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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of Earliest Event Reported): July 17, 1996
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Commission File Number: 0-23472
PACIFIC REHABILITATION & SPORTS MEDICINE, INC.
(Exact Name of Registrant as Specified in Charter)
DELAWARE 93-1072052
(State or Other Jurisdiction (I.R.S. Employer
of Incorporation) Identification Number)
8100 N.E. Parkway Drive, Suite 190, Vancouver, Washington 98662
(Address of Principal Executive Offices) (Zip Code)
Registrant's Telephone Number, including Area Code: (360) 260-8130
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PACIFIC REHABILITATION & SPORTS MEDICINE, INC.
FORM 8-K
INDEX
Item Description Page
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1. Changes in Control of Registrant.....................................3
2. Acquisition or Disposition of Assets.................................3
3. Bankruptcy or Receivership...........................................3
4. Changes in Registrant's Certifying Accountant........................3
5. Other Events.........................................................3
6. Resignations of Registrant's Directors...............................3
7. Financial Statements and Exhibits....................................3
Signatures...........................................................4
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ITEM 1. CHANGES IN CONTROL OF REGISTRANT
None
ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS
None
ITEM 3. BANKRUPTCY OR RECEIVERSHIP
None
ITEM 4. CHANGES IN REGISTRANT'S CERTIFYING ACCOUNTANT
None
ITEM 5. OTHER EVENTS
On July 17, 1996, the Company announced that it would record a one-
time charge in the second quarter of 1996 relating to a restructuring
of its Hawaii operations. It also confirmed its previously disclosed
intention to record a one-time charge relating to the termination of a
proposed merger and further announced that it had successfully raised
additional capital in the form of subordinated debt and common stock
purchase warrants. A copy of the press release regarding these matters
is attached as Exhibit A.
ITEM 6. RESIGNATIONS OF REGISTRANT'S DIRECTORS
NONE
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS
EXHIBITS:
Exhibit A Press Release dated July 17, 1996
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, as
amended, the registrant has duly caused this report to be signed by the
undersigned thereunto duly authorized.
PACIFIC REHABILITATION & SPORTS
MEDICINE, INC.
Date: July 17, 1996 By: /s/ Bill Barancik
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Bill Barancik
President and Chief Executive Officer
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PACIFIC REHABILITATION & SPORTS MEDICINE, INC.
FORM 8-K CURRENT REPORT
EXHIBIT INDEX
Exhibit Description
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Exhibit A Press Release dated July 17, 1996
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Exhibit A
PRESS RELEASE
PACIFIC REHAB ANNOUNCES RESTRUCTURE OF HAWAII OPERATIONS
Vancouver, Washington (July 17, 1996) -- Pacific Rehabilitation & Sports
Medicine, Inc. (Nasdaq:PRHB) today announced that, due to the recently completed
closure of two clinics and related operations in Hawaii, the Company will record
a one-time charge to expense, in an amount estimated to be approximately $3.5
million, in the second quarter of 1996. These actions were taken by the Company
in response to reduced revenues in the Hawaii market resulting from legislation
enacted in Hawaii in 1995. That legislation reduced reimbursement rates and led
to a reduction in patient visits of approximately 50%. The charge includes
costs to reduce the workforce and exit facilities, write down assets and an
amount estimated to be approximately $2.9 million for a reduction in goodwill
and other intangibles associated with the closure of the clinics and related
operations. The $3.5 million pre-tax restructuring charge will have an after-
tax impact of approximately $2.6 million or $.32 per share in the second quarter
of 1996.
Bill Barancik, the Company's President and Chief Executive Officer stated,
"The effects from the 1995 legislation have been devastating and left us with no
choice other than to close these clinics and related operations. The Company's
operations in Hawaii have lost more than $300,000 during the first six months of
1996. The objective of this restructure in Hawaii, including a refocused
marketing effort directed at the employer, managed care and insurance company
level, is to eliminate the losses in Hawaii and bring these operations to a
profit or break-even point in the first quarter of 1997. The Company is not
able to predict whether, due to further legislative changes or other factors,
additional actions will become necessary in Hawaii in the future, or if taken,
what impact such actions will have on the Company's operations and financial
results. However, our underlying objective will remain as stated previously."
The charge related to Hawaii is in addition to the previously disclosed
one-time charge of approximately $975,000 for expenses incurred in connection
with the April 2, 1996 termination of the proposed merger with Horizon/CMS
Healthcare Corporation. This pre-tax charge will have an after-tax impact of
approximately $556,000 or $.07 per share in the second quarter of 1996.
The Company also announced that it had successfully raised approximately
$1.15 million in subordinated debt. This was accomplished through the private
placement of subordinated promissory notes that include warrants to purchase in
the aggregate up to
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230,000 shares of the Company's common stock, in accordance with future exercise
dates, at an exercise price of $5.00 per share. The Company is continuing to
seek additional capital, including additional subordinated notes.
Pacific Rehab provides outpatient physical therapy services at 70
outpatient rehabilitation clinics in Washington, Oregon, California, Hawaii,
Nevada, Arizona, Texas, Mississippi, Florida, and Maryland.
Forward Looking Statements. The foregoing information contains certain forward-
looking information about the Company, including that the actions taken by the
Company in Hawaii will lead to improved results in the future. This information
is based on management's estimates, assumptions and projections. Several
factors could cause actual results to differ materially from these forward-
looking statements, including the assumptions that the actions taken in Hawaii
will reduce expenses, that the reorganized operations in Hawaii will generate
sufficient revenues to warrant continued operations in that state, that the
Company can operate these facilities in a profitable manner and that further
legislation and regulations will not further adversely impact the Company's
operations in Hawaii. Investors are directed to the Company's filings with the
Securities and Exchange Commission, including the Company's Annual Report on
Form 10-K (as amended) for the year ended December 31, 1995, the Company's
Quarterly Report on Form 10-Q for the quarter ended March 31, 1996, the
Company's Registration Statement on Form S-3 (Reg. No. 333-306), and the
Company's Current Reports on form 8-K dated April 2, April 15, and July 1, 1996,
all of which are available without charge from the Company, for a more complete
description of the risks and uncertainties relating to the Company.
