<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 September 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 September 30, 1997
Common stock, par value $1.00 per share 443 shares
- --------------------------------------- ----------
Documents incorporated by reference
NONE
1
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TABLE OF CONTENTS
FORM 10-QSB QUARTERLY REPORT - September 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>
September 30, December 31,
1997 1996
--------------- ------------
(Unaudited)
<S> <C> <C>
ASSETS
Current Assets:
Cash and cash equivalents $ 826,397 $ 769,570
Distribution receivable from
limited partnership investments 30,010 38,520
Income taxes receivable 3,998 6,379
Prepaid expenses 73 6,666
------------- ----------
Total current assets 860,478 821,135
Equity investments 753,462 742,867
Other investments 20,000 20,000
------------- -----------
Total assets $ 1,633,940 $ 1,584,002
============= ===========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accrued expenses $ 15,531 $ 23,978
Income taxes payable 7,520 0
------------- -----------
Total current liabilities 23,051 23,978
Deferred income taxes 78,326 78,326
------------- -----------
Total liabilities 101,377 102,304
Stockholders' equity:
Common stock, $1 par value: 7,500 shares
authorized; 436 shares at September 30, 1997
and 426 shares at December 31, 1996 issued
and outstanding 436 426
Common stock subscribed, 7 shares at
September 30, 1997 and at
December 31, 1996 7 7
Subscriptions receivable (8,600) (11,600)
Additional paid-in capital 739,465 704,975
Retained earnings 801,255 787,890
------------- -----------
Total stockholders' equity 1,532,563 1,481,698
------------- -----------
Total liabilities and stockholders' equity $ 1,633,940 $ 1,584,002
============= ===========
</TABLE>
The accompanying notes are an
integral part of these financial statements.
3
<PAGE> 4
ST. JOSEPH'S PHYSICIAN ASSOCIATES, INC.
STATEMENTS OF INCOME
<TABLE>
<CAPTION>
For the nine For the nine For the three For the three
months ended months ended months ended months ended
Sept 30, 1997 Sept 30, 1996 Sept 30, 1997 Sept 30, 1996
------------- ------------- ------------- -------------
(Unaudited) (Unaudited) (Unaudited) (Unaudited)
<S> <C> <C> <C> <C>
Equity in net earnings (loss) of investees $ 10,595 $ 117,678 ($11,313) $ 26,739
Distribution income 83,400 115,560 30,010 38,520
-------- --------- --------- --------
93,995 233,238 18,697 65,259
Expenses:
Salary 30,000 30,000 10,000 10,000
General and administrative 64,808 61,899 13,400 20,816
-------- --------- --------- --------
94,808 91,899 23,400 30,816
Operating income (loss) (813) 141,339 (4,703) 34,443
Interest income 21,698 18,494 7,737 6,395
-------- --------- --------- --------
Income before income taxes 20,885 159,833 3,034 40,838
Income taxes 7,520 55,942 1,093 13,274
-------- --------- --------- --------
Net Income $ 13,365 $ 103,891 $ 1,941 $ 27,564
======== ========= ========= ========
Net income per common share $ 31 $ 240 $ 4 $ 62
======== ========= ========= ========
Weighted average shares outstanding
and subscribed 435.31 433.6 439.85 447.2
======== ========= ========= ========
</TABLE>
The accompanying notes
are an integral part of these financial statements.
4
<PAGE> 5
ST. JOSEPH'S PHYSICIAN ASSOCIATES, INC.
STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
For the nine For the nine
months ended months ended
Sept 30, 1997 Sept 30, 1996
---------------------- ---------------------
(Unaudited) (Unaudited)
<S> <C> <C>
OPERATING ACTIVITIES
Net income $ 13,365 $ 103,891
Adjustments to reconcile net income to net cash
used in operating activities:
Equity in net earnings of investees (10,595) (117,678)
Distribution income (83,400) (115,560)
Changes in operating assets and liabilities:
Prepaid expenses 6,593 8,029
Income taxes receivable 2,381 0
Accrued expenses (8,447) 4,412
Income taxes payable 7,520 (558)
--------- ---------
Net cash used in operating activities (72,583) (117,464)
INVESTING ACTIVITIES
Distributions received 91,910 159,560
--------- ---------
Net cash provided by investing activities 91,910 159,560
FINANCING ACTIVITIES
Proceeds from sale of common stock 37,500 66,800
Redemption of common stock 0 (9,296)
--------- ---------
Net cash provided by financing activities 37,500 57,504
Increase in cash and cash equivalents 56,827 99,600
Cash and cash equivalents at beginning of period 769,570 643,988
--------- ---------
Cash and cash equivalents at end of period $ 826,397 $ 743,588
========= =========
</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 September 30, 1997 and December 31, 1996, and the results of its
operations and its cash flows for the three months and nine months ended
September 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
<PAGE> 7
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 September 30, 1997, the unamortized excess cost of acquisition of
the investment in HHC was $66,889. 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
<PAGE> 8
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 nine months ended September 30, 1997 is
presented as salary expense.
8
<PAGE> 9
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 49,021 -38,426 10,595
----------------- ------------------ -----------------
Balance at September 30, 1997 $654,121 $ 99,341 $753,462
================= ================== =================
</TABLE>
The condensed balance sheets of the equity investees are as follows:
<TABLE>
<CAPTION>
Balance Sheets September 30, 1997 December 31, 1996
- ------------------------- -------------------------------------- -------------------------------------
HHC PHO HHC PHO
------------------ ----------------- ------------------ -----------------
(unaudited) (unaudited)
<S> <C> <C> <C> <C>
Assets:
Currents assets $2,040,853 $263,333 $2,128,418 $529,474
Noncurrent assets 2,961 291,064 4,902 259,025
------------------ ----------------- ------------------ -----------------
Total assets $2,043,814 $554,397 $2,133,320 $788,499
================== ================= ================== =================
Liabilities and stockholders'
equity:
Current liabilities $656,086 $156,493 $ 827,404 $163,323
Long-term liabilities 232,654 0 232,654 0
Stockholders' equity 1,155,074 397,904 1,073,262 625,176
------------------ ----------------- ------------------ -----------------
Total liabilities and
stockholders' equity $2,043,814 $554,397 $2,133,320 $788,499
================== ================= ================== =================
</TABLE>
The condensed statements of income of the equity investees are as follows:
<TABLE>
<CAPTION>
For the 9 Months Ended For the 3 Months Ended
-------------------------------------- -------------------------------------
Sept 30, Sept 30, Sept 30, Sept 30,
1997 1996 1997 1996
------------------ ----------------- ------------------ -----------------
(unaudited) (unaudited) (unaudited) (unaudited)
<S> <C> <C> <C> <C>
Statement of Income - HHC
Revenues $2,275,475 $2,184,048 $749,987 $774,708
Expenses 2,138,448 1,910,398 715,926 697,159
------------------ ----------------- ------------------ -----------------
137,027 273,650 34,061 77,549
Income tax provision (35,827) (97,765) (14,672) (42,010)
------------------ ----------------- ------------------ -----------------
Net income $ 101,200 $ 175,885 $ 19,389 $ 35,539
================== ================= ================== =================
Statement of Income - PHO
Equity in partnership earnings $ 67,062 $ 74,413 $ 19,934 $ 24,856
Other revenues 37,705 258,858 14,819 84,254
Expenses 204,200 118,010 85,900 39,644
------------------ ----------------- ------------------ -----------------
(99,433) 215,261 (51,147) 69,466
Income tax benefit (provision) 19,476 (68,687) 10,186 (24,859)
------------------ ----------------- ------------------ -----------------
Net income (loss) $(79,957) $ 146,574 $(40,961) $ 44,607
================== ================= ================== =================
</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
September 30, 1997
Liquidity
Cash resources of the Company increased by $56,827 during the first nine months
of 1997 and $99,600 during the same time period in 1996. The increases in 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 proceeds from the sale of additional common stock, offset by
expenditures for operating expenses. A smaller increase in cash resources was
realized in 1997 compared to 1996 because no dividends have been received from
HHC in 1997 and no dividends are expected. Also, more shares of stock were sold
during 1996 than have been sold during 1997.
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 provider network 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 September 30, 1997, a $30,010 distribution with respect to the five SDS
limited partnership units was declared and is expected to be received during
the fourth quarter of 1997. In addition, proceeds of $34,500 from the sale of
additional SJPA common stock in 1997, and $3,000 from subscription payments
from the sale of SJPA common stock in previous years, were 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
From time to time, the Company may find it appropriate to pursue additional
private offerings of its common stock. 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 (loss) of investees is the result of the Company's
investments in the PHO and HHC. As a result of a decrease in the profitability
of the PHO and HHC in 1997, the equity in net earnings has decreased during the
third quarter and the first nine 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. The decrease in the profitability of the HHC during the third
quarter is a result of a decrease in home care visits and infusion ("I.V.")
therapy revenue associated with the termination of a contract with Hillsborough
County, Florida. In addition, the costs of providing I.V. therapy increased
during the third quarter.
The Company owns five SDS limited partnership units and receives quarterly
distributions on such units. Distribution income for the third quarter and
first nine 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 decreased during the third quarter and
increased during the first nine months of 1997 compared to the same time
periods of 1996. Expenditures incurred in the first nine months of 1997
relating to bookkeeping and administrative services were previously provided
without charge by SJHC. The decrease for the quarter is a result of a decrease
in consulting and legal fees as compared to 1996. 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 third quarter of 1997, the Company had net income of $1,941.
Therefore, the net income per common share was $4 for the third quarter of
1997. The net income per common share for the same quarter last year was $62
per share. The decrease in the net income per common share for the third
quarter of 1997 resulted from a decrease in net income.
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
<PAGE> 13
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
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: November 7, 1997 /s/ Anthony Brannan, M.D.
---------------------------------------
Anthony Brannan, M.D., President
St. Joseph's Physician Associates, Inc.
Date: November 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. SEPTEMBER 30, 1997 BALANCE SHEET AND INCOME STATEMENT
FOR THE NINE MONTHS PERIOD ENDED SEPTEMBER 30, 1997, AND IS QUALIFIED IN ITS
ENTIRETY BY REFERENCE TO SUCH FORM 10-QSB FOR THE QUARTERLY PERIOD ENDED
SEPTEMBER 30, 1997.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> JAN-01-1997
<PERIOD-END> SEP-30-1997
<CASH> 826,397
<SECURITIES> 0
<RECEIVABLES> 30,010
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 860,478
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 1,633,940
<CURRENT-LIABILITIES> 23,051
<BONDS> 0
0
0
<COMMON> 731,308
<OTHER-SE> 801,255
<TOTAL-LIABILITY-AND-EQUITY> 1,633,940
<SALES> 0
<TOTAL-REVENUES> 115,693
<CGS> 0
<TOTAL-COSTS> 94,808
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 20,885
<INCOME-TAX> 7,520
<INCOME-CONTINUING> 13,365
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 13,365
<EPS-PRIMARY> 31.00
<EPS-DILUTED> 0
</TABLE>
