<PAGE>
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON OCTOBER 8, 1996
REGISTRATION NO. 333-12893
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
--------------
AMENDMENT NO. 1 TO
FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
--------------
PRIME MEDICAL SERVICES, INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
<TABLE>
<S> <C>
DELAWARE 74-2652727
(STATE OR OTHER JURISDICTION OF (I.R.S. EMPLOYER
INCORPORATION OR ORGANIZATION) IDENTIFICATION NO.)
</TABLE>
1301 CAPITAL OF TEXAS HIGHWAY, SUITE C-300
AUSTIN, TEXAS 78746-6550
(512) 328-2892
(ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING
AREA CODE, OF REGISTRANT'S PRINCIPAL EXECUTIVE OFFICES)
--------------
KENNETH S. SHIFRIN
PRIME MEDICAL SERVICES, INC.
1301 CAPITAL OF TEXAS HIGHWAY, SUITE C-300
AUSTIN, TEXAS 78746-6550
(512) 328-2892
(NAME, ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER
INCLUDING AREA CODE, OF REGISTRANT'S AGENT FOR SERVICE)
--------------
COPIES TO:
TIMOTHY L. LAFREY
SMALL, CRAIG & WERKENTHIN, P.C.
100 CONGRESS AVENUE, SUITE 1100
AUSTIN, TEXAS 78701
(512) 472-8355
FAX: (512) 320-9734
Approximate date of commencement of proposed sale to the public: from time
to time after this Registration Statement becomes effective.
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If any of the securities being registered on this Form are being offered
pursuant to dividend or interest reinvestment plans, please check the
following box. [_]
If any of the securities being registered on this Form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, other than securities offered only in connection with dividend or
interest reinvestment plans, check the following box. [X]
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following
box and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. [_]
----------
If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [_]
----------
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. [_]
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CALCULATION OF REGISTRATION FEE
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<TABLE>
<CAPTION>
PROPOSED PROPOSED
AMOUNT MAXIMUM MAXIMUM AMOUNT OF
TITLE OF EACH CLASS OF TO BE OFFERING PRICE AGGREGATE REGISTRATION
SECURITIES TO BE REGISTERED REGISTERED PER SHARE(1) OFFERING PRICE(2) FEE
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<S> <C> <C> <C> <C>
Common Stock, $.01 par value (2)..... 2,265,240 $13.875 $31,430,205.00 $10,843.42
</TABLE>
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(1) Estimated solely for the purpose of calculating the registration fee in
accordance with Rule 457(c), using the average of the high and low sales
prices reported on The Nasdaq National Market for the Registrant's Common
Stock on September 20, 1996.
(2) The Registration Statement also pertains to rights to purchase shares of
Common Stock of the Registrant. One right is attached to and trades with
each share of Common Stock of the Registrant. Until the occurrence of
certain events, the rights are not exercisable and will not be evidenced
or transferred apart from the Common Stock.
--------------
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT
SHALL FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS
REGISTRATION STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH
SECTION 8(A) OF THE SECURITIES ACT OF 1933, AS AMENDED, OR UNTIL THE
REGISTRATION STATEMENT SHALL BECOME EFFECTIVE ON SUCH DATE AS THE SECURITIES
AND EXCHANGE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(A), MAY DETERMINE.
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<PAGE>
PROSPECTUS
2,265,240 SHARES
PRIME MEDICAL SERVICES, INC.
COMMON STOCK
This prospectus may be used in connection with the distribution of up to
2,265,240 shares (the "Shares") of the Company's Common Stock proposed to be
disposed of from time to time by the Selling Stockholders named herein. See
"Principal and Selling Stockholders." The Company will not receive any of the
proceeds from the sale of shares by the Selling Stockholders. The Company will
bear the expenses of this registration. The Company's Common Stock is traded
on The Nasdaq National Market under the symbol "PMSI." On October 7, 1996, the
last sale price of the Common Stock as reported on The Nasdaq National Market
was $ per share.
SEE "RISK FACTORS" FOR A DISCUSSION OF CERTAIN FACTORS THAT SHOULD BE
CONSIDERED BY PROSPECTIVE INVESTORS.
----------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION
PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
The distribution of the Shares by the Selling Stockholders may be effected
from time to time in one or more transactions (which may involve block
transactions) on The Nasdaq National Market, in the over-the-counter market,
or on any exchange on which the Common Stock may then be listed, in negotiated
transactions or otherwise. Sales will be effected at such prices and for such
consideration as may be obtainable from time to time. Commission expenses and
brokerage fees, if any, will be paid individually by the Selling Stockholders.
See "Plan of Distribution."
THE DATE OF THIS PROSPECTUS IS OCTOBER 8, 1996.
<PAGE>
AVAILABLE INFORMATION
The Company is subject to the informational requirements of the Exchange Act
and, in accordance therewith, files reports, proxy statements and other
information with the Commission. Reports, proxy statements and other
information filed by the Company can be inspected and copied at the public
reference facilities maintained by the Commission at 450 Fifth Street, N.W.,
Washington, D.C. 20549, and at the Commission's Regional Offices at Seven
World Trade Center, 13th Floor, New York, New York 10048 and CitiCorp Center,
500 West Madison Street, Suite 1400, Chicago, Illinois 60661-2511. Copies of
such material can be obtained by mail from the Public Reference Section of the
Commission at 450 Fifth Street, N.W., Washington, D.C. 20549, at prescribed
rates. Such reports, proxy statements and other information concerning the
Company are also available for inspection at the offices of The Nasdaq
National Market, Reports Section, 1735 K Street, N.W., Washington, D.C. 20006.
The Company has filed with the Commission a Registration Statement on Form
S-3 (herein, together with all amendments and exhibits, referred to as the
"Registration Statement") under the Securities Act with respect to the Common
Stock offered hereby. This Prospectus does not contain all of the information
set forth in the Registration Statement, certain parts of which were omitted
in accordance with the rules and regulations of the Commission. For further
information, reference is hereby made to the Registration Statement. Any
statements contained herein concerning the provisions of any document filed as
an exhibit to the Registration Statement or otherwise filed with the
Commission are not necessarily complete, and in each instance reference is
made to the copy of such document so filed. Each such statement is qualified
in its entirety by such reference.
DOCUMENTS INCORPORATED BY REFERENCE
The following documents filed by the Company with the Commission are
incorporated herein by reference:
(1) The Company's Annual Report on Form 10-K for its fiscal year ended
December 31, 1995;
(2) The Company's Annual Report on Form 10-K/A, dated June 4, 1996;
(3) The Company's Quarterly Report on Form 10-Q for the quarterly period
ended March 31, 1996;
(4) The Company's Quarterly Report on Form 10-Q for the quarterly period
ended June 30, 1996;
(5) The Company's Current Report on Form 8-K, dated May 2, 1996;
(6) The Company's Current Report on Form 8-K/A, dated June 4, 1996;
(7) The description of the Common Stock contained in the Company's Form 8-
A, dated September 14, 1993; and
(8) The description of the rights issued to stockholders of the Company
contained in the Company's Form 8-A, dated March 10,1994.
All documents filed by the Company pursuant to Sections 13(c), 14 or 15(d)
of the Exchange Act subsequent to the date of this Prospectus and prior to the
termination of this offering shall be deemed to be incorporated by reference
into this Prospectus and to be a part hereof from the date of filing of such
documents. Any statement contained in a document incorporated or deemed to be
incorporated by reference herein shall be deemed to be modified or superseded
for purposes of this Prospectus to the extent that a statement contained
herein or in any other subsequently filed document which also is or is deemed
to be incorporated by reference herein modifies or supersedes such statement.
Any such statement so modified or superseded shall not be deemed, except as so
modified or superseded, to constitute a part of this Prospectus.
The Company will provide without charge to each person to whom a copy of
this Prospectus is delivered, upon the written or oral request of such person,
a copy of any or all of the documents which are incorporated by reference
herein, other than exhibits to such documents (unless such exhibits are
specifically incorporated by reference into such documents).
2
<PAGE>
PROSPECTUS SUMMARY
The following summary is qualified in its entirety by the detailed
information appearing elsewhere in this Prospectus. Unless the context
otherwise requires, the "Company" refers to Prime Medical Services, Inc. and
its consolidated subsidiaries and affiliated partnerships and limited liability
companies.
THE COMPANY
The Company is the largest and one of the fastest growing providers of
lithotripsy services in the United States. Lithotripsy is a non-invasive
procedure for the treatment of kidney stones, typically performed on an
outpatient basis, that eliminates the need for lengthy hospital stays and
extensive recovery periods associated with surgery. The Company has an economic
interest in 49 mobile and six fixed site lithotripters, all but two of which
are operated by the Company. The Company's lithotripters performed
approximately 31,000, or approximately 17%, of the estimated 180,000
lithotripsy procedures performed in the United States in 1995. Approximately
1,850 urologists utilized the Company's lithotripters in 1995, representing
approximately 25% of the estimated 7,300 active urologists in the United
States. Of these physicians, approximately 900 (12% of the U.S. total) also own
minority interests in certain lithotripters of the Company. In addition,
management believes that the Company has collected the United States' largest
lithotripsy treatment database, containing detailed treatment and outcomes data
on over 100,000 lithotripsy procedures, which the Company and its associated
urologists utilize in seeking to provide the highest quality of lithotripsy
services as efficiently as possible.
The Company began providing lithotripsy services with an acquisition in 1992
and has grown rapidly since that time through a total of ten acquisitions with
interests in 55 lithotripters. Forty-seven of the Company's 55 lithotripsy
operations were formed by the Company's current directors and managers prior to
the Company's acquisition of such operations. Since 1992, the Company has
substantially divested its non-lithotripsy businesses. Lithotripsy revenues
have grown from no revenues in 1991 to $22.2 million in 1995. Total revenues
and income before extraordinary items (including the divested businesses) grew
over the same period from $12.7 million to $23.2 million and from $200,000 to
$7.2 million, respectively.
The Company provides lithotripsy services at approximately 400 hospitals and
surgery centers in 31 states. The Company provides non-medical services related
to the operation of the lithotripters, including scheduling, staffing,
training, quality assurance, maintenance, regulatory compliance and contracting
with payors, hospitals and surgery centers, while medical care is rendered by
urologists utilizing the lithotripters. In addition, the Company has over 200
contracts with managed care organizations.
The market for lithotripsy services remains highly fragmented. While the
Company operates approximately 15% of the estimated 350 lithotripters currently
operated in the United States, the Company believes that the next five largest
lithotripsy service companies collectively account for less than 20% of the
country's lithotripters, and that no other lithotripsy service company operates
more than 2%. In addition, the Company does not currently serve 52 of the 100
largest Metropolitan Statistical Areas ("MSAs") in the United States.
The Company's strategy to continue its growth is as follows:
. Continue to grow through acquisitions.
. Form operations to serve new markets and expand operations in existing
markets.
. Employ its proprietary outcomes database to optimize quality and
efficiency.
. Develop strategic alliances with vertically integrated networks of
providers.
. Develop new business opportunities in partnership with urologists.
The Company is a Delaware corporation. Its principal executive offices are
located at 1301 Capital of Texas Highway, Austin, Texas 78746, and its
telephone number is (512) 328-2892.
3
<PAGE>
RECENT EVENTS
In April 1996, the Company acquired Lithotripters, Inc. (the "Litho
Acquisition") for $86.0 million, consisting of $70.0 million in cash and 1.6
million shares of restricted Common Stock. Lithotripters, Inc. operates 31
lithotripters serving approximately 200 locations in 19 states. The Litho
Acquisition provided the Company with complementary geographic coverage as well
as additional expertise in forming and managing lithotripsy operations. Senior
management of Lithotripters, Inc., most of whom have remained associated with
the Company, formed all of Lithotripters, Inc.'s operations. The President of
Lithotripters, Inc. at the time of the acquisition, Dr. Joseph Jenkins, became
the President and Chief Executive Officer of the Company.
In October 1995, the Company acquired Sun Medical Technologies, Inc. ("Sun")
for an aggregate purchase price of approximately $16.2 million. Sun operates
eight lithotripters serving approximately 70 locations in six states. This
acquisition also extended the Company's service area and provided the Company
with experienced managers.
RISK FACTORS
Prospective investors should carefully consider the factors discussed in
detail elsewhere in this Prospectus under the caption "Risk Factors."
Certain statements contained herein are not based on historical facts, but
are forward-looking statements that are based upon numerous assumptions about
future conditions that could prove not to be accurate. Actual events,
transactions and results may materially differ from the anticipated events,
transactions or results described in such statements. The Company's ability to
consummate such transactions and achieve such events or results is subject to
certain risks and uncertainties. Such risks and uncertainties include, but are
not limited to, the existence of demand for and acceptance of the Company's
services, the availability of appropriate candidates for acquisition by the
Company, regulatory approvals, economic conditions, the impact of competition
and pricing, results of financing efforts and other factors affecting the
Company's business that are beyond the Company's control, including but not
limited to the matters described in "Risk Factors." See "Risk Factors."
THE OFFERING
<TABLE>
<S> <C>
Common Stock offered by the Selling Stockholders .......... 2,265,240 shares
=================
Common Stock outstanding after the offering(1)............. 19,070,600 shares
=================
Nasdaq symbol ............................................. PMSI
</TABLE>
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(1) Based on the number of shares outstanding as of September 19, 1996.
Excludes options outstanding on September 19, 1996, to purchase up to
921,167 shares of Common Stock at a weighted average exercise price of
$7.65 per share. Also excludes 338,500 shares of Common Stock available for
issuance under the Prime Medical Services, Inc. 1993 Stock Option Plan (the
"Option Plan"). See "Management--Option Plan."
4
<PAGE>
RISK FACTORS
Prospective investors should carefully consider the following factors,
together with the other information set forth in this Prospectus, in
evaluating an investment in shares of Common Stock of the Company.
ACQUISITION GROWTH STRATEGY
The Company has followed an aggressive acquisition strategy since 1992 that
has resulted in rapid growth in its business. This acquisition strategy is
dependent on the continued availability of suitable acquisition candidates and
subjects the Company to the risks inherent in assessing acquisition candidates
and integrating and managing the operations of acquired companies. The
Company's growth is also expected to place significant demands on the
Company's financial and management resources. Moreover, the Federal Trade
Commission ("FTC") initiated an investigation in 1991 to determine whether the
limited partnerships in which Lithotripters, Inc. is the general partner posed
an unreasonable threat to competition in the healthcare field. While the FTC
has notified the Company that the investigation has been closed, and no action
was taken, the FTC or another governmental authority charged with the
enforcement of federal or state antitrust laws or a private litigant might,
due to the Company's size and market share, seek to (i) restrict the Company's
future growth by prohibiting or restricting the acquisition of additional
lithotripsy facilities or (ii) require that the Company divest of certain of
its lithotripsy operations. Consequently, there can be no assurance that the
Company will be able to continue to grow or that its growth strategy will
prove successful. Moreover, in view of the Company's significant recent
growth, the Company's historical financial performance may not be indicative
of its future performance. The Company's failure to implement its growth
strategy successfully could adversely affect the Company. See "Business--
Strategy."
OPERATIONS SUBJECT TO GOVERNMENT REGULATION
The Company is subject to extensive regulation by both the federal and state
governments. The Company has agreed to purchase the partnership interests of
certain affiliated physician-investors in the event of changes in the law that
prohibit, or the occurrence of enforcement actions that challenge, the
ownership by physician-investors of an interest in a lithotripsy treatment
facility. These mandatory purchase obligations generally require the payment
by the Company of a multiple of earnings similar to multiples used by the
Company in pricing the original acquisition of such interests. To the extent
the Company is required to purchase such interests, such purchases might cause
a default under the terms of the Company's Senior Credit Facility (the "Senior
Credit Facility"), impair the Company's relationship with urologists and
otherwise have a material adverse impact on the Company. While the Company
believes that it is in compliance in all material respects with all applicable
laws that govern the Company's business and operations, these laws are complex
and have been broadly construed by courts and enforcement agencies.
Accordingly, there can be no assurance that the Company will not be required
to change its business practices or its investment relationships with
urologists or that the Company will not experience a material adverse effect
as a result of any challenge made by a federal or state regulatory agency in
connection with its investigation of such practices or relationships. See
"Business--Strategy" and "--Lithotripsy Operations."
UNCERTAINTIES RELATED TO CHANGING HEALTHCARE ENVIRONMENT
The healthcare industry has experienced substantial changes in recent years.
Although managed care has yet to become a major factor in the delivery of
lithotripsy services, the Company anticipates that managed care programs,
including capitation plans, may play an increasing role in the delivery of
lithotripsy services and that competition in the lithotripsy services industry
may shift from individual practitioners to health maintenance organizations
and other significant providers of managed care. No assurance can be given
that the Company will prosper in the changing healthcare environment. See
"Business--Strategy."
In addition, the hospitals and surgery centers to which the Company provides
services are reimbursed for lithotripsy services under various federal and
state programs, including Medicare, Medicaid and Champus, primarily at fixed
rates. These programs are subject to statutory and regulatory changes,
administrative rulings,
5
<PAGE>
interpretations of policy and governmental funding restrictions, all of which
may have the effect of decreasing program payments, increasing costs or
requiring the Company to modify the way in which it operates its business. The
Company is not able to predict whether changes will be made in the rates
prescribed by these governmental programs. Such changes could have a material
adverse effect on the Company. Furthermore, increases in operating costs that
are subject to inflation, such as labor and supply costs, without a
compensating increase in prescribed rates may adversely affect the Company.
There have been numerous initiatives at the federal and state levels for
comprehensive reforms affecting the payment for and availability of healthcare
services, including services provided by the Company. The Company believes
that such initiatives may continue in the future. Aspects of certain of these
reforms as proposed in the past could, if adopted, adversely affect the
Company.
RISKS INHERENT IN THE PROVISION OF MEDICAL SERVICES
The urologists who use the Company's lithotripters are involved in the
delivery of healthcare services to the public and, therefore, are exposed to
the risk of liability claims. Since the Company typically operates the
lithotripters used by the urologists and provides lithotripsy nurses and
radiology technicians to assist the urologists in the use of lithotripters,
the Company may also be named in a claim against a urologist in connection
with performing a lithotripsy procedure at the Company's facilities. Claims of
this nature, if successful, could result in substantial damage awards to the
claimants which may exceed the limits of any applicable insurance coverage.
While the Company maintains professional liability insurance, there can be no
assurance that any such claims against the Company will not exceed the amount
of insurance maintained. Successful malpractice claims asserted against the
Company, to the extent not covered by the Company's liability insurance, could
adversely affect the Company. See "Business--Lithotripsy Operations."
COMPETITION
The lithotripsy services industry is fragmented and highly competitive in
many respects. Moreover, certain of the Company's current and potential
competitors have substantially greater financial resources than the Company
and may compete with the Company for acquisitions and development of
operations in markets targeted by the Company. The Company has experienced
competition in the acquisition of existing lithotripsy facilities and the
development of relationships with treating physicians. The Company has also
experienced competition from hospitals or treating physicians who have opened
their own lithotripsy facilities. Such competition could intensify in the
event of a decrease in the purchase price of lithotripters or if the supply of
new or used lithotripters increases over time. Another significant provider of
lithotripsy services is also a manufacturer of lithotripsy equipment, which
may create different incentives for such provider in pricing lithotripsy
services. Moreover, while the Company believes that lithotripsy has emerged as
the superior treatment for kidney stone disease, the Company competes with
alternative kidney stone disease treatments. See "Business--Industry Overview"
and "--Competition."
TECHNOLOGICAL CHANGES
The equipment and software utilized by the Company in the provision of its
lithotripsy services have been characterized by technological changes.
Although the Company believes that its equipment and software can generally be
upgraded as necessary to remain technologically current, the development of
new technologies or refinements of existing ones might render the Company's
existing equipment and software technologically or economically obsolete.
Although the Company is not aware of any pending technological developments
that would be likely to materially and adversely affect its business, there
can be no assurance that such developments will not occur. There is also a
risk that the particular manufacturers of the Company's equipment may
discontinue the manufacture of such equipment or may not offer equipment and
software upgrades necessary to keep such equipment technologically current.
Even if such upgrades are available, there can be no assurance that the
Company will have the financial resources to acquire them. See "Business--
Industry Overview" and "--Lithotripsy Operations."
6
<PAGE>
DEPENDENCE ON KEY PERSONNEL
The Company is dependent upon the services and management experience of the
Company's executive officers, including Kenneth S. Shifrin, Chairman of the
Board, and Joseph Jenkins, M.D., President and Chief Executive Officer of the
Company. The Company does not carry key-man life insurance in material amounts
on any of its officers. The loss of, or the failure to attract, qualified
employees could adversely affect the Company. In addition, the Company's
continued growth depends upon its ability to attract and retain skilled
employees, particularly highly skilled lithotripsy nurses and radiology
technicians. See "Management."
DEPENDENCE ON PHYSICIANS
The Company depends upon the treatment of patients by urologists practicing
in the communities served by the Company's lithotripters. In some cases, the
Company's affiliated physician-investors have entered into noncompetition
agreements with the Company under which they have agreed to refrain from
owning interests in competing facilities for various periods. While the
Company has generally experienced compliance with the terms of these
noncompetition agreements, such enforceability is generally a matter of state
law, varies from state-to-state and is evolving over time. Additionally, in
some cases the Company may be forced to purchase the minority ownership
interests of one or more affiliated urologist-investors under mandatory
repurchase arrangements existing between the Company and such urologist-
investors. The loss of relationships with key treating urologists at a
particular facility, whether due to retirement, relocation, dissatisfaction
with the Company's services, regulatory referral prohibitions or other
factors, could adversely affect the Company. See "--Operations Subject to
Government Regulation."
ANTITAKEOVER PROVISIONS
The Company's Rights Agreement (which entitles the Company's stockholders,
other than certain acquiring persons, under the circumstances described
therein, to purchase Common Stock or the common stock of certain acquiring
persons at prices equal to one-half of the fair market value thereof), the
Company's Certificate of Incorporation and certain provisions of the Delaware
General Corporation Law include several provisions that may have the effect of
deterring hostile takeovers, delaying or preventing changes in control or
changes in management of the Company, or limiting the ability of stockholders
to approve transactions that they may deem to be in their best interests.
SHARES ELIGIBLE FOR FUTURE SALE; REGISTRATION RIGHTS
Sales of substantial amounts of Common Stock in the public market or the
perception that such sales might occur could adversely affect the prevailing
market price for the Common Stock and the ability of the Company to raise
equity capital. The Company cannot predict the effect, if any, that sales of
shares of its Common Stock, or the availability of shares for future sale,
will have on the market price of the Common Stock prevailing from time to
time. Such sales may also make it more difficult for the Company to sell
equity securities or equity-related securities at a time and price that it
deems appropriate. Certain stockholders of the Company, including the
recipients of Common Stock in the Litho Acquisition, are also entitled to
registration rights. See "Summary --Recent Events."
DIVIDEND POLICY AND RESTRICTIONS
The Company does not intend to pay cash dividends on the Common Stock in the
foreseeable future and anticipates that future earnings will be retained to
finance future operations and expansion. The Senior Credit Facility also
prohibits the Company from paying dividends and making other distributions on
its Common Stock. See "Price Range of Common Stock" and "Dividend Policy."
7
<PAGE>
USE OF PROCEEDS
The Company will not receive any of the proceeds from the sale by the
Selling Stockholders of the Shares offered hereby. All of the filing fees and
the expenses of this Registration Statement will be borne in full by the
Company, other than any fees or expenses of counsel to the Selling
Stockholders, transfer taxes, if any, and any underwriting fees, discounts and
commissions relating to this offering.
PRICE RANGE OF COMMON STOCK
The Company's Common Stock is quoted on The Nasdaq National Market under the
symbol "PMSI." The following table sets forth, for the periods indicated, the
high and low sale prices per share for the Common Stock as reported on The
Nasdaq National Market.
<TABLE>
<CAPTION>
HIGH LOW
---- ---
<S> <C> <C>
1994
First Quarter.............................................. $ 3.00 $ 2.50
Second Quarter............................................. 3.13 2.38
Third Quarter.............................................. 3.38 2.38
Fourth Quarter............................................. 3.63 2.88
1995
First Quarter.............................................. 4.13 3.25
Second Quarter............................................. 5.00 3.38
Third Quarter.............................................. 4.88 4.00
Fourth Quarter............................................. 9.25 4.63
1996
First Quarter.............................................. 13.50 6.50
Second Quarter............................................. 21.00 12.50
Third Quarter (to September 26, 1996)...................... 17.50 10.75
</TABLE>
The last reported sale price of the Common Stock as reported on The Nasdaq
National Market on September 26, 1996 was $14.50. At September 26, 1996, there
were approximately 916 holders of record of the Common Stock.
DIVIDEND POLICY
The Company currently anticipates that all earnings will be retained for the
development and expansion of its business and therefore does not anticipate
paying dividends on its Common Stock in the foreseeable future. In addition,
the Company's Senior Credit Facility contains provisions that prohibit the
Company from paying dividends on its Common Stock.
8
<PAGE>
CAPITALIZATION
The following table sets forth the capitalization of the Company as of June
30, 1996:
<TABLE>
<CAPTION>
AS OF JUNE 30, 1996
-------------------
(IN THOUSANDS)
<S> <C>
Short-term debt and current maturities of long-term debt... $ 9,930
=========
Long-term debt, net of current maturities.................. 78,642
Minority interest.......................................... 18,406
Stockholders' equity: 40,000,000 shares authorized;
19,070,600 shares issued and outstanding.................. 191
Additional paid-in capital................................. 84,090
Accumulated deficit........................................ (14,443)
---------
Total stockholders' equity................................. 69,838
---------
Total capitalization....................................... $ 166,886
=========
</TABLE>
9
<PAGE>
BUSINESS
GENERAL
The Company is the largest and one of the fastest growing providers of
lithotripsy services in the United States. Lithotripsy is a non-invasive
procedure for the treatment of kidney stones, typically performed on an
outpatient basis, that eliminates the need for lengthy hospital stays and
extensive recovery periods associated with surgery. The Company has an
economic interest in 49 mobile and six fixed site lithotripters, all but two
of which are operated by the Company. The Company's lithotripters performed
approximately 31,000, or approximately 17%, of the estimated 180,000
lithotripsy procedures performed in the United States in 1995. Approximately
1,850 urologists utilized the Company's lithotripters in 1995, representing
approximately 25% of the estimated 7,300 active urologists in the United
States. Of these physicians, approximately 900 (12% of the U.S. total) also
own minority interests in certain lithotripters of the Company. In addition,
management believes that the Company has collected the United States' largest
lithotripsy treatment database, containing detailed treatment and outcomes
data on over 100,000 lithotripsy procedures, which the Company and its
associated urologists utilize in seeking to provide the highest quality of
lithotripsy services as efficiently as possible.
The Company began providing lithotripsy services with an acquisition in 1992
and has grown rapidly since that time through a total of ten acquisitions with
interests in 55 lithotripters. Forty-seven of the Company's 55 lithotripsy
operations were formed by the Company's current directors and managers prior
to the Company's acquisition of such operations. Since 1992, the Company has
substantially divested its non-lithotripsy businesses. Lithotripsy revenues
have grown from no revenues in 1991 to $22.2 million in 1995. Total revenues
and income before extraordinary items (including the divested businesses) grew
over the same period from $12.7 million to $23.2 million and from $200,000 to
$7.2 million, respectively.
The Company provides lithotripsy services at approximately 400 hospitals and
surgery centers in 31 states. The Company provides non-medical services
related to the operation of the lithotripters, including scheduling, staffing,
training, quality assurance, maintenance, regulatory compliance and
contracting with payors, hospitals and surgery centers, while medical care is
rendered by urologists utilizing the lithotripters. In addition, the Company
has over 200 contracts with managed care organizations.
The market for lithotripsy services remains highly fragmented. While the
Company operates approximately 15% of the estimated 350 lithotripters
currently operated in the United States, the Company believes that the next
five largest lithotripsy service companies collectively account for less than
20% of the country's lithotripters, and that no other lithotripsy service
company operates more than 2%. In addition, the Company does not currently
serve 52 of the 100 largest MSAs in the United States.
INDUSTRY OVERVIEW
Kidney Stone Disease
The exact cause of kidney stone formation is unclear, although it has been
attributed to genetics, diet, climate, metabolism and certain medications.
While certain life-style and diet modifications may decrease the incidence of
kidney stones, there is no known preventative cure in the vast majority of
cases. Approximately 25% of all kidney stones do not pass spontaneously and
therefore require medical or surgical treatment. These patients suffer from
extreme pain and, without treatment, may develop serious adverse health
consequences that, in extreme cases, may lead to renal failure, loss of a
kidney or even death. However, through the use of pain medication and other
techniques, treatment can be postponed in nearly all cases for several weeks
without adverse consequences.
Kidney stone disease is most prevalent in the southern United States. Men
are afflicted with kidney stones more than twice as frequently as women, with
the highest incidence occurring in men 45 to 64 years of age.
10
<PAGE>
Treatment Methods
A number of kidney stone treatments are used by urologists ranging from
non-invasive procedures, such as drug therapy or lithotripsy, to invasive
procedures, such as endoscopic extraction or open surgery. The type of
treatment a urologist chooses depends on a number of factors, such as the size
and chemical make-up of the stone, its location in the urinary system and
whether the stone is contributing to other urinary complications such as
blockage or infection.
Certain types of less common kidney stones may be dissolved by appropriate
drugs to allow normal passage from the urinary system. Stones located in
certain areas of the urinary tract may be extracted endoscopically. These
procedures commonly require general or local anesthesia and can injure the
involved areas of the urinary tract. Frequently, kidney stones are located
where they are not accessible by an endoscopic procedure. Prior to the
development of lithotripsy, stones lodged in the upper urinary tract were
often treated by open surgery or percutaneous stone removal, both major
operations requiring an incision to gain access to the stone. After such
procedures, the patient typically spends several days in the hospital followed
by a convalescence period of three to six weeks. As the technology for
treating kidney stones has improved, there has been a shift from more
expensive and complicated invasive procedures to safer, more cost efficient
and less painful non-invasive procedures, such as extracorporeal shock wave
lithotripsy ("ESL"). The overwhelming majority of all kidney stones that
require treatment are treated with ESL, eliminating the need for invasive
surgical procedures and associated lengthy hospital stays and recovery
periods.
Extracorporeal Shock Wave Lithotripsy
General. ESL involves equipment (a lithotripter) that uses shock waves to
disintegrate kidney stones non-invasively. Stone fragments are then passed
with the urine. The ESL lithotripter has dramatically changed the course of
kidney stone disease treatment. ESL is normally performed on an outpatient
basis, often without general anesthesia. Recovery times are generally only a
few hours, and most patients can return to work the next day.
There are three types of ESL technology: electromagnetic, spark-gap and
piezoelectric. The Company has 36 electromagnetic machines, 18 spark-gap
machines and only one piezoelectric machine.
Electromagnetic Technology. Most new lithotripters utilize an
electromagnetic shock wave component that eliminates the need for disposable
electrodes. The use of lithotripters employing electromagnetic technology
allows for more precise focusing of shock wave energy and more predictable
energy delivery, which eliminates the need for anesthesia in most cases.
Utilization of systems employing electromagnetic technology usually results in
fragmentation of the kidney stone in less than 90 minutes.
Spark Gap Technology. With these lithotripsy systems, shock waves generated
by a disposable high-voltage spark electrode are focused on a kidney stone.
Utilization of systems employing spark gap technology usually results in
fragmentation of the kidney stone in less than 60 minutes. The use of spark-
gap technology often requires the administration of sedatives or intravenous
anesthesia care and in some cases requires general anesthesia.
Piezoelectric Technology. Lithotripters applying piezoelectric technology
use a linear array of ceramic elements, all focused at one point. There are
only a few lithotripters utilizing piezoelectric technology operating in the
United States.
STRATEGY
The Company's objective is to continue to grow and strengthen its position
as the leading provider of lithotripsy services in the United States. The
Company has consistently pursued an aggressive growth policy since it entered
the lithotripsy business in 1992 and believes its acquisition experience and
ability to leverage off of its existing infrastructure will allow it to
continue to recognize and take advantage of future acquisition opportunities.
Furthermore, management believes that the Company's reputation and strong
relationships with
11
<PAGE>
physicians, equipment manufacturers, managed care organizations, hospital
groups and integrated provider networks have strategically positioned it to
grow through the introduction of new services and the entry into new markets.
The Company's strategy to accomplish its growth objective is as follows:
Continue to Grow Through Acquisitions
The Company intends to continue to aggressively pursue acquisitions of both
large and small lithotripsy service providers. Since October 1995 the Company
has acquired two of the three other top lithotripsy service companies in the
United States, and since 1992 the Company has made ten acquisitions
representing a total of 55 lithotripters. These acquisitions ranged in size
from one to 31 lithotripters each. The Company believes that the fragmented
nature of the lithotripsy industry, combined with operational challenges
created by increasing regulatory and business complexities, will provide
significant opportunities to acquire additional service providers at
attractive prices. Where appropriate, the Company will seek to increase its
ownership interest in current lithotripsy operations by purchasing interests
of urologists and other investors who desire to divest due to retirement,
concerns over regulatory issues or a desire to realize a return on their
investment.
Form Operations to Serve New Markets and Expand Operations in Existing
Markets
The Company intends to leverage its management and other resources by
forming additional partnerships or subsidiaries to serve new markets. Forty-
seven of the Company's 55 lithotripsy operations were formed by current
directors and managers of the Company prior to the acquisition of such
operations by the Company. Future expansion opportunities exist as 52 of the
largest 100 MSAs in the United States are not currently served by the Company.
The Company believes that it can attract urologist-investors by appealing to
an increasing number of physicians who seek to align themselves with larger,
professionally managed organizations with favorable, established reputations
in the industry. The Company also believes that it can increase the number of
procedures performed per location by increasing its marketing efforts directed
towards urologists and by upgrading existing equipment. For example, the
Company recently modified five of its older spark-gap lithotripters to improve
their imaging systems and to allow for the treatment of distal ureteral
stones. These improvements, which cost approximately $70,000 per lithotripter,
are expected to improve efficiency and increase patient volumes for such
lithotripters. The Company plans to make these same improvements on five of
the remaining spark-gap lithotripters. In addition, the Company also recently
modified seven of its electromagnetic lithotripters which results in a higher
pressure shock wave that significantly reduces procedure time without any
additional need for anesthesia. These improvements, which cost approximately
$53,000 per lithotripter, are expected to improve efficiency and increase
patient volumes for such lithotripters. The Company plans to make these same
improvements on 23 of the remaining electromagnetic lithotripters. The Company
intends to continue to explore other ways to upgrade and modify equipment to
improve efficiency and increase patient volumes. The Company will also
evaluate opportunities to add lithotripters to its existing operations to
serve more locations.
Employ its Proprietary Outcomes Database to Optimize Quality and Efficiency
The Company intends to utilize its proprietary outcomes database and
information system to enhance its ability to furnish the highest quality of
lithotripsy service on an efficient basis. In addition, the Company furnishes
its database information to urologists utilizing the Company's facilities to
assist them in improving the quality and efficiency of patient care. This
information also enables the Company to negotiate more effectively with
hospitals and third-party payors. Moreover, the Company is able to provide
clinical and regulatory information that helps establish strong relationships
with referring physicians, hospitals and surgery centers.
Develop Strategic Alliances with Vertically Integrated Networks of Providers
The Company is positioning its operations to compete successfully within
emerging models of healthcare payment and delivery systems by actively
developing alliances with vertically integrated networks of hospitals and
other healthcare providers and third-party payors, including managed care
organizations. By combining these
12
<PAGE>
alliances with the Company's extensive management experience, relationships
with urologists and proprietary database, the Company believes that it can
cost-effectively develop risk-sharing programs covering the full range of
costs associated with lithotripsy treatment.
Develop New Business Opportunities in Partnership with Urologists
The Company currently provides services to approximately 25% of the
estimated 7,300 active urologists in the United States and seeks to maintain
close relationships with the medical community through its network of local
physician advisory boards. The Company believes that it can utilize these
relationships and its management expertise to develop new opportunities
resulting from technological and other advances in affiliated urology
businesses, including new therapeutic services relating to prostate disease
and other urological disorders. The Company also is evaluating business
opportunities involving physician practice management services. Management
believes that the skills and expertise required to manage its lithotripsy
business are very similar to those required for the management of physician
practices.
LITHOTRIPSY OPERATIONS
The Company manages the operation of 53 of its 55 lithotripters. All of its
lithotripters are operated in connection with hospitals or surgery centers.
The Company operates its lithotripters as the general partner of a limited
partnership or through a subsidiary. The Company provides a full range of
management and other non-medical support services to the lithotripsy
operations, while medical care is provided by urologists utilizing the
facilities and certain medical support services are provided by the hospital
or surgery center. Urologists are investors in 43 of the 55 operations.
Management Services
In general, the Company provides turn-key management services to its
lithotripsy operations. Key services performed include the following:
. routing and scheduling of mobile lithotripters;
. centralized patient scheduling;
. pre-procedure insurance verification and post procedure billing and
collection;
. arranging for the hiring, training and continuing education of
lithotripsy nurses and radiology technicians;
. negotiating contracts with hospitals, surgery centers and all types of
payors;
. monitoring regulatory, legal and legislative issues affecting operations
and arranging Certificate of Need preparation, testimony and support;
. performing satisfaction surveys with hospitals, physicians and patients;
. providing patient education materials;
. arranging for consultation services from leading lithotripsy experts to
treating physicians via a toll free telephone number;
. as necessary, providing for the training and certification of urologists
in the use of lithotripters;
. maintaining the Company's proprietary outcomes database and information
system; and
. providing quality assurance, utilization review and continuing medical
education for hospitals and physicians.
The breadth of these services varies throughout the Company's operations.
The Company continues to evaluate opportunities to expand the provision of
such services throughout its system.
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<PAGE>
Lithotripsy Facilities
There are three types of ESL technology: electromagnetic, spark-gap and
piezoelectric. The Company has 36 electromagnetic machines, 18 spark-gap
machines and only one piezoelectric machine. The Company's lithotripters range
in age from one to 11 years. With its continued ongoing maintenance program,
all parts on the machines can be repaired or replaced as needed and are
readily available. In addition, the Company continues to upgrade its
lithotripters with technological advances as appropriate. As a result, the
Company does not anticipate that any of its existing machines will need to be
replaced or will become obsolete in the foreseeable future.
Mobile Lithotripsy. Of the Company's 55 lithotripters, 49 are mobile units
mounted in tractor-trailers or self-contained coaches serving locations in 31
states. The typical cost of a mobile lithotripter (including the coach) can
range from $400,000 (used) to $1,800,000 (new). Mobile lithotripsy services
are widely accepted and are utilized by most physicians, hospitals and
patients. The increased convenience of bringing the mobile unit to the
physician and patient has greatly enhanced the use of lithotripsy over
alternative invasive treatment methods. In addition, few hospitals in the
United States have the patient volume to justify the purchase and operation of
an in-house system. Typically, a mobile unit will have a scheduled route of
stops, visiting each hospital or surgery center from one to eight times per
month. Most lithotripsy patients can delay the need for immediate treatment
through the use of pain medication and can be scheduled to have their
procedure in a timely manner without risk. In some locations, the Company has
developed a flexible schedule that allows units to move between locations more
than once per day, providing for greater flexibility to accommodate both
physicians and patients.
Fixed Site Lithotripsy. The Company also operates six fixed site
lithotripters in five states. All of the Company's fixed lithotripsy units are
located and operated in conjunction with a hospital or surgery center. Most of
these locations are in major metropolitan markets where the population can
support such an operation. Fixed site lithotripters generally cannot be
economically justified in other locations.
Integration of Acquisitions. The Company's growth strategy has focused on
the acquisition of profitable and well managed lithotripsy operations. Because
its operations are spread over 31 states and given the importance of
maintaining positive relationships with local urologists and hospitals, the
Company generally retains local management and related functions where no
clear economies of scale exist. However, certain functions, such as managed
care contracting, vendor relations, maintenance and supply contracting, and
accounting, have been centralized because obvious benefits have been
identified.
PROPRIETARY OUTCOMES DATABASE
The Company believes that it maintains the most comprehensive quality
outcomes database and information system in the lithotripsy services industry.
The Company has detailed information on over 100,000 procedures covering
patient demographic information and medical condition prior to treatment, the
clinical and technical parameters of the procedure and resulting outcomes.
Information is collected before, during and up to three months after the
procedure through internal data collection by doctors, nurses and technicians
and through patient questionnaires.
This information also enables the Company to negotiate more effectively with
hospitals and third-party payors. In addition, the Company is able to provide
clinical and regulatory information that strengthens relationships with
referring physicians, hospitals and surgery centers.
Because consistency is a key factor in organizing and evaluating this data,
it is collected at a centralized location which disperses results to
management and affiliated urologists on a regular basis. Currently, the
Company has procedures in place to collect all such data on a consistent basis
for 31 of its lithotripters and plans to expand such data collection to
additional lithotripters.
14
<PAGE>
PHYSICIAN RELATIONS AND MARKETING
Approximately 900 physicians have invested in 43 of the Company's 55
lithotripsy operations. In addition, approximately 950 other urologists
utilized the Company's lithotripters in 1995. The Company markets its services
to urologists by providing (i) top quality, well-maintained facilities and
equipment, (ii) well-trained lithotripsy nurses and radiology technicians,
(iii) professional management and a full range of support services, and (iv)
convenient scheduling, all of which enable the urologist to focus on the
practice of medicine. The Company believes that its reputation and management
experience, as well as "word-of-mouth" marketing from urologists currently
utilizing its facilities, also play a significant role in attracting
urologists.
In all of its operations, the Company seeks to maintain strong relationships
with its referring physicians. In most locations, the Company has established
local physician advisory boards that meet periodically to discuss the
provision and quality of services, financial performance and other factors
with management that may impact operations. The Company has also established a
National Advisory Board comprised of leading urologists to assist in
establishing quality factors relating to services, to evaluate new
technological advances and to assist the Company in evaluating other potential
opportunities that would complement its lithotripsy operations. Members of the
National Advisory Board are geographically diverse, which assists the Company
in keeping up to date with regional or local trends in the healthcare market.
CONTRACTS FOR LITHOTRIPSY SERVICES
The Company contracts for its lithotripsy services with hospitals and
surgery centers for utilization by urologists practicing at these facilities.
The Company markets to such facilities by providing well-maintained and
conveniently scheduled equipment for the use of the facility's doctors and
patients and by providing a full range of administrative and support services
that enable the facility to provide higher quality and more efficient care.
The Company believes that its reputation and management experience, together
with input from urologists who wish to utilize the Company's facilities, also
provide significant incentives for hospitals and surgery centers to contract
with the Company.
The Company's service agreements, which generally have terms of one to five
years, provide for the three basic types of billing arrangements described
below. In all instances, urologists who perform lithotripsy procedures bill
separately for their professional fees.
Hospital Billing Contracts
Under a hospital billing contract, the Company bills and collects from the
hospital or surgery center for lithotripsy services provided by the Company to
patients. The rates charged under these arrangements vary and may be based on
the number of procedures performed in a specific period or may be based on
different rates depending on whether the patient is covered by private
insurance or government payment plans or is a private pay patient. The
hospital or surgery center is responsible for billing and collecting from the
patient or third-party payor directly.
True-up Contract
Under a true-up contract, the Company bills and collects a negotiated fee
from the hospital or surgery center, which is then retrospectively reviewed
and adjusted based on the payments received by the hospital or surgery center
for the corresponding treatments. The hospital or surgery center is
responsible for billing and collecting from the patient or third-party payor
directly, which forms the basis for any true-up.
15
<PAGE>
Direct Billing Contracts
Under a direct billing contract, the Company bills the patient or the
patient's third-party payor a combined fee, which includes all aspects of the
procedure, excluding the treating urologist's fee. The Company then pays the
hospital or surgery center a percentage of the collected amount for its
services. Contracts of this type are advantageous to the Company because they
provide it with considerable market feedback concerning reimbursement rates,
which the Company utilizes when negotiating with hospitals, surgery centers
and managed care organizations.
COMPETITION
The market to provide lithotripsy services is highly fragmented and
competitive. The Company competes with other private facilities and medical
centers that offer lithotripsy services and with hospitals, clinics and
individual medical practitioners that offer conventional medical treatment for
kidney stones. Certain of the Company's current and potential competitors have
substantially greater financial resources than the Company and may compete
with the Company for acquisitions and development of operations in markets
targeted by the Company. Another significant provider of lithotripsy services
is also a manufacturer of lithotripsy equipment, which may create different
incentives for such provider in pricing lithotripsy services.
OTHER LINES OF BUSINESS
Prior to entering the lithotripsy business, the Company's primary business
activities involved the ownership and management of diagnostic imaging centers
and the provision of non-medical management services to cardiac rehabilitation
centers. In 1994, the Company completed its exit from the diagnostic imaging
business. The Company has also substantially reduced its cardiac
rehabilitation business.
PROPERTIES
The Company leases approximately 2,800 square feet of office space for its
executive offices in Austin, Texas, under a lease expiring in 1997. The
Company also leases approximately 5,700 square feet of office space in
Campbell, California, under a lease expiring in 1997 and approximately 11,000
square feet of office space in Fayetteville, North Carolina, under two leases
expiring in 2001. The Company believes its facilities are adequate for its
reasonably foreseeable needs.
EMPLOYEES
The Company has approximately 275 employees. None of these employees are
subject to a collective bargaining agreement and the Company has experienced
no work stoppages. The Company believes that its employee relations are good.
16
<PAGE>
MANAGEMENT
DIRECTORS AND EXECUTIVE OFFICERS
The following table sets forth certain information regarding the Company's
directors and executive officers including their respective ages, as of
September 15, 1996.
<TABLE>
<CAPTION>
NAME AGE POSITION(S)
---- --- ----------
<C> <C> <S>
Kenneth S. Shifrin.......... 47 Chairman of the Board
President, Chief Executive Officer and
Joseph Jenkins, M.D., J.D. . 49 Director
Dan Myers, M.D. ............ 42 Sr. Vice President--Development
Michael Madler.............. 37 Sr. Vice President--Operations
Chief Financial Officer, Vice President--
Cheryl Williams............. 45 Finance and Secretary
W. Alan Terry............... 37 Treasurer
Stan D. Johnson............. 42 Vice President
Paul R. Butrus.............. 55 Director
William E. Foree, M.D. ..... 64 Director
Irwin Katz.................. 77 Director
John McEntire............... 34 Director
William A. Searles.......... 53 Director
Michael J. Spalding, M.D. .. 55 Director
</TABLE>
Mr. Shifrin has been Chairman of the Board and a director of the Company
since October 1989. In addition, Mr. Shifrin has served in various capacities
with American Physicians Service Group, Inc. ("APS") since February 1985, and
is currently Chairman of the Board and Chief Executive Officer of APS.
Dr. Jenkins has been President and Chief Executive Officer and a director of
the Company since April 1996. From May 1990 until December 1991, Dr. Jenkins
was a Vice President of Lithotripters, Inc. Since January 1992, Dr. Jenkins
has been President of Lithotripters, Inc. Dr. Jenkins is a board certified
urologist and is a founding member, the immediate past-president and currently
a director of the American Lithotripsy Society.
Dr. Myers has been Sr. Vice President--Development of the Company since
August 1996. Dr. Myers is a board certified urologist and was a Vice President
of Lithotripters, Inc. from January 1990 until it was acquired by the Company
in April 1996.
Mr. Madler has been Sr. Vice President--Operations of the Company since
August 1996. From July 1993 to August 1996, Mr. Madler was Vice President--
Operations of the Company. Previously, Mr. Madler was Vice President of
Operations of American Health Services Corp., a diagnostic imaging company,
from July 1991 to June 1993. He was employed by the Company from 1985 to 1991,
most recently as its Vice President of Operations.
Ms. Williams has been Chief Financial Officer, Vice President--Finance and
Secretary of the Company since October 1989. Ms. Williams was Controller of
Fairchild Aircraft Corporation from August 1988 to October 1989. From 1985 to
1988, Ms. Williams served as the Chief Financial Officer of APS Systems, Inc.,
a wholly-owned subsidiary of APS.
Mr. Terry has been Treasurer of the Company since August 1996. Mr. Terry was
Chief Operating Officer of Lithotripters, Inc. from June 1990 until it was
acquired by the Company in April 1996. Mr. Terry was Vice President of Finance
for May Department Stores from 1987 to 1990.
Mr. Johnson has been a Vice President of the Company and President of Sun, a
subsidiary of the Company, since November 1995. Mr. Johnson was the Chief
Financial Officer of Sun from 1990 to 1995.
Mr. Butrus has been a director of the Company since September 1992. Mr.
Butrus is also an Executive Vice President and a director of MAIC Holdings,
Inc. ("MAIC") and its wholly-owned subsidiary, Mutual Assurance, Inc. ("Mutual
Assurance"), and has served in such positions since 1991. Mutual Assurance is
a property and casualty insurance company.
17
<PAGE>
Dr. Foree has been a director of the Company since October 1993. Dr. Foree
is a board certified urologist and has been practicing medicine since 1965.
Mr. Katz has been a director of the Company since 1986. From 1952 until his
retirement in January 1987, Mr. Katz was a partner with Katz, Sapper & Miller,
Certified Public Accountants. Mr. Katz is currently a director of M-wave,
Inc., a manufacturer of Teflon-based microwave circuitry.
Mr. McEntire has been a director of the Company since September 1996. Since
August 1994, Mr. McEntire has served as Vice President of Corporate
Acquisitions of Parker and Parsley Petroleum, Inc., an oil and gas exploration
company. From 1984 to 1994, Mr. McEntire worked in the banking and investment
banking industry.
Mr. Searles has been a director of the Company since October 1989. He is an
independent business consultant and from 1981 to 1989 was associated with
Bear, Stearns & Co., Inc., an investment banking firm, most recently as an
Associate Director/Limited Partner. He currently serves as a director of APS.
Dr. Spalding has been a director of the Company since October 1993. Dr.
Spalding is a board certified urologist and has been practicing medicine since
1973. Dr. Spalding was the Chairman of Tennessee Valley Lithotripters, which
was acquired by the Company in 1993.
COMPENSATION TO DIRECTORS
The Company pays Dr. Foree, Mr. Katz, Mr. McEntire, Mr. Searles and Dr.
Spalding a monthly fee of $1,250 for serving as directors. The Company's
directors are also eligible to receive stock options under the Company's
Option Plan. The Company's directors receive reimbursement of all ordinary and
necessary expenses incurred in attending any meeting of the Board of Directors
or any committee of the Board of Directors.
COMMITTEES OF THE BOARD OF DIRECTORS
The Board of Directors of the Company has established an Audit Committee, a
Compensation Committee and a Nominating Committee. The Audit Committee's
functions include recommending to the Board of Directors the engagement of the
Company's independent public accountants, reviewing with such accountants the
plans for and the results and scope of their auditing engagement and certain
other matters relating to their services to the Company, including matters
relating to the independence of such accountants. The Compensation Committee
makes recommendations to the Board of Directors with respect to the
compensation of executive officers, including issuance of options under the
Option Plan. The Nominating Committee has primary responsibility for
nominating persons for election to the Board of Directors. Mr. Katz and Dr.
Foree serve on the Audit Committee, Dr. Spalding and Mr. Searles serve on the
Compensation Committee, and Mr. Katz, Mr. Butrus and Mr. Searles serve on the
Nominating Committee.
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<PAGE>
EXECUTIVE COMPENSATION
Summary Compensation Table
Set forth below is information concerning aggregate compensation paid during
each of the Company's last three fiscal years to the Company's Chief Executive
Officer and each of the Company's other most highly compensated executive
officers who received in excess of $100,000 in salary and bonuses during any
of the last three fiscal years (collectively, the "Named Executives").
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG-TERM
COMPENSATION
AWARDS
-------------
ANNUAL COMPENSATION
--------------------- SECURITIES
NAME AND PRINCIPAL UNDERLYING ALL OTHER
POSITION YEAR SALARY($) BONUS($)(1) OPTIONS(#)(2) COMPENSATION($)(3)
- ------------------ ---- --------- ----------- ------------- ------------------
<S> <C> <C> <C> <C> <C>
Kenneth S. Shifrin...... 1995 112,500 68,425 -- 696
Chairman of the Board 1994 112,500 28,350 -- 696
1993 112,500 65,000 -- 408
Jackie C. Majors (4).... 1995 150,000 68,425 -- 2,808
President and Chief
Executive Officer 1994 150,000 47,250 -- 2,808
1993 150,000 100,000 -- 1,800
Michael Madler.......... 1995 150,000 68,425 -- 37,081
Sr. Vice President--
Operations 1994 150,000 20,200 -- 132
1993 71,539 -- 100,000 44
Cheryl Williams......... 1995 80,736 68,425 -- 228
Chief Financial Officer
and 1994 75,385 20,200 -- 206
Vice President--Finance 1993 70,000 40,000 -- 184
</TABLE>
- --------
(1) Reflects bonuses paid during the year.
(2) Options to acquire Common Stock.
(3) Consists of life insurance premiums paid during the fiscal year. Also
reflects moving expenses reimbursed to Mr. Madler in the amount of
$36,905.
(4) Mr. Majors, who had served as President and Chief Executive Officer of the
Company since 1989, retired in January 1996. Dr. Joseph Jenkins was
elected to the Board of Directors and appointed President and Chief
Executive Officer of the Company in April 1996. Under his employment
agreement with the Company, Dr. Jenkins will receive an annual salary of
not less than $325,000 and will be entitled to receive a performance bonus
and stock options at the discretion of the Company's Board of Directors.
Options Granted During Last Fiscal Year
During 1995, the Company did not grant any options to any of the Named
Executives.
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<PAGE>
Option Exercises During 1995 and Option Values at December 31, 1995
The following table provides information related to options exercised by the
Named Executives during 1995 and the number and value of options held at
December 31, 1995. The Company does not have any outstanding stock
appreciation rights.
AGGREGATED OPTION/SAR EXERCISES IN LAST FISCAL YEAR
AND FISCAL YEAR-END OPTION VALUES
<TABLE>
<CAPTION>
NUMBER OF SECURITIES
UNDERLYING UNEXERCISED
OPTIONS/SARS AT FISCAL VALUE OF UNEXERCISED IN-THE-MONEY
SHARES YEAR-END OPTIONS/SARS AT FISCAL YEAR-END($)
ACQUIRED ON VALUE ------------------------- -----------------------------------
NAME EXERCISE(#) REALIZED($)(1) EXERCISABLE UNEXERCISABLE EXERCISABLE($) UNEXERCISABLE($)(2)
---- ----------- -------------- ----------- ------------- -------------- -------------------
<S> <C> <C> <C> <C> <C> <C>
Kenneth S. Shifrin...... 50,000 256,250 200,000 -- 1,750,000(2) --
Jackie C. Majors(3)..... -- -- 150,000 -- 1,312,500(2) --
Michael Madler.......... -- -- 40,000 60,000 215,000(2) 322,500
Cheryl Williams......... 25,000 96,875 42,000 5,000 361,250(2) 42,188
</TABLE>
- --------
(1) Calculated by subtracting the per share exercise price of the option from
the closing price for the Company's Common Stock on the date of exercise
and multiplying the difference by the number of shares of Common Stock
purchased upon the exercise of the option.
(2) Calculated by subtracting the per share exercise price of the option from
the closing price for the Company's Common Stock on December 31, 1995
($9.00) and multiplying the difference by the number of shares of Common
Stock underlying the option.
(3) Mr. Majors, who had served as President and Chief Executive Officer of the
Company since 1989, retired in January 1996. Dr. Joseph Jenkins was
elected to the Board of Directors and appointed President and Chief
Executive Officer of the Company in April 1996.
OTHER COMPENSATION AND RELATED ARRANGEMENTS
Employment Agreements
The Company has entered into employment agreements with Joseph Jenkins,
M.D., President and Chief Executive Officer of the Company, and Stan D.
Johnson, a Vice President of the Company. Dr. Jenkins is currently paid
$325,000 per year and Mr. Johnson is currently paid $165,000 per year under
such agreements. Each of these agreements provides for the payment of basic
salary amounts, performance bonuses and other customary benefits. Dr. Jenkins'
employment agreement provides for his employment through April 30, 1998, and
Mr. Johnson's employment agreement provides for his employment through
September 30, 1998. Each of the agreements entitles such individual to receive
severance payments if the Company terminates such individual's employment
without cause. In any such event, Dr. Jenkins would be entitled to receive
compensation for the remainder of the term of his employment agreement at the
highest annual rate of cash salary that he received from the Company prior to
such termination, and Mr. Johnson would be entitled to receive an amount equal
to the lesser of $165,000 or the amount of salary otherwise payable to Mr.
Johnson through September 30, 1998. Both agreements provide that the executive
may terminate his employment agreement with the Company with or without cause
by providing sixty days prior written notice to the Board of Directors.
Noncompetition Agreements
The Company has entered into noncompetition agreements with Dr. Jenkins, Mr.
Johnson, Dr. Foree, Dr. Spalding and Mr. Butrus. While the terms of such
agreements vary, they generally provide that each such person, during the
period specified in his agreement, will not own, manage or control any
business that competes with the Company and will not advise a customer or
supplier of the Company to cancel or curtail its dealings with, or influence
any employee of the Company to terminate his or her employment with, the
Company.
20
<PAGE>
Indemnity Agreements
The Company has entered into indemnity agreements with its current directors
and executive officers and with a number of persons who have been officers,
directors or key employees of the Company. The agreements generally provide
that, to the extent permitted by law, the Company must indemnify each such
person for judgments, expenses, fines, penalties and amounts paid in
settlement of claims that result from the fact that such person was an
officer, director or employee of the Company. In addition, the Company's and
certain of its subsidiaries' certificates of incorporation provides for
certain limitations on director liability. See "Description of Capital Stock--
Indemnification and Limitations on Directors' Liability."
Option Plan
The Company's Option Plan provides for the issuance of incentive and non-
qualified stock options to purchase up to 2,000,000 shares of Common Stock.
Non-qualified stock options may be granted to employees (including officers
and directors) of the Company or its affiliates or to persons performing
services for the Company or its affiliates. Incentive stock options may only
be granted to employees of the Company. The Company has granted options to
purchase 1,661,500 shares of Common Stock under the Option Plan, of which
options covering 740,333 shares of Common Stock have been exercised, and
options covering 430,333 shares of Common Stock were vested (but had not been
exercised) as of September 15, 1996.
21
<PAGE>
PRINCIPAL AND SELLING STOCKHOLDERS
The following table sets forth certain information regarding the beneficial
ownership of the Common Stock as of September 15, 1996, and as adjusted to
reflect the sale of the Common Stock offered hereby, by (i) each person known
by the Company to own beneficially more than 5% of the Company's Common Stock,
(ii) each of the Company's directors, (iii) each current director and
executive officer of the Company, (iv) all current directors and executive
officers of the Company as a group and (v) the Selling Stockholders. Although
there can be no assurance that the Selling Stockholders will sell any or all
of the Shares, the following table assumes that each of the Selling
Stockholders will sell all Shares registered herein. Unless otherwise
indicated, the Company believes that each person or entity named below has
sole voting and investment power with respect to all shares shown as
beneficially owned by such person or entity, subject to community property
laws where applicable and the information set forth in the footnotes to the
table below.
<TABLE>
<CAPTION>
BENEFICIAL BENEFICIAL
OWNERSHIP PRIOR OWNERSHIP AFTER
TO THE OFFERING NUMBER OF THE OFFERING
----------------- SHARES -----------------
NUMBER OF REGISTERED NUMBER OF
NAME SHARES PERCENT HEREIN SHARES PERCENT
- ---- --------- ------- ---------- --------- -------
<S> <C> <C> <C> <C> <C>
American Physicians Service
Group, Inc...................... 3,064,503 16.1 -- 3,064,503 16.1
1301 Capital of Texas Highway
Austin, Texas 78746
Alabama Lithotripsy Joint
Venture......................... 724,597 3.8 724,597 -- --
FSC Corporation(3).............. 352,000 1.8 352,000 -- --
Atlantic Equity Corporation(3).. 168,000 0.9 168,000 -- --
Kidney Stone Center of South
Florida, Ltd.................... 305,467 1.6 305,467 -- --
Sutter Heath/California
Healthcare System............... 226,771 1.2 226,771 -- --
Health Advantage Ventures....... 303,021 1.6 303,021 -- --
Robert L. Dale, M.D............. 33,437 0.2 33,437 -- --
Robert L. Dale, M.D., Inc....... 28,824 0.2 28,824 -- --
J. Kersten Kraft, M.D........... 30,264 0.2 30,264 -- --
J. Kersten Kraft, M.D., Inc..... 27,806 0.1 27,806 -- --
Mobile Kidney Stone Center,
Inc............................. 65,053 0.3 65,053 -- --
Paul R. Butrus.................. 217,500 1.1 -- 217,500 1.1
William E. Foree, M.D........... 215,385 1.1 -- 215,385 1.1
Joseph Jenkins, M.D............. 57,273 0.3 -- 57,273 0.3
Irwin Katz...................... 5,100 -- -- 5,100 --
Michael Madler(1)............... 28,500 0.1 -- 28,500 0.1
John McEntire................... 10,000 -- -- 10,000 --
Dan Myers, M.D.................. 139,091 0.7 -- 139,091 0.7
William A. Searles(1)(2)........ 9,133 -- -- 9,133 --
Kenneth S. Shifrin(1)(2)........ 209,900 1.1 -- 209,900 1.1
Michael J. Spalding, M.D........ 70,165 0.4 -- 70,165 0.4
Alan Terry...................... 32,727 0.2 -- 32,727 0.2
Cheryl Williams(1).............. 64,569 0.3 -- 64,569 0.3
All directors and executive
officers as a group
(13 persons)................... 1,067,343 5.5 -- 1,067,343 5.5
</TABLE>
- --------
(1) Includes the following number of shares subject to options that are
presently exercisable or exercisable within 60 days after September 15,
1996: Mr. Madler, 20,000; Mr. Shifrin, 100,000; Ms. Williams, 47,000; and
Mr. Searles, 8,333.
(2) Mr. Searles and Mr. Shifrin are each directors of APS and, together with
the other officers and directors of APS, may share in the voting and
investment power with respect to the shares of Common Stock of the Company
owned by APS. Each of such persons disclaims the beneficial ownership of
any such shares.
(3) FSC Corporation is an affiliate of The First National Bank of Boston, and
Atlantic Equity Corporation is an affiliate of NationsBank, both of which
acquired their shares pursuant to the exercise of warrants received in
connection with the Company's Senior Credit Facility.
22
<PAGE>
DESCRIPTION OF CAPITAL STOCK
The following summary is a description of certain provisions of the
Company's Certificate of Incorporation, as amended (the "Certificate of
Incorporation"). Such summary does not purport to be complete and is subject
to, and is qualified in its entirety by, all of the provisions of the
Certificate of Incorporation.
The Company's authorized capital stock consists of 40,000,000 shares of
Common Stock, $0.01 par value per share, and 1,000,000 shares of Preferred
Stock, $0.01 par value per share ("Preferred Stock").
COMMON STOCK
As of September 15, 1996, there were 19,070,600 shares of Common Stock
issued and outstanding. Holders of Common Stock are entitled to one vote for
each share held of record on all matters submitted to a vote of stockholders.
There are no cumulative voting rights applicable to the Common Stock. Subject
to the preferences applicable to shares of Preferred Stock outstanding at any
time, holders of shares of Common Stock are entitled to dividends if, when and
as declared by the Board of Directors from funds legally available therefor
and are entitled, in the event of liquidation, to share ratably in all assets
remaining after payment of liabilities and Preferred Stock preferences, if
any. The authorized but unissued shares of Common Stock are available for
issuance without further action by the Company's stockholders, unless such
action is required by applicable law or the rules of any stock exchange or
trading system on which the Common Stock may be listed or quoted. Shares of
Common Stock are not redeemable and there are no sinking fund provisions.
PREFERRED STOCK
The Board of Directors is authorized, without further action by the
Company's stockholders, to issue Preferred Stock from time to time in one or
more classes or series and to fix, as to any such class or series, the voting
rights, if any, applicable to such series and such other designations,
preferences and special rights as the Board of Directors may determine,
including dividend, conversion, redemption and liquidation rights and
preferences. There are no shares of Preferred Stock outstanding. The issuance
of shares of Preferred Stock under certain circumstances could have the effect
of delaying or preventing a change in control of the Company or other
corporate actions.
INDEMNIFICATION AND LIMITATIONS ON DIRECTORS' LIABILITY
The Certificate of Incorporation provides that the Company shall indemnify
any person who was or is a party or is threatened to be made a party to a
proceeding by reason of the fact that he or she is or was a director or
officer of the Company or, while a director or officer of the Company, is or
was serving at the request of the Company in some capacity with another
business enterprise, to the fullest extent permitted by law.
The Certificate of Incorporation also provides that no director of the
Company shall be personally liable to the Company or its stockholders for
monetary damages for breach of fiduciary duty as a director, except for
liability (i) for any breach of the director's duty of loyalty to the Company
or its stockholders, (ii) for acts or omissions not in good faith or which
involve intentional misconduct or a knowing violation of law, (iii) in respect
of certain unlawful dividend payments or stock redemptions or repurchases or
(iv) for any transaction from which the director derived an improper personal
benefit. The effect of these provisions is to eliminate the rights of the
Company and its stockholders (through stockholders' derivative suits brought
on behalf of the Company) to recover monetary damages against a director for
breach of fiduciary duty as a director (including breaches resulting from
grossly negligent behavior), except in the situations described above. See
"Management--Other Compensation and Related Arrangements."
TRANSFER AGENT
The Company's registrar and transfer agent for the Common Stock is American
Stock Transfer & Trust Company.
23
<PAGE>
PLAN OF DISTRIBUTION
The Shares may be sold from time to time by the Selling Stockholders or by
pledgees, donees, transferees or other successors in interest. Such sales may
be made in any one or more transactions (which may involve block transactions)
in the over-the-counter market, on The Nasdaq National Market and any exchange
in which the Common Stock may then be listed, or otherwise in negotiated
transactions or a combination of such methods of sale, at market prices
prevailing at the time of sale, at prices related to such prevailing market
prices or at negotiated prices. The Selling Stockholders may effect such
transactions by selling Shares to or through broker-dealers, and such broker-
dealers may sell the Shares as agent or may purchase such Shares as principal
and resell them for their own account pursuant to this Prospectus. Such
broker-dealers may receive compensation in the form of underwriting discounts,
concessions or commissions from the Selling Stockholders and/or purchasers of
Shares from whom they may act as agent (which compensation may be in excess of
customary commissions).
The Company has informed the Selling Stockholders that the anti-manipulative
rules under the Exchange Act (Rules 10b-6 and 10b-7) may apply to their sales
of Shares in the market. Also, the Company has informed the Selling
Stockholders of the need for delivery of copies of the Prospectus in
connection with any sale of securities registered hereunder in accordance with
applicable prospectus delivery requirements.
In connection with such sales, the Selling Stockholders and any
participating brokers or dealers may be deemed to be "underwriters" as defined
in the Securities Act and any profit on the sale of the Shares by them and any
discounts, commissions or concessions received by them may be deemed to be
underwriting discounts and commissions under the Securities Act. In addition,
any of the Shares that qualify for sale pursuant to Rule 144 may be sold under
Rule 144 rather than pursuant to this Prospectus.
The Company will not receive any of the proceeds from the sale by the
Selling Stockholders of the Shares offered hereby. All of the filing fees and
the expenses of this Registration Statement will be borne in full by the
Company, other than any fees or expenses of counsel to the Selling
Stockholders, transfer taxes, if any, and any underwriting fees, discounts and
commissions relating to this offering.
In order to comply with certain state securities laws, if applicable, the
Shares will not be sold in a particular state unless such securities have been
registered or qualified for sale in such state or an exemption from
registration or qualification is available and complied with, and, if so
required, will only be sold in that state through registered or licensed
brokers or dealers.
The Shares originally issued by the Company to the Selling Stockholders bear
legends as to their restricted transferability. Upon the effectiveness of the
Registration Statement of which this Prospectus is a part, and the transfer by
the Selling Stockholders of any of the Shares pursuant thereto, new
certificates representing such Shares will be issued to the transferee, free
of any such legends unless otherwise required by law.
No person is authorized to give any information or to make any
representation, other than those contained in this Prospectus, and any
information or representations not contained in this Prospectus must not be
relied upon as having been authorized. This Prospectus does not constitute an
offer to sell or solicitation of an offer to buy any securities other than the
registered securities to which it relates. This Prospectus does not constitute
an offer to sell or a solicitation of an offer to buy such securities under
any circumstances where such offer or solicitation is unlawful. Neither the
delivery of this Prospectus nor any sales made hereunder shall, under any
circumstances, create any implication that there has been no change in the
affairs of the Company since the date hereof or that the information contained
herein is correct as of any time subsequent to its date.
24
<PAGE>
LEGAL MATTERS
The validity of the Common Stock offered hereby will be passed upon for the
Company by Small, Craig & Werkenthin, a Professional Corporation, Austin,
Texas.
EXPERTS
The consolidated financial statements of Prime Medical Services, Inc. and
its subsidiaries as of December 31, 1995 and 1994, and for each of the years
in the three-year period ended December 31, 1995, have been incorporated
herein by reference in reliance upon the report of KPMG Peat Marwick LLP,
independent certified public accountants, incorporated herein by reference,
upon the authority of said firm as experts in accounting and auditing.
The consolidated financial statements of Lithotripters, Inc. and its
subsidiaries as of December 31, 1994 and 1995 and for each of the years in the
three-year period ended December 31, 1995, have been incorporated herein by
reference in reliance upon the report of Arthur Andersen LLP, independent
public accountants, upon the authority of said firm as experts in accounting
and auditing.
25
<PAGE>
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
NO DEALER, SALESPERSON OR OTHER PERSON HAS BEEN AUTHORIZED TO GIVE ANY
INFORMATION OR TO MAKE ANY REPRESENTATIONS OTHER THAN THOSE CONTAINED IN THIS
PROSPECTUS AND, IF GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATIONS MUST NOT
BE RELIED UPON AS HAVING BEEN AUTHORIZED BY THE COMPANY OR ANY OF THE SELLING
STOCKHOLDERS. THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER TO SELL OR A
SOLICITATION OF AN OFFER TO BUY THE SHARES BY ANYONE IN ANY JURISDICTION IN
WHICH SUCH OFFER OR SOLICITATION IS NOT AUTHORIZED, OR IN WHICH THE PERSON
MAKING THE OFFER OR SOLICITATION IS NOT QUALIFIED TO DO SO, OR TO ANY PERSON
TO WHOM IT IS UNLAWFUL TO MAKE SUCH OFFER OR SOLICITATION. NEITHER THE
DELIVERY OF THIS PROSPECTUS NOR ANY SALE MADE HEREUNDER SHALL CREATE ANY
IMPLICATION THAT THE INFORMATION CONTAINED HEREIN IS CORRECT AS OF ANY TIME
SUBSEQUENT TO ITS DATE.
-----------------
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Available Information...................................................... 2
Documents Incorporated by Reference........................................ 2
Prospectus Summary......................................................... 3
Risk Factors............................................................... 5
Use of Proceeds............................................................ 8
Price Range of Common Stock................................................ 8
Dividend Policy............................................................ 8
Capitalization............................................................. 9
Business................................................................... 10
Management................................................................. 17
Principal and Selling Stockholders......................................... 22
Description of Capital Stock............................................... 23
Plan of Distribution....................................................... 24
Legal Matters.............................................................. 25
Experts.................................................................... 25
</TABLE>
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
2,265,240 SHARES
PRIME MEDICAL SERVICES, INC.
COMMON STOCK
-----------------
PROSPECTUS
-----------------
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.
The Registrant estimates that expenses payable by it in connection with the
offering described in this Registration Statement (other than underwriting
fees and commissions) will be as follows:
<TABLE>
<S> <C>
Securities and Exchange Commission registration fee............. $ 10,843.42
NASD filing fee................................................. 20,600
Printing and mailing expenses................................... 25,000
Accounting fees and expenses.................................... 20,000
Legal fees and expenses......................................... 50,000
Blue sky fees and expenses...................................... 2,000
Miscellaneous................................................... 5,000
-----------
Total $133,443.42
===========
</TABLE>
The Selling Stockholders will pay no expenses related to the offering except
underwriting fees, discounts, commissions, transfer taxes and their attorney's
fees, if any.
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
Article Ten of the Certificate of Incorporation of the Registrant provides
that the Registrant shall indemnify any person who was or is a party or is
threatened to be made a party to a proceeding by reason of the fact that he or
she (i) is or was a director or officer of the Registrant or (ii) while a
director or officer of the Registrant, is or was serving at the request of the
Registrant as a director, officer, partner, venturer, proprietor, trustee,
employee, agent, or similar functionary of another foreign or domestic
corporation, partnership, joint venture, sole proprietorship, trust, employee
benefit plan, or other enterprise, to the fullest extent permitted under the
Delaware General Corporation Law, as the same exists or may hereafter be
amended.
Pursuant to Section 145 of the Delaware Corporation Law, the Registrant
generally has the power to indemnify its present and former directors and
officers against expenses and liabilities incurred by them in connection with
any suit to which they are, or are threatened to be made, a party by reason of
their serving in those positions so long as they acted in good faith and in a
manner they reasonably believed to be in, or not opposed to, the best
interests of the Registrant, and with respect to any criminal action, so long
as they had no reasonable cause to believe their conduct was unlawful. With
respect to suits by or in the right of the Registrant, however,
indemnification is generally limited to attorneys' fees and other expenses and
is not available if the person is adjudged to be liable to the Registrant,
unless the court determines that indemnification is appropriate. The statute
expressly provides that the power to indemnify authorized thereby is not
exclusive of any rights granted under any bylaws, agreement, vote of
stockholders or disinterested directors, or otherwise. The Registrant also has
the power to purchase and maintain insurance for its directors and officers
and has obtained such insurance.
The preceding discussion of the Registrant's Certificate of Incorporation
and Section 145 of the Delaware General Corporation Law is not intended to be
exhaustive and is qualified in its entirety by the Certificate of
Incorporation and Section 145 of the Delaware General Corporation Law.
The Registrant has entered into indemnity agreements with certain of its
directors and officers. Pursuant to these agreements, the Registrant will, to
the extent permitted under applicable law, indemnify these persons against all
judgments, expenses, fines and penalties incurred in connection with the
defense or the settlement of any actions brought against them by reason of the
fact that they are or were directors or officers of the Registrant or that
they assumed certain responsibilities at the direction of the Registrant.
II-1
<PAGE>
ITEM 16. EXHIBITS.
(5) Opinion of Small, Craig & Werkenthin, P.C.
(23) (a) Consent of Small, Craig & Werkenthin, P.C. (included in
Exhibit 5)
(b) Consent of KPMG Peat Marwick LLP
(c) Consent of Arthur Andersen LLP
(24) Powers of Attorney (included in the signature pages of this
Registration Statement)
ITEM 17. UNDERTAKINGS.
The undersigned Registrant hereby undertakes:
(1) (i) To file, during any period in which offers or sales are being made,
a post-effective amendment to this Registration Statement;
(ii) To include any prospectus required in Section 10(a)(3) of the
Securities Act of 1933;
(iii) To reflect in the prospectus any facts or events arising after the
effective date of the Registration Statement (or the most recent
post-effective amendment thereof) which, individually or in the
aggregate, represent a fundamental change in the information set
forth in the Registration Statement; and
(iv) To include any material information with respect to the plan of
distribution not previously disclosed in the Registration Statement
or any material change to such information in the Registration
Statement.
(2) That, for the purpose of determining any liability under the Securities
Act, each such post-effective amendment shall be deemed to be a new
registration statement relating to the securities offered therein, and
the offering of such securities at that time shall be deemed to be the
initial bona fide offering thereof.
(3) To remove from registration by means of a post-effective amendment any
of the securities being registered which remain unsold at the
termination of the offering.
(4) That, for purposes of determining any liability under the Securities
Act, each filing of the Registrant's annual report pursuant to section
13(a) or section 15(d) of the Exchange Act that is incorporated by
reference in the Registration Statement shall be deemed to be a new
registration statement relating to the securities offered therein, and
the offering of such securities at that time shall be deemed to be the
initial bona fide offering thereof.
(5) That for purposes of determining any liability under the Securities Act
of 1933, the information omitted from the form of prospectus filed as
part of the Registration Statement in reliance upon Rule 430A and
contained in the form of prospectus filed by the Registrant pursuant to
Rule 424(b)(1) or (4) or 497(h) under the Securities Act shall be
deemed to be part of the Registration Statement as of the time it was
declared effective.
(6) That for the purpose of determining any liability under the Securities
Act of 1933, each post-effective amendment that contains a form of
prospectus shall be deemed to be a new registration statement relating
to the securities offered therein, and the offering of such securities
at that time shall be deemed to be the initial bona fide offering
thereof.
(7) Insofar as indemnification for liabilities arising under the Securities
Act may be permitted to directors, officers and controlling persons of
the Company pursuant to the foregoing provisions or otherwise, the
Company has been advised that in the opinion of the Securities and
Exchange Commission such indemnification is against public policy as
expressed in the Securities Act and is, therefore, unenforceable. In
the event that a claim for indemnification against such liabilities
(other than the payment by the Registrant of expenses incurred or paid
by a director, officer or controlling person of the Registrant in the
successful defense of any action, suit or proceeding) is asserted by
such director, officer or controlling person in connection with the
securities being registered, the Registrant will, unless in the opinion
of its counsel the matter has been settled by controlling precedent,
submit to a court of appropriate jurisdiction the question of whether
such indemnification by it is against public policy as expressed in the
Act and will be governed by the final adjudication of such issue.
II-2
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the registrant
has duly caused this Amendment No. 1 to Registration Statement to be signed on
its behalf by the undersigned, thereunto duly authorized, in the City of
Austin, State of Texas on October 8, 1996.
Prime Medical Services, Inc.
By /s/ Cheryl Williams
-----------------------------------
CHERYL WILLIAMS, VICE PRESIDENT--
FINANCE
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities and on the dates indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<S> <C> <C>
* Chairman of the Board and October 8, 1996
____________________________________ Director
KENNETH S. SHIFTRIN
* President, Chief Executive October 8, 1996
____________________________________ Officer and Director
JOSEPH JENKINS, M.D.
/s/ Cheryl Williams Chief Financial Officer, October 8, 1996
____________________________________ Vice President--Finance and
CHERYL WILLIAMS Secretary (Chief Accounting
Officer)
* Director October 8, 1996
____________________________________
PAUL R. BUTRUS
* Director October 8, 1996
____________________________________
WILLIAM E. FOREE, M.D.
</TABLE>
II-3
<PAGE>
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<S> <C> <C>
* Director October 8, 1996
____________________________________
IRWIN KATZ
* Director October 8, 1996
____________________________________
JOHN A. MCENTIRE IV
* Director October 8, 1996
____________________________________
WILLIAM A. SEARLES
* Director October 8, 1996
____________________________________
MICHAEL J. SPALDING, M.D.
*/s/ Cheryl Williams Attorney-in-Fact October 8, 1996
____________________________________
CHERYL WILLIAMS
</TABLE>
II-4
<PAGE>
INDEX TO EXHIBITS
EXHIBITS
- --------
(5) Opinion of Small, Craig & Werkenthin, P.C.*
(23) (a) Consent of Small, Craig & Werkenthin, P.C. (Included in Exhibit 5).*
(b) Consent of KPMG Peat Marwick LLP*
(c) Consent of Arthur Andersen LLP*
(24) Powers of Attorney*
- --------
* Previously filed.
