SOURCE: American Physicians Service Group, Inc.

November 08, 2005 07:30 ET

American Physicians Service Group, Inc. Reports Strong Third Quarter Earnings

AUSTIN, TX -- (MARKET WIRE) -- November 8, 2005 -- American Physicians Service Group, Inc. ("APS") (NASDAQ: AMPH) today announced results for the quarter and nine months ended September 30, 2005. For the three months ended September 30, 2005, revenues were $9,182,000 compared to $7,593,000 for the three months ended September 30, 2004. Net earnings were $1,395,000 or $.48 per diluted share, compared to a loss of $834,000 or ($.32) per diluted share for the three months ended September 30, 2004. For the nine months ended September 30, 2005, revenues were $22,877,000 compared to $22,178,000 for the nine months ended September 30, 2004. Net earnings were $3,615,000 or $1.24 per diluted share, compared to $549,000 or $.19 per diluted share, for the nine months ended September 30, 2004.

Ken Shifrin, APS Chairman of the Board, stated, "Both of our core businesses continued to perform well in difficult markets. Financial Services had an excellent quarter with revenues outpacing the comparable quarter last year by 42% and operating income increasing 57% for the three months ended September 30, 2005. For the nine months ended September 30, 2005, revenues remained ahead of last year, while operating income declined about 11%, primarily due to higher commission expenses and to payroll expenses related to growth initiatives. Insurance Services, despite facing increased competition and incurring Sarbanes-Oxley compliance expenses, remains slightly ahead of last year in revenues and operating income through nine months. For the quarter ended September 30, 2005, Insurance Services revenues were just short of last year and operating income was down 23%, due to our revenue mix and higher expenses. Our premium-based management fees were down approximately $61,000 due to lower medical malpractice premiums at the managed insurance company. Risk management consulting fees were approximately $77,000 lower, as improved administrative procedures in the insureds' practices reduced our need to provide these services. Commission revenues were up approximately $113,000, but had no contribution margin. Expenses were higher in payroll, professional fees and depreciation due to expanded marketing and sales efforts, Sarbanes-Oxley compliance, and information technology initiatives."

Mr. Shifrin continued, "For the third consecutive quarter we were able to realize gains on strategic equity investments, recognizing over $1.0 million in pretax income. Higher general and administrative expenses are reflective of expenses related to those equity sales. Recognizing the continued improvement in the Company's balance sheet, the result of good cash generation by the operating divisions and successful equity investments, we increased by 25% a dividend payment to shareholders, paying $.25 per share on September 15, 2005. We also continued our share repurchases during the quarter and have now purchased approximately $1.84 million of our $2 million program."

About the Company

APS is a management and financial services firm with subsidiaries that provide: medical malpractice insurance services for doctors; and brokerage and investment services to institutions and high net worth individuals. The Company is headquartered in Austin, Texas and maintains offices in Dallas and Houston.

Forward-Looking Statements

This press release includes forward-looking statements related to the Company that involve risks and uncertainties that could cause actual results to differ materially. These forward-looking statements are made in reliance on the "safe harbor" provisions of the Private Securities Litigation Reform Act of 1995. For further information about the factors that could affect the Company's future results, please see the Company's recent filings with the Securities and Exchange Commission. Prospective investors are cautioned that forward-looking statements are not guarantees of future performance. Actual results may differ materially from management expectations. Copies of the filings are available upon request from the Company's investor relations department.

                AMERICAN PHYSICIANS SERVICE GROUP, INC.
                        SELECTED FINANCIAL DATA
                 (In thousands, except per share data)

                                   Three Months Ended   Nine Months Ended
                                      September 30,       September 30,
                                     2005      2004      2005      2004
                                   --------  --------  --------  --------

Revenues:

Financial services                 $  5,450  $  3,846  $ 12,415  $ 11,905
Insurance services                    3,732     3,747    10,462    10,273
                                   --------  --------  --------  --------
  Total revenues                      9,182     7,593    22,877    22,178

Expenses:

Financial services                    4,788     3,423    11,009    10,324
Insurance services                    2,931     2,704     7,856     7,706
General and administrative              573       429     1,961     1,497
Gain on sale of assets                  (47)        -      (131)      (56)
                                   --------  --------  --------  --------
  Total expenses                      8,245     6,556    20,695    19,471
                                   --------  --------  --------  --------
Operating income                        937     1,037     2,182     2,707
Sale of investments and other         1,042    (2,374)    2,922    (2,054)
                                   --------  --------  --------  --------

Income (loss) before interest,
 income taxes and minority interest   1,979    (1,337)    5,104       653

Interest and other income               163       118       490       289

Income tax expense (benefit)            747      (386)    1,966       392
Minority interest                         -         1        13         1
                                   --------  --------  --------  --------

Net income (loss)                  $  1,395  $   (834) $  3,615  $    549
                                   ========  ========  ========  ========

Earnings (loss) per share:

    Diluted:                       $   0.48  $  (0.32) $   1.24  $   0.19
                                   ========  ========  ========  ========

Weighted average shares outstanding
 (diluted)                            2,885     2,589     2,920     2,823


                AMERICAN PHYSICIANS SERVICE GROUP, INC.
                   SELECTED FINANCIAL DATA, continued


(In thousands)                                             September 30
                                                          2005      2004
                                                        --------  --------
ASSETS

Current assets                                          $ 17,690  $ 10,352

Notes receivable, less current portion                       344       204
Property and equipment                                       696       603
Investment in available for sale equity and fixed
 income securities -- non-current                          8,739    12,388
Goodwill                                                   1,247     1,247
Other assets                                                 977     1,064
                                                        --------  --------

  Total Assets                                          $ 29,693  $ 25,858
                                                        ========  ========


LIABILITIES AND SHAREHOLDERS' EQUITY

Current liabilities                                        4,189     4,140

Other liabilities                                             49       805
                                                        --------  --------

  Total liabilities                                        4,238     4,945

Minority interests                                            14         1

Shareholders' Equity:

Common stock                                                 273       260
Additional paid-in capital                                 7,727     7,369
Retained earnings                                         16,892    12,459
Accumulated other comprehensive income
 net of taxes                                                549       824
                                                        --------  --------

  Total shareholders' equity                              25,441    20,912
                                                        --------  --------

Total Liabilities and Shareholders' Equity              $ 29,693  $ 25,858
                                                        ========  ========

Contact Information

  • For further information, visit APS's Website at www.amph.com or contact:

    Mr. Kenneth Shifrin
    Chairman of the Board
    (or)
    Mr. W. H. Hayes
    Sr. Vice President - Finance
    American Physicians Service Group, Inc.
    1301 Capital of Texas Highway, C-300
    Austin, Texas 78746
    (512) 328-0888