SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 13E-4
ISSUER TENDER OFFER STATEMENT
(PURSUANT TO SECTION 13(e)(1) OF THE SECURITIES EXCHANGE ACT OF
1934)
(Amendment No. ___)
U.S. PHYSICAL THERAPY, INC.
(Name of Issuer)
U.S. PHYSICAL THERAPY, INC.
(Name of Person(s) Filing Statement)
COMMON STOCK
(Title of Class of Securities)
90337L-10-8
(CUSIP Number of Class of Securities)
J. MICHAEL MULLIN
CHIEF FINANCIAL OFFICER
U.S. PHYSICAL THERAPY, INC.
3040 POST OAK BLVD., SUITE 222
HOUSTON, TEXAS 77056
(713) 297-7000
(Name, Address and Telephone Number of Person Authorized to
Receive Notices
and Communications on Behalf of the Person(s) Filing Statement)
With a Copy to:
GEORGE P. BARSNESS, ESQ.
JOSEPH G. CONNOLLY, JR., ESQ.
HOGAN & HARTSON L.L.P.
555 13TH STREET, N.W.
WASHINGTON, D.C. 20007
(202) 637-5600
April 9, 1999
(Date Tender Offer First Published, Sent or Given to Security
Holders)
CALCULATION OF FILING FEE
TRANSACTION VALUATION* AMOUNT OF FILING FEE
$3,460,000 $692
* Calculated solely for the purpose of determining the filing
fee, based upon the purchase of 346,000 shares at the maximum
tender offer price per share of $10.00.
Check box if any part of the fee is offset as provided by Rule 0-
11(a)(2) and identify the filing with which the offsetting fee
was previously paid. Identify the previous filing by registration
statement number, or the form or schedule and the date of its
filing.
Amount Previously Paid: N/A Filing Party: N/A
Form or Registration No.: N/A Date Filed: N/A
ITEM 1. SECURITY AND ISSUER.
(a) The issuer of the securities to which this Schedule
13E-4 relates is U.S. Physical Therapy, Inc., a Nevada
corporation (the "Company"), and the address of its principal
executive office is 3040 Post Oak Blvd., Suite 222, Houston,
Texas 77056.
(b) This Schedule 13E-4 relates to the offer by the
Company to purchase 346,000 shares (or such lesser number of
shares as are properly tendered) of its common stock, par value
$.01 per share (the "Common Stock"), of which 3,621,609 shares
were outstanding as of April 8, 1999, at a price not in excess
of $10.00 nor less than $8.50 per share in cash upon the terms
and subject to the conditions set forth in the Offer to
Purchase, dated April 9, 1999 (the "Offer to Purchase"), and in
the related Letter of Transmittal, which together constitute
the "Offer," copies of which are attached as Exhibits (a)(1)
and (a)(2), respectively, and incorporated herein by reference.
Executive officers and directors of the Company may participate
in the Offer on the same basis as the Company's other
stockholders. The Company has been advised that none of its
directors and executive officers intend to tender shares of
Common Stock pursuant to the Offer. The information set forth
in "Introduction," "The Offer--Section 1, Number of Shares;
Proration" and "The Offer--Section 11, Interests of Directors
and Officers; Transactions and Arrangements Concerning Shares"
of the Offer to Purchase is incorporated herein by reference.
(c) The information set forth in "The Offer--Section 8,
Price Range of Shares; Dividends" of the Offer to Purchase is
incorporated herein by reference.
(d) Not applicable.
ITEM 2. SOURCE AND AMOUNT OF FUNDS OR OTHER CONSIDERATION.
(a) The information set forth in "The Offer--Section 9,
Source and Amount of Funds" of the Offer to Purchase is
incorporated herein by reference.
(b) Not applicable.
ITEM 3. PURPOSE OF THE TENDER OFFER AND PLANS OR PROPOSALS OF
THE ISSUER OR AFFILIATE.
(a)-(j) The information set forth in "Introduction" and
"The Offer--Section 9, Source and Amount of Funds," "The Offer-
-Section 2, Purpose of the Offer; Certain Effects of the
Offer," "The Offer--Section 11, Interests of Directors and
Officers; Transactions and Arrangements Concerning Shares" and
"The Offer--Section 12, Effects of the Offer on the Market for
Shares; Registration Under the Exchange Act" of the Offer to
Purchase is incorporated herein by reference.
ITEM 4. INTEREST IN SECURITIES OF THE ISSUER.
The information set forth in "The Offer--Section 11,
Interests of Directors and Officers; Transactions and
Arrangements Concerning Shares" of the Offer to Purchase is
incorporated herein by reference.
ITEM 5. CONTRACTS, ARRANGEMENTS, UNDERSTANDINGS OR RELATIONSHIPS
WITH RESPECT TO THE ISSUER'S SECURITIES.
The information set forth in "Introduction" and "The Offer--
Section 9, Source and Amount of Funds," "The Offer--Section 2,
Purpose of the Offer; Certain Effects of the Offer" and "The
Offer--Section 11, Interests of Directors and Officers;
Transactions and Arrangements Concerning Shares" of the Offer to
Purchase is incorporated herein by reference.
ITEM 6. PERSONS RETAINED, EMPLOYED, OR TO BE COMPENSATED.
The information set forth in "Introduction" and "The Offer--
Section 16, Fees and Expenses" of the Offer to Purchase is
incorporated herein by reference.
ITEM 7. FINANCIAL INFORMATION.
(a)-(b) The information set forth in "The Offer--Section
10, Certain Information Concerning the Company" of the Offer to
Purchase, and the information set forth on pages 32 through 55
of the Company's Form 10-K for the fiscal year ended December
31, 1998, filed as Exhibit (g) hereto, is incorporated herein
by reference.
ITEM 8. ADDITIONAL INFORMATION.
(a) Not applicable.
(b) The information set forth in "The Offer--Section 13,
Certain Legal Matters; Regulatory Approvals" of the Offer to
Purchase is incorporated herein by reference.
(c) The information set forth in "The Offer--Section 12,
Effects of the Offer on the Market for Shares; Registration Under
the Exchange Act" of the Offer to Purchase is incorporated herein
by reference.
(d) Not applicable.
(e) The information set forth in the Offer to Purchase and
Letter of Transmittal is incorporated herein by reference.
ITEM 9. MATERIAL TO BE FILED AS EXHIBITS.
(a) (1) Form of Offer to Purchase, dated April 9, 1999.
(2) Form of Letter of Transmittal (including
Certification of Taxpayer Identification Number on Form W-9).
(3) Form of Notice of Guaranteed Delivery.
(4) Form of Letter to Brokers, Dealers, Commercial
Banks, Trust Companies and Other Nominees.
(5) Form of Letter to Clients for Use by Brokers,
Dealers, Commercial Banks, Trust Companies and Other Nominees.
(6) Text of Press Release issued by the Company, dated
April 8, 1999.
(7) Form of Letter to Stockholders of the Company,
dated April 9, 1999, from J. Livingston Kosberg, Chairman of
the Company.
(b) Not applicable.
(c) Not applicable.
(d) Not applicable.
(e) Not applicable.
(f) Not applicable.
(g) Pages 32 through 55 of the Company's Form 10-K for
the fiscal year ended December 31, 1998.
SIGNATURE
After due inquiry and to the best of my knowledge and
belief, I certify that the information set forth in this Schedule
13E-4 is true, complete and correct.
U.S. PHYSICAL THERAPY, INC.
By:/s/ J. Michael Mullin
Name: J. Michael Mullin
Title: Chief Financial Officer
Dated: April 9, 1999
EXHIBIT INDEX
Exhibit No. Description
(a)(1) Form of Offer to Purchase, dated April 9, 1999.
(a)(2) Form of Letter of Transmittal (including
Certification of Taxpayer Identification Number on
Form W-9).
(a)(3) Form of Notice of Guaranteed Delivery.
(a)(4) Form of Letter to Brokers, Dealers, Commercial
Banks, Trust Companies and Other Nominees.
(a)(5) Form of Letter to Clients for Use by Brokers,
Dealers, Commercial Banks, Trust Companies and
Other Nominees.
(a)(6) Text of Press Release issued by the Company, dated
April 8, 1999.
(a)(7) Form of Letter to Stockholders of the Company,
dated April 9, 1999, from J. Livingston Kosberg,
Chairman of the Company.
(b) Not applicable.
(c) Not applicable.
(d) Not applicable.
(e) Not applicable.
(f) Not applicable.
(g) Pages 32 through 55 of the Company's Form 10-K for
the fiscal year ended December 31, 1998.
EXHIBIT (a)(1)
U.S. PHYSICAL THERAPY, INC.
OFFER TO PURCHASE FOR CASH UP TO 346,000 SHARES
OF ITS COMMON STOCK AT A PURCHASE PRICE
NOT IN EXCESS OF $10.00 NOR LESS THAN $8.50 PER SHARE
THE OFFER, PRORATION PERIOD AND WITHDRAWAL RIGHTS EXPIRE
AT 5:00 P.M., NEW YORK CITY TIME, ON FRIDAY, MAY 7, 1999,
UNLESS THE OFFER IS EXTENDED.
U.S. Physical Therapy, Inc., a Nevada corporation (the
"Company"), hereby invites its stockholders to tender shares of
its common stock, $.01 par value per share (the "Common Stock"),
to the Company at a price not in excess of $10.00 nor less than
$8.50 per share in cash, as specified by stockholders tendering
their shares of Common Stock, upon the terms and subject to the
conditions set forth herein and in the related Letter of
Transmittal, which together constitute the "Offer." The Company
will determine the single per share price, not in excess of
$10.00 nor less than $8.50 per share, net to the seller in cash
(the "Purchase Price"), that it will pay for shares of Common
Stock properly tendered pursuant to the Offer, taking into
account the number of shares of Common Stock so tendered and the
prices specified by tendering stockholders. The Company will
select the lowest Purchase Price that will allow it to buy
346,000 shares of Common Stock (or such lesser number of shares
as are properly tendered). All shares of Common Stock properly
tendered at prices at or below the Purchase Price and not
withdrawn will be purchased at the Purchase Price, subject to the
terms and the conditions of the Offer, including the proration
and conditional tender provisions. All shares of Common Stock
purchased in the Offer will be purchased at the Purchase Price.
The Company reserves the right, in its sole discretion, to
purchase more than 346,000 shares of Common Stock pursuant to the
Offer. See Sections 1 and 15.
THE OFFER IS NOT CONDITIONED ON ANY MINIMUM NUMBER OF SHARES OF
COMMON STOCK BEING TENDERED. THE OFFER IS, HOWEVER, SUBJECT TO
CERTAIN OTHER CONDITIONS. SEE SECTION 7.
NEITHER THE COMPANY NOR ITS BOARD OF DIRECTORS MAKES ANY
RECOMMENDATION TO ANY STOCKHOLDER AS TO WHETHER TO TENDER OR
REFRAIN FROM TENDERING SHARES. EACH STOCKHOLDER MUST MAKE THE
DECISION WHETHER TO TENDER SHARES AND, IF SO, HOW MANY SHARES TO
TENDER AND THE PRICE OR PRICES AT WHICH SHARES SHOULD BE
TENDERED. THE COMPANY HAS BEEN ADVISED THAT NONE OF ITS
DIRECTORS AND EXECUTIVE OFFICERS INTEND TO TENDER SHARES PURSUANT
TO THE OFFER.
The shares of Common Stock of the Company are listed and
traded on the Nasdaq Stock Market Inc. ("Nasdaq") National Market
("National Market") under the symbol "USPH." As of April 5,
1999, the last reported sale price of the Common Stock, as
reported on the Nasdaq National Market, was $7.50 per share.
STOCKHOLDERS ARE URGED TO OBTAIN CURRENT MARKET QUOTATIONS FOR
THE COMMON STOCK. SEE SECTION 8.
IMPORTANT STOCKHOLDER INFORMATION
Any stockholder wishing to tender all or any of his or her
shares of Common Stock should either (a) complete and sign a
Letter of Transmittal (or a facsimile thereof) in accordance with
the instructions in the Letter of Transmittal and either mail or
deliver it with any required signature guarantee and any other
required documents to Continental Stock Transfer & Trust Company
(the "Depositary"), and either mail or deliver the stock
certificates for such shares to the Depositary (with all such
other documents) or tender such shares pursuant to the procedure
for book-entry tender set forth in Section 3, or (b) request a
broker, dealer, commercial bank, trust company or other nominee
to effect the transaction for such stockholder. Holders of
shares of Common Stock registered in the name of a broker,
dealer, commercial bank, trust company or other nominee should
contact such person if they desire to tender their shares. Any
stockholder who desires to tender shares of Common Stock and
whose certificates for such shares cannot be delivered to the
Depositary or who cannot comply with the procedure for book-entry
transfer or whose other required documents cannot be delivered to
the Depositary, in any case, by the expiration of the Offer must
tender such shares pursuant to the guaranteed delivery procedure
set forth in Section 3.
To properly tender shares, stockholders (other than certain
Odd Lot Holders (as defined below)) must complete the section of
the Letter of Transmittal, including the price at which they are
tendering shares.
Questions and requests for assistance or for additional
copies of this Offer to Purchase, the Letter of Transmittal or
the Notice of Guaranteed Delivery may be directed to Dorothy
Flato, Corporate Secretary, U.S. Physical Therapy, Inc., 3040
Post Oak Blvd., Suite 222, Houston, Texas 77056 (telephone: (713)
297-7000).
THE COMPANY HAS NOT AUTHORIZED ANY PERSON TO MAKE ANY
RECOMMENDATION ON BEHALF OF THE COMPANY AS TO WHETHER YOU SHOULD
TENDER OR REFRAIN FROM TENDERING SHARES PURSUANT TO THE OFFER.
THE COMPANY HAS NOT AUTHORIZED ANY PERSON TO GIVE YOU ANY
INFORMATION OR TO MAKE ANY REPRESENTATION IN CONNECTION WITH THE
OFFER OTHER THAN THOSE CONTAINED HEREIN OR IN THE RELATED LETTER
OF TRANSMITTAL. IF GIVEN OR MADE, YOU MUST NOT RELY ON ANY SUCH
RECOMMENDATION OR ANY SUCH INFORMATION OR REPRESENTATION AS
HAVING BEEN AUTHORIZED BY THE COMPANY.
TABLE OF CONTENTS
SECTION PAGE
SUMMARY. 4
INTRODUCTION 6
THE OFFER. 8
1. Number of Shares; Proration 8
2. Purpose of the Offer; Certain Effects of the Offer. 11
3. Procedures for Tendering Shares 13
4. Withdrawal Rights 16
5. Purchase of Shares and Payment of Purchase Price. 17
6. Conditional Tender of Shares. 18
7. Certain Conditions of the Offer 19
8. Price Range of Shares; Dividends. 21
9. Source and Amount of Funds. 21
10. Certain Information Concerning the Company. 22
11. Interests of Directors and Officers; Transactions and
Arrangements
Concerning Shares 25
12. Effects of the Offer on the Market for Shares; Registration
Under
the Exchange Act. 26
13. Certain Legal Matters; Regulatory Approvals 26
14. Certain Federal Income Tax Consequences 27
15. Extension of Offer; Termination; Amendment. 31
16. Fees and Expenses 32
17. Miscellaneous 32
SUMMARY
This general summary is solely for the convenience of the
Company's stockholders and is qualified in its entirety by
reference to the full text and more specific details in this
Offer to Purchase.
Number of Shares to be Purchased 346,000 shares of Common
Stock (or such lesser
number of shares as are
properly tendered). See
Section 1.
Purchase Price The Company will select a
single Purchase Price which
will be not more than
$10.00 nor less than $8.50
per share. All shares
purchased by the Company
will be purchased at the
Purchase Price even if
tendered at or below the
Purchase Price. Each
stockholder (other than
certain Odd Lot Holders)
desiring to tender shares
must specify in the Letter
of Transmittal the minimum
price (not more than $10.00
nor less than $8.50 per
share) at which such
stockholder is willing to
have his or her shares
purchased by the Company.
A stockholder can specify
different minimum prices
for different shares held
by that stockholder. See
Section 1.
Expiration and Proration Dates Friday, May 7, 1999, at
5:00 p.m., New York City
time, unless extended by
the Company.
Payment Date As soon as practicable
after the expiration of the
Offer. It is expected that
the Payment Date will be
approximately seven to ten
business days after
expiration of the Offer.
Withdrawal Rights Tendered shares may be
withdrawn at any time until
5:00 p.m., New York City
time, on Friday, May 7,
1999, unless the Offer is
extended by the Company,
and, unless previously
purchased, after 5:00 p.m.,
New York City time, on
Monday, June 7, 1999. See
Section 3.
How to Tender Shares Section 3 sets forth the
procedure for tendering
shares of Common Stock. A
stockholder may also
consult with a broker for
assistance.
Brokerage Commission and Tendering stockholders will
Stock Transfer Tax not be obligated to pay brokerage
fees or commissions, or,
except as set forth in
Instruction 7 to the Letter
of Transmittal, transfer
taxes on the sale of shares
pursuant to the Offer. A
tendering stockholder who
holds securities with such
stockholder's broker may be
required by such broker to
pay a service charge or
other fee.
Position of the Company Neither the Company nor its
and its Directors Board of Directors makes
any recommendation to any
stockholder as to whether
to tender or refrain from
tendering shares. The
Company has been advised
that none of its directors
and executive officers
intend to tender shares of
Common Stock pursuant to
the Offer.
Odd Lots There will be no proration
of shares tendered by any
stockholder owning 99 or
fewer shares of Common
Stock who tenders all such
shares at or below the
Purchase Price prior to the
Proration Date and who
checks the "Odd Lots" box
in the Letter of
Transmittal. See Section
1.
Federal Income Tax Consequences Generally, the receipt of
cash pursuant to the Offer
will be subject to federal
income tax. See Section 14.
INTRODUCTION
U.S. Physical Therapy, Inc. (the "Company") invites its
stockholders to tender shares of Common Stock, at a price not in
excess of $10.00 nor less than $8.50 per share, as specified by
stockholders tendering their shares, upon the terms and subject
to the conditions set forth herein and in the related Letter of
Transmittal, which together constitute the "Offer." The Company
will determine the single per share price, not in excess of
$10.00 nor less than $8.50 per share, in cash (the "Purchase
Price"), that it will pay for shares of Common Stock properly
tendered pursuant to the Offer, taking into account the number of
shares so tendered and the prices specified by tendering
stockholders. The Company will select the lowest Purchase Price
that will allow it to buy an aggregate of 346,000 shares of
Common Stock (or such lesser number of shares as are properly
tendered). All shares of Common Stock acquired in the Offer will
be acquired at the Purchase Price. Shares of Common Stock
tendered at prices in excess of the Purchase Price and shares not
purchased because of proration or conditional tender will be
returned. The Company reserves the right, in its sole
discretion, to purchase more than 346,000 shares of Common Stock
pursuant to the Offer. See Section 15.
THIS OFFER IS NOT CONDITIONED UPON THE TENDER OF ANY MINIMUM
NUMBER OF SHARES OF COMMON STOCK. THE OFFER IS, HOWEVER, SUBJECT
TO CERTAIN OTHER CONDITIONS. SEE SECTION 7.
THE BOARD OF DIRECTORS OF THE COMPANY HAS APPROVED THE MAKING OF
THE OFFER. HOWEVER, NEITHER THE COMPANY NOR ITS BOARD OF
DIRECTORS MAKES ANY RECOMMENDATION TO STOCKHOLDERS AS TO WHETHER
TO TENDER OR REFRAIN FROM TENDERING THEIR SHARES.
EACH STOCKHOLDER MUST MAKE THE DECISION WHETHER TO TENDER SHARES
AND, IF SO, HOW MANY SHARES AND AT WHAT PRICE OR PRICES SHARES
SHOULD BE TENDERED. THE COMPANY HAS BEEN ADVISED THAT NONE OF ITS
DIRECTORS AND EXECUTIVE OFFICERS INTEND TO TENDER SHARES OF
COMMON STOCK PURSUANT TO THE OFFER.
Upon the terms and subject to the conditions of the Offer,
if, at the expiration of the Offer more than 346,000 shares of
Common Stock are properly tendered at or below the Purchase Price
and not withdrawn, the Company will buy shares first from all Odd
Lot Holders (as defined below) who properly tender all such
shares at or below the Purchase Price and then, subject to
procedures for conditional tenders described in Section 1, on a
pro rata basis from all other stockholders who properly tender at
prices at or below the Purchase Price (and do not withdraw them
prior to the expiration of the Offer). See Section 1. All
shares of Common Stock not purchased pursuant to the Offer,
including shares tendered at prices greater than the Purchase
Price and not withdrawn and shares not purchased because of
proration or conditional tenders, will be returned at the
Company's expense to the stockholders who tendered such shares or
to other persons at their direction.
The Purchase Price will be paid to the tendering stockholder
in cash for all shares of Common Stock purchased. Tendering
stockholders will not be obligated to pay brokerage fees or
commissions or, except as set forth in Instruction 7 to the
Letter of Transmittal, transfer taxes on the sale of shares
pursuant to the Offer. A tendering stockholder who holds
securities with such stockholder's broker may be required by such
broker to pay a service charge or other fee. A tendering
stockholder will be subject to federal income tax on the receipt
of cash for shares of Common Stock purchased by the Company
pursuant to the Offer. In addition, any tendering stockholder or
other payee who fails to complete, sign and return to the
Depositary the substitute form W-9 that is included with the
Letter of Transmittal may be subject to required backup federal
income tax withholding of 31% of the gross proceeds payable to
such stockholder or other payee pursuant to the offer, and
certain non-U.S. stockholders may be subject to a 30% income tax
withholding. See Section 14. The Company will pay all fees and
expenses of the Depositary incurred in connection with the Offer.
See Section 16.
During the period January 1, 1997 through April 8, 1999, the
Company has repurchased 4,900 shares in open market transactions.
Consistent with this strategy, on March 31, 1999, the Company's
Board of Directors authorized officers of the Company to consider
the advisability of the Offer and on April 8, 1999, the Company's
Board of Directors approved the Offer. The Offer is being made
because the Company's Board of Directors determined that the
Offer constitutes a prudent use of the Company's financial
resources, given the Company's business profile, assets and
current market price.
The Company's Board of Directors also believes that the
Company's financial condition and outlook and current market
conditions, including recent trading prices of the Company's
Common Stock, make this an attractive time to repurchase a
portion of the outstanding shares. Accordingly, the Offer is
consistent with the Company's long term corporate goal of
increasing stockholder value. After the Offer is completed, the
Company believes that its financial condition, access to capital
and outlook for continued favorable cash flow generation will
allow it to continue to reinvest in its business, including the
ongoing expansion of the number of clinics in operation.
The Offer provides stockholders who are considering a sale
of all or a portion of their shares the opportunity to determine
the price or prices, not in excess of $10.00 nor less than $8.50
per share, at which they are willing to sell their shares of
Common Stock and, if any such shares are purchased pursuant to
the Offer, to sell those shares for cash without the usual
transaction costs associated with open market sales. In
addition, the Offer may give stockholders the opportunity to sell
at prices greater than market prices prevailing prior to
announcement of the Offer.
As of April 8, 1999, the Company had issued and outstanding
3,621,609 shares of Common Stock. The 346,000 shares of Common
Stock that the Company is offering to purchase pursuant to the
Offer represent approximately 9.6% of the outstanding shares.
The Common Stock is listed and traded on the Nasdaq National
Market under the symbol "USPH." As of April 5, 1999, the last
reported sale price of the Common Stock, as reported on the
Nasdaq National Market, was $7.50 per share. STOCKHOLDERS ARE
URGED TO OBTAIN CURRENT MARKET QUOTATIONS FOR THE COMMON STOCK.
See Section 8.
THE OFFER
1. NUMBER OF SHARES; PRORATION.
Upon the terms and subject to the conditions of the Offer,
the Company will purchase 346,000 shares of Common Stock or such
lesser number of shares as are properly tendered (and not
withdrawn in accordance with Section 4) prior to the Expiration
Date (as defined below) at prices (determined in the manner set
forth below) not in excess of $10.00 nor less than $8.50 per
share in cash. The term "Expiration Date" means 5:00 p.m., New
York City time, on Friday, May 7, 1999, unless and until the
Company, in its sole discretion, shall have extended the period
of time during which the Offer will remain open, in which event
the term "Expiration Date" shall refer to the latest time and
date at which the Offer, as so extended by the Company, shall
expire. See Section 15 for a description of the Company's right
to extend, delay, terminate or amend the Offer. The Company
reserves the right to purchase more than 346,000 shares pursuant
to the Offer. In accordance with applicable regulations of the
Securities and Exchange Commission (the "Commission"), the
Company may purchase pursuant to the Offer an additional amount
of shares not to exceed 2% of the outstanding shares without
amending or extending the Offer. See Section 15. If (i) the
Company increases or decreases the price to be paid for shares,
the Company increases the number of shares being sought and such
increase in the number of shares being sought exceeds 2% of the
outstanding shares, or the Company decreases the number of shares
being sought and (ii) the Offer is scheduled to expire at any
time earlier than the expiration of a period ending on the tenth
business day from, and including, the date that notice of such
increase or decrease is first published, sent or given in the
manner specified in Section 15, the Offer will be extended until
the expiration of such period of ten business days. For purposes
of the Offer, a "business day" means any day other than a
Saturday, Sunday or federal holiday and consists of the time
period from 12:01 a.m. through 12:00 midnight, Eastern time. In
the event of an over-subscription of the Offer as described
below, shares tendered at or below the Purchase Price prior to
the Expiration Date will be subject to proration and conditional
tender provisions, except for Odd Lots as explained below. The
proration period also expires on the Expiration Date.
The Company will select the lowest Purchase Price that will
allow it to buy 346,000 shares of Common Stock (or such lesser
number of shares of Common Stock as are properly tendered at or
below the Purchase Price) taking into account the number of
shares to be tendered and the prices specified by tendering
stockholders. All shares of Common Stock properly tendered at
prices at or below the Purchase Price and not withdrawn will be
purchased at the Purchase Price, subject to the terms and the
conditions of the Offer, including the proration and conditional
tender provisions. All shares purchased in the Offer will be
purchased at the Purchase Price.
THE OFFER IS NOT CONDITIONED UPON THE TENDER OF ANY MINIMUM
NUMBER OF SHARES, BUT IS SUBJECT TO CERTAIN OTHER CONDITIONS.
SEE SECTION 7.
In accordance with Instruction 5 of the Letter of
Transmittal, stockholders (other than certain Odd Lot Holders)
desiring to tender shares must specify the price, not in excess
of $10.00 nor less than $8.50 per share, at which they are
willing to sell their shares to the Company. By following the
directions of the Letter of Transmittal, stockholders can specify
one minimum price for a specified portion of their shares and a
different minimum price for other specified shares. Stockholders
also can specify the order in which their shares will be
purchased in the event that, as a result of the proration
provisions or otherwise, some but not all of their tendered
shares are purchased pursuant to the Offer. As promptly as
practicable following the Expiration Date, the Company will, in
its sole discretion, determine the Purchase Price that it will
pay for shares properly tendered pursuant to the Offer and not
withdrawn, taking into account the number of shares tendered and
the prices specified by tendering stockholders. The Company
intends to select the lowest Purchase Price, not in excess of
$10.00 nor less than $8.50 per share, that will enable it to
purchase 346,000 shares of Common Stock (or such lesser number of
shares as are properly tendered) pursuant to the Offer. Shares
properly tendered pursuant to the Offer at or below the Purchase
Price and not withdrawn will be purchased at the Purchase Price,
subject to the terms and conditions of the Offer, including the
proration and conditional tender provisions. All shares of
Common Stock tendered and not purchased pursuant to the Offer,
including shares of Common Stock tendered at prices in excess of
the Purchase Price and shares not purchased because of proration
or conditional tender, will be returned to the tendering
stockholders (or to another person specified by a tendering
stockholder) at the Company's expense as promptly as practicable
following the Expiration Date.
Priority of Purchases. Upon the terms and subject to the
conditions of the Offer, if more than 346,000 shares of Common
Stock (or such greater number of shares as the Company may elect
to purchase pursuant to the Offer) have been properly tendered at
prices at or below the Purchase Price and not withdrawn prior to
the Expiration Date, the Company will purchase properly tendered
shares in the following order of priority:
(a) first, all shares tendered and not withdrawn prior to
the Expiration Date by any Odd Lot Holder who:
(1) tenders all shares of Common Stock beneficially
owned by such Odd Lot Holder at a price at or below the
Purchase Price, including by electing to accept the Purchase
Price determined by the Company (tenders of less than all
shares owned by such stockholder will not qualify for this
preference); and
(2) completes the box captioned "Odd Lots" on the
Letter of Transmittal and, if applicable, on the Notice of
Guaranteed Delivery;
(b) second, after purchase of all of the foregoing shares
in item (a) above, all shares (i) conditionally tendered in
accordance with Section 6 for which the condition was
satisfied, and (ii) all other shares tendered properly and
unconditionally, in each case at prices at or below the
Purchase Price and not withdrawn prior to the Expiration Date,
on a pro rata basis (with appropriate adjustments to avoid
purchases of fractional shares) as described below; and
(c) third, if necessary, shares conditionally tendered
for which the condition was not satisfied, at or below the
Purchase Price and not withdrawn prior to the Expiration Date,
selected by lot at random in accordance with Section 6.
Odd Lots. For purposes of the Offer, the term "Odd Lots"
shall mean all shares of Common Stock properly tendered prior to
the Expiration Date at prices at or below the Purchase Price and
not withdrawn by any person who owns, beneficially or of record,
an aggregate of 99 or fewer shares of Common Stock (an "Odd Lot
Holder") (and so certified in the appropriate place on the Letter
of Transmittal and, if applicable, on the Notice of Guaranteed
Delivery). In order to qualify for this preference, an Odd Lot
Holder must tender all such shares of Common Stock in accordance
with the procedures described in Section 3. As set forth above,
Odd Lots will be accepted for payment before proration, if any,
of the purchase of other tendered shares. This preference is not
available to partial tenders. Any stockholder wishing to tender
all of such stockholder's Common Stock pursuant to this Section
should complete the box captioned "Odd Lots" on the Letter of
Transmittal and, if applicable, on the Notice of Guaranteed
Delivery. See Instruction 8 to the Letter of Transmittal.
The Company also reserves the right, but will not be
obligated, to purchase all shares of Common Stock duly tendered
by any stockholder who tendered all such shares owned,
beneficially or of record, at or below the Purchase Price and
who, as a result of proration, would then own, beneficially or of
record, an aggregate of 99 or fewer shares of Common Stock. If
the Company exercises this right, it will increase the number of
shares of Common Stock that it is offering to purchase by the
number of shares of Common Stock purchased through the exercise
of the right.
Proration. If proration of tendered shares is required,
the Company will determine the proration factor as soon as
practicable following the Expiration Date. Proration for each
stockholder tendering shares, other than Odd Lot Holders, shall
be based on the ratio of the number of shares of Common Stock
tendered by such stockholder at or below the Purchase Price (and
not withdrawn) to the total number of shares tendered by all
stockholders, other than Odd Lot Holders, at or below the
Purchase Price (and not withdrawn), subject to the conditional
tender provisions described in Section 6. Because of the
difficulty in determining the number of shares properly tendered
(including shares tendered by guaranteed delivery procedures, as
described in Section 3) and not withdrawn, and because of the odd
lot procedure, the Company does not expect that it will be able
to announce the final proration factor or commence payment for
any shares purchased pursuant to the Offer until approximately
seven (7) to ten (10) business days after the Expiration Date.
The preliminary results of any proration will be announced by
press release as soon as practicable after the Expiration Date.
Stockholders may obtain such preliminary information from the
Company and may be able to obtain such information from their
brokers or financial advisors.
As described in Section 14, the number of shares of Common
Stock that the Company will purchase from a stockholder may
affect the federal income tax consequences to the stockholder of
such purchase and, therefore, may be relevant to the
stockholder's decision whether to tender shares. The Letter of
Transmittal affords each tendering stockholder the opportunity to
designate the order of priority in which shares of Common Stock
tendered are to be purchased in the event of proration and the
opportunity to make a tender of all of the stockholder's shares
conditioned upon the purchase of all or a specified minimum
number of the shares.
This Offer to Purchase and the related Letter of Transmittal
will be mailed to record holders of shares of Common Stock and
will be furnished to brokers, banks and similar persons whose
names, or the names of whose nominees, appear on the Company's
stockholder list or, if applicable, who are listed as
participants in a clearing agency's security position listing for
subsequent transmittal to beneficial owners of the Common Stock.
2. PURPOSE OF THE OFFER; CERTAIN EFFECTS OF THE OFFER.
The discussion in the Introduction, this Section 2 and
Section 10 contains forward-looking statements that involve risks
and uncertainties that could cause actual results to differ
materially from those in the forward-looking statements. When
used in this Offer to Purchase, the words "anticipate,"
"believe," "estimate," "intend" and "expect" and similar
expressions are intended to identify such forward-looking
statements. The forward-looking statements are based on the
Company's current views and assumptions and involve risks and
uncertainties that include, among other things, general economic,
business, and regulatory conditions, competition, federal and
state regulations, availability, terms and use of capital,
environmental issues, weather and year 2000 readiness. Some or
all of the factors are beyond the Company's control.
The Offer provides stockholders who are considering a sale
of all or a portion of their shares of Common Stock with the
opportunity to determine the price or prices (not in excess of
$10.00 nor less than $8.50 per share) at which they are willing
to sell their shares and, subject to the terms and conditions of
the Offer, to sell those shares for cash without the usual
transaction costs associated with market sales. The Offer also
allows stockholders to sell a portion of their shares while
retaining a continuing equity interest in the Company. In
addition, the Offer may give stockholders the opportunity to sell
shares at prices greater than market prices prevailing prior to
announcement of the Offer. Stockholders who determine not to
accept the Offer will realize a proportionate increase in their
relative equity interest in the Company and thus in the Company's
future earnings and assets, subject to the Company's right to
issue additional shares of Common Stock and other equity
securities in the future.
During the period January 1, 1997 through April 8, 1999, the
Company has repurchased 4,900 shares in open market transactions.
Consistent with this strategy, on March 31, 1999, the Company's
Board of Directors authorized officers of the Company to consider
the advisability of the Offer and on April 8, 1999, the Company's
Board of Directors approved the Offer. The Offer is being made
because the Company's Board of Directors determined that the
Offer constitutes a prudent use of the Company's financial
resources, given the Company's business profile, assets and
current market price.
The Company's Board of Directors also believes that the
Company's financial condition and outlook and current market
conditions, including recent trading prices of the Company's
Common Stock, make this an attractive time to repurchase a
portion of the outstanding shares. Accordingly, the Offer is
consistent with the Company's long term corporate goal of
increasing stockholder value. After the Offer is completed, the
Company believes that its financial condition, access to capital
and outlook for continued favorable cash flow generation will
allow it to continue to reinvest in its business, including the
ongoing expansion of the number of clinics in operation.
The Company expects to finance the repurchase of properly
tendered shares with cash on hand. This tender offer is not
subject to the Company's receipt of financing.
NEITHER THE COMPANY NOR ITS BOARD OF DIRECTORS MAKES ANY
RECOMMENDATIONS TO ANY STOCKHOLDER AS TO WHETHER TO TENDER OR
REFRAIN FROM TENDERING ANY OR ALL OF SUCH STOCKHOLDER'S SHARES
AND NEITHER HAS AUTHORIZED ANY PERSON TO MAKE ANY SUCH
RECOMMENDATION. STOCKHOLDERS ARE URGED TO EVALUATE CAREFULLY ALL
INFORMATION IN THE OFFER, CONSULT THEIR OWN INVESTMENT AND TAX
ADVISORS AND MAKE THEIR OWN DECISIONS WHETHER TO TENDER SHARES
AND, IF SO, HOW MANY SHARES TO TENDER AND THE PRICE OR PRICES AT
WHICH TO TENDER.
The Company may in the future purchase additional shares of
Common Stock on the open market, in private transactions, through
tender offers or otherwise. In January 1997, the Company's Board
of Directors authorized the purchase of up to 200,000 shares of
the Company's Common Stock on the open market and outside of the
Offer. Pursuant to that authorization and after consideration of
all purchases to date, the Company has authorization to purchase
up to 195,100 shares of Common Stock in addition to the shares
sought pursuant to the Offer. Any additional purchase may be on
the same terms or on terms which are more or less favorable to
stockholders than the terms of the Offer. However, Rule 13e-4
under the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), prohibits the Company and its affiliates from
purchasing any shares of Common Stock, other than pursuant to the
Offer, until at least ten business days after the Expiration
Date. Any possible future purchases by the Company will depend
on many factors, including the results of the Offer, the market
price of the shares, the Company's business and financial
position and general economic and market conditions.
Shares the Company acquires pursuant to the Offer will be
canceled and returned to the status of authorized but unissued
stock and will be available for the Company to issue without
further stockholder action (except as required by applicable law
or the rules of Nasdaq or any other securities exchange on which
the shares are then listed) for purposes including, without
limitation, the acquisition of other businesses, the raising of
additional capital for use in the Company's business and the
satisfaction of obligations under existing or future employee
benefit or compensation programs or stock plans or compensation
programs for directors. The Company has no current plans for
issuance of the shares purchased pursuant to the Offer.
3. PROCEDURES FOR TENDERING SHARES.
Proper Tender of Shares. For shares of Common Stock to be
tendered properly pursuant to the Offer, (a) the certificates for
such shares (or confirmation of receipt of such shares pursuant
to the procedures for book-entry transfer set forth below),
together with a properly completed and duly executed Letter of
Transmittal (or manually signed facsimile thereof), including any
required signature guarantees and any other documents required by
the Letter of Transmittal, must be received prior to 5:00 p.m.,
New York City time, on the Expiration Date by the Depositary at 2
Broadway, New York, New York 10004; or (b) the tendering
stockholder must comply with the guaranteed delivery procedure
set forth below. IN ACCORDANCE WITH INSTRUCTION 5 OF THE LETTER
OF TRANSMITTAL, STOCKHOLDERS (OTHER THAN CERTAIN ODD LOT HOLDERS)
DESIRING TO TENDER SHARES PURSUANT TO THE OFFER MUST PROPERLY
INDICATE IN THE SECTION CAPTIONED "PRICE (IN DOLLARS) PER SHARE
AT WHICH SHARES ARE BEING TENDERED" ON THE LETTER OF TRANSMITTAL
THE PRICE (IN MULTIPLES OF $0.125) AT WHICH THEIR SHARES ARE
BEING TENDERED. Stockholders who desire to tender shares of
Common Stock at more than one price must complete a separate
Letter of Transmittal for each price at which shares are
tendered, provided that the same shares cannot be tendered
(unless properly withdrawn previously in accordance with the
terms of the Offer) at more than one price. IN ORDER TO PROPERLY
TENDER SHARES (OTHER THAN SHARES TENDERED BY CERTAIN ODD LOT
HOLDERS), ONE AND ONLY ONE PRICE BOX MUST BE CHECKED IN THE
APPROPRIATE SECTION ON EACH LETTER OF TRANSMITTAL.
In addition, Odd Lot Holders who tender all such shares must
complete the box captioned "Odd Lots" on the Letter of
Transmittal and, if applicable, on the Notice of Guaranteed
Delivery, in order to qualify for the preferential treatment
available to Odd Lot Holders as set forth in Section 1, except in
the case of certain tenders made pursuant to the book-entry
procedures described in Section 3. See Instruction 8 of the
Letter of Transmittal.
To prevent backup federal income tax withholding of 31% of
the gross proceeds, and in the case of certain foreign
stockholders, to prevent a 30% withholding tax, certain completed
forms should accompany the Letter of Transmittal. See Section
14.
If any tendered shares are not purchased or if less than all
shares evidenced by a stockholder's certificates are tendered,
certificates for unpurchased shares will be returned as promptly
as practicable after the expiration or termination of the Offer
or, in the case of shares tendered by book-entry transfer at a
Book-Entry Transfer Facilities, such shares will be credited to
the appropriate account maintained by the tendering stockholder
at the appropriate Book-Entry Transfer Facilities, in each case
without expense to such stockholder.
Signature Guarantees and Method of Delivery. No signature
guarantee is required (a) if the Letter of Transmittal is signed
by the registered holder of the shares (which term for purpose of
this Section 3 shall include any participant in The Depository
Trust Company ("DTC") whose name appears on a security position
listing as the owner of the shares of Common Stock tendered
therewith and such holder has not completed the box entitled
"Special Delivery Instructions" on the Letter of Transmittal; or
(b) if shares are tendered for the account of a bank, broker,
dealer, credit union, savings association or other entity which
is a member in good standing of the Securities Transfer Agents
Medallion Program or a bank, dealer, credit union, savings
association or other entity which is an "eligible guarantor
institution," as such term is defined in Rule 17Ad-15 of the
Exchange Act (each such entity being hereinafter referred to as
an "Eligible Institution"). See Instruction 1 of the Letter of
Transmittal. If a certificate for shares is registered in the
name of a person other than the person executing a Letter of
Transmittal or if payment is to be made, or shares not purchased
or tendered are to be issued, to a person other than the
registered holder, then the certificate must be endorsed or
accompanied by an appropriate stock power, in either case, signed
exactly as the name of the registered holder appears on the
certificate, or stock power guaranteed by an Eligible
Institution.
In all cases, payment for shares tendered and accepted for
payment pursuant to the Offer will be made only after timely
receipt by the Depositary of certificates for such shares (or a
timely confirmation of a book-entry transfer of such shares into
the Depositary's account at DTC as described below), a properly
completed and duly executed Letter of Transmittal (or manually
signed facsimile thereof) and any other documents required by the
Letter of Transmittal. THE METHOD OF DELIVERY OF ALL DOCUMENTS,
INCLUDING CERTIFICATES FOR SHARES, THE LETTER OF TRANSMITTAL AND
ANY OTHER REQUIRED DOCUMENTS, IS AT THE ELECTION AND RISK OF THE
TENDERING STOCKHOLDER. IF DELIVERY IS BY MAIL, THEN REGISTERED
MAIL WITH RETURN RECEIPT REQUESTED, PROPERLY INSURED, IS
RECOMMENDED.
Book-Entry Delivery. The Depositary will establish an
account with respect to the shares for purposes of the Offer at
DTC within two business days after the date of this Offer to
Purchase, and any financial institution that is a participant in
the respective Book-Entry Transfer Facilities' system may make
book-entry delivery of the shares by causing such facility to
transfer shares into the Depositary's account in accordance with
the respective Book-Entry Transfer Facility's procedures for
transfer. Although delivery of shares may be effected through a
book-entry transfer into the Depositary's account at DTC, either
(a) a properly completed and duly executed Letter of Transmittal
(or a manually signed facsimile thereof) with any required
signature guarantees and any other required documents must, in
any case, be transmitted to and received by the Depositary at 2
Broadway, New York, New York 10004 prior to the Expiration Date
or (b) the guaranteed delivery procedure described below must be
followed. DELIVERY OF DOCUMENTS TO THE BOOK-ENTRY TRANSFER
FACILITY DOES NOT CONSTITUTE DELIVERY TO THE DEPOSITARY.
Guaranteed Delivery. If a stockholder desires to tender
shares of Common Stock pursuant to the Offer and such
stockholder's share certificates cannot be delivered to the
Depositary prior to the Expiration Date (or the procedures for
book-entry transfer cannot be completed on a timely basis) or if
time will not permit all required documents to reach the
Depositary prior to the Expiration Date, such shares may
nevertheless be tendered, provided that all of the following
conditions are satisfied:
(a) such tender is made by or through an Eligible
Institution;
(b) the Depositary receives by hand, mail, telegram or
facsimile transmission, prior to the Expiration Date, a
properly completed and duly executed Notice of Guaranteed
Delivery in the form the Company has provided with this Offer
to Purchase (specifying the price at which the shares of Common
Stock are being tendered), including (where required) a
signature guarantee by an Eligible Institution; and
(c) the certificates for all tendered shares, in proper
form for transfer (or confirmation of book-entry transfer of
such shares into the Depositary's account at DTC), together
with a properly completed and duly executed Letter of
Transmittal (or a manually signed facsimile thereof) and any
required signature guarantees or other documents required by
the Letter of Transmittal, are received by the Depositary
within three Nasdaq trading days after the date of receipt by
the Depositary of such Notice of Guaranteed Delivery.
Stock Option Plans. The Company is not offering, as part of
the Offer, to purchase any of the options (the "Options")
outstanding under the Company's Stock Option Plans and tenders of
such Options will not be accepted. Holders of Options who wish
to participate in the Offer may exercise their Options and
purchase shares of Common Stock and then tender such shares
pursuant to the Offer, provided that any such exercise of an
Option and tender of shares is in accordance with the terms of
the Stock Option Plan and the Options. An exercise of an Option
cannot be revoked even if the shares received upon the exercise
thereof and tendered in the Offer are not purchased in the Offer
for any reason. All holders of Options who are either executive
officers or outside directors of the Company have indicated that
they do not intend to exercise Options and tender such shares
pursuant to the Offer.
Determination of Validity; Rejection of Shares; Waiver of
Defects; No Obligation to Give Notice of Defects. All questions
as to the number of shares of Common Stock to be accepted, the
price to be paid for shares to be accepted and the validity,
form, eligibility (including time of receipt) and acceptance of
any tender of shares will be determined by the Company, in its
sole discretion, and its determination shall be final and binding
on all parties. The Company reserves the absolute right to
reject any or all tenders of any shares of Common Stock that it
determines are not in appropriate form or the acceptance for
payment of or payments for which may be unlawful. The Company
also reserves the absolute right to waive any of the conditions
of the Offer or any defect or irregularity in any tender with
respect to any particular shares or any particular stockholder.
No tender of shares will be deemed to have been properly made
until all defects or irregularities have been cured by the
tendering stockholder or waived by the Company. None of the
Company, the Depositary or any other person shall be obligated to
give notice of any defects or irregularities in tenders, nor
shall any of them incur any liability for failure to give any
such notice.
CERTIFICATES FOR SHARES, TOGETHER WITH A PROPERLY COMPLETED
LETTER OF TRANSMITTAL AND ANY OTHER DOCUMENTS REQUIRED BY THE
LETTER OF TRANSMITTAL, MUST BE DELIVERED TO THE DEPOSITARY AND
NOT TO THE COMPANY. ANY SUCH DOCUMENTS DELIVERED TO THE COMPANY
WILL NOT BE FORWARDED TO THE DEPOSITARY AND THEREFORE WILL NOT BE
DEEMED TO BE VALIDLY TENDERED.
Tendering Stockholder's Representation and Warranty;
Company's Acceptance Constitutes an Agreement. A tender of
shares of Common Stock pursuant to any of the procedures
described above will constitute the tendering stockholder's
acceptance of the terms and conditions of the Offer, as well as
the tendering stockholder's representation and warranty to the
Company that (a) such stockholder has a net long position in the
shares being tendered within the meaning of Rule 14e-4
promulgated by the Commission under the Exchange Act and (b) the
tender of such shares complies with Rule 14e-4. It is a
violation of Rule 14e-4 for a person, directly or indirectly, to
tender shares for such person's own account unless, at the time
of tender and at the end of the proration period or period during
which shares are accepted by law (including any extensions
thereof), the person so tendering (i) has a net long position
equal to or greater than the amount of (a) shares tendered or (b)
other securities convertible into or exchangeable or exercisable
for the shares tendered and will acquire such shares for tender
by conversion, exchange or exercise and (ii) will deliver or
cause to be delivered such shares in accordance with the terms of
the Offer. Rule 14e-4 provides a similar restriction applicable
to the tender or guarantee of a tender on behalf of another
person. The Company's acceptance for payment of shares of Common
Stock tendered pursuant to the Offer will constitute a binding
agreement between the tendering stockholder and the Company upon
the terms and conditions of the Offer.
4. WITHDRAWAL RIGHTS.
Except as otherwise provided in this Section 4, tenders of
shares of Common Stock pursuant to the Offer are irrevocable.
Shares tendered pursuant to the Offer may be withdrawn at any
time prior to the Expiration Date and, unless theretofore
accepted for payment by the Company pursuant to the Offer, may
also be withdrawn at any time after 5:00 p.m., New York City
time, on Monday, June 7, 1999.
For a withdrawal to be effective, a notice of withdrawal
must be in written, telegraphic or facsimile transmission form
and must be received in a timely manner by the Depositary at 2
Broadway, New York, New York 10004. Any such notice of withdrawal
must specify the name of the tendering stockholder, the name of
the registered holder (if different from that of the person who
tendered such shares), the number of shares tendered and the
number of shares to be withdrawn. If the certificates for shares
to be withdrawn have been delivered or otherwise identified to
the Depositary, then, prior to the release of such certificates,
the tendering stockholder must also submit the serial numbers
shown on the particular certificates for shares to be withdrawn
and the signature on the notice of withdrawal must be guaranteed
by an Eligible Institution (except in the case of shares tendered
by an Eligible Institution). If shares of Common Stock have been
tendered pursuant to the procedure for book-entry tender set
forth in Section 3, the notice of withdrawal also must specify
the name and the number of the account at DTC to be credited with
the withdrawn shares and otherwise comply with the procedures of
such facility. None of the Company, the Depositary or any other
person shall be obligated to give notice of any defects or
irregularities in any notice of withdrawal nor shall any of them
incur liability for failure to give any such notice. All
questions as to the form and validity (including time of receipt)
of notices of withdrawal will be determined by the Company, in
its sole discretion, which determination shall be final and
binding.
Withdrawals may not be rescinded and any shares withdrawn
will thereafter be deemed not properly tendered for purposes of
the Offer unless such withdrawn shares are properly retendered
prior to the Expiration Date by again following one of the
procedures described in Section 3.
If the Company extends the Offer, is delayed in its purchase
of shares or is unable to purchase shares pursuant to the Offer
for any reason, then, without prejudice to the Company's rights
under the Offer, the Depositary may, subject to applicable law,
retain tendered shares on behalf of the Company and such shares
may not be withdrawn except to the extent tendering stockholders
are entitled to withdrawal rights as described in this Section 4.
5. PURCHASE OF SHARES AND PAYMENT OF PURCHASE PRICE.
Upon the terms and subject to the conditions of the Offer,
as promptly as practicable following the Expiration Date, the
Company (a) will determine the Purchase Price it will pay for the
shares of Common Stock properly tendered and not withdrawn prior
to the Expiration Date, taking into account the number of shares
so tendered and the prices specified by tendering stockholders,
and (b) will accept for payment and pay for (and thereby
purchase) shares of Common Stock properly tendered at prices at
or below the Purchase Price and not withdrawn prior to the
Expiration Date. For purposes of the Offer, the Company will be
deemed to have accepted for payment (and therefore purchased)
shares of Common Stock that are tendered at or below the Purchase
Price and not withdrawn (subject to the proration and conditional
tender provisions of the Offer) only when, as and if it gives
oral or written notice to the Depositary of its acceptance of
such shares for payment pursuant to the Offer.
Upon the terms and subject to the conditions of the Offer,
promptly following the Expiration Date, the Company will accept
for payment and pay a single per share Purchase Price for 346,000
shares (subject to increase or decrease as provided in Section
15).
The Company will pay for shares purchased pursuant to the
Offer by depositing the aggregate Purchase Price therefor with
the Depositary, which will act as agent for tendering
stockholders for the purpose of receiving payment from the
Company and transmitting payment to the tendering stockholders.
In the event of proration, the Company will determine the
proration factor and pay for those tendered shares accepted for
payment as soon as practicable after the Expiration Date.
However, the Company does not expect to be able to announce the
final results of any proration and commence payment for shares
purchased until approximately seven (7) to ten (10) business
trading days after the Expiration Date. Certificates for all
shares tendered and not purchased, including all shares tendered
at prices in excess of the Purchase Price and shares not
purchased due to proration or conditional tender, will be
returned (or, in the case of shares tendered by book-entry
transfer, such shares will be credited to the account maintained
with DTC by the participant therein who so delivered such shares)
to the tendering stockholder at the Company's expense as promptly
as practicable after the Expiration Date without expense to the
tendering stockholders. Under no circumstances will interest on
the Purchase Price be paid by the Company by reason of any delay
in making payment. In addition, if certain events occur, the
Company may not be obligated to purchase shares pursuant to the
Offer. See Section 7.
The Company will pay all stock transfer taxes, if any,
payable on the transfer to it of shares purchased pursuant to the
Offer. If, however, payment of the Purchase Price is to be made
to, or (in the circumstances permitted by the Offer) if
unpurchased shares are to be registered in the name of, any
person other than the registered holder, or if tendered
certificates are registered in the name of any person other than
the person signing the Letter of Transmittal, the amount of all
stock transfer taxes, if any (whether imposed on the registered
holder or such other person), payable on account of the transfer
to such person will be deducted from the Purchase Price unless
satisfactory evidence of the payment of the stock transfer taxes,
or exemption therefrom, is submitted. See Instruction 7 of the
Letter of Transmittal.
ANY TENDERING STOCKHOLDER OR OTHER PAYEE WHO FAILS TO COMPLETE
FULLY, SIGN AND RETURN TO THE DEPOSITARY THE SUBSTITUTE FORM W-9
INCLUDED WITH THE LETTER OF TRANSMITTAL MAY BE SUBJECT TO
REQUIRED BACKUP FEDERAL INCOME TAX WITHHOLDING OF 31% OF THE
GROSS PROCEEDS PAID TO SUCH SHAREHOLDER OR OTHER PAYEE PURSUANT
TO THE OFFER. SEE SECTION 14. ALSO SEE SECTION 14 REGARDING
FEDERAL INCOME TAX CONSEQUENCES FOR NON-U.S. STOCKHOLDERS.
6. CONDITIONAL TENDER OF SHARES.
Under certain circumstances set forth in Section 1 above,
the Company may prorate the number of shares of Common Stock
purchased pursuant to the Offer. As discussed in Section 14, the
number of shares of Common Stock to be purchased from a
particular stockholder might affect the tax consequences of such
purchase to such stockholder and such stockholder's decision
whether to tender. Accordingly, if a stockholder tenders all
shares of Common Stock he or she beneficially owns, the
stockholder may tender shares subject to the condition that a
specified minimum number, if any, must be purchased. Any
stockholder wishing to make such a conditional tender should so
indicate in the box captioned "Conditional Tender" on the Letter
of Transmittal and, if applicable, on the Notice of Guaranteed
Delivery. It is the tendering stockholder's responsibility to
calculate such minimum number of shares and each stockholder is
urged to consult his or her own tax advisor. If the effect of
accepting tenders on a pro rata basis is to reduce the number of
shares to be purchased from any stockholder below the minimum
number so specified, such tender will automatically be deemed
withdrawn, except as provided in the next paragraph, and shares
tendered by such stockholder will be returned as soon as
practicable after the Expiration Date.
However, if so many conditional tenders would be deemed
withdrawn that the total number of shares to be purchased falls
below 346,000, then, to the extent feasible, the Company will
select enough of such conditional tenders, which would otherwise
have been deemed withdrawn, to purchase such desired number of
shares. In selecting among such conditional tenders, the Company
will select by lot at random and will limit its purchase in each
case to the designated minimum number of shares of Common Stock
to be purchased. Conditional tenders will be selected by lot
only from stockholders who conditionally tender all of their
shares of Common Stock.
IN THE EVENT OF PRORATION, ANY SHARES OF COMMON STOCK TENDERED
PURSUANT TO A CONDITIONAL TENDER FOR WHICH THE MINIMUM
REQUIREMENTS ARE NOT SATISFIED MAY NOT BE ACCEPTED AND WILL
THEREBY BE DEEMED WITHDRAWN.
7. CERTAIN CONDITIONS OF THE OFFER.
Notwithstanding any other provision of the Offer, the
Company shall not be required to accept for payment, purchase or
pay for any shares of Common Stock tendered and may terminate or
amend the Offer or may postpone the acceptance for payment of, or
the purchase of and the payment for shares of Common Stock
tendered, subject to Rule 13e-4(f) under the Exchange Act, if at
any time on or after April 9, 1999 and prior to the time of
payment for any such shares (whether any shares of Common Stock
have previously been accepted for payment pursuant to the Offer)
any of the following events shall have occurred (or shall have
been determined by the Company to have occurred) and, in the
Company's judgment in any such case and regardless of the
circumstances giving rise thereto (including any action or
omission to act by the Company), the occurrence of such event or
events makes it inadvisable to proceed with the Offer or with
such acceptance for payment or payment:
(a) there shall have been threatened or instituted or be
pending any action or proceeding by any government or
governmental, regulatory or administrative agency, authority or
tribunal or any other person, domestic or foreign, before any
court, authority, agency or tribunal that directly or indirectly
(i) challenges the making of the Offer, the acquisition of some
of all of the shares pursuant to the Offer or otherwise relates
in any manner to the Offer; or (ii) in the Company's sole
judgment, could materially and adversely affect the business,
condition (financial or other), income, operations or prospects
of the Company and its subsidiaries, or otherwise materially
impair in any way the contemplated future conduct of the business
of the Company or any of its subsidiaries or materially impair
the contemplated benefits of the Offer to the Company;
(b) there shall have been any action threatened, pending or
taken, or approval withheld, or any statute, rule, regulation,
judgment, order or injunction threatened, proposed, sought,
promulgated, enacted, entered, amended, enforced or deemed to be
applicable to the Offer or the Company or any of its
subsidiaries, by any court or any authority, agency or tribunal
that, in the Company's sole judgment, would or might directly or
indirectly (i) make the acceptance for payment of, or payment
for, some or all of the shares illegal or otherwise restrict or
prohibit consummation of the Offer or otherwise relates in any
manner to the Offer; (ii) delay or restrict the ability of the
Company, or render the Company unable, to accept for payment or
pay for some or all of the shares; (iii) materially impair the
contemplated benefits of the Offer to the Company; or (iv)
materially and adversely affect the business, condition
(financial or other), income, operations or prospects of the
Company and its subsidiaries, taken as whole, or otherwise
materially impair in any way the contemplated future conduct of
the business of the Company or any of its subsidiaries.
(c) there shall have occurred (i) any general suspension of
trading in, or limitation on prices for, securities on any
national securities exchange or in the over-the-counter market;
(ii) the declaration of a banking moratorium or any suspension of
payments in respect of banks in the United States (whether or not
mandatory); (iii) the commencement of a war, armed hostilities or
other international or national crisis directly or indirectly
involving the United States; (iv) any limitation (whether or not
mandatory) by any governmental, regulatory or administrative
agency or authority on, or any event that, in the Company's sole
judgment, might affect the extension of credit by banks or other
lending institutions in the United States; (v) any significant
decrease in the market price of the shares of Common Stock of the
Company or any change in the general political, market, economic
or financial conditions in the United States or abroad that
could, in the sole judgment of the Company, have a material
adverse effect on the Company's business, condition (financial or
other), operations or prospects or on the trading in the shares;
(vi) any change in the general political, market, economic or
financial conditions in the United States or abroad that could
have a material adverse effect on the Company's business,
condition (financial or other), operations or prospects or that,
in the sole judgment of the Company, makes it inadvisable to
proceed with the Offer; (vii) in the case of any of the foregoing
existing at the time of the commencement of the Offer, a material
acceleration or worsening thereof; or (viii) any decline in
either the Dow Jones Industrial Average or the Standard and
Poor's Index of 500 Companies by an amount in excess of 10%
measured from the close of business on April 8, 1999;
(d) a tender or exchange offer with respect to some or all
of the shares (other than the Offer), or a merger or acquisition
proposal for the Company, shall have been proposed, announced or
made by another person or entity or shall have been publicly
disclosed, or the Company shall have learned that (i) any person,
entity or "group" (within the meaning of Section 13(d)(3) of the
Exchange Act) shall have acquired or proposed to acquire
beneficial ownership of more than 5% of the outstanding shares of
Common Stock, or any new group shall have been formed that
beneficially owns more than 5% of the outstanding shares of
Common Stock (other than any such person, entity or group who has
filed a Schedule 13D or Schedule 13G with the Commission before
April 9, 1999); (ii) any such person, entity or group who has
filed a Schedule 13D or Schedule 13G with the Commission before
April 9, 1999, shall have acquired or proposed to acquire
beneficial ownership of an additional 2% or more of the
outstanding shares of Common Stock; or (iii) any person, entity
or group shall have filed a Notification and Report Form under
the Hart-Scott- Rodino Antitrust Improvements Act of 1976 or made
a public announcement reflecting an intent to acquire the Company
or any of its subsidiaries or any of their respective assets or
securities; or
(e) any change or changes shall have occurred in the
business, condition (financial or other), assets, income,
operations, prospects or stock ownership of the Company or its
subsidiaries that, in the Company's sole judgment, is or may be
material to the Company or its subsidiaries.
The foregoing conditions are for the sole benefit of the
Company and may be asserted by the Company regardless of the
circumstances (including any action or inaction by the Company)
giving rise to any such condition and may be waived by the
Company, in whole or in part, at any time and from time to time
in its sole discretion. The Company's failure at any time to
exercise any of the foregoing rights shall not be deemed a waiver
of any such right and each such right shall be deemed an ongoing
right which may be asserted at any time and from time to time.
Any determination by the Company concerning the events described
above will be final and binding on all parties.
8. PRICE RANGE OF SHARES; DIVIDENDS.
The Common Stock of the Company is traded on the Nasdaq
National Market. The following table sets forth, for the
quarters indicated, the high and low trading prices per share of
the Company's Common Stock.
1999 Quarter Ended HIGH LOW
June 30, 1999 (through April 5, 1999) $ 7.75 $ 7.50
March 31, 1999 9.50 7.50
1998 Quarter Ended
December 31, 1998 10.125 7.00
September 30, 1998 14.375 8.50
June 30, 1998 13.50 11.25
March 31, 1998 12.50 10.50
1997 Quarter Ended
December 31, 1997 12.00 9.50
September 30, 1997 9.625 8.875
June 30, 1997 9.75 9.00
March 31, 1997 10.75 9.25
On April 5, 1999, the closing price of the Common Stock was
$7.50. Since inception, the Company has not declared or paid
cash dividends on its equity securities, and the Company does not
anticipate that it will pay cash dividends in the foreseeable
future. The Company intends to retain earnings to finance its
operations.
STOCKHOLDERS ARE URGED TO OBTAIN CURRENT MARKET QUOTATIONS FOR
THE COMMON STOCK.
9. SOURCE AND AMOUNT OF FUNDS.
Assuming the Company purchases 346,000 shares of Common
Stock pursuant to the Offer at a purchase price of $10.00 per
Share, the Company expects the maximum aggregate cost to purchase
shares and to pay related fees and expenses to be approximately $
3.5 million. The Company expects to finance such transactions as
described in Section 2.
10. CERTAIN INFORMATION CONCERNING THE COMPANY.
GENERAL
The Company operates outpatient physical and occupational
therapy clinics which provide post-operative care and treatment
for a variety of orthopedic-related disorders and sports-related
injuries. At December 31, 1998, the Company operated 99
outpatient physical and occupational therapy clinics in 28
states. The clinics provide post-operative care and treatment
for a variety of orthopedic-related disorders and sports-related
injuries, treatment for neurologically-related injuries,
rehabilitation of injured workers and preventative care. Each
clinic's staff typically includes one or more licensed physical
and/or occupational therapists and office personnel, and may also
include physical and/or occupational therapy assistants, aides,
exercise physiologists and athletic trainers. The clinics
perform a tailored and comprehensive evaluation of each patient
which is followed by a treatment plan specific to their type of
injury. The clinics' business primarily originates from
physician referrals. The principal sources of payment for the
clinics' services are commercial health insurance, workers'
compensation insurance, managed care programs, Medicare and
proceeds from personal injury cases.
While the Company is committed to the partnership program as
its core business, it has begun to manage third-party physical
therapy facilities for physician practices, with five such
third-party facilities under management as of December 31, 1998.
The Company believes that with physician groups facing declining
incomes, the opportunity for enhancing the physicians' income
through the ownership of in-house physical therapy facilities is
becoming increasingly attractive. Since 1992, the Company has
offered management and administrative services to its network of
clinics owned with physical therapist partners. The Company is
now offering that expertise to physician groups nationwide.
The Company was formed in June 1990 and operated as a
subchapter S Corporation until August 1991 when, in conjunction
with a $2,500,000 private placement, it reorganized into a
limited partnership form of organization. In May 1992, in
connection with the Company's initial public offering, the
Company was reorganized into its present form, a Nevada
corporation with operating subsidiaries organized in the form of
limited partnerships. The Company's principal executive office
is located at 3040 Post Oak Blvd., Suite 222, Houston, Texas
77056.
CERTAIN FINANCIAL INFORMATION
Set forth below is certain summary historical consolidated
financial information of the Company and its subsidiaries. The
historical financial information has been derived from the
consolidated financial statements of the Company included in the
Company's Annual Report on Form 10-K for the year ended December
31, 1998. The information presented below should be read in
conjunction with the Company's consolidated financial statements
and notes thereto.
At or For the Year Ended December 31,
1998 1997
(in thousands, except per share data)
Statement of Operations
Data:
Net revenues $44,023 $38,807
Income before
income taxes 2,704 2,481
Net income (1) 1,596
2,426
Per common share:
Basic 0.44 0.67
Diluted 0.43 0.65
Balance Sheet Data:
Working capital 13,007 11,204
Total assets 24,100 22,548
Long-term debt, less
current portion 8,126 8,239
Total shareholders' equity 11,605 10,002
Ratio of earnings to fixed
charges(2) 2.56 2.51
Book value per share 3.21 2.78
______________
(1) Prior to 1998, the Company had available unused net operating
loss carryforwards to offset any federal income tax expense.
(2) Computed by dividing earnings by fixed charges. "Earnings"
consist of pretax income from continuing operations, plus fixed
charges and amortization expense related to capitalized interest.
"Fixed charges" consist of interest costs plus amortization of
debt issue costs and the interest portion of rental expense.
SUMMARY PRO FORMA FINANCIAL INFORMATION
The following summary unaudited consolidated pro forma
financial information gives effect to the purchase of shares of
Common Stock pursuant to the Offer and the payment of related
fees and expenses, as if the transaction had occurred on the
first day of the period presented with respect to statement of
operations data and on December 31, 1998 with respect to balance
sheet data. The summary unaudited consolidated pro forma
financial information should be read in conjunction with the
summary historical financial information set forth above, and
does not purport to be indicative of the results that would
actually have been obtained, or results that may be obtained in
the future, or the financial condition that would have resulted,
if the purchase of shares of Common Stock pursuant to the Offer
and the payment of related fees and expenses had been completed
at the dates indicated.
At or For the Year Ended December 31, 1998
ProForma
At $ 8.50 At $ 10.00
Historical per Share per Share
(in thousands, except per share data)
Statement of Operations
Data:
Net revenues $44,023 $43,866(2) $43,839(2)
Income before income
taxes 2,704 2,547(2) 2,520(2)
Net income 1,596 1,503(2)(3) 1,487(2)(3)
Per common share:
Basic 0.44 0.46(2)(3)(5) 0.46(2)(3)(5)
Diluted 0.43 0.44(2)(3)(5) 0.44(2)(3)(5)
Balance Sheet Data:
Working capital 13,007 9,868(2)(4) 9,322(2)(4)
Total assets 24,100 20,961(2)(4) 20,415(2)(4)
Long-term debt, less
current portion 8,126 8,126 8,126
Total shareholders' equity 11,605 8,530(2)(3)(4) 7,955(2)(3)(4)
Ratio of earnings to fixed
charges(1) 2.56 2.47 2.46
Book value per share 3.21 2.61(2)(3)(4) 2.44 (2)(3)(4)
________________
(1) Computed by dividing earnings by fixed charges. "Earnings"
consist of pretax income from continuing operations, plus fixed
charges and amortization expense related to capitalized interest.
"Fixed charges" consist of interest costs plus amortization of
debt issue costs and the interest portion of rental expense.
(2) Adjusted for the reduction in interest income earned on $3.0
million and $3.5 million of cash and cash equivalents assuming
the Company purchases 346,000 shares of Common Stock at a
purchase price of $8.50 and $10.00 per share, respectively, plus
related fees and expenses.
(3) Adjusted to reflect a 41% effective tax rate, which equals
the historical effective tax rate for 1998.
(4) Adjusted for the Company's use of $3.0 million and $3.5
million of cash and cash equivalents to purchase 346,000 shares
of Common Stock at a purchase price of $8.50 and $10.00 per
share, respectively, plus related fees and expenses.
(5) Reflects the Company's purchase of 346,000 shares of Common
Stock.
ADDITIONAL INFORMATION
The Company is subject to the informational filing
requirements of the Exchange Act and, in accordance therewith, is
obligated to file reports and other information with the
Commission relating to its business, financial condition and
other matters. Information, as of particular dates, concerning
the Company's directors and officers, their remuneration, options
granted to them, the principal holders of the Company's
securities and any material interest of such persons in
transactions with the Company is required to be disclosed in
proxy statements distributed to the Company's stockholders and
filed with the Commission. Such reports, proxy statements and
other information can be inspected and copied at the public
reference facilities maintained by the Commission at 450 Fifth
Street, N.W., Room 2120, Washington, D.C. 20549; at its regional
offices located at 500 West Madison Street, Suite 1400, Chicago,
Illinois 60661-2511; and 7 World Trade Center, New York, New York
10048. Copies of such material may also be obtained by mail,
upon payment of the Commission's customary charges, from the
Public Reference Section of the Commission at Judiciary Plaza,
450 Fifth Street, N.W., Washington, D.C. 20549. The Commission
also maintains a Web site on the World Wide Web at
http://www.sec.gov that contains reports, proxy statements and
other information regarding registrants that file electronically
with the Commission. Such reports, proxy statements and other
information concerning the Company also can be inspected at the
offices of the Nasdaq National Market, 1735 K Street NW,
Washington, DC 20006-1500, on which the Company's Common Stock is
traded.
11. INTERESTS OF DIRECTORS AND OFFICERS; TRANSACTIONS AND
ARRANGEMENTS CONCERNING SHARES.
As of April 8, 1999, the Company had issued and outstanding
3,621,609 shares of Common Stock. The 346,000 shares of Common
Stock that the Company is offering to purchase pursuant to the
Offer represent approximately 9.6% of the outstanding shares. As
of April 8, 1999, the Company's directors and executive officers
as a group (12 persons) beneficially owned an aggregate of
1,709,580 shares of Common Stock, representing approximately
37.6% of the outstanding shares. The Company has been advised
that none of its directors and executive officers intend to
tender shares of Common Stock pursuant to the Offer. If the
Company purchases 346,000 shares pursuant to the Offer, then
immediately after the purchase of shares of Common Stock pursuant
to the Offer, the Company's executive officers and directors as a
group will beneficially own approximately 40.7% of the
outstanding shares of the Company's Common Stock.
Based upon the Company's records and upon information
provided to the Company by its directors, executive officers,
associates and subsidiaries, neither the Company nor, to the best
of the Company's knowledge, any of the directors or executive
officers of the Company or any of its subsidiaries nor any
associates or subsidiaries of the foregoing, has effected any
transactions in the shares during the 40 business days prior to
the date hereof.
Except as set forth in this Offer to Purchase, neither the
Company nor any person controlling the Company nor, to the
Company's knowledge, any of its directors or executive officers,
is a party to any contract, arrangement, understanding or
relationship with any other person relating, directly or
indirectly, to the Offer with respect to any securities of the
Company (including, but not limited to, any contract,
arrangement, understanding or relationship concerning the
transfer or the voting of any such securities, joint ventures,
loan or option arrangements, puts or calls, guarantees of loans,
guarantees against loss or the giving or withholding of proxies,
consents or authorizations).
12. EFFECTS OF THE OFFER ON THE MARKET FOR SHARES; REGISTRATION
UNDER THE EXCHANGE ACT.
The Company's purchase of shares of Common Stock pursuant to
the Offer will reduce the number of shares that might otherwise
be traded publicly and may reduce the number of stockholders.
Nonetheless, the Company anticipates that there will be a
sufficient number of shares of Common Stock outstanding and
publicly traded following consummation of the Offer to ensure a
continued trading market for the shares. Based upon published
guidelines of the Nasdaq National Market, the Company does not
believe that its purchase of shares of Common Stock pursuant to
the Offer will cause the Company's remaining Common Stock to be
delisted from the Nasdaq National Market.
The shares of Common Stock are currently "margin securities"
under the rules of the Federal Reserve Board. This has the
effect, among other things, of allowing brokers to extend credit
to their customers using such shares as collateral. The Company
believes that, following the purchase of shares of Common Stock
pursuant to the Offer, the shares of Common Stock will continue
to be "margin securities" for purposes of the Federal Reserve
Board's margin regulations.
Shares of Common Stock the Company acquires pursuant to the
Offer will be retained as treasury stock by the Company (unless
and until the Company determines to retire or restore such shares
to the status of unissued shares) and will be available for the
Company to issue without further stockholder action (except as
required by applicable law or the rules of the Nasdaq National
Market). The Company has no current plans for issuance of the
shares of Common Stock repurchased pursuant to the Offer.
The shares of Common Stock are registered under the Exchange
Act, which requires, among other things, that the Company furnish
certain information to its stockholders and the Commission and
comply with the Commission's proxy rules in connection with
meetings of the Company's stockholders. The Company believes
that its purchase of shares pursuant to the Offer will not result
in deregistration of the shares under the Exchange Act.
13. CERTAIN LEGAL MATTERS; REGULATORY APPROVALS.
The Company is not aware of any license or regulatory permit
that appears to be material to the Company's business that might
be adversely affected by the Company's acquisition of shares of
Common Stock as contemplated herein or of any approval or other
action by any government or governmental, administrative or
regulatory authority or agency, domestic or foreign, that would
be required for the acquisition or ownership of shares of the
Company as contemplated herein. Should any such approval or
other action be required, the Company presently contemplates that
such approval or other action will be sought. The Company is
unable to predict whether it may determine that it is required to
delay the acceptance for payment of or payment for shares of
Common Stock tendered pursuant to the Offer pending the outcome
of any such matter. There can be no assurance that any such
approval or other action, if needed, would be obtained or would
be obtained without substantial conditions or that the failure to
obtain any such approval or other action might not result in
adverse consequences to the Company's business. The Company's
obligations under the Offer to accept for payment and pay for
shares of Common Stock is subject to certain conditions. See
Section 7.
14. CERTAIN FEDERAL INCOME TAX CONSEQUENCES.
The following is a general summary of the material federal
income tax consequences of the sale of shares pursuant to the
Offer. This discussion is based on the Internal Revenue Code of
1986, as amended (the "Code"), its legislative history, Treasury
Regulations thereunder and administrative and judicial
interpretations thereof, as of the date hereof, all of which are
subject to change (possibly on a retroactive basis). This
summary does not discuss all the tax consequences that may be
relevant to a particular stockholder in light of the
stockholder's particular circumstances and it is not intended to
be applicable in all respects to all categories of stockholders.
Some stockholders, such as insurance companies, tax-exempt
persons, financial institutions, regulated investment companies,
dealers in securities or currencies, persons that hold shares of
Common Stock as a position in a "straddle" or as part of a
"hedge," "conversion transaction" or other integrated investment,
persons who received shares of Common Stock as compensation or
persons whose functional currency is other than United States
dollars, may be subject to different rules not discussed below.
In addition, this summary does not address any state, local or
foreign tax considerations that may be relevant to a
stockholder's decision to tender shares of Common Stock pursuant
to the Offer. This summary assumes shares of Common Stock are
held as capital assets within the meaning of Section 1221 of the
Code.
EACH STOCKHOLDER IS URGED TO CONSULT HIS OR HER OWN TAX
ADVISER WITH RESPECT TO THE FEDERAL, STATE AND LOCAL CONSEQUENCES
OF PARTICIPATING IN THE OFFER, AS WELL AS ANY TAX CONSEQUENCES
ARISING UNDER THE LAWS OF ANY OTHER TAXING JURISDICTION.
Tax Consequences of Offer -- Distribution vs. Sale
Treatment. The Company's purchase of shares of Common Stock from
a stockholder pursuant to the Offer will be treated by the
stockholder either as a sale of the shares or as a distribution.
The purchase will treated as a sale if the stockholder meets any
of the three tests discussed below. It will be treated as a
distribution if the stockholder satisfies none of the three tests
discussed below.
If the purchase of shares from a particular stockholder is
treated as a sale, the stockholder will recognize gain or loss on
the exchange in an amount equal to the difference between the
amount of cash received by the stockholder and the stockholder's
tax basis in the shares sold. The gain or loss will be capital
gain or loss and will be long-term capital gain or loss if the
shares were held more than one year. A stockholder must
calculate gain or loss separately for each block of shares of
Common Stock that he or she owns. A stockholder may be able to
designate which blocks and the order of such blocks of shares of
Common Stock to be tendered pursuant to the Offer.
If the purchase of shares from a particular stockholder is
treated as a distribution, the distribution will be treated as a
dividend and taxed to the stockholder as ordinary income to the
extent that the Company's current and accumulated earnings and
profits would be allocable to the distribution. In addition, the
tax basis of the stockholder's sold shares will be added to the
tax basis of the remaining shares and not used to offset the
stockholder's ordinary income. The Company believes that it has
sufficient current and accumulated earnings and profits so that
all distributions would be treated as dividends and therefore
taxed as ordinary income.
Determination of Sale or Distribution Treatment. The
Company's purchase of shares of Common Stock pursuant to the
Offer will be treated as a sale of the shares by a stockholder
if:
(a) the purchase completely terminates the stockholder's
equity interest in the Company;
(b) the receipt of cash by the stockholder is "not
essentially equivalent to a dividend"; or
(c) as a result of the purchase there is a "substantially
disproportionate" reduction in the stockholder's equity
interest in the Company.
If none of these tests are met with respect to a particular
stockholder, then the stockholder will treat the Company's
purchase of shares of Common Stock pursuant to the Offer as a
distribution.
In applying the foregoing tests, the constructive ownership
rules of Section 318 of the Code apply. Thus, a stockholder is
treated as owning not only shares of Common Stock actually owned
by the stockholder but also shares of Common Stock actually (and
in some cases constructively) owned by others. Pursuant to the
constructive ownership rules, a stockholder will be considered to
own shares of Common Stock owned, directly or indirectly, by
certain members of the stockholder's family and certain entities
(such as corporations, partnerships, trusts and estates) in which
the stockholder has an interest, as well as shares of Common
Stock which the stockholder has an option to purchase.
Complete Termination. A sale of shares pursuant to the
Offer will be deemed to result in a "complete termination" of the
stockholder's interest in the Company if, immediately after the
sale, either:
(a) the stockholder owns, actually and constructively, no
shares of Common Stock; or
(b) the stockholder actually owns no shares of Common Stock
and constructively owns only shares of Common Stock as
to which the stockholder is eligible to waive, and does
effectively waive, such constructive ownership under
the procedures described in Section 302(c)(2) of the
Code. If a stockholder desires to file such a waiver,
the stockholder should consult his or her own tax
advisor.
Not Essentially Equivalent To A Dividend. A sale of shares
pursuant to the Offer will be treated as "not essentially
equivalent to a dividend" if it results in a "meaningful
reduction" in the selling stockholder's proportionate interest in
the Company. Whether a stockholder meets this test will depend
on relevant facts and circumstances. The IRS has held in a
public ruling that, under the particular facts of that ruling, a
3.3% reduction in the percentage stock ownership of a stockholder
constituted a "meaningful reduction" when the stockholder owned
.0001118% of the publicly-held corporation's stock before a
redemption, owned .0001081% of the corporation's stock after the
redemption, and did not exercise any control over corporate
affairs. In that ruling, the IRS applied the meaningful
reduction standard to the following three important rights
attributable to stock ownership:
(1) the right to vote and thereby exercise control;
(2) the right to participate in current earnings and
accumulated surplus; and
(3) the right to share in net assets on liquidation.
In measuring the change, if any, in a stockholder's proportionate
interest in the Company, the meaningful reduction test is applied
by taking into account all shares of Common Stock that the
Company purchases pursuant to the Offer, including shares
purchased from other stockholders.
If, taking into account the constructive ownership rules of
Section 318 of the Code, a stockholder owns shares of Common
Stock that constitute only a minimal interest in the Company and
does not exercise any control over the affairs of the Company,
any reduction in the stockholder's percentage interest in all of
the three rights described in the preceding sentence should be a
"meaningful reduction." Such selling stockholder would, under
these circumstances, be entitled to treat his or her sale of
shares of Common Stock pursuant to the Offer as a sale for
federal income tax purposes.
Substantially Disproportionate. Under Section 302(b)(2) of
the Code, a sale of shares of Common Stock pursuant to the Offer,
in general, will be "substantially disproportionate" as to a
stockholder if immediately after the sale the ratio of the
outstanding Common Stock that the stockholder then actually and
constructively owns (treating as not outstanding all voting stock
purchased by the Company pursuant to the Offer) is less than 80%
of the ratio of the outstanding Common Stock that the stockholder
actually and constructively owned immediately before the sale of
shares (treating as outstanding all Common Stock purchased by the
Company pursuant to the Offer).
Corporate Dividends-received Deduction. If the case of a
corporate stockholder, if cash received pursuant to the Offer is
treated as a dividend, the resulting dividend income may be
eligible for the 70% dividends-received deduction. The dividends-
received deduction is subject to certain limitations. Corporate
stockholders are urged to consult with their own tax advisors
regarding the availability of the dividends-received deduction.
Company Cannot Predict Whether There Will Be Sale or
Distribution Treatment. The Company cannot predict whether or the
extent to which the Offer will be oversubscribed. If the Offer
is oversubscribed, proration of tenders pursuant to the Offer
will cause the Company to accept fewer shares of Common Stock
than are tendered. Consequently, the Company can give no
assurance that a sufficient number of any stockholder's shares of
Common Stock will be purchased pursuant to the Offer to ensure
that such purchase will be treated as a sale or exchange, rather
than as a dividend, for federal income tax purposes pursuant to
the rules discussed above. However, see Section 6 regarding a
stockholder's right to tender shares of Common Stock subject to
the condition that a specified minimum number of such shares of
Common Stock must be purchased (if any are purchased).
Consequences to Stockholders Who Do Not Sell Shares Pursuant
to the Offer. Stockholders who do not sell shares of Common Stock
pursuant to the Offer will not incur any tax liability as a
result of the consummation of the Offer.
Backup Federal Income Tax Withholding. Payments in
connection with the Offer may be subject to "backup withholding"
at a 31% rate. Under the backup withholding rules, a stockholder
may be subject to backup withholding at the rate of 31% with
respect to a payment of cash pursuant to the Offer unless the
stockholder (a) is a corporation or comes within certain other
exempt categories (including financial institutions and certain
non-U.S. stockholders) and, when required, demonstrates this fact
or (b) provides a taxpayer identification number, certifies as to
no loss of exemption from backup withholding and otherwise
complies with applicable requirements of the backup withholding
rules. A U.S. stockholder that does not provide the Depositary
with a correct taxpayer identification number may also be subject
to penalties imposed by the IRS.
To prevent backup withholding and possible penalties, each
stockholder should complete the substitute IRS Form W-9 included
in the Letter of Transmittal. In order to qualify for an
exemption from backup withholding, a non-U.S. stockholder must
submit a properly executed IRS Form W-8 to the Depositary. Any
amount paid as backup withholding will be creditable against the
shareholder's income tax liability.
Taxation of non-U.S. Stockholders. The rules governing
federal income taxation of the receipt by non-U.S. Shareholders
of cash pursuant to the Offer are complex and no attempt is made
herein to provide more than a brief summary of such rules.
Accordingly, non-U.S. stockholders should consult with their own
tax advisers to determine the impact of federal, state, local and
foreign income tax laws with regard to the receipt of cash
pursuant to the Offer.
For purposes of this discussion, a "non-U.S. stockholder"
means a stockholder who is not (a) a citizen or resident of the
United States, (b) a corporation, partnership or other entity
created or organized under the laws of the United States or of
any State or political subdivision of the foregoing, (c) an
estate the income of which is includible in gross income for U.S.
federal income tax purposes regardless of its source, or (d) a
trust with regards to which a court within the United States is
able to exercise primary supervision over the administration and
one or more U.S. trustees have the authority to control all
substantial decisions.
The U.S. generally imposes a withholding tax with respect to
distributions to non-U.S. stockholders, and the Depositary
intends to withhold 30% from the gross payments made to non-U.S.
stockholders pursuant to the Offer, unless the Depositary
determines that a non- U.S. stockholder is either exempt from the
withholding tax or entitled to a reduced withholding rate under
an income tax treaty. A non-U.S. stockholder who is eligible for
a reduced rate of withholding pursuant to a U.S. income tax
treaty must certify such to the Depositary by providing to the
Depositary a properly executed IRS Form 1001 prior to the time
payment is made. A non-U.S. stockholder may be eligible to
obtain from the IRS a refund of tax withheld if such non-U.S.
stockholder is able to establish that no tax (or a reduced amount
of tax) is due.
A non- U.S. stockholder will not be subject to the
withholding tax if a payment from the Company pursuant to the
Offer is effectively connected with the conduct of a trade or
business in the United States by such non-U.S. stockholder (and,
if certain tax treaties apply, is attributable to a United States
permanent establishment maintained by such non-U.S. stockholder)
and the non-U.S. stockholder has furnished the Depositary with a
properly executed IRS Form 4224 prior to the time of payment. If
a payment from the Company pursuant to the Offer is effectively
connected with a United States trade or business, the non-U.S.
stockholder will be subject to tax on a net basis at graduated
rates, in the same manner as U.S. stockholders are taxed with
respect to the payment.
ALL STOCKHOLDERS ARE ADVISED TO CONSULT THEIR OWN TAX
ADVISORS REGARDING THE FEDERAL, STATE, LOCAL AND FOREIGN TAX
CONSEQUENCES OF EXCHANGING SHARES FOR CASH PURSUANT TO THE OFFER
IN LIGHT OF THEIR OWN PARTICULAR CIRCUMSTANCES.
15. EXTENSION OF OFFER; TERMINATION; AMENDMENT.
The Company expressly reserves the right, in its sole
discretion, at any time and from time to time, and regardless of
whether or not any of the events set forth in Section 7 shall
have occurred or shall be deemed by the Company to have occurred,
to extend the period of time during which the Offer is open and
thereby delay acceptance for payment of and payment for any
shares of Common Stock by giving oral or written notice of such
extension to the Depositary and making a public announcement
thereof. The Company also expressly reserves the right, in its
sole discretion, to terminate the Offer and not accept for
payment or pay for any shares of Common Stock not previously
accepted for payment or paid for or, subject to applicable law,
to postpone payment for shares of Common Stock upon the
occurrence of any of the conditions specified in Section 7 by
giving oral or written notice of such termination or postponement
to the Depositary and making a public announcement thereof. The
Company's reservation of the right to delay payment for shares of
Common Stock which it has accepted for payment is limited by Rule
13e-4(f)(5) promulgated under the Exchange Act, which requires
that the Company must pay the consideration offered or return the
shares of Common Stock tendered promptly after termination or
withdrawal of a tender offer. Subject to compliance with
applicable law, the Company further reserves the right, in its
sole discretion, and regardless of whether any of the events set
forth in Section 7 shall have occurred or shall be deemed by the
Company to have occurred, to amend the Offer in any respect
(including, without limitation, by decreasing or increasing the
consideration offered in the Offer to holders of shares or by
decreasing or increasing the number of shares being sought in the
Offer). Amendments to the Offer may be made at any time and from
time to time effected by public announcement thereof, such
announcement, in the case of an extension, to be issued no later
than 9:00 a.m., Eastern time, on the next business day after the
last previously scheduled or announced Expiration Date. Any
public announcement made pursuant to the Offer will be
disseminated promptly to stockholders in a manner reasonably
designated to inform stockholders of such change. Without
limiting the manner in which the Company may choose to make a
public announcement, except as required by applicable law, the
Company shall have no obligation to publish, advertise or
otherwise communicate any such public announcement other than by
making a press release to the Dow Jones New Service.
If the Company materially changes the terms of the Offer or
the information concerning the Offer, or if it waives a material
condition of the Offer, the Company will extend the Offer to the
extent required by Rules 13e-4(d)(2) and 13e-4(e)(2) promulgated
under the Exchange Act. These rules require that the minimum
period during which an offer must remain open following material
changes in the terms of the Offer or information concerning the
Offer (other than a change in price or a change in percentage of
securities sought) will depend on the facts and circumstances,
including the relative materiality of such terms or information.
If (a) the Company increases or decreases the price to be paid
for shares, the number of shares of Common Stock being sought in
the Offer and, in the event of an increase in the number of
shares being sought, such increase exceeds 2% of the outstanding
shares, and (b) the Offer is scheduled to expire at any time
earlier than the expiration of a period ending on the tenth
business day from and including the date that such notice of an
increase or decrease is first published, sent or given in the
manner specified in this Section 15, the Offer will be extended
until the expiration of such period of ten business days.
16. FEES AND EXPENSES.
The Company has retained Continental Stock Transfer & Trust
Company to act as Depositary in connection with the Offer. The
Depositary will receive reasonable and customary compensation for
its services, will be reimbursed by the Company for certain
reasonable out-of-pocket expenses and will be indemnified against
certain liabilities in connection with the Offer, including
certain liabilities under the federal securities laws.
No fees or commissions will be payable to brokers, dealers
or other persons (other than fees to the Depositary as described
above) for soliciting tenders of shares pursuant to the Offer.
The Company, however, upon request, will reimburse brokers,
dealers and commercial banks for customary mailing and handling
expenses incurred by such persons in forwarding the Offer and
related materials to the beneficial owners of shares of Common
Stock held by any such person as a nominee or in a fiduciary
capacity. No broker, dealer, commercial bank or trust company has
been authorized to act as the agent of the Company or the
Depositary for purposes of the Offer.
The Company will pay or cause to be paid all stock transfer
taxes, if any, on its purchase of shares except as otherwise
provided in Instruction 7 in the Letter of Transmittal.
17. MISCELLANEOUS.
The Company is not aware of any jurisdiction where the
making of the Offer is not in compliance with applicable law. If
the Company becomes aware of any jurisdiction where the making of
the Offer is not in compliance with any valid applicable law, the
Company will make a good faith effort to comply with such law.
If, after such good faith effort, the Company cannot comply with
such law, the Offer will not be made to (nor will tenders be
accepted from or on behalf of) the holders of shares of Common
Stock residing in such jurisdiction.
Pursuant to Rule 13e-4 of the General Rules and Regulations
under the Exchange Act, the Company has filed with the Commission
an Issuer Tender Offer Statement on Schedule 13E-4 which contains
additional information with respect to the Offer. Such Schedule
13E-4, including the exhibits and any amendments thereto, may be
examined, and copies may be obtained, at the same places and in
the same manner as is set forth in Section 10 with respect to
information concerning the Company.
NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR MAKE ANY
REPRESENTATION ON BEHALF OF THE COMPANY IN CONNECTION WITH THE
OFFER OTHER THAN THOSE CONTAINED IN THIS OFFER TO PURCHASE OR IN
THE RELATED LETTER OF TRANSMITTAL. IF GIVEN OR MADE, SUCH
INFORMATION OR REPRESENTATION MUST NOT BE RELIED UPON AS HAVING
BEEN AUTHORIZED BY THE COMPANY.
U.S. PHYSICAL THERAPY, INC.
April 9, 1999
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EXHIBIT (a)(2)
LETTER OF TRANSMITTAL
To Tender Shares of Common Stock
of
U.S. PHYSICAL THERAPY, INC.
Pursuant to the Offer to Purchase Dated April 9, 1999
THE OFFER, PRORATION PERIOD AND WITHDRAWAL RIGHTS EXPIRE AT
5:00 P.M., NEW YORK CITY TIME, ON FRIDAY, MAY 7, 1999
UNLESS THE OFFER IS EXTENDED.
The Depositary for the Offer is:
CONTINENTAL STOCK TRANSFER & TRUST COMPANY
By Mail, Overnight Delivery or By Facsimile Transmission:
Hand: (Eligible Institutions only. See
Instruction 1)
Continental Stock Transfer and (212) 509-5150
Trust Company Confirm by Telephone:
2 Broadway (212) 509-4000 (ext. 535)
New York, NY 10004
DELIVERY TO AN ADDRESS OTHER THAN AS SET FORTH ABOVE OR
TRANSMISSION VIA FACSIMILE TO A NUMBER OTHER THAN AS SET FORTH
ABOVE OF THIS LETTER OF TRANSMITTAL WILL NOT CONSTITUTE A VALID
DELIVERY. DELIVERIES TO THE COMPANY WILL NOT BE FORWARDED TO THE
DEPOSITARY AND THEREFORE WILL NOT CONSTITUTE VALID DELIVERY.
DELIVERIES TO DTC WILL NOT CONSTITUTE VALID DELIVERY TO THE
DEPOSITARY.
DESCRIPTION OF SHARES TENDERED (See Instructions 3 and 4)
Name(s) and address(es) of registered Shares Tendered
holder(s) (attach signed additional list
(please fill in, if blank, exactly as if necessary)
name(s) appear(s) on certificate(s))
Total
Number of Number
Certifi- Shares of
cate(s) Repre- Shares
Number1 sented by Tendered
Certifi- 3
cate(s)2
Indicate in this box the order (by certificate number) in which
Shares are to be purchased in the event of proration. If you do not
designate an order, in the event less than all Shares tendered are
purchased due to proration, Shares will be selected for purchase by
the Depositary. See Instruction 10.
1st: 2nd: 3rd: 4th: 5th:
1 Need not be completed by stockholders tendering Shares by book-
entry transfer.
2 This letter of transmittal may not be used for shares
attributable to accounts under the U.S. Physical Therapy, Inc.
Stock Option Plans. See Section 3, "Procedures for Tendering
Shares-Stock Option Plans" in the Offer to Purchase.
3 If you desire to tender fewer than all Shares evidenced by
any certificates listed above, please indicate in this column the
number of Shares you wish to tender. Otherwise, all Shares
evidenced by such certificates will be deemed to have been
tendered. See Instruction 4.
Any stockholder wishing to tender all or any part of his or
her shares of Common Stock should either:
X complete and sign this Letter of Transmittal (or a facsimile
hereof) in accordance with the instructions hereto and either
mail or deliver it with any required signature guarantee and any
other required documents to Continental Stock Transfer & Trust
Company (the "Depositary"), and either mail or deliver the stock
certificates for such shares to the Depositary (with all such
other documents) or tender such shares pursuant to the procedure
for book-entry tender set forth in Section 3, or
X request a broker, dealer, commercial bank, trust company or
other nominee to effect the transaction for such stockholder.
Holders of shares of Common Stock registered in the name of a
broker, dealer, commercial bank, trust company or other nominee
should contact such person if they desire to tender their shares.
Any stockholder who desires to tender shares of Common Stock and
whose certificates for such shares cannot be delivered to the
Depositary or who cannot comply with the procedure for book-entry
transfer or whose other required documents cannot be delivered to
the Depositary, in any case, by the expiration of the Offer must
tender such shares pursuant to the guaranteed delivery procedure
set forth in Section 3 of the Offer to Purchase. See Instruction
2.
Questions and requests for assistance or for additional
copies of this Letter of Transmittal, the Offer to Purchase or
the Notice of Guaranteed Delivery may be directed to Dorothy
Flato, Corporate Secretary, U.S. Physical Therapy, Inc., 3040
Post Oak Blvd., Suite 222, Houston, Texas 77056 (telephone: (713)
297-7000).
LOST, STOLEN OR DESTROYED CERTIFICATES:
Check here if any of the certificates representing Shares
that you own have been lost, destroyed or stolen. See
Instruction 16.
Number of Shares represented by lost, destroyed or stolen
certificates:
METHOD OF TENDER
UNCONDITIONAL TENDER OF SHARES (check one box):
Check here if tendered Shares are enclosed herewith.
Check here if tendered Shares are being delivered by book-entry
transfer made to the account maintained by the Depositary at DTC
and complete the following (for use by Eligible Institutions only):
Name of Tendering Institution:
DTC Account Number:
Transaction Code Number:
Check here if tendered Shares are being delivered pursuant to a
Notice of Guaranteed Delivery enclosed herewith and complete the
following (for use by Eligible Institutions only):
Name of Registered Holder(s):
Window Ticket Number (if any):
Date of Execution of Notice of Guaranteed Delivery:
Name of Eligible Institution that Guaranteed Delivery:
CONDITIONAL TENDER OF SHARES (See Instruction 9) Odd lot shares cannot
be conditionally tendered.
Check here if tendering all of the stockholder's Shares and if
tender of Shares is conditional on the Company's purchasing all or a
minimum number of the tendered Shares and complete the following:
Minimum Number of Shares to be Sold:
ODD LOTS (See Instruction 8)
To be completed ONLY if the Shares are being tendered by or on behalf
of a person owning an aggregate of 99 or fewer Shares (excluding
shares attributable to individual accounts under the Stock Option
Plans) (check one box):
The undersigned is tendering such Shares at the Purchase Price, as
the same shall be determined by the Company in accordance with the
terms of the Offer (persons checking this box need not indicate
the price per Share below); or
The undersigned is tendering such Shares at the price per Share
indicated below under "Price (In Dollars) Per Share at Which
Shares Are Being Tendered."
TO CONTINENTAL STOCK TRANSFER & TRUST COMPANY
The undersigned hereby tenders to U.S. Physical Therapy,
Inc., a Nevada corporation (the "Company"), the above described
shares of the Company's Common Stock, $.01 par value per share
(the "Shares"), at a price per Share indicated in this Letter of
Transmittal (unless this Letter of Transmittal is for an Odd Lot
Holder who has elected to accept the Purchase Price determined by
the Company), in cash, upon the terms and subject to the
conditions set forth in the Company's Offer to Purchase, dated
April 9, 1999 (the "Offer to Purchase"), receipt of which is
hereby acknowledged, and in this Letter of Transmittal (which
together constitute the "Offer").
Subject to and effective upon acceptance for payment of and
payment for the Shares tendered hereby in accordance with the
terms and subject to the conditions of the Offer (including, if
the Offer is extended or amended, the terms and conditions of
such extension or amendment), the undersigned hereby sells,
assigns and transfers to, or upon the order of, the Company all
right, title and interest in and to all the Shares that are being
tendered hereby and orders the registration of all such Shares if
tendered by book-entry transfer that are purchased pursuant to
the Offer and hereby irrevocably constitutes and appoints the
Depositary as the true and lawful agent and attorney-in-fact of
the undersigned (with full knowledge that said Depositary also
acts as the agent of the Company) with respect to such Shares
with full power of substitution (such power of attorney being
deemed to be an irrevocable power coupled with an interest), to:
(a) deliver certificate(s) for such Shares or transfer
ownership of such Shares on the account books maintained by DTC,
together, in either such case, with all accompanying evidences of
transfer and authenticity, to, or upon the order of, the Company
upon receipt by the Depositary, as the undersigned's agent, of
the aggregate Purchase Price (as defined below) with respect to
such Shares;
(b) present certificates for such Shares for cancellation
and transfer on the Company's books; and
(c) receive all benefits and otherwise exercise all rights
of beneficial ownership of such Shares, subject to the next
paragraph, all in accordance with the terms of the Offer.
The undersigned hereby represents and warrants to the Company
that:
(a) the undersigned understands that tenders of Shares
pursuant to any one of the procedures described in Section 3 of
the Offer to Purchase and in the instructions hereto will
constitute the undersigned's acceptance of the terms and
conditions of the Offer, including the undersigned's
representation and warranty to the Company that:
(i) the undersigned has a net long position in Shares
or equivalent securities at least equal to the Shares tendered
within the meaning of Rule 14e-4 under the Securities Exchange
Act of 1934, as amended (the "1934 Act"), and
(ii) such tender of Shares complies with Rule 14e-4
under the 1934 Act;
(b) the undersigned has full power and authority to tender,
sell, assign and transfer Shares tendered hereby and that, when
and to the extent the Company accepts such Shares for purchase,
the Company will acquire good, marketable and unencumbered title
to them, free and clear of all security interests, liens,
restrictions, charges, encumbrances, conditional sales agreements
or other obligations relating to their sale or transfer, and not
subject to any adverse claim;
(c) on request, the undersigned will execute and deliver any
additional documents the Depositary or the Company deems
necessary or desirable to complete the assignment, transfer and
purchase of the Shares tendered hereby; and
(d) the undersigned has read and agrees to all of the terms
of the Offer.
All authorities conferred or agreed to be conferred in this
Letter of Transmittal shall not be affected by, and shall survive
the death or incapacity of the undersigned, and any obligation of
the undersigned hereunder shall be binding upon the heirs,
personal representatives, executors, administrators, successors,
assigns, trustees in bankruptcy, and legal representatives of the
undersigned. Except as stated in the Offer to Purchase, this
tender is irrevocable. The Company's acceptance for payment of
Shares tendered pursuant to the Offer will constitute a binding
agreement between the undersigned and the Company upon the terms
and subject to the conditions of the Offer.
The name(s) and address(es) of the registered holder(s)
should be printed above, if they are not already printed above,
exactly as they appear on the certificates representing Shares
tendered hereby. The certificate numbers, the number of Shares
represented by such certificates and the number of Shares that
the undersigned wishes to tender, should be set forth in the
appropriate boxes above. Any order (by certificate number) in
which the tendered Shares must be purchased should also be
indicated above. The price at which such Shares are being
tendered should be indicated in the box below (unless this Letter
of Transmittal is for an Odd Lot Holder who has elected to accept
the Purchase Price determined by the Company). The undersigned
understands that the Company will, upon the terms and subject to
the conditions of the Offer, determine a single per Share price
(not in excess of $10.00 nor less than $8.50 per Share) in cash
(the "Purchase Price") that it will pay for Shares validly
tendered and not withdrawn prior to the Expiration Date pursuant
to the Offer, taking into account the number of Shares so
tendered and the prices (in multiples of $0.125) specified by
tendering stockholders. The undersigned understands that the
Company will select the lowest Purchase Price that will allow it
to buy 346,000 Shares (or such lesser number of Shares as are
validly tendered at prices not in excess of $10.00 nor less than
$8.50 per Share) pursuant to the Offer. The undersigned
understands that all Shares properly tendered at prices at or
below the Purchase Price and not withdrawn prior to the
Expiration Date will be purchased at the Purchase Price, upon the
terms and subject to the conditions of the Offer, including its
proration and conditional tender provisions, and that the Company
will return all other Shares not purchased pursuant to the Offer,
including Shares tendered at prices greater than the Purchase
Price and not withdrawn prior to the Expiration Date and Shares
not purchased because of proration or conditional tender.
The undersigned recognizes that, under certain circumstances
set forth in the Offer to Purchase, the Company may terminate or
amend the Offer or may postpone the acceptance for payment of, or
the payment for, Shares tendered or may accept for payment fewer
than all of the Shares tendered hereby. In any such event, the
undersigned understands that certificate(s) for any Shares
delivered herewith but not tendered or not purchased will be
returned to the undersigned at the address indicated above,
unless otherwise indicated under the "Special Payment
Instructions" or "Special Delivery Instructions" boxes below.
The undersigned recognizes that the Company has no obligation,
pursuant to the "Special Payment Instructions," to transfer any
certificate for Shares from the name of its registered holder, or
to order the registration or transfer of Shares tendered by book-
entry transfer, if the Company purchases none of the Shares
represented by such certificate or tendered by such book-entry
transfer.
The check for the aggregate Purchase Price for such of the
Shares tendered hereby as are purchased will be issued to the
order of the undersigned and mailed to the address indicated
above, unless otherwise indicated under the "Special Payment
Instructions" or "Special Delivery Instructions" boxes below.
SPECIAL PAYMENT INSTRUCTIONS SPECIAL DELIVERY INSTRUCTIONS
(See Instructions 1, 4, 6, 7 and (See Instructions 1, 4, 6 and 11)
11)
To be completed ONLY if To be completed ONLY if
certificates for Shares not certificates for Shares not
tendered or not purchased and/or tendered or not purchased and/or
any check for the aggregate any check for the aggregate
Purchase Price of Shares purchased Purchase Price of Shares
are to be issued in the name of purchased are to be issued in the
and sent to someone other than the name of and sent to someone other
undersigned. than the undersigned.
Issue Certificate(s) and/or Mail Certificate(s) and/or
Check to: Check to:
Name: Name:
(please print or type) (please print or type)
Address: Address:
(include zip code) (include zip code)
Tax identification or Social
Security Number
(See Substitute Form W-9)
PRICE (IN DOLLARS) PER SHARE AT WHICH SHARES ARE BEING TENDERED
(See Instruction 5)
CHECK ONLY ONE BOX
If more than one box is checked or if no box is checked, there is
no valid tender of shares (except that Odd Lot Holders may check a
box below but are not required to if they accept the Purchase Price,
as determined by the Company pursuant to the Offer). Stockholders
who desire to tender shares at more than one price must complete a
separate letter of transmittal for each price at which shares are
tendered.
$8.50 $9.00 $9.375 $9.75
$8.625 $9.125 $9.50 $9.875
$8.75 $9.25 $9.625 $10.00
$8.875
HOLDER(S) PLEASE SIGN HERE
(See Instructions 2, 5 and 6)
(Please Complete Substitute Form W-9 Contained Herein)
Must be signed by the registered holder(s) exactly as
name(s) appear(s) on certificate(s) or, in the case of book-entry
securities, on a security position listing or by person(s)
authorized to become registered holder(s) by certificate(s) and
documents transmitted with this Letter of Transmittal. If
signature is by a trustee, executor, administrator, guardian,
attorney-in-fact, officer of a corporation or another person
acting in a fiduciary or representative capacity, please set
forth the signer's full title and see Instruction 6.
SIGNATURE OF OWNER(S) GUARANTEE OF SIGNATURES
(See Instructions 1 and 6 below)
Certain Signatures Must be
Guaranteed
by an Eligible Institution
X
X (Authorized Signature)
(Signature(s) of Holder(s) or
Authorized Signatory) (Print Name)
Date: ,1999 (Capacity (full title))
(Name of Eligible Institution
Name(s): Guaranteeing Signature)
(Please Print)
Capacity: (Address of Firm - Please
include ZIP code)
Address:
(Address of Firm - Please
(Please include ZIP code) include ZIP code)
Telephone No. (with area code):
Telephone No. (with area code)
Tax ID No.: of Firm:
Date: , 1999
INSTRUCTIONS
FORMING PART OF THE TERMS AND CONDITIONS OF THE EXCHANGE OFFER
1. Guarantee of Signatures. Except as otherwise provided
below, all signatures on this Letter of Transmittal must be
guaranteed by a firm which is a bank, broker, dealer, credit
union, savings association, or other "eligible guarantor
institution" within the meaning of Rule 17Ad-15 under the 1934
Act (each, an "Eligible Institution"). No signature guarantee is
required on this Letter of Transmittal (i) if this Letter of
Transmittal is signed by the registered holder(s) (which term,
for purposes of this document, shall include any participant in
DTC whose name appears on a security position listing as the
owner of Shares) of Shares tendered herewith, unless such
holder(s) has completed either the box entitled "Special Delivery
Instructions" or the box entitled "Special Payment Instructions"
included herein, or (ii) if such Shares are tendered for the
account of an Eligible Institution. See Instructions 6 and 11.
2. Delivery of Letter of Transmittal and Share
Certificates; Guaranteed Delivery Procedures. This Letter of
Transmittal is to be used only if certificates for Shares are
delivered with it to the Depositary (or such certificates will be
delivered pursuant to a Notice of Guaranteed Delivery previously
sent to the Depositary) or if a tender for Shares is being made
concurrently pursuant to the procedure for tender by book-entry
transfer set forth in Section 3 of the Offer to Purchase.
Certificates for all physically tendered Shares or confirmation
of a book-entry transfer into the Depositary's account at DTC of
Shares tendered electronically, together in each case with a
properly completed and duly executed Letter of Transmittal or
duly executed and manually signed facsimile of it, and any other
documents required by this Letter of Transmittal, should be
mailed or delivered to the Depositary at the appropriate address
set forth above and must be delivered to the Depositary on or
before the Expiration Date (as defined in the Offer to Purchase).
If certificates are forwarded to the Depositary in multiple
deliveries, a properly completed and duly executed Letter of
Transmittal must accompany each such delivery. DELIVERY OF
DOCUMENTS TO DTC DOES NOT CONSTITUTE DELIVERY TO THE DEPOSITARY.
Stockholders whose certificates are not immediately
available or who cannot deliver certificates for their Shares and
all other required documents to the Depositary before the
Expiration Date, or whose Shares cannot be delivered on a timely
basis pursuant to the procedures for book-entry transfer, must,
in any case, tender their Shares by or through any Eligible
Institution by properly completing and duly executing and
delivering a Notice of Guaranteed Delivery (or facsimile of it)
and by otherwise complying with the guaranteed delivery procedure
set forth in Section 3 of the Offer to Purchase. Pursuant to
such procedure, certificates for all physically tendered Shares
or book-entry confirmations, as the case may be, as well as a
properly completed and duly executed Letter of Transmittal (or
facsimile of it) and all other documents required by this Letter
of Transmittal, must be received by the Depositary within three
(3) Nasdaq trading days after receipt by the Depositary of such
Notice of Guaranteed Delivery, all as provided in Section 3 of
the Offer to Purchase.
The Notice of Guaranteed Delivery may be delivered by hand
or transmitted by telegram, facsimile transmission or mail to the
Depositary and must include a signature guarantee by an Eligible
Institution in the form set forth in such Notice. For Shares to
be tendered validly pursuant to the guaranteed delivery
procedure, the Depositary must receive the Notice of Guaranteed
Delivery on or before the Expiration Date.
THE METHOD OF DELIVERY OF ALL DOCUMENTS, INCLUDING SHARE
CERTIFICATES, THE LETTER OF TRANSMITTAL AND ANY OTHER REQUIRED
DOCUMENTS, IS AT THE OPTION AND RISK OF THE TENDERING
STOCKHOLDER, AND THE DELIVERY WILL BE DEEMED MADE ONLY WHEN
ACTUALLY RECEIVED BY THE DEPOSITARY. IF DELIVERY IS BY MAIL,
REGISTERED MAIL WITH RETURN RECEIPT REQUESTED, PROPERLY INSURED,
IS RECOMMENDED. IN ALL CASES, SUFFICIENT TIME SHOULD BE ALLOWED
TO ENSURE TIMELY DELIVERY.
The Company will not accept any alternative, conditional or
contingent tenders, nor will it purchase any fractional Shares,
except as expressly provided in the Offer to Purchase. All
tendering stockholders, by execution of this Letter of
Transmittal (or a facsimile of it), waive any right to receive
any notice of the acceptance of their tender.
3. Inadequate Space. If the space provided in the box
captioned "Description of Shares Tendered" is inadequate, the
certificate numbers, the class or classes, and/or the number of
Shares should be listed on a separate signed schedule and
attached to this Letter of Transmittal.
4. Partial Tenders and Unpurchased Shares. (Not applicable
to stockholders who tender by book-entry transfer.) If fewer than
all of the Shares evidenced by any certificate are to be
tendered, fill in the number of Shares that are to be tendered in
the column entitled "Number of Shares Tendered," in the box
captioned "Description of Shares Tendered." In such case, if any
tendered Shares are purchased, a new certificate for the
remainder of the Shares (including any Shares not purchased)
evidenced by the old certificate(s) will be issued and sent to
the registered holder(s), unless otherwise specified in either
the "Special Payment Instructions" or "Special Delivery
Instructions" box on this Letter of Transmittal, as soon as
practicable after the Expiration Date. Unless otherwise
indicated, all Shares represented by the certificates(s) listed
and delivered to the Depositary will be deemed to have been
tendered.
5. Indication of Price at Which Shares are being Tendered.
Except if this Letter of Transmittal is for an Odd Lot Holder who
has elected to accept the Purchase Price determined by the
Company and has checked the appropriate box, for Shares to be
validly tendered, the stockholder MUST check the box indicating
the price per Share at which he or she is tendering Shares under
"Price (In Dollars) Per Share at Which Shares Are Being Tendered"
on this Letter of Transmittal. ONLY ONE BOX MAY BE CHECKED. IF
MORE THAN ONE BOX IS CHECKED OR IF NO BOX IS CHECKED, THERE IS NO
VALID TENDER OF SHARES. A stockholder wishing to tender portions
of his or her Share holdings at different prices must complete a
separate Letter of Transmittal (and, if applicable, a separate
Notice of Guaranteed Delivery) for each price at which he or she
wishes to tender each such portion of his or her Shares. The
same Shares cannot be tendered (unless previously properly
withdrawn as provided in Section 4 of the Offer to Purchase) at
more than one price.
6. Signatures on Letter of Transmittal, Stock Powers and
Endorsements.
(a) If this Letter if Transmittal is signed by the
registered holder(s) of the Shares tendered hereby, the
signature(s) must correspond exactly with the name(s) as written
on the face of the certificate(s) without any change whatsoever.
(b) If any tendered Shares are registered in the names
of two or more joint holders, each such holder must sign this
Letter of Transmittal.
(c) If any tendered Shares are registered in different
names on different certificates, it will be necessary to
complete, sign and submit as many separate Letters of Transmittal
(or facsimiles thereof) as there are different registrations of
certificates.
(d) When this Letter of Transmittal is signed by the
registered holder(s) of the Shares listed and transmitted hereby,
no endorsement(s) of certificate(s) representing such Shares or
separate stock power(s) are required unless payment of the
Purchase Price is to be made or the certificate(s) for the Shares
not tendered or not purchased are to be issued to a person other
than the registered holder(s). If this Letter of Transmittal is
signed by a person other than the registered holder(s) of the
certificate(s) listed, or if payment is to be made to a person
other than the registered holder(s), the certificate(s) must be
endorsed or accompanied by appropriate stock power(s), in either
case signed exactly as the name(s) of the registered holder(s)
appears on the certificate(s). SIGNATURE(S) ON SUCH
CERTIFICATE(S) OR STOCK POWER(S) MUST BE GUARANTEED BY AN
ELIGIBLE INSTITUTION. See Instruction 1.
(e) If this Letter of Transmittal or any
certificate(s) or stock powers(s) are signed by trustees,
executors, administrators, guardians, attorneys-in-fact, officers
of corporations or others acting in fiduciary or representative
capacity, such persons should so indicate when signing and must
submit proper evidence satisfactory to the Company of their
authority to so act.
7. Stock Transfer Taxes. Except as provided in this
Instruction 7, no stock transfer tax stamps or funds to cover
such stamps need accompany this Letter of Transmittal. The
Company will pay or cause to be paid any stock transfer taxes
payable on the transfer to it of Shares purchased pursuant to the
Offer. If, however:
(a) payment of the aggregate Purchase Price for Shares
tendered hereby and accepted for purchase is to be made to any
other person than the registered holder(s);
(b) Shares not tendered or not accepted for purchase
are to be registered in the name(s) of any person(s) other than
the registered holder(s); or
(c) tendered certificates are registered in the
name(s) of any person(s) other than the person(s) signing this
Letter of Transmittal;
then the Depositary will deduct from such aggregate Purchase
Price the amount of any stock transfer taxes (whether imposed on
the registered holder, such other person or otherwise) payable on
account of the transfer to such person, unless satisfactory
evidence of the payment of such taxes or any exemption from them
is submitted.
8. Odd Lots. As described in Section 1 of the Offer to
Purchase, if the Company is to purchase fewer than all Shares
tendered at or below the Purchase Price before the Expiration
Date and not withdrawn, the Shares purchased first will consist
of all Shares tendered by any stockholder who owns beneficially
an aggregate of 99 or fewer Shares (excluding shares attributable
to individual accounts under the Stock Option Plans), and who
tenders all of his or her Shares at or below the Purchase Price
(an "Odd Lot Holder"). This preference will not be available
unless the box captioned "Odd Lots" is completed.
9. Conditional Tenders. As described in Sections 1 and 6
of the Offer to Purchase, stockholders may condition their
tenders on all or a minimum number of their tendered Shares being
purchased ("Conditional Tenders"). If the Company is to purchase
less than all Shares tendered before the Expiration Date and not
withdrawn, the Depositary will perform a preliminary proration,
and any Shares tendered at or below the Purchase Price pursuant
to a Conditional Tender for which the condition was not satisfied
by the preliminary proration shall be deemed withdrawn, subject
to reinstatement if such conditional tendered Shares are
subsequently selected by random lot for purchase subject to
Sections 1 and 6 of the Offer to Purchase. CONDITIONAL TENDERS
WILL BE SELECTED BY A LOT ONLY FROM STOCKHOLDERS WHO TENDER ALL
OF THEIR SHARES. All tendered Shares shall be deemed
unconditionally tendered unless the "Conditional Tender" box is
completed. The Conditional Tender alternative is made available
so that a stockholder may assure that the purchase of Shares from
the stockholder pursuant to the Offer will be treated as a sale
of such Shares by the stockholder, rather than the payment of a
dividend to the stockholder, for federal income tax purposes.
Odd Lot Shares, which will not be subject to proration, cannot be
conditionally tendered. It is the tendering stockholder's
responsibility to calculate the minimum number of Shares that
must be purchased from the stockholder in order for the
stockholder to qualify for sale (rather than dividend) treatment,
and each stockholder is urged to consult his or her own tax
advisor.
IN THE EVENT OF PRORATION, ANY SHARES TENDERED PURSUANT TO A
CONDITIONAL TENDER FOR WHICH THE MINIMUM REQUIREMENTS ARE NOT
SATISFIED MAY NOT BE ACCEPTED AND THEREBY WILL BE DEEMED
WITHDRAWN.
10. Order of Purchase in Event of Proration. As described
in Section 1 of the Offer to Purchase, stockholders may designate
the order in which their Shares are to be purchased in the event
of proration. The order of purchase may have an effect on the
federal income tax treatment of the Purchase Price for the Shares
purchased. If you do not designate an order, in the event that
fewer than all Shares tendered are purchased due to proration,
Shares will be selected for purchase by the Depositary. See
Sections 1 and 14 of the Offer to Purchase.
11. Special Payment and Delivery Instructions. If
certificate(s) for Shares not tendered or not purchased and/or
check(s) are to be issued in the name of a person other than the
signer of the Letter of Transmittal or to the signer at a
different address, the boxes captioned "Special Payment
Instructions" and/or "Special Delivery Instructions" on this
Letter of Transmittal should be completed as applicable and
signatures must be guaranteed as described in Instruction 1.
12. Irregularities. All questions as to the number of
Shares to be accepted, the price to be paid therefor and the
validity, form, eligibility (including time of receipt) and
acceptance for payment of any tender of Shares will be determined
by the Company in its sole discretion, which determinations shall
be final and binding on all parties. The Company reserves the
absolute right to reject any or all tenders of Shares it
determines not to be in proper form or the acceptance of which or
payment for which may, in the opinion of the Company's counsel,
be unlawful. The Company also reserves the absolute right to
waive any of the conditions of the Offer and any defect or
irregularity in the tender of any particular Shares, and the
Company's interpretation of the terms of the Offer (including
these instructions) will be final and binding on all parties. No
tender of Shares will be deemed to be properly made until all
defects and irregularities have been cured or waived. Unless
waived, any defects or irregularities in connection with tenders
must be cured within such time as the Company shall determine.
None of the Company, the Depositary or any other person is or
will be obligated to give notice of any defects or irregularities
in tenders and none of them will incur any liability for failure
to give any such notice.
13. Questions and Requests for Assistance and Additional
Copies. Questions and requests for assistance may be directed
to, or additional copies of the Offer to Purchase, the Notice of
Guaranteed Delivery and this Letter of Transmittal may be
obtained from Dorothy Flato, Corporate Secretary, U.S. Physical
Therapy, Inc., 3040 Post Oak Blvd., Suite 222, Houston, Texas
77056 (telephone: (713) 297-7000).
14. 31% Backup Withholding. Under federal income tax law,
a stockholder who receives a payment pursuant to the Offer is
required to provide the Depositary (as payor) with such
stockholder's correct taxpayer identification number ("TIN") on
Substitute Form W-9 below. If the stockholder is an individual,
the TIN is his or her social security number. If the Depositary
is not provided with the correct TIN, payments that are made to
the stockholder or other payee with respect to the Offer may be
subject to 31% backup withholding.
Certain stockholders (including, among others, corporations
and certain foreign individuals) may not be subject to these
backup withholding and reporting requirements. In order for a
foreign individual to qualify as an exempt recipient, the
stockholder must submit to the Depositary a Form W-8, signed
under penalties of perjury, attesting to that individual's exempt
status. A Form W-8 can be obtained from the Depositary.
If backup withholding applies, the Depositary is required to
withhold 31% of any such payments made to the stockholder or
other payee. Backup withholding is not an additional tax.
Rather, the tax liability of persons subject to backup
withholding will be reduced by the amount of tax withheld,
provided that the required information is given to the Internal
Revenue Service. If withholding results in an overpayment of
taxes, a refund may be obtained from the Internal Revenue
Service.
The box in Part 3 of the Substitute Form W-9 may be checked
if the submitting stockholder has not been issued a TIN and has
applied for a TIN or intends to apply for a TIN in the near
future. If the box in Part 3 is checked, the stockholder or
other payee must also complete the Certificate of Awaiting
Taxpayer Identification Number below in order to avoid backup
withholding. Notwithstanding that the box in Part 3 is checked
and the Certificate of Awaiting Taxpayer Identification Number is
completed, the Depositary will withhold 31% on all payments made
prior to the time a properly certified TIN is provided to the
Depositary. However, such amounts will be refunded to the
stockholder if a TIN is provided to the Depositary within 60
days.
The stockholder is required to give the Depositary the TIN
(e.g., social security number or employer identification number)
of the record owner of the Shares or of the last transferee
appearing on the transfers attached to, or endorsed on, the
Shares.
15. Withholding for Non-U.S. Stockholders. Although a non-
U.S. stockholder may be exempt from U.S. federal income tax
backup withholding, certain payments to non-U.S. stockholders are
subject to U.S. withholding tax at a rate of 30%. The Depositary
will withhold the 30% from gross payments made to non-U.S.
stockholders pursuant to the Offer unless the Depositary
determines that a non-U.S. stockholder is either exempt from the
withholding or entitled to a reduced withholding rate under an
income tax treaty. For purposes of this discussion, a "non-U.S.
stockholder" is a stockholder who is not (i) a citizen or
resident of the United States, (ii) a corporation or partnership
created or organized in the United States or under the law of the
United States or of any State or political subdivision of the
foregoing, (iii) an estate the income of which is includible in
gross income for U.S. federal income tax purposes regardless of
its source, or (iv) a trust with respect to which a court within
the United States is able to exercise primary supervision over
the administration of the trust and one or more U.S. trustees
have the authority to control all substantial decisions. A non-
U.S. stockholder will not be subject to the withholding tax on a
payment from the Company pursuant to the Offer if the payment is
effectively connected with the conduct of a trade or business in
the United States by the non-U.S. stockholder (and, if certain
tax treaties apply, is attributable to a United States permanent
establishment maintained by such non-U.S. stockholder) and the
non-U.S. stockholder has furnished the Depositary with a properly
executed IRS Form 4224 prior to the time of payment.
A non-U.S. stockholder who is eligible for a reduced rate of
withholding pursuant to a U.S. income tax treaty must certify
such to the Depositary by providing to the Depositary a properly
executed IRS Form 1001 prior to the time payment is made. A non-
U.S. stockholder may be eligible to obtain from the IRS a refund
of tax withheld if such non-U.S. stockholder is able to establish
that no tax (or a reduced amount of tax) is due.
16. Lost, Destroyed or Stolen Certificates. If any
certificate(s) representing Shares has been lost, destroyed or
stolen, the stockholder should promptly notify the Depositary by
checking the box provided in the box titled "Description of
Shares Tendered" and indicating the number of Shares represented
by the certificate so lost, destroyed or stolen. The stockholder
will then be instructed by the Depositary as to the steps that
must be taken in order to replace the certificate(s). This
Letter of Transmittal and related documents cannot be processed
until the procedures for replacing lost, destroyed or stolen
certificates have been followed. Please allow at least ten to
fourteen business days to complete such procedures.
Payor's Name:
SUBSTITUTE Part 1 - PLEASE PROVIDE Social Security number or
Form W-9 YOUR TIN IN THE BOX AT _________/_________/______
RIGHT AND CERTIFY BY ___
SIGNING AND DATING BELOW. Employer identification
number
Payor's Part 2 - Certification - Under penalties of perjury, I
Request for certify that:
Taxpayer (1) The number shown on this form is my correct
Identification Taxpayer Number (or I am waiting for a number to be
Number (TIN) issued to me) and
(2) I am not subject to backup withholding because
(i) I have not been notified by the Internal Revenue
Service ("IRS") that I am subject to backup
withholding as a result of failure to report all
interest of dividends, or (ii) the IRS has notified
me that I am no longer subject to backup
withholding.
Certificate Instructions - You must
cross out item (2) in Part 2 above if
you have been notified by the IRS Part 3 -
that you are subject to backup Awaiting TIN
withholding because of underreporting
interest or dividends on your tax
return. However, if after being
notified by the IRS that you are
subject to backup withholding you
received another notification from
the IRS stating that you are no
longer subject to backup withholding,
do not cross out item (2).
___________________________________
Date _____________, 1999
Signature
___________________________________
Name (please print)
NOTE: FAILURE TO COMPLETE AND RETURN THIS SUBSTITUTE FORM W-9
MAY RESULT IN BACKUP WITHHOLDING OF 31% OF ANY PAYMENTS MADE
TO YOU.
You Must Complete the Following Certificate
if you checked the Box in Part 3 of this Substitute Form W-9
CERTIFICATE OF AWAITING TAXPAYER IDENTIFICATION NUMBER
I certify under penalties of perjury that a taxpayer identification
number has not been issued to me, and either (1) I have mailed or
delivered an application to receive a taxpayer identification number
to the appropriate Internal Revenue Service Center or Social
Security Administration Office or (2) I intend to mail or deliver an
application in the near future. I understand that if I do not
provide a taxpayer identification number by the time of payment, 31%
of all reportable payments made to me will be withheld; but that
such amounts will be refunded to me if I then provide a Taxpayer
Identification Number within sixty (60) days.
Signature: Date: , 1999
Name (please print)
EXHIBIT (a)(3)
U.S. PHYSICAL THERAPY, INC.
NOTICE OF GUARANTEED DELIVERY
For Tender of Shares of Common Stock
(not to be used for signature guarantees)
This form, or a form substantially equivalent to this form,
must be used to accept the Offer (as defined below) if
certificates for the shares of Common Stock of U.S. Physical
Therapy, Inc. are not immediately available, if the procedure for
book-entry transfer cannot be completed on a timely basis, or if
time will not permit all other documents required by the Letter
of Transmittal to be delivered to the Depositary prior to the
Expiration Date (as defined in Section 1 of the Offer to Purchase
(defined below)). Such form may be delivered by hand or
transmitted by mail or overnight courier, or (for Eligible
Institutions (as defined below) only) by facsimile transmission,
to the Depositary. See Section 3 of the Offer to Purchase.
The Depositary for the Offer is:
CONTINENTAL STOCK TRANSFER & TRUST COMPANY
By Mail, Overnight Delivery or By Facsimile Transmission:
Hand: (Eligible Institutions only. See
Instruction 1)
Continental Stock Transfer and (212) 509-5150
Trust Company Confirm by Telephone:
2 Broadway (212) 509-4000 (ext. 535)
New York, NY 10004
DELIVERY OF THIS INSTRUMENT TO AN ADDRESS, OR TRANSMISSION OF
INSTRUCTIONS VIA A FACSIMILE NUMBER, OTHER THAN AS SET FORTH
ABOVE WILL NOT CONSTITUTE A VALID DELIVERY. DELIVERIES TO THE
COMPANY WILL NOT BE FORWARDED TO THE DEPOSITARY AND THEREFORE
WILL NOT CONSTITUTE VALID DELIVERY. DELIVERIES TO DTC WILL NOT
CONSTITUTE VALID DELIVERY TO THE DEPOSITARY.
This form is not to be used to guarantee signatures. If a
signature on a Letter of Transmittal is required to be guaranteed
by an Eligible Institution under the instructions thereto, such
signature guarantee must appear in the applicable space provided
in the signature box on the Letter of Transmittal.
The Eligible Institution that completes this form must
communicate the guarantee to the Depositary and must deliver the
Letter of Transmittal and certificates for shares to the
Depositary within the time shown herein. Failure to do so could
result in a financial loss to such eligible institution.
Ladies and Gentlemen:
The undersigned hereby tenders to U.S. Physical Therapy, Inc.,
a Nevada corporation (the "Company"), upon the terms and subject
to the conditions set forth in the Offer to Purchase, dated April
9, 1999 (the "Offer to Purchase"), and the related Letter of
Transmittal (which, as amended from time to time, together
constitute the "Offer"), receipt of which is hereby acknowledged,
the number of shares of common stock, $.01 par value (the
"Shares"), of the Company listed below, pursuant to the
guaranteed delivery procedure set forth in Section 3 of the Offer
to Purchase.
If Shares will be tendered by book-entry transfer:
Name of Tendering Institution:
Area Code and Telephone Number
Account No. ____________________ at The Depository Trust Company
Signature(s)
Number of Shares: Name(s) (Please Print):
Certificate Nos.:
(if available) Address(es):
(Including Zip Code)
PRICE (IN DOLLARS) PER SHARE AT WHICH SHARES ARE BEING TENDERED
CHECK ONLY ONE BOX
If more than one box is checked or if no box is checked, there is no
valid tender of shares (except that Odd Lot Holders may check a box
below but are not required to if they accept the Purchase Price, as
determined by the Company pursuant to the Offer). Stockholders who
desire to tender shares at more than one price must complete a
separate letter of transmittal for each price at which shares are
tendered.
$8.50 $9.00 $9.375 $9.75
$8.625 $9.125 $9.50 $9.875
$8.75 $9.25 $9.625 $10.00
$8.875
ODD LOTS
To be completed ONLY if the Shares are being tendered by or on behalf
of a person owning an aggregate of 99 or fewer Shares (excluding
shares attributable to individual accounts under the Stock Option
Plans) (check one box):
The undersigned is tendering such Shares at the Purchase Price,
as the same shall be determined by the Company in accordance
with the terms of the Offer (persons checking this box need not
indicate the price per Share below); or
The undersigned is tendering such Shares at the price per Share
indicated above under "Price (In Dollars) Per Share at Which
Shares Are Being Tendered."
GUARANTEE
(Not To Be Used For Signature Guarantee)
The undersigned, a firm which is a bank, broker, dealer, credit
union, savings association, or other "eligible guarantor
institution" within the meaning of Rule 17Ad-15 under the 1934 Act
(each, an "Eligible Institution"), hereby guarantees (i) that the
above-named person(s) has a net long position in the Shares being
tendered within the meaning of Rule 14e-4 promulgated under the
Securities Exchange Act of 1934, as amended, (ii) that such tender
of Shares complies with Rule 14e-4, and (iii) to deliver to the
Depositary at one of its addresses set forth above certificate(s)
for the Shares tendered hereby, in proper form for transfer, or a
confirmation of the book-entry transfer of the Shares tendered
hereby into the Depositary's account at The Depository Trust
Company, in each case together with a properly completed and duly
executed Letter(s) of Transmittal (or manually signed facsimile(s)
thereof), with any required signature guarantee(s) and any other
required documents, all within three Nasdaq trading days after the
date hereof.
The Eligible Institution that completes this form must
communicate the guarantee to the Depositary and must deliver the
Letter of Transmittal and certificates for shares to the Depositary
within the time shown herein. Failure to do so could result in a
financial loss to such eligible institution.
Name of Firm:
Authorized Signature:
Name:
(Please print)
Title:
Address:
(City, State, Zip Code)
Area Code and Telephone Number:
Dated: __________________, 1999
NOTE: DO NOT SEND SHARE CERTIFICATES WITH THIS FORM.
YOUR SHARE CERTIFICATES MUST BE SENT WITH THE LETTER OF
TRANSMITTAL.
EXHIBIT (a)(4)
Continental Stock Transfer & Trust Company
U.S. PHYSICAL THERAPY, INC.
OFFER TO PURCHASE FOR CASH UP TO 346,000 SHARES
OF ITS COMMON STOCK AT A PURCHASE PRICE
NOT IN EXCESS OF $10.00 NOR LESS THAN $8.50 PER SHARE
THE OFFER, PRORATION PERIOD AND WITHDRAWAL RIGHTS WILL EXPIRE AT 5:00
P.M., NEW YORK CITY TIME, ON FRIDAY, MAY 7, 1999, UNLESS THE OFFER IS
EXTENDED.
April 9, 1999
To Brokers, Dealers, Commercial Banks, Trust Companies and Other
Nominees:
In our capacity as Depositary, we are enclosing the material
listed below relating to the offer of U.S. Physical Therapy,
Inc., a Nevada corporation (the "Company"), to purchase up to
346,000 shares of its common stock, $.01 par value (the
"Shares"), at prices not greater than $10.00 nor less than $8.50
per Share, in cash, specified by tendering stockholders, upon the
terms and subject to the conditions set forth in the Offer to
Purchase, dated April 9, 1999 (the "Offer to Purchase"), and in
the related Letter of Transmittal (which, as amended from time to
time, together constitute the "Offer").
The Company will determine a single price (not greater than
$10.00 nor less than $8.50 per Share) that it will pay for Shares
validly tendered and not withdrawn pursuant to the Offer (the
"Purchase Price"), taking into account the number of Shares so
tendered and the prices specified by tendering stockholders. The
Company will select the lowest Purchase Price that will allow it
to purchase 346,000 Shares (or such lesser number of Shares as is
validly tendered at prices not greater than $10.00 nor less than
$8.50 per Share) and not withdrawn pursuant to the Offer. The
Company will purchase all Shares validly tendered at prices at or
below the Purchase Price and not withdrawn, upon the terms and
subject to the conditions of the Offer, including the provisions
relating to proration described in the Offer to Purchase. See
Section 1 of the Offer to Purchase.
The Purchase Price will be paid in cash with respect to all
Shares purchased. Shares tendered at prices in excess of the
Purchase Price and Shares not purchased because of proration will
be returned.
THE OFFER IS NOT CONDITIONED ON ANY MINIMUM NUMBER OF SHARES
BEING TENDERED. THE OFFER IS, HOWEVER, SUBJECT TO CERTAIN OTHER
CONDITIONS. SEE SECTION 7 OF THE OFFER TO PURCHASE.
We are asking you to contact your clients for whom you hold
Shares registered in your name (or in the name of your nominee)
or who hold Shares registered in their own names. Please bring
the Offer to their attention as promptly as possible. The
Company will, upon request, reimburse you for reasonable and
customary handling and mailing expenses incurred by you in
forwarding any of the enclosed materials to your clients.
For your information and for forwarding to your clients, we
are enclosing the following documents:
l. The Offer to Purchase.
2. The Letter of Transmittal for your use and for the
information of your clients.
3. A letter to stockholders of the Company from the
Chairman of the Company.
4. The Notice of Guaranteed Delivery to be used to accept
the Offer if the Shares and all other required documents
cannot be delivered to the Depositary by the Expiration Date
(each as defined in the Offer to Purchase).
5. A letter that may be sent to your clients for whose
accounts you hold Shares registered in your name or in the
name of your nominee, with space for obtaining such clients'
instructions with regard to the Offer.
6. A return envelope addressed to Continental Stock
Transfer & Trust Company, the Depositary.
WE URGE YOU TO CONTACT YOUR CLIENTS AS PROMPTLY AS POSSIBLE.
PLEASE NOTE THAT THE OFFER, PRORATION PERIOD AND WITHDRAWAL
RIGHTS EXPIRE AT 5:00 P.M., NEW YORK CITY TIME, ON FRIDAY, MAY 7,
1999, UNLESS THE OFFER IS EXTENDED.
The Company will not pay any fees or commissions to any
broker, dealer or other person for soliciting tenders of Shares
pursuant to the Offer. The Company will, upon request, reimburse
brokers, dealers, commercial banks and trust companies for
reasonable and customary handling and mailing expenses incurred
by them in forwarding materials relating to the Offer to their
customers. The Company will pay all stock transfer taxes
applicable to its purchase of Shares pursuant to the Offer,
subject to Instruction 7 of the Letter of Transmittal.
As described in the Offer to Purchase, if more than 346,000
Shares have been validly tendered at or below the Purchase Price
and not withdrawn prior to the Expiration Date, as defined in
Section l of the Offer to Purchase, the Company will accept
Shares for purchase in the following order of priority: (i) all
Shares validly tendered at or below the Purchase Price and not
withdrawn prior to the Expiration Date by any stockholder who
owns beneficially an aggregate of 99 or fewer Shares (excluding
Shares attributable to individual accounts under the Stock Option
Plans (as defined in the Offer to Purchase)) and who validly
tenders all of such Shares (partial tenders will not qualify for
this preference) and completes the box captioned "Odd Lots" in
the Letter of Transmittal and, if applicable, the Notice of
Guaranteed Delivery and (ii) after purchase of all of the
foregoing Shares, all other Shares validly tendered at or below
the Purchase Price and not withdrawn prior to the Expiration Date
on a pro rata basis.
The Board of Directors of the Company has approved the making
of the Offer. However, stockholders must make their own
decisions whether to tender Shares and, if so, how many Shares to
tender and the price or prices at which Shares should be
tendered. Neither the Company nor its Board of Directors makes
any recommendation to any stockholder as to whether to tender or
refrain from tendering Shares. The Company has been advised that
none of its directors or executive officers intend to tender
Shares pursuant to the Offer.
Questions and requests for assistance or for additional copies
of this Letter of Transmittal, the Offer to Purchase or the
Notice of Guaranteed Delivery may be directed to Dorothy Flato,
Corporate Secretary, U.S. Physical Therapy, Inc., 3040 Post Oak
Blvd., Suite 222, Houston, Texas 77056 (telephone: (713) 297-
7000).
Very truly yours,
Continental Stock Transfer &
Trust Company
NOTHING CONTAINED HEREIN OR IN THE ENCLOSED DOCUMENTS SHALL
CONSTITUTE YOU OR ANY OTHER PERSON THE AGENT OF THE COMPANY OR
THE DEPOSITARY, OR AUTHORIZE YOU OR ANY OTHER PERSON TO USE ANY
DOCUMENT OR MAKE ANY STATEMENT ON BEHALF OF ANY OF THEM IN
CONNECTION WITH THE OFFER OTHER THAN THE DOCUMENTS ENCLOSED
HEREWITH AND THE STATEMENTS CONTAINED THEREIN.
EXHIBIT (a)(5)
U.S. PHYSICAL THERAPY, INC.
OFFER TO PURCHASE FOR CASH UP TO 346,000 SHARES
OF ITS COMMON STOCK AT A PURCHASE PRICE
NOT IN EXCESS OF $10.00 NOR LESS THAN $8.50 PER SHARE
THE OFFER, PRORATION PERIOD AND WITHDRAWAL RIGHTS WILL EXPIRE
AT 5:00 P.M., NEW YORK CITY TIME, ON FRIDAY, MAY 7, 1999,
UNLESS THE OFFER IS EXTENDED.
To Our Clients:
Enclosed for your consideration are the Offer to Purchase,
dated April 9, 1999 (the "Offer to Purchase"), and the related
Letter of Transmittal (which, as amended from time to time,
together constitute the "Offer") setting forth an offer by U.S.
Physical Therapy, Inc., a Nevada corporation (the "Company"), to
purchase up to 346,000 shares of its common stock, $.01 par value
(the "Shares"), at prices not greater than $10.00 nor less than
$8.50 per Share, in cash, specified by tendering stockholders,
upon the terms and subject to the conditions of the Offer. Also
enclosed herewith is certain other material related to the Offer,
including a letter to stockholders from J. Livingston Kosberg,
Chairman of the Board.
The Company will determine a single per Share price (not
greater than $10.00 nor less than $8.50 per Share) that it will
pay for the Shares validly tendered pursuant to the Offer and not
withdrawn (the "Purchase Price"), taking into account the number
of Shares so tendered and the prices specified by tendering
stockholders. The Company will select the lowest Purchase Price
that will allow it to purchase 346,000 Shares (or such lesser
number of Shares as are validly tendered at prices not greater
than $10.00 nor less than $8.50 per Share) validly tendered and
not withdrawn pursuant to the Offer. The Company will purchase
all Shares validly tendered at prices at or below the Purchase
Price and not withdrawn, upon the terms and subject to the
conditions of the Offer, including the provisions thereof
relating to proration. See Section 1 of the Offer to Purchase.
WE ARE THE HOLDER OF RECORD OF SHARES HELD FOR YOUR ACCOUNT.
AS SUCH, A TENDER OF SUCH SHARES CAN BE MADE ONLY BY US AS THE
HOLDER OF RECORD AND PURSUANT TO YOUR INSTRUCTIONS. THE LETTER
OF TRANSMITTAL IS FURNISHED TO YOU FOR YOUR INFORMATION ONLY AND
CANNOT BE USED BY YOU TO TENDER SHARES HELD BY US FOR YOUR
ACCOUNT.
We request instructions as to whether you wish us to tender
any or all of the Shares held by us for your account, upon the
terms and subject to the conditions set forth in the Offer to
Purchase and the Letter of Transmittal.
Your attention is invited to the following:
1. You may tender Shares at either the price determined by
you (in multiples of $0.125), not greater than $10.00 nor less
than $8.50 per Share, or the price determined by the "Dutch
Auction" tender process as indicated in the attached
instruction form, net to you in cash.
2. The Offer is for up to 346,000 Shares, constituting
approximately 9.6% of the total Shares outstanding as of
April 8, 1999. The Offer is not conditioned on any minimum
number of Shares being tendered. The Offer is, however,
subject to certain other conditions set forth in the Offer to
Purchase.
3. The Offer, proration period and withdrawal rights will
expire at 5:00 p.m., New York City time, on Friday, May 7,
1999, unless the Offer is extended. Your instructions to us
should be forwarded to us in ample time to permit us to submit
a tender on your behalf.
4. As described in the Offer to Purchase, if more than
346,000 Shares have been validly tendered at or below the
Purchase Price and not withdrawn prior to the Expiration Date,
as defined in Section 1 of the Offer to Purchase, the Company
will purchase Shares in the following order of priority:
(i) all Shares validly tendered at or below the Purchase
Price and not withdrawn prior to the Expiration Date by any
stockholder who owns an aggregate of 99 or fewer Shares
(excluding Shares attributable to individual accounts under
the Stock Option Plans (as defined in the Offer to
Purchase)) who validly tenders all of such Shares (partial
tenders will not qualify for this preference) and completes
the box captioned "Odd Lots" in the Letter of Transmittal
and, if applicable, the Notice of Guaranteed Delivery; and
(ii) after purchase of all the foregoing Shares, all
other Shares validly tendered at or below the Purchase
Price and not withdrawn prior to the Expiration Date on a
pro rata basis. See Section 1 of the Offer to Purchase for
a discussion of proration.
5. Tendering stockholders will not be obligated to pay any
brokerage commissions or solicitation fees on the Company's
purchase of Shares in the Offer. Any stock transfer taxes
applicable to the purchase of Shares by the Company pursuant
to the Offer will be paid by the Company, except as otherwise
provided in Instruction 7 of the Letter of Transmittal.
6. If you wish to tender portions of your Shares at
different prices you must complete a separate Instruction Form
for each price at which you wish to tender each portion of
your Shares. We must submit separate Letters of Transmittal
on your behalf for each price you will accept.
7. If you own an aggregate of 99 or fewer Shares
(excluding Shares attributable to individual accounts under
the Stock Option Plans (as defined in the Offer to Purchase)),
and you instruct us to tender at or below the Purchase Price
on your behalf all such Shares prior to the Expiration Date
and check the box captioned "Odd Lots" in the Instruction
Form, all such Shares will be accepted for purchase before
proration, if any, of the purchase of other tendered Shares.
The Board of Directors of the Company has approved the making
of the Offer. However, stockholders must make their own
decisions whether to tender Shares and, if so, how many Shares to
tender and the price or prices at which Shares should be
tendered. Neither the Company nor its Board of Directors makes
any recommendation to any stockholder as to whether to tender or
refrain from tendering Shares. The Company has been advised that
none of its directors or executive officers intend to tender
Shares pursuant to the Offer.
If you wish to have us tender any or all of your Shares held
by us for your account upon the terms and subject to the
conditions set forth in the Offer to Purchase, please so instruct
us by completing, executing and returning to us the attached
Instruction Form. An envelope to return your instructions to us
is enclosed. If you authorize tender of your Shares, all such
Shares will be tendered unless otherwise specified on the
Instruction Form. YOUR INSTRUCTIONS SHOULD BE FORWARDED TO US IN
AMPLE TIME TO PERMIT US TO SUBMIT A TENDER ON YOUR BEHALF PRIOR
TO THE EXPIRATION OF THE OFFER.
The Offer is being made to all holders of Shares. The Company
is not aware of any jurisdiction where the making of the Offer is
not in compliance with applicable law. If the Company becomes
aware of any jurisdiction where the making of the Offer is not in
compliance with any valid applicable law, the Company will make a
good faith effort to comply with such law. If, after such good
faith effort, the Company cannot comply with such law, the Offer
will not be made to (nor will tenders be accepted from or on
behalf of) the holders of Shares residing in such jurisdiction.
INSTRUCTION FORM
WITH RESPECT TO OFFER TO PURCHASE FOR CASH UP TO 346,000 SHARES
OF COMMON STOCK OF U.S. PHYSICAL THERAPY, INC. AT A PURCHASE
PRICE
NOT GREATER THAN $10.00 NOR LESS THAN $8.50 PER SHARE
The undersigned acknowledge(s) receipt of your letter and the
enclosed Offer to Purchase, dated April 9, 1999, and the related
Letter of Transmittal (which, as amended from time to time,
together constitute the "Offer") in connection with the Offer by
U.S. Physical Therapy, Inc. (the "Company") to purchase up to
346,000 shares of its common stock, $.01 par value (the
"Shares"), at prices not greater than $10.00 nor less than $8.50
per Share, in cash, specified by the undersigned, upon the terms
and subject to the terms and conditions of the Offer.
This will instruct you to tender to the Company the number of
Shares indicated below (or, if no number is indicated below, all
Shares) that are held by you for the account of the undersigned,
at the price per Share indicated below, upon the terms and
subject to the conditions of the Offer.
PRICE (IN DOLLARS) PER SHARE AT WHICH SHARES ARE BEING TENDERED
CHECK ONLY ONE BOX
If more than one box is checked or if no box is checked, there is no
valid tender of shares (except that Odd Lot Holders may check a box
below but are not required to if they accept the Purchase Price, as
determined by the Company pursuant to the Offer). Stockholders who
desire to tender shares at more than one price must complete a
separate Instruction Form for each price at which shares are
tendered.
$8.50 $9.00 $9.375 $9.750
$8.625 $9.125 $9.50 $9.875
$8.75 $9.25 $9.625 $10.00
$8.875
ODD LOTS
To be completed ONLY if the Shares are being tendered by or on behalf
of a person owning an aggregate of 99 or fewer Shares (excluding
shares attributable to individual accounts under the Stock Option
Plans) (check one box):
The undersigned is tendering such Shares at the Purchase Price,
as the same shall be determined by the Company in accordance
with the terms of the Offer (persons checking this box need not
indicate the price per Share below); or
The undersigned is tendering such Shares at the price per Share
indicated above under "Price (In Dollars) Per Share at Which
Shares Are Being Tendered."
SHARES TENDERED
If fewer than all Shares are to be tendered, please check the
box and indicate below the aggregate number of Shares to be
tendered by us.
_________________________________ Shares
Unless otherwise indicated, it will be assumed that all Shares
held by us for your account are to be tendered.
THE METHOD OF DELIVERY OF THIS DOCUMENT IS AT THE ELECTION AND
RISK OF THE TENDERING STOCKHOLDERS. IF DELIVERY IS BY MAIL,
REGISTERED MAIL WITH RETURN RECEIPT REQUESTED, PROPERLY INSURED,
IS RECOMMENDED. IN ALL CASES, SUFFICIENT TIME SHOULD BE ALLOWED
TO ASSURE DELIVERY.
Sign Here:
Signature(s)
Name(s):
(Please print name(s))
Address(es):
(Include Zip Code)
Dated: _______, 1999
(Tax Identification or Social Security Number(s)
EXHIBIT (a)(6)
FOR IMMEDIATE RELEASE
U.S. PHYSICAL THERAPY ANNOUNCES ISSUER TENDER
Houston, TX - April 8, 1999 - U.S. Physical Therapy, Inc. (Nasdaq
National Market:USPH) today announced that it is offering to
purchase up to 346,000 shares of its common stock at a price not
greater than $10.00 nor less than $8.50 per share (the "Offer").
The Company is conducting the Offer through a procedure commonly
referred to as a "Dutch Auction". This procedure allows
stockholders to select the price within the specified range at
which the stockholder is willing to sell all or a portion of his
or her shares to the Company.
Based on the number of shares tendered and the prices specified
by the tendering stockholders, the Company will determine the
single per share price within the range that will allow it to buy
346,000 shares (or such lesser number of shares that are properly
tendered). All of the shares that are properly tendered at
prices at or below that purchase price (and not withdrawn) will,
subject to possible proration and provisions relating to the
tender of "odd lots," be purchased for cash at the purchase price
selected by the Company. All other shares that have been
tendered and not purchased will be returned to the stockholder.
The Offer is scheduled to expire at 5:00 p.m., New York City
time, on Friday, May 7, 1999, unless extended by the Company.
The Offer is explained in detail in the Offer to Purchase, Letter
of Transmittal, and the Notice of Guaranteed Delivery that can be
obtained either from Continental Stock Transfer & Trust Company,
2 Broadway, New York, New York 10004 (telephone: (212) 509-4000
(ext.535)) or from Dorothy Flato, Corporate Secretary, U.S.
Physical Therapy, Inc., 3040 Post Oak Blvd., Suite 222, Houston,
Texas 77056 (telephone: (713) 297-7000).
This press release contains forward-looking statements,
which involve numerous risks and uncertainties. The Company's
actual results could differ materially from those anticipated in
such forward-looking statements as a result of certain factors,
including those set forth in the Company's filings with the
Securities and Exchange Commission.
U.S. Physical Therapy and its partners currently
operate 101 outpatient clinics in 28 states and manage five PT
facilities for physician practices.
# # #
CONTACT: -or- USPH's INVESTOR RELATIONS:
U.S. Physical Therapy, Inc. The Equity Group Inc.
J. Livingston Kosberg, Chairman Linda Latman(212)836-9609
Roy W. Spradlin, President Robert Goldstein(212)371-8660
and CEO
(713) 297-7000
EXHIBIT (a)(7)
April 9, 1999
Dear Stockholder:
U.S. Physical Therapy, Inc. (the "Company") is offering to
purchase up to 346,000 shares of its common stock at a price not
greater than $10.00 nor less than $8.50 per share. The Company
is conducting the offer through a procedure commonly referred to
as a "Dutch Auction." This procedure allows you to select the
price within the specified range at which you are willing to sell
all or a portion of your shares to the Company.
Based on the number of shares tendered and the prices
specified by the tendering stockholders, the Company will
determine the single per share price within the range that will
allow it to buy 346,000 shares (or such lesser number of shares
that are properly tendered). All of the shares that are properly
tendered at prices at or below that purchase price (and not
withdrawn) will, subject to possible proration and provisions
relating to the tender of "odd lots," be purchased for cash at
the purchase price selected by the Company. All other shares
that have been tendered and not purchased will be returned to the
stockholder.
If you do not wish to participate in the offer, you do not
need to take any action.
The offer is explained in detail in the enclosed Offer to
Purchase and Letter of Transmittal. If you wish to tender your
shares, instructions on how to tender shares are provided in the
enclosed materials. I encourage you to read these materials
carefully before making any decision with respect to the offer.
Neither the Company nor its Board of Directors makes any
recommendation to any stockholder whether or not to tender any or
all shares. The Company has been advised that none of its
directors and executive officers intend to tender shares of
common stock pursuant to the offer.
Please note that the offer is scheduled to expire at 5:00
p.m., New York City time, on Friday, May 7, 1999, unless extended
by the Company. Questions and requests for assistance or for
additional copies of this Offer to Purchase, the Letter of
Transmittal or the Notice of Guaranteed Delivery may be directed
to Dorothy Flato, Corporate Secretary, U.S. Physical Therapy,
Inc., 3040 Post Oak Blvd., Suite 222, Houston, Texas 77056
(telephone: (713) 297-7000).
Sincerely,
/s/ J. Livingston Kosberg
J. Livingston Kosberg
Chairman of the Board
EXHIBIT (g)
Item 8. Financial Statements.
U.S. PHYSICAL THERAPY, INC. AND SUBSIDIARIES
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
Report of Independent Auditors 33
Audited Financial Statements
Consolidated Balance Sheets as of
December 31, 1998 and 1997 34
Consolidated Statements of Operations for the years
ended December 31, 1998, 1997 and 1996 36
Consolidated Statements of Shareholders' Equity for
the years ended December 31, 1998, 1997 and 1996 37
Consolidated Statements of Cash Flows for the years
ended December 31, 1998, 1997 and 1996 38
Notes to Consolidated Financial Statements 40
REPORT OF INDEPENDENT AUDITORS
Board of Directors and Shareholders
U.S. Physical Therapy, Inc.
We have audited the accompanying consolidated balance sheets of
U.S. Physical Therapy, Inc., and subsidiaries (the "Company") as
of December 31, 1998 and 1997, and the related consolidated
statements of operations, shareholders' equity, and cash flows
for the years ended December 31, 1998, 1997 and 1996. Our audits
also included the financial statement schedule listed in the
index at Item 14(a). These financial statements are the
responsibility of the Company's management. Our responsibility
is to express an opinion on these financial statements based on
our audits.
We conducted our audits in accordance with generally accepted
auditing standards. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether
the financial statements are free of material misstatement. An
audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An
audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating
the overall financial statement presentation. We believe that
our audits provide a reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to
above present fairly, in all material respects, the consolidated
financial position of U.S. Physical Therapy, Inc. and
subsidiaries at December 31, 1998 and 1997, and the consolidated
results of their operations and their cash flows for the years
ended December 31, 1998, 1997 and 1996, in conformity with
generally accepted accounting principles. Also, in our opinion,
the related financial statement schedule, when considered in
relation to the basic financial statements taken as a whole,
presents fairly in all material respects the information set
forth therein.
ERNST & YOUNG LLP
Houston, Texas
March 16, 1999
U.S. PHYSICAL THERAPY, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(in thousands)
December 31,
1998 1997
ASSETS
Current assets:
Cash and cash equivalents $ 6,328 $ 5,556
Patient accounts receivable, less
allowance for doubtful accounts
of $1,692 and $1,595,
respectively 8,505 7,707
Accounts receivable-other 183 187
Other current assets 614 504
Total current assets 15,630 13,954
Fixed assets:
Furniture and equipment 9,523 8,111
Leasehold improvements 4,537 3,869
14,060 11,980
Less accumulated depreciation 7,636 5,951
6,424 6,029
Noncompete agreements, net of
amortization of $340, and $501,
respectively 41 124
Goodwill, net of amortization of
$169, and $138, respectively 1,000 1,042
Other assets 1,005 1,399
$ 24,100 $ 22,548
See notes to consolidated financial statements.
U.S. PHYSICAL THERAPY, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(in thousands, except share amounts)
December 31,
1998 1997
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable - trade $ 553 $ 250
Accrued expenses 1,094 1,333
Estimated third-party payor
(Medicare) settlements 944 1,095
Notes payable 32 72
Total current liabilities 2,623 2,750
Notes payable - long-term portion 76 189
Convertible subordinated notes
payable 8,050 8,050
Minority interests in subsidiary
limited partnerships 1,746 1,557
Commitments - -
Shareholders' equity:
Preferred stock, $.01 par value,
500,000 shares authorized, -0-
shares outstanding - -
Common stock, $.01 par value,
10,000,000 shares authorized,
3,616,509 and 3,615,634 shares
outstanding at December 31, 1998
and 1997, respectively 36 36
Additional paid-in capital 11,696 11,689
Accumulated deficit (80) (1,676)
Treasury stock at cost, 4,900 shares
held at December 31, 1998 and
and 1997, respectively (47) (47)
Total shareholders' equity 11,605 10,002
$ 24,100 $ 22,548
See notes to consolidated financial statements.
U.S. PHYSICAL THERAPY, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except per share data)
Year Ended December 31,
1998 1997 1996
Net patient revenues $ 43,444 $ 38,342 $ 32,029
Other revenues 579 465 178
Net revenues 44,023 38,807 32,207
Clinic operating costs:
Salaries and related costs 20,263 17,624 14,743
Rent, clinic supplies and other 11,454 10,562 9,144
Provision for doubtful accounts 1,143 1,050 929
32,860 29,236 24,816
Corporate office costs:
General and administrative 4,240 3,666 3,097
Recruitment and development 1,396 1,105 784
5,636 4,771 3,881
Loss on closure of facility 230 - -
Operating income before non-
operating expenses 5,297 4,800 3,510
Interest expense 730 741 745
Minority interests in subsidiary
limited partnerships 1,863 1,578 1,007
Income before income taxes 2,704 2,481 1,758
Provision for income taxes 1,108 55 117
Net income $ 1,596 $ 2,426 $ 1,641
Basic earnings per common share $ .44 $ .67 $ .46
Earnings per common share-assuming
dilution $ .43 $ .65 $ .45
See notes to consolidated financial statements.
U.S. PHYSICAL THERAPY, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
(in thousands)
<TABLE>
<CAPTION>
Total
Add'l Accumu- Share-
Common Stock Paid-In lated Treasury Stock holders'
Shares Amount Capital Deficit Shares Amount Equity
<S> <C> <C> <C> <C> <C> <C> <C>
Balance at
January 1, 1996 3,520 $ 35 $10,870 $(5,743) - $ - $ 5,162
Proceeds from
exercise 4 - 27 - - - 27
of stock options
Interest
enhancement
on 8% Convertible
Subordinated 71 1 764 - - - 765
Notes,
Series B
Net income - - 1,641 - 1,641
Balance at
December 31, 1996 3,595 36 11,661 (4,102) - - 7,595
Proceeds from
exercise 4 - 28 - - - 28
of stock options
Proceeds from
exercise 17 - - - - - -
of warrants
Repurchase of
treasury - - - - (5) (47) (47)
Shares
Net income - - - 2,426 - - 2,426
Balance at
December 31, 1997 3,616 36 11,689 (1,676) (5) (47) 10,002
Proceeds from
exercise 1 - 7 - - - 7
of stock options
Net income - - - 1,596 - - 1,596
Balance at
December 31, 1998 3,617 $ 36 $11,696 $ (80) (5)$ (47) $ 11,605
</TABLE>
See notes to consolidated financial statements.
U.S. PHYSICAL THERAPY, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
Year Ended December 31,
1998 1997 1996
Operating activities
Net income $ 1,596 $ 2,426 $ 1,641
Adjustments to reconcile net income
to net cash provided by operating
activities:
Depreciation and amortization 2,071 1,880 1,735
Minority interests in earnings
of subsidiary limited
partnerships 1,863 1,578 1,007
Provision for bad debts 1,143 1,050 929
Deferred income taxes 320 (833) -
Loss on sale of fixed assets - 28 2
Loss on disposal of certain assets
in closure of
facility 144 - -
Changes in operating assets and
liabilities:
Increase in patient accounts
receivable (1,941) (2,398) (1,415)
Decrease (increase) in accounts
receivable-other 4 (60) (19)
Decrease (increase) in other assets (84) (34) 43
Increase in accounts payable and
accrued expenses 64 337 234
Increase (decrease) in estimated
third-party payor (Medicare)
settlements (151) (182) 562
Net cash provided by operating
activities 5,029 3,792 4,719
See notes to consolidated financial statements.
U.S. PHYSICAL THERAPY, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
Year Ended December 31, 1998 1997 1996
Investing activities
Purchase of fixed assets (2,357) (1,844) (1,677)
Purchase of intangibles (192) (276) (301)
Proceeds on sale of fixed assets 26 67 11
Net cash used in investing
activities (2,523) (2,053) (1,967)
Financing activities
Proceeds from notes payable - 40 215
Payment of notes payable (55) (73) (61)
Acquisition of treasury stock - (47) -
Proceeds from investment of minority
investors in subsidiary limited
partnerships 6 1 11
Proceeds from exercise of stock options 7 28 27
Distributions to minority investors
in subsidiary limited partnerships (1,692) (1,044) (666)
Net cash used in financing
activities (1,734) (1,095) (474)
Net increase in cash
and cash equivalents 772 644 2,278
Cash and cash equivalents -
beginning of year 5,556 4,912 2,634
Cash and cash equivalents -
end of year $6,328 $5,556 $4,912
Supplemental disclosures of cash
flow information
Cash paid during the year for:
Income taxes $ 816 $ 735 $ 137
Interest $ 657 $ 667 $ 667
See notes to consolidated financial statements.
U.S. PHYSICAL THERAPY, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 1998
1. Organization, Nature of Operations and Basis of Presentation
U.S. Physical Therapy, Inc. and its subsidiaries (the "Company")
is engaged in the business of developing, owning and operating
outpatient physical therapy and occupational therapy clinics. As
of December 31, 1998, the Company was operating 99 clinics in 28
states. The clinics provide post-operative care and treatment
for a variety of orthopedic-related disorders and sports-related
injuries, treatment for neurologically related injuries,
rehabilitation of injured workers and preventative care. The
clinics' business primarily originates from physician referrals.
The principal sources of payment for the clinics' services are
commercial health insurance, workers' compensation insurance,
managed care programs, Medicare and proceeds from personal injury
cases.
The consolidated financial statements include the accounts of
U.S. Physical Therapy, Inc. and its subsidiaries. All
significant intercompany transactions and balances have been
eliminated. The Company, through its wholly-owned subsidiaries,
currently owns a 1% general partnership interest and limited
partnership interest ranging from 59% to 99% in the clinics it
operates. For the majority of the clinics, the managing
therapist of each such clinic, along with other therapists at the
clinic in several of the partnerships, own the remaining limited
partnership interest in the clinic which ranges from 0% to 40%.
The minority interest in the equity and earnings of the
subsidiary clinic limited partnerships is presented separately in
the consolidated financial statements.
2. Significant Accounting Policies
Cash Equivalents
The Company considers all highly liquid investments with a
maturity of three months or less, when purchased, to be cash
equivalents. The Company, pursuant to its investment policy,
invests its cash in deposits with major financial institutions,
in highly rated commercial paper, Eurodollar deposits and short-
term treasury and United States government agency securities.
Included in cash and cash equivalents at December 31, 1998 is
$4,700,000 of short-term U.S. government agency securities and
$415,000 in a money market fund invested in short-term debt
securities issued by U.S. government agencies.
Long-Lived Assets
Fixed assets are stated at cost. Depreciation is provided using
the straight-line method over the estimated useful lives of the
related assets. Estimated useful lives for furniture and
equipment range from three to eight years. Leasehold
improvements are amortized over the estimated useful lives of the
assets or the related lease terms, whichever is shorter.
Non-compete agreements are being amortized on a straight-line
basis over their respective six- or seven-year terms. Goodwill is
being amortized on a straight-line basis over twenty years.
In August 1998, the Company closed its clinic located in Corpus
Christi, Texas due to adverse clinic performance. During 1998,
the Company recognized a $230,000 loss relating to this closure.
Of the $230,000 loss, $18,000 represented lease commitments,
$99,000 was due to the write-off of goodwill, fixed assets,
leasehold improvements and a non-compete agreement and the
remainder was costs incurred in connection with closing the
facility.
Net Patient Revenues
Net patient revenues are reported at the estimated net realizable
amounts from patients, third-party payors, and others for
services rendered, including estimated retrospective adjustments
under Medicare. Retrospective adjustments are accrued on an
estimated basis in the period the related services are rendered
and adjusted in future periods as final settlements are
determined. The Company has agreements with third-party payors
that provide for payments to the Company at amounts different
from its established rates.
Medicare reimbursement for outpatient physical therapy or
occupational therapy services furnished by clinics or
rehabilitation agencies is based on a cost reimbursement
methodology. The Company is initially reimbursed at a tentative
rate with final settlement determined after submission of an
annual cost report by the Company and audits thereof by the
Medicare fiscal intermediary. The majority of the Company's
Medicare cost reports have been audited by the Medicare fiscal
intermediary through December 31, 1997. Revenues from the
Medicare program accounted for approximately 12% and 13% of the
Company's net patient revenues for the years ended December 31,
1998 and 1997, respectively. Laws and regulations governing the
Medicare program are complex and subject to interpretation. The
Company believes that it is in compliance with all applicable
laws and regulations and is not aware of any pending or
threatened investigations involving allegations of potential
wrongdoing. While no such regulatory inquiries have been made,
compliance with such laws and regulations can be subject to
future government review and interpretation as well as
significant regulatory action including fines, penalties, and
exclusion from the Medicare program. The Company has also
entered into payment agreements with certain commercial insurance
carriers and health maintenance organizations. The basis for
payment to the Company under these agreements is primarily based
on discounts from established rates.
Income Taxes
The Company uses the liability method in accounting for income
taxes. Under this method, deferred tax assets and liabilities
are determined based on differences between financial reporting
and tax bases of assets and liabilities and are measured using
the enacted tax rates and laws that will be in effect when the
differences are expected to reverse.
Fair Values
The carrying amounts reported in the balance sheet for cash and
cash equivalents approximate their fair values. The fair values
of the majority of long-term borrowings are not readily
determinable due to the features of the borrowings which are
described fully in Note 4.
Net Income Per Share
In 1997, the Financial Accounting Standards Board issued
Statement No. 128, Earnings per Share. Statement No. 128
replaced the calculation of primary and fully diluted earnings
per share with basic and diluted earnings per share. Unlike
primary earnings per share, basic earnings per share excludes any
dilutive effects of options, warrants and convertible securities.
Diluted earnings per share is very similar to the previously
reported fully diluted earnings per share. All earnings per
share amounts for all periods have been presented, and where
appropriate, restated to conform to the Statement No. 128
requirements.
Use of Estimates
Management is required to make estimates and assumptions that
affect the amounts reported in the financial statements and
accompanying notes. Actual results could differ from those
estimates.
Reclassifications
Certain amounts presented in the accompanying financial
statements for 1997 have been reclassified to conform with the
presentation used for 1998. This reclassification had no effect
on net income.
3. Non-Cash Transaction
In May 1994, the Company issued $2,000,000 aggregate principal
amount of 8% Convertible Subordinated Notes, Series B ("the
Series B Notes"). The Series B Notes contained a Contingent
Interest Enhancement provision which allowed the Series B Note
holders to receive an interest enhancement payable in shares of
Company common stock based upon the market value of the Company's
shares for the month of June 1996. In 1996, a total of 70,965
shares of the Company's common stock were issued in connection
with the Contingent Interest Enhancement provision. Deferred
financing costs, included in "Other Assets" on the balance sheet
and being amortized over the life of the Series B Notes, totaling
$765,000 were recorded in connection with the issuance of the
70,965 shares. As of December 31, 1998, 1997 and 1996, interest
expense included $351,000, $276,000 and $200,000, respectively,
of amortization relating to the deferred financing costs.
4. Notes Payable
On June 2, 1993, the Company completed the issuance and sale of
$3,050,000 aggregate principal amount of the Company's 8%
Convertible Subordinated Notes due June 30, 2003 (the "Notes").
The Notes, which are subordinated to any indebtedness for
borrowed money, were issued at par in a private placement
transaction to a total of six investors, including two directors
who purchased a total of $175,000 of the Notes and a company
controlled by one of the Company's directors, Mr. Richard C.W.
Mauran, who purchased $2,000,000 of the Notes. The Notes bear
interest at 8% per annum, payable quarterly, and are convertible
at the option of the Note holders into common stock of the
Company at any time during the life of the Notes. The conversion
price is $10.00 per share (subject to adjustment as provided in
the Notes). The Company can require the Note holders to convert
the Notes into shares of common stock at any time that the
average trading price of the Company's common stock equals or
exceeds $20.00 per share (subject to adjustment as provided in
the Notes) during the immediately preceding 90-day period. As of
December 31, 1998, none of the Notes had been converted into
common stock of the Company.
On May 5, 1994, the Company completed the issuance and sale of
$2,000,000 aggregate principal amount of 8% Convertible
Subordinated Notes, Series B, due June 30, 2004 (the "Series B
Notes"). The Series B Notes were issued at par in a private
placement. The Series B Notes are convertible at the option of
the holder, into the number of whole shares of the Company's
common stock, determined by dividing the principal amount so
converted by $12.00 (the "Conversion Price"), subject to
adjustment upon the occurrence of certain events. The Company
may require conversion, in whole or in part, at any time at the
Conversion Price then in effect if, during the preceding 90-day
period, the average market price of the Company's common stock
equals or exceeds $20.00 per share. The Series B Notes bear
interest from the date of issuance at a rate of 8% per annum,
payable quarterly. Holders of Series B Notes were entitled to
receive an interest enhancement payable in shares of Company
common stock based upon the market value of the Company's common
stock at June 30, 1996, which was two years from the date of
issuance of the Series B Notes. In July 1996, the Company issued
70,965 shares of its common stock in connection with the interest
enhancement provision.
The Company also completed on May 5, 1994, the issuance and sale
of $3,000,000 aggregate principal amount of 8% Convertible
Subordinated Notes, Series C due June 30, 2004 (the "Series C
Notes"). The Series C Notes were issued at par in a private
placement to a company controlled by one of the Company's
directors, Mr. Richard C.W. Mauran. The Series C Notes are
convertible, at the option of the holder, into the number of
whole shares of common stock, determined by dividing the
principal amount so converted by $10.00, subject to adjustment
upon the occurrence of certain events. The Series C Notes bear
interest from the date of issuance at a rate of 8% per annum,
payable quarterly.
Both Series B Notes and Series C Notes are unsecured subordinated
obligations of the Company and rank pari passu with the Company's
8% Convertible Subordinated Notes due June 30, 2003. Each of the
Notes are subordinated in right of payment to all other
indebtedness for borrowed money incurred by the Company.
Holders of the Notes have piggy-back registration rights as set
forth in the Registration Agreement relating to the Notes.
Holders of the Series B Notes and Series C Notes each have demand
and piggy-back registration rights as set forth in the
Registration Agreements relating to the Notes.
Notes payable as of December 31, 1998 and 1997 consist of the
following:
December 31,
1998 1997
Promissory note at a floating interest rate
of 1% above prime, payable in semi-annual
installments beginning January 31, 1993
until the earlier of payment of the entire
principal and accrued interest due or 30
days from the sixth anniversary of the date
of this note. Each installment of principal
is equal to the greater of $9,375 or 4.5%
of the net patient revenues of one of the
Company's clinics for the six months of the
calendar year immediately preceding each
installment date. This note is secured by
certain furniture and equipment with a net
book value of approximately -0-. $ - $ 51,000
Promissory note at a floating interest
rate of 1% above prime, payable in monthly
installments through November 1, 2001.
This note is secured by the facility,
with a net book value of approximately
$74,000, of one of the Company's clinics. 25,000 32,000
Promissory note with an 8% interest rate
payable in equal monthly installments
through March 19, 2007. This note is
secured by the facility, with a net book
value of approximately $49,000, of one of
the Company's clinics. 35,000 38,000
Unsecured promissory notes with a 7%
interest rate payable in equal monthly
installments through December 31, 2000. 48,000 140,000
8% Convertible Subordinated Notes due
June 30, 2003 with interest payable
quarterly. 3,050,000 3,050,000
8% Convertible Subordinated Notes,
Series B, due June 30, 2004, with
interest payable quarterly. 2,000,000 2,000,000
8% Convertible Subordinated Notes,
Series C, due June 30, 2004, with
interest payable quarterly. 3,000,000 3,000,000
8,158,000 8,311,000
Less current portion (32,000) (72,000)
$8,126,000 $8,239,000
Scheduled maturities for the next five years and thereafter as of
December 31, 1998 are as follows:
1999 $ 32,000
2000 39,000
2001 12,000
2002 4,000
2003 3,054,000
Thereafter 5,017,000
$8,158,000
5. Related Party Transactions
During 1998, 1997 and 1996, the Company recognized interest
expense of $414,000 per year relating to Convertible Subordinated
Notes held by directors of the Company.
See Note 4 for additional related party transactions.
6. Income Taxes
Significant components of the Company's deferred tax assets at
December 31 were as follows:
1998 1997
Deferred tax assets:
Accrued liabilities $ 157,000 $ 130,000
Allowance for bad debt 375,000 353,000
Minimum tax credit carryforward - 297,000
Other 7,000 100,000
Total 539,000 880,000
Deferred tax liabilities:
Depreciation (26,000) (47,000)
Net deferred tax assets $ 513,000 $ 833,000
The differences between the federal tax rate and the Company's
effective tax rate, at December 31 were as follows:
<TABLE>
<CAPTION>
1998 1997 1996
<S> <C> <C> <C> <C> <C> <C>
U.S. tax at
statutory rate $ 919,000 34.00% $ 844,000 34.00% $574,000 35.00%
Reduction in valuation
allowance - - (1,087,000)(43.80) (557,000)(33.95)
State income taxes 156,000 5.77 170,000 6.87 43,000 2.62
Nondeductible
expenses 32,000 1.18 16,000 0.63 29,000 1.76
Other - net 1,000 0.03 112,000 4.52 28,000 1.70
$1,108,000 40.98% $ 55,000 2.22% $117,000 7.13%
</TABLE>
Significant components of the provision/(benefit) for income
taxes, for the years ended December 31, were as follows:
1998 1997 1996
Current:
Federal $ 552,000 $ 630,000 $ 74,000
State 236,000 258,000 43,000
Total current 788,000 888,000 117,000
Deferred:
Federal 320,000 (833,000) -
State - - -
Total deferred 320,000 (833,000) -
Total income tax provision $1,108,000 $ 55,000 $ 117,000
Income taxes paid during 1998, 1997 and 1996 were approximately
$816,000, $735,000 and $137,000, respectively.
7. Stock Option Plans
The Company has elected to follow Accounting Principles Board
Opinion No. 25, "Accounting for Stock Issued to Employees"(APB
25) and related interpretations in accounting for its employee
stock options. Pro forma information regarding net income and
earnings per share is required by FASB Statement No. 123,
"Accounting and Disclosure of Stock-Based Compensation", and has
been determined as if the Company had accounted for its employee
stock options under the fair value method of that Statement. The
fair value of these options was estimated at the date of grant
using a Black-Scholes option pricing model.
1992 Stock Option Plan, as Amended
The Company has a 1992 Stock Option Plan, as amended (the "Option
Plan") which permits the Company to grant to key employees and
outside directors of the Company options to purchase shares of
common stock (subject to proportionate adjustments in the event
of stock dividends, splits, and similar corporate transactions).
During 1998, the Option Plan was amended to (i) increase by
350,000 (from 645,000 to 995,000) the number of shares of common
stock reserved for issuance upon exercise of options granted
under the Option Plan and (ii) increase the number of stock
options that may be granted to any one eligible individual in any
one calendar year from 50,000 to 100,000 (in each case, subject
to adjustments for stock dividends, stock splits and the like as
provided in the Option Plan).
Incentive stock options (those intended to satisfy the
requirements of the Internal Revenue Code) granted under the
Option Plan are granted at an exercise price of not less than the
fair market value of the shares of common stock on the date of
grant. The exercise prices of non-incentive options granted
under the Option Plan are determined by the committee which
administers the Option Plan upon each grant. The period within
which each option will be exercisable is determined by the
committee which administers the Option Plan (in no event may the
exercise period of an incentive stock option extend beyond 10
years from the date of grant). As of December 31, 1998, 1997 and
1996, 78,750, 78,750 and 78,750 incentive stock options and
776,175, 520,375 and 416,000 non-incentive stock options have
been granted. Incentive stock options of 3,750, 3,750 and 3,750
and non-incentive stock options of 13,000, 12,125 and 8,000 have
been exercised as of December 31, 1998, 1997 and 1996,
respectively.
Outstanding incentive stock options vest one-fourth on each of
the second, third, fourth and fifth anniversaries of the date of
grant. Of the 763,175 non-incentive stock options granted, but
not yet exercised as of December 31, 1998, 263,000 options vest
100% on the date of grant, and 500,175 options vest one-fourth on
each of the second, third, fourth and fifth anniversaries of the
date of grant.
The following weighted-average assumptions for 1998, 1997 and
1996 were used in estimating the fair value of the options
granted under the Option Plan: risk-free interest rates ranging
from 4.65% to 6.36%; dividend yield rate of 0%; volatility
factors of the expected market price of the Company's common
stock ranging from .245 to .251; and a weighted-average expected
life of the option of eight years for those options which vest
one-fourth on each of the second, third, fourth and fifth
anniversaries of the date of grant and weighted-average expected
lives of five to eight years for the remaining options.
The Black-Scholes option valuation model was developed for use in
estimating the fair value of traded options which have no vesting
restrictions and are fully transferable. In addition, option
valuation models require the input of highly subjective
assumptions including the expected stock price volatility.
Because the Company's employee stock options have characteristics
significantly different from those of traded options, and because
changes in the subjective input assumptions can materially affect
the fair value estimate, in management's opinion, the existing
models do not necessarily provide a reliable single measure of
the fair value of its employee stock options.
For purposes of pro forma disclosures, the estimated fair value
of the options is amortized to expense over the options' vesting
period. The pro forma effect on net income for 1998, 1997 and
1996 is not representative of the pro forma effect on net income
in future years because it does not take into consideration pro
forma compensation expense related to grants made prior to 1995.
The Company's pro forma information follows (in thousands except
for earnings per share information):
1998 1997 1996
Pro forma net income $1,347 $2,249 $1,426
Pro forma earnings per share $ 0.37 $ 0.62 $ 0.40
A summary of the Company's Option Plan activity and related
information for the years ended December 31 follows:
1998 1997 1996
Weighted- Weighted- Weighted-
Average Average Average
Exercise Exercise Exercise
Options Price Options Price Options Price
Outstanding-
beginning
of year 583,250 $8.92 483,000 $8.68 381,500 $8.41
Granted 262,800 10.60 111,250 9.89 105,750 9.59
Exercised (875) 8.89 (4,125) 7.19 (4,000) 6.75
Forfeited (7,000) 9.77 (6,875) 8.78 (250) 8.63
Outstanding-
end of year 838,175 $9.44 583,250 $8.92 483,000 $8.68
Exercisable
at end
of year 427,281 $8.89 329,063 $8.89 241,625 $8.66
Weighted-
average
fair value
of options
granted
during the
year $ 4.41 $ 3.99 $ 4.12
Exercise prices for options outstanding as of December 31, 1998
ranged from $6.25 to $12.19. The weighted-average remaining
contractual life of those options is 7.46 years.
Executive Option Plan
The Executive Option Plan (the "Executive Plan") was adopted by
the Board of Directors of the Company on March 2, 1993 and was
approved by the Company's stockholders on May 24, 1993. The
Executive Plan permits the Company to grant to any officer of the
Company or its affiliates, options to purchase up to 200,000
shares of common stock (subject to adjustments in the event of
stock dividends, splits and similar corporate transactions). No
further grants of options will be made under the Executive Plan
as a result of the amendment to the 1992 Stock Option Plan (see
Note 7, 1992 Stock Option Plan, as Amended). The exercise prices
of the options granted under the Executive Plan are determined by
the committee which administers the Executive Plan upon each
grant, and in the case of incentive and non-incentive options,
may not be less than the greater of 175% of the fair market value
of a share of common stock on the date of grant of the option or
the par value per share of the stock. The period within which
each option will be exercisable is determined by the committee
which administers the Executive Plan (in no event may the
exercise period extend beyond 10 years from the date of grant).
The outstanding options vest one-third on each of the third,
fourth and fifth anniversaries of the date of grant.
A summary of the Company's Executive Plan activity and related
information for the years ended December 31 follows:
1998 1997 1996
Weighted- Weighted- Weighted-
Average Average Average
Exercise Exercise Exercise
Options Price Options Price Options Price
Outstanding-
beginning
of year 105,000 $13.31 105,000 $13.31 105,000 $13.31
Granted - - - - - -
Exercised - - - - - -
Forfeited - - - - - -
Outstanding-
end of year 105,000 $13.31 105,000 $13.31 105,000 $13.31
Exercisable
at end
of year 95,000 $13.15 60,000 $13.05 25,000 $12.69
Exercise prices for options outstanding as of December 31, 1998
ranged from $12.69 to $14.88. The weighted-average remaining
contractual life of those options is 4.71 years.
In total, the Company has 1,854,917 shares which are reserved for
issuance under the 1992 Stock Option Plan, the Executive Option
Plan, the 8% Convertible Subordinated Notes, the Series B Notes
and the Series C Notes.
8. Warrants
In connection with the Company's initial public offering of its
stock effective May 28, 1992, the Company agreed to sell to the
managing underwriter, for nominal consideration, warrants to
purchase from the Company 120,000 shares of common stock (the
"Representative's Warrants"). The Representative's Warrants were
initially exercisable at a price of $8.125 per share of common
stock for a period of four years, commencing one year from the
initial public offering date.
In May 1997, 96,000 of the Representative's Warrants were
exercised by surrendering the Warrants in exchange for 16,794
shares of Company common stock. The remaining 24,000 of the
Representative's Warrants expired.
9. Preferred Stock
The Board of Directors of the Company is empowered, without
approval of the stockholders, to cause shares of Preferred Stock
to be issued in one or more series and to establish the number of
shares to be included in each such series and the rights, powers,
preferences and limitations of each series. There are no
provisions in the Company's Articles of Incorporation specifying
the vote required by the holders of Preferred Stock to take
action.
All such provisions would be set out in the designation of any
series of Preferred Stock established by the Board of Directors.
The bylaws of the Company specify that, when a quorum is present
at any meeting, the vote of the holders of at least a majority of
the outstanding shares entitled to vote who are present, in
person or by proxy, shall decide any question brought before the
meeting, unless a different vote is required by law or the
Company's Articles of Incorporation. Because the Board of
Directors has the power to establish the preferences and rights
of each series, it may afford the holders of any series of
Preferred Stock, preferences, powers, and rights, voting or
otherwise, senior to the right of holders of common stock. The
issuance of the Preferred Stock could have the effect of delaying
or preventing a change in control of the Company. The Board of
Directors has no present plans to issue any of the Preferred
Stock.
10. Defined Contribution Plan
The Company has a 401(k) profit sharing plan covering all
employees with three months of service. The Company may make
discretionary contributions of up to 50% of employee
contributions. The Company recognized $-0- in contribution
expense for the years ended December 31, 1998, 1997 and 1996,
respectively.
11. Commitments and Contingencies
Operating Leases
The Company has entered into operating leases for its executive
offices and clinic facilities. In connection with these
agreements, the Company incurred rent expense of $3,125,000,
$2,831,000 and $2,415,000 for the years ended December 31, 1998,
1997 and 1996, respectively. Several of the leases provide for
an annual increase in the rental payment based upon the Consumer
Price Index for each particular year. The leases also provide
for renewal periods ranging from one to five years. The
agreements to extend the leases specify that rental rates would
be adjusted to market rates as of each renewal date.
The future minimum lease commitments for the next five years and
in the aggregate are as follows:
1999 $3,105,000
2000 2,378,000
2001 2,023,000
2002 1,430,000
2003 704,000
Thereafter 101,000
$9,741,000
Employment Agreements
At December 31, 1998, the Company had an outstanding employment
agreement with one of its executive officers for $180,000
annually, subject to adjustment to reflect positive performance,
for a term extending through February 2002.
In addition, the Company has outstanding employment agreements
with the managing physical therapist partners of the Company's
physical therapy clinics and with certain other clinic employees
which obligate subsidiaries of the Company to pay compensation of
$7,126,000 in 1999 and $12,559,000 in the aggregate through 2003.
In addition, each employment agreement with the managing physical
therapists provides for monthly bonus payments calculated as a
percentage of each clinic's net revenues (not in excess of
operating profits) or operating profits. The Company recognized
salaries and bonus expense for the managing physical therapist
partners of $7,044,000, $5,810,000 and $4,852,000 for the years
ended December 31, 1998, 1997 and 1996, respectively.
The employment agreements generally include a non-competition
provision which extends through the term of the agreement and for
one to two years thereafter.
Minority Interest in Outpatient Physical Therapy Clinic Limited
Partnerships
The managing physical and/or occupational therapist of each
clinic owns a partial interest in the clinic he or she operates.
This is accomplished by having each clinic structured as a
separate limited partnership (the "Operating Subsidiaries"). The
Company, through its wholly-owned subsidiaries, currently owns a
1% general partnership interest and limited partnership interest
ranging from 59% to 99% in the clinics it operates. For the
majority of the clinics, the managing therapist of each such
clinic, along with other therapists at the clinic in several of
the partnerships, own the remaining limited partnership interest
in the clinic which ranges from 0% to 40%.
The majority of the partnership agreements are structured such
that the managing therapist begins with a 20% profit interest in
his or her clinic limited partnership and, at the end of each of
the first five years, the managing therapist's profit interest
increases by 3% until his or her interest reaches 35%. These
therapists have no interest in net losses of clinic partnerships,
except to the extent of their capital accounts. The Company
presently anticipates that future clinics developed by the
Company will be structured in a comparable manner.
12. Earnings per Share
The following table sets forth the computation of basic and
diluted earnings per share:
1998 1997 1996
Numerator:
Net income $1,596,000 $2,426,000 $1,641,000
Numerator for basic
earnings per share
and diluted earnings
per share $1,596,000 $2,426,000 $1,641,000
Denominator:
Denominator for basic
earnings per share--
weighted-average shares 3,611,039 3,603,159 3,557,113
Effect of dilutive
securities:
Stock options 132,490 94,346 92,463
Warrants - 10,803 30,010
Dilutive potential
common shares 132,490 105,149 122,473
Denominator for diluted
earnings per share--
adjusted weighted-
average shares and
assumed conversions 3,743,529 3,708,308 3,679,586
Basic earnings per share $ 0.44 $ 0.67 $ 0.46
Diluted earnings per share $ 0.43 $ 0.65 $ 0.45
For additional disclosures regarding the stock options and
warrants, see Notes 7 and 8, respectively.
The Notes, the Series B Notes and the Series C Notes were all
outstanding during 1996, 1997 and 1998, but were not included in
the computation of diluted earnings per share because the effect
on the computation was anti-dilutive.
