<PAGE>
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
(X) QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the Quarterly Period Ended September 30, 1996
OR
( ) TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from _________ to _________
Commission File No. 1-13778
PHYSICIANS RESOURCE GROUP, INC.
(Exact name of registrant as specified in its charter)
Delaware
(State or other jurisdiction of incorporation or organization)
76-0456864
(I.R.S. Employer Identification No.)
Three Lincoln Center, 5430 LBJ Freeway, Suite 1540, Dallas, TX 75240
(Address of principal executive office) (Zip Code)
Registrant's telephone number, including area code: (972) 982-8200
Indicate by check mark whether the Registrant (1) has filed all
reports required to be filed by Section 13 or 15(d) of the Securities
Exchange Act of 1934 during the preceding 12 months (or for such shorter
period that the Registrant was required to file such reports), and (2)
has been subject to such filing requirements for the past 90 days.
Yes X No___
Indicate the number of shares outstanding of each of the issuer's
classes of common stock as of the latest practicable date.
Class Outstanding at November 1, 1996
Common Stock, $.01 par value 27,923,374 shares
<PAGE>
Physicians Resource Group, Inc.
Form 10-Q for the Quarterly Period Ended September 30, 1996
INDEX
PART I. Financial Information Page
Item 1 Financial Statements and General Information .............3
Consolidated Balance Sheets - December 31, 1995
and September 30, 1996 (unaudited)......................4
Consolidated Statements of Operations - Three Months
and Nine Months Ended September 30, 1995 and
September 30, 1996 (unaudited)..........................5
Consolidated Statements of Cash Flows - Nine Months
Ended September 30, 1995 and September 30, 1996
(unaudited).............................................6
Notes to Consolidated Financial Statements -
September 30,1996 (unaudited).........................7-11
Item 2 Management's Discussion and Analysis of Financial
Condition and Results of Operations ...................12-16
PART II. Other Information
Item 1 Legal Proceedings ...........................................17
Item 2 Changes in Securities .......................................17
Item 3 Defaults Upon Senior Securities .............................17
Item 4 Submission of Matters to a Vote of Security Holders .........17
Item 5 Other Information ...........................................17
Item 6 Exhibits and Reports on Form 8-K .........................17-21
SIGNATURE...........................................................22
<PAGE>
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
General Information
Physicians Resource Group, Inc. (PRG or the Company) was
incorporated in November 1993 for the purpose of providing
physician practice management services to ophthalmic and
optometric practices and developing integrated eye care systems.
Simultaneously with the closing of its initial public offering on
June 28, 1995, the Company acquired in a reorganization, certain
assets of and liabilities associated with 10 ophthalmic and
optometric practices. Prior to the consummation of the offering
and reorganization, the Company's operations consisted primarily
of seeking affiliations with these practices and negotiating the
service agreements and the reorganization agreements. The
consummation of the initial public offering, the reorganization
and the entry into its initial service agreements in June of 1995
marked the beginning of PRG's operations.
On March 18, 1996 the Company, through a wholly-owned subsidiary,
merged with EyeCorp Inc. (EyeCorp), a privately held physician
practice management company, in a pooling of interests merger
transaction. EyeCorp provides practice management services to 50
ophthalmic and optometric practices. The Company has also
completed the acquisition of certain assets and assumed certain
liabilities and entered into management services relationships
with 40 additional ophthalmic and optometric practices during the
first nine months of 1996, a number of which were poolings of
interests. Accordingly, as of September 30, 1996, the Company was
providing management services to a total of 100 ophthalmic and
optometric practices across the United States. The financial
statements for periods prior to the consummation of the EyeCorp
merger and the poolings have been adjusted to reflect the
operations of the combined merged and pooled entities for those
periods. Certain other acquisitions were entered into and
completed subsequent to September 30, 1996. See Notes 1 and 7 in
the accompanying Notes to Consolidated Financial Statements for
further information regarding the acquisitions made during the
first nine months of 1996, as well as those made subsequent to
September 30, 1996.
<PAGE>
<TABLE>
PHYSICIANS RESOURCE GROUP, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(Amounts in 000's Except Share Data)
December 31, September 30,
ASSETS 1995 1996
(unaudited)
<S> <C> <C>
CURRENT ASSETS:
Cash and cash equivalents $18,183 $ 70,260
Accounts receivable, net 15,285 30,305
Receivables due from affiliated practices 6,265 16,662
Inventories 2,546 4,251
Prepaid expenses and other current assets 6,984 4,572
Total current assets 49,263 126,050
PROPERTY AND EQUIPMENT, net 35,550 46,362
INTANGIBLE ASSETS, net 52,257 153,702
OTHER NONCURRENT ASSETS, net 1,710 5,626
Total assets $138,780 $331,740
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Obligations to affiliated physicians $ 1,086 $ ---
and physician groups
Current portion of long-term debt and 2,209 1,639
capital leases
Accounts payable and accrued expenses 10,969 14,008
Accrued taxes, payroll and executive 4,554 5,430
resignation costs
Amounts due under the ASC Option 3,100 ---
Total current liabilities 21,918 21,077
LONG-TERM DEBT AND CAPITAL LEASES, net of 32,788 9,223
current portion
DEFERRED TAXES AND OTHER LONG-TERM LIABILITIES 15,479 45,606
Total liabilities 70,185 75,906
STOCKHOLDERS' EQUITY:
Common stock, $.01 par value, 100,000,000
shares authorized,19,248,774 and
27,354,677 outstanding 193 274
Preferred stock, $.01 par value, 10,000,000
shares authorized, none outstanding --- ---
Additional paid-in capital 60,984 247,816
Retained earnings 7,418 7,744
Total stockholders' equity 68,595 255,834
Total liabilities and
stockholders' equity $138,780 $331,740
</TABLE>
The accompanying notes are an integral part of these consolidated
financial statements.
<PAGE>
<TABLE>
PHYSICIANS RESOURCE GROUP, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(Amounts in 000's Except Per Share Amounts)
Three Months Nine Months
Ended September 30, Ended September, 30
1995 1996 1995 1996
(unaudited) (unaudited)
<S> <C> <C> <C> <C>
REVENUES:
Management services $26,414 $39,835 $53,083 $110,317
Medical services and surgery
center 2,006 19,199 7,700 49,720
Other 506 1,457 736 3,354
Total revenues 28,926 60,491 61,519 163,391
COSTS AND EXPENSES:
Salaries, wages and benefits 15,250 21,548 33,125 73,316
Pharmaceuticals and supplies 3,135 8,843 6,145 21,888
General and administrative 8,102 19,138 14,651 43,043
Depreciation and amortization 1,494 3,052 2,648 7,470
Executive resignation expenses 1,117 --- 1,117 ---
Interest (income) expense 116 (1,172) 1,007 (830)
Merger transaction expenses --- 3,030 --- 12,030
Total costs and expenses 29,214 54,439 58,693 156,917
INCOME (LOSS) BEFORE INCOME TAXES (288) 6,052 2,826 6,474
PROVISION FOR INCOME TAXES 227 2,537 917 6,148
NET INCOME (LOSS) $(515) $3,515 $1,909 $ 326
NET INCOME (LOSS) PER SHARE $(.03) .13 $ .17 $ .01
NUMBER OF SHARES USED IN NET
INCOME (LOSS) PER SHARE
CALCULATION 16,432 27,305 11,060 24,177
</TABLE>
The accompanying notes are an integral part of these consolidated
financial statements.
<PAGE>
<TABLE>
PHYSICIANS RESOURCE GROUP, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Amounts in 000's)
Nine Months Ended
September 30,
1995 1996
(unaudited)
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss) $1,909 $ 326
Adjustments to reconcile net income (loss) to
net cash provided by operating activities:
Depreciation and amortization 2,937 7,470
Change in deferred taxes (516) (6,102)
Changes in assets and liabilities, net of
acquisitions:
Increase (Decrease) in accounts payable,
accrued expenses and accrued payroll (25) (1,899)
Decrease (Increase) in accounts
receivable and receivables due from
affiliates 2,534 (13,765)
Decrease (Increase) in inventories (137) (369)
Decrease (Increase) in prepaid expenses
and other assets (2,305) 395
Net cash provided by operating activities 4,347 (13,944)
CASH FLOWS FROM INVESTING ACTIVITIES:
Cash consideration paid to acquire physician
practices, net of cash acquired (13,362) (11,681)
Cash paid to former owners of Founding
Affiliated Practices (3,610) (1,086)
Additions to property and equipment (3,408) (7,687)
Net cash used by investing activities (20,380) (20,454)
CASH FLOWS FROM FINANCING ACTIVITIES:
Cash paid in connection with organization of
the Company and the initial public offering (4,479) ---
Proceeds from initial public offering 42,919 ---
Proceeds from 1996 Offering, net --- 114,267
Proceeds from credit facility --- 18,000
Advances from related party 2,122 ---
Proceeds from long-term debt --- 663
Payments on long-term debt (6,051) (47,851)
Proceeds from exercise of stock options --- 1,396
Retirement of preferred stock (1,745) ---
Net cash provided by financing
activities 32,766 86,475
NET INCREASE IN CASH AND CASH EQUIVALENTS 16,733 52,077
CASH AND CASH EQUIVALENTS, beginning of period 3,396 18,183
CASH AND CASH EQUIVALENTS, end of period $20,129 $70,260
</TABLE>
The accompanying notes are an integral part of these consolidated
financial statements.
<PAGE>
PHYSICIANS RESOURCE GROUP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
1. BUSINESS, ORGANIZATION AND BASIS OF PRESENTATION:
Business and Organization
Physicians Resource Group, Inc. (PRG or the Company) was
incorporated in 1993 but did not conduct any significant
operations prior to its initial public offering and concurrent
acquisition of certain assets and assumption of certain
liabilities of 10 eye care practices in June 1995. As part of
that reorganization and subsequent acquisitions, PRG acquired
tangible and intangible assets and liabilities of, and entered
into service agreements with, its affiliated practices and earns
fees (Service Fees) thereunder. The Service Fees payable to PRG
by the various practices under the service agreements (Service
Agreements) vary based on the nature and amount of services
provided. Such fees are payable monthly and consist of various
combinations of the following: (i) percentages of the revenues or
percentages of the earnings of the affiliated practices, relating
to professional services and certain other non-medical services,
depending on the scope and breadth of the services provided, (ii)
all revenues, or a substantial portion of revenues, relating to
facility and other non-physician fees with respect to certain
assets owned by PRG, (iii) operating and non-operating expenses of
the practices paid by PRG pursuant to the Service Agreements and
(iv) certain negotiated performance and other adjustments. In
addition, with respect to several of the practices, the Service
Fees are based on flat rates that are either subject to
renegotiation on an annual basis or that transition over time to a
variable fee.
EyeCorp Merger
On March 18, 1996, PRG, through a wholly-owned subsidiary, merged,
in a transaction accounted for as a pooling of interests, with
EyeCorp, Inc. (EyeCorp), a privately held physician practice
management company devoted solely to eye care. In connection
therewith, PRG issued 6,089,506 shares of common stock to the
shareholders of EyeCorp. EyeCorp provides management services to
approximately 50 eye care practices and five ambulatory surgery
centers (ASC's). The financial statements of EyeCorp have been
combined with those of the Company for all periods presented.
Acquisitions Subsequent to December 31, 1995 and Prior to
September 30, 1996
During the first quarter of 1996, PRG acquired certain assets and
liabilities of, and entered into Service Agreements with 11 eye
care practices and seven ASC's (the First Quarter Acquisitions).
These acquisitions were accounted for as purchases. The net
assets acquired in the transactions were approximately
<PAGE>
$31,300,000. As consideration for these acquisitions, PRG paid
approximately, $7,800,000 in cash and issued 1,446,437 shares of
its common stock. The PRG common stock issued in connection with
the First Quarter Acquisitions was valued from $20.75 to $22.00
per share.
During the second quarter of 1996, PRG acquired certain assets and
liabilities of, and entered into Service Agreements with, 11 eye
care practices and two ASC's (the Second Quarter Acquisitions).
These acquisitions were accounted for as purchases. As
consideration for these acquisitions, PRG paid approximately
$1,835,000 in cash and issued 801,659 shares of its common stock.
The PRG common stock issued in connection with the Second Quarter
Acquisitions was valued from $26.24 to $30.41 per share.
Additionally, during the second quarter of 1996, PRG, through a
wholly-owned subsidiary, merged, in a transaction accounted for as
a pooling of interests, with one eye care practice (the Second
Quarter Merger). In connection therewith, PRG issued 281,832
shares of common stock to the owners of the practice. The
financial statements of the Second Quarter Merger have been
combined with those of the Company for all periods presented.
During the third quarter of 1996, PRG acquired certain assets and
liabilities of, and entered into Service Agreements with 11 eye
care practices and two ASC's (the Third Quarter Acquisitions).
These acquisitions were accounted for as purchases. As
consideration for these acquisitions, PRG paid approximately
$767,000 in cash and issued 1,374,799 shares of its common stock.
The PRG common stock issued in connection with the Third Quarter
Acquisitions was valued from $21.46 to $30.45 per share.
Additionally, during the third quarter of 1996, PRG, through its
wholly-owned subsidiaries, merged in transactions accounted for as
poolings of interests, with six eye care practices and one ASC
(the Third Quarter Mergers). In connection therewith, PRG issued
3,355,142 shares of common stock. The financial statements of the
Third Quarter Mergers have been combined with those of the Company
for all periods presented.
Separate and combined results for PRG, the Second Quarter Merger
and the Third Quarter Mergers for the nine month periods are as
follows (amounts in 000's):
Description 1995 1996
<TABLE> <S> <C> <C>
Revenues:
PRG and EyeCorp ........... $ 30,405 $131,498
Second Quarter Merger ..... 5,088 4,435
Third Quarter Mergers ..... 26,026 27,458
Total revenues ......... $ 61,519 $163,391
Net income:
PRG and EyeCorp ........... $ 853 $(3,745)
Second Quarter Merger ..... 313 108
Third Quarter Mergers ..... 743 3,963
Total net income ....... $ 1,909 $ 326
</TABLE>
<PAGE>
Acquisitions Subsequent to September 30, 1996
On October 7, 1996, PRG entered into a definitive agreement to
acquire American Ophthalmic Incorporated ("AOI"), a privately held
physician practice management company devoted solely to eye care.
The aggregate consideration to be paid by PRG in connection with
the AOI acquisition is expected to be up to approximately
$70,000,000, with up to $35,000,000 to be paid in cash and the
remainder in PRG common stock (up to 1,499,000 shares). The total
consideration could be decreased as much as $10,000,000 if certain
acquisition parameters are not met, with the cash and common stock
components of the consideration being adjusted proportionately.
PRG will also be required to refinance approximately $44,500,000
of AOI debt at the date of closing (such amount excludes
$3,200,000 of seller debt that accelerates at closing). AOI
provides management services to 16 eyecare practices and nine
ASCs. Although there can be no certainty as to if and when this
transaction will close, management of PRG believes such
transaction will close prior to the end of the fourth quarter.
Management of PRG anticipates funding the purchase of AOI with
existing cash resources, borrowings from the existing credit
facilities and potential new borrowings from its lenders.
On November 5, 1996, the Company acquired substantially all of the
assets and certain of the liabilities of the eye care division of
EquiMed, Inc. ("EquiMed"), a publicly held physician practice
management company, in exchange for approximately $55,077,000 in
cash. The eye care division of EquiMed provides management
services to 22 eye care practices and 10 ASCs. Additional cash
payments may be required in connection with the possible
consummation of future acquisitions that meet specified criteria
and are closed with the assistance of EquiMed.
Also during the early fourth quarter of 1996, PRG consummated the
acquisition of the assets of four eye care practices (the Fourth
Quarter Acquisitions). As consideration for these acquisitions,
PRG paid approximately $722,000 in cash and issued 566,767 shares
of PRG common stock. These acquisitions will be accounted for as
purchases.
Basis of Presentation
In the opinion of Company management, the accompanying
consolidated financial statements include the accounts of the
Company and all adjustments necessary to present fairly the
Company's financial position at December 31, 1995 and September
30, 1996, its results of operations for the three month and nine
month periods ended September 30, 1995 and 1996 and its cash flows
for the nine month periods ended September 30, 1995 and 1996. The
financial statements for all merged entities have been combined
with those of the Company for all periods presented. Although
the Company believes that the disclosures are adequate to make the
information presented not misleading, certain information and
footnote disclosures normally included in annual financial
statements prepared in accordance with generally accepted
accounting principles have been condensed or omitted pursuant to
the rules and regulations of the Securities and Exchange
Commission. These consolidated financial statements should be
<PAGE>
read in conjunction with the Company's financial statements and
footnotes thereto included in the Company's report on Form 8-K/A
filed with the Securities and Exchange Commission on September 24,
1996. The results of operations for the three month and nine
month periods ended September 30, 1995 and 1996 may not be
indicative of the results for the full year.
2. RECEIVABLES DUE FROM AFFILIATED PRACTICES:
The amounts due from the affiliated practices include management
service receivables, receivables from the practices for certain
expenses being paid on their behalf and certain other
miscellaneous receivables from the practices. The receivables due
from certain of the affiliated practices are collateralized by a
security interest in the affiliated practices' receivables from
third-party payors and patients.
Pursuant to the terms of certain of the EyeCorp service
agreements, the affiliated practices' accounts receivable are
purchased without recourse. The purchase price is the face amount
of the accounts receivable less any reserve recorded by the
affiliated practices for uncollectible amounts. Accounts
receivable are purchased daily and paid for at the end of each
month.
3. LONG-TERM OBLIGATIONS:
In January 1996, PRG entered into a $35,000,000 credit facility
(the PRG Credit Facility) with a bank, to be used for
acquisitions, capital expenditures and working capital. The PRG
Credit Facility is secured by the stock of the subsidiaries of PRG
and guaranteed by such subsidiaries. PRG may obtain advances
under the PRG Credit Facility to the extent of the lesser of the
$35,000,000 or the borrowing base in effect from time to time.
Interest rates on borrowings are prime plus .5% or LIBOR plus
1.25% to 2.0%. In December 1995, EyeCorp entered into a
$20,000,000 revolving credit facility (the EyeCorp Credit
Facility) with the same bank involved in the PRG Credit Facility.
The EyeCorp Credit Facility is secured by certain assets and
common stock of the Company. Interest rates on borrowings are
prime plus .5% or LIBOR plus 2.0% to 2.5%.
The Company repaid all outstanding amounts drawn on both credit
facilities in May 1996 (approximately $38,100,000) following the
consummation of the public offering discussed in Note 4. The
PRG Credit Facility and the EyeCorp Credit Facility have been
consolidated and no amounts were outstanding as of September 30,
1996. The Company borrowed $10,000,000 on the consolidated
facility in November 1996. As indicated in Note 1, however,
management of PRG anticipates using substantially all of the
available borrowings under the consolidated credit facility to
close the purchase of AOI in late November or early December of
1996.
The Company has initiated discussions with the same bank regarding
a new credit facility that would, if consummated, provide for
borrowings of up to $125,000,000 to be used for acquisitions,
working capital, capital expenditures and general corporate
purposes.
<PAGE>
4. STOCKHOLDERS' EQUITY:
The Company is authorized to issue up to 100,000,000 shares of
common stock, $.01 par value. In addition to those common shares
that were outstanding at December 31, 1995, 7,535,943 shares were
issued in the first quarter of 1996 in connection with the EyeCorp
merger and the First Quarter Acquisitions (see Note 1). During
the second quarter of 1996, the Company issued an additional
1,083,491 shares of common stock in connection with the Second
Quarter Acquisitions and the Second Quarter Merger. During the
third quarter of 1996, the Company issued an additional 4,729,941
shares of common stock in connection with the Third Quarter
Acquisitions and the Third Quarter Mergers (see Note 1). Certain
additional shares were issued for acquisitions subsequent to
September 30, 1996 as further explained in Note 1.
In May 1996 the Company completed a public offering of 5,750,000
shares of common stock. In connection therewith, the Company
issued 4,250,000 new shares of common stock and existing
stockholders of the Company sold and additional 1,500,000 shares.
Proceeds to the Company, net of estimated offering expenses and
underwriting discounts, were approximately $115,400,000. Of this
amount, approximately $38,100,000 was used to pay down
indebtedness, primarily amounts outstanding under the PRG Credit
Facility and the EyeCorp Credit Facility, with the remainder
available for acquisitions, capital expenditures and general
corporate purposes.
The Company has reserved (i) 3,315,674 shares of common stock for
issuance upon exercise of stock options under the Company's stock
option plans (net of options exercised) and (ii) 40,000 shares of
common stock for issuance upon exercise of warrants. The Company
also registered 3,000,000 shares of common stock during the first
quarter of 1996, an additional 3,000,000 shares of common stock
during the second quarter of 1996 and 5,000,000 shares of common
stock in August 1996 to be used in connection with acquisitions,
of which 958,234 shares remain available for future issuance as of
November 1, 1996.
5. STOCK OPTION PLANS:
The Amended and Restated 1995 Stock Option Plan, (the Plan)
permits the Company to grant stock options to directors, key
employees and certain advisors. The aggregate amount of common
stock with respect to which options may be granted may not exceed
2,000,000 shares. The Plan provides for the grant of incentive
stock options (ISO's) and non-qualified stock options. The
options typically vest over a five-year period and expire ten
years from the date of grant.
The 1995 Health Care Professionals Stock Option Plan (the HCP
Plan) permits the Company to grant stock options to employees,
advisors and consultants of the Company, which the Company expects
will generally be ophthalmologists and optometrists, who both (i)
provide advisory or consulting services to the Company and (ii)
are employed by an affiliated practice. The aggregate amount of
common stock with respect to which options may be granted may not
exceed 1,000,000 shares. Options granted under the HCP Plan
<PAGE>
typically vest over a period of five years and expire ten years
from the date of grant. Generally, such options will expire upon
the termination of employment or the advisory or consultant
relationship with the Company or on the day prior to the tenth
anniversary of the date of grant, whichever occurs first.
Under the terms of the EyeCorp merger, stock options outstanding
under a prior EyeCorp stock option plan are exercisable for shares
of PRG common stock. The options are exercisable over a period of
five years.
Transactions under the foregoing plans are summarized as follows:
<TABLE>
Stock Options
ISO's Non-Qualified Total
<S> <C> <C> <C>
Outstanding at December 31, 1995 1,014,937 616,386 1,631,323
Granted in 1996 1,263,864 1,263,864
Exercised in 1996 (170,790) (31,023) (201,813)
Canceled in 1996 (10,903) (10,903)
Outstanding at September 30, 1996 844,147 1,838,324 2,682,471
</TABLE>
Of the stock option grants outstanding, 362,218 were issued at
prices between $5.00 and $10.00 per share, 911,415 were issued at
prices between $10.01 and $15.00 per share, 514,038 were issued at
prices between $15.01 and $25.00 per share, and 894,800 were
issued at prices between $25.01 and $35.00 per share.
6. INCOME TAX EXPENSE:
Income tax expense differed from the amount computed by applying
the statutory federal income tax rate of 34% to income before
income taxes as a result of the following:
<TABLE>
Three Months Nine Months
Ended Ended
September 30, September 30,
1995 1996 1995 1996
<S> <C> <C> <C> <C>
Tax expense (benefit) $(98) $2,058 $ 961 $2,201
at statutory rate
Nondeductible merger --- 350 --- 3,410
transaction costs
Tax free interest income (224) (360)
(Income) loss of poolings of
interests mergers not
taxable to PRG 228 --- (253) ---
State income taxes 88 353 116 849
Other 9 --- 93 48
Total income tax income $227 $2,537 $917 $6,148
</TABLE>
<PAGE>
The (income) loss of pooling of interests mergers not taxable or
deductible to PRG reflects the earnings of the entities with which
PRG merged in pooling of interests transactions. A tax provision
for the interim earnings and losses has not been provided, since
the taxable income at the close of the fiscal year is nominal.
State income taxes vary between periods due to the different tax
rates for the states in which the Company operates and the varying
levels of earnings in these states.
7. SUBSEQUENT EVENTS AND PRO FORMA INFORMATION:
Acquisitions
As more fully discussed in Note 1, subsequent to September 30,
1996, the Company (i) completed the acquisitions of the assets of
four eye care practices in early October (ii) entered into a
definitive agreement to acquire AOI, a privately-held physician
practice management company devoted solely to eye care, on
October 7, 1996 and (iii) completed, on November 5, 1996,the
acquisition of substantially all of the assets and liabilities
of the eyecare division of EquiMed, a publicly traded physician
practice management company. AOI and EquiMed provide management
services to 16 eye care practices and 22 eye care practices,
respectively. See Notes 1 and 3 for more details regarding these
transactions.
In addition to the subsequent acquisitions discussed above and in
Note 1, the Company is currently in various stages of negotiations
with a number of other eye care practices regarding the
acquisition of certain assets and liabilities and the provision of
management services. Management of PRG believes certain of these
negotiations will result in additional acquisitions in the future.
Pro Forma
The summarized unaudited pro forma consolidated statement of
operations data for the nine months ended September 30, 1995 and
1996 presented below have been prepared as if (i) the
reorganization and initial public offering in 1995 had been
completed; (ii) the consummation of the First Quarter
Acquisitions, the Second Quarter Acquisitions, the Second Quarter
Merger, Third Quarter Acquisitions and the Third Quarter Mergers
and entry into service agreements with these 40 eye care practices
had occurred; (iii) consummation of the AOI and EquiMed
acquisitions and the acquisition of the four Fourth Quarter
Acquisitions had occurred; (iv) the acquisitions made by EyeCorp
during 1995 were completed; and (v) the 1996 public offering had
occurred, all as if such transactions or events had occurred
January 1, 1995 (amounts in 000's, except shares).
<PAGE>
<TABLE>
Nine Months Ended
September 30,
1995 1996
<S> <C> <C>
Total revenues $270,136 $ 270,654
Net income $ 13,122 $ 2,974
Net income per share $ .45 $ .10
Number of shares used in net
income per share calculation 29,248 29,686
</TABLE>
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
OVERVIEW
As discussed in Item 1, PRG conducted no significant operations
until the reorganization. Through the Service Agreements in late
June 1995, the Company began providing management, operational and
administrative services to its affiliated practices in return for
Service Fees (see Note 1 of Notes to Consolidated Financial
Statements for more details regarding the Service Fees). The
expenses incurred by the Company in fulfilling its obligations
under the Service Agreements are generally the same as the
operating costs and expenses that would have otherwise been
incurred by the practices. In addition to the operating costs and
expenses discussed above, the Company is incurring personnel and
administrative expenses in connection with establishing and
maintaining a corporate and regional offices, which provide
additional management and administrative services to the
practices.
As discussed in Note 1 of the Notes to Consolidated Financial
Statements, the Company has made a number of acquisitions
subsequent to December 31, 1995. On March 18, 1996, the Company
merged, in a pooling of interests transaction, with EyeCorp, a
physician practice management company devoted solely to eyecare.
EyeCorp provides practice management services to 50 eye care
practices. The Company issued 6,089,506 shares of its common
stock in consideration thereof. The Company also acquired the
assets of an additional 11 practices at various dates during the
first quarter of 1996 for cash of approximately $7,800,000 and
1,446,437 shares of common stock. In addition, during the second
quarter of 1996, PRG acquired certain assets and liabilities of 11
ophthalmic and optometric practices for cash of $1,835,000 and
801,639 shares of its common stock. Further, during the second
quarter of 1996, PRG merged, in a transaction accounted for as a
pooling of interests, with one eye care practice. In connection
therewith, PRG issued 281,832 shares of common stock to the owners
of the practice. During the third quarter of 1996, PRG acquired
certain assets and liabilities of 11 practices for cash of
$767,000 and 1,374,799 shares of its common stock in purchase
transactions. PRG also acquired 6 practices during the third
<PAGE>
quarter in pooling transactions wherein 3,355,142 shares of common
stock were issued. The financial statements of EyeCorp and the
pooled practices have been combined with those of the Company for
all periods presented in the accompanying financial statements.
As more fully discussed in Note 1, subsequent to September 30,
1996, the Company (i) completed the acquisitions of the assets of
four eye care practices in early October (ii) entered into a
definitive agreement to acquire AOI, a privately-held physician
practice management company devoted solely to eye care, on October
7, 1996 and (iii) completed on November 5, 1996, the acquisition
of substantially all of the assets and liabilities of the eyecare
division of EquiMed, a publicly traded physician practice
management company, for approximately $55,077,000 in cash. AOI
and EquiMed provide management services to 16 eye care practices
and 22 eye care practices, respectively. See Note 1 for more
details regarding these transactions.
RESULTS OF OPERATIONS - UNAUDITED HISTORICAL
As indicated above, PRG did not commence any significant
operations until the third quarter of 1995. In addition, EyeCorp
did not acquire the assets of 48 of its 50 practices until the end
of the fourth quarter of 1995 and 40 additional practices have
been acquired by PRG during the first nine months of 1996, 33 of
which have been accounted for as purchases. As a result,
revenues, costs and expenses have all increased significantly
during the three months and nine months ended September 30, 1996
when compared to the corresponding three months and nine months of
the previous year.
Three Months Ended September 30, 1996 Compared to Three Months
Ended September 30, 1995
Revenues
Revenues for the three month period ended September 30, 1996
increased approximately $31,565,000 or 109% as compared to the
same period in 1995. These significant increases are largely
attributable to (i) the fact that 48 of the 50 practices
affiliated with EyeCorp were acquired on December 28, 1995, and
had no significant operating results included in the 1995 period
and (ii) a significant increase in the number of practice asset
acquisitions made during 1996 that are accounted for as purchases
(33 acquisitions). The percentage of revenues derived from
management services declined during the 1996 period when compared
to the 1995 period, while the percentage derived from medical
service and surgery centers and other increased correspondingly,
primarily due to (i) medical service revenues generated by the
pooled practices prior to acquisition date and (ii) the fact that
the number of 100% owned surgery center facilities increased
disproportionately to the number of non-100% owned surgery center
facilities. Revenues from 100% owned surgery center facilities
are included in the surgery center line item, while revenues from
less than 100% owned facilities are included in management service
revenues.
<PAGE>
Costs and Expenses
The significant increase in the absolute amount of total costs and
expenses between the 1996 and 1995 period ($25,225,000), as well
as the large percentage increase (86%), are both attributable to
same factors cited above that caused the large revenue increase
between the two periods. The decrease in the percentage of the
largely variable expense categories (salaries, wages and benefits;
pharmaceuticals and supplies; general and administrative) to
revenues from 92% in the 1995 period to 82% in the 1996 period is
primarily attributable to significantly higher physician
compensation withdrawals in the 1995 period compared to the 1996
period (such withdrawals are classified as salaries, wages and
benefits) relative to several large practices that affiliated with
PRG in pooling transactions during the 1996 period. These larger
withdrawals from pooled entities, along with the non-recurring
executive resignation expense of $1,117,000, were the primary
contributors to the loss in the 1995 period. Pharmaceuticals and
supplies increased as a percentage of revenues between the two
periods from 11% to 15% due primarily to the increased level of
surgery center revenue in the Company during 1996 which generally
has higher levels of pharmaceuticals and supplies associated
therewith. General and administrative expense increased as a
percentage of revenues (28% to 32%) due primarily to higher
corporate expenses in 1996 due to the ramp up of corporate
and regional facilities during this period. Depreciation and
amortization did not change as a percentage of revenues (5%)
between the 1996 and 1995 period. During the 1995 period, the
Company had a small amount of interest expense that was a
combination of interest on EyeCorp and other indebtedness, offset
somewhat by interest income on investment of initial public
offering proceeds. The significant amount of interest income
during the 1996 period is the result of the pay-off of almost all
existing debt with the May 1996 secondary offering proceeds and
the re-investment of the excess proceeds. PRG had no merger
transaction expenses during 1995 as no poolings were consummated
during that period, whereas there were six poolings consummated
during the third quarter of 1996.
Provision For Income Taxes
The effective income tax rate for the 1996 period (41.9%) is
higher than the U.S. statutory rate of 34% due to state income
taxes and the non-tax deductibility of the $1,030,000 of
transaction expenses offset somewhat by the effect of tax exempt
interest income on Company investments. The income tax provision
for the 1995 period is primarily due to the federal and state
income taxes on PRG's earnings, before consideration of the losses
from the entities which PRG merged with in pooling of interests
transactions. A tax provision for the interim earnings and losses
for the entities with which PRG merged in pooling transactions has
not been provided since the taxable income of these entities at
the close of their fiscal year was reduced to nominal levels.
<PAGE>
Nine Months Ended September 30, 1996 Compared to Nine Months Ended
September 30, 1995
Revenues
Revenues for the nine month period ended September 30, 1996
increased approximately $101,872,000 or 166% when compared to the
same nine month period of 1995. These significant increases are
primarily attributable to (i) the fact that PRG did not have any
significant operations during the first six months of 1995 (ii)
the fact that 48 of EyeCorp's 50 practices were acquired on
December 28, 1995, and had no significant operating results
included in the 1995 period and (iii) a significant increase in
the number of practice asset acquisitions made by PRG during 1996
that are accounted for as purchases (33 acquisitions). The
percentage of revenues derived from management services declined
during the 1996 period when compared to the 1995 period, while the
percentage derived from medical services and surgery centers and
other increased correspondingly, primarily due to (i) medical
service revenues generated by the pooled practices prior to the
acquisition date and (ii) the fact that the number of 100% owned
surgery center facilities increased disproportionately to the
number of non-100% owned surgery center facilities. Revenues from
100% owned surgery center facilities are included in the surgery
center line item, while revenues from less than 100% owned
facilities are included in management service revenues.
Costs and Expenses
On an overall basis, total costs and expenses increased
significantly during 1996 over 1995, both on an absolute basis
($98,224,000) and on a percentage basis (167%) for the same
reasons as cited above for the nine month revenue increase.
However, the percentage of revenues attributable to the three
largely variable expense categories (salaries, wages and benefits;
pharmaceutical and supplies; and general and administrative) did
not change significantly, in total, as a percentage of revenues
between the periods (i.e. 88% in 1995 as compared to 85% in 1996).
The slight decrease is consistent with the causes of the much
larger decrease discussed above. Depreciation and amortization,
as a percentage of revenues, did not change significantly between
the periods. Pharmaceuticals and supplies increased as a
percentage of revenues between the two periods (10% to 13%) due
primarily to the increased level of surgery center revenue in the
Company during 1996 which generally has higher levels of
pharmaceuticals and supplies associated therewith. General and
administrative expense increased as a percentage of revenues (24%
to 26%) due primarily to higher corporate expenses resulting from
the fact that during the first six months of 1995 PRG maintained a
very small corporate office, and began to ramp up its corporate
and retional facilities in 1996. PRG had $12,030,000 of merger
transaction expenses during 1996 compared to none in 1995, as no
poolings were consummated during 1995. The $1,117,000 of 1995
expenses associated with the resignation of the Company's former
chief executive officer are also nonrecurring in nature
and, accordingly, were not incurred in 1996. PRG incurred
approximately $1,007,000 of interest expense during 1995
attributable primarily to EyeCorp's outstanding indebtedness,
<PAGE>
whereas in 1996, there was $830,000 of interest income as a result
of repayment of substantially all indebtedness (in May) and
interest income on investment of excess proceeds from the May 1996
stock offering.
Provision For Income Taxes
The 95% effective tax rate for the 1996 period is substantially
higher than the U.S. statutory tax rate of 34% as a result,
primarily, of the nondeductibility, for income tax purposes, of
most of the merger transaction expenses as well as, to a lesser
extent, to the effect of state income taxes and tax-free interest
income on Company investments. The effective tax rate for the nine
month period ended September 30, 1995 was approximately 32.4%.
This percentage was less than the U.S. statutory tax rate of 34%
as a result, primarily, of the earnings from the entities with
which PRG merged in pooling of interests transactions somewhat
offset by state income taxes and the nondeductibility of a portion
of the executive resignation expenses. A tax provision for the
interim earnings for the entities with which PRG merged in pooling
transactions, has not been provided since the taxable income of
these entities at the close of their fiscal year was reduced to
nominal levels.
RESULTS OF OPERATIONS - UNAUDITED PRO FORMA
As discussed in Note 7 in the Notes to Consolidated Financial
Statements, the summarized unaudited pro forma consolidated
statement of operations data for the nine months ended September
30, 1995 and 1996 presented below have been prepared as if (i) the
reorganization and initial public offering had been completed;
(ii) the consummation of the First Quarter Acquisitions, the
Second Quarter Acquisitions, the Second Quarter Merger, the Third
Quarter Acquisitions and the Third Quarter Mergers, and entry into
Service Agreements with these 40 eye care practices had occurred;
(iii) consummation of the AOI and EquiMed acquisitions and the
acquisition of the four Fourth Quarter Acquisitions had occurred;
(iv) the acquisitions made by EyeCorp during 1995 were completed;
and (v) the 1996 public offering had occurred, all as if such
transactions or events had occurred January 1, 1995 (amounts in
000's, except shares).
<TABLE>
Nine Months Ended
September 30,
1995 1996
<S> <C> <C>
Total revenues $ 270,136 $ 270,654
Net income $ 13,122 $ 2,974
Net income per share $ .45 $ .10
Number of shares used in net
income per share calculation 29,248 29,686
</TABLE>
<PAGE>
Total revenues did not change significantly between the two
periods. However, pro forma net income decreased approximately
$10,148,000 between the two periods. This decline in income is
attributable primarily to (i) the $12,030,000 of nonrecurring
merger transaction expenses incurred in 1996 but not in 1995 and
(ii) substantial increases in corporate expenses at PRG and
EyeCorp during 1996. PRG maintained a small corporate office in
1995, particularly prior to going public in June. Had the merger
transaction expenses and related tax effects not been incurred,
pro forma income and pro forma income per share for the nine
months ended September 30, 1996, would have been approximately
$14,366,000 and $.48 per share, respectively, based on 29,686,000
shares outstanding.
LIQUIDITY AND CAPITAL RESOURCES
Cash, Working Capital and Debt
During the nine months ended September 30, 1996, the Company made
significant cash expenditures and incurred significant obligations
with respect to (i) the EyeCorp merger (ii) various practice asset
and ASC acquisitions and related debt pay-off (see Note 1 of Notes
to Consolidated Financial Statements) (iii) capital expenditures
for establishment and relocation of the corporate and regional
offices and information systems (iv) final pay-off of certain
obligations due to the physician owners of the Company's initial
affiliated practices and (v) other miscellaneous cash expenditures.
To finance these significant cash expenditures, PRG utilized
proceeds from the 1996 public offering, cash generated from
operations and a portion of its bank credit facilities.
Accordingly, as of September 30, 1996, cash on hand was
$70,260,000, working capital was $104,973,000 and total long-term
debt was $10,750,000 (including current portion).
Subsequent to September 30, 1996, the Company continued to make
significant cash expenditures, particularly with respect to
acquisitions. Approximately $55,077,000 of cash was spent in
connection with the acquisition of EquiMed's eye care division in
November and approximately $722,000 in connection with the
purchase of assets of four additional eye care practices and two
ASCs in October. Also, an additional $9,700,000 of additional
indebtedness was assumed in connection with the EquiMed
transactions. Accordingly, as of November 7, 1996, PRG's cash
balance was approximately $22,000,000 and its long-term debt
(including current portion) was approximately $20,862,000. The
Company also entered into a definitive agreement to acquire AOI on
October 7, 1996, a physician practice management company devoted
solely to eyecare for up to approximately $70,000,000. In
connection with this acquisition, PRG will pay up to $35,000,000
of cash, $35,000,000 in common stock (up to 1,499,000 shares) and
will refinance approximatel $44,500,000 o existing indebtedness
of AOI (and any portion of the $3,200,000 seller debt which
accelerates at closing). In addition, PRG will assume
approximately $13,700,000 of debt payable to AOI physicians. The
purchase price could decrease by as much as $10,000,000 if certain
acquisition parameters are not met. This transaction is
anticipated to close in late November or early December of 1996.
<PAGE>
PRG anticipates utilizing its existing cash balances, cash flow
from operations, the available borrowings under its $55,000,000 of
credit facilities and potential additional bank borrowings to fund
the closing of this transaction.
Credit Facilities
During December 1995 and January 1996, PRG and EyeCorp
respectively, entered into separate credit facilities providing
for an aggregate amount of $55,000,000. These facilities, which
are secured by certain assets of PRG and EyeCorp, are available to
provide funding for acquisitions, capital expenditures and working
capital. These facilities have been consolidated and such amount
remained available under the consolidated line of credit as of
September 30, 1996. The Company borrowed $10,000,000 on the
consolidated facility in November 1996. As indicated above, PRG
anticipates borrowing substantially all of the remaining facility
to fund t he purchase of AOI. The Company has initiated
discussions with the same bank regarding a new facility that
would, if consummated, provide for borrowings of up to
$125,000,000 to be used for acquisitions, working capital,
capital expenditures and general corporate purposes.
The Offering
In May 1996, PRG completed an offering of 5,750,000 shares of
its common stock at $28.50 per share. Of these shares, 4,250,000
shares were sold by the Company and 1,500,000 were sold by
existing shareholders. Proceeds to the Company, net of estimated
offering expenses and underwriting discounts were approximately
$115,400,000. Of this amount, approximately $38,100,000 was used
to pay down indebtedness under PRG's credit facilities (see
above). The remainder is available for acquisitions, capital
expenditures and general corporate purposes, a substantial portion
of which ($55,077,000) was used to fund the EquiMed purchase.
Liquidity
As discussed above, PRG management anticipates that its existing
cash resources, cash flow from operations and available borrowings
under its existing credit facilities and potentially new
borrowings will be sufficient to allow for the closings of the AOI
and EquiMed transactions. Subsequent to those closings,
management believes that its cash flow from operations will be
sufficient to fund PRG's ongoing operations and capital
expenditures through 1997, and that a combination of those same
cash resources, PRG common stock and proceeds from potential
expansion of bank lending amounts and/or other equity or debt
offerings will be sufficient to fund the planned acquisition
program throughout 1997; however, there can be no assurance that
the Company will be able to successfully expand its bank lending
amounts or consummate such offerings.
<PAGE>
PART II. OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS.
None
ITEM 2. CHANGES IN SECURITIES.
None
ITEM 3. DEFAULTS UPON SENIOR SECURITIES.
None.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
None.
ITEM 5. OTHER INFORMATION.
None.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K.
(a) Exhibits
2.1 -- Agreement and Plan of Merger by and among Central
Florida Eye Associates, P.A., Ronald Case, M.D., Brian Renz,
M.D., Teo Kulyk, M.D., Jay Mulaney, M.D., PRG FL Acquisition
Corporation, and Physicians Resource Group, Inc. (8)
2.2 -- Agreement and Plan of Merger by and among G.C.R.
Investors, Ronald Case, M.D., Brian Renz, M.D., Jay Mulaney,
M.D., PRG FL Partnership I, and Physicians Resource Group,
Inc. (8)
2.3 -- Agreement and Plan of Merger by and among Central
Florida Eye Associates, Partners, Ronald Case, M.D., Brian
Renz, M.D., Teo Kulyk, M.D., Jay Mulaney, M.D., PRG FL
Partnership II, and Physicians Resource Group, Inc. (8)
2.4 -- Agreement and Plan of Merger by and among South Texas
Retina Affiliates, Inc., South Texas Retina Consultants,
L.L.P., Charles H. Campbell, M.D., P.A., Charles H. Campbell,
M.D., PRG TX Acquisition Corp. I and Physicians Resource
Group, Inc. (8)
2.5 -- Agreement and Plan of Merger, dated August 13, 1996,
between PRG Ohio III, Inc., Physicians Resource Group, Inc.,
Cincinnati Eye Institute, Inc., John S. Cohen, M.D., James D.
Faulkner, M.D., William J. Faulker, M.D., Robert C. Kersten,
M.D., Richard S. Kerstine, M.D., Robert H. Osher, M.D.,
Robert W. Nash, M.D., Michael R. Petersen, M.D., Gary A.
Varley, M.D., Linda J., Greff, M.D., Robert J. Cionni, M.D.,
Kevin T. Corcoran, O.D. and Corwin M. Smith, M.D. (9)
<PAGE>
2.6 -- Agreement and Plan of Reorganization, dated August 13,
1996, between PRG HEA Acq. Corp., Physicians Resource Group,
Inc., Houston Eye Associates, P.A., Malcom L. Mazow, M.D.,
Robert H. Stewart, M.D., Robert B. Wilkins, M.D., Jeffrey D.
Lanier, M.D., Michael A. Bloome, M.D., Paul C. Salmonsen,
M.D., Richard L. Kimbrough, M.D., Jack T. Holladay, M.D.,
Jeffrey B. Arnoult, M.D., William H. Quayle, M.D., John D.
Goosey, M.D., John M. Lim, M.D., Kathryn H. Musgrove, M.D.,
Marsha F. Soechting, M.D. and Marc N. Longo, M.D. (9)
2.7 -- Asset Purchase Agreement, dated August 13, 1996, between
PRG Ohio III, Inc., Physicians Resource Group, Inc. and CEI
Realty Associates, Ltd. (9)
2.8 -- Agreement and Plan of Merger, dated August 13, 1996
between PRG IV Acq. Corp., Physicians Resource Group, Inc.,
Gregory L. Henderson .M.D., P.A. and Gregory L. Henderson,
M.D. (9)
2.9 -- Agreement and Plan of Merger, dated August 13, 1996,
between PRG IX Acq. Corp., Physicians Resource Group, Inc.,
William Reynolds, M.D., P.A. and William Reynolds, M.D. (9)
2.10 -- Agreement and Plan of Merger, dated August 12, 1996
between PRG II Acq. Corp., Physicians Resource Group, Inc.,
Tampa Eye Clinic, P.A., J. Burns Creighton, M.D., Ronald
Seely, M.D., Lewis Lauring, M.D., William Reynolds, M.D.,
David Leach, M.D., P.A. and Timothy Lorenzen, M.D., P.A. (9)
2.11 -- Agreement and Plan of Merger, dated August 13, 1996
between PRG XI Acq. Corp, Physicians Resource Group, Inc.,
Timothy Lorenzen, M.D., P.A. and Timothy Lorenzen, M.D. (9)
2.12 -- Agreement and Plan of Merger, dated August 13, 1996,
between PRG VII Acq. Corp., Physicians Resource Group, Inc.,
Ronald Seely, M.D., P.A. and Ronald Seely, M.D. (9)
2.13 -- Agreement and Plan of Merger, dated August 13, 1996,
between PRG VI Acq. Corp, Physicians Resource Group, Inc., J.
Burns Creighton, M.D., P.A., and J. Burns Creighton, M.D. (9)
2.14 -- Asset Purchase Agreement by and among EquiMed, Inc., PRG
Georgia and Physicians Resource Group, Inc., dated October 7,
1996. (10)
2.15 -- Agreement and Plan of Merger by and among American
Ophthalmic Incorporated, PRG Acquisition Corporation and
Physicians Resource Group, Inc., dated October 7, 1996. (10)
3.1 -- Restated Certificate of Incorporation of Physicians
Resource Group, Inc.(1)
3.2 -- Certificate of Designations, Preferences, Rights and
Limitations of Class A Preferred Stock of Physicians Resource
Group, Inc.(1)
<PAGE>
3.3 -- Third Amended and Restated Bylaws of Physicians Resource
Group, Inc.(4)
4.1 -- Form of Warrant Certificate.(1)
4.2 -- Rights Agreement dated as of April 19, 1996 between
Physicians Resource Group, Inc. and Chemical Mellon
Shareholder Services(7)
4.3 -- Form of certificate evidencing ownership of Common Stock
of Physicians Resource Group, Inc.(1)
10.1 -- Physicians Resource Group, Inc. Amended and Restated
1995 Stock Option Plan.(4)
10.2 -- Physicians Resource Group, Inc. 1995 Health Care
Professionals Stock Option Plan.(1)
10.3 -- Employment Agreement between Physicians Resource Group,
Inc. and Gregory L. Solomon.(1)
10.4 -- Employment Agreement between Physicians Resource Group,
Inc. and Emmett E. Moore.(1)
10.5 -- Employment Agreement between Physicians Resource Group,
Inc. and Richard M. Owen.(1)
10.6 -- Form of Indemnification Agreement for certain
Directors.(1)
10.7 -- Form of Service Agreement by and between Physicians
Resource Group, Inc., Physicians Resource Group Subsidiary,
Inc. and TPZ, Inc. d/b/a/ Eye Care of Medina, Inc.(1)
10.8 -- Form of Service Agreement by and between Physicians
Resource Group, Inc., its wholly-owned subsidiary and The Eye
Clinic of Texas.(1)
10.9 -- Form of Service Agreement by and between Physicians
Resource Group, Inc., its wholly-owned subsidiary and David
M. Schneider, M.D., Inc.(1)
10.10 -- Form of Service Agreement by and between Physicians
Resource Group, Inc., its wholly-owned subsidiary and Texas
Eye Institute Assoc.(1)
10.11 -- Form of Service Agreement by and between Physicians
Resource Group Subsidiary, Inc., its wholly- owned subsidiary
and McDonald Eye Associates, P.A.(1)
10.12 -- Form of Service Agreement by and between Physicians
Resource Group, Inc., its wholly-owned subsidiary and Michael
A. Minadeo, M.D., P.A.(1)
10.13 -- Form of Service Agreement by and between Physicians
Resource Group, Inc., its wholly-owned subsidiary and
Southern Nevada Eye Clinic, Inc., Kenneth C. Westfield, M.D.,
Ltd. and Nevada Institute of Ambulatory Surgery, Inc.(1)
<PAGE>
10.14 -- Form of Service Agreement by and between Physicians
Resource Group, Inc., its wholly-owned subsidiary and Eye
Clinic, P.C.(1)
10.15 -- Form of Service Agreement by and between Superior Eye
Care, Inc. and Charles D. Fritch, M.D., Inc.(1)
10.16 -- Form of Service Agreement by and among Pacific Vision
Services, Inc. and Loma Linda Ophthalmology Medical Group,
Inc., Inland Eye Institute Medical Group, Inc. and T.E.S.C.,
Inc.(1)
10.17 -- First Amendment to Service Agreement by and among
Physicians Resource Group, Inc., as successor by merger to
Pacific Vision Services, Inc., Loma Linda Ophthalmology
Medical Group, Inc., Inland Eye Institute Medical Group, Inc.
and T.E.S.C., Inc. dated August 9, 1995.(3)
10.18 -- Subscription Agreement, dated June 30, 1995 between
Notre Capital Ventures, Ltd. and Physicians Resource Group,
Inc.(1)
10.19 -- Form of Registration Rights Agreement.(1)
10.20 -- Form of Registration Rights Agreement.(1)
10.21 -- Form of Registration Rights and Stockholders
Agreement.(1)
10.22 -- Form of Registration Rights Agreement dated as of March
7, 1996, by and among Physicians Resource Group, Inc. and the
former stockholders of EyeCorp, Inc.(4)
10.23 -- Form of Option Agreement between Physicians Resource
Group, James A. Price, M.D., Ben F. House, M.D., Bruce E.
Herron, M.D. and Mark R. Bateman, M.D.(1)
10.24 -- Separation and Mutual Release Agreement between Gregory
Solomon and Physicians Resource Group.(5)
10.25 -- Loan Agreement dated as of January 8, 1996 between PRG
and NationsBank of Tennessee, N.A. ("NationsBank").(6)
10.26 -- Subordination Agreement dated as of December 28, 1995 by
and among NationsBank, EyeCorp, Eyecare Resource, Inc.,
the EyePA, Inc. and PRG.(4)
10.27 -- Reimbursement Agreement dated as of December 28, 1995
between EyeCorp and PRG.(6)
10.28 -- Service Agreement dated as of February 23, 1994, by and
between EyeCorp, Inc., the Vitreoretinal Foundation and David
Meyer, M.D., John E. Linn, M.D., John D. Armstrong, M.D.,
John L. Elfervig, M.D. and Thomas A. Browning, M.D.(4)
<PAGE>
10.29 -- Amendment to Service Agreement, dated March 8, 1996, by
and between the Vitreoretinal Foundation, David Meyer, M.D.,
John E. Linn, M.D., John D. Armstrong, M.D., John L.
Elfervig, M.D. and Thomas A. Browning, M.D. and EyeCorp,
Inc.(4)
10.30 -- Second Amendment to Service Agreement dated as of
February 23, 1994, by and between EyeCorp, Inc., the
Vitreoretinal Foundation and David Meyer, M.D., John E. Linn,
M.D., John D. Armstrong, M.D., John L. Elfervig, M.D.
and Thomas A. Browning, M.D.(4)
10.31 -- Loan and Security Agreement dated as of December 28,
1995 among EyeCorp, Inc., EyeCare Resource, Inc. The EyePA,
Inc. and NationsBank of Tennessee, N.A.(4)
27.1 -- Financial Data Schedule.(2)
________
1) Previously filed as an exhibit to the Company's Registration
Statement on Form S-1 (No. 33-91440) and incorporated herein by
reference.
2) Filed herewith.
3) Previously filed as an exhibit to the Company's quarterly report
on Form 10-Q for the quarter ending June 30, 1995, and
incorporated herein by reference.
4) Previously filed as an exhibit to the Company's annual report on
Form 10-K for the year ended December 31, 1995, and incorporated
herein by reference.
5) Previously filed as an exhibit to the Company's quarterly report
on Form 10-Q for the quarter ending September 30, 1995, and
incorporated by reference.
6) Previously filed as an exhibit to the Company's Registration
Statement on Form S-4 (No. 333-00230) and incorporated herein by
reference.
7) Previously filed as an exhibit to the Company's Current Report
on Form 8-K dated April 19, 1996 and incorporated by reference
herein.
8) Previously filed as an exhibit to the Company's Current Report
on Form 8-K dated July 1, 1996, and amended on July 17, 1996,
and incorporated herein by reference.
9) Previously filed as an exhibit to the Company's Current Report
on Form 8-K dated September 7, 1996, and amended on September
24, 1996, and incorporated herein by reference.
10) Previously filed as an exhibit to the Company's Current Report
on Form 8-K dated October 7, 1996, as amended on October 30,
1996, and incorporated herein by reference.
(b) Reports on Form 8-K
1. On July 12, 1996, the Company filed with the Securities and
Exchange Commission (the _Commission_) a Current Report on
Form 8-K dated June 30, 1996, which Form 8-K reported the
consummation of the acquisition of certain acquisitions,
under Item 2 (Acquisition of Assets).
<PAGE>
2. On July 17, 1996, the Company filed with the Commission a
Current Report on Form 8-K/A dated June 30, 1996, which
Form 8-K/A reported the consummation of the acquisition of
certain acquisitions, under Item 2 (Acquisition of Assets).
The following financial statements were also included in
such Form 8-K/A:
(i) The audited balance sheets of Central Florida Eye
Associates, P.A. and affiliates and South Texas Retina
Consultants, P.A. and affiliate, as of December 31,
1995 and March 31, 1996 (unaudited), and the related
statements of earnings, owners' equity and cash flows
for the periods then ended.
(ii) The unaudited pro forma balance sheet of PRG, the
unaudited pro forma condensed consolidated statements
of income of PRG for the year ended December 31, 1995
and the three-months ended March 31, 1996 and 1995.
3. On August 13, 1996, the Company filed with the Commission
a Current Report on Form 8-K dated August 13, 1996, which
Form 8-K reported the consummation of certain acquisitions
under Item 5 (Other Events). The following financial
statements were also included in such Form 8-K:
(i) The audited combined balance sheet of Physicians
Resource Group, Inc. - Sundry Acquisition Practices as
of December 31, 1995, and the related combined
statements of earnings, owners' equity and cash flows
for the year then ended.
4. On September 6, 1996, the Company filed with the
Commission, a Current Report on Form 8-K dated August 30,
1996, which Form 8-K reported the consummation of certain
acquisitions under Item 2 (Acquisition of Assets) and Item
5 (Other Events).
5. On September 24, 1996, the Company filed with the
Securities and Exchange Commission a Current Report on Form
8-K/A dated August 30, 1996, which Form 8-K/A reported the
consummation of certain acquisitions under Item 2
(Acquisition of Assets) and Item 5 (Other Events). The
following financial statements were included in such Form
8-K/A:
(i) The audited balance sheet of Cincinnati Eye Institute,
Inc. and affiliate, Houston Eye Associates, Gregory L.
Henderson, M.D., Tampa Eye Clinic, P.A., West Florida,
P.A. and Douglas G. Johnson, O.D., P.A., as of December
31, 1995 and June 30, 1996 (unaudited), and the related
statements of earnings, owners equity and cash flows for
the periods then ended.
(ii)The unaudited merger/significant transactions pro
forma combined balance sheet of the Company as of June
30, 1996 and unaudited pro forma combined statements of
operations of the Company for the year ended December
31, 1995 and the six months ended June 30, 1996.
<PAGE>
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of
1934, the Registrant has duly caused this report to be signed on
its behalf by the undersigned, thereunto duly authorized.
PHYSICIANS RESOURCE GROUP, INC.
Dated: November 14, 1996 By:/S/RICHARD M. OWEN
Richard M. Owen
Senior Vice President and
Chief Financial Officer
Dated: November 14, 1996 By:/S/JOHN N. BINGHAM
John N. Bingham
Vice President, Controller
and Principal Accounting
Officer
<PAGE>
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