As filed with the Securities and Exchange Commission on March 19, 1998
Registration No. 333-47621
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)
Delaware 74-2652727
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
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
Akin, Gump, Strauss, Hauer & Feld, L.L.P.
816 Congress Avenue, Suite 1900
Austin, Texas 78701
(512) 499-6200
Fax: (512) 499-6290
Approximate date of commencement of proposed sale to the public: from time
to time after this Registration Statement becomes effective.
..................
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. [_]
CALCULATION OF REGISTRATION FEE
<TABLE>
====================================================================================================================
<S> <C> <C> <C> <C>
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
Common Stock, $.01 par value (2) 3,064,503 $11.75 $36,007,910 $10,623
====================================================================================================================
</TABLE>
(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
March 5, 1998.
(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.
<PAGE>
PROSPECTUS
3,064,503 Shares
Prime Medical Services, Inc.
Common Stock
This prospectus may be used in connection with the distribution of up to
3,064,503 shares (the "Shares") of the Company's Common Stock proposed to be
disposed of from time to time by American Physicians Service Group, Inc.
("APS"). See "Selling Stockholder." The Company will not receive any of the
proceeds from the sale of shares by APS. APS will bear the expenses of this
registration. The Company's Common Stock is traded on The Nasdaq National Market
under the symbol "PMSI." On March 18, 1998, the last sale price of the Common
Stock as reported on The Nasdaq National Market was $12.4375 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 APS 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
by APS. See "Plan of Distribution."
The date of this Prospectus is March 19, 1998.
<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
Commission maintains a Web site that contains reports, proxy and information
statements and other information regarding registrants that file electronically
with the Commission at "http://www.sec.gov."
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, 1996;
(2) The Company's Quarterly Report on Form 10-Q for the quarterly period
ended March 31, 1997;
(3) The Company's Quarterly Report on Form 10-Q for the quarterly period
ended June 30, 1997;
(4) The Company's Quarterly Report on Form 10-Q for the quarterly period
ended September 30, 1997;
(5) The description of the Common Stock contained in the Company's Form
8-A, dated September 14, 1993; and
(6) 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(a), 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). Such requests should be directed
to Prime Medical Services, Inc., 1301 Capital of Texas Highway, Suite C-300,
Austin, Texas 78746-6550, Attention: Chief Financial Officer.
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<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 a Delaware corporation. Its principal executive offices are
located at 1301 Capital of Texas Highway, Suite C-300, Austin, Texas 78746, and
its telephone number is (512) 328-2892. The Company's Common Stock is quoted on
The Nasdaq National Market under the symbol "PMSI."
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
.........Common Stock offered by APS 3,064,503 shares
.........Common Stock outstanding after the offering(1) 19,314,267 shares
.........Nasdaq symbol PMSI
..............
(1) Based on the number of shares outstanding as of March 9, 1998.
Excludes options outstanding on March 9, 1998, to purchase up to 1,339,000
shares of Common Stock at a weighted average exercise price of $11.03 per
share. Also excludes 125,000 shares of Common Stock available for issuance under
the Prime Medical Services, Inc. 1993 Stock Option Plan.
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<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., now a wholly-owned subsidiary of the Company, was
the general partner posed an unreasonable threat to competition in the
healthcare field. While the FTC closed its investigation and took no action, 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.
Operations Subject to Government Regulation; Recent Regulatory Proposals
The Company is subject to extensive regulation by both the federal and
state governments. The Company is subject to Section 1128B of the Social
Security Act (known as the "Illegal Remuneration Statute"), which imposes civil
and criminal sanctions on persons who solicit, offer, receive or pay any
remuneration, directly or indirectly, for referring, or arranging for the
referral of, a patient for treatment that is paid for in whole or in part by
Medicare, Medicaid or similar government programs. The federal government has
published regulations that provide exceptions or a "safe harbor" for certain
business transactions. Transactions that are structured within the safe harbors
are deemed not to violate the Illegal Remuneration Statute. Transactions that do
not satisfy all elements of a relevant safe harbor do not necessarily violate
the Illegal Remuneration Statute, but may be subject to greater scrutiny by
enforcement agencies. The arrangements between the Company and the partnerships
and other entities in which it owns an indirect interest and through which the
Company provides most of its lithotripsy services (and the corresponding
arrangements between such partnerships and other entities and the treating
physicians who own interests therein and who use the lithotripsy facilities
owned by such partnerships and other entities) could potentially be questioned
under the illegal remuneration prohibition and may not fall within the
protection afforded by these safe harbors. Many states also have laws similar to
the Federal Illegal Remuneration Statute. While failure to fall within the safe
harbors may subject the Company to scrutiny under the Illegal Remuneration
Statute, such failure does not constitute a violation of the Illegal
Remuneration Statute. Nevertheless, these illegal remuneration laws, as applied
to activities and relationships similar to those of the Company, have been
subjected to limited judicial and regulatory interpretation, and the Company has
not obtained or applied for any opinion of any regulatory or judicial authority
that its business operations and affiliations are in compliance with these laws.
Therefore, no assurances can be given that the Company's activities will be
found to be in compliance with these laws if scrutinized by such authorities.
Section 1877 of the Social Security Act ("Stark II") imposes certain
restrictions upon referring physicians and providers of certain designated
health services under the Medicare, Medicaid and Champus programs ("Government
Programs"). Subject to certain exceptions, Stark II provides that if a physician
(or a family member of a physician) has a financial relationship with an entity:
(i) the physician may not make a referral to the entity for the furnishing of
designated health services under the Government Programs; and (ii) the entity
may not bill Government Programs, any individual or any third-party payor for
designated health services pursuant to a prohibited referral under the
Government Programs. The prohibitions of Stark II only apply to the treatment of
Government Program patients, and
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<PAGE>
have no application to services performed for non-government program
patients. Entities and physicians committing an act in violation of Stark II
will be required to refund amounts collected in violation of the statute and
also are subject to civil money penalties and to exclusion from the Government
Programs. Of the Company's lithotripsy revenues for the nine months ended
September 30, 1997, 77% were attributable to affiliates of the Company having
referring physician-investors. Urologists are investors in 43 of the Company's
61 lithotripsy operations, and the two Company affiliates engaged in
thermotherapy services have referring physician-investors (the Company
lithotripsy and thermotherapy affiliates with referring physician-investors are
referred to herein as the "Company Physician Entities").
Many key terms in Stark II are not adequately defined and the statute is
silent regarding its application to vendors, such as the Company Physician
Entities, contracting "under arrangements" with hospitals for the provision of
outpatient services. Since the passage of Stark II, the Company interpreted
Stark II consistently with the informal view of the General Counsel for Health
and Human Services, and concluded that the statute did not apply to its method
of conducting business. Based upon a reasonable interpretation of Stark II, by
referring a patient to a hospital furnishing the outpatient lithotripsy or
thermotherapy services "under arrangements" with the Company Physician Entity, a
physician investor in a Company Physician Entity is not making a referral to an
entity (the hospital) in which they have an ownership interest.
On January 9, 1998, the federal government published proposed regulations
under Stark II (the "Proposed Stark Regulations"). By clarifying certain
ambiguities and defining certain statutory terms, the Proposed Stark Regulations
and accompanying commentary apply the physician referral prohibitions of Stark
II to the Company Physician Entities' practice of contracting "under
arrangements" with hospitals for treatment and billing of Government Program
patients. Only hospitals can bill the Government Programs for lithotripsy and
thermotherapy services; thus contracting under arrangements with hospitals was
the way the Company Physician Entities economically participated in the
treatment of Government Program patients. Absent a restructuring of traditional
operations, to comply with the government's interpretation of Stark II the
physician-investors will be prohibited from referring Government Program
patients to the hospitals contracting with the Company Physician Entities. The
Company cannot predict when final Stark II regulations will be issued or the
substance of the final regulations, but the interpretive provisions of the
Proposed Stark Regulations may be viewed as the federal government's interim
enforcement position until final regulations are issued. Restructuring
traditional operations may reduce Company revenues and limit future growth by
(i) reducing or eliminating revenues attributable to the treatment of Government
Program patients by Company Physician Entities, (ii) reducing revenues from the
treatment of non-government patients by Company Physician Entities due to
physician, hospital and third-party payor anxiety and concern created by Stark
II, (iii) requiring the Company Physician Entities to restructure their
operations to comply with Stark II, (iv) restricting the acquisition or
development of additional lithotripsy or thermotherapy operations that will both
treat Government Program patients and have referring physician-investors, (v)
impairing the Company's relationship with urologists and (vi) otherwise
materially adversely impacting the Company.
Many states currently have laws similar to Stark II that restrict a
physician with a financial relationship with an entity from referring patients
to that entity. Often these laws contain statutory exceptions for circumstances
where the referring physician, or a member of his practice group, treats their
own patients. States also commonly require physicians to disclose to patients
their financial relationship with an entity. The Company believes that it is in
material compliance with these state laws. Nevertheless, these state
self-referral laws, as applied to activities and relationships similar to those
of the Company, have been subjected to limited judicial and regulatory
interpretation, and the Company has not obtained or applied for any opinion of
any regulatory or judicial authority that its business operations and
affiliations are in compliance with these laws. Therefore, no assurances can be
given that the Company's activities will be found to be in compliance with these
laws if scrutinized by such authorities.
In addition, upon the occurrence of changes in the law that may adversely
affect operations, the Company is required to purchase the interests of
physician-investors for certain of the Company Physician Entities. These
mandatory purchase obligations 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. The Company estimates that, as of December 31,
1997, the aggregate potential cost of all such mandatory purchases would not
exceed $6 million. To the extent the Company is required to purchase such
interests, such purchases might cause a default under the terms
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the extent the Company is required to purchase such interests, such
purchases might cause a default under the terms of the Company's credit facility
and other indebtedness, impair the Company's relationship with urologists and
otherwise have a material adverse impact on the Company. Regulatory
developments, such as the Proposed Stark Regulations, might also dictate that
the Company purchase all the interests of its physician-investors, regardless of
any contractual requirements to do so, or substantially alter its business and
operations to remain in compliance with applicable laws. A purchase of all the
physician-investors in the Company Physician Entities would require significant
resources, and there can be no assurance that the Company could fund such
acquisitions. Additionally, 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 addition, there can be no assurance that physician- investors who,
voluntarily or otherwise, divest of their interests in Company Physician
Entities will continue to refer patients at the same rate or at all.
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 or thermotherapy services, the Company anticipates that managed care
programs, including capitation plans, may play an increasing role in the
delivery of lithotripsy and thermotherapy services and that competition for
these services may shift from individual practitioners to health maintenance
organizations and other significant providers of managed care. No assurance can
be given that the changing healthcare environment will not have a material
adverse effect on the Company.
In addition, the hospitals and surgery centers to which the Company
provides services are reimbursed for lithotripsy and thermotherapy 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, 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. Furthermore, over the last several years, there has been a general
trend toward lower reimbursement rates for healthcare services by government and
other third-party payors. Such reimbursement reductions 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 and thermotherapy
devices 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 and thermotherapy devices used by the
urologists and provides nurses and/or radiology technicians to assist the
urologists in the use of lithotripters and thermotherapy devices, the Company
may also be named in a claim against a urologist in connection with performing a
lithotripsy or thermotherapy procedure at the Company's facilities. Although the
Company has not experienced any losses due to claims for malpractice, such
claims, 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.
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
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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, as a result of the
development of less expensive lithotripsy equipment, if the supply of new or
used lithotripters increases over time, or as a result of regulatory changes.
Most of the Company's lithotripsy services agreements have matured past their
initial terms and are now in annual renewal terms or are on a month-to-month
basis, which increases the risk that a large number of agreements may be
terminated over a relatively short period of 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, the Company competes with alternative kidney stone disease
treatments.
Technological Changes
The equipment and software utilized by the Company in the provision of its
lithotripsy services and other business activities have been characterized by
technological changes. The development of new technologies or refinements of
existing ones might render the Company's existing equipment and software
technologically or economically obsolete. Regulatory approvals have recently
been received for smaller and less expensive lithotripsy equipment that can
either be utilized as a mobile or fixed site operation and can be transported
with smaller and less expensive vehicles than those utilized by the Company.
Although this compact lithotripsy technology is relatively new and not in
widespread use, the availability of such technology could materially and
adversely affect the Company's business. 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.
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, Joseph Jenkins, M.D., President and Chief Executive Officer, and Michael
Madler, Senior Vice President-Operations. 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.
Dependence on Physicians
The Company depends upon the treatment of patients by urologists practicing
in the communities served by the Company's lithotripters and thermotherapy
units. 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. The
enforceability of these noncompetition agreements 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
affiliated physician-investors under mandatory repurchase arrangements existing
between the Company and such physician-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.
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
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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 are also entitled to registration rights.
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 Company's credit facility also
prohibits the Company from paying dividends and making other distributions on
its Common Stock.
Year 2000 Compliance
The Company is aware of the issues associated with the programming code in
existing computer systems as the year 2000 approaches. The "year 2000 problem"
is pervasive and complex as virtually every computer operation will be affected
in some way by the rollover of the two digit year value to 00. The issue is
whether computer systems will properly recognize date sensitive information when
the year changes to 2000. Systems that do not properly recognize such
information could generate erroneous data or cause a system to fail. The Company
does not anticipate that it will incur significant operating expenses or be
required to invest heavily in computer systems improvements to be year 2000
compliant. However, significant uncertainty exists concerning the potential
costs and effects associated with any year 2000 compliance. Any year 2000
compliance problem of either the Company or its vendors, third party payors or
customers could have a material adverse effect on the Company's business,
results of operations, financial condition and prospects.
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USE OF PROCEEDS
The Company will not receive any of the proceeds from the sale by APS of
the Shares offered hereby. All of the filing fees and the expenses of this
Registration Statement will be borne in full by APS.
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THE SELLING STOCKHOLDER
The following table sets forth certain information regarding the beneficial
ownership of the Common Stock as of March 1, 1998, and as adjusted to reflect
the sale of the Common Stock offered hereby, by APS. Although there can be no
assurance that APS will sell any or all of the Shares, the following table
assumes that APS will sell all Shares registered herein.
<TABLE>
Beneficial Ownership Number Beneficial Ownership
Prior to the Offering of Shares After the Offering
<S> <C> <C> <C> <C> <C>
Number of Registered Number of
Name Shares Percent Herein Shares Percent
American Physicians Service Group, Inc. 3,064,503 15.9 3,064,503 - -
1301 Capital of Texas Highway
Austin, Texas 78746
</TABLE>
APS is the Company's largest stockholder and is a management and financial
services firm which, through its subsidiaries, provides medical malpractice
insurance services for doctors and investment services to institutions and
individuals. APS is headquartered in Austin, Texas and maintains offices in
Dallas and Houston.
At February 1, 1995 the Company owned 772,000 shares of the common stock of
APS, which constituted approximately 22% of the total shares of the common stock
of APS then issued and outstanding. During 1995, the Company retired a note
payable to APS by transferring to APS 87,000 shares of common stock of APS that
the Company owned. During 1995, the Company also sold 635,000 shares of common
stock of APS to third parties for $2,760,000. The Company currently owns 50,000
shares of common stock of APS.
Kenneth S. Shifrin and William A. Searles are each directors of both the
Company and 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. Mr. Shifrin has been Chairman of the Board and a
director of the Company since October 1989 and has been Chairman of the Board,
Chief Executive Officer and a director of APS since March 1990, March 1989 and
February 1987, respectively. Mr. Searles has been a director of the Company
since October 1989 and has been a director of APS since July 1989.
The Company occupies approximately 5,575 square feet of office space owned
by APS and also shares certain personnel with APS. The Company pays APS rent and
personnel cost reimbursements of approximately $7,500 per month.
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 March 9, 1998, there were 19,314,267 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
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references, 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.
Insofar as indemnification for liabilities arising under the Securities Act
of 1933 may be permitted to directors, officers or persons controlling the
Company pursuant to the foregoing provisions, the Company has been informed 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.
Transfer Agent
The Company's registrar and transfer agent for the Common Stock is American
Stock Transfer & Trust Company.
PLAN OF DISTRIBUTION
The Shares may be sold from time to time by APS 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 for such cash or other consideration as may be obtainable at such time.
APS 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 APS and/or purchasers of Shares from
whom they may act as agent (which compensation may be in excess of customary
commissions).
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The Company has informed APS that the anti-manipulative rules under the
Exchange Act (Rules 10b-6 and 10b-7) may apply to its sales of Shares in the
market. Also, the Company has informed APS 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, APS 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 APS of
the Shares offered hereby. All of the filing fees and the expenses of this
Registration Statement will be borne in full by APS.
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 APS 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 APS 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.
LEGAL MATTERS
The validity of the Common Stock offered hereby will be passed upon for the
Company by Akin, Gump, Strauss, Hauer & Feld, L.L.P.
EXPERTS
The consolidated financial statements and schedule of Prime Medical
Services, Inc. as of December 31, 1996 and 1995, and for each of the years in
the three-year period ended December 31, 1996, have been incorporated herein and
in the registration statement by reference in reliance upon the report of KPMG
Peat Marwick LLP, independent certified public accountants, incorporated herein
by reference, and upon the authority of said firm as experts in accounting and
auditing.
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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 APS. 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.
3,064,503 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 in connection with the
offering described in this Registration Statement (other than underwriting fees
and commissions) will be as follows:
Securities and Exchange Commission registration fee............$ 11,000
Printing and mailing expenses.................................. 1,000
Accounting fees and expenses................................... 5,000
Legal fees and expenses........................................ 10,000
Blue sky fees and expenses..................................... 2,000
Miscellaneous.................................................. 2,000
---------
Total $ 31,000
=========
APS will pay, or reimburse the Registrant, for all expenses related to the
offering, including those estimated above and underwriting fees, discounts,
commissions, transfer taxes and their attorney's fees, if any.
Item 15. Indemnification of Directors and Officers.
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.
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Item 16. Exhibits.
(5) Opinion of Akin, Gump, Strauss, Hauer & Feld, L.L.P.
(23) (a) Consent of Akin, Gump, Strauss, Hauer & Feld, L.L.P.
(included in Exhibit 5)
(b) Consent of KPMG Peat Marwick LLP
(24) Powers of Attorney (included in the signature pages of this
Registration Statement)
Item 17. Undertakings.
The undersigned Registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being made,
a post-effective amendment to this Registration Statement:
(i) To include any prospectus required in Section 10(a)(3) of
the Securities Act of 1933;
(ii) 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
(iii) 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 of 1933, each filing of the Registrant's annual report
pursuant to section 13(a) or section 15(d) of the Securities
Exchange Act of 1934 (and, where applicable, each filing of an
employee benefit plan's annual report pursuant to Section
15(d) of the Securities Exchange Act of 1934) 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 this 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 of 1933 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 Registrant pursuant to the foregoing
provisions, or otherwise, the Registrant 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.
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SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Registrant
certifies that it has reasonable grounds to believe that it meets all of the
requirements for filing on Form S-3 and has duly caused this Registration
Statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of Austin, State of Texas on March 19, 1998.
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.
Signature Title Date
----------------------- --------------------- -----------------
* Chairman of the Board March 19, 1998
---------------------- and Director
Kenneth S. Shiftrin
* President, March 19, 1998
----------------------- Chief Executive Officer
Joseph Jenkins, M.D. and Director
/s/ Cheryl Williams Chief Financial Officer, March 19, 1998
----------------------- Vice President-Finance
Cheryl Williams and Secretary
(Chief Accounting Officer)
* Director March 19, 1998
-----------------------
Paul R. Butrus
* Director March 19, 1998
-------------------------
William E. Foree, M.D.
* Director March 19, 1998
----------------------
Irwin Katz
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Signature Title Date
----------------------- --------------------- -----------------
* Director March 19, 1998
-------------------------
John A. McEntire IV
* Director March 19, 1998
-------------------------
William A. Searles
* Director March 19, 1998
-----------------------------
Michael J. Spalding, M.D.
* /s/ Cheryl Williams Attorney-in-Fact March 19, 1998
-----------------------
Cheryl Williams
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INDEX TO EXHIBITS
Exhibits
(5) Opinion of Akin, Gump, Strauss, Hauer & Feld, L.L.P. *
(23) (a) Consent of Akin, Gump, Strauss, Hauer & Feld, L.L.P.
(Included in Exhibit 5). *
(b) Consent of KPMG Peat Marwick LLP *
(24) Powers of Attorney *
- -----------------------
* Previously filed.
