<PAGE> 1
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
--------------------------------
FORM 10-Q
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
(MARK ONE)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934 FOR THE QUARTERLY PERIOD ENDED
JUNE 30, 1999
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934 FOR THE TRANSITION PERIOD
FROM_______________________________________________
COMMISSION FILE NO. 0-23311
AMERICAN PHYSICIAN PARTNERS, INC.
(Exact name of registrant as specified in its charter)
DELAWARE 75-2648089
(State or other (I.R.S. Employer
jurisdiction of Identification)
incorporation or
organization)
2200 ROSS AVENUE
3600 CHASE TOWER
DALLAS, TEXAS 75201
(Address of principal executive offices, including zip code)
(214) 303-2776
(Registrant's telephone number, including area code)
Indicate by 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 [ ]
Indicate the number of shares outstanding of each of the issuer's
classes of common stock, as of the latest practicable date.
<TABLE>
<CAPTION>
Class Outstanding at August 11, 1999
----- ------------------------------
<S> <C>
COMMON STOCK, $0.0001 PAR VALUE 19,312,213 SHARES
</TABLE>
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AMERICAN PHYSICIAN PARTNERS, INC.
FORM 10-Q
INDEX
<TABLE>
<CAPTION>
FORM 10-Q ITEM PAGE
- -------------- ----
<S> <C>
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
Consolidated Balance Sheets as of June 30, 1999 (Unaudited) and December 31, 1998........... 1
Consolidated Statements of Income (Unaudited) for the three months and six months
ended June 30, 1999 and 1998................................................................ 2
Consolidated Statements of Cash Flows (Unaudited) for the three months and six months
ended June 30, 1999 and 1998................................................................ 3
Notes to Consolidated Financial Statements.................................................. 4
Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations ...... 8
Item 3. Quantitative and Qualitative Disclosures About Market Risk ................................. 14
PART II. OTHER INFORMATION
Item 1. Legal Proceedings.......................................................................... 15
Item 2. Changes in Securities....................................................................... 15
Item 3. Defaults Upon Securities.................................................................... 15
Item 4. Submission of Matters to a Vote of Security Holders......................................... 15
Item 5. Other Information .......................................................................... 16
Item 6. Exhibits and Reports on Form 8-K............................................................ 16
SIGNATURES.................................................................................................... 17
</TABLE>
<PAGE> 3
AMERICAN PHYSICIAN PARTNERS, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS)
<TABLE>
<CAPTION>
ASSETS
JUNE 30, DECEMBER 31,
1999 1998
----------- ---------
(UNAUDITED)
<S> <C> <C>
CURRENT ASSETS:
Cash and cash equivalents ................................. $ 3,291 $ 6,485
Accounts receivable, net of allowances .................... 49,285 36,789
Due from affiliated practices ............................. 1,982 1,412
Other current assets ...................................... 2,929 2,835
--------- ---------
Total current assets ................................... 57,487 47,521
PROPERTY AND EQUIPMENT, net of accumulated depreciation ...... 51,359 37,002
INVESTMENTS IN JOINT VENTURES ................................ 6,591 5,424
INTANGIBLE ASSETS, net ....................................... 65,839 61,119
DEFERRED FINANCING COSTS, net ................................ 3,159 3,408
OTHER ASSETS ................................................. 112 2,165
--------- ---------
Total assets ........................................... $ 184,547 $ 156,639
========= =========
LIABILITES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts payable and accrued expenses ..................... $ 9,361 $ 13,884
Accrued physician retention ............................... 7,120 6,319
Accrued salaries and benefits ............................. 5,670 3,893
Current portion of long-term debt ......................... 1,125 840
Current portion of capital lease obligations .............. 1,723 1,677
Deferred income taxes ..................................... 617 636
Other current liabilities ................................. 345 894
--------- ---------
Total current liabilities .............................. 25,961 28,143
DEFERRED INCOME TAXES ........................................ 2,406 2,406
LONG-TERM DEBT, net of current portion ....................... 134,630 113,807
CAPITAL LEASE OBLIGATIONS, net of current portion ............ 4,370 3,887
OTHER LIABILITIES ............................................ 167 243
--------- ---------
Total liabilities ...................................... 167,534 148,486
MINORITY INTERESTS IN CONSOLIDATED SUBSIDIARIES .............. 1,490 1,107
STOCKHOLDERS' EQUITY:
Common stock .............................................. 2 2
Additional paid-in capital ................................ (605) (910)
Retained earnings ......................................... 16,126 7,954
--------- ---------
Total stockholders' equity ............................. 15,523 7,046
--------- ---------
Total liabilities and stockholders' equity ............. $ 184,547 $ 156,639
========= =========
</TABLE>
1
<PAGE> 4
AMERICAN PHYSICIAN PARTNERS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
FOR THE THREE MONTHS FOR THE SIX MONTHS
ENDED JUNE 30, ENDED JUNE 30,
1999 1998 1999 1998
-------- -------- -------- --------
(UNAUDITED)
<S> <C> <C> <C> <C>
SERVICE FEE REVENUE ..................... $ 42,751 $ 33,556 $ 81,946 $ 63,272
COSTS AND EXPENSES:
Salaries and benefits .................. 12,780 10,342 24,623 19,709
Practice supplies ...................... 2,838 1,971 5,319 4,157
Practice rent and lease expenses ....... 3,738 3,167 7,561 5,527
Other practice expenses ................ 7,646 6,061 14,318 11,404
Corporate general and administrative ... 2,664 2,429 5,293 4,440
Depreciation and amortization .......... 4,244 2,907 7,856 5,379
Interest expense, net .................. 2,574 1,688 4,913 3,088
-------- -------- -------- --------
Total costs and expenses ............ 36,484 28,565 69,883 53,704
-------- -------- -------- --------
INCOME BEFORE TAXES, MINORITY
INTERESTS IN CONSOLIDATED SUBSIDIARIES
AND EQUITY IN EARNINGS OF INVESTMENTS .... 6,267 4,991 12,063 9,568
EQUITY IN EARNINGS OF INVESTMENTS ........ 883 596 1,556 1,247
MINORITY INTERESTS IN INCOME OF
CONSOLIDATED SUBSIDIARIES ................ (230) (117) (435) (223)
-------- -------- -------- --------
INCOME BEFORE TAXES ...................... 6,920 5,470 13,184 10,592
INCOME TAX EXPENSE ....................... 2,632 2,079 5,012 4,128
-------- -------- -------- --------
NET INCOME ............................... $ 4,288 $ 3,391 $ 8,172 $ 6,464
======== ======== ======== ========
NET INCOME PER COMMON SHARE
Basic .................................. $ 0.22 $ 0.18 $ 0.42 $ 0.35
Diluted ................................ $ 0.22 $ 0.17 $ 0.41 $ 0.34
WEIGHTED AVERAGE SHARES OUTSTANDING
Basic .................................. 19,297 18,744 19,296 18,401
Diluted ................................ 19,738 19,449 19,734 19,148
</TABLE>
2
<PAGE> 5
AMERICAN PHYSICIAN PARTNERS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(IN THOUSANDS)
<TABLE>
<CAPTION>
FOR THE THREE MONTHS FOR THE SIX MONTHS
ENDED JUNE 30, ENDED JUNE 30,
1999 1998 1999 1998
-------- -------- -------- --------
(UNAUDITED)
<S> <C> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income ................................................... $ 4,288 $ 3,391 $ 8,172 $ 6,464
Adjustments to reconcile net income to net cash
provided by (used in) operating activities --
Minority interests ........................................ 230 117 435 223
Depreciation and amortization ............................. 4,244 2,907 7,856 5,379
Equity in earnings of investments ......................... (883) (596) (1,556) (1,247)
Changes in assets and liabilities- net of acquisitions
Accounts receivable, net .............................. (8,106) 1,274 (11,640) (995)
Other current assets .................................. (337) (187) (531) 1,950
Other assets .......................................... 2,300 211 2,123 513
Accounts payable and accrued expenses ................. (3,736) (4,920) (3,826) (11,523)
Accrued salaries and benefits ......................... 1,040 136 1,777 433
Other liabilities ..................................... (1,281) 2,934 (648) 4,429
-------- -------- -------- --------
Net cash provided by (used in)
operating activities ............................... (2,241) 5,267 2,162 5,626
-------- -------- -------- --------
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of property and equipment .......................... (11,718) (2,914) (17,779) (4,711)
Cash paid for acquisitions ................................... (2,129) (12,927) (6,590) (38,981)
Contributions to joint ventures .............................. (65) (497) (115) (627)
Distributions from joint ventures ............................ 443 974 534 1,062
-------- -------- -------- --------
Net cash used in investing activities .............. (13,469) (15,364) (23,950) (43,257)
-------- -------- -------- --------
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from issuance of long-term debt, net ................ 15,237 6,565 19,714 37,159
Payments on capital leases ................................... (655) (291) (1,120) (990)
Proceeds from the exercise of options ........................ -- 15 -- 15
-------- -------- -------- --------
Net cash provided by financing activities .......... 14,582 6,289 18,594 36,184
-------- -------- -------- --------
NET DECREASE IN CASH
AND CASH EQUIVALENTS ............................................ (1,128) (3,808) (3,194) (1,447)
CASH AND CASH EQUIVALENTS, beginning of period .................. 4,419 6,933 6,485 4,572
-------- -------- -------- --------
CASH AND CASH EQUIVALENTS, end of period ........................ $ 3,291 $ 3,125 $ 3,291 $ 3,125
======== ======== ======== ========
</TABLE>
3
<PAGE> 6
AMERICAN PHYSICIAN PARTNERS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
The accompanying consolidated unaudited financial statements have been
prepared by American Physician Partners, Inc., a Delaware corporation, (together
with its subsidiaries, "APPM" or the "Company") pursuant to the rules and
regulations of the Securities and Exchange Commission, and reflect all
adjustments (all of which are of a normal recurring nature) which, in the
opinion of management, are necessary for a fair statement of the results of the
interim periods presented. These financial statements do not include all
disclosures associated with the annual financial statements and, accordingly,
should be read in conjunction with the attached Management's Discussion and
Analysis of Financial Condition and Results of Operations and the consolidated
financial statements and notes thereto for the year ended December 31, 1998,
included in APPM's Form 10-K/A filed with the Securities and Exchange Commission
on May 12, 1999.
1. DESCRIPTION OF BUSINESS:
APPM develops, consolidates and manages radiology service networks. These
networks consist primarily of free-standing diagnostic imaging centers and
locations at which the Company provides radiology services that have been
outsourced by hospitals. The Company's objective is to develop and operate
networks of radiology facilities to provide a full spectrum of radiology
services and extend geographic coverage in existing market areas and in selected
new markets. At July 29, 1999, APPM owns, operates or maintains an ownership
interest in imaging equipment at 90 locations and provides management services
to ten radiology practices consisting of 260 physicians who provide professional
radiology services at the Company's imaging centers and at 58 hospitals. APPM's
radiology networks are concentrated in geographic markets located in California,
Florida, Kansas, Maryland, New York, Texas, Virginia and Washington, D.C.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:
Basis of Presentation
The consolidated financial statements have been prepared on the accrual
basis of accounting and include the accounts of the Company and its
majority-owned subsidiaries. All intercompany accounts and transactions have
been eliminated in consolidation.
New Accounting Standard - Revenue Presentation
The Financial Accounting Standards Board's Emerging Issues Task Force
issued its abstract, Issue 97-2, "Application of FASB Statement No. 94 and
Accounting Principles Board ("APB") Opinion No. 16 to Physician Practice
Management Entities and Certain Other Entities with Contractual Arrangements"
("EITF 97-2"). EITF 97-2 addresses issues relating to (1) whether a "controlling
financial interest" can be established through a contractual management
agreement under FASB Statement No. 94, (2) whether a transaction between a
physician practice management entity ("PPM") and a physician practice in which
the PPM enters into a management agreement with the physician practice should be
considered a business combination and thus accounted for under APB No. 16, (3)
whether the pooling-of-interests method of accounting may be followed in certain
circumstances, (4) what are common types of intangibles that should be
considered in performing the purchase price allocation, and (5) whether an
employee of the physician practice should be considered an employee of the PPM
for purposes of accounting for stock-based compensation.
In 1998, the Company displayed physician group revenue in its consolidated
statements of income. Since the Company has not established a "controlling
financial interest" under EITF 97-2, the 1998 display has been restated to
reflect the service fees earned as revenues. This change had no effect on the
Company's financial position, results of operations, or liquidity.
4
<PAGE> 7
The following table sets forth the amounts of physician groups revenue
that would have been presented in the consolidated statements of income had the
Company met the provisions of EITF 97-2 (in thousands):
<TABLE>
<CAPTION>
For the Three Months Ended For the Six Months Ended
June 30, June 30,
1999 1998 1999 1998
--------- --------- --------- ---------
<S> <C> <C> <C> <C>
Physician groups revenue, net .................. $ 64,878 $ 51,131 $ 123,378 $ 98,139
Less: amounts retained by physician groups ..... (22,127) (17,575) (41,432) (34,867)
--------- --------- --------- ---------
Service fee revenue, as reported ............... $ 42,751 $ 33,556 $ 81,946 $ 63,272
========= ========= ========= =========
</TABLE>
Service Fee Revenue
Service fee revenue represents radiology practices revenue less amounts
retained by radiology practices. The amounts retained by radiology practices
represent amounts paid to the radiology practices pursuant to the service
agreements between the Company and the radiology practices. Under the service
agreements, the Company provides each physician group with the facilities and
equipment used in its medical practice, assumes responsibility for the
management of the operations of the practice, and employs substantially all of
the non-physician personnel utilized by the group. Although the Company assists
in negotiating managed care contracts for the radiology practices, it assumes no
risk under these arrangements.
The Company's service fee revenue is dependent upon the operating results
of the radiology practices. Where state law allows, service fees due under the
service agreements are derived from two distinct revenue streams: (1) a
negotiated percentage (typically 20% to 30%) of the adjusted professional
revenues as defined in the service agreement; and (2) 100% of the adjusted
technical revenues as defined in the service agreements. In states where the law
requires a flat fee structure, the Company has negotiated a base service fee,
which is equal to the fair market value of the services provided under the
service agreement and which is renegotiated each year to equal the fair market
value of the services provided under the service agreement. The fixed fee
structure results in the Company receiving substantially the same amount of
service fee as it would have received under its negotiated percentage fee
structure. Adjusted professional revenues and adjusted technical revenues are
determined by deducting certain contractually agreed-upon expenses
(non-physician salaries and benefits, rent, depreciation, insurance, interest
and other physician costs) from the radiology practices' revenue.
Service fee revenue consists of the following (in thousands):
<TABLE>
<CAPTION>
For the Three Months Ended For the Six Months Ended
June 30, June 30,
1999 1998 1999 1998
------- ------- ------- -------
<S> <C> <C> <C> <C>
Professional component ...... $ 9,143 $ 9,372 $19,423 $17,094
Technical component ......... 33,608 24,184 62,523 46,178
------- ------- ------- -------
$42,751 $33,556 $81,946 $63,272
======= ======= ======= =======
</TABLE>
3. ACQUISITION
In a series of transactions, the Company acquired a ninety-percent
interest in an imaging center located in Olney, Maryland. The total
consideration for the transaction was approximately $1,900,000, which included
the assumption of approximately $1,000,000 of outstanding debt. This transaction
was accounted for using the purchase method.
5
<PAGE> 8
4. EARNINGS PER SHARE
The Company adopted Statement of Financial Accounting Standards No. 128
("SFAS 128"), "Earnings per Share," effective December 15, 1997. SFAS 128
requires that the calculation of basic earnings per share be calculated by
dividing net income applicable to common stock by the weighted average number of
shares of common stock outstanding during the period and diluted earnings per
common share be calculated using the weighted average number of shares of common
stock and common stock equivalents outstanding during the period. As required,
the Company has reported earnings per share in accordance with SFAS 128.
5. SEGMENT REPORTING
The Company has four reportable segments: Mid-Atlantic Region,
Northeastern Region, Central Region, and Western Region. The Company's
reportable segments are strategic business units defined by geography. Each owns
and operates imaging centers and provides management services to the radiology
practices within their respective regions.
The accounting policies of the segments are the same as those described
in the summary of significant accounting policies except that the Company does
not allocate taxes associated with income to any of the regions. They are
managed separately because each region operates under different contractual
arrangements, providing service to a diverse mix of patients and payors.
FOR THE SIX MONTHS ENDED JUNE 30, 1999
<TABLE>
<CAPTION>
Mid-Atlantic Northeastern Central Western
Region (1) Region (2) Region (3) Region (4) Total
-------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
Service fee revenue ......... $ 35,756 $ 25,297 $ 9,772 $ 11,121 $ 81,946
Total operating expenses .... 22,682 16,111 5,690 7,338 51,821
-------- -------- -------- -------- --------
Segment contribution ........ 13,074 9,186 4,082 3,783 30,125
Contribution margin ......... 37% 36% 42% 34% 37%
Depreciation and
amortization expense .... 3,195 1,493 400 921 6,009
Interest expense ............ 542 486 99 360 1,487
Segment profit .............. 10,091 7,207 3,950 2,502 23,750
Segment assets .............. 54,087 30,901 15,715 15,130 115,833
Expenditures for
segment assets ........... 8,852 1,694 1,834 2,707 15,087
</TABLE>
(1) Includes the Mid-Atlantic Market.
(2) Includes the Finger Lakes and Hudson Valley Markets.
(3) Includes the South Texas, Treasure Coast and Northeast Kansas Markets.
(4) Includes the Bay Area Market.
FOR THE SIX MONTHS ENDED JUNE 30, 1998
<TABLE>
<CAPTION>
Mid-Atlantic Northeastern Central Western
Region Region Region Region Total
------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C>
Service fee revenue ......... $28,926 $18,313 $ 7,196 $ 8,837 $63,272
Total operating expenses .... 18,732 12,468 3,979 5,618 40,797
------- ------- ------- ------- -------
Segment contribution ........ 10,194 5,845 3,217 3,219 22,475
Contribution margin ......... 35% 32% 45% 36% 36%
Depreciation and
amortization expense .... 2,509 903 364 775 4,551
Interest expense ............ 446 328 85 312 1,171
Segment profit .............. 7,948 4,614 3,083 2,132 17,777
Segment assets .............. 37,043 17,658 11,130 17,721 83,552
Expenditures for
segment assets ........... 1,424 942 216 422 3,004
</TABLE>
6
<PAGE> 9
<TABLE>
<CAPTION>
Reconciliation of profits 1998 1999
--------- ---------
<S> <C> <C>
Segment profit ..................................... $ 17,777 $ 23,750
Unallocated amounts:
Corporate general and administrative ........... (4,440) (5,293)
Corporate depreciation and amortization ........ (828) (1,847)
Corporate interest expense ..................... (1,917) (3,426)
--------- ---------
Income before taxes ................................ $ 10,592 $ 13,184
========= =========
</TABLE>
<TABLE>
<CAPTION>
Reconciliation of assets and expenditures 1998 1999
--------- ---------
<S> <C> <C>
Assets:
Segment amounts .................................... $ 83,552 $ 115,833
Corporate assets (including intangible assets) ..... 38,699 68,714
--------- ---------
Total assets ....................................... $ 122,251 $ 184,547
========= =========
Expenditures:
Segment amounts .................................... $ 3,004 $ 15,087
Corporate expenditures ............................. 1,707 2,692
--------- ---------
Total expenditures ................................. $ 4,711 $ 17,779
========= =========
</TABLE>
6. SUBSEQUENT EVENTS
On July 1, 1999, the Company acquired two imaging centers in the
Baltimore/Washington D.C. market. The total consideration for the transaction
was approximately $25,000 in cash, plus the assumption of certain liabilities.
This transaction will be accounted for using the purchase method.
On August 1, 1999, the Company acquired all the outstanding stock of
Questar Imaging, Inc. of Tampa, Florida ("Questar"), a private operator of
state-of-the-art radiology centers. Questar currently offers magnetic resonance
imaging (MRI) and other diagnostic imaging services at 27 centers in 14 states,
and is in the process of developing 17 additional MRI centers. The total
consideration for the transaction will be approximately $26,825,000 in cash.
This transaction will be accounted for using the purchase method.
In connection with the Questar transaction, the Company issued
$20,000,000 of eight-percent convertible junior subordinated notes. The notes
are convertible into the Company's common stock at a conversion price of $8.625
per share. The notes were issued to DB Capital Partners, a private equity arm
and affiliate of Deutsche Bank.
7
<PAGE> 10
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS (DOLLARS IN THOUSANDS)
The following discussion of the results of operations and financial
condition of the Company should be read in conjunction with the Company's
consolidated financial statements and notes thereto included in the Annual
Report on Form 10-K/A for the year ended December 31, 1998, and with the
consolidated financial statements included in this Form 10-Q.
OVERVIEW
American Physician Partners, Inc., a Delaware corporation, (together with
its subsidiaries, "APPM" or the "Company") develops, consolidates and manages
radiology and imaging networks. The Company was incorporated in 1996, but
conducted no significant operations until November 26, 1997, when the Company
consummated an initial public offering ("IPO") and simultaneously exchanged cash
and shares of its common stock for certain assets of and liabilities associated
with seven radiology practices. These exchanges were accounted for using the
historical cost basis with the stock being valued at the historical cost of the
net assets received by the Company. Cash consideration given in these exchanges
was treated for accounting purposes as a dividend from the Company.
APPM develops, consolidates and manages radiology service networks. These
networks consist primarily of free-standing diagnostic imaging centers and
locations at which the Company provides radiology services that have been
outsourced by hospitals. The Company's objective is to develop and operate
networks of radiology facilities to provide a full spectrum of radiology
services and extend geographic coverage in existing market areas and in selected
new markets. At July 29, 1999, APPM owns, operates or maintains an ownership
interest in imaging equipment at 90 locations and provides management services
to ten radiology practices consisting of 260 physicians who provide professional
radiology services at the Company's imaging centers and at 58 hospitals. APPM's
radiology networks are concentrated in geographic markets located in California,
Florida, Kansas, Maryland, New York, Texas, Virginia and Washington, D.C.
Physician services are provided at all of APPM's locations under the terms
of service agreements with ten radiology practices, seven of which expire in
November 2037, with the other three expiring in 2038. Under the terms of the
service agreements, the Company provides management, administrative, technical
and non-medical services to radiology practices in return for service fees. The
service agreements cannot be terminated by either party without cause,
consisting primarily of bankruptcy or material default. However, under certain
conditions, the Company can terminate the service agreement if the number of
physicians in a practice falls below a certain percentage.
RESULTS OF OPERATIONS
Three Months Ended June 30, 1999
Service Fee Revenue
Service fee revenue increased $9,195,000 or 27.4% in the second quarter of
1999 to $42,751,000 from $33,556,000 in the second quarter of 1998. Of the
increase from 1998 to 1999, $5,853,000 resulted from increased business within
existing facilities (17.4% same store increase), $1,488,000 resulted from
practices acquired and developed in 1998, and $1,854,000 resulted from "tuck-in"
acquisitions of imaging centers in 1998 and 1999.
Salaries and Benefits
Salaries and benefits increased $2,438,000 or 23.6% in the second quarter
of 1999 to $12,780,000 from $10,342,000 in the second quarter of 1998. Of the
increase from 1998 to 1999, $1,557,000 resulted from existing facilities
representing a 15.3% same store increase, consistent with the revenue growth of
those centers. An increase of $526,000 resulted from practices acquired and
developed in the latter half of 1998 and the remaining $355,000 increase
resulted from "tuck-in" acquisitions of imaging centers in 1998 and 1999. As a
percentage of service fee revenue, these costs were 29.9% and 30.8% in 1999 and
1998, respectively.
8
<PAGE> 11
Practice Supplies
Supplies increased $867,000 or 44.0% in the second quarter of 1999 to
$2,838,000 from $1,971,000 in the second quarter of 1998. Of the increase from
1998 to 1999, $575,000 resulted from existing facilities representing a 29.2%
same store increase. In 1998 supplies expenses were lower than expected due to
the run off of excess inventories of supplies at the existing centers. An
increase of $91,000 resulted from practices acquired and developed in the latter
half of 1998 and the remaining $201,000 resulted from "tuck-in" acquisitions of
imaging centers in 1998 and 1999. As a percentage of service fee revenue, these
costs were 6.6% and 5.9% in 1999 and 1998, respectively.
Practice Rent and Lease Expense
Rent and lease expense increased $571,000 or 18.0% in the second quarter
of 1999 to $3,738,000 from $3,167,000 in the second quarter of 1998. Of the
increase from 1998 to 1999, $158,000 resulted from existing facilities
representing a 5.0% same store increase. An increase of $98,000 resulted from
practices acquired and developed in the latter half of 1998 and the remaining
$315,000 resulted from "tuck-in" acquisitions of imaging centers in 1998 and
1999. As a percentage of service fee revenue, these costs were 8.7% and 9.4% in
1999 and 1998, respectively.
Other Practice Expenses
Other expenses increased $1,585,000 or 26.2% in the second quarter of 1999
to $7,646,000 from $6,061,000 in the second quarter of 1998. Of the increase
from 1998 to 1999, $1,104,000 resulted from existing facilities representing a
18.2% same store increase. An increase of $265,000 resulted from practices
acquired and developed in 1998, and $216,000 resulted from "tuck-in"
acquisitions of imaging centers in 1998 and 1999. As a percentage of service fee
revenue, these costs were 17.9% and 18.1% in 1999 and 1998, respectively.
Corporate General and Administrative
Corporate general and administrative increased $235,000 or 9.7% in the
second quarter of 1999 to $2,664,000 from $2,429,000 in the second quarter of
1998. This increase was principally due to the continued development of the
Company's infrastructure. As a percentage of service fee revenue, these costs
were 6.2% and 7.2% in 1999 and 1998, respectively.
Depreciation and Amortization
Depreciation and amortization increased $1,337,000 or 46.0% in the second
quarter of 1999 to $4,244,000 from $2,907,000 in the second quarter of 1998.
This increase was principally due to amortization of goodwill resulting from the
Company's acquisition of additional practices and facilities. In addition, the
Company has continued to upgrade its radiology equipment resulting in increased
deprecation expense. As a percentage of service fee revenue, these costs were
9.9% and 8.7% in 1999 and 1998, respectively.
Interest Expense, net
Interest expense, net increased $886,000 or 52.5% in the second quarter of
1999 to $2,574,000 from $1,688,000 in the second quarter of 1998. As a
percentage of service fee revenue, these costs were 6.0% and 5.0% in 1999 and
1998, respectively. The increase as a percentage of service fee revenue is a
result of the Company's acquisitions throughout 1999, resulting in higher debt
levels.
Income Taxes
The Company's effective tax rate for the second quarters of 1999 and 1998
was 38.0%. The Company has not recognized any income tax benefit for operating
losses incurred in 1997 and 1996. The Company will continue to carry the losses
with a fully reserved valuation allowance. The Company will recognize the tax
benefit at such time as it is deemed reasonably certain that it will not be
challenged.
9
<PAGE> 12
Net Income
As a result of the foregoing factors, the Company generated a net income
of $4,288,000 for the three months ended June 30, 1999, or diluted income per
share of $0.22 on 19,738,000 shares outstanding, compared to a net income of
$3,391,000 for the three months ended June 30, 1998, or diluted income per share
of $0.17 on 19,449,000 shares outstanding.
Six Months Ended June 30, 1998
Service Fee Revenue
Service fee revenue increased $18,674,000 or 29.5% in the first six months
of 1999 to $81,946,000 from $63,272,000 in the first six months of 1998. Of the
increase from 1998 to 1999, $10,914,000 resulted from increased business within
existing facilities (17.6% same store increase), $5,668,000 resulted from
practices acquired and developed in 1998, and $2,092,000 resulted from "tuck-in"
acquisitions of imaging centers in 1998 and 1999.
Salaries and Benefits
Salaries and benefits increased $4,914,000 or 24.9% in the first six
months of 1999 to $24,623,000 from $19,709,000 in the first six months of 1998.
Of the increase from 1998 to 1999, $2,329,000 resulted from existing facilities
representing a 12.9% same store increase, consistent with the revenue growth of
those centers. An increase of $1,706,000 resulted from practices acquired and
developed in 1998 and the remaining $879,000 increase resulted from "tuck-in"
acquisitions of imaging centers in 1998 and 1999. As a percentage of service fee
revenue, these costs were 30.3% and 31.2% in 1999 and 1998, respectively.
Practice Supplies
Supplies increased $1,162,000 or 28.0% in the first six months of 1999 to
$5,319,000 from $4,157,000 in the first six months of 1998. Of the increase from
1998 to 1999, $505,000 resulted from existing facilities representing a 12.4%
same store increase, which is consistent with the revenue growth at the
facilities. An increase of $370,000 resulted from practices acquired and
developed in 1998 and the remaining $287,000 resulted from "tuck-in"
acquisitions of imaging centers in 1998 and 1999. As a percentage of service fee
revenue, these costs were 6.5% and 6.6% in 1999 and 1998, respectively.
Practice Rent and Lease Expense
Rent and lease expense increased $2,034,000 or 36.8% in the first six
months of 1999 to $7,561,000 from $5,527,000 in the first six months of 1998. Of
the increase from 1998 to 1999, $1,168,000 resulted from existing facilities
representing a 21.5% same store increase, which is largely due to increased
rental payments based on number of diagnostic imaging procedures performed. An
increase of $323,000 resulted from practices acquired and developed in 1998 and
the remaining $543,000 resulted from "tuck-in" acquisitions of imaging centers
in 1998 and 1999. As a percentage of service fee revenue, these costs were 9.2%
and 8.7% in 1999 and 1998, respectively.
Other Practice Expenses
Other expenses increased $2,914,000 or 25.5% in the first six months of
1999 to $14,318,000 from $11,404,000 in the first six months of 1998. Of the
increase from 1998 to 1999, $1,674,000 resulted from existing facilities
representing a 15.1% same store increase. An increase of $1,185,000 resulted
from practices acquired and developed in 1998, and $55,000 resulted from
"tuck-in" acquisitions of imaging centers in 1998 and 1999. As a percentage of
service fee revenue, these costs were 17.5% and 18.0% in 1999 and 1998,
respectively.
10
<PAGE> 13
Corporate General and Administrative
Corporate general and administrative increased $853,000 or 19.2% in the
first six months of 1999 to $5,293,000 from $4,440,000 in the first six months
of 1998. This increase was principally due to the continued development of the
Company's infrastructure. As a percentage of service fee revenue, these costs
were 6.2% and 7.0% in 1999 and 1998, respectively.
Depreciation and Amortization
Depreciation and amortization increased $2,477,000 or 46.0% in the first
six months of 1999 to $7,856,000 from $5,379,000 in the first six months of
1998. This increase was principally due to amortization of goodwill resulting
from the Company's acquisition of additional practices and facilities. In
addition, the Company has continued to upgrade its radiology equipment resulting
in increased deprecation expense. As a percentage of service fee revenue, these
costs were 9.6% and 8.5% in 1999 and 1998, respectively.
Interest Expense, net
Interest expense, net increased $1,825,000 or 59.1% in the first six
months of 1999 to $4,913,000 from $3,088,000 in the first six months of 1998. As
a percentage of service fee revenue, these costs were 6.0% and 4.9% in 1999 and
1998, respectively. The increase as a percentage of service fee revenue is a
result of the Company's acquisitions throughout 1999, resulting in higher debt
levels.
Income Taxes
The Company's effective tax rate for the first six months of 1999 and 1998
was 38.0% and 39.0%, respectively. The Company has not recognized any income tax
benefit for operating losses incurred in 1997 and 1996. The Company will
continue to carry the losses with a fully reserved valuation allowance. The
Company will recognize the tax benefit at such time as it is deemed reasonably
certain that it will not be challenged.
Net Income
As a result of the foregoing factors, the Company generated a net income
of $8,172,000 for the six months ended June 30, 1999, or diluted income per
share of $0.41 on 19,734,000 shares outstanding, compared to a net income of
$6,464,000 for the six months ended June 30, 1998, or diluted income per share
of $0.34 on 19,148,000 shares outstanding.
Liquidity and Capital Resources
At June 30, 1999, the Company had $31,526,000 in working capital, an
increase of $12,148,000 from December 31, 1998. The Company's principal sources
of liquidity consist of (i) cash and cash equivalents aggregating $3,291,000,
(ii) net accounts receivable of $49,285,000, and (iii) approximately $10,798,000
in borrowing capacity under the Company's bank credit facility (the "Credit
Facility").
For the six months ended June 30, 1999, $2,162,000 was provided by
operations. Cash of $23,950,000 was used in investing activities in the first
six months of 1999, $6,590,000 of which was related to certain acquisitions,
$17,779,000 related to the purchase of property and equipment and $419,000 net
was received from joint ventures. Cash of $18,594,000 was provided by financing
activities in the first six months of 1999, substantially all of which was
provided under the Credit Facility.
For the six months ended June 30, 1998, $5,626,000 was provided by
operations. Cash of $43,257,000 was used in investing activities, primarily
related to certain acquisitions. Cash of $36,184,000 was provided by financing
activities, primarily through borrowings under the Credit Facility.
11
<PAGE> 14
On November 26, 1997, the Company entered into the Credit Facility. The
Credit Facility was amended May 19, 1998. The loan agreement provides for
revolving loans of up to $160,000,000 to be used by the Company for acquisitions
and general working capital needs. The Company may borrow, repay and reborrow
amounts during the first three years of the Credit Facility. Amounts outstanding
under the Credit Facility at the end of three years are required to be repaid in
quarterly installments of varying amounts commencing September 30, 2000. The
Credit Facility expires and all loans thereunder mature on the sixth anniversary
of the closing date of the Credit Facility. Borrowings under the Credit Facility
at any time may not exceed the lesser of $160,000,000 or 3.0 times the
consolidated EBITDA of the Company, giving pro forma effect to acquisitions made
with such borrowings. At June 30, 1999, the Company's debt could not exceed
$152,646,000 under the Credit Facility. As of June 30, 1999, the Company had
outstanding borrowings of $133,000,000 under the Credit Facility and an
additional $8,848,000 outstanding under other credit arrangements. At the
Company's option, the interest rate under the Credit Facility is (i) an adjusted
LIBOR rate, plus an applicable margin which can vary from 1.5% to 2.5% dependent
on certain financial ratios or (ii) the prime rate, plus an applicable margin
which can vary from 0.5% to 1.5%. In each case, the applicable margin varies
based on financial ratios maintained by the Company. The Credit Facility
includes certain restrictive covenants including prohibitions on the payment of
dividends and the maintenance of certain financial ratios (including minimum
debt-service coverage and maximum debt-to-EBITDA coverage, as defined).
Borrowings under the Credit Facility are secured by all service agreements,
which the Company is, or becomes a party to, and a pledge of the stock of the
Company's subsidiaries.
On August 3, 1999, the Company issued $20,000,000 of eight-percent
convertible junior subordinated notes. The notes are convertible into the
Company's common stock at a conversion price of $8.625 per share. The notes were
issued to DB Capital Partners, a private equity arm and affiliate of Deutsche
Bank. The Company may source other debt or equity financing to facilitate its
growth strategy. In the event the Company is unsuccessful in obtaining
additional financing, the Company anticipates that funds generated from
operations, cash and cash equivalents, and funds available under the Credit
Facility will be sufficient to meet the Company's working capital requirements
and debt obligations and to finance any necessary capital expenditures through
the end of 1999.
YEAR 2000 ISSUE
Impact of Year 2000
The Year 2000 Issue exists because many computer systems and
applications currently use two-digit date fields to designate a year. As the
century date occurs, computer programs, computers and embedded microprocessors
controlling equipment with date-sensitive systems may recognize Year 2000 as
1900, or not at all. This inability to recognize or properly treat the Year 2000
date fields may result in computer system failures or miscalculations of
critical financial and operational information, as well as failures of equipment
controlling date-sensitive microprocessors. In addition, there are two other
related issues which could also lead to miscalculations or failures: (i) some
older systems assign special meaning to certain dates, such as 9/9/99, and (ii)
the Year 2000 is a leap year.
State of Readiness
The Company started to formulate a plan to address the Year 2000 Issue
in the third quarter of 1998. The Company's Year 2000 Plan focuses on (i)
diagnostic imaging equipment utilized in its imaging operations, (ii) internal
information technology systems, including all types of systems used by the
Company in its operations, finance and human resources departments, and (iii)
information systems of its customers, payors and vendors. The Year 2000 Plan for
each of these areas involves the following phases: awareness, assessment,
renovation, testing and implementation. The Company has completed the awareness
and assessment phases and has made significant progress in renovating
noncompliant systems. In addition, the Company has established a timeline for
the testing and implementation phases. In general, the Company's goal is to
complete all phases of the Year 2000 Plan by November 30, 1999, although
complications arising from vendor delays may cause some delay.
Most of the Company's diagnostic imaging equipment used to provide
imaging services in the Company's imaging centers have computer systems and
applications, and in some cases, embedded microprocessors, that could be
affected by Year 2000 Issues. The Company assessed the impact on its diagnostic
imaging equipment by contacting the vendors of
12
<PAGE> 15
such equipment to determine their state of readiness in relation to each piece
of equipment. The vendors with respect to the majority of imaging equipment used
by the Company have informed the Company that (i) certain identified imaging
equipment is Year 2000 compliant, (ii) they have developed software for the
functional work arounds to ensure Year 2000 compliance with respect to the
balance of their noncompliant imaging equipment, and (iii) renovation will be
made during future regular maintenance visits. The Company expects that
renovation will be completed by November 30, 1999, and that, as of June 30,
1999, 70 percent of its diagnostic imaging equipment was Year 2000 compliant.
The Company has completed the renovation of approximately 85 percent of
its information technology systems, including modifying and upgrading software
and developing and purchasing new software. The Company continues to renovate
and test the remaining portions of such systems and to assess the potential for
Year 2000 problems with the embedded microprocessors in its other equipment,
facilities and corporate and regional offices, including telecommunications
systems, utilities, dictation systems, security systems and HVACS. The Company
expects to complete the renovation and testing phases for such systems by
November 30, 1999.
During the second quarter of 1999, the Company implemented a plan to
assess the potential for Year 2000 problems with the information systems of its
customers, payors and vendors. The Company prepared and sent questionnaires to
its customers, vendors and other third parties with which the Company has a
material relationship. The Company recently completed its assessment with
respect to such parties. While the Company has received preliminary information
concerning the Year 2000 readiness of many of its customers, vendors and other
third parties with which the Company has material relationships, the Company
does not have sufficient information to provide an estimated timetable for
completion of renovation and testing that such third parties with which the
Company has a material relationship may undertake. As a result, the Company is
unable to estimate the costs that it may incur to remedy the Year 2000 issues
relating to such parties. The Company expects to engage in discussions with the
noncompliant parties in an attempt to determine the extent to which the Company
is vulnerable to those parties' possible failure to become Year 2000 compliant.
Costs to Address Year 2000 Issue
The Company estimates, on a preliminary basis, that the cost of
assessment, renovation, testing and implementation of its internal systems will
range from approximately $500,000 to $1,500,000. The major components of these
costs are: consultants, additional personnel costs, programming, new software
and hardware, software upgrades and travel expenses. The Company expects that
such costs will be funded through operating cash flows. This estimate, based on
currently available information, will be updated as the Company continues its
assessment and proceeds with renovation, testing and implementation, and may be
adjusted upon receipt of more information from the Company's vendors, customers
and other third parties and upon the design and implementation of the Company's
contingency plan. In addition, the availability and cost of consultants and
other personnel trained in this area and unanticipated acquisitions might
materially affect the estimated costs. The effects of the aforementioned costs
have had no material impact on the Company's progress as it relates to other
information system projects and implementation.
Risks to the Company
The Company's Year 2000 Issue involves significant risks. There can be
no assurance that the Company will succeed in implementing all of its Year 2000
Plan. The following describes the Company's most reasonably likely worst-case
scenario, given current uncertainties. If the Company's renovated or replaced
internal information technology systems fail the testing phase, or any software
application or embedded microprocessors central to the Company's operations are
overlooked in the assessment or implementation phases, significant problems,
including delays, may be incurred in billing the Company's major customers
(Medicare, HMOs or private insurance carriers) for services performed. If its
major customers' systems do not become Year 2000 compliant on a timely basis,
the Company will have problems and incur delays in receiving and processing
correct reimbursements. If the computer systems of third parties (including
hospitals) with which the Company's systems exchange data do not become Year
2000 compliant, both on a timely basis and in a manner compatible with continued
data exchange with the Company's information technology systems, significant
problems may be incurred in billing and reimbursement. If the systems on the
diagnostic imaging equipment utilized by the Company are not Year 2000
compliant, the Company may not be able to provide imaging services to patients.
If the Company's vendors or suppliers of the Company's necessary power,
telecommunications,
13
<PAGE> 16
transportation and financial services fail to provide the Company with equipment
and services, the Company will be unable to provide services to its customers.
If any of these uncertainties were to occur, the Company's business, financial
condition and results of operations would be adversely affected. The Company is
unable to assess the likelihood of such events occurring or the extent of the
effect on the Company.
Forward-Looking Statements
This report contains or may contain forward-looking statements within
the meaning of Section 21E of the Securities Exchange Act of 1934 including
statements of the Company's and management's expectations, intentions, plans and
beliefs, including those contained in or implied by "Management's Discussion and
Analysis of Financial Condition and Results of Operations." These
forward-looking statements, as defined in Section 21E of the Securities Exchange
Act of 1934, are dependent on certain events, risks and uncertainties that may
be outside of the Company's control. These forward-looking statements may
include statements of management's plans and objectives for the Company's future
operations and statements of future economic performance; the Company's capital
budget and future capital requirements, and the Company's meeting its future
capital needs; and the assumptions described in this report underlying such
forward-looking statements. Actual results and developments could differ
materially from those expressed in or implied by such statements due to a number
of factors, including, without limitation, those described in the context of
such forward-looking statements.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
The Company's exposure to market risk for changes in interest rates
relates primarily to the Company's cash equivalents and its Credit Facility.
14
<PAGE> 17
PART II: OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
From time to time the Company is subject to certain legal proceedings
and claims which arise in the normal course of its business. Pending matters
include claims relating to professional services provided by a founding
affiliated practice. There can be no assurances that additional claims will not
be asserted against the Company in the future. The Company became subject to
certain of the pending claims as the result of successor liability in connection
with the acquisition of the founding affiliated practices; however, the Company
believes that the ultimate resolution of such claims net of applicable
indemnification and available insurance will not have a material adverse effect
on the business, financial condition or results of operations of the Company.
There can be no assurance that the Company will not subsequently be
named as a defendant in additional lawsuits. Each existing Affiliated Practice
has retained responsibility for, and agreed to indemnify the Company in full
against, the liabilities associated with certain lawsuits. In the event the
Company is named or subsequently added as a party of these lawsuit, or a
monetary judgment is entered against the Company and indemnification is
unavailable for any reason, the Company's business, financial condition and
results of operations could be materially adversely affected.
ITEM 2. CHANGES IN SECURITIES AND USE OF PROCEEDS
Not Applicable
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
Not Applicable
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
The annual meeting of shareholders of the Company was held on Wednesday,
May 5, 1999. At this meeting, the following matters were voted upon by the
Company's shareholders:
(A) ELECTION OF DIRECTORS
Less T. Chafen, M.D., John W. Colloton, John Pappajohn, Derace L.
Schaffer, M.D., Michael L. Sherman, M.D. and Mark L. Wagar were elected to serve
as directors of the Company until the annual meeting of stockholders held in
1999. The vote was as follows:
<TABLE>
<CAPTION>
Votes Cast Votes Cast
Name In Favor Against or Withheld
---- -------- -------------------
<S> <C> <C>
Less T. Chafen, M.D. 14,063,613 144,486
John W. Colloton 14,063,613 144,486
John Pappajohn 13,921,681 286,418
Derace L. Schaffer, M.D. 13,931,561 276,538
Michael L. Sherman, M.D. 13,903,968 304,131
Mark L. Wagar 14,063,613 144,486
</TABLE>
15
<PAGE> 18
(B) SELECTION OF AUDITORS
The shareholders of the Company ratified the appointment of Arthur
Andersen LLP as the Company's independent auditors for the fiscal year ended
December 31, 1999, by the following vote:
<TABLE>
<CAPTION>
Votes Cast In Favor Votes Cast Against Abstentions
------------------- ------------------ -----------
<S> <C> <C>
13,676,369 386,289 145,441
</TABLE>
(C) AMEND THE COMPANY'S RESTATED CERTIFICATE OF INCORPORATION
The shareholders of the Company ratified the proposal to amend the
Company's Restated Certificate of Incorporation to authorize the Board
of Directors to adopt, alter or amend the Company's Amended and Restated
Bylaws, by the following vote:
<TABLE>
<CAPTION>
Votes Cast In Favor Votes Cast Against Abstentions
------------------- ------------------ -----------
<S> <C> <C>
10,193,532 1,097,572 326,155
</TABLE>
(D) AMEND THE COMPANY'S 1996 STOCK OPTION PLAN
The shareholders of the Company ratified the proposal to amend the
Company's 1996 Stock Option Plan to increase the number of shares
reserved for the issuance thereunder by 1,000,000 shares, by the
following vote:
<TABLE>
<CAPTION>
Votes Cast In Favor Votes Cast Against Abstentions
------------------- ------------------ -----------
<S> <C> <C>
8,576,271 2,495,548 545,440
</TABLE>
ITEM 5. OTHER INFORMATION
Not Applicable
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits. See Index to Exhibits following signatures.
(b) Reports on Form 8-K
16
<PAGE> 19
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.
AMERICAN PHYSICIAN PARTNERS, INC.
Date: August 16, 1999 /s/ MARK L. WAGAR
-----------------
Mark L. Wagar
Chairman of the Board of Directors,
President and Chief Executive Officer
(Principal Executive Officer)
Date: August 16, 1999 /s/ SAMI S. ABBASI
------------------
Sami S. Abbasi
Senior Vice President and Chief Financial
Officer
(Principal Financial Officer)
Date: August 16, 1999 /s/ DAVID W. YOUNG
------------------
David W. Young
Controller and Treasurer
(Principal Accounting Officer)
17
<PAGE> 20
INDEX TO EXHIBITS
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
------- -----------
<S> <C>
2.1 Agreement and Plan of Reorganization and Merger, dated June 27,
1997 by and among American Physician Partners, Inc., Carroll
Imaging Associates, P.A., Diagnostic Imaging Associates, P.A.,
Drs. Copeland, Hyman and Shackman, P.A., Drs. Decarlo, Lyon,
Hearn & Pazourek, P.A., Drs. Thomas, Wallop, Kim & Lewis, P.A.,
Harbor Radiologists, P.A., and Perilla, Syndler & Associates,
P.A.**
2.2 Agreement and Plan of Reorganization and Merger, dated June 27,
1997 by and between American Physician Partners, Inc., Radiology
and Nuclear Medicine, A Professional Association.**
2.3 Agreement and Plan of Reorganization and Merger, dated June 27,
1997 by and between American Physician Partners, Inc., and Mid
Rockland Imaging Associates, P.C.**
2.4 Agreement and Plan of Reorganization and Merger, dated June 27,
1997 by and between American Physician Partners, Inc., and
Rockland Radiological Group, P.C.**
2.5 Agreement and Plan of Reorganization and Merger, dated June 27,
1997 by and between American Physician Partners, Inc., and
Advanced Imaging of Orange County, P.C.**
2.6 Agreement and Plan of Reorganization and Merger, dated June 27,
1997 by and between American Physician Partners, Inc., and
Central Imaging Associates, P.C.**
2.7 Agreement and Plan of Reorganization and Merger, dated June 27,
1997 by and between American Physician Partners, Inc., and Nyack
Magnetic Resonance Imaging, P.C.**
2.8 Agreement and Plan of Reorganization and Merger, dated June 27,
1997 by and between American Physician Partners, Inc., and Pelham
Imaging Associates, P.C.**
2.9 Agreement and Plan of Reorganization and Merger, dated June 27,
1997 by and between American Physician Partners, Inc., and
Women's Imaging Consultants, P.C.**
2.10 Agreement and Plan of Reorganization and Merger, dated June 27,
1997 by and between American Physician Partners, Inc., and
Pacific Imaging Consultants, A Medical Group, Inc.**
2.11 Agreement and Plan of Reorganization and Merger, dated June 27,
1997 by and between American Physician Partners, Inc., and Total
Medical Imaging, Inc.**
2.12 Agreement and Plan of Reorganization and Merger, dated June 27,
1997 by and between American Physician Partners, Inc., and Valley
Radiologists Medical Group, Inc.**
2.13 Agreement and Plan of Reorganization and Merger, dated June 27,
1997 by and between American Physician Partners, Inc., and The
Ide Group, P.C.**
2.14 Agreement and Plan of Reorganization and Merger, dated June 27,
1997 by and between American Physician Partners, Inc., and M&S
X-Ray Associates, P.A.**
2.15 Agreement and Plan of Reorganization and Merger, dated June 27,
1997 by and between American Physician Partners, Inc., and South
Texas MR, Inc.**
2.16 Agreement and Plan of Exchange, dated June 27, 1997 by and
between American Physician Partners, Inc., and San Antonio MR,
Inc.**
2.17 Agreement and Plan of Exchange, dated June 27, 1997 by and among
American Physician Partners, Inc., Lexington MR, Ltd. and the
Sellers.**
2.18 Agreement and Plan of Exchange, dated June 27, 1997 by and among
American Physician Partners, Inc., Madison Square Joint Venture
and the Sellers.**
2.19 Agreement and Plan of Exchange, dated June 27, 1997 by and among
American Physician Partners, Inc., South Texas No. 1 MRI Limited
Partnership, a Texas limited partnership, and the Sellers.**
2.20 Agreement and Plan of Exchange, dated June 27, 1997 by and among
American Physician Partners, Inc., San Antonio MRI Partnership
No. 2 Ltd., a Texas limited partnership, and the Sellers**
2.21 Agreement and Plan of Exchange, dated June 27, 1997 by and
between American Physician Partners, Inc., and the Sellers**
</TABLE>
<PAGE> 21
<TABLE>
<S> <C>
2.22 Amendment No. 1 to the Agreement and Plan of Reorganization and
Merger, dated as of September 30, 1997, by and among American
Physician Partners, Inc., Carroll Imaging Associates, P.A.,
Diagnostic Imaging Associates, P.A., Drs. Thomas, Wallop, Kim &
Lewis, P.A., Drs. Copeland, Hyman & Shackman, P.A., Drs. DeCarlo,
Lyon, Hearn & Pazourek, P.A., Harbor Radiologists, P.A., and
Perilla, Sindler & Associates, P.A.**
2.23 Amendment No. 1 to the Agreement and Plan of Reorganization and
Merger, dated as of September 30, 1997, by and between American
Physician Partners, Inc., and Radiology and Nuclear Medicine, A
Professional Association.**
2.24 Amendment No. 1 to the Agreement and Plan of Reorganization and
Merger, dated as of September 30, 1997, by and between American
Physician Partners, Inc., and Mid Rockland Imaging Associates,
P.C.**
2.25 Amendment No. 1 to the Agreement and Plan of Reorganization and
Merger, dated as of September 30, 1997, by and between American
Physician Partners, Inc., and Rockland Radiological Group, P.C.**
2.26 Amendment No. 1 to the Agreement and Plan of Reorganization and
Merger, dated as of September 30, 1997, by and between American
Physician Partners, Inc., and Advanced Imaging of Orange County,
P.C.**
2.27 Amendment No. 1 to the Agreement and Plan of Reorganization and
Merger, dated as of September 30, 1997, by and between American
Physician Partners, Inc., and Central Imaging Associates, P.C.**
2.28 Amendment No. 1 to the Agreement and Plan of Reorganization and
Merger, dated as of September 30, 1997, by and between American
Physician Partners, Inc., and Nyack Magnetic Resonance Imaging,
P.C.**
2.29 Amendment No. 1 to the Agreement and Plan of Reorganization and
Merger, dated as of September 30, 1997, by and between American
Physician Partners, Inc., and Pelham Imaging Associates, P.C.**
2.30 Amendment No. 1 to the Agreement and Plan of Reorganization and
Merger, dated as of September 30, 1997, by and between American
Physician Partners, Inc., and Women's Imaging Consultants, P.C.**
2.31 Amendment No. 1 to the Agreement and Plan of Reorganization and
Merger, dated as of September 30, 1997, by and between American
Physician Partners, Inc., and Pacific Imaging Consultants, A
Medical Group, Inc.**
2.32 Amendment No. 1 to the Agreement and Plan of Reorganization and
Merger, dated as of September 30, 1997, by and between American
Physician Partners, Inc., and Total Medical Imaging, Inc.**
2.33 Amendment No. 1 to the Agreement and Plan of Reorganization and
Merger, dated as of September 30, 1997, by and between American
Physician Partners, Inc., and Valley Radiologists Medical Group,
Inc.**
2.34 Amendment No. 1 to the Agreement and Plan of Reorganization and
Merger, dated as of September 30, 1997, by and between American
Physician Partners, Inc., and The Ide Group, P.C.**
2.35 Amendment No. 1 to the Agreement and Plan of Reorganization and
Merger, dated as of September 30, 1997, by and between American
Physician Partners, Inc., and M & S X-Ray Associates, P.A.**
2.36 Amendment No. 1 to the Agreement and Plan of Reorganization and
Merger, dated as of September 30, 1997, by and between American
Physician Partners, Inc., and South Texas MR, Inc.**
2.37 Amendment No. 1 to the Agreement and Plan of Reorganization and
Merger, dated as of September 30, 1997, by and between American
Physician Partners, Inc., and San Antonio MR, Inc.**
2.38 Amendment No. 1 to the Agreement and Plan of Exchange, dated
September 30, 1997, by and between American Physician Partners,
Inc., and Lexington MR, Ltd.**
</TABLE>
<PAGE> 22
<TABLE>
<S> <C>
2.39 Amendment No. 1 to the Agreement and Plan of Exchange, dated
September 30, 1997, by and between American Physician Partners,
Inc., and Madison Square Joint Venture.**
2.40 Amendment No. 1 to the Agreement and Plan of Exchange, dated
September 30, 1997, by and between American Physician Partners,
Inc., and South Texas No. 1 MRI Limited Partnership.**
2.41 Amendment No. 1 to the Agreement and Plan of Exchange, dated
September 30, 1997, by and between American Physician Partners,
Inc., and San Antonio MRI Partnership No. 2, Ltd.**
2.42 Asset Purchase Agreement, dated as of January 1, 1998, by and
among American Physician Partners, Inc., Community Radiology
Associates, Inc., Drs. Korsower and Pion Radiology, P.A., and the
Principal Stockholders****
2.43 Asset Purchase Agreement, dated as of January 12, 1998, by and
among American Physician Partners, Inc., Valley Imaging Partners,
Inc., Questar Imaging, Inc. and Questar Imaging VR, Inc.****
2.44 Asset Purchase Agreement, dated as of January 23, 1998, by and
among American Physician Partners, Inc., Valley Imaging Partners,
Inc., PAL Imaging Corp. and the Principal Stockholders****
2.45 Asset Purchase Agreement, dated as of April 1, 1998, by and among
American Physician Partners, Inc., Treasure Coast Imaging
Partners, Inc. and Radiology Imaging Associates, Basilico,
Gallagher and Raffa, M.D., P.A. and Robert F. Basilico, M.D.,
Edward Gallagher, M.D., R.J. Raffa, M.D., Joseph T. Charles,
M.D., Alex N. Vennos, M.D., and Robin J. Connolly, M.D.*****
2.46 Asset Purchase Agreement, dated as of April 1, 1998, by and among
American Physician Partners, Inc., Treasure Coast Imaging
Partners, Inc. and St. Lucie Imaging and Breast Center, Inc. and
Robert F. Basilico, M.D., Edward Gallagher, M.D., R.J. Raffa,
M.D., Joseph T. Charles, M.D., Alex N. Vennos, M.D., and Robin J.
Connolly, M.D.*****
2.47 Asset Purchase Agreement, dated as of April 28, 1998, by and
among American Physician Partners, Inc., Valley Imaging Partners,
Inc., LXL, Ltd. and the Partners of LXL, Ltd.*****
2.48 Asset Purchase Agreement, dated as of June 1, 1998, by and among
American Physician Partners, Inc., Mid Rockland Imaging Partners,
Inc., Empire State Imaging Partners, Inc., RF Management Corp.
and Modern Medical Modalities Corporation*****
2.49 Asset Purchase Agreement, dated as of June 23, 1998, by and among
American Physician Partners, Inc., Valley Imaging Partners, Inc.,
Brewster Imaging Center, Inc. and Each Principal Stockholder*****
2.50 Asset Purchase Agreement, dated as of June 29, 1998, by and among
American Physician Partners, Inc., Valley Imaging Partners, Inc.
and Bryan M. Shieman, M.D., a sole proprietorship d/b/a El Camino
Center for Osteoporosis and/or ECOO II*****
2.51 Stock Purchase Agreement, dated September 1, 1998, by and among
American Physician Partners, Inc., WB&A Imaging Partners, Inc.
and Vimla Bhooshan, M.D., John B. DeGrazia, M.D., Edwin
Goldstein, M.D., Paul T. Lubar, M.D., Calvin D. Neithamer, M.D.,
William P. O'Grady, M.D., Robert A. Olshaker, M.D., Stanley M.
Perl, M.D., Michael S. Usher, M.D., Alan B. Kronthal, M.D.,
Steven A. Meyers, M.D., Victor A. Bracey, M.D. and Larry W.
Busching******
2.52 Asset Purchase Agreement, dated September 1, 1998, by and among
American Physician Partners, Inc., Ormond Imaging Partners, Inc.,
Magnetic Resonance Imaging Associates Limited Partnership and
Paul T. Lubar, Stanley M. Perl, Michael S. Usher, John B.
DeGrazia, Larry W. Busching, Vimla Bhooshan, William P. O'Grady,
Robert A. Olshaker, and Calvin D. Neithamer******
2.53 Asset Purchase Agreement, dated September 1, 1998, by and among
American Physician Partners, Inc., Ormond Imaging Partners, Inc.,
Duke Associates Limited Partnership and Paul T. Lubar, Stanley M.
Perl, Michael S. Usher, John B. DeGrazia, Larry W. Busching,
Vimla Bhooshan, William P. O'Grady, Edwin Goldstein, Robert A.
Olshaker, Calvin D. Neithamer and Alan J. Kronthal******
3.1 Restated Certificate of Incorporation of American Physician
Partners, Inc.***
3.2 Amended and Restated Bylaws of American Physician Partners,
Inc.***
3.3 Amendment to Restated Certificate of Incorporation of American
Physician Partners, Inc.*
3.4 Amendment to Restated Bylaws of American Physician Partners,
Inc.*
4.1 Form of certificate evidencing ownership of Common Stock of
American Physician Partners, Inc.***
</TABLE>
<PAGE> 23
<TABLE>
<S> <C>
4.2 Form of Convertible Promissory Note of American Physician Partners,
Inc.**
10.1 American Physician Partners, Inc. 1996 Stock Option Plan.**
10.2 Employment Agreement between American Physician Partners, Inc. and
Gregory L. Solomon.**
10.3 Employment Agreement between American Physician Partners, Inc. and
Mark S. Martin.**
10.4 Employment Agreement between American Physician Partners, Inc. and
Sami S. Abbasi.**
10.5 Employment Agreement between American Physician Partners, Inc. and
Paul M. Jolas.**
10.6 Form of Indemnification Agreement for certain Directors and
Officers.***
10.7 Form of Registration Rights Agreement.**
10.8 Service Agreement dated November 26, 1997, by and among American
Physician Partners, Inc., APPI-Advanced Radiology, Inc. and Carroll
Imaging Associates, P.A., Diagnostic Imaging Associates, P.A., Drs.
Thomas, Wallop, Kim & Lewis, P.A., Drs. Copeland, Hyman and
Shackman, P.A., Drs. Decarlo, Lyon, Hearn & Pazourek, P.A., Harbor
Radiologists, P.A., Perilla, Sindler & Associates, P.A.**
10.9 Service Agreement dated November 26, 1997, by and among American
Physician Partners, Inc., Ide Admin Corp. and Ide Imaging Group,
P.C.**
10.10 Service Agreement dated November 26, 1997, by and among American
Physician Partners, Inc., M & S X-Ray Associates, P.A. and M&S
Imaging Associates, P.A.**
10.11 Service Agreement dated November 26, 1997, by and among American
Physician Partners, Inc., Rockland Radiological Group, P.C. and The
Greater Rockland Radiological Group, P.C.**
10.12 Service Agreement dated November , by and among American Physician
Partners, Inc., Advanced Imaging of Orange County, P.C. and The
Greater Rockland Radiological Group, P.C.**
10.13 Service Agreement dated November 26, 1997, by and among American
Physician Partners, Inc., Central Imaging Associates, P.C. and The
Greater Rockland Radiological Group, P.C.**
10.14 Service Agreement dated November 26, 1997, by and among American
Physician Partners, Inc., Nyack Magnetic Resonance Imaging, P.C. and
The Greater Rockland Radiological Group, P.C.**
10.15 Service Agreement dated November 26, 1997, by and among American
Physician Partners, Inc., Pelham Imaging Associates, P.C. and The
Greater Rockland Radiological Group, P.C.**
10.16 Service Agreement dated November 26, 1997, by and among American
Physician Partners, Inc., Women's Imaging Consultants, P.C. and The
Greater Rockland Radiological Group, P.C.**
10.17 Service Agreement dated November 26, 1997, by and among American
Physician Partners, Inc., APPI-Pacific Imaging Inc. and PIC Medical
Group, Inc.**
10.18 Service Agreement dated November 26, 1997, by and among American
Physician Partners, Inc., Radiology and Nuclear Medicine, a
Professional Association and RNM L.L.C.**
10.19 Service Agreement dated November 26, 1997, by and among American
Physician Partners, Inc., APPI-Valley Radiology, Inc. and Valley
Radiology Medical Associates, Inc.**
10.20 Consulting Agreement between American Physician Partners, Inc. and
Michael L. Sherman, M.D.***
10.21 Office Building Lease Agreement between Dallas Main Center Limited
Partnership and American Physician Partners, Inc.***
10.22 First Amendment to Office Building Lease Agreement between Dallas
Main Center Limited Partnership and American Physician Partners,
Inc.***
10.23 Credit Agreement by and among American Physician Partners, Inc., GE
Capital Corporation and the other credit parties signatory
thereto.***
10.24 Consulting Agreement between American Physician Partners, Inc. and
Lawrence R. Muroff, M.D.***
10.25 Side Letter dated November 12, 1997 by and between American
Physician Partners, Inc. and Lawrence Muroff, M.D.***
10.26 Side Letter dated November 12, 1997 by and between American
Physician Partners, Inc. and Mark Martin.***
10.27 Side Letter dated November 12, 1997 by and between American
Physician Partners, Inc. and Sami Abbasi.***
10.28 Side Letter dated November 12, 1997 by and between American
Physician Partners, Inc. and Gregory L. Solomon.***
</TABLE>
<PAGE> 24
<TABLE>
<S> <C>
10.29 First Amendment to Consulting Agreement between American Physician
Partners, Inc. and Lawrence R. Muroff, M.D.***
10.30 Side Letter dated November 12, 1997 by and between American
Physician Partners, Inc. and Michael Sherman, M.D.***
10.31 Side Letter dated November 12, 1997 by and between American
Physician Partners, Inc. and Paul M. Jolas.***
10.32 Side Letter dated November 12, 1997 by and between American
Physician Partners, Inc. and Derace Schaffer, M.D.***
10.33 Side Letter dated November 12, 1997 by and between American
Physician Partners, Inc. and John Pappajohn.***
10.34 Side Letter dated November 12, 1997 by and between American
Physician Partners, Inc. and Mary Pappajohn.***
10.35 Side Letter dated November 12, 1997 by and between American
Physician Partners, Inc. and Thebes Ltd.***
10.36 Side Letter dated November 12, 1997 by and between American
Physician Partners, Inc. and Halkis Ltd.***
10.37 Service Agreement dated January 1, 1998, by and among American
Physician Partners, Inc., Community Imaging Partners, Inc.,
Community Radiology Associates, Inc. and Drs. Korsower and Pion
Radiology, P.A.****
10.38 Service Agreement dated April 1, 1998, by and among American
Physician Partners, Inc., Treasure Coast Imaging Partners, Inc. and
Radiology Imaging Associates - Basilico, Gallagher & Raffa, M.D.,
P.A.*****
10.39 First Amendment to Credit Agreement and Consent dated May 19, 1998,
by and among American Physician Partners, Inc., General Electric
Capital Corporation and the other credit parties signatory
thereto*****
10.40 Employment Agreement between American Physician Partners, Inc. and
Mark L. Wagar*****
10.41 Service Agreement dated September 1, 1998, by and among American
Physician Partners, Inc., WB&A Imaging Partners, Inc. and WB&A
Imaging, P.C.******
10.42 Office Building Lease Agreement between The Equitable-Nissei Dallas
Company and Fibreboard Corporation******
10.43 Office Building Sublease Agreement by and between Fibreboard
Corporation and American Physician Partners, Inc.******
10.44 First Amendment to Employment Agreement between American Physician
Partners, Inc. and Mark L. Wagar*******
10.45 First Amendment to Employment Agreement between American Physician
Partners, Inc. and Mark S. Martin*******
10.46 First Amendment to Employment Agreement between American Physician
Partners, Inc. and Sami S. Abbasi*******
10.47 First Amendment to Employment Agreement between American Physician
Partners, Inc. and Paul M. Jolas*******
10.48 Amendment No. 1 to American Physician Partners, Inc. 1996 Stock
Option Plan*
27 Financial Data Schedule *
</TABLE>
- --------------
* Filed herewith.
** Incorporated by reference to the corresponding Exhibit number to the
registrant's Registration Statement No. 333-31611 on Form S-4.
*** Incorporated by reference to the corresponding Exhibit number to the
registrant's Registration Statement No. 333-30205 on Form S-1.
**** Incorporated by reference to the corresponding Exhibit number to the
registrant's Form 10-Q filed on May 15, 1998.
<PAGE> 25
***** Incorporated by reference to the corresponding Exhibit number to the
registrant's Form 10-Q filed on August 14, 1998.
****** Incorporated by reference to the corresponding Exhibit number to the
registrant's Form 10-Q filed on November 13, 1998.
******* Incorporated by reference to the corresponding Exhibit number to the
registrant's Form 10-Q filed on May 17, 1999
<PAGE> 1
Exhibit 3.3
CERTIFICATE OF AMENDMENT
OF
RESTATED CERTIFICATE OF INCORPORATION
OF
AMERICAN PHYSICIAN PARTNERS, INC.
PURSUANT TO SECTION 242 OF THE
GENERAL CORPORATION LAW OF THE STATE OF DELAWARE
-------------------
American Physician Partners, Inc., a corporation organized and existing
under and by virtue of the General Corporation Law of the State of Delaware (the
"Corporation"),
DOES HEREBY CERTIFY:
FIRST: That the following resolutions setting forth a proposed
amendment of the Restated Certificate of Incorporation of the Corporation,
declaring said amendment to be advisable and directing that said amendment be
submitted to the stockholders of the Corporation for consideration thereof were
adopted by the Board of Directors of the Corporation, on May 5, 1999. The
resolutions setting forth the proposed amendment are as follows:
"RESOLVED, that Article VII of the Restated Certificate of
Incorporation be, and it hereby is, amended to read in its entirety as
follows:
`The management of the business and the conduct of the affairs
of the Corporation shall be vested in its Board. The number of
directors which shall constitute the whole Board shall be fixed by, or
in the manner provided in, the Bylaws of the Corporation. In
furtherance and not in limitation of the Board's power to manage the
business and conduct the affairs of the Corporation, the Board shall
have the power, upon the affirmative vote of at least a majority of the
Directors then serving, to adopt, amend or repeal from time to time the
Bylaws of the Corporation, subject to the right of the stockholders
entitled to vote thereon to adopt, amend or repeal the Bylaws.
Notwithstanding the foregoing, the Board shall not have the power to
alter, amend or repeal the second or third sentences of the first
paragraph of Article III, Section 2 of the Bylaws regarding the
composition of the Board, or any other Bylaw (or Article or Section
thereof) that expressly provides that it cannot be altered, amended or
repealed by the Board.'
and, be it
RESOLVED, that the amendment (or a summary thereof) be
submitted to the Corporation's stockholders for their consideration at
the Annual Meeting of Stockholders to be held May 5, 1999."
<PAGE> 2
SECOND: That thereafter, an Annual Meeting of the Stockholders of the
Corporation was duly called and held on May 5, 1999, upon notice in accordance
with Section 222 of the General Corporation Law of the State of Delaware and the
Bylaws of the Corporation, at which meeting the necessary number of shares as
required by statute were voted in favor of the amendment.
THIRD: That said amendment was duly adopted in accordance with the
provisions of Section 242 of the General Corporation Law of the State of
Delaware.
* * * * *
- 2 -
<PAGE> 3
IN WITNESS WHEREOF, the Corporation has caused this certificate to be
signed by Mark L. Wagar, its President, and Paul M. Jolas, its Secretary, on May
11, 1999.
AMERICAN PHYSICIAN PARTNERS, INC.
By:
----------------------------------------
Mark L. Wagar, President
By:
----------------------------------------
Paul M. Jolas, Secretary
- 3 -
<PAGE> 1
Exhibit 3.4
UNANIMOUS CONSENT
OF
THE BOARD OF DIRECTORS
OF
AMERICAN PHYSICIAN PARTNERS, INC.
The undersigned, constituting all of the directors of American
Physician Partners, Inc., a Delaware corporation (the "Corporation"), do hereby
consent and agree, pursuant to the provisions of Section 141 of the Delaware
General Corporation Law ("DGCL"), to the adoption of the following resolutions:
ADOPT ARTICLE X OF THE AMENDED AND RESTATED BYLAWS OF THE CORPORATION
WHEREAS, the Board of Directors (the "Board") of the Corporation
proposed adopting Article X of the Amended and Restated Bylaws of the
Corporation at the 1999 Annual Meeting of the Board; and
WHEREAS, the Board deems it advisable to adopt Article X in order to
require the Corporation to maintain a Physician Advisory Board which will
enhance the quality of services provided by the Corporation, its imaging
centers, and to the radiology practices to which it provides administrative
services; now, therefore, be it
"RESOLVED, that Article X of the Amended and Restated Bylaws
be, and it hereby is, adopted to read in its entirety as follows:
`The Company shall establish and maintain a Physician Advisory
Board. The purpose of the Physician Advisory Board shall be to advise
the Company's Board and management with respect to issues and matters
affecting physicians, the Company's services to physicians and
affiliated practices and the enhancement of patient services and
satisfaction. The size, scope of activities and the process for the
selection of members of the Physician Advisory Board shall be
determined from time-to-time by the Company's Board. The Physician
Advisory Board shall not be qualified or authorized to engage in any
activity which may be construed or deemed to constitute the practice of
medicine by the Company. The Chairman of the Physician Advisory Board
will provide a written or oral report to the Company's Board at the
request of the Company's Chairman of the Board. This Article X shall
not be altered, amended or repealed by the Company's Board of
Directors.'"
<PAGE> 2
FURTHER ACTIONS
FURTHER RESOLVED, that the appropriate officers of the
Corporation be, and the same hereby are, authorized, empowered and
directed to execute and deliver all documents, instruments and other
agreements, to waive any and all conditions and to do all things
necessary and helpful to carry out the purposes of the foregoing
resolution; and all acts and deeds of such appropriate officers and
agents of the Corporation which are consistent with the purpose and
intent of the above resolution be, and the same hereby are, in all
respects, ratified, approved, and adopted as the acts and deeds of the
Corporation.
* * * * *
<PAGE> 3
IN WITNESS WHEREOF, the undersigned directors have executed this
Unanimous Consent in one or more counterparts as of the ___ day of May, 1999.
---------------------------------------------
Mark L. Wagar
---------------------------------------------
John W. Colloton
---------------------------------------------
John Pappajohn
---------------------------------------------
Derace L. Schaffer, M.D.
---------------------------------------------
Less T. Chafen, M.D.
---------------------------------------------
Michael L. Sherman, M.D.
<PAGE> 1
EXHIBIT 10.48
AMENDMENT NO. 1
TO
AMERICAN PHYSICIAN PARTNERS, INC.
1996 STOCK OPTION PLAN
1. Section VI. A. of Article One of the American Physician Partners,
Inc. 1996 Stock Option Plan is hereby amended to read in its entirety as
follows:
"VI. STOCK SUBJECT TO THE PLAN
A. Shares of Common Stock shall be available for issuance
under the Plan and shall be drawn from either the Corporation's
authorized but unissued shares of Common Stock or from reacquired
shares of Common Stock. The maximum number of shares of Common Stock
which may be issued over the term of the Plan shall not exceed
4,000,000 shares, subject to adjustment from time to time in accordance
with the provisions of Section VI."
2. No other term or provision of the American Physician Partners, Inc.
1996 Stock Option Plan shall be affected by this Amendment.
This Amendment was approved by the American Physician Partners, Inc.
Board of Directors to be effective on May 5, 1999. The Stockholders of American
Physician Partners, Inc. approved this Amendment on May 5, 1999.
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-START> JAN-01-1999
<PERIOD-END> JUN-30-1999
<CASH> 3,291
<SECURITIES> 0
<RECEIVABLES> 49,285
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 57,487
<PP&E> 51,359
<DEPRECIATION> 0
<TOTAL-ASSETS> 184,547
<CURRENT-LIABILITIES> 25,961
<BONDS> 0
0
0
<COMMON> 2
<OTHER-SE> 15,521
<TOTAL-LIABILITY-AND-EQUITY> 184,547
<SALES> 81,946
<TOTAL-REVENUES> 0
<CGS> 0
<TOTAL-COSTS> 69,883
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 4,913
<INCOME-PRETAX> 13,184
<INCOME-TAX> 5,012
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 8,172
<EPS-BASIC> 0.42
<EPS-DILUTED> 0.41
</TABLE>
