<PAGE> 1
U.S. SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
================
FORM 10-QSB
QUARTERLY REPORT UNDER SECTION 13 or 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 1997
Commission File Number 33-22011-A
ST. JOSEPH'S PHYSICIAN ASSOCIATES, INC.
---------------------------------------
(Exact name of Small Business Issuer as specified in its charter)
Florida 59-2858209
------- ----------
(State of incorporation) (I.R.S. Employer Identification No.)
4900 North Habana Ave., Tampa,FL 33614
- -------------------------------- -----
(Address of principal executive offices) (Zip Code)
Issuer's telephone number,
including area code: (813) 854-4668
--------------
Check whether the issuer (1) filed all reports required to be filed by Section
13 or 15(d) of the Exchange Act during the past 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
----- -----
State the number of shares outstanding of each of the issuer's classes of common
equity, as of the latest practicable date:
Class Outstanding at June 30, 1997
Common stock, par value $1.00 per share 433 shares
- --------------------------------------- ----------
Documents incorporated by reference
NONE
1
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TABLE OF CONTENTS
FORM 10-QSB QUARTERLY REPORT - June 30, 1997
ST. JOSEPH'S PHYSICIAN ASSOCIATES, INC.
<TABLE>
<CAPTION>
Page
----
<S> <C>
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements 3 - 9
Item 2. Management's Discussion and Analysis or
Plan of Operation 10 - 12
PART II - OTHER INFORMATION
Item 1. Legal Proceedings 13
Item 2. Changes in Securities 14
Item 3. Defaults Upon Senior Securities 14
Item 4. Submission of Matters to a Vote of Security
Holders 14
Item 5. Other Information 14
Item 6. Exhibits and Reports on Form 8-K 14
Signatures 15
</TABLE>
2
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ST. JOSEPH'S PHYSICIAN ASSOCIATES, INC.
BALANCE SHEETS
<TABLE>
<CAPTION>
June 30, December 31,
1997 1996
----------- ------------
(Unaudited)
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents $ 702,079 $ 769,570
Distribution receivable from
limited partnership investments 30,010 38,520
Income taxes receivable 78,879 6,379
Prepaid expenses 2,228 6,666
----------- -----------
Total current assets 813,196 821,135
Equity investments 764,776 742,867
Other investments 20,000 20,000
----------- -----------
Total assets $ 1,597,972 $ 1,584,002
=========== ===========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accrued expenses $ 20,096 $ 23,978
Income taxes payable 6,428 0
----------- -----------
Total current liabilities 26,524 23,978
Deferred income taxes 78,326 78,326
----------- -----------
Total liabilities 104,850 102,304
Stockholders' equity:
Common stock, $1 par value: 7,500 shares
authorized; 426 shares at June 30, 1997
and 426 shares at December 31, 1996 issued
and outstanding 426 426
Common stock subscribed, 7 shares at
June 30, 1997 and 7 shares at
December 31, 1996 7 7
Subscriptions receivable (11,600) (11,600)
Additional paid-in capital 704,975 704,975
Retained earnings 799,314 787,890
----------- -----------
Total stockholders' equity 1,493,122 1,481,698
----------- -----------
Total liabilities and stockholders' equity $ 1,597,972 $ 1,584,002
=========== ===========
</TABLE>
The accompanying notes
are an integral part of these financial statements.
3
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ST. JOSEPH'S PHYSICIAN ASSOCIATES, INC.
STATEMENTS OF INCOME
<TABLE>
<CAPTION>
For the six For the six For the three For the three
months ended months ended months ended months ended
June 30, 1997 June 30, 1996 June 30, 1997 June 30, 1996
------------- ------------- ------------- --------------
(Unaudited) (Unaudited) (Unaudited) (Unaudited)
<S> <C> <C> <C> <C>
Equity in net earnings of investees $ 21,909 $ 93,855 $ 12,736 $ 63,004
Distribution income 53,390 77,040 30,010 38,520
-------- -------- --------- --------
75,299 170,895 42,746 101,524
Expenses:
Salary 20,000 20,000 10,000 10,000
General and administrative 51,408 41,084 36,384 28,814
-------- -------- --------- --------
71,408 61,084 46,384 38,814
Operating income (loss) 3,891 109,811 (3,638) 62,710
Interest income 13,960 12,099 7,426 5,942
-------- -------- --------- --------
Income before income taxes 17,851 121,910 3,788 68,652
Income taxes 6,427 42,668 1,364 24,028
-------- -------- --------- --------
Net Income $ 11,424 $ 79,242 $ 2,424 $ 44,624
======== ======== ========= ========
Net income per common share $ 26 $ 187 $ 6 $ 105
======== ======== ========= ========
Weighted average shares outstanding
and subscribed 433.0 424.7 433.0 426.7
======== ======== ========= ========
</TABLE>
The accompanying notes
are an integral part of these financial statements.
4
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ST. JOSEPH'S PHYSICIAN ASSOCIATES, INC.
STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
For the six For the six
months ended months ended
June 30, 1997 June 30, 1996
------------- -------------
(Unaudited) (Unaudited)
<S> <C> <C>
OPERATING ACTIVITIES
Net income $ 11,424 $ 79,242
Adjustments to reconcile net income to net cash
used in operating activities:
Equity in net earnings of investees (21,909) (93,855)
Distribution income (53,390) (77,040)
Changes in operating assets and liabilities:
Prepaid expenses 4,438 5,353
Income taxes receivable (72,500) 0
Accrued expenses (3,882) 6,938
Income taxes payable 6,428 (13,832)
--------- ---------
Net cash used in operating activities (129,391) (93,194)
INVESTING ACTIVITIES
Distributions received 61,900 82,520
--------- ---------
Net cash provided by investing activities 61,900 82,520
FINANCING ACTIVITIES
Proceeds from sale of common stock 0 26,600
Redemption of common stock 0 (3,048)
--------- ---------
Net cash provided by financing activities 0 23,552
Increase (decrease) in cash and cash equivalents (67,491) 12,878
Cash and cash equivalents at beginning of period 769,570 643,988
--------- ---------
Cash and cash equivalents at end of period $ 702,079 $ 656,866
========= =========
</TABLE>
The accompanying notes
are an integral part of these financial statements.
5
<PAGE> 6
ST. JOSEPH'S PHYSICIAN ASSOCIATES, INC.
NOTES TO FINANCIAL STATEMENTS
The financial statements included herein have been prepared by St. Joseph's
Physician Associates, Inc. (the "Company"), without audit, pursuant to the rules
and regulations of the Securities and Exchange Commission. In the opinion of
management, the accompanying unaudited financial statements contain all
adjustments necessary to present fairly the financial position of the Company as
of June 30, 1997 and December 31, 1996, and the results of its operations and
its cash flows for the three months and six months ended June 30, 1997 and 1996.
NOTE 1 - ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:
Organization
The Company was organized on November 20, 1987, as a Florida corporation, to
establish and operate an association of qualified physicians for the purpose of
engaging directly or indirectly in health care related ventures.
In February 1989, the Company acquired 2,500 shares of the common stock of St.
Joseph's Physicians-Healthcenter Organization, Inc. (the "PHO") for $20 per
share. The 2,500 shares represent 50% of the outstanding common stock of the
PHO. The remaining 2,500 common shares of the PHO are owned by St. Joseph's
Enterprises, Inc.("Enterprises") The PHO also had 6,250 preferred shares
outstanding as of December 31, 1996. Prior to January 31, 1997, the Company
earned equity in the net earnings of the PHO at 22.22% of the PHO's earnings
after deducting a 6% cumulative dividend for the 6,250 preferred shares. The
PHO's preferred shares were redeemed effective January 31, 1997 for $184,375. As
a result of this redemption, the Company and Enterprises now each own a 50%
interest in the PHO. The PHO was organized for the purpose of engaging directly
or indirectly in managed care arrangements and health care related ventures.
In June 1989, the Company acquired 4,000 shares of the common stock in
Hospitals' Home Health Care of Hillsborough County, Inc. d/b/a St. Joseph's Home
Health Services ("HHC") for $10 per share. The 4,000 shares represent 50% of the
outstanding common stock of HHC. HHC was organized for the purpose of providing
medical services to patients in the home environment.
6
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NOTE 1 - ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (con't):
Equity Investments
The Company accounts for its investments in the PHO and HHC on the equity
method. Accordingly, these investments have been stated in the accompanying
balance sheets at the cost of acquisition plus the Company's equity in the
undistributed earnings/losses since acquisition, less distributions to the
Company. None of the assets or liabilities of the investments are included in
the balance sheets except to the extent of the Company's interests in the
underlying net assets included in equity investments. The excess of the cost of
acquisition of the investment in HHC over the Company's interest in the
underlying net liabilities at the date of acquisition was $84,264 and is being
amortized as a component of equity in net earnings of investees over forty
years. As of June 30, 1997, the unamortized excess cost of acquisition of the
investment in HHC was $67,415. The Company's net earnings/losses resulting from
its proportionate share of the investees' revenues and expenses are included in
the statements of income.
Other Investments
The Company owns five limited partnership units in St. Joseph's Same-Day Surgery
Center, Ltd. ("SDS"). The investment is accounted for at cost due to the
Company's limited percentage interest in the partnership and inability to
exercise significant influence over the partnership. Distributions are recorded
as income when declared and reported as distribution income.
Subscriptions Receivable
Subscriptions receivable relate to agreements to purchase common stock of the
Company and are to be paid in installments during 1997 and 1998.
Cash Equivalents
The Company considers all highly liquid investments with original maturities of
three months or less when purchased to be cash equivalents.
Income Per Common Share
Income per common share is based upon the weighted average number of common
shares outstanding during the period.
7
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NOTE 2 - RELATED PARTIES:
The members of the Board of Directors of the Company are also members of the
medical staff of St. Joseph's Hospital, Inc., which is owned by St. Joseph's
Health Care Center, Inc("SJHC"). Until January 31, 1997, SJHC provided
administrative support to the Company at no charge. Beginning February 1, 1997,
SJHC began to charge the Company for administrative support and direct costs
(i.e., supplies, food charges, printing, etc.).
All limited partner investors in the PHO's ventures are investors in the
Company. In addition, all physicians who hold provider contracts with a
subsidiary of the PHO are investors in the Company.
On October 1, 1991, the Company hired an executive director to provide and
facilitate the efficient operations of the Company. Prior to April 29, 1996, the
executive director was a member of the Company's Board of Directors. Under the
terms of a funding agreement dated October 1, 1991, the PHO agreed to reimburse
the Company for compensation paid to the executive director up to the limits set
forth in the Executive Director Agreement. The funding agreement was terminated
by the PHO effective January 1, 1996. Accordingly, the Company currently is
responsible for paying the compensation of the executive director without
reimbursement from the PHO. The Company's payment of compensation to the
executive director for the six months ended June 30, 1997 is presented as salary
expense.
8
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NOTE 3 - EQUITY INVESTMENTS:
A summary of the changes in equity investments is presented below:
<TABLE>
<CAPTION>
HHC PHO Total
-------- --------- --------
<S> <C> <C> <C>
Balance at December 31, 1996 $605,100 $ 137,767 $742,867
Equity in net earnings (loss) of investees 39,853 (17,944) 21,909
-------- --------- --------
Balance at June 30, 1997 $644,953 $ 119,823 $764,776
======== ========= ========
</TABLE>
The condensed balance sheets of the equity investees are as follows:
<TABLE>
<CAPTION>
Balance Sheets June 30, 1997 December 31, 1996
- ----------------------------- --------------------- ---------------------
HHC PHO HHC PHO
---------- -------- ---------- --------
(unaudited) (unaudited)
<S> <C> <C> <C> <C>
Assets:
Currents assets $2,040,853 $326,787 $2,128,418 $529,474
Noncurrent assets 2,961 270,561 4,902 259,025
---------- -------- ---------- --------
Total assets $2,043,814 $597,348 $2,133,320 $788,499
========== ======== ========== ========
Liabilities and stockholders'
equity:
Current liabilities $ 656,086 $148,407 $ 827,404 $163,323
Long-term liabilities 232,654 0 232,654 0
Stockholders' equity 1,155,074 448,941 1,073,262 625,176
---------- -------- ---------- --------
Total liabilities and
stockholders' equity $2,043,814 $597,348 $2,133,320 $788,499
========== ======== ========== ========
</TABLE>
The condensed statements of income of the equity investees are as follows:
<TABLE>
<CAPTION>
For the 6 Months Ended For the 3 Months Ended
----------------------------- ---------------------------
June 30, June 30, June 30, June 30,
1997 1996 1997 1996
----------- ----------- ----------- -----------
(unaudited) (unaudited) (unaudited) (unaudited)
<S> <C> <C> <C> <C>
Statement of Income - HHC
- -------------------------
Revenues $ 1,525,488 $ 1,409,338 $ 767,387 $ 766,475
Expenses 1,422,522 1,207,237 725,815 632,508
----------- ----------- --------- ---------
102,966 202,101 41,572 133,967
Income tax provision (21,155) (55,925) (8,569) (45,706)
----------- ----------- --------- ---------
Net income $ 81,811 $ 146,176 $ 33,003 $ 88,261
=========== =========== ========= =========
Statement of Income - PHO
- -------------------------
Equity in partnership earnings $ 47,128 $ 49,556 $ 23,434 $ 27,281
Other revenues 22,886 174,604 13,346 165,206
Expenses 118,300 78,366 64,424 63,249
----------- ----------- --------- ---------
(48,286) 145,794 (27,644) 129,238
Income tax benefit (provision) 9,290 (43,828) 5,361 (40,048)
----------- ----------- --------- ---------
Net income (loss) $ (38,996) $ 101,966 $ (22,283) $ 89,190
=========== =========== ========= =========
</TABLE>
9
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ST. JOSEPH'S PHYSICIAN ASSOCIATES, INC.
PART I - FINANCIAL INFORMATION
ITEM 2
MANAGEMENT'S DISCUSSION AND ANALYSIS
OR PLAN OF OPERATION
June 30, 1997
Liquidity
Cash resources of the Company decreased by $67,491 during the first six months
of 1997 and increased $12,878 during the same time period in 1996. Cash
resources resulted from the quarterly distributions received with respect to the
five limited partnership units in St. Joseph's Same-Day Surgery Center, Ltd.
("SDS"), and were offset by expenditures for operating expenses and estimated
tax payments. The tax payment made in the first quarter of 1997 included the
estimated balance due for the 1996 tax liability and the estimated payment for
the first quarter of 1997. Upon completion of the Company's 1996 federal and
state income tax returns, it was determined that the Company was entitled to tax
refunds. After applying sufficient amounts to cover the 1997 estimated taxes,
the Company requested refunds totaling approximately $74,900 which are expected
to be received during the third quarter of 1997. In addition, cash resources
during the second quarter of 1996 included proceeds of $26,600 from the sale of
common stock.
On May 26, 1995, St. Joseph's Health Network, Inc. ("SJHN"), a 100%-owned
subsidiary of the PHO, was incorporated. SJHN, a physician-hospital
organization, is negotiating at-risk products with managed care organizations on
behalf of its membership to provide high quality, competitively priced health
care services for persons residing or employed in the Tampa area. In the near
future, the Company might find it appropriate to assist the PHO with providing
additional capitalization for SJHN. The amount of funding, if any, has not been
determined at this time. However, the Company's contribution to such funding
would be determined by taking into account the Company's available liquidity and
its other anticipated cash needs. Additional liquidity for SJHN is expected to
be received from other sources, including provider credentialing fees,
additional equity contributions from the PHO and/or borrowings.
On June 30, 1997, a $30,010 distribution with respect to the five SDS limited
partnership units was declared and will be received during the third quarter of
1997.
10
<PAGE> 11
Management believes that current cash reserves, additional distributions with
respect to the five SDS limited partnership units, as well as the proceeds of
additional sales of its common stock will provide adequate short-term funding of
the Company's on-going operations. However, because of the Company's decision to
use its cash flows to compensate its Executive Director, and to fund its other
regular operating expenses, it is possible that the Company will not be in a
position to fund new projects that could arise in the future.
Capital Resources
In July 1997, the Company completed a private stock offering in which 10 shares
of its common stock were sold at $3,450 per share. Although there can be no
assurance, the Company does not anticipate substantial difficulty in raising
additional funds, should the need arise.
Results of Operations
Equity in net earnings of investees is the result of the Company's investment in
the PHO and HHC. As a result of a decrease in the profitability of the PHO and
HHC, the equity in net earnings has decreased during the second quarter and the
first six months of 1997 as compared to the same time periods in 1996. The
decrease in the profitability of the PHO is a result of an increase in expenses
relating to compensation and benefit costs incurred with respect to newly hired
staff and a decrease in provider member fees associated with SJHN. Although
revenues increased for HHC, overall profitability during the second quarter of
1997 was lower than the same period of 1996 because the volume of Medicaid
patients increased significantly. The Medicaid per patient reimbursement is
lower than for patients covered by commercial HMO's and insurers but the cost of
providing services is similar.
The Company owns five SDS limited partnership units and receives quarterly
distributions on such units. Distribution income for the second quarter and
first six months of 1997 was lower than for the same periods in 1996. The
distribution was calculated by taking into account anticipated operating cash
needs of SDS, with the intent of maintaining appropriate reserves.
Interest earnings represent interest on bank deposits. The increase between 1997
and 1996 resulted from a higher average cash balance in 1997 than during the
same period of 1996.
11
<PAGE> 12
General and administrative expenses increased during the second quarter and
first six months of 1997 compared to the same time periods of 1996. Expenditures
incurred in the first six months of 1997 relating to bookkeeping and
administrative services were previously provided without charge by SJHC. It is
anticipated that over the near term, general and administrative expenses will
continue to be incurred at comparable levels.
Salary expense remained consistent with the same time period of 1996.
Expenditures incurred relate to the compensation paid to the executive director.
During the second quarter of 1997, the Company had net income of $2,424.
Therefore, the net income per common share was $6 for the second quarter of
1997. The net income per common share for the same quarter last year was $105
per share. The decrease in the net income per common share for the second
quarter of 1997 resulted from a decrease in net income and a greater number of
shares outstanding.
Several new laws and regulations affecting the healthcare industry were adopted
at both the state and federal levels during the last several years, including
1996 and 1997. Some of the legislation and regulation could have a significant
adverse impact on the Company, its related investments, and the stockholders of
the Company. The Company is continuing to monitor and evaluate the impact of
such changes in laws and regulations.
12
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ST. JOSEPH'S PHYSICIAN ASSOCIATES, INC.
PART II - OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
To the knowledge of the Company's management, there are no material pending
legal proceedings, other than ordinary routine litigation incidental to the
business of the Company, or its Partially Owned Operations, to which the Company
or any of its Partially Owned Operations is a party or of which any of their
property is the subject.
13
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ITEM 2. CHANGES IN SECURITIES
None
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
None
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
On May 5, 1997, the annual stockholders meeting of the Company was held.
Directors elected at the meeting were:
<TABLE>
<CAPTION>
Number of Votes
---------------
For Withheld
--- --------
<S> <C> <C>
Lane France, M.D. (term expiring 2001) 176 17
Allen Miller, M.D. (term expiring 2001) 190 3
John Rasmussen, M.D. (term expiring 1998) 187 6
</TABLE>
Other directors whose term of office continued after the meeting were:
Anthony Brannan, M.D. William Luria, M.D.
Norman Castellano, M.D. Benedict Maniscalco, M.D.
N. Bruce Edgerton, M.D. Michael Wasylik, M.D.
ITEM 5. OTHER INFORMATION
None
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
a. Exhibits
27 - Financial Data Schedule (for SEC use only)
b. Reports on Form 8-K
None
14
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SIGNATURES
August 7, 1997
In accordance with the requirements of the Exchange Act, the registrant caused
this report to be signed on its behalf by the undersigned, thereunto duly
authorized.
ST. JOSEPH'S PHYSICIAN ASSOCIATES, INC.
--------------------------------------------
(Registrant)
Date: August 7, 1997 /s/ Anthony Brannan, M.D.
--------------------------------------------
Anthony Brannan, M.D., President
St. Joseph's Physician Associates, Inc.
Date: August 7, 1997 /s/ William Luria, M.D.
--------------------------------------------
William Luria, M.D., Treasurer and
Principal Financial Officer
St. Joseph's Physician Associates, Inc.
15
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM ST. JOSEPH'S
PHYSICIAN ASSOCIATES, INC. 6/30/97 BALANCE SHEET AND INCOME STATEMENT FOR THE
SIX MONTHS PERIOD ENDED 6/30/97 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO
SUCH FORM 10-QSB FOR THE QUARTERLY PERIOD ENDED 6/30/97.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> JAN-01-1997
<PERIOD-END> JUN-30-1997
<CASH> 702,079
<SECURITIES> 0
<RECEIVABLES> 30,010
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 813,196
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 1,597,972
<CURRENT-LIABILITIES> 26,524
<BONDS> 0
0
0
<COMMON> 693,808
<OTHER-SE> 799,314
<TOTAL-LIABILITY-AND-EQUITY> 1,597,972
<SALES> 0
<TOTAL-REVENUES> 89,259
<CGS> 0
<TOTAL-COSTS> 71,408
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 17,851
<INCOME-TAX> 6,427
<INCOME-CONTINUING> 11,424
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 11,424
<EPS-PRIMARY> 26.00
<EPS-DILUTED> 0
</TABLE>
