Proxy Statement Pursuant to Section 14(a) of the
Securities Exchange Act of 1934
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to SECTION 240.14a-11(c) or
SECTION 240.14a-12
U.S. Physical Therapy, Inc.
(Name of Registrant as Specified In Its Charter)
(Name of Person(s)Filing Proxy Statement if other
than Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-
6(i)(4) and 0-11.
1) Title of each class of securities to which transaction
applies:
2) Aggregate number of securities to which transaction
applies:
3) Per unit price or other underlying value of transaction
computed pursuant to Exchange Act Rule 0-11 (Set forth
the amount on which the filing fee is calculated and
state how it was determined):
4) Proposed maximum aggregate value of transaction:
5) Total fee paid:
[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by
Exchange Act Rule 0-11(a)(2) and identify the filing for
which the offsetting fee was paid previously. Identify the
previous filing by registration statement number, or the
Form or Schedule and the date of its filing.<PAGE>
1) Amount Previously Paid:
2) Form, Schedule or Registration Statement No.:
3) Filing Party:
4) Date Filed: <PAGE>
U.S. PHYSICAL THERAPY, INC.
3040 Post Oak Blvd., Suite 222
Houston, Texas 77056
(713) 297-7000
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON MAY 25, 1999
_________________________
NOTICE IS HEREBY GIVEN that the 1999 Annual Meeting of
Stockholders (the "Annual Meeting") of U.S. Physical Therapy, Inc.
(the "Company") will be held on Tuesday, May 25, 1999, at 10:00
a.m. (CDT), at the Company's office at 3040 Post Oak Boulevard,
Suite 222, Houston, Texas, for the following purposes:
(1) To elect nine directors; and
(2) To transact such other business as may properly come
before the Annual Meeting or any adjournments thereof.
Pursuant to the Bylaws, the Board of Directors has fixed the
close of business on April 19, 1999 as the record date for the
determination of stockholders entitled to notice of and to vote at
the Annual Meeting. Only holders of common stock of record at the
close of business on that date will be entitled to notice of and to
vote at the Annual Meeting or any adjournments thereof.
In the event that there are not sufficient votes to approve
any one or more of the foregoing proposals at the time of the
Annual Meeting, the Annual Meeting may be adjourned in order to
permit further solicitation of proxies by the Company.
By Order of the Board of Directors
/s/ Dorothy N. Flato
Dorothy N. Flato
Corporate Secretary and Treasurer
Houston, Texas
April 29, 1999
IT IS IMPORTANT THAT PROXIES BE RETURNED PROMPTLY. THEREFORE,
WHETHER OR NOT YOU PLAN TO BE PRESENT IN PERSON AT THE ANNUAL
MEETING, PLEASE SIGN, DATE AND COMPLETE THE ENCLOSED PROXY AND
RETURN IT IN THE ENCLOSED ENVELOPE WHICH REQUIRES NO POSTAGE IF
MAILED IN THE UNITED STATES.
<PAGE>
U.S. PHYSICAL THERAPY, INC.
3040 Post Oak Blvd., Suite 222
Houston, Texas 77056
(713) 297-7000
PROXY STATEMENT
ANNUAL MEETING OF STOCKHOLDERS
MAY 25, 1999
_________________________
SOLICITATION, VOTING AND REVOCABILITY OF PROXIES
This Proxy Statement is furnished to stockholders of U.S.
Physical Therapy, Inc. (the "Company") in connection with the
solicitation by the Board of Directors of the Company of proxies to
be used at the 1999 Annual Meeting of Stockholders (the "Annual
Meeting") of the Company, to be held on Tuesday, May 25, 1999, at
10:00 a.m. (CDT), at the Company's office at 3040 Post Oak
Boulevard, Suite 222, Houston, Texas, and at any adjournments
thereof.
The Annual Meeting has been called for the following purposes:
(1) to elect nine directors and (2) to transact such other business
as may properly come before the meeting or any adjournments
thereof. If the enclosed form of proxy is properly executed and
returned to the Company in time to be voted at the Annual Meeting,
the shares represented thereby will be voted in accordance with the
instructions marked thereon. Properly executed but unmarked
proxies will be voted FOR the election of the nine nominees of the
Board of Directors as directors. If any other matters are properly
brought before the Annual Meeting, the persons named in the
accompanying proxy will vote the shares represented by the proxies
on such matters as determined by a majority of the Board of
Directors. This Proxy Statement is initially being mailed to
stockholders on or about April 29, 1999.
The presence of a stockholder at the Annual Meeting will not
automatically revoke such stockholder's proxy. Stockholders may,
however, revoke a proxy at any time prior to its exercise by
delivering to the Company a duly executed proxy bearing a later
date, by attending the Annual Meeting and voting in person, or by
filing a written notice of revocation with Dorothy N. Flato,
Corporate Secretary and Treasurer of the Company, at 3040 Post Oak
Boulevard, Suite 222, Houston, Texas 77056.
The cost of soliciting proxies in the form enclosed herewith
will be borne by the Company. In addition to the solicitation of
proxies by mail, the Company, through its directors, officers and
regular employees, may also solicit proxies personally or by
telephone. The Company will also request persons, firms and
corporations holding shares in their names or in the name of their
nominees, which are beneficially owned by others, to send proxy
material to and obtain proxies from such beneficial owners and will<PAGE>
reimburse such holders for their reasonable expenses in doing so.
The securities which can be voted at the Annual Meeting
consist of shares of common stock of the Company with each share
entitling its owner to one vote on all matters. There is no
cumulative voting in the election of directors. The close of
business on April 19, 1999 has been fixed by the Board of Directors
as the record date for determination of stockholders entitled to
vote at the meeting. The number of shares of the Company's common
stock outstanding as of such date was 3,621,609. The presence, in
person or by proxy, of at least a majority of the total number of
outstanding shares of common stock is necessary to constitute a
quorum at the Annual Meeting. Directors of the Company will be
elected by a plurality vote of the votes cast at the Annual
Meeting. Abstentions and broker non-votes will be treated as votes
present for the purpose of determining a quorum at the Annual
Meeting. Broker non-votes will not be counted as shares entitled
to be voted on any matter.
A copy of the Annual Report to Stockholders for the year ended
December 31, 1998 accompanies this Proxy Statement. The Company
has filed an Annual Report on Form 10-K for the year ended December
31, 1998 with the Securities and Exchange Commission (the "SEC").
Stockholders may obtain, free of charge, a copy of the Form 10-K by
writing to U.S. Physical Therapy, Inc., 3040 Post Oak Blvd., Suite
222, Houston, Texas 77056, Att'n: Dorothy Flato, Corporate
Secretary.
ELECTION OF DIRECTORS
The Board of Directors is currently composed of eight members
and one vacancy. All directors hold office until the next annual
meeting of stockholders of the Company and until their successors
have been elected and qualified. There are no arrangements or
understandings between the Company and any person pursuant to which
such person has been elected as a director.
At the Annual Meeting, nine directors will be elected for one-
year terms. Unless otherwise specified on the proxy, it is the
intention of the persons named in the proxy to vote the shares
represented by each properly executed proxy for the election as
directors of each of the persons named below as nominees of the
Board of Directors. The Board of Directors believes that such
nominees will stand for election and will serve if elected as
directors. However, if any person nominated by the Board of
Directors fails to stand for election or is unable to accept
election, the proxies will be voted for the election of such other
person or persons as the Board of Directors may recommend.
<PAGE>
Information as to Nominees
The following table sets forth the names of the Board of
Directors' nine nominees for election as directors. Each of these
persons currently serves as a director of the Company, except for
Mr. Broussard who is being nominated for a term as a director for
the first time at the Annual Meeting. Also set forth is certain
other information with respect to each such person's age, the
period during which he has served as a director and positions
currently held with the Company.
Position(s)
Director Held With
Nominees: Age (a) Since (b) the Company
J. Livingston Kosberg 62 1990 Chairman of the Board
Mark J. Brookner 54 1990 Vice Chairman of the
Board
Roy W. Spradlin 50 1994 President, Chief
Executive Officer and
Director
Daniel C. Arnold 69 1992 Director
James B. Hoover 44 1993 Director
Marlin W. Johnston 67 1992 Director
Richard C.W. Mauran 66 1993 Director
Albert L. Rosen 75 1992 Director
Bruce D. Broussard 36 n/a Nominee
(a) At March 31, 1999.
(b) Messrs. Kosberg and Brookner have served as directors of each
corporate predecessor (and subsidiaries thereof) of the
Company since the formation of the original predecessor,
National Rehab Associates, Inc., in June 1990. Mr. Brookner
also served as an officer of all predecessors (and
subsidiaries thereof) of the Company. Mr. Kosberg served as
an officer of certain, but not all, predecessors (and
subsidiaries thereof) of the Company.
The principal occupation of each nominee for the past five
years is set forth below.
J. Livingston Kosberg has served as Chairman of the Board of
the Company since April 1992 and as the Company's Chief Executive<PAGE>
Officer from April 1992 to August 1995. From September 1991 to
June 1995, Mr. Kosberg also served as Chairman of the Board and was
employed by CareerStaff Unlimited, Inc., which is a national
provider of temporary rehabilitation therapist staffing. Prior to
April 1992, Mr. Kosberg was primarily engaged in managing personal
investments through a variety of ventures and entities, including
National Rehab Associates, Inc., the Company's predecessor.
Mark J. Brookner has served as Vice Chairman of the Board of
the Company since August 1998. Mr. Brookner served as Chief
Financial Officer of the Company from April 1992 to August 1998 and
also served as Secretary and Treasurer during portions of that
time. From August 1991 through June 1994, Mr. Brookner served as
Vice President of the corporate general partner of Therapists
Unlimited, L.P., a predecessor of CareerStaff Unlimited, Inc.
Roy W. Spradlin has served as President and Chief Operating
Officer of the Company since May 1994. Effective August 1995, Mr.
Spradlin was named the Company's Chief Executive Officer. From
1991 to May 1994, Mr. Spradlin was President of outpatient clinics
for Pinnacle Rehabilitation Inc. ("Pinnacle"). Pinnacle is a
wholly-owned subsidiary of Pinnacle Care Inc., which provides
rehabilitation services in nursing homes, hospitals and owned and
operated outpatient physical therapy clinics. From 1988 through
1991, he was the Vice President of outpatient clinics in Missouri
and Kansas for Pinnacle.
Daniel C. Arnold has been engaged primarily in managing
personal investments since April 1988, except for the period
February 1989 to April 1991, when he served as Chairman of the
Board and Chief Executive Officer of Farm & Home Financial
Corporation and its wholly-owned subsidiary, Farm & Home Savings
Association. In April 1991, Mr. Arnold retired from these
positions, except that he remained Chairman of the Boards until
retiring as such in October 1991. His directorships in these
institutions terminated on June 30, 1994 upon acquisition by
another company. He also serves as a Director of Parkway
Properties, Inc., a real estate investment trust whose holdings are
predominately office buildings, and Belco Oil & Gas Corp., an oil
and gas exploration and production company.
James B. Hoover is the founding managing member of Dauphin
Capital Partners, a health care venture capital firm established in
1998. For the previous six years, he was a general partner of
Welsh, Carson, Anderson & Stowe, a management buyout firm focused
on the acquisition of health care and information services
companies. Prior thereto, Mr. Hoover was a general partner with
the investment banking firm of Robertson, Stephens & Company,
serving initially as a senior medical industry research analyst and
subsequently as manager of the firm's health care corporate finance
group. Mr. Hoover presently serves on the Board of Directors of
New American Healthcare, a rural hospital management company,
Centennial Healthcare <PAGE>
Corporation, a subacute and rehabilitation services provider, and
several privately owned health care companies.
Marlin W. Johnston has been a management consultant with Tonn
& Associates, a management consulting firm, since September 1993.
During 1992 and 1993, Mr. Johnston served as a management
consultant to the Texas Department of Health and the Texas
Department of Protective and Regulatory Services.
Richard C.W. Mauran has been engaged primarily in managing
personal investments for more than the past five years. Mr. Mauran
was appointed a director of the Company in August 1993. He also
serves on the Board of Directors of French Fragrances Inc., a
perfume company.
Albert L. Rosen retired as President and General Manager of
the San Francisco Giants major league baseball team in December
1992. He had served in such position since September 1985.
Bruce D. Broussard has been the Chief Executive Officer of
HarborDental Properties, a dental development company specializing
in free-standing upscale dedicated dental buildings, since December
1997. He was Executive Vice President and Chief Financial Officer
of Regency Health Services, Inc., a national chain of nursing homes
and provider of long-term health services, from January 1996 to
October 1997. For the period from 1993 to 1996, he was the Chief
Financial Officer and director of Sun Health Care Group, a health
care provider.
Corporate Governance and Other Matters
The Board of Directors has appointed an Audit Committee whose
members currently consist of Messrs. Johnston (chairman), Arnold
and Brookner. The Audit Committee is responsible for engaging the
Company's independent auditors and reviewing with them the scope
and timing of their audit services and any other services they are
asked to perform, their report on the Company's financial
statements following completion of their audit and the Company's
policies and procedures with respect to internal accounting and
financial controls. The Audit Committee met two times during 1998.
The Board has a Compensation Committee, the current members of
which are Messrs. Arnold (chairman), Rosen and Hoover. The
Compensation Committee reviews matters concerning compensation of
employees of the Company. During 1998, the Compensation Committee
held three meetings.
The Board has a Stock Option Committee, the current members of
which are Messrs. Arnold (chairman), Rosen and Hoover. The Stock
Option Committee reviews matters concerning the Company's stock
option plans. During 1998, the Stock Option Committee held two
meetings.
The Board of Directors has a Corporate Compliance Committee,
the current members of which are Messrs. Johnston (chairman),
Spradlin and Brookner. During 1998, the Corporate Compliance
Committee held four meetings.
In November 1994, the Board of Directors established the
Executive Committee whose members are Messrs. Kosberg, Arnold and
Hoover. The Executive Committee assists management by providing
advice and recommendations when needed and performs such other
services as delegated by the Board of Directors. During 1998, the
Executive Committee did not hold any meetings.
There is no separate Nominating Committee of the Board of
Directors.
During 1998, the Company's Board of Directors held four
meetings. No incumbent director attended fewer than 75% of the
total number of meetings of the Board of Directors of the Company
and of all committees of the Board of Directors of the Company on
which he served.
Compensation of Directors
Directors who are also employees of the Company are not
compensated separately for serving on the Board. Each of the
Company's directors who are not employees of the Company received
$3,500 for attendance at each regular meeting of the Board of
Directors. Directors are also reimbursed for their out-of-pocket
travel and related expenses incurred in attending all Board and
committee meetings. In November 1998, five of the Company's
current non-employee directors, Daniel C. Arnold, James B. Hoover,
Marlin W. Johnston, Richard C.W. Mauran and Albert L. Rosen, each
received ten-year non-qualified options to purchase 6,000 shares of
the Company's common stock. The exercise price of these options,
which were granted under the Company's 1992 Stock Option Plan, is
$9.4375 per share. J. Livingston Kosberg received $75,000 for
serving as Chairman of the Board in 1998. Mark J. Brookner was
named Vice Chairman of the Board effective August 3, 1998 and
received $31,250 for serving in that capacity during 1998.
EXECUTIVE COMPENSATION
Compensation
The following table shows the compensation paid by the Company
and its subsidiaries during 1998, 1997 and 1996 to the Company's
Chief Executive Officer. <PAGE>
None of the Company's executive officers received compensation in
excess of $100,000 during 1998.
Summary Compensation Table
Long-Term
Compensation
Annual Compensation Awards
Securities
Name and Fiscal Underlying
Principal Position(s) Year Salary Bonus Options(#)
Roy W. Spradlin (a) 1998 $ 180,000 $ 35,000 100,000
President and Chief 1997 165,000 35,000 15,000
Executive Officer 1996 150,000 30,000 15,000
(a)Mr. Spradlin became President and Chief Operating Officer in May
1994. In August 1995, he was named Chief Executive Officer.
Option Grants
The following table contains information with respect to
grants of stock options to the Company's Chief Executive Officer
during the year ended December 31, 1998.
Option Grants in 1998 Fiscal Year
Individual Grants
Potential
Number of % of Total Realizable Value
Securities Options at Assumed Annual
Underlying Granted to Exercise Rates of Stock
Options Employees or Base Price Appreciation
Granted in Fiscal Price Expiration for Option Term(b)
Name (#) (a) Year ($/Sh) Date 5% ($) 10% ($)
Roy Spradlin 100,000 44% $10.4375 09/09/08 $656,409 $1,663,469
__________________
(a) The options vest one-fourth on each of the second, third,
fourth and fifth anniversaries of the date of grant. Vesting will
be accelerated in the event of a "change in control" of the Company
(defined generally as the acquisition of 50% or more of the
Company's outstanding voting stock, a change in a majority of the
Board of Directors or a merger, consolidation or acquisition of all
or substantially all of the assets of the Company), subject to
certain limitations if vesting would result in adverse tax
consequences to the optionee. The per share option exercise price
equaled the fair market value of a share of the Company's common
stock on the date of grant, as determined in accordance with the
Company's 1992 Stock Option Plan.
(b) The options granted to Mr. Spradlin are non-incentive stock
options which expire ten years from the date of grant.
Option Exercises and Holdings
The following table sets forth the 1998 year-end value of all
unexercised in-the-money options held by the Company's Chief
Executive Officer. No options were exercised by the Company's
Chief Executive Officer during 1998.
Aggregated Option Exercises in Last Fiscal Year
and FY-End Option Values
Value of Securities
Underlying Unexercised
Number of Securities In-the-Money Options
Underlying Unexercised at FY-End ($)(a)
Options At FY-End (#) Exercisable/
Name Exercisable/Unexercisable Unexercisable
Roy W. Spradlin 86,250/173,750 $60,938/$20,313
(a) Market value of underlying securities at year-end of $8.375
per share minus the exercise or base price of in-the-money
options at year-end.
Employment Agreements
Mr. Spradlin has entered into an amended and restated
employment agreement with the Company dated as of February 24,
1998, which supersedes his amended and restated employment
agreement with the Company dated as of February 21, 1997. Under
his new employment agreement, Mr. Spradlin is employed as President
and Chief Executive Officer for a five-year term ending on February
21, 2002. Pursuant to the terms of his new employment agreement,
Mr. Spradlin's base salary was $165,000, subject to review at least
annually with increases based on performance. Additionally, Mr.
Spradlin is eligible to receive cash bonuses payable at the
discretion of the Board of Directors and, subject to conditions of
eligibility, is entitled to participate in any employee benefit
plans adopted by the Company. Mr. Spradlin's new employment
agreement may be terminated by the Company prior to the expiration<PAGE>
of its five-year term in the event (i) he becomes disabled for 90
consecutive days or (ii) his employment is terminated for "cause"
(as defined in the agreement). In the event that (i) Mr.
Spradlin's employment is terminated without "cause," (ii) the
Company sells all or substantially all of its assets, (iii) more
than 50% of the Company's outstanding common stock is transferred
or sold by the Company's stockholders,
(iv) the Company completes a merger or consolidation in which the
stockholders of the Company immediately prior to the merger or
consolidation own less than 50% of the surviving company or (v) the
Company is dissolved in a voluntary or involuntary dissolution, Mr.
Spradlin would be entitled to receive a lump sum
termination/severance benefit equal to one and one-half times his
annual salary plus bonus for the then most recent 12-month period.
Under his new employment agreement, in the event of his death, Mr.
Spradlin's heirs or beneficiaries would become entitled to receive
a payment equal to one year's annual salary. Mr. Spradlin's new
employment agreement further contains a covenant not to compete
during its five-year term and for a one year period following the
termination of his employment.
Certain Transactions
In May 1994, the Company completed 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 Sloan Financial Corporation ("Sloan Financial"), a
company which is 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 of the Company determined by dividing the principal amount
converted by $10.00, subject to adjustment upon the occurrence of
certain events. Interest on the Series C Notes is payable at a
rate of 8% per annum, payable quarterly. Holders of Series C Notes
also have certain registration rights with respect to the
underlying common shares. Sloan Financial also owns $2,000,000
aggregate principal amount of the Company's 8% Convertible
Subordinated Notes due June 30, 2003 (the "Notes"), which were
issued by the Company at par in June 1993. The conversion price of
the Notes is also $10.00, subject to adjustment as provided in the
Notes. Interest on the Notes is also payable quarterly at an
annual rate of 8%, and holders of the Notes possess certain
registration rights with respect to the underlying shares. See
"Principal Holders of Voting Securities."
Stock Performance Graph
The following performance graph compares the cumulative total
stockholder return of the Company's common stock to The Nasdaq
Stock Market United States Index and The Nasdaq Stock Market
Healthcare Index for the period from December
31, 1993 through December 31, 1998. The graph assumes that $100
was invested in each of the Company's common stock and the
companies listed on The Nasdaq Stock <PAGE>
Market United States Index and The Nasdaq Stock Market Healthcare
Index on December 31, 1993 and that any dividends were reinvested.
Comparison of Five Years Cumulative Total Return for the Year
Ended December 31, 1998*
The Nasdaq
Measurement Period Stock Market The Nasdaq Stock
(Fiscal Year U.S. Physical United States Market
Covered) Therapy, Inc. Index Healthcare Index
12/31/93 $100 $100 $100
12/31/94 114 -102 107
12/31/95 119 138 136
12/31/96 101 170 136
12/31/97 122 209 138
12/31/98 -113 293 119
*Cumulative total return assumes an initial investment of $100 on
December 31,1993 and the reinvestment of dividends. There were
no dividends paid by the Company during the period presented.
Report on Executive Compensation
The Board of Directors and its Compensation and Stock Option
Committees have prepared the following report on the Company's
policies with respect to the compensation of executive officers for
1998. The Board of Directors makes all decisions on compensation
of the Company's executive officers (other than stock options),
based upon recommendations of the Compensation Committee.
Decisions as to the grant of stock options are made by the Stock
Option Committee.
Compensation of Executive Officers
The compensation policies of the Company are designed to
enable the Company to attract, motivate and retain experienced and
qualified executives. The Company seeks to provide competitive
compensation. The Company's policy has been to provide a
significant component of an executive officer's compensation
through the grant of stock options. The Company believes that
grants of stock options to executives, as well as to employees
generally, help align the interests of such persons with the
interests of Company stockholders.
The following describes in more specific terms the elements of
compensation of executive officers for 1998.<PAGE>
Base Salaries
Base salaries of executives are initially determined by
evaluating the responsibilities of the position, the experience and
knowledge of the individual and the competitive marketplace for
executive talent. Base salaries for executive officers are
reviewed annually by the Compensation Committee and the Board
based on, among other things, individual performance and
responsibilities.
Incentive Compensation
Based on performance, incentive opportunities are available to
a wide range of Company employees. Incentive compensation is
effective in reinforcing both the overall values of the Company and
the specific operating goals of the various business units.
Incentive compensation programs are designed to focus
employees' attention on the key performance goals of the Company,
to identify the expected levels of performance and to reward
individuals who meet or exceed such expectations. The aggregate
amounts available for incentive awards are determined by the
overall financial performance of the Company. The actual awards
paid to individual recipientsare formulated by management and
approved by the Compensation Committee at its discretion.
Stock Option Awards
The Company's 1992 Stock Option Plan, as amended, (the "1992
Option Plan") and the Executive Option Plan (the "Executive Plan")
were approved by the Board of Directors and the stockholders of the
Company to align employee and outside directors' interests with
stockholders' interests, to provide incentives to key employees of
the Company by encouraging their ownership of common stock and to
aid the Company in attracting and retaining such key employees,
upon whose efforts the Company's success and future growth depends.
Options are granted at the discretion of the Stock Option
Committee. Individual grant sizes are determined based on
organizational and individual performance. At the discretion of
the Stock Option Committee, and based on the recommendation of
management, options may also be used as an incentive for candidates
recruited to fill key positions.
During 1998, the Company granted options covering a total of
262,800 shares of Company common stock to 46 directors, officers
and employees, including an option for 100,000 shares granted to
Mr. Spradlin. The per share exercise price of all options granted
in 1998 equaled the fair market value of a share of Company common
stock on the date of grant. At December 31, 1998, 115,075 shares
were available for future grant under the 1992 Option Plan and no
shares were available for future grant under the Executive Plan.<PAGE>
Stock option grants made to executive officers in 1998 reflect
significant individual performance and contributions relating to
the Company's operations, including implementation of the Company's
development program.
Other
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 did not make any contributions during 1998.
Compensation of Chief Executive Officer
Mr. Spradlin received a salary of $180,000, $165,000 and
$150,000 in 1998, 1997 and 1996, respectively. He also received
bonuses totaling $35,000, $35,000 and $30,000 in 1998, 1997 and
1996, respectively. Although Mr. Spradlin participated in the
Company's 401(k) Plan for 1996 through 1998, the Company did not
make any matching contributions to such plan during these years.
In addition to cash compensation, Mr. Spradlin was granted 100,000,
15,000 and 15,000 options to purchase shares of common stock under
the 1992 Option Plan during 1998, 1997 and 1996, respectively.
Compensation Deductibility Policy
Under Section 162(m) of the Internal Revenue Code of 1986, as
amended (the "Code") and applicable Treasury regulations, no
deduction is allowed for annual compensation in excess of $1
million paid by a publicly traded corporation to its chief
executive officer and the four other most highly compensated
officers. Under those provisions, however, there is no limitation
on the deductibility of "qualified performance-based compensation."
In general, the Company's policy is to maximize the extent of
tax deductibility of executive compensation under the provisions of
Section 162(m) so long as doing so is compatible with its
determinations as to the most appropriate methods and approaches
for the design and delivery of compensation to the Company's
executive officers.
Respectfully submitted,
The Board of Directors Compensation Committee
J. Livingston Kosberg Daniel C. Arnold
Roy W. Spradlin James B. Hoover
Mark J. Brookner Albert L. Rosen
Daniel C. Arnold
James B. Hoover Stock Option Committee
Marlin W. Johnston Daniel C. Arnold
Albert L. Rosen James B. Hoover
Richard C.W. Mauran Albert L. Rosen<PAGE>
Section 16(a) Beneficial Ownership Reporting Compliance
Section 16(a) of the Securities Exchange Act of 1934 requires
the Company's directors and officers to file with the SEC initial
reports of ownership of the Company's equity securities and to file
subsequent reports when there are changes in such ownership. The
Company believes that during 1998 all Section 16(a) filing
requirements applicable to the Company's directors and officers
were complied with on a timely basis.
INDEPENDENT PUBLIC ACCOUNTANTS
Ernst & Young LLP acts as the Company's independent public
accountants. Representatives of Ernst & Young LLP are expected to
be present at the Annual Meeting. They will be given an
opportunity to make a statement if they desire to do so and will be
available to respond to appropriate questions.
STOCK OWNED BY MANAGEMENT
The following table sets forth information as of April 19,
1999 with respect to the shares of the Company's common stock
beneficially owned by each director and director nominee of the
Company, the Company's Chief Executive Officer and by all directors
and executive officers as a group.
Amount and Percent of
Name and Address Nature of Common Stock
of Beneficial Owner Beneficial Ownership(a) Outstanding
Daniel C. Arnold 179,500 (b) 4.87%
Director
Mark J. Brookner 126,250 3.44
Vice Chairman of the Board
James B. Hoover 81,000 (c) 2.20
Director
Marlin W. Johnston 53,000 1.45
Director
J. Livingston Kosberg 508,330 (d) 14.04
Chairman of the Board
Richard C.W. Mauran 538,000 (d) 12.93
Director
Albert L. Rosen 91,000 2.48
Director
Roy W. Spradlin 94,500 2.54
President, Chief Executive
Officer and Director
All directors and 1,709,580 37.64
executive officers as
a group (12 persons)
* Less than 1%.
(a) In accordance with Rule 13d-3 under the Securities Exchange
Act of 1934 (the "1934 Act"), a person is deemed to be the
beneficial owner, for purposes of this table, of any shares of
the Company's common stock if he has or shares voting power or
investment power with respect to such security, or has the
right to acquire beneficial ownership at any time within 60
days from April 19, 1999. As used herein, "voting power" is
the power to vote or direct the voting of shares and
"investment power" is the power to dispose or direct the
disposition of shares. All persons shown in the table above
have sole voting and investment power, unless otherwise
indicated. This table includes 403,250 shares of common stock
subject to outstanding options which are exercisable within 60
days from April 19, 1999. Of such shares, Messrs. Arnold,
Brookner, Hoover, Johnston, Mauran, Rosen and Spradlin hold
options to purchase 51,000, 51,250, 51,000, 41,000, 38,000,
41,000 and 92,500 shares, respectively. This table also
includes 217,500 shares that can be acquired upon conversion
of $2,175,000 aggregate principal amount of the Company's
outstanding 8% Convertible Subordinated Notes due June 30,
2003 and 300,000 shares that can be acquired upon conversion
of $3,000,000 aggregate principal amount of the Company's
outstanding 8% Convertible Subordinated Notes, Series C due
June 30, 2004.
(b) Includes 50,000 shares owned by the Arnold Family Limited
Partnership; 16,000 shares owned by the Bintliff 1990 Limited
Partnership; 50,000 shares owned by Arnold 1997 Limited
Partnership; and 12,500 shares that can be acquired upon
conversion of $125,000 aggregate principal amount of the
Company's outstanding 8% Subordinated Notes due June 30, 2003
held by the Arnold Family Limited Partnership. Mr. Arnold is
the managing general partner of the Arnold Family Limited
Partnership and the Arnold 1997 Limited Partnership and a
general partner of the Bintliff 1990 Limited Partnership. As
such, he has shared voting and dispositive power over the
shares held by the three partnerships. Mr. Arnold disclaims
beneficial ownership of these securities except to the extent
of his pecuniary interest therein.
(c) Includes 5,000 shares that can be acquired upon conversion of
$50,000 aggregate principal amount of the Company's outstanding
8% Convertible Subordinated Notes due June 30,2003 owned by
Mr.Hoover.
(d) See "Principal Holders of Voting Securities".
PRINCIPAL HOLDERS OF VOTING SECURITIES
The following table sets forth information as of April 19,
1999 with respect to the ownership of shares of common stock by the
persons known to management to be the beneficial owners of more
than 5% of the Company's outstanding common stock. The information
is based on the most recent statements on Schedule 13D or 13G filed
on behalf of such persons or on other information available to the
Company.
Amount and Percent of
Name and Address Nature of Common Stock
of Beneficial Owner Beneficial Ownership Outstanding
J. Livingston Kosberg 508,330 (a) 14.04%
3040 Post Oak Blvd., Suite 222
Houston, Texas 77056
Clarence E. Mayer 337,500 (b) 9.34
5847 San Felipe, Suite 1700
Houston, Texas 77057
Richard C.W. Mauran 538,000 (c) 12.93
Sloan Financial Corporation
31 Burton Ct.
Franklins Row
London, SW 3, England
J. Carlo Cannell d/b/a 358,600 (d) 9.93
Cannell Capital Management
750 Battery Street
San Francisco, California 94111
(a) The Schedule 13G of Mr. Kosberg dated February 2, 1999 states
that such amount includes 56,250 shares held by the Dolores
Wilkenfeld Trust, 442,080 shares held by the Livingston
Kosberg Trust and 10,000 shares held individually in Mr.
Kosberg's name. Mr. Kosberg is the trustee of both trusts and
the income beneficiary of the Livingston Kosberg Trust. The
reported share amount excludes 1,170 shares held by Mr.
Kosberg's wife and 48,000 shares held by Mr. Kosberg's three
children and their spouses. Mr. Kosberg disclaims beneficial
ownership of such shares.
(b) The Schedule 13D of Mr. Mayer dated February 16, 1993 states
that he has sole voting and dispositive power over the entire
number of such shares.
(c) Includes 200,000 shares of Company common stock that may be
acquired by Sloan Financial Corporation ("Sloan Financial"),
of which Mr. Mauran is the controlling stockholder, upon
conversion of $2,000,000 aggregate principal amount of the
Company's outstanding 8% Convertible Subordinated Notes due
June 30, 2003 owned by Sloan Financial and 300,000 shares of
Company common stock that may be acquired by Sloan Financial
upon conversion of $3,000,000 aggregate principal amount of
the Company's outstanding 8% Convertible Subordinated Notes,
Series C, due June 30, 2004 owned by Sloan Financial. The<PAGE>
Schedule 13D of Sloan Financial and Mr. Mauran dated May 3, 1994
states that they possess shared voting and shared dispositive power
over the entire number of such shares. Also includes 38,000
director options held by Mr. Mauran.
(d) The Schedule 13G of J. Carlo Cannell d/b/a Cannell Capital
Management dated November 17, 1998 states that Cannell Capital
has shared voting and shared dispositive power over the entire
number of such shares; Tongo Partners, L.P. has sole voting
and sole dispositive power over 181,100 shares; Pleiades
Investment Partners, L.P. has sole voting and sole dispositive
power over 26,500 shares; The Cuttyhunk Fund Limited has sole
voting and sole dispositive power over 112,500 shares; Canal,
Ltd. has sole voting and sole dispositive power over 29,600
shares; Goldman Sachs Performance Partners (Offshore), L.P.
has sole voting and sole dispositive power over 3,000 shares
and Goldman Sachs Performance Partners, L.P. has sole voting
and sole dispositive power over 5,900 shares. Mr. Cannell is
a general partner of Tonga Partners, L.P. and is the
investment advisor of each of the other named entities.
DEADLINE FOR SUBMISSION OF STOCKHOLDER PROPOSALS TO BE
PRESENTED AT THE 2000 ANNUAL MEETING OF STOCKHOLDERS
Any proposal intended to be presented by any stockholder for
action at the 2000 Annual Meeting of Stockholders of the Company
must be received by the Company on or before December 24, 1999 in
order for the proposal to be considered for inclusion in the proxy
statement and form of proxy relating to the 2000 Annual Meeting.
Nothing in this paragraph shall be deemed to require the Company to
include in its proxy statement and form of proxy relating to the
2000 Annual Meeting any stockholder proposal which does not meet
all of the requirements for inclusion established by the SEC in
effect at the time such proposal is received.
OTHER MATTERS
As of the date of this Proxy Statement, the Board of Directors
of the Company does not know of any other matters to be presented
for action by the stockholders at the 1999 Annual Meeting. If,
however, any other matters not now known are properly brought
before the meeting, the persons named in the accompanying proxy
will vote such proxy in accordance with the determination of a
majority of the Board of Directors.
By Order of the Board of Directors
/s/ Dorothy N. Flato
Dorothy N. Flato
Corporate Secretary and Treasurer
Houston, Texas
April 29, 1999<PAGE>
U.S. PHYSICAL THERAPY, INC.
PROXY FOR ANNUAL MEETING OF STOCKHOLDERS -- May 25, 1999
THE PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned stockholder of U.S. Physical Therapy, Inc.
(the "Company") hereby appoints J. Livingston Kosberg and Dorothy
N. Flato, and each of them, with full power of substitution in
each, as proxies to cast all votes, as designated below, which the
undersigned stockholder is entitled to cast at the 1999 Annual
Meeting of Stockholders of the Company to be held on Tuesday, May
25, 1999, at 10:00 a.m. (CDT), at the Company's office at 3040 Post
Oak Boulevard, Suite 222, Houston, Texas, and at any adjournments
thereof, upon the following matters.
This proxy will be voted as directed by the undersigned
stockholder. UNLESS CONTRARY DIRECTION IS GIVEN, THIS PROXY WILL
BE VOTED FOR THE ELECTION OF THE NOMINEES LISTED IN PROPOSAL 1 AND
IN ACCORDANCE WITH THE DETERMINATION OF A MAJORITY OF THE BOARD OF
DIRECTORS AS TO OTHER MATTERS.
The undersigned stockholder hereby acknowledges receipt of the
Notice of Annual Meeting and Proxy Statement, and hereby revokes
any proxy or proxies heretofore given. This proxy may be revoked
at any time before its exercise.
(continued and to be signed and dated on reverse side)
<PAGE>
1. Election of nine directors for one-year terms. Nominees: J.
Livingston Kosberg, Roy W. Spradlin, Mark J. Brookner, Daniel
C. Arnold, James B. Hoover, Marlin W. Johnston, Richard C.W.
Mauran, Albert L. Rosen and Bruce D. Broussard.
FOR all nominees listed WITHHOLD AUTHORITY
above (except as marked to vote for all nominees
to the contrary below). listed.
(INSTRUCTION: To withhold authority to vote for any individual
nominee, print that nominee's name on the space provided below.)
___________________________________________
2. As determined by a majority of the Company's Board of
Directors, the proxies are authorized to vote upon such other
business as may properly come before the meeting, or any
adjournments thereof.
Please date and sign exactly as
name appears hereon and return in
the enclosed envelope.
Date:_________________________
______________________________
Signature of Stockholder or
Authorized Representative
(Only one signature is required
in the case of stock ownership
in the name of two or more
persons.)
