UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
[X] QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the Quarterly Period Ended March 31, 1999
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
Commission File Number 0-26762
PEDIATRIX MEDICAL GROUP, INC.
(Exact name of registrant as specified in its charter)
Florida 65-0271219
(State or other jurisdiction (I.R.S. Employer
of incorporation or organization) Identification No.)
1455 North Park Drive
Ft. Lauderdale, Florida 33326
(Address of principal executive offices)
(Zip Code)
(954) 384-0175
(Registrant's telephone number, including area code)
Not Applicable
(Former name, former address and fiscal year, if changed since last report)
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 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. Yes X No ______
At May 7, 1999, the Registrant had 15,502,022 shares of $0.01 par value common
stock outstanding.
<PAGE>
PEDIATRIX MEDICAL GROUP, INC.
INDEX
Page
----
PART I - FINANCIAL INFORMATION
- ------------------------------
ITEM 1. Financial Statements
Condensed Consolidated Balance Sheets as of March 31,1999 (Unaudited)
and December 31, 1998....................................................... 3
Condensed Consolidated Statements of Income for the Three Months Ended
March 31, 1999 and 1998 (Unaudited)......................................... 4
Condensed Consolidated Statements of Cash Flows for the Three Months Ended
March 31, 1999 and 1998 (Unaudited)......................................... 5
Notes to Condensed Consolidated Financial Statements.......................... 6
ITEM 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations...................10
ITEM 3. Quantitative and Qualitative Disclosures
About Market Risk...............................................12
PART II - OTHER INFORMATION...................................................13
- ---------------------------
SIGNATURES....................................................................15
- ----------
2
<PAGE>
PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
PEDIATRIX MEDICAL GROUP, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
March 31, 1999 December 31,
(Unaudited) 1998
------------------ -------------------
(in thousands)
ASSETS
<S> <C> <C>
Current assets:
Cash and cash equivalents .................. $ 584 $ 650
Accounts receivable, net.................... 65,506 61,599
Prepaid expenses............................ 732 682
Other current assets........................ 1,211 769
------------------ -------------------
Total current assets.................... 68,033 63,700
Property and equipment, net...................... 11,977 11,942
Other assets, net................................ 211,014 195,016
================== ===================
Total assets............................ $ 291,024 $ 270,658
================== ===================
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable and accrued expenses....... $ 31,991 $ 30,043
Income taxes payable........................ 3,654 3,938
Current portion of note payable............. 200 200
Deferred income taxes....................... 15,791 14,604
----------------- -------------------
Total current liabilities............... 51,636 48,785
Line of credit................................... 8,800 7,850
Note payable..................................... 2,300 2,350
Deferred income taxes............................ 3,605 3,327
Deferred compensation............................ 1,296 953
----------------- -------------------
Total liabilities....................... 67,637 63,265
Minority interest................................ 13,894 6,342
Commitments and contingencies
Stockholders' equity:
Preferred stock............................. -- --
Common stock................................ 154 154
Additional paid-in capital.................. 131,912 130,720
Retained earnings........................... 77,427 70,177
----------------
------------------
Total stockholders' equity.............. 209,493 201,051
---------------- ------------------
Total liabilities and stockholders'
equity. $ 291,024 $ 270,658
================ ==================
</TABLE>
The accompanying notes are an integral part of
these condensed consolidated financial statements
3
<PAGE>
PEDIATRIX MEDICAL GROUP, INC.
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)
<TABLE>
<CAPTION>
Three Months Ended
March 31,
--------------------
1999 1998
------- -------
(in thousands, except for per share data)
<S> <C> <C>
Net patient service revenue ........................... $ 53,826 $ 37,808
Operating expenses:
Salaries and benefits .............................. 34,390 23,560
Supplies & other operating expenses ................ 4,526 2,695
Depreciation and amortization ...................... 2,666 1,688
-------- --------
Total operating expenses ..................... 41,582 27,943
-------- --------
Income from operations ....................... 12,244 9,865
Investment income ..................................... 75 446
Interest expense ...................................... (235) (109)
-------- --------
Income before income taxes ................... 12,084 10,202
Income tax provision .................................. 4,834 4,083
-------- --------
Net income ....................................... $ 7,250 $ 6,119
======== ========
Per share data:
Net income per common and common equivalent share:
Basic ........................................ $ .47 $ .40
======== ========
Diluted ...................................... $ .45 $ .39
======== ========
Weighted average shares used in computing net
income per common and common
equivalent share:
Basic ........................................ 15,432 15,159
======== ========
Diluted ...................................... 16,107 15,841
======== ========
</TABLE>
The accompanying notes are an integral part of
these condensed consolidated financial statements
4
<PAGE>
PEDIATRIX MEDICAL GROUP, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
<TABLE>
<CAPTION>
Three Months Ended
March 31,
-----------------------
1999 1998
------ ------
(in thousands)
<S> <C> <C>
Cash flows from operating activities:
Net income ............................................................... $ 7,250 $ 6,119
Adjustments to reconcile net income to net cash provided by operating
activities:
Depreciation and amortization ........................................ 2,666 1,688
Deferred income taxes ................................................ 1,465 2,136
Changes in assets and liabilities:
Accounts receivable ............................................. (3,907) (4,293)
Prepaid expenses and other current assets ....................... (54) 146
Other assets .................................................... 671 51
Accounts payable and accrued expenses ........................... 2,098 (71)
Income taxes payable ............................................ 318 909
------- --------
Net cash provided from operating activities ................. 10,507 6,685
------- --------
Cash flows used in investing activities:
Physician group acquisition payments ..................................... (17,549) (49,443)
Purchase of investments .................................................. -- (9,939)
Proceeds from sale of investments ........................................ -- 36,983
Purchase of property and equipment ....................................... (513) (482)
------- --------
Net cash used in investing activities ....................... (18,062) (22,881)
------- --------
Cash flows from financing activities:
Borrowings on line of credit, net......................................... 950 --
Payments on note payable ................................................. (50) (50)
Proceeds from issuance of common stock ................................... 832 631
Proceeds from issuance of subsidiary stock ............................... 5,757 --
------- --------
Net cash provided from financing activities ................. 7,489 581
------- --------
Net decrease in cash and cash equivalents ..................................... (66) (15,615)
Cash and cash equivalents at beginning of period .............................. 650 18,562
------- --------
Cash and cash equivalents at end of period .................................... $ 584 $ 2,947
======= ========
</TABLE>
The accompanying notes are an integral part of
these condensed consolidated financial statements
5
<PAGE>
PEDIATRIX MEDICAL GROUP, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
March 31, 1999
(Unaudited)
1. Basis of Presentation:
The accompanying unaudited condensed consolidated financial statements
of Pediatrix Medical Group, Inc. (the "Company" or "Pediatrix")
presented herein do not include all disclosures required by generally
accepted accounting principles for complete financial statements. In
the opinion of management, these financial statements include all
adjustments, consisting only of normal recurring adjustments, necessary
for a fair presentation of the results of interim periods.
The results of operations for the three months ended March 31, 1999 are
not necessarily indicative of the results of operations to be expected
for the year ended December 31, 1999. The interim condensed
consolidated financial statements should be read in conjunction with
the consolidated financial statements and footnotes thereto included in
the Company's Annual Report on Form 10-K filed with the Securities and
Exchange Commission on March 24, 1999.
Certain prior year amounts have been reclassified to conform to the
1999 presentation.
2. Business Acquisitions:
During the first three months of 1999, the Company completed the
acquisition of three physician group practices. Total consideration for
acquisitions approximated $17.5 million in cash and 1,000,000 shares of
stock in a subsidiary of the Company.
The Company has accounted for the acquisitions using the purchase
method of accounting and the excess of cost over fair value of net
assets acquired is being amortized on a straight-line basis over 25
years. The results of operations of the acquired practices have been
included in the consolidated financial statements from the dates of
acquisition.
The following unaudited pro forma information combines the consolidated
results of operations of the Company and the physician group practices
acquired during 1998 and 1999 as if the acquisitions had occurred on
January 1, 1998:
Three Months Ended
March 31,
----------------------------------------
1999 1998
------------- -------------
(in thousands, except for per share data)
Net patient service revenue $ 55,390 $ 47,189
Net income 7,313 6,512
Net income per share:
Basic .47 .43
Diluted .45 .41
The pro forma results do not necessarily represent results which would
have occurred if the acquisitions had taken place at the beginning of
the period, nor are they indicative of the results of future combined
operations.
Historically, the Company has capitalized certain incremental internal
costs directly related to completed acquisitions. Effective January 1,
1999, the Company expensed these costs as incurred.
6
<PAGE>
PEDIATRIX MEDICAL GROUP, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
(Unaudited)
3. Accounts Payable and Accrued Expenses:
Accounts payable and accrued expenses consists of the following:
March 31, December 31,
1999 1998
--------- ------------
(in thousands)
Accounts payable...................... $ 13,398 $ 10,373
Accrued salaries and bonuses.......... 4,967 6,433
Accrued payroll taxes and
benefits............................ 3,833 4,465
Accrued professional liability
coverage............................ 7,347 6,866
Other accrued expenses................ 2,446 1,906
-------- ---------
$ 31,991 $ 30,043
======== =========
4. Net Income Per Share:
Basic net income per share is calculated by dividing net income by the
weighted average number of common shares outstanding during the period.
Diluted net income per share is calculated by dividing net income by
the weighted average number of common and potential common shares
outstanding during the period. Potential common shares consist of the
dilutive effect of outstanding options calculated using the treasury
stock method.
5. Comprehensive Income:
During 1998, the Company adopted the provisions of SFAS No. 130,
"Reporting Comprehensive Income," which requires that all items
recognized under accounting standards as components of comprehensive
income be reported in the financial statements. The components of
comprehensive income not reflected in the Company's net income are
related to the unrealized gains and losses on investments. For the
quarters ended March 31, 1999 and 1998, the net impact of recording
these items would be $0 and ($89,000), respectively.
6. Subsidiary Stock:
In January 1999, Obstetrix Medical Group, Inc. ("Obstetrix"), a
subsidiary of the Company, sold 6,257,150 shares of its common stock,
valued at $1.00 per share, in a private placement to certain officers
and employees of the Company. These officers and employees were
required to meet certain financial qualifications to be considered
accredited investors and become eligible to participate in the
offering. Obstetrix used the proceeds from the offering to repurchase
shares previously issued to the Company.
7. Preferred Share Purchase Rights Plan:
On March 31, 1999, the Board of Directors of the Company adopted a
Preferred Share Purchase Rights Plan (the "Rights Plan") and, in
connection therewith, declared a dividend distribution of one preferred
share purchase right ("Right") on each outstanding share of the
Company's common stock to shareholders of record at the close of
business on April 9, 1999. The Board of Directors also adopted various
amendments to the Company's Bylaws, including provisions in connection
with shareholder meetings, actions by written consent and other
matters.
7
<PAGE>
PEDIATRIX MEDICAL GROUP, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
(Unaudited)
7. Preferred Share Purchase Rights Plan, continued:
Subject to the terms of the Rights Plan, each Right entitles the
registered holder to purchase from the Company one one-thousandth of a
share of the Company's Series A Junior Participating Preferred Stock
(the "Preferred Shares") (or in certain circumstances, cash, property
or other securities). Each Right has an initial exercise price of
$150.00 for one one-thousandth of a Preferred Share (subject to
adjustment). The Rights will be exercisable only if a person or group
acquires 15% or more of the Company's common stock or announces a
tender or exchange offer, the consummation of which would result in
ownership by a person or group of 15% or more of the common stock. Upon
any such occurrence, each Right will entitle its holder (other than
such person or group of affiliated or associated persons) to purchase,
at the Right's then-current exercise price, a number of the Company's
common shares having a market value of twice such price.
8. Contingencies:
During the ordinary course of business, the Company has become a party
to pending and threatened legal actions and proceedings, most of which
involve claims of medical malpractice and are generally covered by
insurance. These lawsuits are not expected to result in judgments which
would exceed professional liability insurance coverage, and, therefore
will not have a material impact on the Company's consolidated results
of operations, financial position or liquidity, notwithstanding any
possible insurance recovery.
In February 1999, the first of several federal securities law class
actions was commenced against the Company and three of its principal
officers in United States District Court for the Southern District of
Florida. To date, the Company is aware of seven separate actions that
have been filed, all of which make substantially similar claims.
Plaintiffs are shareholders purporting to represent a class of all open
market purchasers of the Company's common stock between April 28, 1998,
and various dates through and including April 1, 1999. They claim that
during that period the Company violated the antifraud provisions of the
federal securities laws by issuing false and misleading statements
concerning its accounting practices and financial results, focusing in
particular on the capitalization of certain payments made to employees
in connection with acquisitions and revenue recognition in light of
recent inquiries initiated by state investigators into the Company's
billing practices. The complaints seek damages in an undetermined
amount based on the alleged decline in the value of the common stock
after the Company disclosed the capitalization issue and the inquiries
by state investigators. The Company expects that in a normal course the
separate cases will be consolidated into one and that plaintiffs will
seek to file an amended complaint after the appointment of lead
plaintiffs and lead plaintiffs' counsel. Until that time, no response
to the initial complaints is required by the Company. The Company
believes, however, that the claims are without merit and intends to
defend them vigorously at the appropriate time.
In April 1999, the Company received requests, and in one case a
subpoena, from investigators in Arizona, Colorado and Florida for
information related to its billing practices. The Company is fully
cooperating with these inquiries. Although the Company believes that
its billing practices were proper, the investigations are ongoing and
the Company is unable to predict at this time whether they will have
any material adverse effect on the Company's business, financial
condition or results of operations.
8
<PAGE>
PEDIATRIX MEDICAL GROUP, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
(Unaudited)
9. Subsequent Events:
Subsequent to March 31, 1999, the Company completed the acquisition of
two physician group practices. Total consideration for these
acquisitions approximated $17.9 million in cash. The acquisitions will
be accounted for using the purchase method of accounting.
9
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
Results of Operations
Three Months Ended March 31, 1999 as Compared to Three Months Ended
March 31, 1998
The Company reported net patient service revenue of $53.8 million for
the three months ended March 31, 1999, as compared with $37.8 million for the
same period in 1998, a growth rate of 42.4%. Of this $16.0 million increase,
$14.3 million, or 89.4% was attributable to new units, including units at which
the Company provides services as a result of acquisitions. Same unit patient
service revenue, exclusive of administrative fees, increased $1.7 million, or
4.9%, for the three months ended March 31, 1999. Same units are those units at
which the Company provided services for the entire period for which the
percentage is calculated and the entire comparable period.
Salaries and benefits increased $10.8 million, or 46.0% to $34.4
million for the three months ended March 31, 1999, as compared with $23.6
million for the same period in 1998. Of this $10.8 million increase, $7.0
million, or 64.8%, was attributable to hiring new physicians to support new unit
growth, $345,000 was attributable to the expensing of acquisition related costs
that had historically been capitalized, and the remaining $3.5 million was
primarily attributable to increased support staff and resources added in the
areas of nursing, management and billing and reimbursement. Supplies and other
operating expenses increased $1.8 million, or 67.9% to $4.5 million for the
three months ended March 31, 1999, as compared with $2.7 million for the same
period in 1998. Of this $1.8 million increase, approximately $500,000 was
attributable to additional audit fees related to the Company's 1998 concurrent
audit. The remaining increase was primarily the result of new units and the
addition of several new perinatology offices. Perinatology services require a
higher level of office supplies than do neonatal services. Depreciation and
amortization expense increased by $1.0 million, or 57.9% to $2.7 million for the
three months ended March 31, 1999, as compared with $1.7 million for the same
period in 1998, primarily as a result of amortization of goodwill in connection
with acquisitions.
Income from operations increased $2.3 million, or 24.1%, to $12.2
million for the three months ended March 31, 1999, as compared with $9.9 million
for the same period in 1998. The increase in income from operations was
primarily due to increased volume, principally from acquisitions.
The Company recorded net interest expense of approximately $160,000 for
the three months ended March 31, 1999, as compared with net interest income of
approximately $337,000 for the same period in 1998. The reduction of interest
income in 1999 is the result of funds used for the acquisition of physician
practices and the use of the Company's line of credit for such purposes.
The effective income tax rate was approximately 40% for the three month
periods ended March 31, 1999 and 1998.
Net income increased 18.5% to $7.3 million for the three months ended
March 31, 1999, as compared with $6.1 million for the same period in 1998.
Diluted net income per common and common equivalent share increased to 45 cents
for the three months ended March 31, 1999, compared to 39 cents for the same
period in 1998.
Liquidity and Capital Resources
As of March 31, 1999, the Company had working capital of approximately
$16.4 million, an increase of $1.5 million from the working capital of $14.9
million available at December 31, 1998.
As of March 31, 1999, the Company had $66.2 million available under its
$75 million line of credit. The Company anticipates that funds available under
its credit facility together with funds generated from operations, will be
sufficient to meet its working capital requirements and finance any required
capital expenditures for at least the next twelve months.
10
<PAGE>
Status of Year 2000 Compliance
The Company has completed a review of its computer systems to identify
any software that could be affected by the transition to the year 2000.
Currently, all of the Company's critical systems are year 2000 compliant or are
upgradeable to commercially available versions that are compliant. The Company
anticipates that by the end of the second quarter of 1999 it will have completed
testing on all of its critical systems which include its clinical, billing,
general ledger and accounts payable systems. In addition, the Company is
completing an inventory and certain tests of its information technology assets
as well as critical non-information technology related assets and services,
including embedded microprocessors in, for example, ultra-sound machines. It is
expected that the testing and resolution of any issues encountered will be
completed by the end of the third quarter of 1999. The ultimate resolution may
require the replacement of certain equipment owned by the Company. The Company
has not set a limit on the financial resources that may be applied to complete
this project, although, based upon the information that is currently available,
it is expected that the total cost, both capitalized and expensed, will not
exceed $500,000.
In preparing for the year 2000, the Company has requested certain
information from its payors, vendors, financial institutions and hospital
customers in order to evaluate their compliance plans and state of readiness.
The Company will continually update this information throughout 1999 in order to
determine what impact, if any, these third parties may have on it's business.
Pediatrix is in the process of developing a contingency plan to ensure that it
will be able to continue to provide services to its customers on and after
January 1, 2000. However, if a substantial number of payors, vendors, and
hospital customers do not make modifications and conversions required on a
timely basis, it could have a material adverse effect on the Company's financial
condition and results of operations.
11
<PAGE>
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
The Company's unsecured revolving credit facility, mortgage note
payable and certain lease agreements are subject to market risk from interest
rate changes. The total amount available under the credit facility is $75
million. At the Company's option, the credit facility bears interest at either
LIBOR plus .875% or the prime rate. The mortgage note payable bears interest at
the prime rate and the leases bear interest at LIBOR based variable rates. The
outstanding principal balance on the note payable was $2,500,000 at March 31,
1999, and the outstanding principal balances related to the two leases totaled
approximately $11 million at March 31, 1999. Considering the total outstanding
balances under these instruments at March 31, 1999 of approximately $22.3
million, a 1% change in interest rates would result in an impact to pre-tax
earnings of approximately $219,000 per year.
12
<PAGE>
PART II - OTHER INFORMATION
Item 1. Legal Proceedings
During the ordinary course of business, the Company has become
a party to pending and threatened legal actions and proceedings, most
of which involve claims of medical malpractice and are generally
covered by insurance. These lawsuits are not expected to result in
judgments which would exceed professional liability insurance
coverage, and, therefore will not have a material impact on the
Company's consolidated results of operations, financial position or
liquidity, notwithstanding any possible insurance recovery.
In February 1999, the first of several federal securities law
class actions was commenced against the Company and three of its
principal officers in United States District Court for the Southern
District of Florida. To date, the Company is aware of seven separate
actions that have been filed, all of which make substantially similar
claims. Plaintiffs are shareholders purporting to represent a class
of all open market purchasers of the Company's common stock between
April 28, 1998, and various dates through and including April 1,
1999. They claim that during that period the Company violated the
antifraud provisions of the federal securities laws by issuing false
and misleading statements concerning its accounting practices and
financial results, focusing in particular on the capitalization of
certain payments made to employees in connection with acquisitions
and revenue recognition in light of recent inquiries initiated by
state investigators into the Company's billing practices. The
complaints seek damages in an undetermined amount based on the
alleged decline in the value of the common stock after the Company
disclosed the capitalization issue and the inquiries by state
investigators. The Company expects that in a normal course the
separate cases will be consolidated into one and that plaintiffs will
seek to file an amended complaint after the appointment of lead
plaintiffs and lead plaintiffs' counsel. Until that time, no response
to the initial complaints is required by the Company. The Company
believes, however, that the claims are without merit and intends to
defend them vigorously at the appropriate time.
In April 1999, the Company received requests, and in one case
a subpoena, from investigators in Arizona, Colorado and Florida for
information related to its billing practices. The Company is fully
cooperating with these inquiries. Although the Company believes that
its billing practices were proper, the investigations are ongoing and
the Company is unable to predict at this time whether they will have
any material adverse effect on the Company's business, financial
condition or results of operations.
Item 2. Changes in Securities
On March 31, 1999, the Company adopted a Preferred Share
Purchase Rights Plan and, in connection therewith, declared a
dividend distribution of one preferred share purchase right on each
outstanding share of the Company's Common Stock of record at the
close of business on April 9, 1999. Also on March 31, 1999, the
Company amended its Bylaws to provide for certain procedures and
other provisions in connection with shareholder meetings, actions by
written consent and other matters. These provisions could render more
difficult or discourage an attempt to obtain control of the Company
through a proxy contest or consent solicitation.
Item 3. Defaults Upon Senior Securities
Not applicable.
Item 4. Submission of Matters to a Vote of Security-Holders
Not applicable.
13
<PAGE>
Item 5. Other Information
This quarterly report contains statements which, to the extent
they are not historical fact, constitute "forward looking statements"
under the securities laws. All forward looking statements involve
risks, uncertainties and other factors that may cause the actual
results, performance or achievements of the Company to differ
materially from those expressed or implied by or in such forward
looking statements. The forward looking statements in this document
are intended to be subject to the safe harbor protection provided
under the securities laws.
For additional information identifying certain other important
factors which may affect the Company's operations and could cause
actual results to vary materially from those anticipated in the
forward looking statements, see the Company's Securities and Exchange
Commission filings, including but not limited to, the discussion
included in the Business section of the Company's Form 10-K under the
heading "Factors to be Considered."
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
10.37 Amendment No. 3 to the Employment Agreement between
Pediatrix and Kristen Bratberg
11.1 Statement Re: Computation of Per Share Earnings
27.1 Financial Data Schedule
(b) Reports on Form 8-K
(i) Form 8-K, filed February 2, 1999, dated February 1,
1999, reporting Item 5 (Other Events) relating to
press release issued on January 20, 1999 (superceded
by press release dated February 22, 1999).
(ii) Form 8-K, filed March 16, 1999, dated March 16, 1999,
reporting Item 5 (Other Events) relating to press
releases issued on February 10, 1999 (parts of which
were superceded by press release dated February 12,
1999), February 12, 1999, and February 22, 1999.
14
<PAGE>
SIGNATURES
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.
PEDIATRIX MEDICAL GROUP, INC.
Date: May 17, 1999 By: /s/ Roger J. Medel
-----------------------------
Roger J. Medel, President
and Chief Executive Officer
(Principal Executive Officer)
Date: May 17, 1999 By: /s/ Karl B. Wagner
-----------------------------
Karl B. Wagner, Chief
Financial Officer (Principal
Financial and Accounting
Officer)
15
AMENDMENT 3 TO EMPLOYMENT AGREEMENT
BETWEEN PEDIATRIX MEDICAL GROUP, INC.
and KRISTEN BRATBERG
This is Amendment 3 to the Employment Agreement by and between KRISTEN
BRATBERG ("Executive") and PEDIATRIX MEDICAL GROUP, INC. (the "Company") dated
November 6, 1995 (the "Employment Agreement"). Except as specifically set forth
below, all terms and conditions of the Employment Agreement remain effective and
binding upon the parties.
1. Amendment 1 to Employment Agreement between Pediatrix Medical Group,
Inc. and Kristen Bratberg dated October 13, 1998, is hereby amended to
read Amendment 2 to Employment Agreement between Pediatrix Medical Group,
Inc. and Kristen Bratberg.
2. Effective on January 1, 1999, Section 2.1 Base Salary of the Employment
Agreement shall be amended to read: "The Executive shall receive a base
salary at the annual rate of not less than Three Hundred Thousand Dollars
($300,000.00) (the "Base Salary") during the term of this Agreement, with
such Base Salary payable in installments consistent with the Company's
normal payroll schedule, subject to required applicable withholding for
taxes."
3. Effective on January 1, 1999, Section 2.2 Performance Bonus shall be
added to the Employment Agreement and shall read: "The Employee shall be
eligible to receive at the end of each calendar year a performance bonus
(the "Performance Bonus") of Two Hundred Thousand Dollars ($200,000).
Company shall pay the Performance Bonus to Employee within ninety (90)
days after the end of the applicable calendar year."
4. Effective January 1, 1999, Section 2.3 Incentive Bonus of Amendment No.
1 is deleted in its entirety, except that the additional payment at the
end of the initial fiscal year referred to therein, shall continue in
force for any acquisitions completed prior to December 31, 1998.
IN WITNESS WHEREOF, the parties have executed this Amendment as of the
26th day of April, 1999.
PEDIATRIX MEDICAL GROUP, INC. EXECUTIVE
/s/ Lawrence M. Mullen /s/ Kristen Bratberg
- ------------------------------------------ --------------------------
Lawrence M. Mullen Kristen Bratberg
Vice President and Chief Operating Officer
Exhibit 11.1
STATEMENT RE: COMPUTATION OF PER SHARE EARNINGS
Three Months Ended
March 31,
----------------------------------
1999 1998
------------- -------------
(in thousands, except for per share
data)
Basic:
Net income applicable to common
stock $ 7,250 $ 6,119
============== ================
Weighted average number of
common shares outstanding 15,432 15,159
============== ================
Basic net income per share $ .47 $ .40
============== ================
Diluted:
Net income applicable to common
stock $ 7,250 $ 6,119
============== ================
Weighted average number of
common shares outstanding 15,432 15,159
Weighted average number of
dilutive common stock equivalents 675 682
-------------- ----------------
Weighted average number of
common and common equivalent
shares outstanding 16,107 15,841
============== ================
Diluted net income per share $ .45 $ .39
============== ================
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> Dec-31-1999
<PERIOD-END> Mar-31-1999
<CASH> 584
<SECURITIES> 0
<RECEIVABLES> 65506<F1>
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 68033
<PP&E> 11977<F1>
<DEPRECIATION> 0
<TOTAL-ASSETS> 291024
<CURRENT-LIABILITIES> 51636
<BONDS> 2300
0
0
<COMMON> 154
<OTHER-SE> 131912
<TOTAL-LIABILITY-AND-EQUITY> 291024
<SALES> 0
<TOTAL-REVENUES> 53826
<CGS> 0
<TOTAL-COSTS> 41582
<OTHER-EXPENSES> (75)
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 235
<INCOME-PRETAX> 12084
<INCOME-TAX> 4834
<INCOME-CONTINUING> 7250
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 7250
<EPS-PRIMARY> 0.47
<EPS-DILUTED> 0.45
<FN>
<F1> AMOUNTS FOR RECEIVABLES AND PROPERTY, PLANT AND EQUIPMENT ARE NET OF ANY
ALLOWANCES AND ACCUMULATED DEPRECIATION.
</FN>
</TABLE>
