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Previous: CAL DIVE INTERNATIONAL INC, SC 13D, 1997-07-25 |
Next: PHYSICIANS HEALTH SERVICES INC, 10-K405/A, 1997-07-25 |
<PAGE>
--------------------------------------------------------------
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q/A-1
(Mark One)
X QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
- - EXCHANGE ACT OF 1934 For the quarterly period ended March 31, 1997.
_ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from _______ to _______.
Commission file number 0-21098.
Physicians Health Services, Inc.
(Exact name of registrant as specified in its charter)
Delaware 06-1116976
(State or other jurisdiction of (IRS Employer
incorporation or organization) Identification No.)
One Far Mill Crossing 06484
Shelton, Connecticut (Zip Code)
(Address of principal executive offices)
Registrant's telephone number, including area code (203) 381-6400
120 Hawley Lane
Trumbull, Connecticut 06611
---------------------------------------------------------
(Former name, former address and former fiscal year,
if changed since last report)
Indicate by a check mark whether the registrant (1) has filed all
reports required to be filed by Section 13 or 15(d) of the Securities Exchange
Act of 1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes X No
--- ---
There were 5,767,196 shares of Class A Common Stock ($0.01 par value) and
3,542,921 shares of Class B Common Stock ($0.01 par value) outstanding as of May
7, 1997.
--------------------------------------------------------------------------
<PAGE>
This amendment to the Quarterly Report on Form 10-Q of Physicians Health
Services, Inc. for the fiscal quarter ended March 31, 1997 (the "Original Form
10-Q") amends and modifies the Original Form 10-Q as follows:
In response to comments from the Securities and Exchange Commission, the
second paragraph of "Note 5. Subsequent Events," in "Item 1. Financial
Statements," is amended by the addition of language disclosing how the
described exchange transaction was recorded and valued.
<PAGE>
Part I - Financial Information
Item 1. Financial Statements
PHYSICIANS HEALTH SERVICES, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(DOLLARS IN THOUSANDS EXCEPT PER SHARE AMOUNTS)
<TABLE>
<CAPTION>
MARCH 31, DECEMBER 31,
1997 1996
-------- -------------
(Unaudited)
<S> <C> <C>
ASSETS:
Current Assets
Cash and Cash Equivalents $ 23,286 $ 39,213
Fixed Maturity Securities available for sale-(amortized cost--1997--$105,770
and 1996--$88,820) 92,612 59,115
Accounts Receivable Less Allowances (1997--$1,634 and 1996--$1,781) 40,263 49,613
Other Receivables 33,880 19,696
Advances to Participating Hospitals
- 400
Prepaid Expenses and Other 1,332 1,154
----------------- ----------------
Total Current Assets 191,373 169,191
Property, Plant, and Equipment
Land 8,822 8,822
Building and Improvements 26,938 26,938
Furniture and Equipment 49,309 46,559
----------------- ----------------
85,069 82,319
Less Accumulated Depreciation and Amortization 16,762 15,273
----------------- ----------------
Total Property, Plant, and Equipment 68,307 67,046
----------------- ----------------
Other Assets (including restricted investments) 13,537 13,658
----------------- ----------------
TOTAL ASSETS $ 273,217 $ 249,895
================= ===============
LIABILITIES AND STOCKHOLDERS' EQUITY:
Current Liabilities
Accrued Health Care Expenses $ 71,508 $ 51,757
Unearned Premiums 28,688 27,757
Amounts Due to IPA's, Physicians and other Providers 64,457 59,084
Accounts Payable and Accrued Expenses 10,878 13,849
----------------- ----------------
Total Current Liabilities 175,531 152,447
Excess of Net Assets Over Cost of Company Acquired 1,132 1,162
Stockholders' Equity
Class A Common Stock, Par Value $0.01 per Share--Authorized 58 56
13,000,000 Shares, Issued and Outstanding; 1997--5,763,905
shares; 1996--5,566,023 shares
Class B Common Stock, Par Value $0.01 per Share; 36 38
Non-transferable--Authorized and Issued 1997--3,632,612 shares;
1996--3,829,880 Shares; Voting Rights - 10 per share
Additional Paid-In Capital 41,369 41,360
Net Unrealized Gains (Losses) on Fixed Maturity Securities
available for sale
Net of Tax (108) 279
Retained Earnings 55,200 54,554
----------------- ----------------
96,555 96,287
Less Cost of Class B Common Stock (86,400) Shares in Treasury 1 1
----------------- ----------------
Total Stockholders' Equity 96,554 96,286
----------------- ----------------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 273,217 $ 249,895
================= ================
</TABLE>
See Notes to Condensed Consolidated Financial Statements.
-3-
<PAGE>
PHYSICIANS HEALTH SERVICES, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(IN THOUSANDS EXCEPT PER SHARE AMOUNTS)
(Unaudited)
<TABLE>
<CAPTION>
THREE MONTHS ENDED
MARCH 31,
-------------------------------------------
1997 1996
-------------------------------------------
<S> <C> <C>
REVENUES:
Premiums $ 149,253 $ 111,820
Investment and Other Income 1,805 1,666
---------------- ------------------
151,058 113,486
COSTS AND EXPENSES:
Hospital Services 49,060 39,655
Physicians and Related Health Care Services 62,019 40,938
Other Health Care Services 16,080 10,719
Indemnity Costs - 2,633
---------------- ------------------
Total Health Care Costs 127,159 93,945
---------------- ------------------
Selling, General and Administrative Expenses 22,873 18,321
---------------- ------------------
150,032 112,266
---------------- ------------------
Income before Income Taxes 1,026 1,220
Income Tax Expense 380 354
---------------- ------------------
NET INCOME $ 646 $ 866
================ ==================
Net Income Per Common Share $ 0.07 $ 0.09
================ ==================
Weighted Average Number of Common and Common
Equivalent Shares Outstanding 9,376 9,536
================ ==================
</TABLE>
See Notes to Condensed Consolidated Financial Statements.
-4-
<PAGE>
PHYSICIANS HEALTH SERVICES, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
(IN THOUSANDS)
(Unaudited)
<TABLE>
<CAPTION>
THREE MONTHS ENDED
MARCH 31,
------------------------------------
1997 1996
------------ --------------
<S> <C> <C>
CLASS A COMMON STOCK
Balance at Beginning of Period $ 56 $ 53
Conversion of Class B Common Stock
into Class A Common Stock 2 1
============ ==============
Balance at End of Period $ 58 $ 54
============ ==============
CLASS B COMMON STOCK
Balance at Beginning of Period $ 38 $ 41
Conversion of Class B Common Stock
into Class A Common Stock (2) (1)
============ ==============
Balance at End of Period $ 36 $ 40
============ ==============
ADDITIONAL PAID-IN CAPITAL
Balance at Beginning of Period $ 41,360 $ 40,760
Exercise of Stock Options 9 378
============ ==============
Balance at End of Period $ 41,369 $ 41,138
============ ==============
NET UNREALIZED GAINS (LOSSES) ON FIXED MATURITY SECURITIES,
NET OF TAX
Balance at Beginning of Period $ 279 $ 510
Unrealized Depreciation (387) (322)
============ ==============
Balance at End of Period $ (108) $ 188
============ ==============
RETAINED EARNINGS
Balance at Beginning of Period $ 54,554 $ 67,518
Net Income 646 866
============ ==============
Balance at End of Period $ 55,200 $ 68,384
============ ==============
TREASURY STOCK
Balance at Beginning and End of Period $ (1) $ (1)
============ ==============
TOTAL STOCKHOLDERS' EQUITY
Balance at Beginning of Period $ 96,286 $ 108,881
Exercise of Stock Options 9 378
Net Income 646 866
Unrealized Depreciation of Fixed Maturity Securities (387) (322)
============ ==============
Balance at End of Period $ 96,554 $ 109,803
============ ==============
</TABLE>
See Notes to Condensed Consolidated Financial Statements.
-5-
<PAGE>
PHYSICIANS HEALTH SERVICES, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOW
(IN THOUSANDS)
(Unaudited)
<TABLE>
<CAPTION>
THREE MONTHS ENDED
MARCH 31,
--------------------------------------
1997 1996
---------- ---------
<S> <C> <C>
OPERATING ACTIVITIES
Net Income $ 646 $ 866
Adjustments to Reconcile Net Income to Net Cash
Provided by (Used for) Operating Activities:
Depreciation and Amortization 1,489 827
Provision for Doubtful Accounts 617 832
Amortization of Excess of Net Assets over Cost
of Company Acquired (30) (30)
Deferred income tax benefit (268) (319)
Changes in Assets and Liabilities:
Accounts Receivable 8,733 (7,065)
Other Receivables (14,184) (3,262)
Advances to Participating Hospitals 400 2,767
Prepaid Expenses and Other (178) (1,064)
Accrued Health Care Expenses 19,751 2,552
Unearned Premiums 931 1,765
Due to IPA's, Physicians and Other Providers 5,373 (14,353)
Accounts Payable and Accrued Expenses (2,452) (5,400)
---------- ----------
Net Cash Provided by (Used for) Operating Activities 20,828 (21,884)
INVESTING ACTIVITIES
Purchases of Property, Plant, and Equipment (2,750) (3,926)
Proceeds from Disposal of Equipment - 6
(Increase) Decrease in Other Assets 121 (1,225)
Purchases of Fixed Maturity Securities (95,409) (140,990)
Proceeds from Sales and Maturities of Fixed Maturity Securities 61,274 163,847
---------- ----------
Net Cash Provided by (Used for) Investing Activities (36,764) 17,712
FINANCING ACTIVITIES
Exercise of Stock Options 9 378
---------- ----------
Net Cash Provided by Financing Activities 9 378
---------- ----------
Decrease in cash and cash equivalents (15,927) (3,794)
Cash and cash equivalents at beginning of period 39,213 7,536
========== ==========
Cash and cash equivalents at end of period $ 23,286 $ 3,742
========== ==========
</TABLE>
See Notes to Condensed Consolidated Financial Statements.
-6-
<PAGE>
PHYSICIANS HEALTH SERVICES, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 1997
(UNAUDITED)
1. Basis of Presentation
The accompanying unaudited condensed consolidated financial statements
have been prepared in accordance with generally accepted accounting
principles for interim financial information and with the instructions to
Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not
include all of the information and footnotes required by generally
accepted accounting principles for complete financial statements. In the
opinion of management, all adjustments (consisting solely of normal
recurring accruals) considered necessary for a fair presentation have been
included. Operating results for the three month period ended March 31,
1997 are not necessarily indicative of the results that may be expected
for the year ended December 31, 1997. For further information, refer to
the consolidated financial statements and footnotes thereto included in
the Physicians Health Services, Inc. and Subsidiaries Annual Report on
Form 10-K for the year ended December 31, 1996.
2. Stockholders' Equity and Per Share Data
Pursuant to the Company's Certificate of Incorporation, upon conversion
of Class B shares to Class A shares, such Class B shares are canceled and
cannot be reissued. Per share data are based upon the weighted average
number of common and common equivalent shares outstanding during the
period. Common stock equivalents are excluded to the extent they have an
antidilutive effect on per share data.
In February 1997, the Financial Accounting Standards Board issued
Statement No. 128, Earnings per Share, which is required to be adopted on
December 31, 1997. At that time, the Company will be required to change
the method currently used to compute earnings per share and to restate all
prior periods. Under the new requirements for calculating primary earnings
per share, the dilutive effect of stock options will be excluded. The
impact of Statement 128 on the calculation of primary and fully diluted
earnings per share for the first quarter ended March 31, 1997 and March
31, 1996 is not expected to be material.
3. Tax Provision
The Company is currently under examination by the Internal Revenue
Service (IRS) for certain prior tax years. Management does not expect any
proposed adjustments which may result from the IRS' audit to have a
material adverse impact on the Company's financial position or results of
operations.
4. Reclassifications
Certain reclassifications were made to conform the 1996 amounts to the
1997 presentation.
-7-
<PAGE>
PHYSICIANS HEALTH SERVICES, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 1997
(UNAUDITED)
5. Subsequent Events
On May 8, 1997, the Company and Foundation Health Systems, Inc. ("FHS")
executed a merger agreement pursuant to which FHS would acquire all of
the shares of common stock of the Company for $29.25 per share in cash,
or a total consideration to the Company's stockholders of approximately
$280 million. FHS announced that it intends to finance the purchase with
a combination of cash and bank debt. As part of the transaction, the
Company has entered into a voting trust agreement with the Greater
Bridgeport Individual Practice Association ("GBIPA"), which owns shares
constituting approximately 61% of the voting power of the Company. The
agreement stipulates that such shares will be voted in favor of the
transaction by GBIPA. The transaction is subject to certain closing
conditions, including receipt of regulatory approvals and entering into
certain agreements with The Guardian. This transaction is expected to
close by the end of 1997.
On May 2, 1997, the Company acquired 200 shares of Physicians Health
Services of New Jersey, Inc. ("PHS NJ") from MasterCare Companies, Inc.
("MasterCare"). In exchange for the receipt of the shares of PHS NJ the
Company gave up 1,250,000 shares of Series B Convertible Preferred Stock
of MasterCare Companies, Inc. and 190 shares of Common Stock of
MasterCare of Connecticut, Inc. Since the common stock of MasterCare and
PHS NJ are not publicly traded, fair values of the shares exchanged were
estimated. MasterCare shares were valued based upon prices obtained in a
recent private placement while the fair value of PHS NJ shares were
derived from a valuation of membership. The purchase price paid (fair
value of MasterCare shares held by the Company) exceeded the fair value
of MasterCare's proportionate interest in the net assets of PHS NJ
acquired from MasterCare by approximately $ 1.8 million. Such excess will
be amortized over 10 years. As a result of this transaction, PHS NJ will
become a wholly-owned subsidiary of the Company. This transaction will
not have a significant impact on the operating results of the Company.
-8-
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
PHYSICIANS HEALTH SERVICES, INC.
-------------------------------
(Registrant)
Date: July 24, 1997 /s/ Robert L. Natt
------------------------ -----------------------
Robert L. Natt
President
Date: July 24, 1997 /s/ James L. Elrod, Jr.
-------------------------- -------------------------
James L. Elrod, Jr.
Chief Financial Officer
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