<PAGE>
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
---------
QUARTERLY REPORT UNDER SECTION 13 OR 15 (D) OF
THE SECURITIES EXCHANGE ACT OF 1934
FOR THE QUARTER ENDED MARCH 31, 1996 COMMISSION FILE NUMBER: 1-11196
AMERICAN MEDICAL RESPONSE, INC.
- --------------------------------------------------------------------------------
(Exact name of registrant as specified in its charter)
DELAWARE 04-3147881
- ------------------------------- -------------------------------
(State or other jurisdiction of (I.R.S. Employer Identification
incorporation or organization) No.)
2821 SOUTH PARKER ROAD, 10TH FLOOR, AURORA, COLORADO 80014
- --------------------------------------------------------------------------------
(Address of principal executive offices) (Zip Code)
(303) 614-8500
----------------------------------------------------
(Registrant's telephone number, including area code)
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.
X YES NO
------- -----
The number of shares outstanding of each of the issuer's classes of
common stock as of May 6, 1996 is: Common Stock, $0.01 par value,
20,566,331 shares.
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AMERICAN MEDICAL RESPONSE, INC.
INDEX
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<TABLE>
<CAPTION>
Page
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PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
<S> <C> <C>
Consolidated Balance Sheets at March 31, 1996 (unaudited) and
December 31, 1995.............................................. 3
Consolidated Statements of Earnings for the Three Months
Ended March 31, 1996 and 1995 (unaudited)...................... 4
Consolidated Statement of Stockholders' Equity for the
Three Months Ended March 31, 1996 (unaudited).................. 5
Consolidated Statements of Cash Flows for the
Three Months Ended March 31, 1996 and 1995 (unaudited)......... 6
Notes to Interim Consolidated Financial Statements............. 7
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations.......................................... 9
PART II. OTHER INFORMATION
Item 1. Legal Proceedings.............................................. 13
Item 2. Changes in Securities.......................................... 13
Item 3. Defaults Upon Senior Securities................................ 13
Item 4. Submission of Matters to a Vote of Security Holders............ 13
Item 5. Other Information.............................................. 13
Item 6. Exhibits and Reports on Form 8-K............................... 13
Signature .................................................................. 14
Exhibit Index .............................................................. 15
</TABLE>
Page 2
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AMERICAN MEDICAL RESPONSE, INC.
CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS, EXCEPT SHARE AMOUNTS)
<TABLE>
<CAPTION>
March 31, December 31,
ASSETS 1996 1995
----------- ------------
(unaudited)
<S> <C> <C>
Current assets:
Cash and cash equivalents................................................ $ 28,088 $ 8,804
Accounts receivable, net of allowance for uncompensated care of
$53,866 and $47,654.................................................. 117,775 98,215
Inventories.............................................................. 4,083 3,927
Prepaid expenses and other receivables................................... 9,476 7,678
Deferred income taxes.................................................... 31,540 30,646
------- -------
Total current assets................................................... 190,962 149,270
------- -------
Property and equipment, net............................................... 66,115 64,669
------- -------
Non-current assets:
Goodwill, net............................................................ 274,280 258,877
Covenants not to compete, net............................................ 360 423
Other.................................................................... 7,067 3,142
------- -------
Total non-current assets............................................... 281,707 262,442
------- -------
TOTAL.................................................................. $ 538,784 $ 476,381
======= =======
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable......................................................... $ 19,800 $ 15,378
Accrued compensation, benefits and taxes................................. 22,300 20,387
Accrued expenses......................................................... 34,975 31,405
Accrued restructuring charge............................................. 16,607 20,349
Income taxes payable..................................................... 18,529 15,651
Current maturities of debt............................................... 17,957 13,919
------- -------
Total current liabilities.............................................. 130,168 117,089
------- -------
Non-current liabilities:
Long-term debt........................................................... 14,691 101,660
Convertible subordinated notes........................................... 125,000 ----
Deferred income taxes.................................................... 7,393 7,905
Other liabilities........................................................ 164 163
------- -------
Total non-current liabilities.......................................... 147,248 109,728
------- -------
Total liabilities...................................................... 277,416 226,817
------- -------
Stockholders' equity:
Preferred stock, $.01 par value, 500,000 shares authorized, none issued.. ---- ----
Common stock, $.01 par value, 25,000,000 shares authorized, 20,037,221
and 19,868,337 shares issued and outstanding........................... 200 199
Additional paid-in capital............................................... 199,065 194,948
Retained earnings........................................................ 62,103 54,417
------- -------
Total stockholders' equity............................................. 261,368 249,564
------- -------
Commitments and contingencies
TOTAL.................................................................. $ 538,784 $ 476,381
======= =======
</TABLE>
See accompanying notes to interim consolidated financial statements.
Page 3
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AMERICAN MEDICAL RESPONSE, INC.
CONSOLIDATED STATEMENTS OF EARNINGS
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
<TABLE>
<CAPTION>
Three Months Ended
March 31,
----------------------
1996 1995
---- ----
(unaudited)
<S> <C> <C>
Total revenue................................ $ 157,809 $ 109,179
------- -------
Operating expenses:
Salaries and benefits....................... 79,771 55,718
Uncompensated care.......................... 29,555 21,157
Other....................................... 24,977 17,802
Depreciation................................ 5,182 3,516
Amortization of intangibles................. 2,240 951
------- -------
Total operating expenses.................. 141,725 99,144
------- -------
Earnings from operations..................... 16,084 10,035
Interest expense, net....................... 2,146 1,030
------- -------
Earnings before income taxes................. 13,938 9,005
Income taxes................................ 6,252 4,515
------- -------
Net earnings.............................. $ 7,686 $ 4,490
======= =======
PRO FORMA DATA
Historical net earnings...................... $ 7,686 $ 4,490
Salaries and benefits........................ ---- (96)
Income taxes................................. ---- (417)
------- -------
Net earnings.............................. $ 7,686 $ 5,003
======= =======
Net earnings per common share:
Primary..................................... $ 0.39 $ 0.32
======= =======
Fully diluted............................... $ 0.38 $ 0.32
======= =======
Weighted average common shares outstanding:
Primary..................................... 19,948 15,557
======= =======
Fully diluted............................... 22,131 15,557
======= =======
</TABLE>
See accompanying notes to interim consolidated financial statements.
Page 4
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AMERICAN MEDICAL RESPONSE, INC.
CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY
(IN THOUSANDS)
(UNAUDITED)
<TABLE>
<CAPTION>
Common Stock Additional Total
---------------- Paid-in Retained Stockholders'
Shares Amount Capital Earnings Equity
------- ------ -------- -------- -------------
<S> <C> <C> <C> <C> <C>
Balance at December 31, 1995 ................. 19,868 $199 $194,948 $54,417 $249,564
Stock options exercised, including related
tax benefit .............................. 132 1 3,590 ---- 3,591
Stock issued for employee stock purchase
plan ..................................... 37 --- 527 ---- 527
Net earnings ............................... ---- --- ---- 7,686 7,686
------ ---- -------- ------- --------
Balance at March 31, 1996 .................... 20,037 $200 $199,065 $62,103 $261,368
====== ==== ======== ======= ========
</TABLE>
See accompanying notes to interim consolidated financial statements.
Page 5
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AMERICAN MEDICAL RESPONSE, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(IN THOUSANDS)
<TABLE>
<CAPTION>
Three Months Ended
March 31,
-----------------------
1996 1995
--------- --------
(unaudited)
<S> <C> <C>
Cash flows from operating activities:
Net earnings............................................................... $ 7,686 $ 4,490
Adjustments to reconcile net earnings to net cash provided by operating
activities:
Depreciation............................................................. 5,182 3,516
Amortization of intangible assets........................................ 2,240 951
Deferred income taxes.................................................... (1,406) 3,500
Changes in assets and liabilities, net of acquisitions:
Accounts receivable...................................................... (18,040) (6,142)
Other current assets..................................................... (135) 483
Other assets............................................................. (2,018) (27)
Accounts payable and accrued expenses.................................... 6,325 (1,721)
Accrued compensation, benefits and taxes................................. 1,698 (615)
Accrued restructuring.................................................... (3,126) ----
Income taxes payable..................................................... 3,365 329
Other liabilities........................................................ 1 511
------- -------
Net cash provided by operating activities............................... 1,772 5,275
------- -------
Cash flows from investing activities:
Acquisitions, net of cash acquired......................................... (10,053) (8,001)
Capital expenditures, net.................................................. (5,198) (4,349)
------- -------
Net cash (used for) investing activities................................ (15,251) (12,350)
------- -------
Cash flows from financing activities:
Proceeds from exercise of stock options.................................... 3,103 264
Proceeds from employee stock purchase plan................................. 528 657
Net borrowings (repayments) under credit facility.......................... (87,065) 12,170
Proceeds from convertible subordinated notes, net of offering costs........ 121,375 ----
Repayment of borrowings.................................................... (5,178) (4,052)
------- -------
Net cash provided by financing activities............................... 32,763 9,039
------- -------
Increase (decrease) in cash and cash equivalents............................ 19,284 1,964
Cash and cash equivalents at beginning of period............................ 8,804 6,543
------- -------
Cash and cash equivalents at end of period.................................. $ 28,088 $ 8,507
======= =======
Supplemental disclosure of cash flow information:
Cash paid during the period for:
Interest............................................................... $ 1,839 $ 966
======= =======
Income taxes........................................................... $ 4,411 $ 748
======= =======
Acquisitions:
Assets acquired............................................................ $ 21,326 $ 20,137
Liabilities assumed and issued............................................. (11,194) (8,049)
Common stock issued........................................................ ---- (3,863)
------- -------
Cash paid.................................................................. 10,132 8,225
Less cash acquired......................................................... (79) (224)
------- -------
Net cash paid for acquisitions........................................... $ 10,053 $ 8,001
======= =======
</TABLE>
See accompanying notes to interim consolidated financial statements.
Page 6
<PAGE>
AMERICAN MEDICAL RESPONSE, INC.
NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS
1. BASIS OF PRESENTATION
The interim consolidated financial statements include the accounts of American
Medical Response, Inc. and its subsidiaries (the "Company"). All intercompany
balances and transactions have been eliminated in consolidation.
The interim consolidated financial statements are unaudited, but in the
opinion of management include all adjustments, which consist only of normal and
recurring adjustments, necessary for a fair presentation of its financial
position and results of operations. Results of operations for the interim
periods are not necessarily indicative of the results to be expected for the
full year. These financial statements should be read in conjunction with the
consolidated financial statements of the Company as of and for the year ended
December 31, 1995.
2. ACQUISITIONS
During the first three months of 1996, the Company acquired six ambulance
service providers in transactions accounted for as purchases. The aggregate
purchase price paid in connection with these acquisitions consisted of $10.0
million in cash and $7.7 million in promissory notes of which $3.0 million were
subordinated.
At March 31, 1996, possible outstanding future contingent payments aggregated
approximately $8.4 million in cash and 88,000 shares of Common Stock.
SUBSEQUENT ACQUISITIONS
Subsequent to March 31, 1996, the Company acquired three ambulance service
providers in transactions to be accounted for as purchases and one ambulance
service provider in a transaction to be accounted for as a pooling-of-interests.
The aggregate purchase price paid in connection with these acquisitions
consisted of $7.8 million in cash, $5.0 million in subordinated promissory
notes, and 424,424 shares of Common Stock.
3. DEBT
On February 9, 1996, the Company amended its line of credit to increase
borrowing availability to $200 million, increase letter of credit availability
to $25 million, and extend the maturity date to September 30, 2000.
Additionally, the maximum LIBOR spread on borrowings has been reduced to 1.25%
from 1.5%. The maximum commitment fee on the unused portion remains at 0.375%
of the average daily amount of the line which is unused. Borrowings under the
line of credit are limited to $200 million less outstanding letters of credit.
In addition, the total amount of debt the Company may incur, including
borrowings under the line of credit is limited to a percentage of the Company's
earnings before interest, income taxes, depreciation, and amortization for the
most recent twelve months, which percentage equals 350% through December 30,
1996, 325% through December 30, 1997 and 300% thereafter. The line of credit is
secured by a pledge of the stock of the Company's subsidiaries.
On February 1, 1996, the Company completed an offering of $125 million of
convertible subordinated notes. The notes bear interest at 5.25% and mature on
February 1, 2001. Net proceeds to the Company after underwriters' discounts and
expenses totaled approximately $121.4 million. The notes are convertible into
Common Stock of the Company at the option of the holder, at a conversion price
of $37.75 per share. The notes are redeemable, at the option of the Company,
after February 15, 1999.
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AMERICAN MEDICAL RESPONSE, INC.
NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS
4. PRO FORMA ADJUSTMENTS
The pro forma data in the Consolidated Statements of Earnings include
adjustments to salaries and benefits and income taxes related to a subsidiary
that was acquired in a transaction accounted for as a pooling-of-interests in
February 1995. Prior to it being acquired, this subsidiary was taxed as an S
Corporation on the cash basis method of accounting. Income tax expense for the
quarter ended March 31, 1996 includes $610,000 attributable to the termination
of this subsidiary's S Corporation status. The pro forma amounts reflect a
contractual adjustment made to officers' salaries and adjust income tax expense
to what would have been recorded had this subsidiary been a C Corporation prior
to acquisition.
5. RESTRUCTURING
In November 1995, the Company announced a strategic restructuring initiative
designed to create operating efficiencies, cost savings and revenue enhancement
opportunities. This initiative, which is expected to be substantially completed
during 1996, involves the consolidation of the Company's operations into six
regional units. In connection with this plan, the Company recorded a
restructuring charge of $23.0 million during the fourth quarter of 1995, which
consisted primarily of $14.4 million of severance and other employee costs, $4.6
million of fixed asset disposals and $4.0 million of lease abandonment costs
related to consolidating the corporate and regional offices. Under this
initiative, there are approximately 350 positions affected, including senior and
middle management positions at both the corporate and regional levels, and
certain clerical positions. A substantial number of these positions will be
replaced in corporate and regional locations. At March 31, 1996, the remaining
restructuring accrual was $16.6 million.
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<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS
INTRODUCTION
For all periods presented, the following financial information includes the
consolidated results of the four ambulance service providers the Company
acquired concurrent with its initial public offering in August 1992 and the
three ambulance service providers the Company acquired in June 1993, February
1994 and February 1995 in transactions accounted for as poolings-of-interests.
The results of the ambulance service providers acquired by the Company through
March 31, 1996 and accounted for as purchases are included from their respective
dates of acquisition.
The Company's total revenue, which is comprised primarily of fees charged for
ambulance services, is presented net of contractual adjustments. Contractual
adjustments represent the difference between gross billable charges and the
amounts paid under contractual arrangements with third party payors. The
provision for uncompensated care represents the difference between net ambulance
service fees and expected collections from patients and third party payors.
This quarterly report on Form 10-Q contains certain forward-looking
statements. For example, the words "expects", "believes", "anticipated" and
similar expressions often identify such statements. Undue reliance should not
be placed on these forward-looking statements which were current at the time
they were prepared. Certain important factors could cause results to differ
materially from those anticipated by these statements. A description of many
such factors is filed as Exhibit 99 to the Company's annual report on Form 10-K
for the year ended December 31, 1995.
THREE MONTHS ENDED MARCH 31, 1996 COMPARED TO THE THREE MONTHS ENDED MARCH 31,
1995
Overview
The Company's net earnings amounted to $7.7 million or $0.38 per share on a
fully diluted basis for the three months ended March 31, 1996, based on
22,131,000 weighted average shares outstanding, as compared with pro forma net
earnings of $5.0 million or $0.32 per share on a fully diluted basis for the
three months ended March 31, 1995, based on 15,557,000 weighted average shares
outstanding. The increase in net earnings, was a result of incremental earnings
provided from acquisitions and internal growth. The increase in earnings per
share on a fully diluted basis, results from the increase in net earnings,
offset by an increase in the weighted average number of shares outstanding.
This increase in the weighted average number of shares is primarily due to
shares issued in connection with acquisitions and the Company's public offering
of 3.75 million shares in May 1995 and the issuance of the convertible
subordinated notes in February 1996.
Results of Operations
The Company's total revenue amounted to $157.8 million for the three months
ended March 31, 1996 as compared with $109.2 million for 1995, an increase of
$48.6 million or 44.5%. The largest single contributor to the increase in total
revenue was the incremental revenue provided from acquisitions. Also
contributing to the increase was internal growth resulting from an increase in
the number of transports and rate increases.
Salaries and benefits expense was 50.5% of total revenue for the three months
ended March 31, 1996, as compared with 50.9% on a pro forma basis for the three
months ended March 31, 1995. The pro forma adjustments were made for
contractual reductions in officers' salaries related to the acquisition of
Paramed, Inc. which was accounted for as a pooling-of-interests. This decrease
in salary-related costs as a percentage of total revenue resulted from
acquisitions in the Company's existing markets (sometimes referred to as "lock-
on" acquisitions) where revenues are added but numerous administrative and
support costs can be reduced. In addition, at the end of 1995, the Company
restructured operations into six regions which consolidated numerous
administrative functions such as billing offices. This decrease was partly
offset by salaries and benefits of certain new corporate management and staff
hired in connection with the Company's growth, as well as general wage
increases. In addition, the Company incurred temporary overtime wages during
the quarter ended March 31, 1996 in connection with its contract to provide
paramedic transport services to the City of San Jose in Santa Clara County,
California.
Page 9
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MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS (CONTINUED)
Uncompensated care expense as a percentage of total revenue was 18.7% and
19.4% for the three months ended March 31, 1996 and 1995, respectively. The
percentage decrease is due primarily to the favorable impact of certain
acquisitions, which have experienced lower uncompensated care expense as a
percentage of total revenue, as compared with the subsidiaries included in the
prior period. These acquisitions have a greater mix of basic life support or
scheduled ambulance transport revenue, which in general has lower uncompensated
care expense than advanced life support or emergency transport revenue.
Other operating expenses were $25.0 million in the three months ended March
31, 1996 as compared with $17.8 million in the three months ended March 31,
1995. As a percentage of total revenue, other operating expenses decreased to
15.8% in the three months ended March 31, 1996 as compared to 16.3% in the three
months ended March 31, 1995. The decrease as a percentage of total revenue
resulted from "lock-ons" acquisitions in existing markets which, in general,
expanded the Company's operations without the duplication of certain operating
expenses. The increase of $7.2 million was a result of incremental operating
expenses of acquisitions, development costs for future managed care products,
and costs associated with the new accounts receivable system and inflation.
Amortization of intangibles increased to $2.2 million for the three months
ended March 31, 1996 from $0.9 million for the three months ended March 31,
1995, an increase of $1.3 million. This increase was a result of goodwill
recorded in connection with the Company's acquisitions accounted for as
purchases. Amortization of intangibles will increase in the future as a result
of goodwill recorded in connection with the Company's recent and future
acquisitions.
Net interest expense increased by $1.1 million for the three months ended
March 31, 1996 as compared to 1995. This increase was the result of an increase
in the average amount of debt outstanding during the period resulting primarily
from borrowings to finance acquisitions.
The effective income tax rate remained relatively constant at 44.9% for the
three months ended March 31, 1996 compared to 45.0% for the three months ended
March 31, 1995. A certain subsidiary acquired in a transaction accounted for as
pooling-of-interest was taxed as an S Corporation prior to its acquisition. The
pro forma income tax expense adjusts income tax expense to what would have been
recorded if this subsidiary had been a C Corporation during the period. If this
subsidiary had been subject to corporate income taxes on an ongoing basis, the
Company's income tax expense would have been $4.1 million for the three months
ended March 31, 1995.
LIQUIDITY AND CAPITAL RESOURCES
The Company has financed its cash needs, including cash used for
acquisitions, from the net proceeds of its public offerings of equity and
convertible subordinated debt, borrowings under its revolving line of credit,
and cash from operations.
In May 1995, the Company completed a public offering of 4,250,000 shares of
common stock at $25.50 per share. The offering included 3,750,000 shares of
common stock issued by the Company and 500,000 shares sold by a group of selling
stockholders. Net proceeds to the Company after underwriters' discounts and
expenses totaled approximately $90.2 million. Such proceeds were used to repay
approximately $50 million of debt under the Company's line of credit and for
general corporate purposes, including acquisitions.
On February 9, 1996, the Company amended its line of credit to increase the
amount available under the line to $200 million from $150 million. Borrowings
bear interest at either prime or LIBOR plus a spread of up to 1.25%. At March
31, 1996, under the $200 million line there were $3.4 million of borrowings
outstanding, $15.6 million of letters of credit outstanding and $72.5 million
available for future borrowings based on current total debt limitations. As of
May 6, 1996, under the $200 million line, the Company had $5.6 million
borrowings outstanding, $15.9 million in letters of credit outstanding, and
$85.9 million available for future borrowings.
Page 10
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MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS (CONTINUED)
On February 1, 1996, the Company completed an offering of $125 million of
convertible subordinated notes. The notes bear interest at 5.25% and mature on
February 1, 2001. Net proceeds to the Company after underwriters' discounts and
expenses totaled approximately $121.4 million. The notes are convertible into
Common Stock of the Company at the option of the holder, at a conversion price
of $37.75 per share. The Company used the proceeds to repay approximately $100
million outstanding under its line of credit and intends to use the remaining
proceeds for general corporate purposes, including acquisitions.
Cash generated from operations during the three months ended March 31, 1996
was $1.8 million. Excluding cash payments resulting from the Company's
restructuring initiative, cash generated from operations during the three months
ended March 31, 1996 was $4.9 million as compared with $5.3 million for 1995.
The decrease in cash generated from operations as compared to the prior quarter
was a result of an increase in accounts receivables. This increase in accounts
receivables was primarily attributable to growth in working capital related to
recent acquisitions where working capital was not acquired and billing delays
due to the consolidation of certain of the Company's billing centers. Working
capital at March 31, 1996 amounted to $60.8 million as compared to $32.2 million
at December 31, 1995. Capital expenditures made primarily for new ambulances
and other operating equipment amounted to $5.2 million and $4.3 million for the
three months ended March 31, 1996 and 1995, respectively. The restructuring
charge the Company recorded during the fourth quarter of 1995 is expected to
reduce cash flow by approximately $10 million during 1996. Current financial
resources, including amounts available under the line of credit and anticipated
funds generated by operations, are expected to be adequate to meet the Company's
operating cash requirements in the foreseeable future.
The Company has two Shelf Registration Statements on file with the Securities
and Exchange Commission covering a total of 5,000,000 shares of which, 2,119,933
are available at May 6, 1996 in connection with acquisitions of other
businesses.
During the three months ended March 31, 1996, the Company made acquisitions
for a total of approximately $10.0 million in cash, $7.7 million in notes of
which $3.0 million were subordinated. At March 31, 1996, potential outstanding
future contingent payments aggregated approximately $8.4 million in cash and
88,000 shares of Common Stock. The Company's growth strategy depends in large
measure on its ability to acquire additional service providers. Although the
Company has acquired many ambulance service providers since its initial
acquisition of four providers in August 1992, there can be no assurance that
additional acquisition candidates can be identified, consummated or successfully
integrated into the Company's operations. The Company has used a combination of
cash, Common Stock and subordinated debt as consideration for past acquisitions
and plans to continue to use these sources in the future. In the event that the
Company's Common Stock does not maintain sufficient valuation or if potential
acquisition candidates are unwilling to accept the Company's securities as
consideration, the Company will be required to use more cash resources to
continue its acquisition program. In addition, if sufficient financing is not
available as needed on terms acceptable to the Company, the Company's
acquisition program could be adversely affected.
Medicare and Medicaid Reform
In October 1995, both houses of Congress passed separate versions of Medicare
and Medicaid reform. During the budget reconciliation process, Congress adopted
the Senate provisions for Medicare and Medicaid reform which called for a seven-
year freeze on rates for ambulance services. However, in December 1995, the
bill was vetoed by the President. Although a budget compromise has not been
reached, there exists a potential for a freeze of Medicare reimbursement rates
for ambulance services in future periods. Any long term freeze in Medicare
reimbursement, which represents 28% of the Company's revenues, could have an
adverse impact on the Company's future operating results.
In addition, Congressional hearings in December 1994 focused attention on
efforts within the Health Care Financing Administration ("HCFA") to control
Medicare expenditures for ambulance services. In November 1995, HCFA published
a pre-rule stage notice announcing its intention to revise ambulance coverage
policies. The proposed rule would revise HCFA's policy on Medicare coverage of
ambulance services. It focuses on the medical necessity for ambulance service,
redefines an ambulance as an "emergency vehicle" and revises the policy on
coverage of non-emergency ambulance
Page 11
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS (CONTINUED)
transportation for beneficiaries with end-stage renal disease. These changes
would prevent use of ambulance transportation in non-emergency situations where
the medical need has not clearly been determined. These changes require the use
of emergency vehicles as ambulances and would focus on the medical treatment
rather than the level of medical transportation provided as the primary concern
for furnishing ambulance services.
With respect to reimbursement for non-emergency transportation to and from
dialysis treatment facilities for patients with end-stage renal disease, the
Company believes it is in substantial compliance with current regulations in
this area, which require documentation of medical necessity. The Company does
not believe that any rule changes in this area would have a material adverse
effect on its business.
Any rule changes which focus reimbursement based on the medical treatment
rather than the level of medical transportation provided would affect virtually
all providers of emergency ambulance services, including the Company. Under
current rules, Advanced Life Support ("ALS") service is reimbursed at ALS rates
if, based on an assessment of the patient's condition, it is determined that ALS
service is medically necessary or if ALS response is required under "911"
contracts or state or local law. Under the proposed rule change, an ambulance
provider would only be reimbursed at ALS rates, if ALS services were medically
necessary at the time the service is provided. The proposed rule HCFA is
currently considering would likely receive substantial opposition from many
interested groups, including public and private ambulance providers, state and
local governments that mandate ALS responses and patient advocacy groups. In
addition, the Company believes that any change in ALS reimbursement would not
become final until late-1996 and, if adopted, would be phased in or otherwise
structured so as to minimize any adverse effect on ambulance service providers.
The Company could make adjustments to mitigate the effect of any HCFA proposal
in this area. For example, most of the Company's "911" contracts provide for a
renegotiation of rates in the event of a change in reimbursement policy. In
addition, the Company could potentially offset reduced Medicare revenue by
negotiating for increases in local operating subsidies. The Company could also
attempt to change the staffing of its ambulance crews and negotiate for longer
response times. Because of the preliminary nature of this proposal, the Company
is unable to predict whether HCFA will adopt the current proposal or determine
the impact of any proposal adopted by HCFA. However, if a proposal like the one
HCFA is currently considering were to become law without any phase-in period and
if the Company were unable to mitigate the effect by implementing one or more of
the changes described above, it would at least in the short term have an adverse
effect on the Company's profitability.
Page 12
<PAGE>
PART II. OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
Not applicable.
ITEM 2. CHANGES IN SECURITIES
Not applicable.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
Not applicable.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
(a) A special meeting of the stockholders of the Company was held on
March 26, 1996.
(b) The Company proposed to amend the Company's Certificate of
Incorporation to increase the number of authorized shares of the
Company from 25 million to 75 million shares. The voting for the
proposal was: 12,175,535 for the proposal; 4,733,832 against the
proposal; 20,701 abstained; and there was no vote cast by
3,005,551 shares.
ITEM 5. OTHER INFORMATION
Not applicable
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(A) EXHIBITS
Exhibit 10 Material Contracts
---------- ------------------
10.1 Employment Agreement between the Registrant and David C.
Colby dated as of April 1, 1996.
10.2 Severance and General Release Agreement between the
Registrant and Dominic J. Puopolo dated as of March 31,
1996.
10.3 Consulting Agreement between the Registrant and Exel
Holdings Ltd. dated as of April 1, 1996.
10.4 Executive Separation Allowance Plan (as amended through
April 1, 1996).
Exhibit 11 Statement Regarding Computation of Per Share
---------- --------------------------------------------
Earnings
--------
11.1 Statement regarding computation of per share earnings
Exhibit 27 Financial Data Schedule
---------- -----------------------
27 Financial Data Schedule
(B) REPORTS ON FORM 8-K
The Company filed a Form 8-K on January 16, 1996 relating to
its offering of $125 million of convertible subordinated notes
due 2001.
Page 13
<PAGE>
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
AMERICAN MEDICAL RESPONSE, INC.
-------------------------------
(Registrant)
May 14, 1996 /s/ DAVID C. COLBY
- ------------ ---------------------------------
(Date) David C. Colby
Director, Executive Vice President,
Chief Financial Officer and Treasurer
Page 14
<PAGE>
AMERICAN MEDICAL RESPONSE, INC.
EXHIBIT INDEX
-------------
PAGE
----
EXHIBIT 10
----------
10.1 Employment Agreement between the Registrant and
David C. Colby dated as of April 1, 1996. 16
10.2 Severance and General Release Agreement between the
Registrant and Dominic J. Puopolo dated as of March 31, 1996. 22
10.3 Consulting Agreement between the Registrant and
Exel Holdings Ltd. dated as of April 1, 1996. 24
10.4 Executive Separation Allowance Plan (as amended through
April 1, 1996). 28
EXHIBIT 11
----------
11.1 Statement regarding computation of per share earnings. 32
EXHIBIT 27
----------
27 Financial Data Schedule 33
Page 15
<PAGE>
EXHIBIT 10.1
EMPLOYMENT AGREEMENT
This Agreement among American Medical Response, Inc., a Delaware
corporation (the "Company") and David C. Colby ("Executive") is hereby entered
into as of April 1, 1996.
Recitals:
- --------
As of the date of this Agreement, the Company and its affiliates are
engaged in the business of medical transportation services. The operations of
the Company and its subsidiaries are a complex matter requiring direction and
leadership in a variety of arenas, including financial, strategic planning,
regulatory, community relations and others. The Executive is possessed of
certain experience and expertise that qualify him to provide the direction and
leadership required by the Company and its subsidiaries.
Executive is or will be employed by the Company in a confidential
relationship wherein Executive, in the course of his employment with the
Company, will become familiar with and aware of information as to the specific
manner of doing business and the customers of the Company, and its subsidiaries
and future plans with respect thereto, all of which will be established and
maintained at great expense to the Company and its subsidiaries; this
information is a trade secret and constitutes the valuable goodwill of the
Company and its subsidiaries.
Executive recognizes that the business of the Company and its subsidiaries
depends upon a number of trade secrets, including secret techniques, methods and
data. The protection of these trade secrets is of critical importance to the
Company and its subsidiaries.
The Company and its subsidiaries will sustain great loss and damage if
Executive should violate the provisions of paragraph 3 of this Agreement.
Further, monetary damages for such losses would be extremely difficult to
measure.
NOW, THEREFORE, in consideration of the mutual promises, terms, covenants
and conditions set forth herein and the performance of each, it is hereby agreed
as follows:
1. Employment and Duties.
---------------------
(a) The Company hereby employs Executive as Chief Financial Officer
and Executive Vice President to perform the duties normally associated
therewith. Executive hereby accepts this employment upon the terms and
conditions herein contained. Executive shall faithfully adhere to, execute and
fulfill all policies established by the Company. During the term of his
employment, as defined in paragraph 6(a), Executive shall devote his full time,
attention and efforts to promote and further the business and services of the
Company and perform all services not inconsistent with his position which the
Company's Board of Directors and Chief Executive Officer shall designate, use
his best efforts to promote the Company's interests, and serve as director of
the Company if elected as such.
(b) Executive shall perform such duties, assume such responsibilities
and devote such time, attention and energy to the business of the Company as the
Board of Directors and President of the Company shall from time to time require
and shall have all powers and duties consistent with such positions, subject to
the direction of the Board.
(c) All funds received by Executive on behalf of the Company, if any,
shall be held in trust for the Company and shall be delivered to the Company as
soon as practicable.
(d) The Company agrees to propose to the shareholders of the Company,
upon the recommendation of the Nominating Committee of the Board of Directors,
at each appropriate Annual Meeting of such shareholders during the term hereof
(provided the Executive continues in his position and is not in material
violation of this Agreement) the election or reelection of the Executive as a
member of the Board of Directors of the Company, provided that the Executive is
otherwise eligible for such election.
2. Compensation and Expenses. For all services rendered by Executive to
-------------------------
the Company, the Company shall compensate the Executive as follows:
Page 16
<PAGE>
EXHIBIT 10.1
(a) Base Salary. The base salary payable to Executive shall be not
-----------
less than $275,000 per year payable in accordance with the Company's customary
pay practices.
(b) Annual Bonus. Executive shall be eligible for an annual
------------
performance bonus subject to the evaluation and approval of the Compensation
Committee of the Board of Directors.
(c) Expenses. Executive shall be entitled to reimbursement for
--------
expenses incurred on behalf of the Company in the performance of his duties
hereunder, consistent with the Company's reimbursement policies.
(d) Disability. Executive shall be entitled to receive for a period
----------
of up to six (6) months his base salary and a pro rata portion of his bonus
during such time as, because of illness or physical or mental disability or
other incapacity, he is unable to perform his duties under this Agreement. Such
amounts payable shall be offset by any amounts paid to Executive under
disability insurance policies maintained by the Company.
(e) Other Benefits. In addition to the benefits described above,
--------------
Executive shall be entitled, during the term hereof and subject to any
contribution therefor generally required of executives of the Company, to
participate in any and all employee benefit plans from time to time in effect
for employees or executives of the Company generally, except to the extent such
plans are in a category of benefit otherwise provided to the Executive. Such
benefits and participation shall be subject to (i) the terms of the applicable
plan documents, (ii) generally applicable Company policies and (iii) the
discretion of the Board or any administrative or other committee provided for in
or contemplated by such plan. The Company may alter, modify, add to or
eliminate its employee benefit plans at any time as it, in its sole judgment,
determines to be appropriate, without recourse by the Executive.
(f) Change of Control. The parties acknowledge that the Executive is
-----------------
subject to the provisions of and entitled to certain benefits under the
Company's Executive Separation Allowance Plan. The Executive acknowledges and
agrees that in addition to this Agreement, his inclusion in the Company's
Executive Separation Allowance Plan constitutes good and valuable consideration
for his covenants under Paragraph 3 of this Agreement.
3. Non-Competition Agreement; Trade Secrets.
-----------------------------------------
(a) Executive agrees that, during the term of his employment with the
Company and for a two-year period following termination of his employment with
the Company for any reason, he shall not, directly or indirectly, for himself or
on behalf of any other person, company, partnership, corporation or business of
whatever nature:
(i) knowingly call upon any then current customer of the
Company or any of its subsidiaries (including any such customer
obtained by the Executive) for the purpose of soliciting or selling
any services or products in competition with those of the Company or
any of its subsidiaries;
(ii) knowingly solicit any employee of the Company or any of
its subsidiaries for the purpose or with the intent of enticing them
away from or out of the employ of the Company or any of its
subsidiaries for any reason whatsoever;
(iii) establish, enter into, be employed by or for, advise,
consult with or become an owner in or a part of, any company,
partnership, corporation or other business entity or venture, or in
any way engage in business where a material portion of such entity or
business competes in the business of providing medical transportation
services with the Company or any of its subsidiaries, within the
United States of America or within 100 miles of any location in which
the Company or any of its subsidiaries conducts business; or
(iv) call upon any prospective acquisition candidates on
Executive's own behalf or on behalf of any competitor, which candidate
was either called upon by the Executive or for which Executive made an
acquisition analysis for the Company.
Ownership of not more than one percent of the voting stock of a corporation
whose stock is traded on a national securities exchange or over-the-counter
shall not of itself constitute a violation of this paragraph 3(a).
Page 17
<PAGE>
EXHIBIT 10.1
(b) Executive agrees that he will not, during or after the term of
his employment with the Company, disclose or use for his personal benefit,
nonpublic confidential information relating to the customers or other trade
secrets (whether in existence or proposed) of the Company or any of its
subsidiaries, or any other confidential information of the Company or its
subsidiaries to any person, firm, partnership, corporation or business for any
reason or purpose whatsoever.
(c) Because of the difficulty of measuring economic losses to the
Company and its subsidiaries as a result of the breach of any of the foregoing
covenants, and because of the immediate and irreparable damage that would be
caused to the Company and its subsidiaries for which they may have no other
adequate remedy, Executive agrees that, in the event of a breach by him of any
of the foregoing covenants, the Company or any of its subsidiaries may, in
addition to obtaining any other remedy or relief available to it, enforce the
foregoing covenants by all equitable relief, including injunctions and
restraining orders.
(d) The covenants in this paragraph 3 are severable and separate, and
the unenforceability of any specific covenant shall not affect the provisions of
any other covenant. Moreover, in the event any court of competent jurisdiction
shall determine that the scope, time or territorial restrictions set forth are
unreasonable, then it is the intention of the parties that such restrictions be
enforced to the fullest extent which the court deems reasonable, and this
Agreement shall thereby be reformed.
(e) It is specifically agreed that the post-termination non-
competition period referred to in paragraph 3(a) shall be computed by excluding
from such computation any time during which Executive is in violation of any
provision of this paragraph 3 as determined by a final and nonappealable decree
of a court of competent jurisdiction.
4. Return of Company Property. All records, plans, memoranda, lists and
--------------------------
other property delivered to Executive by or on behalf of the Company or any of
its subsidiaries or by a customer of any of them (including but not limited to,
any such customers obtained by Executive), and all records compiled by the
Executive which pertain to the business of the Company or any of its
subsidiaries shall be and remain the property of the Company or such subsidiary,
as the case may be, and be subject at all times to its discretion and control.
Likewise, all correspondence with customers or representatives, reports,
records, charts, advertising materials, and any data collected by Executive, or
by or on behalf of the Company, any of its respective subsidiaries or any
representative of any of them shall be delivered promptly to the Company without
request by them upon termination of Executive's employment.
5. Inventions. Executive shall disclose promptly to the Company any and
----------
all conceptions and ideas for inventions, improvements, discoveries and works,
whether or not patentable or copyrightable, which are conceived or made by
Executive solely or jointly with another during the period of employment which
are related to the business or activities of the Company or any of its
subsidiaries or which Executive conceives as a result of his employment by the
Company (collectively, "Proprietary Rights"), and Executive hereby assigns and
agrees to assign all his interests therein to the Company or its nominee. All
copyrightable Proprietary Rights shall be considered to be "works made for
hire". Whenever requested to do so by the Company, Executive shall execute any
and all applications, assignments or other instruments and do such other acts
that the Company shall request to apply for and obtain Letters Patent of the
United States or any foreign country or to otherwise protect the Company's
interest therein. These obligations shall continue beyond the termination of
employment with respect to inventions, improvements, discoveries and works,
whether or not patentable or copyrightable, conceived, made or acquired by
Executive during the period of employment, and shall be binding upon Executive's
assigns, executors, administrators and other legal representatives.
6. Term; Termination; Rights of Termination.
----------------------------------------
(a) The initial term of Executive's employment with the Company
hereunder shall, unless terminated as herein provided, continue for a term of
three (3) years ending on the third anniversary of the date of this Agreement.
On each anniversary of the date of this Agreement, unless either party has given
prior written notice of nonrenewal at least 30 days prior to the date of such
anniversary, the term of the Executive's employment with Company shall
automatically be renewed for an additional three (3) year term commencing on
such anniversary, on the same terms and conditions contained herein, unless
otherwise terminated as herein provided. The Executive's employment with the
Company may be terminated in any one of the following ways:
(i) The death of Executive or the inability of Executive,
because of illness or physical or mental disability or other
incapacity which continues for period in excess six months, to perform
his duties under this Agreement shall terminate Executive's
employment.
Page 18
<PAGE>
EXHIBIT 10.1
(ii) The Company may terminate the Executive's employment
after ten-days' written notice to Executive for good cause, including
without limitation:
(A) Executive's willful failure to perform, or gross
negligence in performance of, the Executive's duties and
responsibilities to the Company and its affiliates or in the
Executive's obligations under this Agreement;
(B) Executive's fraud, embezzlement or other material
dishonesty with respect to the Company or any of its affiliates or if
Executive is convicted of, or pleads nolo contendere to, a felony
involving fraud, dishonesty or moral turpitude; or
(C) Executive's exclusion from participation in Medicare,
Medicaid or any other third party reimbursement program, for any
reason, or if Executive has had material civil money penalties or
assessments imposed on him under any federal or state law involving
Medicare, Medicaid or any other third party reimbursement program.
(iii) At any time after the commencement of Executive's
employment with the Company, the Company or Executive may, without
cause, terminate the Executive's employment thirty days after written
notice is provided to the other party.
(iv) The Executive may terminate his employment hereunder for
Good Reason, upon notice to the Company setting forth in reasonable
detail the nature of such Good Reason. The following shall constitute
Good Reason for termination by the Executive:
(A) Failure of the Company to continue the Executive in the
position of Chief Financial Officer and Executive Vice President;
(B) Material diminution in the nature or scope of the
Executive's responsibilities, duties or authority;
(C) Material failure of the Company to provide the Executive
the Base Salary and benefits in accordance with the terms of Section 4
hereof; or
(D) Failure by the Company to procure Directors and Officers
Insurance which is substantially equivalent to the coverage provided
at the time of the execution of this Agreement.
(b) Upon termination of Executive's employment pursuant to clause (i)
of paragraph 6(a), by the Company pursuant to clause (iii) of paragraph 6(a)
(other than upon expiration of the initial or any successive term after notice
in accordance with paragraph 7(a)) or for Good Reason pursuant to clause (iv) of
paragraph 6(a), Executive shall be entitled to receive (i) all cash compensation
earned under this Agreement to the date of termination plus (ii) an amount equal
----
to last year's cash bonus, if any, prorated for any partial year prior to
termination plus (iii) base compensation as in effect on the date prior to
----
termination for an additional period of eighteen months plus (iv) an amount
----
equal to one and one-half times the greater of the amount any cash incentive or
bonus compensation paid to him during the preceding twelve months or 50% of the
Executive's base salary, and subject to any employee contribution applicable to
the Executive on the date of termination, for an eighteen month period following
the date of termination the Company shall continue to pay for the cost of the
Executive's participation in the Company's group medical and dental insurance
plans, provided that the Executive is entitled to continue such participation
under applicable state and federal law and plan terms. In addition, upon the
date of such termination all options to purchase common stock of the Company
which were previously granted to the Executive but which have not vested shall
automatically and immediately vest.
(c) Upon termination of Executive's employment by the Company
pursuant to clause (ii) of paragraph 6(a), upon expiration of the initial or any
successive term after notice in accordance with paragraph 7(a), or by the
Executive pursuant to clause (iii) of paragraph 6(a), Executive shall be
entitled to receive all base cash compensation earned under this Agreement to
the date of termination, together with an amount equal to a pro rata portion of
last year's cash bonus based on the number of days worked in the year of such
termination. Such termination of the Executive's
Page 19
<PAGE>
employment shall not otherwise accelerate the payment date of any monies accrued
or accruing to the account of Executive as a result of any bonuses or other
compensation, nor shall termination vest in Executive any right in connection
therewith.
(d) In the event of termination of Executive's employment for any
reason provided in this paragraph 6, all rights and obligations of the Company
and Executive under this Agreement shall cease immediately, except that
Executive's obligations under paragraphs l(c), 3, 4, 5 and 7 hereof shall
survive such termination, and thereafter Executive shall have the right to
receive, and the Company shall be obligated to pay, the compensation as set
forth in paragraphs 6(b) or 6(c).
7. Representations of Executive. Executive has represented and hereby
----------------------------
represents and warrants to the Company that he is not subject to any restriction
or non-competition covenant in favor of a former employer or any other person or
entity (other than the Company and its subsidiaries), and that the execution of
this Agreement by Executive and his employment by the Company and the
performance of his duties hereunder will not violate or be a breach of any
agreement with a former employer or any other person or entity and Executive
agrees to indemnify the Company for any claim by any third party that such third
party may now have or may hereafter come to have against the Company based upon
or arising out of any non-competition agreement or invention and secrecy
agreement between Executive and such third party.
8. Complete Agreement. There are no oral representations, understandings
------------------
or agreements with the Company or any of its officers, directors or
representatives covering the same subject matter as this Agreement and this
Agreement supersedes any prior agreement or understanding between the Company
and the Executive with respect to his employment. This Agreement is the final,
complete and exclusive statement and expression of this Agreement among the
Company and Executive and of all the terms of this Agreement, and it cannot be
varied, contradicted or supplemented by evidence of any prior or contemporaneous
oral or written agreements. The payments, benefits and rights of the Executive
under this agreement are not intended to be duplicative, and to the extent that
the Executive is entitled to payments or benefits with respect to a particular
class or category of benefit which is in the same category or class of a right
to payment or benefit found elsewhere in this Agreement or in any other
arrangement between the Company and the Executive, the Executive shall be
entitled to the greater benefit or payment but such payment or benefits shall
not be cumulative. This Agreement may not be later modified except by a further
writing signed by the parties, and no term of this Agreement may be waived
except by writing signed by the party waiving the benefit of such terms.
9. No Waiver. No waiver by the parties hereto of any default or breach of
---------
any term, condition or covenant of this Agreement shall be deemed to be a waiver
of any subsequent default or breach of the same or any other term, condition or
covenant contained herein.
10. Assignment: Binding Effect. Executive understands that he has been
--------------------------
selected for employment by the Company on the basis of his personal
qualifications, experience and skills. Executive agrees, therefore, that
neither he nor the Company shall assign all or any portion of this Agreement.
11. Notice. Whenever any notice is required hereunder, it shall be given
------
in writing addressed as follows:
To the Company: American Medical Response, Inc.
2821 South Parker Road, 10th Floor
Aurora, CO 80014
Attention: General Counsel
Telephone: (303) 614-8500
Telecopy: (303) 614-8549
To Executive: David C. Colby
4425 Sheppard Place
Nashville, TN 37205
Notice shall be deemed given and effective three (3) days after the deposit in
the U.S. mail of a writing addressed as above and sent first class mail,
certified, return receipt requested, or when actually received. Either party
may change the address for notice by notifying the other party of such change in
accordance with this paragraph 11.
12. Severability: Headings. If any portion of this Agreement is held
----------------------
invalid or inoperative, the other portions of this Agreement shall be deemed
valid and operative and, so far as is reasonable and possible, effect shall be
given to the
Page 20
<PAGE>
EXHIBIT 10.1
intent manifested by the portion held invalid or inoperative. The paragraph
headings herein are for reference purposes only and are not intended in any way
to describe, interpret, define or limit the extent or intent of this Agreement
or of any part hereof.
13. Miscellaneous. This Agreement shall in all respects be construed
--------------
according to the laws of The State of Colorado. This Agreement may be executed
in any one or more counterparts, each of which shall be deemed to be an original
but all of which together shall constitute one and the same instrument.
AMERICAN MEDICAL RESPONSE, INC.
By /s/ PAUL T. SHIRLEY
-------------------
Paul T. Shirley
Chief Executive Officer and President
EXECUTIVE:
/s/ DAVID C. COLBY
- ------------------
David C. Colby
Page 21
<PAGE>
EXHIBIT 10.2
SEVERANCE AND GENERAL RELEASE AGREEMENT
THIS SEVERANCE AND GENERAL RELEASE AGREEMENT (the "Agreement") is entered into
as of the 31st day of March, 1996, by and between AMERICAN MEDICAL RESPONSE,
INC., a Delaware corporation (the "Company") and DOMINIC J. PUOPOLO (the
"Employee"). The Company and the Employee each hereby covenant and agree as
follows:
1. TERMINATION. The Employee's last active day of employment with the Company
-----------
will be March 31, 1996 (the "Termination Date"), and the Employee's employment
with the Company will terminate effective on that date.
2. SEVERANCE PAYMENTS. As consideration for the Employee's commitments set
------------------
forth in this Agreement, the Company agrees to pay to Employee upon expiration
of the revocation period provided in paragraph 5 below cash in the amount of
$802,000. The Company also agrees that any options to purchase stock which are
currently held by the Employee will automatically and immediately vest upon
expiration of the revocation period provided in paragraph 5 below.
All compensation or payments will be made in accordance with the Company's
standard pay practices and, less any legally required deductions for FICA,
taxes, etc., will be mailed to the Employee, unless otherwise advised in
writing, at his offices at 67 Batterymarch St., Boston, MA 02110. The payments
provided for in this paragraph shall be in full and complete satisfaction of,
without limitation, any claim for salary, benefits, compensation of any sort, or
any other claim for anything of economic value which the Employee may have
arising out of his employment with the Company, or the termination thereof.
3. NONCOMPETITION AGREEMENT. The Employee acknowledges that the payments and
------------------------
other benefits provided to him under this Agreement constitute good and valuable
consideration for his noncompetition covenants and that monetary damages for
losses occasioned by his failure to abide by these covenants would be
substantial and extremely difficult to measure. Because of the difficulty of
measuring economic damages to the Company as a result of violations of this
Section 3, and because of the immediate and irreparable damage that would be
caused to the Company, in the event of a breach by the Employee of the
provisions of this Section 3, the Employee agrees that the Company and its
affiliates may, in addition to any other available remedy, enforce the
provisions of this Section 3 by all equitable relief, including injunctions and
restraining orders.
In order to induce the Company to enter into this Agreement the Employee hereby
affirms his noncompetition covenants found in his Employment Agreement with the
Company and further agrees that until January 2, 1998, he will not, directly or
indirectly, personally or on behalf of, or in conjunction with any other
person, company, partnership corporation or business of whatsoever nature (i)
establish, enter into, be employed by or for, advise, consult with or become an
owner in or a part of, any entity or venture, or in any way engage in business
for himself or for others, that competes with the Company or any of its
affiliates in the business of providing medical transportation within the
Territory (as defined below); (ii) call upon any past, present or potential
customer of the Company or any of its affiliates (including any such customer
obtained by the Employee) for the purpose of soliciting or selling any service
or product in competition with any service or product of the Company or any of
its affiliates; (iii) solicit for hire any person who is employed by the Company
or any of its affiliates, other than Sabrina Poles, CarolAnn Panzini or any
other person approved by the President of the Company; or (iv) unless otherwise
approved by the Board of Directors, call upon any prospective acquisition
candidate which was either called upon by the Employee on behalf of the Company
or for which the Employee on behalf of the Company has made an acquisition
analysis. The "Territory" shall be defined to include the United States and a
one hundred mile radius around any area in which the Company currently has
operations of any kind.
The covenants of this Section 3 are severable and separate, the unenforceability
of any specific provision or covenant shall not affect the enforceability of any
other covenant, and it is the intention of the parties that the provisions
hereunder be enforced to the fullest extent a court may deem reasonable. It is
further specifically agreed that, with respect to any period in which the
Employee is in violation of this Section 3, the non-competition period referred
to herein shall be extended by the length of time the Employee was in violation
of any provision of this Section 3.
4. GENERAL RELEASE OF CLAIMS. With the exceptions of (i) a Consulting
-------------------------
Agreement which is entered into concurrently with this Termination Agreement and
(ii) the basic obligations between the Company and Employee as a continuing
member of its Board of Directors, this letter constitutes the entire agreement
between the Employee and the Company (and supersedes any prior communication,
written or oral, including without limitation the Employment Agreement except as
set
Page 22
<PAGE>
EXHIBIT 10.2
forth herein) with respect to the employment and the termination of
Employee's employment and with respect to all matters relating thereto. The
Employee hereby agrees that he has no additional rights to salary, benefits,
compensation of any sort or any other thing of economic value from the Company
except as explicitly set forth in this letter. This letter shall be in complete
and final settlement of any and all causes of action or claims that the Employee
may have had, now has or may have, in any way related to or arising out of such
employment and its termination or pursuant to any federal, state or local
employment laws, regulations, orders or other requirements including without
limitation Title VII of the Civil Rights Act of 1964, the Employee Retirement
Income Security Act of 1974, the Age Discrimination in Employment Act of 1967,
the Rehabilitation Act of 1973, the Older Workers Benefit Protection Act, and
the Americans with Disabilities Act of 1990, as they may be amended. In
consideration of the special benefits that the Employee will receive under this
Agreement, the Employee, personally and on behalf of his heirs, assigns and
representatives, hereby releases, waives and discharges any and all such causes
of action or claims against the Company and their respective past, present and
future affiliates, directors, trustees, officers, agents, employees, successors
and assigns, and agrees never to bring any such claim or cause of action in any
forum.
5. REVOCATION PERIOD. For a period of seven days following the Employee's
-----------------
execution of this Agreement the Employee may revoke this Agreement, and
this Agreement shall not be effective or enforceable until this seven day
revocation period has expired. After such revocation period, the parties intend
that this Agreement shall have the effect of a sealed instrument under the laws
of the Commonwealth of Massachusetts.
In signing this Agreement the Employee acknowledges that he understands its
provisions, and that such Agreement is knowing and voluntary, that he has been
afforded a full and reasonable opportunity of at least twenty-one days to
consider its terms and to consult with or seek advice from any attorney or other
person of Employee's choosing, and that Employee has been advised by the Company
to consult with an attorney prior to executing this Agreement.
EMPLOYEE: AMERICAN MEDICAL RESPONSE, INC.
/s/ DOMINIC J. PUOPOLO /s/ PAUL T. SHIRLEY
- ----------------------- --------------------
Dominic J. Puopolo Paul T. Shirley
Chief Executive Officer and
President
Page 23
<PAGE>
EXHIBIT 10.3
CONSULTING AGREEMENT
This Consulting Agreement between American Medical Response, Inc., a
Delaware corporation (the "Company"), and Exel Holdings Ltd. (the "Consultant")
is entered into as of the 1st day of April, 1996.
RECITALS
1. The Company and its affiliates are engaged in the business of
providing emergency and non-emergency ambulance services and other
medical transportation services ("Services").
2. Dominic J. Puopolo, (the "Principal") a principal of the
Consultant, was previously an executive of the Company, has terminated
his employment with the Company and its affiliates and has agreed,
through the Consultant, to provide services to the Company on the terms
and conditions contained herein.
3. The Company desires to engage Consultant to provide consulting
services to the Company on the terms and conditions herein.
NOW, THEREFORE, in consideration of said engagement and the promises,
terms, covenants and conditions set forth herein, the Company and Consultant
hereby agree as follows:
AGREEMENT
1. ENGAGEMENT AND DUTIES. The Company hereby engages Consultant for
---------------------
a period commencing on the date hereof, and ending on December 31, 1996,
(the "Term") to consult with the Company regarding acquisition strategy.
Consultant hereby accepts this engagement and agrees to perform such
duties and to devote such time, attention and efforts to promote and
further the acquisition program of the Company as the Company may
reasonably require.
2. COMPENSATION AND EXPENSES. During the term of Consultant's
-------------------------
engagement with the Company, for all services rendered by Consultant to
the Company, the Company shall pay to Consultant, upon presentation of a
corresponding bill for services, an appropriate consulting fee for each
acquisition successfully completed by the Company during the Term up to
an aggregate maximum of $100,000. The Company agrees during the Term of
this Agreement to pay all of Principal's reasonable business related
expenses and to provide to the Principal office space, telephone and an
administrative assistant in Boston, Massachusetts.
3. CONFIDENTIALITY.
---------------
a. As used herein, the term "Confidential Information" means any
information, technical data or know-how of the Company and its
subsidiaries, including, but not limited to, that which relates to
customers, business affairs, business plans, financial matters,
financial plans and projections, pending and proposed acquisitions,
operational and hiring matters, contracts and agreements, marketing,
sales and pricing, prospects of the Company and/or its subsidiaries, and
any information, technical data or know-how that contain or reflect any
of the foregoing, whether prepared by the Company, any subsidiary of the
Company, Consultant, the Principal, or by any other person or entity;
provided, however, that the term "Confidential Information" shall not
-------- -------
include information, technical data or know-how that Consultant can
demonstrate is generally available to the public not as a result of any
breach of this Agreement by Consultant.
b. Except in the performance of its duties as a Consultant to the
Company, neither Consultant nor the Principal will, during or after the
Term, disclose to any person or entity or use, for any reason
whatsoever, any Confidential Information.
4. NON-COMPETITION. Each of the Consultant and the Principal agree
---------------
that each shall not, during the Term and for two years following the end
of the Term, directly or indirectly, for himself or itself or on behalf
of, or in conjunction with, any other person or entity:
Page 24
<PAGE>
EXHIBIT 10.3
a. establish, enter into, be employed by or for, advise, consult with or
become an owner in or a part of any entity or venture, or in any way engage in
business for himself or itself or for others, that competes with the Company or
any of its affiliates in the business of providing medical transportation
services within the United States or within 100 miles of any location in which
the Company or any of its affiliates conducts business at any time during the
Term; or
b. call upon any past, present or potential customer of the Company or
any of its affiliates (including any such customer obtained by Consultant) for
the purpose of soliciting, selling or providing any service or product in
competition with any service or product of the Company or any of its affiliates;
or
c. solicit for hire any person who is employed by the Company or any of
its affiliates during the Term other than Sabrina Poles, CarolAnn Panzini or any
person approved by the President of the Company; or
d. unless otherwise approved by the Board of Directors, call upon any
prospective acquisition candidate which was either called upon by the Consultant
or the Principal on behalf of the Company or with respect to which the
Consultant or the Principal has made an acquisition analysis on behalf of the
Company.
5. RETURN OF COMPANY PROPERTY. All records, plans, manuals, "field guides",
--------------------------
memoranda, lists, documents, statements and other property delivered to
Consultant or the Principal, by or on behalf of the Company, by any customer of
the Company or any of its subsidiaries (including but not limited to, any such
customers obtained by Consultant), by any acquisition candidate of the Company,
and all records compiled by Consultant or the Principal, which pertain to the
business or activities of the Company shall be and remain the property of the
Company, and be subject at all times to its discretion and control. Likewise,
all correspondence with customers, representatives or acquisition candidates,
reports, records, charts, advertising materials, and any data collected by
Consultant or the Principal, by or on behalf of the Company, or any
representative of any of them shall be delivered promptly to the Company without
request by it upon termination of Consultant's engagement with the Company.
6. INDEMNIFICATION. The Company shall indemnify Consultant and the Principal
---------------
for serving hereunder and for liabilities from third-party claims against either
of them by reason of his or its serving as a consultant to the Company
hereunder, except that the Company shall not be required to indemnify Consultant
or the Principal with respect to any action or omission suffered or taken that
is in violation of this Agreement or constitutes fraud, gross negligence or
willful misconduct.
7. COMPLETE AGREEMENT; AMENDMENT. This Agreement is not a promise of future
-----------------------------
engagement. There are no oral representations, understandings or agreements
with the Company or any of its subsidiaries or any of their officers, directors
or representatives covering the same subject matter as this Agreement. This
Agreement is the final, complete and exclusive statement and expression of the
agreement between the Company the Consultant and the Principal and of all the
terms of this Agreement, and it cannot be varied, contradicted or supplemented
by evidence of any prior or contemporaneous oral or written agreements. This
Agreement may not be later modified except by a further writing signed by the
parties, and no term of this Agreement may be waived except by a writing signed
by the party waiving the benefit of such terms.
8. NO WAIVER. No waiver by the parties hereto of any default or breach of any
---------
term, condition or covenant of this Agreement shall be deemed to constitute a
waiver of any subsequent default or breach of the same or any other term,
condition or covenant contained herein.
9. ASSIGNMENT; BINDING EFFECT. This Agreement shall be binding upon and
---------------------------
inure to the benefit of the parties hereto and their respective heirs,
successors and assigns. It is understood and agreed that in the event that the
Company is merged or consolidated with another entity, the surviving or
resulting entity from such merger or consolidation shall automatically succeed
to the rights, benefits and powers of the Company hereunder.
Page 25
<PAGE>
EXHIBIT 10.3
10. NOTICE. Whenever any notice is required hereunder, it shall be given in
------
writing addressed as follows:
If to the Company:
American Medical Response, Inc.
2821 South Parker Road, 10th Floor
Aurora, Colorado 80014
Attention: General Counsel
If to Consultant or the Principal:
Exel Holdings Ltd.
67 Batterymarch Street, #300
Boston, Massachusetts 02110
Attn: Dominic J. Puopolo
Notice shall be deemed given and effective three days after the deposit in the
U.S. mail of a writing addressed as above and sent first class mail, certified,
return receipt requested, or when actually received. Either party may change
the address for notice by notifying the other party of such change in accordance
with this Section 10.
11. SEVERABILITY. The covenants set forth in this Agreement are severable and
------------
separate, and the unenforceability of any specific covenant shall not affect any
other covenant or provision set forth herein. In the event that any court of
competent jurisdiction shall determine that the scope, time or territorial
restrictions set forth in any covenant contained herein are unreasonable, it is
the intention of the parties that such restrictions be enforced to the fullest
extent the court deems reasonable, and this Agreement shall thereby be reformed.
12. SEVERANCE. This Agreement shall not affect the Principal's rights in
----------
connection with his termination and severance from the Company.
13. MISCELLANEOUS. This Agreement shall be governed by and construed in
-------------
accordance with the internal laws of the Commonwealth of Massachusetts. The
section headings herein are for reference purposes only and are not intended in
any way to describe, interpret, define or limit the extent or intent of this
Agreement or of any part hereof. This Agreement may be executed in one or more
counterparts, each of which shall be deemed to be an original but all of which
together shall constitute one and the same instrument.
Page 26
<PAGE>
EXHIBIT 10.3
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the day and year first above written.
AMERICAN MEDICAL RESPONSE, INC.
By /s/ PAUL T. SHIRLEY
--------------------
Paul T. Shirley, Chief Executive Officer
EXEL HOLDINGS LTD.
By /s/ DOMINIC J. PUOPOLO
-----------------------
Dominic J. Puopolo, Principal
By /s/ DOMINIC J. PUOPOLO
-----------------------
Dominic J. Puopolo, Individually
Page 27
<PAGE>
EXHIBIT 10.4
AMERICAN MEDICAL RESPONSE, INC.
EXECUTIVE SEPARATION
ALLOWANCE PLAN
I. RIGHT TO RECEIVE SEPARATION BENEFITS
------------------------------------
Subject to the terms and conditions of the American Medical Response,
Inc. Executive Separation Allowance Plan (the "Plan"), Executives (as
hereinafter defined) of the ("Company") shall be entitled to receive the
separation benefits hereinafter provided.
II. DEFINITION OF EXECUTIVE
-----------------------
For purposes of the Plan, an "Executive" shall be each of the employees
listed on Exhibit A hereto and any other executive designated by the
Compensation Committee of the Board of Directors of the Company to be
entitled to be covered by the Plan.
III. CONDITIONS TO RECEIPT OF SEPARATION BENEFITS
--------------------------------------------
An Executive shall receive the separation benefits provided by the Plan
if, within 90 days following a change in control (as defined below):
A. The Company or any subsidiary of the Company terminates the
Executive's employment for any reason other than Cause. "Cause"
shall be defined as:
1. The material default of the Company in performing its obligations
under contracts with other persons or business entities if caused
by Executive;
2. Executive's fraud with respect to the business or affairs of the
Company or if Executive is convicted of a felon involving fraud
or dishonesty;
3. Executive's exclusion from participation in Medicare, Medicaid or
any other third party reimbursement program, for any reason, or
if Executive has had civil money penalties or assessments imposed
on him under any federal or state law involving Medicare,
Medicaid or any other third party reimbursement program;
4. Alcohol or drug abuse by Executive; or
5. A finding that the Executive has conducted sexual harassment in
connection with such Executive's employment.
B. The Executive elects to terminate his employment by the Company and
its subsidiaries after the occurrence of any of the following
events:
1. There has been a major reduction in the Executive's employment
responsibilities; or
2. The Executive's base salary has been decreased by more than 10
percent or the Executive's base salary has been decreased and in
percentage terms such decrease, when aggregated with any other
percentage decreases during the preceding five years, is more
than 10 percent; or
3. The Company or any such subsidiary determines that the
Executive's principal employment location shall be a location
outside a 50-mile radius of Aurora, Colorado or if the Executive
is not located in Aurora, Colorado, outside a 50-mile radius of
his principal location as of the date of the change in control
provided, however, that a temporary assignment to a different
location not to exceed a period of six months shall not be
considered a change of principal employment location for the
individuals designated on Exhibit A; or
Page 28
<PAGE>
EXHIBIT 10.4
4. There is a material adverse change in the aggregate level of
benefits provided to the Executive. For purposes of the Paragraph
2(e) "benefits" shall include all (i) qualified and nonqualified
corporation plans or programs and (ii) employee pension or welfare
benefit plans in which the Executive participates as of June 30,
1995.
The date the Company or any subsidiary of the Company terminates the
Executive's employment for any reason other than Cause as defined in Section
1 of Article III above or the date the Executive elects to terminate his
employment by the Company and its subsidiaries as provided in Section 2 of
Article III because of the occurrence of any of the events specified in such
section is hereinafter referred to as the "Separation Date".
IV. SEPARATION BENEFITS
-------------------
The separation benefits to which the Executive shall be entitled under the
Plan shall be (a) a lump sum cash payment determined as provided in Article
VI below within five business days of his Separation Date, (b) the benefit
coverage specified in Article VI below, and (c) acceleration of stock
options as specified in Article VII below. If any payments to any Executive
under the Plan are determined to be contingent upon a change of control
within the meaning of Section 280G of the Internal Revenue Code of 1986, as
amended, or any successor provision ("IRC Section 280G"), and if it will
result in a greater net after-tax benefit to any such Executive, the
aggregate value of compensation payments or benefits to be paid or provided
to such Executive under this Plan will be reduced to the extent necessary so
that none of the payments to be made such Executive under this Agreement or
any other plan, agreement or arrangement will constitute "excess parachute
payments" as defined in IRC Section 280G.
V. CASH PAYMENT
------------
A. The lump sum cash payment shall be equal to the number of years
indicated next to the name of the Executive on Exhibit A times the sum
of:
1. the highest annual base salary in effect for the Executive at any
time within the last five years ending prior to the Separation
Date, plus
2. the highest calendar year cash bonus paid or payable to the
Executive with respect to the three most recent years ending prior
to this Separation Date.
VI. BENEFITS COVERAGE
-----------------
A. The Executive's coverage under the (a) Company's Medical and Dental
Plan(s), Savings and Retirement Plan and Accidental Death and
Dismemberment Plan will terminate as of the Separation Date and (b)
Company's Basic Group Life Insurance Plans and Disability Plans will
terminate as of the thirty-first day following the Separation Date.
Notwithstanding the foregoing, the Executive shall, at his cost, have
the right to convert or continue his coverage under these plans to or
as personal coverage to the extent a plan permits.
B. Effective thirty-one days after the Separation Date, the Company will
purchase or otherwise provide life insurance (which may be individual
or group term insurance ) on the life of the Executive in an amount
equal to two times his highest annual base salary in effect at any time
within the last five years prior to the Separation Date (or such other
higher amount as is provided to the Executive prior to his termination
of employment); provided that such coverage is obtainable at standard
rates. The beneficiary of such policy shall be designated by the
Executive. The Executive's coverage under such policy shall continue
for one year following the Separation Date.
C. For a period of one year after the Separation Date, the Company at its
expense will continue coverage for the Executive and his eligible
dependents under the Company's medical and dental insurance plans that
are provided generally to executives of the Company provided that the
Company shall not be required to provide such coverage (a) during any
period in which the Executive and his eligible dependents shall be
eligible to receive coverage under medical and dental insurance plans
of any subsequent employer of the
Page 29
<PAGE>
EXHIBIT 10.4
Executive providing substantially the same or better benefits as the
Company's medical and dental insurance plans or (b) if it is unable
to do so at a reasonable cost.
D. For purposes of Sections 1, 2 and 3 of this Article VI, none of the
plans specified in such sections shall be amended following an
Executive's Separation Date to limit or prohibit his right of
conversion to personal coverage, except with the Executive's express
written consent or as required by law.
E. In the event that an Executive's participation in any benefit plan or
program shall be barred as a matter of law, the Company shall arrange
to provide the Executive with benefits substantially similar to those
which the Executive is entitled to receive under such plans or
programs, or, if the Company cannot provide such benefits, pay the
Executive the amount of premium required to purchase such benefits,
in either case to the extent such benefits can be provided at
standard rates. If the benefits cannot be provided at standard rates,
the Company shall pay to the Executive the amount the Company would
have paid to provide the benefits at standard rates.
VII. ACCELERATION OF STOCK OPTIONS
-----------------------------
Upon a separation under which an Executive would be entitled to receive
benefits under this Plan, all stock options held by the Executive shall
become immediately exercisable, but shall otherwise be governed by the
terms and conditions of the plan or agreement under which they were
granted.
VIII. AMENDMENT AND TERMINATION
-------------------------
The Plan may be amended by the Company by a vote of the Compensation
Committee of the Company's Board of Directors, or to such other committee
(including the full Board) as shall have been authorized. Following a
Change in Control (as hereinafter defined), the Plan may not be amended by
the Company, or any successor thereto, during the one year period
following the date of such Change in Control.
"Change in Control" shall mean and shall be considered to occur if (i)
individuals who, as of the Effective Date, constituted the Board of
Directors of the Company (the "incumbent Board") cease for any reason to
constitute at least a majority of the Board of Directors of the Company;
provided, however, that any individual (other than any individual whose
initial assumption of office is in connection with an actual or threatened
election contest relating to the election of the directors of the Company
(as such terms are used in Rule 14a-11 of the Regulation 14A promulgated
under the Securities Exchange Act of 1934, as amended)) becoming a
director subsequent to the date hereof, whose election, or nomination for
election by the stockholders of the Company, was approved by a vote of at
least a majority of the directors then comprising the Incumbent Board,
shall be considered as though such individual was a member of the
Incumbent Board; or (ii) the stockholders of the Company approve an
agreement providing for (a) a transaction in which the Company will cease
to be a publicly owned company, or (b) the sale or other disposition of
all or substantially all of the assets of the Company.
IX. MISCELLANEOUS
-------------
The benefits payable to an Executive under the Plan shall be in lieu of
any benefits payable to him upon termination of employment pursuant to any
contract between the Executive and the Company if and to the extent that
the benefits exceed the benefits under such contract.
Page 30
<PAGE>
EXHIBIT 10.4
EXHIBIT A
Name Duration Payment Period
- ---- -----------------------
Shirley, Paul T. 2.99 years
Colby, David C. 2 years
DeHuff III, George 2 years
George, William 1 year
Allen, Robert 1 year
Pahl, William C. 1 year
Leland, Glenn 1 year
Rachlen, Wayne S. 1 year
Brandon, Merwin 1 year
Porazzo, Gino L. 1 year
Participation in this Plan is conditioned upon the Executive executing a
satisfactory noncompetition and confidentiality agreement with the Company.
Page 31
<PAGE>
EXHIBIT 11.1
AMERICAN MEDICAL RESPONSE, INC.
STATEMENT REGARDING COMPUTATION OF EARNINGS PER SHARE
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
<TABLE>
<CAPTION>
Three Months Ended
March 31,
-------------------
1996 1995
--------- --------
(unaudited)
<S> <C> <C>
PRIMARY
Pro forma net earnings..................................... $ 7,686 $ 5,003
====== ======
Weighted average common shares outstanding................. 19,948 15,557
====== ======
Pro forma net earnings per share........................... $ 0.39 $ 0.32
====== ======
FULLY DILUTED
Pro forma net earnings..................................... $ 7,686 $ 5,003
Add: Interest expense on convertible subordinated notes,
net of income taxes................................ 717 ----
------ ------
Pro forma net earnings used to calculate fully diluted
earnings per share................................. $ 8,403 $ 5,003
====== ======
Weighted average common shares outstanding................. 19,948 15,557
Add: Weighted average shares of convertible subordinated
notes assuming conversion.......................... 2,183 ----
------ ------
Weighted average shares used to compute fully diluted
earnings per share................................. 22,131 15,557
====== ======
Fully diluted pro forma net earnings per share............. $ 0.38 $ 0.32
====== ======
</TABLE>
Page 32
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM FINANCIAL
STATEMENTS FOR THE PERIOD ENDED MARCH 31, 1996 AND IS QUALIFIED IN ITS ENTIRETY
BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> MAR-31-1996
<CASH> 28,088
<SECURITIES> 0
<RECEIVABLES> 171,641
<ALLOWANCES> 53,866
<INVENTORY> 4,083
<CURRENT-ASSETS> 190,962
<PP&E> 66,115
<DEPRECIATION> 0
<TOTAL-ASSETS> 538,784
<CURRENT-LIABILITIES> 130,168
<BONDS> 0
0
0
<COMMON> 200
<OTHER-SE> 261,168
<TOTAL-LIABILITY-AND-EQUITY> 538,784
<SALES> 157,809
<TOTAL-REVENUES> 157,809
<CGS> 0
<TOTAL-COSTS> 112,170
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 29,555
<INTEREST-EXPENSE> 2,146
<INCOME-PRETAX> 13,938
<INCOME-TAX> 6,252
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 7,686
<EPS-PRIMARY> 0.39
<EPS-DILUTED> 0.38
<FN>
<F1>AMOUNTS INAPPLICABLE OR NOT DISCLOSED AS A SEPERATE LINE IN THE INTERIM
CONSOLIDATED FINANCIAL STATEMENTS ARE REPORTED AS 0 HEREIN.
<F2>
PROPERTY, PLANT, AND EQUIPMENT ARE REPORTED NET OF ACCUMULATED DEPRECIATION
IN THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS.
<F3>
TOTAL COSTS DOES NOT INCLUDE PROVISION FOR UNCOMPENSATED CARE.
</FN>
</TABLE>
