<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 March 31, 2000
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:
<TABLE>
<CAPTION>
Class Outstanding at March 31, 2000
<S> <C>
Common stock, par value $1.00 per share 425 shares
- --------------------------------------- ----------
</TABLE>
Documents incorporated by reference
NONE
<PAGE> 2
TABLE OF CONTENTS
FORM 10-QSB QUARTERLY REPORT - March 31, 2000
ST. JOSEPH'S PHYSICIAN ASSOCIATES, INC.
<TABLE>
<CAPTION>
Page
----
<S> <C> <C>
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 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
<PAGE> 3
ST. JOSEPH'S PHYSICIAN ASSOCIATES, INC.
BALANCE SHEETS
<TABLE>
<CAPTION>
March 31, December 31,
2000 1999
--------------- ---------------
(Unaudited)
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents $ 1,104,804 $ 1,115,984
Distribution receivable from
limited partnership investments 36,195 14,938
Income taxes receivable 26,665 26,665
Prepaid expenses 3,339 6,375
--------------- ---------------
Total current assets 1,171,003 1,163,962
Equity investments 210,613 212,207
Other investments 120,000 120,000
--------------- ---------------
Total assets $ 1,501,616 $ 1,496,169
=============== ===============
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accrued expenses $ 13,089 $ 23,692
Due to related party 500 1,953
Income taxes payable 9,710 0
--------------- ---------------
Total current liabilities 23,299 25,645
Deferred income taxes 76,265 76,265
--------------- ---------------
Total liabilities 99,564 101,910
Stockholders' equity:
Common stock, $1 par value: 7,500 shares
authorized; 413 shares at March 31, 2000
and 415 shares at December 31, 1999
issued and outstanding 413 415
Common stock subscribed, 12 shares at
March 31, 2000 and 12 shares at
December 31, 1999 12 12
Subscriptions receivable (27,097) (27,097)
Additional paid-in capital 682,470 689,239
Retained earnings 746,254 731,690
--------------- ---------------
Total stockholders' equity 1,402,052 1,394,259
--------------- ---------------
Total liabilities and stockholders' equity $ 1,501,616 $ 1,496,169
=============== ===============
</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 For the
quarter ended quarter ended
31-Mar-00 31-Mar-99
--------------- ---------------
(Unaudited) (Unaudited)
<S> <C> <C>
Distribution income $ 36,195 $ 29,875
Equity in net earnings of investees (1,594) 2,461
--------------- ---------------
34,601 32,336
Expenses:
Salary 10,000 10,000
General and administrative 14,837 23,408
--------------- ---------------
24,837 33,408
Operating (loss) income 9,764 (1,072)
Interest income 14,511 12,615
--------------- ---------------
Income before income taxes 24,275 11,543
Provision for income taxes 9,710 4,617
--------------- ---------------
Net Income $ 14,565 $ 6,926
=============== ===============
Net income per common share -
basic and diluted $ 34 $ 17
=============== ===============
Weighted average shares outstanding
and subscribed 426.5 414.0
=============== ===============
</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 For the
quarter ended quarter ended
31-Mar-00 31-Mar-99
--------------- ---------------
<S> <C> <C>
OPERATING ACTIVITIES
Net income $ 14,565 $ 6,926
Adjustments to reconcile net income to
net cash used in operating activities:
Equity in net earnings of investees 1,594 (2,461)
Distribution income (36,195) (29,875)
Changes in operating assets and liabilities:
Prepaid expenses 3,036 2,663
Income taxes receivable 0 (12,500)
Accrued expenses (10,603) 2,138
Due to related party (1,453) (835)
Income taxes payable 9,710 4,617
--------------- ---------------
Net cash used in operating activities (19,346) (29,327)
INVESTING ACTIVITIES
Proceeds from sale of equity investment 0 0
Purchase of noncurrent investment 0 (100,000)
Distributions received 14,938 40,315
--------------- ---------------
Net cash provided by (used in)investing activities 14,938 (59,685)
FINANCING ACTIVITIES
Proceeds from sale of common stock 0 100
Redemption of common stock (6,772) (9,339)
--------------- ---------------
Net cash used in financing activities (6,772) (9,239)
Increase (decrease)in cash and cash equivalents (11,180) (98,251)
Cash and cash equivalents at beginning of quarter 1,115,984 1,202,252
--------------- ---------------
Cash and cash equivalents at end of quarter $ 1,104,804 $ 1,104,001
=============== ===============
</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 March 31, 2000 and
December 31, 1999, and the results of its operations and its cash
flows for the three months ended March 31, 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 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.
6
<PAGE> 7
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 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
7
<PAGE> 8
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 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 to be 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. Until January 31,
1997, HCC provided administrative support to the Company at no charge. Beginning
8
<PAGE> 9
February 1, 1997, HCC began to charge the Company for administrative
support and direct costs (i.e., food, printing).
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 three months ended March 31, 2000 is presented as salary expense.
9
<PAGE> 10
NOTE 3 - EQUITY INVESTMENTS:
A summary of the changes in equity investments is presented below:
<TABLE>
<CAPTION>
PHO Total
--------------- ---------------
<S> <C> <C>
Balance at December 31, 1999 $ 212,207 $ 212,207
Equity in net earnings of investees (1,594) (1,594)
--------------- ---------------
Balance at March 31, 2000 $ 210,613 $ 210,613
=============== ===============
</TABLE>
The condensed balance sheets and statements of operations of the PHO are as
follows:
<TABLE>
<CAPTION>
Balance Sheets - PHO 31-Mar-00 31-Dec-99
- ----------------------------- --------------- ---------------
(unaudited)
<S> <C> <C>
Assets:
Currents assets $ 340,668 $ 326,483
Noncurrent assets 202,765 199,549
--------------- ---------------
Total assets $ 543,433 $ 526,032
=============== ===============
Liabilities and stockholders'
equity:
Current liabilities $ 122,207 $ 101,617
Stockholders' equity 421,226 424,415
--------------- ---------------
Total liabilities and
stockholders' equity $ 543,433 $ 526,032
=============== ===============
</TABLE>
<TABLE>
<CAPTION>
For the Three Months Ended
---------------------------------------
March 31, March 31,
Statements of Operations - PHO 2000 1999
- ------------------------------ --------------- ---------------
(unaudited) (unaudited)
<S> <C> <C>
Equity in partnership earnings $ 4,987 $ 14,168
Other revenues 6,781 22,645
Expenses 14,697 30,242
--------------- ---------------
Income (loss) before taxes (2,929) 6,571
Income tax provision 260 1,650
--------------- ---------------
Net income (loss) ($ 3,189) $ 4,921
=============== ===============
</TABLE>
10
<PAGE> 11
ST. JOSEPH'S PHYSICIAN ASSOCIATES, INC.
PART I - FINANCIAL INFORMATION
ITEM 2
MANAGEMENT'S DISCUSSION AND ANALYSIS
OR PLAN OF OPERATION
March 31, 2000
Liquidity
Cash resources of the Company decreased by $11,180 during the first three
months of 2000, as compared to a decrease in cash resources of $98,251 during
the first three-month period in 1999. The decrease in cash resources in 2000
resulted primarily from a decrease in the quarterly distribution received with
respect to the five SDS limited partnership units. SDS reduced its distribution
for the fourth quarter of 1999 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
March 31, 2000, a $36,195 distribution with respect to the five SDS limited
partnership units was declared and was received during the second 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.
11
<PAGE> 12
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 decreased during the first three months
of 2000, as compared to the first quarter of 1999, resulting from a decrease in
the profitability of the PHO. PHO revenues decreased primarily as a result of a
decrease in the profitability of SDS during the first quarter of 2000 as
compared to the same period in 1999. PHO revenues and expenses also 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 for the first quarter of 2000
was higher than for the same period in 1999. The distribution for the first
quarter of 2000 was higher because of increased SDS cash balances that resulted
from the reduction that was made to the 1999 fourth quarter distribution in
anticipation of the year 2000 computer changes. 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 interest rates.
12
<PAGE> 13
General and administrative expenses decreased during the first quarter compared
to the same period 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 three 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 first quarter of 2000, the Company had net income of $14,565.
Therefore, the net income per common share was $34 for the first quarter of
2000. The net income per common share for the first quarter of 1999 was $17 per
share. The increase in the net income per common share for the first 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
adopted, at both the state and federal levels, during the last several years,
including 1999 and 2000, including additional health care reform that was
considered and adopted by the Florida Legislature during its 2000 Session,
which ended on May 5, 2000. However, because of the way that bills are reported
by the Florida Legislature, the text of a number of bills is not yet available.
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.
13
<PAGE> 14
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.
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:
<TABLE>
<CAPTION>
Number of Votes
-------------------------
For Withheld
------ --------
<S> <C> <C>
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
</TABLE>
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
14
<PAGE> 15
SIGNATURES
May 11, 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.
---------------------------------------
(Registrant)
Date: May 11, 2000 /s/ N. Bruce Edgerton, M.D.
---------------------------------------
N. Bruce Edgerton, M.D., President
St. Joseph's Physician Associates, Inc.
Date: May 11, 2000 /s/ Allen Miller, M.D.
---------------------------------------
Allen Miller, 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 (A) ST.
JOSEPH'S PHYSICIAN ASSOCIATES, INC. 3/31/00 BALANCE SHEET AND INCOME STATEMENT
FOR THE 3 MONTHS ENDED 3/31/00 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO
SUCH (B) FORM 10-QSB FOR THE QUARTERLY PERIOD ENDED 3/31/00.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-2000
<PERIOD-START> JAN-01-2000
<PERIOD-END> MAR-31-2000
<CASH> 1,104,804
<SECURITIES> 0
<RECEIVABLES> 36,195
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 1,171,003
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 1,501,616
<CURRENT-LIABILITIES> 23,299
<BONDS> 0
0
0
<COMMON> 655,798
<OTHER-SE> 746,254
<TOTAL-LIABILITY-AND-EQUITY> 1,501,616
<SALES> 0
<TOTAL-REVENUES> 49,112
<CGS> 0
<TOTAL-COSTS> 24,837
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 24,275
<INCOME-TAX> 9,710
<INCOME-CONTINUING> 14,565
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 14,565
<EPS-BASIC> 34.00
<EPS-DILUTED> 0
</TABLE>
