and 1996, respectively. 0 (8) (138) (9)
Loss on disposal of computer software segment,
net of income tax benefit of $0 and $0 and
$411 and $0 for the three and nine months
in 1997 and 1996, respectively. 0 0 (798) 0
Minority interest (5) 0 (5) 0
---------- ---------- ---------- ---------
NET EARNINGS 486 387 1,148 1,040
========== ========== ========== =========
</TABLE>
See accompanying notes to consolidated financial statements
- 3 -
<PAGE>
EARNINGS PER COMMON SHARE:
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
Primary $0.11 0.09 0.27 0.24
========== ========== ========== =========
Fully Diluted $0.11 0.09 0.26 0.24
========== ========== ========== =========
Primary weighted average shares outstanding 4,321 4,301 4,218 4,259
========== ========== ========== =========
Fully Diluted weighted average shares outstanding 4,384 4,311 4,348 4,329
========== ========== ========== =========
</TABLE>
See accompanying notes to consolidated financial statements
- 4 -
<PAGE>
AMERICAN PHYSICIANS SERVICE GROUP, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED)
(In thousands)
September 30, December 31,
1997 1996
------------- -------------
ASSETS
Current Assets:
Cash and cash investments $8,572 5,770
Marketable securities (Note 2) 0 29
Trading account securities 791 699
Notes receivable - current 3,447 3,447
Management fees and other receivables 425 512
Receivable from clearing broker 0 279
Deferred income tax receivable 808 650
Prepaid expenses and other 421 239
------------- -------------
Total current assets 14,464 11,625
Notes receivable, less current portion 299 179
Property and equipment 1,882 1,781
Investment in affiliates 10,664 8,905
Other assets 330 1,226
------------- -------------
Total Assets $27,639 23,716
============= =============
See accompanying notes to consolidated financial statements
- 5 -
<PAGE>
AMERICAN PHYSICIANS SERVICE GROUP, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED)
(In thousands)
September 30, December 31,
1997 1996
----------- -----------
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Current installments of obligations
under capital leases $ ---- 542
Accounts payable - trade 380 382
Payable to clearing broker 272 ---
Accrued compensation 263 252
Accrued expenses and other
liabilities (Note 5) 4,242 2,144
----------- -----------
Total current liabilities 5,157 3,320
Net deferred income tax liability 842 766
----------- -----------
Total liabilities 5,999 4,086
Minority interest 5 ----
Shareholders' Equity:
Preferred stock, $1.00 par value,
1,000,000shares authorized ---- ----
Common stock, $0.10 par value, shares
authorized 20,000,000; issued 4,157,865
at 9/30/97 and 4,049,195 at 12/31/96 416 405
Additional paid-in capital 5,449 4,614
Unrealized holding losses 0 (11)
Retained earnings 15,770 14,622
----------- -----------
Total shareholders' equity 21,635 19,630
Total Liabilities and Shareholders' Equity $27,639 23,716
=========== ===========
See accompanying notes to consolidated financial statements
- 6 -
<PAGE>
AMERICAN PHYSICIANS SERVICE GROUP, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
(In thousands)
Nine Months Ended
September 30,
1997 1996
----------- -----------
Cash flows from operating activities:
Cash received from customers $7,525 8,232
Cash paid to suppliers and employees (5,784) (8,885)
Change in trading account securities (92) 298
Change in receivable from clearing broker (551) 314
Interest paid (12) (42)
Income taxes paid (574) (610)
Interest, dividends and other investment
proceeds 164 403
----------- -----------
Net cash provided by (used in) operating
activities 677 (290)
Cash flows from investing activities:
Proceeds from the sale of marketable securities --- 1,906
Payments for purchase of marketable securities --- (3,331)
Payments for purchase property and equipment (292) (121)
Funds loaned to others (180) (165)
Proceeds from sale of insurance exchange 1,000 ---
Proceeds from sale of 20% Insur Serv 2,000 ---
Collection of notes receivable 41 49
Other 4 (61)
----------- -----------
Net cash provided by (used in) investing
activities 2,573 1,723
Cash flows from financing activities:
Repayment of long term obligations (542) (250)
Purchase/retire treasury stock (324) (335)
Exercise of stock options 418 704
----------- -----------
Net cash provided by (used in) financing
activities (448) 119
----------- -----------
Net change in cash and cash equivalents $2,802 (1,894)
=========== ===========
Cash and cash equivalents at beginning of period 5,770 6,798
----------- -----------
Cash and cash equivalents at end of period $8,572 4,904
=========== ===========
See accompanying notes to consolidated financial statements
- 7 -
<PAGE>
AMERICAN PHYSICIANS SERVICE GROUP, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS, continued
(In thousands)
Nine Months Ended
September 30,
1997 1996
--------- ---------
Reconciliation of net earnings to net cash from operating activities:
Net earnings $1,148 1,040
Adjustments to reconcile net earnings to net cash from operating activities:
Depreciation and amortization 275 249
Loss from discontinued operations 210 9
Loss on disposal of discontinued operations 1,209 ---
Gain on sale of securities --- (78)
Undistributed earnings of affiliate (1,759) (968)
Change in federal income tax payable (158) (826)
Gain on sale of 20% Insurance Services (1,899) ---
Gain on sale of insurance exchange (133) ---
Minority interest in consolidated earnings (5) ---
Change in unrealized holding loss 11 ---
Provision for deferred tax asset 76 751
Change in trading securities (92) 298
Change in receivable from clearing broker (551) 314
Change in management fees & other receivables 321 255
Change in prepaids & other current assets (182) (35)
Change in other assets 1,158 329
Change in trade payables (2) 97
Change in accrued expenses & other liabilities 1,050 (1,724)
--------- ---------
Net cash from operating activities $677 (290)
========= =========
See accompanying notes to consolidated financial statements
- 8 -
<PAGE>
AMERICAN PHYSICIANS SERVICE GROUP, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
September 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 September 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 September 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:
Sep Dec
1997 1996
---------- ----------
Taxes payable-other .............................. $ 70,000 74,000
Commissions payable .............................. 336,000 18,000
Deferred income .................................. 1,180,000 339,000
Health insurance and other
claims payable ................................. 60,000 87,000
Contractual/legal claims ......................... 1,353,000 1,352,000
Vacation payable ................................. 104,000 77,000
Funds held for others ............................ 50,000 63,000
Syntera disposition costs ....................... 1,058,000 0
Other ............................................ 31,000 134,000
---------- ----------
$4,242,000 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 September 30, 1997 consisted of the following:
Cash and cash investments .................................. $ 16.0
Trade accounts receivable .................................. 242.8
Other receivables .......................................... 2.7
Prepaid and other current assets ........................... 69.7
Fixed assets, net of depreciation .......................... 123.8
Intercompany receivables ................................... 609.7
Trade accounts payable ..................................... (26.7)
Accrued expenses ........................................... (1,113.7)
--------
Net liabilities ......................................... $ (75.7)
========
- 11 -
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
RESULTS OF OPERATIONS
REVENUES
Revenues from operations increased $1,007,000 (47.7%) and $594,000 (8.7%) for
the three and nine month periods ended September 30, 1997, respectively,
compared to the same periods in 1996. For the current three month period,
financial services and real estate revenues increased while investments and
other decreased compared to the same period in 1996. For the current nine
months, financial services revenues increased, real estate revenues remained the
same and investments and other revenues decreased compared to the same period in
1996.
Financial services revenues increased $1,085,000 (60.8%) and $696,000 (11.7%)
for the three and nine month periods ended September 30, 1997, respectively,
compared to the same periods in 1996. The increase in both periods of 1997 was
due primarily to greater commission income at the Company's broker/dealer
subsidiary, APS Financial Corp. 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 seventeen brokers.
Revenues from premium-based insurance management fees were down $41,000
(3.9%) and $158,000 (4.8%) for the three and nine month periods ended September
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 rose $9,000 (8.8%) for the current year three month period
and remained the same for the nine month period ended September 30, 1997
compared to the same periods in 1996. The three month increase in 1997 over 1996
was due to rising lease rates. These rising lease rates were offset in the nine
month period due to a reclassification of Syntera Technologies, Inc. as a wholly
owned subsidiary, whose lease income is now eliminated at consolidation. 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 $91,000 (78.8%) and $103,000 (25.5%) for
the three and nine month periods ended September 30, 1997, respectively,
compared to the same periods in 1996. The decrease in the current quarter was
primarily 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).
- 12 -
<PAGE>
The nine month decrease in investment and other income was partially offset by a
first quarter 1997 gain from the dissolution of an inactive insurance entity.
EXPENSES
Total operating expenses increased $992,000 (47.4%) and $1,715,000 (27.6%) for
the three and nine month periods ended September 30, 1997, respectively,
compared to the same periods in 1996. All segments recorded an increase in
expenses in both the three and nine month periods of 1997 compared to the same
periods in 1996.
Financial services expense increased $885,000 (53.8%) and $914,000 (16.9%) for
the three and nine month periods ended September 30, 1997, respectively,
compared to the same periods in 1996. 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 as a
result of opening the Houston branch office. Year-to-date expenses in 1997 are
not dramatically higher than the prior year due to lower legal fees resulting
from satisfactory settlements on prior year claims and lower general and
administrative fees at the Austin office, a result of cost cutting measures.
Expenses at the insurance management subsidiary increased $88,000
(10.0%) and $261,000 (9.9%) for the three and nine month periods ended September
30, 1997, respectively, compared to the same periods in 1996 due primarily to a
change in the managing general agency contract whereby certain agents'
commissions are recorded at gross in both revenues and expenses rather than
netted against one another as was recorded in prior years. In addition,
personnel additions in the marketing department increased expenses in the
current year.
General and administrative expense increased $105,000 (33.0%) and $787,000
(196.0%) for the three and nine month periods ended September 30, 1997,
respectively, compared to the same periods in 1996. The increase in the current
nine month period 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, development expenses were incurred in both current year
periods associated with a new physician practice management company. These new
costs, primarily personnel related, totaled $127,000 and $326,000 for the three
and nine month periods ended September 30, 1997, respectively.
Interest expense decreased $6,000 (46.2%) and $30,000 (71.0%) for the three and
nine month periods ended September 30, 1997, respectively, compared to the same
periods in 1996. The decrease in both periods in 1997 was due to the early
payoff of the note payable for the office space owned by the Company.
- 13 -
<PAGE>
Equity in Earnings of Unconsolidated Affiliates
The Company's equity in earnings of Prime Medical Services, Inc. ("Prime")
increased $78,000 (12.2%) and $791,000 (81.7%) for the three and nine month
periods ended September 30, 1997, respectively, compared to the same periods in
1996.
Prior year earnings were adversely affected by two non-recurring write-offs in
the second quarter: (1) financing costs associated with Prime's acquisition of
Lithotripters, Inc.; and (2) costs associated with a secondary offering. The
current quarter increase was due to growth in Prime's lithotripsy operations.
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.
GAIN ON SALE OF PORTION OF SUBSIDIARY
Effective June 30, 1997, the Company sold twenty percent of the stock of its
medical professional liability insurance management subsidiary, APS Insurance
Services, Inc. ("Insurance Services") to Florida Physicians Insurance Company
("FPIC"). This strategic alliance was formed in an effort to strengthen and
expand both companies' 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.
MINORITY INTEREST
As a result of the abovementioned sale of a portion of Insurance Services, the
Company now 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.
LIQUIDITY AND CAPITAL RESOURCES
Current assets exceeded current liabilities by $9,105,000 and $8,305,000 at
September 30, 1997, and December 31, 1996, respectively. The increase was
primarily the result of cash received ($1,000,000) after shutting down an
insurance exchange earlier in the year. This exchange had been recorded as a
long-term asset.
- 14 -
<PAGE>
Capital expenditures through the period ended September 30, 1997 were
approximately $292,000. 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 $42,903,000 at September 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
September 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.
- 15 -
<PAGE>
PART II
OTHER INFORMATION
- 16 -
<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 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. According to documents which Exsorbet has filed with the Securities
and Exchange Commission, Exsorbet has limited liquidity, which has not allowed
payment of the Company's note. Exsorbet has sought but has not been able to
procure additional financing.
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 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 will be no income effect from converting the interest to additional debt.
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.
- 17 -
<PAGE>
During the third quarter of 1997, the Company formed a physician practice
management company. The company, APS Practice Management, Inc., will specialize
in the management of OB/GYN practices. The Company capitalized the new practice
management company with $5 million from cash on-hand. The initial asset
acquisitions and management contracts will be completed in the fourth quarter,
1997.
Item 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) EXHIBITS
11 Computation of Net Income Per Share at September 30, 1997
and 1996.
(b) CURRENT REPORTS ON FORM 8-K.
No current reports on Form 8-K were filed during the quarter
ended September 30, 1997.
- 18 -
<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: November 13, 1997 By: /s/ William H. Hayes
--------------------------------------
William H. Hayes, Vice President
and Chief Financial Officer
- 19 -
<PAGE>
EXHIBIT 11
AMERICAN PHYSICIANS SERVICE GROUP, INC.
COMPUTATION OF NET INCOME PER SHARE
FOR THE THREE MONTHS ENDED SEPTEMBER 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 $486 486
Average number of shares outstanding 4,171 4,171
Average stock option shares 150 213
----------- ----------
Shares for earnings calculation 4,321 4,384
Net income per share $0.11 0.11
=========== ==========
1996
Net Income applicable to common stock $387 387
Average number of shares outstanding 4,072 4,072
Average stock option shares 229 239
----------- ----------
Shares for earnings calculation 4,301 4,311
Net income per share $0.09 0.09
=========== ==========
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>
EXHIBIT 11
AMERICAN PHYSICIANS SERVICE GROUP, INC.
COMPUTATION OF NET INCOME PER SHARE
FOR THE NINE MONTHS ENDED SEPTEMBER 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 $1,148 1,148
Average number of shares outstanding 4,088 4,088
Average stock option shares 130 260
----------- ----------
Shares for earnings calculation 4,218 4,348
Net income per share $0.27 0.26
=========== ==========
1996
Net Income applicable to common stock $1,040 1,040
Average number of shares outstanding 4,013 4,013
Average stock option shares 246 316
----------- ----------
Shares for earnings calculation 4,259 4,329
Net income per share $0.24 0.24
=========== ==========
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.
- 21 -
<PAGE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
SEPTEMBER 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 9-MOS
<FISCAL-YEAR-END> DEC-31-1997 DEC-31-1997
<PERIOD-START> JUL-01-1997 JAN-01-1997
<PERIOD-END> SEP-30-1997 SEP-30-1997
<CASH> 8,572 8,572
<SECURITIES> 0 0
<RECEIVABLES> 4,127 4,127
<ALLOWANCES> 257 257
<INVENTORY> 14 14
<CURRENT-ASSETS> 14,464 14,464
<PP&E> 5,585 5,585
<DEPRECIATION> 3,703 3,703
<TOTAL-ASSETS> 27,639 27,639
<CURRENT-LIABILITIES> 5,157 5,157
<BONDS> 0 0
0 0
0 0
<COMMON> 416 416
<OTHER-SE> 21,219 20,219
<TOTAL-LIABILITY-AND-EQUITY> 27,639 27,639
<SALES> 0 0
<TOTAL-REVENUES> 3,116 7,460
<CGS> 0 0
<TOTAL-COSTS> 2,831 7,463
<OTHER-EXPENSES> 254 456
<LOSS-PROVISION> 0 0
<INTEREST-EXPENSE> 7 12
<INCOME-PRETAX> 742 1,288
<INCOME-TAX> 251 1,097
<INCOME-CONTINUING> 491 191
<DISCONTINUED> 0 (936)
<EXTRAORDINARY> 0 0
<CHANGES> 0 0
<NET-INCOME> 486 1,148
<EPS-PRIMARY> 0.11 0.27
<EPS-DILUTED> 0.11 0.26
</TABLE>
