<PAGE> 1
SCHEDULE 14A
(RULE 14A-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE SECURITIES
EXCHANGE ACT OF 1934 (AMENDMENT NO. )
Filed by the Registrant /X/
Filed by a Party other than the Registrant / /
Check the appropriate box:
/ / Preliminary Proxy Statement / / Confidential, for Use of the
Commission Only (as permitted by
Rule 14a-6(e)(2))
/X/ Definitive Proxy Statement
/ / Definitive Additional Materials
/ / Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12
U.S. HEALTHCARE, INC.
- --------------------------------------------------------------------------------
(Name of Registrant as Specified in Its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
/X/ $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1), or 14a-6(i)(2) or
Item 22(a)(2) of Schedule 14A.
/ / $500 per each party to the controversy pursuant to Exchange Act Rule
14a-6(i)(3).
/ / Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
(1) Title of each class of securities to which transaction applies:
- --------------------------------------------------------------------------------
(2) Aggregate number of securities to which transaction applies:
- --------------------------------------------------------------------------------
(3) Per unit price or other underlying value of transaction computed pursuant to
Exchange Act Rule 0-11 (Set forth the amount on which the filing fee is
calculated and state how it was determined):
- --------------------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
- --------------------------------------------------------------------------------
(5) Total fee paid:
- --------------------------------------------------------------------------------
/ / Fee paid previously with preliminary materials.
- --------------------------------------------------------------------------------
/ / Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the form or schedule and the date of its filing.
(1) Amount previously paid:
- --------------------------------------------------------------------------------
(2) Form, schedule or registration statement no.:
- --------------------------------------------------------------------------------
(3) Filing party:
- --------------------------------------------------------------------------------
(4) Date filed:
- --------------------------------------------------------------------------------
<PAGE> 2
[US HEALTHCARE LOGO]
980 Jolly Road
P.O. Box 1109
Blue Bell, Pennsylvania 19422
April 27, 1995
Dear Shareholder:
You are cordially invited to attend the 1995 Annual Meeting of Shareholders
of U.S. Healthcare, Inc. on Wednesday, May 24, 1995.
The meeting will begin promptly at 10:00 a.m., Eastern Daylight Time in the
Auditorium at our Customer Service Center (Building 2), 1425 Union Meeting
Road, Blue Bell, Pennsylvania 19422.
The official Notice of Annual Meeting, Proxy Statement and form of proxy
are included with this letter. The matters listed in the Notice of Annual
Meeting are described in detail in the Proxy Statement.
The vote of every shareholder is important. Mailing your completed proxy
will not prevent you from voting in person at the meeting if you wish to do so.
Please mark, sign, date and return your proxy promptly. Your cooperation
will be greatly appreciated.
Your Board of Directors and management look forward to greeting personally
those shareholders who are able to attend.
Sincerely,
/s/ LEONARD ABRAMSON
Leonard Abramson
Chairman and Principal Executive Officer
<PAGE> 3
U.S. HEALTHCARE, INC.
980 Jolly Road
P.O. Box 1109
Blue Bell, Pennsylvania 19422
------------
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD ON WEDNESDAY, MAY 24, 1995
------------
The 1995 Annual Meeting of Shareholders (the "Meeting") of U.S. Healthcare,
Inc., a Pennsylvania corporation (the "Company"), will be held on Wednesday,
May 24, 1995, at 10:00 a.m., Eastern Daylight Time, at U.S. Healthcare, Inc.,
Customer Service Center (Building 2), 1425 Union Meeting Road, Blue Bell,
Pennsylvania 19422, for the following purposes:
1. To elect two Class I directors to hold office until the Annual
Meeting of Shareholders in 1998 and until their respective
successors are duly elected and qualified.
2. To elect one Class II director to hold office until the Annual
Meeting of Shareholders in 1997 and until her successor is duly
elected and qualified.
3. To transact such other business as may properly come before the
Meeting and any and all adjournments or postponements thereof.
The Board of Directors has fixed the close of business on April 5, 1995 as
the record date for the Meeting. Only shareholders of record at that time are
entitled to notice of and to vote at the Meeting and any and all adjournments
or postponements thereof.
The enclosed proxy is solicited by the Board of Directors of the Company.
Reference is made to the accompanying Proxy Statement for further information
with respect to the business to be transacted at the Meeting.
THE BOARD OF DIRECTORS URGES YOU TO MARK, SIGN, DATE AND RETURN THE
ENCLOSED PROXY AS SOON AS POSSIBLE. YOU ARE CORDIALLY INVITED TO ATTEND THE
MEETING IN PERSON. SHAREHOLDERS WILL BE ADMITTED TO THE MEETING ONLY UPON
PRESENTATION OF PROOF OF STOCK OWNERSHIP, WHICH MAY INCLUDE A CURRENT BROKERAGE
STATEMENT OR A LETTER FROM THEIR BANK OR BROKER. THE RETURN OF THE ENCLOSED
PROXY WILL NOT AFFECT YOUR RIGHT TO VOTE IN PERSON IF YOU DO ATTEND THE
MEETING.
By order of the Board of Directors,
Alan R. Letofsky
Secretary
BLUE BELL, PENNSYLVANIA
APRIL 27, 1995
<PAGE> 4
PROXY STATEMENT FOR
ANNUAL MEETING OF SHAREHOLDERS
OF U.S. HEALTHCARE, INC.
MAY 24, 1995
------------
GENERAL INFORMATION
This Proxy Statement is furnished in connection with the solicitation of
proxies by the Board of Directors of U.S. Healthcare, Inc., a Pennsylvania
corporation (the "Company"), for use at the Company's 1995 Annual Meeting of
Shareholders (together with any and all adjournments or postponements thereof,
the "Meeting") which is scheduled to be held on Wednesday, May 24, 1995, at
10:00 a.m., Eastern Daylight Time, at U.S. Healthcare, Inc., Customer Service
Center (Building 2), 1425 Union Meeting Road, Blue Bell, Pennsylvania 19422,
for the purposes set forth in the accompanying Notice of Annual Meeting of
Shareholders. This Proxy Statement, the foregoing notice and the enclosed proxy
are being sent to shareholders on or about April 27, 1995.
The Board of Directors knows of no other matters which are likely to be
brought before the Meeting. If any other matters properly come before the
Meeting, however, the persons named in the enclosed proxy, or their duly
constituted substitutes acting at the Meeting, will be authorized to vote or
otherwise act thereon in accordance with their judgment on such matters. If the
enclosed proxy is properly executed and returned prior to voting at the
Meeting, the shares represented thereby will be voted in accordance with the
instructions marked thereon. In the absence of instructions, executed proxies
will be voted "FOR" the two nominees of the Board of Directors for election as
Class I directors and "FOR" the nominee of the Board of Directors for election
as a Class II director.
<PAGE> 5
Any proxy may be revoked at any time prior to its exercise by notifying the
Secretary of the Company in writing, by delivering a duly executed proxy
bearing a later date, or by attending the Meeting and voting in person.
VOTING SECURITIES, VOTING RIGHTS AND SECURITY OWNERSHIP
VOTING SECURITIES
At the close of business on April 5, 1995, the record date fixed for the
determination of shareholders entitled to notice of and to vote at the Meeting,
there were outstanding 145,685,517 shares of the Company's Common Stock, par
value $.005 per share ("Common Stock"), which have one vote per share, and
14,536,530 shares of the Company's Class B Stock, par value $.005 per share
("Class B Stock"), which have 50 votes per share. The Common Stock is thus
entitled to cast 145,685,517 votes and the Class B Stock 726,826,500 votes.
The presence at the Meeting, in person or by proxy, of shareholders entitled to
cast at least a majority of the votes which all shareholders are entitled to
cast on a particular matter shall constitute a quorum for the purpose of
considering such matter. With respect to the proposed reelection of Leonard
Abramson and Betsy Z. Cohen to the Board of Directors as a Class I director and
a Class II director, respectively, the presence at the Meeting, in person or by
proxy, of holders of Common Stock and Class B Stock entitled to cast an
aggregate of 436,256,009 votes will be required for a quorum. With respect
to the proposed reelection of Jerome S. Goodman to the Board of Directors as a
Class I director, the presence at the Meeting, in person or by proxy, of
holders of Common Stock entitled to cast an aggregate of 72,842,759 votes
will be required for a quorum. Abstentions will be counted for the purpose of
establishing a quorum but will not be voted. Broker non-votes will not be
counted for the purpose of establishing a quorum and will not be voted.
Shareholders do not have cumulative voting rights in the election of directors
or otherwise.
<PAGE> 6
PRINCIPAL SHAREHOLDERS
The following table sets forth certain information with respect to the
holdings of Common Stock and Class B Stock of each person who is known to the
Company to be the beneficial owner of more than 5% of the outstanding shares of
Common Stock or Class B Stock. Except as otherwise specified, the named
beneficial owner has sole voting and investment power with respect to such
shares.
<TABLE>
<CAPTION>
Common Class B
------------------------------- --------------------------------
Name and Address of Amount and Nature of % of Amount and Nature of % of
Beneficial Owner (1) Beneficial Ownership Class Beneficial Ownership Class
- -------------------------- -------------------- ------ ----------------------- -----
<S> <C> <C> <C> <C>
Leonard Abramson 1,881,028 (2) 1.3% 14,517,483 99.9%
980 Jolly Road
P.O. Box 1109
Blue Bell, PA 19422
FMR Corp. 8,607,449 (3) 5.9%
82 Devonshire Street
Boston, MA 02109
Provident Investment Counsel 12,643,442 (4) 8.7%
300 North Lake
Pasadena, CA 91101
</TABLE>
- -------
(1) Information as to Mr. Abramson provided by him to the Company as of March
15, 1995, and as to FMR Corp. and Provident Investment Counsel, provided
by each of them in a Schedule 13G filed with the Securities and Exchange
Commission as of December 31, 1994.
(2) Includes 35,260 shares of Common Stock held by Mr. Abramson and two other
individuals, as trustees of a trust for the benefit of Mr. Abramson's
grandchildren, 1,771,543 shares of Common Stock held by Madlyn K.
Abramson, Mr. Abramson's wife, as trustee for three trusts for the benefit
of their three children, and 685 shares of Common Stock held by Mrs.
Abramson in her own right; Mr. Abramson disclaims beneficial ownership of
these shares. Also includes options to purchase 60,000 shares of Common
Stock that are currently exercisable or will become exercisable by May 14,
1995.
<PAGE> 7
(3) FMR Corp. ("FMR") and its Chairman and controlling stockholder, Edward C.
Johnson 3d, have sole dispositive power over 7,074,680 shares
beneficially owned by Fidelity Management & Research Company, a wholly
owned subsidiary of FMR and an investment adviser to investment companies.
They have sole dispositive power over 1,439,769 shares beneficially owned
by another wholly owned subsidiary of FMR, Fidelity Management Trust
Company, an investment manager of institutional accounts. They have sole
voting power over 813,932 of such shares. A partnership controlled by
Mr. Johnson and members of his family, through its ownership of voting
stock of Fidelity International Limited, an investment adviser, has sole
voting and dispositive power over 93,000 shares owned by Fidelity
International Limited, an investment adviser and manager of non-U.S.
investment companies and institutional accounts; FMR disclaims beneficial
ownership of these shares. Mr. Johnson, various members of his family, and
various trusts for the benefit of Mr. Johnson's family members form a
controlling group with respect to FMR through their ownership of voting
common stock.
(4) Provident Investment Counsel ("Provident"), a registered investment
adviser, and Robert Marvin Kommerstad, voting trustee of a voting trust
which holds all of the outstanding securities of Provident, beneficially
own 12,643,442 shares of Common Stock based on Provident's discretionary
authority to buy, sell and vote shares of Common Stock for its investment
advisory clients. Provident and Mr. Kommerstad have shared dispositive
power over all of the 12,643,442 shares of Common Stock and shared voting
power over 10,040,485 of such shares. They do not have sole voting power
or sole dispositive power as to any of the shares.
<PAGE> 8
The following table sets forth certain information as of March 15, 1995
with respect to the holdings of shares of Common Stock and Class B Stock of (i)
each director and nominee for director of the Company, (ii) the Company's chief
executive officer and the four other most highly compensated executive officers
of the Company, and (iii) all directors and executive officers as a group, and
includes options to purchase shares of Common Stock which are currently
exercisable or will become exercisable by May 14, 1995. Each of the persons
named below as beneficially owning the shares set forth opposite his or her
name has sole voting power and sole investment power with respect to such
shares, unless otherwise stated.
<TABLE>
<CAPTION>
Common Class B
------------------------------- -------------------------------------
Name of Amount and Nature of % of Amount and Nature of % of
Beneficial Owner (1) Beneficial Ownership Class Beneficial Ownership Class
- -------------------------- -------------------- ------ ----------------------- -----
<S> <C> <C> <C> <C>
Leonard Abramson...................... 1,881,028 (2) 1.3% 14,517,483 99.9%
Betsy Z. Cohen........................ 1,000 *
Jerome S. Goodman..................... 65,075 *
Allen Misher, Ph.D.................... 5,250 *
David B. Soll, M.D.................... 282,147 *
Timothy T. Weglicki................... 39,000 (3) *
Michael J. Cardillo................... 69,351 (4) *
Costas C. Nicolaides.................. 43,573 (5) *
Timothy E. Nolan...................... 106,843 (6) *
Joseph T. Sebastianelli............... 18,036 (7) *
All directors and executive officers
as a group (12 persons)............... 2,570,018 (8) 1.8% 14,517,483 99.9%
</TABLE>
- ------
*Less than 1% of Class.
(1) Based on information furnished by the beneficial owners listed.
(2) Includes 35,260 shares of Common Stock held by Mr. Abramson and two other
individuals, as trustees of a trust for the benefit of Mr. Abramson's
grandchildren, 1,771,543 shares of Common Stock held by Madlyn K. Abramson,
Mr. Abramson's wife, as trustee for three trusts for the benefit of their
three children, and 685 shares of Common Stock held by Mrs. Abramson in her
own right; Mr. Abramson disclaims beneficial ownership of these shares.
Also includes options to purchase 60,000 shares of Common Stock that are
currently exercisable or will become exercisable by May 14, 1995.
<PAGE> 9
(3) Includes options to purchase 39,000 shares of Common Stock that are
currently exercisable or will become exercisable by May 14, 1995. Mr.
Weglicki has been a general partner of ABS Capital Partners, L.P., a
merchant banking fund affiliated with Alex. Brown & Sons Incorporated, an
investment banking and brokerage firm, since January 1994, and has been a
Managing Director of Alex. Brown & Sons Incorporated since 1984. Alex.
Brown & Sons Incorporated is a market maker in the Common Stock of the
Company, and in the ordinary course of business buys and sells the Common
Stock of the Company. Mr. Weglicki disclaims beneficial ownership of any
shares of Common Stock of the Company held by Alex. Brown & Sons
Incorporated in connection with its market making activities.
(4) Includes 151 shares of Common Stock held under the U.S. Healthcare, Inc.
Savings Plan (the "Savings Plan"). Also includes options to purchase
16,200 shares of Common Stock that are currently exercisable or will become
exercisable by May 14, 1995.
(5) Includes 5,573 shares of Common Stock held under the Savings Plan. Also
includes options to purchase 18,000 shares of Common Stock that are
currently exercisable or will become exercisable by May 14, 1995.
(6) Includes 9,000 shares of Common Stock held by the Company under a
Restricted Stock Agreement (as described below) and 14,407 shares of Common
Stock held under the Savings Plan. Also includes options to purchase 7,500
shares of Common Stock that are currently exercisable or will become
exercisable by May 14, 1995, 60 shares of Common Stock held in a custodial
account for the benefit of Mr. Nolan's niece and 55 shares of Common Stock
held in a custodial account for the benefit of Mr. Nolan's godchild. Under
a Restricted Stock Agreement between the Company and an officer, the
Company issues Common Stock in the name of the officer, which is placed in
the custody of the Company's Treasurer. The shares are generally released
from custody in annual installments, as specified in the Agreement,
provided the officer remains in the employ of the Company, or upon the
officer's death or permanent disability. The officer is entitled to vote
the shares registered in his or her name and receive dividends, but has no
investment power with respect to any shares held in custody until they are
released.
<PAGE> 10
(7) Includes 12,000 shares of Common Stock held by the Company under a
Restricted Stock Agreement (as described above) and 36 shares of Common
Stock held under the Savings Plan. Also includes options to purchase 3,000
shares of Common Stock that are currently exercisable or will become
exercisable by May 14, 1995.
(8) Includes options to purchase 164,138 shares of Common Stock that are
currently exercisable or will become exercisable by May 14, 1995. Also
includes 52,500 shares of Common Stock held by the Company subject to
Restricted Stock Agreements and 20,756 shares of Common Stock held under
the Savings Plan.
By reason of the multiple voting rights of the Class B Stock, Mr. Abramson,
principal executive officer and a Director of the Company, is entitled to cast
approximately 83.2% of the votes that all shareholders are entitled to cast
and, therefore, has the ability to exercise voting control of the Company in
matters where the holders of Common Stock and Class B Stock vote together as
one class.
<PAGE> 11
EXECUTIVE COMPENSATION
SUMMARY COMPENSATION TABLE
The following table summarizes the compensation paid by the Company to the
Company's principal executive officer and the four other most highly
compensated executive officers for each of the last three fiscal years.
<TABLE>
<CAPTION>
ANNUAL COMPENSATION
-------------------------------------------
OTHER
FISCAL ANNUAL
NAME AND POSITION YEAR SALARY (1) BONUS (2) COMPENSATION ($)
- ----------------- ----- ---------- --------- ----------------
<S> <C> <C> <C> <C>
Leonard Abramson 1994 $1,817,407 $1,635,000 None
Principal executive officer 1993 1,751,814 1,459,395 None
1992 1,841,004 1,064,395 None
Costas C. Nicolaides 1994 484,592 324,000 None
Principal financial officer 1993 440,413 270,000 None
1992 405,571 200,000 None
Michael J. Cardillo 1994 484,788 300,000 None
Principal marketing officer 1993 440,629 225,000 None
1992 405,831 200,000 None
Timothy E. Nolan 1994 292,291 270,000 None
Senior marketing officer 1993 248,624 270,000 None
1992 232,474 205,620 None
Joseph T. Sebastianelli (6) 1994 313,906 255,000 None
Principal medical administrative
officer
</TABLE>
<TABLE>
<CAPTION>
LONG-TERM COMPENSATION
---------------------------------------
AWARDS PAYOUTS
------------------------- ---------
RESTRICTED SECURITIES
STOCK UNDERLYING LTIP ALL OTHER
NAME AND POSITION AWARDS ($) OPTIONS (#) PAYOUTS ($) COMPENSATION (3)(4)
- ----------------- ---------- ----------- ----------- -------------------
<S> <C> <C> <C> <C>
Leonard Abramson None None None $421,581 (5)
Principal executive officer None 150,000 None 310,836
None None None 338,687
Costas C. Nicolaides None None None 20,096
Principal financial officer None 45,000 None 29,270
None None None 28,642
Michael J. Cardillo None None None 20,096
Principal marketing officer None 40,500 None 29,270
None None None 28,642
Timothy E. Nolan None None None 20,096
Senior marketing officer None 37,500 None 29,270
None None None 28,642
Joseph T. Sebastianelli (6) 635,000 (7) 15,000 None 3,000
Principal medical administrative
officer
</TABLE>
<PAGE> 12
(1) Includes deferred compensation that accrues annually at a designated
percentage of each executive officer's annual base salary, which is payable
upon termination of employment. The designated percentage of deferred
compensation for Mr. Abramson for 1992, 1993, and 1994 was 11.78%, and the
designated percentage of deferred compensation for the other executive
officers for 1992, 1993, and 1994 was 8%. The deferred compensation amount
accrued is increased each year by an amount corresponding to interest,
based upon the Company's average yield on its investments, on the prior
year's accumulated balance. Deferred compensation plus accrued interest
earned by each executive officer for 1992, 1993, and 1994, respectively,
were as follows: Mr. Abramson, $262,044, $251,814, and $261,157; Mr.
Nicolaides, $37,302, $40,413, and $44,592; Mr. Cardillo, $37,562, $40,629,
and $44,788; Mr. Nolan, $22,282, $23,624, and $27,291; and Mr.
Sebastianelli, $0, $0, and $23,252.
The amount reported in this column also includes the portion of salary that
each executive officer contributed to the Savings Plan. Participants in
the Savings Plan may contribute a percentage of their cash compensation,
subject to certain limitations set forth in the Savings Plan. Employee
contributions to the Savings Plan for each executive officer for 1992,
1993, and 1994, respectively, were as follows: Mr. Abramson, none; Mr.
Nicolaides, $1,357, $730, and $9,240; Mr. Cardillo, $1,357, $730, and
$9,240; Mr. Nolan, $1,356, $730, and $9,240; and Mr. Sebastianelli, $0, $0,
and $9,240.
(2) In the case of Mr. Abramson only, the bonus amount for 1992 and 1993 also
includes a contract renewal bonus of $64,395 per year payable pursuant to
the employment agreement which terminated on December 31, 1992.
(3) Includes contributions made by the Company to the Pension Plan for
Employees of U.S. Healthcare, Inc. (the "Pension Plan") and to the Savings
Plan. The Company contributed to the Pension Plan for each executive
officer (other than Mr. Sebastianelli) $28,190, $29,027, and $17,096 for
1992, 1993 and 1994, respectively. Mr. Sebastianelli did not receive any
contributions. Under the Pension Plan, the Company contributes for each
eligible employee an amount equal to 8% of the employee's compensation
plus 5.7% of the employee's compensation in excess of the social security
taxable wage base, subject to a maximum limitation on the Company
contribution per employee as specified in the Pension Plan. The Pension
Plan provides for payment of an employee's account balance either in a
lump sum or under an annuity option specified in the Pension Plan, as
selected by the employee.
<PAGE> 13
The amount reported in this column also includes Company contributions
under the Savings Plan in an amount equal to one-third of the participating
employee's contribution, up to 2% of the employee's annual compensation.
The Company's contributions to the Savings Plan for each executive officer
for 1992, 1993, and 1994, respectively, were as follows: Mr. Abramson,
none; Mr. Nicolaides, $452, $243, and $3,000; Mr. Cardillo, $452, $243,
and $3,000; Mr. Nolan, $452, $243, and $3,000; and Mr. Sebastianelli, $0,
$0, and $3,000.
(4) Pursuant to agreements between the Company and two trusts created by
Leonard Abramson, the trusts have purchased three split-dollar life
insurance policies on Mr. Abramson's life and one split-dollar life
insurance policy on the joint lives of Mr. Abramson and his wife, Madlyn
K. Abramson. Under these agreements, the Company pays the premium on each
policy, minus a sum equal to the lesser of the applicable one-year term
premium cost computed under Internal Revenue Service Revenue Ruling 55-747
or the cost of comparable one-year term life insurance in the amount of
each policy. The trusts are the beneficiaries of the insurance policies.
However, the Company has been granted a security interest in the death
benefits of each policy equal to the sum of all premium payments made by
the Company. These arrangements are designed so that if the assumptions
made as to mortality experience, policy dividends and other factors are
realized, the Company, upon Mr. Abramson's death or the surrender of the
policies, will recover all of its insurance premium payments (which do not
include certain amounts paid annually to Mr. Abramson, as described below).
The premiums paid by the Company in 1992, 1993, and 1994 pursuant to these
arrangements were $408,146, $405,267, and $405,177, respectively. The
amounts in this column do not include such premium payments. However, the
amounts in this column include the present value of the imputed interest on
such premium payments, such interest calculated based upon Mr. Abramson's
remaining life expectancy, and totaled $288,327, $256,760, and $282,346 in
1992, 1993, and 1994, respectively.
<PAGE> 14
Pursuant to the split-dollar arrangement described above, Mr. Abramson
receives each year an amount equal to the portion of the annual premiums
due and payable on the life insurance policies which are not paid by the
Company pursuant to the above-described formula, but paid by Mr. Abramson.
The amounts reported in this column include such amounts, which totaled
$22,170, $25,049 and $25,139 in 1992, 1993, and 1994, respectively.
(5) Includes payment by the Company of $50,000 for travel expenses and $47,000
for 1992 and 1993 tax return preparation fees.
(6) No information is reported for 1992 and 1993 because Mr. Sebastianelli was
not an employee of the Company prior to 1994.
(7) The value of the restricted stock grant reflected in this column is
determined by multiplying the total number of shares awarded by the closing
price of Common Stock on The NASDAQ Stock Market on the date of grant.
Mr. Sebastianelli was awarded 15,000 shares of the Company's Common Stock.
The Company did not grant any stock appreciation rights (SARs) to any
executive officer during the three fiscal years covered by the Summary
Compensation Table.
<PAGE> 15
OPTION/SAR GRANTS IN FISCAL YEAR 1994
No stock options were granted to the Company's principal executive officer
or any of the four other most highly compensated executive officers during the
last fiscal year, except as described in the following table. No SARs were
granted during the last fiscal year.
<TABLE>
<CAPTION>
INDIVIDUAL GRANTS
- ------------------------------------------------------------------------------------------------------
NUMBER OF % OF TOTAL
SECURITIES OPTIONS/SARS
UNDERLYING GRANTED TO EXERCISE
OPTIONS/SARS EMPLOYEES IN OR BASE GRANT DATE
NAME GRANTED (#)(1) LAST FISCAL YEAR PRICE ($/SH) EXPIRATION DATE PRESENT VALUE (2)
- --------------------- ---------------- ---------------- ------------ --------------- -----------------
<S> <C> <C> <C> <C> <C>
Joseph T. Sebastianelli 15,000 3.4 $41.04 February 18, 2004 $327,600
</TABLE>
(1) The options reflected in the table become exercisable in five equal
annual installments commencing on February 18, 1995. The exercise
price of the options is 100% of the fair market value of the Company's
Common Stock as of the date of grant.
(2) The dollar amount set forth under this heading is the result of
calculations based on requirements promulgated by the Securities and
Exchange Commission and is not intended to reflect the Company's
estimate or projection of possible future stock prices. The dollar
amount was calculated for all options using the binomial option
pricing model with the following assumptions: (a) 42.2% volatility,
(b) 6.38% risk-free rate of return, (c) 2% annual dividend yield and
(d) all options exercised at the end of their term.
<PAGE> 16
AGGREGATED OPTION/SAR EXERCISES IN FISCAL YEAR 1994 AND FISCAL YEAR-END OPTION
VALUES
The following table summarizes the stock options exercised by the Company's
principal executive officer and the four other most highly compensated
executive officers during the last fiscal year and the fiscal year-end number
and value of unexercised stock options held by such executive officers. No SARs
had been granted as of the end of the last fiscal year.
<TABLE>
<CAPTION>
NUMBER OF
SECURITIES VALUE OF
UNDERLYING UNEXERCISED
UNEXERCISED IN-THE-MONEY
OPTIONS/SARS AT OPTIONS/SARS AT
FISCAL YEAR END (#) FISCAL YEAR END ($)(2)
SHARES ------------------- ----------------------
ACQUIRED VALUE (EXERCISABLE (E) / (EXERCISABLE (E) /
NAME ON EXERCISE(#) REALIZED ($)(1) UNEXERCISABLE (U)) UNEXERCISABLE (U))
- ----------------- -------------- --------------- ------------------- ----------------------
<S> <C> <C> <C> <C>
Leonard Abramson 0 0 30,000 (E) $371,897 (E)
120,000 (U) 1,487,586 (U)
Costas C. Nicolaides 0 0 9,000 (E) 114,300 (E)
36,000 (U) 457,200 (U)
Michael J. Cardillo 0 0 8,100 (E) 102,870 (E)
32,400 (U) 411,480 (U)
Timothy E. Nolan 7,500 $63,375 30,000 (U) 381,000 (U)
Joseph T. Sebastianelli 0 0 15,000 (U) 3,150 (U)
</TABLE>
- ------
(1) Based on the difference between the closing price of the Company's Common
Stock on The NASDAQ Stock Market on the date of exercise and the exercise
price of the options.
(2) Based on the difference between the closing price of the Company's Common
Stock on The NASDAQ Stock Market at year end 1994 and the exercise price of
the options.
<PAGE> 17
EMPLOYMENT CONTRACTS AND TERMINATION OF EMPLOYMENT ARRANGEMENTS
Each of the five most highly compensated officers of the Company
(including the Company's principal executive officer) has entered into an
employment agreement with the Company for a term of five years commencing on
January 1, 1993 (except that the employment term for Mr. Sebastianelli
commenced on March 1, 1994). These agreements (other than Mr. Sebastianelli's
agreement) will be extended automatically for another five-year term unless
terminated by either party prior to the expiration of the initial five- year
term. After the first ten years (and, in the case of Mr. Sebastianelli, the
first five years) of employment under their respective employment agreements,
the terms of Messrs. Cardillo, Nolan and Sebastianelli's employment agreements
will be extended automatically for one-year terms, unless terminated by either
the executive officer or the Company prior to the expiration of the employment
term then in effect. Mr. Abramson is entitled to receive the following
compensation for his services in 1995: (i) an annual base salary of $1,602,938,
(ii) an annual bonus based upon the Company's performance and (iii) non-cash
compensation and fringe benefits (including insurance against accidental injury
or death of Mr. Abramson or his spouse). Mr. Nicolaides, Mr. Cardillo, Mr.
Nolan, and Mr. Sebastianelli are entitled to receive in 1995 annual base
salaries of $465,000, $465,000, $350,000, and $350,000, respectively, and an
annual bonus and such additional compensation as may be determined by the
Compensation Committee of the Board of Directors.
Each of these employment agreements provides for a severance payment
if the officer's employment is terminated by the Company without cause,
provided that the officer complies with certain confidentiality and
non-competition obligations. In such event, each of these executive officers
is entitled to receive his then-current base salary for the balance of his
employment term (but not less than one year's base salary), except that Mr.
Sebastianelli will be paid an amount equal to his then-current base salary for
two years if such termination occurs within the first two years of employment
or his then-current base salary for one year if such termination occurs
thereafter. Under their respective employment agreements, Mr. Abramson and
Mr. Nicolaides are also entitled to receive the pro rata portion of other
cash compensation (based upon the other cash compensation they would have
received had the agreement not been terminated).
The Company and Marshall V. Rozzi (former principal medical
administrative officer of the Company) entered into an agreement pursuant to
which Mr. Rozzi resigned as an employee of the Company effective as of April 1,
1995. In accordance with that agreement, (i) Mr. Rozzi is to be paid an
aggregate amount of $500,000, in bi-weekly installments over a twelve-month
period commencing on April 1, 1995, and all of his employee benefits that
accrued or vested through the effective date of his resignation; and (ii) the
vesting date for the portion of the Company's stock options granted to Mr.
Rozzi on September 22, 1993 which would have vested on May 2, 1995 was changed
to April 1, 1995.
<PAGE> 18
REPORT OF THE COMPENSATION COMMITTEE OF THE BOARD OF DIRECTORS
ON EXECUTIVE COMPENSATION FOR THE FISCAL YEAR ENDED DECEMBER 31, 1994
Membership of the Committee
The compensation of the Company's executive officers is determined by
the Compensation Committee of the Board of Directors (the "Committee"), which
is comprised of the undersigned non-employee directors who have no interlocking
relationships with the Company. The members of the Committee also serve as the
members of the Incentive Plan Committee of the Board of Directors.
Objectives of the Committee
The Committee bases its determinations upon the Company's financial
performance as well as the personal contribution, leadership, experience, and
performance of each individual. The Committee also considers performance
measures such as market share, efficiency gains, corporate reputation, quality
improvements and the Company's relationships with customers, providers and
employees. Each executive officer's contribution to the enhancement of the
Company's corporate culture and values is also evaluated. The Committee also
seeks to set compensation at levels believed to be sufficient to retain the
services of the Company's executive officers.
A fundamental goal of the Committee is to link the financial interests
of the Company's executive officers with those of the Company's shareholders.
In addition to being reflected in other compensation determinations, stock
options are granted to provide incentives that focus attention on the
enhancement of shareholder value and to align the interests of executive
officers with those of the Company's shareholders. In reviewing individual
performance and determining the salary and bonuses of executive officers other
than Leonard Abramson, the Company's principal executive officer ("CEO"), the
Committee relies upon the recommendations of Mr. Abramson. In addition to base
salary, bonus and stock options, executive officers receive certain employee
benefits including deferred compensation, paid insurance coverages and pension
plan contributions.
<PAGE> 19
The Committee also considers the impact of the deduction limitation
under Section 162(m) of the Internal Revenue Code and, in the case of
outstanding performance, may set compensation levels that exceed the deduction
limitation. The Committee believes that any stock options granted under the
Company's Incentive Plan currently meet the requirement of being
performance-based under the provisions of Section 162(m), and also takes this
into account in its determinations.
Chief Executive Officer Compensation
Over the last five years, the Company has achieved significant
increases in revenue, net income, enrollment and total shareholder value under
the leadership of its current CEO. These increases were considered in the
Committee's compensation determinations.
Effective January 1, 1993, the Company and its CEO, Mr. Abramson,
entered into a performance-based employment agreement for a term of five years.
This agreement will renew for a second five-year term unless either party gives
prior notice of non-renewal. Under this agreement, Mr. Abramson received a
base salary for 1993 of $1,500,000, which was increased to $1,556,250 in 1994
and to $1,602,938 in 1995 to reflect cost of living increases. In addition,
the agreement provides for an annual performance-based incentive bonus
determined by the sum of two components. The first component is equal to 0.5%
of the amount by which the net income of the Company exceeds the amount equal
to 10% of the Company's shareholders' equity at the beginning of the year for
which the performance bonus is being determined. The second component is equal
to the lower of (a) $10,000 for each percentage point in excess of five by
which the Company's revenues from continuing operations increased over the
prior year and (b) the first component. Mr. Abramson's incentive bonus for
1994 was $1,635,000.
On September 22, 1993, the members of the Committee, as the Incentive
Plan Committee, granted Mr. Abramson options to purchase 150,000 shares of the
Company's Common Stock exercisable in five equal annual installments beginning
on May 2, 1994. The exercise price is equal to 110% of the fair market value
on the date of grant for the incentive stock options (15,915 shares) and 100%
of such market value for the non-qualified stock options (134,085 shares).
This grant and any future grants complement Mr. Abramson's performance-based
employment agreement and further the Committee's desire to provide incentives
for Mr. Abramson to continue to increase total shareholder return.
<PAGE> 20
The Committee believes Mr. Abramson's performance-based compensation
arrangements are beneficial to the Company for numerous reasons. Under his
effective leadership, the Company has achieved outstanding corporate financial
performance (including increases in enrollment, revenue and net income) as well
as total shareholder return (increased market value and dividends). Mr.
Abramson has also established an exceptional record in customer service,
technology use and innovation, quality of care, government relations,
management efficiency, and development of a strong management team. The
Committee recognized that the Company received outstanding results in quality
evaluations conducted by the National Committee for Quality Assurance; that
the Company was rated as having one of the best corporate reputations in
survey results published in March, 1995 by Fortune magazine; and that the
Company was ranked in February, 1995 by Business Week magazine as one of
ten "Go-Go Goliaths" - large companies which have achieved outstanding sales,
profits and market value results through an entrepreneurial environment, cost
controls and customer responsiveness. The arrangements also recognize
Mr. Abramson's exemplary service to the Company since its inception and
Mr. Abramson's stature in both the community and the health care industry
while offering incentives for his continued leadership, vision and performance.
Compensation of Executive Officers other than the CEO
The 1994 base salaries of the Company's executive officers other than
Mr. Abramson ranged from $265,000 to $440,000, which, in the judgment of the
CEO and the Committee, reflect each person's performance, experience and
responsibilities within the Company. The 1994 year-end incentive bonuses for
these officers as recommended by the CEO and endorsed by the Committee ranged
from $150,000 to $324,000. In the case of Mr. Nicolaides, his annual bonus was
calculated based on a percentage of the Company's 1994 net income and annual
growth in revenue. The remaining executive officers participated in an
executive bonus pool, which was based on the Company's 1994 net income in
comparison to the amount budgeted for 1994. Each executive officer
participating in this pool received an allocation based on the Company's 1994
net income and membership (in comparison to the 1994 budgeted amounts), the
respective responsibilities of each officer, and each officer's individual
performance. The analysis of an executive officer's performance is in part
subjective and does not lend itself to formulas.
<PAGE> 21
Summary
As described above, the Committee's policies and actions link CEO and
other executive officer compensation to corporate financial performance, total
shareholder return, individual achievement and other relevant considerations.
In 1994, a significant portion of the compensation of the Company's executive
officers consisted of performance-based variable components. The Committee
intends to continue its policy of linking a substantial portion of executive
officer compensation to corporate financial performance, total return to
shareholders (including growth of share price and dividends over time), and the
other criteria described in this report.
Signed and respectfully submitted
this 31st day of March, 1995.
JEROME S. GOODMAN
ALLEN MISHER, Ph.D.
<PAGE> 22
STOCK PERFORMANCE GRAPH
The following stock performance graph, prepared by Value Line, Inc.
from its own data, compares the performance of the Company's Common Stock to
the S&P Composite 500 Stock Index and a peer group selected by Value Line, Inc.
for the past five fiscal years. The graph assumes an investment of $100 in
each of the Company's Common Stock, the S&P Composite 500 Stock Index and the
peer group at the close of trading on the last trading day preceding the first
day of the fifth preceding fiscal year and reinvestment of all dividends.
[GRAPHIC]
<TABLE>
<CAPTION>
1989 1990 1991 1992 1993 1994
<S> <C> <C> <C> <C> <C> <C>
USHC o $100.00 $215.73 $462.04 $765.48 $999.87 $1,092.47
S & P 500 + $100.00 $96.83 $126.41 $136.25 $150.00 $151.97
Peer Group* $100.00 $112.73 $178.67 $203.60 $239.42 $266.57
</TABLE>
The peer group selected by Value Line, Inc. and used for the above graph is
the Value Line Medical Services Industry Group, which consists of U.S.
Healthcare, Inc., Beverly Enterprises, Inc., Columbia/HCA Healthcare
Corporation, Community Psychiatric Centers, Inc., FHP International Corporation,
Manor Care, Inc., National Health Laboratories Incorporated, National Medical
Enterprises, Inc., NovaCare, Inc., Omnicare, Inc., PacifiCare Health Systems,
Inc. (Class A Stock), Rotech Medical Corporation, Surgical Care Affiliates,
Inc., Shared Medical Systems Corporation, and United HealthCare Corporation.
Medical Care America, Inc., T(2) Medical, Inc., and Tokos Medical Corporation
were included in the peer group used in the Company's proxy statement dated
April 22, 1994, but they were not included by Value Line, Inc. in the peer
group utilized for the above graph because they were deleted by Value Line,
Inc. from its Medical Services Industry Group.
<PAGE> 23
ELECTION OF DIRECTORS
NOMINEES FOR ELECTION
At the Meeting, the shareholders will elect two Class I directors to hold
office until the Annual Meeting of Shareholders in 1998 and until their
successors are duly elected and qualified and one Class II director to hold
office until the Annual Meeting of Shareholders in 1997 and until her successor
is duly elected and qualified. The Company's Board of Directors is divided into
three classes serving staggered three-year terms, the term of one class of
directors to expire each year. The term of the Class I directors expires at the
Meeting. The nominees of the Board of Directors for election as Class I
directors are Messrs. Leonard Abramson and Jerome S. Goodman, who are currently
Class I directors. The nominee of the Board of Directors for election as a
Class II director is Betsy Z. Cohen, who is currently a Class II director. Ms.
Cohen was elected as a Class II director by the Company's Board of Directors on
December 8, 1994, to fill a vacancy created on the Board of Directors and to
serve until the Meeting and until her successor is duly elected and qualified.
In accordance with the Company's Articles of Incorporation, one of the
Class I directors is to be elected by the holders of the Common Stock and Class
B Stock, voting together as a single class, and the other Class I director is
to be elected solely by the holders of the Common Stock. Mr. Abramson has been
designated by the Board of Directors as the Class I director to be elected by
the holders of the Common Stock and Class B Stock, and his election will
require the affirmative vote of a majority of the votes which the holders of
Common Stock and Class B Stock present at the Meeting in person or by proxy are
entitled to cast, voting together as a single class. Mr. Goodman has been
designated by the Board of Directors as the Class I director to be elected
solely by the holders of the Common Stock, and his election will require the
affirmative vote of a majority of the votes which the holders of Common Stock
present at the Meeting in person or by proxy are entitled to cast. In
accordance with the Company's Articles of Incorporation, Class II directors are
to be elected by the shareholders of the Common Stock and Class B Stock, voting
together as a single class. Ms. Cohen's election will require the affirmative
vote of a majority of the votes which the holders of Common Stock and Class B
Stock present at the Meeting in person or by proxy are entitled to cast, voting
together as a single class. Unless contrary instructions are given, the shares
represented by the enclosed proxy will be voted "FOR" the election of Messrs.
Abramson and Goodman and Ms. Cohen. The Board of Directors believes that the
nominees are willing to serve as directors. If any nominee at the time of
election is unable or unwilling to serve or is otherwise unavailable for
election and, as a result, another nominee is designated, the persons named in
the enclosed proxy or their substitutes will have discretion and authority to
vote for or to refrain from voting for the other nominee in accordance with
their judgment. The nominees for election as directors and the directors
whose terms of office continue after the Meeting, together with certain
information about them, are as follows:
<PAGE> 24
<TABLE>
<CAPTION>
Director Term Expires
Name Age Since (Class) Position(s) with the Company
- --------------- --- -------- ------------ ----------------------------
<S> <C> <C> <C> <C>
Leonard Abramson(1)(2) . . . . . . 62 1982 1995(I) Principal executive officer
and Director
Betsy Z. Cohen . . . . . . . . . . 53 1994 1995(II) Director (5)
Jerome S. Goodman(3)(4) . . . . . . 60 1988 1995(I) Director
Allen Misher, Ph.D.(1)(2)(3)(4) . . 62 1985 1997(II) Director
David B. Soll, M.D . . . . . . . . 64 1982 1996(III) Director
Timothy T. Weglicki(3) . . . . . . 43 1990 1996(III) Director
</TABLE>
- ---------------
(1) Member of the Company's Stock Option Committee.
(2) Member of the Company's Executive Committee.
(3) Member of the Company's Audit Committee.
(4) Member of the Company's Compensation Committee and Incentive Plan
Committee.
(5) Ms. Cohen was elected to fill a vacancy on the Board of Directors and to
serve until the Meeting and until her successor is duly elected and
qualified.
PRINCIPAL OCCUPATIONS AND DIRECTORSHIPS HELD BY THE
NOMINEES FOR DIRECTORS AND DIRECTORS OF THE COMPANY
Mr. Abramson has been the principal executive officer and a Director of the
Company since 1982.
Ms. Cohen has been Chairperson, Chief Executive Officer, and a Director of
State Bancshares, Inc. since 1981. From 1985 until 1993, Ms. Cohen was
Director of First Union Corp. of Virginia and its predecessor, Dominion
Bankshares, Inc. Ms. Cohen has also been a Director of Life Technologies, Inc.
since 1992.
Mr. Goodman has been Chairman of Cherry Hill Travel, Inc. d/b/a Travel One
since 1971, and was the sole stockholder of Travel One from 1971 to 1994. He
has been a Director of GBC Technologies, Inc. since 1992. From 1987
until 1992, Mr. Goodman was also Chairman, President and Chief Executive
Officer of First Peoples Financial Corporation.
<PAGE> 25
Dr. Misher has been President Emeritus of the Philadelphia College of
Pharmacy and Science since February 1995 and was President of the Philadelphia
College of Pharmacy and Science from 1984 to 1994. He has been a Director of
U.S. Bioscience, Inc. since 1988, a Director of Marsam Pharmaceuticals, Inc.
since 1991 and a Director of Cortech, Inc. since 1994.
Dr. Soll is a practicing ophthalmologist and has been Director of the
Division of Ophthalmology, Cooper Hospital/University Medical Center and
Clinical Professor of Surgery (Ophthalmology), University of Medicine and
Dentistry of New Jersey/Robert Wood Johnson Medical School at Camden, New
Jersey since 1988. Dr. Soll has been Director of the Ophthalmology Service at
Frankford Hospital and the Philadelphia Geriatric Center since 1965, and from
1968 to the present, he has been Director of the Ophthalmology Service at
Medical College Hospitals, Elkins Park Campus.
Mr. Weglicki has been a general partner of ABS Capital Partners, L.P., a
merchant banking fund affiliated with Alex. Brown & Sons Incorporated, an
investment banking and brokerage firm, since January 1994, and has been a
Managing Director of Alex. Brown & Sons Incorporated since 1984.
MEETINGS AND COMMITTEES OF THE BOARD OF DIRECTORS
The Company has an Audit Committee, a Compensation Committee, an Incentive
Plan Committee, a Stock Option Committee and an Executive Committee, but does
not have a Nominating Committee.
The Audit Committee, which held two meetings in 1994, consists of Dr.
Misher and Messrs. Goodman and Weglicki. The functions of the Audit Committee
generally include the following: reviewing with the Company's independent
auditors the scope and results of their engagement; reviewing the scope and
results of the Company's internal audit function; and reviewing the adequacy of
the Company's systems of internal accounting controls.
<PAGE> 26
The Compensation Committee, which held one meeting in 1994, consists of Mr.
Goodman and Dr. Misher. The function of the Compensation Committee is to review
and approve the compensation of the Company's executive officers.
The Incentive Plan Committee, which held no meetings in 1994, consists of
Mr. Goodman and Dr. Misher. The functions of the Incentive Plan Committee are
to grant stock options and restricted stock awards pursuant to the Company's
Incentive Plan and to serve as the administrative committee of the Company's
Incentive Plan.
The Stock Option Committee, which held no meetings in 1994, consists of
Messrs. Abramson and Nicolaides and Dr. Misher. The function of the Stock
Option Committee is to grant stock options pursuant to the Company's
non-statutory stock option plan, special non-statutory stock option plan and
1993 Physician Stock Option Plan (pursuant to which stock options may be
granted to participating physicians under contract with the Company's HMOs).
The Executive Committee is empowered to exercise all of the powers of the
Board of Directors between meetings of the Board, except for certain powers
reserved by law or the Company's bylaws to the Board or the shareholders. The
members of the Executive Committee are Mr. Abramson and Dr. Misher. The
Executive Committee did not hold any meetings in 1994.
The Board of Directors held four meetings in 1994. Each Director attended
at least 75% of the aggregate number of meetings of the Board of Directors and
committees on which the Director served.
COMPENSATION OF DIRECTORS
For 1994, the Company paid an annual fee of $10,000 to each non-management
director and $1,000 for each Board or committee meeting attended. For 1994,
Ms. Cohen received $1,000, Mr. Goodman received $13,000, Dr. Misher received
$17,000, Dr. Soll received $14,000 and Mr. Weglicki received $16,000.
<PAGE> 27
CERTAIN TRANSACTIONS
During 1994, the medical practice of Dr. Soll, a Director of the Company,
received fees of $555,855 from the Company or its subsidiaries for medical
services rendered to members of the Company's HMOs.
During 1994, the Company paid $2,408,993 to vendors of travel and lodging
services for business related travel by employees arranged through Cherry Hill
Travel, Inc. d/b/a Travel One, a travel agency. Mr. Goodman, a Director of the
Company, is the Chairman of Cherry Hill Travel, Inc.
The Company paid $267,000 in salary and bonus for services rendered in 1994
by Nancy A. Wolfson, an employee who directs the health education department of
the Company. Ms. Wolfson is a daughter of Mr. Abramson.
The Company paid $300,000 in salary and bonus for services rendered in 1994
by Richard A. Wolfson, an employee who directs the pharmacy and dental
operations of the Company. Mr. Wolfson is a son-in-law of Mr. Abramson.
On January 6, 1994, the Company contributed $510,000 and Marcy A.
Shoemaker (a daugther of Mr. Abramson) contributed $490,000 to form Criterion
Communications, Inc. ("Criterion"), a Delaware corporation engaged in
corporate communications business. The Company owns 51%, and Ms. Shoemaker
49%, of the outstanding voting securities of Criterion. The Company has made
available to Criterion a line of credit for up to $10,000,000. In 1994,
Criterion borrowed $2,007,889 under the line of credit. The Company has also
entered into a service agreement with Criterion pursuant to which Criterion is
obligated to pay for certain administrative services and facilities provided
by the Company for Criterion. Criterion paid the Company $108,400 for
services and facilities provided in 1994. In addition, the Company is the
guarantor of Criterion's obligations under a lease agreement for Criterion's
office space. Criterion has also entered into a service agreement with the
Company pursuant to which the Company is obligated to pay for certain services
provided or arranged by Criterion for the Company. The Company paid Criterion
$5,150,102 for services provided in 1994. Marcy A. Shoemaker was paid $310,000
in salary and bonus as an officer of Criterion.
<PAGE> 28
RELATIONSHIP WITH INDEPENDENT AUDITORS
The Company has selected the firm of Ernst & Young LLP to serve as its
independent auditors for fiscal year 1995. Representatives of Ernst & Young
LLP are expected to be present at the Meeting, will have the opportunity to
make a statement if they so desire and are expected to be available to respond
to appropriate questions.
SHAREHOLDER PROPOSALS
Proposals of shareholders intended to be presented at the Annual Meeting of
Shareholders in 1996 must be received by the Secretary of the Company at the
Company's principal office in Blue Bell, Pennsylvania, prior to December 29,
1995 in order to be considered for inclusion in the Company's proxy statement
and form of proxy relating to that meeting. Proposals must be in writing and
sent via registered, certified or express mail. Facsimile or other forms of
electronic submissions will not be accepted.
SOLICITATION OF PROXIES
The accompanying form of proxy is being solicited on behalf of the Board of
Directors of the Company. The expense of solicitation of proxies for the
Meeting will be paid by the Company. In addition to the mailing of the proxy
material, such solicitation may be made in person or by telephone or telegraph
by directors, officers or regular employees of the Company or its subsidiaries.
<PAGE> 29
ANNUAL REPORT ON FORM 10-K
THE COMPANY WILL PROVIDE WITHOUT CHARGE TO EACH PERSON SOLICITED BY THIS PROXY
STATEMENT, ON THE WRITTEN REQUEST OF ANY SUCH PERSON, A COPY OF THE COMPANY'S
ANNUAL REPORT ON FORM 10-K (INCLUDING THE FINANCIAL STATEMENTS AND THE
SCHEDULES THERETO, BUT EXCLUDING EXHIBITS) AS FILED WITH THE SECURITIES AND
EXCHANGE COMMISSION FOR ITS MOST RECENT FISCAL YEAR. SUCH WRITTEN REQUEST
SHOULD BE DIRECTED TO INVESTOR RELATIONS AT THE ADDRESS OF THE COMPANY
APPEARING ON THE FIRST PAGE OF THIS PROXY STATEMENT.
By Order of the Board of Directors,
Alan R. Letofsky
Secretary
THE BOARD OF DIRECTORS ENCOURAGES SHAREHOLDERS TO ATTEND THE MEETING IN PERSON.
WHETHER OR NOT YOU PLAN TO ATTEND THE MEETING, YOU ARE URGED TO MARK, SIGN,
DATE AND RETURN THE ENCLOSED PROXY PROMPTLY IN THE ACCOMPANYING ENVELOPE.
SHAREHOLDERS WHO ATTEND THE MEETING MAY VOTE THEIR SHARES PERSONALLY EVEN
THOUGH THEY HAVE SENT THEIR PROXIES.
<PAGE> 30
U.S. HEALTHCARE, INC.
PROXY SOLICITED BY THE BOARD OF DIRECTORS
ANNUAL MEETING OF SHAREHOLDERS MAY 24, 1995
The undersigned shareholder(s) of U.S. HEALTHCARE, INC., a Pennsylvania
corporation (the "Company"), revoking all previous proxies, hereby appoints
Leonard Abramson and Alan R. Letofsky, and each of them acting individually, as
the attorneys and proxies of the undersigned, with full power of substitution,
to cast all votes for all shares of Common Stock of the Company which the
undersigned would be entitled to cast if personally present at the Annual
Meeting of Shareholders of the Company, to be held at U.S. Healthcare, Inc.,
Customer Service Center (Building 2), 1425 Union Meeting Road, Blue Bell,
Pennsylvania 19422 on May 24, 1995, at 10:00 a.m., Eastern Daylight Time, and
any and all adjournments of postponements thereof. Said proxies are authorized
and directed to vote as indicated with respect to the matters on the reverse
side.
This Proxy is solicited on behalf of the Board of Directors. Unless otherwise
specified, the shares will be voted "FOR" the election of the nominees for
Class I directors and the nominee for Class II director. This Proxy also
delegates discretionary authority to vote with respect to any other business
which may properly come before the Annual Meeting of Shareholders and any and
all adjournments or postponements thereof.
(CONTINUED ON REVERSE SIDE)
<PAGE> 31
/X/ Please mark your
votes as in this
example
<TABLE>
<S> <C>
FOR WITHHELD
1. ELECTION OF / / / / NOMINEES: Leonard Abramson 3. To vote on such other business which may
CLASS I and properly come before the Annual Meeting
DIRECTORS Jerome S. Goodman of Shareholders and any and all
(Class I Directors) adjournments or postponements thereof.
(INSTRUCTIONS: To withhold authority to vote for any nominee, strike
a line through the nominee's name above.)
</TABLE>
<TABLE>
<S> <C>
FOR WITHHELD
2. ELECTION OF / / / / NOMINEE: Betsy Z. Cohen
CLASS II (Class II Director)
DIRECTOR
SIGNATURE(S) DATE
------------------------------------------------------------------------------- --------------------------
</TABLE>
NOTE: Please sign this Proxy exactly as the name(s) appear hereon.
When signing as attorney-in-fact, executor, administrator, trustee or guardian,
please add your title as such. Proxies executed in the name of a corporation
should be signed on behalf of the corporation by a duly authorized officer.
Where shares are owned in the name of two or more persons, all such persons
should sign. PLEASE SIGN, DATE AND RETURN IN THE ENCLOSED POSTAGE-PAID
ENVELOPE.
<PAGE> 32
U.S. HEALTHCARE, INC.
PROXY SOLICITED BY THE BOARD OF DIRECTORS
ANNUAL MEETING OF SHAREHOLDERS MAY 24, 1995
The undersigned shareholder(s) of U.S. HEALTHCARE, INC., a Pennsylvania
corporation (the "Company"), revoking all previous proxies, hereby appoints
Leonard Abramson and Alan R. Letofsky, and each of them acting individually, as
the attorneys and proxies of the undersigned, with full power of substitution,
to cast all votes for all shares of Class B Stock of the Company which the
undersigned would be entitled to cast if personally present at the Annual
Meeting of Shareholders of the Company, to be held at U.S. Healthcare, Inc.,
Customer Service Center (Building 2), 1425 Union Meeting Road, Blue Bell,
Pennsylvania 19422 on May 24, 1995, at 10:00 a.m., Eastern Daylight Time, and
any and all adjournments of postponements thereof. Said proxies are authorized
and directed to vote as indicated with respect to the matters on the reverse
side.
This Proxy is solicited on behalf of the Board of Directors. Unless otherwise
specified, the shares will be voted "FOR" the election of the nominee for
Class I director and the nominee for Class II director. This Proxy also
delegates discretionary authority to vote with respect to any other business
which may properly come before the Annual Meeting of Shareholders and any and
all adjournments or postponements thereof.
(CONTINUED ON REVERSE SIDE)
<PAGE> 33
/X/ Please mark your
votes as in this
example
<TABLE>
<S> <C>
FOR WITHHELD
1. ELECTION OF / / / / NOMINEE: Leonard Abramson 3. To vote on such other business which may
CLASS I (Class I Director) properly come before the Annual Meeting
DIRECTOR of Shareholders and any and all
adjournments or postponements thereof.
</TABLE>
<TABLE>
<S> <C>
FOR WITHHELD
2. ELECTION OF / / / / NOMINEE: Betsy Z. Cohen
CLASS II (Class II Director)
DIRECTOR
SIGNATURE(S) DATE
------------------------------------------------------------------------------- --------------------------
</TABLE>
NOTE: Please sign this Proxy exactly as the name(s) appear hereon.
When signing as attorney-in-fact, executor, administrator, trustee or guardian,
please add your title as such. Proxies executed in the name of a corporation
should be signed on behalf of the corporation by a duly authorized officer.
Where shares are owned in the name of two or more persons, all such persons
should sign. PLEASE SIGN, DATE AND RETURN IN THE ENCLOSED POSTAGE-PAID
ENVELOPE.
