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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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SCHEDULE 13D
Under the Securities Exchange Act of 1934
PACIFIC REHABILITATION & SPORTS MEDICINE, INC.
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(Name of Issuer)
Common Stock, par value $.01 per share
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(Title of Class of Securities)
692926
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(CUSIP Number)
Scot Sauder
General Counsel
Horizon/CMS Healthcare Corporation
6001 Indian School Road, N.E., Suite 530
Albuquerque, NM 87110
(505) 881-4961
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(Name, Address and Telephone Number of Person
Authorized to Receive Notices and Communications)
November 9, 1995
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(Date of Event which Requires Filing of this Statement)
If the filing person has previously filed a statement on Schedule 13G to
report the acquisition which is the subject of this Schedule 13D, and is
filing this schedule because of Rule 13d-1(b)(3) or (4), check the following
box. / /
Check the following box if a fee is being paid with this statement. /X/
The information required on the remainder of this cover page shall not
be deemed to be "filed" for the purpose of Section 18 of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), or otherwise subject
to the liabilities of that Section of the Exchange Act but shall be subject
to all other provisions of the Exchange Act.
Ownership percentages set forth herein assume that at November 9, 1995
there were 7,509,551 shares outstanding.
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1 NAME OF REPORTING PERSON . . . . . . . . . . . . HORIZON/CMS HEALTHCARE
CORPORATION
S.S. OR I.R.S. IDENTIFICATION NO.
OF ABOVE PERSON . . . . . . . . . . . . . . . . . . . . . . 91-1346899
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2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (a) / /
(b) / /
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3 SEC USE ONLY
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4 SOURCE OF FUNDS
WC
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5 CHECK IF DISCLOSURE OF LEGAL PROCEEDINGS IS
REQUIRED PURSUANT TO ITEMS 2(d) or 2(e) / /
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6 CITIZENSHIP OR PLACE OF ORGANIZATION
Delaware
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7 SOLE VOTING POWER
NUMBER
OF 1,126,433(1)
SHARES ---------------------------------------------------------------
BENEFICIALLY 8 SHARED VOTING POWER
OWNED
BY 856,565
EACH ---------------------------------------------------------------
REPORTING 9 SOLE DISPOSTIVE POWER
PERSON
WITH: 1,126,433(1)
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10 SHARED DISPOSITIVE POWER
0
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11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
(1) 1,982,998
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12 CHECK IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES
CERTAIN SHARES / /
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13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
26.4%
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14 TYPE OF REPORTING PERSON
CO
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(1) Pursuant to Rule 13d-4 under the Exchange Act, the Reporting Person
disclaims beneficial ownership of the 1,126,433 shares listed under
the headings "Sole Voting Power" and "Sole Dispositive
Power". See Item 5 of this Schedule 13D.
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ITEM 1. SECURITY AND ISSUER.
This Schedule 13D relates to the common stock, par value $.01 per share
("Pacific Rehab Common Stock"), of Pacific Rehabilitation & Sports Medicine,
Inc., a corporation organized under the laws of the State of Delaware
("Pacific Rehab"). The principal executive offices of Pacific Rehab are
located at 8100 NE Parkway, Suite 190, Vancouver, Washington 98662.
ITEM 2. IDENTITY AND BACKGROUND.
This Schedule 13D is being filed by Horizon/CMS Healthcare Corporation, a
corporation organized under the laws of the State of Delaware ("Horizon").
Horizon provides specialty healthcare services and long-term nursing care.
The principal offices of Horizon are located at 6001 Indian School Road,
N.E., Suite 530, Albuquerque, New Mexico 87110.
Other than executive officers and directors, there are no persons or
corporations controlling or ultimately in control of Horizon.
During the last five years, to the best of Horizon's knowledge, neither
Horizon nor any of its executive officers or directors has been convicted in
a criminal proceeding (excluding traffic violations or similar misdemeanors)
or has been a party to a civil proceeding of a judicial or administrative
body of competent jurisdiction as a result of which Horizon or such person
was or is subject to a judgment, decree, or final order enjoining future
violations of, or prohibiting or mandating activities subject to, federal or
state securities laws, or finding any violation with respect to such laws.
Each executive officer and each director of Horizon is a citizen of the
United States. The name, business address and present principal occupation of
each executive officer and director of Horizon are set forth in Exhibit A to
this Schedule 13D and are specifically incorporated herein by reference.
ITEM 3. SOURCE AND AMOUNT OF FUNDS OR OTHER CONSIDERATION.
The exercise of an irrevocable option (the "Stock Option") held by
Horizon pursuant to a Stock Option Agreement, dated as of November 9, 1995
(the "Stock Option Agreement"), by and among Horizon and Pacific Rehab, for
the full number of shares of Pacific Rehab Common Stock currently covered
thereby would require a maximum aggregate of funds of $8,729,856 or issuance
of Horizon Common Stock having a market value equal to $8,729,856 (determined
by dividing the product of $8,729,856 and 1,126,433 by the average daily
closing price for Horizon Common Stock on the New York Stock Exchange
("NYSE") for the ten NYSE trading days prior to the fifth NYSE trading day
preceding the determination date). It is anticipated that should the Stock
Option become exercisable and should Horizon decide to exercise the Stock
Option, Horizon would obtain the funds necessary for the purchase from
working capital, which may include borrowings under its current revolving
credit facility.
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ITEM 4. PURPOSE OF TRANSACTION.
Pursuant to the Stock Option Agreement, Horizon has the right to
purchase up to 1,126,433 shares of Pacific Rehab Common Stock (15% of the
number of shares outstanding on November 9, 1995), subject to certain
adjustments, at a price, subject to certain adjustments, of $7.75 per share.
The Stock Option was granted by Pacific Rehab as a condition of and in
consideration for Horizon's entering into the Agreement and Plan of Merger,
dated as of November 9, 1995 (the "Merger Agreement"), by and among Horizon,
Horizon PRSM Corporation, a corporation organized under the laws of the State
of Delaware and a wholly owned subsidiary of Horizon ("Merger Sub") and
Pacific Rehab.
Simultaneously with the execution of the Stock Option Agreement,
Horizon, Merger Sub and Pacific Rehab entered into the Merger Agreement,
pursuant to which Merger Sub would merge with and into Pacific Rehab (the
"Merger"). Pursuant to the Merger Agreement, each share of Pacific Rehab
Common Stock issued and outstanding immediately prior to the effective time
of the Merger (the "Effective Time") will be converted into .3483 shares of
common stock, par value $.001 per share ("Horizon Common Stock"), of Horizon,
(the "Pacific Rehab Common Stock Exchange Ratio"). Notwithstanding the
foregoing, if between November 9, 1995 and the Effective Time the outstanding
shares of Horizon Common Stock or Pacific Rehab Common Stock have been
changed into a different number of shares or a different class, by reason of
any stock dividend, subdivision, reclassification, recapitalization, split,
combination or exchange of shares, the Pacific Rehab Common Stock Exchange
Ratio will be correspondingly adjusted to reflect such stock dividend,
subdivision, reclassification, recapitalization, split, combination or
exchange of shares. Pursuant to the Merger Agreement, the Pacific Rehab
management will continue to serve as such subsequent to the Merger and the
Pacific Rehab board of directors shall be replaced by the board of directors
of Merger Sub, currently consisting of three directors of Horizon.
Consummation of the transactions contemplated by the Merger Agreement is
subject to the terms and conditions contained in the Merger Agreement,
including the receipt of approval of the Merger Agreement and the
transactions contemplated thereby by the stockholders of Pacific Rehab, the
receipt of certain regulatory approvals, the receipt of legal opinions that
the Merger will be tax-free and accountants' confirmation that the Merger
will be accounted for as a pooling of interests. The Merger Agreement and the
transactions contemplated thereby will be submitted for approval at a special
meeting of the stockholders of Pacific Rehab called for such purpose.
Pursuant to a Voting Agreement, dated as of November 9, 1995 (the
"Voting Agreement"), between Horizon and certain stockholders of Pacific
Rehab holding in the aggregate 856,565 shares of Pacific Rehab Common Stock
(11.4% of the number of shares outstanding on March 31, 1995), including Dr.
Brian Bussanich, formerly Chairman of the Board and Chief Executive Officer
and currently a director of Pacific Rehab, John A. Elorriaga, currently
Chairman of the Board and Chief Executive Officer of Pac Rehab, and Frank
Jungers, a Director of Pacific Rehab (collectively, the "Stockholders"), the
Stockholders have, among other things, agreed to vote all Pacific Rehab
Common Stock beneficially owned by them in favor of the Merger and (subject
to their agreement, if requested by Horizon, not (i) to attend, or vote any
Pacific Rehab Common Stock beneficially owned by them at, any annual or
special meeting of stockholders or (ii) to execute any written consent of
stockholders) against any combination proposal or other matter that may
interfere or be inconsistent with the Merger.
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Except as set forth herein, Horizon presently does not have any plans or
proposals that relate to or would result in any of the actions specified in
clauses (a) through (j) of Item 4 of Schedule 13D.
Each of the Stock Option Agreement, the Merger Agreement and
the Voting Agreement are included as Exhibits B, C and D, respectively, and
each is specifically incorporated by reference herein.
ITEM 5. INTEREST IN SECURITIES OF ISSUER.
Although the Stock Option Agreement does not allow Horizon to purchase
any shares of Pacific Rehab Common Stock pursuant thereto unless the
specified conditions allowing exercise occur, assuming for purposes of this
Item 5 that such conditions occur and Horizon is entitled to purchase shares
of Pacific Rehab Common Stock pursuant to the Stock Option, Horizon would own
1,126,433 shares of Pacific Rehab Common Stock, which is 15% of the number of
shares outstanding on November 9, 1995, or approximately 13% of the total
number of shares of Pacific Rehab Common Stock outstanding as adjusted to
reflect the issuance to Horizon of such 1,126,433 shares pursuant to its
exercise of the Stock Option.
Under the Stock Option Agreement, Horizon currently does not have the
right to acquire any shares of Pacific Rehab Common Stock unless specific
events occur. Accordingly, Horizon does not have sole or shared voting or
dispositive power with respect to any shares of Pacific Rehab Common Stock,
and Horizon therefore disclaims beneficial ownership of the Pacific Rehab
Common Stock subject to the Stock Option until the events allowing exercise
occur. Assuming for purposes of this Item 5, however, that events occur that
would enable Horizon to exercise the Pacific Rehab Option, Horizon would have
the right to purchase up to 1,126,433 shares, subject to adjustment as
described above, of Pacific Rehab Common Stock, as to which it would have
sole voting power and sole dispositive power.
Under the Voting Agreement, the Stockholders, as described above in Item
4, have agreed to vote all Pacific Rehab Common Stock beneficially owned by
them in favor of the Merger and (subject to their agreement, if requested by
Horizon, not (i) to attend, or vote any Pacific Rehab Common Stock
beneficially owned by them at, any annual or special meeting of stockholders
or (ii) to execute any written consent of stockholders) against any
combination proposal or other matter that may interfere or be inconsistent
with the Merger. Consequently Horizon shares voting, but not dispositive,
power as to such 856,565 shares of Pacific Rehab Common Stock.
No other person is known by Horizon to have the right to receive
or the power to direct the receipt of dividends from, or the proceeds from
the sale of, the securities covered by this Schedule 13D.
ITEM 6. CONTRACTS, ARRANGEMENTS, UNDERSTANDINGS OR RELATIONSHIPS WITH
RESPECT TO SECURITIES OF THE ISSUER.
Contracts, arrangements, understandings or relationships with respect to
securities of Pacific Rehab consist of the Stock Option Agreement, the Merger
Agreement and the Voting Agreement. The aforementioned documents are attached
hereto as Exhibits B, C and D, respectively, and are specifically
incorporated herein by reference. See also description of the aforementioned
documents in Items 3 and 4 above.
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ITEM 7. MATERIAL TO BE FILED AS EXHIBITS.
The following Exhibits are filed as part of this Schedule 13D:
Exhibit A -- Name, Business Address, and Present Principal Occupation of
Each Executive Officer and Director of Horizon.
Exhibit B -- Stock Option Agreement, dated as of November 9, 1995, by
and among Horizon and Pacific Rehab.
Exhibit C -- Agreement and Plan of Merger, dated as of November 9, 1995,
by and among Horizon, Merger Sub and Pacific Rehab.
Exhibit D -- Voting Agreement, dated as of November 9, 1995, between
Horizon and certain stockholders of Pacific Rehab named
therein.
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SIGNATURE
After reasonable inquiry and to the best of my knowledge and belief, I
certify that the information set forth in this statement is true, complete
and correct.
Date: November 20, 1995 HORIZON/CMS HEALTHCARE CORPORATION
By: /s/ ERNEST A. SCHOFIELD
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Name: Ernest A. Schofield
Title: Senior Vice President
and Chief Financial
Officer
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EXHIBIT INDEX
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SEQUENTIAL
EXHIBIT DESCRIPTION PAGE NUMBER
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A Name, Business Address, and Present Principal
Occupation of Each Executive Officer and Director
of Horizon/CMS Healthcare Corporation.
B Stock Option Agreement, dated as of November 9, 1995,
by and among Horizon/CMS Healthcare Corporation and
Pacific Rehabilitation & Sports Medicine, Inc.
(incorporated by reference to Exhibit 2.2 to Horizon/CMS
Healthcare Corporation's Current Report on Form 8-K dated
November 9, 1995).
C Agreement and Plan of Merger, dated as of March 31,
1995, by and among Horizon/CMS Healthcare Corporation,
Horizon PRSM Corporation and Pacific Rehabilitation &
Sports Medicine, Inc. (incorporated by reference to
Exhibit 2.1 to Horizon/CMS Healthcare Corporation's
Current Report on Form 8-K dated November 9, 1995).
D Voting Agreement, dated as of November 9, 1995,
between Horizon/CMS Healthcare Corporation and certain
stockholders of Pacific Rehabilitation & Sports Medicine,
Inc. named therein (incorporated by reference to
Exhibit 2.3 to Horizon/CMS Healthcare Corporation's
Current Report on Form 8-K dated November 9, 1995).
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EXHIBIT A
NAME, BUSINESS ADDRESS AND PRESENT PRINCIPAL OCCUPATION OF
EACH EXECUTIVE OFFICER AND DIRECTOR OF HORIZON
I. EXECUTIVE OFFICERS OF HORIZON
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PRESENT PRINCIPAL
NAME BUSINESS ADDRESS OCCUPATION
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Neal M. Elliott 6001 Indian School Road, Chairman of the Board,
N.E., Suite 530 President, Chief Executive
Albuquerque, NM 87110 Officer and Director
Klemett L. Belt, Jr. 6001 Indian School Road, Executive Vice
N.E., Suite 530 President and Director
Albuquerque, NM 87110
Robert A. Ortenzio 600 Wilson Lane, Executive Vice President
Mechanicsburg, PA 17055 and Director
Michael A. Jeffries 6001 Indian School Road, Senior Vice President,
N.E., Suite 530 Operations and
Albuquerque, NM 87110 Director
Charles H. Gonzales 6001 Indian School Road, Senior Vice President,
N.E., Suite 530 Subsidiary Operations
Albuquerque, NM 87110 and Director
Ernest A. Schofield 6001 Indian School Road, Senior Vice President
N.E., Suite 530 and Chief Financial
Albuquerque, NM 87110 Officer
Scot Sauder 6001 Indian School Road, Vice President of
N.E., Suite 530 Legal Affairs, Secretary
Albuquerque, NM 87110 and General Counsel
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II. NON-EMPLOYEE DIRECTORS OF HORIZON
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PRESENT PRINCIPAL
NAME BUSINESS ADDRESS OCCUPATION
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Gerard M. Martin 600 Centre Street Consultant
Newton, MA 02158
Frank M. McCord 2828 Colby Avenue Chairman, Cascade
Everett, WA 98201 Savings Bank
Raymond N. Noveck 460 Totten Pond Road President, Strategic
Waltham, MA 02158 Systems, Inc.
Barry M. Portnoy One Post Office Square Attorney-at-Law,
Boston, MA 02109 Sullivan & Worcester
Russell L. Carson 1 World Financial Center Partner, Welsh, Carson,
Suite 3601 Anderson & Stawe
200 Liberty St.
New York, NY 10211
Rocco A. Ortenzio 600 Wilson Lane Consultant
Mechanicsburg, PA 17055
LeRoy Zimmerman One South Market Square Attorney-at-Law,
Building Eckert, Seamans, Cherin
213 Market Street & Mellott
Harrisburg, PA 17108
Bryan C. Gressey 6100 Sears Tower Partner, Golder, Thoma,
Chicago, IL 60606-6402 Cressey, Rauner, Inc.
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