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U.S. SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D. C. 20549
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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, 2000
Commission File Number 33-22011-A
ST. JOSEPH'S PHYSICIAN ASSOCIATES, INC.
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(Exact name of Small Business Issuer as specified in its charter)
Florida 59-2858209
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(State of incorporation) (I.R.S. Employer Identification No.)
4900 North Habana Ave., Tampa,FL 33614
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(Address of principal executive offices) (Zip Code)
Issuer's telephone number,
including area code: (813) 854-4668
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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, 2000
Common stock, par value $1.00 per share 419 shares
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Documents incorporated by reference
NONE
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TABLE OF CONTENTS
FORM 10-QSB QUARTERLY REPORT - June 30, 2000
ST. JOSEPH'S PHYSICIAN ASSOCIATES, INC.
Page
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PART I - FINANCIAL INFORMATION
Item 1. Financial Statements 3 - 10
Item 2. Management's Discussion and Analysis or
Plan of Operation 11 - 13
PART II - OTHER INFORMATION
Item 1. Legal Proceedings 14
Item 2. Changes in Securities 15
Item 3. Defaults Upon Senior Securities 15
Item 4. Submission of Matters to a Vote of Security
Holders 15
Item 5. Other Information 15
Item 6. Exhibits and Reports on Form 8-K 15
Signatures 16
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ST. JOSEPH'S PHYSICIAN ASSOCIATES, INC.
BALANCE SHEETS
<TABLE>
<CAPTION>
June 30, December 31,
2000 1999
----------- ------------
(Unaudited)
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents $ 1,108,432 $ 1,115,984
Distribution receivable from
limited partnership investments 22,005 14,938
Income taxes receivable 26,665 26,665
Prepaid expenses 3,331 6,375
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Total current assets 1,160,433 1,163,962
Equity investments 218,838 212,207
Other investments 120,000 120,000
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Total assets $ 1,499,271 $ 1,496,169
=========== ===========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accrued expenses $ 12,384 $ 23,692
Due to related party 1,001 1,953
Income taxes payable 14,540 0
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Total current liabilities 27,925 25,645
Deferred income taxes 76,265 76,265
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Total liabilities 104,190 101,910
Stockholders' equity:
Common stock, $1 par value: 7,500 shares
authorized; 407 shares at June 30, 2000
and 415 shares at December 31, 1999
issued and outstanding 407 415
Common stock subscribed, 12 shares at
June 30, 2000 and December 31, 1999 12 12
Subscriptions receivable (21,589) (27,097)
Additional paid-in capital 662,750 689,239
Retained earnings 753,501 731,690
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Total stockholders' equity 1,395,081 1,394,259
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Total liabilities and stockholders' equity $ 1,499,271 $ 1,496,169
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</TABLE>
The accompanying notes are an integral
part of these financial statements.
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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, 2000 June 30, 1999 June 30, 2000 June 30, 1999
---------------------------------------------------------------------------------
(Unaudited) (Unaudited) (Unaudited) (Unaudited)
<S> <C> <C> <C> <C>
Distribution income $58,200 $ 59,750 $22,005 $ 29,875
Equity in net earnings
of investees 6,631 5,502 8,225 3,041
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64,831 65,252 30,230 32,916
Expenses:
Salary 20,000 20,000 10,000 10,000
General and administrative 39,286 63,488 24,448 40,079
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59,286 83,488 34,448 50,079
Operating (loss) income 5,545 (18,236) (4,218) (17,163)
Interest income 30,806 24,624 16,295 12,009
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Income before income taxes 36,351 6,388 12,077 (5,154)
Provision for income taxes 14,540 2,761 4,830 (1,856)
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Net Income $21,811 $ 3,627 $ 7,247 $(3,298)
==================================================================================
Net income per common share -
basic and diluted $ 51 $ 9 $ 17 $ (8)
==================================================================================
Weighted average shares
outstanding and subscribed 425 414 423 414
==================================================================================
</TABLE>
The accompanying notes
are an integral part of these financial statements.
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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, 2000 June 30, 1999
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(Unaudited) (Unaudited)
<S> <C> <C>
OPERATING ACTIVITIES
Net income $ 21,811 $ 3,627
Adjustments to reconcile net income to
net cash used in operating activities:
Equity in net earnings of investees (6,631) (5,502)
Distribution income (58,200) (59,750)
Changes in operating assets and liabilities:
Prepaid expenses 3,044 2,525
Income taxes receivable 0 (12,500)
Accrued expenses (11,308) (7,190)
Due to related party (952) (8,109)
Income taxes payable 14,540 2,761
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Net cash used in operating activities (37,696) (84,138)
INVESTING ACTIVITIES
Proceeds from sale of equity investment 0 0
Purchase of noncurrent investment 0 (100,000)
Distributions received 51,133 70,190
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Net cash provided by (used in)investing activities 51,133 (29,810)
FINANCING ACTIVITIES
Payments received of stock subscriptions 5,508 2,300
Proceeds from sale of common stock 0 0
Redemption of common stock (26,497) (12,727)
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Net cash used in financing activities (20,989) (10,427)
Increase (decrease)in cash and cash equivalents (7,552) (124,375)
Cash and cash equivalents at beginning of period 1,115,984 1,202,252
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Cash and cash equivalents at end of period $ 1,108,432 $ 1,077,877
=========== ===========
</TABLE>
The accompanying notes are an
integral part of these financial statements.
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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, 2000 and December 31, 1999, and the results of its operations for
the three months and six months ended June 30, 2000 and 1999, and its cash flows
for the six months ended June 30, 2000 and 1999.
NOTE 1 - ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:
Organization
The Company was organized on November 20, 1987 as a Florida corporation. The
Company was organized to establish and operate as 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 was organized for the purpose of
engaging directly or indirectly in managed care arrangements and health care
related ventures.
Use of Estimates
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the amounts reported in
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the financial statements and accompanying notes. Actual results could differ
from these estimates.
Equity Investments
The Company accounts for its investment in the PHO on the equity method.
Accordingly, the investment has 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 investment 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 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"). Management has not actively marketed these partnership
units and intends to hold them beyond one year. Accordingly, this investment is
presented as noncurrent, other investments. The investment is accounted for at
cost because of 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.
On March 3, 1999, the Company purchased 100,000 shares of common stock,
representing approximately 3% of the outstanding common stock, of Entrusted
Health Management Services, Inc. ("EHMS"), a Florida corporation. The balance of
the outstanding common stock of EHMS is owned by several other individuals and
entities, none of whom holds a majority interest in EHMS. EHMS is a start up
entity that was organized to manage and administer health benefit arrangements
for self-insured employers. Its services ultimately are planned to include
designing and implementing benefit plans, developing one or more networks of
hospitals, physicians and other health care providers, administering claims, and
collecting and analyzing health care data for those employers with which it has
contracts for the provision of some or all of these offered services.
The investment in EHMS is accounted for at cost because of the Company's limited
percentage interest. Revenue derived from the EHMS common stock will only be
recorded by the Company upon declaration of distributions or a gain upon sale of
the stock. No distributions from EHMS were made in 1999, and none are
anticipated in 2000 or the foreseeable future, and there can be no assurance
that the Company ever will receive any distributions from EHMS. Likewise,
although the Company has no present intention to sell the
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EHMS stock, there can be no assurance that the Company would be able to realize
a gain, or even recover its investment, on any sale of the stock in the future.
Accordingly, this investment is presented as noncurrent, other investments.
Subscriptions Receivable
Subscriptions receivable relate to agreements to purchase common stock of the
Company and are being paid in installments during 2000 and 2001.
Cash Equivalents
The Company considers all highly liquid investments with original maturities of
three months or less when purchased to be cash equivalents.
Income Taxes
The Company accounts for income taxes under FASB Statement No. 109, Accounting
for Income Taxes. Deferred income tax assets and liabilities are determined
based upon differences between financial reporting and tax bases of assets and
liabilities and are measured using the enacted tax rates and laws that will be
in effect when the differences are expected to reverse.
Income Per Common Share
Income per common share is based upon the weighted average number of common
shares outstanding and subscribed during the period.
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. ("HCC"), an affiliate of Enterprises.
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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 and agreed to pay a salary to 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, and he continues to be a shareholder in the Company. The
Company's payment of compensation to the executive director for the six months
ended June 30, 2000 is presented as salary expense.
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NOTE 3 - EQUITY INVESTMENTS:
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A summary of the changes in equity investments is presented below:
PHO Total
-------- --------
Balance at December 31, 1999 $212,207 $212,207
Equity in net earnings of investees 6,631 6,631
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Balance at June 30, 2000 $218,838 $218,838
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The condensed balance sheets and statements of operations of the PHO
are as follows:
Balance Sheets - PHO June 30, 2000 Dec. 31, 1999
-------------------- ------------- -------------
(unaudited)
Assets:
Current assets $353,586 $326,483
Noncurrent assets 231,335 199,549
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Total assets $584,921 $526,032
======== ========
Liabilities and stockholders'
equity:
Current liabilities $147,243 $101,617
Long-term liabilities 0 0
Stockholders' equity 437,678 424,415
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Total liabilities and
stockholders' equity $584,921 $526,032
======== ========
For the Six Months Ended
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June 30, June 30,
Statements of Operations - PHO 2000 1999
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(unaudited) (unaudited)
Equity in partnership earnings $31,786 $30,629
Other revenues 12,637 43,032
Expenses 27,157 57,452
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Income before taxes 17,266 16,209
Income tax provision 4,005 5,206
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Net income $13,261 $11,003
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For the Three Months Ended
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June 30, June 30,
Statements of Operations - PHO 2000 1999
------------------------------ ----------- -----------
(unaudited) (unaudited)
Equity in partnership earnings $12,311 $16,461
Other revenues 1,395 20,387
Expenses 4,476 27,210
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Income before taxes 9,230 9,638
Income tax provision 1,987 3,556
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Net income $ 7,243 $ 6,082
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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, 2000
Liquidity
Cash resources of the Company decreased by $7,552 during the first six months of
2000, as compared to a decrease in cash resources of $124,375 during the first
six months of 1999. The decrease in cash resources in 2000 resulted from an
increase in the number of shares of common stock redeemed during the first six
months of 2000, as compared to the same time period in 1999. In addition, the
quarterly distribution received with respect to the five SDS limited partnership
units decreased during the first six months of 2000, as compared to the same
period in 1999. SDS reduced its distribution in anticipation of possible delays
in reimbursement caused by the year 2000 computer changes. The decrease in cash
resources was offset by a decrease in expenditures for operating expenses. On
June 30, 2000, a $22,005 distribution with respect to the five SDS limited
partnership units was declared and will be received during the third quarter of
2000.
On March 3, 1999, the Company purchased approximately 3% (100,000 shares) of the
common stock of EHMS, for which it paid $100,000. No distributions from EHMS
were made during 1999 and no distributions are anticipated for 2000 or the
foreseeable future. There can be no assurance that the Company ever will receive
any distributions from EHMS.
St. Joseph's Health Network, Inc. ("SJHN") is a 100%-owned subsidiary of the
PHO. Until December 31, 1999, SJHN, a physician-hospital organization,
negotiated at-risk products (i.e., capitation 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.
SJHN was not successful in obtaining a sufficient number of managed care
contracts to develop the base of patients needed to spread risk and make
capitation successful. As a result, in 1999, the Board of Directors of SJHN
undertook a review of SJHN's business, its opportunities and its strategic
alternatives. As a result of this review, the Board of Directors of SJHN voted
to terminate the business operations of SJHN. Based upon the advise of legal and
accounting advisors, the Board of Directors determined that the business should
cease as of December 31, 1999.
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Management believes that current cash reserves and additional distributions with
respect to the five SDS limited partnership units will meet the Company's cash
needs during 2000.
Capital Resources
The Company does not anticipate the need for any significant capital
expenditures in connection with its current operations for the foreseeable
future. If the Company determines that capital expenditures are necessary or
appropriate, it is anticipated that the Company's current cash reserves would be
used for this purpose. Any additional funds would then come from additional
sales of the Company's common stock, although there currently are no plans for a
sale of common stock. 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. The equity in net earnings increased during the second quarter and
first six months of 2000, as compared to the same time periods of 1999,
resulting from an increase in the profitability of the PHO. PHO revenues and
expenses decreased as a result of the termination of SJHN's operations effective
December 31, 1999.
The Company owns five SDS limited partnership units and receives quarterly
distributions on such units. Distribution income decreased for the second
quarter of 2000 and the first six months of 2000, as compared to the same
periods in 1999. 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 2000
and 1999 resulted from increased cash balances and an increase in interest
rates.
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The Company's general and administrative expenses decreased during the second
quarter and first six months of 2000, as compared to the same periods of 1999.
The decrease in expenses resulted from a decrease in consulting fees related to
the review of the operations of SDS during the first six months of 1999. 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 1999.
Expenditures incurred relate to the compensation paid to the Executive Director.
During the second quarter of 2000, the Company had net income of $7,247.
Therefore, the net income per common share was $17 for the second quarter of
2000. The net loss per common share for the second quarter of 1999 was $8 per
share. The increase in the net income per common share for the second quarter of
2000 resulted from an increase in net income, which was attributable to the
factors described above.
Several new laws and regulations affecting the health care business were
considered and adopted, at both the state and federal levels, during the last
several years, including 1999 and 2000. Additional health care reform
legislation also has been proposed for consideration in 2000 at the federal
level. All of the legislation and regulation could have a dramatically 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.
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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 entities affiliated with the Company, to which the
Company or any of the affiliated entities is a party or of which any of their
property is the subject.
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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 1, 2000, the annual stockholders meeting of the Company was held.
Directors elected at the meeting were:
Number of Votes
-----------------
For Withheld
--- --------
Benedict Maniscalco, M.D. (term expiring 2004) 167 14
William Luria, M.D. (term expiring 2004) 172 9
Carlos Dalence, M.D. (term expiring 2001) 177 4
Other directors whose term of office continued after the meeting were:
Lane France, M.D. N. Bruce Edgerton, M.D.
Allen Miller, M.D. Angel Docobo, M.D.
Anthony Brannan, M.D. Norman Castellano, 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
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SIGNATURES
August 14, 2000
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.
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(Registrant)
Date: August 14, 2000 /s/ N. Bruce Edgerton, M.D.
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N. Bruce Edgerton, M.D., President
St. Joseph's Physician Associates, Inc.
Date: August 14, 2000 /s/ Allen Miller, M.D.
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Allen Miller, M.D., Treasurer and
Principal Financial Officer
St. Joseph's Physician Associates, Inc.
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